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Operator: Good afternoon, and welcome to the Qnity Business Update Conference and Webcast Call. [Operator Instructions] Please be advised that today's call is being recorded. [Operator Instructions] I will now turn the call over to Nahla Azmy, Vice President of Investor Relations. You may begin. Nahla Azmy: Thank you. Good afternoon, and thank you for joining Qnity's business update call and a review of our estimated third quarter 2025 results. This morning, DuPont reported its third quarter performance, including the Electronics co-segment results, which do not include our full allocation of corporate costs or pro forma adjustments. Qnity's earnings are not yet final, and our remarks today are based on estimated pro forma results and carved financials. We anticipate releasing our full earnings results mid-November when we file our Form 10-Q, including posting additional supplemental information to the IR section of the Qnity Electronics website. I would like to bring your attention to Slide 2 in our presentation, which notes that we will be discussing forward-looking statements. These statements represent our best view of predictions and expectations for the future, but numerous risks and uncertainties may cause actual results to differ from those provided. Additionally, we will be discussing certain non-GAAP financial measures. The reconciliation of these non-GAAP financial measures to the closest GAAP measure can be found in the appendix of the presentation. As for the agenda, we will start with formal remarks by Qnity's Chief Executive Officer, Jon Kemp; and Chief Financial Officer, Matt Harbaugh. We will then follow with a Q&A session. Now it's my pleasure to turn this over to Jon Kemp. Jon? Jon Kemp: Thanks, Nahla. Good afternoon, everyone. Thanks for joining us. It's an honor to speak with you today for the first time as CEO of Qnity following our spin on November 1. This moment marks more than the launch of a new company, it's the beginning of a bold chapter. I want to take a moment to thank DuPont, our Board of Directors and the Qnity team whose dedication, vision and hard work made the spin and successful launch of our new company possible. Over the past few weeks, Matt and I met with many of you. Thank you for the opportunity to share Qnity's compelling story and for your insights and support, as we crossed the finish line for the spin. While the company is new, it's built on more than 50 years of technology and innovation leadership and our deep and lasting customer relationships continue to be one of our greatest strengths. Over the past few months, I've had countless conversations with customers around the globe from chip fabricators to leading OEMs. And what's clear is that Qnity is seen as a trusted partner with the scale and technical depth and breadth to enable their next-generation technologies. We've worked hard to earn their trust and their confidence, and it's a testament to the impact our teams are making. It reflects the depth of our commitment to delivering the latest technology innovations at an exceptional level of quality, coupled with both speed and reliability. Let's turn to Slide 4. As you can see, we've had a big week. As planned on November 1, we completed the spin and launched Qnity as an independent pure-play electronics company focused on solutions for the semiconductor value chain. On November 3, we started regular way trading on the New York Stock Exchange under the stock ticker Q, and we joined the ranks of the S&P 500. When we spoke to you at Investor Day in September, we told you about our strategic path and operating model to achieve above-market growth and strong profitability. The third quarter results we're sharing today are solid evidence of our ability to stay focused and continue to execute during transformational change while also delivering for our customers and driving consistent financial performance for shareholders. We've delivered 6 consecutive quarters of sustained strong organic growth. We're continuing to build momentum and invest in the fastest-growing, highest margin areas with a robust innovation pipeline, a true competitive advantage. And we're making meaningful progress shaping a culture that keeps us focused on what truly matters: our customers, innovation, speed and our people, empowering us to deliver with purpose and agility at a pace our customers require. With that foundation, let's dive into our third quarter performance, where the results speak to the power of our execution and the value we are creating. We had solid third quarter results driven by AI-related customer demand from advanced nodes, advanced packaging and thermal management. On a year-over-year basis, net sales were up 11% at about $1.3 billion, with organic growth up 10%. Our results include spin-related timing adjustments on orders contributing to a 3% lift in the quarter. Our estimated adjusted pro forma operating EBITDA was up 6% in the quarter year-over-year, which equates to an estimated 29% margin. These preliminary results reflect the strength of our portfolio and the continuing wins in leading-edge innovation we're delivering to customers, making us their partner of choice with a broad range of offerings and deep application engineering expertise that enable true end-to-end solutions. Based on the strength of our third quarter results, we're raising our 2025 full year net sales guidance to $4.7 billion. We're also reaffirming our estimated adjusted pro forma operating EBITDA of approximately $1.4 billion and margin of roughly 30%. Before I turn things over to Matt, let me cover a few macro trends we're seeing broadly across the industry. The semiconductor market recovery continues to be fueled by the adoption of leading-edge technologies for AI applications, including advanced logic, high-bandwidth memory, advanced packaging and thermal solutions. We believe customer utilization rates have improved slightly since last quarter, averaging in the high 70% range, led by advanced logic in the high 70s and DRAM in the mid-80s. More recent customer feedback suggests slow improvement in mature logic, although still in the mid-70s. And while NAND commentary has improved, overall utilization has remained steady, also in the mid-70s. MSI wafer start data remains a good indicator for Qnity's demand, given that about 90% of our portfolio is made up of consumable products that are used with every unit produced. We expect MSI to grow mid-single digits this year. We continue to outperform wafer starts driven by our leadership position in next-generation technologies, such as CMP pads, cleans and slurries; advanced packaging with metallization and substrates; and thermal applications at the chip, package and device level. With strong company performance and improving semiconductor demand signals, let me turn the call over to Matt to share a more detailed look at our third quarter preliminary results. Matthew Harbaugh: Thanks, Jon. Today's preliminary results reflect anticipated recurring stand-alone public company costs, carve-related items and management adjustments similar to prior quarters disclosed in our Form 10 and the accompanying supplemental information. These reconciliations and bridges will provide a clear view of our underlying performance and the impact of our ongoing transition to a stand-alone public company. In the third quarter, we delivered net sales of $1.3 billion, up 11% year-over-year with 10% organic growth and 1% benefit from currency. The major drivers fueling this growth were advanced nodes, advanced packaging and thermal management, including AI-driven applications. In addition, order timing contributed approximately $40 million in net sales from the fourth quarter into the third quarter in advance of our IT systems transition prior to the spin. Sales in the Americas and Asia were very strong for the quarter in both segments. China net sales in the third quarter were 31% and flat versus third quarter 2024, in line with normalizing trends. Preliminary adjusted pro forma operating EBITDA for the quarter is estimated to be approximately $370 million, up approximately 6% year-over-year, including a 2% currency headwind. EBITDA margin was approximately 29%. While volume growth was strong, margin expansion was tempered by net sales mix where interconnect solutions grew faster than semiconductor technologies, but at lower average margins in the mid-20s as a percentage of net sales. Additionally, we made selective growth investments to improve both R&D and supply chain capabilities. Let's shift to our business segments on Slide 6. The Semiconductor Technologies segment posted $692 million in net sales with volume growth of 9% and estimated adjusted pro forma EBITDA margin in the mid-30s. This was led by end market demand strength, as we benefited from content gains in advanced nodes, share gains and improved customer utilization rates, as Jon mentioned earlier. Our Interconnect Solutions segment delivered higher-than-expected net sales of $583 million with volume growth of 15% and estimated adjusted pro forma EBITDA margin in the mid-20s. This growth was led by strength from AI-driven technology ramps, including advanced packaging, high layer count PCBs and thermal solutions for data centers in addition to growth from other industrial end markets such as aerospace, defense and automotive. While the broader semiconductor market is still recovering, we saw accelerated growth across several parts of our Interconnect segment, highlighting the strength of our portfolio diversification across the entirety of the semi and advanced electronics value chain. As we look ahead, our fundamentals remain strong. 2/3 of our portfolio is directly tied to semiconductors, including chip fabrication, advanced packaging and thermal management. About half of our net sales are driven by chip fabrication, where we are already a key player, especially in areas like CMP pads, cleans and slurries as well as lithography materials. These areas are critical enablers of AI, high-performance computing and advanced connectivity, and they will continue to fuel our growth. To ensure our results are transparent and comparable, we will provide detailed reconciliations between our results from the third quarter as a business segment within DuPont, bridging to our pro forma adjusted operating EBITDA for Qnity at the time of our 10-Q filing in a few weeks. Now let's turn to the fourth quarter and our full year guidance. While our third quarter net sales were exceptionally strong, it's important to remember that approximately $40 million of the third quarter strength was accelerated due to IT-related order timing ahead of the spin. Considering this a timing effect, our organic growth rate for the third quarter was closer to 7%. Moving forward to Slide 7. On a full year 2025 basis, we are guiding to approximately 9% net sales growth. This outlook reflects our confidence in continued electronics market recovery and our strong execution, but also incorporates a prudent normalization, as the temporary third quarter timing shift will not repeat. As Jon highlighted earlier, today, we are updating our full year guidance to $4.7 billion in net sales and reaffirming the estimated $1.4 billion in adjusted pro forma operating EBITDA, representing 9% top line growth, consistent with above-market growth and an estimated 10% EBITDA growth year-over-year. Adjusted EBITDA margin as a percentage of net sales outlook remains at approximately 30% with continued momentum expected from strong top line growth, mix improvements and productivity initiatives. As I wrap up, I'll leave you with this: As an independent company, Qnity is well positioned for growth. We have a resilient business model, a strong balance sheet and a clear strategy for value creation. With that, let me turn it back over to Jon for his final thoughts before we begin the Q&A. Jon Kemp: Thank you, Matt. We're proud of the strong third quarter results we've delivered, thanks to the dedication of our teams and the clarity of our strategy. Over the past few months, I've had many energizing conversations, and I want to take a moment to share why I'm so confident in Qnity's future. With our leading-edge technology, deep customer relationships and our global network that provides local-for-local flexibility, we're well positioned to build on this momentum to support our customers' ongoing growth. Leveraging decades of innovation and leadership, you can see on Slide 8, we sit at the heart of the semiconductor value chain. Our portfolio allows us to play a critical role across nearly every stage, including chip fabrication, advanced packaging, PCB builds and assembly and display solutions. We've built trusted relationships with leading global companies that represent nearly 80% of the market. Our top 10 customers have partnered with us for an average of 35 years and 7 of the 10 rely on solutions from both segments, underscoring our reputation as a partner of choice. Turning to Slide 9. Another key strategic advantage underlying our performance is our local-for-local approach. Our manufacturing and R&D facilities are located close to customers, enhancing customer intimacy, strengthening supply chain resiliency and increasing agility to ensure consistent, stable supply. With this footprint and local engagement model, we offer the best of both worlds, close customer collaboration backed by capabilities at scale. As I wrap up on Slide 10, let me highlight our key priorities moving forward. We'll execute Qnity's strategy to drive continued growth by investing in innovation and partnering with customers. We also plan to further optimize our footprint for both cost and complexity, and we will deploy capital to high-value opportunities. With a foundation built on decades of experience, Qnity's strategic vision and performance will continue to build value for our shareholders, customers and our team. We look forward to updating you on our progress and engaging with you in the weeks ahead. Operator, we're ready to take questions. Operator: [Operator Instructions] And we'll take our first question from Jim Schneider with Goldman Sachs. James Schneider: I was wondering if you could maybe comment on the sort of high-performance compute and AI segment of your business? Maybe quantify what that was in the quarter? And then if you were to take that in isolation, how fast do you expect that segment to grow or that business to grow over, say, the next 3 years structurally? Jon Kemp: Yes, Jim, thanks. Obviously, a lot of the growth that we're seeing is coming from the AI high-performance segment. As you think about it, it's one of the several segments in our portfolio. It's worth -- as we talked about at our Investor Day, it's about 15% of the total portfolio. It's obviously growing nicely this year, really through a combination of offerings across both segments within our portfolio, including advanced nodes across both logic and memory as well as advanced packaging capabilities and high layer count printed circuit board. So really nice diversity of applications going there. I think, as I said before, it's 15% of the portfolio today. It is growing nicely. We talked -- the data centers and advanced packaging, we talked about at Investor Day that growing at the high single digits. I think we're a little bit above that this year, but we expect that to continue to be a strong growth driver through the remainder of this year and into next year going forward. James Schneider: And then maybe if you could help us in terms of framing the business and the seasonality you typically see into a normal Q1. You've given us enough data points in Q4, but I'm just kind of curious how you think about the seasonality specifically in Q1? Normally, what you expect this year? And then maybe any additional help on seasonality as we model out 2026. Jon Kemp: Yes. Thanks, Jim. If you go back and you look at kind of the history of the business, there's not a ton of seasonality to it. There's a little bit of seasonality where you start kind of from a low point in the year in Q1 and then you increase sequentially into Q2 and then you have kind of a modest peak in Q3 and then you kind of drop sequentially a bit in fourth quarter and then into the first quarter and it starts again. But these are not huge fluctuations. It's really driven a little bit more by the Interconnect segment because there's not much seasonality at all in the semiconductor segment. Matthew Harbaugh: And I just want to echo -- this is Matt. I want to echo what I said in my prepared remarks. As you're thinking about the quarterly flow, I want you to think about the $40 million that came into the third quarter that would have come into the fourth quarter on a natural basis. Operator: And we'll take our next question from Arun Viswanathan with RBC Capital Markets. Arun Viswanathan: Congrats on a strong quarter as a public company. I guess, first of all, it sounds like your growth was about 7% year-on-year in Q3 ex the onetime event, but your EBITDA growth was in the 6% range year-on-year. Maybe you can just kind of highlight how that EBITDA growth should ultimately get to maybe a higher level than sales growth? I think you were guiding maybe to 6% to 7% sales growth longer term and 7% to 9% EBITDA growth. So should we see a little bit more operating leverage come into the model in future periods? Matthew Harbaugh: Well, thanks for your comments around a strong quarter. The way we think about it is we did have higher sales in Interconnect Solutions. Therefore, the margins there are in the mid-20 range, EBITDA that is. And semiconductor was a bit under that. So we had a mix shift that was going on. You'll see in the release the last page, we outlined what the currency effect was on the quarter from a top line perspective. I encourage you to keep that in mind as well. And then we did make some strategic investments in the business during the quarter to set ourselves up well for future quarters and years. Jon Kemp: The only thing I would add there, thanks Matt, is -- the only thing I would add there is, we remain confident that as we drive additional volume growth, we'll continue to see the operating leverage that we talked about at the Investor Day. I would also just mention third quarter last year was an exceptionally strong quarter. It was actually our best margin quarter going all the way back to mid-2021. Matthew Harbaugh: No, I was just going to make a final comment. I know you didn't really ask about the full year. But I just want to highlight, if you look at our financial estimates that we reaffirmed, we still see good strong underlying profitability in that roughly 30% range EBITDA. Arun Viswanathan: Perfect. And just one follow-up would be on the investment side, you mentioned some organic investments and very strong growth in that 15% AI and advanced HPC area. Do you kind of feel like the capacity there you have is sufficient? Or how do you plan to address kind of future capacity needs if that area continues to grow above expectations? Jon Kemp: Yes. Thanks for that. We've been continuously investing in our portfolio, both from an R&D point of view as well from a capital point of view. Over the last -- most of our capital investments, just to size it for you, R&D is kind of the 7% of net sales and CapEx is kind of 6% of net sales. So in aggregate, kind of that 13% of net sales reinvestment in the business. Over the last 3 or 4 years, we've added capacity to every single one of our semiconductor businesses, planning for kind of the electronics market recovery and coming out of some of the challenges that the whole industry faced during the pandemic. So from a capacity point of view, we're in really good position to be able to support the continued electronics market recovery, and that's contemplated kind of within our guidance range on reinvestment. And then we're really focused on partnering with our customers on exciting node migrations and node transitions over the next couple of years. We typically are working on node transitions that are 2 to 3 years out from now, while we're scaling up the node transitions that we want from investments that were taking place in 2023 and early 2024. Operator: And we will take our next question from Melissa Weathers of Deutsche Bank. Melissa Weathers: Congrats on the official spin-out. I'm sure it's a ton of work. So I guess, I wanted to touch on the cyclical side of things. I really appreciate the utilization numbers that you gave across the different semis end markets. So given those utilization levels, can you give us a preliminary, I don't know, sneak peek? Or I guess, what are your assumptions going into 2026 in terms of revenue growth, wafer starts? Do you think that those utilizations will increase? Just any like sneak peek on 2026 would be helpful. Jon Kemp: Yes. Thanks, Melissa. I appreciate that. As I mentioned in my prepared remarks, we're seeing wafer starts in the mid-single digits for this year, although we've kind of characterized it as being in the early stages of the recovery with most of the strength really coming from advanced logic and DRAM. I think there's still a bit of uncertainty around forecast for next year and the pace of the recovery around both mature logic as well as NAND. As I talked about, we were encouraged by some of the improving utilization rates, particularly in improved -- in mature logic. And we're optimistic that we'll see kind of a return to higher growth rates there, as we move into next year. But I think it's a little bit too soon to call exactly what that's going to look like in terms of quantifying it. What I would say is that as the market recovers, we're -- 35% of our portfolio is exposed to advanced nodes. And that's really what's driving the growth. As we get stronger recovery into the other parts of the market, we'll continue to support the market outperformance above the wafer starts. Melissa Weathers: Got it. And then for my follow-up, I wanted to ask on the advanced nodes side of things. I think in your deck, you called out node transitions at these advanced nodes. And so in the context of like 2-nanometer gate-all-around nodes that are ramping late this year and then all throughout next year, can you help us size the content opportunity that you guys are seeing? I think you also got maybe some share gains on that side of the business. So any way to help us think about like gate-all-around that transistor shift in the foundry logic space as we move into 2026? Jon Kemp: Yes. So obviously, we're really excited by the investments and the pace of the logic transitions -- logic and memory transitions. We're well positioned kind of across both logic and memory for future migrations, whether that's in the logic space with 2A or -- with 2-nanometer or 18A transitions or things that are happening on the DRAM side as well. We're excited by that. We've been continuously making investments with our customers, particularly in kind of on the front end of the fab in places like our CMP portfolio with pads, cleans and slurries as well as in the advanced packaging part of the portfolio with the metallization substrates and thermal materials. And we're excited as we've already -- we've seen the benefit of some of those ramps this year that's really allowed us to perform at the levels that we reported. And then as we continue to see more wafer starts start to come into those advanced nodes, that will create even more opportunities for us, especially in CMP. When you go to gate-all-around, the process complexity continues to drive an increased sensitivity to the smoothness of the surface of the wafers as you're trying to manage the architecture of the device that results in more CMP steps and more opportunities for kind of our leading portfolio of CMP solutions. On the memory side, similar opportunities for CMP, but then also the high-bandwidth memory transitions that creates opportunities for advanced packaging, where we're going to see continued opportunities and growth for metallization substrates and thermal, which is kind of where we've seen the most benefit from the share gains this year. Operator: And we'll take our next question from Bhavesh Lodaya with BMO. Bhavesh Lodaya: Congrats to the full team here. So as a stand-alone company, I presume it's now easier for you to review your business mix and operations here, makes big nimble changes. You mentioned footprint optimization. Could you share early thoughts on what that could look like? Does it also include potentially divesting some platforms, reinvesting in something else, like changing your mix? Any color there? Jon Kemp: Yes. So I'll maybe start in reverse order. I'll talk a little bit about how we think about the portfolio and then let Matt talk a little bit about things on the cost side of the house. When we look at our -- when we think about our portfolio, we're really happy with our portfolio. It's continuing to perform very nicely. I think we've talked about before, we continue to be very interested in pursuing opportunities for inorganic growth and some targeted areas like thermal management, advanced packaging, areas where there would be attractive strategic adjacencies with adding additional technologies to our portfolio. We've got a nice set of strategic and financial criteria that we use to evaluate that. And we're really focused on establishing a steady, consistent cadence of performance. And then as we get into next year, we'll look at what opportunities might be available and how we continue to build out the complementary strength into the portfolio. As you think about how we've been managing the portfolio over time, we always evaluate our portfolio based on from an ROIC point of view and based on the potential returns. And you've seen us do a handful of product line trimming over time, and we'll continue to use that same logic to evaluate the portfolio and make adjustments as necessary. Matt? Matthew Harbaugh: Yes. Thank you, Jon. I think the easiest way for me to answer your question is kind of to do a walk down the P&L. Obviously, you know our viewpoint on net sales. We've talked about that a lot of late. So let's talk about our cost of goods sold. Our team has done an excellent job in taking cost out over time, and we expect that to continue. So we'll see some improvement there. And we'll continue to operate the company and focus on operational excellence and flexibility. Where our opportunities are probably greater would be in the SG&A category, and we're going to look at our footprint and see how it aligns with where the business is going to unfold in the coming years. We have a big effort to reduce our complexity in IT systems, and we're also looking at legal entities and warehouses as well. So a number of opportunities there. As Jon said earlier on the call, we're going to look to optimize our R&D spend, but keep it at that 7% level. So that should give you some color around how we think about it. We haven't quantified the cost takeout, but we certainly know that, that's a real important area to focus on in the coming weeks, months and years. Bhavesh Lodaya: Appreciate that. And then as a follow-up, Interconnect Solutions continues to grow at double digits here. Can you touch on how advanced packaging and thermal solutions is growing within that? And if possible, any early look into 2026 growth rates? Jon Kemp: Yes. So obviously, the strength of the Interconnect segment is being driven by advanced packaging and thermal. I would say we saw growth accelerate off of the first half of the year in both of those areas nicely, as we saw additional opportunities to scale up some of the wins and some incremental capacity become available. We saw some of those growth rates accelerate into the third quarter. As we get additional capacity available for these different technologies, we would expect to be well positioned to continue to participate in the growth as we see more wafer starts and more volumes come to these technologies. Operator: And we will take our next question from John Roberts with Mizuho Securities. John Ezekiel Roberts: Your trend line growth targets are for semiconductors to grow faster than the Interconnect segment. How do we think about that being flipped here in the recent results? Jon Kemp: Yes, it's a great question. So typically, I would -- the Interconnect segment has had a lot of opportunity to grow because of the significant increases in advanced packaging and thermal, while the mature node part of the semiconductor business has struggled a bit, and that's created kind of an abnormal flip of growth rates where the Interconnect business has seen accelerated growth, whereas we've still demonstrated strong growth from the semiconductor portfolio. But as we start to see broader recovery across the semiconductor market, I think it creates opportunities for us to see further growth from the full complement of technologies and customers in the portfolio as opposed to kind of what we're seeing today, which is mostly driven by the advanced nodes. John Ezekiel Roberts: And then how will we get additional financials like the full balance sheet, full income statement? I'm not sure what your requirements are to file here. Matthew Harbaugh: Yes. As Nahla mentioned in the prepared remarks, we will be filing in a couple of weeks, and we'll give you as much color as we can give you. So stay tuned. Operator: And we will take our next question from Chris Parkinson with Wolfe Research. Christopher Parkinson: Jon, even before the actual spin was announced, there were what many would classify as a bunch of false starts in terms of the recovery and kind of different ways to think about lagging edge memory, especially for the HBM, obviously ripping to the upside. I mean, as it appears things are turning fairly convincingly, including a lot of customer commentary last week, what -- is there anything you could point to that feels different in terms of the sustainability of the said recovery and how we should be thinking about building a little bit more confidence for '26 and perhaps even '27? Like what's different now versus 6, 12, 18 months ago? Anything specific that jumps to you? Jon Kemp: Yes, Chris, maybe 2 things that I would point to. First of all, I think the industry is comfortable that inventory positions are cleared and that we're in a really healthy place from an inventory point of view. And that's -- I think that digestion took longer than anyone expected, but I think we're in a really good spot right now. And then the other thing I would say is this is the first that we've talked about it for a while, but I think this is the first time I've made comments where mature logic utilization rates have actually started to trend in the positive direction. So we've already started to see those utilization rates kind of trend up a little bit. Clearly, there's room for a lot more improvement from where we're at today, but it's the first time that we started to see those utilization rates start to tick up across the customer base. So those are kind of the 2 things that I would point to that give me more confidence. And then I would just say that a lot of the rest of it depends on some of the macro factors in the broader economy because a lot of those chips, as you know, are going to automotive and other applications in the broader industrial economy. Christopher Parkinson: Got it. And just as a quick follow-up, you've had a lot -- I'm sure you're exhausted. You've had a lot of conversations with both the buy and the sell side over the last several months. What are the 1 or 2 most consistent areas of feedback that you're receiving? Is it about just, hey, just deliver results? Is it something on capital allocation, M&A, more focus on products and explaining those and getting kind of the idea of content and process steps across to The Street? Just what would be the 1 or 2 things that really stuck out to you basically saying like I need to do this as an independent company's CEO? Jon Kemp: Yes. Thanks, Chris. I think -- again, I'd say there's probably 2 things. First of all, the conversations that we've had over the last several weeks have been terrific. I've really enjoyed the opportunity to get to know many of you, many of the folks in the investor community. It's been a real pleasure to be able to tell the Qnity story. I think the 2 pieces of feedback that we've heard pretty consistently is the importance of just focusing on steady, consistent results kind of set the guidance and then beat the guidance and that's certainly where we're focused as a management team is consistently delivering on the results to drive -- continue to drive the customer partnerships and deliver for our customers, maintain that business continuity. That's one of the things that I'm most pleased about. Even during all of the extra efforts around the spin process that we continue to deliver all of the customer orders and capitalize on opportunities for technology-driven growth, and we continue to have really nice win rates in the innovation portfolio. So job #1 is really kind of steady, consistent results and performance. I think the other thing that we've heard is a little bit, as people are starting to become more familiar with the portfolio, is really the way in which the 2 segments really kind of naturally fit together that I think has surprised a lot of people as they've gotten to understand. I think the semi segment was really well understood. There seems to be a lot of solid understanding around what that segment is all about. I think as people have gotten to understand the Interconnect segment and the benefit of advanced packaging and thermal solutions, the overlap across the customer base and the convergence of the technology road maps, I think the power of that integrated solutions and portfolio has really surprised a lot of people. And we've received a lot of questions around kind of how we're leveraging technologies broadly across the market to continue to drive new growth opportunities. Operator: And we will take our final question from Alex Yefremov with KeyBanc Capital Markets. Aleksey Yefremov: Congrats. I wanted to ask you about advanced packaging. We talked about node transitions in semis. Is there a similar dynamic where your customers are adopting new technologies where you can gain content and accelerate growth even more perhaps over the next 12 to 18 months? Jon Kemp: Yes. Alex, I think a lot of the growth is -- we're going to see continued investment in growth from the existing technologies that we see today internally. CoWos or CoWos-like packaging on the logic side and then the migrations from whether it's HBM3 to 3E to HBM4, you'll see those migrations continue to proliferate over the next 12 to 18 months as we bring on more capacity into those kind of known architectures. And then I think there's other incremental opportunities that we're pretty excited about in things like where we're working with customers on opportunities like hybrid bonding or even potentially panel-level packaging. Probably a little premature to call when the timing of that would be, but we're certainly excited to continue to work with customers on their technology road maps with some of these more emerging packaging technologies. Aleksey Yefremov: And then I think you gave explanation why sales grew faster than EBITDA this quarter. Is this the type of picture we should expect for the next few quarters or should it revert to sort of more typical EBITDA growth faster than sales over the next quarter or 2? Jon Kemp: I think this is a little bit of an aberration. The currency dynamic and some of -- the mix dynamic and currency dynamic, the 3 factors that Matt alluded to earlier, I think, are a fairly unique situation. I wouldn't expect those to be structurally ongoing. So I think we see kind of a reversion to our usual typical cadence of performance that we talked about at Investor Day here going forward. Operator: And we have reached our allotted time for questions. This concludes the call and webcast. You may disconnect your line at this time, and have a wonderful day.
Operator: Good morning, ladies and gentlemen. Welcome to AXIA Energia's Third Quarter 2025 Earnings Call. Joining us today are the following members of our executive team: Mr. Ivan de Souza Monteiro, CEO of AXIA Energia; Mr. Eduardo Haiama, Executive VP of Finance and Investor Relations; Mr. Antonio Varejao de Godoy, Executive VP of Operations at Security; Ms. Camila Araujo, VP of Governance, Risk, Compliance and Sustainability; Mr. Elio Wolff, VP of Strategy and Business Development; Mr. Italo Freitas, Vice President of Commercialization and Energy Solutions; Mr. Juliano Dantas, VP of Innovation, P&D -- R&D, Digital and IT; Mr. Marcelo de Siqueira Freitas, Executive VP of Legal Affairs; Mr. Renato Carreira, VP of People and Services; Mr. Robson Pinheiro De Campos, VP of Expansion Engineering; and Mr. Rodrigo Limp, Executive VP of Regulation, Institutional and Markets. We would like to inform you that this call is being recorded, and it will be made available on the company's IR website, along with the presentation being shared today, both in Portuguese and English. [Operator Instructions] Before we proceed, we would like to clarify that any statements that may be made during this conference call as to the company's business outlook, projections, operational and financial goals are based on beliefs and assumptions of AXIA Energia's executive management's as well as information currently available. Forward-looking statements are not guarantees of performance as they involve risks and uncertainties and therefore, depend on circumstances that may or may not occur. Investors should understand that general economic conditions and other operational factors may affect the results expressed in such forward-looking statements. I'll now turn the call over to Mr. Ivan Monteiro, CEO of AXIA Energia. Please go ahead, Mr. Monteiro. Ivan de Souza Monteiro: Good morning, everyone. Welcome to our earnings call for the third quarter. Ever since the beginning, we aimed at building an efficient company, transparent company with predictable results aimed at serving its customers. The highlights for the quarter are an indication of this goal, record compensation for shareholders, additional BRL 4.3 billion adding up to those BRL 5 billion we had announced previously. This was only made possible through the derisking process ever since the capitalization process. We have greater generation margin along the lines of building a company focused on customers, teams in place with robust processes in place that will allow us both financially and commercially capture the benefits of this higher margin, continuous management of our portfolio. And we are divesting in EMAE and Eletronuclear after the Candiota thermal power plant and again, in the gas thermal plants, adding up to the sale of our stake in Santa Cruz. Eletronuclear is an indication of divesting our presence in nuclear power plants that started out with an agreement with the government, and we were not obligated to keep on investing in Angra 3. The acquisition of Tijoa adds up to several asset disentanglement operations we've been putting in place in the past 2 years. We are proud of this growth on investments, record highs between BRL 2.5 billion and BRL 3 billion. We are reaching a record reaching BRL 10 billion this year, focused on operational efficiency and an active participation of auctions. Just like we've seen in the last or the latest auction, we were awarded 4 lots. I would like to thank you very much for attending, and I'll turn it over to our CFO. Eduardo Haiama: Good morning. On to Slide 7, please. Let me point out the financial highlights. First, with the revenue, there was a decrease both regulatory as was the capital, but 3 highlights. #1, in transmission, there was an increase in revenue. After the tariff review of '24, '25, there was a major impact. We no longer have that as of this quarter. But in generation, just like Ivan mentioned, this has also impacted revenue in generation as well as that one-off effect by extending the Tucurui contract last year. As to the EBITDA impact, these impacts are smaller. On the regulatory side, there was a small or a slight decrease of our EBITDA. That was the divestment of the thermal power plants. They were offset by our PMSO reduction and also because of the increase of the revenue from transmission. On to Slide 8, net income. Now let's address that from the company point of view. The reported net income was a lot smaller than Q3 of last year, driven by the provision we had for the nuclear contract. And in the previous year, given the tariff review that posted a positive impact in transmission revenue. But when we look the numbers adjusted by these effects, we would have had a 68% decrease due to the effect of the sale of other assets that would impact the total number. On to Slide 10, energy trading. This is our portfolio as is today. We are operating in every region. This is the available energy and energy that has been traded in each of these markets, either through quotas or through the captive market through ACL. This will impact the energy we have available for the free market. On to Slide 11. That's the energy balance. We have boosted the hiring for '26 and '27. But let me point out that we are increasing, just like Ivan put it at the beginning, the increase in the number of customers. We are transforming the company to put even more focus on the end users. On to Slide 12, that's the contribution of our results. For the second quarter in a row, we've been having good results in commercialization. Just like we said in Q1. So we had low results here. Weak results would impact the results for the following year. And in Q4, you can see on the chart on your right, this is the amount of available energy to be traded in the free contracted or contracting environment. And we expect to have yet another strong quarter. On to Slide 14, capital allocation. The highlight is the signing of selling Eletronuclear, we will be receiving BRL 535 million for our stake. But there's more. We'll be releasing the guarantees that we had to take over and transfer that to Eletronuclear and the guarantees will be granted by J&F. And our debentures that we were committed to investor to invest in Angra 1 that would amount to BRL 2.4 billion. On to Slide 15 now. On top of Eletronuclear, we also signed our stake. We signed the sale of our stake in EMEA. The completion of the last thermal power plant we had, which was in Santa Cruz. And we also acquired 50.1% stake in Tres Irmaos, Tijoa Energia for BRL 247 million. On to Slide 16. This is the role the auction plays out. We were awarded the week before. So you can see the highlight on the table. That's the amount of the investment of BRL 1.6 billion and another BRL 140 million of RAP. Ever since we were privatized, when we add up all the investments already realized and yet to be realized, we have BRL 17.4 billion worth of investments with an increase of BRL 2.4 billion in the transmission revenue stream yet again indicating our competitiveness in this industry. On to Slide 17 now. When we combine everything that has happened ever since the last earnings call in which we announced BRL 4 billion dividend payment, signing of Eletronuclear sales, selling EMAE and the acquisition of Tijoa and our participation in the transmission auction and this announcement of a dividend payout of BRL 4.3 billion, everything is part of our capital allocation strategy. And this is how it plays out. On Slide 18, consistent deliveries, everything we've done to simplify the structure and bring risks down and it's an indication of the price resilience we are projecting for 2026, advances in energy trading. And of course, we are improving our long-term pricing model that is more comforting in a sense when you look at the financial status of the company in the mid and long runs. By doing so, we've approved additional dividend payout of BRL 4.3 billion to be paid out in December this year, adding up to BRL 8.3 billion in the fiscal year of 2025. By doing so, dividends, including what have been already paid out will be reaching BRL 4.01 for both PNA and PNB shares and BRL 3.65 for the ordinary or common stock and golden share. Finally, on Slide 19, let me address the ESG agenda. I would like to point out our partnership with Google Cloud to develop our weather forecasting system by using AI. We'll be expanding our capacity to predict extreme events and strengthen operational and energy resilience. We are taking good care of the water resources. We have just started works to protect the source of the Sao Francisco River, BRL 51 million investment in the Canastra Mountain chain reinforcing water conservation and environmental safety in one of the most iconic areas of our country. And I would be remiss if I failed to mention that we sold our last thermal power plant back in October. The company is now 100% generating clean and renewable energy. We stand out and we are leading the energy transition to accelerating the Net Zero 2030 goal. That concludes my part of the presentation. Thank you. Operator: We'll now have the Q&A session for investors and analysts. [Operator Instructions] Mr. Andre Sampaio from Santander asks the first question. Andre Sampaio: I have 2 questions actually. The first one is related to the price resilience for 2026. Can you elaborate the reasons behind that comfort that you feel? What could be the roadblocks for prices next year? And the second question is more from a more strategic point of view. You've been reducing risks, thermal power plants. I believe you have addressed most of those problems you had in the turnaround process since the privatization. Can you elaborate on what the next steps should be? There's the trading portion we're all familiar with. Is there anything else? Are you considering going back to the new market as a second step in that derisk process or derisking process? Ivan de Souza Monteiro: Thank you, Andre. As to the resilience, I'll turn it over to Rodrigo Limp. Rodrigo Nascimento: Well, thank you for your question. Despite greater volatility in shorter months, we've been monitoring that throughout the year. However, for 2026, prices are usually around 240, a little over that. As to rainfall, we have a wet season that has started already, but somewhat delayed. And now in November, we've received some rain in important basins. But based on the price model we have today closer to the operator -- operators that are risk averse, well, changing or the change of our matrix, a more flexible matrix and especially during peak times, that will bring average prices more resilient. Maybe 1 or 2 weeks on the short-term prices may come down. Those variations tend not to be as relevant for 2026. Ivan de Souza Monteiro: Thank you, Limp. Well, as to your second question, Andre, that process started from the capitalization. But day 1, after that capitalization, we had to deal with legacy contracts from the period in which it was a government-owned company. We had to wait for them to expire and then bring in new contracts. The best example, you mentioned it was the compulsory loans. The legal partner did fantastic work. We adopted a more active approach. We discussed that with the Board, and we're looking for solutions. We did not want to postpone anything or resort to the legal system. We wanted to address the problem. And we were very fortunate. This number is under BRL 12 billion, and we are heading in the same direction. This is something that we can manage. It's well known, and we are in a downward trend. Well, what we can expect down the road, the company will be completely focused on growing its business. We'll be paying close attention to the next auctions, just like we did in the transmission auction. You can expect active participation of AXIA Energia in the coming auctions. I hope I have answered your question. As to governance, of course, that will be discussed with the Board of Directors. Operator: Mr. Bruno Amorim from Goldman Sachs asks the next question. Bruno Amorim: Congratulations on the results. I have 2 questions actually as to capital allocation. My question is, is the company focus will be on looking for dividends to compensate shareholders through reinforcements and improvements? Or is there anything else that the company is considering for capital allocation for the near future? The second question is actually a request. I would like to know what the methodology was adopted for the dividend's payout. The way I understand it, your methodology tries to use net debt and EBITDA. As you gain confidence, you're getting close to that goal, you pay out dividends. My question is, to what extent that leverage includes as a factor to reduce net debt? Why am I asking this question? One of the reasons you gave us to pay out this dividend was the sale of some assets. So I want to understand the rationale behind it. When you announce the dividend, are you considering the assets that are available for sale will be sold? Or as they are sold, you can trigger more dividends to pay out? Ivan de Souza Monteiro: Thank you for your question. Well, not necessarily. We do not take into account assets that haven't been traded yet. That isn't the rationale -- that's not the rationale of the methodology. As to capital allocation, you're right. As the company starts -- well, we always had the impression we're lagging behind. Now we're more familiar with the risks that are inherent to the company and preparing the company to live with that risk more proactively with more alternatives, financially, operational solutions. Bottom line is that once we know that what the cash flow will be in the future, you have more room to allocate capital. I would like to give the floor to Elio. I want to hear his thoughts as to those M&A operations and our auction participation. And then Haiama can talk about the methodology a little bit more. Elio de Meirelles Wolff: Thank you for your question. Yes, in the recent past in terms of investment allocation and capital allocation rather for investment, we've been focusing on transmission. That's true. Our #1 focus is reinforcements and improvements. And the second point is transmission auctions. They've been very profitable. We've been involved more and more often. And the next one will be on -- in March next year. But the agenda will be including other topics. We have the capacity auction, again, in March 2026, we consider being there with some hydroelectric power plants, and the second half of the year, the auction for batteries. So our focus is to provide options for investments as we see an opportunity to allocate capital for this option, either through an auction or elsewhere, we've been increasing that direction. We want to simplify, but the agenda remains robust in '25, '26. There are some assets that can be used elsewhere, and we'll be pursuing those goals to generate even more value. Eduardo Haiama: Well, Bruno, let me explain how we make those simulations to understand how much capital we do have to allocate throughout time. M&A operations, for example, that haven't been finalized or they're only in paper. We're still considering it. These things are not included. We have to be conservative, be it when we spend or when you believe you're going to have that receivable. It works in both ends. Just like the energy price. Looking ahead on a midterm horizon, you include contracts that are actually signed. But everything that hasn't been signed, we will adopt conservative prices because that's how the methodology was put together so that the company can be robust all the time to face the volatility we see in the marketplace. So this is written in stone to us. We include several factors, just like we mentioned in the presentation, ever since the signing of the sale of Eletronuclear, Brazilian prices for 2026 as well as the acquisition of our stake in Tijoa, we can have better control of the cash flow of a company in which we have a stake in. Well, everything is put together so that we can feel comfortable to run a company like ours in that kind of environment. Operator: Maria Carolina Carneiro from Banco Safra asks the next question. Maria Carolina Carneiro: Let me go back to the question about capital allocation. You mentioned your participation in the auction on Friday. Can you give us more color as to the strategy of the auctions. It's not that common in Brazil. When we compare to other assets you've been developing, is there any synergy? Is there a possibility of anticipating some of these lots? We would like to better understand how attractive this lot is. What's your take on this opportunity? You've just mentioned that you may be part of the capacity reserve auction. Can you elaborate on that ordinance that will regulate this? Can you help us understand what assets can be regarded as competitive, if you can, please. Ivan de Souza Monteiro: Thank you, Carol. One of the great advantages of predictability of our cash flow in the future is, of course, to be able to participate in those auctions to capture all the synergies of existing assets and the assets will be built. We are awarded that and a better relationship with our top customers or suppliers. We can provide greater predictability as to what we will need and when suppliers, of course, can schedule their production accordingly. Let's now address the strategy of the previous auction and the position of the company for future auctions and our opinion about the ordinance or the RFP. Thank you for your question, Carol. The approach for transmission auctions is similar. We assess all opportunities, and we are very careful to make sure we're generating value to the group. This is key, and it was not all that different in this time around, in this auction. Not only in those lots that we were not awarded, we were still competitive. we were awarded 6, 6A, 7A and 7B. They are somewhat different, as you said. They have more equipment, less construction will be needed, and they are very competitive as a product. Let me try to give you more color. We look at the auction with a very positive outlook. The positive result brings us more than 2-digit return. We like to strive for mid to low teens, around 15% in a nutshell. Now in March 2026, we have similar products. We'll be learning from the previous auctions to come up with the best possible strategy. For the capacity auction on the other hand, we do not give any detail of the ones we are going to be taking part in. We have a very comprehensive portfolio, almost 6 gigawatt capacity. It's not what will qualify the auction, but 6 gigawatts can be implemented. That's our goal. Part of it will be implemented in March. That's our goal for that auction. This is how far I can mention. And now on to products. The '31 product is a very good alternative and additional option to sell excess capacity for our hydroelectric power plant. Yes, piggyback on Eduardo's comments, that public consultation would include just one product. Now we have the 2031 product, yet another opportunity to get a kick start on our projects. The granting power has realized that HPPs have become very important to provide flexibility to the system overall. Operator: Mr. Antonio Junqueira from BTG is up next. Antonio Junqueira: Questions about regulation and about the company. We've had the ordinance for the capacity auction and a new provisional measure. Considering the draft as is, what are the possible impacts you foresee in the next 3 to 5 years, marginal expansion costs, are the right incentives in place, if you were to come up with public policies, what changes would you make, especially in the 1034 ordinance? Ivan de Souza Monteiro: Well, thank you for your question. I'll hand it over to Elio. Elio de Meirelles Wolff: Well, that answer could last hours, but I'll try to be as brief as possible. In sum, that provision measure, our take on it is very positive. It will address the needs and it's heading in the right direction. The industry has many substantial distortions that impacted expansion, and it ended up generating several problems we're faced with now, energy reductions, among others. So that draft bill approved in Congress tries to address some problems with a positive approach, something that is very important, trying to reduce subsidies, limiting high production models. High production has a way different concept. Consumers wanted to resort to that self-production model to try to have more predictability. Today, the model is used not to pay taxes. There are some positive limitations, and this is something that the industry has to do to organize expansion, and that is price policies. So in that sense, that provision measure provides important guidelines. They're not only self-applicable. There has to be a methodology that has to be regulation, but it's heading towards that price policy that is more aligned with the actual needs of the system, such as the expansion of a need will be regulating, flexibility, availability concepts. Conceptually speaking, they are positive. But of course, they'll demand some fine-tuning. There was something else that we have been discussing for quite some time in the industry. It was mature enough, which was the complete opening of the market. I believe that this addresses these topics, especially sustainability of distributors and paying attention to consumers, both that won't migrate. It will be opening up by providing more flexibility, competitiveness, not only to come up with an account for the captive consumers and the time line. We believe it's appropriate to meet the needs of the system. There are a few items that will be more controversial that were included in that provisional measure. And I mean distributed generation. There was a proposal to charge the distributed production and during a plenary session in Congress that was removed from the draft bill. That distributed is not used with the price tagged to it, unlike decentralized projects. Today, after the approvals of those discounts that have been approved, you have that price indication so that we can have the green light for some projects. We believe there should be some modeling in place that can provide more rationality behind the expansion. And one of the most discussed topics in the industry is to the reimbursement of curtailment that will impact many generators today, for both wind and solar generators. A solution was tried, was attempted at least. The government will have the prerogative to increase 2/3 of the provisional measure, 1/3 for the commission and one -- well, they're not conflicting in nature, those 2 texts, those 2 drafts, but there are some contradictions. But again, this is a very important topic. The executive branch will come up with a solution to strike the proper balance, trying to what should be considered risks for the generator and what's not that could be carried over or transferred over to consumers. So the Congress tried to wear those lenses so that we don't want to allocate costs to consumers that could be better managed by the generators themselves. As to GD, do you believe that the break will happen only when we run into a serious problem, when you have that, can we do that without the regulation? Well, the text of the provisional measure chose not to charge for projects that are for distributed generation. You have to take into account the investments and you also have the CDE discussion that will, one way or another, impose limits for distributed generation. They want to strike a balance in the expansion. That was the goal. Operator: Mr. Gustavo Faria from Bank of America asks the next question. Gustavo Faria: I have 2. One is more operational, and the other one is more straightforward. My operational question is about the modulation gain from hydroelectric power plants. What is the trading market for that modulation hedging for other sources? Some traders say they have little liquidity for future markets as to the modulation. And the benefit is only for the past prices. My question is about what's your take on the liquidity? Do you believe there will be a spread for hydric? Can you give us some color as to what the price would be for future contracts, not only on the spot market? And my second question is about the recurrence of dividends payments. You've announced in Q2, Q3. My question is about the frequency of the coming quarters. Can we expect quarterly dividends payout? I think it would be better for the market to -- if we could have that understanding. Ivan de Souza Monteiro: I'll hand it over to Italo. He will talk about the modulation. Italo de Carvalho Freitas Filho: Thank you, Ivan. Limp, I think, can field the questions as to the current status of the modulating system. And then I can address the trading issue and the product we have in the market today. Rodrigo Nascimento: Well, modulation, just a while ago, maybe a year or 2 ago, it was not something noticeable. We've included a slide today to explain that so that we can actually quantify each one of these sources. Hydroelectric, for example, it's the source that can supply those times in which prices are higher. It will have that modulation benefit. In the last quarter, it was about BRL 14 to BRL 15. We expect it will grow not substantially. It will grow as the price reflects the need of the system or up until the expansion will prevent again the need for those very clear-cut ramps in place. Again, it's a benefit that is captured by sources, those that are regulated and those that are not end up being exposed. As to the liquidity of the modulation product and trading, I'll get back. Italo de Carvalho Freitas Filho: Well, thank you, Limp, for that explanation. This is an energy-only market as they call it. It only impacts energy. And within that energy, we have a modular characteristic in our system in the case of hydroelectric power plants. Well, we don't see any discussion of an actual modulation product in the market, especially if you were to modulate wind or solar, for example. Again, it's not a product with liquidity, a product that you can put on a shelf and actually sell it. Well, in the future, there may be that option or the possibility of having such a product. But some rules, some issues will have to be addressed in the regulation so that we can actually have a modulation as a product in a market like that of Brazil. Haiamawill talk about the frequency of dividends payments. Eduardo Haiama: Thank you, Gustavo. Well, recurrence, every quarter, we'll be updating the methodology. That's the recurrence we can guarantee. Based on the events, these events can be what we've seen this past quarter, selling Eletronuclear, selling EMEA, the acquisition of Tijoa, the transmission auctions and so on and so forth and the price outlook for 2026. If by chance, significant sales occur, we'll be signing midterm, long-term contracts that will be included in that calculation. That's the only thing I can say to you now. Paying dividends every quarter, that will depend on the model itself. The discipline is what we're going to keep on abiding by so that we can have a company with a financial health that will allow us to execute only what we believe will generate value at the right time. So we have to make that very clear before we make any decision. Operator: Isabella Pacheco from Bank of America. Isabella Pacheco: There are 2 questions. What's the leverage ratio you can reach by the end of 2026? The second, what's the minimum cash position that are -- that is comfortable to you? Are there any policies associated to that? Ivan de Souza Monteiro: Let me make sure I understand your question. You're looking at 2026 as if it were a hindrance to announce new dividends, new capital allocation. Our methodology does not take into account the short term. We look at the 5-year horizon, and we are confident in doing so because our company generates a lot of cash. If you're not allocating, our leverage will plummet. Having said that, when we look at 2026, our leverage won't be that different to the one we're having in 2025. And why? On top of the investments we're making this year, some will disappear just like T&E [indiscernible]. For next year, we'll be investing in that auction we were awarded back in 2024. Investment peak in '26, we'll be ending that cycle in 2027. The global investment won't change all that much. If the level we have until July remains the same, we expect very similar dynamics as of 2027. As capital allocation that we have today comes down, we'll be beginning to substantially deleveraging the company. That's why we do not take the short term into account. As far as liquidity goes, we have made movements to reduce risks on one hand. And of course, the liquidity we had to have earlier this year and in the previous year, this need is no longer all that important given these events that has happened in recent times. Of course, we cannot bring the cash to 0. It's a very large corporation even considering the fixed income market growing exponentially. We have -- we do not have a number as the minimum cash we have. We are BRL 20-odd billion. I would never go below BRL 10 billion, maybe BRL 20 billion, BRL 30 billion would be necessary, taking into account everything we've done so far. Operator: Raul Cavendish from XP asks the following question. Raul Cavendish: I have 3 questions. #1 is about the Tijoa acquisition you are considering being part of the capacity reserve. This could be one of the value levers that you might resort to. But I would like to know if there are others, a deleverage asset, there may be some value generation, maybe some recap, but there are other levers in Tijoa. That's my first question. The second question is about dividends, given the BRL 1.087 billion and the BRL 4.3 billion announcement for this quarter, is it the level you expect till year's end? But if you approve, if there is approval of the BRL 1.087 billion, is there any possibility of an additional dividend payout before the year's end? And my third question is about storage. You talked about it already. But I believe that provisional measure provides a more comprehensive discussion, and it's under the radar of ANEEL as to how that technology is to be implemented through regulatory routes. My question is, what's the company's take because there are many different types of applications in the system, right? I would like to understand what's the company's strategic position. Is it through auctions only? Are there any alternatives, focusing more on transmission. I would like to better understand what the company is thinking about. It's an opportunity and a risk structurally speaking, if we expand on the limitation of the modulation gains. Ivan de Souza Monteiro: Thank you, Raul. The first and the third question will be addressed by Elio and dividends will be addressed by Haiama. Elio de Meirelles Wolff: Thank you for your question. I think you've explained it -- you put it very well. Tijoa, the acquisition has been a very appropriate and advantageous decision, 50% of the plant, it's a quota-based plant. When you look back in 2024, BRL 136 million is they have, they are debt free in itself is a beneficial acquisition for AXIA. And there's more. You would have to resort to arbitration. We put an end to that arbitration. So you end that discussion. And the main driver in that sense is the possibility to expand. You have 3 additional machines. There's room there. Construction has been concluded. Again, it's an advantageous decision. For the auction in March, we will not be able to take part in that given the auction regulations. It's a 100% quota-based plant. We believe that expansion makes sense to the country, to the company. We expect to put that in practice in the future. As to the batteries, your third question, we have a very substantial battery pipeline. We've been considering several alternatives in that sense. But the way the Brazilian system has been conceived, you cannot capture the value of that intraday. We believe it should be very interesting, very attractive. As a solution, batteries are important to the system. They will come. We see that happen in many other markets in a more mature stage. It's only at a very early stage in Brazil. And the short-term opportunity, of course, is the battery auction, but the regulations or the rules haven't been published yet. And at the same time, we would like to see opportunities to maximize value through the intraday operation. It hasn't been created yet. That would be great for the market, not only through actions, but rather effective market solution for batteries. Ivan de Souza Monteiro: Thank you, Elio. Well, the last payment did not take into account the taxation. But I would like to turn it over to Haiama. Eduardo Haiama: Thank you, Raul. As to dividends, of course, we have been monitoring whether there will be taxation on dividends or not. What I can say to you is that any decision the company makes will take into account a look at our methodology. If there's room, if it makes sense, if we believe that economically to our shareholders, it makes sense to pay additional dividends before using, but the methodology for capital allocation will determine whether there is that payment or not. Operator: Rafael Dias from Banco do Brasil ask the next question. Rafael Bezerra Dias: What's the expected EBITDA margin and maintenance CapEx for the lots that you have just been awarded in the latest auction? Is the same for traditional assets, transmissions, substations? Do you expect any efficiency on the annual CapEx for these assets? Ivan de Souza Monteiro: Turn it over to Elio. Elio de Meirelles Wolff: That was a very objective question. As far as margins are concerned, they are higher, higher ROI. Well, it's clear that the competitiveness we brought to this product, just like we've said in the past, it's a trustworthy relationship, the commitment of our suppliers, they will provide us with that capacity to invest. We implemented that CapEx optimization when compared to the original CapEx from ANEEL. The numbers I've seen around as to the appreciation, what that discount would be, they are somewhat conservative as to what we got. We see that possibility to optimize. We'll keep on looking for partnerships with suppliers so that we can have even more competitiveness in the auctions. Operator: Debora Borges from Banco Safra. Debora Borges: I have 2 questions. The first one is about Eletronuclear. It needs urgent investments. Are you going to make any investments there? And the second question about price dynamics. We still see prices below average. Can you talk on that price dynamic? How can the company address that issue? Ivan de Souza Monteiro: Thank you, Debora. We are still partners of Eletronuclear, and we keep tracking that management, and we are aware of the company needs. I cannot tell you right now as to we are going to be making additional investments in that. As to price dynamics, you have to be careful when you compare ourselves to our -- to the competition. Well, we are 100% hydroelectric and part of it is contracted out. Our competitors have midterm, long-term contracts, contracts that have been signed way before, and they may have included some higher prices in there. But when you look at the hydroelectric product, I believe our prices are higher. There are many products out there with wind, solar, when everyone was still developing those sources. But at the end of the day, they'll have to purchase energy, and we do not have to incur in those purchases. So our trading margin generation will be probably higher and on a growing trend because the price dynamics, the way we see it, it's trending upwards. Operator: Gustavo Pimenta from BTG Pactual. Gustavo Pimenta: The TPI stake in Tijoa connected to other creditors. What are the conclusion -- what are the necessary requirements for the conclusion of the transaction? Ivan de Souza Monteiro: Elio will field that question. Elio de Meirelles Wolff: Well, of course, Gustavo, any divestment will depend on approval. It's only natural. That's the way it is. It's a condition to finalize that sale. It has to go through the regulatory agencies to ANEEL. We are pending those approvals. We don't expect any roadblocks along the way. As far as the timing, everything is going on according to plan. Maybe in 2 to 3 months, we'll be able to finalize that deal. It's a natural time frame. Operator: This concludes the Q&A session. I'd like to turn the conference over to Mr. Ivan Monteiro for his closing remarks. Ivan de Souza Monteiro: Thank you all for attending. If you have additional questions, our IR team is available to answer any questions. Thank you. Have a great day. Operator: This concludes AXIA Energia's earnings call. Thank you. Have a great day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]
Simon Pryce: Thanks very much, and good morning, everyone. Welcome to the RS Group Interim Results Call for the 6-month period ending 30th September 2025, and thank you all for joining us this morning. The presentation should take around 30 minutes, and then we'll have some time at the end for questions. But we'll try and make sure that we finish the call by no later than 10:00. I'm going to start by summarizing our pleasing first half performance. Kate will then run through our in-line financials and what's driving them, both at a group and a regional level. Then I'll conclude by sharing with you the good underlying progress that we're making as we make the business better at RS and position ourselves to accelerate growth, improve efficiency, and drive better operating leverage over time. But before we get into the details of this morning's presentation, we'd like to start our meetings, virtual or physical, at RS with a health and safety moment and a values highlight. So although we're virtual, please make sure you do take a safety moment to identify your nearest exit and safest evacuation route in the event of an emergency. For our values highlight, I would just like to call out and celebrate our new multi-year global partnership with SolarAid to support their mission to light up lives across rural Africa. As our new global charity partner, their and our purposes and values are completely aligned that is one team delivering brilliantly, doing the right thing and making every day better. We'll bring our people, our innovation, our technical expertise and our suppliers and partners together to help raise over GBP 1 million to partner with SolarAid to deliver clean, safe solar light and power to over 150,000 people living in rural communities without electricity. This is very much RS demonstrating our values in action and continuing to make amazing happen for a better world. So as you know, we're on a journey to create a better business here at RS, and I am really pleased with the progress that we have made in the first half. Against the background of a challenging geopolitical environment and uncertain markets, our data tells us that we're continuing to outperform. We're delivering financial outcomes that are in line with expectations. We're actively managing our business to reflect the trading environment we find ourselves in, but we're continuing to invest in the strategic and operational initiatives that are already beginning to deliver, which underpins our continued confidence in returning RS Group to growth and through focused investment and effective execution delivering on those medium-term financial targets and much improved value creation that we first talked about at our Capital Markets Day last September. So before Kate takes you through the financials, I think it's worth looking at what's going on in our markets, which remain uncertain, although I have to say a bit more stable. As we shared with you at our Capital Markets Day, high service industrial and MRO distribution markets are large, complex and multifaceted, and they are also generally fragmented as are the competitors who play in them. And it's for this reason that we have highlighted that the best way of thinking about our future direction of travel is to look at PMI data, and that our revenue growth is very closely correlated with trends in PMI data, typically lagged by between 3 and 6 months. And during the first half of the year, this remained true. As you can see from the chart on the left and in the red circle, PMI data, which is the gray bars, have been improving since the low point in our fiscal Q3 last year, but it still does remain below 50, suggesting modest contraction. And markets in the first half were probably a bit slower than we anticipated. But against this backdrop, our revenue, shown by the red line, has stabilized and indeed started to move in the right direction over the last couple of quarters, and we actually returned to marginal growth in Q2. As the chart of the regional PMI data on the right indicates, and as you'll hear from Kate in a minute, this was reflected in good growth in Americas and APAC, broadly offsetting a small decline in EMEA. Now whilst PMI data is a good indicator of the likely future direction of travel, we use other data sources to assess our relative performance, and probably the most relevant of these are web searches and supplier reported channel shares. We monitor Google traffic for relevant search terms, and these were down 6% in the first half versus our own group and indeed digital performance, which was only down 2%. And in the chart on the left, you can see that we've broken it down by product category across EMEA, where we have the most detailed data. And in all 4 of our major product categories, you can see that we are performing significantly better than the market. And on the right-hand side of the chart, on channel shares, supplier data continues to indicate that we're gaining share from other distributors across virtually all of our industrial product categories in Europe, and if anything, this has probably picked up a bit in the first half of this year, which is all indicative of our continued outperformance, which is enabled by our differentiated proposition. So with that market background, let me pass you over to Kate, who will take you through the numbers and the drivers behind them. Kate Ringrose: Thank you, Simon, and good morning, everyone. I'd like to echo what Simon has said, we've made considerable progress over the last couple of years. And although the market environment remains uncertain, RS Group is in a much better place today. There is plenty of evidence to support this in the first half. In Q2, we moved into growth for the group. We are actively demonstrating strong cost management, managing pricing and cash flow, alongside discipline in investment. Revenue decreased by 3% compared to last year on a reported basis. On a like-for-like, the decline is 1% after excluding impact of the weaker dollar and reduced trading days. EMEA performed relatively well in a weak industrial environment, and performance in the Americas and Asia Pacific was positive, and I will go through the revenue bridge on the next slide. Lower revenue and increased investment drove single-digit reductions in our adjusted profit and earnings measures, despite the benefit of a slightly higher gross margin. And cash flow conversion was very strong at 107%, with continued good working capital management and ROCE stable at 15%. In our unadjusted free cash flow, we also saw a GBP 10 million cash contribution following a successful legal challenge. We are increasing the interim dividend by 2% to 8.7p per share, in line with our progressive dividend policy and our expectation of low single-digit growth until cover grows back to historical levels. There are a few things to highlight on the progress we're making in our growth accelerators at the bottom right corner of this page. As Simon has illustrated, in current market conditions, the digital revenue decrease of 2% is indeed a resilient performance, supported by the investment in web conversion and a 9% growth in our e-procurement solution for higher value customers. This largely offset reduced revenue from typically lower value web-only customers, including the temporary impact of our U.S. digital platform upgrade. This growth in e-procurement was also reflected in a 7% increase in like-for-like service solutions revenue, alongside improved revenue and profit from RS Integrated Supply, following the strategic refocusing of that business under new leadership last year. And RS PRO grew sales by 4% with growth in all of our regions. We continue to develop our product offering and improve the marketing of our range, and RS PRO now accounts for 14% of Group revenues. So let us turn to look at revenue in a bit more detail. As I said, like-for-like revenue fell 1% compared with last year after excluding the impact of FX and working days, and in this chart, we also show the temporary impact on revenue of the U.S. digital platform upgrade. Most of that impact was in the first quarter, with steady recovery through Q2. And adding this back, like-for-like revenue would have been flat in the first half. We also saw a reduced average order frequency and a lower number of customers as demand fell in markets that were in contraction through the period, including some expected customer attrition in Distrelec as customers migrated to the RS proposition. However, this was offset by the benefit of active pricing management, including supplier pricing pass-through, and importantly, the increased revenue from our higher value corporate and managed key customer accounts. These factors resulted in a 3% increase in the average order value in the first half. At a product level, the more resilient categories of facilities and maintenance, mechanical and fluid power, PPE and site safety grew 3%. Automation and control and electrification was down 2%, but do show signs of recovery. Demand for semiconductors continues to be weak, with end markets remaining challenging. Turning to costs and cost management in the half year has been good, and I am really pleased with the discipline evidenced across the group. We have held costs flat half-on-half despite inflation and increased organic OpEx investment and the net impacts of inflation, a favorable FX impact on the weaker dollar, and a GBP 5 million increase in organic OpEx investment was largely offset by restructuring and integration benefits, including those in Distrelec, which was an additional GBP 9 million in the first half. We are on track to comfortably achieve our target of over GBP 15 million of benefits for the full year. Within our ongoing cost base, our efficiency and savings, which have also enabled us to absorb investments in people, capability and the migration of technology spend to the Software-as-a-Service model for solutions partners. This results in an ongoing cost base of GBP 482 million for the half, effectively flat on last year. Minor benefits relates to a GBP 3 million profit on the disposal of part of the Distrelec Nordic business to our existing export partners, and the cost to deliver the restructuring and integration savings in the half was GBP 4 million. Underlying operating margin, excluding the elevated organic investment OpEx, was flat through the effective management of pricing and costs. The net impact of lowering revenue and cost inflation reduced margin by 100 basis points. However, this was offset by restructuring and integration benefits alongside a reduced cost to deliver these. In addition, we have been delivering an increasing OpEx investment spend through the transition period, with the year-on-year increase reducing margin by 40 basis points, shown to the right of the chart. These investments will drive improved margins over time from our strengthened differentiated proposition and improved operating leverage. So moving on to the regions now and starting with EMEA, which delivered a resilient revenue and operating profit performance in weak economic conditions. PMIs were below 50 in our main markets for the period, indicating market contraction, and like-for-like revenue was down 2%, which includes the anticipated Distrelec customer attrition post the closure of the Distrelec DC, which in and of itself saved us over EUR 10 million per year. Now let's drill down by markets. Business confidence remained weak in the U.K., but we relatively outperformed. Our performance in France continued to be strong, and our targeted products and sales offering to more resilient industry verticals were successful, for example, those connected to process manufacturing such as food and beverage. The DACH market remains challenging, with volumes remaining weak in the manufacturing and automotive industry. Gross margin was slightly up with early benefits of pricing coming through. Operating costs increased by less than inflation through active cost management and strong synergy delivery. Largely reflected the reduction in revenue on a like-for-like operating profit was down 11% to GBP 86 million, and most of the increased organic OpEx investment resides in EMEA, which was the main factor in the operating margin decline to 10%. Moving to Americas, which on a like-for-like basis, grew by 1%. On a reported dollar basis, it was down 5%, which is largely a function of a weaker U.S. dollar. You can see the recovery in digital sales since May, which were impacted following the upgrade of our digital platform in Q1. And if we adjust Americas' like-for-like revenue for the temporary impact, H1 revenue would have been up around 5%. Growth rates accelerated through Q2 in the U.S. and Canada against a backdrop of resilient economic sentiment. Markets in Mexico remain more volatile, with persistent concerns over tariffs and their impact on the wider Mexican economy, and this has led to a number of larger customers deferring capital expenditure which was the significant factor in a decrease in like-for-like revenue in Mexico. Gross margin for the region was slightly up, with a strong performance in the U.S. against the tariff backdrop, more than offsetting increased cost of sales in Mexico due to unfavorable dollar to peso movement. Inflation and strategic investment in digital and pricing optimization were reflected in operating costs. And like-for-like operating profit was down 9%. Profit was down in Mexico, which reflected reduced revenue and gross margin. However, profit was slightly up in U.S. and Canada from improved revenue and gross margin. Let's move on to Asia Pacific. We have been seeing positive momentum here since the final quarter of last year, and revenue was up 4% on a like-for-like basis. We delivered growth in Australia and New Zealand, with last year's Trident acquisition performing ahead of expectations. We also delivered growth in Southeast Asia and Japan and Korea. Greater China was impacted by very weak performance in Hong Kong, reflecting significantly lower spend from a few large state-owned customers linked to government budgetary constraints. Gross margin benefited from favorable pricing and lower inventory provisions. And with costs broadly stable, we saw a strong increase in operating profit, reflecting improved operational leverage. All right. Let's move on to cash. This is where our continued focus has delivered strong cash conversion. Our adjusted free cash flow was broadly flat, with our working capital metrics stable. This resulted in cash flow conversion of 107%, well in excess of our target of over 80%, and this was largely a function of disciplined inventory management in response to revenue demand. Stable CapEx of GBP 25 million translated to 1.1x depreciation as we continue to invest in our physical and system infrastructure. And our well-funded pension obligations mean we don't anticipate any further additional company contributions for these schemes. Net debt decreased to GBP 333 million, continuing a downward trend over the last 12 months, and is now equivalent to 1x net-debt-to-EBITDA at the low end of our 1 to 2x range. Our cash-generative business model, strong balance sheet, and debt facility headroom provide us with plenty of capacity for continued investment and selective M&A. And there is no change to our capital allocation policy. Firstly, we prioritize organic investments in order to significantly improve our efficiency and our market position. Secondly, financially disciplined acquisitions in this global fragmented market can accelerate our strategy, especially small bolt-ons. And third, we believe in sharing cash generated with our shareholders through a progressive dividend policy. And if we cannot productively invest excess capital over a reasonable period of time, we will seek to return this to shareholders. Finally, from me, our full year outlook, which is pretty consistent with what we indicated at the start of the year. There are a few points of emphasis for the second half. We now expect our gross margin to be a bit above 43%, so higher than last year. Our organic investment to deliver our strategic initiatives in OpEx is still likely to be at the lower half of the guided range of GBP 35 million to GBP 45 million per annum. And depreciation and employee incentives are expected to be weighted to the second half. We have demonstrated our active cost management in relation to the market environment, and we will continue to do so. There are further guidance points, including trading days and ForEx, and a summary of our restructuring benefits to-date, which are included in Slide 29 of the presentation. I will now hand you back to Simon. Simon Pryce: Thanks, Kate. And I think you can tell, there is a huge amount going on at RS. But I do recognize that in challenging markets, it is difficult to see this in our financial performance. So over the next few slides, I am going to highlight a number of the areas where I see the changes and the strategic improvement investments that we are making already beginning to deliver. Because it's this that I'm pleased about and it's real evidence of the progress we're making in repositioning RS to drive better growth, improve efficiency, deliver better operating leverage, and much improved sustainable shareholder value over time. So just a quick reminder that we set out our ambitious strategy to improve RS at our Capital MarketS Day just over a year ago, and we continue to execute to that multi-year plan. Our aim is to deliver sustainable outcomes and to be first choice for all of our stakeholders, particularly our customers and suppliers. And we have detailed actions in each of the areas of our strategic wheel set out on this slide. Whilst it's still relatively early in our change journey, in the First half, we executed effectively, and we've set that out in a fair bit of detail in the RNS. But what I'd like to do here is just highlight a few areas where we're making real tangible progress, delivering increased resilience today, improving some of our key underlying operational metrics and supporting accelerated growth that are all early indicators of us beginning to realize some of the exciting RS opportunity. Core to delivering our strategy is, of course, our people, and we have significantly strengthened our leadership over the past 2 years and we continue to do so, while investing in training and upskilling across the group. Our people buy into this strategic journey that we are on with our engagement score well into the mid-70s, despite the challenging markets and the level of change going on within the group today. Our people are doing a fantastic job, and they remain the lifeblood of this business as they embrace and drive change to create greater agility and efficiency. But it's probably in customers where our biggest opportunity lies and where I'm most excited about the progress that we've made over the last 6 months. There is huge potential here through the more effective use of our unique data to target the right type of high potential value customers and to increase our share of wallet with them through delivering a tailored value proposition and a personalized experience, but with an optimized cost to serve. This requires consistent and ultimately connected customer data engagement and management platforms coordinated across the channels globally. We've now reconfigured, cleansed and uploaded and matched over 90% of our customer data across EMEA and APAC, with Americas to follow. And we are already starting to use this data to develop highly targeted and potential-based segmentation models, which will allow us to prioritize customer targeting with both human and digital marketing and to more effectively deploy our sales efforts next year, particularly in EMEA. We've also completed in the first half the development of our customer data platform, which we're now using to develop opportunity-based personalized experiences, both online and offline, to better attract, nurture and gain a larger share of customers' wallet. Our CRM system, which we completed the rollout of last year, has now recorded over 340,000 customer interactions. And to date, this has enabled our sales team to identify more than 50,000 new sales opportunities. And levering this richer data insight, we've seen materially higher win rates and bigger deal sizes, which is part of how we've achieved that 4% growth in revenue from our corporate customer segment in half 1 that Kate referred to earlier. This is all before we ultimately knit it all together and connect it to our enhanced digital commerce engine as we roll that out across the Group, all of which will accelerate customer and wallet capture through enhanced connected data platforms. I'm also pleased with the progress we're making to further strengthen our technical product offer. Our product management solution launched at the end of last year now has allowed us to more than triple our average new product introductions to over 30,000 a month in the first half of this year, and that's resulted in a nearly 30% increase in new product sales and great expansion of our curated product range. And initial Investment in more dynamic pricing has allowed us to process over 3x the normal number of pricing changes that we make in the Americas, which is part of how we've dealt so effectively with the impact of tariffs. But the real opportunity of dynamic pricing and the database margin optimization capability that comes with it is already supporting gross margin expansion in Americas, and we will be rolling this out across the group more widely over the next couple of years. And these investments are just examples of how we're better supporting both suppliers and customers and enhancing the value that we create for them. Kate shared with you a bit earlier the growth that upgrading our e-procurement solution is already delivering, and we continue to invest in our other digital procurement solutions for upgrade next year. Our investment in process and technology, as Kate alluded to, is also repositioning our integrated supply business, RSIS, which delivered strong growth in revenue and much improved profitability in the first half, which is all evidence that our solutions and services focus is driving much improved strategic engagement, and importantly, product pull-through and enhanced value. I'd also like to call out the investments that we've made in the first half to improve our digital experience, which is also contributing to our performance. Our investment in enhanced findability tools have driven a 2% improvement to more than 18% in our Add to Cart rate when a customer searches for product on our website. Our new basket and checkout functionality has resulted in a 5% improvement in basket to order conversion, which is now up to 41%. We've launched an upgraded version of our enhanced digital platform in North America in the first half, as you know, and we continue to tune that platform. Just an example of how much more effective it is, our website load times are now a third quicker compared to the old website. We also continue to tune our delivery promise solution that we launched last year. That's already resulting in fewer cancellations and returns, but is importantly now beginning to yield increasingly granular data, which will allow commercialization of artificial intelligence and machine learning optimized decisions, particularly in the areas of stock availability, inventory management and pricing. Kate's already talked about much of what we have achieved to enhance the efficiency of our physical, digital and process infrastructure across the group, and that is an ongoing initiative. But it's important to realize that we have now delivered sustainable restructuring and integration savings, totaling over GBP 47 million over the last 2 years, and that's more than we anticipated at the outset. We're also now well into the detailed plans that will deliver at least an additional 150 basis points of margin that we referred to as potential upside in our Capital Markets Day over a year ago. But it isn't just about cost reduction. As an example, our delivery to promise investment that I mentioned earlier is also allowing us to do things like optimize product flows through our distribution network. In the first half, we reduced the number of times we handled a product more than once from 52% to 40%, clearly reducing our cost to serve, and importantly, also reducing our carbon footprint. We see lots of opportunity to further optimize this with more data going forward. All of these efforts around improving our infrastructure is driving significant improvement in our future operating leverage. So notwithstanding a decent in-line financial performance despite the challenging, albeit, a bit more stable markets, I hope this presentation has highlighted for you the real reason why I'm pleased with the first half performance. The change in investment we're making is already delivering better revenue resilience and continued outperformance. It's delivering growth in our accelerators and areas of focus, such as our corporate customer segment, RS PRO and our solutions business. It's driving improvements in our gross margin, in part driven by our investments in new pricing technology and capability, and we're also exercising good cost control and improved efficiency. And always more importantly for me, it confirms that RS is uniquely positioned in fragmented markets with attractive through-cycle growth characteristics. We have an increasingly differentiated technical and digital product and service solutions offer, which positions us to continue to drive market share gains. We are improving the efficiency of our global infrastructure, which will drive operating leverage and significant margin expansion over time. And we can deliver value-creative growth through disciplined acquisitions. And although we've not made any in the first half, this was a result of value discipline, not a lack of opportunity, and we have a good pipeline going into the second half. Most importantly, it's further evidence to me that our medium-term financial targets to grow revenues at twice the market with mid-teens adjusted operating margins, over 80% cash conversion and over 20% return on invested capital are more than achievable, and this will all deliver exciting sustainable value creation for all of our stakeholders over time. That's the end of the formal presentation. Thank you for listening. And I'd now like to open the call up to any questions you might have. Operator: [Operator Instructions] Our first question comes from David Brockton from Deutsche Numis. David Brockton: Can I ask 3 quick ones, please? Firstly, on the U.S. I guess that's a region where you have a little bit more visibility, or at least historically have done. Can you just touch on what the book-to-bill looks like there? The second question relates to Germany. Clearly, that's still been a tough region for you. Can you maybe give any insight as to whether you're seeing any signs of improvement in that region? And then the final question relates to some of the improvements that you've touched on, the share gains as well, that you clearly set out. The one sort of lagging indicator or indicator that's still off a little bit looks like the net promoter score, which is down year-on-year. Can you maybe just give any insight into what you think is happening there, please? Simon Pryce: Thanks, David. Yes, U.S. book-to-bill rates stable to slightly positive in North America; in Mexico, stable-ish. I think what we are seeing in Mexico is a continued deferral of some quite big capital projects. So although the book-to-bill rate looks okay, we do see pretty consistent deferral. We haven't seen that capital investment spend loosen up yet, but generally pretty solid. In Germany, yes, it remains difficult. There is the hope that stimulus will eventually feed through both to industrial confidence and to investment. I mean the one thing about Germany is that lapping means the pace of decline is slowing. We have new leadership in Germany, and I'm very confident that we're positioned to recover or to benefit from recovery in Germany when it happens. But no major signs of that happening yet, but equally, Germany is a lot more stable than it was even 6 months ago. Then lastly, the NPS score that you referred to, David. The way we report NPS is on a rolling lagging basis -- 12-month basis. We did anticipate internally a decline in our NPS score, both in Europe and in North America, firstly with the launch of DTP, and secondly with the introduction of our new digital commercial -- commerce engine. I think, pleasingly, the monthly recovery in NPS has actually followed or slightly exceeded, if I am honest, our own expectations. So whilst the externally reported number still looks a bit weak, if you look at the movement that we can see internally month-on-month, we're on a very good trajectory on NPS. Operator: [Operator Instructions] Our next question comes from Michael Donnelly from Investec. Michael Donnelly: Just a couple from me, please, and they're both about RS PRO. Now that it's 14% of group, and we've seen great strength in the US, albeit from a low base, should we be thinking about a sustained mid-single-digit growth trajectory for that product in the medium term, or is it more likely to moderate to group growth at some point? And related to that, I think you've mentioned the potential in the past for RS to reach about 1/5 of group revenues. Could you comment on that potential, given the recent performance of the period? Simon Pryce: Thanks, Michael. So we have seen a good performance for RS PRO in the first half. Given the very low base we're starting from in America, I am not sure that we're celebrating victory there quite yet. There's a lot of work to do to build both recognition and understanding of the RS PRO brand to make sure we've got the right products stocked for our U.S. customer base and are actively selling and promoting the brand in the right way. I do think you should expect RS -- I mean it will be a little choppy, but I do expect, or I do think you should expect to continue to see RS PRO growth outperform the broader group growth over time. And with reference to sort of medium and long-term targets, I'm not sure we've gone out there with a formal position on where our RS PRO brand should get to. But if you look at world-class distributors, I think your comments about between 20% and 25% of revenue being about the right level for a private label products. I don't think we're necessarily disagreeing with that. It takes time to get there, and we're on a journey with RS PRO that's not yet finished. Operator: We currently have no further questions. And with that, this concludes today's call. We thank everyone for joining, and you may now disconnect your lines. Simon Pryce: Thanks, everybody.
Max Westmeyer: Thank you very much. And welcome to all of you to our Q3 2025 results presentation. Today's call is hosted by our CEO, Nikolai Setzer; and our CFO, Roland Welzbacher. Both the press release and the presentation of today's call are available for download on our Investor Relations website. And I'd like to remind everyone that this conference call is for investors and analysts only. So if you do not belong to either of these groups, please disconnect now. Following the presentation, we will conduct a Q&A session for sell-side analysts. [Operator Instructions] And before handing over, I want to briefly highlight some extraordinary effects that impacted our Q3 figures. As you're already used to it from the former AUMOVIO reporting, the signing of the sale of our original Equipment Solutions business within ContiTech has resulted in some accounting technicalities. Here, too, IFRS 5 applies and the assets and liabilities attributable to OESL were reclassified to assets and liabilities held for sale. Furthermore, the sale has resulted in a write-down of the assets, which reduced the basis for depreciation. The depreciation of the new book values of the OESL assets has stopped. Without the signing, there would have been no impairment trigger and the depreciation would have been roughly EUR 6.5 million higher in Q3. With this upfront, let me now hand you over to Niko. Nikolai Setzer: Thanks, Max. Very welcome to the call of an, again, eventful third quarter. Our quarters have been in the last time, always eventful, but this time with 2 major events and 2 major milestones, as already mentioned. On the one hand, the AUMOVIO spin-off with a fantastic ring the bell event on September 18. So this was very impressive going forward for sure. And you could see already that it started quite well as well in terms of market cap. So just in that day, EUR 700 million in market cap was additionally created and success story continues. I should say, as of today or better yesterday, it's in the meantime, greater than EUR 2 billion -- EUR 2.4 billion roughly or 15% in 7 weeks. And if you look the underlying indices they are definitely not 15% up. So we clearly outperformed. With that measure, the market, not just that this measure has been greatly but looking as well how it was executed, speed and precision from announcement, August, we started last year, December decision and September 18, then the listing with the final transaction, I should say. So that shows how focused and determined the Conti team was and is once we decide on strategic realignment and all hands on deck, and I'm really grateful that the team has achieved this on time and on budget, I should say, in particular, or even more because the OESL sale has been signed basically in parallel. So it was August 27 when the signing took place with the industrial holding company regions, which is, and that's why we were pursuing the strategic move from our point of view, clear better strategic owner for that asset to develop its value accretive going forward and -- on the one hand, on the other hand, we see for ContiTech, this is a clear strategic move to focus even more on the industry business, on industry customers, getting now to an 80% industry business. And therefore, our strategy, which we announced 3 plus 1 champions, 3 sectors plus the one, the one is OESL. We see us following suit with those 2, focusing now on the last 2, which are within the group. And just to finalize this one, expected closing is until first quarter 2026. And then OESL is done. And at the same time, we fully focus then on the ContiTech independence. So with those strategic milestones coming now to our performance and it's a good operational performance. But first of all, those strategic moves have had as well strong impacts, in particular on the Near base. You see on the special effects on the right side that combined both had an impact of greater than EUR 1 billion, EUR 1.1 billion negative impact. Roland will give more details in his part. However, I want to highlight right now already, those have been all noncash effect of one-offs means as we did it as well in previous years, we -- our dividend policy allows for adjusting such events means they would be out of the dividend base, which we will then look into for next year's dividend. Secondly, leverage ratio. So now on a pro forma base means we have excluded out of the 12 months EBITDA, the automotive deconsolidation effect, EUR 680 million, so very substantial, which is getting us right now to 2.2%. So we said we believe to be at around 2-ish. This is now September until year-end. We are working further to -- with our cash as well to deleverage. So we are on target, and we have expected such a ratio. So from the more strategic part now to the operational part, you see organic growth, 2.6%, which is a decent growth given that the last quarters have been more shy, very strongly driven by tires, tires 3.7%, which you would see on the next chart, why I mentioned it already because that tells you immediately that the growth was very much driven or all driven by tires. ContiTech still slightly improving, but slightly negative organically with 0.6% and responsible clearly, replacement tire business and there, the regions, North America and APAC and PAT helped as well overall good operational performance. And you could see that channel mix, regional mix, our measures all contributed to a strong price/mix on the sales part. And you see that the negative impacts, which we had still lower volumes in line with the year-to-date, so at a minus 1 percentage points roughly. Strong exchange rate effects with drop-throughs and the tariff effects, they have been almost completely offset by all the mitigation measures which we took in place, which we started more or less at the beginning of the year and which are now unfolding. So the adjusted EBIT margin is with a strong comp of last year, basically close to be stable. On ContiTech, as mentioned before, slight sales down. However, earnings are significantly up. That is a proof that our measures or safeguarding measures, which we have initiated, they clearly pay off. And the environment -- in an environment which is still weak on the industry as well as on the OE side. However, we can admit that the third quarter already shown some signs, in particular, September of improvement. So industry business, our business areas have been in at least a positive territory with regard to growth, whereas OE is still down. I already mentioned, OESL results in a stop of depreciation, EUR 6.5 million. Already now I can mention ContiTech would be as well up in terms of earnings even without that effect. And we have excluded it, which you see in the middle from the group result where it has only a minor effect. Looking on the adjusted free cash flow, here, a slight operational improvement, EUR 157 million to EUR 169 million, so EUR 12 million. But you have to consider that last year, we had the one-off payment from Vitesco EUR 125 million. If you adjust for that, you see that operationally, we are going in the right direction. And this holds as well true for the adjusted EBIT of the group, which you see on the upper there, if you deduct the EUR 125 million, you see that our EBIT has improved there as well based on the 2 stronger sectors -- 2 strong factors. And looking on the group operational holding costs, you see like-for-like that we are trending. If you do the math, you see that we are trending as well downwards on those costs, and we have elaborated on that. This is expected, and we are further working in order to get further to the pure play of tires, now combined with ContiTech to lower holding costs, which are in line with our businesses. So looking into the figures. All in all, you see a challenging quarter, but with the strong September ending, so the second half of September was on the stronger upper side, it helped with solid performances. On tires, you see 3.6%, which I already mentioned. Again, sales in replacement PAT up, whereas the OE part and in parts as well truck tire was down, still is overall with the strong price/mix in organic sales growth. And the result, you see on the right side, 14.6% to 14.3%, flattish, again, strong comp last year. It was a strong quarter with the EUR 508 million, only slightly down with the EUR 501 million based on our mitigation measures, which took place. ContiTech, again, 0.6% industry up, OE down, both trending as well the OE side trending a bit better in the year-to-date trend. So that is a positive. And you see on the right side, even if you deduct from the EUR 97 million, the EUR 6.5 million Max mentioned, gets you to EUR 91 million, you see we are up from EUR 44 million to EUR 61 million. So in a difficult environment with organic sales slightly down, particularly the industry business contributed and the safeguarding measures we managed quite well on the ContiTech side to mitigate the impact. And with that, I hand over to Roland. Roland Welzbacher: Yes. Thank you, Niko, and a warm welcome also from my side. My pleasure today to join my first earnings call as a speaker, not just for Q&A as last time. Before we start looking at the entire Q3 figures, let me start with a brief look at the Q3 developments in our key markets and regions based on the latest available information. So due to some delay in the data on imports, you will see some retroactive changes in the database moving forward. On this page, you see the market dynamics in which we operate with our passenger and light truck tires business. Light vehicle production overall improved, but we're coming from a very low level, so rather easy comps year-over-year. The strong performance of the Chinese market continues, also driven by government subsidies and exports and Europe, while being slightly positive, flagging compared with the other market dynamics due to weaker demand and declining vehicle exports, while North America seems to normalize a little bit in a still difficult macroeconomic environment. Now over to the tires market. PLT replacement sell-in was slightly down in Europe and North America. However, you have to consider the solid comparison base Q3 '24 and looking at the single quarters, it can be clearly seen that the impact of imports to Europe that were partly driven by the anticipation of potential antidumping measures by the European Commission is normalizing. On Chart 7, coming now to the trends for our truck tires business. As far as commercial vehicle production is concerned, there are still only slight signs of recovery in Europe, even though we're coming from a very low level already in Q3 '24. The North American volume trend is even worsening sequentially. Truck tire replacement business continues to show modest positive momentum. In EMEA, demand remained muted due to ongoing economic uncertainty, while in North America, it's been lately fueled by pre-tariff import activity. However, this trend is already slowing down. And how these market dynamics translate now into the performance of the Tires Group sector, you can see on the next Slide #8. Tires is significantly impacted by the highly volatile environment. Once more, we had to deal with substantial headwinds from FX and tariffs. Overall, as Niko said, volumes slightly declined on the same level as in the first half, mainly due to the continuing weak PLT OE market and softer truck tires replacement demand for local manufacturers business. However, demand for our tires in PLT replacement was healthy in North America and APAC during Q3. The sell-in for the winter tire season was also comparatively strong with a promising order book also from a mix perspective. And despite all challenges, we managed to perform in line with the market or even slightly better in our key regions. The strong price/mix of plus 4.8%, predominantly driven by product, channel and country mix more than compensated for the negative impact from FX and lower volumes in the top line. We benefited from regional trends, positive effects in sales channels and the continuing trend towards premium and ultra-high performance tires in our product portfolio. In terms of profitability, price/mix helped us to almost completely compensate for lower volumes, the drop-through on FX and the mid-double-digit million euro cross burden still from tariffs. Raw material costs provided a slight tailwind versus prior year in Q3 with more positive effects now expected in Q4. And while we're talking about tariffs, the timing for the tariff reimbursements from the U.S. government and whether we still receive it in '25 or in '26 is still unclear. However, this will not have any impact on our ability to reach our cash flow guidance for the full year. This brings us to Chart #9. So we shed some more light on our regional performance. Let's take a look at the trends and drivers in Americas, EMEA and APAC. Starting with the Americas. We achieved strong organic sales growth of plus 5.1%. While we faced a slightly negative volume effect due to a very weak truck tires OE market, robust performance in both PLT and truck tires replacement volumes helped us to offset this. Favorable price/mix largely compensated for FX and volume effects, whereby mix was also strongly influenced by channel mix effect. Moving on to EMEA. Here we saw an organic growth of plus 2.7%. The negative volume effects were mainly driven by weak PLT OE and truck tire replacement business. Truck OE, however, that's the difference to the Americas recovered strongly, and the PLT replacement business was supported by a healthy start into the winter business. In addition to that, sequentially improved price/mix fully compensated for FX and volume headwinds. Finally, on the right side, APAC. On the sales side, we delivered plus 3.2% organic growth. Our PLT business showed solid growth in both channels, OE and replacement. On the truck side, however, Q3 was impacted by the closure of the APAC truck tires business in Modipuram, India. Price/mix performance was largely flat sequentially. So all in all, we demonstrated healthy organic growth across all regions despite the challenging market conditions. This brings us now to Chart 10 over to ContiTech. Despite continuing weak volumes in the automotive and industry sectors, there are slight signs of improvement as evidenced by sequentially increasing volumes in our industry business and the automotive business showed a slightly positive development in September too. FX effects on sales were again negative, though with limited drop-through to earnings for ContiTech. Other than tires, raw material impact overall was still slightly negative in Q3 due to some offsetting effects caused by some ContiTech-specific materials. However, the negative effects of lower volumes and exchange rate losses were more than offset by price/mix, the safeguarding measures we implemented, such as our measures to compensate for the impact of tariffs and by positive effects related to our transformation, resulting in adjusted EBIT significantly above the prior year level. Those are onetime effects associated with the planned separation between AUMOVIO and ContiTech and Technical as we stopped depreciation in OESL, which increased the adjusted EBIT, as Niko said, from a pro forma 6.1% to 6.6%. Excluding OESL, the ContiTech margin in Q3 would have been at 8.5% with sales amounting to EUR 1 billion. With that healthy underlying performance and an expected sequential improvement in Q4, mainly because of a seasonally stronger industrial business as well as continuous cost-saving measures, we're confident to achieve the lower end of the guidance corridor for ContiTech. With that, let's talk about cash flow on Page 11. The Q3 free cash flow generation operationally slightly improved compared to Q3 2024. For prior year, however, you need to consider that Q3 '24 was positively affected by a one-off effect from the reimbursement from Vitesco that Niko already touched upon earlier. The other changes in the operating free cash flow mainly relate to changes in employee benefits and some other changes in other assets and liabilities. Capital expenditures increased compared to the previous year, mainly due to our continued investment in respective intension -- extension projects such as our plant in Rayong, Thailand, ongoing construction of our new tire distribution center in Texas, for example, as well as a more balanced quarterly phasing of our CapEx spend compared to the last year. So much to the operational part. Let's move on to Slide 12. I would like to briefly address the more technical implications concerning our balance sheet resulting from the spin-off of AUMOVIO. The left side shows how our net debt has developed over the last few quarters. You can see the influence of the spin-off in Q3 '25. All figures up to June 30, '25 are presented as reported for the entire group as it existed back then. That means for continuing and discontinued operations. The figures as of September 30, '25 refer only to continuing operations. EBITDA for the pro forma leverage ratio was adjusted for the deconsolidation effect resulting from the spin-off. As expected, we came in at around 2x leverage, which is a level that we will now continuously drive downwards in the upcoming quarters. On the right side, you can see how the total equity as well as the net debt was particularly affected by the cash contribution to AUMOVIO. At the same time, the total assets were reduced by the disposal of the associated net assets. All in all, this led to an improvement of the equity ratio from 14.6% as per the end of June to 22.2% as per the end of September, just as we already expected in H1. All KPI targets mentioned on our CMD do, of course, remain valid. That means we will continue to operationally strengthen our balance sheet. With that being said, let's move on to our market outlook on Page 13. After a very negative picture of light vehicle production expectations, especially in Europe and North America, S&P Global has raised their expectations for financial year '25. However, we see in this forecast certain risk related to supply chain disruptions, such as the situation around Nexperia, for example, so we remain cautious. The latest S&P Global figures on commercial vehicle production show that the situation has further deteriorated. Although the negative trend in Europe is gradually reversing, it is still far from sufficient to achieve growth for the year as a whole and the outlook for North America has also deteriorated significantly once again. Our assumptions regarding the passenger car tire replacement markets did not change materially, while we increased the outlook for the commercial vehicle replacement business on the back of a healthy year-to-date performance. And for the Eurozone, we slightly increased our assumptions for overall industrial production following the latest developments in this area. However, this is a very broad picture of industrial activities for the Eurozone. Unfortunately, we have not yet seen that positive momentum in the important areas for the ContiTech Industrial business. Let's now turn to our guidance. As already announced in our prerelease in October, we are confirming the guidance for sales, EBIT and cash flow. However, some changes had been made because of the impact of Continental's transformation, the noncash one-offs are affecting our earnings before tax, which leads to a distortion of our regular tax rate since we, of course, still have to pay taxes in the countries where we are doing business. This is leading to an expectation of a low triple-digit percentage tax rate for the full year. Without the spin-off, without the transformation, there would have been no adjustment for the tax rate, meaning it would have still been at around 27%. In addition, we have also adjusted the value for expected special effects from EUR 350 million to EUR 1.5 billion for the same reasons, meaning this adjustment is solely attributable to the transformation-related special effects that we have already explained. Please keep in mind, we are mainly giving you the guidance for special effects and tax rate, so we can model a net income. Our dividend policy does, however, as mentioned in the introduction by Niko and previously done in the past, allow us to exclude those noncash one-offs for the basis of our dividend proposal in 2026. In other words, the changes in the guidance will presumably not impact the dividend this year. Furthermore, we've also adjusted our CapEx guidance from 6% to 6.5%, mainly due to the ongoing plant expansion in Asia. With this, we come to the end of our presentation. I would like to hand over the rest of the time to you now. Operator, could you please open the line for the Q&A? Operator: [Operator Instructions] And the first question is from Akshat Kacker, JPMorgan. Akshat Kacker: Akshat from JPMorgan. I have 3 questions, please. The first one on the market outlook for the passenger car replacement business. I see that you've talked about a slight decline in demand in the second half of the year versus the first half. And when we think about the inventory situation, I think something that has been very well flagged is the high inventories of [indiscernible] tires in Europe and the U.S. So how do you assess the current inventory levels in these markets? And are you cautious on sell-in volumes when we head into this year? That's the first question. The second question is on the winter tire market, which I think mainly underpins the very strong price mix that you've had in the quarter. And it's a more structural question on the evolution of this market, given that we have had 2 very strong sell-in seasons in 2024 and '25. How do you expect this market to evolve going forward, please, given the discussions we've always had on a structural declining winter tire market due to all-season tires, but also global warming? The last question is on the cost actions that you have talked about and the fixed cost measures that you have taken in response to tariffs. Are there any structural cost savings that you can carry into 2026? Or are most of these measures onetime in nature, please? Roland Welzbacher: Let's start with the market outlook on the PLT side, and I would like to refer to your comment on the inventories level. So overall, I think the inventories, specifically in Europe on the [indiscernible] side were driven by imports and the imports, again, were driven by the expectation with regard to antidumping measures. Whether they come not and to what extent and when is still unclear. So if it would not come, then stocks obviously would normalize pretty fast, I guess. It had a dampening effect on the sell-in. Whether this now continues into the first half of '26 remains to be seen. In U.S., of course, we also have seen raised imports, but the dynamic was due to the tariffs. There was a lot of preload on the inventory side with regard to the tariffs. This is now also normalizing to some extent. It also takes time. It also muted to some extent the demand. But overall, in general, for volumes in Q4, as Niko pointed out in the beginning, we are rather on the cautious side. So we expect a slight decrease, flattish at this. Nikolai Setzer: With the winter tire market, this is, as you pointed out, a strategic question. So, so far, we've seen in the last years, still a solid business there. I mean, in those markets where still there is the winter tire regulations. So we assume that this will drag for a certain time, and this will still support the tire business strongly as well as our position strongly. On the other hand, we see as well that those which are changing due to climate situations, they are going into our season business. And on the all-season side, we are well positioned. So it's a one-for-one change to that. How this will play out remains to be seen. Still, what we said on the Capital Markets say that overall tires is not a strong growth business, but in the area of 1% CAGR. So you should see a switch, but moves then strongly over time from the winter side will move towards season and then as well to summer. On the fixed cost measures, you asked what is structural. On the tire side, we have announced the restructuring measures in Malaysia, [indiscernible] truck tire in Modipuram, India. I mean they are -- all those actions are getting as well into next year and helping on ContiTech, we have announced as well as several plant closures and structural measures. So there is a certain amount of those which are executed this year, which are in execution, which will bring positive fixed cost savings then for the next year. However, with the one or the other part, like the truck tire, Modipuram, there's obviously as well business, not from high enough quality in terms of value creation. That's why we are pursuing this, but there's a certain kind of business which is as well then phasing out, which you have to keep in mind. Operator: And the next question is from Christoph Laskawi, Deutsche Bank. Christoph Laskawi: The first one, please, on essentially competitive situation in tires. And one of your main competitors talked about portfolio repositioning to rebalance volume and market share. Do you see any increasing commercial or competitive pressure in Q3, Q4 right now or so far, no major impact? And then the second question, just if you could provide -- I know it's quite early, but the main building blocks that we should think about on volume price mix, potentially FX and cost for tires and ContiTech into '26. And then remind us of the onetime cash effects that you had in '25 and what to expect in '26, please? Nikolai Setzer: Yes. First of all, as you know, we don't comment competitors. So no comment from our side to that. At the end of your question, you referred to market situations. I think Roland already mentioned how we currently see the markets. Right now, we should say from the trending point, similar to where we have been in the 9 months. That's what Roland has as well referred to. So we are minus 1% in volume so far. So we managed quite well the balances between our cost situation, the market and the different dynamics. And we assume for the fourth quarter that this is unchanged. Obviously, we're always striving to be better. That's why Roland mentioned as well and to be flattish at best. We had a stronger second half last year, so higher comps overall. So this is the market dynamics in which we are operating right now. Going to the second part for the fourth quarter, the other important metrics. FX, assuming that it continues on the FX rate, then right now, FX should be the same because it was relatively stable last year. In Q2 this year, it changed. So it should be relatively stable for the fourth. And then looking even into the first quarter, you should see similar effects as then second quarter, really the exchange rate on the globe versus the euro have changed overall. Cost situation, we have seen on the indices and the spot prices since the second quarter into the third quarter already that they were downwards. We had only limited effects in the third quarter based on inventory and consumption. We assume that this gets a larger effect in Q4, still being certain shy due to how we currently see the inventories and the markets and the different parts and then would drag as well into 2026. On the price mix or I should call it quality business -- the quality of our business because it depends on sales channel mix, where we've been relatively rich in the third quarter. As mentioned, North America, larger tires, larger mix. That is pure math. Similar to Asia Pacific, we see that certain trends should persist. However, as mentioned, we had a really strong quality of our business in the third quarter. Certain parts will continue for sure. How it all plays out remains to be seen. We have seen the question on the winter tire business, strong order book so far. Sell-in was good. Now we are hoping November, December to see as well a strong sellout. So winter weather in Germany right now is not so winterish. So we hope that we see some snowflakes and some predictions, then obviously, this helps as well the quality and the price mix to be more supportive in the fourth quarter. Roland Welzbacher: Yes, I can take the free cash flow question. So going back 2024, we forecasted that total expected onetime effects for '25 are expected to be in a high triple-digit million euro area, more or less evenly split between restructuring, separation costs and taxes. So restructuring cash outs are mostly borne by AUMOVIO. Spin-off cash outs have been specified in the prospectus, EUR 279 million, thereof over EUR 200 million will ultimately be borne by AUMOVIO. Tax cash outs will mostly be covered by Continental. This should lead to one-offs on the Continental side amounting to roughly 1/3 of the originally anticipated volume. Christoph Laskawi: And for '26 that should be gone, right? Roland Welzbacher: Well, from the -- let's say, from the first 2 steps of the transformation that is AUMOVIO and OESL, we do not expect any big effects for '26. Max Westmeyer: On the tax side, we announced that we are looking into plant measures as well, which is also dragging into 2026. So there will be some one-offs associated to that, special effects also will be there, but it's minor compared to what you've historically seen, yes. Operator: The next question is from Horst Schneider, Bank of America. Horst Schneider: The first one that I have relates to ContiTech and the disposals. So on OESL, you have, of course, not quantified the purchase price, but what effects can we expect basically on debt when the OESL disposal gets executed? And in that context as well, do you expect closure of that this year or it's more in January, if I remember right? And in that context, maybe also you can give an update on the disposal process of the remainder of ContiTech. So when that is really kicking off and when you expect basically closure of that? And in that context, again, when we think about net debt to EBITDA and your long-term guidance, 1x, but I think that is more for 2029. How should we think about net debt to EBITDA when the ContiTech disposal gets executed because that determines then, of course, the potential special dividend. So when this decision is made, do you want to be exactly at 1x net debt to EBITDA or you can be also above because you just want to trend towards end of the decade towards 1? That would be the other question. Roland Welzbacher: All right. So let me take the first one. We agreed not to announce any details of the transaction with the buyer of OESL. So I cannot be too specific, but all the debt associated with the business will transfer to the buyer. This is mainly expected for the pensions. Nikolai Setzer: Pensions [indiscernible] items. Roland Welzbacher: Exactly. And then [indiscernible], I think you mentioned that already early in Q1 2026 to be expected for OESL and then for the entire sales process for ContiTech, we more or less stay on track what we already announced. So we are in the final stages of preparation that should be finalized before Christmas, and then we're basically ready to approach the market, and we want to complete the transaction in the second half of '26. So there is no news because we're still on track. And long term, with regard to capital allocation and net debt-EBITDA ratios, we always said midterm, that is '27 to '29, we want to get to a leverage ratio of 1 or below, whereas we have certainly some flexibility with regard to the timing. Nikolai Setzer: So when we will -- that depends on the market conditions, how is our business situation at that point of time. And obviously, what does the preferences overall to be evaluated. Horst Schneider: Okay. Just a quick follow-up. This ContiTech disposal, basically, the remainder can be initiated already before the OESL transaction is completed or it only starts when OESL is completed? Nikolai Setzer: No, it starts already. As Roland mentioned, we are in the preparation. We are going into the market already in parallel than in the first quarter in 2026. And OESL is itself carved out as its own business. The one is independent from the other. Operator: And the next question is from Monica Bosio with Intesa Sanpaolo. Monica Bosio: The first one is a flavor between the passenger car tires and the truck tires. I know that the company does not split between the 2 areas, but can you give us a flavor on the -- of the underlying margins in trucks? And can you imagine that the margins in trucks could be in the mid-single-digit zone or maybe better? Any color on this would be really appreciated. My second question is more on the strategic side. As you mentioned that the tariff impact for 2026 is still not very visible. But more in general, in the long, medium term, what could be your strategic response to tariffs? And the very last is on the margins for the fourth quarter for the truck tires. So on back of the favorable winter tire season and on the back of the sound results achieved in the third quarter, should we expect margins for the full year closer to the upper part of the [indiscernible] range because at this moment, the consensus is not accounting this. Just to check from you. Nikolai Setzer: I will take the first one. So we are not splitting the margins between PAT and truck tire. But in general, each businesses which we have has to create value, so at least create or give the returns on the cost of capital. This must be -- this is true for truck tire as well for PAT. You saw us in India getting out of a certain business where this was not the case. [indiscernible] we've seen the same. So we act once we are getting into it and truck tire has as well a different cost of capital. It's a different business model. It's different cost base. That's why you cannot compare it. But again, we don't publish the different margins. However, as we have a strong position in Europe and Americas, you can believe that we have -- we are creating as well value over there. Otherwise, we wouldn't be in that business supporting and further investing into it. Strategic response to tariffs. First of all, our strategic response were mitigation measures as much as we could. Obviously, we explore our EMEA and Americas manufacturing sites or the North American manufacturing sites, which we have to the MAX. We are doing debottlenecking measures and so on. For further more long term, we have to wait until really the dust settles. So we have right now a certain tariff, which is in place. We have to see how the dynamics as well on the cost side will go further out. And then as typically, we take further measures with regards to our sourcing and where we produce those tariffs. Keep in mind that building a tire plant is a very strategic long-term decision. We have to be sure that the environment and the framework and the market is in line for a longer period of time to justify such a decision. Roland Welzbacher: And with regard to your third question, Monica, I expect that you're asking about the guidance, right? So that was my understanding. So we feel totally comfortable with the current guidance in place for ContiTech 6% to 7% and Antares 12.5% to 14%. So right now, we're remaining cautious for Q4. We're slightly optimistic, but we remain cautious. There's no need to change this. We just confirmed it, and we want to stay with this. Operator: The next question is from Harry Martin, Bernstein. Harry Martin: The first one that I have is on the CapEx increase. It sounds like this is for capacity increase in tires primarily. So can I just ask about the motivation here? Is this effectively shifting capacity out of higher cost locations or an attempt to win more volume share in total? The second question, I have a few really on ContiTech. The first one, just on the Q3 performance. Is the industrial business now back to double-digit margins in Q3? And how far away from the midterm target, the industrial business specifically now? And then finally, on the industrial separation process. Now that you've been working through that for a few more months, can I ask what you found out about potential dissynergies between the separation? What proportion of the group's purchasing volume of rubber or some shared raw materials go to the tire business versus the industrial business? And what is your current thinking about how the segment margins may be impacted by that dissynergy on the separation? Roland Welzbacher: I can take the first one, Harry, on the CapEx side. But what we've seen this year and what was the course for the slight increase in the ratio is, first of all, our investments into 2 regions, that is Americas and Asia for the tires business. So we're continuing to invest in our [indiscernible] plant in China. And in the second phase of expansion for our Thailand plant in [indiscernible]. This was basically driving the ratio up. There's a little bit of a phasing element, as I already said in the beginning. So the motivation is explicitly not what you said, shift to best costs or it is more expansion into the 2 regions where we want to get stronger. Nikolai Setzer: Yes. Looking forward the industrial margins, so we don't publish the full industrial margins. Keep in mind that ContiTech without the OESL still includes the Surface Solutions parts, which has as well automotive business. For that, we published that we reached in the third quarter, 8.5%. Looking for 2024, we have shown this on the Capital Markets, we have been at 8.0%. So we improved by 0.5 percentage point, and this mainly comes from the industrial business now. With 80% industrial business, you can do the math and somehow see that this business is in a better shape than before. However, we are not where we are targeting to be. The 11% to 13% is the midterm target for this parameter, including SSL. And the market itself is not where it should be. It's still a weak market environment. When I mentioned that September has shown some positive signs, it's still on a low base and the minus 0.6% organic growth was as well versus last year, already reduced sales. So we are still in a trough, which shows that slowly, but surely, we see some light of better trends, let's put it that way. Disysenergies rubber, what we can say, so we are not there yet. So we have now separated our purchasing. We built up our purchasing on the ContiTech side. But with the very small part only of same rubber materials from the same suppliers, this is really a minor part. We don't assume any larger dissynergies from the material side. We even believe on the material side, we should have opportunities by having a ContiTech purchasing team, which fully focuses on a very, very complex purchasing part with a high variety of materials and the tire side with a lower complexity, however, higher volume, those 2 parts, and that's why we are doing as well the independence. That's why we are convinced that both parties are better off in the separation. We clearly believe that we can eliminate the synergies and even create momentum and better purchasing conditions for the individual companies. Operator: The next question is from Thomas Besson, Kepler Cheuvreux. Thomas Besson: It's Thomas at Kepler Cheuvreux. I have 3 questions as well, please. First, could you tell us whether you've decided yet what you intend to disclose in the future for the car business as we get closer to the target of having Continental [indiscernible] business. I've noticed you're giving us revenues and organic growth for 3 regions, but you're not giving profitability, you're not giving passenger or truck tires. What's the plan there, please? Second question, when I look at Q2 '24 versus Q2 '25, Q3 '24 versus Q3 '25, I'm a bit surprised by the margin evolution. There was a strong decline in Q2, a much greater resilience in Q3 with relatively similar volumes, worse effect and a delta in price/mix that's not sufficient to explain the substantially greater resilience in Q3. Could you explain what I'm missing, please? And thirdly, just to be fully clear on the base for the dividend you're going to give -- propose to shareholders for 2025. Could you tell us what is the clean net income base over 9 months on which you're going to base your reflection, please? Roland Welzbacher: Yes, I can take the first one, the tires reporting structure. I think we wanted to already point out in which direction we want to report in the future by providing now a regional sales split. So we believe this is the best way of creating transparency into the tires business by splitting it by region, not by product segment. At some point in time next year, probably between signing and closing, we will have to change our reporting and provide more details also by region than in the tires business still to be decided what the right moment in time will be, but we cannot do that before that because otherwise, that would trigger then probably backward split and we get into problems with the auditors. Nikolai Setzer: So with the sequential improvement on the tire side, Q2, Q3. I mean, in Q2, we have mentioned that we had all the negative effects already started. We had the tariffs, which have been higher at the beginning, where you've seen now as well the lower base and then certain reimbursements which were coming then within the third quarter, all our mitigation measures, which we implied due to the tariffs only unfolded in the third quarter, as I mentioned. On the material side, we mentioned before, there was a certain tailwind has been small, but there was sequentially, there was an improvement. And overall, the third quarter volume, so it's as well at a minus 1% versus prior year, but the third quarter volumes are a bit higher than in the second quarter. So those are all the reasons, the positives, which were the negatives in the second quarter were reversing then in the third quarter. That's the reason why our margin is substantially better than we have been there. Roland Welzbacher: And then the last one basis for dividend and clean net income. I mean you've seen our net income, it's minus EUR 756 million negative. If you now would adjust this for the special effects, we also showed on one of the first charts in our presentation, already EUR 1.1 billion is due to the OTI recycling driven by the spin-off of AUMOVIO and then the second portion EUR 680 million, sorry, EUR 680 million. Nikolai Setzer: And the other part is the U.S.A. Roland Welzbacher: And EUR 454 million is then driven by OESL. And this together would already most likely bring us to positive territory. So we did not do the math because it's a technical question, but it's certainly not negative. Max Westmeyer: And there's the fourth quarter to come? Nikolai Setzer: Sure. Yes. You should get us at a reasonable net income, let's put it that way. Operator: And the next question is from Ross MacDonald with Citi. Ross MacDonald: My first question is just coming back to tires. And you mentioned the second half of September, in particular, was accelerating. Can you maybe give some commentary around whether that trend has continued into the fourth quarter? And obviously, we're tracking at the sort of midpoint of the tire margin range. So just keen to understand if you feel like we're tracking in the upper half now for the full year guidance on the tires margin. My second question also again on tires. Given the weakness that we see in truck original equipment, could you potentially update on factory load or factory capacity utilization rates, please? And maybe comment on how big a benefit to group margins it would be if we see, let's say, the truck cycle at a normal level? And then my final question is coming back to Christoph's comment on the U.S. market. Obviously, Michelin have reduced their exposure to ATD. Could you comment on your exposure to ATD? I understand you sell to ATD. So just curious in the third quarter, if there was any additional potentially one-off volume benefits as you took additional share with ATD, it'd be very interesting in understanding the volume dynamics in the U.S. there. Roland Welzbacher: Ross, thank you very much. So let me take the first one on Q4 trends in general. We already commented a little bit on it. So raw mat slightly up versus Q3, maybe mid-double-digit million euro amount. FX more or less in line with Q3. Volume also in line, potentially even flattish year-over-year, as we said, price/mix slightly below Q3 because the quality of business in Q3 was really very good, rather towards Q2 this year. And then fixed costs slightly worse than Q3. That's more or less the comment, our expectations going into Q4. We don't want to be more specific at this point in time with regard to the guidance for tires. Nikolai Setzer: Yes. And there's the Q4 to come. So obviously, many things can happen on the sales channel and so on with regard to the sales quality of our business. Let's see how that ends, and we referred already to the winter, which is not a winter yet so much. On the truck tire plant utilization, the OE part, we are largely exposed to replacement to the aftermarket than to the OE part. So obviously, lower OE affects our plant utilization, which is a bit lower at that point of time. However, we can replace it with -- in a certain part with the replacement business. We have as well some factories where we share PLT with truck tires. So we manage this quite well going through, which means on the other side, if truck obviously comes back, that helps to how much remains to be seen difficult to quantify. Roland Welzbacher: Yes. And on individual customers, sorry, we don't want to comment on individual customers. Obviously, ATD is an important customer for us and will remain an important customer for us, but that's all we can say on this one. Nikolai Setzer: As in other markets, and we have a substantial share overall in the U.S. market means we have several -- many customers where we are balancing our businesses carefully in order to balance as well as risks and opportunities. Ross MacDonald: That's helpful. Maybe if I could phrase that final question just slightly differently then. Obviously, versus some of your peers, you're clearly gaining share, let's say, in the U.S. market. Is that a trend you expect to continue? And would that trend be at a similar level to the third quarter? Obviously, just removing the individual wholesaler names, but just keen to understand the momentum on market share gains in the U.S. that you expect into '26. Nikolai Setzer: So we don't comment on gaining share, that's not the important part anyhow. So looking on how our business continues, we are confident and also Roland said that we continue as well on North America and the Asian PLT replacement business, where we have clearly seen positive momentum in the third quarter, and we assume this going on. What our position is afterwards in the market, that is the result of what we are doing and not vice versa. Operator: And the next question is from Michael Punzet, DZ Bank. Michael Punzet: I have 2 questions. Maybe first one on your statements in the pre-close call. Can you maybe explain the difference between the statements in the pre-close call and the final margin development for both divisions, especially since this must be result related to the development in September? And the second one is on the special items. Can you give us any kind of guidance what we should expect for special items related to the transformation process besides the stopped depreciation on OESL? Nikolai Setzer: So the first part, I will do. So what was the difference? I already referred at the beginning, the second half of September was very strong. We came out of the July, August, which were kind of muted. First half of September took over momentum. And then in particular, at the end, we have seen the markets much better. This -- in terms of volume, there was more volume coming in. There was more favorable quality of business, so price mix. So clearly, in the different regions, which are contributing as well to the better results, we have seen unexpectedly better ones. We had -- we came out at lower cost -- lower fixed cost as we have predicted the tariff relief, which was then in September then published where we had to do the math back. So what have we paid before, how much, how do we reconcile and book for it this effect has been larger. And then we had as well transitional service agreements with AUMOVIO, which came in positive on the cost side on the IT license allocation. So you see it was a month ending with many positives, which has resulted in a more positive result than we have foreseen it in the pre-close call. So good news came relatively late. Roland Welzbacher: Yes. That leads us to the second one. So special items of the transformation, let me refer back to Chart 4 of the presentation where we tried to list all of the effects in Q3. We already touched upon the most important one. So the impairment impact, EUR 455 million and the EUR 680 million coming from the auto spin. And then there is some other carve-out related project costs for ContiTech as well as auto and also some tax-related special effects coming from the carve-out and from the spin-off. And then the only thing left is then the restructuring, EUR 22 million in Q3, EUR 111 million in total for year-to-date. There is more or less all the special effects, which we explained on Page 4. Michael Punzet: So that means there will not be any major part or the major additional special items in Q4 related to the transformation? Roland Welzbacher: Well, that could well be that there is a little bit still in terms of FX change related and there probably some [indiscernible] related project costs still coming in Q4, but it's not as big as you've seen here in Q3. Q3 was the major impact of everything to do with the spin-off and the large portion of the current preparation for OESL and also for ContiTech. Operator: And the next question is from Michael Aspinall, Jefferies. Michael Aspinall: Michael from Jefferies. Just one, you might not comment, but it's being discussed a lot, so I thought I asked directly. Wondering if you can give us any thoughts as to the value of ContiTech. Nikolai Setzer: Yes, your assumption is right. We get value, we believe in the strong value of ContiTech, which is then underpinned by strong interest in this asset, which we believe is a great one. A valuation asset, we will not comment yet. This will come then later in the process. Sorry for that. Roland Welzbacher: We're getting basically calls every week from potential buyers saying when are we going to start the process, and we want to be part of it. So we believe it's going to be an attractive purchase price, but of course, we don't want to be specific. Operator: And the last question is from Horst Schneider, Bank of America. Horst Schneider: Maybe we get it done in 30 seconds. I'm glad that I can ask a follow-up. Briefly on price/mix because that seems to come down again, normalize in Q4. Ronald, I think you said also at the Munich Auto Show that going forward, you would expect that 3% to 4%. So the 3% is a minimum number we can assume going forward, not for Q4, it more refers maybe '26 and thereafter. And on cost savings specifically in ContiTech, can you maybe quantify to what extent cost savings have driven the ContiTech results year-to-date? And what specifically, not just on cost savings, but in general, any statement on ContiTech Q4? Because I think Q4 is always the strongest quarter usually for ContiTech also in terms of margin. Is that going to be the case also this year? Nikolai Setzer: So I do it very fast. I start with the back in Q4. I mean, if you do the math, Q4 must be stronger than the year-to-date must be the best quarter. Otherwise, to get into the margin corridor. We said as well before, it will be for ContiTech more at the lower part depending on how the Q4 will end. So yes, and most of the improvement versus prior year was clearly from the cost side. If you take this as a comparison, a bit we worked obviously as well on the quality of our business, repositioning and more focus on the higher quality business, let's put it that way, but really a large portion of that is coming from our safeguarding measures. as obviously, the sales part has not contributed a lot. To the price/mix part, I mean, how Q4 will end remains to be seen. It depends on all sales channel mixes and so on, which we assume rather stable, and we already referred to that Q3 was on a high level. Everything was coming in, larger markets, larger customers with larger tires contributed, which is great. Going forward, as mentioned at the Capital Market Day, historically, a mix in the range of 2% to 3%, 2%, 2.5% has been shown. Looking at the trends in the market, EV, the new car park and the new cars which are registered with larger higher tires suggest that such a trend should extrapolate for the future. And then it all depends the additional one, how we perform in the different markets. Our main growth markets are the Americas as well as Asia Pacific. Truck tire might come back, which adds then to that on top. Max Westmeyer: And with that, we have come to the end of the time. So thank you, everyone, for participating today. As always, we, the Conti IR team are happily available if you have any remaining questions. And with that, we would like to conclude for today. Thank you very much, and goodbye.
Operator: Good morning, ladies and gentlemen, and a warm welcome to the 9 Months 2025 Conference Call of the DEUTZ AG. Please note that this call is being recorded, and a replay will be available on deutz.com later today. Your participation in this call implies a consent to this. I'm pleased to welcome DEUTZ's CEO, Sebastian Schulte; and CFO, Oliver Neu. So Sebastian will begin the presentation with the key figures of the 9 months 2025 and then walk you through the progress made in the business units. Oliver then will provide you with the financial details of the 9 months financials 2025, and Sebastian again will conclude the presentation with a look on the guidance, after which we will move over to our Q&A session. And as always, please note the disclaimer, especially regarding forward-looking statements. And having said this, Sebastian, I hand over to you. Sebastian Schulte: Yes. Thank you very much, Zara, and also good morning, everyone, and thanks a lot for joining us for this 9 months earnings call here. So let me say -- let me start actually with a lot of confidence and optimism because our numbers show clearly that we, as DEUTZ continue to deliver. Double-digit growth in revenue and new orders, rising profitability, EBIT margin now year-to-date at 5%, and I will show later quarter-by-quarter improving. And most importantly, a business that's proving more resilient and dynamic again quarter-by-quarter. Our broader portfolio is paying off and the transformation towards really innovative and sustainable mobility and energy solutions is clearly gaining momentum. As I said right now, we went through this first 3 quarters of the year and quite actually following the second half of last year, every quarter, an improvement. Let's bear in mind, we came out of a very strong '23, driven at that point by the strong demand in our sort of heritage core markets, construction, agricultural equipment. But then there was the slowdown in demand, which helped -- which brought -- which made our numbers in the second half of '24, in particular, going down. But since then, we are on an upward trend. First quarter, 4.3% margin, second quarter, 5% margin and third quarter now 5.8% margin, which is actually even more impressive given the fact that typically the summer quarter, the Q3 is seasonally a little difficult because most of our customers have at least 2, 3, 4 weeks of vacation, and so do we in our engine factories in Cologne and Ulm. So clearly, year-on-year improvement and continuous momentum in margin uptake. If you look at the markets, and I mentioned earlier our sort of previous core markets now we've been broader, we're becoming broader. So we're talking about construction, agriculture, material handling, defense as the most recent addition, but also energy for our gensets. And what we see here is in construction equipment in Europe, well, the activity is still somehow muted. In the U.S., the infrastructure demand is stable. But overall, here the outlook, let me put it that way, is resilient. Agri, still in the short term, fairly weak outlook because inventories have been high. Financing costs have been slightly negative on the customer side, but structurally, it's very, very solid. Material handling, this megatrend is helping us. Commercial logistics, e-commerce that demands here quite stable activity in the material handling. Forklift CapEx remains robust. So that's why we see also on the left-hand side, a positive projection going forward. And defense, of course, very strong momentum in Europe, driven by the increasing budgets and also the NATO programs in the European Union. And energy, the gensets, I mean, this is another megatrend growth in data centers, backup power application, and we here see a supporting expansion in all regions, but particularly the regions which are relevant for us in this segment as of now, the United States with our Blue Star business and also going forward, Europe. So in total, we see that 9 months year-over-year, we've been growing at 15%. That's growing above all relevant markets here given that we are also entering into these new markets, defense and energy. If we look at -- let me start with defense. I mean, here, really the headline is that we have been strengthening our footprint in the defense tech ecosystem. When we talk about defense tech ecosystem, I mean, particular military drones. I mean, military autonomous land vehicles. You will all remember our most recent acquisition of SOBEK Group. SOBEK is a leading manufacturer of electric drives, very high-performance electric drives for not only military drones, but obviously, that is the -- that is the factor which is growing most significantly right now. We signed and closed that transaction at the beginning of September and the purchase price we financed by a capital increase using the 10% ABB procedure, which Oliver will elaborate on later. And the business has been developing pretty well since then. So all expectations that we placed into SOBEK so far have been fulfilled. The momentum continues to be strong. Then we entered into a strategic partnership with Arx Robotics. That's a Munich-based defense tech scale up. Here, we're not talking about drones, we're talking about vehicles, autonomous vehicles on the ground, as you see on the picture also on that page. And the idea of that partnership is that going forward, we will, on the one hand, supply drive systems for these vehicles and also made our mobile energy infrastructure products and of course, the global production network available because assembly of those products, I mean, that's something where we have with our facilities in this case, in Ulm, in Southern Germany, where we've got actually a competency, which help Arx Robotics in the scale-up of their production. And almost -- well, as a nice side effect, we're also intending to participate as one of the lead investors in the next Arx funding round that's going to happen over the next weeks. If you move on to engines, we are quite proud to be able to announce that we extended our product portfolio. We entered -- we brought a new product to the market. It's the DEUTZ TCD 24.0 V12 GDUL engine. That's a large engine. It's the largest engine we now have in our portfolio. It delivers some 780 kilowatts, so really on the upper end of the portfolio. It's optimized for use in gensets. That's why it's future-proof in a way that the power-gen market is expected to grow very, very strongly in the next years. And obviously, the diesel engine for backup power is a very crucial component in such gensets. And we were able to develop that product very, very quickly using our international partnerships, our international supply chains. And currently, this -- the first product is being tested in a pilot customer, by a pilot customer in Italy in a genset operation. And we also already received the first small series order very, very recently. We have planned a broader market launch of that 24-liter engine in the beginning of 2026. On top of that, partnerships becoming more important for us on a broader scale as well because we have, over the last years, engines -- industrial engines also developed together with joint venture partners in Asia, and we're currently undergoing or these engines currently undergoing the testing in our test benches, our test center in Cologne in order for us to allow these engines to be offered in the future on a global scale with a very strong focus on price and performance as well. And we want to develop or we will develop a new 6-liter engine, the DEUTZ TCD 6.0, and we will launch sort of the premier of this very, very powerful 6-cylinder engine in the Agritechnica. The leading trade fair for agricultural equipment, which is starting this Sunday in Hannover and then being there for the coming next week. So we're pretty excited about this expansion of our engine portfolio, where we are broadening the portfolio. We're bringing, particularly on the upper end, more powerful engines to the market. And of course, also sort of in the mid-end, we're utilizing our global footprint to become also more cost competitive on a global scale. If you look at service, a very important backbone for our growth, for our very profitable growth. And here, we can also proudly announce that we continue or we have continuously been growing our global service network over the last weeks and months as well. We concluded 3 acquisitions, our long-lasting Turkish service partner, Catalkaya Makina. We closed that acquisition beginning of October. And on top of that, we widened our service network and also the capabilities in the United States, most recently by achieving 2 mergers or 2 acquisitions. One is a company called OnSite Diesel and it's a Texas acquisition happened in October 2025. With OnSite Diesel, we are offering or we're broadening our offering to mobile and stationary full services, where the customer focus here is on waste management, construction and rail. So all segments where the combustion engine, the diesel engine in particular, will, particularly in the United States, be relevant for quite some time to come going forward. So that's why that was the rationale behind the acquisition of OnSite. More recently, just a couple of days ago, we acquired a company with a fantastic name of DoubleDown Heavy Repairs it's in Nevada, and it's a service company, which is extremely experienced and well positioned in the repair and maintenance of heavy equipment and engines in the mining, really gold mines and other mines in Nevada, also railway, construction and transport industries. And then on top of that, we complement these inorganic growth with also our strong organic United States growth path, where we opened 2 new DEUTZ power centers in 2025. And the plan, which is totally on track is to open another 4 new DPCs throughout 2026. On top of that, I mean, that's the footprint in the market. But on top of that, obviously, we need to really work on our backbone as well because all the parts that we deliver through our footprint to the customers, they have to come in time and in the right quantity and quality out of our very, very modern global logistics center in Cologne. We modernized that with an out-of-store system, AI-driven out-of-store system, which helped us really increasing the efficiency in the management of these parts. So we're talking about more than 25,000 parts and increasing the efficiency of up to 50%. So that means not only are we going to be faster, but we also have more space in order to grow and to really support our global footprint out of our global logistics center of Cologne. Let me continue then with our Solutions business, particular Energy continues with a very, very strong and solid performance. The business unit Energy, driven by Blue Star Power Systems in the North American market. Market is continuing to be extremely favorable and there are more and more growth opportunities. So order intake is strong, sales strong, bottom line, most importantly, with a very high cash conversion is strong that is continued to be strong at Blue Star. We also are beginning to realize more and more synergies with our U.S. business. So the service operations, that's what ties it into what I said just a couple of minutes ago on our DPC growth path in the United States. So obviously, with Blue Star, we're bringing products into the market with our service center throughout the nation, we are serving them when they are in operation. And on top of that, our North African business, which operates under the name of MagiDEUTZ, got a new Managing Director in play, a new team, and they're working quite successfully on really restructuring it and repositioning for MagiDEUTZ to be really one of the backbones for Europe. And on top of that, we're looking -- we're continuously looking here also at inorganic growth within energy. NewTech is increasing traction. UMS, a company we acquired earlier this year. The onboarding of the company is progressing pretty well. Last call, the former owner and one of the guys leading the business operationally. It's also been named as Head of Technology at NewTech. We merged now the existing sort of the formerly known as DEUTZ product portfolio with the product lines of UMS. So we've got a very, very clearly defined product portfolio now, and we're following literally dozens of promising leads with very, very relevant customers also throughout the world. So the momentum is increasing here is improving here. So there is more to come in terms of positive news throughout the remainder of the year and of course, particularly the next year as well. And with that highlights on our operational and strategic developments, I would hand over to Oliver before I come back later to give an outlook for the rest of the year. Oliver Neu: Good morning. Welcome also from my side to our investor call. And let me start with the capital increase we recently conducted. So as Sebastian said, we are in the execution phase on our strategy. We successfully conducted a capital increase to finance further growth. We have an exciting M&A pipeline. So we decided to do that capital increase even though additional debt level would have been possible as well. But considering the exciting M&A growth and keeping strategic flexibility, we conducted a capital increase. We saw strong demand, very strong demand, investors from Europe, but also from the U.S. that shows that the equity story is convincing and investors are trusting in DEUTZ, and our continuously improving performance. Books were filled after a few minutes. The take a capital increase was several times oversubscribed, and it really was a successful event that made a lot of fun from a CFO perspective as well. Talking about execution, our Future Fit program is absolutely well on track. Just to remind you, we are intending here to achieve at least EUR 50 million savings 2026 compared to 2024 based on structural cost reduction savings we are talking about. We are absolutely well on track with a good measure pipeline, more than EUR 50 million in terms of ideas. So we are expecting even an overachievement here of 10% or 20% in terms of savings, and that also applies to the current year 2025, where we will end up more than EUR 25 million rather towards EUR 30 million on the savings side. Measures are implemented, measures are on track. negotiations with the works council have been successfully conducted around 180 people already left the company. So that is a good sign and it was a good example of a positive execution. Going a bit more to the details of the figures, we see an increase in the order intake, 11.8% year-over-year. So that is basically driven due to the portfolio development. Book-to-bill ratio is around 1. Order backlog remains at EUR 470 million. On the revenue side, even EUR 15 million -- sorry, 15% increase there. So we see that application areas like construction and agriculture and a slight increase. That's, of course, also driven by the fact that we have the Daimler Truck engines, which we acquired last year, which are mainly in those areas. So the M&A activity is driving up revenue compared to the previous year. On the earnings side, cost savings are paying off. We are at EUR 75.5 million or 5.0% adjusted EBIT margin year-to-date. We see that the third quarter was the strongest of the quarters. And typically, third quarter is driven by cyclicity rather than weak quarter. So that was very good and shows and proves that our portfolio measures, but also our cost reduction measures are really paying off and that we see that continuously in our results. Talking about the different segments covering here, firstly, the segment Engines and Services. So we see here order intake increasing, revenue increasing and especially a good signaling that the margin is increasing from 6.1% last year to 6.6% this year. We need to keep in mind that last year, beginning of the year, we still were in a stronger market situation with the 3 shift operations. So overall, we see that volumes on the engine side, purely driven by market effects went down a bit, 8% compared to last year. Production almost 10%. But nevertheless, we managed to increase the margin, which is a very positive sign because it means that our measures, our strategic measures, our cost measures are overcompensating the negative economies of scale resulting from a weaker production due to weaker market conditions. Also HJS, the emission after treatment producer, which we acquired beginning of the year, successfully managed the turnaround, is profitable, is contributing positive EBIT as well. On the service side, revenue is year-to-date at EUR 406.6 million that is a 9.4% increase compared to last year. So even in the current market environment, we are continuously growing both organically, but especially, of course, also inorganically via the acquisitions we recently saw. Coming to the segment DEUTZ Solutions, we see overall an increase in the revenue. This is due to the fact that we acquired Blue Star Power Systems last year in August, but also the adjusted EBIT improved significantly. In order to understand the segment, the figures, we need to keep in mind that we combine 2 business units with a different financial profile. On the one hand, we have the business unit Energy. So especially Blue Star, MagiDEUTZ, our smaller entity in China as well. We see here the business is absolutely well on track. Order intake is on track. It's not totally like linear over the year, but it's absolutely on track. We just recently received another big order, which is not reflected in the figures here yet. Also, revenue is organically growing, a little bit offset by the U.S. dollar development compared to the former year, but organically with a strong growth rate and also the adjusted EBIT of the segment at EUR 11 million or almost 10%. With that, and you see that in a little bit hidden in the footnote, but there is purchase price allocation effect, if I take that out, right EBIT would even be at 18.8% at a margin level of 15%. So operationally, the margin is even better than what we show you on the figures driven by the technical accounting purchase price allocation effect. On the business unit, new technology, we are making progress as well. So new orders at EUR 15 million, first time consolidating the subsidiary UMS in the Netherlands. In June 2025, revenue is at EUR 9 million, so still on a low level, but we are about to start and consolidating the product portfolio and good talks with customers. So we are expecting some increase going forward there, of course. And the EBIT improved. It's still negative, mainly driven by R&D expenses, but the run rate is getting better here as well. Coming to a few more KPIs. R&D spending, we are at 4.3% of revenue. So that's a direct consequence, improvement as a direct consequence of the Future Fit measures, where R&D people are continuously getting out as part of the agreements we conducted with the works council. So that is showing a very positive trend here. Same for CapEx, we remain on a low CapEx level of 3.3%, more or less as in the year before. That is showing that we are investing where necessary. But of course, we're also structurally targeting for continuously improved CapEx ratios, considering that the business profile of our group is changing towards less CapEx-intensive businesses. Working capital, we see a slight improvement there. We are at 19.9%, so 1.2 percentage points better than in the year before. We are not overdoing it on the inventory side here. We are pushing, but we are not overly pushing inventories down just to be prepared because we are convinced that the market in this engines part of our business is picking up at one point in time, and then we want to be prepared without restrictions on the supply chain. So that is why we are still on a 20% inventory or working capital level. Talking about cash flow. Operating cash flow improved as well. So also here, good signals, direct development of a better cash generation capability, better operational performance, also a lower increase in working capital compared to the increase we saw in the year before. That is positive on the free cash flow before M&A, we guide a mid-double-digit million euro amount. That's absolutely on track here. We are -- even though the Q4 -- Q3 is typically the weakest quarter in terms of cash flow due to summer breaks and so on, we are here at EUR 2.4 million year-to-date. So that's a EUR 31 million better development than the year before, also showing the positive impacts of our transformation. And net debt slightly increased, among others, due to the M&A financing. Last but not least, balance sheet that remains strong, 49% equity ratio and also solidly financed. Our leverage is at 1.4x. That gives us sufficient headroom for the further M&A transactions we are working on. So only positive signals from this end of balancing balance sheet and financing figures. With that, I hand over to Sebastian. Sebastian Schulte: Yes. Thanks, Oliver, for the update on the financial part. Let me give you an update on the outlook of the rest of the year. So first of all, we confirm with a small specification, we confirm our guidance for 2025. So just to bear in mind what we -- what was our guidance or what has our guidance been so far. We provided so far a range between EUR 2.1 billion and EUR 2.3 billion revenue. We were always assuming a bit of an earlier recovery of the market in the fourth quarter. So that's not yet kicking in. So that's why we are specifying to arrive at roughly EUR 2.1 million or at EUR 2.1 million at the lower end of that guidance. Good thing is we confirmed the adjusted EBIT margin range as well. We confirm here to arrive in the middle of that guidance range. And I think we've been showing clearly earlier that the path on profitability increase is well on way quarter-by-quarter. And we also confirm the free cash flow prognosis mid-double-digit million euro amount. As Oliver said, particularly, the margin is supported strongly by our cost savings for Future Fit by the Service business and of course, by this ever strong Energy business as well as the portfolio measures. So we're showing that we're actually very well on track and quite happy with the progress here. We also currently do not foresee any sort of significant impact from the semiconductor crisis because that's one of the things we're pretty good at. Bottleneck management when there are issues with supply chain, I mean, '22, '21, '22, we've been training quite hard on that, how to deal with difficulties in supply chain, particularly when it comes to semiconductors. So all these activities, which guided us back in days well through these -- the problems is also helping us a lot so that we can actually say that there's no issue to be foreseen at this point in time. All right. With that, yes, this is a confident outlook for the fourth quarter and of course, also for beyond because I said it earlier, when I talked about the outlook on revenue, it's true. There is no tangible recovery in the engine demand in construction and the material handling. However, we are able to -- or we have been able and will continuously to be able to steadily increase our profitability from quarter-to-quarter. Now the 5.8% in the third quarter is a preliminary high point, but we expect to arrive at a higher level in the fourth quarter as well. And that's, of course, due to the Future Fit program, as we just heard from Oliver, the savings -- further savings to materialize in the coming quarters, EUR 50 million. We announced this EUR 50 million a bit more than a year ago. And we just heard it from Oliver, we're very well on track, and that's an important thing. We promised and we deliver the promises. And of course, DEUTZ is now more than just an engine company. The engine remains to be important, but we manage, we guide this transformation towards a much, much broader business model quite successfully. And that's why we are now in a position that despite still struggles in the former core markets, construction, agri and material handling were actually developing so well, particularly, of course, due to the business unit service and energy in particular, demand for gensets is extremely high and strong. So a good start into Q4 that we can already say. I mean we are at 6th of November. So we know already what's happening in the first month. So that's been very good and continues to support our expectation for a very strong last quarter of the year. Revenue growth, which we expect to happen in the fourth quarter compared to the third quarter, supported by the latest portfolio additions in defense and services as well. Margin increase I mentioned already, and our strategic transformation, we continue to implement going forward. With that in mind, 9 months in the books, 3 months to go. And thanks for your attention. And obviously, now, as usual, we are open for questions. Operator: Thank you so much for your presentation, Sebastian and Oliver. So we will now move over to the Q&A session. [Operator Instructions] We move on with the virtual hand we received from Stefan Augustin. Stefan Augustin: Can you hear me? Operator: Yes. Stefan Augustin: Great. Okay. That was a couple of buttons to press. So I would like to then dive already quickly into the Q4 projections. So I don't want to be really nitty-gritty, but we're looking for around EUR 100 million in higher sales versus Q3. And could you help us a little bit of how much of these EUR 100 million we roughly look for would be the additions from SOBEK and the purchased service businesses> And where does in the fourth quarter then otherwise come the demand in the verticals from? So where -- into what vertical do you sell some more engines? Who gets more interesting? And from that would be then the conclusion, can we keep this level going into 2026 roughly on the same level? So let's say, having -- or is there a onetime effect in sales in Q4? Sebastian Schulte: Stefan, thanks for the question. So first of all, when I go through, let's say, the verticals when I talk about verticals, I mean, that's sort of our business units. So obviously, the business unit engines, that will make quite a significant contribution in that fourth quarter. Typically, the fourth quarter is always a little stronger than the third quarter for 2 reasons. First of all, in the third quarter, we have that summer break mainly in August, end of July, beginning of August. So that's why we're always lagging behind a little bit. And when it comes to the verticals within engines, it's pretty much across the 3 verticals, construction, agri and material handling. So there's nothing -- there's no vertical, which particularly stands out. Then as you rightfully said, I mean, the service -- the service is developing quite nicely. We obviously track that on a monthly basis. So the last month is indicated that we're going -- we're getting better month by month as well and then the 2 acquisitions support as well. We don't disclose like the very details of the acquisitions. They're sort of too small to provide like exact million euro numbers for that, but obviously, they add up as well. Energy business, Blue Star is expected to be a bit stronger in the fourth quarter than in the third quarter as well. And then, of course, the most recent acquisition, SOBEK as well, but that's not like we -- we don't talk about like tens of millions. In short, it all adds up together, and that's how we arrived at that outlook for the fourth quarter. Sorry, I forgot to answer. And then, of course, you asked, which is sort of the million-dollar question for 2026. We are currently putting the plans together for 2026. And the fourth quarter right now, I don't expect to be a one-off to make that clear. However, to be able to arrive at a guidance for 2026, that's too early. Stefan Augustin: So sure. I understand that one, but that was already giving me an idea. Second is then this larger order at Energy that has been hinted. Is that something we should look for in the scope of something like between EUR 5 million to EUR 10 million? Or is that rather an annual big order of EUR 20 million, EUR 30 million, EUR 40 million or something like that? That would be the second question. Sebastian Schulte: This order, which Oliver hinted to is the first, sort of, let's say, the first third of the year order from our major customer in the United States. So it came expected because they don't order on a weekly or monthly basis. They order, let's say, 3 times per year, 2 times per year. And I believe Oliver will talk about something -- EUR 20 million to EUR 30 million, yes. Stefan Augustin: All right. That's quite some scope here then. All right. And lastly, maybe on the tax rate in the third quarter. This has been a bit unusually high, but is there -- is this something that has to do with the structural changes from where we generate the profits? Or is it rather a onetime effect? Oliver Neu: No, that are typical onetime effects. I mean, overall, the tax rate on a group level is at around 17%. That is mainly -- in general, that's mainly driven because we have a significant amount of tax loss carryforward from the past from the 1990s basically, but we are benefiting from that still. And so that in Germany itself, we are rather on 11% minimum taxation. So there are no structural changes to that and the tax loss carryforward is going to last some years in the future. Operator: So Mr. Ringel was a bit surprised that I muted him, but he sent me his questions. So I'm happy to ask the questions for him. So his first question is, is the adjusted EBIT margin level now achieved a sustainable cruise level that can be assumed going forward? Sebastian Schulte: Well, we want to improve it further. So I mean, very clearly, we want to get better. And obviously, with the current structure of the company, with the current demand in engines, you may consider that as a cruise level, but we are not up for cruising, we're up for speed. So that's why, obviously, with further expectation in market recovery in the next year in the engines business and further growth in the verticals, which we entered into. Yes, we want to clearly depart from that cruise level towards a bit of more of a full throttle way of traveling. Operator: All right. So has [indiscernible] 2 further questions. [Operator Instructions] And his second question is, what is your view on the expected recovery of the markets in the coming months also with regards to the German infrastructure package? Sebastian Schulte: Yes. I mean that's what I tried to say earlier when Stefan asked a similar question. We don't see it -- still, we don't see it in the incoming orders as you saw it here in our numbers yet. We're still like book-to-bill around or slightly above 1. But yes, we will see. We cannot say yet. That brings me back to what you just said before. It's good to have such a high cruise level now on this low occupation in the engine business. But the good news is, obviously, we're bringing also some new products into the market. We're bringing this 3.9 liter engines into the market. The demand from our customers is quite strong. So one thing is how is the general market developing in the engine business. And that's again the million-dollar question for next year. We do expect a recovery, but everyone expects a recovery, but it's just not materializing. However, we're working also quite strongly on winning market share with the new products that we bring into the market, 3.9, as I just mentioned, but also the 24-liter engine in energy and utilizing also our JV partner engines from Asia in particular. So we're actually quite positive looking forward. Operator: All right. And his last question is, when will you be in a position to carry out larger M&A transactions again? Will the focus remain on the energy sector? Or are they currently concentrating in particular, on the defense tech sector? Sebastian Schulte: Both verticals are extremely interesting for us. And you will understand that there's not much more to say in a public earnings call on M&A strategy, but both energy and defense are very interesting verticals. And we are observing and pursuing a lot of different avenues. But as we have shown very clearly in the last 2.5, 3 years, if we do M&A, we want to do it very successfully. And I think the acquisition of Blue Star and the Daimler Truck Engine business and all the others have shown that we're actually pretty good at it now. So that's why we are very picky, and we will only do the things which make a lot of sense. But in order to arrive there, you need to follow lots of opportunities, but we're pretty confident that we continue to work on that track. Operator: All right. And then we have next question or raised virtual hand from Klaus Soer. [Operator Instructions] Then in the meantime, we will move on with Mr. Jansen. So same for you, Mr. Jansen. [Operator Instructions] Unknown Analyst: Okay. Just one question regarding Arx Robotics. You spoke about the investment round. And just for clarification, you don't plan to have a major stake afterwards, right, because there are so many other investors. And with SOBEK, you already had a big investment in the defense market, right? Sebastian Schulte: Yes, that's correct. I mean we plan to participate in an investment round, but that does not -- that would not turn us into a major investor. That's absolutely correct, yes. This is an investment which is rather underlining our ambition or our strategic partnership, but we do not plan to takeover or anything like that. Unknown Analyst: And is there an indication on how big the round overall could be? Sebastian Schulte: Of course, there is an indication, but that's in the court of Arx Robotics. So you will understand that I can and do not want to comment on an investment round of another company, right? Operator: And now Mr. Soer, I'm not sure if you're able to speak. Klaus Soer: I hope so. Operator: Great. Then we're happy to take your questions. Klaus Soer: Just coming back to the announcement that you are introducing the large 24-liter engine into the market. Could you be a bit more specific what your expectation is in terms of sales or market entry in '26? Is this material or small size, big-size units? Any indication what type of impact this might have? Sebastian Schulte: Yes. First of all, we don't talk about huge unit sizes here because it doesn't go into sort of serial mobile equipment such as, let's say, material handling, where sometimes we sell 5,000, 6,000, 7,000 engines to one customer a year. But we also talk about a significantly larger engine. So the unit price is a multiple of the unit -- of the average unit price of what we typically bring into the market. So we do not talk about thousands per year. We talk about after the ramp-up, probably hundreds per year -- per year at least in the next year. But from a revenue and especially also from a profitability point of view, there is sort of a rule of thumb in the engine business, the larger the engine, the more the financial attractiveness as well. Klaus Soer: Okay. And if I may add one question on Arx. In your statements and in the presentation, it always says you intend to participate. Is there still an open question, if you participate in the financing round? Sebastian Schulte: No, we have decided to participate, but this is a cautiously legally checked wording because we are one party to participate. And as in the financing rounds, there are also other parties to participate. And typically, in these sort of investment rounds, the financing round is concluded when every investor who wants to participate signed sort of the legal agreements. And that's currently, as far as I understand, being negotiated with many investors. So it's more like a process point of view. So that's why we have this very cautious statement, but we are very clearly committed to do so because we are very convinced of the outlook of the company and also of the areas of cooperation between Arx and DEUTZ. It's an amazing opportunity, where DEUTZ can bring the industrialization expertise, scaling expertise, management of supply chain expertise to the fantastic technology expertise coming from dev tech company. Operator: And then we have a follow-up question from Mr. Augustin. So please ask your question. Stefan Augustin: Yes. Just 2 smaller ones. I recall that you mentioned you had a new customer with comparatively higher amounts of unit volumes. Can you just remind me, if there is the expectation that this customer should ramp-up the business in '26? Or will that be a bit later? And the other one would be, when do you expect the LOIs of UMS to materialize into orders? Is that also expected maybe for the year-end already or rather going into '26? Sebastian Schulte: Yes. For the first question, that larger, I believe you referred to the larger order for our 3.9 engine in construction. And yes, for confidentiality reasons, we were -- we're still not allowed by the customer to announce who it is, but it's a very relevant construction equipment company. The ramp-up is expected to kick in at '27, not in '26. So that's the following the ramp-up of their respective products. With UMS, we expect first orders or we are already gaining orders yes, but first larger orders potentially to be -- to kick in, in '26 already. We're still at the sort of smaller pre-series orders right now, but we're having very promising conversations also, particularly in the field of multinational construction equipment companies. And I'm pretty hopeful or pretty positive on good developments and news already early '26. Operator: And in the meantime, we did not receive any further questions. So I see no further virtual hands. And that means we will come to the end of today's earnings call. And thank you very much for attending and to shown interest in the DEUTZ AG. And also a big thank you to you. Sebastian and Oliver, we appreciate the time you took and for guiding us through your presentation and for answering all the questions. So yes, from my side, I wish you all a lovely remaining week. All the best for you for the remaining quarter. And Sebastian, as always, some final remarks from your side. Sebastian Schulte: Yes. Thank you very much also from my side. Again, still in some areas difficult market environment, but we're doing well. Transformation is on track and the results clearly show that this is the case. We're looking forward to be in touch with all of you in the next touch points, financial calendar here is very clear, 2025 annual results end of March, Q1, May 7 and so on and so forth. But on the road to there, we'll be around at many investors conference and hosting a couple of roadshows. So looking forward to be in touch with all of you, and thanks for your interest, for your confidence in DEUTZ. And yes, it's happy -- we're happy to continue rocking this thing here. Thank you.
Operator: Thank you for standing by. This is the conference operator. Welcome to the TC Energy Third Quarter 2025 Results Conference Call. [Operator Instructions] The conference is being recorded. I would now like to turn the conference over to Gavin Wylie, Vice President, Investor Relations. Please go ahead. Gavin Wylie: Thanks very much, and good morning. I'd like to welcome you to TC Energy's Third Quarter 2025 Conference Call. Joining me are Francois Poirier, President and Chief Executive Officer; Sean O'Donnell, Executive Vice President and Chief Financial Officer; Tina Faraca, Executive Vice President and Chief Operating Officer, Natural Gas Pipelines; and Greg Grant, Executive Vice President and President, Power and Energy Solutions. Our agenda for today will start with Francois and our strategic update. Tina and Greg will walk you through our business in more detail, and we'll wrap up with Sean's quarterly update and financial outlook before moving to Q&A. A copy of the slide presentation is also available on our website under the Investors section. Following opening remarks, we'll take questions from the investment community. Please limit yourself to two questions. And if you're a member of the media, please contact our media team. Today's remarks will include forward-looking statements that are subject to important risks and uncertainties. For more information, please see the reports filed by TC Energy with Canadian securities regulators and with the U.S. Securities and Exchange Commission. Finally, we'll refer to certain non-GAAP measures that may not be comparable to similar measures presented by other companies. A reconciliation of these measures is contained in the appendix of the presentation. With that, I'll turn the call to Francois. Francois Poirier: Thanks, Gavin, and good morning, everyone. I want to begin by expressing my sincere appreciation for our team's unwavering commitment to safety and operational excellence. These are the cornerstones of how we operate and the reason we continue to deliver strong results quarter after quarter. I'm proud to report that our safety incident rates continue to trend at 5-year lows. And through the first 9 months of the year, comparable EBITDA has increased 8% year-over-year. We've successfully placed $8 billion of assets into service on schedule, and we're tracking approximately 15% under budget for those projects with 2025 in-service dates. Today, I'm also pleased to announce an additional $700 million in new growth projects at a weighted average build multiple of 5.9x. This takes our total sanctioned projects up to $5.1 billion over the last 12 months, largely capitalizing on the extensive demand we're seeing for power generation and data centers. Driven by exceptional project execution and capital optimization, we now expect 2025 net capital expenditures to be at the low end of our $5.5 billion to $6 billion range. When you combine that with our expected growth in comparable EBITDA, we have clear line of sight to achieving our long-term target of 4.75x debt-to-EBITDA, ensuring continued financial flexibility for future growth. These strong results continue to demonstrate that our focused strategy is delivering solid growth, low risk and repeatable performance. Across North America, the policy environment is becoming increasingly supportive, enabling more timely and cost-effective delivery of our projects to further ensure our infrastructure projects can meet the unprecedented growth in demand. In Canada, recent developments are improving the regulatory environment for projects of national interest. This includes LNG Canada Phase 2, which is directly enabled by our Coastal GasLink pipeline. In the U.S., recent actions to clarify NEPA's scope, accelerate agency review processes and implement FERC and Department of Energy permitting reforms are all supportive of streamlining the process and reducing delays, driving further demand for natural gas as a reliable, dispatchable power source. To be clear, this can be achieved without compromising core principles of safety, reliability and environmental protection. And in Mexico, the economy is poised for significant expansion, driven by strong fundamentals and President Scheinbaum's plan Mexico 2030, which aims to attract over $270 billion in investment through public-private partnerships. By 2030, the Mexican government plans to bring 8 gigawatts of new installed natural gas capacity online, and our assets are strategically positioned to support this necessary build-out. So when you look across all three countries, policy tailwinds are enabling growth initiatives that reinforce the value of our incumbent network. Over the past 12 months, our natural gas forecast has been revised 5 Bcf a day higher, now calling for 45 Bcf a day increase in natural gas demand by 2035. This is driven by electrification, LNG exports and the rapid expansion of data centers. Meeting the increase in demand, we've set 14 new natural gas pipeline flow records across our systems in 2025, further reflecting our focus on operational excellence. Looking beyond North American demand and driven largely by global electrification, we are the only operator capable of delivering natural gas to every major LNG export shore line in Canada, the U.S. and Mexico. And today, as a result of that, we move approximately 30% of all feed gas bound for LNG export. Now additionally, TC Energy is the only midstream peer with a significant interest in nuclear power generation. In Ontario, nuclear capacity requirements are expected to nearly triple by 2050, highlighting the long-term potential opportunity for Bruce Power and our power portfolio. As the outlook for natural gas and power demand continues to trend higher, TC Energy's extensive footprint is uniquely positioned to capture this growth. The robust fundamentals we're seeing in energy demand has generated over $5 billion in new high-quality executable projects that we have sanctioned over the last 12 months without moving up the risk curve. We remain focused on predominantly brownfield in-corridor expansions that leverage our existing footprint, minimize execution risk and are underpinned by long-term contracts with utility and investment-grade customers. The three new projects announced today are prime examples of how our strategy is working. Strategically located along our network, these investments are directly responding to accelerating incremental load growth, especially from data centers and power generation demand. Looking ahead, we expect the steady cadence of similarly high-quality project announcements to continue into 2026 with attractive EBITDA build multiples in the 5x to 7x range, further demonstrating our disciplined value-driven approach. This next chart highlights the consistent upward trend in returns from our sanctioned capital program since 2020, all without compromising contract duration or taking on additional market risk. With the addition of the three new projects announced today, our sanctioned portfolio for the year now stands at an implied weighted average unlevered after-tax IRR of approximately 12.5%, a meaningful increase from 8.5% just a few years ago. Looking ahead, we remain committed to our disciplined approach to capital allocation, ensuring that every dollar we invest is focused on maximizing returns and long-term value for our shareholders. So over the next decade, natural gas and electricity are expected to account for about 75% of the increase in final energy consumption, highlighting our role in the energy mix of the future. We believe our portfolio is of one amongst our peers and highly aligned with the fastest-growing segments of the energy market. We are over 85% long-haul natural gas pipelines, almost entirely take-or-pay or cost of service commercial frameworks. We're one of the largest operators of natural gas storage, providing our customers with integrated pipe and storage solutions, which is a key competitive advantage. And we have over 30 years in the power business across multiple fuel types, including our ownership in one of the world's largest operating nuclear facilities, Bruce Power. So these assets, combined with our low-risk business model and the momentum from powerful market and policy tailwinds position us to continue to capture accretive opportunities. After adjusting for company size, we are leading our peers in sanctioned natural gas and power capital opportunities, converting these into our project backlog that is further extending our growth visibility through the end of the decade and beyond. And with that, I'll turn it over to Tina to speak in more detail on this opportunity set. Tina Faraca: Thanks, Francois. With over 94,000 kilometers of pipelines across North America, TC Energy's network is delivering reliable supply at scale. The competitiveness of our footprint and our extensive customer relationships position us to win our fair share of this growing market. Natural gas demand from power generation continues to accelerate, propelled by widespread electrification, coal-to-gas conversions and the rapid expansion of data centers and AI infrastructure. In Alberta, our systems have seen an 80% increase in gas for power volumes over the past 5 years. And with the queue of data center interconnections tripling over the last year, we are working closely with customers to ensure our assets can meet the market's evolving demands. In the U.S., approximately 40 gigawatts of coal-fired generation is expected to retire over the next decade with the majority of that capacity anticipated to be replaced by natural gas generation. Across the full landscape, the 170 gigawatts of current operational coal capacity equates to over 20 Bcf per day of potential natural gas demand. Additionally, our assets are strategically positioned in key power growth markets like PJM and MISO, where forecast for natural gas power capacity additions through the end of the decade have doubled compared to last year. Nearly 60% of U.S. data center growth is expected within reach of our asset footprint, and we're collaborating across the entire value chain to deliver the natural gas that powers this transformation. And finally, in Mexico, our assets supply 20% of the nation's gas to power plants and will feed 80% of the new public tender natural gas generation projects entering service over the next 5 years. We have a 30-year relationship with the CFE, Mexico's national electricity provider. CFE is the primary driver behind the country's generation capacity expansion initiatives that we support through assets such as Southeast Gateway. Our connectivity to low-cost supply, extensive footprint and market reach is the foundation for cost competitive system expansions. Additionally, our ability to deliver innovative commercial offerings is fundamentally rooted in the long-term customer relationships we've built across our footprint. It is these relationships that allow us to anticipate market opportunities and move quickly, bringing new projects into service and optimize capacity. Our ability to sanction over $5 billion of high-quality executable projects in the last 12 months is a direct result of this collaborative approach. Today's announcements demonstrate our ongoing ability to capitalize on gas for power demand within our footprint. And what we are seeing today and the evolution over the past 18 months gives me confidence that our development queue will continue to grow with high-quality, low-risk and executable projects. We are at the forefront of natural gas pipeline growth. Within our development portfolio, we are originating growth opportunities representing $17 billion of potential value. Our strategy is anchored by 4 growth pillars. First, power generation is the greatest source of North American natural gas demand, and it is accelerating, thanks to electrification, coal conversions and the surging energy needs of data centers. Our footprint along expanding power markets and our long-standing relationships with our utility customers has resulted in a pipeline of origination opportunities that exceeds 7 billion cubic feet per day that have not been sanctioned to date. North American LNG is entering a new era with over 60 million tons per annum of U.S. export capacity reaching FID in 2025. And over the next decade, we expect more than 10 new facilities to come online. Our existing assets enable us to efficiently serve this expanding market through brownfield developments. Local Distribution Companies, or LDCs, account for 20% of our average daily demand, supplying energy to 80 million homes. And during peak periods such as extreme cold, demand can triple. Our sizable natural gas storage portfolio and projects like our Southeast Virginia energy storage project, a template for future reliability initiatives play a critical role in ensuring reliable supply and resilience for our customers. By 2035, we expect that 60% of North American gas production will move through TC Energy connected basins, providing our pipeline long-term abundant low-cost supply. This strategic advantage allows us to respond swiftly to market shifts, supply migration and support the evolving needs of our customers. We are growing our capabilities, harnessing technology and innovation to meet safety, reliability and regulatory standards while unlocking new commercial and operational potential. Every day, our teams process vast amounts of information, quickly draw insights and then make smart decisions that can translate into higher EBITDA contribution while mitigating risk. Our approach to AI adoption is to break it down into focused initiatives to ensure faster execution. We have developed an integrity-focused AI platform that automates document verification and compliance workflows, cutting review times from hours to minutes and reducing risk across our asset base. And recent breakthroughs in the ability to reliably train AI with large volumes of data are allowing us to enhance safety and sustainability. Our pipeline blowdown emissions reduction program uses advanced methods and automation to minimize emissions during maintenance, supporting our environmental commitments and regulatory compliance. Commercially, we are driving smarter decisions across capacity optimization and short-term marketing by using Agentic AI. We are also using advanced algorithms to recommend optimal pipeline configurations and available capacity on our U.S. assets in real time, improving throughput and reliability while maintaining safety and compliance. And we have developed a commercial intelligence platform to simplify access to external and third-party commercial information, overlaying it with our own data and capacity modeling to understand our customer needs and market conditions. This means we can respond to customer needs more quickly, optimize asset utilization and capture incremental revenue opportunities while maintaining transparency and governance. We are identifying opportunities to implement innovation and technology at scale across our organization, and we see a significant potential for our systems to be smarter and drive even stronger performance. For projects being placed into service this year, I'm extremely pleased to report that our teams have delivered, and we are currently trending approximately 15% under budget. Over the past few years, we have developed a series of enhancements that have fundamentally improved our capital allocation and project development rigor, increasing capital efficiency and cost management across our capital programs. We have enhanced our project risk reviews prior to sanctioning, enabling capital allocation decisions to be grounded in robust validated project fundamentals, ensuring that risk funding is precisely targeted, estimates are more accurate and overall capital efficiency is significantly enhanced. We have also strengthened our front-end project development discipline, allowing for deeper rights holder and stakeholder engagement and more thorough project analysis. This has resulted in high-quality estimates and risk assessments, driving more reliable cost projections and enabling us to manage risks with greater confidence and precision. The result, we have delivered 23 out of 25 of our sanctioned projects on or ahead of schedule while tracking 15% under budget for the year, fully aligned with our strategic priorities. Again, an exceptional job by all the respective teams. With that, I'll pass to Greg to update you on our Power and Energy Solutions business. Greg Grant: Thank you, Tina. As Francois noted, our portfolio is one of a kind, highly aligned with the fastest-growing segment of the energy market. Anchored by our position in nuclear power, our Power and Energy Solutions business is designed to deliver complementary solutions that drive incremental shareholder value. Importantly, this portfolio is built for scalability. We can grow with market demand, adapt to evolving energy needs and capitalize on opportunities that allow us to deliver solid growth, low risk that are repeatable for decades to come. In the near term, our focus is on maximizing the value of our existing assets. At the core of this effort is the on-time, on-budget execution of our Major Component Replacement program, or MCR at Bruce Power. These extend reactor life until at least 2064, while improving the availability of our nuclear fleet. As realized prices continue to rise and availability improves, with the completion of each unit's MCR, this performance is translating into incremental revenue and stronger financial results. By leveraging our expertise across natural gas and power, we're also capturing value through commercial marketing, system optimization while maximizing availability of our cogeneration fleet. Our 118 Bcf of nonregulated natural gas storage in Canada is a prime example of where we have the ability to generate incremental EBITDA in a highly dynamic market. Looking ahead, we're positioned to build on the incumbency of our North American footprint, deep customer relationships core capabilities in natural gas transmission, storage and nuclear power. We have a strong foundation to scale our operations and deliver complementary solutions at the intersection of the molecule and the electron that will unlock incremental value across the energy chain. The proposed Ontario pump storage project is a great example of the optionality we have in our portfolio. The 1,000-megawatt storage project will provide critical fast response reliability to the grid and complements our nuclear position in Ontario. By utilizing long-duration storage, we can store excess electricity during low demand periods and help meet peak needs. This reduces overall the capacity requirements across the province. Looking to the next decade, Bruce Power is uniquely positioned for growth, in a market where electricity demand is expected to grow by 75% through 2050. With a brownfield site, greater than 90% Canadian-based supply chain and strong alignment from all levels of government, Bruce Power is uniquely positioned to support the required baseload expansion in the province. While a decision to advance a new build is still years away, we have initiated a federal impact assessment for the potential 4,800-megawatt Bruce C Project. This early work creates the optionality for long-term expansion backed by Bruce Power's prudent management team and execution capabilities. At the same time, we're building low-carbon capabilities to ensure that we're prepared to respond to market shifts and capitalize on strategic growth opportunities when market signals and customer demand emerges. These strategic investments in technologies and innovation not only create new opportunities, but have application in supporting emissions reduction in our natural gas infrastructure, enhancing the long-term value of our systems. There are many attributes that make Bruce Power exceptional and unique. The Bruce Power team is best-in-class, and we're seeing that in project execution. The team continues to deliver on time, on budget across our replacement program. The MCR program replaces critical reactor components, extending operational life by at least 35 years per unit while simultaneously increasing availability. With a focus on enhancing both refurbishment efficiency and ongoing reliability, Bruce Power has been a pioneer in automation technologies. The team deployed the world's first robotic tooling machine on a reactor face, enabling skilled tradespeople to perform complex maintenance tasks safely, successfully and on schedule, all while minimizing radiation exposure. As shown on the left-hand side, these innovations have transformed Bruce Power's operational performance. Units refurbished under the MCR will see increased availability, like Unit 6, which achieved over 99% availability in 2024 after the completion of its MCR. That's compared to a historical average of 84% before the program began and the financial impact is clear. More megawatt hours made available, combined with increased realized prices that reflect our capital investment, inflation and some other factors will drive stronger financial performance for decades. Through innovation and disciplined execution, Bruce Power continues to be a leader in this space. Today, we're investing approximately $1 billion annually in Bruce Power. This is expected to increase site capacity to over 7 gigawatts by 2033. All of this output is secured under a long-term power purchase agreement with Ontario's ISO through 2064. This provides visibility to predictable cash flows and long-term revenue. As shown on the chart, the financial upside is very compelling. Equity income is expected to double from $750 million today to $1.6 billion by 2035. Over the same period, free cash flow is projected to grow substantially, generating nearly $8 billion in net distributions. This growing free cash flow gives us the flexibility to deploy capital where it creates the most value. Whether that's capturing growth opportunities across the natural gas system, expanding our nuclear footprint, accelerating low-carbon initiatives or capitalizing on opportunities that enhance the complementary service offering across our footprint. We can leverage our scalable, differentiated portfolio to invest in areas aligned with long-term market trends and deliver repeatable performance. I'll pass to Sean now to walk through the numbers. Sean O'Donnell: Thanks, Greg. Good morning, everybody. I'll start with a few of the operational and financial highlights achieved in the third quarter. Most notably, each pipeline business increased its average daily flows on their way to setting the 14 all-time high delivery records that Francois mentioned. I would highlight our U.S. natural gas business in particular, which saw LNG flows increase 15% this quarter as well as setting a new peak delivery record of 4 Bcf per day. In Mexico, our network is tracking towards 100% availability year-to-date at the same time that Mexico's daily gas imports are averaging 4% higher in 2025 than 2024. Mexico also saw its highest peak import day of record in August for over 8 Bcf a day. We also had our first full quarter of EBITDA contribution from Southeast Gateway, driving our comparable results up 57% in the quarter. In our Power and Energy Solutions business, Bruce Power achieved 94% availability, which includes the planned outages on Units 3 and 4 and is in line with our expected annual availability in the low 90% range for full year 2025. Turning to the top of the EBITDA bridge on the right-hand side. You'll see that we generated $2.7 billion in comparable EBITDA in the quarter, which was a 10% increase year-over-year. The 10% growth reflects a 13% increase in our natural gas pipelines network, partially offset by an 18% reduction in our Power and Energy Solutions segment. Let me walk you through the components of those changes, starting with Canada Gas, where EBITDA increased by $68 million due to higher incentive earnings, higher depreciation, higher income taxes on the NGTL System, partially offset by lower flow-through financial charges. In the U.S., EBITDA increased by $60 million, primarily from our Columbia gas settlement, partially offset by higher O&M costs. We also continue to see incremental earnings from new customers and commercial innovations and monetizing available capacity on existing pipelines and the nine new projects that our teams placed into service this year. Our Mexico business EBITDA increased primarily due to Southeast Gateway, which was partially offset by lower equity earnings from certain payoffs as a result of the strengthening peso. Lastly, in our Power and Energy Solutions business, equity income from Bruce Power was lower quarter-over-quarter as we began the 2-unit MCR outage program earlier this year versus only a single unit being in its planned MCR outage in the third quarter of 2024. That said, execution of the dual MCR program is going very well, slightly ahead of schedule, as Greg mentioned. And our unregulated natural gas storage portfolio's EBITDA is benefiting from the increased volatility in storage spreads in Alberta. Turning to our financial outlook. We are reaffirming our 2025 outlook for comparable EBITDA that we revised higher last quarter. As a reminder, we delivered year-over-year growth of 6% from 2023 to '24, and we remain on track to achieve 7% to 9% growth from 2024 to '25. Looking ahead to 2026, we anticipate delivering another year of strong performance with year-over-year growth of 6% to 8%. This sustained performance underscores the strength and repeatability of our base business. With the inventory of growth projects over the next 3 years that Francois and Tina highlighted, we are positioned to deliver EBITDA growth of 5% to 7% with a 2028 comparable outlook of $12.6 billion to $13.1 billion of EBITDA. On the right-hand side of the page, we're recapping some of the tailwinds that have been mentioned this morning that we're working on. We have several items supporting our 3-year outlook. We have multiple revenue-enhancing rate case outcomes in process and several more pending. We have increasingly supportive regulatory frameworks that could accelerate our project delivery time lines. We have multiple strategies for increasing asset availability, and we're working on technological and commercial innovations that each improve our capital efficiency across operations and project development. Any combination of those drivers will position us to maximize the value of our existing assets and our financial results. Shifting to our investment outlook. We introduced this capital allocation dashboard at last year's Investor Day to demonstrate that TC has uniquely clear visibility on its growth drivers through the end of the decade. Over the past year, we sanctioned an additional $5.1 billion of primarily in-corridor brownfield projects, predominantly in the U.S. natural gas pipeline business unit. The steady momentum of project approvals, particularly in the U.S., demonstrates the attractiveness of our assets to utility, LNG and data center customers, which will position us for steady growth through the end of the decade and beyond. By the end of next year, we expect to FID a series of projects that will fill out our $6 billion net annual investment allocation target through 2030, all with build multiples in the 5 to 7x range. This will be achieved through sanctioning the $6 billion of late-stage opportunities currently pending approval shown in the gray bars on the slide. And allocating the remaining only $3.5 billion of white space from a large portfolio of earlier-stage projects that are currently competing for internal capital. Given the level of advanced activity in gas origination and the overall $17 billion of projects under review, we feel confident in our ability to fill this chart to the annual $6 billion level through the end of the decade. Our disciplined capital allocation framework enables growth by underwriting projects that deliver the highest possible risk-adjusted returns while also ensuring we preserve our financial strength and flexibility and our long-term leverage target of 4.75x. From a sources and uses perspective, our 3-year plan requires approximately $31 billion in aggregate funding. About 80% of that funding is expected to come from operating cash flows, which is an improvement from last year's internal funding ratio of only 77%. The remaining 20% of our funding is expected to come from a combination of bond and hybrid issuances. The $6 billion in external funding is supported by the incremental annual EBITDA growth we expect to generate by 2028, which will create additional balance sheet capacity at or below our 4.75x leverage target. The key takeaway is that our strong operating cash flows and balance sheet capacity result in no equity issuance required to deliver this plan. With that update, I'll pass the call back to Francois. Francois Poirier: Thanks, Sean. In summary, our strategy is working. As we look ahead, our focus remains squarely on the priorities that have proven successful. First, maximizing the value of our assets through safety and operational excellence while leveraging commercial and technological innovation. Second, prioritizing low-risk, high-return growth, including placing projects in service on time and on budget or better and allocating our remaining net annual investment capacity through 2030 within our targeted build multiples range of 5 to 7x without moving up the risk curve. And third, maintaining that financial strength and agility to support long-term value creation through capital discipline and efficiency. With our asset base and strong momentum, I am confident we can deliver low-risk, repeatable growth into the next decade. Operator, we're now ready to take questions. Operator: [Operator Instructions] Our first question comes from Praneeth Satish with Wells Fargo. Praneeth Satish: I think if we just zoom out for a second and think about EBITDA growth on a longer time frame than 2028, it would seem to me like the current mid-single-digit CAGR guidance can be sustained for a long time past 2028. The backlog is very large on the gas side, ROIC is increasing. And then when you get out to 2030, there's at least $1 billion to $2 billion per year of CapEx capacity that opens up with Bruce Power. So I know you aren't formally guiding past 2028, but can you maybe walk us through the puts and takes that shape your long-term EBITDA growth trajectory and how long that 5% to 7% CAGR can be maintained? Sean O'Donnell: Praneeth, it's Sean. I'll take that question. Great question. You highlighted on Francois's Page 9, those IRRs going to kind of 12.5% right now, that is that's critical, right, for us to continue to see those types of return levels to be able to allocate capital in that '29 and '30 period. And I'll tell you a little bit of what's happening. Small to midsized projects were taking down very quickly, but projects are getting bigger and more complex. And that just -- that's where we want to wait to see. Can we continue to push returns and capital allocation up in the '29 to '30 time frame. So if these returns remain true, then I do think you'll see the same kind of midpoint of growth, if not potentially better, but the projects are just taking a little bit longer for us to have that degree of clarity. Praneeth Satish: Got it. That's helpful. And maybe if I could follow up on that. line of questioning here. So as leverage trends lower over the next few years, it seems like there's a lot of balance sheet capacity that opens up, especially as you get out to 2028. So I know you kind of reiterated the $6 billion per year of CapEx, but is there room to scale towards $7 billion or even $8 billion at some point over the next few years? Or should we kind of assume a more conservative leverage targets over time? Any update on kind of how you're thinking about that longer-term CapEx cadence? Francois Poirier: Praneeth, it's Francois. I'll take this one. our goal is that 12 months from now, we've essentially filled up the project backlog at the $6 billion level through 2030 inclusively. I think the opportunity set we have will give us the opportunity at that point to consider going above that $6 billion level. A couple of really important criteria, which we are not going to lose sight of, however. First one is human capital. It's the most important consideration. We've made the progress we've made because we've executed our projects with excellence. So wanting to make sure that if and when we consider going above $6 billion, we can continue to execute with the performance that we've demonstrated over the last 2 or 3 years. Second is the 4.75 is going to continue to be a targeted cap for us irrespective of the size of our capital program. So we could make excellent progress on efficiencies, on technological innovation and commercial innovation that could allow us to go above $6 billion without looking to rotate capital or any other sources of funds. I would say though, as I said before, the opportunity set will absolutely allow us to go there. But I would say it's within those two caveats. And then when you look at the lead time for projects, realistically, that's probably 2028 or 2029 before we could go there just with the time it takes to develop projects and then the time it takes to get them permitted. Operator: And the next question comes from Robert Hope with Scotiabank. Robert Hope: Maybe to follow up on your commentary that the projects are becoming larger and more complex. Can you maybe add a little bit more color on what size of projects that you are now seeing and why they're more complex? And are you more willing to go for larger projects given the increasingly more favorable regulatory outlook in the U.S.? Tina Faraca: Thanks, Rob. This is Tina. We are really encouraged by the development pipeline that we have, primarily related to the growth in the power generation sector. Along our entire footprint, we see opportunities in scale of volumes that could be anywhere from just 0.5 Bcf all the way up to more than 1 Bcf, depending on the type a project we're pursuing. The value of our footprint is such that it allows us to capture all of these opportunities, whether they're on a smaller scale or the larger scale. The hyperscalers that we're working with behind the utilities do take more time just because of the supply chain constraints. But certainly, we continue to see those opportunities progress, and we'll pursue those as we see them advance. So the larger ones are taking a little bit more time, but we're able to capture some of the more single, doubles, triples along the way. Francois Poirier: Yes. And I'll add a little bit to that, Rob. I appreciate the question. When we talk about increased size and complexity, we're not talking about SGP or CGL like multi-jurisdictional multibillion-dollar projects. These are still in-corridor expansions. The average size of our projects in our backlog right now is about $0.5 billion. You might see projects announced over the next year, creep up around that $1 billion level or maybe still a little bit north of that, but they are still in corridor in -- with existing customers and very straightforward from a construction execution standpoint. So we don't view, despite the larger size, any execution complexity increase. Simply, we've had a number of projects this year that we -- 6 months ago, we would have expected to have announced by now, but they're getting pushed out into next year because they're getting upsized. Demand is increasing so quickly that our utility customers are looking to increase the scope of our projects, and we just have to go back to the drawing board a little bit. Robert Hope: Appreciate that color. And then maybe continuing on the theme of the project backlog. So you have $17 billion of projects in the backlog, $6 billion are in advanced development. How do you expect that kind of overall size to progress over the next year as you're seeing increasing demand for your system? Are you seeing projects -- are you having to turn away projects just given the organizational requirements? Or could we see that backlog expand a little bit further over the next, we'll call it, 12 to 24 months? Francois Poirier: Yes. We have -- just to be very clear, Rob, thank you for the question because it gives me the opportunity to point out that we have not turned down a single project because of balance sheet or capital. We still have even with our expectation of bringing in all of the pending projects to full sanctioning, we still have $3.5 billion of room under the $6 billion level. And as we talked about, with careful consideration of our human capital, we think we can go beyond that. So we're not capital constrained in that we're turning away projects. We simply want to make sure that we maintain our 4.75 level and that we're continuing to execute projects with excellence. So the great thing, for example, if you look at our guidance for 2028 of $12.5 billion to $13.1 billion, with EBITDA growing the way it is, it's natural that our backlog and annual capital spend can grow along with it. So as I said, the opportunity set is definitely there for us to go there if we choose to. And based on the cadence of projects we expect to be announced regularly through 2026, I think at this time next year, we're going to be thinking long and hard about increasing that $6 billion level, starting in maybe '28 or '29. Operator: And the next question comes from Theresa Chen with Barclays. Theresa Chen: On the theme of gas to power for data centers, you've clearly chosen to stay focused on transmission, supporting your customers rather than competing with them in power generation despite your deep expertise in that space. What drove this strategic decision? And what are the key considerations behind it? Tina Faraca: Thanks, Theresa. This is Tina. I'll focus on the U.S. because that's where we're seeing the majority of our data center growth right now. And the attractiveness and depth of our portfolio of data center projects, primarily accessed through our interconnections with key utility customers provides us with a low-risk, compelling return approach to capturing that data center growth. We're actually not seeing a big pull from customers to develop behind-the-meter projects in the U.S. And in instances where we have seen those requested, there have been limiting factors, including contract term or requirements to procure long lead time items, just inconsistent with our risk preferences. And we have a deep pipeline now of those opportunities with our long-standing relationships with our key utility customers. Additionally, when we're working with those utility customers, we're not just solving the needs for their data center growth. It's all of the other electrification needs that they have, whether it's coal to gas conversion or economic development. Theresa Chen: Got it. And in regards to Bruce C, can you walk us through the current status on the path to FID, the next key milestones, how you plan to manage cost and execution risk if the project proceeds? And on the heels of Greg's comments related to the technological advancements and use of robotics for the NCR program, it seems that you're incorporating additional efficiencies and innovative solutions in general here. But what are the key lessons from the NCR process that you'll be applying to Bruce C if FID-ed? Greg Grant: Sure. Thanks, Theresa. Appreciate the question. It's Greg. We do continue to progress Bruce C. We actually just received the notice of commencement from the IAC here in August. As we talked about in the last quarter, there's still a lot of work to do when you think about moving towards FID in the early 2030s. But what the next step for us is we're actually working with the ISO and our next tranche of funding. As a reminder, we're currently using federal funding through Enercan and the next tranche will help provide us the funding as we move towards FID towards the end of the decade. Nice for you to point out the Slide 19. I think there's many innovations that Bruce have been using both operationally and through the MCR program with the robotics that I talked about earlier. You'll see successive efficiencies being taken through all those lessons learned when you think about -- this is almost a decade-long plan. And the reason that we actually put robotics and other things in as we progress through Unit 3 was to be able to continue that over through all the success of MCR programs. So the team have been doing a great job on time and on budget. And what you'll continue to see is that time shrinking in terms of how long it's taken us to do the MCR program and get these units back online. Operator: And the next question comes from Aaron MacNeil with TD Cowen. Aaron MacNeil: The negotiated settlement on the Canadian Mainline expires in 2026. You mentioned several rate cases over the next several years. So I guess, just very simply, have toll increases or rate cases been contemplated in the 2028 guide? Or could we think about that as potential upside very much like we saw with Columbia earlier this year? Tina Faraca: Yes. Thanks for the question, Aaron. We do have several rate cases in flight. As you're familiar, we have the ANR, the Great Lakes rate cases that we have just recently filed and are in settlement discussions. We had a successful settlement on the Columbia Gas system. We have a cadence going forward on other U.S. pipes. Specific to Canada Gas, we have the mainline settlement, which goes through the end of 2026. in our NGTL settlement that ends at the end of 2029. The projections for those rate cases or rate settlements include conservative estimates in our budgeting and forecasting. And each rate case is very different depending on the rate base, the capital investment, but you will see the proposed uplift on those rate cases already embedded into our forecast. Aaron MacNeil: Okay. Understood. And then I wanted to dig in on the cost savings that you've realized on capital. As we look to the future and just given the broader investment in energy infrastructure across North America, are you starting to run into challenges or bottlenecks with contractors? Or can you speak to any other pressure points that we should be aware of or risks that you're actively mitigating? And ultimately, I guess I'm just wondering if this level of outperformance can be sustained. Tina Faraca: Yes, thanks. Market pressures haven't really had a material impact yet, but we do see industry backlogs building, and we're continuously monitoring our suppliers and our contractors. Francois earlier highlighted our human capital, and that's one of our also top considerations when we're sanctioning and executing projects. This applies also to our contractors and skilled labor workforces. We've been through these cycles before. We learn when it gets busy. It's increasingly important to retain top-tier suppliers, contractors, crews. And we're able to attract some of those top suppliers and contractors in two ways: one, through our long-term relationships and our contracting strategies that we deploy; and two, our portfolio. Our contractors like this long-term portfolio that we have, whether it's small, medium-sized in quarter projects and all of our maintenance capital, we're able to develop long-term relationships with them for that long-term backlog. Francois Poirier: Yes. And I'll add to that, Aaron, it's Francois. With respect to outperforming plan going forward. Remember that the risk of our portfolio is decreasing. If you look over the last 2 or 3 years, we had CGL and Southeast Gateway in there. The small- to medium-sized projects are much more straightforward to execute. The predictability of cost estimates is very high because we know the right of way, we know the terrain. The time lines are quite predictable. So we do tend to take a more conservative approach in an inflationary environment to our costs. Projects we're putting into service now were sanctioned in 2022 and 2023. Remember, we were in a much higher inflationary environment back then. But I'm optimistic that we can continue that execution excellence with a recognition that we're in a generational time in terms of allowed rates of return or rates of returns on projects we sanction. And to some extent, we might be a little bit more aggressive in terms of our estimation simply because we want to be able to allocate more capital to growth. Over the last few years, as we've been deleveraging any outperformance on projects, the proceeds have gone to accelerating our deleveraging. Going forward, the balance sheet is in good shape right now. We're more focused on growth. So we're going to want to allocate more capital. There are some great examples that our team, our supply chain team have been working with some of our key suppliers on long-term contracts, things like turbine maintenance, things like delivery of new equipment for new projects with the long backlog that Tina mentioned, we are a preferred customer that our contractors very much like to deal with. That means we get the A teams on our projects. And project execution is always about people and our human capital. And our team is very strong, and we get the strongest teams from our contractors, which leads to the results we've been getting, and we hope to continue those. Operator: And the next question comes from Jeremy Tonet with JPMorgan. Jeremy Tonet: Just wanted to turn to Slide 23, if I could revisit that. On the right-hand side, piling up tailwinds and headwinds for the guide here, if I recall correctly, it seems like there's a lot more tailwinds than headwinds at this point. So just wondering, is it fair to think that, that is the balance when you're thinking about the guide period? Sean O'Donnell: Jeremy, it's Sean. I'll take that question. Candidly, I think you're right. We are feeling more tailwinds than headwinds at the moment, whether that be the jurisdiction regulatory reforms that Francois mentioned, the customer kind of demand pull on our systems, we're being asked to do more than we ever have been. And to Francois's point, we're able to drive kind of project IRRs up, and we're able to drive rate case outcomes higher than we've ever seen before. So it is a bit of an imbalance towards the tailwinds for the first time in a long time. But towards that -- outside of that [ '29 and '30 ], we've been asked a few times about why not 5 years guidance. We just want to maintain a few -- another year to make sure that all of these tailwinds remain durable through the end of the decade. But so far, so good. Jeremy Tonet: Got it. That's helpful. So the 3-year guide looks really conservative here given that backdrop. So that's helpful to understand. And then just wanted to go to Mexico, I guess, there have been comments in the past with regards to potential for monetization there. I'm just wondering any updated thoughts you might be able to provide there? Sean O'Donnell: Yes. I'll take that one as well, Jeremy. No updated thoughts, but just let us recap kind of where we've been on that one. Look, Mexico is a phenomenal business for us, right, putting SGP into service this year and kind of demonstrating the commercial viability of that. CFE has a major campaign underway, right, with their $20-some billion kind of power and transmission build-out and given that a couple of quarters to continue to develop. So we're still committed to looking at alternatives in 2026. We'll have USMCA, some clarity there by hopefully, June or July. We'll have progress on the CFE side with connecting a number of different power plants that will be served primarily by SGP and other assets. And we'll look at capital market and partnership opportunities starting in 2026 and hopefully have an update by mid to fall of 2026. Operator: And the next question comes from Maurice Choy wit RBC. Maurice Choy: I just want to come back to a comment earlier that Francois, you made about your ability to go above $6 billion without rotating capital. It doesn't sound like you need this program. But from everything you shared today, you're also not short of opportunities. So how do you see the company being more engaged on an active capital rotation program just from a financial discipline perspective, particularly for mature or derisked projects? Francois Poirier: Thanks for the question, Maurice, and it gives me an opportunity to maybe be a bit clearer based on my prior response. What I wanted to indicate is that the first source of deleveraging is always growing your EBITDA. And before we consider capital rotation or any outside form of equity, we always look to improve the ROIC on our existing assets. So through commercial innovations and increasingly interesting technological innovation, the use of AI more specifically, we see an opportunity to accelerate EBITDA growth through optimization and efficiencies in our system. And I would like to see those carried out and run through before we consider any outside capital or deleveraging. Obviously, we hold share count dearly. Our bias to the extent we need -- to the extent we want to grow our capital program above $6 billion and we decide that we do need some equity the bias will always be the capital rotation first. But first, let's see what we can do with the EBITDA. We've had some really good successes here in improving the efficiency of our systems, getting our OM&A down and getting the ROIC on our existing assets up. And that's what I meant by that comment. Maurice Choy: That makes sense. And if I could just finish on the question about returns. On a forward-looking basis, you mentioned that you are expecting 5 to 7x build multiple. Compared to the Investor Day last year, has there been certain assets or project types that you're seeing evolving returns? Or have they broadly been quite steady over the past 12 months? Sean O'Donnell: Maurice, it's Sean. The answer is the latter. We have seen the 5% to 7% guidance from Investor Day last year to this year, we have executed right in the middle of that range. So it is steady. The proof points are there, and they are why we're extending that guidance through '28 at this point. Francois Poirier: Yes. And just to add to that, as we talked about our priorities for 2026 and our goal of filling out the slate of growth projects at the $6 billion level through 2030, along with that is at a 5 to 7x EBITDA build multiple. As you can imagine, our $17 billion BD pipeline, we have pretty good visibility on the returns of those projects. And so we think that, that outcome is very achievable. And the clear implication there is that we expect the build multiples to hold at the levels that you just referred to. Maurice Choy: So just a quick follow-up. I think earlier, there was a mention, I believe, by Tina that just we've not seen a whole lot of cost pressures, but perhaps there may be some on the horizon if all the resources are directed towards data centers, for example. What you're saying is that even if costs globally goes up, your returns should hold. Is that fair? Francois Poirier: Yes. Look, I think we compete with our peer company pipelines for projects, particularly in the U.S. My presumption is that if all competitors are impacted by the same inflationary environment, we're competing on a level playing field, and those costs will be reflected in all of our bids, and we expect to be able to hold our returns to deliver that 5 to 7x EBITDA build multiple. Operator: And the next question comes from Manav Gupta with UBS. Manav Gupta: You recently got an upgrade from S&P rate. They finally moved you to stable outlook versus negative. I know you had been working with them. Help us understand what that process was and finally, what pushed them to acknowledge that the outlook is actually stable and not negative. Sean O'Donnell: Manav, it's Sean. I'll take that one. Look, without speaking to any particular agency, we've simply delivered on the plan that we introduced at Investor Day last year, right? Obviously, getting SGP done on time and on service and living within our $6 billion to $7 billion capital raise. Those were commitments that we made to the market. And to be fair, the agencies held us accountable and wanted to see a couple of quarters of performance under that new strategy. So we've delivered and better. So yes, we're grateful for recognition of that, but it was always kind of part of our plan and expectation to get to this point. Manav Gupta: A number of question we are getting from investors is when you look at 2026, your guide is 6% to 8% and people feel it's slightly conservative. Help us understand what can get us closer to 8% versus the 6%, if you could talk a little bit about that? Sean O'Donnell: Yes. Happy to take that one again, Manav, it's Sean. Look, we have a little over $8 billion going into service kind of driving that. So these are new assets. And as it relates to the optionality that we have with all of our assets, right, customer-driven events, weather-driven events, outperformance. It's -- we need a little bit of time with our new assets in particular, but we are seeing new counterparties come across all of our systems with really kind of commercially innovative strategies to express hedging across molecules to electrons. So with these new assets, in particular, we'll be conservative in how much more we can do from a new customer standpoint, but we look forward to having all the new inventory kind of up and running here by the end of the year. Operator: And the next question comes from Olivia Foster with Goldman Sachs. Olivia Halferty: I wanted to go back to some of the comments which were made on improving IRRs across the footprint. Could you talk about specific drivers of the improved project returns we are seeing versus earlier this decade? And specifically, are there insights you can share on customer willingness to sign up for rates underpinning these improved project returns? And on the other hand, any balancing factors from project competition in regions where TC operates? Tina Faraca: Olivia, this is Tina. I'll take that question. There are various factors that are driving our higher returns and our strong build multiples. One is our project execution capabilities. We've really have advanced our skill set, our governance are the way we advance our projects on early development. And so I feel like our project development and execution experience has really driven us a long way in executing on time and under budget at returns that are continuing to increase. Second is the capacity in the market on the pipeline side continues to be more and more utilized. And so as we're working with our customers, the optionality in our systems requires expanding. And as we're working with them, they are highly valuing the new capacity as well as the security of supply. So we are able to negotiate, in some cases, returns that are providing us stronger options there. In addition, just the amount of growth across North America is really providing a big landscape for us to be able to select projects that have the highest return and strong build multiples. That's really the value of our footprint. Our footprint is a strategic advantage for us to find those low-risk, high-return opportunities that we can filter into our $6 billion to $7 billion capital. Olivia Halferty: Got it. That's clear. And for my second question, I wanted to ask a follow-up on one of Praneeth's questions, specifically on the leverage build and annual CapEx outlay. How much cushion specifically would you like to build under the 4.75 target on a run rate basis before we could see annual CapEx trend towards the higher end of the range? And then maybe this is a clarifying question as well, I'll tag on. But is TC contemplating moving towards the higher end of the $6 billion to $7 billion range or eventually moving above the upper end of the range over time? Sean O'Donnell: Yes, Olivia, it's Sean. I'll take the first part of that question. Look, as it relates to having a specific target below 4.75, our objective is really capital efficiency. And as Francois mentioned, our per share metrics at 4.75 or below are really how we kind of triangulate balance of total shareholder return. So -- and we are being below $6 billion here for the next kind of couple of years, we are giving the balance sheet time to breathe. We could have gone to $6 billion, but we have chosen not to. We're not chasing projects in favor of giving -- lower return projects in favor of giving the balance sheet time to breathe. That's a critical takeaway. As it relates to going from $6 billion to $7 billion or $7 billion to $8 billion, if the project returns are there, and it works within our -- that 12.5%, that glide path up that we're seeing, if that continues to be true and our teams can deliver on time and on budget, and it works at 4.75 or lower, those are the ingredients for both growth and continued preservation of balance sheet strength. Operator: And the next question comes from Robert Catellier with CIBC. Robert Catellier: Rob Catellier from CIBC. First of all, congratulations on your ongoing safety record. I just wanted to follow up a little bit with Tina, just on the project execution we've seen recently. You gave a whole host of reasons on how you got there. But I wondered if you could maybe highlight the one or two top reasons why you -- the projects are coming in on time and on budget recently? Tina Faraca: Thanks for the question, Rob. I'd love to talk about our project execution teams because they have been delivering time and time again. Our human capital there is really the #1 driver, in my opinion, of why we're executing on time and on budget. We've really advanced our internal leadership execution skills, more due diligence on risk we are engaging our stakeholders much earlier in the process, in the development cycle. We are negotiating strong contractors with our third-party constructors to provide the A teams. All of that allows us to execute on time and on budget and drive that increasing returns on our invested capital. Francois Poirier: And just to add to that, Rob, I really appreciate the question. We don't talk about culture enough on these types of calls and having a one-team approach to project execution, creating a psychologically safe environment where our teams feel comfortable identifying challenges early on so that we can manage them and manage risk. Is critical to the high-quality execution on projects. So we've worked really hard on creating a strong culture with strong psychological safety, and it's definitely benefited us. Robert Catellier: Yes. It sounds like you put in a really sustainable framework there that should benefit you for years to come. My second question was for Greg Grant on the power side. On Slide 18, there's a comment in the midterm bucket about exploring complementary services in high-demand power and energy solution markets. I wondered if you could give us a flavor of what you think the highest likelihood opportunities are there, in your opinion, as we stand here today? And whether or not you're contemplating any behind-the-meter power in that bucket. Greg Grant: Sure. Yes. Thanks, Robert. Happy to talk a bit about that. We've talked about areas where we do have some of the complementary gas and power solutions. Obviously, we have to be quite strategic with our footprint on both the gas and power side. We've talked about we're not just trying to build out the power business on its own. Certainly, Alberta has been the one area that I've talked about in the past, just given we have that energy supply chain footprint, whether it goes from the gas storage all the way to the end of power. So that's a natural area where we would be looking to potentially look to colocation and/or power solution. The one thing I just want to highlight, and I think Tina highlighted it earlier, we have a great pipeline of growth. And so we're going to be very selective. Some of the projects that we have seen are probably taking on a bit more risk than we would like to, especially given the footprint and the pipeline that we have. But certainly, in Alberta, when you see over 20 gigawatt queue on the data center front, whether we're developing it or we see other developers come in and build out some more demand, that's great for our existing footprint on the gas and power side. Operator: And the next question comes from Sam Burwell with Jefferies. George Burwell: Given the LNG build-out on the Gulf Coast, it seems like there's at least some opportunity to send more Canadian gas south. So are possible brownfield expansions on your system something that might make sense for you to pursue? And if so, how would those projects rank within your opportunity set? Tina Faraca: Yes. Thanks for the question, Sam. This is Tina. Yes, LNG opportunities are continuing to evolve. It is a large market, as you know, from a demand perspective. If you think about it across our portfolio, we've placed 8 LNG projects into service over the last few years, primarily related to Gulf Coast projects. Recently, you're familiar, we have built our Coastal GasLink project to the West Coast, and we think there's great opportunity to continue to provide egress out of the WCSB to the West Coast for LNG exports there. As you think about coming down into the U.S., we certainly have a corridor there through our ANR pipeline system and other systems where we have had some expansions in the past to bring gas from Western Canada down to the Gulf Coast, and we'll continue to evaluate those as necessary. There are about 10 more LNG projects proposed along the Gulf Coast that we'll be looking for additional supply. But again, I think the West Coast of Canada and building that out is going to be an incredible opportunity for us to move that gas west. George Burwell: Okay. Understood. So I guess on that point, I mean, any updates you can share on Coastal GasLink expansion? Tina Faraca: Sure. We're excited to have Coastal GasLink in service and flowing gas, Train 1 and Train 2 now moving forward. We are working really closely with LNG Canada right now to evaluate the Phase 2, and we're supporting them in the development related to what would be necessary on the pipeline. So the FID does rest with them, but we are working jointly to evaluate what would be necessary to expand Coastal to get to the Phase 2. Francois Poirier: And recall, Sam, that LNG Canada Phase 2 is part of the projects and the national interest that the federal government has identified. So from a permitting standpoint, I think that process is well underway with the major projects office. And really, the decision now rests with the proponent for the LNG facility. Operator: And the next question comes from Ben Pham with BMO. Benjamin Pham: I appreciate the update. A couple of maintenance questions from me on the 5% to 7% EBITDA growth guidance. So there's a couple of questions earlier on this topic. But I'm wondering, could you provide the building blocks on that CAGR, that 5%? Like what amounts growth? What is rate cases? What is the efficiencies? And then what takes you to the 6% and the 7% or beyond? Sean O'Donnell: Ben, it's Sean. Thanks for the question. Look, we maybe do a better job on that kind of offline, but just to give you a sense for it. there's another big chunk of that with capital coming into service kind of over the next 2 years, right? That's always our baseline, capital kind of coming into service. We could have up to a half a dozen rate cases kind of in flight during this plan. So that's probably the biggest driver of the range and what has to be true over the course of the next kind of couple of years. And then the smaller kind of bucket, but things that we've had real kind of demonstrable experience and results from asset availability, commercial and technology. Those -- it's a small but kind of growing kind of influence on the growth. And you heard both Tina and Greg kind of mentioned we've got active robotics. We've got AI, we've got preventative maintenance that are all showing early signs of kind of cash flow productivity and contribution. So those are really the three big buckets, but happy to take that offline in more detail. Benjamin Pham: Okay. That's great. And maybe the other maintenance question that I had is on the dividend growth side, are you still expecting the ranges you've highlighted in the past on dividend growth? Sean O'Donnell: Yes. So just to be clear for all the listeners, our 3% to 5% range is consistent. We are just given the returns that we're seeing in our new projects, right, well above our cost of capital, we are going to direct as much capital as we can into new projects, which implies we will keep the dividend growth at the low end of that range for the foreseeable future because the projects just warrant as much growth at 12.5% or better. That's the highest and best use of capital we see across the entire system. Operator: Ladies and gentlemen, this concludes the question-and-answer session. If there are any further questions, please contact Investor Relations at TC Energy. I will now turn the call over to Gavin Wylie for any closing remarks. Gavin Wylie: I just wanted to say once again, thank you for attending the call this morning and for the great questions. As the operator stated, if we didn't get to your question or if there was anything that was outstanding, please feel free to contact us in the Investor Relations team. We're always happy to help. And of course, we look forward to providing you our next update likely in mid-February. Thank you. Operator: This brings to a close today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.
Operator: Good afternoon, everyone, and thank you for standing by. Welcome to Evolus' Third Quarter Earnings Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded and webcast live. [Operator Instructions] I would now like to turn the conference over to Nareg Sagherian, Vice President and Head of Global Investor Relations and Corporate Communications. Please go ahead. Nareg Sagherian: Thank you, operator, and welcome to everyone joining us on today's call to review Evolus' third quarter financial results. Our third quarter press release is now on our website at evolus.com. With me today are David Moatazedi, President and Chief Executive Officer; Tatjana Mitchell, Chief Financial Officer; and Rui Avelar, Chief Medical Officer and Head of R&D. Today's call will include forward-looking statements. Actual results may differ materially due to risks and uncertainties outlined in our earnings press release and SEC filings. These forward-looking statements are based on current assumptions, and we undertake no obligation to update them. Additionally, we will discuss certain non-GAAP financial measures. These measures should be considered in addition to and not as a substitute for our GAAP results. A reconciliation of GAAP to non-GAAP measures is included in today's earnings release. As a reminder, our earnings release and SEC filings are available on the SEC's website and on our Investor Relations website. Following the conclusion of today's call, a replay will be available on our website at investors.evolus.com. With that, I'll turn the call over to our CEO, David Moatazedi. David Moatazedi: Thank you, Nareg, and good afternoon, everyone. Before we begin, I'd like to take a moment to welcome Tatjana Mitchell as our new Chief Financial Officer. Tatjana brings deep financial and operational expertise to Evolus, and she's made an immediate impact as we strengthen our focus on efficiency and long-term growth. The third quarter marks an important transition for Evolus. And before I discuss the results, I want to take a moment to recognize the outstanding efforts of our team. Over the past year, we successfully created or expanded a number of capabilities, solidifying the foundation for long-term growth. Most notably, our medical education platform has evolved into a comprehensive training ecosystem, working with world-renowned experts in the field of aesthetics to engage more than 17,000 injectors year-to-date through cadaver labs, in-office hands-on sessions, mobile training with our Evolus bots across 100 events and digital webcasts. Our Evolus consumer loyalty program has now grown to more than 1.3 million members, up 34% year-on-year, with nearly 70% returning customers, underscoring the strength of our consumer engagement. Our first-in-class Evolux co-branded media program has reached over 1,400 accounts year-to-date and generated over 300 million media impressions to digital, billboard and streaming campaigns, further amplifying awareness of the Evolus brand. Our Evolysse launch is off to an incredible start. To date, more than 4,000 customers have completed hands-on training and the majority have purchased Evolysse. One of the key insights we've learned is that first training builds familiarity and comfort with the product, while the second training is what drives meaningful adoption. In fact, 75% of Evolysse revenue comes from accounts that have participated in hands-on training, and we've seen a 100% increase in purchasing volume when an account is trained the second time. This clearly underscores the value of continued education in building product confidence and driving consistent use. Internationally, we entered 2 new markets this year, and our mature markets are continuing to grow at a very high rate. In the U.K., our most mature direct market, we estimate that our market share closely mirrors the share uptake we experienced in the U.S. following launch. Lastly, despite the headwinds in the U.S. aesthetic market Jeuveau continues to outperform the category with unit volume growing year-to-date and on track to continue that trajectory in a market that remains down single digits this year. Our above-market performance and disciplined expense management have positioned us to enter the next phase of our growth trajectory. Achieving profitability in the fourth quarter of 2025 and positioning us for sustainable annual profitability beginning in 2026. We've rebased our expenses with the benefits reflected in our third quarter results and remain well positioned to deliver sustainable profitability. While the aesthetic market continues to face near-term challenges related to consumer spending, we're encouraged by early signs of stabilization and expect demand for injectables to continue to improve sequentially. Against this backdrop, Evolus continues to deliver results that demonstrate the strength of our strategy and the resilience of our brand. In the third quarter, our revenue increased 13% due to strong global Jeuveau demand and meaningful early contribution from Evolysse in the U.S. Following a challenging second quarter, global Jeuveau performance in the third quarter reflected healthy demand as the business experienced sequential revenue growth in what is typically a seasonally lower quarter. Jeuveau sales benefited from positive unit growth, both in the U.S. and internationally, supported by record consumer demand through our Evolus Rewards program. As the market strengthens and the overall toxin category returns to growth, Jeuveau is poised to regain healthy momentum. We strengthened our 14% share of the U.S. market year-to-date, reinforcing the synergy within our portfolio and our differentiated positioning as a leader in performance beauty. With Evolysse, we continue to lay the foundation for adoption and scale, delivering $5.7 million revenue in the third quarter and $15.5 million since launch, marking the strongest HA filler debut in over a decade. Demand for Evolysse increased sequentially over the run rate of approximately $5 million after factoring for initial stocking by accounts in our launch quarter. We're particularly excited about the performance of Evolysse as feedback from customers has been exceptional, highlighting the product handling, results and seamless integration in their practice. This further validates our Beauty First strategy to build a full facial aesthetics portfolio under a single trusted brand. Through this launch, we targeted our highest volume Jeuveau accounts and gained valuable insights that will aid us as we now expand our focus to a broader customer base in the fourth quarter. Our launch-to-date strategy was focused on establishing Evolysse as a differentiated product independent from Jeuveau. And we intentionally avoided bundling during this initial phase. As we approach 6 months of experience with Evolysse on the market and as practices are now planning for the new year, the fourth quarter is the right time to bring the value of our 2 portfolio products together. This quarter, we have introduced our first Evolus portfolio bundle designed to reward practices that grow across both Jeuveau and Evolysse. This initiative enables us to compete more directly against competitive bundles and drive market share gains across the portfolio. In the third quarter, we expanded our customer base by adding nearly 500 new purchasing accounts, bringing our total to more than 17,000, 2,000 of which are now also purchasing Evolysse. Our Evolus Rewards consumer loyalty program remains a central growth driver, fueling both repeat use and brand engagement. Total redemptions grew 34% compared to the prior year quarter. New redemptions for the quarter were a record 244,000, of which approximately 68% came from existing consumers. Jeuveau and Evolysse are building lasting consumer loyalty, which fuels a sustainable growth and profitability of our portfolio. In parallel with our commercial execution, we achieved a key regulatory milestone with the submission of our PMA to the U.S. FDA for Evolysse Sculpt, our advanced injectable HA sculpt for mid-face volume restoration. We expect the FDA review to follow the standard PMA pathway with potential approval anticipated in the second half of 2026. We also remain on track for a broader launch of a steam in Europe in the first half of 2026. Before I close, I'd like to address the recent developments related to tariffs. We've taken proactive measures to mitigate potential tariff impact on pharmaceuticals, including Jeuveau. We will provide additional clarity once the trade agreement with South Korea and pharmaceutical tariffs are finalized. But the current time line gives us a valuable window to strategically plan and prepare for any changes. We remain confident in our ability to navigate these dynamics effectively without disruption to our customers or our financial performance. In summary, our third quarter results reflect above-market growth, financial discipline and the early benefits of our expanding portfolio. With Jeuveau performing steadily, Evolysse building scale, as team on track for launch in 2026 and the resetting of our expense base, Evolus remains well positioned to achieve sustainable profitability and long-term growth. With that, I'll turn it over to Rui for an update on Evolysse and our recent Sculpt submission. Rui Avelar: Thank you, David. Since the launch of Form and Smooth here in the U.S., the feedback continues to be consistent. This line of gels are described as being efficient in that a given amount of product goes a long way. They have a low inflammatory profile and are very versatile. On the development side, Evolysse Sculpt is our HA injectable that targets the premium mid-face volume market and is currently making its way through the FDA process. In August, the first disclosure of the data was presented. The study compared Sculpt to Restylane Lyft in a prospective double-blind randomized trial and enrolled 304 patients in a 3:1 ratio. Using a validated 5-point scale, patients with moderate, severe or extreme mid-face volume deficit were eligible for treatment, then followed for 24 months. The primary endpoint was non-inferiority design measured at 6 months and looked at the difference in mean change in mid-face volume deficit scores after treatment. Patients were treated in the cheek area and the mean volume of HA product used was 1.8 mls per cheek or 3.7 mls per patient. The primary endpoint of non-inferiority was met with the difference in favor of Evolysse Sculpt. The confidence intervals demonstrated both non-inferiority and statistical superiority. The corresponding p-value also demonstrated statistical superiority at less than 0.001. The secondary endpoint looked at responder rates of each treated cheek, defined as at least a 1-point improvement on the scale. At 6 months, 83% of cheeks treated with Restylane Lyft were responders compared to 91% in the Evolysse Sculpt Group, with the p value that reached the level of statistical significance at 0.015. Following the patients over the course of 2 years, there was a pattern of increasing separation across the efficacy metrics over time between the 2 groups, favoring Evolysse Sculpt over the control. A 1 point change on the validated volume deficit scale represents a clinically meaningful improvement. Looking at patients with at least a 1-point change as assessed by the blinded evaluator at 24 months or the study's end, 8% of Lyft patients were responders compared to 29% of Sculpt patients over a threefold difference at the end of 2 years. The pattern was similar when looking at the global aesthetic improvement scale as assessed by the patients themselves. At 24 months, 13% of Lyft patients were responders compared to 29% of Sculpt patients. Treatment-related adverse events between the 2 groups were similar, 18.7% for Lyft and 19.7% for Sculpt, and there were no treatment-related serious adverse events in either of the groups during the trial. As mentioned, the PMA for Sculpt was submitted in the third quarter of this year, and we anticipate FDA approval in the second half of 2026. Lastly, the Lyft HA injectable trial is fully enrolled, ongoing, and we anticipate its approval and launch in 2027. With that, I'll turn it over to Tatjana to walk you through the financial details. Tatjana Mitchell: Thank you, Rui, and thank you, David, for the warm welcome. Over the past 60 days, I have had the opportunity to get to know the Evolus team and spend time with some of our customers. It's been energizing to see firsthand what makes this company unique. And I wanted to share a few observations before we move into the results. First, Evolus has a highly differentiated business model. As a cash pay-focused company in a multibillion dollar aesthetics market, we have built meaningful relationships with both customers and consumers. Our ability to connect with both groups driving customer growth and retention while deepening consumer loyalty gives us a multitude of levers to drive performance. Based on my experience and scale consumer businesses, Evolus is still in the early stages of realizing our full potential. Second, the fundamentals of our business are strong. We have built productive long-term partnerships with Daewoong and Symatese, and our expense base has been successfully rebased following the second quarter, all while continuing to deliver on our revenue targets. This positions us well to drive operating leverage and profitability going forward. Third, we operate in a high-growth category with long-term secular tailwinds. Our strategy of building a facial aesthetics portfolio under one trusted brand provides a strong foundation for continued expansion and innovation. We are confident in delivering profitability with our current portfolio while actively pursuing strategic business development opportunities to expand our pipeline. And finally, I've been impressed by the strength of the Evolus culture. The grit and focus on impact that I've seen across the organization are what makes me confident in our ability to deliver on our long-term goals. I'm joining Evolus at a pivotal moment, one where the foundation is strong, the opportunity is clear and the team is focused on execution. I look forward to partnering with David and the leadership team to drive profitable growth and long-term value for our shareholders. With that, I'm pleased to share our third quarter financial results. Global net revenue for the third quarter was $69 million, a 13% increase over the third quarter of 2024. Sales growth in the third quarter was driven by a combination of the introduction of Evolysse and growth in global Jeuveau. And on a sequential basis, sales growth in the third quarter was driven by accelerating demand for Jeuveau, increasing underlying demand for Evolysse and continued strength in the international business. Net revenue for the third quarter of 2025 included $63.2 million of global Jeuveau revenue and $5.7 million of Evolysse revenue. Our reported gross margin for the third quarter was 66.5% and adjusted gross margin was 67.6%, which excludes the amortization of intangibles. Earlier, we touched on the topic of tariffs. There have been recent announcements related to potential tariffs on pharmaceutical products. At this time, the impact on Jeuveau is still being evaluated, pending additional guidance by the administration. Current inventory levels will sustain us through the first quarter of 2026, and therefore, Jeuveau will not be subject to any near-term tariff impact. Separately, under the recently announced trade agreement with the European Union, Evolysse is subject to a 15% tariff that began August 7. This star has been fully incorporated into our outlook and has a minimal impact on our financials. We continue to actively monitor global trade agreements and remain focused on mitigating any potential future exposure while ensuring stable supply for our customers. Moving now to operating expenses. GAAP operating expenses for the third quarter were $57.3 million, up from $55.5 million in the second quarter. As a note, on the sequential comparison, Q2 2025 GAAP operating expenses benefited from a $3.9 million reduction related to the revaluation of the contingent royalty obligation. Non-GAAP operating expenses for the third quarter were $49.7 million compared to $54 million in the second quarter. As a reminder, non-GAAP operating expenses exclude stock-based compensation, revaluation of the contingent royalty obligation and depreciation and amortization. This quarter, non-GAAP operating expenses also exclude $1.4 million in restructuring charges, primarily consisting of onetime severance benefits for inactive employees. These restructuring expenses are related to the strategic cost structure optimization announced in August. Within operating expenses, selling, general and administrative expenses for the third quarter were $52.8 million compared to $56.7 million in the second quarter. This included $5 million of noncash stock-based compensation compared to $4.3 million in the prior quarter. Non-GAAP operating loss in the third quarter was $3.1 million compared to non-GAAP operating loss of $6.7 million in Q3 of 2024. The better-than-expected third quarter results was due to operating expense reduction and in part to the timing of our largest customer event of the year, which moves from Q3 to Q4. As a result of this timing shift, the associated costs of the customer rent will be recognized in the fourth quarter rather than the third while the full year impact remains unchanged. Lowest non-GAAP operating expenses and non-GAAP operating income excludes stock-based compensation expense, revaluation of the contingent royalty obligation, depreciation and amortization and restructuring charges. Non-GAAP operating income also excludes amortization of intangible assets. Turning to the balance sheet. We ended the third quarter with $43.5 million in cash as compared with $61.7 million at the end of the second quarter. The decrease in cash during the quarter was primarily driven by our decision to pull forward inventory purchases ahead of potential tariffs on pharmaceuticals. Looking ahead, underpinned by our strong third quarter performance, our outlook for 2025 remains unchanged and includes the following. Reiterating total net revenue between $295 million and $305 million, representing 11% to 15% growth over 2024 results. We continue to expect Evolysse revenue contribution to be between 10% and 12% of total revenue for the full year 2025. Full year non-GAAP operating expenses to remain between $208 million and $213 million. Non-GAAP operating income between $5 million and $7 million in Q4 2025, which includes the timing of costs related to our customer events that shifted from the third quarter to the fourth quarter. In addition to our continued expectation to achieve profitability in the fourth quarter of 2025, we also remain on track to achieve sustainable annual profitability beginning in 2026. With that, I will now turn the call back to David for closing comments. David Moatazedi: Thank you, Tatjana. Amid a challenging macro backdrop, our double-digit growth reflects the strength of our business fundamentals and the consistency of our execution. We're a company operating with focus and efficiency, maintaining financial discipline while advancing on one of the most differentiated injectable pipeline in aesthetics. As we move into the fourth quarter, we're deepening customer engagement with the introduction of our Evolysse portfolio bundle, which aligns incentives and drives growth across our injectable portfolio. With Jeuveau in the #3 share position and gaming on the market leader, Evolysse in the early stages of scaling and a theme set to launch in Europe in the first half of 2026, we are well positioned to deliver sustainable growth, profitability and long-term shareholder value. Operator, you may now begin the Q&A. Operator: [Operator Instructions] Our first question comes from the line of Annabel Samimy with Stifel. Annabel Samimy: A great recovery on the quarter. I just wanted to ask you some questions about, I guess, the solar dynamic on Evolysse, how much of what you're seeing for Evolysse includes a headwind for stocking versus seasonality versus, say, market sentiment? I guess maybe some macro commentary could be useful here. Like, for example, has sentiment shifted? Is sentiment still poor for fillers? Or are you seeing meaningful headwind from free product for injectors to trial? And could you potentially quantify any of this? And I guess from here, can you sort of give us a better sense of what we can expect of the cadence? And then just -- that was a lot of questions, but one more on this. I guess you mentioned there were about 4,000 trained and 2,000 have adopted Evolysse. Do you have any metrics for the time that it takes to go from like, say, first training to second training into adoption? How should we think about the conversion of those patients -- those physicians who have initially trained? David Moatazedi: Great. All really good questions, Annabel, around Evolysse. And I'll try to maybe dimensionalize for you for just a minute. If we take a couple of steps back, the one thing I'd say is when we launched, we focused initially on our core Evolus customers. And I'm really proud that in our first 6 months, when we look at our Jeuveau revenue, half of our revenue for Jeuveau has purchased Evolysse. So I think our focus on that, Evolysse customer set has been very productive for us. To your point, the recipe that we've uncovered, that has been effective, is to expose them to the product through our sales force, bring them in for training. One live hands-on training is very useful for them to have enough confidence to start trialing the product in their patients. But it really is consistently that second training that changes from trialing the product or dabbling with it to turning into an adopter. And that is really the key insight that we gained over the last couple of quarters with this product. We see a significant inflection point in those clinics when they get through that second training. As you can imagine, the first quarter that we launched, we had very few that actually had the opportunity to get trained 2 times. And so we started to see that more in the third quarter. And you could expect a number of those trainings. Second trainings are booked in the fourth quarter. That's a very significant part of the uptick within our core group. The second is in the fourth quarter, now that we've learned this product, and keep in mind, the U.S. is the first market that's launched Evolysse. So we're relying on our learnings here in the U.S. to continue to adapt our launch. We've now opened the door for Evolysse to go wider beyond our current Evolus customer base. And so you'll see the results from us being able to replicate what we've done over the first 6 months with our core customer group to a broader audience of customers. That's the second. And then lastly, as you pointed out, on the full year, the HA market, as we've read reports from our peers in the space, the market is down double digits. It continues to be relatively challenged, partly due to the macro environment. At the same time, Q3 is the seasonally low period for injectables as well. So you sort of have a compounding effect, if you will, and that's unique to the third quarter. Whereas in contrast, the fourth quarter, we expect will be the strongest quarter of the year, and will be now 3 quarters into our launch. So as we think about our guide for the full year, it reflects those market dynamics of those -- the fourth quarter being sort of the culmination now of 6 months of experience, our key learnings on the product and the benefit of the seasonality working favorably for us. Operator: Our next question comes from the line of Marc Goodman with Leerink Partners. Alyssa Larios: This is Alyssa Larios on for Marc Goodman. Just a few questions from us. Could you comment on the usage trends between Evolysse Smooth and Form and how those 2 different product lines are being used across the consumer base? And then can you give us an update on the advertising campaign and remind us exactly what channels you're using, whether it's DTC or going directly to the clinics themselves? And then finally, you mentioned that you intentionally avoided bundling the filler and toxin in the initial phase. Just curious what the rationale was for doing that. If you can walk us through your thought process? That's it. David Moatazedi: Great. Why don't I start with bundling the advertising, and then I'll comment on the usage of Smooth and Form. I'd like to Rui to add his color. Both Rui and I spent a lot of time with customers, trying to understand how they do position it, and there are some interesting insights there. So just on the bundling piece, it became very clear to us as we're preparing for the launch of Evolysse that customers weren't looking for us to bring in new product to market and sort of force it on them because there are customers that use our primary product, Jeuveau. And instead, following a number of advisory board meetings and looking at prior product launches, we chose to take a different route, which has let the product stand on its own and allow these customers a period of multiple quarters to learn through the product before we start to think about bringing our portfolio together. So it was very deliberate in the first quarter that we launched. The product was entirely independent. In the second quarter, we introduced consumer loyalty. We didn't want to introduce that too early. We wanted accounts to get comfort with the usage of the product before we expose consumers to the loyalty benefit. And now in our third quarter following launch, it's not the right time where customers are asking us about what the future of our portfolio is. As you can imagine, they are currently partnered with the larger companies, and they commit to these larger portfolio of purchases as part of their ongoing commitment to gain better pricing. Today, by keeping them independent, there's no advantage to bringing the full portfolio under Evolus. And so we provided this growth portfolio bundle offering in the fourth quarter as our first test of how we'll bring the portfolios together. And this will carry through into next year. And so this is our first attempt of doing that. And I can tell you that we tested it in one of our larger customer meetings that Tatiana mentioned, that was a result of the phasing of spend in and it was very, very successful in terms of the reception we got to it. On the DTC side, look, our strategy is more focused around co-branded media. So all of the advertising we do is surrounding each clinic individually. And we've been able to build a model with Evolus where we do personalization at scale. And part of that personalization is around our co-branded media in the form of streaming TV spots, billboards within local markets. And the heaviest portion of it is digital media. That could be social, it could be search and it does vary by market. And as I said, there are over 1,400 accounts that have participated in our co-branded media benefits. So it's not an insignificant portion of our customer base, but they have to meet certain purchasing criteria to gain those benefits. And so -- and then lastly, on the usage of Smooth and Form, both products have the same indication, which is the nasolabial fold, but the properties of the gels are very different. And we're learning more and more about their personalities as injectors are generally purchasing both. We have very few that are entirely using one or the other, mainly because the property is a smoother, that's a softer gel, whereas the Form product provides more structure. And so our label may be limited nasolabial fold, but of course, the usage expands beyond that. And so what we're hearing consistently is whether looking for a product to fill in areas more -- to create more of a smoothing effect, that's where they're leaning towards smooth. And when they're looking for greater structure in a product, that's where they're reaching for the Form. But I'll ask to share his part, Rui? Rui Avelar: Sure. I'm going to paraphrase a little bit. The indication is actually broader. The indication is medium to deep wrinkles and folds. And the nasolabial fold is one example of that. You can also go into the marionette lines. And if you look under that lower lip, sometimes there's a deep fold in there, it's called the submental fold. And there's a lot of versatility with these products. And when a clinician looks at a wrinkle or a fold, for example, nasolabial fold is one example, they can look at it strategically and think I'm taking all the attributes of this patient. Are they thin? Are they heavy? Skin quality, all these different things. And if their strategy is to try to use something more superficially, then they'll reach for Smooth. It's got a rheological profile that's very soft and you can bring it up very superficial. If the strategy is different and you want to create a little bit more lift and you need some more lifting power, your strategy is going to be deeper. So you go into Form. And sometimes you combine the 2, you layer them. You want something with more lift underneath and you want to smooth that out. So that's one group. And then in Europe, Smooth is actually approved for perioral fine lines and off-label here in the United States. But we're living in a global environment and people understand that, that product can be used so superficially that it will be used in parallel lines. And the other thing that's come in that's been very interesting is a recurrent comment that these gels are incredibly efficient. And what they typically say is I reach for a gel and I may go for something that needs more lift such as a Form. And I get done, and I still have product left over. And this product is so forgiving that I can continue through different parts of the area or even go superficial in the area that typically couldn't with the gel that has these properties. So that's been the feedback so far. For us, that was kind of reassuring because it was very consistent with the feedback we got before we brought the product on, and that's always nice to see that confirmation. Operator: Our next question comes from the line of Navann Ty with BNP Paribas. Navann Ty Dietschi: First, can you discuss in more detail the Q3 action underlying the sequential growth for Jeuveau despite the seasonality, including that Evolus Day event and practices support and potential promotional activities and whether you expect similar actions in Q4 such as the 11th day? And then second, we know that AbbVie commented on the Q3 call that their middle income customers for BOTOX are on the sidelines. So can you discuss the early signs of consumer stabilization that you are seeing? David Moatazedi: Sure. Thanks for the question, Navann. I think what we saw in the second quarter, as we commented before, was a unique point at the end of the quarter where we saw a pullback in customer purchasing that was really unique to the second quarter that we hadn't observed before. We did not see that dynamic in the third. We maintained a consistent promotional effort and we always do, both on the consumer side, through our loyalty platform where we did engage consumers that we saw stretching their intervals between treatment with a way to bring them back into their normal routine. We also were able to do some things in the market around the clinics with partnerships. We did have a partnership with consumer magazine, Allure, where there was a gift with purchase that consumers were able to partner with us on that did drive a lot of interest in our product. And then, of course, now as we enter the fourth quarter, as you pointed out, this is our annual 11th day, which kicked off towards the end of October. And it's we're in the middle of it now, and it's a very important phase for us as our customers look at that annually. Operator: Our next question comes from the line of Uy Ear with Mizuho Securities. Uy Ear: Congrats on the positive quarter here. So maybe a question on, well, could you maybe just tell us the split between U.S. and ex U.S. sales for Jeuveau? And maybe you can also kind of help us understand, I think you indicated that you strengthened your 14% market share. Maybe just help us understand what you mean by that as well as what are you kind of seeing, I guess, in terms of your customer base who are -- who could be different from what AbbVie -- the customer base that AbbVie or Galderma have? David Moatazedi: Yes. Let's start with what we're seeing in terms of just overall in the market. Obviously, the only 2 companies that report down the revenue and break out that level of detail is both us and AbbVie. So through that, what we see is a market that in the third quarter, likely decline by some small degree and we continue to outpace when you look at our year-to-date Jeuveau in the declining market, we've grown in terms of units. What's probably most promising is you see our consumer rewards data where the overall redemption, that's consumers going in, getting treated and earning their $40 off, it's up over 30% year-on-year. So we continue to see very healthy demand for the product in these clinics and we're continuing to, we believe, improve our presence there. Now that all at the same time, we're establishing Evolysse in these clinics. So overall, we feel very good about how Jeuveau has performed out of the third quarter. And we hope to see that momentum continue. The second part was, yes, that was the 14%. Yes. As far as the -- we don't do segment reporting on the toxin business, Uy. So unfortunately, we won't be able to give you that color. But we did in the script make the comment that both the U.S. and the international business are growing positive in terms of units year-to-date. So I think it gives you some color around there is growth happening on both sides on top of that, Uy. Uy Ear: Okay. Can I sneak in another question. You're now going to bundle the product. Maybe just help us understand the potential synergies that you could get from this? Do you expect in some of the accounts, I think you're heavily penetrated. In terms of Jeuveau, do you expect greater -- significantly greater penetration there? Or do you think the synergies will work -- sort of will be greater synergies in terms of Evolysse? Just help us understand the dynamic and the potential and the magnitude. David Moatazedi: Yes. I think my view is the portfolio bundle is a long play for us. This is a very early innings. We've been operating as a single product company and without a bundle for 7 years, and you've seen us establish. Jeuveau is the fastest-growing brand for the majority of those years since we entered the market. And we're the first company to break through the double-digit mark outside of the initial 2 players to enter the space. We do believe this is a meaningful opportunity for Jeuveau. There are countless conversations that we've had with clinics where their Jeuveau usage is limited by the downside risk they have by moving over more of their share to us on their total purchasing with some of the competitive products. The idea of a bundle unlocks and alleviate some of that pressure. And I think the reason I say it's a longer-term endeavor is because Sculpt further unlocks it because it further expands our portfolio within the HA space, which is an important part of continuing to move more of their business over. So I view the fourth quarter as the first of many quarters to come where we'll start talking a little bit more about the advantage of the portfolio. Operator: Our next question comes from the line of Douglas Tsao with H.C. Wainwright. Douglas Tsao: Congrats on the progress. David, I guess, I'm just curious, have you seen that effect yet in the marketplace, meaning sort of accounts that were perhaps not purchasing Jeuveau because they were very defensive around sort of the bundle with Allergan or AbbVie and now are beginning to be able to purchase Jeuveau as well as Evolysse? Or is that more of the sort of a conversation that you're starting to have? David Moatazedi: Yes. We have had a combination of both inbound interest from accounts that weren't working with us on Jeuveau and they're interested in Evolysse and that opens the door for us to begin partnering with them. Now keep in mind, Evolysse is still early. So I think some of those could be dabblers that will continue to expand their presence. And as a result of that, they've started to dabble with Jeuveau. So that's one group of customers. Another group are customers that have been somewhat moderate users of Jeuveau. And now with Evolysse, they're looking at us differently. And consistently in the conversation is the idea of having a mid-face product, that bringing in a differentiated mid-face product, which is a big gap in a lot of portfolios in our industry is going to be a significant point in time to do that. So we've used this, if you will, in 3 stages, right? The first 6 months was establishing Evolysse. The next 6 months is starting to establish our portfolio value proposition and then opening the doors to follow as Sculpt gets to approval, and then we can really use that entire bundle to start to take advantage of it. So we've been deliberate about how we've tried to roll these out, especially to support our customers who've helped us get here. Douglas Tsao: And as a follow-up, David, I'm just curious, on the co-branded marketing side, is Jeuveau remaining the focal point? Or have you had accounts inquire or begin to actually do co-branded marketing where Evolysse is the focus? David Moatazedi: Yes. So the third quarter, we started to put out co-branded media on Evolysse. Some of those co-branded media ads had mentioned the weight loss. As you know, we're the only hyaluronic acid that has mention of weight loss in our label. There's a lot of interest. Some of those in our billboards now sitting around the U.S., some of them are digital media. And that was one that many [Technical Difficulty]. Douglas Tsao: Hello? David Moatazedi: Yes. We're back, Doug. Douglas Tsao: I think, David, we lost you midstream about the co-branded marketing. David Moatazedi: Yes. My only comment there was, we are seeing co-branded marketing on Evolysse in the form of billboards as well as digital with a number of them having the mention of weight loss, which is unique to our product. And as we mentioned on the prior call, the more you purchase from Evolysse, the more co-branded media dollars you earn. And then our team works with those clinics to choose which products they want to highlight between the 2, Jeuveau and Evolysse. And we started to introduce it in the third quarter in the market, and it's going to continue to rise as we enter the fourth quarter. Operator: Our next question comes from the line of Serge Belanger with Needham & Company. Serge Belanger: David, first question is on ordering patterns. Like you mentioned earlier, volumes and size of orders kind of dropped off at the end of the second quarter. Just curious what impact that had on inventory levels and the overall ordering pattern throughout 3Q? And maybe what you've seen in the early part of 4Q right now? Secondly, I think Tatjana mentioned that the customer event was moved from 3Q to 4Q. I imagine that's the 11-day promotion. What impact did that have on OpEx? And could that be another tailwind for 4Q Jeuveau sales? Operator: Apologies. The speakers are experiencing more technical difficulties. Tatjana Mitchell: Serge, can you let me know where we cut off? Can you let me know where my response cut off? Serge Belanger: I don't think we heard your response at all. Tatjana Mitchell: Okay. Apologies. We are dealing with some technical difficulties, but we are back on. So the question was around the customer event that moved from Q3 to Q4. That was the summit that we have for our largest customers. It was not the 11th-day promotion. So the 11th-day promotion, as David said, kicked off at the end of October and is currently underway. And so there's no change in promotional cadence or any impact on revenue. David Moatazedi: Okay. And to your -- second part of your question around purchasing pattern, Serge. A couple of things that we pointed out coming out of the Q2 earnings call. One is that accounts were drawing down their inventory. We expected that to continue through the third quarter. And so what we're seeing were accounts that are carrying less inventory and purchasing more on an on-demand basis versus placing sort of the larger volume orders that they had been placing before. But collectively, we saw them coming through strong just with over the course of more orders rather than the bigger volume ones. Now the fourth quarter is at the busiest season. So we do expect that the purchase volumes are generally higher. They will be higher than they have been over the past 2 quarters. But we do expect that inventory levels will continue to be managed carefully in the space as the overall volumes year-on-year. We expect the fourth quarter hopefully to be relatively flat coming off of a depressed base. So we expect it to be relatively stable. Operator: Our next question comes from the line of Sam Eiber with BTIG. Sam Eiber: Maybe I can move to the tariff mitigation strategies that you called out in the prepared remarks. So I'd love to hear any more details. I guess you could provide on potential offsets if we do get tariffs. I know it's a fluid situation, but would love your thoughts there. And maybe as a follow-up, if we do get potentially material rates, what's your ability to, I guess, build in the U.S., manufacture in the U.S.? How long something like that could take to build out? Any thoughts there would be great. David Moatazedi: Yes, Sam, it's a great question on tariffs. Like you, we've also been watching this very closely. And I want to be careful not to get into too much detail here because it's harder to lay out plans when it's not entirely clear yet. The Korean trade agreement is nearing a close. So we're looking forward to seeing that agreement finalized, but the pharmaceutical tariffs and whether those continue to hold are still not yet clear. I can tell you that we have an incredible partnership with our partner, Daewoong in Korea. They're very well aware of the impact of tariffs, the conversations we've had with them. And they've also been very supportive. As you see, on one hand, there's been a higher impact on our cash burn as a result of pulling forward inventory into the U.S. That allows us and affords us the luxury of time to be able to get more clarity on some of these unknown items. But as you can imagine, we're working through it in scenario planning. So rather than going through each of those scenarios, I can tell you that we have a partner that's committed. We have the luxury of time to work through this. And it's still unclear within that range of options, I would just say that we are open to exploring... Operator: Apologies. Looks like we lost him again. There are no further questions at this time. I'd like to pass the call back over to Nareg Sagherian for details on an upcoming IR event. Nareg? Nareg Sagherian: We hope to see many of you there. Thank you for joining us today. Operator: This concludes today's teleconference. You may now disconnect your lines.
Operator: Ladies and gentlemen, welcome to the SES 9 Months and Third Quarter 2025 Results Conference Call. [Operator Instructions] Now I will hand over the conference to Christian Kern, Head of Investor Relations. Please go ahead. Christian Kern: Thank you, Gaya. Good morning, everyone, and thank you for joining us today. It is my pleasure to welcome you to SES Q3 2025 Results Call on behalf of our management team. Before proceeding with the management presentation, we would like to inform you that the financial information contained in this document has been prepared under International Financial Reporting Standards. As usual, this presentation may contain announcements that constitute forward-looking statements, which are no guarantees for future business performance and involve risks as well as uncertainties. Also, certain results may materially differ from those in these forward-looking statements due to several factors. We invite you to read the detailed disclaimer on Page 2 of the presentation, which is also available on our company web page. Today, I'm joined by our CEO, Adel Al-Saleh; and our CFO, Lisa Pataki, who will take you through the presentation followed by a Q&A session. Adel, without further ado, over to you. Adel Al-Saleh: Thank you, Christian. Good morning, everyone. I'd like to start on Page #4 with The New SES. Now fully consolidated with Intelsat after transaction closed on 17th of July 2025, it has been a very extremely and very busy and extremely difficult period for us, bringing the 2 companies together, creating a heavy weight in our industry. So first of all, let me briefly recap the rationale behind this transformational deal. We brought together 2 industry leaders beyond scale through a value-accretive acquisition with more than 60% of revenues in high-growth segments and a total net present value of EUR 2.4 billion in synergies. We have started executing on these synergies from day 1 of closing. In fact, this transformational combination was not just about bringing SES and Intelsat together. It was about redefining who we are as a company. We have created a new SES, a global multi-orbit connectivity powerhouse and a true space solutions company, empowering businesses and governments worldwide with integrated purpose-built satellite network and connectivity solutions. We have brought together a powerful mix of talented people, market-leading engineering capabilities, network infrastructure, spectrum, innovation and global relationships. We're expanding beyond satellite connectivity and exploring adjacent capabilities to grow and compete more effectively in space based on our network, such as hosted payloads, space situational awareness and direct-to-device services. All of this is focused on shareholder value creation and returns. For our customers, we have created a more capable and forward-looking space solutions company, one that combines a compelling value proposition backed by strong underlying capabilities and a continued commitment to innovation focused on solving our customers' challenges. For our shareholders, we are driving value creation and shareholder returns through our focus on profitable growth in combination with disciplined capital management and allocation. Let's move to Page #5. With the combination of SES and Intelsat, we have significantly strengthened our portfolio. Our 4 verticals, how we manage the business, if you will, are now media, government, aviation and fixed and maritime. With the combination, we have created an undisputed leader in satellite-based communication solutions. Let's start with media. Media is our largest and most cash-generative segment, now operating at even greater scale, delivering nearly 11,000 channels to 2.3 billion viewers worldwide. We're securing long-term renewals well into the next decade. And despite industry headwinds, our strategy is clear: defend and optimize high-value neighborhoods by leveraging our industry-leading reach while expanding into new segments like sports and events, free-to-air and free-to-view. In our network segments, government, aviation and fixed and Maritime, capacity and resources are precious, and we're purposely allocated to the right opportunities as we scale for the future. With our expanded scale and capabilities, we're well positioned in our new growth segments, particularly government and aviation. In government, we're supporting over 60 global government organizations, including European governments, U.S. government, NATO allies and Five Eye nations. We will continue to focus on growing and expanding on both sides of the Atlantic, especially as the geopolitical environment drives increases in global government budgets by capturing sovereign demand and expanding into new space-based solutions. We're not only offering government capacity, but truly space partner, allowing governments to diversify and expand their space architecture. In aviation, where we have gained substantial scale through the acquisition, we now provide in-flight connectivity to 30 leading commercial airlines, supporting around 3,000 tails. Powered by our multi-orbit electronically steered antenna technology known as ESA, we offer global coverage, multi-orbit, low latency and flexible business models that enable airlines to meet their ever-rising bandwidth demand, especially with the rapid rollout of in-flight Wi-Fi. Our strategy here is simple: accelerate growth by scaling our multi-orbit, multi-band solutions to stay ahead of this fast-growing market. And as our MEO network grows, we will make it available at scale to our airline clients across the world, providing truly unique multi-orbit multi-band flexibility. In maritime, SES is also well positioned, serving 5 of the 6 major cruise lines and leveraging our scale up in commercial shipping. We are the leading provider of connectivity at sea, keeping passengers and cruise connected informed and competitive in the fast-moving world. We're confident in our maritime platforms, which position us well despite facing pressures from some partners moving to LEO solutions. Our strategy is to focus, defend and rationalize, supported by selective investments. Last but not least, our fixed business remains very tough and highly competitive. We're serving important customers with 8 out of the world's 10 mobile network -- sorry, with 8 of the world's top 10 mobile network operators as well as major energy companies and drive digital inclusion across the world. Our strategy here is to rationalize and focus on green zones, where we have the right to win. We pursue higher yield opportunities, streamline operations and leverage digitization to improve efficiency and performance. Let's go to Page #6. Here, we show you the combined assets supporting our new business. We're now a multi-orbit space solutions provider at scale. We operate a powerful fleet of around 120 state-of-the-art GEO and MEO satellites in a multi-orbit multiband network supported by over 150 teleports well spread across the globe and an extensive ground network with over 600,000 kilometers of fiber, covering 99% of the world's populated regions. In combination with strategic access to LEO capabilities, this unmatched scale and flexibility position us well to meet our customers' most demanding connectivity needs with unified solutions and accelerate profitable growth. Let's move to Page #8. Discussing our 9-month business highlights and financial performance. The third quarter 2025 was the first quarter of the combined company with Intelsat contributing roughly 10 weeks to the stand-alone business performance. Therefore, the following financial performance is shown on a reported basis with Intelsat fully consolidated from 17th of July 2025. In the 9 months of 2025, we showed a solid financial performance with revenue of around EUR 1.75 billion, up 19.8% year-on-year with growth in all verticals. Adjusted EBITDA for the 9 months was EUR 849 million, with 11% growth year-on-year and a margin of 48.6%. In the first 9 months of the year, we secured EUR 1.4 billion of renewals. and new customer contracts with the majority coming from our growth segments, supporting our gross backlog of EUR 7.1 billion, which has been impacted by the weaker U.S. dollar and intercompany eliminations. We have just combined 2 companies with multiple platforms. We have been working on various scope changes, intercompany eliminations and some different accounting conversions. So this has been a rather complex reporting quarter. In terms of like-for-like underlying trends, revenue was down minus 1.8% year-on-year and adjusted EBITDA declined around minus 10% year-on-year. These year-on-year trends can be mainly attributed to a few key business factors. Number one, in aviation, we're working through the backlog of ESA antenna implementations, which come with equipment revenue diluting profitability before enabling higher-margin service revenue. There are also some timing differences between onboarding new customers, new planes and decommissioning some of the airline customers. In government, we have seen timing impacts, mainly due to the U.S. budget delays at the start of the year, contract rationalization by the U.S. Department of Government Efficiency and postponement of large contracts in part due to the U.S. government shutdown. These deals remain highly accretive and underpin our confidence in the future growth. In media, we continue to see expected structural decline with SD channel switch-offs and the drag from the Brazilian customer bankruptcy. This combined business is now over EUR 1 billion in revenue and remains highly cash generative. Going forward, we see the underlying decline unchanged in the mid-single digits while having signed renewals well into the next decade. Fixed remains our most challenged business in a highly competitive environment. We face difficult market conditions and are focused on securing value-accretive deals supported by disciplined capacity allocation. And finally, just a reminder of the third-party capacity utilization after the failure of IS-33e as well as intercompany eliminations that we had to adjust. Turning to Page #9. Let's talk about our notable wins that support our growing segments. We're a trusted partner to customers worldwide in over 130 countries as evidenced by our strong customer base. In our high cash-generative media segment, we continue to see momentum driven by the strength of our managed services offerings and the global reach of our network. As media evolves, satellite broadcasting remains the most cost-efficient and reliable way to reach global audiences. SES continues to be a trusted partner to leading media companies such as Warner Bros. Discovery, having signed this year a long-term capacity agreement to deliver high-quality content to millions of TV users on 19.2 degree East, our most valued TV neighborhood in Europe. In Q3, we renewed a business with major media customer in the Americas, including a multi-transponder. We also had a long-term extension with a major U.S. program and have broadened our agreement with a long-time customer, Dish Mexico. In addition, we expanded our partnership with Telekom Srbija, adding 2 additional transponders and extending our capacity agreements through 2032. We also renewed a multiyear multimillion euro agreement with Arqiva for satellite capacity and our prime video neighborhood at 28.2 degrees East. Under this agreement, SES will enable Arqiva to deliver a wide range of television channels as well as radio services to audiences in the U.K. and the Republic of Ireland. In Africa, we continue to build momentum with long-term renewals with our customers in East Africa specifically. We also extended important direct-to-home contracts in Asia and secured 2 new blue-chip broadcasters on our key orbital location for C-band distribution across Asia Pacific. Many of our large customers are now talking to us about extending our partnership well into the next decade. More to come on this in the future as we renew these contracts and are able to talk about them. Let me now shift to our government business. We continue to see strong and growing demand for our resilient secure communication solutions from government customers around the world. Together, we built a government solution business of scale on both sides of the Atlantic, being true space partner to over 60 government organizations, including European and U.S. agencies. We're well positioned to tackle the sovereign capabilities governments now demand with multi-orbit networks, with space and defense budget increasing both in the U.S. and amongst NATO allies as we view the government vertical as one of the strongest growth levers over the next few years. In Q3, the French Navy aircraft carrier, Charles de Gaulle, utilized SES' O3b mPOWER SatCom service during the Clemenceau 25 mission. This high throughput, low-latency MEO connectivity supported all operational needs on board, enabled seamless collaboration with mission partners and ensured uninterrupted availability for mission-critical applications. Our IRIS2 program is also progressing well ahead of the 1W1 early next year. In the U.S., as mentioned, we're experiencing timing delays in some contract awards due to the continuing resolution and subsequent government shutdown. Despite this, our business is growing, and we remain well positioned for long-term growth. Notably, in Q3, the U.S. Space Force awarded 5 companies, including SES, positions on a 5-year $4 billion contract under the Protected Tactical Satellite Communications Global program, known as PTHG. SES is now competing for a prime contractor position going forward. This initiative focuses on the design and demonstration of resilient satellite architectures with the potential for future delivery orders. The goal is to provide anti-jam secure communications for tactical military operations by leveraging both commercial innovation and defense expertise. Also in Q3, SES Space & Defense joined the Defense Innovation Unit's Hybrid Space Architecture Network initiative with our secure integrated multi-orbit networking platform known as SIMON. This program is building a secure, integrated multi-orbit network that connects commercial and government systems to deliver assured, low-latency, multipath communications across a scalable and resilient multi-domain architecture. These strategic wins highlight our commitment to innovation and growth in the government sector. With regards to aviation, this segment continues to be a growth engine for the company. Over the last 3 months, we have won 200 new tails from various airlines. We're winning new airline customers around the world who are choosing SES because of our clear differentiators. These include our ESA solution, which uniquely enables access to GEO and LEO orbits, delivering broad coverage, low latency and unmatched resilience. We also offer multi-band flexibility across both Ku and Ka bands and solutions tailored for both narrow-body and wide-body aircraft. Our flexible commercial models further strengthen our value proposition. All of this is underpinned by ongoing investments in our global network, enhancing the passenger experience down to the seat level and expanding our footprint globally to meet rising demand. While competition from LEO-only providers remains very strong, the market is large and diverse enough to support multiplayers offering solutions tailored to the specific needs of airlines. In Q3, our ESA multi-orbit solution was selected by new airline customers across Latin America and Asia Pacific, spanning both narrow-body and wide-body fleets. Today, it is flying on over 300 aircraft and has received consistently positive feedback from customers and analysts. In total, 16 airlines have committed to deploy our ESA across 1,000 aircraft globally, underscoring the growing momentum behind our offering. We also continue to make great progress with our open orbit solutions, including wins with Thai Airways, Turkish Airlines and Uzbekistan Airways earlier this year. Our maritime business remains solid, fueled by strong demand from both customers such as MSC, Princess and Virgin. Our leadership in ocean ships and gate segment is powered by our end-to-end multi-orbit connectivity anchored by our managed MEO network that enhances the onboard passenger experience. In Q3, we secured renewals from multiple major cruise lines, reinforcing the critical role of our solution play in this market. Today, we serve 5 of the 6 leading cruise lines at sea. Additionally, SES completed the largest cruise ship transition of the year, helping a major customer migrate from GEO to SES Cruise mPOWERED service. With SES Cruise mPOWERED, we're redefining the onboard experience. Our real-time network optimization dynamically synchronizes space and ground systems across multiple orbits, enabling the cruise operators to deliver consistent, high-quality connectivity at all times. Further to the cruises, SES is supporting over 14,000 vessels on the Flex Maritime global network exclusively through our major solution partners, serving commercial shipping, oil and gas and fishing vessels. While our fixed segment continues to face competitive pressures from NGSO players, we remain focused on offering differentiated solutions to our clients. We're doing this by leveraging the strength of our multi-orbit GEO, MEO, LEO offerings, along with robust cell backhaul and trunking services. These capabilities are supported by our extensive ground infrastructure, which enables us to deliver reliable connectivity across these diverse geographies. We're serving 8 of the world's top 10 mobile network operators and a multiple of energy companies across the world. For example, we support Orange across Africa with services in Mali and Burkina Faso and most recently expanding into Liberia. And additionally, in Q3, we secured business with major mobile network operators in the Americas and expanded our digital inclusion services in Brazil with Telebras. This further strengthens our position in that region. As you can see, we are creating stronger, more agile, more competitive SES, one built on lead across orbits, across markets and across technologies. Let's turn to Page #10. This page highlights our synergy progress and integration efforts. I'm pleased to report that the integration is progressing well. In the first 90 days, we have successfully established our new organization from the leadership team through every level of the company. We have also implemented our new operating model, which defines how we manage the business on a day-to-day basis and ensures alignment across the combined organization. I'm proud to share that we have launched our new SES brand, a new purpose that capture the essence of who we are, space to make a difference and a new tagline, Solve, Empower, Soar. Our synergy delivery plan is strong, and we're crystallizing synergies more rapidly. What we have communicated is that we expect to deliver synergies with a total net present value of EUR 2.4 billion, representing an annual run rate of approximately EUR 370 million, with 70% of these efficiencies expected to be executed within 3 years. We're moving fast and delivering ahead of plan. We're moving fast and delivering ahead of our plan on our synergy commitments as we began identifying and capturing synergy opportunities across multiple areas. Our annual run rate of OpEx synergies of EUR 210 million are being fast tracked. We have already executed key labor and nonlabor synergies, including overlapping contracts, office footprint consolidation, third-party capacity optimization, procurement savings, IT consolidations and license optimization with longing IT systems such as ERP and CRMs are all progressing to plan. We're approaching this process with the utmost care and respect, ensuring we support our people while aligning our workforce to the needs of the new organization. On the CapEx side, we're fast tracking the annual run rate of EUR 160 million savings through smarter asset use, non-replacement of certain satellites and the rationalization of networks and ground infrastructure. These efficiencies will flow through in 2026 and 2027, reflecting our determination to deliver what we promised. We're executing with discipline and precision. And with our financial year 2025 results, we plan to share further details on our synergy progress. With this, I'd like to hand over to our CFO, Lisa, who will share with you more details of our financial performance. Elisabeth Pataki: Thank you, Adel. Good morning, everyone. Before I begin my remarks on the financial performance of the combined company, I would like to inform you that in the Q3 results press release available on our company website, you will also find supplementary financial information with like-for-like revenue per vertical and adjusted EBITDA at the group level as if the Intelsat transaction had consolidated from the 1st of January 2024. This additional disclosure should help you better understand the underlying performance of the combined business and complements your financial modeling going forward. As usual, our Investor Relations team is available to help you with any questions that may arise after this earnings call. Now let's turn to Page 12 for our financial highlights. I will start with our financial performance for Q3 and 9 months, which is shown throughout this presentation on a reported basis with Intelsat fully consolidated from 17th of July 2025. This is equal to about 10 weeks of Intelsat performance, which we did not have in the prior comparative period. Revenue for SES was EUR 769 million in Q3 2025 and EUR 1.747 billion for the first 9 months of 2025, showing growth of 19.8% compared to the same period last year at constant foreign exchange rates. On a like-for-like basis, 9 months revenue was down 1.8% year-over-year, with strong growth in aviation and government outpacing lower revenues in fixed in which we are navigating a challenging competitive environment and media, which declined as expected due to structural headwinds and the effects of our Brazilian customer bankruptcy. On a year-to-date 9-month basis, our revenue was negatively impacted by EUR 52 million, of which EUR 17 million were attributable to the weaker U.S. dollar and the remainder to intercompany eliminations and alignment to IFRS accounting rules. Q3 2025 adjusted EBITDA was EUR 328 million and EUR 849 million for the first 9 months of 2025, showing growth of 11% year-over-year, driven by volume with margins of 42.7% for Q3 and 48.6% for 9 months. In the first 9 months, our adjusted EBITDA was negatively impacted by EUR 10 million attributable to the weaker U.S. dollar. On a like-for-like basis, 9 months adjusted EBITDA was down 10.2% year-over-year, with near-term margin headwinds driven by profitability diluting equipment sales from the electronically steered antenna, ESA installations in our aviation business in combination with some timing differences between onboarding and decommissioning airline customers. The Intelsat IS-33e anomaly, which occurred in October 2024, which required higher third-party capacity; and finally, mix and timing impacts on government revenue. In addition, as Adel mentioned, we have introduced more discipline to pass on tactical opportunities that are outside of our green zones and not margin accretive to our business. Moving now to Page 13. I would like to discuss in more detail the top line financial performance of our vertical segments. Media's 9-month revenue was EUR 686 million and accounted for close to 40% of group revenue. Total revenue remained stable year-over-year as inorganic growth effectively offset anticipated segment contraction in the media business. On a like-for-like basis, Media was down low teens year-over-year, driven by structural declines with capacity optimization in mature markets, standard definition channel switch-offs and the full Q2 and Q3 impact of a Brazilian customer bankruptcy. Media continues to operate as a highly accretive cash-generating business for SES. Year-to-date, we have signed EUR 440 million in long-term renewals spanning well into the next decade and new business reiterating customer confidence. Year-to-date, the media business gross backlog stands at EUR 3.3 billion. SES' media business serves close to 2.3 billion viewers worldwide, ensuring sustained reach and future revenue visibility, underpinning the cash-generative nature of this business. While the world's TV viewing trends are changing and are in structural decline, we expect the curve to flatten as free-to-air, free-to-view and sports and events become more prominent and remote regions continue receiving TV access most efficiently via satellite. Now moving to Page 14. Our Networks business comprises around 60% of total group revenues for the first 9 months of 2025. Networks revenue increased 36% year-over-year, driven by growth in government and aviation. The same trend is also valid on a like-for-like basis with growth in networks driven by the same 2 segments. Government in the first 9 months of 2025 has seen strong demand and growth in both the U.S. and global markets with revenues of EUR 491 million for the first 9 months of 2025, a 33% growth year-over-year. On a like-for-like basis, government is also growing double digits despite the timing impacts that Adel mentioned. Growth was driven by demand of European and global governments, completion of project milestones in the period and managed services in the U.S. We expect this vertical to drive continued growth as we see increased demand for our secure multi-orbit resilient and sovereign solutions. Amid the ongoing geopolitical shifts and rising global tensions, we are seeing governments prioritizing sovereign capabilities and robust communications infrastructure, particularly in Europe, where defense spending is increasing. SES is well positioned to meet these needs with our proven multi-orbit solutions and growing track record of trusted partnerships of serving the European and U.S. governments as well as allied governments. Our Aviation business continues to be a strong growth business for the company, now at a bigger scale, thanks to the Intelsat acquisition, supporting over 3,000 aircraft tails. The first 9 months revenue stood at EUR 223 million, showing 112% growth year-over-year with continued momentum in securing global airline customers. On a like-for-like basis, this segment has seen a double-digit growth year-over-year, thanks to increased commercial traction around our multi-orbit ESA antennas. This strong commercial momentum and these new installs are a key driver for future revenue growth and showcase our strong value proposition in a competitive market. The Fixed & Maritime business achieved EUR 339 million in the first 9 months, showing 13% growth year-over-year. On a like-for-like basis, revenue was declining year-over-year due to the competitive headwinds, primarily in our fixed data business, in combination with our rationalization and prioritization of capacity to our growth segment. We continue to hold our footing in our maritime business, where demand for MEO capacity remains high. Finally, Networks combined gross backlog stood at EUR 3.8 billion, having secured close to EUR 1 billion of new business and renewals this quarter with a strong aviation and government pipeline. Our strong growth backlog and robust pipeline support our forecast and future growth momentum, reflecting the market's demand for our strategy and multi-orbit solutions as being essential to meeting evolving connectivity needs. Now let's turn to Page 15 to share with you a more detailed view of our capital allocation priorities and our debt maturity profile as of the 30th of September 2025. Our combined like-for-like adjusted net debt to adjusted EBITDA ratio stood at 3.7x after closing the Intelsat transaction. This includes cash and cash equivalents of EUR 965 million, excluding EUR 266 million of restricted cash related to the SES-led consortium's involvement in the IRIS2 program. We remain firmly committed to deleveraging and meeting our near-term debt obligations. Our debt maturity profile is well distributed. The current debt portfolio carries a weighted average cost of 3.9% with 84% of SES debt at fixed interest rates. Furthermore, the weighted average maturity of our debt facilities stands at approximately 5 years, providing a solid foundation for financial flexibility and long-term planning. In terms of capital allocation priorities, our objective is to pay down debt to at least 3.0x adjusted net leverage. With existing liquidity and our undrawn committed facilities, SES is well positioned to meet near-term obligations, including the debt falling due in Q4 2025. We continue to make solid progress in our insurance settlement discussions related to the first mPOWER satellites. To date, we have successfully collected approximately USD 87 million. We will provide further updates as settlement negotiations progress. We continue to invest in innovation with discipline to drive sustainable growth with a focus on new space technologies and transforming our approach to capital deployment. This shift aims to reduce reliance on large-scale CapEx cycles. Capital expenditures in the first 9 months totaled EUR 335 million, primarily reflecting milestone achievements in the mPOWER satellite program. With respect to shareholder returns, SES continues to be sector leading. We paid the interim 2025 dividend of EUR 0.25 per A share and EUR 0.10 per B share on the 16th of October. Subject to shareholder approval, this is expected to be followed by a final FY '25 dividend of at least EUR 0.25 per A share and EUR 0.10 per B share to be paid to shareholders in April 2026. Once the company meets its net leverage target, at least a majority of future exceptional cash flows of the combined company will be prioritized for shareholder returns. SES remains focused on improving its financial metrics. Our priority is deleveraging while selectively investing in growth where returns are clear and accretive. Capital allocation remains disciplined. Slide 16 outlines our disciplined financial management strategy, underscoring our commitment to driving long-term value for shareholders. We are focused on the seamless integration of Intelsat, implementing best-in-class processes, policies and combining enterprise resource planning systems while maintaining operational excellence. As part of the acquisition, we are implementing SEC compliance measures to align with regulatory requirements supporting the combined entities' governance framework. We continue to exercise prudent capital deployment with strict capital discipline, aligning investments with our strategic priorities and applying strong business case rigor. Finally, cash flow remains a central focus of our value creation strategy. We are actively implementing initiatives to enhance cash generation across the business from disciplined capital allocation to optimizing working capital. Cost control and optimization remain top priorities, managing discretionary spend, leveraging automation and driving synergies. We are committed to a strong balance sheet and healthy cash flows, supported by targeted working capital initiatives and disciplined investments to drive sustainable growth. Lastly, I would like to thank all of our teams at SES for their hard work and precision through a complex integration. With this, I'd like to hand it back to Adel for his closing remarks. Adel Al-Saleh: Thank you, Lisa. On Page 18, I'd like to set out our company's full year 2025 outlook on a reported basis with Intelsat fully consolidated from 17th of July 2025. Based on our solid first 9 months results and at an assumed average euro versus U.S. dollar exchange of $1.12 for the full year 2025, we expect the following: revenue to be in the range of EUR 2.6 billion to EUR 2.7 billion, adjusted EBITDA to be in the range of EUR 1.17 billion to EUR 1.21 billion. Capital expenditures to be in the range of EUR 600 million to EUR 700 million. This is a -- this is reduced from our previous communicated 2025 CapEx guidance of around EUR 1 billion for the combined company on a full 12-month basis, and it's comparable to around EUR 800 million to EUR 900 million on a reported basis. Also in light of FCC's recent press release with regards to the C-band process, it's worth adding that we're now with our combined asset base even better positioned to continue working collaboratively with the commission and our customers throughout the upper C-band process. The draft notice of proposed rulemaking, also known as NPRM, will see comments on a range of options, including auctioning up to 180 megahertz of the upper spectrum and is scheduled to vote at the next open commission meeting on 20th of November. The One Big Beautiful Bill requires the FCC to complete a system of competitive bidding for at least 100 megahertz in the upper C-band no later than July 2025. I would like to conclude our presentation today with Page #19, highlighting some of the key takeaways. This year, 2025 is very much about laying the foundation for the new company. It's also a period of transformation and transition of the 2 companies with quite different systems and scopes coming together. 2025 is all about getting the basics right. Next year, integration activities will continue as we tackle enterprise systems and processes, focus on optimizing our structure, driving operational efficiency and excellence and of course, delivering the synergies. Our near-term priorities are clear: integrate the new SES, execute synergies, delever, focus on innovation and multi-orbit solutions, operational excellence and disciplined capital allocation. Our key management objective remains to drive profitable growth. To achieve this goal, we're rationalizing our portfolio and allocating capacity and resources in a disciplined manner into businesses that are aligned with SES' strategy and provide us with the best returns. We are on an exciting journey building a leader in space. As we move forward together, we'll provide greater clarity and insight into the combined potential of the new SES with our full year 2025 results. With this, we're now ready to take your questions. Operator, please open up the floor. Operator: [Operator Instructions] The first question comes from Paul Sidney from Berenberg. Paul Sidney: I had 2 questions, please. Firstly, just following up on the Q3 EBITDA headwind remarks that you made during the presentation. Could you expand on how profitability expectations for the second half of this year have changed since the Q2 results compared to previous stand-alone expectations of SES and Intelsat and maybe try and quantify these headwinds for us, please? And then secondly, looking beyond 2025 with reference to the new '25 guidance, are the medium-term targets for the combined revenue growth and EBITDA growth for the targets, are they still relevant, i.e., is SES just resetting to a lower 2025 starting point, but when the synergies come through, we can expect those growth rates sent to -- still be very much relevant for the business? Elisabeth Pataki: All right. Yes. Thanks, Paul, for the question. So let me first start off then with talking a little bit more about Q3 EBITDA and then also what to expect going into Q4. So if we think about what the combined company looks like, we had always expected that the Intelsat combination would have a lower EBITDA performance in the second half. And that's really attributed to some of the things that we had already known. So the first is in the aviation business, the electronically steered antennas, they're effectively at cost. We're installing a significant number of those antennas we started in Q3. So you can almost expect that we didn't have that at this time last year. They're all being installed in Q3, and then that ramp is even going to occur even further in Q4. So those are at cost. And then when you start to see those aircraft go into service, that's when you're going to see more meaningful EBITDA performance out of the aviation group, which you can expect then into 2026. But in terms of aviation and how to think about that, you are going to see the headwinds going into Q4. The second thing is on the Intelsat side, the IS-33 satellite failure did occur at this exact same time last year. So while the company did a great job retaining almost 90% of their customers, they did so through the use of third-party capacity. So you're seeing a lot of that headwind occur throughout the second half as well. And then just to kind of follow up on what Adel had mentioned with respect to our government. The U.S. government is a very good profitable customer for us. But with timing delays, we are seeing certain awards and renewals push out into 2026. We may see a little bit of pickup in Q4 with the U.S. government, but it really depends a little bit about when the government shutdown resolve itself. So those are kind of the major things to think about in terms of Q3, Q4. On the exchange rate topic, we're kind of planning with an exchange rate of $1.16 when you think about the fourth quarter. Obviously, we've had quite a bit of headwind with the weakened U.S. dollar. The other thing, I think, just kind of when we look at how we're putting these 2 companies together, we do have U.S. GAAP to IFRS conversions. That has started to filter through some of the results. I do want to make sure that you're all cautioned that the guidance that we've given and the results to date do not include the effects of purchase price accounting. So we'll be going through those -- that activity throughout the fourth quarter. We hope to have the majority of those impacts included in the results for the full year. We've got intercompany eliminations. We did report on that in the F-4 filings. They're more or less holding constant with what we had expected. But that just gives you a little bit of a flavor on Q3. On your second question related to the medium-term targets, I'll start off and then Adel can fill in. We're in the middle right now of going through our planning cycle. We're about -- gosh, we're almost 4 months into this acquisition. We've spent a lot of our initial time focused on synergies, and that's been related to a lot of headcount actions that we've had to take. We've been combining the 2 plants. We have been converting accounting standards. So we're putting those plans together right now, and we're looking forward to communicating as early as we can at the start of 2026 on the updated midterm guidance. Adel Al-Saleh: Thank you, Lisa. Just a little bit more on beyond 2025. There's nothing today that would change our perspective on this business going forward. The portfolio is well balanced. We have growth businesses. We have some businesses that do have structural decline, but generate a lot of cash, and we have a business that is facing quite significant competition. But all of that is known to us. This is -- none of it is new, right? We all knew that. We understood it. Our portfolio was very similar in a stand-alone basis. So there is nothing on a go-forward basis that would be different from our earlier assumptions on how the profile -- growth profile of the business should be. I hope that answers Paul your questions. Paul Sidney: Yes, obviously, it does. So we're looking at the longer we look forward, shape of how the business progresses hasn't changed, but clearly some headwinds that we brought into 2025. Is that a good summary? Adel Al-Saleh: That's a good summar. Elisabeth Pataki: Yes, that's a good summary. Operator: The next question comes from Terence Tsui from Morgan Stanley. Terence Tsui: I just wanted to explore the previous topic in a bit more detail just around the financial performance. So when I look at the guidance published today, it implies a pro forma EBITDA, i.e., if SES owned Intelsat since the start of 2025 of around EUR 1.5 billion of 2025 compared to EBITDA of EUR 1.8 billion delivered in 2024. Is the deterioration of EUR 300 million all due to these near-term headwinds that you just mentioned in your previous answer? Or is there something else going on? And then I just wanted to ask briefly around IRIS2. A quick update on that topic would be great, especially as we're nearing the 1-year anniversary. Are you happy with the process so far? And given the geopolitical tensions, do you see any scope for adjustments to the existing agreement? Elisabeth Pataki: Yes, sure. Thanks for the question. So I'll start off with the guidance and then your second question on IRIS2, Adel has a lot more of what's happening there. So on the guidance side, on a like-for-like basis, you're right that at the upper end of that guide would be EUR 1.5 billion on a like-for-like basis for adjusted EBITDA. That is down from the prior year. If we look at what the stand-alone guidance was, the guidance that legacy Intelsat had given out into the market did indicate that there would be close to a double-digit decline in EBITDA. So we're starting from that basis. We did discuss the headwinds, so I don't want to repeat those. On the government side, it is largely timing. The one thing I would just add to the commentary that we gave in the last answer is related to the fixed data business. So that business is more challenged than what we had expected. But as we did say in our prepared remarks, we are really critiquing that business. We're prioritizing where we're going to take deals, and we're starting to incorporate a lot more rigor into the bid process that we have here at the new SES. Adel Al-Saleh: And the same dynamics apply, right, so to the full year guidance. So there's nothing else new in there besides what we shared with you, right? So it just works itself through to the end of the year. Also intercompany eliminations and exchange rate changes and all those things are things that some of them we knew very, very well, and they're within the boundaries kind of where we thought they would be. So that's all in terms of that, Terence. And then on IRIS2, look, the program is in full swing. I actually spent a day yesterday at the Commission -- European Commission, met with the Commissioner of Defense, Space & Defense, and there were a forum that talks about European Commission's determination to build European sovereignty and capabilities. And IRIS2 is right at the core of that. because there is huge commitment behind it. We're working through all of the engineering activities that are required to get us now to one to make the final decision, how do we proceed? Are we able to meet the specifications, the timing, the budgets and all that stuff as planned, right? So that's progressing very, very well. And the commitment from Europe remains very, very strong to make sure that, that program continues going forward. So that's -- I think that's the update. Is that -- Terence, is that helpful? Operator: The next question comes from Ben Rickett from New Street Research. Ben Rickett: I have 2, please. Firstly, so leverage is obviously a bit higher than you'd initially expected following the transaction close. I just wanted to check, are you still committed to staying investment grade? And what sort of options could you look at if you didn't delever naturally as quickly as you had expected? And then second question, just around the C-band process. And specifically, I was interested in what tax rate you're expecting to pay on any incentive proceeds from the C-band and the extent to which you can use the tax losses? Elisabeth Pataki: All right. Yes. So on the leverage, so we're very committed to delevering. That is our -- one of our primary pillars of our financial policy. So we're very committed to that. Again, as we're kind of turning through the process of putting together our 2026 plan, which we will share at the beginning of next year, I'll be able to give more concrete guidance on how we're thinking about the debt maturity profile and deleveraging. Right now, if all things are unchanged, we will pay back what's due in Q4 of 2025 with existing cash. So let's table more of that discussion until we get through the 2026 planning cycle. With respect to the C-band process, Adel, do you want to give an update on that? Adel Al-Saleh: Yes. And just to add on that one, clearly, as a company and as always, we've always had other measures that we always look at, right, and make sure that we have backup to the backup. We're a space company. So we're used to having backup to the backup to the backup. Those things we don't talk -- we don't disclose them publicly, but we're very confident of where we are, right? So as Lisa said, right, there's good confidence in our liquidity and what we'll be able to do going forward. And it's a priority. Delevering is a priority for us for sure. Look, on C-band, look, good news, right? I mean, overall, we're working hard with our clients, number one, make sure that we have solutions for our clients as we progress through the clearings. And clearly, the ambition of FCC is very, very clear. Now regarding what the tax rate, I'm going to let the IR team get with you then just individually and walk through it. But you got to keep in mind, we have a lot of knows, tax knows and a lot of tax assets that we have in this company that is hugely valuable for us as a company. But let's not speculate and talk about them here publicly. We can follow up with any analysts that would like to get a better understanding of what the tax rate may look like. Ben Rickett: Okay. And just -- sorry, just to follow up on the first question. So I mean, you're not necessarily committed to remaining investment grade. Elisabeth Pataki: We're committed to delevering, and we're committed to -- our objective is to remain consistent with the financial policy that we have laid out. But again, we have to work through the process of going through our 2026 plan. We are -- there's a lot of initiatives that we also have on the table that we're actively working. So for example, working capital management, thinking through rationalization of our existing CapEx profile, so that we can funnel the money that we have allocated over to lower cost new space initiatives that we think are going to help propel our growth going into the future. So it's really hard to give you a concrete answer on anything with respect to how we're trying to concretely get to numbers in 2026 at this point in time, but that's just to give you a little bit of flavor of what we're doing. Adel Al-Saleh: Yes. And Lisa, just to add to that, Ben. I mean, I know you want just a black and white answer. So the fact that we're focused on delevering, that tells you a lot. There are many other factors that we don't control of what the credit agencies do. So very hard for us to say how do we get there, right? But we are exactly on the same plan we were before. We got to get to the 3.0 and below, and that's what we're working towards, right? And we -- as Lisa explained it and I explained it, there are multiple levers that we have in the company in addition to operational rigor and operational cash generation that this company is known for. Operator: The next question comes from Roshan Ranjit from Deutsche Bank. Roshan Ranjit: I've got 3 questions, please, and I think broadly touching on the earlier topics. Adel, you mentioned the ESA revenues, and I appreciate that whilst they are lumpy, we have seen a slowdown in the, I guess, aviation growth rate this quarter on a like-for-like basis versus Q2. Now this is in the context of, I guess, capacity ramping up on mPOWER 7 and 8. So are you seeing new contracts coming through as that capacity is ramping up? And I guess, 9 and 10 has been launched. How should we expect the ramp-up of that capacity and I guess, contracts coming through in the coming quarters? Secondly, and I guess, more on the margin side, the third-party capacity being used because of IS-33. When can we expect that third-party capacity to be moved on to essentially on net? When will that all wash out? And just quickly on the CapEx, you saw a material reduction in the '25 outlook. Is that coming from savings? Or is that a timing effect and we should expect kind of that delta to be spread out over the next couple of years? Adel Al-Saleh: Roshan, just the last question was about CapEx, right? Why is the CapEx reduced, right? Roshan Ranjit: Exactly. If it's a push out or if it's the driver of the synergies. Adel Al-Saleh: Yes, very good. Look, let me start, and then Lisa will complement as we go forward. Look, first of all, on a like-for-like basis, our aero business is growing double digit. So it has not slowed down, right? And it's significant double-digit growth. And actually, we will see that ramp in revenue driven by the equipment continue in the fourth quarter. And as Lisa explained, I mean, this is all leading to then services revenue that is going to be accelerating going forward. And this was in our press release. So in our press release, you see that the third quarter like-for-like growth in aviation is 36.3% growth year-on-year, right? So it has not slowed down. It's accelerated actually this year. Now that will slow down in the beginning of the year despite the fact we do have 1,000 tails orders to transition to the terminals, but they are spread, right? In aviation, it's a quite delicate planning process, right, to getting planes out of service and making sure we do them in the maintenance windows, et cetera. But it will be spread more than what it is concentrated this year because the ramp-up really happened in third quarter. There was a little bit in the beginning of first half of the year. Fourth quarter, as Lisa said, is a major ramp-up, especially with American with them really eager to get to their Wi-Fi offerings in the beginning of next year. Now remember, your question related to 9 and 10 coming into service, today, it's very limited usage of MEO in the aero business. In the future, we expect to be a game changer when we put MEO in air. I mean there's a little bit of MEO usage in one of the Middle East, Asia Pacific airlines. We will be announcing that quite soon. They're going live very, very quickly, and they love it. It's a game changer. It's no big difference between a LEO or MEO on an airplane. And by the way, they're using standard antennas, right? So not even an optimized antenna for MEO, which our goal is to have an optimized antenna that is easy to install, that's cheaper than what we have today on airlines as our MEO capabilities ramp. Now on the 9 and 10 capacity, which benefits government benefits our maritime business, that is expected to go into use by beginning of 2026. Those 2 satellites have been launched. They're making their way to their orbits. There is some in orbit testing that needs to be done, et cetera. So beginning of 2026, that's where the capacity comes on board. And then we have 3 other satellites that we'll be launching in 2026 to get us to 3x of the capacity we have, right? And that capacity comes on to service in 2027. So that's all progressing. And look, we -- when we have all these healthy satellites up, we will have a lot of other options to consider how do we configure that constellation because we will have a lot more flexibility to be able to drive that mPOWER constellation, which continues to be oversubscribed today. Look, on that third-party capacity for IS-33e. So first of all, the Intelsat team did a great job securing customers, right? Because those customers have long-term contracts and long longevity in our business. It was important to secure them despite the fact that your cost dramatically goes up. We are working through figuring out how much of that capacity we can move over to on fleet. Our problem, of course, is it's not like we have dramatically excess capacity everywhere, right? That's our biggest challenge, right? We're quite highly utilized, including our GEO satellites. So we're working through that. And that's the thing that's going to be tough. I mean, Lisa talked about this discipline because we're going to be rationalizing what's the best return for our shareholders in using that capacity. And it means trade-ups. It's not easy as we have the -- if we had capacity, we have moved that already, right? Everything that we could have moved will move. Now it's about rationalizing what's the better return for the company, when do we do it, how do we not lose trust with our customers as we transition some of that capacity. But that's all going to happen during -- it's happening. And during 2026, as other contracts come to an end, we'll be able to rationalize it. I have no doubt we will manage that throughout 2026, beginning of 2027. And look, then the final question on reduction of 2025 CapEx. Look, this is the benefit. A big part of it is the benefit of this integrated company. Now for example, we decided we're not going to go for some of the satellite replacements. We're able to move some of the satellites to pick up some of the loads in areas where it was highly utilized. So the result of that is not just delays of CapEx, it's actually rationalizing. There were some delays, but it's not material if you look at the overall CapEx envelope. And part of it was not only saying, well, there is an overlap. Part of it was our decision to say, we're not going to do that. It doesn't have the return that we would like to do. Our teams would like to do it, but we said, look, let's rationalize the business case and came back to the conclusion that is not a good capital deployment approach for us. So that's how it kind of come together for now. Hopefully, we answered your question. Lisa, anything to add to that? Elisabeth Pataki: No. Maybe the only thing just to add is we're continuing to look at the CapEx. We've already taken decisions to stop some things. So I think we're in a good shape with where we're at with our integration process. Roshan Ranjit: That's great. And sorry, I should have clarified. When I said slowdown, I meant slowdown versus the growth rate in Q2. So as you said, 36% growth aviation in Q3 like-for-like. But my point was it was a slight slowdown versus the 45% in Q2 despite the ESA terminals installs. Adel Al-Saleh: So, very good comment. I mean, look, part of it also is we mentioned it is we did lose some airlines, right? So we're winning and we're losing and the balance is still quite good in our favor, right? So that is just part of the offboarding and onboarding timing differences and all that. That's why you see those dynamics change a little bit, but still quite healthy growth, right, if you look at it. Operator: The next question comes from Nick Dempsey from Barclays. Nick Dempsey: I've got 3 left. So first of all, just on that -- coming back to that midterm guidance point, will you give us numerical midterm guidance for revenue and adjusted EBITDA growth in February at your full year '24 results? The first question. Second question, am I right in calculating that at the midpoint of your adjusted EBITDA guidance, you will be -- you're roughly on track to be at about 4.0x net debt EBITDA at the end of this year, including leases and including only 50% of the hybrids and perpetuals the way you're showing it today? And the third question, inside that combined constant FX growth of minus 19.5% for fixed and maritime, did you see cruise revenues showing positive year-on-year growth? You've got more capacity coming through from mPOWER there's a demand in cruise. So did cruise grow within that implying the rest was down quite a lot? Elisabeth Pataki: Yes. So I'll take the first question on the midterm guidance. So at the start of next year, we'll certainly give quantitative guidance for 2026. And I think it's very fair to assume that we'll give ranges of the updated midterm at that point. In terms of the net leverage and how we see that towards the end of the year, again, a lot of it depends on still working through a little bit of the planning, but also from a cash flow perspective, there's things that we can do. So it's hard for me to speculate right now for you where we're going to land on net leverage by the end of this particular year. But again, we're doing everything that we can to control cash going out the door, accelerate cash payments coming in, all the working capital things that you would expect. Adel Al-Saleh: And paying down debt, right? We're going to be paying down significant amount in fourth quarter. So it's too early, Nick, to look at it. Look, let me take the last question and then see if we can -- if we have answered it. So look, cruise continues to be quite stable for us. I mean there's some noise in the numbers in cruise because you remember, we had periodic in the revenue both in 2023 and 2024. So the compares are -- 2024 and 2025, I have to say, right? So compares are a little bit different. But on a stable basis, if you look at our ships and what we have and who we serve, that is quite stable. I mean there was a big transition for a very large customer that just came across, right, and put a bunch of stuff. We have new vessels that we're winning. When you look at the build profile of the vessels, we continue to win much more than our fair share of the new vessels. So it just proves you that customers want to have multi-orbit on the ships, right? They have LEO capable solutions. Starlink is a very, very strong competitor there. But our value proposition continues to resonate with these guys, right? And they continue to extend contracts with us. As I said, 2 major cruise lines just extended contracts with us just last quarter going forward. So it remains a very stable business. Look, the problem we have, Nick, and I've talked about this multiple times, if I can give more gigabytes to our crew guys, they will consume it. They will consume, right? So we're eagerly waiting for 2026. And when we get the additional capacity, we're looking at can we optimize the network even further to be able to get to because it's not lack of demand. It is really our optimization of where the capacity is being used. And as I said, we have a big government customer base across the world that want a lot of that capacity and have booked a lot of that MEO capacity. And it's a tricky dribble for us, right? How do you optimize it without losing customer confidence and trust because we are a trusted partner. when we provide a solution to our customers, they can count on us, right? So it's not so easy for us to just move stuff around. But yes, it remains quite stable and the growth is going to come when we give them more capacity. Is that okay, Nick? Did that answer your question? Operator: The next question comes from Aleksander Peterc from Bernstein. Aleksander Peterc: I have a few. The first one will be on the actual momentum when I look at your year-on-year margin evolution in EBITDA for the pro forma entity. I see a 3% decline in Q1, Q2 and then that deepens to 7% in Q3. And at guidance midpoint, your implied Q4 is down 10.5 percentage points on the margin front. So I'd just like to understand if I understand correctly that you're going to be at roughly 38% EBITDA margin in the fourth quarter. And I'd like to understand if this is the worst point of the year and then momentum will improve from here? I mean why should we assume that this negative trend should stop now? And I think it would be helpful if you could quantify those one-off in the current quarter, the things that you outlined on Slide 12, all of those negative elements, how much are they contributing to this margin erosion? And I have a couple of follow-ups as well. Adel Al-Saleh: Lisa, do you want me to start and then you... Elisabeth Pataki: Yes, yes. Go for it. Adel Al-Saleh: Look, so you are right, Aleksander, you're absolutely right. I mean the headwinds that we talked about, I'm not going to repeat them, right? These are the headwinds that are contributing to that margin impact. They are not forever headwinds, right? So for example, our -- the content of the equipment, there's a large portion -- large content of the revenue is the equipment this year. By the way, not only in aviation, we also have equipment sales that a lot of our customers, big customers are buying the equipment that they need in order to turn up and light up some of the capacity that they bought for us that are already paying for it, but they need the equipment in order to do it. So that is -- it happens to us as it's a forecast for the future profitable revenue basically, right? If you have a lot of equipment, it means that you are getting new customers on board and they are going to be using. And that accelerates in the year, right? So it started ramping up in the first half of the year. It's accelerating in second quarter, third quarter. And fourth quarter will be high volume of that equipment, especially in aviation, plus some of the eliminations that we talked about, et cetera that have an impact. And IS-33e, you have the full impact of IS-33e in the fourth quarter, if you look at it year-on-year, right, when we've had to go and get the third capacity. So that in 2026 is not going to have the same profile. It will come down. That equipment sales will come down. And by the way, again, it's not that we're avoiding equipment sales. We actually like those equipment sales because we're very particular and very disciplined. We don't do equipment sales for the sake of equipment sales. We're doing equipment sales to turn on the volume on very high profitable capacity solutions that the customers are looking for. So that's the -- now I can't -- maybe, Lisa, you can comment. I can't make the math on the call on how many points it is and where do we end up with the margin overall. But you can see -- maybe, Lisa, you can add something to it or... Elisabeth Pataki: Yes. So I think there's a bit of a mix effect happening in the fourth quarter. So if you look on a like-for-like basis, which luckily the fourth quarter is going to be, you're going to have a lot of revenue growth that's coming from 0 to low-margin activities, primarily in aviation, which we just talked about. So the ESA installations, the kits are probably -- if you want to quantify that, it's probably 30% more installs coming in the fourth quarter than what we saw in the third quarter. And then on the government side, a lot of our higher-margin business is pushing out to the right. And that's just mainly due to timing effects that we're seeing on the U.S. side, and that's being supplemented by revenue that's more on the NATO and the European side. We do have some contracts that have a bit of lumpiness as they're percent complete type contracts, and we're seeing some of those material and subcontractors coming into the fourth quarter at very, very low margins. So that's what's driving the revenue growth from Q3 into Q4 because you will see that there's a bit of growth on a pro forma basis. And then on the EBITDA, again, it is largely being driven by the mix effect on the government side and on the ESA terminals. And you can -- if you want to quantify the ESA, you can think about that EUR 6 million to EUR 10 million. Aleksander Peterc: Okay. That's very helpful. So on the basis of what you just said, will we see, therefore, next year, a headwind from lower equipment sales because they're so high in the current year. And if my math is right, you have -- you're flat for revenue year-on-year in the fourth quarter at the midpoint of your guidance. So -- but this includes a lot of equipment sales. So as we go into 2026, you're going to see probably a headwind from that. So will we actually be able to grow next year like-for-like on ops? Adel Al-Saleh: So Alex, you're asking us to build a forecast for next year already, right? Look, we will give full guidance for 2026 and even beyond when we sit down with all of you guys in February, right? But I'd say one thing, right? So clearly, the equipment profile will change, right, both for aviation, but also for the government. It's not means 0 equipment. It will be other contracts we're signing that we're competing for that will drive early revenue driven by equipment and some of them have better margin than others, followed by a high-margin revenue business when we get to the solution and turn on the capacity and deliver the services. But as I said earlier, nothing has changed to date that would change our view of the company going forward. Nothing has changed, right? So therefore, we are prioritizing growth, right? But with a disciplined approach into revenue growth, we're prioritizing profitable growth going forward. And we continue to see the business that way, right? We haven't changed our view on this business despite some of these adjustments that we have to make in 2025 based on what you heard. That's as much as I can say right now without giving you more forward-looking forecast, which will come in February 2026. I apologize, Alex, I can't be more precise, but hopefully, you understand where we are. Aleksander Peterc: Can I just have a quick follow-up on the band. Are you striving towards a higher than 100 megahertz transaction there because that will be obviously your strong interest given that there's no CDRs on anything above 100 megahertz. Can we go to 180? Adel Al-Saleh: Excellent. And now I remember conversations we had with you guys the year before where we talked about 100 and how the CDR plays out. And you -- Alex, you're absolutely right, the CDRs only applies to the first 100 megahertz. Look, it's very clear the FCC wants to do more, right? It's clear, right? I mean you've seen the releases, press releases and we're in the middle of it. I do expect -- all the cards tell you that it will be more than 100 megahertz, but it's very hard to predict. By the way, you don't have to wait that long anymore because it's -- the ruling should come out on the 20th of November, right? So it's about 10 days from now, right, a little bit more 2 weeks from now, right, and so on. So that is really good news for us, right? And for our investors at the end of the day, right? So that's where it is, and we'll see where -- and like I said, given the scale that this company has and the usage we have of the C-band, we are really well positioned, right? And not only well positioned with the FCC and the commission and help them accomplish what they're trying to do, but also with our customers because we have a much bigger scaled network that we can think of solutions that keep the customers and not lose them as we clear that C-band going forward. And that's really good news, Alex, for us. So I will leave it at that, right? And then we'll see the news coming in and we'll all then reflect when we talk to you guys in February. Christian Kern: Operator, we've got time for one final question, which is in the line there. Operator: Yes. The final question comes from Stéphane Beyazian from ODDO BHF. Stéphane Beyazian: I've got 3 follow-ups, if that's possible. Just on the spectrum clearance on which you spent some time recently. Can you tell us a little more on the difficulties, how long that could take? And what could be the associated cost? I understand it's pretty early, but that'd be interesting to have your views on that. Second follow-up on IRIS2. I was just wondering if you think the final plans will be very much in line with the initial plan. I'm talking about the total cost of the project and the capacity, which looks relatively small in total, in my opinion, when it was announced. And finally, just a follow-up on the airline contracts. I was just wondering if there is anything you can share on the economics of the contract from an airline point of view, how your pricing is comparing, for instance, to Starlink? Is the pricing flat per aircraft or quite volume-based? Anything could be interesting there on the economics. Adel Al-Saleh: Very good. Thank you, Stéphane. Look, I don't want to get ahead of myself here on the clearing, right, and how long it will take. You can use the proxy of the prior clearance that we had, right, and so on. But it's not years and years, right? I mean -- and we've recommended a certain approach to FCC that I'm not able to share until FCC decides to publish it themselves where it could be accelerated, right, and moved quite fast. But this is FCC's decision, right? I mean they, at the end, will set the pace on where we do. We know the technical requirements and what it takes to do it. And the more you do, the longer it takes, right, which is not such a bad news. In terms of cost, to be very clear, we expect full cost reimbursement, right? There is no cost that we will have to cover without FCC covering the cost. And of course, we also expect that the rules will be very similar to the prior clearance, i.e., how the financials were set up for the clearance. Look, on the IRIS2, as I said, Stéphane, we're right in the middle of it, right? And we have a budget that we shared with the market in terms of what our investment is going to be. We have not changed it, and that is our ceiling. We're not thinking of going beyond that. The question we're all trying to solve for is, do we still get the return that we require in order to make this an accretive project. And that's what we're working, and it's too early to speculate whether or not. It does not meet our requirements, financial requirements, we will make the right decision for our company and for our shareholders. And our customer knows that, right? They know the importance. And this is a private-public partnership. So everybody understands in clarity what is expected. We know what the customer wants. They know what we need to do in order to be able to deliver. So we need to have a little bit of patience as we get through it. But you got to keep in mind, I mean, we announced -- Stéphane, I didn't major on it this time because I want to major on this discussion in February. We announced our ambitions for the next-generation meeting. I announced it in the Paris show, and we call it meoSphere, which is the next generation of our MEO capabilities that we desperately need as we go forward. IRIS is absolutely part of that. It's the foundation of that meoSphere. It's not another project, right? It's the beginning of the meoSphere, if you will, the core elements of meoSphere as we scale it and we grow it. So for us, we have a very clear plan as a company, how we're going to do meoSphere going forward. And the objective is to make IRIS a component of that, a foundation of it, but it has to meet certain criteria for us to make it work. So that's what we're working on. And by the way, it's important and significant in the future. It's not a rounding error. I'm not talking about the capital investment required. I'm talking about the revenue upside. We want to bring a massive MEO network into airlines. It changes the game of the airlines. The governments desperately want us to keep scaling that MEO network. We want to bring much more capacity into the government business. So it is a significant opportunity for us as we go forward. But we must do it right, in order to have the right capital returns. And look, on the airlines, and we can take it offline. Look, one of the biggest differentiators we have as a business is our flexible business models. We can do it per plane. We can do it per seat. We can do it for usage and the customers love that. That is a differentiator. And we have a very strict guidance on how we do the mechanics and how does the business case work, et cetera. But it's very flexible for the customer adoption. So customers -- some customers want to pay for investment upfront. Others want to recoup it over time, right? And et cetera. So each business model is adapted to what the customer needs are and as they adopt the Wi-Fi solution on the plane, which, as I said, makes it differentiating from our competition. Stéphane Beyazian: Interesting. And if I can just follow -- can you hear me? Christian Kern: Yes, we can, Stéphane. Stéphane Beyazian: Yes. And just to follow up on that, in general, in the recent contract, the aircraft prefer pricing per seat, per usage or per aircraft in general. Adel Al-Saleh: It varies, Stéphane. It's interestingly, it varies. Customers who have experience with Wi-Fi and have enough capital capability to do it, they want to pay a lot of things upfront. Customers who are experimenting and rolling out for the first time, they want to see it based on passenger usage. And for us, it works, right? I mean both -- all of these variations, they work for us and so on. So it really is different, and it's not one dominating versus the other. Operator: There are no more questions at this time, sorry. So I hand the conference back to Christian Kern for any closing remarks. Christian Kern: Thank you so much, Gaya, and really thank you to everyone joining this call. I hope you found these answers helpful and to assess the Q3, 9-month results. Any follow-up questions, please contact Investor Relations at any time. We're here to help. Thank you so much, and have a good day. Adel Al-Saleh: Thank you, everybody. Operator: Thanks for participating in today's call. You may now disconnect.
Robin John Harries: Good morning, everyone, and welcome to our Q3 earnings call. I'm very pleased with the development of our last quarter and with the opportunities ahead of us both in mobile and with waipu.tv. In mobile, we see strong opportunities for efficient customer growth through optimized marketing mix, through optimized web shops, through a reduction in churn and through the acquisition of mobilezone. And with waipu.tv we also believe that there is huge potential for further customer growth and even more profitability. I'm very excited about the final sprint of The Year and an initiative-rich '26, which will mark our transformation into an AI-first telco. There's a lot to do, and we are on it and looking forward to it. I would like to thank our entire team for their hard work and their courage to discover new paths. I'm truly enjoying this. And I'm -- and we are just getting started. I also want to thank our CFO, Ingo Arnold, working with him is a real pleasure. We have rolled up our sleeves and he has been a tremendous support. Let's dive into the presentation and our key messages. We can confirm our '25 guidance. We are on track. We can show strong key financials. Our most important postpaid and TV service revenues are growing and our adjusted EBITDA grew nicely 1.6% for the first 9 months and for the last quarter, even 4%, Waipu.tv IPTV has been a driver in our EBITDA, contributes nicely. It's a fantastic product, not only growing in terms of customers but also getting more and more profitable. Our free cash flow in the first 9 months is growing nicely with 2.8%. And yes, so we are on track in Q3, impacted by the communicated tax one-off, but fully on track. We are also very pleased with our customer growth. Postpaid net adds even exceeded our expectations. Waipu.tv growth recovers, and we are here on a strong path, and we will continue. freenet TV is declining, but this was also expected. We are focusing on waipu.tv by continuing to monetize our user base at freenet TV. We can confirm our '25 guidance. And when you look into our strategic initiatives in the Mobile segment for our organic growth, we are focusing on 3 pillars. It's optimization of our marketing mix and optimization of our web shops and reducing churn. In terms of marketing mix, we are shifting budgets. We look at the return on ad spend. We don't do just pure brand marketing. We always connect it with direct performance impact, clear messages. And yes, so we improved the transparency of our campaigns. We improved the reporting. We really put the money where we see a direct impact. Conversion rates, I mentioned it last time, the conversion rates on our web shops, they are not there yet where we want to have them. They're not great yet, but we are getting better and better, and we see strong improvements in the last quarter. The page speed improved drastically. We have a better user experience. We create kind of urgencies on our website. All of this helps. And there's still a lot of stuff to do, but we can already see that it's working. And the third pillar is that we are working on churn reduction. If you look at the top 2 reasons why users change their mobile provider, it's either they get a better offer somewhere or because they are not happy about the network connection. So this does not make sense when you look at freenet because we are really offering great deals. We are able to match the most aggressive offers, and we provide all networks. So there's obviously no reason for users to leave us. And so therefore, we are working on it. We see a huge potential in reducing our churn. We have created more than or developed more than 50 initiatives to reduce the churn to bring it down, and we are working on it. And yes, so this is, I think, one of our drivers -- success drivers also for next year. When we look into our customer value management, we also try to use AI wherever we can use it. So whether we look at the customer service, if you look at telesales, if you look at smart pricing, so we try to apply it everywhere, do smart tests, don't do crazy things, but there's -- we believe there's huge potential and we are on it. And besides all of these 3 pillars, of course, we are also constantly trying to improve our other channels. We are very happy about our stable retail business with our almost 500 stores, our strong online and off-line partners, and we are optimizing this as well. In September, we started our first performance-based brand marketing campaign with klarmobil. So we produced a new TV spot. We changed the website, improved the UX. And there was a clear message. So when you look at the TV spot, you can see that there was clear branding, but also clear messaging, a clear offer, and this was reflected in the successful numbers. We could increase the visits significantly and also the conversions and sales. This was a very successful campaign. We have the next campaign in October. We see and also the team see that it's working. It's driving sales on one hand. And on the other hand, it will also create more brand awareness. And klarmobil is one of our top brands. Together with freenet, it's important that we increase the unaided brand awareness and performance-based marketing campaigns will help to reach this goal. We are very happy about the mobile subscriber growth in the first 9 months and also the last quarter. Within the first 9 months, we could increase our customer base, 190,000 postpaid customers. If you look at our historic data numbers, you can see that this is quite a lot, also the last quarter, very successful also when you compare it to last year. So we can see that the initiatives, the things that we changed that they are working. We also are very happy about the renewal of our -- about the 5-year renewal of our strong partnership with the MediaMarktSaturn, it's important channel for us. And yes, next steps, so we will keep doing what we have started in the last quarter, looks promising. And besides this, there's also one big thing that's coming at the moment when you look at our -- I mean, the strongest brand that we have is freenet and we do advertising with freenet. So there, you can see our strongest product, mobile phones, mobile plans. But at the moment, it's on the domain freenet-mobilfunk.de. And if you, for example, go to freenet.de, you can find the news and e-mail portal. So -- and this is not ideal, yes. So you cannot do marketing efficiently with freenet if people or if users then search on Google and end up on freenet.de where they don't find the offers that you do advertising for. So this is something that we changed, we made the decision to change it, and this will be in place beginning of next year. And then we will do advertising for mobile phones and mobile plans on freenet.de. And then we will also start marketing campaigns, performance-based marketing campaigns for freenet.de. So this will increase the conversion. This will be much more efficient than in the past. And so then we believe that this will be a nice potential for the next year to really increase numbers for freenet and increase the unaided brand awareness for freenet as well. And besides this, one big thing is you heard about it, we already disclosed it, we bought mobilezone. This is a strategic acquisition. mobilezone, it's a really strong company. It's a sales machine. So they -- every year, they generate over -- they close over 1 million contracts. It's one of our strongest competitors. They are very successful, they have many nice brands like sparhandy, deinhandy. And yes, so we acquired them. Yesterday, there was also news that the antitrust approved the acquisition. So we are in the process of closing the deal. And this will give us much more -- even more sales power. So consolidation in the market, I think it's healthy, makes a lot of sense if you look at allocating resources about the offerings, so makes us even stronger. We'll -- and I think it's also good for the entire industry, for our partners. We have really healthy relationships to Vodafone, Telefonica, Telecom also to 1&1. And so we believe that this makes us even stronger and that will enable us to further support them. Waipu.tv, I mentioned it. We believe it's a fantastic company. We could show in Q3 subscriber growth again and also nice profitability. It's -- for us, it's important that we have a company that's not only growing, but also getting more and more profitable. I think we proved both of this with waipu.tv, very happy about it, it's developing as expected. So -- and we also believe that in Q4, we will see even stronger growth and that we are on track to reach our guidance for '25. Waipu.tv has started -- has just started a new campaign which is promising it's -- they offer a start-up package with a TV stick and a no-frills product for just not so much money. It's an entry product and which will help to -- for people to experience IPTV and this great product. And so afterwards, we believe that there will be upselling opportunities. And besides this, we also started to do marketing with bundles where we bundle mobile plans together with waipu. And all of this, we believe, is really is -- makes a lot of sense and will bring us or leads us into the right direction. Yes, with this, I hand over to Ingo. Ingo Arnold: Thank you, Robin. So I start as normal with the group financials. I think we are -- and Robin already commented, I think from my side, there's nothing to add. We are really, really happy with what we generated during the first 9 months of the year 2025. We are totally on track to reach our guidance. So in terms of revenues, you see in the quarter, a slight decrease of revenues, I think, main reason, and we will -- I think you will hear the name of the company, The Cloud more often than in the years when we owned the company today. But I think it is important to show the deviations what we do have in -- on the group level, but also on the mobile level. So here, I think what we lost here in revenues with the sale of The Cloud is something like EUR 10 million. So without it, also in Q3, there would be a small increase of revenues. So all in, it's a confirmation of the guidance where we promised moderate growth for the gross profit. I think, much more positive than the revenue development. We see an increase of the gross profit in the quarter by even 7% on a 9-year base, 4.3%. It is definitely driven by the IPTV. I think we are so happy that this is the first year where we do not only generate growth in the base of waipu.tv but where it is also possible to make the business much, much more profitable. And you see the effect here even on a group level. Moving to the adjusted EBITDA, strong quarter, 130 -- nearly EUR 138 million, which brings us to EUR 395 million up to the end of September. And I think I did the calculation in August. I do the calculation again what is necessary to reach the full year guidance. I think it is relatively clear that from EUR 395 million you need a quarter and you need an EBITDA of something between EUR 125 million and EUR 145 million to reach the guidance. And compared to the performance in the third quarter, I think this looks totally doable. And I'm even more convinced now than I was in August to reach it. So moving to the Mobile business. I think, yes, definitely, the revenue looks a little bit disappointing. But on the one hand, again here, there is the reason from the missing revenues of The Cloud in the full quarter. And if you would add the EUR 10.3 million, the difference would be much smaller. On the other hand, we -- and this is something what we already commented in after Q2, we had some no-frills, some prepaid revenues where we could not generate any profit. And to make administration easier, we cut some -- we terminated some of these contracts. This makes a lot of sense from our side. It has a few negative effects on revenue. But as you see, moving to gross profit, this does not have any profit effect. The gross profit in Q3 slightly decreasing. Also here, it was something like EUR 3.5 million, which was missing from The Cloud. If you would add it, I would say it is something like a stable development, Q3 to Q3 and the Q3 '24 was a strong one. So all in, there is an increase in gross profit to nearly EUR 527 million. Moving to the adjusted EBITDA. Also here, we are near to what we had last year. It's a stable development and making the same math, what I did on the group level, what we can see here is that we need an EBITDA of something like between EUR 100 million to EUR 120 million in the fourth quarter, and then we would reach the guidance. Maybe a small comment to marketing spending because we discussed it intensively after the second quarter. And the good news is that even with all the campaigns, what Robin was talking about and all the action and the big growth in the customer base, it was possible to decrease the marketing spending in Q3. So I think in the first half of the year, we spent something like EUR 6 million more in '25 than in '24. But in Q3, we spent less than last year. I think we have some long-running contracts with some brand marketing partners, which does not make that much sense. But I think it is not easy to terminate these contracts. Some of them are still running. So I think there will be a full saving effect from stopping these contracts in 2026 but also in Q3 and in Q4, we will see something comparable. Marketing spendings are down. And I think the results are still affected from the negative first half spending what we saw. Moving to some KPIs of the -- in the mobile business. Yes, Robin already commented. I'm really surprised how strong we are in terms of postpaid net adds. I think we discussed during the year to reach something like 200,000 net adds for the full year time. I think definitely, it will be far above 200,000, what we will reach I think it is still a surprising quarter as ever, the fourth quarter because of Black Week and so on. But I think we are more than on track here to grow the postpaid customer base. Well, we are not that good on track, but I think this is a market problem what the whole market does have is still that the ARPU is decreasing. So what we see at the moment with the growth, what we generate, it is possible to overcompensate the ARPU effect and I'm positive and optimistic that this will also continue in the next quarters. But I think it is a pity and it is market driven. I think we discussed it already in the other quarters. It's not a freenet problem. The market is slightly aggressive. Still, we hope we can come back to a rational, a more rational behavior in the mobile market here. So we are not that unhappy that there will be a CEO change at Telefonica because we saw them very aggressive in the last quarter. So I think this could help to repair the market here. So we are basically optimistic for the following quarters, but -- and this is clearly shown on this chart here. At the moment, the negative trend for the ARPU is continuing. But clear message service revenues are slightly increasing. So it's possible for us to compensate it. Digital Lifestyle revenues, the last picture here on this chart, I think you all know that we were behind plans at the beginning of the year. We could close the gap now. So we are totally on track compared to last year. And yes, I'm even positive for the fourth quarter to see a slight increase here. Moving to the successful TV business, revenues and all financials are mainly driven by the positive waipu.tv developments. What we do see in revenues is in the quarter and even an increase by 10% for the full year, it increased by 7.5%. I think the fourth quarter was a little bit influenced by a media barter deal. What is a media barter deal? It is that we have these deals, these contracts with the private channels. And therefore, we get on a -- at the end of the day, we get some marketing to place -- some channel plays there for free but we have to show it in our figures. So on the one hand, you see it on the revenue. But on the other hand, you see it on the marketing cost. So at the end of the day, these marketing campaigns are for free. But you show it on every level here. And so therefore, we made it clear or we try to make it clear and we wanted to make it clear because especially the development in revenues and in gross profit is slightly exaggerated from these deals, and we want to have positive figures, but we want to have honest figures. And therefore, we mentioned it here that there is an effect of EUR 5 million even in revenues and in gross profit. On the adjusted EBITDA level, you see that we have an increase compared to last year. Waipu.tv EBITDA year-to-date is something like EUR 25 million. So it's a perfect confirmation that the business cannot only grow but that the business can also generate EBITDA. And I think this is -- I think we discussed it earlier times that we expect something between EUR 30 million and EUR 35 million of EBITDA from the business. And I think we are totally on track here. We have lower marketing spending. This is something what we discussed earlier together. This definitely helps in the fourth quarter. Yes, I think we need some marketing campaigns. We need and we want to generate some growth in the fourth quarter. But I think we are also on an EBITDA level, we are very optimistic to reach the goals what we do have. Last page from my side is the free cash flow bridge. I think -- most of you should not be surprised that we have the negative tax effect. I think we -- to be honest, we expect it for years. And now we really got it. So we had to pay something like EUR 20 million for the period 2015 to 2018. I think we are not at the end of the road here because we also took legal action because we -- I think we had a -- we built provision years ago, and -- but we took legal action now. And -- but the legal proceedings will take years to find an end, but we paid the EUR 20 million now because we have high interest rates to pay here in the meantime. And I think there are good chances to win the case. But for now, we paid the EUR 20 million. And I think let's wait and see. I think I do not expect a decision as long as I am here, as CFO. So -- that could be quite open. But there is a good chance to get the money back. But for now, the tax expenses are higher as expected. On the other hand, change in net working capital. It is a negative of EUR 32 million. I think those of you who are familiar with our working capital figures, know that EUR 26 million out of it is a liability or a reduction of a liability where we have to pay a monthly fee to Media Saturn. So out of it, it is more or less stable. Then the CapEx figure, EUR 26.8 million. It's near to what we saw last year. Lease payments. It's easy to calculate EUR 45 million now. So no surprises and interest payments, EUR 15 million. So I'm quite fine here. I'm also fine with the free cash flow for the guidance for the full year because what do I expect from change in net working capital, maybe some more investments in the fourth quarter into the business. So I expect something like EUR 45 million for the full year. I expect EUR 60 million for taxes, EUR 35 million for CapEx. Lease is easy to calculate, something like EUR 60 million and interest payments nearly to EUR 20 million. So this is also in -- the sum is the same what we expected or what we forecasted at the beginning of the year. And so I think at the end of the day, no surprises for all of us. And therefore, I think the guidance could be reached. So therefore, the overview from my side for the financials. So I would hand over to the operator again to start the Q&A session. Operator: [Operator Instructions] And the first question comes from Sofija Rakicevic, Goldman Sachs. Sofija Rakicevic: I have 3 questions, please. The first one is on the guidance. What are the main 4Q drivers that could push results to the low or high end of the guided range? The second one is on mobile. Can you please give us more color on your net adds mix? How many come from the lower end of the market? And how do you perceive quality of your customer base in general? And the last one is on the marketing. So I'm just wondering, can you compete effectively in 4Q without a big marketing increase for both waipu.tv and mobile because we are heading towards Black Friday and Christmas. Ingo Arnold: Yes, Sofija. Thanks for your questions. From my side for the guidance. I think if I would have a clear plan where we would end, I would already have told you. I think there is good chances to end on an EBITDA level between EUR 520 million and EUR 540 million. I think it is correct that we have to look, and it's -- I think the question to the guidance is linked to your last question about the marketing spending. I think we want to grow the business. And therefore, if we see chances, especially during Black Week to increase our customer base in both segments, then we would -- then we have to decide what we would like to invest. So it's difficult to say from today's point of view. So I cannot -- and this is something I think we have not published a guidance which is -- which narrow band because it is still open. I think we will watch the market. And if there will be chances to grow and to have a profitable growth, we will use the chances. And -- but I think this is the main reason why we are not more concrete on the guidance now because as typical during Black Week and during Christmas business, there could be so many chances. And we do not want to miss chances and opportunities. And therefore, I think it is still open. But basically, I would not expect a big increase in marketing expenses compared to last year because also last year, we had the Black Week and we had a Christmas business where we were. And last year, we were very aggressive. So I would even expect that even with a strong and growth-oriented philosophy in the fourth quarter, I would expect marketing expenses to be lower than last year. Robin John Harries: And related to your question regarding the mix, we have different brands. We have brands like Mega SIM, Dr. SIM, Happy SIM, where we have aggressive offers and then we have klarmobil, it's something in between. And then we have our premium brand, which is freenet. And at the moment, we -- freenet is not ready yet. I mentioned this. It does not make too much sense to do advertising with freenet if it's not on the freenet.de domain, yes. So therefore, we don't invest into brand marketing campaigns, we rather focus our activities on the other brands like klarmobil and the other brands where we have better conversions. So this is what we are doing at the moment. And so therefore, the -- it will be, I think, relatively similar to the last quarter. But if we look into the next year, I mentioned it that we want to scale the performance based brand marketing investments for freenet as well, and this is an opportunity for us because with freenet, this is our premium brand. We will be able to also sell for more -- for healthier prices with higher ARPUs. We will focus on mobile phones. We will position freenet as a premium brand. And I think this is a nice opportunity for us next year. And then ideally, we have a freenet as our premium brand for mobile phones with nice brand marketing campaigns but based on performance, so we want to sell. Then we have klarmobil our brand for mobile plans for good prices that make a lot of sense. And then we still have our -- where we -- more aggressive brands like Dr. SIM, Happy SIM, Mega SIM where we try to get users in a more aggressive environment and compete against those brands who think they can be more aggressive. Operator: And the next question is from Ulrich Rathe, Bernstein. Ulrich Rathe: I have 2 questions, please, if I may. The first one is on the service revenue situation. I think you highlighted that this is owing to the market backdrop at this point in time and that is not necessarily a big concern from a managerial perspective at this point. Could you talk about how you see this unfold. I mean what's your base case here for the market backdrop and the service revenue performance in 2026. And related to that, this sort of slight compression on the service revenues, how does this affect your gross margin? I mean that's ultimately a question how the cost to the MNO hosts scales with service revenue performance? And my second question is on the Media Saturn renewal economics. That's more technicality, I suppose. But you talked about this EUR 5 million incremental barter deal in -- sorry, in the third quarter. Is that related to the renewal, should we add that to the renewal? And have you agreed to a different cost compared to the prior contract with a multiyear contract with Media Saturn in the current renewal which explain the economics of that another EUR 5 million sort of fits into this. Robin John Harries: This is Robin. Thanks for the question. Regarding the service revenue, as you -- I mean when you look into the Q3 numbers, you can see the ARPU, but you can also see strong mobile growth. Overall, the effect of both is positive, and we expect that also, if we look into the future, we -- as I just said, we want to also more marketing with freenet. We believe there's a fair chance to sell products with higher prices to increase the ARPU, this might have a positive effect as well. Yes, that -- I mean the market is -- the competition in the market was tough in the last month. I think, is what's driven by Telefonica. So there are some changes. There were -- they announced that there will be some changes. Hopefully, this will be healthy for the market, for the industry, but we are prepared. We have many opportunities to grow our subscribers -- our marketing channels through our website, through performance marketing, through performance-based marketing, to not lose so many users by optimizing our churn. So there's really a lot of potential for us to grow. And so therefore, it also will put us in a situation that we will hopefully also be able to sell for better prices, which are more healthy for us. So therefore, we are quite confident. Ingo Arnold: Yes. From my side, Ulrich, I think you also asked what effect does the service revenue has on our MNO contract. And yes, definitely, this is very relevant. I think in earlier times, when I started in the business, all were only focused on growth of customers, but this changed during the year. So the contracts, what we do have with the MNOs are mainly based on revenue, on service revenue. And so yes, it is important to generate service revenues, but I can only confirm what Robin said. I think that there are -- and I work in this company for a long time, I never saw so many initiatives here to increase the number of customers. And therefore, if we could combine it with a stabilization of the ARPU, I think, and you asked about '26, I have no -- I'm not afraid of '26. I think -- I'm more afraid of the fourth quarter now because this will be difficult to -- and this is what we saw during the year. But with all the initiatives, what we saw -- what we see and what we have here, we are much, much more optimistic for '26 in terms of service revenue than based on '25. Then you asked about the Media-Saturn one-off of EUR 5 million, I think this is, is it linked to the contract? Or it is not linked to the contract? My official answer is not linked to the contract. But I think it's definitely only -- it's only a one-off and it is not by accident that the one-off happens in the same year when we renewed the contract. So -- but this is something that will not happen again in the next years. And what happened -- what has not happened again in the last years. So therefore, it's a typical one-off. It is not typical. I think we have other payments what we do pay -- what we do grant to Media Saturn, but this is definitely a one-off. Ulrich Rathe: Ingo, can I just sort of follow on this comment, which you put into a sub-clause that maybe you're afraid of Q4. Could you just for clarity, explain what you meant by your afraid of Q4? Ingo Arnold: Yes. I think what we see at the moment that is that the service revenues are growing, and we are happy that they are growing, but they are only growing by small euro effect. And so -- can I be 100% sure that in the fourth quarter, it is plus EUR 3 million or minus EUR 3 million? No, I cannot be 100% sure because the effect, the positive effect is not that big that I do have a lot of headroom. So -- and this is the -- I do expect stable service revenue for the fourth quarter to make it very clear here and to clarify it. So thanks for your question. But what I do expect for '26 is that we are not only see a stable service revenue but a growing service revenue. Operator: And the next question is Siyi He from Citi. Siyi He: I just have a question on this redefinition that you put through on the adjusted EBITDA. I think now your adjusted EBITDA is including [indiscernible] sales and restructuring. I'm wondering if you can talk us through the thinking behind that. And also, it seems that the adjustments led to around EUR 10 million uplift on your 2014 EBITDA, but you decided to not change the full year guidance of '25. I want to understand the thinking behind that as well. And finally, just on the free cash flow bridge, you have kept the free cash flow guidance unchanged. But it seems that the CapEx guidance is now reduced from EUR 55 million to EUR 35 million. I want to check if that is a sustainable reduction on CapEx. Ingo Arnold: Yes. So thanks for your questions. I think the -- what is the reason why we started to report an adjusted EBITDA at the beginning of '25 or -- in '24. What we saw were from the sale of the IP addresses. We saw a very positive effect, and it was the idea to show an adjusted EBITDA, which is really based on the ongoing business. So then this year, we had a similar effect from the sale of these IP accounts. And in addition, we had the sale of The Cloud. And so this was also a positive effect in the EBITDA, which we wanted to correct. So I think we were -- we were very open here, and we were very transparent and corrected the EUR 25 million of positive effects this year. On the other hand, what we saw were that, and you all know that we reduced the number of board members here. And we saw a -- and the restructuring, the amount of EUR 6 million is more or less only the payments, the severance payments, what we had to do to the leaving Board members here. So this is definitely also a one-off. And in the thinking, what I was describing before to only show the ongoing business. Therefore, we decided that we use the adjusted EBITDA to correct the EBITDA by the effects in both directions. And so therefore, I think we changed it. Then you had a question about the full year guidance. And yes, you are correct that there was a -- that with starting putting all the effects in the -- on the adjustment list we had also to adjust the year 2024. And you asked if, therefore, the guidance should be increased. My answer is that we do not guide a delta to the year before. What we guide is an absolute EBITDA amount for the year, and we calculated the EBITDA for the year, which was from the beginning, something between EUR 520 million and EUR 540 million. So with a change of EUR 24 million, we do not change our guidance. Your question to the cash flow bridge. Yes, you are correct. To reach the full amount of the bridge and to have a comparable amount to what we forecasted at the beginning of the year, we had to reduce the CapEx compared to what we forecasted at the beginning of the year. I think we expect, especially from the radio business -- from the digital radio business we expected more spending during the year. This has not happened. It is not -- it was not necessary during the year, and it will not be possible to catch up here in the fourth quarter. So from my point of view, the EUR 35 million, what I said is I think this is a strong figure, and I do not see any big risks here. Operator: The next question is from Florian Treisch, Kepler Cheuvreux. Florian Treisch: I have 2 questions. The first one is for Robin, I mean in the Q2 -- sorry. In the Q2 call, you made very clear that you want to change the marketing strategy, the customer journey. I mean, this is what you have underpinned today with the presentation. So my question would be a bit when do you really expect, let's call it, first tangible impact. I mean you mentioned in the presentation that they are first positive signs. But to really make a difference, is it fair to assume that this will only happen over the course of '26 and how relevant is the closing of the mobilezone transaction to support that journey. The second question is on waipu.tv. I mean you have seen an improving momentum in Q3. So the first question would be how much of that is driven by lower headwinds from the O2 shift. And you flagged high confidence in a good finish to the year. Can you also quantify your expectations here? And do you expect this momentum to stay as strong as in Q4 entering 2026? Robin John Harries: Yes. Thanks for your question. Regarding the impact, so we could already experience the impact in Q3. So far, in Q3, we only did 1 campaign. It was a short campaign, was 2 weeks brand campaign. So I mean, it's just like 1 month out of 3 months. So therefore, the impact is not so big. But if you just isolate this campaign, and if you look at the visit uplift, it was very strong. The conversion rates were very strong. We improved the user experience on the website for klarmobil and also the sales numbers. This was a very successful campaign. And we just started the second test in October. And also, again, a small test. That's how we do it. Yes. First, we shoot with bullets. And then with cannonball balls. At the moment, we are still in the stage of shooting with bullets. So we do small tests, but they are already very promising. And yes, so also for the plan for next year, we then scale their investments, but they are performance based. That means that it's not that we are burning money. If we scale the investments, this will be also lead directly to more sales, so positive impact. And at the moment, we just do the first test with klarmobil. As I mentioned, we are preparing the freenet.de domain, will be done beginning of next year. And then we will also scale and freenet together with klarmobil. So most of the impact will come next year and also this year, but also for Q4, we are -- I mean, if you improve the conversion rates on the website, you'll see directly a positive impact because visits are rather going up. End of the year, we have some nice campaigns. And then it's -- at the moment, it's a little bit, but most of it, you will see in the -- over the course of next year. This was your first question then you asked for mobilezone. I mean, mobilezone, they -- it's still not closed. I haven't checked their conversion rates. And so their return on ad spend, how they do it. If you look at top line numbers, you can see that they are very successful. They have strong brands, Sparhandy is a strong brand, Deinhandy is a strong brand. They -- I think they do a very good job. They have good -- they have a good performance. And yes, after closing, we will look into how we can benefit from it. I'm sure that there are synergies. If you look at allocating resources, if you look at positioning of brands and all that stuff, this will be, I think, healthy for us and for the market. Regarding waipu.tv, there was -- still impacted by the end of the partnership with O2, yes -- old O2 users are churning. But even though we are growing and if you look into Q4, we anticipate that there will be a much stronger growth than in Q3. This will, I think, a strong quarter. There is -- I mentioned that they just started campaign for the strong starter package, then we have some campaigns where we bundle it together with mobile plans. This also makes a lot of sense. Then there's a Black Week. We are quite confident that we will see a nice subscriber uplift in Q4. Operator: And for the moment, the last question is from Simon Stippig, Warburg Research. Simon Stippig: First one would be, I wonder about your long-term guidance, 2028 or your long-term aspiration in 2028. Because certainly, by your acquisition of mobilezone and Germany segment, you should get a bump in growth. And you also mentioned the marketing contracts. Longer term, you could cancel in 2026 as I understood it. And then additionally, you expect from your campaigns quite some growth in the next year and beyond, hopefully. But on your presentation, you kept your longer-term aspiration in 2028 unchanged. So can we deduct anything from that? Or will you review that in due course? And then secondly, tied to that is the financing of the transaction. You mentioned you will or you will debt finance it and you have a bridge loan in place. But then you will receive around EUR 150 million in H1 2026 from the CECONOMY sale of your stake. And will you then lever up a little bit from your 0.5x net debt to EBITDA currently? Or do you intend to use that cash for financing the transaction. And lastly, I saw until the end of October, you bought back EUR 60 million in shares. Will you continue to buy back shares until the end of the year and then you stop or will you continue to purchase back shares until you have fulfilled the full volume of your EUR 100 million. Ingo Arnold: Yes. Thanks a lot for your questions. I think, yes, I think maybe in all levels, the long-term guidance could be different, and this is normal during the years. But I think what is important for us at the moment is that we stick to the whole amount to the EUR 600 million of EBITDA, for example. So we stick to the guidance 2028. I think we -- earlier or later, yes, we have to recalculate the levels and have to decide if it could be even more than EUR 600 million or if there could be changes between the levels and between the effects. But from our point of view, the most important thing is at the moment that we stick to the guidance. And yes, definitely, we will recalculate it during 2026. And then we -- maybe I think we have not decided when we give an update to the guidance 2028, but I do expect it for 2026, whenever in 2026. And then I think we -- all your points are correct. But I think this does not change the big picture for now or this does not make it less probable that we reach the guidance, it makes it even more easier to reach the guidance. So therefore, I think during 2026, we have to think about it internally. We have to -- have our discussions and then we will come back to you and to the market definitely. Then you asked about financing of the transaction. We use a bridge loan, which has a duration of 12 plus 6 plus 6 months. So we are not in the hurry to refinance it at the moment. But we do also have some promissory notes due in November. So what I would expect for the first quarter is a transaction with promissory notes where we refinance our debt. And yes, there's the chance that we partly repay the debt by the EUR 150 million. What we could get from CECONOMY, and we hope that we will get it during the first half of the year, and this will only change the volume of promissory notes, what we would do. So at the end of the day, there will be a slight up on the leverage. This is what I would expect. If we spend EUR 230 million on the one hand and if we do get EUR 150 million on the other, there is a slight increase, but I think this will not change the world. Concerning the share buyback, yes, you are correct. We spent something like EUR 59 million at the moment. So nearly EUR 60 million. And we announced during the year that we will pay at least the EUR 60 million, which was the cash overhang from 2024. So we spend it now. I think we will look into the cash flow development during -- until the end of the year. If there will be some room then we would invest more. If there is no room, then we would stop the program at EUR 60 million. But I think this is not clear. We have no final decision. We will decide based on the cash development in the fourth quarter. But I think we have done the EUR 60 million. So from today's point of view, I would not expect any additional share buybacks during the year. Simon Stippig: Okay. Great. And maybe if I can one follow-up on the bridge loan. Could you tell me the conditions of the bridge loan, like what you're paying there and interest costs? Ingo Arnold: I think they are relatively lower than what we pay in other instruments at the moment, but this is -- it is difficult to say what the margin on a bridge loan is because I think this is typical for a bridge loan that in the first 6 months, you pay much lower rate than an average market rate. And if you use it for longer, then it's getting more expensive. So I think the main information is that at the moment, it's much cheaper than what we pay on our outstanding promissory notes. Operator: And the last question is from Dhruva Shah, UBS. Dhruva Shah: Just a couple on waipu.tv. So it's clear that you expect an acceleration into Q4 of around 180,000 net adds to meet the EUR 2.2 million guidance for the end of the year. But one bigger picture question is just how do you see the competitive environment in the IPTV market? And then perhaps more specifically, if a large part of the growth you expect is going to be driven by the lower ARPU entry-level products or the bundling with klarmobil, how do you weigh up the balance between financials or ARPUs and volume in that unit going forward? Robin John Harries: Thanks for your question. And the competitive environment, so we believe that the product is superior. So when you look into ratings, reviews, when you test the product, it's really a fantastic product that makes a lot of sense, yes. And I think it's one of the best, maybe the best product in the market. Also, when you look at growth rates, I think it's outgrowing competition. It's really strong, yes. So therefore, I'm not afraid of any competition in the German market. I believe if we do our job, so there is no reason why we should not grow. And in terms of -- the offers at the moment is a start-up package. So -- but there is also a clear path for upselling. That means that we want to make it easier for people to switch from the old world to the new world, to experience the product, make it easy. And so therefore, it's also a product where you don't have or the channels is something where you can get to know the product. And then later, after a certain time, we will show you the -- like the entire world, the entire product you can experience it. And if you like it, you would have to pay more. So -- and I mean, I think it's normal for advertising for and promotions that you go out with reduced pricing. That's the same in the mobile world, but then you need smart upselling. I think we are quite good in it. And then there are also convincing arguments why you should do the upselling. So therefore, yes, it's -- and this is something that we have been doing throughout the year. There were always promotions and campaigns. Nevertheless, you can see that profitability went up quite nicely. And this is something that we are -- that we believe will also happen during the course of next year. We will further grow the customer base. We will further grow profitability and generate more EBITDA. So there, we are fully on track and absolutely convinced about the product and don't fear any competition in the market. Operator: And if there are no further questions from the audience, I would like to hand back for closing remarks. Robin John Harries: Yes. Thanks for attending our earnings call. So as we've said, we are very pleased about the quarter. We are confident about the outlook for '25. We are excited about '26, many, many initiatives. We have a very motivated team, open mindset. They show a lot of courage, they want to explore new opportunities. It's really -- it's a lot of fun. It's a very good vibe, good spirit here. And I'm very confident that we will keep delivering. So therefore, thanks for your time and looking forward to the next call.
Operator: Dear participants, we warmly welcome you to today's conference call of the SUSS MicroTec SE following the publication of the 9-month results of 2025 earlier this morning. SUSS is represented by the CEO, Burkhardt Frick; CFO, Dr. Cornelia Ballwießer; and COO, Dr. Thomas Rohe. The Management Board will speak shortly and guide us through the presentation followed by a Q&A session. But before we start the presentation, let me hand over to Sven Kopsel from Investor Relations. Sven Kopsel: Thank you, Sarah. Yes, and many thanks. Welcome to our Q3 conference call. As you probably know from earlier calls, this call is again being recorded and considered as copyright material. It cannot be recorded or rebroadcast without permission and participating in this call implies your consent to this procedure. Please be aware of our safe harbor statement on Page 2 of the slide deck. It applies throughout the conference call. And now I hand over to our CEO, Burkhardt, for some opening remarks, followed by our CFO, Dr. Cornelia Ballwießer, presenting the financial development. Burkhardt, please. Burkhardt Frick: Thank you, Sven, and many thanks, and welcome, everyone, to this call. I will go a bit faster over the next few slides to have more time to focus on the margin analysis you guys are all interested in, I'm sure. We showed the next page, we showed this exactly this page already 9 days ago in the extraordinary call. So nothing new here. The changes -- there are no changes to the figures since then. We also mentioned the low level of EUR 70 million in orders received in Q3. After various customer meetings in Korea and Taiwan last week, I'm very happy to report that activities are picking up in the fourth quarter. Orders exceeding EUR 100 million are likely. We do see quite some momentum here. We already communicated last week about the pressure on margins and the fact that we had to adjust our guidance for the gross profit and EBIT margins once again. I will go into details of margin development in a moment. However, I would like to state that the current margin pressure does not impact our 2030 ambitions. We will present our new midterm expectations at our CMD on November 17. Last week, the development of our 2 segments was not yet included. So I'd like to highlight a few things here. First, Advanced Backend Solutions. The order intake remains strong for coaters, but this was not quite enough to offset the decline for bonders. The demand for our UV scanners remain intact. Imaging and Coating Systems showed year-on-year sales growth of larger than 50% each. Bonders still showing slight growth after 9 months. Gross profit margin significantly impacted, more on this shortly. Photomask Solutions, we have a very low order intake again. Orders from China now down EUR 32 million versus previous year but more significant orders expected in this Q4. Still high year-on-year sales growth, but Q3 sales was lower than expected. Unfavorable product mix is the main reason for low gross profit margin of 31.7%. Now we have prepared 3 pages where we compare our initial 2025 guidance for sales, gross profit margin and EBIT margin with the actual year-to-date 9 months figures. Firstly, on sales. After 3 quarters, we reached EUR 384 million or 78% of the midpoint of our sales forecast and therefore, are on track and achieved what we expected to do. Q3 sales, as expected, was EUR 118 million, lower than previous quarters. Reason here lower order intake in the first half of 2025. In the fourth quarter, we need sales of EUR 85 million to EUR 125 million to meet our forecast. EUR 105 million would, therefore, leads to the midpoint, which is EUR 490 million. The product mix is different as planned at the beginning of the year with more coaters and fewer bonders based on orders received in the first half of the year. The recent postponement of 2 high-margin projects to 2026 will have a negative impact on gross profit margin in Q4. Now we'd like to provide more transparency on our negative gross profit development. Let me first explain the methodology we applied here. The table on the left shows our actual figures for the first 3 quarters. These are the left columns and a projection of what our gross profit would have been if actual sales had a gross profit margin of 40%, which is the midpoint of our original forecast of 39% to 41%. Our analysis shows we have a gap of EUR 16 million, which we like to explain. On the right-hand side, we allocate these EUR 16 million to special effects, quantify them, specify the timing and if these effects can be considered as one-offs or not. From top to bottom, first, the UV scanner in Taiwan, the ramp we performed there in the first half of the year. We had extra expenses for training and supply chain efforts amounting to EUR 3.2 million, and that's a one-off. Secondly, we had a write-down on discontinued technology projects amounting to EUR 2.2 million that affected Q2. Also, that is a one-off. Expenses for our new site in Zhubei, EUR 1.2 million for double rent relocation and utilities, they affected us only from Q3 onwards. And they will have -- this will have an impact on expenses in Q4 as well as in Q1 2026. Rework during assembly and customer ramp-up support amounting to EUR 2.4 million since Q1 were necessary to support customers to improve performance of recently installed multiple lines and maximize the output and availability of these in the field. This was really important and is an ongoing effort and it also will open the door for follow-up business, which we are, of course, looking forward to expect. The last point is the unexpected product and customer mix changes, which we often use also to explain deviations in our margin. This is for more coaters, less bonders, many low-margin photomask tools for key customers, and that results in also lower fixed cost coverage due to lower sales and overall business activity. That amounts to EUR 7 million in Q3. In total, EUR 16 million of which slightly less than half can be characterized as one-offs. Now on this page, we focus on the EBIT. We applied the same methodology. Left column shows the actual development of first 3 quarters, right column, the projection with midpoints of initial gross profit and EBIT margin targets, which was 15% to 17%. The gap here is EUR 7.2 million, which means that more than half of the gross profit gap of EUR 16 million was offset by stricter cost management and a positive balance in other operating income expenses. According to the original guidance, we allowed for OpEx of EUR 92.3 million after 3 quarters and would still be on track to achieve the original EBIT margin targets. The actual OpEx, that is expenditure on R&D, sales and administration amounted to EUR 86.8 million. This shows our short-term cost-cutting measures are having an effect, savings of more than EUR 5 million compared to Q2. In Q4, OpEx is expected to be below EUR 30 million. However, most likely above Q2 level based on increased expenses on IT and digitalization projects as well as rising R&D costs also to support scheduled product launches. I think I said above Q2, I should have said above Q3, right? Yes. We will correct this, and you will see it also in the tables. Now after all these numbers, here are a few impressions from last week's opening of our new site in Zhubei, Taiwan. It was an amazing day with a great atmosphere. We welcomed over 100 guests, including Taiwan's Vice Minister of Economic Affairs, a C-level representation from a leading HBM manufacturer and management from the top foundry in Taiwan. We got a broad confirmation that it's important to increase our presence close to the heart of the semi industry sector. We introduced our large clean rooms and made it clear that we are set for future growth. First modules and tools are already being built in Zhubei and will be delivered to our customers in early 2026. Leases for all old locations will terminate by the end of Q1 2026. The financial double burden will also end at this point. And with this, I'd like to hand over to Cornelia to provide some more insights on our financial performance. Cornelia Ballwießer: Thank you, Burkhardt. After we've already discussed Q3 in detail, I will just summarize some additional developments on the next slides. We already talked about the slow order intake, which leaves us with an order book of EUR 276.1 million as of end of September. This is 35.9% below the level of the first 9 months of last year. Tool orders with roughly EUR 140 million are scheduled for delivery in '26. The visibility for '26 is improving. Our free cash flow from continuing operations came in at minus EUR 0.7 million in the third quarter with operating cash flow of EUR 5.9 million and cash flow from investing of minus EUR 6.6 million. After 3 quarters, free cash flow is now at minus EUR 28.2 million. For the full year, we still see potential to generate around EUR 28 million of free cash flow so that we could end up at end '25 in slightly positive territory. Total CapEx for the 9 months is EUR 17.8 million, mainly driven by our new fab in Taiwan. At the end of the year, we expect to land at CapEx level of EUR 25 million. In '26, we will return to a level of clearly below EUR 20 million. Without additional projects, the level will be approximately at EUR 10 million. On this slide, you see the development of our most important key performance indicators for the last 7 quarters. You can very clearly see the margin development, especially in the last quarter due to the effects we already talked about today. On this slide, you see the two segments. In the Advanced Backend Solutions segment, margins in the third quarter were roughly at the same level as in the previous quarter. Burkhardt already mentioned the most important drivers. In Photomask Solutions, the margin level is in the first 2 quarters of the year higher. Overall, we're still at 38.4% gross profit margin for the 9-month period. However, the third quarter was weak, mainly due to an unfavorable customer mix, as already explained. Here, you see our order intake by segment and regions. The book-to-bill ratio continued to remain at a very low level of 0.62 for the 9-month period. This is, of course, far too low for a company with growth ambitions as we do have. But as already discussed, we expect increasing orders in Q4. Demand from China continues to be very low. The China share of total order intake in the first 9 months of '25 is now 18.5%. In '24, also after the third quarter, the share was at roughly 30%. But generally speaking, we do not have major shifts in the order intake by region. Finally, let's go over the main developments of the balance sheet. Total assets increased by EUR 22 million. For the noncurrent assets, the main driver was the Taiwan expansion with the right-of-use asset for the site and further installations at the site as well as CapEx in Germany, which we already showed in our half year report. Current assets, we have a decrease by EUR 29 million to a total volume of EUR 413.3 million. Inventories declined and are now EUR 12.9 million below the value of end of December '24. Contract assets and trade receivables increased by EUR 22.7 million. Cash and cash equivalent decreased by EUR 41.8 million due to free cash flow in total of minus EUR 31.5 million and the dividend payment as well as repayments of financial debt, including the leasing liabilities. On the liability side, the main changes also happened in the first half of the year with the inclusion of the leasing liability from the Taiwan site. In noncurrent liabilities, the major driver in the 9-month period was also the inclusion of the lease liability for the Zhubei site, which already happened in the second quarter. Current liabilities decreased. Here, the major drivers are still lower advanced payments from our customers who supported last year's ramps and less orders from customers, which have prepayments. After the 9 months, the equity ratio is at 58.2%, which means we improved the equity ratio while we had our ambitious investments. Burkhardt? Burkhardt Frick: Now let's turn to the outlook for 2025 as a whole. First, here is a page that was already shown last week with the reduced guidance ranges for gross profit margin and EBIT margin. Everything stays the same as communicated last week. Last week, we already explained that we are discussing possible measures to sustainably improve the cost structure. However, I ask for your understanding that all decisions will be carefully considered. I do not currently expect that we will be able to communicate these possible measures already in 2025. For now, our full attention lies on Q4 to bring in the anticipated new business and set the stage for 2026. We are now opening the floor for your questions. Thank you. Operator: [Operator Instructions] We will start with the first raised hand with Janardan Menon. Janardan Menon: I just want to go back to the order increase that you're expecting in Q4. 9 days ago, you had said that you would see an increase in orders. You said above EUR 100 million is possible. But at that point in time, you had also just commented that your Q4 is always typically quite strong. You've seen a very healthy double-digit increase in quarter-on-quarter in your Q4 orders in both 2024 and 2023. So my question is, this increase that you are expecting in Q4, is it purely a seasonal thing? Or do you see an underlying trend of improving orders amongst your customer base? And -- especially, you have been seeing quite low orders on the temporary bonding side. And one of your big customers looks like he's -- they're getting qualified or have got qualified, who knows. And so is there a clear upswing that you see in that market? Also on the UV scanner, are you seeing an upswing? What I'm trying to get at is the sustainability of this order. I mean it may not be huge, but does Q3 mark the bottom and then more than the seasonal, are we getting a more improvement into next year? Whatever your current thoughts are? Second question is just on the margin. Just trying to piece together the whole thing. You'll end up at about 36% gross margin this year based on your guidance. Are you -- do you think that as some of those one-offs go away in the first couple of quarters of next year? You're likely to get to a higher margin than that? Any kind of color on where we could expect based on current expectations? Where you assume your sales are down in line with consensus for next year? Where would your gross margin end up for next year? Any thoughts there would be great. Burkhardt Frick: Yes. Of course, we have to be careful in forward guidance, but let me start with the order intake. Yes, there has been some seasonality in the past years. But of course, customers order when they really have demand. And so therefore, I would not really call it seasonality at all. I would rather see it as a consequence of activity in the AI space picking up again. And that has been, of course, communicated for the frontline AI players already a quarter earlier, but it takes a while until this goes through the entire equipment chain and also leads to orders. So there's not an immediate effect at the moment a big memory supplier gets qualified or post their future plans, it will not immediately trigger orders. This is more a question of how utilized are your lines, how much throughput can you get on the existing lines and when is the next window to increase? And that seems to now nearer than before. And that's also why we are confident that we get AI-related orders in the first quarter and especially after those discussions we had with our lead customers. Now this will be a mix, of course. So there will be, of course, HBM-related orders, but also CoWoS or packaging-related orders requiring multiple systems, but we see a clear upward trend. How big this one is, as I said, well, I feel confident that it will be larger than EUR 100 million that -- I stick to that number. How large we have to see because we also have to make sure we can also deliver and build these machines on short notice because the demand is required on short notice. On the second question on the margin expectations, I can hand over to Cornelia. But of course, we want to improve our margin performance. There's no doubt in that. But even in line of potentially declining top line, we have to make sure that we do this with good sense. Cornelia Ballwießer: In terms of margin, of course, our ambition is to have a better margin or to achieve a better gross margin in '25. What I can say is it is probably lower as '24. Currently, we are preparing our budget. And as you see and as explained, the margin depends on the customer and product mix, and we are working on this. And that's all I can say for the moment. Regarding your one-offs, yes, there are, of course, one-offs that will not occur again in '26. For example, the write-down of the discontinued technology project, then our double rent relocation and utilities costs in Zhubei, in Taiwan will end, end of the first quarter '26. And yes, the rework, we will see. It depends how we can satisfy our customer or what is needed. But that's what I can say regarding the margin for the next year. Operator: So -- and then we move on with [indiscernible]. I can see that you're unmuted, unfortunately, we cannot hear you. Unknown Analyst: Can you hear me now? Operator: Yes. Unknown Analyst: Yes. Great. Sorry for the background noise. A few questions. On the order backlog, can you give a little bit the split in ABS segment? What is the CoWoS, the scanner part in the order backlog? And then in the cleaning equipment market, what is the part of the China business in the PS segment? In the backlog, right, not for order entry. Burkhardt Frick: Yes, we are not being specific on the individual products on our backlog. Please accept that because we do give this granularity. The China portion, of course, is declining, as already previously mentioned. We see it in both in sales, but order intake significantly. We have for China, for example, only 18.4% of the order intake are China bound. For Taiwan, for example, in contrast, it's close to 40%, that's usually what we can disclose. In terms of further information on the backlog, we have, of course, also announced that EUR 140 million of the current backlog is already bound for 2026. And we can also safely state that we have about EUR 20 million in service and upgrade business also for '26 already slated. Unknown Analyst: Okay. Maybe let me ask a little bit differently. On your CoWoS, I think the scanner is a little bit older technology generation, right, if I understood that correctly. And the question would be, what are your lead times? I mean when the customer places an order with your scanner business until you ship and final acceptance, what is the time lag there for the scanner business? Burkhardt Frick: Yes. For scanners, of course, it's around 6 months. But of course, as we stated also in previous calls, we tripled our output capability this year. That means also we are pretty full in that sense. So that's also why we concentrate on our main application field, which you rightly state is CoWoS. Now of course, we also get inquiries, how quickly can you top this up. And that's exactly the discussions we are currently having with those lead customers because they expect basically deliveries already as early as in Q1 next year. So right now, we have very active engagements with these customers who also realize that our lead times reduced, but I think they are waiting really until the last second how to place orders. And then we also have to make sure that we can react very quickly, and that keeps us busy. But that's also causing a bit positive momentum of the last days. Unknown Analyst: Okay. And would it be fair to assume that the gross margin, the product mix impact was also due to this, yes, high volume ramp in scanner business and that this is a little bit more service intense for you in order to have the machines up and running with your lead customer, and that might change with the second generation of the scanner tool you are planning to introduce next year? Burkhardt Frick: Yes, it definitely will change with the next generation of scanners. But we need to distinguish between product margin and supporting efforts. So I think the supporting efforts of our scanner are not higher than other 2.5D or HBM type products. So you need to account for that. For some of our products, our support efforts were higher than anticipated, which I explained earlier, which caused the extra cost. But I mean, you're absolutely right that the scanner is not our highest margin product. Unknown Analyst: Got it. And then final one. If you look at your product mix or backlog, what you have right now and the EUR 140 million for 2026, do you expect that the share delivered from your Asia business will be substantially different from this year? I mean that you have much higher shipments in your Asia locations than here in Europe? And if so, what would be the incremental there, the incremental shipments? Burkhardt Frick: You mean shipments from or to. Unknown Analyst: No, from your Asian manufacturing footprint, right, your fabs in Asia. Burkhardt Frick: Yes. Thank you. So first of all, our regional mix will not change, except what we explained, the decline of the China portion. In terms of the products we manufacture out of Asia, they are the same products we are currently manufacturing. But of course, this can change if we are introducing new products. As you know, we are launching up to 5 new products next year. And we have to see also where we will produce those products. So there's a fair assessment, a fair judgment that the amount of products will increase, which we are going to produce in Asia. Unknown Analyst: But you cannot quantify like EUR 50 million more sales from your China -- Asia footprint and versus this year, it's not possible right now from your backlog? Thomas Rohe: No, that's -- I can answer this. We use both sides really pretty flexible in terms of where we do have rich capacity. So we try to leverage our load of factories in both sides as well as in Asia as well as in Germany. Operator: So by now, we have 4 participants left who raised the virtual hand. So please be patient. And the next one who is able to ask his question is Michael Kuhn. Michael Kuhn: I'll start with one on the guidance once more. If I just use the midpoint of your sales and gross margin guidance and then combine it with the midpoint of your EBIT margin guidance, I'm ending up at Q4 OpEx of EUR 34 million, which is clearly above the less than EUR 30 million you're envisaging for the final quarter. So let's assume you do midpoint sales, midpoint gross margin, is it fair to assume that you would rather end up at the upper end of the EBIT margin range, excluding obviously any one-offs you might book in the fourth quarter? Cornelia Ballwießer: We calculated various scenarios over the last past days. And if we achieve the gross profit margin in the middle of the range, let's say, 36%, it is likely that the EBIT margin will end up above the middle. Yes, could be. Michael Kuhn: That is good to hear. Then one more in the context of OpEx. So we are obviously in the upper 20s run rate-wise right now. This is still including some double costs. At the same time, I guess, IT costs will rise into next year. From today's point of view, what would you think is a realistic OpEx run rate to assume for next year, maybe from the second quarter onwards when you don't incur the double cost in Taiwan anymore? Cornelia Ballwießer: Yes, good question. Our ambition is that we have a run rate, let's say, EUR 30 million. Michael Kuhn: Around EUR 30 million. Okay. And last but not least, you mentioned product launches already. Obviously, those include new products in the Photomask area, including the mid-range product. Do you think part of the softness you see from Chinese customers right now is due to those customers waiting for those products? And that said, is there a chance of, let's say, a little China revival at some point next year once the new product range is available for orders? Burkhardt Frick: China revival sounds like the rolling stones in concert. But I -- obviously, the mid-end range of the mask cleaner is really geared for nodes between 30, 90 nanometers, which are the predominant nodes China is running on. In the past years, they bought very high-end equipment, which was basically overspecced because they don't have EUV equipment in China. So the mid-end range is a better fit for the Chinese market. So yes, we do expect that, that business will pick up once that system is in mass production. And we already have several reservations and quite some are out of China. But also, of course, this mid-end product is interesting enough to replace the aging fleet of old mid-end mask cleaners. Therefore, there is also quite some replacement need lining up. Operator: And then we will move on with Madeleine Jenkins. Madeleine Jenkins: I just have one clarification. The customer that is pushing for kind of expedited deliveries in Q1, I think you said. Is that memory or logic? Burkhardt Frick: It's fair to say both. It's not a single customer who is pushing. Madeleine Jenkins: Okay. And then in terms of -- on the kind of HBM side specifically, are you still running at like underutilization at your big Korean customer? Or is that kind of back to the levels where you'd expect incremental orders? Burkhardt Frick: Well, I think one -- we have 2 out of 3 HBM players. And one is really running at full swing. And then, of course, that's also the one which kind of further scales up. The other one, of course, is just about to accelerate again, and they still have, I would say, headroom left. So we don't see short-term excess business coming up there because I think they're not running at peak utilization. Madeleine Jenkins: Okay. So the kind of Q4 orders isn't necessarily driven out of Korea. Is that fair? Burkhardt Frick: Correct. Madeleine Jenkins: Okay. And then I just had a -- you've got a high-NA cleaning tool, Photomask cleaning tool coming out. Could you just give us a sense of kind of when you expect the first orders for that? And also what sort of ASP uplift versus the low-NA version? Burkhardt Frick: Yes. Madeleine, you're referring to the MaskTrack Smart cleaning platform, which is launching pretty much as we speak. So we are working with some lead customers who want to position this system in kind of -- it's more than just evaluation. It's kind of early production state. So we do expect that we get the first orders still this quarter for this first system. But we are, of course, in the middle of the negotiations, and it's important that we get this first volume customer order for that system, but we anticipate it this quarter. Madeleine Jenkins: And just on the ASP... Burkhardt Frick: Sorry, say again? Madeleine Jenkins: Just on the ASP, is it kind of significant uplift versus the last generation? Burkhardt Frick: It is somewhat more expensive than a MaskTrack Pro. But as you know, it highly depends on the configuration. So this is a tool which can be configurated to a larger extent and therefore, will be also more expensive than the existing platform. Operator: And then we move on with the questions from Johannes Ries. Johannes Ries: Also some follow-on questions to the cost side first. Maybe first, what -- the leasing cost for the old production side, which will fall away at the end of Q1, how high is this maybe regarding to the full year or for the remaining 9 months. Therefore, what is maybe the positive impact? Then maybe on the bonders, if the bonders recover, will they have the same margin like in the past, there have been maybe some special high prices regarding the shortage or maybe the urgency at the customer side to cut the products in the past. So are you achieving the same pricing at the temporary bonding side like in the past? And on the coaters, is anything possible also to increase the margins there because it seems that they have comparable low margins. I know there is more competition from Tokyo Electron, for example, but maybe also an update there. And you talked a little bit now on mask cleaners. How is the ramp for all the new products with better margins, the scanners? I have also something like you have a new coater coming on the market for next year. That's maybe all impacting a little bit the cost and the margin side. Therefore, I took all these questions in one. Burkhardt Frick: Yes. Thanks, Johannes. That's a lot of questions. Let me try to start taking them down one by one. So the bonder orders, of course, we had at the very early phase of the ramp, they did have somewhat better margins because we were -- these were rush orders. We had to expedite things. So once we got into real volume phase, also we had more volume prices applied to that. So the initial systems were more profitable than the volume systems. But this has stabilized now, so we don't anticipate unusual things there. So they are above average compared to the rest of the portfolio. On coaters, we have -- we keep getting stable repeat orders from existing OSAT customers. And that is a very stable business and also this customer continues to place these orders. There was also one of the customers I visited early last week. So we can also expect a good solid business there. You are absolutely right. The competitive situation is very strong. But when you're a tool of record, you at least can retain your seat, but you have to price competitively. And that's why coaters usually are more on the average spectrum of our margin. For the Photomask tools, we are launching, so the new systems, they are completely redesigned. They do have a different margin structure, but you cannot just increase margin without offering new features. So it's always a mix of both. Then I think you had a question on the rental cost, right? Cornelia Ballwießer: Yes. The impact of the additional rental cost for the old site rental cost that turns out in a positive impact next year is EUR 600,000 per quarter. Johannes Ries: Per quarter, okay. And when will the scanners be launched this new scanner generation, will it happen in the first half next year? Burkhardt Frick: No, I think that's a bit too early, but we will deliver the first system around, yes, mid next year to the first customer. And that's, of course, we get more feedback. The broad launch of the system is more towards the end of next year. Johannes Ries: Okay. Super. And also maybe there's definitely much more but not to go in too much details. The wafer cleaning product will also not launch next year or will it come over the next year? Burkhardt Frick: They will launch next year. And we kind of -- we get the first hardware at the turn of the year. And then, of course, we need to refine the processes. We have one lead customer who will start evaluating. And then we will have not only the volume tool because the first one is a 200-millimeter wafer cleaner, low volume, there will be high-volume tools coming shortly after. And we have -- since we kind of got quite some customer traction, we have now 300-millimeter customers interested in that tool as well. So we are also now checking how fast can we launch a 300-millimeter tool. So wafer cleaning will be a family of tools, the first one coming next year. Johannes Ries: Super. Great. Maybe also on our calculation for next year, you mentioned you have on top of the EUR 140 million in product backlog for next year, you have also 20-point something on service and spare parts. What is the normal number for service and spare parts for the whole year? I think it's more than EUR 20 million. Burkhardt Frick: Yes. Johannes, usually, it's about 15% of the total revenue. I think the numbers, I think we stated before were, of course, the first 9 months and then the portion of 26 out of those first 9 months. But I think it's -- you can roughly assume 15% of the total revenue is the service-related part. Johannes Ries: Only maybe a follow-on. You mentioned it already in the comments. The recovery you see maybe in the pipeline coming on maybe the whole back-end market and also driven also partly by the strong business with AI. It's not only the OEMs, it's also the OSATs you see a recovery. Burkhardt Frick: Yes. And they -- of course, they are somewhat connected because the 2.5D players, they are closely linked to OSATs as well. And you have all these new sites evolving based -- driven by CHIPS Act projects, which are also starting ramping. I mean all the big news were, of course, for the front-end fabs, but you also need the back-end operations somewhat close by, and that's starting to evolve as we speak. Operator: So before we move over to Martin Marandon, who is waiting for such a long time in the queue, please be reminded that it's still possible to ask questions if you may have. And with this, Martin, please go ahead with your questions. Martin Marandon-Carlhian: The first one is on temporary bonders. I was wondering there if you mentioned the AI demand picking up. There is also the qualification of one of your customers. But I was wondering if the transition to HBM4 is already a factor here because we know that the number of layers are increasing -- the average number of layers. So it should demand more equipment. So do you think it has started now? Or will we see these effects maybe a bit later? And I have some follow-ups. Burkhardt Frick: Yes, it's a good question. Of course, our -- at least one of our lead customers is in active pursuit of also planning the ramp for HBM4. And we received the good news last week that we are qualified with our temporary bonder for the HBM4 process. And that is good news because the ramp of that will start from late Q1 or starting Q2 next year onwards. Martin Marandon-Carlhian: Okay. That's very clear. And maybe still on temporary bonders. I mean, Johannes mentioned some competition with Tokyo Electron, but I was wondering about new entrants as well. So like EVG, for instance, if that's something that you see at some point, multi-sourcing in that market or you do not see it at the moment? Burkhardt Frick: Yes, we do see, of course, our competition. There are no new entrants. They are the same. They have been the same in the past years. And indeed, EVG and TEL are our main contenders there. And yes, they are actively pursuing our base. So yes, so this is happening to some extent. But I think for now, we have the majority of our equipment at those existing customers of ours. Martin Marandon-Carlhian: Okay. That's clear. And the last one is on the EBIT margin for next year. I mean, I know it's too soon to give a guidance. But I'm just wondering with the backlog that we see at the moment, it probably implies a down year next year, and you have the consensus down by about 15%. And I'm just wondering in that context, let's say, of a double-digit decrease of sales, how much space do you have to reduce cost on the OpEx side next year? Do you think that, for instance, mid-single digit could be a credible scenario if you have such a down year? Or is it too aggressive? Burkhardt Frick: You mean mid-single digit for what, which... Martin Marandon-Carlhian: For decrease of OpEx. Burkhardt Frick: Yes. I think that's a reasonable assumption. I think we need to stay below EUR 30 million. I think this was mentioned before. We also said that we will not reach gross margins of the heydays like '24. So we will be also there, I think, definitely below 40%, but above the numbers we are currently seeing. So because we have to compensate this with a lower top line. Operator: And now we have a further virtual hand from a person who has dialed in with the phone ending 847. [Operator Instructions] I can see that you are unmuted, but unfortunately, we cannot hear you. Malte Schaumann: Can you hear me now? Operator: Yes. Now we can hear you. So if you can please introduce yourself to us. Malte Schaumann: It's Malte Schaumann, Warburg Research. First question is a follow-up to the former question of -- related to Chinese waiting for the new tools and the environment of the demand. I would broaden that to the overall customer base. Do you see potentially among other customers kind of holding back because you're about to introduce new product generations? I mean you indicated a pickup in activity and in the pipeline. But do you see generally some customers holding back in light of the upcoming product workovers? Or is that not really the case? Burkhardt Frick: Yes, Malte, that's very hard to say because we cannot judge if they're waiting for new products, but some of these new products are only launching late next year. So if there is a demand and we don't have the right product, I'm pretty sure customers will order elsewhere. So if they wait, of course, good for us. But we -- where we see a kind of more wait behavior that's on the mid-end cleaner because that is the right tool for that market. There, we get a lot of inquiries. But of course, we have to get the first tool out first before we can be bullish about that. But other than that, we, I think, see customers simply wait till the last moment until they order and then they are rushing and then we have to see how we can, even with our reduced lead time to make it happen. That's the current discussions we have also with our -- among our sites. Malte Schaumann: Okay. Then on the rework on some tools that impacted the gross margin. What caused that basically? I mean that this happens from time to time, but what caused it this time? Was it kind of design flow? Was it new customer demand? Was it the extreme -- potentially extreme ramp? And do you think that you more or less sorted these out? I mean you indicated that this is kind of mixed effect so might reoccur next year. So maybe you can expand a little bit more on that topic. Thomas Rohe: Well, Malte, Thomas speaking here. So the question cannot be easily answered, to be honest, because it's a lot of facts which really come into this point here. On the one side, for sure, our customers are also very demanding with the request for support there because they also ramped up in a pretty short time and really they already have by themselves a very demanding customer. So the support was really requested by customers to be there on site, sometimes even 24/7 to support this ramp-up of our customers, and this was really partially -- only partially anticipated, and we were really a little bit overwhelmed by the request and also the hard request from customers. Nevertheless, we supported them pretty good, I guess, and this is also why we still have really very good relations with these customers because they are taking us into account also for our next-generation HBM4, as Burkhardt already said. And also, if you go really in this steep ramp-up, we see sometimes also some topics which we did not see if we use our tools in a normal way or 2-shift way. So this is some, let's say, improvements, which we also did also because customers changed the process chemistry partially, where we also had some learnings together with our customers. And this is -- these are the main reasons why we had to support more than we anticipated before. Malte Schaumann: Okay. And the reason why you indicated that this is a mixed effect that you think you're not fully through, so that might reoccur? Thomas Rohe: I don't think that it might reoccur. We learned a lot and we learned together with customers and they let us learn together with them. So from that point of view, the learning curve also for us should go down so that we really reduce it. It will not go away completely, but it should really be reduced significantly. Operator: And we have further virtual hand from Nicole Winkler. Nicole Winkler: So basically, I have one left regarding operating cash flow development. So basically, in Q3, you turned positive again. Can you give us an indication what we should expect for Q4 and where we could end up for full year 2025? Cornelia Ballwießer: Yes. As you said, in Q3, we turned in terms of operating cash flow into a positive number. And we think that there is a good chance that we can end up at EUR 25 million in a positive territory. So this means in Q4, we will have or there are a good chance to have the EUR 28 million cash inflow that we need to get in a positive number. Sven Kopsel: That's for free cash flow, Cornelia, right? Cornelia Ballwießer: Free cash flow, yes. Sven Kopsel: And for operating cash flow, for sure, this would mean that this number should be a bit higher because we also still have CapEx ongoing. Cornelia Ballwießer: Yes, that's right. It's around -- yes, I would say, EUR 30 million, EUR 35 million we need in terms of operating cash flow. Operator: And then we have a follow-up from [indiscernible]. So you should be able to speak now. Unknown Analyst: A brief question on your next-generation scanner tool. If I remember correctly from your previous calls, this is also enabling panel level packaging, right? If so, if -- can you give a little bit color around -- I mean, what we hear panel level packaging could bring cost advantages to TSMC, et cetera, well above 30%. So the technology seems to make sense. But then can you elaborate a little bit, are you covering different parts of the manufacturing process? And can you give a little bit color on the competition part of the business? So are you working with one lead customer and you're exclusive there? Or are other companies in the qualification process as well? A little bit color would be great. Burkhardt Frick: Yes, [indiscernible], thanks for the question. I mean, obviously, yes, this is really for panel level packaging. This new UV scanner can handle both wafers and panel-level package applications. There will be several versions of that also with a path to 1 micron resolution. So it's also a more accurate system, but this will not be launched from the get-go. The first focus is indeed panel level packaging for that one lead customer whom we develop this closely together. So this is the launching platform. This will be applied in similar applications as spaces as the current ones, but we have access to more layers and more process layers than before. And also, it will open the door for more other customers because this is a very interesting field to be. So we will be able to broaden our exposure there. Unknown Analyst: And competition part? Burkhardt Frick: Well, competition is the same as we have now, which are I-line steppers and scanners, you have already in the market, but we currently have a lead over them in cost of ownership and throughput. And we, of course, want to maintain that lead. Operator: And in view of the time, we will come to the end of today's earnings call. So thank you to the Management Board for your presentation and the time you took and also to you, dear participants, for joining and your shown interest. So should further questions arise, yes, Sven Kopsel from Investor Relations will be happy to assist you. And on that point, it was -- yes, it was our pleasure to be your host. And Sven, final sentence belongs to you. Sven Kopsel: Yes. Thank you so much. Just one remark. You know that we are going to have this CMD on Monday, the 17th of November. If you have not registered yet or if you are unsure, maybe please just contact me or Florian Mangold as soon as possible. We are still accepting registrations. So take care. Goodbye.
Operator: Good morning, ladies and gentlemen. Welcome to Saturn's Third Quarter 2025 Results Conference Call. [Operator Instructions]. The conference is being recorded. [Operator Instructions]. I will now turn the meeting over to Ms. Cindy Gray, Vice President, Investor Relations. Please go ahead, Cindy. Cindy Gray: Good morning, everyone, and thanks for attending Saturn's Third Quarter 2025 Earnings Conference Call. Please note that our financial statements, MD&A and press release have been filed on SEDAR+ and are available on Saturn's website. Some of the statements on today's call may contain forward-looking information, references to non-IFRS and other financial measures, and as such, listeners are encouraged to review the disclaimers outlined in our most recent MD&A. Listeners are also cautioned not to place undue reliance on these forward-looking statements since a number of factors could cause the actual future results to differ materially from the targets and expectations expressed. The company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless expressly required by applicable securities laws. For further information on risk factors, please view the company's AIF filed on SEDAR+ and on our website. Also note, all amounts discussed today are Canadian dollars unless otherwise stated. Today's call will include comments from John Jeffrey, Saturn's CEO; Justin Kaufmann, our Chief Development Officer; and Scott Sanborn, our Chief Financial Officer. I'll now hand the call over to John. John Jeffrey: Thank you, Cindy. Good morning, everyone, and thank you for taking the time to join us today. I'm pleased to share some additional context around our third quarter results, which reflects another consecutive quarter of outperformance as we continue to execute on our Blueprint strategy. The Q3 production averaged over 41,100 barrels a day and exceeded our previous guidance as well as analyst consensus, which had us just over 40,000 barrels a day. We also beat guidance on a BOE operating cost in Q3, which came in at $19.24, below the $20 per BOE annual target. This past quarter also showcased Saturn's ability to be nimble, our commitment to allocating capital to the highest potential return opportunities. Given the uncertainty and volatile commodity price environment that prevailed in the quarter, we elected to reduce our original $300 million development capital budget by 18% to approximately $255 million and pivot our focus towards opportunistic tuck-in opportunities. These tuck-ins offered more attractive capital efficiencies than drilling, having a combined production addition cost of under $16,000 per flowing barrel. Reallocating capital to M&A allowed us to increase production while preserving the value of our existing assets by not drilling them at a time when prices were weak. How we view this is when prices are stronger, we can always go back and drill those wells, but we won't be able to execute on these deals at this pricing level. Further, by coring up in areas where Saturn has strong development success, we can leverage our size, scale and existing infrastructure. which allows us to optimize production, reduce costs and enhance the performance of the assets. Our first tuck-in acquisition included an asset package in Southeast Saskatchewan that was approximately 4,100 BOE a day, comprising just under 70% liquids for a total consideration of $63 million. These acquired assets have an estimated 255 gross company identified locations, including open hole multilateral development potential in the Midale and Torquay. The asset features high working interest, optimization and cost reduction potential, along with extensive opportunities to consolidate facilities and batteries. As Justin will expand on, this package is strategic for Saturn. It expands our runway of open hole multi-leg drilling locations, which are among the highest rate of return wells in our development program today. With the second tuck-in, which closed in October, we acquired a private company operating in Central Alberta, located within Saturn's greater Pembina Cardium area for total consideration of approximately $22 million. In addition to its 1,300 barrels a day of low decline current production, Saturn gained over 80 internally identified drilling locations in the Cardium, Glauconite and Bluesky development, enhancing our operation in the area. Our operations team has already started digging into these assets to identify cost synergies, optimization opportunities and streamlining potential. The nature of our conventional asset base has allowed us to be very opportunistic by being able to stay nimble and pivot quickly when market conditions require. We are unique from other peers who are developing resource plays where they can cost tens of millions of dollars with lead times that can take several quarters or even years to plan and execute. With our assets, we can respond and adapt quickly to a dynamic market condition. As a result of production adds from the acquisitions, along with our strong drilling results to date in 2025, Saturn remains on target to exit the year with a production range of 43,000 to 44,000 BOE a day, which will represent a new production record for the company. We are committed to value creation and continue to use share buybacks as an effective way to return capital to shareholders and drive equity value over time. Our team believes the combination of ongoing share buybacks, coupled with tuck-in acquisitions contributes to growing production per share, adjusted funds flow per share and free funds flow per share. For example, August 2024 to today, we have bought back nearly 16 million shares in the open market through the NCIB and SIB, returning approximately $36 million to shareholders. Over a similar time frame, we have also increased our production per share by 22%. I'm extremely proud of the team who continue to give 110%, putting in the hard work needed to advance Saturn's goals and deliver compelling value for our shareholders while prioritizing safety to ensure that every one of our employees makes it home safe at the end of every night. I'll now pass it over to Justin to expand on our capital program and development highlights in the quarter. JK, over to you. Justin Kaufmann: Thanks, John, and good morning, everyone. As John mentioned, Saturn made the decision to shift a portion of our 2025 drilling capital to M&A during Q3 as we identified 2 tuck-in opportunities that would compete for capital in the prevailing commodity price environment and which we could acquire for attractive metrics. Our Q3 production does include new volumes from the Southeast Saskatchewan tuck-in acquisition, but it also showcases our ongoing type curve outperformance, plus the start of our drilling program after spring breakup, which supported the guidance beat. Our Bakken open hole multi-leg program and conventional Spearfish development wells coming online in Q3 contributed to another quarter of strong results. Saturn invested $87 million of capital in Q3, with $58 million of that directed to drilling and completion activities, including 29 gross wells, 23 of which were in Southeast Saskatchewan and 6 in Central Alberta. We also directed $17 million to purchase 2 strategic parcels of undeveloped land, which we believe will unlock 60 new open hole multilateral locations, representing 5 years of drilling inventory to an additional rig in Southeast Saskatchewan. Our open hole multilateral locations in Southeast Saskatchewan offer some of the shortest payouts and highest potential returns among our undeveloped locations, even in a softening oil price environment. Several of our open hole Bakken wells ranked in Saskatchewan's top 10 best performing wells over the last year. Most recently, our 16-21 wells was ranked as a top 10 well in the province in September for monthly oil volume and daily oil rate. This is a testament to how prolific these wells continue to be. We are excited about the potential we see with this program and our open hole inventory currently represents about 15% of the 2,500 total identified locations in our portfolio. The open hole multi-leg portion of this portfolio has essentially doubled every year for the last 3 years as we continue to progress this exploitation technique to other plays. Most recently, we continued this expansion into the Spearfish play, where we became the first and only operator in Canada to have drilled in an open hole multilateral Spearfish well, and now we have drilled 3 of them. Our third Spearfish well at 1605 came online during the quarter with an IP30 rate of 330 barrels a day. This is about 3x our internal estimate type curve of 110 barrels a day. These initial strong results support our plans to drill 4 additional Spearfish open-hole multilateral wells next year. Building on this success, we are planning 2 open hole multilateral reentries into the Midale in Q4 with up to 6 legs each. This would represent the first ever Midale open-hole multilateral reentry wells ever drilled. These wells are expected to be drilled on land acquired through the Southeast Saskatchewan tuck-in we completed in Q3. More broadly, we expect to allocate up to 35% of our 2026 development capital to our open hole multilateral program, including plans to drill our first of 2 Torquay open hole multilateral wells. With this, we expect to be the most active open hole multilateral driller in Saskatchewan next year. And if oil prices further weaken, we can shift more capital to this program, positioning us to generate compelling returns and robust economics even in very weak price environments. In addition to our open hole multilateral development, we continue to advance the Creelman waterflood in Saskatchewan, where we currently have 5 active injectors. In late October, we received regulatory approval to convert another 2 producers into injectors, which not only support base production, but also fuels future repressurized development locations. Investing in waterflood is a part of Saturn's ongoing strategy to mitigate declines and enhance our long-term sustainability. In Alberta, we finalized the drilling and completion of our 3-well Montney pad featuring 3-mile extended reach laterals. These wells are the longest laterals on record to ever be drilled in the Kaybob area. The North well on this pad has the most productive days and is already exceeding type curve expectations. The South 2 are still cleaning up, but based on reservoir quality observed while drilling, we do expect similar results once they've reached peak production. Finally, I'm proud to share that Saturn drilled the fastest extended reach horizontal Cardium well ever on record during the quarter, drilling to 5,090 meters measured depth on a single draw, achieving well completion from surface casing to full depth in only 4.8 days. These best-in-class results are another example of Saturn's commitment to enhancing efficiencies while operating safely and responsibly. With that, I'll hand things over to Scott for an overview of our financial results. Scott Sanborn: Thanks, Justin. Saturn demonstrated continued resilience this quarter despite a challenging price environment with WTI prices falling 14% over the comparative 2024 period. Operationally, the company continued with its success, producing over 41,100 BOE per day touring revenue over $235 million, driving adjusted funds flow of $103 million or $0.54 per share compared to $94 million or $0.46 per share in the third quarter of 2024, a 17% increase on a per share basis. The integration of the company's most recent tuck-in in South Saskatchewan, which closed on July 31, has been seamless with our production mix remaining consistent at 81% oil and liquids compared to 83% in previous quarters, reflecting the 67% oil and liquids weighting from the acquired asset. Our team continued to focus on operating cost reduction initiatives, realizing year-to-date net operating expense per BOE of $19.04, down from $19.30 on a year-to-date basis prior year. Our third quarter net operating expense per BOE of $19.24 reflects the increased field activity following a seasonal low period due to spring breakup in prior quarters, consistent with increased capital expenditures and associated workover costs. Saturn maintains its annual net operating expense target between $19.50 and $20 per BOE. During the quarter, we returned $12 million to shareholders through a normal course issuer bid and substantial issuer bid. Subsequent to Q3, we returned an additional $4.6 million via the NCIB. As John mentioned earlier, we successfully bought back nearly 16 million shares, representing approximately 8% of the shares that were outstanding at the time we launched the first NCIB in August of 2024. With the combination of tuck-in acquisition activity in Q3, the restart of our drilling program in July after spring breakup and movement in foreign exchange rates, net debt at September 30 was $783 million. Over the past 5 quarters, Saturn has repaid just under CAD 135 million or USD 95 million on the principal outstanding balance of our notes by making our regular 2.5% quarterly amortization payments as well as the open market purchases we did at a discount earlier this year. To drive a more meaningful leverage ratio, we are presenting our net debt to adjusted funds flow on a pro forma figure that incorporates the impact from our Southeast Saskatchewan tuck-in assets, resulting in net debt to pro forma annualized cash flow to 1.6x or 1.4x net debt for EBITDA in line with guidance. Saturn maintains strong liquidity and financial flexibility with $34 million of cash on hand at quarter end, plus an undrawn $150 million credit facility and an uncommitted accordion feature that allows for the expansion of additional $100 million, giving us up to approximately $250 million in total. Looking out to year-end, we are expecting Q4 capital expenditures to range between $60 million and $70 million with average production between 42,000 and 43,000 BOE per day, while our December exit approaching 44,000 BOE per day. This reflects our fourth quarter drilling program and new production from the Central Alberta tuck-ins, which closed October 20 through the end of the year. Saturn anticipates releasing our full 2026 budget and guidance mid-December. That concludes our formal remarks. So I'll thank everyone for joining us and hand the call back to the operator to begin Q&A. Operator: [Operator Instructions]. Our first question comes from Adam Gill at Ventum Financial. Adam Gill: One question for me. As we go into 2026 in a bit of a softer oil price environment, how are you thinking about prioritizing production maintenance versus buybacks versus net debt reduction? John Jeffrey: Yes. Thank you, Adam. So it's a constant kind of battle. So we're always looking to deploy our capital at whatever can get us the highest rate of return. So we're going to go into the year, most likely when we do set guidance, most likely just to maintain flat production. Meanwhile, the NCIB is likely to continue. However, should we find M&A opportunities that pose a higher return than drilling our own land, as you've seen us do in Q3, I think what we'll do is likely reduce our CapEx to fund those acquisitions. We really like that strategy in that not only does it leave our reserves in the ground, but if we're able to acquire some of these assets, at a discounted price due to this commodity. That's something we like. We get all those reserves. So generally, we get production online that's a lower decline at a better capital efficiency than drilling our lands. And again, we can save our locations for that -- for a higher oil price. So that's just something that we're always watching. And again, if we can monitor that and get the highest price, the highest return on our capital, that's where you're going to see us continue to do. Adam Gill: Sounds good. One quick follow-up. Just on terms of declines, what do you think your decline would have been through a 100% organic drilling program coming into 2026 versus doing the tuck-in acquisitions that you disclosed in Q3? John Jeffrey: Yes. That's a great point as well. So again, by acquiring mid-life cycle assets as is a Blueprint, you're getting assets with a much lower decline. Obviously, a new well has a much higher decline. So should we have spent all that capital on CapEx instead of doing the M&A, I think we would have been around the 23%, 24%. However, we get -- this will be closer to that 20%, 21% now with these 2 acquisitions and the reduction in CapEx. Operator: And our next question today comes from Jamie Somerville at ROTH Canada. James Somerville: How does the 330 barrels a day from this Spearfish multilateral compared to the previous 2 wells that you drilled? And why was your type curve only 110 barrels a day? So like what I'm trying to get at is, what are the chances that this is just a fluke rather than a significant technological breakthrough. John Jeffrey: Well, I will pass it over to Sylvester Zdonczyk to elaborate a little more on that. But I will say, I think generally so I will agree that, that was more of a risk type curve. But I'll pass it over to [ Sylvester ] to comment. Sylvester Zdonczyk: Yes. Thank you, John, and thank you for the question. Absolutely for us, this is a new concept, a new play. So our type curve was risked. So while we're pleasantly surprised with 330 barrels a day, the 110 barrel a day type curve was a risk number. So we've done modeling. We've looked at analogs, but we do have limited data coming into the Spearfish in this specific zone for the first time. So this is better than our 2 previous wells. The type curve would have been closer average to the 2 previous wells. So while we can't expect 330 barrels a day every time for IP30, we do expect strong and consistent results. So this result may result in us writing up that type curve, but we wouldn't consider it a fluke. We knew what we were going after. We saw good signs when we were drilling. So we're expecting to see strong results go forward. Again, it might result in a slight write-up in our type curve. But again, that type curve represents an average. And as we learn more about this play, as we drill more wells, we'll refine that as we go. But we're confident in our inventory for 2026 and beyond. James Somerville: That's helpful. Can I follow up as we think about potential reserve bookings from everything you've been doing, both organically and acquisitions, but in particular with regards to multilaterals, can you maybe talk around the reserve booking potential? I'm not clear as to the extent to which your -- the locations. I think you're indicating like 375 multilateral locations currently, but I don't think all of those were booked at year-end 2024. And I don't know to what extent that number -- that estimate has increased since year-end 2024. John Jeffrey: So corporately, we try and be conservative in that we only book what we have strong confidence in. And as we've expanded our overall multi-leg drilling, that will allow us to further increase our bookings. We definitely did not have those booked, but we are lucky because Sylvester actually does our reserves as well. So can you give a little color on what we had booked going into last year, going into this year and what we could expect going into next year? Sylvester Zdonczyk: Absolutely. It's a well-timed question as we're going through our 2025 year-end reserves process right now. And as John said, we were a bit conservative, but also not knowing to the extent, which we'd be drilling in the next 5 years, which remember, with reserves, you need to maintain that line of sight to development and also balance the inventory that you can drill. We have close to 2,500 locations internally that are viable and that we like. But unfortunately, we just won't drill them in a 5-year development plan. And so for reserves, we must honor that. So that's why last year, we only had 1,115 booked locations. Looking ahead to this year, we will see growth in that number, and we will see growth in our open hole multi-lats as we drill more and have line of sight to drilling those in the coming year and within the next 5 years. So I can't give you a number of what 2025 year-end will be. We were only in the 20s last year for open hole multi-lats, so quite conservative, but it did honor our pace of development. Now as we drill more and have multiple rigs drilling open hole multi-lats, we will see an increase in that number. And as we go through this process, that will become apparent in the next couple of months. James Somerville: Sorry, really quickly, I missed the number that -- of multi-lats that you had booked last year. Did you say in the 20s? Sylvester Zdonczyk: Yes. Last year, we were in the 20s in the Bakken, and we only had 3 booked in the Spearfish. So again, we had only drilled at that time last year. So us and the reserve auditors weren't prepared to book tens or hundreds of those Spearfish. But now that we've drilled 2 more and have line of sight to 4 this year and beyond, we'll see that number grow. Operator: And our next question comes from Abhi Patwardhan with Sculptor Capital. Abhishek Patwardhan: Congratulations on another strong quarter. With regards to your reserve report since we are already in November, have you been talking to your auditors around getting better credit for a slightly higher or above type curve performance? John Jeffrey: Yes. Again, I'll hand it over to [ Sylvester ] here in a minute, but what we don't want to do and what we've been successful in doing thus far is we've never had to take a write-down on our reserves. Again, maybe we are a little conservative in our approach. But what we'd rather do is have them come in a little more on the conservative side, beat expectations and grow our reserves instead of getting a position where you're overbooking and then having to take write-downs. But I will pass it over to Sylvester to comment further. Sylvester Zdonczyk: Yes. The other thing to add to that, John, is that the type curve represents a field-wide average. So we're not just looking at a localized pool, especially in Southeast Saskatchewan. We're taking our results from the past year as well as recent years as well as our peers and competitors in the area. So our outperformance speaks to our technical team's ability to deliver on those results as well as the quality of our reservoir and inventory. So while there is potential, and we do look at this year-over-year. So I shouldn't say that it doesn't happen because every year, our type curves are reviewed. We look at the well results, we look at our remaining land base, and we do reflect our remaining inventory. So the fact that we've outperformed speaks well to our technical team and to the quality of assets and reservoir that we do have, but we are honoring the field and pool averages. So we will look at that. We do look at that every year. It's not stagnant. They get looked at year-over-year, and you might see some changes to reflect the most recent performance, but we also want to honor what our remaining inventory is, not just within the next year, but again, within that 5-year book period on our proved reserves. John Jeffrey: And I think the best example of that is one of the fields we've been in the longest would be the Viking. And the Viking for almost 5 or 6 years in a row, I believe, that type curve has increased because we've had such great results in that field. So again, it's -- the more time we spend this field, the more data points we have, the more confidence we get, and that allows us to take higher estimates on those wells. Again, the Viking is the best case because we were beating type curves consistently for 6 years in a row. And each one of those 6 years, you've seen that type curve come up. So again, something that hopefully, we can continue these great results in our other fields, and you'll see that similar trend. Abhishek Patwardhan: And John, remind me for Viking, how much above the type curve are you right now? I mean when I say type curve, I mean the type curve that you got credit for in your reserve report last year? John Jeffrey: So this year, we have actually deferred a Viking program. Again, in favor of with this commodity price and the relatively higher declines you get in the Viking, we deferred that in favor of some of these tuck-in acquisitions. The last Viking program that we executed on was last year. I think we're 22% ahead of type curve there. So strong consistent results, which is what we like. But again, as the type curve comes up, year-over-year, your beat on that will eventually decline until you're at type curve. And that's the point is not just to beat the type curve, but eventually land on it. So you're booking properly, you're executing accordingly. But yes, so no Viking results so far this year. But in the past, we have managed to beat our expectations even with those expectations rising year-over-year. Abhishek Patwardhan: Got it. Would you mind sharing some color on hedging? I'm curious how hedged you are right now and if there is any changes to the hedging philosophy internally? John Jeffrey: Yes. So I'll pass that over to Scott to have a couple of comments. I will say, I think this will make this part of our corporate presentation moving forward. We have been really lucky this year in that the 3 times we have added hedges were the 3 highest oil prices we've seen in the last 10 months. But as far as the amount hedged and where we're at with that hedge book, I'll pass it over to Scott. Scott Sanborn: Abhi, Scott here. Yes. So currently, right now, we're 50% hedged on a 12-month basis on oil and liquid volumes. We've been pretty active on the gas front as well. So we're between 50% and 70% of gas between 280 and 350 makes up a small proportion of our production, but still there, nonetheless. Thereafter, we're about 20% for the following 6 months. So we're pretty active in the market. As John mentioned, we did take the opportunity this year to hedge at the peaks of oil in early January and again in August. And we layered on some subsequent hedges in our financial statements as noted yesterday. Abhishek Patwardhan: Got it. And one last one for me. What's the base decline across all the assets, the entire portfolio right now? John Jeffrey: Yes. So I think going into '26, you should see a decline right around, I would think that 21%, 22% kind of depends on if it's an annual average or specific to, say, January 1. But I think we're going to be somewhere in that low 20s would be a great number to use. Operator: Thank you. And that's all the time we have questions for today. So this concludes today's conference call. You may now disconnect your lines. Thank you for participating, and have a pleasant day.
Daniel Fairclough: Hi. Good afternoon, everyone. This is Daniel Fairclough from the ArcelorMittal Investor Relations team. Thank you for joining this call to discuss ArcelorMittal's performance and progress during the third quarter of 2025. Leading today's call will be our Group CFO, Mr. Genuino Christino. Before we begin, I would like to mention a few housekeeping items. As usual, we will not be going through the results presentation, which was published this morning on our website. However, I do want to draw your attention to the disclaimers on Slide 20 of that presentation. As usual, Genuino will make some opening remarks before we move directly to the Q&A session. [Operator Instructions] Over to you, Genuino. Genuino Christino: Thanks, Daniel, and welcome, everyone, and thanks for joining today's call. As usual, I will keep my remarks brief, beginning with safety, a core value for our company. The company is completing the first year of its 3-year transformation program, supporting ArcelorMittal's journey to be a zero fatality and serious injury company. The first year has focused on building the foundations for improvement across the business, and I'm encouraged by the progress we are making. We are already observing an improvement in the frequency of serious injuries and fatalities compared to last year. But there is more to be done, and there is clear determination across the entire company to implement the bespoke safety road maps that have been developed to drive lasting change. Now I want to focus this quarter on 3 key points. First and foremost, our results continue to demonstrate structural improvements. Third quarter EBITDA per tonne was $111. This is 25% above our historical average margin. To be achieving such improved margins at what we believe to be the bottom of the cycle demonstrates the positive impact that our asset optimization and growth strategy is having. Our strategic projects, together with the impacts of recently completed M&A will support structurally higher margins and returns on capital employed through the cycle. We remain on track to capture $0.7 billion structural EBITDA improvement this year, and the expected medium-term impact of $2.1 billion remains unchanged. My second point is on free cash flow. Our underlying business continues to generate healthy cash flows. Excluding working capital, 9 months free cash flow was approximately $0.5 billion positive. Remember, this is after having invested close to $1 billion in our strategic growth projects. As we head into year-end, I expect that working capital investment will unwind as it normally does. This supports the positive outlook for free cash flow and lower net debt. And then my final point is on the positive outlook for our business. Relative to where we were 3 months ago, the outlook for our business has clearly improved. We welcome the new trade tool proposed by the European Commission. They will support a more sustainable European steel sector, returning the industry to healthier capacity utilization levels. The proposal must now be transposed into legislation as fast as possible. And together with an effective CBAM, this can provide a solid foundation for our European business to earn its cost of capital as we have been achieving in other regions. With our advanced product offering and strong market franchises, we are well equipped to seize new structural opportunities and translate them into profitable growth. As a company, ArcelorMittal is actively enabling the energy transition. We are supplying the steel required for new energy and mobility systems and the steel required for infrastructure development. We are investing in high-quality, high-margin electrical steels and building a competitive renewable energy portfolio. Putting this all together, ArcelorMittal is in a strong position, both operationally and financially. We have a unique diversified asset base across geographies and end markets. We are delivering structurally higher margins, supported by an optimized asset portfolio and execution of our strategic growth projects. We have momentum and our growth will continue. We will continue to implement our clearly defined capital return policies. It is working well, allowing us over the past 5 years to grow our dividend at a compound rate of 16% as well as repurchase 38% of our equity. Each ArcelorMittal share now represents a greater proportion of our capacity, a bigger share of our leading franchise businesses, a larger stake in our growth projects and a greater ownership of our unique business in India. With that, Daniel, let's move to Q&As. Daniel Fairclough: Great. Thank you, Genuino. We have a good queue of questions in front of us. [Operator Instructions] But we will take the first question, please, from Alain at Morgan Stanley. Alain Gabriel: Genuino, I have two questions. I'll ask them one at a time. So the first one is looking forward to 2026 and before we take into account any impact from CBAM or the new safeguard, what are the unusual or exceptional costs that we need to consider while building our EBITDA bridge into next year? And I'm thinking here more the incurred U.S. tariff costs year-to-date, the stoppages in Mexico, et cetera. That's my first question. Genuino Christino: Okay. Sure, Alain. Well, thinking about 2023 in terms of exceptionals. So right now, I cannot really point to you when it comes to tariffs that we are seeing change, right? We will see, of course, in 2026, as we know, we have the USMCA. And I'm sure the negotiations between Canada, U.S., Mexico will continue. But of course, we have to wait and see how -- what comes out of the negotiations, right? Then clearly, we have the losses in Mexico, and we do expect that they will not reoccur in 2026. And that's really in terms of exceptionals, that's what I see. Of course, when you think about the bridge for 2026, there are many positives that we could potentially talk about, right? One is the contribution from our projects. So we have another about $800 million coming in 2026. We just saw also the first forecast of the World Steel Association in terms of demand for next year. I think we will start to see some of the benefits of the lower interest rates impacting the economies. We are seeing PMIs in Europe recovering. As we know, demand has been just moving sideways in most of our core regions. And I think there is hope that we might see a better picture next year also in terms of demand. I don't know, Daniel, if I'm missing something, if you want to complement? Daniel Fairclough: Thanks Genuino. So all I was going to do is perhaps just adding the numbers for Mexico. So if you recall back to the Q2 conference call, at Q2 results, we talked about a $40 million impact from costs and operational costs in Q2. In our release today, you will see a number for Mexico of $90 million. And then in Q4, things should improve, but there will still be a cost in Q4 of maybe $60 million, $65 million. So as Genuino said, that shouldn't recur in 2026. So then when you think about the bridge from 2025 to 2026, that is close to about $200 million there from nonrecurrence of Mexico. Alain Gabriel: That's very clear. And the second question is in Europe, you currently ship around 30 million tonnes of finished steel. If the safeguards work next year as intended or designed and imports dramatically reduce, how much can you flex your production in the near and medium term after taking into account the restart costs, the purchase of CO2 allowances, et cetera? So in other words, what is your achievable Blue Sky shipments in Europe if we go into that scenario where imports decline dramatically? Genuino Christino: Well, the way we see it, I mean, we do expect to be able to supply the market. I mean, as we all know, the expectation looking at the numbers, I mean there is an expectation that imports will come down by about 40% and flat as we saw, right? And it's not a secret that our market, it's about 30%. So we don't see any problems to make sure that we can capture that part of our market share. And you know, I mean, you have that also in our back book. So our capacity in Europe is way in excess of 31 -- 30 million tonnes that we are currently producing. So we feel very comfortable here to be in a position to supply the market when these new measures are in place. Daniel Fairclough: Great. So we will move now to the next question, which we're going to take from Tom at Barclays. Tom Zhang: Two for me as well. The first one, just the usual one on the kind of moving parts, maybe, please, into Q4 by division? And any color around realized pricing, volumes, that kind of stuff. Genuino Christino: Do you want to take it, Daniel? Daniel Fairclough: Yes, sure, Genuino. So when we look at the bridge from the third quarter to the fourth quarter, I think it's pretty simple. I think there are really 3 key building blocks for you to be thinking about. The first, of course, is the normal seasonal improvement in European volumes. The second factor or the second building block would be higher iron ore shipments. So as Genuino was talking about, we have good momentum in our strategic projects. So we're well on track to achieve the targeted 10 million tonnes of shipments in Liberia. And so that will be a nice increment in the fourth quarter. And then the third building block would be North America. So we would expect normal seasonality in volumes. So we do have 2 holidays in the fourth quarter. So normally, volumes are seasonally weaker in the NAFTA segment. If you look at pricing and if you just purely on a sort of a 2-month lagged basis, pricing should be lower in the fourth quarter than the third quarter, but that's going to be slightly offset by the improvement in our Mexican operations, which we just talked about in Alain's question. So those would be the 3 key building blocks: seasonally higher volumes in Europe, higher shipments in mining from the Liberia expansion and seasonally lower volumes and lower lag prices in the North America segment. Tom Zhang: Great. And then maybe just following up on North America. I mean, is there anything else that you guys would call out for the print in Q3, which I guess was very strong despite the sort of additional Mexico outages. I know you've added Calvert, but I guess, on the consolidation numbers you've given before, that was maybe sort of $60 million a quarter of incremental EBITDA contribution. So maybe that offsets the hit from Mexico, but U.S. spot pricing has been drifting. There's obviously extra tariff costs. Was there anything on either the cost side, the mix side that you flagged for North America? Genuino Christino: Yes, Tom. So first of all, we had a record level of shipments at Calvert. Calvert doing extremely well. So I would suggest that the contribution was a bit higher than what you referred to. Our Canadian team is also doing a very good job in managing what they can. Costs, there is a very high focus on making sure that we take cost out. So that is also supporting the results in quarter 3. So you have the strong operations in Calvert, you have strong operations in Canada in both of the facilities in the [ Long ] facility as well. So we have also a good contribution from some of the other business, our HBI DRI plant in Texas also performing well. So I think we have -- except for, of course, the problems in Mexico, we have our franchise business in North America operating quite, quite well. Daniel Fairclough: So we will move now to the next question, which we're going to take from Cole at Jefferies. Cole Hathorn: I'd just like to ask on the CapEx profile medium term and the envelope that you're thinking about because you do have a number of strategic projects in the pipeline. How should we think about broad buckets for CapEx '25, '26, '27? Any broad-based guidance you can provide? And then following up on working capital, it's a strong improvement into the fourth quarter coming back, but I imagine as you look into 2026, hopefully, we will benefit from a stronger pricing environment. And I'm just wondering how you're thinking about working capital into 2026. Are you hoping for kind of working capital outflows and stronger pricing and demand environment for 2026? Genuino Christino: So in terms of CapEx, what we have been saying is -- and then, of course, we are now -- we're going to be actually just -- we're going to be starting our budget discussions for 2026 and beyond. But what we have been saying is that the range that you have -- that we have been using over the last couple of years between $4.5 billion and $5 billion, including strategic sustaining maintenance, that is a good reference for now. So I would encourage you to keep that as your reference. And then I'm sure in Q4, we will be updating you with more details, but it's a good reference. In terms of working capital, I hope you're right. I mean I hope that in 2026, we have to deploy working capital because then it means that the business is strong. It's performing well. Prices are moving in the right direction, volumes as well. What we try to encourage is you should think about working capital moving in line with our EBITDA, right? So if you believe that if you have for 2026 high EBITDA numbers, then it would be fair to expect that there will be potential investments in working capital, which is something that we would see as positive. Cole Hathorn: And then maybe just as a follow-up, have you seen any changes in order books? Or how are you managing your order book for the start of 2026? Are you keeping some availability for higher prices? Or how are you seeing your order book develop into 2026? Genuino Christino: Well, as we talked about, the demand has been moving sideways, right? So we -- and our order book remains relatively stable, right? So we have segments doing better than others. The order books are relatively stable across the group. We are not doing anything special to try to anticipate a stronger 2026 other than making sure that we allow the business to keep the working capital that they need so that they can benefit from a stronger 2026 that we hope will materialize. So that's really how we are planning. And yes, that's how we are seeing it so far. Daniel Fairclough: Great. So we're going to move to the next question, which we'll take from Reinhardt at Bank of America. Reinhardt van der Walt: Can you hear me? Daniel Fairclough: Yes, we can. Go ahead. Reinhardt van der Walt: I just want to ask on capital allocation. So if the safeguard replacements in Europe come through in their proposed form, how would you think about Europe from a capital allocation point of view? And I don't want to necessarily draw into discussion about sort of decarbonization investment in CBAM. But just from a purely economic perspective, you talk about organic growth. Do you think Europe could be a home for capital in the future if we get this framework? Genuino Christino: I think you touched on it. I mean this is an important framework, right? And then what we are talking about is that this framework should allow the industry to be sustainable, to earn its cost of capital. And when you achieve that, then you are in a position to consider then investments. And that's exactly where we are. And so we are encouraged by these new measures. Of course, still waiting for the implementation. We still need to hear more about CBAM as we all know. And then the last piece of the equation is, of course, energy, energy cost. So I think once we have that framework very clear, then we're going to be in a position to move forward. And as we discussed before, this will happen gradually, right? So you should not expect ArcelorMittal launch a number of simultaneous projects. It will happen gradually. This is going to be a multiyear journey. Reinhardt van der Walt: Understood. That's very helpful. And could you just remind me, I mean, you mentioned the business in Europe could potentially return to its cost of capital. Could you just remind us what exactly is the installed capital base of the European business? Genuino Christino: Well, I don't think this is something that we are very specifically disclosing, Daniel? Daniel Fairclough: No, you're right, Genuino. It's not something that's broken out in our financials. Reinhardt van der Walt: Okay. No, that's fine. Maybe just one last quick one, Genuino. You mentioned that you've got the capacity to be able to deliver effectively your share of the 10 million tonnes. Can I just see what kind of costs you might need to incur in order to bring that capacity to market? I mean I appreciate it's there, but could you just maybe talk through some of the costs that you need to incur to actually get that utilization up? Genuino Christino: Yes. Well, it's a good point. And I would break it down into 2 components or 2 parts, right? First is, so you have the fixed cost part. So in a number of facilities, we're going to be able to leverage the fixed cost that we have, right? So you're just going to be running at a higher capacity. So you benefit on the fixed cost side. But then in such cases, normally, what you're going to see also, it's an increase in your variable costs, including then CO2 cost, right? If you want to improve your productivity, you might need to charge higher quality materials, pellets, more pellets. So that will be -- you should expect that to have an impact as well. So I would just encourage you to think about the 2 components. Daniel Fairclough: So we'll move now to a question from Timna at Wells Fargo. Timna Tanners: I wanted to ask two things. One, just kind of probing a little bit more your efforts to mitigate the tariff costs and specifically how you're approaching the annual contract negotiations with automakers at Dofasco? And then a separate question, just if I missed it, I apologize. I was just wondering if you commented on why not -- why there weren't any buybacks in the quarter. Genuino Christino: Yes. So we continue to renew our contracts, our OEM contracts. So we just -- we're basically almost done now for part of first half of next year. So signing even more than a 1-year contract. So I think fundamentally, our customers, so they like the product. They like what they get from Dofasco. So I think there is very good cooperation between us and our customers there. So we don't expect really here significant change in terms of -- looking at our North America business in terms of volumes going to automotive, of course, other than if we have lower production next year, which we are not talking about, but just because of renegotiations, we are not really expecting significant change in the overall volumes going to automotive. And in terms of buybacks, there is not really much more I have to say. And as you know, we have a very clear policy, and we believe that is a differential. I mean not all of our competitors will have a very clear policy. And I think we were in a way, lucky. We did a lot of buybacks at the very beginning of the year when the share price was still low. And all I would say is that you should expect that the company will -- on that policy, that 50% of the free cash after paying dividends will be distributed to shareholders. I would just also add that the policy is working quite well. I mean we talked about 38%. So we did 9 million shares this year already. And we have a very low average price. So we are really creating a lot of value to our shareholders. Daniel, if you want to complement? Daniel Fairclough: Yes. Thanks, Genuino. I think that was very complete. So we will move to the next question, which we will take from Tristan at BNP. Tristan Gresser: First one is on working capital. Just wanted to see how confident you are on the almost $2 billion of release that you expect in Q4? And what should be driving that? Is there any impact from outages at Fos or Mexico? And isn't there a risk of reducing inventories a bit too much and missing the recovery in Q1? And if you can discuss that as well. Is that not your base case that notably in Europe, you'll see a bit of a pickup in Q1? And also if you can comment on the CBAM uncertainty. And does that have any impact on your order book in Europe and pushing more buyers towards local producer? That's my first question. Genuino Christino: Yes. So we -- the working capital release in Q4 to some extent, it's seasonal, right? I mean, as we know, we have just less working days in December. So that will have an impact on how much receivables we carry at the end of the year, right? And then if you look also, we had a reduction in payables. So as we prepare actually for potentially a stronger 2026, so we start also increasing, and that should also start to normalize. And you're right. So there are a couple of one-offs such as the fact that we are not able -- we are not producing as standard in Mexico, some accumulation of raw materials that should also start to normalize, right? We have the reline of our Dunkirk blast furnace, which is also then in the process for now. We are normalizing the inventory of slabs. So yes, we are very confident that you're going to see a significant release of working capital as was also the case last year. So if you go back to 2024, you're going to see something very, very similar. And you're right. So we have a concern here not to squeeze the working capital that is available to the business. And that's why what you're going to really see is more on the receivables side and payable side, not so much in terms of inventories. Tristan Gresser: Okay. No, that's clear. And just following up then on Europe and with the steel action plan, do you believe that there is a possibility of seeing the new quotas implemented before July next year? And to come back to my earlier question, what kind of environment do you see in Q1? If the quotas are not implemented in January, April, but in July, do you see a risk of import surging? Yes, and if you could comment a little bit on your order books in Europe, if you're starting to see a bit more activity there, that would be helpful. Genuino Christino: Yes. Well, in terms of timing of implementation, so when we discuss internally, I think there is still hope that we might actually see it earlier. And I think that's quite important, and that's really the efforts in terms of making sure that the parliament and the council, they understand the urgency of having these measures implemented as soon as possible. So even though it's challenging, I think there is still hope that we may see this implemented earlier. But of course, we have to wait and see. One thing is for sure, though, I mean, of course, we don't even don't yet know for sure all the details of CBAM. But CBAM for sure is effective already from 1st of Jan, right? And then we will see what are the final terms. But that alone should already at least bring the -- make the imports less competitive. And then in terms of order book, I think we discussed, I mean, order books are at -- they are not higher than normal. I think it's just as we are seeing demand for now at least kind of moving sideways, demand -- the order book is relatively stable. Daniel Fairclough: Great. So we'll move now to take a question from Max at ODDO. Maxime Kogge: So my first question is on Mexico. So this is an asset where you have had a number of issues over the recent past. So there was this illegal blockade last year. There was the outage on the EAF earlier this year, and now there's this problem on the DRI plant. So how confident are you basically that the asset can return to a normalized productivity and performance and that on a recurring basis from next year? Genuino Christino: Yes. That's a fair question. And then, of course, we are not pleased. Some of the problems that we are facing this year, they are still a result of the legal blockade that happened last year. And what we are doing right now is really reviewing all of our SOPs. So we have our engineers, we have our CTO group going through all the procedures, making sure that we avoid repetition of some of these issues. So I'm very confident that with the support of the group, CTO and local team also very engaged, we're not going to have a repetition of some of these operational issues in Mexico. Maxime Kogge: Okay. And then a second question is on the import pressure in Brazil and India, which seems to be quite high at the moment, and it's reflected in very low prices. So it seems that the authorities there are not really willing to tackle the situation at this stage. So how are you confident that this will be the case? And would you be ready to scale back your investments in Brazil if that's not the case, given that I think one of your competitor has done such a move and Brazil is still the biggest region where you invest at the moment if we leave aside Liberia. Genuino Christino: Yes. Look, I mean, mid- to long term, we continue to be bullish on Brazil. We will continue to invest. You're right that we have seen imports rising in Brazil. And there is also a very close dialogue with the government showing what the governments are doing around the globe, right? And what is encouraging is we have a number of antidumping measures that should start to have an impact, we believe by end of this year or beginning of next year. So we have antidumping against China on cold rolled, which, of course, are products that we are selling domestically. So that should have a positive impact. I think the system, the way it is designed today, it also allows for -- if we see surges in other products that we can also then look to add them to the quota systems that we have in place today. We have seen a reduction of imports already in quarter 3 compared to quarter 2. So we'll see, but I think the fact that we have the antidumping is important, showing that the government is also concerned. Local mills, as we know, announced price increase as well beginning of the quarter, we'll see how it plays out. And India, I would say that demand continues to be extremely good, strong, rising, strong economic performance. You're right that prices are low, that the, I would say, -- there is also the impact of the new capacity that normally takes a while to be absorbed. So we are going through that process right now. But I think we can also be optimistic for the near term. Maxime Kogge: Okay. And just perhaps the last one is on Ukraine. It seems that the challenges there have gone bigger in recent months in terms of railways, in terms of electricity costs. So is there a point where you will consider shutting down production entirely? Or are you still committed to maintaining production as it is for the time being? Genuino Christino: Yes. The situation in Ukraine, you're right. So we are running today at basically at capacity that is available to us. So we are running 2 furnaces. So the trend is EBITDA positive. We are not yet free cash flow neutral as we discussed before, right? And the key issue for us remains the high energy costs. So again, here, we are trying to engage in discussions with the government to show the importance to bring that to levels that are -- that will allow the industry to be sustainable even in this very challenging conditions of the war. We'll see. But for now, the plan is to continue to produce. We have the mining operations that are also close to capacity. So we are able to sell the iron ore to our own mills either in Europe or to third parties outside. So yes, I think it's -- for now, we are managing through a very challenging situation. Daniel Fairclough: So we'll move now to take the next question, which is going to be from Bastian at Deutsche Bank. Bastian Synagowitz: My first one is on Europe, and can I please come back on the situation here in the context of the policy plans? So when you look at the European capacity landscape, do you believe that the current capacity, which is in operation, would be enough to pick up the additional market share, which the domestic industry would likely absorb from the imports? Or would this 10 million tonnes, which you referred to in the chart require idle capacity to restart? And then maybe just as a quick add-on to that, are you generally more positive on the volume or the price leverage for your business from the policy, which has been laid out? Those are my first questions. Genuino Christino: Yes. Well, I think in terms of -- as we know, I mean, and that was also made very clear by Europe, by the commission. As we know, the capacity utilization in Europe today is low. And that's the whole idea behind some of these trade actions to allow the industry to regain a level that is more sustainable, right? And I think, Bastian, it will depend on where you are in Europe, right? So there can be cases where you're going to need to bring some idle capacity. And then, of course, costs are going to be also higher because you're not going to have the benefit of the fixed cost, right? So it's difficult to be very precise on that. And for us, I think it's -- I guess what is important here is really to make sure that the industry can run at a decent level of capacity utilization, right? I think that's the whole idea because then, you can earn your cost of capital, you can optimize your fixed cost base, your cost base, et cetera, et cetera. So that's how we are seeing it. Bastian Synagowitz: Okay. And just in terms of the leverage for your own business, when you look at the gives and takes, are you more positive on the price effect? Or are you more positive on the volume impact on your earnings contribution? Genuino Christino: Well, I want to be drawn on that. I think for us, as I said, what is important is that we can run our facilities at a higher capacity utilization, right? And that should be then, if you have less imports, which as we know today, the cost or the price of imports is so low, right? Daniel, do you want to add anything to this question? Daniel Fairclough: Yes. So I think like you're saying, it's very difficult to isolate the sort of contribution of the fixed cost absorption, the sort of operating leverage or the impact of just higher industry utilization on spreads. But I think I'm sure you've analyzed this in the past that, Bastian, there's a good correlation between spreads and utilization. So there should be 2 factors, and those 2 factors should contribute to what Genuino is talking about, our business in Europe, the industry in Europe being in a position to covers cost of capital. And that's ultimately the objective here. Bastian Synagowitz: Okay. Sounds good. And my next question is on North America. And I guess one of your Canadian peers here is heavily loss-making. Could you maybe give us a bit of color on how Dofasco is actually performing on a single entity basis? And are you still making money there? Genuino Christino: Yes, absolutely. Dofasco is one of the best facilities in the world. And so it's still very much profitable. Bastian Synagowitz: Okay. Great. And then very last question, just on your expansion strategy in Hazira. Is that on track? And just, I guess, given what you discussed earlier in terms of the capacity, which has been brought on already this year. Do you think the market is ready for the ramp-up next year as you're planning it? Genuino Christino: Yes. I think, first of all, our projects are ongoing and going well. So we're going to be, as we discussed, commissioning some of the finishing lines still later this year, beginning of next year. And then during 2026, we're going to be completing the upstream, including coke batteries. And a lot of the new capacity has just come down. So I think we're going to be in a good position to ramp up our own capacity. So allowing some time so the market can absorb that. So I think in terms of timing, it looks good, Bastian. Daniel Fairclough: Great. So we still have a few more questions to take, Genuino. So the first of those we will take from Dominic at JPMorgan. Dominic O'Kane: Just a couple of quick questions on, again, sort of real-time indicators of demand. You obviously have a seasonal slowdown in the North American market. But are you seeing any visible signs of kind of new pockets of weakness in the U.S., particularly given the government shutdown? And then my second question relates to Europe and the auto segment. Do you have any insight you can share with regards to how you're approaching contracts moving into January? Genuino Christino: Yes. So starting with the U.S., you're right. So I think overall, we all know the numbers, right? So the demand moving sideways. But I would say that when I look at our business, Calvert is running absolutely full. We had record levels of production shipments, right? So the 2 segments where we are very much focused, the energy, automotive doing relatively well. And then when it comes to Canada and Mexico, I think that's where we also see some potential because, of course, the demand domestically, let's forget tariffs for a moment, also significantly impacted, right, with all the uncertainties created by the change in the relationship between the various governments within North America. So I think we see potential for stabilization there that should also support the shipments domestically in Canada and Mexico. Coming to the auto contracts, I mean, it's going to be just how it is. So I think we have a lot to offer to the automakers. In some cases, in North America, as we know, the negotiations will happen gradually during the year. And in Europe, there has weight to the beginning of the year. So this process is ongoing. And I expect that it will be -- as always is, we have an agreement that is -- that should be a win-win for both companies. Dominic O'Kane: Is there any sense that the price tension that we've seen over the last 2 years could alleviate this time around? Genuino Christino: Yes. As you know, I mean, we don't comment on -- specifically on prices, as you can imagine. So these negotiations, first of all, they are specific. And so we don't comment on prices. I would just -- of course, the spot price is always a reference, right, starting point. You see prices moving higher in Europe already. They are also coming up again in North America. We talked about prices in Brazil also, higher prices being announced. So I think the environment is, in that sense, it is positive. Daniel Fairclough: So we will move now to Andy at UBS. Andrew Jones: So just to go back to the European question about the CO2. Can you just remind us what your emissions are likely to finish at in 2025 if we assume the normal seasonal uptick in 4Q and how that compares to your free allocation levels this year? And going into 2026 with the reduction of the free allocations, and I guess at some of your sites, you produced less in recent years, so you may lose some free allocation because of lower production. Can you give us an idea by how much you expect your free allocation to change next year? And maybe as a follow-on to that, are there any assets which are kind of emitting less the reallocation where the uplift in production would have minimal cost on the CO2 side. Just to give us an idea for how much you could ramp production easily. Genuino Christino: Andy, I mean this is -- I mean, there are many, many moving parts, right, when it comes to DTS system, it is complex. I would just say that as we know, in Europe, most players, if not all players, they are short, right? So they don't meet the benchmarks. I would say a good rule of thumb, it's about -- you're paying CO2 costs for about 20% of your production, right? That's the ballpark to give you an idea. I think when we look at our -- and it's always based on an average, you have your how. So it's highly technical. So we don't really expect going forward in 2026 that we're going to be losing free emissions meaningfully because of levels of operation, right? But as we know, there are reductions, gradual reductions that will happen with the implementation of CBAM. You need to take that into account. And there are also revisions to the benchmarks, right? So that's the situation. Andrew Jones: But you don't have a number of credits reduction that you expect for next year? Genuino Christino: Well, I mean, we all know what's going to happen in terms of reductions. There is a 2% reduction in the DTS system, the 3 allowances, right? And then we have to see what happens now with the benchmarks. So it's too early to talk about it. I would just add that what is important here also is now with CBAM, right, and to the extent that CBAM is effective, then at least you are at par with imports. So they will be paying the same costs, right? I think I would encourage you also to see to the extent that costs increase in Europe, but you have at least the same cost being applied to imports, at least there is a level playing field in that regard, right, which is, I guess, what the whole industry in Europe has been advocating. Andrew Jones: Okay. That's clear. And just a second question on Canada. There was a recent document about medium and light -- medium and heavy vehicles, a proclamation on the auto industry from the White House, which have a paragraph in it talking about potential carve-outs for auto-grade steel from Canada where the tariff would drop by -- from 50% to 25%, conditional on some conditions around like investments in the U.S. and things like that. I was wondering how you interpreted that because it seems slightly unclear to me. But if you've got an asset in the U.S. that you're clearly investing in, do you see potential to use that recent proclamation to reduce the tariff from Dofasco into the U.S.? Genuino Christino: My understanding is that the negotiations at this point in time, as we all know, they are suspended, right? And we are hoping that they will resume the negotiations. And then we'll see finally what comes out of these discussions. I don't have anything else really to add. Daniel Fairclough: So two questions left. So we're going to take the first of those from Phil at KeyBanc. Philip Gibbs: Regarding North America, how is the Calvert EAF ramp going? And is that part of your incremental 2026 strategic EBITDA growth bridge as you look into next year as that comes up to the levels you expect? Genuino Christino: Yes. Well, we are ramping up. So our expectation now -- latest expectation is to end the year with a run rate between 40% and 50%. So it's progressing. We started also the qualification process. And you're right. So when you look at our bridge, that is on Slide 10 and the 800 million, then you're going to have contribution from Calvert in 2 buckets. One is, of course, we're going to be consolidating Calvert for the full year. And as you know, we started the consolidation in end of quarter 2. So you're going to have an extra contribution from Calvert consolidation, which is in our M&A bucket. And you're going to have the contribution from the EAF. Especially in this environment, right, when we are -- when Calvert is also paying for tariffs on the slabs. So that is also part of the 600 million that you see from projects. So Calvert next year, it's in the 2 buckets there. Philip Gibbs: And as a follow-up, you mentioned in your remarks in your analyst deck that Canada is beginning to address some of the unfairly traded steel or some level of reciprocity for the U.S. tariffs. What have they done specifically? And do you think they're doing enough? Genuino Christino: Well, as we know, we have a very large level of imports into Canada, right? So of course, they reduce the quotas for non-FTA countries. That's a good step, but it doesn't really address the problem. So we believe that Canada should be put in place a much stronger trade protection to make sure that the industry can again also regain market share vis-a-vis imports. As we know, a lot of the imports also come from the U.S., right? And there, we are hopeful, again, as we said, that Canada, U.S., Mexico, and maybe as part of the USMCA negotiations, they will also come to an agreement. And that would be very, very good, right, if you have the whole USMCA with similar rules, similar protection. So that would be extremely positive. And you would expect if you have a common trade block that the rules would be similar. Daniel Fairclough: So we'll take our final question, and we'll take that from Boris at Kepler Cheuvreux. Boris Bourdet: Two questions and one technical precision. The first is on Europe. I think you're quite close with politics in talks about those trade barriers to be implemented. What is your take on the fact that those proposals of the European Commission will be adopted in the current state they have been proposed or whether there could be some dilution? That would be my first question. Then on China, there is a lot of talks about the anti-involution measures. Do you see any chance that China might be moving towards a cut in production as some headlines were referring earlier this year? And lastly, just to confirm what you said earlier on the market share in Europe, is it 30% or 20% to 30%? Genuino Christino: Okay. So Boris, I will take your first question, and then I will comment on China. Well, I mean the dilution risk, I mean there is a process, right? So the proposal is now going through the parliament, it's going through the council. I think there is a desire expressed by a number of governments by the commission to have an accelerated approval process. And that is only possible if we don't have a significant change. So I think that's our request that we have these measures in place as soon as possible. And then on the market, that's -- I mean, that's -- I'm just giving you a reference. Okay. Daniel, do you want to talk about China? Daniel Fairclough: Yes, yes. So it's obviously a question that we receive on most of our calls around the theme of China excess capacity, when will they address it, when will they take measures to structurally reform the industry to balance domestic capacity with domestic demand and in an effort to restore the industry to health, to reasonable levels of profitability, reasonable margins, et cetera, et cetera. So to your question, there have, of course, been lots of headlines and suggestions that steel could be one of the beneficiaries of the anti-involution theme in China this year. But the reality is that we really haven't seen any changes in the impact that China is having in external markets. So they continue to have weak prices, very weak margins. Generally, there's a substantial proportion of the industry operating with -- on a loss-making basis. And they continue to export at extremely elevated levels, run rates of 120 million tonne, 130 million tonnes annualized. So those negative domestic dynamics are then being translated into other regions through those exports. So I guess my answer to your question is until we really see strong evidence of change, and that would be through improved prices, improved margins, improved profitability and most importantly, through reduced exports, then nothing is really changing. And that just puts even more emphasis on the requirement for governments to take appropriate actions to ring-fence those domestic industries from these negative impacts of excess capacity in China. So Genuino, he was just talking about the progress, the strong progress that we're making in Europe. We talked earlier about what's happening in Brazil. But it's clear that, that's the best way to deal with this issue is by putting appropriate protections in place. Great. So I think that's our last question, Genuino. So I'll hand back to you for any closing remarks. Genuino Christino: Thank you, everyone. Before we close, let me briefly reiterate the key messages from the start of the call. First, our results continue to demonstrate structural improvements. The fact that we are posting such improved results at what we believe to be the bottom of the cycle bodes well for when conditions normalize. Secondly, our underlying business continues to generate healthy cash flows. Looking behind seasonal working capital movements shows that we continue to generate good underlying free cash flow, and this is after having invested close to $1 billion in our strategic growth projects. These projects are delivering structurally high EBITDA, and this will continue in 2026. Finally, the outlook for our business has clearly improved over the past 3 months. The newly proposed trade tool, combined with an effective CBAM provides the foundation for our new business to earn its cost of capital. Together with the actions being taken in other regions like Brazil and Canada, this continues to point towards a more regionalized and better protected steel industry in which ArcelorMittal can thrive. With that, I will close today's call. And if you need anything further, please do reach out to Daniel and his team. I look forward to speaking with you soon. Stay safe and keep those around you safe as well. Thank you very much.
Operator: [Interpreted] Good morning. We will now begin NAVER's 2025 Q3 Earnings Conference Call. For the benefit of our investors joining from home and abroad, we will provide simultaneous interpretation service for the presentation and switch to consecutive interpretation for the Q&A. Unknown Executive: [Interpreted] Good morning. I am [indiscernible] from the Office of Capital Markets. I would like to thank the analysts and investors for joining NAVER's 2025 Q3 Earnings Presentation. On this call, we are joined by CEO, Soo-yeon Choi; and CFO, Hee-Cheol Kim, and they will walk you through NAVER's business highlights and strategies and financial results, after which, we will entertain your questions. Please note that the earnings results are K-IFRS based provided for timely communications and have not yet been audited by an independent auditor and hence, are subject to change after such review. With that, I will turn it over to our CEO to present on the business highlights. Soo-yeon Choi: [Interpreted] Good morning. I am Soo-yeon Choi, the CEO. In Q3, NAVER continued to strengthen its foundation for new growth by advancing its services and monetization through the integration of AI technology into content and data. In search, AI briefing has been expanded to 15% coverage, leading to a notable improvement in user satisfaction and delivery, delivering a positive user experience. At the same time, the revamped home screen, along with expanded content supply through Clip and Shopping Connect as well as personalized recommendations contributed to higher usability. As a result, the loyal user base strengthened both quantitatively and qualitatively during the quarter. Supported by these initiatives, together with NAVER's solid media influence and strong monetization capability, overall advertising revenue on the NAVER platform grew by 10.5% Y-o-Y. In commerce, NAVER strengthened a personalized experience optimized for exploration and discovery-based shopping by enhancing user benefits through services such as end delivery and membership. As a result, user engagement within the NAVER Plus Store app increased, surpassing 10 million downloads. In Q3, Smart Store GMV recorded accelerated growth with the full quarter reflection of the revised commission structure, serving as a key driver of overall performance. Going forward, NAVER will continue to enhance the customer experience through closer collaboration with Kurly and expanded application of AI-driven personalization. Let me begin with NAVER's differentiated AI-powered search services and the performance of the search platform. To strengthen competitiveness, informational search, AI briefing launched in March, expanded its coverage to 15% of integrated search queries as of September end. It continues to enhance our usability by providing information to reinforce with highly reliable sources and improving answer satisfaction for long-tail queries. AI briefing used by more than 30 million users offers a differentiated experience by enabling summarized information consumption as well as deeper exploration through research using related questions displayed at the bottom of the main text, thereby expanding content consumption. Since its launch, the number of clicks on related questions has increased by more than 5x compared to April, the early stage of the service. This allows users to explore more topics more deeply without entering new or complex queries by naturally engaging with a wider range of NAVER's UGC, creating a virtuous cycle of content consumption. Starting in November, NAVER will gradually test personalization in both the answer text and related question areas. In particular, for shopping and local queries, the company plans to strengthen contextual connections of businesses and explore monetization opportunities. Ultimately, NAVER aims to provide a differentiated search experience in which advertising and content are seamlessly integrated with the answer text while also exploring revenue models for the emerging AI agent environment. The home screen revamp in August, along with the expansion of high-quality content supply, including clip and the enhancement of personalized content recommendation logic led to higher feed engagement. As a result, in September, the average daily users of the home feed and clip stabilized at 10 million users each. With improvements in the usability and recommendation areas of the home feed, user activity indicators such as content impressions and clicks continue to increase. The resulting growth in feed consumption also translated into higher advertising revenue. The number of loyal users visiting NAVER home feed more than 20 days per month increased by over 2x Y-o-Y, while the proportion of such loyal users rose by 5 percentage points compared to the beginning of the year. This indicates that inactive users have been converted into active users, leading to the stable growth of the home feed. Also, NAVER's high-quality UGC and advertising content, together with its more advanced recommendation technology, are being effectively exposed in the right placement, thereby strengthening user engagement and lock-in. It is also expected to lead to further monetization opportunities, including advertising revenue growth. With a solid user base and stronger engagement, along with the expanded application of AI briefing, providing a differentiated search experience, NAVER achieved a 10.5% increase in total platform advertising revenue driven by improved AI-based advertising efficiency. In Q3, continued optimization of ad placements and services using NAVER's proprietary AI technology enabled more efficient ad exposure within the same inventory, resulting in higher advertising efficiency, steady growth across key metrics and an expanded advertiser base. NAVER is also seeking ways to further strengthen its response to commercial queries, one of the key competitive areas of its search business by delivering more satisfying search results for users while capturing additional advertising revenue. To this end, the company plans to expand efforts to identify new advertising services and optimize ad placements across its platforms, including commerce areas such as Plus store, the entertainment section, which is gradually being transitioned into a feed format. The automated advertising campaign at Boost has demonstrated proven advertising efficiency, contributing to both performance advertiser growth and overall advertising revenue expansion. Boost Shopping, which has successfully established itself recorded a conversion performance in September that was more than 100 percentage points higher than standard search ads. Supported by this momentum, the number of NAVER performance advertisers increased more than 2x Y-o-Y. Looking ahead, NAVER is building an environment that will allow Smart Store sellers to more easily experience ad Boost shopping within the seller center while continuing to incorporate advertiser feedback and expand exposure across various placements, including Plus Store. Furthermore, NAVER has integrated advertiser billing accounts to enable advertisers to manage campaigns under a single account and has launched a customized consulting program for advertisers that operate their campaigns directly. Next year, NAVER plans to introduce a new business agent that will design and execute growth strategies together with advertisers and business partners and evolve it into an integrated solution that analyzes business performance and competitiveness based on NAVER's high-quality data to propose practical solutions. Next, I will discuss the key achievements of the e-commerce business. In Q3, commerce focused on enhancing personalized experiences tailored for discovery and exploratory shopping, strengthening delivery competitiveness and expanding membership benefits. As a result of these efforts, Smart Store GMV grew by 12.3% Y-o-Y. NAVER Plus Store is rapidly evolving into a structure optimized for discovery and exploratory shopping through features such as Discovery Tab, AI shopping guide and content integration. By serving as a core channel that enables a brand experience-driven purchase journey supported by each brand's unique data and content assets, along with our proprietary promotions and campaigns, the platform has helped brands achieve 40% or higher growth for 5 consecutive quarters, firmly establishing itself as a key growth driver. NAVER plans to further refine its personalized recommendations and ranking algorithms within search to ensure that brand and SME product databases unique to NAVER are more effectively surfaced. The company will also significantly expand the application of AI personalization on the NAVER Plus Store home screen from 31% to 80%. These efforts are expected to enhance the discovery and exploration experience by connecting users with popular products and UGC while maximizing user lock-in and improving both time spent on the platform and purchase conversion rates. From a monetization perspective, GMV generated through AI recommendations within the Plus Store increased by 48% Q-o-Q, supported by enhanced personalization and service optimization. On some placements, conversion rates for personalized recommendations were more than 10x higher than those of standard formats. Going forward, NAVER plans to further expand the application and coverage of AI recommendations by accurately identifying user intent, thereby driving meaningful growth in both adoption and GMV. Thanks to these efforts, NAVER Plus store app surpassed 10 million downloads within 6 months of its launch. In-app activity also strengthened with page views increasing by 19.4% and average session duration rising by 9.7% Q-o-Q, reflecting higher user engagement. Membership has become a core element that not only provides shopping benefits, but also connects NAVER's broader ecosystem and encourages users to stay longer on the platform. Following the partnership with Netflix, NAVER expanded membership benefits in Q3 to include Microsoft Game Pass, Uber membership and free delivery on purchases over KRW 20,000 at Kurly N Mart. As a result, the number of active membership users increased by more than 20% Y-o-Y. In particular, the partnership with Microsoft Game Pass resulted in a 23% increase in male users in their teens and 20s compared to before its introduction, broadening NAVER's overall customer base. And in addition, fresh food purchases have also risen significantly, positioning membership as a key driver of commerce growth and a catalyst for greater content engagement across platforms. Following the partnership with Nexon in September, NAVER announced a new partnership with Spotify, global audio and subscription streaming platform, further expanding its content offerings. Through this partnership, NAVER plans to integrate Spotify's extensive library, including 100 million songs and more than 7 million podcasts across various NAVER services, enabling users to easily discover and enjoy audio content suited to their preferences and moods. NAVER will share more details on this collaboration in the near future. NAVER also continued its efforts to enhance user experience by strengthening delivery competitiveness. With the rebranding of N Delivery and the enhancement of free delivery and free return benefits for members, the purchase frequency of membership users increased by 13% Y-o-Y, while the membership purchase ratio rose by 1.3 percentage points Y-o-Y. These results show that stronger delivery competitiveness is driving higher purchase activity among our customers. Following the partnership with CJ Logistics in July, NAVER introduced an early morning delivery service with Kurly in September, resulting in a significant improvement in overall delivery lead time. In addition, the implementation of cold chain system has allowed NAVER to expand the share of low-temperature product listings, which were previously restricted, thereby strengthening its product assortment competitiveness. N Delivery GMV continued its strong growth with sellers that adopted N Delivery in the previous quarter, recording over 19 percentage points higher Q-o-Q GMV growth compared to those that had not. This clearly demonstrates that enhanced delivery competitiveness is driving both a stronger user lock-in and increased purchase activity. The C2C segment also delivered meaningful results. Cream and Soda achieved over 15% Y-o-Y GMV growth in Q3, driven by strong sales of exclusive brand products and growing demand for trading cards in Japan. In addition, both platforms are maximizing user experience and sales efficiency through content-driven planning and browsing enhancements aligned with evolving trends. Poshmark is expanding its app entry points through integration with the NAVER search engine while enhancing user experience by improving auto complete and search result layouts to deliver more accurate and relevant search experiences. Through the introduction of a new ad format and enhancement of ranking logic, NAVER continued to achieve growth in first-party advertising revenue, while efficient marketing execution led to improvements in both platform profitability and traffic quality, resulting in double-digit growth in GMV and revenue. Regarding Wallapop, whose acquisition was announced last quarter, the transaction process is proceeding as planned, and NAVER will provide a more detailed update on the global C2C business performance following the completion of the acquisition. In Q3, the core pillars of discovery and exploration-based app experience, brand membership, delivery and advertising were organically connected, creating strong synergies that reinforce the virtuous cycle from traffic inflow to purchase conversion and monetization, thereby advancing the overall growth of the platform. Going forward, NAVER will continue to leverage those organic synergies across the platform to further strengthen its solid position in the commerce market. Next, I will provide an update on the Fintech business. In Q3, NAVER Pay TPV reached KRW 22.7 trillion, representing a 21.7% Y-o-Y increase. Non-captive payments, which accounted for 55% of total TPV grew 31% Y-o-Y to reach KRW 13 trillion, driven by higher payment activity and continued merchant expansion. In addition, through the partnership with Nexon announced at the end of September, including account and payment integration, NAVER is continuing to expand its third-party ecosystem across both online and offline channels. In the platform business, NAVER completed the acquisition of Securities Plus Unlisted in September. In line with Korea's fintech policy direction, the company aims to evolve into an integrated platform that enhances accessibility and reliability for investors in the OTC market. Next, I will discuss Webtoon's results. In September, Webtoon Entertainment signed a global content partnership with Disney through which more than 35,000 titles from Marvel, Star Wars, Disney, Pixar and 20th Century Studios will be introduced for the first time on a new digital platform. The development and operation of this platform will be led by Webtoon Entertainment, and it will feature not only iconic titles from Disney portfolio spanning several decades, but also a selection of Webtoon original series. The new platform represents the results of an unprecedented collaboration that combining Webtoon's product and technological expertise with Disney's unrivaled IP portfolio, allowing users to enjoy Disney's iconic content all in one place. This initiative is expected to broaden Webtoon's reach beyond its existing user base, expand engagement with new global audiences and serve as an important stepping stone for global growth while also laying the foundation for an even deeper partnership with Disney in the future. Please note that Webtoon Entertainment is scheduled to announce its earnings on November 12, U.S. local time. For more detailed information, please refer to Webtoon's earnings release. Lastly, I will discuss the performance of the enterprise business. The B2B business within enterprise achieved new revenue generation through the monetization of GPU as a service contracts secured in the first half of the year. For LINE WORKS, the number of paid IDs continue to record double-digit growth Y-o-Y despite the high base effect from the same period last year. Services integrated with LINE WORKS such as AI node and Roger are also growing steadily as planned. In October, LINE WORKS launched its service in Taiwan and is now seeking to expand into global markets by leveraging its experience as the leading business platform in Japan. Leveraging its full stack AI capabilities, NAVER is building a stronger track record in Korea by providing AI transformation solutions and industry-specific products tailored to both the public sector and the private sector. The company's global sovereign AI initiatives are also progressing as planned. At the end of October, NAVER signed an MOU with NVIDIA to capture physical AI opportunities, which operates in real industrial environments and systems. Also, we secured an additional 60,000 latest GPUs and strengthened its AI capabilities. NAVER has been building industry-specific references, including the financial and energy sectors by providing neuro cloud and customized AI services to clients such as the Bank of Korea and KHNP. In a similar vein, the company is engaging discussions with multiple partners across the manufacturing industry, including the semiconductor, shipbuilding and defense to explore further collaboration opportunities. NAVER also plans to develop specialized AI models tailored to major industries and seek diverse use cases and additional business opportunities within the private cloud market, ensuring that optimized AI technologies can be swiftly adopted across sector. Following the launch of the new administration, large-scale national policy projects have been promoted to accelerate Korea's AI transformation, including initiatives for independent foundation model development, GPU leasing projects and the establishment of SPCs for AI data centers. And NAVER is actively participating in key projects under these initiatives. In Saudi Arabia, NAVER is finalizing the establishment of a joint venture with the Ministry of Housing, aiming to expand into super app, [indiscernible], data center and cloud businesses with the goal of commencing operations next year. The company is also pursuing various global collaborations and opportunities, including the development of an AI agent for tourism and a sovereign LLM in Thailand, participation in GPU as a Service and AI data center projects for Europe based in Morocco and human rights research collaboration with MIT to secure future robotics platforms and any plans to share further updates as these initiatives begin to take shape. Going forward, NAVER will continue to strengthen the competitiveness of its core businesses through AI, while also adding new growth drivers for mid- to long-term expansion and laying the groundwork for global growth. Now CFO, Hee-Cheol Kim, will discuss the financial performance. Hee-cheol Kim: [Interpreted] Good morning. This is CFO, Hee-Cheol Kim. I will now walk you through Q3 financial performance. Revenue in Q3 increased 15.6% Y-o-Y to KRW 3.1381 trillion, driven by solid growth across NAVER's core businesses, including advertising, commerce and fintech. Building on the previous quarter, AI-driven enhancement of advertising efficiency continued, resulting in advertising revenue growth outpacing the market rate. The full quarter impact of the revised commission structure in the commerce business further accelerated overall revenue growth, while seasonal effects from the triple holiday peak period also contributed to the increase. Operating profit increased 8.6% Y-o-Y to KRW 570.6 billion, maintaining a solid growth trend despite higher expenses related to mid- to long-term business expansion and competitiveness enhancement supported by accelerated top line growth. The operating profit margin reached 18.2%, a slight increase from the previous quarter. Next, I will explain the revenue by business segment. In Q3, search platform revenue increased 6.3% Y-o-Y to KRW 1.0602 trillion. Total NAVER platform advertising revenue, which includes search, display commerce, fintech and Webtoon ads grew 10.5% Y-o-Y. This reflects the combined impact of AI-based ad and service optimization, advancements in personalized ad recommendations and the continued expansion of the advertiser base. In Q4, along with along the -- although the long holidays in October may have some impact due to fewer business days, NAVER will continue to enhance advertising efficiency through AI, expand monetization of noncommercial queries and broaden ad inventory, thereby strengthening its competitive edge in the advertising market. Commerce revenue increased 35.9% Y-o-Y to KRW 985.5 billion. The enhanced discovery and exploration experience within the NAVER Plus Store app, expanded membership benefits and the revised commission structure all contributed positively, driving balanced Y-o-Y growth across all segments. Commission and sales revenue grew 39.7% Y-o-Y as the enhanced discovery and exploration experience within the NAVER Plus Store app led to brand purchase growth, driving an increase in Smart Store GMV. The full quarter impact of the revised commission structure also contributed with Smart Store revenue increasing 102% Y-o-Y. Commerce advertising revenue grew 31.2% Y-o-Y, driven by advancement in AI-based recommendation ads and the full rollout of ad boost shopping in Q3. Membership revenue increased 30.5% Y-o-Y, supported by a broader user base and higher active user numbers following the addition of new benefits such as partnerships with Microsoft Game Pass and Uber and free delivery at Kurly N Mart. Fintech revenue increased 12.5% Y-o-Y to KRW 433.1 billion. At the end of September, NAVER launched the beta service of the Connect terminal, which seamlessly links online and offline merchants. This enables NAVER to provide not only payment services within its ecosystem, but also data-driven customer management functions. Going forward, the company will focus on building an integrated online/offline ecosystem and creating new value for both users and merchants. Content revenue increased 10% Y-o-Y to KRW 509.3 billion. Within this, Webtoon revenue based on NAVER's consolidated results in Korean won terms grew 11.3% Y-o-Y. For more details, please refer to Webtoon Entertainment's earnings announcement scheduled for November 12 local time. SNOW Revenue increased 24.3% Y-o-Y, driven by the continued growth in paid subscribers of its camera app integrated with AI content features. Enterprise revenue increased 3.8% Y-o-Y to KRW 150 billion. The number of paid LINE WORKS IDs continued to record double-digit growth in Q3. And GPU as a Service contracts secured in the first half have begun generating revenue. The year-over-year comparison reflects the base effect from one-off revenue related to well-booked deliveries to the Jeonbuk Office of Education in the same period last year. Next, I will discuss the detailed cost items. Development and operations expenses increased 14.2% Y-o-Y, mainly due to higher headcount from new hires, increased stock-based compensation following the rise in share price and onetime severance payments related to Poshmark's workforce optimization initiatives. Partner expenses increased 17% Y-o-Y, while infrastructure costs rose 22.7% Y-o-Y, driven by higher depreciation expenses from the acquisition of new assets such as GPUs. Considering model training and inference for AI integration across all businesses as well as the expansion of new initiatives, including government projects, NAVER expects large-scale infrastructure investments to continue. Marketing expenses increased 20.3% Y-o-Y, driven by promotional activities in the commerce, fintech and Webtoon businesses. Through the end of the year, NAVER plans to efficiently execute various marketing initiatives aimed at enhancing competitiveness across business units and strengthening the foundation for top line growth, including content expansion to boost engagement with the NAVER app ecosystem and promotions for Kurly N Mart launched in September. Next, I will explain NAVER's operating profit by business segment. First, the Integrated Search Platform and Commerce segment maintained a stable profit margin of over 30% despite a slight year-over-year decline due to AI integration within services and shopping promotions while continuing to deliver solid top line growth. In the Fintech business, despite continued growth in payment revenue, profitability declined slightly Y-o-Y due to delayed purchase confirmations caused by summer vacation seasonality and expanded promotional activities. In content, operating losses widened due to increased production costs related to Webtoon IP business development and higher marketing expenses to strengthen global competitiveness. In the Enterprise business, losses also expanded, driven by increased infrastructure investments for AI model training and inference. Going forward, NAVER plans to continue investing to secure future growth drivers, including investments in global platform development for Webtoon, expanded infrastructure investment in the enterprise business to support project acquisition. In the mid- to long term, however, the company will work to narrow operating losses. Q3 consolidated net income increased 38.6% Y-o-Y to KRW 734.7 billion, driven by higher -- the overall increase in investment gains of affiliated companies, including higher equity method gains from A Holdings following the consolidation of LINE Man into LYC. Operating cash flow remained on a stable growth trend, while Q3 free cash flow decreased by KRW 185.2 billion Y-o-Y to KRW 201.9 billion due to increased infrastructure investments. Going forward, we will continue to make capital expenditures to strengthen the competitiveness of each business unit while maintaining financial soundness through stable operating cash flow driven by top line growth and disciplined debt management. This concludes the overview of our Q3 financial results. We will now move on to the Q&A session. Unknown Executive: Before we begin the Q&A session, let me make a brief announcement. Tomorrow, NAVER will unveil its detailed strategic direction at DAN25 Integrated Conference through both on-site participation and live online streaming. We invite everyone to join and tune in. Operator: [Foreign Language] [Operator Instructions] [Foreign Language] The first question will be provided by Stanley Yang from JPMorgan. Stanley Yang: [Interpreted] I have two questions. Number one is related mostly to CapEx. So I understand that GPU CapEx will be increasing this year. And so I'm curious about any guidance on GPU CapEx for this year and next year and also a guidance on the total CapEx that you forecast. And also, I'm curious whether the 60,000 GPUs in the partnership with NVIDIA is included in this GPU CapEx. And along these lines also, I'm curious about management's thoughts on the potential pressure on margin that the increased depreciation expenses can bring about. My number two question is largely about the vertical AI. I'm sure that you are engaging in a myriad of different strategies in terms of your AI verticals, especially on the B2C side in ads and shopping. I'm curious about how the extent to which AI is integrated into your services? And also along that lines, the revenue contribution. I know it's early days right now, but what do you expect for this year and in the future? Hee-cheol Kim: [Interpreted] To answer your first question, our AI integration efforts have resulted in very fruitful and meaningful outcomes in terms of boosting our revenue and monetization strategies with our AI briefing and also ad boost amongst other commitments and efforts. We have also communicated to investors and markets our commitment to keep on investing in the infrastructure and therefore, CapEx in terms of increasing the competitiveness of our services. And although I can't speak to the exact figures right now, as of this year, we expect our GPU CapEx to -- including GPU CapEx, our entire CapEx to stand around the KRW 1 trillion range. And from 2026 and onwards, considering our new business expansion strategies and plans, we expect about KRW 1 trillion in CapEx to go into GPU investments alone. And in terms of our GPU investments, although it is, of course, a proactive move on our part, this also includes our endeavors into increasing profitability as well as it includes GPU as a Service provided to the government and also public sectors as well. So with the review that we have, we will continue to actively invest in GPU with our CapEx. And also this figure will include the 50,000 NVIDIA GPUs that you mentioned. Soo-yeon Choi: [Interpreted] And to address your second question, when we first released the AI briefing service earlier this year, our initial goal for coverage was in the 10% range within the year closing out. However, as the business has progressed, we've come to realize that this has actually been very effective in boosting not only our loyal user base, but also our existing search business as well. And therefore, we'll be accelerating our efforts to bring this figure up to the 20% range. And you'll know if you compare with our global platform competitors that we at NAVER have all around a comprehensive understanding of our users, which we will lean into in terms of providing numerous vertical services, including payment services, reservations, shopping, so on and so forth, which will make sure that we can be a lot more flexible in terms of the AI services that we provide. You'll be able to hear more announcements about the exact timing and features at tomorrow's DAN event. However, by spring of next year, we plan on rolling out our AI shopping agent as well as the AI tab and integrated AI services that will be providing a lot more integrated approach to what we provide in terms of our services. The integrated AI agent is part of our omni service strategies, and we've begun to come to the realization that this has been a significant boost in our revenue with search ads, commerce and also the local business side as well. And so as you've mentioned, it is still early days in terms of revenue contribution, but we expect strong contributions to monetization and revenue moving forward. Operator: [Interpreted] The following question will be presented by Junhyun Kim from HSBC. Junhyun Kim: [Interpreted] I have two questions for you. Number one is about the enterprise side. I know that there has been some variability until now with WORKS and so on and so forth. However, it seems that you are really doubling down on your commercialization efforts with the commercial divisions for GPU as a Service, AI and also Digital Twins on the move. So I'm curious about how you expect revenue to pan out moving forward. It seems that physical AI and robots are one of your focus areas. What will be some of the major key monetization pillars moving forward? And number two, speaking to the commerce marketing expense, when can we expect these expenses to start going down until when do you think we will expect these expenses to be executed? And also on the GPU side, we talked about the GPU CapEx investments that will be going into infrastructure. When do you think that the GPU business will begin to turn a plus margin? Soo-yeon Choi: [Interpreted] I'll answer your first question first and speak a little bit more about the color on the R&D that we have for Digital Twins and robots. You know that in 2017, which was quite a while before the terminology or concept of physical AI really began to come to the fore, we established NAVER Labs to that end. And our core competitive, of course, we assess lies in not hardware, but on the software side. So our focus has really been on developing our software, ARC and ALIKE. ARC will be providing management services in an integrated and comprehensive manner that can bring together robots that are from various different manufacturers, playing a role like Windows or Android sorts. And ALIKE will be able to provide accurate location and delivery services. And we have continued to make endeavors to make sure that if you look at our technology through our efforts in R&D, our technology competitiveness and capabilities, competencies are truly global #1 and at the top. And 3 or 4 years ago, when we began the test bed at the 174 headquarters of NAVER, we were able to make sure that we can go ahead with more speed and also make sure that we can use and accelerate, compile more global references with those efforts. Although it is still early days to really speak to the entire global market size that we can forecast, as per our expectations, we expect that our market share in terms of global robots will stand at about at least 30% in the international arena. And we are making sure that this can serve as our next growth driver moving forward. And we are continuously working to make sure that we can create these technologies in-house and internalize these core competencies in terms of the technology that we have. And especially given that we are a full stack AI service provider based on our cloud competencies, we are working to make sure that the potential that we see in opening up new markets in Korea for tailored and customized cloud to manufacturers can really serve as a growth driver moving forward, and we will continue to focus our efforts in this area. With the Bank of Korea and also Korea Hydro KHNP, we are continuously in negotiations about these types of customized private cloud services that we can provide, and we will be coming to you with more details and color once we can provide them to you. Hee-cheol Kim: [Interpreted] And speaking to your second question on commerce, you'll know that we've revamped our commission structure, and we are planning on fully leaning into the changes that we have made. However, our focus on marketing in this arena is not just as a one-off initiative in order to boost GMV. It will be an all-around comprehensive strategy that focuses on increasing loyalty as well as other aspects, and management will continue to focus on this aspect. And we did touch upon this topic when we were talking about GPU CapEx guidances, but we will continue to make sure that our investments are very active and aggressive on the GPU side, and this will also lead into revenue contributions and growth as well. So we will be taking into consideration the growth in revenue as well as we decide upon our investment plans in GPU. And as is with all infrastructure investments, the direct revenue contribution in the early stages, especially is quite minimal. So this really is in the term of a long-term view with a long-term lens. And so maybe in the temporary time, there might be a slight dip in revenue because of this. However, in the mid- to long term, we are more than certain that this will be able to turn a plus. Sorry, just a revision about one of the interpretation that was provided. The market share of 39% when we're speaking about NAVER's robot initiative wasn't NAVER's market share. It is the OS control platform market within the robot market that is expected to account for about 39% of the global market moving forward. Operator: [Interpreted] The following question will be presented by Eric Cha from Goldman Sachs. Minuh Cha: [Interpreted] So I have two questions for you. Number one is about AI briefing. I know that you aren't into really pushing full monetization strategies yet with AI briefing, but I'm curious about the user behavior or pattern changes that you've seen after the release. And also any updates on the performance or results in a more detailed manner would be very much appreciated. And question number 2 is about the commerce side. I know that the uptick in take rate has really pushed up revenue this year. What do you expect for take rate next year and moving forward? Will there be some meaningful growth in take rate continuing on moving forward? And also, if you can provide us a little bit more update about any recent changes or any results regarding the Kurly partnership. Soo-yeon Choi: [Interpreted] First of all, to answer your question about AI briefing, when we launched AI briefing service, it really wasn't geared towards monetization side. It was more towards really ramping up our weaker side comparatively compared to our competitors that was pointed out in terms of the information-seeking queries in order to increase the quality. And in the initial stages, we were able to find that with the coverage on information-seeking queries as well as long-tail queries, which comprise of 15 words or more that the user satisfaction was very high, and we found that the duration time spent was going up as well as Y-o-Y increase in [indiscernible]. And the search result satisfaction is, of course, important, but also tying that in with the relevant information or relevant questions is extremely important. That's something that we continue to monitor. And if you compare the relevant questions that people click on at the bottom of the AI briefing service, compared to the initial launch days, it has expanded to about fivefold. So that is one of the changes that we have seen. And the fact that it's creating a virtuous cycle where it really is encouraging users and to use the search results, but also explore upon their search results and to build upon that and also to consume content as well. And with the increase in query coverage, I also mentioned about how we will be integrating more and more AI into the business queries as well as the commercial queries, and we're continuing to monitor very closely how this impacts our monetization strategies and also how this will impact the merchants and businesses as well. And at NAVER Place, which comprises of restaurants and other places to go out, we've integrated AI services. And as a result, we've seen our GPR go up 2.3 fold and conversion rates increased 15%. So these are some of the positives that we've seen throughout the release that has made us really have a much more stronger confidence in expanding these services moving forward, and these will be really panning out in our AI agent services that we will be rolling out such as AI tab and so on and so forth next year. And in terms of the shopping side, as you will know, the big boost to our revenue in terms of the shopping side has really been twofold. Number one is the increased shopping revenue that came after the release of Plus Shop and also the increase after we've integrated our services with AI. And with the change in our commission structure as well, that has been a big boost to our revenue. We can look on the GMV side where it's been a big boost for brand stores on shopping as well, as well as in delivery. And we will be leaning into these AI verticals and looking at the commission structure revamp, we are very certain that this will be a boost in terms of increasing take rate moving forward as well. And since the launch of the NAVER Plus Store app, we've been in talks with manufacturers about the ad inventory and placements of our stores that we have, and this will also be a meaningful contribution to revenue monetization as well. And next, speaking to the Kurly side, our shopping strategy has really been in leveraging the lead and edge we have in AI technology and also the shopping product listings that we have in order to provide more personalized recommendations, boosting this side as well as making sure that we make improvements on to the logistics side, which has been played out as one of our weaknesses. And in this area, Kurly will be able to provide more [indiscernible] It is still early days, so we can't talk to the exact figures. However, it is on par and progressing well as we have initially planned. Operator: [Interpreted] The last question will be presented by [indiscernible] from Bernstein. Unknown Analyst: [Interpreted] My question is related to the commerce side, especially the marketing expense. I am curious about the incremental increase on commerce that accounts for in the Y-o-Y increase in marketing expense. Hee-cheol Kim: [Interpreted] On a Y-o-Y basis as of Q3, our marketing expense has increased KRW 85 billion, and about half of that is commerce. And from that commerce marketing expense, which is half of KRW 85 billion, half of that, again, is from the increase in the provisions that came from the increase in GMV as on the backdrop of the increase in commissions as per the structure revamp. And another half will go to the strategic promotions that we provided. Unknown Executive: [Interpreted] Thank you very much for joining us, and we look forward to your continued... [Statements in English on this transcript were spoken by an interpreter present on the live call.]
Operator: Good morning, and welcome to the Euronext Third Quarter 2025 Results Conference Call. On today's call, we have Stephane Boujnah, CEO and Chairman of the Managing Board; and Giorgio Modica, CFO. Please note this conference is being recorded. [Operator Instructions] I will now hand over to your host, Stephane Boujnah, to begin today's conference. Please go ahead, sir. Stéphane Boujnah: [Audio Gap] quarter 2025 results call. I'm Stephane Boujnah, CEO and Chairman of the Managing Board of Euronext, and I will start with the highlights of this quarter of the year. Giorgio Modica, the Euronext CFO, will then develop the main business and financial highlights of the quarter. As an introduction, I would like to highlight three points. First, Q3 2025 is Euronext's sixth consecutive quarter of double-digit top line growth. This quarter, our revenue and income grew by 10% plus 6% (sic) [ plus 10.6% ] compared to Q3 2024 to EUR 438.1 million. Our adjusted EBITDA margin increased also double -- increased by 1.2 points to 63.2%. This strong performance was driven by the expansion of non-volume-related business, driven also by resilient trading and clearing revenues and also driven by continued cost discipline. Second, during this quarter, we were very proud to announce the inclusion of Euronext within the CAC 40 Index. This milestone demonstrates that when Europeans decide to succeed together, they can transform European capital markets and the financial infrastructure landscape. And this inclusion in the French blue-chip index will have a positive impact on the liquidity of our stock. Third, we are at a cornerstone moment for the development of the group in terms of industrial developments. All the Euronext teams are fully engaged to deliver the ambitious targets of the Innovate for Growth 2027 strategic plan. Progress accelerates with all our clients and partners to achieve these objectives and to create more competition in the European market. We recently launched the first fully integrated European marketplace for ETFs with substantial efficiency gains for the entire value chain, including issuers, market makers, distributors, custodians and investors. To boost retail participation, we have introduced the first ever mini-sized cash-settled futures on main European government bonds, and we were pleased to see that they have been trading from day 1. We are providing the innovative and competitive post-trade solutions that the European market needs. This is reflected in the growing momentum with clients that actively commit to support our CSD expansion program, a key requisite for the success of this initiative. Let me give you now a quick overview of the Q3 2025 highlights on Slide 4. As I said earlier, Euronext delivered double-digit revenue growth in Q3 2025 for the sixth quarter in a row. This quarter, revenue and income grew by plus 10.6% year-on-year up to EUR 438.1 million. So first, our non-volume revenue reached 60% of total revenue and income and posted a strong performance overall. This plus 12% increase of non-volume-related revenue year-on-year was driven by sustainable growth in custody and settlement and the first full quarter contribution of Admincontrol. This quarter, we reached a new record level of EUR 7.5 trillion in assets under custody, driven by growth in equities and bonds. And that tells a lot about the strength and the growth of our post-trade business. Second, volume-related business was fueled by double-digit growth in fixed income and commodities trading and clearing. Euronext continues to record robust volumes and revenue capture in cash equity trading and clearing, driving revenue up plus 11.5% year-on-year. Our underlying expenses, excluding D&A, were EUR 161.4 million, up plus 7.3% compared to Q3 2024. And this increase reflects our consistent growth, investments in innovation and human capital and the impact of acquisitions. But in February this year, we announced an underlying cost guidance of EUR 670 million for 2025. Thanks to this continuous rigorous cost discipline on recurring expenses, Euronext today upgrades its underlying operating cost guidance for 2025 to EUR 660 million. As a reminder, this guidance does not include Admincontrol. Our Q3 2025 adjusted EBITDA grew by plus 12.6% compared to last year, reaching EUR 276.7 million. Euronext's adjusted EBITDA margin increased by 1.2 points to 63.2%, reflecting strong top line growth and cost discipline. Adjusted net income was EUR 169 million. Reported EPS was EUR 1.49 per share and adjusted EPS was EUR 1.68 per share. As a reminder, and this is quite important for comparison purpose, last year, Euronext received a dividend of EUR 23.4 million in Q3. This year, this dividend was received in Q2. Therefore, net income and EPS are not really comparable year-on-year. In our continued commitment towards deleveraging, net debt to last 12 months adjusted EBITDA was 1.5x at the end of September 2025 from 1.8x at the end of June 2025. The large decrease compared to Q3 2024 reflects our strong operating leverage and ability to generate cash flow. The leverage is in line with our target range between 1 and 2x announced as part of the Innovate for Growth 2027 plan. On the basis of this strong financial position and in line with our capital allocation principles, I am pleased to announce the launch of a EUR 250 million share repurchase program to be executed from the 18th of November until the end of Q1 2026. Today -- moving to Slide 5. Today, Euronext is ready to contribute to the next level of consolidation of markets in Europe. Our offer for ATHEX Group is a step towards this consolidation of European market infrastructure to support European listings and economic growth and create even deeper liquidity pool in Europe. Euronext expects to deliver significant synergies from the integration of ATHEX into its European market infrastructure, into its single liquidity pool, single order book, single technology platform. And we expect EUR 12 million of annual cash synergies to be targeted and delivered by the end of '28. This combination is fully aligned with our investment criteria to have a return on capital employed above the WACC of the company in year 3 to 5 after the closing of the transaction and post synergies. The transaction is expected to be accretive for shareholders following the delivery of synergies from year 1. The deal provides major benefits for the Greek market, which is going to become much more integrated into European flows and into global flows. This transaction is clearly a sign of confidence in the recovery of the Greek economy. I now give the floor to Giorgio for the business and financial review of Q3 2025. Giorgio Modica: Thank you very much, Stephane, and good morning, everyone. Let's now have a look together the strong financial performance recorded in the third quarter of 2025. I'm now on Slide 7. I like this slide because it shows how we have truly increased the share of our revenue that is not related to volumes. Capital Markets and Data Solutions are today the largest contributor to our top line and a sustainable source of recurring revenue growth. This is also the case for Securities Services, driven by another quarter of double-digit growth of custody and settlement. Total revenue and income in the third quarter 2025 reached EUR 438.1 million, up 10.6% compared to last year. Today, non-volume-related revenue represents 60% of our top line and covers 162% of underlying operating expenses, excluding D&A. Let's take a closer look at the key drivers behind this performance, beginning with non-volume-related revenue and income and move together to Slide 8. Starting with Securities Services. Revenue was at EUR 77.3 million, marking a solid 6% increase compared to the third quarter of 2024. Custody and Settlement revenue reached EUR 70.6 million, an 11.8% increase compared to the third quarter of 2024. The strong performance was driven by the growth in assets under custody that reached another record at EUR 7.5 trillion. This double-digit growth was also supported by resilient settlement activity and continued growth of value-added services. Other Post Trade revenue declined 32% compared to the third quarter of 2024 to EUR 6.7 million. This, as discussed in previous quarters, stems from the migration of derivative clearing from LCH SA to Euronext Clearing and the internalization of the related treasury income into the net treasury income line of our P&L. Net Treasury Income was up 23.8% compared to the third quarter of 2024, benefiting from the expansion of Euronext Clearing that I just mentioned. As announced during the previous results, we have successfully migrated Italian markets to a harmonized clearing framework at the end of June 2025. These important milestones offer Euronext clearing clients material risk management benefits and operational efficiency and helps them to optimize their total trading cost. This optimized clearing system provides clients with resilient, stable and efficient infrastructure. It will serve as the pillar of all new product and services Euronext Clearing is developing, notably for our repo expansion initiative. Turning to Capital Markets and Data Solutions. I'm now on Slide 9. Revenue reached EUR 168.4 million, reflecting a 13.9% increase compared to the third quarter of 2024. Primary Markets generated EUR 46.2 million of revenue, up 3%. Euronext maintained its leading position for equity listing in Europe with a solid rebound in the third quarter, recording 20 new listings. Advanced Data Solutions revenue grew to EUR 66.2 million, up 6.5% compared to the same quarter last year. This good performance was driven by steady growth in our data solutions, thanks to rising demand for diversified data sets and increasing interest from our retail clients. Corporate and Investor Solutions and Technology Services reported EUR 56 million of revenue in the third quarter of 2025, up 37.3%. This outstanding performance reflects the full quarter contribution of Admincontrol, alongside the growth of Investor Solutions and colocation services. Moving to our volume-related activities. I'm now on Slide 10. Revenue of FICC Markets reached EUR 81.9 million, marking an 11% increase compared to 2024. Revenue for FICC Markets include fixed income trading and clearing, whose revenue grew 14.7% to EUR 46.8 million, driven by the continued strong volumes. In particular, MTS Cash average daily volume was up 29.5% year-on-year at EUR 44.8 billion (sic) [ EUR 48.8 billion ]. MTS Repo term adjusted average daily volume reached EUR 585.6 billion, up 23%. The strong performance was also supported by the expansion of our D2C segment and the growing volumes outside of Italy with significant growth in Portugal and Spain. Commodity trading and clearing revenue increased 11.3% to EUR 27.6 million in the third quarter of 2025. This reflects record intraday power volumes and the recovery of volumes on agricultural commodities trading and clearing. FX trading revenue reached EUR 7.5 million, down 8.3% compared to the same quarter last year. This reflects lower volatility and the negative currency impact on the U.S. dollar. Like-for-like revenue decreased only 2.5% despite an 11.8% decrease in volume, thanks to proactive revenue capture management. Continuing with our review of volume-related revenue, I'm now on Slide 11. Equity Markets revenue saw a 6.6% increase compared to the third quarter 2024, reaching EUR 93.7 million. Cash equity trading and clearing revenue grew 11.5% compared to 2024, reaching EUR 82.5 million. This reflects a 14.8% increase in average daily volume traded to EUR 11 billion. This quarter, Euronext reached solid average revenue capture on cash trading at 0.53 basis points. Lastly, financial derivatives trading and clearing revenue was at EUR 11.2 million, a 19.4% decline compared to 2024. This performance mostly reflects lower volatility. Following clearing migration, certain clearing fees are now reported in the Other Post Trade revenue, and as such, is not fully comparable with the third quarter of 2024. Now I move to Slide 13 with the EBITDA bridge. Euronext's reported EBITDA for the quarter grew 13.9% to EUR 275.2 million, mainly thanks to EUR 29.5 million of additional revenues at constant perimeter and EUR 13.2 million of additional revenue generated through acquisitions. This was offset by EUR 4.3 million of additional cost at constant perimeter and EUR 7.1 million of additional cost coming from the change of scope. Non-underlying expenses, excluding depreciation and amortization, were at EUR 1.5 million. This is slightly lower than the third quarter of 2024 due to the completion of the Borsa Italiana Group integration last year. Euronext's adjusted EBITDA for the quarter grew 12.6% to EUR 276.7 million with an adjusted EBITDA margin of 63.2%, up 1.2 points compared to 2024. The underlying operating expenses, excluding depreciation and amortization, increased 7.3% compared to 2024, mostly related to the growth investment for the delivery of our strategic plan and acquisitions. In parallel, we remain highly disciplined in managing our recurring expenses. I'm now moving on Slide 14. Adjusted net income this quarter reached EUR 169 million. Please note, as Stephane already reminded that the Euroclear dividend was received in the second quarter this year and not in the third quarter as last year. Depreciation and amortization accounted for EUR 49.3 million, up 4.4% versus the third quarter of 2024. PPA related to the acquired businesses accounted for EUR 19.7 million. Euronext reported net financing expense of EUR 6.8 million in the third quarter of 2024 compared to EUR 2.9 million of net financing income in 2024. The variation reflects decreasing interest rate, lower cash position after the redemption of our EUR 500 million bond and the impact of currency variations. Please note that it also recognizes noncash interest expenses related to the convertible bonds. Income tax for the third quarter of 2025 was EUR 58.5 million. This translated into an effective tax rate of 26.7% for the quarter compared to 23.8% in the third quarter 2024. As a reminder, in the third quarter of 2024, the tax rate was positively impacted by the tax exempt EUR 23.4 million dividend received from Euroclear. Share of noncontrolling interest amounted to EUR 11 million correlated to the resilient performance of MTS and Nord Pool mainly. As a result, the reported net income share of parent company reached EUR 149.7 million. Moreover, adjusted EPS was at EUR 1.68 per share this quarter compared to EUR 1.74 per share in the third quarter of 2024. And reported EPS was EUR 1.49 per share. I continue with cash flow generation and leverage. I'm now on Slide 15. In the third quarter of 2025, Euronext reported a solid net cash flow from operating activities of EUR 401 million compared to EUR 237.4 million in the third quarter of 2024. This increase mainly reflects higher working capital from Euronext Clearing and Nord Pool CCP activities this quarter. Excluding the impact of such a change in working capital, the net cash flow from operating activities accounted for 99.9% of EBITDA this quarter. As Stephane already reminded us, net debt to adjusted EBITDA ratio was at 1.5x at the end of the quarter, right in the middle of our long-term target range. I'm now on Slide 16, and I wanted to say that at our Investor Day last year, we have announced that we would have proactively assessed special shareholder returns according to the -- our capital allocation principles. In line with this principle, Euronext has decided to launch a share repurchase program of a maximum of EUR 250 million, which represents around 2% of Euronext outstanding share capital. The share repurchase will start on 18 November and is expected to be completed by the end of the first quarter of next year. This program underlines the strong confidence in the growth prospect of the group and will not impact our strategic flexibility to invest and capture market opportunity. This concludes my presentation. And with this, I give back the floor to Stephane. Stéphane Boujnah: Thank you, Giorgio. And to round things off, we have delivered a very strong third quarter financial results. This quarter's results reflect the strength of our diversified business model with increasing diversification, both in volume-related revenues and in non-volume-related revenues, and our ability to collaborate effectively with our clients, with our partners on their evolving priorities in order to create new offerings and in order to create more competition. Since the beginning of the year, we have demonstrated a sharp focus on the execution of our strategic plan. We are today in an ideal position to deliver our Innovate for Growth 2027 targets. We are confident in our ability to achieve our strategic objectives and to deliver sustainable long-term growth. Our unique integrated value chain has once again proven its strength. We are very pleased to share that we have kicked off the last quarter of the year on an even stronger note. Our assets under custody reached another record at the end of October 2025. And across the business, we continue to benefit from elevated volatility and long-term structural growth drivers as we speak. Our ongoing offer for ATHEX further reinforces our position as the consolidator of European capital markets and creates further attractive growth prospects for the group. Thank you for your attention, and we are now ready to take your questions with Giorgio Modica and Anthony Attia. Operator: [Operator Instructions] The first question come from the line of Michael Werner of UBS. Michael Werner: Congrats on the results. Two questions from me, please. In terms of the Q3 costs, they were certainly below, I think, consensus expectations. You brought down your guidance for costs for the full year. I was just wondering, is this a scenario where you maybe you pushed out some of the investment spend that you had anticipated just because of changing dynamics in the marketplace? Or is this something more sustainable? This is the first question. And then the second question, I think, Stephane, you mentioned at the beginning in terms of the consolidation of the post-trade space that there's a growing list of clients that are supporting this effort. Is it possible to kind of give us an indication as to the number of potential custodians you have signed up or what other signposts we should be looking for when it comes to measuring the progress of the CSD opportunity? Stéphane Boujnah: Thank you for those two questions. Giorgio will answer the question on cost. I will answer the question on the CSD expansion. And let me be a bit blunt. I mean we are implementing an industrial project, which has a certain time line and a certain pace of execution, and we talk once every 3 months about the financial results. Now there is sometimes a disconnect between the pace of financial results every quarter and the pace of delivery of those industrial projects. And let me be a bit more specific. The go-live will happen in September '26. We are in the process of signing all sorts of market participants, custodians, issuers, other critical people in the project. And at the moment, the process of cementing those and signing those -- this support is ongoing. So our intention is to share with the market an interim status update whenever it's ready, let's say, within the next few months, irrespective of the timing of the quarterly results -- financial results announcement. I can't be more specific. And if you want me to be roughly correct or precisely wrong, I would tell you that things are going in the right direction. We are in the process of signing the relevant people. Before sharing with the market where we are, we want to have a sort of critical mass of homogenous signing to be shared and to be communicated. Unfortunately, I can't be more specific at this current moment. Giorgio Modica: Yes. On cost for the third quarter, the message is that this does not come at the expense of investments. We are going full speed to deliver things as quickly as we can. There are three elements that I would like to highlight just to give you a sense of what has happened in the third quarter. So there is an element you are all aware, which is the seasonality in the third quarter, where we record lower salary expenses linked to the holiday season. This is something that you are aware of. The second element that I would like to highlight because it's meaningful and not necessarily -- what we've seen is that what we have recorded in the third quarter is a reduction of the social contribution related to our long-term incentive plan which is driven by the share price performance. So we have recorded extremely high increases in the share price in the first and second quarter and more muted dynamic in the third quarter, which has resulted in a less steep increase of that line of cost. And the last element I would like to highlight is that our cost base, as you know, is largely fixed, but it's not entirely fixed. So there is a small component of cost of sales and as the cost of the third quarter -- sorry, the revenues of the third quarter were lower than the previous quarter, then we record some savings. So to make a long story short, this performance is sustainable, point one, does not come at the expense of investment, and is explained mainly by the element that I just mentioned. Operator: The next question comes from Enrico Bolzoni calling from JPMorgan. Enrico Bolzoni: So one question on MTS volumes. They seem to have plateaued a little bit. I was looking at the statistics for October as well. I just wanted to ask you, what should happen for volume growth to be picking up again basically? And related to that, do you think that the current situation in France with the political instability and clearly, the yields having gone up increases a bit the probability of French debt being migrated near term to MTS? So that's my first question. And the second question is on technology. There's been a bit of rumors, a bit of conversation around the potential disruption that blockchain could bring to post-trade services, for example, by making instantaneous settlement of trades or accelerating the velocity of collateral within clearing houses. Can you just give us some color what are your thoughts there? Is something that worries you, something you're investing into to protect the business? Or you think these fears are a bit inflated and actually nothing will materialize anytime soon? Stéphane Boujnah: Thank you. So Anthony will answer your question on technology impact of the post-trade. Giorgio will answer your question on MTS volumes, and I'm going to answer your question on the French dynamics around the way the French Republic is managing the liquidity and the trading and the secondary trading of its sovereign debt. On that particular point, we have an ongoing dialogue with the French debt management office and with the relevant ministers in charge to demonstrate the benefits of the MTS solution to increase liquidity and to reduce spreads on the French sovereign debt. For the time being, the French Republic is still focusing on the primary dealers only type of structure. But we have a dialogue. But where you have a point is that things have changed significantly. One year ago, well, at least last summer, the 10-year for France was more expensive than Germany, but cheaper than the one of Portugal, Spain, Greece and Italy. The 10-year for France is now more expensive than Greece, Portugal, Spain and Italy. And there is an ongoing analysis within the French Ministry of Finance about what can be done in this new environment, which is fundamentally different from what the situation was 18 months ago. When they will agree to migrate to a form of MTS solution, whether they will do it, how it will be implemented, I can't be specific because I can tell you that there is a dialogue, but -- and that clearly, the more French debt, French sovereign debt looks like the Italian sovereign debt and the numbers are at least in terms of 10-year costs are clear. The more the situation is similar, the better the chances that things will move. But at this current moment, there is no decision taken. Giorgio on the MTS volumes and then Anthony on the impact of technology on post-trading? Giorgio Modica: Yes, absolutely. What I can say is that if I look at the current trading, I see that quarter-to-date, we are above 30% up with respect to where we were last year. If I look at the month-to-date, the increase in excess of 50%, and I now have the statistic of the 5th of November, where the volume traded on MTS were EUR 65 billion. So what I'm trying to say is that the volume remains extremely elevated. And what I can comment is the fact that the market conditions remain highly constructive going forward, and we don't see any reason for a change in the short to midterm. Then elaborating more on what are going to be the volume first quarter next year and the trend is difficult. But again, the message is that the performance remain very strong and the market condition highly constructive. Anthony Attia: This is Anthony. Thank you for your question on the impact of DLT on post-trade and in particular, on clearing houses. Look, to make a short answer, we believe that the impact is neutral to positive with some opportunities. But the longer answer is we need to look at the impact of DLT by asset class. So the role of the clearing house is to provide guarantee and manage potential default. The fact that we have some market demand, some market trend to tokenize collateral is actually a positive thing, and at Euronext, we are working with the market to look at that specific technology change and test it. It is positive, sorry, because it would create some fluidity in the way collateral is allocated and in the way margins are called. So that's the positive part. Now this is true for derivative market, OTC clearing -- OTC cleared market. Now if you move to cash equity, the move towards T+1 gets us closer to a form of a same-day settlement or some would say, instantaneous one. We're not there yet in terms of real-time settlement because we would lose the netting effect. And so some less liquid asset class could benefit from DLT nuclear settlement, if you wish. But in the market that we operate, where it's highly liquid asset classes, the market still benefit from netting effect. So I don't believe there is a negative effect there. Operator: The next question comes from the line of Hubert Lam calling from Bank of America. Hubert Lam: I've got three of them. Firstly, on European exchange consolidation, which has now been brought up by Chancellor Merz, how realistic do you think this is for further and broader consolidation within Europe, including Germany? Second question is on costs. As you said, you improved your cost guidance for this year while you continue to invest. How should we think about cost growth now into next year? Should we expect cost growth to be slower just given a lot of investments assumed are kind of front loaded? And lastly, on -- question on ATHEX. If I look at the implied offer price today, it's close to the spot price. Just wondering if you would consider increasing your offer? And if not, how confident are you in terms of getting the required take-up for your offer? Stéphane Boujnah: Okay. So I will answer your question on ATHEX and your question on the European exchange consolidation and Giorgio will answer your question on cost. On ATHEX, let me reiterate that we do not intend to change the price of the offer and that we will communicate on this offer in accordance with appropriate requirements under Greek law. But we do not intend to change the price of the offer. As you know, the offer is open until the 17th of November. We are intensively communicating and sharing views with all the relevant group of shareholders in order to convince them that the premium we are offering is very attractive and to make sure that they understand the value proposition of making ATHEX business, the Greek capital markets part of an integrated European project. And so far, the dialogue is very constructive. But as I said, the offer is open until the 17th of November, and we will communicate the results of this tender offer on the 19th of November. On the European exchange consolidation, three remarks. We welcome the comments or the aspirations expressed by the German Chancellor that echoed with the ones of Mrs. Christine Lagarde, the President of the European Central Bank. And we share that vision, and we are available to contribute to the next phase of potential consolidation within Europe. Euronext today is the backbone of the Capital Markets Union, is the backbone of the integrated equity markets because as many of you know, the aggregate market capitalization of the companies listed and traded on Euronext amounts to approximately EUR 6.5 trillion, which is more than twice the aggregate market capitalization of companies listed on the London equity market and which is more than 3x, almost 4x the size of the Frankfurt equity market. This is just because we have focused for years on the equity markets, even if at group level, equity trading represents within Euronext 17% of our top line, it's still a multiple of what the other places in Europe, the large players in Europe are doing. And one of the reasons why this vision makes sense is that for all sorts of good historical and corporate reasons, we have found ourselves as focusing historically on equity markets and in fixing the equity financing ambitions of local stakeholders, whereas other players have been focusing in diversifying away from equity markets, sometimes in a very intense way. And by the way, this difference of focus on equity markets is also reflected in the difference of valuation multiples historically because markets tended for long to value diversification away from equity markets more than focus on equity markets. But this is a difference between investors' preferences and stakeholders' aspirations. So we are in a situation where we have been able to build Europe platform that raised 25% of the equities within Europe, which is probably the backbone of any future consolidation because we have the federal governance which is available, we have the integrated processes that are available, we have the strategic focus which is available. We have the operational performance, which is available to be what Mr. Merz and Mrs. Lagarde want to happen. Now why it is not taking place and why it may or may not take place is that because when you do M&A, you operate into a consenting added game. To do an M&A transaction, you need a willing buyer or willing consolidator and Euronext is a willing buyer and is a willing consolidator, but you need also a willing seller. And for the moment, there is just no willing seller. So I think you should not ask us whether we are available. You should ask Deutsche Borse whether they are willing to enter into this type of conversations. And as always in Germany, what the Chancellor says in Berlin is interesting, but what is decided in Frankfurt by Deutsche Borse and in [ Eschborn ] by the government of the land of [ Essen ], which is the supervisor of Deutsche Borse is much more relevant to deliver the output. So that's where we are for the German situation. So we are available, but the answer is in the hands of decision-makers. Giorgio Modica: Yes. On the cost, what I can say is that we will follow the usual time line for cost guidance, which means that we will share with you cost for next year in February next year. And the reason is simple and is the fact that we have not concluded the budget process, which will be approved in December. So it would be a little bit complex to share and commit with you before having secured approval from our governments. Operator: The next question comes from Ian White from Autonomous Research. Ian White: Three from my side as well, please. Just a follow-up on this consolidation or M&A topic. Can you just say a bit about your openness or otherwise to innovative structures or partnerships to boost scale and liquidity in European equity markets? I know there was a proposed joint project with Vitura, I think, a couple of years ago. Would you revisit something like that? Or are you clear that sort of consolidation of European markets in Euronext's own business is the only option you're really sort of thinking about, please? That's question one. Secondly, can I just ask a follow-up as well on the drivers of the performance at MPS? And in terms of the growth, how much is coming from sort of more trading of Italian govies and how much is coming from new pockets, maybe products outside of Italy, B2C, sort of new trading user types, the algo-focused traders that I think you talked about at the Capital Markets Day last year, a bit more detail on that would be helpful, please. And finally, ESMA has issued some new proposals regarding commercial practices with respect to selling market data and particularly with respect to pricing of data across different types of user and restrictions around auditing practices by the exchanges. What's your view on those proposals at this stage? And what impact do you think that might be for Euronext, please? Stéphane Boujnah: So I'll take your question on consolidation, and Giorgio will take your question on MTS and the dynamic on our market data business. On consolidation, when it comes to equity trading, which is the core of the discussion for the moment because the motivation of the German Chancellor was to secure a proper downstream for the liquidity of all the great companies that are developing in Germany that look for exiting public markets. For equities, consolidation is needed to deliver a single liquidity pool because if you want a single liquidity pool, you need to have a single order book, and to enable a single order book, you need a single technology platform. So -- and you need to have processes, harmonized rule book and consolidation is necessary to create scale. Hybrid model and IDs have been very creative. They have not really delivered not because people were not acting in good faith or were not positive and enthusiastic, because it just doesn't fit with what is needed to create a deep, low latency, large liquidity pool. So we are happy to consider all sorts of cooperation when it comes to, let's say, indices, when it comes to listing initiatives, when it comes to facilitating or using tools that facilitate the retail onboarding in public markets. But when you want to create impact, you need more liquidity, and to create more liquidity, you need a bigger order book. And to have a bigger book, you need a solid, robust centralized integrated technology platform. And that's why this is a prerequisite. Giorgio Modica: Okay. Yes. So let's start with MTS. You're absolutely right. One of the ambition of the project is to grow platforms which are different from the traditional dealer-to-dealer and shift more in the dealer to clients. This is -- this platform is something that is performing extremely well, and we can see volumes on that platform growing, I would say, exponentially with growth rate exceeding 50% year-on-year. But still is not a huge proportion of the overall revenues, but the direction of travel is very strong. And the other interesting feature is that we are expanding into the three key segments of the space of the dealer to clients. So we are seeing very good traction in rates, the beginning of an activity in credit, and we are developing the swap. So the results so far are good. The partnership with dealers is performing well, but clearly, this is just the beginning. Then when it comes to the traditional dealer-to-dealer, Italy remains the largest contributor to the pool. However, as I have highlighted during the presentation, we have seen very good growth coming from countries outside of Italy, namely Spain and Portugal. When it comes to market data, we are a recipient of regulation. We are adjusting ourselves. It's difficult to comment at this stage because the game is not over, which means that we are still analyzing the situation. What I can comment is that we are going to see what is going to be the outcome and whether -- who's going to be the actual beneficiary of the change, whether are going to be the large resellers of data or the smaller players in the market. Operator: The next question comes from the line of Arnaud Giblat calling from Exane BNP. Arnaud Giblat: I've got two quick follow-up questions, please. Firstly, on the potential movement of OAT on MTS. I'm just wondering, I heard your comments. I'm just wondering in terms of potential competition, who are you facing up to and how well are you positioned to win that business if it eventually comes over? And my second question is, again, a follow-up on Euronext Securities. I'm just wondering if you can report any progress on getting issuers moved to Italy. Stéphane Boujnah: Your second question, sorry, Arnaud? Arnaud Giblat: Yes. I think so far, it's just Euronext and Exor that have shifted their issuance to Euronext Securities. Are they -- are you seeing any progress with any other issuers? Stéphane Boujnah: Okay. So on the second question, which is basically the pace of CSD expansion. So as I said a few minutes ago, following question of one of your colleagues, we are trying to find the right moment to wrap up what is the precise status of onboarding. As you know, for making that project impactful, we need to have a combination of conditions. One avenue is to go one by one to migrate each individual issuers as it was the case of Stellantis or [indiscernible] company, et cetera, and we are working with others. This will be also filled with some new IPOs that have the possibility to decide their full post-trade chain. So that's one avenue. The other avenue is the custodians and in general, beyond the custodians, all the players who are intermediating issuers with the post-trade chain. So we are working on it. And I hope that soon, and I can't be more specific, we will be in a position to share status of that. But as I said, you have to understand that industrial projects do not have necessarily the same pace and timing as our quarterly meetings. We have in March, the go-live of the power derivatives market that will happen after our full year results, but this is a very important step. We had the ETF moment and European ETF listing trading platform that took place in September, at the end of September. So these things happen when they are ready, and we communicate when they are ready because the go-live for the CSD expansion as a whole is September '26. We need to share with you where we are. We will be in a position to do so soon, but it is not now. On the competition for the French OAT, for the French 10-year, I don't know. I think the MTS situation -- platform is quite unique. It's a European design. It's European-proved. It's a good platform to combine the sort of European primary dealers' culture and practices together with an electronic platform that provides transparency and that has ultimately an impact on spreads. I think as much as the French OAT was perceived as being massively different from the Italian liquidity problems back in the days, just even back in the days means even 15 months ago. Now the facts are that French sovereign debt belongs to the same league as the Italian sovereign debt. And therefore, we believe that there is an opportunity to continue this dialogue. I know you are asking a question you want, but systematically, we continue to explain to [indiscernible]. I must -- my conviction is that the more there is a sort of normalization of French sovereign debt around the debt of Italy and countries that have been through similar type of environments, the stronger the likelihood of all solution being considered and then implemented alongside the traditional primary dealers scheme. Operator: The next questions comes from the line of Herve Drouet calling from CIC Market Solutions. Herve Drouet: The first one is, could you share with us what is the percentage of your cost which is externalized in terms of operation? And could the seasonality we've seen in third quarter be reflected by the fact some of your external costs, either on development, on operations, which are externalized, tends to be lower during that period of time? And the second question is on ATHEX as well. Is there something you can share with us in terms of already what you have secured in terms of acceptance for your open offer for exchange of equity, if there are any you can communicate at this stage? Stéphane Boujnah: I'll take the question on ATHEX and Giorgio will take your question on cost. We will not communicate any interim acceptance level in accordance with applicable laws and regulations. We will communicate the result of the offer on the 19th of November. As you can imagine, we have a close dialogue with the three different constituencies that are owning shares in ATHEX, the local Greek institutions, the international asset managers or the international investors that own shares in ATHEX. And the third group is the local retail investors that interact through their brokers. So we have a very intense, continuous and precise and updated dialogue with those three constituencies. But in accordance with appropriate rules and relevant laws and regulations, we will communicate the outcome of the offer on the 19th of November. Giorgio Modica: With respect to your first question, the percentage of activity which is outsourced is inexistent or absolutely negligible. Our business model is based on the fact that we operate what we do. And the synergies of the transaction we do are exactly based on that, which means that we take care of others' operation and not the other way around. When it comes to the seasonality in our P&L, this is more simply, it's the full-time employees of Euronext. When they go to holidays, we do not record part of the cost in our P&L, and this gives the seasonality. But it has nothing to do with outsourcing. It's an accounting treatment for holidays across the different countries. So what you will see is that there is -- in Nordic countries, this is more June, July. In the rest of Europe, it is more July, August. And this is the reason why it has an impact which is stronger in the third quarter. Nothing more to highlight. Operator: The last question comes from the line of Reg Watson calling from ING. I don't think we have more questions at this time. I will now hand back to our speakers for their closing remarks. Thank you. Stéphane Boujnah: So if there are no further questions, I thank you very much for your attention and for your time, and I wish you a very good day.
Daniel Fairclough: Hi. Good afternoon, everyone. This is Daniel Fairclough from the ArcelorMittal Investor Relations team. Thank you for joining this call to discuss ArcelorMittal's performance and progress during the third quarter of 2025. Leading today's call will be our Group CFO, Mr. Genuino Christino. Before we begin, I would like to mention a few housekeeping items. As usual, we will not be going through the results presentation, which was published this morning on our website. However, I do want to draw your attention to the disclaimers on Slide 20 of that presentation. As usual, Genuino will make some opening remarks before we move directly to the Q&A session. [Operator Instructions] Over to you, Genuino. Genuino Christino: Thanks, Daniel, and welcome, everyone, and thanks for joining today's call. As usual, I will keep my remarks brief, beginning with safety, a core value for our company. The company is completing the first year of its 3-year transformation program, supporting ArcelorMittal's journey to be a zero fatality and serious injury company. The first year has focused on building the foundations for improvement across the business, and I'm encouraged by the progress we are making. We are already observing an improvement in the frequency of serious injuries and fatalities compared to last year. But there is more to be done, and there is clear determination across the entire company to implement the bespoke safety road maps that have been developed to drive lasting change. Now I want to focus this quarter on 3 key points. First and foremost, our results continue to demonstrate structural improvements. Third quarter EBITDA per tonne was $111. This is 25% above our historical average margin. To be achieving such improved margins at what we believe to be the bottom of the cycle demonstrates the positive impact that our asset optimization and growth strategy is having. Our strategic projects, together with the impacts of recently completed M&A will support structurally higher margins and returns on capital employed through the cycle. We remain on track to capture $0.7 billion structural EBITDA improvement this year, and the expected medium-term impact of $2.1 billion remains unchanged. My second point is on free cash flow. Our underlying business continues to generate healthy cash flows. Excluding working capital, 9 months free cash flow was approximately $0.5 billion positive. Remember, this is after having invested close to $1 billion in our strategic growth projects. As we head into year-end, I expect that working capital investment will unwind as it normally does. This supports the positive outlook for free cash flow and lower net debt. And then my final point is on the positive outlook for our business. Relative to where we were 3 months ago, the outlook for our business has clearly improved. We welcome the new trade tool proposed by the European Commission. They will support a more sustainable European steel sector, returning the industry to healthier capacity utilization levels. The proposal must now be transposed into legislation as fast as possible. And together with an effective CBAM, this can provide a solid foundation for our European business to earn its cost of capital as we have been achieving in other regions. With our advanced product offering and strong market franchises, we are well equipped to seize new structural opportunities and translate them into profitable growth. As a company, ArcelorMittal is actively enabling the energy transition. We are supplying the steel required for new energy and mobility systems and the steel required for infrastructure development. We are investing in high-quality, high-margin electrical steels and building a competitive renewable energy portfolio. Putting this all together, ArcelorMittal is in a strong position, both operationally and financially. We have a unique diversified asset base across geographies and end markets. We are delivering structurally higher margins, supported by an optimized asset portfolio and execution of our strategic growth projects. We have momentum and our growth will continue. We will continue to implement our clearly defined capital return policies. It is working well, allowing us over the past 5 years to grow our dividend at a compound rate of 16% as well as repurchase 38% of our equity. Each ArcelorMittal share now represents a greater proportion of our capacity, a bigger share of our leading franchise businesses, a larger stake in our growth projects and a greater ownership of our unique business in India. With that, Daniel, let's move to Q&As. Daniel Fairclough: Great. Thank you, Genuino. We have a good queue of questions in front of us. [Operator Instructions] But we will take the first question, please, from Alain at Morgan Stanley. Alain Gabriel: Genuino, I have two questions. I'll ask them one at a time. So the first one is looking forward to 2026 and before we take into account any impact from CBAM or the new safeguard, what are the unusual or exceptional costs that we need to consider while building our EBITDA bridge into next year? And I'm thinking here more the incurred U.S. tariff costs year-to-date, the stoppages in Mexico, et cetera. That's my first question. Genuino Christino: Okay. Sure, Alain. Well, thinking about 2023 in terms of exceptionals. So right now, I cannot really point to you when it comes to tariffs that we are seeing change, right? We will see, of course, in 2026, as we know, we have the USMCA. And I'm sure the negotiations between Canada, U.S., Mexico will continue. But of course, we have to wait and see how -- what comes out of the negotiations, right? Then clearly, we have the losses in Mexico, and we do expect that they will not reoccur in 2026. And that's really in terms of exceptionals, that's what I see. Of course, when you think about the bridge for 2026, there are many positives that we could potentially talk about, right? One is the contribution from our projects. So we have another about $800 million coming in 2026. We just saw also the first forecast of the World Steel Association in terms of demand for next year. I think we will start to see some of the benefits of the lower interest rates impacting the economies. We are seeing PMIs in Europe recovering. As we know, demand has been just moving sideways in most of our core regions. And I think there is hope that we might see a better picture next year also in terms of demand. I don't know, Daniel, if I'm missing something, if you want to complement? Daniel Fairclough: Thanks Genuino. So all I was going to do is perhaps just adding the numbers for Mexico. So if you recall back to the Q2 conference call, at Q2 results, we talked about a $40 million impact from costs and operational costs in Q2. In our release today, you will see a number for Mexico of $90 million. And then in Q4, things should improve, but there will still be a cost in Q4 of maybe $60 million, $65 million. So as Genuino said, that shouldn't recur in 2026. So then when you think about the bridge from 2025 to 2026, that is close to about $200 million there from nonrecurrence of Mexico. Alain Gabriel: That's very clear. And the second question is in Europe, you currently ship around 30 million tonnes of finished steel. If the safeguards work next year as intended or designed and imports dramatically reduce, how much can you flex your production in the near and medium term after taking into account the restart costs, the purchase of CO2 allowances, et cetera? So in other words, what is your achievable Blue Sky shipments in Europe if we go into that scenario where imports decline dramatically? Genuino Christino: Well, the way we see it, I mean, we do expect to be able to supply the market. I mean, as we all know, the expectation looking at the numbers, I mean there is an expectation that imports will come down by about 40% and flat as we saw, right? And it's not a secret that our market, it's about 30%. So we don't see any problems to make sure that we can capture that part of our market share. And you know, I mean, you have that also in our back book. So our capacity in Europe is way in excess of 31 -- 30 million tonnes that we are currently producing. So we feel very comfortable here to be in a position to supply the market when these new measures are in place. Daniel Fairclough: Great. So we will move now to the next question, which we're going to take from Tom at Barclays. Tom Zhang: Two for me as well. The first one, just the usual one on the kind of moving parts, maybe, please, into Q4 by division? And any color around realized pricing, volumes, that kind of stuff. Genuino Christino: Do you want to take it, Daniel? Daniel Fairclough: Yes, sure, Genuino. So when we look at the bridge from the third quarter to the fourth quarter, I think it's pretty simple. I think there are really 3 key building blocks for you to be thinking about. The first, of course, is the normal seasonal improvement in European volumes. The second factor or the second building block would be higher iron ore shipments. So as Genuino was talking about, we have good momentum in our strategic projects. So we're well on track to achieve the targeted 10 million tonnes of shipments in Liberia. And so that will be a nice increment in the fourth quarter. And then the third building block would be North America. So we would expect normal seasonality in volumes. So we do have 2 holidays in the fourth quarter. So normally, volumes are seasonally weaker in the NAFTA segment. If you look at pricing and if you just purely on a sort of a 2-month lagged basis, pricing should be lower in the fourth quarter than the third quarter, but that's going to be slightly offset by the improvement in our Mexican operations, which we just talked about in Alain's question. So those would be the 3 key building blocks: seasonally higher volumes in Europe, higher shipments in mining from the Liberia expansion and seasonally lower volumes and lower lag prices in the North America segment. Tom Zhang: Great. And then maybe just following up on North America. I mean, is there anything else that you guys would call out for the print in Q3, which I guess was very strong despite the sort of additional Mexico outages. I know you've added Calvert, but I guess, on the consolidation numbers you've given before, that was maybe sort of $60 million a quarter of incremental EBITDA contribution. So maybe that offsets the hit from Mexico, but U.S. spot pricing has been drifting. There's obviously extra tariff costs. Was there anything on either the cost side, the mix side that you flagged for North America? Genuino Christino: Yes, Tom. So first of all, we had a record level of shipments at Calvert. Calvert doing extremely well. So I would suggest that the contribution was a bit higher than what you referred to. Our Canadian team is also doing a very good job in managing what they can. Costs, there is a very high focus on making sure that we take cost out. So that is also supporting the results in quarter 3. So you have the strong operations in Calvert, you have strong operations in Canada in both of the facilities in the [ Long ] facility as well. So we have also a good contribution from some of the other business, our HBI DRI plant in Texas also performing well. So I think we have -- except for, of course, the problems in Mexico, we have our franchise business in North America operating quite, quite well. Daniel Fairclough: So we will move now to the next question, which we're going to take from Cole at Jefferies. Cole Hathorn: I'd just like to ask on the CapEx profile medium term and the envelope that you're thinking about because you do have a number of strategic projects in the pipeline. How should we think about broad buckets for CapEx '25, '26, '27? Any broad-based guidance you can provide? And then following up on working capital, it's a strong improvement into the fourth quarter coming back, but I imagine as you look into 2026, hopefully, we will benefit from a stronger pricing environment. And I'm just wondering how you're thinking about working capital into 2026. Are you hoping for kind of working capital outflows and stronger pricing and demand environment for 2026? Genuino Christino: So in terms of CapEx, what we have been saying is -- and then, of course, we are now -- we're going to be actually just -- we're going to be starting our budget discussions for 2026 and beyond. But what we have been saying is that the range that you have -- that we have been using over the last couple of years between $4.5 billion and $5 billion, including strategic sustaining maintenance, that is a good reference for now. So I would encourage you to keep that as your reference. And then I'm sure in Q4, we will be updating you with more details, but it's a good reference. In terms of working capital, I hope you're right. I mean I hope that in 2026, we have to deploy working capital because then it means that the business is strong. It's performing well. Prices are moving in the right direction, volumes as well. What we try to encourage is you should think about working capital moving in line with our EBITDA, right? So if you believe that if you have for 2026 high EBITDA numbers, then it would be fair to expect that there will be potential investments in working capital, which is something that we would see as positive. Cole Hathorn: And then maybe just as a follow-up, have you seen any changes in order books? Or how are you managing your order book for the start of 2026? Are you keeping some availability for higher prices? Or how are you seeing your order book develop into 2026? Genuino Christino: Well, as we talked about, the demand has been moving sideways, right? So we -- and our order book remains relatively stable, right? So we have segments doing better than others. The order books are relatively stable across the group. We are not doing anything special to try to anticipate a stronger 2026 other than making sure that we allow the business to keep the working capital that they need so that they can benefit from a stronger 2026 that we hope will materialize. So that's really how we are planning. And yes, that's how we are seeing it so far. Daniel Fairclough: Great. So we're going to move to the next question, which we'll take from Reinhardt at Bank of America. Reinhardt van der Walt: Can you hear me? Daniel Fairclough: Yes, we can. Go ahead. Reinhardt van der Walt: I just want to ask on capital allocation. So if the safeguard replacements in Europe come through in their proposed form, how would you think about Europe from a capital allocation point of view? And I don't want to necessarily draw into discussion about sort of decarbonization investment in CBAM. But just from a purely economic perspective, you talk about organic growth. Do you think Europe could be a home for capital in the future if we get this framework? Genuino Christino: I think you touched on it. I mean this is an important framework, right? And then what we are talking about is that this framework should allow the industry to be sustainable, to earn its cost of capital. And when you achieve that, then you are in a position to consider then investments. And that's exactly where we are. And so we are encouraged by these new measures. Of course, still waiting for the implementation. We still need to hear more about CBAM as we all know. And then the last piece of the equation is, of course, energy, energy cost. So I think once we have that framework very clear, then we're going to be in a position to move forward. And as we discussed before, this will happen gradually, right? So you should not expect ArcelorMittal launch a number of simultaneous projects. It will happen gradually. This is going to be a multiyear journey. Reinhardt van der Walt: Understood. That's very helpful. And could you just remind me, I mean, you mentioned the business in Europe could potentially return to its cost of capital. Could you just remind us what exactly is the installed capital base of the European business? Genuino Christino: Well, I don't think this is something that we are very specifically disclosing, Daniel? Daniel Fairclough: No, you're right, Genuino. It's not something that's broken out in our financials. Reinhardt van der Walt: Okay. No, that's fine. Maybe just one last quick one, Genuino. You mentioned that you've got the capacity to be able to deliver effectively your share of the 10 million tonnes. Can I just see what kind of costs you might need to incur in order to bring that capacity to market? I mean I appreciate it's there, but could you just maybe talk through some of the costs that you need to incur to actually get that utilization up? Genuino Christino: Yes. Well, it's a good point. And I would break it down into 2 components or 2 parts, right? First is, so you have the fixed cost part. So in a number of facilities, we're going to be able to leverage the fixed cost that we have, right? So you're just going to be running at a higher capacity. So you benefit on the fixed cost side. But then in such cases, normally, what you're going to see also, it's an increase in your variable costs, including then CO2 cost, right? If you want to improve your productivity, you might need to charge higher quality materials, pellets, more pellets. So that will be -- you should expect that to have an impact as well. So I would just encourage you to think about the 2 components. Daniel Fairclough: So we'll move now to a question from Timna at Wells Fargo. Timna Tanners: I wanted to ask two things. One, just kind of probing a little bit more your efforts to mitigate the tariff costs and specifically how you're approaching the annual contract negotiations with automakers at Dofasco? And then a separate question, just if I missed it, I apologize. I was just wondering if you commented on why not -- why there weren't any buybacks in the quarter. Genuino Christino: Yes. So we continue to renew our contracts, our OEM contracts. So we just -- we're basically almost done now for part of first half of next year. So signing even more than a 1-year contract. So I think fundamentally, our customers, so they like the product. They like what they get from Dofasco. So I think there is very good cooperation between us and our customers there. So we don't expect really here significant change in terms of -- looking at our North America business in terms of volumes going to automotive, of course, other than if we have lower production next year, which we are not talking about, but just because of renegotiations, we are not really expecting significant change in the overall volumes going to automotive. And in terms of buybacks, there is not really much more I have to say. And as you know, we have a very clear policy, and we believe that is a differential. I mean not all of our competitors will have a very clear policy. And I think we were in a way, lucky. We did a lot of buybacks at the very beginning of the year when the share price was still low. And all I would say is that you should expect that the company will -- on that policy, that 50% of the free cash after paying dividends will be distributed to shareholders. I would just also add that the policy is working quite well. I mean we talked about 38%. So we did 9 million shares this year already. And we have a very low average price. So we are really creating a lot of value to our shareholders. Daniel, if you want to complement? Daniel Fairclough: Yes. Thanks, Genuino. I think that was very complete. So we will move to the next question, which we will take from Tristan at BNP. Tristan Gresser: First one is on working capital. Just wanted to see how confident you are on the almost $2 billion of release that you expect in Q4? And what should be driving that? Is there any impact from outages at Fos or Mexico? And isn't there a risk of reducing inventories a bit too much and missing the recovery in Q1? And if you can discuss that as well. Is that not your base case that notably in Europe, you'll see a bit of a pickup in Q1? And also if you can comment on the CBAM uncertainty. And does that have any impact on your order book in Europe and pushing more buyers towards local producer? That's my first question. Genuino Christino: Yes. So we -- the working capital release in Q4 to some extent, it's seasonal, right? I mean, as we know, we have just less working days in December. So that will have an impact on how much receivables we carry at the end of the year, right? And then if you look also, we had a reduction in payables. So as we prepare actually for potentially a stronger 2026, so we start also increasing, and that should also start to normalize. And you're right. So there are a couple of one-offs such as the fact that we are not able -- we are not producing as standard in Mexico, some accumulation of raw materials that should also start to normalize, right? We have the reline of our Dunkirk blast furnace, which is also then in the process for now. We are normalizing the inventory of slabs. So yes, we are very confident that you're going to see a significant release of working capital as was also the case last year. So if you go back to 2024, you're going to see something very, very similar. And you're right. So we have a concern here not to squeeze the working capital that is available to the business. And that's why what you're going to really see is more on the receivables side and payable side, not so much in terms of inventories. Tristan Gresser: Okay. No, that's clear. And just following up then on Europe and with the steel action plan, do you believe that there is a possibility of seeing the new quotas implemented before July next year? And to come back to my earlier question, what kind of environment do you see in Q1? If the quotas are not implemented in January, April, but in July, do you see a risk of import surging? Yes, and if you could comment a little bit on your order books in Europe, if you're starting to see a bit more activity there, that would be helpful. Genuino Christino: Yes. Well, in terms of timing of implementation, so when we discuss internally, I think there is still hope that we might actually see it earlier. And I think that's quite important, and that's really the efforts in terms of making sure that the parliament and the council, they understand the urgency of having these measures implemented as soon as possible. So even though it's challenging, I think there is still hope that we may see this implemented earlier. But of course, we have to wait and see. One thing is for sure, though, I mean, of course, we don't even don't yet know for sure all the details of CBAM. But CBAM for sure is effective already from 1st of Jan, right? And then we will see what are the final terms. But that alone should already at least bring the -- make the imports less competitive. And then in terms of order book, I think we discussed, I mean, order books are at -- they are not higher than normal. I think it's just as we are seeing demand for now at least kind of moving sideways, demand -- the order book is relatively stable. Daniel Fairclough: Great. So we'll move now to take a question from Max at ODDO. Maxime Kogge: So my first question is on Mexico. So this is an asset where you have had a number of issues over the recent past. So there was this illegal blockade last year. There was the outage on the EAF earlier this year, and now there's this problem on the DRI plant. So how confident are you basically that the asset can return to a normalized productivity and performance and that on a recurring basis from next year? Genuino Christino: Yes. That's a fair question. And then, of course, we are not pleased. Some of the problems that we are facing this year, they are still a result of the legal blockade that happened last year. And what we are doing right now is really reviewing all of our SOPs. So we have our engineers, we have our CTO group going through all the procedures, making sure that we avoid repetition of some of these issues. So I'm very confident that with the support of the group, CTO and local team also very engaged, we're not going to have a repetition of some of these operational issues in Mexico. Maxime Kogge: Okay. And then a second question is on the import pressure in Brazil and India, which seems to be quite high at the moment, and it's reflected in very low prices. So it seems that the authorities there are not really willing to tackle the situation at this stage. So how are you confident that this will be the case? And would you be ready to scale back your investments in Brazil if that's not the case, given that I think one of your competitor has done such a move and Brazil is still the biggest region where you invest at the moment if we leave aside Liberia. Genuino Christino: Yes. Look, I mean, mid- to long term, we continue to be bullish on Brazil. We will continue to invest. You're right that we have seen imports rising in Brazil. And there is also a very close dialogue with the government showing what the governments are doing around the globe, right? And what is encouraging is we have a number of antidumping measures that should start to have an impact, we believe by end of this year or beginning of next year. So we have antidumping against China on cold rolled, which, of course, are products that we are selling domestically. So that should have a positive impact. I think the system, the way it is designed today, it also allows for -- if we see surges in other products that we can also then look to add them to the quota systems that we have in place today. We have seen a reduction of imports already in quarter 3 compared to quarter 2. So we'll see, but I think the fact that we have the antidumping is important, showing that the government is also concerned. Local mills, as we know, announced price increase as well beginning of the quarter, we'll see how it plays out. And India, I would say that demand continues to be extremely good, strong, rising, strong economic performance. You're right that prices are low, that the, I would say, -- there is also the impact of the new capacity that normally takes a while to be absorbed. So we are going through that process right now. But I think we can also be optimistic for the near term. Maxime Kogge: Okay. And just perhaps the last one is on Ukraine. It seems that the challenges there have gone bigger in recent months in terms of railways, in terms of electricity costs. So is there a point where you will consider shutting down production entirely? Or are you still committed to maintaining production as it is for the time being? Genuino Christino: Yes. The situation in Ukraine, you're right. So we are running today at basically at capacity that is available to us. So we are running 2 furnaces. So the trend is EBITDA positive. We are not yet free cash flow neutral as we discussed before, right? And the key issue for us remains the high energy costs. So again, here, we are trying to engage in discussions with the government to show the importance to bring that to levels that are -- that will allow the industry to be sustainable even in this very challenging conditions of the war. We'll see. But for now, the plan is to continue to produce. We have the mining operations that are also close to capacity. So we are able to sell the iron ore to our own mills either in Europe or to third parties outside. So yes, I think it's -- for now, we are managing through a very challenging situation. Daniel Fairclough: So we'll move now to take the next question, which is going to be from Bastian at Deutsche Bank. Bastian Synagowitz: My first one is on Europe, and can I please come back on the situation here in the context of the policy plans? So when you look at the European capacity landscape, do you believe that the current capacity, which is in operation, would be enough to pick up the additional market share, which the domestic industry would likely absorb from the imports? Or would this 10 million tonnes, which you referred to in the chart require idle capacity to restart? And then maybe just as a quick add-on to that, are you generally more positive on the volume or the price leverage for your business from the policy, which has been laid out? Those are my first questions. Genuino Christino: Yes. Well, I think in terms of -- as we know, I mean, and that was also made very clear by Europe, by the commission. As we know, the capacity utilization in Europe today is low. And that's the whole idea behind some of these trade actions to allow the industry to regain a level that is more sustainable, right? And I think, Bastian, it will depend on where you are in Europe, right? So there can be cases where you're going to need to bring some idle capacity. And then, of course, costs are going to be also higher because you're not going to have the benefit of the fixed cost, right? So it's difficult to be very precise on that. And for us, I think it's -- I guess what is important here is really to make sure that the industry can run at a decent level of capacity utilization, right? I think that's the whole idea because then, you can earn your cost of capital, you can optimize your fixed cost base, your cost base, et cetera, et cetera. So that's how we are seeing it. Bastian Synagowitz: Okay. And just in terms of the leverage for your own business, when you look at the gives and takes, are you more positive on the price effect? Or are you more positive on the volume impact on your earnings contribution? Genuino Christino: Well, I want to be drawn on that. I think for us, as I said, what is important is that we can run our facilities at a higher capacity utilization, right? And that should be then, if you have less imports, which as we know today, the cost or the price of imports is so low, right? Daniel, do you want to add anything to this question? Daniel Fairclough: Yes. So I think like you're saying, it's very difficult to isolate the sort of contribution of the fixed cost absorption, the sort of operating leverage or the impact of just higher industry utilization on spreads. But I think I'm sure you've analyzed this in the past that, Bastian, there's a good correlation between spreads and utilization. So there should be 2 factors, and those 2 factors should contribute to what Genuino is talking about, our business in Europe, the industry in Europe being in a position to covers cost of capital. And that's ultimately the objective here. Bastian Synagowitz: Okay. Sounds good. And my next question is on North America. And I guess one of your Canadian peers here is heavily loss-making. Could you maybe give us a bit of color on how Dofasco is actually performing on a single entity basis? And are you still making money there? Genuino Christino: Yes, absolutely. Dofasco is one of the best facilities in the world. And so it's still very much profitable. Bastian Synagowitz: Okay. Great. And then very last question, just on your expansion strategy in Hazira. Is that on track? And just, I guess, given what you discussed earlier in terms of the capacity, which has been brought on already this year. Do you think the market is ready for the ramp-up next year as you're planning it? Genuino Christino: Yes. I think, first of all, our projects are ongoing and going well. So we're going to be, as we discussed, commissioning some of the finishing lines still later this year, beginning of next year. And then during 2026, we're going to be completing the upstream, including coke batteries. And a lot of the new capacity has just come down. So I think we're going to be in a good position to ramp up our own capacity. So allowing some time so the market can absorb that. So I think in terms of timing, it looks good, Bastian. Daniel Fairclough: Great. So we still have a few more questions to take, Genuino. So the first of those we will take from Dominic at JPMorgan. Dominic O'Kane: Just a couple of quick questions on, again, sort of real-time indicators of demand. You obviously have a seasonal slowdown in the North American market. But are you seeing any visible signs of kind of new pockets of weakness in the U.S., particularly given the government shutdown? And then my second question relates to Europe and the auto segment. Do you have any insight you can share with regards to how you're approaching contracts moving into January? Genuino Christino: Yes. So starting with the U.S., you're right. So I think overall, we all know the numbers, right? So the demand moving sideways. But I would say that when I look at our business, Calvert is running absolutely full. We had record levels of production shipments, right? So the 2 segments where we are very much focused, the energy, automotive doing relatively well. And then when it comes to Canada and Mexico, I think that's where we also see some potential because, of course, the demand domestically, let's forget tariffs for a moment, also significantly impacted, right, with all the uncertainties created by the change in the relationship between the various governments within North America. So I think we see potential for stabilization there that should also support the shipments domestically in Canada and Mexico. Coming to the auto contracts, I mean, it's going to be just how it is. So I think we have a lot to offer to the automakers. In some cases, in North America, as we know, the negotiations will happen gradually during the year. And in Europe, there has weight to the beginning of the year. So this process is ongoing. And I expect that it will be -- as always is, we have an agreement that is -- that should be a win-win for both companies. Dominic O'Kane: Is there any sense that the price tension that we've seen over the last 2 years could alleviate this time around? Genuino Christino: Yes. As you know, I mean, we don't comment on -- specifically on prices, as you can imagine. So these negotiations, first of all, they are specific. And so we don't comment on prices. I would just -- of course, the spot price is always a reference, right, starting point. You see prices moving higher in Europe already. They are also coming up again in North America. We talked about prices in Brazil also, higher prices being announced. So I think the environment is, in that sense, it is positive. Daniel Fairclough: So we will move now to Andy at UBS. Andrew Jones: So just to go back to the European question about the CO2. Can you just remind us what your emissions are likely to finish at in 2025 if we assume the normal seasonal uptick in 4Q and how that compares to your free allocation levels this year? And going into 2026 with the reduction of the free allocations, and I guess at some of your sites, you produced less in recent years, so you may lose some free allocation because of lower production. Can you give us an idea by how much you expect your free allocation to change next year? And maybe as a follow-on to that, are there any assets which are kind of emitting less the reallocation where the uplift in production would have minimal cost on the CO2 side. Just to give us an idea for how much you could ramp production easily. Genuino Christino: Andy, I mean this is -- I mean, there are many, many moving parts, right, when it comes to DTS system, it is complex. I would just say that as we know, in Europe, most players, if not all players, they are short, right? So they don't meet the benchmarks. I would say a good rule of thumb, it's about -- you're paying CO2 costs for about 20% of your production, right? That's the ballpark to give you an idea. I think when we look at our -- and it's always based on an average, you have your how. So it's highly technical. So we don't really expect going forward in 2026 that we're going to be losing free emissions meaningfully because of levels of operation, right? But as we know, there are reductions, gradual reductions that will happen with the implementation of CBAM. You need to take that into account. And there are also revisions to the benchmarks, right? So that's the situation. Andrew Jones: But you don't have a number of credits reduction that you expect for next year? Genuino Christino: Well, I mean, we all know what's going to happen in terms of reductions. There is a 2% reduction in the DTS system, the 3 allowances, right? And then we have to see what happens now with the benchmarks. So it's too early to talk about it. I would just add that what is important here also is now with CBAM, right, and to the extent that CBAM is effective, then at least you are at par with imports. So they will be paying the same costs, right? I think I would encourage you also to see to the extent that costs increase in Europe, but you have at least the same cost being applied to imports, at least there is a level playing field in that regard, right, which is, I guess, what the whole industry in Europe has been advocating. Andrew Jones: Okay. That's clear. And just a second question on Canada. There was a recent document about medium and light -- medium and heavy vehicles, a proclamation on the auto industry from the White House, which have a paragraph in it talking about potential carve-outs for auto-grade steel from Canada where the tariff would drop by -- from 50% to 25%, conditional on some conditions around like investments in the U.S. and things like that. I was wondering how you interpreted that because it seems slightly unclear to me. But if you've got an asset in the U.S. that you're clearly investing in, do you see potential to use that recent proclamation to reduce the tariff from Dofasco into the U.S.? Genuino Christino: My understanding is that the negotiations at this point in time, as we all know, they are suspended, right? And we are hoping that they will resume the negotiations. And then we'll see finally what comes out of these discussions. I don't have anything else really to add. Daniel Fairclough: So two questions left. So we're going to take the first of those from Phil at KeyBanc. Philip Gibbs: Regarding North America, how is the Calvert EAF ramp going? And is that part of your incremental 2026 strategic EBITDA growth bridge as you look into next year as that comes up to the levels you expect? Genuino Christino: Yes. Well, we are ramping up. So our expectation now -- latest expectation is to end the year with a run rate between 40% and 50%. So it's progressing. We started also the qualification process. And you're right. So when you look at our bridge, that is on Slide 10 and the 800 million, then you're going to have contribution from Calvert in 2 buckets. One is, of course, we're going to be consolidating Calvert for the full year. And as you know, we started the consolidation in end of quarter 2. So you're going to have an extra contribution from Calvert consolidation, which is in our M&A bucket. And you're going to have the contribution from the EAF. Especially in this environment, right, when we are -- when Calvert is also paying for tariffs on the slabs. So that is also part of the 600 million that you see from projects. So Calvert next year, it's in the 2 buckets there. Philip Gibbs: And as a follow-up, you mentioned in your remarks in your analyst deck that Canada is beginning to address some of the unfairly traded steel or some level of reciprocity for the U.S. tariffs. What have they done specifically? And do you think they're doing enough? Genuino Christino: Well, as we know, we have a very large level of imports into Canada, right? So of course, they reduce the quotas for non-FTA countries. That's a good step, but it doesn't really address the problem. So we believe that Canada should be put in place a much stronger trade protection to make sure that the industry can again also regain market share vis-a-vis imports. As we know, a lot of the imports also come from the U.S., right? And there, we are hopeful, again, as we said, that Canada, U.S., Mexico, and maybe as part of the USMCA negotiations, they will also come to an agreement. And that would be very, very good, right, if you have the whole USMCA with similar rules, similar protection. So that would be extremely positive. And you would expect if you have a common trade block that the rules would be similar. Daniel Fairclough: So we'll take our final question, and we'll take that from Boris at Kepler Cheuvreux. Boris Bourdet: Two questions and one technical precision. The first is on Europe. I think you're quite close with politics in talks about those trade barriers to be implemented. What is your take on the fact that those proposals of the European Commission will be adopted in the current state they have been proposed or whether there could be some dilution? That would be my first question. Then on China, there is a lot of talks about the anti-involution measures. Do you see any chance that China might be moving towards a cut in production as some headlines were referring earlier this year? And lastly, just to confirm what you said earlier on the market share in Europe, is it 30% or 20% to 30%? Genuino Christino: Okay. So Boris, I will take your first question, and then I will comment on China. Well, I mean the dilution risk, I mean there is a process, right? So the proposal is now going through the parliament, it's going through the council. I think there is a desire expressed by a number of governments by the commission to have an accelerated approval process. And that is only possible if we don't have a significant change. So I think that's our request that we have these measures in place as soon as possible. And then on the market, that's -- I mean, that's -- I'm just giving you a reference. Okay. Daniel, do you want to talk about China? Daniel Fairclough: Yes, yes. So it's obviously a question that we receive on most of our calls around the theme of China excess capacity, when will they address it, when will they take measures to structurally reform the industry to balance domestic capacity with domestic demand and in an effort to restore the industry to health, to reasonable levels of profitability, reasonable margins, et cetera, et cetera. So to your question, there have, of course, been lots of headlines and suggestions that steel could be one of the beneficiaries of the anti-involution theme in China this year. But the reality is that we really haven't seen any changes in the impact that China is having in external markets. So they continue to have weak prices, very weak margins. Generally, there's a substantial proportion of the industry operating with -- on a loss-making basis. And they continue to export at extremely elevated levels, run rates of 120 million tonne, 130 million tonnes annualized. So those negative domestic dynamics are then being translated into other regions through those exports. So I guess my answer to your question is until we really see strong evidence of change, and that would be through improved prices, improved margins, improved profitability and most importantly, through reduced exports, then nothing is really changing. And that just puts even more emphasis on the requirement for governments to take appropriate actions to ring-fence those domestic industries from these negative impacts of excess capacity in China. So Genuino, he was just talking about the progress, the strong progress that we're making in Europe. We talked earlier about what's happening in Brazil. But it's clear that, that's the best way to deal with this issue is by putting appropriate protections in place. Great. So I think that's our last question, Genuino. So I'll hand back to you for any closing remarks. Genuino Christino: Thank you, everyone. Before we close, let me briefly reiterate the key messages from the start of the call. First, our results continue to demonstrate structural improvements. The fact that we are posting such improved results at what we believe to be the bottom of the cycle bodes well for when conditions normalize. Secondly, our underlying business continues to generate healthy cash flows. Looking behind seasonal working capital movements shows that we continue to generate good underlying free cash flow, and this is after having invested close to $1 billion in our strategic growth projects. These projects are delivering structurally high EBITDA, and this will continue in 2026. Finally, the outlook for our business has clearly improved over the past 3 months. The newly proposed trade tool, combined with an effective CBAM provides the foundation for our new business to earn its cost of capital. Together with the actions being taken in other regions like Brazil and Canada, this continues to point towards a more regionalized and better protected steel industry in which ArcelorMittal can thrive. With that, I will close today's call. And if you need anything further, please do reach out to Daniel and his team. I look forward to speaking with you soon. Stay safe and keep those around you safe as well. Thank you very much.
Geoffroy d'Oultremont: Good afternoon, everyone, and welcome to Solvay's Third Quarter and First 9 Months of 2025 earnings call. I'm Geoffroy d'Oultremont, Head of Investor Relations, and I'm joined here today on the call by our CEO, Philippe Kehren; our CFO, Alex Blum; and our COO, Lanny Duvall. This call is being recorded and will be accessible for replay on the Investor Relations section of Solvay's website later today. I would like to remind you that the presentation includes forward-looking statements that are subject to risks and uncertainties. The slides presented in today's call are also available on our website. We'll further discuss our third quarter earnings, then give an update on the operational excellence program and come back also on some recent developments at Solvay before taking your questions. Philippe, please go ahead. Philippe Kehren: Thank you very much, Geoffroy and hello, everyone. As usual, I will start with a word on safety. While the number of injuries is stabilizing at lower rates since the beginning of the year, the few accidents we saw in our operations remind us that we need to continue to work hard on the transformation of our safety culture. Changing the mindset and the behaviors is our main focus. Safety will always remain our #1 priority. . Slide 6, please. So Alex will go through the earnings in detail, but I would like to give you a few messages first. So first, the overall environment remains difficult. We didn't see any improvement in the general macroeconomic indicators and the geopolitical and trade environment remains volatile. Our Coatis business continues to see very difficult market conditions related to the direct and indirect impact of the increased tariffs for Brazilian imports to the U.S. Our soda business also continues to be under pressure, specifically in our seaborne export markets due to Chinese overcapacity. Our analysis of the situation is confirmed by the recent anti involution regulation announced by the Chinese government and its intention to restructure industries where there is overcapacity. If and when they will target the older synthetic soda ash industry in China, we estimate that the market will rebalance and rapidly improve. But as long as demand remains subdued and supply remains as such, we expect to see continued price pressure in the Southeast Asian region. We continue to think that this situation is unsustainable for the region with many players seemingly selling below their cash costs. In this context, we have reduced the quantities produced in our European soda ash exporting plants. The upside to this downside is we were able to save some CO2 emission rights consumption. And since we've been building our CO2 emission rights portfolio for quite some time at Solvay and as how coal phaseout is more and more secured, we decided to sell part of our CO2 emission rights inventory in Q3, and that generated EUR 40 million EBITDA and EUR 50 million cash gain. So allow me to be very clear about this. This is definitely not a one-off, but it is a business decision that we may repeat in the future should these market conditions persist. Now before we move to financial, I would also like to spend a few minutes on the good work that we've done related to our transformation. Slide 8, please. So earlier this year, we shared with you our essential for generation strategy to establish Solvay as the leader in essential chemistry. Operational excellence is the first lever of the strategy and will allow us to accelerate the transformation of the company. We've been updating you regularly on the progress of our cost savings program with the commitment to generate EUR 350 million of cost savings by 2028. Today, we have invited Lanny Duvall, our Chief Operations Officer; to this call to give you a deeper understanding of what we do and how we achieve real results on the ground. Lanny, the floor is yours. Lanny Duvall: Thank you very much, Philippe. My job is to translate this strategic commitment into hard numbers across the company. Today, I will zoom in on our industrial sites and describe how we approach the sustained improvements. Our savings targets are the results of 2 main programs. First, we may be a 163-year-old company, but we are becoming a digital-first company. Over the last 18 months, we've invested significantly in both infrastructure and in capability. We've created a world-class data structure where all key operational data resides, and we can leverage our scale to quickly deploy across the organization. Second, we're implementing what we call our Star factory program, where all plants have a road map for improvement in really all dimensions needed to operate our plants. All the examples that we are going to discuss are or will be implemented across all regions and all clients. Slide 10, please. Our maintenance strategy is important for our fixed cost and the reliability of our assets. This transformation in our operational performance comes from moving away from a time-based maintenance to condition-based monitoring or what we call CBM. We utilize real-time data analysis to predict equipment failure and determine the optimal moment for intervention. By utilizing sensors to major and asset status, CBM enables the collection of critical data such as temperature, vibration or sound. This data allows us to spot trends predict potential failures and determine the remaining lifetime of the equipment. This allows us to reduce the cost of the repair and plan for the interventions. This shifts our entire operation from being reactive to being proactive. This isn't a hypothetical pilot. We've deployed this on a global scale. We've gone from a couple of hundred sensors in 2023 to over 4,500 sensors today and 9,000 by 2027. Creating a more resilient, reliable and cost-effective industrial footprint. This is a good example of the value we are creating with our digital and data strategy, and demonstrates our ability to quickly scale across the company in all regions. Vibration monitoring is not new or novel. But the deployment strategy at scale is a best-in-class practice. As an example, at the Dombasle site helped to detect abnormal vibration on a fan and a malfunctioning of a lubrication valve. Thanks to the alerts generated by the IoT sensors, this could be quickly corrected, and we saved a potential EUR 100,000 repair cost. These highlights -- these examples highlight the effectiveness of the CBM in preventing failures before they escalate into more serious and costly issues. Again, the secret is how we have invested in our data platform, and we are now perfectly set up for using advanced AI tools to further our impact. Another example, we are redefining how we manage material and energy performance across our industrial operations. This isn't just about efficiency. It's about unlocking EUR 37 million of potential plant variable costs by 2027, which represents roughly 2% reduction compared to 2023. It's about building a smarter, safer and more sustainable future. At the heart of this transformation is digitization. We are rolling out standard real-time dashboards giving operations and engineers instant access to the metrics that they need. The helicopter view, as we call it, which is the standard in all of our control room includes everything our employees need, such as safety indicators to ensure our people and processes are protected, real-time production levels to track throughput and performance or material and energy consumption metrics to drive efficiency. This is not a technical upgrade. This is a cultural shift. It's about embedding performance thinking into every layer of the organization, starting with the shop floor. It's about making sustainability and efficiency inseparable from operational excellence. Next slide, please. Continuously optimizing our industrial footprint is a core part of our strategy to enhance performance. Let me give you 3 examples. First, we've aligned our regional footprint with demand. In our peroxide business, we've taken decisive action in Povoa, in Portugal and Warrington in the U.K. and reduced our capacity in the European merchant markets. Second, we recently announced different measures in our Special Chem operations in Germany to secure our long-term competitiveness. In practice, this means we will consolidate our Special Chem German production sites to improve efficiency by relocating the NOCOLOK Tech Center and production operations from Garbsen to Bad Wimpfen. We will consolidate expertise into one location. We will establish Bad Wimpfen as a global hub for production, innovation and customer applications, reinforcing Solvay's position as a worldwide leader in automotive brazing. Third, our energy transition, which is key to our long-term competitiveness. At our Torrelavega soda ash plant in Spain, we could not ensure competitive production costs after a full coal phase out. Hence, we will supply Latin American customers from our Green River plant with a very cost-efficient alternative. We decided to decrease the Torrelavega production by 1/3. We will allow -- this will allow for reduced fixed cost and CapEx at the site while making the energy transition project possible for the remaining capacity. Indeed, earlier this year, we announced moving forward with the biomass co-generation unit that will reduce the CO2 emissions by half in 2027. These actions are taken to ensure our operations are lean, competitive and ready for the future. The last example, our spin review challenge. This is a 5-step process that brings together a multidisciplinary team to challenge traditional ways of working and create value. The team analyzes spending at a site level and covers all of the site-related purchasing categories, operations, procurement and leadership all need to work closely together to create value for each site. This is an ongoing process. We started with the industrial categories, and we've expanded to include facilities, R&D services and goods, on-site logistics and packaging. The SRC has the potential to return EUR 15 million to EUR 20 million annually, primarily in fixed costs. In 2025, we have challenged EUR 330 million in spending across 21 sites and identified EUR 11.3 million in savings opportunities, but we're not stopping there. We plan to complete 9 additional sites until the end of the year, aiming for a 5% savings on the addressable spend. An interesting case from our Qingdao site in China, where we redesigned the plastic pallets to reduce the rate by 18% and allowing for EUR 230,000 in annual savings. So this change is better for our bottom line, more efficient for us and our customers' operations and better for the environment. We are currently investigating how to scale this initiative to other sites. Slide 12, please. We feel confident we will deliver the EUR 350 million in gross annual savings by 2028. Because we have invested in our digital transformation, have an execution at scale strategy, all while improving safety performance and providing a platform that is future-proof. The early results are speaking for themselves. We achieved EUR 110 million in 2024 and are on our way to exceed EUR 200 million by the end of 2025. At the core of our transformation is digitization, by embedding digital tools and building a common data infrastructure, we are ensuring that our operations are future-proof and AI ready. We are already rolling out machine learning and exploring options for GenAI and Agentic AI in operations. To conclude, I want to leave this -- I want to leave you with this, we are not just cutting costs. We are fundamentally improving how Solvay operates for the next generation. And this is how we contribute to the long-term financial resilience of Solvay. With that, I'll hand it over to Alex to walk us through the Q3 results. Alexandre Blum: Thank you, Lanny, and good morning, good afternoon, everyone. Moving to the financial I'll remind you that my comments are based on organic evolution, meaning at constant scope and currency, unless otherwise stated. Moving to Slide 14. In the context of subdued demand underlying net sales in Q3 2025 reached EUR 1.040 billion, down minus 7% versus Q3 2024. Volumes, were down minus 4% year-on-year, mainly driven by weaker performance in the Coatis business and in the soda ash seaborne market, while volumes for peroxide, Bicar, Silica and Special Chem were steady year-on-year. Pricing was overall resilient, although we continue to see strong pressure on seaborne soda ash market and in our Coatis business. As already highlighted by Philippe. Slide 15, please. Underlying EBITDA amounted to EUR 232 million in Q3 2025, down minus 7% compared to last year. However, EBITDA margin remained solid, up 22%. Volume [indiscernible] mix was up thanks to the positive impact of the optimization of our portfolio of CO2 addition rights. Excluding this one-off, of course, the volume and mix was down mainly due to soda ash export volumes. Net pricing decreased year-on-year, again, primarily driven by the seaborne soda ash market in Coatis. Net pricing in the other businesses remained very resilient. With regard to fixed costs, the year-on-year variation this quarter was negative EUR 9 million. But this is exclusively coming from the EUR 10 million temporary stranded costs related to the separation from SYENSQO as our selling program continued to exceed inflation. Looking sequentially, we have stabilized our manufacturing cost base and despite still low production, we have been able to keep our maintenance cost below Q2 level. Moving to the segment review, starting with Basic Chemicals. Sales in the soda ash and derivatives business unit were lower for the quarter by 8% soda ash volumes were down mostly from the seaborne market, where unsustainable pricing pressure persist due to the overcapacities built in China. On the other hand, the bicarbonate volumes are steady year-on-year. Peroxide remains resilient with stable volumes in the merchant market. benefiting from the growing demand in the electronic grade H2O2 for the semiconductor industry. The segment was down minus 15% compared to Q3 2024, while the EBITDA margin remained slightly -- only slightly decrease of 23%, still a very healthy figure in such a challenging environment. Performance Chemical, moving to Slide 17. Silica sales remained more or less stable with some slight volume slowdown in the entire market. In line with last quarter, Coatis saw the largest decline with sales of minus 26%. Volumes were down in all end markets impacted by strong competition from Asian players. And the overall weak demand further aggravated by the U.S. tariff from Brazilian imports currently reaching 50% or more. Special Chem for the quarter, sorry, Special Chem net sales for the quarter were flat with slightly higher volumes in autocat in rare earth and electronics. Offsetting lower fluorine demand . As explained earlier by Lanny, this drove us to take strategic decisions in Germany to ensure the long-term competitiveness of the fluorine business line. The segment EBITDA was down minus 21% due to the negative volume of the different business units and negative net pricing of Coatis. The EBITDA margin decreased year-on-year to 15%. Slide 18, Corporate segment results. The EBITDA contribution of the Corporate segment in this -- the third quarter was a positive contribution of EUR 22 million. As explained by Philippe, this includes a EUR 40 million gain from optimizing our portfolio of CO2 emission rights. Generally speaking, to manage our EUA deficit we use a mix of CO2 emission rights, free allowances, EUA, inventory, energy transition projects and financial hedging instruments. Thanks to the progress made on the energy transition project and given the current low production level in Europe we've decided to optimize our portfolio of CO2 emission rights in Q3. I said in part of our inventory without changing our overall risk profile. As a consequence, the full year EBITDA for the corporate segment is now expected to be between minus EUR 40 million and minus EUR 50 million which is in regard to the previous guidance of minus EUR 80 million to EUR 90 million, excluding the positive EUR 40 million I just mentioned. This brings us to the free cash flow to shareholders from continuing operations. We generated EUR 117 million of free cash flow in the third quarter. Bringing the total for the first 9 months to EUR 214 million. This result was supported by a contribution of EUR 50 million from the optimization of the portfolio of CO2 emission rates. CapEx reached EUR 81 million for the quarter and EUR 214 million for the first 9 months of the year. This is well in line with our objective to stay within EUR 300 million. The cash flow -- the cash outflow year-to-date from provision are in line with expectation and include EUR 37 million related to the energy transition project in. So to wrap up the financial, I would like to end with a word on net debt. Net debt has come down a bit since the end of June. And this is in line with our expectation of approximately EUR 1.7 billion at the end of the year. Our leverage ratio remained healthy at 1.8x. And with that, Philippe, back to you for the recent development in the outlook. Philippe Kehren: Absolutely. Thank you very much, Alex. But before we move to the outlook, I'd like to remind you of some recent developments at Solvay. You might have seen the expansion of capacity of our electronic grade H2O2 in China. The announcement and our willingness to accelerate the development of circular Silica. And the changes we announced in Germany, as explained earlier by Lanny. While we stay focused on the transformation of the company through structural adjustments, we were also able to ensure the future long-term value creation of our businesses through disciplined investments in high-growth areas. Rare earth is another example. Earlier in the year, we inaugurated our rare use production line for permanent magnets at's La Rochelle in France. And given the recent developments around this industry, we will take the opportunity of this call to provide a bit more details about Solvay's current activities and the future prospects in the rare earth industry. At Solvay, we've been rare earth experts for quite some time. Our La Rochelle site has been processing them since its opening in 1948, right after World War II. Today, our position in value chain is focused on separation, purification and formulation. High-value chemical rare earth oxides are formulated in 3 industrial units. So in addition La Rochelle in France, we have one site in Japan and another site in China, and they're all serving several advanced applications such as emission-controlling cars, chemical polishing for semiconductors and precision optics, green energy or medical contrast agents in MRI procedures or Scintillators for PET scans. This global footprint and the modularity of our 3 plants allow us to ensure business continuity for our customers in these different industries, even at times of supply chain disruptions as it has happened earlier this year. So let's now have a look at our projects in La Rochelle and the new high potential opportunities in rare earth separation and purification that we want to capture. Next slide, please. So we proudly inaugurated our new production line in La Rochelle in April this year. And since April, we've been producing Nd-Pr oxide, that's neodymium-praseodymium oxides for the permanent magnets end markets. This is what we call the light rares for permanent magnets. And I'm excited to share that we've made the decision to start separation and purification of 3 more rare earth elements. Samarium has already started in the second half of 2025. And Dy-Tb or dysprosium and terbium which we call the halves, this will be done by 2026 and they are all essential for permanent magnets as well. And Solvay will be the first in Europe to do that. Moving forward, we have the ambition to grow this capacity as the demand for permanent magnets is expected to increase significantly in the next few years especially thanks to growing needs related to energy transition, as you can see on the slide. When looking at the production of magnets in Europe, today, it's very limited. But it could represent up to 40,000 tonnes by 2030, which is equivalent to 15,000 tons of light and heavy rare earth oxide needs. And we can capture up to 30% of that European market with our existing assets in La Rochelle quite easily. We will need to invest to reach that level, and we can do this in different stages. And thanks to our process innovation and our operational leadership, our team is continuously improving the product cost and value creation. And the total investment to bring these assets at full capacity is now expected to be between EUR 50 million and EUR 100 million versus the more than EUR 100 million we announced earlier. But to do this, we are first aligning all stakeholders of the value chain. We are discussing with potential partners and customers in Europe, but also in other regions, including North America. Regarding sourcing, we are partnering with recyclers and miners for the development of a secure and sustainable supply chain that would not lead to rely solely on Chinese materials. This is concrete. This is happening now. Additionally, and beyond permanent magnet, we're considering also supplying other essential rare earths like gadolinium or yttrium, which are critical for aeronautics, medical and other high-end applications. To conclude on this, we can say that our solution offers the greatest potential within the rare earth value chain. We already operate as Europe's largest rare earth producer of or if automotive, catalysts and electronics industry, and our strength lies in our proven ability and unique expertise to separate, purify and formulate every main rare earth element. I'm confident that based on the current geopolitical situation that these supply chains will be developed and we're the obvious partner to do it. Now moving to the outlook now. As shared at the beginning of this call, the environment remains difficult, and we do not see any short-term improvement. However, the overall stabilization of activity levels that we've seen in Q3 and the positive impact in the actions that we've taken support our results. This is why we confirm our full year guidance for 2025. We expect the underlying EBITDA to be between EUR 880 million and EUR 930 million. And we confirm that the free cash flow from continuing operations to Solvay shareholders is expected to be around EUR 300 million with CapEx at maximum EUR 300 million. And this will more than cover the dividend payment. This, I think, concludes our introduction. Which was quite extensive. And thank you very much, and back to you, for the Q&A session. Geoffroy d'Oultremont: Thank you, Philippe, Lanny and Alex. We move now to the Q&A session. We have until 2:55 so that you can join the next call after. And Gaya, please you can now open the line for questions. Operator: [Operator Instructions] The first question comes from Wim Hoste from KBC Security. Wim Hoste: Wim Hoste KBC Securities. I have a couple of questions around soda ash, if I can. Can you maybe elaborate on the production footprints? How fast do you intend to ramp up the Green River capacity expansion? And to what extent will that then reduce the European capacities I think there was an example from the Spanish plant, but I would like to have a bit more guarantee on the whole European footprint in soda ash. And then also, can you maybe elaborate on how much of the clearance European production is exported outside of Europe to give an idea of that? And then any thoughts on, the last question, any thoughts on the pricing for 2026 contracts given the state of the soda ash market, that would also be interesting. Philippe Kehren: Thank you very much for your questions. So first, the production footprint. Clearly, today, as we said, there is enough capacity. So we don't plan to, in the very short term, obviously, to increase our production. So what we will do is, as you said, arbitrate in order to use the most competitive assets to supply in the different markets. And this is also one of the reasons why we can adjust our portfolio of Q2 instruments because indeed -- and we mentioned several times, Latin America. It is today more competitive to supply Latin America from the U.S. than from Europe. And this is freeing up a little bit of CO2 quota's that we can valorize on the market. So you see that this is really very much related to the business, you see when we say the sale of CO2 is not a one-off. This is the perfect illustration. It's the way we manage our industrial footprint. Then how much of the production is still exported? We are still exporting soda ash from Europe to the seaborne market and in particular, to the Southeast Asian market. And this is also where -- and that's done mainly from Bulgaria. So we use our asset in Bulgaria to export to Middle East, to Africa and to Southeast Asia. And today, given the situation on the Southeast Asian market and the volumes that are sold and the level of the margins in this area, we decided to reduce our production in Bulgaria. And this is also why we can revisit our portfolio strategy on our CO2 instruments. 2026, I think it's too early to say very clearly, the dynamic is still the same. Keep in mind that we see a certain good resilience in Europe and in North America. And more volatility on the seaborne market still and in Latin America and Southeast Asia, volatility and low level of margins. Operator: The next question comes from Hannah Harms from BNP Paribas. Hannah Harms: I was wondering more broadly, if you're expecting any improvement in the underlying trend through 2026. And if not, what additional levers can you pull to ensure that you're able to cover the dividend for next year as well? Philippe Kehren: So I think, again, I think it's early to talk about 2026 from a business standpoint. We don't see any big changes, but we continue to work on what we control. We will continue to deliver the cost savings. We will continue to have the payback of the different restructuring actions that we take both on our industrial footprint and on the operating model of the group. And beyond that, we will also have, I think, a lower level of cash out next year from the provisions because this year, we had a high level. This is, I would say what we can say at this one. Operator: The next question comes from Katie Richards from Barclays. Katie Richards: I think my question would just be why now? My understanding is that the CO2 certificates have the potential to rise sharply going forward. So why have you chosen to monetize these certificates now? Was it purely just the cash optimization or are you confident that your future needs will be structurally lower? And also just a question on your priorities on sort of growth CapEx versus protecting the dividend. So you mentioned that La Rochelle needs another potentially EUR 100 million CapEx to scale up further. Would you be willing to sell more CO2 certificates, for example, in order to fund further expansion of this site? Philippe Kehren: Thank you. I mean if we sell CO2 credit, it's not to fund anything, it's because it is the result of the assessment of our portfolio at this moment. Maybe I will let Alex explain a little bit one now. And that's, I think, a good question. And then I would probably give you the answer regarding the CapEx priorities in terms of capital allocation. Alexandre Blum: Yes. Thank you, Philippe. Yes, it's a good question what you have to keep in mind is because, as we said, we have several projects, we have the energy transition project. We have the EUA forward, we have the EUA stock and so on. And there are plenty of parameters. You have the regulation and you have the level of production. So why now is also because we are the consumption of 2 things. We are derisking and are progressing on our coal phaseout in Europe. We have mentioned that we have not exceeded coal in Germany, which was -- it's a quite large plant of soda ash and we've talked several times about our Dombasle project for which we had to record, as you may remember, a provision last year, but we are no less than 1 year from start-up. So this part is quite derisked so it means we are confident to be able to exceed coal from France next year. So when you have the consumption of less demand for EUAs and at the same time, a production level, which is slightly more, yes, we are to take the positive part of the negative the business contract. So that's why we decided. But again, we will do that only if we think we are fairly covered until 2030. Philippe Kehren: And on your question regarding the prioritization of CapEx, I mean, let me just first remind you how we see the capital allocation main principles. First, we will dedicate between EUR 250 million and EUR 300 million for our essential CapEx. This is, I would say, #1, obviously. And we're working, Lanny can testify, as hard as we can to optimize this bucket, right? And this year, even if we have also a little bit of discretionary CapEx, we will be at a maximum of EUR 300 million. Number two, payment of the dividend. So that's EUR 250 million, EUR 260 million, more or less -- that's the #2 allocation of capital. Number three, it's discretionary allocation of capital to create additional value. First comment is obviously, in the current market environment. We don't need big investments in a new soda ash plant, in a new Dombasle plant and so on. So this question is addressed. But we want to continue to invest in small targeted investments in order -- in markets that are growing fast. And I mentioned that it's electronic grade H2O2 because artificial intelligence requires a lot of processors, and this requires more EG, electronic grade H2O2. I mentioned circular Silica and we also talked a little bit about rare earth. Those are investments that are, I think, important because we have a real differentiation in these different businesses, but there are a lot of big ticket items, right? So -- and we will do these investments only if we have secured offtake of the products that will be produced through these investments. So we will do them. We will do them if the conditions are here to get the right level of comfort on the profitability. Operator: The next question is coming from Matthew Yates from Bank of America. Matthew Yates: I had a question relating to the carbon trading you did in the quarter. I acknowledge this trading is possible to the extent you've got excess permits relative to the lower rates of production. And so Philippe it was pretty clear in the introduction there, that is definitely not a one-off, but it is made incredibly difficult for us from the outside to understand the size and recurring nature of this and the level of disclosure from the company is so limited around this carbon position. So maybe for Alex. Alex, what can you tell us today to help us better understand what that CO2 position of the group looks like as it stands. And in light of sort of the proposed changes in regulatory phase outs, your decarbonization projects and your potential production shutdowns. How do you think that evolves over the coming years so we can think a bit more intelligently about such trading opportunities going forward? Alexandre Blum: Okay. I think what we meant by saying I think it's not a one-off. I mean it's significant. We will not get 40 million every quarter, and that's key. What we meant is that it cannot be looked in isolation from the rest of the business situation. That's really what we mean. If the plant were saturated, everything was running high, we wouldn't have this flexibility. There, okay, from disclosure, I cannot give you a lot of detail. What I can tell you gather many parameters that will be the benchmark, what will be the volume of action. But I mean, when we look at the overall picture, even if we do this transaction, we consider we are fairly hedged, we are fairly covered until 2030. So it means whatever we are no longer exposed to variation of the price of the CO2 in Europe. That's the main element I can give you. And it should -- the quicker we do our -- the best protection we have are our energy transition project because when you move to -- from coal to biomass or to recycled waste, then I mean you significantly reduce your exposure and you have the opportunity to release some CO2. Matthew Yates: Okay. But when I think about your level of disclosure compared to other carbon-intensive businesses, whether that's a are in fertilizers or a utility company it still seems to be on the rather limited side. So why are you not able to be more forthcoming in quantifying the position of the group? Philippe Kehren: Well, I think we can probably check this, but we have -- we provisioned our annual report a certain number of elements, I guess, such as the inventory and hedges and so on. Our energy transition projects are public. I will communicate on them. And every time I think we say how many thousands of tons of CO2 emission reduction we expect. So I think there is nothing hidden in what we say our level of production, our level of emissions, our energy transition projects, what we have in inventory, what we take in terms of forward hedges everything is more or less defined. And as Alex said, the guiding, the guiding principle for us is really to be covered until 2030. I mean obviously, we are currently discussing what could be post 2030, but it's really to be covered by 2030. Alexandre Blum: Yes, we can follow up with the Investor Relations if there are certain questions that you think we could answer better. Overall, we don't think until 2030, you will have a big change in regulation or we consider ETS will still apply the benchmark, the allowance will progressively reduce. This is why we need to have this stock and forward, and this is why we need also to do the energy transition project. But we don't foresee by 2030 a big change. Is that clear Matthew? Matthew Yates: Yes, yes, we can follow up offline. Operator: The next question is coming from Thomas Wrigglesworth from Morgan Stanley. Please go ahead. Thomas Wrigglesworth: I did have a question on the carbon credits, but I -- I think we're kind of getting there. I mean, it just looks like a very big number, right? Because ultimately, EUR 40 million of profit on selling carbon credits I mean, if I assume that you bought at [ EUR 30 ] and you sold at [ EUR 70, ] which kind of stacks up with the kind of communication you've made in the past, that's 1 million tonnes of CO2, which is equivalent to 1 million tonnes of soda ash exports when the Europe exports 2 million tonnes a year. So in soda ash export equivalent, you've sold half a year's worth of all the European exports. And that's, I think, why we're getting a bit stuck on the order of magnitude of the size of the credit sale. So any -- but I think what you're saying is that there's energy savings as well, not just soda ash production savings that are going on top of that. So anything to clarify that kind of thought process would be helpful. Second question is just clarification. So if I understood correctly, the -- previously, you've been thinking on the rare earth business that I think you said, and forgive me if my understanding is wrong, that you wouldn't do this project of itself, the economics didn't stack up to compete with China and you needed to have customers provide long-term offtake agreements to deliver to approve the project. Have you now got those long-term offtake agreements if that's what's changed between the first half and now such that you're now willing to commit the capital? Philippe Kehren: Okay. So first question on the order magnitude. So clearly, I mean, as Alex said, we will not have this type of impact every quarter. This represents, I would say, more or less to give you [indiscernible] a yearly impact, right? And I think the numbers that you mentioned are wave overestimated because if you look at the CO2 price that we have today on the market, you don't come with this type of quantities. Now that being said, I mean, we are the only sodas ash exporter in Europe, I think, today. So it's true that we are impacting significantly. If we decide to cut the exports from Europe to the Southeast Asia, it has a significant impact because we are the only ones to do it, right? So that's, I think, the element. I don't know if I missed anything, Alex? Alexandre Blum: No, no, Philippe you're right. It's the combination of ETP, again, we are releasing also some quantity from [indiscernible] project. Philippe Kehren: Production, you're right, that is one element of the equation that we take into account when we set our portfolio. And then the other important element is the progress that we make on the coal phaseout in Europe. Now on rear earth, just to avoid any misunderstanding, we don't say that we will invest today between EUR 50 million and EUR 100 million, what we're saying is that what we did this year, investing a few millions to start production of Nd-Pr, so the light rare earths of permanent magnets, we will do the same for the hedges. So we're talking about a few million of investment. It's nothing big. It's just to show, we don't have to do it. We can do it super fast, and we want to work with the customers to check that it works. Now if you ask me today, do you have offtake contracts to move to the real stuff, so the big investment of EUR 50 million to EUR 100 million. I say not yet. We are progressing. It's true that the current context is supporting this type of discussions, but we are not ready today to move to the big investment. The -- what has changed, I would say, over the past days and weeks is that it seems to move forward in the U.S. There is -- there are some potential mechanisms that are implemented with floor prices. And we could envisage to contribute to this mechanism. Even from La Rochelle, we know we can produce, so this is the only thing that has changed. But we are -- we continue to discuss to the -- with the different potential customers and with the policymakers, both in Europe and in North America. Thomas Wrigglesworth: Just a follow-up on that, Philippe. What do you think the hesitation? Is it that customers are trying to figure out if this is a 1-year problem or a 10-year problem you kind of need, let's say, a multiyear offtake agreement and they're trying to figure out, well, do I want to commit to your multiyear offtake and commit to this whereas on the other hand, we don't -- it's very difficult to understand any of this trade development and how it's going [ pan ] out and therefore, we don't know if rare is a 1-year problem or a 10-year problem, right, in terms of supply chains? Is that -- do you think that's what the customers are struggling with? Philippe Kehren: Well, it's true that when you have a problem and then it's sold, you have a tendency to think that you don't need any more to move into long-term agreements. But I think fundamentally, fundamentally, both in Europe and in North America. Customers, they want to derisk their sourcing. So they're just trying to figure out what is the best -- how is the best way to do it. And they're probably also waiting for some indications from the policies. Gara, we will take 2 more questions, please. Operator: Okay. The next question is coming from Mr. Udeshi from JPMorgan. Chetan Udeshi: The first one was a bit weird one. I recently -- or actually, it was this week, Element Solutions brought fluorocarbon gases company, ESC for 12x EBITDA. And I think you are the ones who are supplying to them the fluorine-based gases and chemicals used in the semiconductor market. I'm just curious if somebody is buying a distributor of your business for 12x EBITDA. Why would you not consider monetizing this business within Solvay? Doesn't seem most of us care about this business anyway. So what is stopping you from monetizing this business? And the second question is, in your Performance Chemicals business, what exactly happened in Q3? Because your EBITDA seems to have collapsed from EUR 100 million to EUR 60 million, I understand there was a EUR 20 million one-off, but even then, it seems like a big collapse even when the sales aren't really that different from Q2 to Q3. So can you help us understand what happened in that business? Philippe Kehren: Thank you very much, Chetan. I will probably let Alex comment on the evolution of the Performance Chemicals between Q2 and Q3, I think that's your question. On fluorine, very clearly, you noticed that we're in a process of really restructuring this business and making sure that we concentrate our resources, efforts, capital on what will make the future of this business. So this is why basically we stopped our production in France. We also stopped our production of HF and organic fluorine in Germany. And we will concentrate on the aluminum bracing business. And also, we'll continue to produce some fluorine gas as this is indeed still a good business today. Then, I mean, again, there is absolutely no -- nothing is excluded at this point, but we're really focused on making sure that we have a sound and profitable business, and then we'll see. Alex, I don't know if we -- if you wanted to take the bridge on Performance Chemicals? Alexandre Blum: Would love to. Yes. So nothing major in Q3, just to remind that what we've mentioned in the past, we have mentioned that in Q1, we have successfully added litigation with one company that helped us to get paid and invoice some royalties for the past. We had the termination close of the contract in Q2, and we think, in general, this segment is probably the one which has the less -- the more -- the variability from quarter, there was nothing really special in Q3. It's true that all business has to be a little bit soft. I mean, you see the tire market, what we said about Coatis and in term of fluorine, I mean we are taking measures to improve the profitability of the business, but you don't see it yet. So nothing major to signal, and we are taking measure to improve sequentially. Operator: The next question and the final question comes from Tristan Lamotte from Deutsche Bank. Tristan Lamotte: Just one last, please. I was just wondering in the existing rare earth business, was the actual rare earth you're using in that? And how does that differ to the new ones that you'll be using with the new business if you develop that? Philippe Kehren: Well, today, on the auto catalysis business, on the electronics business and medical applications, we're not using the Nd-Pr and Dy-Tb. So the Neodymium, Praseodymium, dysprosium, terbium are really specific from the permanent magnet business. So we're not using them in our current businesses. It's more based on samarium and all this type of material that we're working. And on tandem as well. Geoffroy d'Oultremont: Thank you, Tristan. Thank you, Gaya, and thank you all for your participation today. So if you have any further questions, please feel free to reach out to the Investor Relations team. We have a few events planned in November and December. They are available in the financial calendar on our website. And we'll publish our Q4 and full year earnings on February 24. Thank you very much. Operator: Thank you for joining today's call. You may now disconnect.
Operator: Hello, and welcome to the Genmab First Half 2025 Financial Results Conference Call. As a reminder, this conference call is being recorded. During this telephone conference, you may be presented with forward-looking statements that include words such as believes, anticipates, plans or expects. Actual results may differ materially, for example, as a result of delayed or unsuccessful development projects. Genmab is not under any obligation to update statements regarding the future nor to confirm such statements in relation to actual results, unless this is required by law. Please also note that Genmab may hold your personal data as indicated by you as part of our Investor Relations outreach activities in order to update you on Genmab going forward. Please refer to our website for more information on Genmab and our privacy policy. I would now like to hand the conference over to your first speaker today, Jan van de Winkel. Please go ahead. Jan van de Winkel: Hello, and welcome to our financial results call for the first 9 months of 2025. With me today is our Chief Financial Officer, Anthony Pagano; our Chief Commercial Officer, Brad Bailey; and our Chief Medical Officer, Ta Ahmadi. And for the Q&A, we will be joined by our Chief Development Officer, Judith Klimovsky. As noted, we will be making forward-looking statements, so please keep that in mind. During today's presentation, we will reference products being developed under some of our strategic collaborations. And this slide acknowledges those relationships. As we near the end of 2025, I would like to remind you of the commitments that we made at the beginning of the year. We said that we would accelerate the development of our high-impact late-stage pipeline that we would maximize the potential of our commercialized medicines and that we would deliver on our capital allocation priorities. I'm pleased to say that we are following through on these commitments, supporting our continued growth and long-term value creation. Over the past 9 months, our total revenue grew by 21%, fueled by increased recurring revenue. And we have invested fully in line with our capital allocation priorities. Importantly, we have grown operating profit by 52% even while making these strategic investments. We ended the first half with around $3.4 billion in cash. Our strong financial foundation has given us the flexibility for continued growth and expansion through investment in our high-impact late-stage programs. EPKINLY and Rina-S have both progressed rapidly over the course of this year with extremely encouraging data sets. And for Rina-S, we have initiated additional Phase III clinical trials. As part of our disciplined investment into the highest potential programs together with BioNTech, we have agreed that the current data in frontline head and neck cancer for GEN1042 did not meet our high bar for continued development. As part of our capital allocation priorities was our promise to explore focused M&A opportunities. We have delivered on this commitment with a potentially transformative proposed acquisition of Merus. So let's briefly review the highlights. The proposed acquisition of Merus is an exceptional opportunity that advances our evolution into a global biotech leader. It accelerates our shift towards a 100% owned model. It expands and diversifies our revenue and it brings us closer to achieving our 2030 vision to improve the lives of patients. With this proposed acquisition, we will add petosemtamab or peto to our already compelling portfolio. High potential assets like peto, which has received 2 breakthrough therapy designations are truly rare. The totality of data we have seen for peto underscores the potential as a best-in-class EGFR bispecific across head and neck cancer indications as well as in other EGFR-expressing tumors. And with data anticipated in 2026 from one or both of the ongoing Phase III trials, we expect peto will also be first-in-class with an initial launch expected in 2027. We are confident that our expertise and leadership in antibody-based innovation as well as our swift and broad clinical development of both EPKINLY and Rina-S demonstrate our ability to fully realize peto's potential. We will also see real promise for it to join EPKINLY and Rina-S as multibillion-dollar program. We expect to close the acquisition by early in the first quarter of 2026, subject to the satisfaction of customary closing conditions. And combined with our disciplined capital allocation, strong financial foundation and proven commercial execution, this transaction sets us up for durable long-term growth into the next decade. Now let's turn to some of the recent advancements for our late-stage programs. Beginning with EPKINLY, we eagerly await the -- its potential approval in second-line follicular lymphoma later this month. In addition to the unprecedented Phase III second-line follicular lymphoma data we discussed during our second quarter call, recently, we announced updated results for epcoritamab in the outpatient setting. These data evaluated the feasibility of treating and monitoring patients with relapsed or refractory diffuse large B-cell lymphoma in this setting. Data from both the Phase III second-line and outpatient studies are included in more than 20 EPCOR abstracts that have been accepted for presentation at this year's ASH meeting end of the year. Excitingly, the second-line follicular lymphoma data will be 1 of 7 oral presentations for epco at ASH. These abstracts highlight advances that expand epcoritamab's clinical profile, supporting use in earlier lines of therapy and across additional B-cell malignancies. So now let's turn to Rina-S. Last month at ESMO, we presented an update of the data for single-agent Rina-S in patients with advanced endometrial cancer. Today, Tahi will provide a brief overview of this data, which further supports the encouraging results that we showed at ASCO. This progress reflects our vision to accelerate our innovative late-stage pipeline and shows additional momentum behind the possibilities of Rina-S. Our confidence in the potential of Rina-S in endometrial cancer is reinforced by the breakthrough therapy designation granted by the U.S. FDA. As a reminder, this indicates that the FDA considers Rina-S to have the potential to significantly improve patient outcomes compared with existing therapies. The data we have seen and the recognition from the FDA both support our development plans for Rina-S. And I'm pleased to tell you that we have initiated the Phase III trial in endometrial cancer. So our rapid development of Rina-S continues. And we are also preparing for potential commercialization. TIVDAK is now available for prescribing in Germany, our first European market. And the foundation that we are building in the European gynomic community with TIVDAK will set us up for future success with Rina-S. Now over to Tahi and the updated Rina-S data from ESMO. Tahi, go ahead. Tahamtan Ahmadi: Thank you, Jan. At ASCO, we presented the first results for single-agent Rina-S in patients with advanced endometrial cancer from the ongoing Phase I/II RAINFOL-01 study. And at ESMO, just a few weeks ago, we provided an update on that data with 4 additional months of follow-up. What we saw was that at a median follow-up of around a year, Rina-S dose at 100 milligram per meter square showed deep and durable responses regardless of folate receptor alpha expression. With the disease control rate at that dose continuing to be at 100% and a confirmed ORR remaining at 50%, including 2 complete responders and with 7 out of the 11 confirmed responses still ongoing at that data cutoff. This compares to standard of care chemotherapy, which delivers approximately a 15% ORR and a limited durability, roughly around 6 months. In addition to the durable efficacy, Rina-S continues to have a manageable safety profile. There are still no signals of ocular toxicity, interstitial lung disease or neuropathy across the entire program. So in summary, the data we have seen for Rina-S, both in endometrial cancer and the data we presented on PROC reinforce our conviction that Rina-S is best-in-class ADC across efficacy, safety and durability across the entire spectrum of folate receptor alpha expression. And we are maximizing its potential with an accelerated and extremely comprehensive development plan that includes now 3 ongoing Phase IIIs, if you follow today's disclosure on clinicaltrials.gov and 2 Phase IIIs that are intended for potential registration under the accelerated approval pathway in the United States, one in PROC and one in second-line endometrial cancer. And we expect a first launch in 2027, and we also are generating data beyond GynOc with signal-seeking Phase II trial in non-small cell lung cancer. And now over to Brad for a review of the recent commercial performance for EPKINLY and TIVDAK. Brad Bailey: Yes. Thank you, Tahi. Q3 marked another strong quarter for our proprietary portfolio. Our commercialized medicines are contributing positively to our overall revenue growth, driven by the strong performance in our established markets as well as now the early success in new markets. This gives us further confidence in our growth potential as we advance our portfolio and prepare to bring our medicines to even more patients around the world. Take a closer look now at performance overall. EPKINLY and TIVDAK sales through the third quarter of 2025 were up 54% year-over-year. This accounted for 25% of our total revenue growth. And as we've said before, we expect our proprietary portfolio to increasingly contribute to our overall revenue growth over time. During the quarter, we continued to scale our operations across markets in a disciplined fashion, accelerate the adoption of our medicines and meet patients' needs. And as you just heard from Jan, the proposed Merus transaction provides us with the unique potential to double down on our shift to a 100% owned model and maximize our long-term growth. With EPKINLY, Rina-S, [ Acasunlimab ] and potentially petosemtamab, we have the pieces in place to deliver several multibillion-dollar opportunities in the coming years. Let's turn now to our EPKINLY's performance. EPKINLY posted $333 million through Q3, which represents a 64% year-over-year increase. We're highly encouraged by EPKINLY's performance and steady growth globally as the clear leader in the third-line setting across diffuse large B-cell lymphoma and follicular lymphoma. In the U.S., performance continues to demonstrate the value of EPKINLY as the only dual indication option in DLBCL and FL. We're seeing increases in adoption across sites of care and new patient starts, reinforcing both the clinical and operational differentiation that EPKINLY brings to the market. Indications, further growing utilization within ordering accounts and expanding more broadly into the community setting. As we prepare to enter earlier lines of therapy with the anticipated launch in second-line FL later this year, we'll build on this positive momentum to bring EPKINLY to even more patients. Now looking at Japan, we're seeing an encouraging start to EPKINLY's launch in third-line plus follicular lymphoma. Our teams are building on the traction we've seen in large B-cell lymphoma and continue to drive account activation while also preparing for future potential launches. To that end, today, we filed a supplemental JNDA for EPKINLY in second-line FL, marking another important milestone to potentially bring EPKINLY to earlier lines of therapy in this priority market. Across all other markets through our partner, AbbVie, we saw solid sales for EPKINLY in the quarter as an increasing number of countries gain access to reimbursement and saw rapid uptake. Globally, EPKINLY has received the most regulatory approvals for a bispecific in DLBCL and FL with approvals in more than 65 countries worldwide, including more than 50 countries now with the dual indication. As we look ahead to the remainder of the year and into 2026, we're focused on increasing utilization across sites of care and delivering EPKINLY to patients in earlier disease settings where we may have the opportunity to transform outcomes. With its strong performance to date and accelerating development program, we're confident in EPKINLY's growth potential to reach peak sales of more than $3 billion in the future. Now let's look at TIVDAK. TIVDAK is well recognized as the global standard of care in recurrent or metastatic cervical cancer. Our year-to-date sales for TIVDAK totaled $120 million with performance in both new and established markets, highlighting the clear need for women with advanced cervical cancer across geographies. In the U.S., we continue to see strong, stable performance across sites of care. And in Japan, we saw continued early launch success, further reinforcing the patient need, the strength of our launch strategy and impactful execution by our field teams. Broadening our reach across markets, in September, TIVDAK officially launched in Germany. This marks the first medicine we've launched in Europe independently. We've seen encouraging early uptake in Germany, providing positive momentum as we look ahead to expand to additional countries. With our focus on TIVDAK, we've made important progress establishing our operations to support our current and future portfolio in Europe. This strong foundation will ensure we are equipped to broaden our impact with the gynecologic cancer community and deliver our medicines to more patients around the world. The work we've done to transform our business has positioned us well now for sustained growth and profitability. We remain focused on expanding the utilization of our medicines and bringing them to as many patients as possible. The proposed acquisition of Merus and the potential addition of petosemtamab could strengthen the opportunities ahead for our proprietary portfolio of antibody-based medicines. We look forward to closing out the fiscal year with continued strong performance. And with that, I'll hand the call over to Anthony to discuss our financials. Anthony Pagano: Thanks, Brad. We continue to deliver solid revenue growth throughout the first 9 months of 2025, driven by sustained recurring revenues and the solid market performance of our products. We've also strengthened our long-term growth potential as we continue to generate encouraging clinical data for both epcoritamab and Rina-S. And our financials remain strong. We grew total revenues by 21% with recurring revenue up 26%. This was driven by royalties from DARZALEX and Kesimpta. And importantly, this growth was also supported by product sales from EPKINLY and TIVDAK, which together represented 25% of our total revenue growth. Looking at DARZALEX, we continue to see extremely strong growth. Overall, net sales grew by nearly 22% -- that's $10.4 billion for the first 9 months of the year, which translates to over $1.7 billion in royalty revenue for us. This growth was driven by continued share gains and solid performance in the frontline setting. So you can see that the quality of our revenue profile continues to improve. In fact, in the first 9 months of this year, recurring revenues represented 96% of our revenues, and that's up from 92% in the same period of last year, a clear sign of increasing visibility and durability of our revenues. What's really clear is that the investments we've made in building out our commercialization teams and capabilities are paying off. This sets us up well as we prepare for potential expansion into earlier lines for EPKINLY, including second-line FL and the anticipated launch of Rina-S and contingent on the successful close of the transaction, the launch of Peto. And we continue to take a disciplined approach to these investments. Total OpEx in the first 9 months of 2025 was slightly less than $1.5 billion, up 7% over the same period last year, excluding the impact of the ProfoundBio acquisition. And we're managing our investments strategically, prioritizing our high-impact Phase III programs and focused investments in our commercialization capabilities. Our operational discipline contributed to our operating profit growth of an impressive 52% in the first 9 months of the year. So here, you can see that we're really continuing to deliver on our commitments. Next, looking at our net financial items. Here, we have a net gain of $142 million. Then moving on to tax. We have tax expense of $217 million, which equates to an effective tax rate of 18.9%. Taken together, our net profit amounts to $932 million. So as you can see, continued strong underlying financial performance. With that, let's move to our 2025 financial guidance. We remain on track to achieve our existing financial guidance with projected double-digit revenue and double-digit profit growth. We expect our revenue to be in the range of around $3.5 billion to $3.7 billion, delivering a robust 15% growth at the midpoint. And it's our recurring revenues from royalty medicines and from EPKINLY and TIVDAK that's been driving that growth in 2025. In total for the year, we expect our recurring revenues to grow by 22%. For operating expenses, due to our continued focus and disciplined approach to our investments, we still expect to be in a range of around $2.1 billion to $2.2, putting all this together, we're planning for operating profit in a range between around $1.1 billion to $1.4 billion, with the midpoint of our guidance amounting to over $1.2 billion of operating profit and strong year-over-year growth of 26%. Our guidance highlights our continued strategic discipline, targeted investments and operational efficiency, all while advancing our pipeline and enhancing shareholder value. Now to give you just a bit more color on FX, every 10-point move in the exchange rate relative to our guidance rate of the U.S. dollar to the Danish kroner of 7.20 is worth just around $1 million in operating profit or loss at the midpoint. Now finally, before I conclude, I would like to take a minute to look ahead to 2026. While, of course, our guidance will be given in February next year, as I stand here today, 2026 consensus expectation for Genmab stand-alone investments appear to be in a reasonable place, capturing our investment priorities. And as I take a look at consensus expectations for Merus investments, they also appear to be in a reasonable place. Importantly, we remain confident that Genmab will deliver significant profitability in 2026 and meaningful EBITDA growth in 2027. Our performance in the first 9 months of 2025 underscores our ability to produce solid high-quality revenue growth, advance key pipeline assets, deliver on our capital allocation commitments with the proposed acquisition of Merus and maintain strong profitability through disciplined execution. So in summary, our very strong financial foundation, sustained profitability and disciplined capital allocation strategy positions Genmab for growth, creating value for both shareholders and for patients. And on that note, I'm going to hand the call back over to Jan. Jan van de Winkel: Thank you, Anthony. Let's move on to our final slide. We have strengthened the foundations of our business in the first 9 months of 2025. We have expanded the reach of both EPKINLY and TIVDAK to more patients. For Rina-S, we have presented additional support of clinical data showing its potential beyond ovarian cancer, and we are prepared to accelerate and maximize the potential with additional Phase III clinical trials. And we continue to anticipate further Acasunlimab data this year, and they will be presented at ESMO I-O in December in London. Beyond our commitments, to our existing pipeline priorities, we further delivered on our capital allocation strategy with the proposed acquisition of Merus, an extraordinary opportunity that will advance our evolution into a global biotech leader and position us for sustainable long-term growth and value creation. Before we move to the Q&A, I'm pleased to announce that we will hold our annual R&D update and ASH data review on December 11. And to ensure that this event is accessible to as many people as possible, this year's presentation will once again be fully virtual. Details will be available on our website, and we look forward to a lively event. That ends our formal presentation. Thank you for listening. Operator, please open the call for questions. Operator: [Operator Instructions]. We will now take the first question from the line of Jonathan Chang from Leerink. Jonathan Chang: Now coming out of ESMO, there's been a lot of discussion around the competitive landscape of Peto and Rina-S. What are your latest thoughts on how these drugs are positioned in the competitive landscape? And what gives you confidence in the potential for these 2 programs to be key drivers of growth? Jan van de Winkel: Thanks, Jonathan. Very good question. So let me ask Tahi to start off, giving you our thinking on the positioning of Peto as the best and first-in-class molecule and the same for Rina-S. And I'm sure that Judith will then also add to that. Tahi, why don't you get going? Tahamtan Ahmadi: Thank you, Jonathan, for the question. And so let me start this there was really nothing that in any shape or form was a surprise to us. Our conviction in Pito and Rena being the best and first-in-class asset in the respective indications of head and neck and GynOc has not changed. Pito, if you look at the totality of data, Jan said this in the prepared remarks, in our mind, has all the attributes of the best-in-class second-generation EGFR bispecific. There are 2 Phase IIIs already ongoing in head and neck in second-line immunotherapy for which it has a BTD and in combination with pembro in frontline where it has BTD. So it's also on track to be the first-in-class. Nothing really changed on that. As it relates to Rina, there's, of course, a couple of folate receptor alpha ADCs in development by AZ and Eli Lilly. Again, this is not news. we are, generally speaking, operating in a very competitive landscape. None of the data in any way, shape or form are changing our assumption that [ VAS ] based on the data in PROC and endometrial, both in response and long-term follow-up and durability and long-term safety has the profile to be best-in-class. I mentioned this in my comments. There are now 2 Phase IIs that are ongoing for some time. And we expect a launch at least one of these indications in '27 and 3 Phase IIIs that are actively enrolling. So I think we have a good position here also to be the first-in-class Topo ADC in GynOc space, and we're expanding already into other indications. So in totality, we feel very comfortable about the profile of the assets. We feel extremely comfortable over where we are positioned in the competitive landscape, and we feel very confident in our ability to accelerate the development of pito once we are having control of this asset, hopefully, and on Rina-S. So there's more to come on both of these assets. That's probably all that is to say at this point. Jan van de Winkel: Thanks, Tahi. Judith, do you want to add anything to that? Judith Klimovsky: No, beautifully said, nothing to add. Operator: We will now take the next question from the line of Michael Schmidt from Guggenheim Partners. Michael Schmidt: Congrats on all the progress. I had a question on EPKINLY. I was just wondering if you could comment on the commercial dynamics. I'm just curious in terms of sales, what are you seeing in terms of use in the approved indications between follicular and DLBCL. And then how should we think about the near-term growth opportunity in second line follicular in the U.S. and Japan in your markets? What is the magnitude of that near-term growth opportunity? Jan van de Winkel: Thanks, Michael, for the questions. And I think these are perfect questions for Brad to handle. Brad? Brad Bailey: Thank you for the question. We actually are extremely encouraged and pleased with our progress to date and the performance. We don't actually split out by indication, and that's actually part of the benefit, and we're hearing from customers and planning around their feedback that the dual indication from an operationalization perspective is extremely beneficial, along with the seamless SubQ administration. And as we move into the earlier lines of therapy, see this as a tremendous opportunity to bring treatment close to where patients live and see this as an opportunity, again, moving forward with where we are. So extremely encouraged with our performance to date. And as we know the value is in earlier lines of therapy and look forward to seeing that success in the future as well. Jan van de Winkel: Thanks, Brad. Do you want to say a bit about the size of the market in second-line follicular lymphoma? Brad Bailey: Yes. The second-line follicular lymphoma as previously stated, we really feel the value of these medicines are much broader and much greater in the earlier lines, approximately 9,000 patients in second-line FL, and it's really our first step into this larger opportunity. And so we would expect that this enabling treatment in earlier lines will open up additional opportunities for us in the not-too-distant future as well. Operator: Thank you. We will now take the next question from the line of Xian Deng from UBS. Xian Deng: Sorry, if I may just stay on EPKINLY a bit. I wonder if I could maybe push a little bit more on sort of the near-term performance given -- I mean, this quarter, we did see kind of a miss in EPKINLY. Just wondering is there anything you would flag in terms of this quarter's performance? And also just wondering for second-line follicular lymphoma, just wondering how should we think about the launch trajectory? Do you think this is actually going to be a bit more gradual given, I don't know, follicular lymphoma, is it mainly community setting? Or do you think this actually will be a pretty fast uptake? Jan van de Winkel: Thanks, Xian, for the questions. I'm going to hand them over to Brad. Brad, please comment. Brad Bailey: Yes. We're actually seeing right now, the observed consistent and continued uptake across sites of care in the U.S. And we do see to your latter part of the question that second-line FL allows this acceleration in the community setting where FL patients are actually treated, as you stated. And we do see that as a consistent uptake over time as we continue to get operationalization, if you will, of bispecifics in the community setting. And as it relates to the performance, we're extremely encouraged by what we're seeing year-to-date with the performance, both in the U.S. as well as Japan and through our partner, AbbVie globally. And again, feel like, as we've said all along, the earlier lines of therapy are where the value of EPKINLY will be and the second-line FL is really that first step taking us into this next phase. So hopefully, that answered your question. Jan van de Winkel: Thanks, Brad. And definitely, on, we definitely hope to move forward to frontline and second-line diffuse large B-cell lymphoma also very rapidly from here with readouts hopefully soon of the Phase III trial. So we're very encouraged by EPKINLY and really look forward to a very, very good future there. Let us move to the next question. Operator: We will now take the next question from the line of Qize Ding from Rothschild & Co. Qize Ding: One, if I may. So can you elaborate a little bit more on your decision to terminate the clinical development of 1042 in first-line head and neck cancer? And also what is the implication to the future development of this drug in first-line lung cancer and first-line melanoma? Jan van de Winkel: Thanks, for the question. I think I can start there and then maybe Judith can step in there. So what we determined together with our partner, BioNTech, that basically the data of 1042 in combination with chemo and pembro in frontline head and neck cancer didn't meet the high bar we have internally for continued development. So we stopped the development there. And that's where I want to leave at that. Judith, do you want to add anything there? Judith Klimovsky: Yes. No, just to add that this was the most relevant data set and the initial proof of concept. And based on that, we decided to stop the development in combination with pembro and chemo. Operator: Thank you. We will now take the next question from the line of Rajan Sharma from Goldman Sachs. Rajan Sharma: Just wanted to get your thoughts ahead of the EPKINLY PDUFA in November. There's obviously been a bit more of a focus seemingly on U.S. representation in clinical trials. So I just wanted to get your confidence going into that potential approval. And if you could just confirm that efficacy in the EPCORE FL-1 trial is consistent across both U.S. and non-U.S. patients. Jan van de Winkel: Thanks, Rajan, for the questions. Tahi, can you give some color on the U.S., non-U.S.? Tahamtan Ahmadi: Yes. I mean basically, the way I'm going to respond to that without getting into the minutes of the data is that there's absolutely nothing at this point that would indicate that it will not be approved in the next few weeks or days in the United States. Jan van de Winkel: All right. So we are highly confident, Rajan. So let's wait and see the coming weeks. Operator: Thank you. We will now take the next question from the line of Yaron Werber from TD Securities. Yaron Werber: Great. Anthony, I got a couple of questions for you more about 2026 and then '27. So you mentioned for next year, the numbers, the stand-alone OpEx for Merus and Genmab are reasonable. For Merus, they're sort of in the $450 million range in terms of OpEx, let's call it, $450 million, maybe some even have as high as $500 million. I think we're imagining there's going to be some synergies as you bring that company in. And I know you're not -- you can't give guidance, but can you give us any -- a little bit of a sense, are we thinking about this correctly? And then secondly, when you're talking about significant profitability next year, there could be as much as like $430 million change between interest income net to noninterest expense net because of the debt liability. So are we thinking about that correctly? Because it would impact profitability next year. Jan van de Winkel: Thanks, Yaron, for the questions. Anthony, I think it's good that you also got the chance to answer some questions here. thanks for that guidance. Anthony Pagano: I can really start off by thinking, as you all now know and appreciate, we have a very disciplined and focused approach to our investments. We've outlined for the market, starting with the overall capital allocation framework, a very clear framework of where and how we're going to invest on the one hand. And as we do that, do that in the most prioritized and productive manner as possible. That's how we're able to deliver on our 2024 actual financial results and also what our overall guide was for 2025 and where the year-to-date performance is. Moving forward, that same approach in terms of very clear investment priorities remains as well as that approach to being super focused and disciplined. Now to reiterate what I said, as I kind of look at overall stand-alone consensus for Genmab, that is in a reasonable place. Likewise, for Merus, here, I'm looking at the consensus number is in a reasonable place. We also have to appreciate where we are at in the overall process here as it relates to being on track to closing the transaction in early Q1 2026. Today, I thought it was important to provide that market -- the market the commentary similar to it did last year, but I think the overall investments are in a reasonable place. Of course, we will look for opportunities to prioritize, to remain disciplined. And ultimately, we'll provide our guidance when we get to February of 2026. Now my comment as it relates to significant profitability, just to be super clear, here, I am referring to EBIT. So I'm referring to our EBIT figure, our operating profit, consistent with historical practice, we are guiding on the EBIT line. So overall, if I think you sort of step back and we think about the overall setup here, what you should expect, Yaron, is continued investment in line with our capital allocation framework, lots of focus and discipline by the team and continue to deliver on our overall commitments, both operationally and financially. Operator: Thank you. We will now take the next question from the line of Asthika Goonewardene from Truist. Asthika Goonewardene: I want also to say congrats on all the growth that you guys have shown this quarter. It's impressive. Jan, when the Merus acquisition was announced, you mentioned that head and neck cancer was the main driving factor for that -- for your interest there. And you said you'll talk a little bit more about colorectal when that data is presented. The data in CRC at the triple meeting was, I would say, perhaps a little better than what even Bill telegraphed. So how do you view that colorectal opportunity? And then importantly, for that as well as head and neck, do you feel that you need a subcutaneous formulation to be competitive with your emerging competition from RYBREVANT. Jan van de Winkel: Thanks very much for the questions. And we said that well, the value was primarily determined by head and neck, and we want to expand head and neck, Asthika, as you know, into locally advanced and potentially other settings fairly soon. And we would say that the data, the early data in colorectal cancer is very exciting, but very early data. And we believe that there is potential in other EGFR-positive tumors also outside of head and neck, but there is simply no limited data there. I will ask Tahi to maybe give a bit more color there on our thinking. Tai? Tahamtan Ahmadi: Yes. Thank you, Asthika, and thank you for obviously hard questions. I'll try to manage this. I think as Jan said, early data, limited data, encouraging and we should leave it at that until we have control of the asset, and it's really us to speak about the data. But I think that's kind of the top line. And broadly speaking, I think we even talked about this in the prepared remarks when we announced the acquisition. We do think of pit as a best-in-class second-generation EGFR bispecific, and that obviously includes also opportunities outside of head and neck. But the focus is where it is right now. 2 Phase IIIs ongoing in head and neck. And there we have a significant head start over any form of competition. Subcutaneous administration is something that we are very familiar with that we have some deep understanding in prior path. And it's obviously something that we are looking at as part of a life cycle management. But our focus right now is execution of the studies that are already ongoing and then -- and we can talk more about what Genmab is going to plan in due time. Jan van de Winkel: Thanks, Tahi. So confirming that Asthika, the SubQ development is an integral part of our strategy for peto, but more to come after the finalization of the transaction. Let's move on to the next question, operator. Operator: Thank you. We will now take the next question from the line of Matthew Phipps from William Baird. Matthew Phipps: I've had a lot of investor interest recently on the first-line DLBCL trial with EPKINLY reading out next year. I'm wondering if you can give us any sense where you think that's a first half or second half readout? And then what level of PFS benefit do you think you need to really outcompete the Pola-R-CHP regimen that has gained some traction there? Jan van de Winkel: Thanks, Matthew, for the question. Tahi, can you give a bit of color on the frontline diffuse large B-cell lymphoma trial and the potential need for the type of data to give us an angle, a differentiated angle of other therapies. Tahamtan Ahmadi: Well, I'll take it, Jan. I think we have guided that we expect the readout to happen in 2026, and we should probably leave it at this. It's obviously an event-driven study, and we will update in the appropriate setting when we have a little bit more clarity. But clearly, the study was more or less fully accrued in the summer of last year. So as it relates to what it has to do in order to be competitive in the competitive landscape vis-a-vis putting I don't think it makes sense to go into some kind of like discussion about hazard ratio and what it has to show. I think we are very confident that if the study -- when the study reads out, that there will be a significant improvement over the standard of care and in that regard, also significantly differentiated from the Pola-R data, the POLARIX study. That is partially underwritten by the data that's going to be -- we presented now with a longer follow-up at ASH, where you have a Phase II data set that in these high-risk patients, IPI -35 shows an incredible high CR rate with an incredible high durability. And what we've seen over and over again is that these very robust Phase II studies that we ran and then the data we generated on them more or less one-to-one translates into the Phase III. And so we anticipate the same to be true for the frontline diffuse large B-cell study. Jan van de Winkel: Thanks, Tahi. So in addition to efficacy, also think about the convenience of the SubQ dosing and the safety pattern may be very different from other combination therapies, Matthew. So we are very excited about the potential to see the readout hopefully soon from the frontline diffuse large B-cell lymphoma. It's a potential game changer we feel for EPKINLY. Let's move to the next question. Operator: The next question comes from the of Victor Floch from BNP Paribas. Victor Floch: Maybe just a small housekeeping question on data readout timing. So thanks for the comments on the first-line DLBCL. But you used to have an anticipated readout column on the Slide 7. So I just wanted to ask you whether you can confirm that all the Phase III trials that are on that slide, all the timings are consistent with what we -- what you've discussed last time for the second quarter update. Jan van de Winkel: Tahi, can you comment on the timing there? Tahamtan Ahmadi: Nothing has changed. Jan van de Winkel: So we have confirmed the signal. Operator: Thank you. The next question is from the line of Zain Ebrahim from JPMorgan. Zain Ebrahim: I've got one clarification question for Anthony. Just on the OpEx for '26 in terms of when you say both the stand-alone investments for Merus and Genmab [indiscernible] reasonable place, I think is how you characterized it. Does that include the potential for indication expansion that you outlined for locally advanced head and neck for peto and maybe other indications that we might hear about more in Q1 was my first question. And the second question is just on -- if you can remind us on the filing strategy for Rina-S in PROC next year? I know you just said everything is on track. But in terms of recruitment, how that's progressing for the Phase III and when we can expect to see more duration response data from the Phase II trial? Jan van de Winkel: Thanks, , for the questions. I will leave the first one to Anthony, of course, to give you further clarity there. The second one I can take for Rina-S, filing strategy, the initial filing will likely be based on the Phase II potentially registrational trial for PROC. That trial is completely recruited and also in parallel, the Phase III is recruiting very rapidly. So we are fully on track there to have a readout next year, potentially a filing and an approval hopefully in '27. Anthony, can you give a bit more color on the inclusion of the locally advanced head and neck for the Genmab trials as projected for 2026? Anthony Pagano: Yes, the short answer is yes. So I think about, again, just reiterating, as we think looking about forward to 2026, it's important to condition the market, thinking about overall investment levels, again, to reiterate, expect as I look at consensus today for both Genmab stand-alone as well as Merus, look to be in a reasonable place, also reflective of our investment priorities. Of course, we're going to provide ultimately our guidance to the market in February of '26. But to put a finer point on it, an, yes, as I sit here today, it does include what we think about it from an overall portfolio development, including your specific question around inclusion of investment in the locally advanced. Operator: Next question is from the line of Charlie Haywood Bank of America. Charlie Haywood: Charlie Haywood, Bank of America. First one was on just how to look -- how you're looking at the first-line head and neck cancer landscape, specifically, I guess, the option to have a triplet versus a doublet strategy, how you think those segments of the markets differ versus the KEYTRUDA mono or combo arms that you have as part of the trials? And then the second one being in Rina-S, your endometrial data, I think optically looked like better responses in the folate receptor greater than 25% and a bigger delta than you'd seen in PROC. I guess, confidence in efficacy across broad folate receptor alpha expresses. Jan van de Winkel: Thanks, Charlie, for the question. Tahi, can you start and then maybe, Judith, you can step in there. Let's first start with the frontline head and neck cancer landscape. Tahamtan Ahmadi: Sure. I mean I would say the way I would answer your question is that broadly speaking, in the current landscape, as you were alluding to, there is a pembro mono strategy and then a pembro chemo strategy and at times, physicians make that choice based on maybe a slightly higher response rate for the chemo, pembro combination and a faster time to response, and that's a lot to do with location of the tumor and size of the tumor. That all becomes essentially irrelevant if the data in the Phase II with peto and pembro is essentially double twice the reported response rate for chemo pembro because at that point, you basically have a higher twice as high response rate without the significant toxicities of chemotherapy and these patients don't necessarily tolerate chemotherapy too well. So this is what we like about the profile of peto in particular, also the data on pembro really in the combination provides an opportunity where you have a high response rate, a rapid time to response without any of the quite significant toxicities that go along with combination chemotherapy in this patient setting. That's the head and neck story. On the EC and the Rina-S and endometrial cancer, I mean, there are nuances here and there. It's not that we have ever said that folate receptor alpha expression is eviraluvant to the response that's not the case. What we said is that Rina-S has a profile that allows us to generate meaningful responses across the entire spectrum of folate receptor alpha expression and thus does not require a biomarker selection. And that's a strategy that has allowed us to go into these indications. Endometrial is generally considered to be a lower folate receptor alpha expressing tumor than PROC. And it's also what is underriding the confidence in going to other indications such as, for example, EGFR non-small cell lung cancer. And so this is one of the differentiating aspects of Rina-S that it is able to generate meaningful and stable response rates across the entire spectrum. That doesn't mean that the higher don't even have higher responses. That just means that even at the lower end, the responses are meaningful and durable. Operator: There are no further questions at this time. I would now like to turn the conference back to Jan van de Winkel for closing remarks. Jan van de Winkel: So thank you for calling in today. If you have additional questions, please reach out to our Investor Relations team. We very much look forward to speaking with you all again soon. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: [Interpreted] Good morning. We will now begin NAVER's 2025 Q3 Earnings Conference Call. For the benefit of our investors joining from home and abroad, we will provide simultaneous interpretation service for the presentation and switch to consecutive interpretation for the Q&A. Unknown Executive: [Interpreted] Good morning. I am [indiscernible] from the Office of Capital Markets. I would like to thank the analysts and investors for joining NAVER's 2025 Q3 Earnings Presentation. On this call, we are joined by CEO, Soo-yeon Choi; and CFO, Hee-Cheol Kim, and they will walk you through NAVER's business highlights and strategies and financial results, after which, we will entertain your questions. Please note that the earnings results are K-IFRS based provided for timely communications and have not yet been audited by an independent auditor and hence, are subject to change after such review. With that, I will turn it over to our CEO to present on the business highlights. Soo-yeon Choi: [Interpreted] Good morning. I am Soo-yeon Choi, the CEO. In Q3, NAVER continued to strengthen its foundation for new growth by advancing its services and monetization through the integration of AI technology into content and data. In search, AI briefing has been expanded to 15% coverage, leading to a notable improvement in user satisfaction and delivery, delivering a positive user experience. At the same time, the revamped home screen, along with expanded content supply through Clip and Shopping Connect as well as personalized recommendations contributed to higher usability. As a result, the loyal user base strengthened both quantitatively and qualitatively during the quarter. Supported by these initiatives, together with NAVER's solid media influence and strong monetization capability, overall advertising revenue on the NAVER platform grew by 10.5% Y-o-Y. In commerce, NAVER strengthened a personalized experience optimized for exploration and discovery-based shopping by enhancing user benefits through services such as end delivery and membership. As a result, user engagement within the NAVER Plus Store app increased, surpassing 10 million downloads. In Q3, Smart Store GMV recorded accelerated growth with the full quarter reflection of the revised commission structure, serving as a key driver of overall performance. Going forward, NAVER will continue to enhance the customer experience through closer collaboration with Kurly and expanded application of AI-driven personalization. Let me begin with NAVER's differentiated AI-powered search services and the performance of the search platform. To strengthen competitiveness, informational search, AI briefing launched in March, expanded its coverage to 15% of integrated search queries as of September end. It continues to enhance our usability by providing information to reinforce with highly reliable sources and improving answer satisfaction for long-tail queries. AI briefing used by more than 30 million users offers a differentiated experience by enabling summarized information consumption as well as deeper exploration through research using related questions displayed at the bottom of the main text, thereby expanding content consumption. Since its launch, the number of clicks on related questions has increased by more than 5x compared to April, the early stage of the service. This allows users to explore more topics more deeply without entering new or complex queries by naturally engaging with a wider range of NAVER's UGC, creating a virtuous cycle of content consumption. Starting in November, NAVER will gradually test personalization in both the answer text and related question areas. In particular, for shopping and local queries, the company plans to strengthen contextual connections of businesses and explore monetization opportunities. Ultimately, NAVER aims to provide a differentiated search experience in which advertising and content are seamlessly integrated with the answer text while also exploring revenue models for the emerging AI agent environment. The home screen revamp in August, along with the expansion of high-quality content supply, including clip and the enhancement of personalized content recommendation logic led to higher feed engagement. As a result, in September, the average daily users of the home feed and clip stabilized at 10 million users each. With improvements in the usability and recommendation areas of the home feed, user activity indicators such as content impressions and clicks continue to increase. The resulting growth in feed consumption also translated into higher advertising revenue. The number of loyal users visiting NAVER home feed more than 20 days per month increased by over 2x Y-o-Y, while the proportion of such loyal users rose by 5 percentage points compared to the beginning of the year. This indicates that inactive users have been converted into active users, leading to the stable growth of the home feed. Also, NAVER's high-quality UGC and advertising content, together with its more advanced recommendation technology, are being effectively exposed in the right placement, thereby strengthening user engagement and lock-in. It is also expected to lead to further monetization opportunities, including advertising revenue growth. With a solid user base and stronger engagement, along with the expanded application of AI briefing, providing a differentiated search experience, NAVER achieved a 10.5% increase in total platform advertising revenue driven by improved AI-based advertising efficiency. In Q3, continued optimization of ad placements and services using NAVER's proprietary AI technology enabled more efficient ad exposure within the same inventory, resulting in higher advertising efficiency, steady growth across key metrics and an expanded advertiser base. NAVER is also seeking ways to further strengthen its response to commercial queries, one of the key competitive areas of its search business by delivering more satisfying search results for users while capturing additional advertising revenue. To this end, the company plans to expand efforts to identify new advertising services and optimize ad placements across its platforms, including commerce areas such as Plus store, the entertainment section, which is gradually being transitioned into a feed format. The automated advertising campaign at Boost has demonstrated proven advertising efficiency, contributing to both performance advertiser growth and overall advertising revenue expansion. Boost Shopping, which has successfully established itself recorded a conversion performance in September that was more than 100 percentage points higher than standard search ads. Supported by this momentum, the number of NAVER performance advertisers increased more than 2x Y-o-Y. Looking ahead, NAVER is building an environment that will allow Smart Store sellers to more easily experience ad Boost shopping within the seller center while continuing to incorporate advertiser feedback and expand exposure across various placements, including Plus Store. Furthermore, NAVER has integrated advertiser billing accounts to enable advertisers to manage campaigns under a single account and has launched a customized consulting program for advertisers that operate their campaigns directly. Next year, NAVER plans to introduce a new business agent that will design and execute growth strategies together with advertisers and business partners and evolve it into an integrated solution that analyzes business performance and competitiveness based on NAVER's high-quality data to propose practical solutions. Next, I will discuss the key achievements of the e-commerce business. In Q3, commerce focused on enhancing personalized experiences tailored for discovery and exploratory shopping, strengthening delivery competitiveness and expanding membership benefits. As a result of these efforts, Smart Store GMV grew by 12.3% Y-o-Y. NAVER Plus Store is rapidly evolving into a structure optimized for discovery and exploratory shopping through features such as Discovery Tab, AI shopping guide and content integration. By serving as a core channel that enables a brand experience-driven purchase journey supported by each brand's unique data and content assets, along with our proprietary promotions and campaigns, the platform has helped brands achieve 40% or higher growth for 5 consecutive quarters, firmly establishing itself as a key growth driver. NAVER plans to further refine its personalized recommendations and ranking algorithms within search to ensure that brand and SME product databases unique to NAVER are more effectively surfaced. The company will also significantly expand the application of AI personalization on the NAVER Plus Store home screen from 31% to 80%. These efforts are expected to enhance the discovery and exploration experience by connecting users with popular products and UGC while maximizing user lock-in and improving both time spent on the platform and purchase conversion rates. From a monetization perspective, GMV generated through AI recommendations within the Plus Store increased by 48% Q-o-Q, supported by enhanced personalization and service optimization. On some placements, conversion rates for personalized recommendations were more than 10x higher than those of standard formats. Going forward, NAVER plans to further expand the application and coverage of AI recommendations by accurately identifying user intent, thereby driving meaningful growth in both adoption and GMV. Thanks to these efforts, NAVER Plus store app surpassed 10 million downloads within 6 months of its launch. In-app activity also strengthened with page views increasing by 19.4% and average session duration rising by 9.7% Q-o-Q, reflecting higher user engagement. Membership has become a core element that not only provides shopping benefits, but also connects NAVER's broader ecosystem and encourages users to stay longer on the platform. Following the partnership with Netflix, NAVER expanded membership benefits in Q3 to include Microsoft Game Pass, Uber membership and free delivery on purchases over KRW 20,000 at Kurly N Mart. As a result, the number of active membership users increased by more than 20% Y-o-Y. In particular, the partnership with Microsoft Game Pass resulted in a 23% increase in male users in their teens and 20s compared to before its introduction, broadening NAVER's overall customer base. And in addition, fresh food purchases have also risen significantly, positioning membership as a key driver of commerce growth and a catalyst for greater content engagement across platforms. Following the partnership with Nexon in September, NAVER announced a new partnership with Spotify, global audio and subscription streaming platform, further expanding its content offerings. Through this partnership, NAVER plans to integrate Spotify's extensive library, including 100 million songs and more than 7 million podcasts across various NAVER services, enabling users to easily discover and enjoy audio content suited to their preferences and moods. NAVER will share more details on this collaboration in the near future. NAVER also continued its efforts to enhance user experience by strengthening delivery competitiveness. With the rebranding of N Delivery and the enhancement of free delivery and free return benefits for members, the purchase frequency of membership users increased by 13% Y-o-Y, while the membership purchase ratio rose by 1.3 percentage points Y-o-Y. These results show that stronger delivery competitiveness is driving higher purchase activity among our customers. Following the partnership with CJ Logistics in July, NAVER introduced an early morning delivery service with Kurly in September, resulting in a significant improvement in overall delivery lead time. In addition, the implementation of cold chain system has allowed NAVER to expand the share of low-temperature product listings, which were previously restricted, thereby strengthening its product assortment competitiveness. N Delivery GMV continued its strong growth with sellers that adopted N Delivery in the previous quarter, recording over 19 percentage points higher Q-o-Q GMV growth compared to those that had not. This clearly demonstrates that enhanced delivery competitiveness is driving both a stronger user lock-in and increased purchase activity. The C2C segment also delivered meaningful results. Cream and Soda achieved over 15% Y-o-Y GMV growth in Q3, driven by strong sales of exclusive brand products and growing demand for trading cards in Japan. In addition, both platforms are maximizing user experience and sales efficiency through content-driven planning and browsing enhancements aligned with evolving trends. Poshmark is expanding its app entry points through integration with the NAVER search engine while enhancing user experience by improving auto complete and search result layouts to deliver more accurate and relevant search experiences. Through the introduction of a new ad format and enhancement of ranking logic, NAVER continued to achieve growth in first-party advertising revenue, while efficient marketing execution led to improvements in both platform profitability and traffic quality, resulting in double-digit growth in GMV and revenue. Regarding Wallapop, whose acquisition was announced last quarter, the transaction process is proceeding as planned, and NAVER will provide a more detailed update on the global C2C business performance following the completion of the acquisition. In Q3, the core pillars of discovery and exploration-based app experience, brand membership, delivery and advertising were organically connected, creating strong synergies that reinforce the virtuous cycle from traffic inflow to purchase conversion and monetization, thereby advancing the overall growth of the platform. Going forward, NAVER will continue to leverage those organic synergies across the platform to further strengthen its solid position in the commerce market. Next, I will provide an update on the Fintech business. In Q3, NAVER Pay TPV reached KRW 22.7 trillion, representing a 21.7% Y-o-Y increase. Non-captive payments, which accounted for 55% of total TPV grew 31% Y-o-Y to reach KRW 13 trillion, driven by higher payment activity and continued merchant expansion. In addition, through the partnership with Nexon announced at the end of September, including account and payment integration, NAVER is continuing to expand its third-party ecosystem across both online and offline channels. In the platform business, NAVER completed the acquisition of Securities Plus Unlisted in September. In line with Korea's fintech policy direction, the company aims to evolve into an integrated platform that enhances accessibility and reliability for investors in the OTC market. Next, I will discuss Webtoon's results. In September, Webtoon Entertainment signed a global content partnership with Disney through which more than 35,000 titles from Marvel, Star Wars, Disney, Pixar and 20th Century Studios will be introduced for the first time on a new digital platform. The development and operation of this platform will be led by Webtoon Entertainment, and it will feature not only iconic titles from Disney portfolio spanning several decades, but also a selection of Webtoon original series. The new platform represents the results of an unprecedented collaboration that combining Webtoon's product and technological expertise with Disney's unrivaled IP portfolio, allowing users to enjoy Disney's iconic content all in one place. This initiative is expected to broaden Webtoon's reach beyond its existing user base, expand engagement with new global audiences and serve as an important stepping stone for global growth while also laying the foundation for an even deeper partnership with Disney in the future. Please note that Webtoon Entertainment is scheduled to announce its earnings on November 12, U.S. local time. For more detailed information, please refer to Webtoon's earnings release. Lastly, I will discuss the performance of the enterprise business. The B2B business within enterprise achieved new revenue generation through the monetization of GPU as a service contracts secured in the first half of the year. For LINE WORKS, the number of paid IDs continue to record double-digit growth Y-o-Y despite the high base effect from the same period last year. Services integrated with LINE WORKS such as AI node and Roger are also growing steadily as planned. In October, LINE WORKS launched its service in Taiwan and is now seeking to expand into global markets by leveraging its experience as the leading business platform in Japan. Leveraging its full stack AI capabilities, NAVER is building a stronger track record in Korea by providing AI transformation solutions and industry-specific products tailored to both the public sector and the private sector. The company's global sovereign AI initiatives are also progressing as planned. At the end of October, NAVER signed an MOU with NVIDIA to capture physical AI opportunities, which operates in real industrial environments and systems. Also, we secured an additional 60,000 latest GPUs and strengthened its AI capabilities. NAVER has been building industry-specific references, including the financial and energy sectors by providing neuro cloud and customized AI services to clients such as the Bank of Korea and KHNP. In a similar vein, the company is engaging discussions with multiple partners across the manufacturing industry, including the semiconductor, shipbuilding and defense to explore further collaboration opportunities. NAVER also plans to develop specialized AI models tailored to major industries and seek diverse use cases and additional business opportunities within the private cloud market, ensuring that optimized AI technologies can be swiftly adopted across sector. Following the launch of the new administration, large-scale national policy projects have been promoted to accelerate Korea's AI transformation, including initiatives for independent foundation model development, GPU leasing projects and the establishment of SPCs for AI data centers. And NAVER is actively participating in key projects under these initiatives. In Saudi Arabia, NAVER is finalizing the establishment of a joint venture with the Ministry of Housing, aiming to expand into super app, [indiscernible], data center and cloud businesses with the goal of commencing operations next year. The company is also pursuing various global collaborations and opportunities, including the development of an AI agent for tourism and a sovereign LLM in Thailand, participation in GPU as a Service and AI data center projects for Europe based in Morocco and human rights research collaboration with MIT to secure future robotics platforms and any plans to share further updates as these initiatives begin to take shape. Going forward, NAVER will continue to strengthen the competitiveness of its core businesses through AI, while also adding new growth drivers for mid- to long-term expansion and laying the groundwork for global growth. Now CFO, Hee-Cheol Kim, will discuss the financial performance. Hee-cheol Kim: [Interpreted] Good morning. This is CFO, Hee-Cheol Kim. I will now walk you through Q3 financial performance. Revenue in Q3 increased 15.6% Y-o-Y to KRW 3.1381 trillion, driven by solid growth across NAVER's core businesses, including advertising, commerce and fintech. Building on the previous quarter, AI-driven enhancement of advertising efficiency continued, resulting in advertising revenue growth outpacing the market rate. The full quarter impact of the revised commission structure in the commerce business further accelerated overall revenue growth, while seasonal effects from the triple holiday peak period also contributed to the increase. Operating profit increased 8.6% Y-o-Y to KRW 570.6 billion, maintaining a solid growth trend despite higher expenses related to mid- to long-term business expansion and competitiveness enhancement supported by accelerated top line growth. The operating profit margin reached 18.2%, a slight increase from the previous quarter. Next, I will explain the revenue by business segment. In Q3, search platform revenue increased 6.3% Y-o-Y to KRW 1.0602 trillion. Total NAVER platform advertising revenue, which includes search, display commerce, fintech and Webtoon ads grew 10.5% Y-o-Y. This reflects the combined impact of AI-based ad and service optimization, advancements in personalized ad recommendations and the continued expansion of the advertiser base. In Q4, along with along the -- although the long holidays in October may have some impact due to fewer business days, NAVER will continue to enhance advertising efficiency through AI, expand monetization of noncommercial queries and broaden ad inventory, thereby strengthening its competitive edge in the advertising market. Commerce revenue increased 35.9% Y-o-Y to KRW 985.5 billion. The enhanced discovery and exploration experience within the NAVER Plus Store app, expanded membership benefits and the revised commission structure all contributed positively, driving balanced Y-o-Y growth across all segments. Commission and sales revenue grew 39.7% Y-o-Y as the enhanced discovery and exploration experience within the NAVER Plus Store app led to brand purchase growth, driving an increase in Smart Store GMV. The full quarter impact of the revised commission structure also contributed with Smart Store revenue increasing 102% Y-o-Y. Commerce advertising revenue grew 31.2% Y-o-Y, driven by advancement in AI-based recommendation ads and the full rollout of ad boost shopping in Q3. Membership revenue increased 30.5% Y-o-Y, supported by a broader user base and higher active user numbers following the addition of new benefits such as partnerships with Microsoft Game Pass and Uber and free delivery at Kurly N Mart. Fintech revenue increased 12.5% Y-o-Y to KRW 433.1 billion. At the end of September, NAVER launched the beta service of the Connect terminal, which seamlessly links online and offline merchants. This enables NAVER to provide not only payment services within its ecosystem, but also data-driven customer management functions. Going forward, the company will focus on building an integrated online/offline ecosystem and creating new value for both users and merchants. Content revenue increased 10% Y-o-Y to KRW 509.3 billion. Within this, Webtoon revenue based on NAVER's consolidated results in Korean won terms grew 11.3% Y-o-Y. For more details, please refer to Webtoon Entertainment's earnings announcement scheduled for November 12 local time. SNOW Revenue increased 24.3% Y-o-Y, driven by the continued growth in paid subscribers of its camera app integrated with AI content features. Enterprise revenue increased 3.8% Y-o-Y to KRW 150 billion. The number of paid LINE WORKS IDs continued to record double-digit growth in Q3. And GPU as a Service contracts secured in the first half have begun generating revenue. The year-over-year comparison reflects the base effect from one-off revenue related to well-booked deliveries to the Jeonbuk Office of Education in the same period last year. Next, I will discuss the detailed cost items. Development and operations expenses increased 14.2% Y-o-Y, mainly due to higher headcount from new hires, increased stock-based compensation following the rise in share price and onetime severance payments related to Poshmark's workforce optimization initiatives. Partner expenses increased 17% Y-o-Y, while infrastructure costs rose 22.7% Y-o-Y, driven by higher depreciation expenses from the acquisition of new assets such as GPUs. Considering model training and inference for AI integration across all businesses as well as the expansion of new initiatives, including government projects, NAVER expects large-scale infrastructure investments to continue. Marketing expenses increased 20.3% Y-o-Y, driven by promotional activities in the commerce, fintech and Webtoon businesses. Through the end of the year, NAVER plans to efficiently execute various marketing initiatives aimed at enhancing competitiveness across business units and strengthening the foundation for top line growth, including content expansion to boost engagement with the NAVER app ecosystem and promotions for Kurly N Mart launched in September. Next, I will explain NAVER's operating profit by business segment. First, the Integrated Search Platform and Commerce segment maintained a stable profit margin of over 30% despite a slight year-over-year decline due to AI integration within services and shopping promotions while continuing to deliver solid top line growth. In the Fintech business, despite continued growth in payment revenue, profitability declined slightly Y-o-Y due to delayed purchase confirmations caused by summer vacation seasonality and expanded promotional activities. In content, operating losses widened due to increased production costs related to Webtoon IP business development and higher marketing expenses to strengthen global competitiveness. In the Enterprise business, losses also expanded, driven by increased infrastructure investments for AI model training and inference. Going forward, NAVER plans to continue investing to secure future growth drivers, including investments in global platform development for Webtoon, expanded infrastructure investment in the enterprise business to support project acquisition. In the mid- to long term, however, the company will work to narrow operating losses. Q3 consolidated net income increased 38.6% Y-o-Y to KRW 734.7 billion, driven by higher -- the overall increase in investment gains of affiliated companies, including higher equity method gains from A Holdings following the consolidation of LINE Man into LYC. Operating cash flow remained on a stable growth trend, while Q3 free cash flow decreased by KRW 185.2 billion Y-o-Y to KRW 201.9 billion due to increased infrastructure investments. Going forward, we will continue to make capital expenditures to strengthen the competitiveness of each business unit while maintaining financial soundness through stable operating cash flow driven by top line growth and disciplined debt management. This concludes the overview of our Q3 financial results. We will now move on to the Q&A session. Unknown Executive: Before we begin the Q&A session, let me make a brief announcement. Tomorrow, NAVER will unveil its detailed strategic direction at DAN25 Integrated Conference through both on-site participation and live online streaming. We invite everyone to join and tune in. Operator: [Foreign Language] [Operator Instructions] [Foreign Language] The first question will be provided by Stanley Yang from JPMorgan. Stanley Yang: [Interpreted] I have two questions. Number one is related mostly to CapEx. So I understand that GPU CapEx will be increasing this year. And so I'm curious about any guidance on GPU CapEx for this year and next year and also a guidance on the total CapEx that you forecast. And also, I'm curious whether the 60,000 GPUs in the partnership with NVIDIA is included in this GPU CapEx. And along these lines also, I'm curious about management's thoughts on the potential pressure on margin that the increased depreciation expenses can bring about. My number two question is largely about the vertical AI. I'm sure that you are engaging in a myriad of different strategies in terms of your AI verticals, especially on the B2C side in ads and shopping. I'm curious about how the extent to which AI is integrated into your services? And also along that lines, the revenue contribution. I know it's early days right now, but what do you expect for this year and in the future? Hee-cheol Kim: [Interpreted] To answer your first question, our AI integration efforts have resulted in very fruitful and meaningful outcomes in terms of boosting our revenue and monetization strategies with our AI briefing and also ad boost amongst other commitments and efforts. We have also communicated to investors and markets our commitment to keep on investing in the infrastructure and therefore, CapEx in terms of increasing the competitiveness of our services. And although I can't speak to the exact figures right now, as of this year, we expect our GPU CapEx to -- including GPU CapEx, our entire CapEx to stand around the KRW 1 trillion range. And from 2026 and onwards, considering our new business expansion strategies and plans, we expect about KRW 1 trillion in CapEx to go into GPU investments alone. And in terms of our GPU investments, although it is, of course, a proactive move on our part, this also includes our endeavors into increasing profitability as well as it includes GPU as a Service provided to the government and also public sectors as well. So with the review that we have, we will continue to actively invest in GPU with our CapEx. And also this figure will include the 50,000 NVIDIA GPUs that you mentioned. Soo-yeon Choi: [Interpreted] And to address your second question, when we first released the AI briefing service earlier this year, our initial goal for coverage was in the 10% range within the year closing out. However, as the business has progressed, we've come to realize that this has actually been very effective in boosting not only our loyal user base, but also our existing search business as well. And therefore, we'll be accelerating our efforts to bring this figure up to the 20% range. And you'll know if you compare with our global platform competitors that we at NAVER have all around a comprehensive understanding of our users, which we will lean into in terms of providing numerous vertical services, including payment services, reservations, shopping, so on and so forth, which will make sure that we can be a lot more flexible in terms of the AI services that we provide. You'll be able to hear more announcements about the exact timing and features at tomorrow's DAN event. However, by spring of next year, we plan on rolling out our AI shopping agent as well as the AI tab and integrated AI services that will be providing a lot more integrated approach to what we provide in terms of our services. The integrated AI agent is part of our omni service strategies, and we've begun to come to the realization that this has been a significant boost in our revenue with search ads, commerce and also the local business side as well. And so as you've mentioned, it is still early days in terms of revenue contribution, but we expect strong contributions to monetization and revenue moving forward. Operator: [Interpreted] The following question will be presented by Junhyun Kim from HSBC. Junhyun Kim: [Interpreted] I have two questions for you. Number one is about the enterprise side. I know that there has been some variability until now with WORKS and so on and so forth. However, it seems that you are really doubling down on your commercialization efforts with the commercial divisions for GPU as a Service, AI and also Digital Twins on the move. So I'm curious about how you expect revenue to pan out moving forward. It seems that physical AI and robots are one of your focus areas. What will be some of the major key monetization pillars moving forward? And number two, speaking to the commerce marketing expense, when can we expect these expenses to start going down until when do you think we will expect these expenses to be executed? And also on the GPU side, we talked about the GPU CapEx investments that will be going into infrastructure. When do you think that the GPU business will begin to turn a plus margin? Soo-yeon Choi: [Interpreted] I'll answer your first question first and speak a little bit more about the color on the R&D that we have for Digital Twins and robots. You know that in 2017, which was quite a while before the terminology or concept of physical AI really began to come to the fore, we established NAVER Labs to that end. And our core competitive, of course, we assess lies in not hardware, but on the software side. So our focus has really been on developing our software, ARC and ALIKE. ARC will be providing management services in an integrated and comprehensive manner that can bring together robots that are from various different manufacturers, playing a role like Windows or Android sorts. And ALIKE will be able to provide accurate location and delivery services. And we have continued to make endeavors to make sure that if you look at our technology through our efforts in R&D, our technology competitiveness and capabilities, competencies are truly global #1 and at the top. And 3 or 4 years ago, when we began the test bed at the 174 headquarters of NAVER, we were able to make sure that we can go ahead with more speed and also make sure that we can use and accelerate, compile more global references with those efforts. Although it is still early days to really speak to the entire global market size that we can forecast, as per our expectations, we expect that our market share in terms of global robots will stand at about at least 30% in the international arena. And we are making sure that this can serve as our next growth driver moving forward. And we are continuously working to make sure that we can create these technologies in-house and internalize these core competencies in terms of the technology that we have. And especially given that we are a full stack AI service provider based on our cloud competencies, we are working to make sure that the potential that we see in opening up new markets in Korea for tailored and customized cloud to manufacturers can really serve as a growth driver moving forward, and we will continue to focus our efforts in this area. With the Bank of Korea and also Korea Hydro KHNP, we are continuously in negotiations about these types of customized private cloud services that we can provide, and we will be coming to you with more details and color once we can provide them to you. Hee-cheol Kim: [Interpreted] And speaking to your second question on commerce, you'll know that we've revamped our commission structure, and we are planning on fully leaning into the changes that we have made. However, our focus on marketing in this arena is not just as a one-off initiative in order to boost GMV. It will be an all-around comprehensive strategy that focuses on increasing loyalty as well as other aspects, and management will continue to focus on this aspect. And we did touch upon this topic when we were talking about GPU CapEx guidances, but we will continue to make sure that our investments are very active and aggressive on the GPU side, and this will also lead into revenue contributions and growth as well. So we will be taking into consideration the growth in revenue as well as we decide upon our investment plans in GPU. And as is with all infrastructure investments, the direct revenue contribution in the early stages, especially is quite minimal. So this really is in the term of a long-term view with a long-term lens. And so maybe in the temporary time, there might be a slight dip in revenue because of this. However, in the mid- to long term, we are more than certain that this will be able to turn a plus. Sorry, just a revision about one of the interpretation that was provided. The market share of 39% when we're speaking about NAVER's robot initiative wasn't NAVER's market share. It is the OS control platform market within the robot market that is expected to account for about 39% of the global market moving forward. Operator: [Interpreted] The following question will be presented by Eric Cha from Goldman Sachs. Minuh Cha: [Interpreted] So I have two questions for you. Number one is about AI briefing. I know that you aren't into really pushing full monetization strategies yet with AI briefing, but I'm curious about the user behavior or pattern changes that you've seen after the release. And also any updates on the performance or results in a more detailed manner would be very much appreciated. And question number 2 is about the commerce side. I know that the uptick in take rate has really pushed up revenue this year. What do you expect for take rate next year and moving forward? Will there be some meaningful growth in take rate continuing on moving forward? And also, if you can provide us a little bit more update about any recent changes or any results regarding the Kurly partnership. Soo-yeon Choi: [Interpreted] First of all, to answer your question about AI briefing, when we launched AI briefing service, it really wasn't geared towards monetization side. It was more towards really ramping up our weaker side comparatively compared to our competitors that was pointed out in terms of the information-seeking queries in order to increase the quality. And in the initial stages, we were able to find that with the coverage on information-seeking queries as well as long-tail queries, which comprise of 15 words or more that the user satisfaction was very high, and we found that the duration time spent was going up as well as Y-o-Y increase in [indiscernible]. And the search result satisfaction is, of course, important, but also tying that in with the relevant information or relevant questions is extremely important. That's something that we continue to monitor. And if you compare the relevant questions that people click on at the bottom of the AI briefing service, compared to the initial launch days, it has expanded to about fivefold. So that is one of the changes that we have seen. And the fact that it's creating a virtuous cycle where it really is encouraging users and to use the search results, but also explore upon their search results and to build upon that and also to consume content as well. And with the increase in query coverage, I also mentioned about how we will be integrating more and more AI into the business queries as well as the commercial queries, and we're continuing to monitor very closely how this impacts our monetization strategies and also how this will impact the merchants and businesses as well. And at NAVER Place, which comprises of restaurants and other places to go out, we've integrated AI services. And as a result, we've seen our GPR go up 2.3 fold and conversion rates increased 15%. So these are some of the positives that we've seen throughout the release that has made us really have a much more stronger confidence in expanding these services moving forward, and these will be really panning out in our AI agent services that we will be rolling out such as AI tab and so on and so forth next year. And in terms of the shopping side, as you will know, the big boost to our revenue in terms of the shopping side has really been twofold. Number one is the increased shopping revenue that came after the release of Plus Shop and also the increase after we've integrated our services with AI. And with the change in our commission structure as well, that has been a big boost to our revenue. We can look on the GMV side where it's been a big boost for brand stores on shopping as well, as well as in delivery. And we will be leaning into these AI verticals and looking at the commission structure revamp, we are very certain that this will be a boost in terms of increasing take rate moving forward as well. And since the launch of the NAVER Plus Store app, we've been in talks with manufacturers about the ad inventory and placements of our stores that we have, and this will also be a meaningful contribution to revenue monetization as well. And next, speaking to the Kurly side, our shopping strategy has really been in leveraging the lead and edge we have in AI technology and also the shopping product listings that we have in order to provide more personalized recommendations, boosting this side as well as making sure that we make improvements on to the logistics side, which has been played out as one of our weaknesses. And in this area, Kurly will be able to provide more [indiscernible] It is still early days, so we can't talk to the exact figures. However, it is on par and progressing well as we have initially planned. Operator: [Interpreted] The last question will be presented by [indiscernible] from Bernstein. Unknown Analyst: [Interpreted] My question is related to the commerce side, especially the marketing expense. I am curious about the incremental increase on commerce that accounts for in the Y-o-Y increase in marketing expense. Hee-cheol Kim: [Interpreted] On a Y-o-Y basis as of Q3, our marketing expense has increased KRW 85 billion, and about half of that is commerce. And from that commerce marketing expense, which is half of KRW 85 billion, half of that, again, is from the increase in the provisions that came from the increase in GMV as on the backdrop of the increase in commissions as per the structure revamp. And another half will go to the strategic promotions that we provided. Unknown Executive: [Interpreted] Thank you very much for joining us, and we look forward to your continued... [Statements in English on this transcript were spoken by an interpreter present on the live call.]
Operator: Good morning, everyone. Welcome to Exchange Income Corporation's conference call to discuss the financial results for the 3 and 9 months ended September 30, 2025. The corporation's results, including the MD&A and financial statements, were issued on November 6, 2025 and are currently available via the company's website on SEDAR+. Before turning the call over to management, listeners are cautioned that today's presentation and the responses to questions may contain forward-looking statements within the meaning of the safe harbor provisions of Canadian provincial securities laws. Forward-looking statements involve risks and uncertainties, and undue reliance should not be placed upon such statements. Certain material factors or assumptions are applied in making forward-looking statements and actual results may differ materially from those expressed or implied in such statements. For additional information about factors that may cause actual results to differ from expectations and about material factors or assumptions applied in making forward-looking statements, please consult the quarterly and annual MD&A, the Risk Factors section of the Annual Information Form and EIC's other filings with Canadian securities regulators. Except as required by Canadian securities law, EIC does not undertake to update any forward-looking statements, such as statements speak only as of the date made. Listeners are also reminded that today's call is being recorded and broadcast live via the Internet for the benefit of individual shareholders, analysts and other interested parties. I would now like to turn the call over to CEO of Exchange Income Corporation, Mike Pyle. Please go ahead, sir. Michael Pyle: Thank you, operator. Good morning, and thank you for joining us on today's call. With me today is Richard Wowryk, our CFO, who will speak to our quarterly financial results, along with Jake Trainor and Travis Muhr, who will speak about our outlook for our 2 operating segments. Yesterday, we released our third quarter results for 2025, which were very strong overall. We set all-time quarter high watermarks for all of our key financial metrics, including revenue, adjusted EBITDA, net earnings, adjusted net earnings, free cash flow and free cash flow less maintenance capital expenditures. We also set highs for our basic and fully diluted share metrics for virtually all of our KPIs despite the fact that our share count has significantly increased during the past 12 months due to the redemption of 3 classes of our convertible debentures, coupled with the shares issued for our acquisitions. This demonstrates the performance of our underlying businesses. Subsequent to quarter end, we called our last remaining convertible debenture, which was originally due in 2029. And by the first week of December, we will have no convertible debentures in our capital structure. In short, our balance sheet is simplified, delevered and very liquid with total leverage near all-time lows. Rich will talk to the record financial metrics later in the call, but I wanted to delve further into the more significant quarterly highlights, along with some of the forward-looking remarks included in our 2026 guidance. The third quarter was the first period, which included the financial results from the highly strategic acquisition of Canadian North. The acquisition cemented our position as the foremost expert in Northern Aviation and the results during the quarter were consistent with our expectations. The profitability and the passenger cargo business of Canadian North are reasonably similar and will ultimately match that of Calm Air and our other air operators. As I previously communicated, Canadian North also has a large charter operation that flies on paved runways and utilizes 737 aircraft with a much lower margin profile than the Northern Air operations, which explains some of the outsized increases in revenues. The majority of the aircraft serving up the business are leased. And therefore, as these contracts wrap up, we will be evaluating that specific business component to assess its returns and see whether they meet our requirements. Taking a step back, the integration of the business is proceeding consistent with our plan that was developed during the due diligence process. The new long-term air services agreement provides future profitability and certainty as the contract is modified both up and down for aviation-specific inflation factors. Significant process has started in adjusting the cost structure of the underlying operations, including the renegotiation of [ supplier ] arrangements. Our other air operators and aircraft sales and leasing have been working with Canadian North to identify operating efficiencies along with the purchase of spare parts and engines to improve the reliability of the fleet long into the future. The inclusion of the 737 fleet provides Regional One an opportunity to attend 737 University, learning about the value of its parts and may provide it with another engine and parts business line opportunity in the future. Overall, I'm very happy with the progress made to date, and we expect by the latter portion of 2026, the profitability and free cash flow returns of Canadian North will meet our requisite requirements. The remainder of our Aerospace and Aviation segment had a very strong quarter. The second quarter did have some challenges associated with wildfire activity in Manitoba and Ontario. However, the load factors returned partway through the third quarter, and the underlying business was performing very strong during the quarter and as we exited the quarter. We remain very positive about each of the business lines within the segment. And our aircraft sales and leasing continued to see step-based improvement in their aircraft and engine leasing portfolio, and we made some significant investments into the fleet that we had signaled during the second quarter call. The business line also had a number of opportunities to sell whole aircraft and engines during the third quarter. Those large sales are generally at higher dollar values, but with lower margins than our traditional part business, and it provides further evidence of the demand for aircraft sales and leasing single-aisle turboprop and jet niches. Our Aerospace business continues to see significant demand signals, both domestically and internationally. We are at the intersection of a number of megatrends in Canada. The focus on meeting NATO defense spending targets, coupled with Northern sovereignty means there are tremendous opportunities for EIC as a whole. Our infrastructure in the North is second to none. And as we already perform ISR services for the federal government along the East and West Coast, we believe there are opportunities to expand these services into the North. We know that the government is facing human capital and infrastructure shortages. With our relationships with indigenous communities, coupled with our Northern aviation expertise and infrastructure, we believe that we are uniquely suited to provide a solution to the government. We are excited about this opportunity, along with the opportunities immediately before us with other countries. Our Netherlands and U.K. operations have positioned us as a global expert in ISR and countries are actively calling us to inquire about our services. The megatrends are also providing us with tailwinds in our other business lines. Focus on critical minerals, resources and precious metals is anticipated to drive demand for fly-in, fly-out services in our air operators, coupled with the demand for our Environmental Access Solutions business line as companies will be required to build access roads to protect ecologically sensitive areas. Furthermore, the focus on artificial intelligence and data center is driving demand within the transportation sector. Our North American electrical grid system requires significant maintenance, improvements and enhancements to handle electrification requirements of the future, whether it be from data center demands or from households or transportation. This is a tailwind for both our Canadian wood and U.S. composite operations in our Environmental Access Solutions business line. We continue to see significant demand in composite matting. We have effectively sold out all of our production into 2026 because of the demand of our best-in-class SYSTEM7-XT mat. We're in the final stages of selecting a location and are actively negotiating with a lessor for the installation of a new state-of-the-art plant. We anticipate the plant will be up and running in about 18 to 24 months and will require acquire an investment of approximately $60 million. The demand for composite matting is ever increasing due to its advantages over wood mats and transmission and distribution sector, coupled with increased transition from wooden mat users across the United States. Lastly, data centers and AI are also driving demand in our Precision Manufacturing & Engineering as we provide ancillary products, including cooling stainless steel tanks, [ hydronic ] load cell testing capabilities, chip racking and wireline services. We have been transparent that our Multi-Storey Window business continues to be the most challenged business line due to the impact of aluminum tariffs, deferrals in projects and our strategic decision to retain skilled workers and staff over the shorter term. We are still seeing elevated number of inquiries. However, developers remain uncertain in booking projects as they're awaiting government clarification on interest rates and anticipated reductions in development costs. Capital exists to develop these projects. However, the capital remains on the sidelines until these uncertainties further abate. The long-term economics demonstrate the need for affordable housing across North America, and we are seeing a shift from condo projects to apartments in Canada. We are still bullish on the longer-term trends, and we are seeing positive developments in certain markets across the continent. These challenges in this business line are included in our current financial results and are also included in our 2026 guidance. Looking back at the quarterly record results, these were generated while there continued to be significant uncertainty in various markets. However, EIC as a group of company is at the foremost of a number of emerging trends. When Adam and team buy companies, we focus on the sustainable niches and their management teams. Our secret sauce at EIC is maintaining the culture at these companies and unleashing the entrepreneurial spirit that made these companies successful prior to joining the EIC family. Because of that, I'm excited that our future opportunities as each management team is energized to execute on the many strategic opportunities that are before us. I will let Rich focus on the financial results for the operating segments. However, before passing off the call, I wanted to update you on contract opportunities. During the fourth quarter of 2024, we submitted our proposal to the Australian government for their maritime surveillance contract. We previously anticipated hearing the results of the work by the end of the third quarter as their May election delayed the bid evaluation process for a period of time. We have recently been advised that the evaluation process is not yet complete. As I previously commented, we believe we put together a very strong bid, and we expect to have as good a chance as any other bidder. Due to the timing of getting the assets ready for the contract to start in 2028, we still anticipate the government will have to make a decision by early 2026. As I mentioned -- as I mentioned, this contract would be a home run of sorts. However, in my prepared remarks, there are a number of other opportunities that would approximate the size of Australia. I'm happy to report that our second aircraft for the U.K. Home Office has been fully modified and has started flying missions in the fourth quarter. Flying with a strong tempo, we have received great feedback from the U.K. and other countries, who have utilized the aircraft. We crossed another milestone of being a $4 million -- $4 billion, I'm sorry, equity market cap during the quarter. As we continue to grow and tell our story, investors will see the immense amount of opportunity before us. We are still the same company. We'll be very disciplined in our acquisition and organic growth investments. I'm very proud of the progress made by our various teams, and I'm excited about the future of EIC. Due to the strength of our underlying results and per share metrics, we have made the decision to increase our dividend from $2.64 per annum to $2.76 per annum. This increase in dividend is consistent with our stated commitment to our shareholders to provide stable and growing dividend and is ultimately driven by the increases in profitability and free cash flow, along with our outlook for the future. The dividend increase of 5% continues to represent a lower proportion of our earnings as our earnings and adjusted net earnings grew by approximately 25% on a year-to-date basis and grew by 17% on a year-to-date basis -- on a per share basis. As such, less than 1/3 of the capital generated by this profitability was directed to increase dividends, thereby reducing our payout ratio. Lastly, the dividend protects the purchasing power of our shareholders due to inflationary effects held by all. The demand for our services and products is robust. Jake and Travis will focus on the outlook for our segments for the balance of 2025. However, before passing the call over, I want to speak about our 2026 guidance. We anticipate that our adjusted EBITDA will be between $825 million and $875 million for fiscal '26. This estimate is based on the portfolio of companies that exist today and do not include any new acquisitions, significant contracts or significant growth capital expenditures other than what exists today. We have a track record of executing on our strategic initiatives in the past, and we are confident in the future. I also wanted to reconfirm our guidance for 2025 with an adjusted EBITDA range of $725 million to $765 million with a bias to the midpoint of the range. I will now pass the call over to Rich. Richard Wowryk: Thank you, Mike, and good morning, everyone. For the third quarter of 2025, revenue of $960 million, adjusted EBITDA of $231 million, free cash flow of $171 million, free cash flow less maintenance CapEx of $88 million, net earnings of $69 million and adjusted net earnings of $76 million were all quarterly high watermarks for EIC's busiest quarter. Almost all of the third quarter per share metrics were also quarterly high watermarks, which is even more impressive when you take into account the additional shares that were issued over the past 12 months for the convertible debenture conversions and acquisitions. Revenue in our Aerospace & Aviation segment increased by $247 million or 57% to $680 million. Adjusted EBITDA increased by $46 million or 30% to $202 million. Revenue growth outpaced adjusted EBITDA growth due to changes in product mix at our Aircraft Sales & Leasing business, where they monetize certain large aircraft and engine sales during the quarter, along with the inclusion of Canadian North's charter revenue, for which adjusted EBITDA margins are lower than our Northern Air operators, passenger and cargo businesses. Looking at the Essential Air Services business line, the improvements were driven by a couple of key factors. The acquisition of Canadian North, increased demand, contract scope and price increases in our medevac contracts and improved load factors after the wildfires subsided and operations normalized. Our Aerospace business line revenues were consistent with the prior period, and profitability was slightly lower due to changes in product mix. Our Aircraft Sales & Leasing business line increase in revenue and profitability was driven by continued improvement in leasing activity and robust parts demand. We also saw significant increases in large asset sales compared to the prior period. As a reminder, those assets are generally lower margin and lumpier than our traditional parts business. Revenue in our Manufacturing segment increased by $3 million or 1% to $279 million. Adjusted EBITDA decreased by $6 million or 12% to $45 million. Our Environmental Access Solutions business line had increased revenues and adjusted EBITDA, driven by the acquisition of Spartan, which continues to have a significant demand for its composite mat. As previously discussed, the Spartan team is in the final stages of designing a new plant as the longer-term secular demands have demonstrated our need to increase capacity. In the Canadian market, we saw a decrease in adjusted EBITDA due to customer deferrals of projects into the fourth quarter and into 2026. As expected, our Multi-Storey Window Solutions business revenue and profitability decreased due to customer deferrals and related production gaps. Profitability was further negatively impacted by aluminum tariffs. We are continuing to see significant activity. During the quarter, we booked a number of projects. However, the geography and pace of bookings continues to be sporadic as there is developer uncertainty due to anticipated changes in government regulations and further clarity on interest rate environment, including mortgage rates. Our Precision Manufacturing & Engineering business line had another solid quarter from a revenue and profitability perspective. It was driven by customer demand across several industries, including telecommunications, technology, resource and data centers. Overall, net earnings were $69 million for the third quarter, which was an increase of $13 million or 23%. The higher EBITDA was partially offset by increased depreciation and amortization through the Canadian North acquisition, which was expected due to the significant asset backing and growth in capital investments made over the past number of periods. Earnings per share increased to $1.32 per share compared to $1.18 in the prior period. Adjusted net earnings were $76 million compared to $61 million in the prior year with an increase in adjusted net earnings per share from $1.29 to $1.46 per share. Free cash flow was $171 million compared to $136 million in the prior year. Free cash flow per share increased from $2.86 to $3.30 per share. Free cash flow less maintenance capital expenditures was $88 million compared to $81 million in the comparative period. Maintenance capital expenditures during the third quarter of 2025 were $83 million compared to the prior year of $55 million. On a 9-month basis, maintenance capital expenditures were $205 million compared to $142 million in the prior year. Q1 in the prior year was an anomaly on the low end due to the timing of maintenance events. The increase in the current year is due to 3 parts. First, the elevated maintenance capital expenditures at Canadian North, as we expected and previously disclosed. Secondly, the timing of events occurring. And lastly, the changes in policy based on utilization of aircraft and engines and aircraft sales and leasing as discussed in the first quarter, which saw us switch to a more conservative policy as fleet utilization increased. Growth capital expenditures during the third quarter were $128 million compared to the prior year at $93 million. The third quarter growth CapEx primarily related to Carson Air, the construction of an Ottawa hangar for Canadian North and the execution of growth capital purchases at Aircraft Sales & Leasing. We noted during the second quarter, a significant amount of deposits were made, and we executed on certain of those transactions during the quarter, which more than offset negative growth CapEx from the second quarter. From a working capital perspective, we had a recovery of approximately $3 million and investment of $37 million for the 3 and 9 months ended, respectively. Subsequent to quarter end, we collected 2 large receivables totaling approximately $25 million. We are actively managing our working capital and working with each subsidiary team to convert working capital into cash. Our corporation's aggregate leverage, assuming that the convertible debentures called subsequent to quarter end materially convert, would be 2.89x. Our aggregate leverage ratio remains historic lows and well within our target. We continue to have significant liquidity available to us. Our balance sheet is very strong and including cash on hand and the accordion feature within the credit facility, we have approximately $1.2 billion of capital available to be deployed. This allows us to execute on growth opportunities and acquisitions that are accretive and meet our disciplined financial metrics. Our view of leverage and our disciplined approach to acquisitions and organic growth investments have been constant over the years, and they will continue to serve us well into the future. Within our third quarter results, the preliminary purchase equation for Canadian North has been included. As discussed previously, the acquisition is significantly asset-backed. Preliminary goodwill that is recorded is entirely attributed to deferred taxes. Hard assets account for more than 100% of the purchase price. This level of asset backing drove depreciation up materially in the quarter. I will now turn the call over to Jake, who will provide an update for the 2025 remaining outlook for Aerospace & Aviation. Jake Trainor: Perfect. Thank you, Rich. Travis and I will once again split up the outlook section. I'll focus on Aerospace & Aviation segment, and Travis will provide context on our Manufacturing activities. Overall, we're expecting a strong last quarter of growth from a revenue and adjusted EBITDA perspective from our Aerospace & Aviation segment for several key reasons. The most significant driver is the acquisition of Canadian North. The Canadian North operations met our internal expectations for the third quarter, and we anticipate continued performance during the fourth. Our integration activities have been progressing in accordance with our plans and time lines. We should start to see further improvement in operating margins as we move into 2026. There will be further investment in maintenance capital expenditures on the fleet, including spare parts, engines and overhauls during the next few quarters. Secondly, we anticipate further strengthening of results due to growth capital investments made for the contractual wins announced over the past few years, including contributions from the U.K. Home Office second aircraft, which has started operations early in the fourth quarter. The operating returns associated with the fixed-wing Newfoundland & Labrador medevac contract operations will start becoming evident in mid-2026. Our Essential Air Services business line will see growth driven by a multitude of factors when compared to the prior Q4. The first and most significant will be the addition of Canadian North. We also anticipate strong load factors and growth across our network. And lastly, we expect continued growth in our medevac business because of strong yields, coupled with increased scope and price compared to last year. We have received 7 of the 12 new King Air 360s to date, with another aircraft expected in the fourth quarter. And we'll use the previous BC aircraft to redeploy through our other operations, including the Newfoundland & Labrador fixed-wing medevac operations, which will further enhance our returns. Offsetting some of these gains is the impact of continued labor shortages and supply chain challenges. We're not seeing a worsening of these dynamics. However, the challenges still remain specifically on aircraft parts and consumables. The Aerospace business lines revenue and EBITDA are expected to increase in the fourth quarter relative to the prior year, driven by the second aircraft deployed onto the U.K. home office contract and continued strong tempo flying for other owned ISR assets. Our aircraft sales and leasing business is also expected to experience growth as we start to lease out assets acquired during the quarter. When we deploy capital in this manner, it does take a period of time to ready the aircraft and enter into lease contracts with customers. Furthermore, we continue to see very strong demand for parts sales and whole aircraft and engine sales. The environment for aircraft sales and leasing remains robust. Taking a step back, I want to focus on the strategic benefits of Canadian North transaction for the longer term for EIC as a whole. We believe that the Canadian North infrastructure and aviation assets, coupled with our existing operations, provide us with a unique offering to meet the development needs of the North. As the Canadian government renews its focus on development and security in the North, EIC's comprehensive portfolio, including advanced aerospace capabilities, sovereign Arctic aviation, medevac solutions, defense-enabling infrastructure and in-country defense manufacturing as well as our extensive network of partnerships with indigenous communities uniquely position the company to lead and support these critical initiatives. We're having discussions with the government and our customers about how EIC can support them. We expect maintenance capital expenditures to increase for a number of reasons. Firstly, due to the addition of Canadian North, we noted that the first year returns are expected to be muted due to higher-than-normal maintenance CapEx expenditures required. When we negotiated the purchase price, we took into account the projected maintenance capital expenditures, and it ultimately was factored into our purchase price. Secondly, maintenance capital expenditures are expected to increase in line with increases in adjusted EBITDA for our Aerospace & Aviation segment. Additionally, increases in maintenance capital expenditures related to our Aircraft Sales & Leasing business due to continued strengthening of utilization in our lease portfolio and the impact of the more conservative change to the calculation of maintenance capital expenditures adopted in 2025. Lastly, this quarter's maintenance CapEx expenditures in Essential Air Services were below our internal expectations due to the timing of certain maintenance events. Growth investments in the remainder of 2025 include capital expenditures for 1 new King Air aircraft, which we used in the BC medevac contract. The remaining aircraft for this contract have been pushed into 2026 due to manufacturer delays. Regional One has placed deposits on certain aircraft assets and anticipate executing on aircraft and engine transactions during the fourth quarter. I'll now pass it off to Travis to provide some commentary on the Manufacturing segment. Travis Muhr: Thanks, Jake. We're anticipating continued growth in our revenues and profitability for the Manufacturing segment for the fourth quarter compared to the prior year. This growth is expected for 2 reasons. Firstly, we're seeing our customers normalizing the fact that uncertainty will continue to persist in the economy. However, investments and purchases will be required to maintain industrial capacity, and therefore, we anticipate the recognition of sales that were pushed from earlier in the year. The second is the continued strong results from Spartan in our Environmental Access Solutions business line as Spartan was acquired in early November 2024, and they continue to see significant demand for their products. All of the businesses within the Manufacturing segment continue to experience strong levels of customer inquiries. The impact of the tariffs has resulted in reduced business confidence, which has deferred customer investment purchase decisions throughout 2025. To be clear, we have not been directly impacted by the tariffs, except for the aluminum tariffs impacting our Multi-Storey Windows business line during the second and third quarters. The vast majority of our products that we produce are CUSMA compliant and therefore, the broader risk of tariffs relates to the declining business confidence and supply chain changes, which do take some time to effect. Our Environmental Access Solutions business line is expected to generate returns higher than the comparative periods for the fourth quarter. Spartan continues to experience very strong demand for its composite mat solutions, and we are anticipating that they will continue to sell out of their manufacturing capacity based on feedback received from their customers on their SYSTEM7-XT and FODS mats. Due to the strong demand for its composite mats, we are finalizing a location and final pricing to build a second state-of-the-art plant as discussed by Mike. We see long-term positive trends in the composite mat industry as the geographic and sector usage continues to expand and take market share away from the traditional wood mat industry in the United States. We've seen some deferrals in project start dates in Canada, and we anticipate those projects commencing in the fourth quarter and into 2026. We've talked a lot about our bullish view on the transmission and distribution sector as electric grids have to be expanded and hardened for the new electricity demands, whether it be from data centers, vehicles or homes. With the Build Canada mantra of the federal government and fast tracking of nation-building projects, we also see several tailwinds for the traditional oil and gas and pipeline business within that business line. As expected, our Multi-Storey Window Solutions business line, revenues and adjusted EBITDA will be lower than the comparative periods. The period-over-period declines are expected due to the heightened interest rates in 2023 and into 2024 that resulted in reduced project manufacturing for 2025. Secondly, for the projects scheduled for 2025, we anticipated margin pressures due to the type of projects booked, coupled with production gaps. We've integrated the manufacturing capacity in Canada by combining manufacturing facilities and have made the strategic decision to retain skilled staff during this downturn. We also highlighted that the business line was negatively impacted by tariffs during the quarter. As discussed in our reporting, we cannot alter the supply chains in the short term. In the longer term, we'll be able to mitigate the tariffs and optimize production. Quoting in Canada and the U.S. continues to be very active across several geographies. As discussed at last quarter's call, we were successful in booking well over $100 million of new projects across various geographies and project types within the business line. We remain very bullish on this business line as the longer-term fundamentals, which drive demand being an acute shortage of affordable housing remains very strong across several geographic regions in Canada and the U.S. This shortage has been highlighted by several government officials on both sides of the border. The Precision Manufacturing & Engineering business line is expected to improve from a revenue and profitability perspective for the fourth quarter compared to the prior year. We're seeing strength across various sectors, including telecommunications, technology, resource and data centers industries, along with sector tailwinds in the defense industry. We're anticipating growth capital expenditures to be incurred. So the growth capital expenditures in the Environmental Access Solutions business line will depend on the market dynamics. However, we do anticipate investments due to the demand expectations in 2026 due to the revised project start dates and anticipated opportunities. I'll now pass the call back to Mike. Michael Pyle: We're very encouraged about the state of our business. EIC lies at the intersection of a number of positive and sustainable tailwinds in the Canadian and global economy, which will drive our results long into the future. Our 2026 guidance represents the collective investments we have made in our business. However, to be clear, it does not include any amounts related to future acquisitions, new contracts or significant growth capital expenditures for new contracts. EIC will continue to be a company characterized by resiliency and stability as the core of who we are. We buy great companies and help unlock entrepreneurial power within those businesses. Thank you for your time this morning, and we would now like to open the call to questions. Operator? Operator: [Operator Instructions] And your first question will be from Steve Hansen at Raymond James. Steven Hansen: Team, frankly, it feels like there's a couple of ways for you to benefit from Canada's new focus on North, be it military or otherwise. How do we think about, though, the government overlay with all this and the timing? What I'm trying to understand is ultimately is like where do you think we'll start to see the benefits first and over sort of what time frame? Michael Pyle: That's a tough question to start the morning, Steve. We do the maritime surveillance for Canada on the East and West Coast. Canada has historically not felt the need to surveil the North. That's clearly changed. All 3 political parties in Canada have talked about the need for military bases and the need to look after the north. With our acquisition of Canadian North, we now have the infrastructure across Canada's Arctic to enable us to move very quickly to stand up maritime surveillance operations. We've met with the government. I would say that the discussions have been very positive. I would suggest that there's support across the government, whether it be in the PMO, the Defense Minister, the Procurement Minister or I think most significantly in the Canadian military. They acknowledge that they're stretched with all the other things they're doing, the future strike fighters, the Canadian -- the search and rescue planes. They can't take on a new project. And so the advantage we bring on this is we will bring them a service. All they've got to do is tell us how much and where. And so while it's difficult for me to make a prediction for a government, I think this is something that's actionable within weeks or months, not years. And so for us to be able to announce something next year, I think, is a reasonable time line. Again, this is dependent on the government. So we're not sure we're active working with them, but we're excited about the opportunity. And quite frankly, one of the things we love about it is we've built all the information technology conduits to deliver the data to the government and to the departments of the government. So our ability to stand this up would be much easier than, for example, when we went into the Netherlands or when we went into Britain, where we had to build that infrastructure or if we will win in Australia, it's really just a bolt-on in Canada. So the next year, I think, is a reasonable target to hear something on that. But the other thing I'd point out is it's much more than that. It's not just the IFRS. We're going to build -- we don't have anywhere to land the F-35s up North. We need to build runways. We need to build military bases. Well, as the people and professionals that are going to go into those communities, they're going to be coming in, whether it be on Calm Air if they're building in Rankin or in Canadian North if they're building in Yellowknife or building in [ Calvert ]. And so we're going to see part of the benefit of this through our scheduled airlines. You're also going to see it as more and more development of particularly critical minerals that exist in Nunavut. The charter operations to bring employees in and out of those are also going to be done through our bases and our dominant position in the North. I would like to say that when we started discussions with Canadian North over a year ago, closer to 2 years ago, we saw this coming with the movement towards a much greater investment in defense. But we did -- we saw it just based on the pure business, the pure stuff that we're used to doing for the last 50 years up there. The addition of this turns what was a good deal into a great deal for us. Jake Trainor: Steve, it's Jake. One other comment I'd make just outside of the defense and security initiatives by the Canadian government. You hear a lot of discussion in the budget about infrastructure and nation building. And again, we have very positive exposure, whether that's pipelines, whether that's port infrastructure, a lot of the building that's related to, let's call it, the nonspecific defense matters, we have positive exposure to. So again, we're feeling very good about a number of the initiatives and working with the Canadian government and obviously, the provincial governments as well. Steven Hansen: Appreciate the color. And hopefully, we can get going on building some stuff. Just one follow-up for me is just around the Regional One. It's been active. There's constraints in the system still, and you've made some additional investments there. Is that a business that will continue to have opportunities through next year? It sounds like the broader thematics there are quite strong, but I just want to get a sense for how your thoughts are into '26 on that business specifically. Michael Pyle: Yes. Regional One has become such a player in the markets it's in. Their growth in terms of whether it's parts sales, which are very predictable and reliable quarter-to-quarter, whether it's leases, which are also very reliable quarter-to-quarter or whether it's the stuff that's a little bit more lumpy like we had this quarter. Maybe I'll just touch on something here that our revenue in Regional One in this quarter was up about 70% year-over-year because of sales of full aircraft. And those bounce around. But the margins on those kinds of sales are lower. And so when you look at our overall margin profile for the whole company, margins aren't down in aviation. It's just product mix. We're selling -- in this quarter, we happen to sell more full aircraft, which have good profit in them, but they're lower margins than if I sell the plane in pieces. And so when you look at Regional One, don't extrapolate that kind of revenue growth, but the core EBITDA growth, which takes into account earnings in all 3 segments is going to continue to grow. Our market position is going to grow. And while I wouldn't promise you this for 2026, it will start there. The ability to trade in the 737 marketplace is coming. We just bought 20 years of data from Canadian North about the value of every part on those planes, and we're now selling parts to ourselves. Canadian North is taking Regional One to the 737 University, very similar to what we did when we moved into the Embraer portfolio about 10 years ago. You're going to see the opportunity for a massive amount of growth in the future in Regional One as we internalize the knowledge required to be a trader in the parts of the 737, and we'll use the business model that's proven so successful in Regional One over the last 10 years. I'd point out for the people who don't know, we bought Regional One in 2013, and it was doing about $16 million in EBITDA. We'll be close to 10x that this year and -- in Canadian dollars, and we'll continue to see that grow in the future. Operator: Next question will be from Cameron Doerksen at National Bank. Cameron Doerksen: I guess I want to have, I guess, a little more detail on the 2026 guide. I mean, obviously, you've got very good visibility. So I would say high confidence, not to put words in your mouth, high confidence in the low end of that range. I guess what gets you to the higher end of the guidance range? Like what has to happen with the various businesses to get you to that $875 million level? Michael Pyle: It's really -- the high end would be driven probably by acceleration in the Canadian environmental matting space. We see a whole bunch of very positive trends there. There's a super cycle beginning for matting with the things that need to be done for T&D work. And the T&D being the transmission and distribution of electrical power. So there's earnings power there. There's also massive earnings power sitting in the window business. The window business is essentially breaking even. It's not making a material contribution. That business will make $50 million plus just in a normal market, not in a strong market. And there's easily another $20-or-so million available in the Canadian matting business. So just those 2 things would take you above the top end of the range and continued improvement and wins in contracts because quite frankly, we fully anticipate winning things that aren't in the guidance we give. We try to be consistent in not guessing what we're going to win before we get it. And so to get beyond that, more contract wins, whether it be in ISR or in Medevac or even more charter work in our aviation business could push us up and beyond that. Richard Wowryk: And the other thing that Jake talked about in his prepared remarks is just the timing it takes between acquisition and deployment of certain leased assets at Regional One. So as that -- if you deploy those assets sooner than you expected, that would help. And as we've seen over the last 18 months, step-based improvements in our lease occupancy rates at Regional One, if you had continued improvement in that above what we're expecting, that would also drive you closer to the top end of the range. Operator: Next question will be from James McGarragle at RBC. James McGarragle: So just on the '26 outlook, you mentioned it doesn't include any M&A, any contract wins or any incremental growth CapEx. But you alluded to a lot of those things in the press release and in your prepared remarks. So just following up there specifically on M&A and some of Adam's comments in the press release. Can you just talk about what the pipeline looks like now and anything that we could expect early in '26 that could potentially represent some upside to the guidance you gave? Michael Pyle: Yes. I mean I'm really a little disappointed in Adam. We closed Canadian North, and he hasn't done anything since. So we'll get him off his ass and working again. And of course, being facetious. We've got a couple of interesting things cooking in aviation, things that are tangential to what we do. I think if we're successful, they would be kind of like the market's reaction to Canadian North, though that makes a lot of sense. We should have saw that coming. Nothing though, James, that like we're going to close in the next 30 days. We're busy working on a couple of things. We're excited about it, but nothing imminent. Richard Wowryk: I think the other thing that's super exciting for us, James, is when you look at the -- where our balance sheet is compared to where we were 12 months ago, we have significant capacity. Adam and his team do a really great job of finding really great deals for us, and we've positioned ourselves to be able to act on that quickly without needing to access the equity markets. Pro forma, our leverage is the lowest it's been in well over a decade, and we're very excited about the transformation of our balance sheet over the last 12 months and where that positions us to execute on the opportunities we see in front of us and the ones we hope we continue to uncover. Michael Pyle: And I think just one more thing as it relates to the balance sheet, James, I appreciate this is a very long-winded answer. But with the reduction in leverage and the continued growth of the business, I think that puts us in a strong position to tap the bond market in the future should we want further funding beyond our bank syndicate. The interest rates in the bond market are lower than what we pay. And I believe that we would be viewed as investment grade. So that's something we'll work on in the next year about getting that in place. But I would point out also that the strength of our performance has brought in international banks looking to join our syndicate, whether they be from the United States or even Asia. So our ability to grow the syndicate in line with our business is also there. So we're not dependent on the public debt markets to grow either. So I just -- it's a super exciting spot for us with our balance sheet because we have so many options to fund growth when the right contracts come, like an Australia win, like ISR for the Canadian government, those kinds of things, we're in a position where we can pull the trigger so fast. James McGarragle: And just to follow up, you mentioned ISR, obviously, the Australia, you talked about some opportunities in Canada and in the U.K. But can you just talk about the opportunity more generally? Because in the past, you've kind of flagged some other opportunities in Europe. So kind of where you see that going in the next couple of months and the next couple of years and how you're positioned to maybe potentially have some wins outside of that Australia deal, outside of some of the Canadian opportunities that you've spoken about? Jake Trainor: Yes, James, it's Jake. I can take that question. Again, 2 parts. First, there's opportunities with existing contracts. And in every ISR contract that we have, we're in discussions in either expanding scope or scale of those contracts in terms of duration. Secondly, we're in discussions and well down the path with a couple of European governments. One, I'd like to say that we're close. And again, as Mike says, when this comes out, hopefully announced, it will sit there in the markets go, well, yes, this makes sense. Absolutely. So we're excited about that. We're talking to folks in Southeast Asia as well. Unfortunately, the instability in the world drives demand for greater situational awareness and thus ISR activities globally. So we're well positioned for that, whether it's directly positioned with aircraft or with sales of our software system onto unmanned aircraft vessels, land vehicles. So again, we're excited about the opportunities broad-based across that sector. Operator: Next question will be from Matthew Lee at Canaccord Genuity. Matthew Lee: Maybe back on Manufacturing. Just it feels like margins have been a little bit lower this year than we're used to seeing, especially given the success in the high-margin mat business. And I'm not holding you to anything, but when you think about the medium term, where do you think the EBITDA margins of that business should be? And what has to happen to get there? Michael Pyle: I think you're going to -- over the medium term, you'll see material accretion in the margins. It's really going to come from a couple of places. When the leasing of -- or the rental of mats in the Canadian market expands towards the end of next year. That's a very high-margin business. And so you'll see that drive margins. And then the other thing, quite frankly, in the window business. Right now, it has 3 big challenges. One, the work we booked in a couple of years ago when it's soft is at lower margins; two, we're not efficiently running the plant at full capacity; and three, we're carrying people that we don't need based on today's level. So as that returns to normal, you will see us add tens of millions of dollars in margin EBITDA, and it basically flows through straight to the bottom line because there's no new capital required. And so that drives the top line, it drives increases in the margin line, and it drives the EBITDA line. Those 2 things will be the main drivers, I think. When things were tough, we to keep our people working, we took lower margin work in the window business, knowing what was going on in the industry, wanted to keep our production, and people have left the industry. So as this turns back up, there's going to be less players, and we're the best equipped one to deal with it. So -- and one of the things I really want to make sure people understand is EIC was built on the concept that not everything is going to be perfect at the same time. And so we're hitting targets. We're increasing dividends. I mean we had 17% increases in earnings per share this quarter, even with all the new shares from the conversion of the strengthening of our balance sheet with windows basically not in a position to help. That's not going to be the same all the time. I can tell you at the beginning of COVID, when the airline struggled, the window business carried us. And so you're going to see the improvement in the window business, some more growth in the matting business drive the margins as we go forward. And whether that's likely not early next year, but it's coming out of next year into '27. And those lower margins in '26 are fully factored into the guidance we've given. Richard Wowryk: Yes. And maybe just to add on the Access Solutions business. So that one is really, as we talked about, is like the deferral of projects that pushed out from Q3 into the fourth quarter and into early 2026. So we do anticipate sort of the expansion of margin as those mats go on rent and then the long-term tailwinds about sort of the nation building and all that's going to require access matting. So very excited about the future. Matthew Lee: Okay. That's helpful. Then maybe just a quick one maybe for Rich. A philosophical question on maintenance and growth CapEx. When you think about refreshing the fleet for Canadian North, to me, it seems like it's to capture incremental revenue. So how do you think about that the new fleet up between maintenance and growth CapEx? Michael Pyle: Maybe I'll jump in. Rich, is just calculate something. When you look at Canadian North, they're actually pulling up our actual numbers. The Canadian North investment, we knew that under the previous ownership, they made decisions to defer cash investments. And so they were renting engines instead of overhauling engines. They were doing stuff. Their planes were fully safe and fully maintained, but they weren't doing them on a cost-effective basis because of capital restrictions. And so we've got engines to overhaul. We've got landing gear to overhaul. And that stuff is, by our definition, purely a maintenance CapEx. Now it's actually in an absolutely transparent world, it's maintenance CapEx that we would have done over the last 2 years, not now. We're going to catch up. And that's why I said we're going to take a little bit of a period to get to our 15% because we're going to make those investments. When we bought the company, we knew those investments were required. And so there's not a surprise here, but it's part of the process. But you're also hitting on a key other factor. There's opportunities within Canadian North to switch to more of a combi fleet, get rid of some pure freighter aircraft and replace those with combination passenger/freight aircraft. That will take some investment. And to the extent we do that, that we would view that as a growth CapEx because it's going to generate new revenue because of that investment. It's not big dollars, and we're not -- because bear in mind, you're going to trade off pure freighter capacity to buy the combi capacity. So there will be the investment in some aircraft, but that would flow through our growth line in the future. That's not part of the maintenance CapEx that was really factored into the purchase price when we bought the company. Richard Wowryk: I think the one other thing I would just point out when we're talking about capital, that's really pointed to your growth and maintenance split that Mike has already talked about, but just certain investment decisions that they've made over a period of time because of their capital constrained nature, specifically finance leasing certain assets, we'll buy those out and did that during the -- during the third quarter. And just deploying our balance sheet, having a lower cost of capital than they had provides us with the opportunity to be a little more efficient. But to Mike's point, the growth versus maintenance split, when we look at that, we've looked at it consistently with how we've looked at our ongoing businesses and notwithstanding that, that meant that we had to take it on the chin a little bit for 6 to 9 months here. We thought that was the appropriate way to disclose it so that folks didn't think there was additional growth coming out of something that was really getting their fleets into a spot to drive that consistent cash flow. Operator: The next question will be from Krista Friesen at CIBC. Krista Friesen: I just wanted to touch on -- I mean, obviously, there's a lot in the budget as it relates to the North and to defense. But do you have any comments around the accelerated depreciation in the budget? And if that's something that you guys are excited about? Michael Pyle: Yes. I mean the accelerated depreciation of the budget will let us maybe take on a couple of projects that might not have hit the threshold the way we wanted them to. So I'm not in a position to give you specifics yet. We've only had a couple of days with this, and we've locked our rockstar tax department led by [ Marley ] into a room, and they're working on a couple of these things. But it's very exciting for us that the government wants money to go back in to the Canadian economy, and they want to be specifically Canadian. And I just want to harken back to that ISR opportunity here because when you look at our ability to surveil, we would take a Canadian-made aircraft, the Q400. We put Canadian-made equipment on that aircraft. We'd adapt it in Canadian facilities. We'd fly it with Canadian pilots out of Canadian facilities with investment from Inuit partners because this is taking place in the North. So I'm not sure we can have a better fit with what the government is trying to do than our ISR opportunity. And quite frankly, there is no one else in the country who could do this. Richard Wowryk: And I think one thing just to point out, when we think about returns on an investment that we look at, we're always looking at a 15% unlevered pretax return. So while this won't change the way -- the returns that we're generating because we're going to continue to look at them the same way we always have since our inception, it will make the economics better for us to get the tax deduction faster. Krista Friesen: Right. Okay. That makes sense. And then maybe just another one on the budget. I noticed there were comments there around Northern Medical access. Is that something like -- will you guys play a role in that? Or are there conversations that you've had there? Michael Pyle: The discussions thus far have been preliminary. But to be honest with you, I wouldn't suggest that we play a role. I would suggest that we play the role. We have been the sole provider of medevac services to the government of Nunavut for decades. And we're in the midst of negotiations now on a new long-term contract with enhanced services, enhanced care for the Northern people. And so yes, we will be smacked out in the middle of that. Krista Friesen: I appreciate the color. Congrats on the quarter. Michael Pyle: Thank you. Operator: Next question will be from Tim James at TD Cowen. Tim James: My first question around, again, Canadian North. And Mike, you talked earlier on about kind of the charter business and the contribution from that here in the third quarter. It sounds like it was fairly meaningful. How do you factor -- and it sounds like you're kind of going through a bit of a review on the plan for that business and how strategically it fits over the long term. How do you think about or factor that decision into your guidance for next year? Or not to say that it's maybe material, but when we think about the guidance range, it probably has enough of an impact on that. Could you just discuss what's factored into that when you think about 2026? Michael Pyle: Yes. I mean, it's a really good question, Tim. The charter business in Canadian North is different than our charter business anywhere else. This is long-run 737 pavement-to-pavement that WestJet could do it, Air Canada could do it, Nolinor could do it. There's lots of people that could do it. And as a result, it's much more commodity-like. The margins are very small. And the contracts are old. And because the contracts are old, everyone knows what aviation inflation has been, the returns on the old contracts are very thin. But at the same time, like the first LNG project is coming to a close. And so that means revenue from that will decline. That's factored into next year. But the margin impact is de minimis. Now we are in discussions with the people in terms of the second phase of LNG. And we could do that at a price that is acceptable, we will continue to do it. But the aircraft release, and if we can't do it at a return that matches what EIC wants to do, we don't need to do this business. We effectively didn't pay for it. And the reason I say that is we paid asset value and most of the aircraft that are utilized in this business are these aircraft. So if we didn't win it at the right price, we would just move out of it. We'd have no losses and no write downs. There's nothing. But it's a big opportunity if our team is successful in negotiating new contracts to generate new EBITDA that isn't reflected. So it's got an upside, not really a downside. Did I answer your question? Tim James: That's helpful. That is helpful, yes. My next question, just want to confirm two things quickly here, actually. The 2026 guidance came up earlier. You're not assuming any M&A in there or any sort of incremental growth CapEx. But does that guide take into account EBITDA from currently planned growth CapEx? I'm assuming that's the case but not any unplanned additional growth CapEx that you may kind of announce or plan in the future. Is that the way to think about it? Michael Pyle: Yes. It includes the stuff that we're underway with this year. So we're just finished off our flight simulator for our King Airs in Winnipeg. That's going to generate revenue next year. So that's in there but it's paid for. It includes the Newfoundland contract of the medevac contract. It includes the additional aircraft that we've added to our leasing portfolio in Regional One, ones that are completed and the ones that will close during the fourth quarter. So there's nothing in there for growth beyond the start of the year. Whatever we add to that will be additive to the guidance. One of the things we like to do, and this is very cultural within EIC, and I appreciate we might be a bit of an outlier on this in the public markets, is I don't want my team's feeling any pressure that we need to invest x dollars to get to our budget. We don't have to invest anything to get to our budget other than our maintenance CapEx and finishing the projects we've already started. So when we get, for example, the Spartan plant up and going, that's going to cost us $60 million or-so, but that's 100% additive to the guidance when it gets up and running. It's not a 2026 example. Adam has no targets for acquisitions. He has returns he needs to generate when he finds one. But that way, when we talk to the markets, it's not about something we haven't done yet. And it's part of the reason I believe we've been quite reliable in hitting the numbers we've told the market about. It's because we base our promises based on what we know we have, not what we aspirationally think we will. Having said all that, we aspirationally expect we're going to do some things that aren't in this number. Richard Wowryk: I think the other thing, just we talked about it earlier in the call, but just for avoidance of doubt here. From a growth CapEx perspective, for next year, we still also have the 4 aircraft that will be delivered for the Carson Air contract. And those aircraft that they're displacing will be rolled into the Newfoundland contract. Tim James: Okay. And those -- that growth CapEx, I assume, and the EBITDA coming from that is in the guide for '26, is that? Michael Pyle: That is correct. That's in the guide because it's a project we already announced. Tim James: Okay. Very quickly, Mike, you cited earlier kind of a $50 million approximate sort of normal window business for systems and $20 million for matting. This was in reference to a question earlier. Is that in reference to EBITDA? Is that those two dollar figures you were talking about in very round numbers, I realized, it was an EBITDA reference? Michael Pyle: Yes. I mean, yes but it's also effectively an EBIT number because we're already paying the dollar already. And there's really -- the only net cost would be your working capital costs because you're going to have receivables. But other than that, that ramp up -- and quite frankly, the number in the window business will ultimately be more than that with the synergies that have been created by Darwin and the teams at Quest and BV by streamlining production. You'll see that when those plants start running anywhere near capacity. Richard Wowryk: And just to clarify, those numbers are additive to where we are now, not the run rate for that business. Tim James: Okay. Sorry, I'm going to try and sneak one more in. Mike, you're highlighting kind of the opportunity that you see coming in trading in the 737 market for Regional One, should we think about that market -- and obviously, that's a huge sort of potential market. How do you think about the margin profile of trading in that platform versus the regional platforms that you focused on to date? I mean, is it any different? Or does it not really matter in that type of business? Michael Pyle: It's a great question. And the short answer is we're not there yet. We're going to sell to ourselves first, figure out what we can do. We're going to build up what we could buy older 737s at. This is not something we'll jump on. It's not like cliff diving. We're going to jump in and go all in one. It's more like stepping in the kitty pool. We'll get our ankles wet first and we'll grow, and it's exactly how we did it with the Embraers. The model we have at Regional One is going to work with the 737s. But the key thing that's made Regional One so good with Hank and their team is they make sure they know what the exit is before we get in. We always know we can make a product -- a profit by part of these things out. We're not there yet on the 737 but we now have a whole bunch of data we didn't have before. And quite frankly, the size of that market is so big. The parts stuff will be more efficiently priced, which probably means slightly lower margins. But the ability to gain market share in a massive segment like that is so exciting. And I mean, quite frankly, Hank Gibson, the guy who runs Regional One, spent 15 years in the Boeing world. He has -- this isn't his first rodeo. So this is something I think you'll hear us talking about for the next 20 quarters as we slowly grow this business. Operator: The next question will be from Jeff Fenwick at Cormark Securities. Jeff Fenwick: I wanted to focus back on the ISR conversation. And maybe first, just, Mike, you offered up some commentary that it's relatively easier to put that effort to work with the Canadian government in a relatively short term. So I guess just help us understand that. Is it a case where this isn't about putting out another RFP but maybe there's an opportunity just to amend the existing sort of contracting that you have with the government? Is that kind of the key to moving it along? Michael Pyle: Again, I got to be really careful that I don't tell the government what they're doing, but we have proposed something to them without an RFP. And there are certain ways the government could do new projects without RFPs if they hit certain thresholds, largely driven by how Canadian they are and whether there would be multiple people capable of doing it or not. And we think we hit most of the -- well, not most, all of the criteria to do this without an RFP. But to be clear, the federal government hasn't told us that's what they're doing. We're in the state. I mean you're closer to that than I am. Jake Trainor: Yes. Keep in mind, in the budget that was just announced with the formation of the new Defense Investment Agency, and that's the clear mandate of that organization, how to put capital to work faster than in previous practice. So you've got to appreciate that was only really formed 30 days ago. And obviously, we've been in contact with the bureaucracy and the government ministers responsible for that. So we're encouraged by the initial steps the government has made. They're making the right signals. But again, we're somewhat at the mercy of them as a pacing function. Jeff Fenwick: Okay. That's helpful commentary. And then, Jake, I wanted to circle back on the one comment you made reference to potentially providing some solutions in the ISR into the unmanned vehicles. So when I kind of survey the industry, there's clearly a big focus on the opportunity in drones as being a cost-effective solution for a lot of different countries around the world. So on the one hand, I guess we view that as a competitor to the sort of solutions you've been putting out today but I know that CarteNav is a pretty flexible platform. So maybe there's an opportunity there as well. Like how do you kind of balance those 2 things in the context of that the drone market? Jake Trainor: Sure. So great question, Jeff. And I think drones are a solution -- is part of the solution. It's a tool in the box. And if I look back 10 years ago, there was a lot of commentary about the manned aircraft are going to be substituted by unmanned, and that's really not the case. What we're seeing today employed in a lot of regions is what's called a system of systems that really is a woven network of satellite information of manned aircraft and unmanned aircraft. And it's really taking the data off all the platforms, merging that data and taking the data and creating insights. And that really is what CarteNav, our software product is great at. We're using that in the U.K. Home Office, for example, where it's a layered approach to generating the insights needed for decision-makers. And so while we see each type of platform is good at certain things, they're not good at others. And that combination of things, particularly in a marine environment where you've got long space and time constraints or in Canada's north, the same thing. So it's going to be a combination of all. We're excited again by the employment of CarteNav on certain unmanned systems. But we don't feel necessarily any of the manned platforms are a threat. It's all part of the similar solution. Michael Pyle: I think that a way to look at this is when you look at freight delivery within the cities, you've got couriers who are running around in Prius is handing off envelopes. You've got the Amazon fans with the big high roof handling packages. And then you've got semi-trailers and planes moving it from city to city. One doesn't replace the other. They're all parts of the system. Drones and fixed wing aircraft are -- each have their area where they're better. When you're flying into a dangerous place, if you can do it without a person, that's an advantage. Jake Trainor: And I was just going to say the common thread through it all is the information generated and the information handling system, and that's what CarteNavs great at, and that's where we're seeing significant adoption across all segments. Operator: Next question will be from Konark Gupta at Scotiabank. Konark Gupta: I wanted to first clarify a few things on the 2026 guide. So good to see another ton. By that, I mean, $100 million EBITDA growth back to back. It seems it's mostly driven by the Aviation segment. Is that a fair characterization? I mean manufacturing might grow a little bit, but not too much as compared to aviation. Michael Pyle: That's absolutely fair, Konark. Konark Gupta: Okay. And seasonality-wise, do you think -- I mean, this year has been very similar to last year, '26. Do you see any significant changes in seasonality... Michael Pyle: The interesting thing is Canadian North is exactly the same cycles as Com Air, Perimeter, PAL, all the other one of our airlines. So Q1 is always going to be the weakest. Q3 is always going to be the best. The only thing that has changed that a little bit is Spartan, it doesn't really have a slow first quarter. If anything, they have a slower Q3, Q4 because it's so hot in the south, it actually slows some of their work. But with the exception of Spartan, the seasonality of our business really hasn't changed. Konark Gupta: Okay. And on the windows business, I know and I appreciate the challenges that you guys have been facing for the last little while here. I hate to be a devil's advocate on this one. But like -- what will take you to make a tough call on this one? Michael Pyle: I would -- I'd make a tough call if I didn't believe in it. EIC is doing really well with windows not contributing but they're not hurting us. We're not losing money. It's not like we're feeding it. And if I wanted to shrink it down to make it even more cost efficient, we can lay people off, we could do stuff. But the simple fact is, if you look at the competitive landscape in that business, the number of companies that have left the business is dramatic. And we're not going to not build high-rise apartments for people in big cities. This is -- in Canada, this is the result of a hangover of building 500 square foot condos that people were buying and renting out. The market didn't build what the users needed. They built what was easy to finance. And we have a hangover and that hangover is not over yet. That hangover is not nearly as bad in the U.S. and that's why we see more life right now in the U.S. than we do in Canada. But ultimately, that's coming, Konark. And if I got to wait 12, 24 months to get there, the $50 million in EBITDA that I know I can make in that business is a big prize for no net investment. I'm not going to trade out of it for the sake of not having to talk about it each quarter. Our business model is based on being able to carry things when there's a challenge. And I believe I've got the best management team there is in the window business. So I'm prepared to wait. Jake Trainor: And maybe a couple of other things, Konark. So like we are strong believers in the business, but we are seeing positive demand signals in certain geographies, whether it be sort of in U.S. or certain cities across Canada. Oftentimes, we're very focused on the Toronto market, but there is a lot of positivity in some of the other markets across Canada, where we're seeing lots of opportunities and projects. So we are starting to see that turn. It's just a bit of a function of how fast does it turn? And can we get developer costs down, interest rates are coming down. So we are seeing some of the big demand drivers existing. And as Mike talked about on the call, we are also seeing in Canada a big shift similar to the other geographies moving to rentals as opposed to condos, which is a different form of financing but we think the capital exists there. People are just waiting on the sidelines for -- to book the projects because we're seeing a huge number of inquiries continue. Richard Wowryk: And ultimately, this just comes back to EIC's strategy and how we've conducted our businesses over 20-plus years. In the early days of COVID, no one was asking us whether we were going to sell our aviation businesses because they were challenged and windows was carrying the day. And ultimately, we're at the low point of the market. It will come back, and we're excited that what it does will generate returns that fall right to the bottom line. And ultimately, there may be another challenge at that point in time, and we'll deal with it the same way we always have, focusing on the long term and making decisions so that we're profitable over the long term, not maximizing short-term profitability for at the expense of the long term. Michael Pyle: If you looked at Comair in sort of 2011, 2012 period, it was a lot worse than this is. We were feeding that business. And now it's amongst my best-performing airlines. And so this really is part of the EIC model. Not everything is going to work at once, but quite frankly, it doesn't need to. Jake Trainor: And the last point I'd make is the fact that we have confidence in the management team. As Mike said, we feel we have the best windows management team out there. And as we look at things like infrastructure build, schools, hospitals, we're seeing them pivot towards that direction. So again, we hire good management teams. We acquire companies with good management teams and expect them to captain the ship through a little bit of rough water, and we're there to support them. Konark Gupta: Okay. And those are very insightful comments. And clearly, we have seen that strategy work. So all the best for that. And if I can just ask one more quick before I turn over. In the budget, obviously, there's a lot of great things, I think, for you guys you talked about. But one thing I kind of noticed there as well, I think these guys are also looking to build some sort of all-season roads up north. And I know you have a bunch of airlines doing sort of work and seasonality is more pronounced, right, during the summertime. But what do you think about that being as a small risk to your business up there in the north? Michael Pyle: There are certain places where they will probably build all-season roads. it's exceptionally difficult. And it's not a project that's built in a year or 2 or 5. You're talking -- some of these are decade-long projects, where they're going to get built, how they're going to get built. Just as an example, and this is just an anecdotal example, there's been discussions of building a road to Churchill. Well, they're having trouble keeping the rail line functional because the permafrost is melting and it's turned into a blog. And so the railway keeps sinking into the ground. Building roads over that's exceptionally difficult. And so undoubtedly, if the government is committed to this, there will be some of that done. But we don't view that as being a material piece of our business. Some of the places we fly are so remote. The cost per person of building a road is prohibitive. Jake Trainor: And not to mention the very difficult environment, can you imagine snow clearing thousands of kilometers of roads between communities that, as Mike pointed out, have very low population density. It's something that we just don't see that will necessarily be a factor. Operator: Next question will be from Amr Ezzat at Ventum. Amr Ezzat: Just to press on the guidance. I mean, you guys announced it shortly after the federal budget, and that included all the good stuff you mentioned, new defense spending, critical mineral spending and so on. Just to clarify, were any of these tailwinds embedded in your guidance? Or should we treat it as a clean base case with upside tied to procurement activity materializing? Michael Pyle: That's the easiest question of the day, yes. It doesn't include any of those things, and that's the base case that as these things become operationalized, they'll be additive to this guidance. Amr Ezzat: I love to hear that. Then if you'll allow just one follow-up. On the Canadian North charter operation, I mean, I think we all know that the returns are thin like you guys mentioned, all contracts are rolling off. But can you walk us through the framework you're using to evaluate whether that business is worth keeping, especially how you weigh your return thresholds versus strategic access and customer stickiness? Michael Pyle: It's a bit of an art form as it relates to charters because we don't own the assets. They're leased. So we're not putting the capital out. But quite frankly, we look at it the same way. If we own that aircraft, are we getting our 15% return. And that's kind of the way we factor into, that we factor lease payments in at the end that isn't enough to do the work. I mean, the good part is within Canadian North, it provides good jobs. It spreads our overhead over more flights. So there's lots of good things about it. But the advantage is in the way we acquired Canadian North, we said, look, we've got to fix this up so that the returns match your assets. And we knew that LNG 1 was coming to an end. We knew that -- and it's quite clear LNG 2 is getting done. So -- and we have great relationships with those people. And so we're very optimistic that we'll be successful in being able to do this. But as I mentioned earlier, this business is the most commodity-like of anything we do. We could be replaced by Nolinor. We could be replaced by Porter. We could be replaced by anyone who could fly a jet spot to spot. There's facilities in there. It's not the business that -- hard business that Canadian North does everywhere else where they look after inuit people in remote communities where it's an essential service. This is much different. It's much more akin to what Air Canada does than to what we do. Now we have some advantages because of our First Nations ownership of the communities and those kinds of things that help us. But quite frankly, we'll be disciplined. If it makes economic sense, we'll do it. If it doesn't, we won't. And because of the way we bought it, there's no downside. And I mean, I think you can see it, it's not really a charter question but it relates to the Canadian North thing. It's very seldom that we buy something that's 100% asset-backed, including an adjustment for deferred taxes. And so that's why you see higher depreciation in the statements perhaps than some of the analysts are coming because we don't often buy things that have that much asset back in. But in the long run, that makes it way better because we own everything we've got. We don't need to make investments. We just maintenance CapEx, which we've talked to you about. So this Canadian North business is such a great fit for EIC. Whether we do the charter work or not, we'll see. We'd like to, we're going to try to. But if we can't, -- we still got everything we paid for it. Operator: Next question will be from Chris Murray at ATB Capital Markets. Chris Murray: Just this is more of, I guess, a semantic question or a thought process question around the balance sheet. So Mike, you mentioned that you're kind of working through getting to an investment-grade rating. Historically, I'm thinking about you guys have always been thought of as sort of a diversified financial company. What are the rating agencies telling you about what's going to be required for you to get that investment grade? Is it going to be kind of the end markets you're supporting? Is it going to be leverage levels? And really, how do you think about what that does? Because a lot of the time, what happens in the debt markets drives what we're going to think about in the equity markets longer term. So just thinking about how to think about the company over the next 3 to 5 years as it evolves. Michael Pyle: I got to be very careful how I answer this question because we have had discussions with the rating agencies. I'd start by saying we're confident that we will fit into the investment-grade window. I think the thing that really helps us with the rating agency is the percentage of our business that's tied to government contracts or the dominant market positions where it's an essential service. You see our investment-grade argument is made in 2020 when other people in the aviation space or the manufacturing space got crushed, our EBITDA fell by 10% and then was back up immediately in the following year. I think it's the resilience and the reliability of our cash flow stream. And then quite frankly, we have a 20-year track record of discipline on the amount of leverage we place on those kind of contracts. And so that combined with the -- I guess, the way I can describe it is we've grown up and outgrown our convertible debentures. They've been great to us. We didn't get to Series N because I didn't like them. They were great. They let us sell equity at a future price. The ones we're calling now are only, I think, 3 years old, and the stock price was in the 40s at the time we did it, low 40s, we're selling equity at 60. So they've been good to us but as we've gotten bigger, we will be able to access the bond market at prices that are materially lower than what we paid for convertibles and give us a much more quotation marks traditional balance sheet for a material public company. Richard Wowryk: Yes. I think the other thing, Chris, when we talk about having the conversations and what we need to make us successful in that endeavor is really telling the EIC story we tell every day anyway. We're not a traditional airline. We don't fly point-to-point in southern centers where there's material competition risks. And that story moves you away from an airline's rating methodology into a different ratings methodology where our leverage profile is considered conservative. And it's really -- to Mike's point, we have a 20-plus year track record of maintaining leverage in a band that is viewed as conservative or modest. And I think it's that track record and reinforcing that track record with the rating agency that we prefund things in the equity market if we need to do something. We don't go splash and raise leverage to 4.5x and promise to pay it down over a period of time with cash flow. And I think it's really that track record that really drives the EIC equity story that will be just compelling in the debt markets as well. Chris Murray: Okay. To that point, and I guess the next piece of this question is just even looking at the equity stack. I know you've always had the NCIB kind of as more of a defensive tool, given some of the history. But is there a point where you start just starting to buy back stock expectations that if you do get that re-rating, maybe the stock you're buying back today is going to be less expensive than it would be in the future, especially you've managed to put out a fair amount of dilution with all the converts. But with that being said, just any thoughts around that? And if you can also maybe talk about the DRIP as well and where that sits, that would be great. Michael Pyle: That's a good question. And it's one, which is going to be weird for me, I have a relatively short answer. We look at buying back stock as the alternative to deploying the money on future projects. As long as I've got things I can do with the money, whether it be Australia, the government of Canada, an acquisition for Adam, the plant for Spartan, that's the first place our money goes. If I don't have enough of those and I've got some left, we will use it to buy back stock but only when I don't have the ability to use that as the base for my growth. We are looking at the DRIP. It creates uncertainty every quarter end because people short the dividend and play games with it to get to the 2% discount. Is that right, Mitch, 2% 3% discount. So we are looking at whether maybe we've outgrown that, maybe we don't need it anymore. No decision has been made at this point, and none will be made until we get to our year-end Board meetings. But there's definitely, at the very least, a thought that maybe we've outgrown the premium that we pay on the DRIP. Operator: Next question will be from Gary Ho at Desjardins Capital Markets. Gary Ho: Just one question for me. So you talked about the build-out of a second facility for your composite mat business, $60 million investment. Just any color in terms of the increase in composite matte production with the second facility? And what are your thoughts on offering these through a rental leasing model? And maybe talk about geographies that this new facility could open up? Michael Pyle: I'll start with the last one first. We're going to be in that Southeast corner of the U.S., somewhere between the resin factories in Louisiana and Texas and Florida, where we are now. So I think you'll see us in the Mississippi, Louisiana, those kinds of places. We're very close. I really had hoped to announce on this call where it was going. We haven't finalized the lease. So I don't want to limit my negotiating capability by saying exactly where it is. But it will be somewhere because -- well, those mats are used across the U.S., our customer base is more East Coast driven. And so we want to stay close to our -- the resource we need to make it, which is the resin pellets and close to our customers because mats are heavy and shipping them, I'd rather not. In terms of the lease portfolio concept, that's part of the reason we're building this as we'd like to eventually build out a rental mat business like we have in Canada. It's impossible to do right now because we're selling every mat we can make, and I'm not going to not sell something as we're the smallest guys in this business in the U.S. There's really 3 manufacturers, and we'd be the smallest but we're also the fastest growing. We want market acceptance. So we'll continue to put the product out. And when we build this factory, it's quantum bigger, its capacity will be depending on how many ships you assume, 2, 3x the size, perhaps even more than that than our existing factory, although we certainly won't go from nothing to full blast in that factory. We'll phase it in over time. But we definitely would like to take some of the stress off our Florida plant. The people we have there are doing a phenomenal job of running the plant 24 hours a day, 7 days a week. That's not something that's easy to do. And so the sooner we can get some additional capacity into the system, the better. Operator: Next question will be from Razi Hasan at Paradigm Capital. Razi Hasan: Just 2 quick ones. On Canadian North, can you disclose what percentage of the revenue comes from the Charter business? Michael Pyle: It varies period to period but just let me have got a sheet out here. It would be 0.25. Razi Hasan: Okay. Great. And then lastly, if we think about the Aerospace business representing about whatever, 11% of 2024 revenue, given your comments on defense spending and all the potential that can come with that, are you able to maybe frame how large a piece of the pie the business line can become? Do you think it can double from where it is in terms of revenue contribution? Or just any color on how big this can get? Michael Pyle: Okay. This is a complicated question, Razi, because what we give you in guidance is based on what we know, not based on what we could do. If we are successful in a couple of the negotiations we're in, the revenue from this business could double easily. It could be more than that. Australia in and of itself would do that. The government of Canada would be a huge piece, the discussions that we're in Greenland or in other European countries. So -- and bear in mind, none of that's in the sort of $850 million number at the midpoint of the guidance we've given you. That's all additive if as and when we win. Jake Trainor: And the one point I'd make is just keep in mind, depending on the nature of the contract and the types of assets that are required to service those, there might be a delay while we modify the aircraft. So again, as Rich spoke to the delay between deploying capital and seeing returns, Australia is a good example where we're deploying capital for a couple of years and the contract doesn't start generating revenue into '28. So you've got a bit of a delay and a lag until you see some of the material gains through that. And as Mike said, we've not put that in our '26 guidance. Richard Wowryk: And just because you referenced the revenue disclosure that's in the MD&A, the one piece that obviously I'll point out is that, that's a percentage of revenue at a point in time. Even if the revenue within the aerospace side doubled, we don't plan to stop growing our other businesses. So it's not like that's going to go from 11% to 22%, you're going to see growth within the other businesses. In absolute dollars, it could kind of double, as Mike said, but you would still see growth within our other businesses. So that percentage wouldn't grow at the same rate. Operator: Next question will be from Michael Goldie at BMO Capital Markets. Michael Goldie: On the Northern Canada opportunity, both from an aerospace and Essential Air perspective, how much of this would be new aircraft versus increased utilization of existing equipment? And then for the new piece, like what would the time line be to get assets up and running? Michael Pyle: We have to -- let's break that into the 2 types of business. So the ISR business would be all new aircraft. We don't have -- we just deployed the last one we built into England. So those ones would be all new aircraft. The time line could be -- depending on how many could be as short as 12 months, could be as long as 24 or 30 months, depending on how many we can build a lot of them but our system is basically built on 1 or 2 at a time, not 4 at a time. So it depends on how big a contract would be. But I think on the all but Australia world, it's 12 to 18 months to get them up and running. Although your first aircraft may be flying before the other ones go in, it's probably a phased approach. It's not like we'll wait until we have all 4 until we fly. Anything, you'll start flying as soon as the first one is ready. On the regular part of our traditional airline, we have capacity in that business to add volume without investing something. And then as it comes, it will be kind of step, like we've got x number of ATRs, we add 1 more, we had 2 more. And so there's not a big investment coming in that. There's no investment coming in the near term. And then if we decide to make an investment to move towards the combi stuff that I talked about earlier in the call, that would be a new investment, but that would come with efficiencies immediately. Jake Trainor: Yes. And the other thing I'd say is the benefit of scale as we have multiple airlines operating similar aircraft is we have that ability to start to smooth some of those step changes. And we've got examples where we've got 2 of our airlines involved in servicing a specific customer where as it ramps up, we're employing smaller aircraft from one operator for the bulk of the contract, larger aircraft from another. And then as the shoulder hits on the downside, it reverts back to the original. That gives us a real advantage to other competitors as opposed to having to go buy a bespoke asset to engage, and it might not be optimized for the volume through the contract. Michael Goldie: Okay. And then obviously, as you've added assets, D&A up 18% quarter-over-quarter. Can you remind us how we should think about that as we go into 2026? What assets will be coming online and how that can trend? Michael Pyle: Yes. I mean most of the stuff that's on -- is in now what's different is, as Ritchie mentioned, we got 4 more of the aircraft for the BC Medevac contract. I think round numbers, those are about $10 million a piece, closer to $15 million after they're fully modified for medevac stuff. So there's probably $60 million worth of assets there. And then the variable is quite simply how many assets Regional One buys to put into their lease portfolio. We described them every quarter and how much we bought. But it's highly variable. Earlier this year, we actually had negative growth investment for a quarter where we sold more assets than we purchased. And so that can bounce around. So you got to kind of look at the trailing 12 in terms of the investment to work on the D&A number of that. And I think where it was hard to do on this was we don't often do asset deals. Like the Canadian North was essentially -- we bought $200 million worth of stuff. And so it was all depreciable, and I think that was a higher number than people thought when they did it. Operator: Any further questions, Mike? Michael Pyle: Okay. Well, it sounds like we're done. We really appreciate everyone taking the time and listening to us today. We're ecstatic about what's coming. We've given good guidance for 2026, and I can't wait to increase it. So have a great day and enjoy it. Operator: Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we ask that you please disconnect your lines. Have a good weekend.
Operator: Good morning, ladies and gentlemen. Welcome to Saturn's Third Quarter 2025 Results Conference Call. [Operator Instructions]. The conference is being recorded. [Operator Instructions]. I will now turn the meeting over to Ms. Cindy Gray, Vice President, Investor Relations. Please go ahead, Cindy. Cindy Gray: Good morning, everyone, and thanks for attending Saturn's Third Quarter 2025 Earnings Conference Call. Please note that our financial statements, MD&A and press release have been filed on SEDAR+ and are available on Saturn's website. Some of the statements on today's call may contain forward-looking information, references to non-IFRS and other financial measures, and as such, listeners are encouraged to review the disclaimers outlined in our most recent MD&A. Listeners are also cautioned not to place undue reliance on these forward-looking statements since a number of factors could cause the actual future results to differ materially from the targets and expectations expressed. The company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless expressly required by applicable securities laws. For further information on risk factors, please view the company's AIF filed on SEDAR+ and on our website. Also note, all amounts discussed today are Canadian dollars unless otherwise stated. Today's call will include comments from John Jeffrey, Saturn's CEO; Justin Kaufmann, our Chief Development Officer; and Scott Sanborn, our Chief Financial Officer. I'll now hand the call over to John. John Jeffrey: Thank you, Cindy. Good morning, everyone, and thank you for taking the time to join us today. I'm pleased to share some additional context around our third quarter results, which reflects another consecutive quarter of outperformance as we continue to execute on our Blueprint strategy. The Q3 production averaged over 41,100 barrels a day and exceeded our previous guidance as well as analyst consensus, which had us just over 40,000 barrels a day. We also beat guidance on a BOE operating cost in Q3, which came in at $19.24, below the $20 per BOE annual target. This past quarter also showcased Saturn's ability to be nimble, our commitment to allocating capital to the highest potential return opportunities. Given the uncertainty and volatile commodity price environment that prevailed in the quarter, we elected to reduce our original $300 million development capital budget by 18% to approximately $255 million and pivot our focus towards opportunistic tuck-in opportunities. These tuck-ins offered more attractive capital efficiencies than drilling, having a combined production addition cost of under $16,000 per flowing barrel. Reallocating capital to M&A allowed us to increase production while preserving the value of our existing assets by not drilling them at a time when prices were weak. How we view this is when prices are stronger, we can always go back and drill those wells, but we won't be able to execute on these deals at this pricing level. Further, by coring up in areas where Saturn has strong development success, we can leverage our size, scale and existing infrastructure. which allows us to optimize production, reduce costs and enhance the performance of the assets. Our first tuck-in acquisition included an asset package in Southeast Saskatchewan that was approximately 4,100 BOE a day, comprising just under 70% liquids for a total consideration of $63 million. These acquired assets have an estimated 255 gross company identified locations, including open hole multilateral development potential in the Midale and Torquay. The asset features high working interest, optimization and cost reduction potential, along with extensive opportunities to consolidate facilities and batteries. As Justin will expand on, this package is strategic for Saturn. It expands our runway of open hole multi-leg drilling locations, which are among the highest rate of return wells in our development program today. With the second tuck-in, which closed in October, we acquired a private company operating in Central Alberta, located within Saturn's greater Pembina Cardium area for total consideration of approximately $22 million. In addition to its 1,300 barrels a day of low decline current production, Saturn gained over 80 internally identified drilling locations in the Cardium, Glauconite and Bluesky development, enhancing our operation in the area. Our operations team has already started digging into these assets to identify cost synergies, optimization opportunities and streamlining potential. The nature of our conventional asset base has allowed us to be very opportunistic by being able to stay nimble and pivot quickly when market conditions require. We are unique from other peers who are developing resource plays where they can cost tens of millions of dollars with lead times that can take several quarters or even years to plan and execute. With our assets, we can respond and adapt quickly to a dynamic market condition. As a result of production adds from the acquisitions, along with our strong drilling results to date in 2025, Saturn remains on target to exit the year with a production range of 43,000 to 44,000 BOE a day, which will represent a new production record for the company. We are committed to value creation and continue to use share buybacks as an effective way to return capital to shareholders and drive equity value over time. Our team believes the combination of ongoing share buybacks, coupled with tuck-in acquisitions contributes to growing production per share, adjusted funds flow per share and free funds flow per share. For example, August 2024 to today, we have bought back nearly 16 million shares in the open market through the NCIB and SIB, returning approximately $36 million to shareholders. Over a similar time frame, we have also increased our production per share by 22%. I'm extremely proud of the team who continue to give 110%, putting in the hard work needed to advance Saturn's goals and deliver compelling value for our shareholders while prioritizing safety to ensure that every one of our employees makes it home safe at the end of every night. I'll now pass it over to Justin to expand on our capital program and development highlights in the quarter. JK, over to you. Justin Kaufmann: Thanks, John, and good morning, everyone. As John mentioned, Saturn made the decision to shift a portion of our 2025 drilling capital to M&A during Q3 as we identified 2 tuck-in opportunities that would compete for capital in the prevailing commodity price environment and which we could acquire for attractive metrics. Our Q3 production does include new volumes from the Southeast Saskatchewan tuck-in acquisition, but it also showcases our ongoing type curve outperformance, plus the start of our drilling program after spring breakup, which supported the guidance beat. Our Bakken open hole multi-leg program and conventional Spearfish development wells coming online in Q3 contributed to another quarter of strong results. Saturn invested $87 million of capital in Q3, with $58 million of that directed to drilling and completion activities, including 29 gross wells, 23 of which were in Southeast Saskatchewan and 6 in Central Alberta. We also directed $17 million to purchase 2 strategic parcels of undeveloped land, which we believe will unlock 60 new open hole multilateral locations, representing 5 years of drilling inventory to an additional rig in Southeast Saskatchewan. Our open hole multilateral locations in Southeast Saskatchewan offer some of the shortest payouts and highest potential returns among our undeveloped locations, even in a softening oil price environment. Several of our open hole Bakken wells ranked in Saskatchewan's top 10 best performing wells over the last year. Most recently, our 16-21 wells was ranked as a top 10 well in the province in September for monthly oil volume and daily oil rate. This is a testament to how prolific these wells continue to be. We are excited about the potential we see with this program and our open hole inventory currently represents about 15% of the 2,500 total identified locations in our portfolio. The open hole multi-leg portion of this portfolio has essentially doubled every year for the last 3 years as we continue to progress this exploitation technique to other plays. Most recently, we continued this expansion into the Spearfish play, where we became the first and only operator in Canada to have drilled in an open hole multilateral Spearfish well, and now we have drilled 3 of them. Our third Spearfish well at 1605 came online during the quarter with an IP30 rate of 330 barrels a day. This is about 3x our internal estimate type curve of 110 barrels a day. These initial strong results support our plans to drill 4 additional Spearfish open-hole multilateral wells next year. Building on this success, we are planning 2 open hole multilateral reentries into the Midale in Q4 with up to 6 legs each. This would represent the first ever Midale open-hole multilateral reentry wells ever drilled. These wells are expected to be drilled on land acquired through the Southeast Saskatchewan tuck-in we completed in Q3. More broadly, we expect to allocate up to 35% of our 2026 development capital to our open hole multilateral program, including plans to drill our first of 2 Torquay open hole multilateral wells. With this, we expect to be the most active open hole multilateral driller in Saskatchewan next year. And if oil prices further weaken, we can shift more capital to this program, positioning us to generate compelling returns and robust economics even in very weak price environments. In addition to our open hole multilateral development, we continue to advance the Creelman waterflood in Saskatchewan, where we currently have 5 active injectors. In late October, we received regulatory approval to convert another 2 producers into injectors, which not only support base production, but also fuels future repressurized development locations. Investing in waterflood is a part of Saturn's ongoing strategy to mitigate declines and enhance our long-term sustainability. In Alberta, we finalized the drilling and completion of our 3-well Montney pad featuring 3-mile extended reach laterals. These wells are the longest laterals on record to ever be drilled in the Kaybob area. The North well on this pad has the most productive days and is already exceeding type curve expectations. The South 2 are still cleaning up, but based on reservoir quality observed while drilling, we do expect similar results once they've reached peak production. Finally, I'm proud to share that Saturn drilled the fastest extended reach horizontal Cardium well ever on record during the quarter, drilling to 5,090 meters measured depth on a single draw, achieving well completion from surface casing to full depth in only 4.8 days. These best-in-class results are another example of Saturn's commitment to enhancing efficiencies while operating safely and responsibly. With that, I'll hand things over to Scott for an overview of our financial results. Scott Sanborn: Thanks, Justin. Saturn demonstrated continued resilience this quarter despite a challenging price environment with WTI prices falling 14% over the comparative 2024 period. Operationally, the company continued with its success, producing over 41,100 BOE per day touring revenue over $235 million, driving adjusted funds flow of $103 million or $0.54 per share compared to $94 million or $0.46 per share in the third quarter of 2024, a 17% increase on a per share basis. The integration of the company's most recent tuck-in in South Saskatchewan, which closed on July 31, has been seamless with our production mix remaining consistent at 81% oil and liquids compared to 83% in previous quarters, reflecting the 67% oil and liquids weighting from the acquired asset. Our team continued to focus on operating cost reduction initiatives, realizing year-to-date net operating expense per BOE of $19.04, down from $19.30 on a year-to-date basis prior year. Our third quarter net operating expense per BOE of $19.24 reflects the increased field activity following a seasonal low period due to spring breakup in prior quarters, consistent with increased capital expenditures and associated workover costs. Saturn maintains its annual net operating expense target between $19.50 and $20 per BOE. During the quarter, we returned $12 million to shareholders through a normal course issuer bid and substantial issuer bid. Subsequent to Q3, we returned an additional $4.6 million via the NCIB. As John mentioned earlier, we successfully bought back nearly 16 million shares, representing approximately 8% of the shares that were outstanding at the time we launched the first NCIB in August of 2024. With the combination of tuck-in acquisition activity in Q3, the restart of our drilling program in July after spring breakup and movement in foreign exchange rates, net debt at September 30 was $783 million. Over the past 5 quarters, Saturn has repaid just under CAD 135 million or USD 95 million on the principal outstanding balance of our notes by making our regular 2.5% quarterly amortization payments as well as the open market purchases we did at a discount earlier this year. To drive a more meaningful leverage ratio, we are presenting our net debt to adjusted funds flow on a pro forma figure that incorporates the impact from our Southeast Saskatchewan tuck-in assets, resulting in net debt to pro forma annualized cash flow to 1.6x or 1.4x net debt for EBITDA in line with guidance. Saturn maintains strong liquidity and financial flexibility with $34 million of cash on hand at quarter end, plus an undrawn $150 million credit facility and an uncommitted accordion feature that allows for the expansion of additional $100 million, giving us up to approximately $250 million in total. Looking out to year-end, we are expecting Q4 capital expenditures to range between $60 million and $70 million with average production between 42,000 and 43,000 BOE per day, while our December exit approaching 44,000 BOE per day. This reflects our fourth quarter drilling program and new production from the Central Alberta tuck-ins, which closed October 20 through the end of the year. Saturn anticipates releasing our full 2026 budget and guidance mid-December. That concludes our formal remarks. So I'll thank everyone for joining us and hand the call back to the operator to begin Q&A. Operator: [Operator Instructions]. Our first question comes from Adam Gill at Ventum Financial. Adam Gill: One question for me. As we go into 2026 in a bit of a softer oil price environment, how are you thinking about prioritizing production maintenance versus buybacks versus net debt reduction? John Jeffrey: Yes. Thank you, Adam. So it's a constant kind of battle. So we're always looking to deploy our capital at whatever can get us the highest rate of return. So we're going to go into the year, most likely when we do set guidance, most likely just to maintain flat production. Meanwhile, the NCIB is likely to continue. However, should we find M&A opportunities that pose a higher return than drilling our own land, as you've seen us do in Q3, I think what we'll do is likely reduce our CapEx to fund those acquisitions. We really like that strategy in that not only does it leave our reserves in the ground, but if we're able to acquire some of these assets, at a discounted price due to this commodity. That's something we like. We get all those reserves. So generally, we get production online that's a lower decline at a better capital efficiency than drilling our lands. And again, we can save our locations for that -- for a higher oil price. So that's just something that we're always watching. And again, if we can monitor that and get the highest price, the highest return on our capital, that's where you're going to see us continue to do. Adam Gill: Sounds good. One quick follow-up. Just on terms of declines, what do you think your decline would have been through a 100% organic drilling program coming into 2026 versus doing the tuck-in acquisitions that you disclosed in Q3? John Jeffrey: Yes. That's a great point as well. So again, by acquiring mid-life cycle assets as is a Blueprint, you're getting assets with a much lower decline. Obviously, a new well has a much higher decline. So should we have spent all that capital on CapEx instead of doing the M&A, I think we would have been around the 23%, 24%. However, we get -- this will be closer to that 20%, 21% now with these 2 acquisitions and the reduction in CapEx. Operator: And our next question today comes from Jamie Somerville at ROTH Canada. James Somerville: How does the 330 barrels a day from this Spearfish multilateral compared to the previous 2 wells that you drilled? And why was your type curve only 110 barrels a day? So like what I'm trying to get at is, what are the chances that this is just a fluke rather than a significant technological breakthrough. John Jeffrey: Well, I will pass it over to Sylvester Zdonczyk to elaborate a little more on that. But I will say, I think generally so I will agree that, that was more of a risk type curve. But I'll pass it over to [ Sylvester ] to comment. Sylvester Zdonczyk: Yes. Thank you, John, and thank you for the question. Absolutely for us, this is a new concept, a new play. So our type curve was risked. So while we're pleasantly surprised with 330 barrels a day, the 110 barrel a day type curve was a risk number. So we've done modeling. We've looked at analogs, but we do have limited data coming into the Spearfish in this specific zone for the first time. So this is better than our 2 previous wells. The type curve would have been closer average to the 2 previous wells. So while we can't expect 330 barrels a day every time for IP30, we do expect strong and consistent results. So this result may result in us writing up that type curve, but we wouldn't consider it a fluke. We knew what we were going after. We saw good signs when we were drilling. So we're expecting to see strong results go forward. Again, it might result in a slight write-up in our type curve. But again, that type curve represents an average. And as we learn more about this play, as we drill more wells, we'll refine that as we go. But we're confident in our inventory for 2026 and beyond. James Somerville: That's helpful. Can I follow up as we think about potential reserve bookings from everything you've been doing, both organically and acquisitions, but in particular with regards to multilaterals, can you maybe talk around the reserve booking potential? I'm not clear as to the extent to which your -- the locations. I think you're indicating like 375 multilateral locations currently, but I don't think all of those were booked at year-end 2024. And I don't know to what extent that number -- that estimate has increased since year-end 2024. John Jeffrey: So corporately, we try and be conservative in that we only book what we have strong confidence in. And as we've expanded our overall multi-leg drilling, that will allow us to further increase our bookings. We definitely did not have those booked, but we are lucky because Sylvester actually does our reserves as well. So can you give a little color on what we had booked going into last year, going into this year and what we could expect going into next year? Sylvester Zdonczyk: Absolutely. It's a well-timed question as we're going through our 2025 year-end reserves process right now. And as John said, we were a bit conservative, but also not knowing to the extent, which we'd be drilling in the next 5 years, which remember, with reserves, you need to maintain that line of sight to development and also balance the inventory that you can drill. We have close to 2,500 locations internally that are viable and that we like. But unfortunately, we just won't drill them in a 5-year development plan. And so for reserves, we must honor that. So that's why last year, we only had 1,115 booked locations. Looking ahead to this year, we will see growth in that number, and we will see growth in our open hole multi-lats as we drill more and have line of sight to drilling those in the coming year and within the next 5 years. So I can't give you a number of what 2025 year-end will be. We were only in the 20s last year for open hole multi-lats, so quite conservative, but it did honor our pace of development. Now as we drill more and have multiple rigs drilling open hole multi-lats, we will see an increase in that number. And as we go through this process, that will become apparent in the next couple of months. James Somerville: Sorry, really quickly, I missed the number that -- of multi-lats that you had booked last year. Did you say in the 20s? Sylvester Zdonczyk: Yes. Last year, we were in the 20s in the Bakken, and we only had 3 booked in the Spearfish. So again, we had only drilled at that time last year. So us and the reserve auditors weren't prepared to book tens or hundreds of those Spearfish. But now that we've drilled 2 more and have line of sight to 4 this year and beyond, we'll see that number grow. Operator: And our next question comes from Abhi Patwardhan with Sculptor Capital. Abhishek Patwardhan: Congratulations on another strong quarter. With regards to your reserve report since we are already in November, have you been talking to your auditors around getting better credit for a slightly higher or above type curve performance? John Jeffrey: Yes. Again, I'll hand it over to [ Sylvester ] here in a minute, but what we don't want to do and what we've been successful in doing thus far is we've never had to take a write-down on our reserves. Again, maybe we are a little conservative in our approach. But what we'd rather do is have them come in a little more on the conservative side, beat expectations and grow our reserves instead of getting a position where you're overbooking and then having to take write-downs. But I will pass it over to Sylvester to comment further. Sylvester Zdonczyk: Yes. The other thing to add to that, John, is that the type curve represents a field-wide average. So we're not just looking at a localized pool, especially in Southeast Saskatchewan. We're taking our results from the past year as well as recent years as well as our peers and competitors in the area. So our outperformance speaks to our technical team's ability to deliver on those results as well as the quality of our reservoir and inventory. So while there is potential, and we do look at this year-over-year. So I shouldn't say that it doesn't happen because every year, our type curves are reviewed. We look at the well results, we look at our remaining land base, and we do reflect our remaining inventory. So the fact that we've outperformed speaks well to our technical team and to the quality of assets and reservoir that we do have, but we are honoring the field and pool averages. So we will look at that. We do look at that every year. It's not stagnant. They get looked at year-over-year, and you might see some changes to reflect the most recent performance, but we also want to honor what our remaining inventory is, not just within the next year, but again, within that 5-year book period on our proved reserves. John Jeffrey: And I think the best example of that is one of the fields we've been in the longest would be the Viking. And the Viking for almost 5 or 6 years in a row, I believe, that type curve has increased because we've had such great results in that field. So again, it's -- the more time we spend this field, the more data points we have, the more confidence we get, and that allows us to take higher estimates on those wells. Again, the Viking is the best case because we were beating type curves consistently for 6 years in a row. And each one of those 6 years, you've seen that type curve come up. So again, something that hopefully, we can continue these great results in our other fields, and you'll see that similar trend. Abhishek Patwardhan: And John, remind me for Viking, how much above the type curve are you right now? I mean when I say type curve, I mean the type curve that you got credit for in your reserve report last year? John Jeffrey: So this year, we have actually deferred a Viking program. Again, in favor of with this commodity price and the relatively higher declines you get in the Viking, we deferred that in favor of some of these tuck-in acquisitions. The last Viking program that we executed on was last year. I think we're 22% ahead of type curve there. So strong consistent results, which is what we like. But again, as the type curve comes up, year-over-year, your beat on that will eventually decline until you're at type curve. And that's the point is not just to beat the type curve, but eventually land on it. So you're booking properly, you're executing accordingly. But yes, so no Viking results so far this year. But in the past, we have managed to beat our expectations even with those expectations rising year-over-year. Abhishek Patwardhan: Got it. Would you mind sharing some color on hedging? I'm curious how hedged you are right now and if there is any changes to the hedging philosophy internally? John Jeffrey: Yes. So I'll pass that over to Scott to have a couple of comments. I will say, I think this will make this part of our corporate presentation moving forward. We have been really lucky this year in that the 3 times we have added hedges were the 3 highest oil prices we've seen in the last 10 months. But as far as the amount hedged and where we're at with that hedge book, I'll pass it over to Scott. Scott Sanborn: Abhi, Scott here. Yes. So currently, right now, we're 50% hedged on a 12-month basis on oil and liquid volumes. We've been pretty active on the gas front as well. So we're between 50% and 70% of gas between 280 and 350 makes up a small proportion of our production, but still there, nonetheless. Thereafter, we're about 20% for the following 6 months. So we're pretty active in the market. As John mentioned, we did take the opportunity this year to hedge at the peaks of oil in early January and again in August. And we layered on some subsequent hedges in our financial statements as noted yesterday. Abhishek Patwardhan: Got it. And one last one for me. What's the base decline across all the assets, the entire portfolio right now? John Jeffrey: Yes. So I think going into '26, you should see a decline right around, I would think that 21%, 22% kind of depends on if it's an annual average or specific to, say, January 1. But I think we're going to be somewhere in that low 20s would be a great number to use. Operator: Thank you. And that's all the time we have questions for today. So this concludes today's conference call. You may now disconnect your lines. Thank you for participating, and have a pleasant day.