Ferrovial N.V.

Good afternoon, everybody. This is Silvia Ruiz speaking, and I would like to welcome you to FROEAL's conference call to discuss the financial results for the third quarter of 2025. I'm joined here today by your CFO, Ernesto López-Mozo. Just as a reminder, both the results report and the presentation are available on our website since yesterday evening after the U.S. market was closed. At the end of the presentation, there will be a Q&A session. As in previous calls, you have the opportunity to ask questions live. For that, you will need to join the call through the conference call channel and press star 5 on your phone keypad. If you prefer, you can send them through the forum included in the webcast and I will be reading them out loud at the end of the Q&A session. Before starting, please take a moment to look at the safe harbor statement included in the presentation and please bear in mind that the presentation contains forward-looking statements and expectations that are subject to certain risks and uncertainties, so actual figures may differ. Other than as required by law, the company assumes no obligation to update forward-looking statements. During this call, we will discuss non-IFRS financial measures which are defined and reconciled to the most comparable IFRS measures in our results report. With all this, I will hand over to Ernesto. Ernesto, the floor is yours.

Thank you, Silvia, and hello, everyone. Thank you for joining us today for Ferrovial's third quarter of 2025 operating earnings conference call. Starting with the overview, I mean, the first nine months of 2025, we saw continued strong momentum across our business divisions. Our highways delivered outstanding revenue and EBITDA growth fueled by our North American assets. Airports saw continued progress at new Terminal 1 at JFK. Here we are now intensely focused on operational readiness. Construction maintains solid profitability with the adjusted EBIT margin reaching 3.7% in the first nine months. On the financial side, net debt excluding infrastructure projects is to that negative net debt or net cash, let's say, 706 million euros. The main cash inflows included 406 million in dividends collected from projects and proceeds of 534 million from the sale of AES airports in the UK and 539 million from the sale of a 5.25% stake in Heathrow Airport. This was closed in July. The main cash outflows related to the acquisition of an additional 5.06% stake in the 407 ETR for the equivalent of 1.3 billion euros and also equity injections of 239 million euros in NTO. Shareholder distributions reached 426 million in the first nine months. We also announced a second script dividend and expect to submit the RFQ for the I-77 South Express Lines project in North Carolina in December. As a reminder, we have already been shortlisted for bidding on the I-24 Southeast Choiceless in Tennessee and the I-85 East Express Lines in Georgia. We expect to submit these bids in the first half of 2026. Let's move now into the operations with the slide on highways. And here the U.S. highways revenue grew 16.4% in like-for-like terms in the first nine months of the year compared to last year, and adjusted EBITDA was up nearly 15.1%. 97% of the highways adjusted EBITDA and 88% of the highways revenue comes from the North American assets. Dividends from these North American assets in the first nine months of 2025 totaled 312 million versus the 420 million in the same period last year. I mean, this reflects the strong growth and the cash generation of these concessions. As a reminder, in the first nine months of 2024 included the first dividend from the I-77, which was an extraordinary amount of 195 million euros. Let's move to the specific assets, the 407 ETR that delivered another outstanding performance this quarter. The traffic in the quarter grew strongly, 9.4%, and it grew 6.2% in the first nine months of the year compared to last year. This growth reflects the success of targeted rush hour driving offers, as well as the increase in mobility in the region from return to office mandates. The strong underlying traffic trends was the cost driving 18.6% revenue growth in the third quarter and 19.3% in the first nine months. EBITDA surged 20.1% in the third quarter and 15.8% in the first nine months. In terms of Schedule 22, 407-ETR reduced the 2035 Schedule 22 payment estimate. Given the new estimate is markedly lower than the previous estimate, the provision for the first nine months is lower than the one recorded up to June. As a result, the 407-ETR recorded a $9.8 million Canadian provision recovery in the third quarter, bringing the accrued provision for the nine months to $35.4 million Canadian dollars. Promotions are working really well in incentivizing more efficient use of the road. Through these targeted offers, we continue to gain valuable insights into customer behavior. We expect our focus on demand segmentation to continue enhancing value for users and maximizing EBITDA growth. In terms of dividends, 450 million Canadian dollars has been paid in the first nine months of the year. This is up 13% compared with the same period last year. And the 407 board has approved a dividend of 1.05 billion Canadian dollars to be distributed in Q4. This is up 50% from last year's fourth quarter dividend. And this would bring the total amount of dividends approved for the 2025 year to Canadian 1.5 billion. This is up 36% from 2024. Moving to the Dallas-Fort Worth managed lanes, slide 6, we will start with NTE. And here, well, despite we see traffic impact from capacity improvement construction works, really there's fewer vehicles in the corridor. And that has affected traffic, declining 3.7% in the third quarter and 4.4% in the first nine months of the year. The revenue per transaction has increased significantly. by a healthy 14.2% in these first nine months. And this benefits from a favorable traffic mix. That means more heavy vehicles in proportion and more mandatory mode events. The asset grew the adjusted EBITDA by 7.4% in the first nine months. And this includes $1.3 million of revenue share in the third quarter and $4 million in the first nine months. In LBJ, traffic grew 1.7% in the quarter and 1.5% in the first nine months of the year. And this despite that there's impact of continued construction works in the surrounding roads and corridors. The revenue per transaction grew 8.7% in the first nine months, and the adjusted EBITDA grew 11.1%. Now, with NT35 West is the only Dallas-Fort Worth managed lane that is not impacted by construction works, traffic in the third quarter grew 4.6% and by 4.1% in the first nine months. This drove outstanding revenue per transaction growth of 12.0% in the third quarter and 10.2% for the first nine months. The adjusted EBITDA that grew 11.8% in the first nine months of the year included 4.9 million of revenue share in the third quarter and 14.8 million in the first nine months of 2025. All the Dallas forward assets, as you see, recorded solid revenue per transaction growth, and this is above the soft cap, benefiting from the favorable traffic mix that I mentioned. There's more heavy in proportion. And in the case of NTE and NTE35 worst, they are also benefiting from more mandatory mode events, which occur when tolls are temporarily forced above the soft cap to guarantee a minimum level of service. In terms of dividend distributions for the first nine months, I mean, the figures at 100% participation would be $108 million for the NTE, $52 million for LBJ, and $99 million for the NTE 35 West. There's no changes versus June. Please remember that these projects usually distribute dividends in June and December. Moving to managed lanes outside Dallas-Fort Worth, we have the I-66 and the I-77. The I-66 saw exceptional traffic growth, 13.2% in the third quarter and 8.5% in the first nine months of the year. And the revenue per transaction grew 12.1% in the quarter and 18.3% in the first nine months of the year. This strong growth was driven by robust corridor growth, especially during peak times. where we are seeing some benefits from greater enforcement of return-to-office policies. Really, this is happening across the U.S. and also Canada. This strong underlying traffic trend has helped to drive the outstanding growth of 32.5% in adjusted dividends in the first nine months of the year. Day 66 distributed 64 million in dividends in these first nine months. The I-77 also saw traffic growth here 1.5% in the third quarter, despite adverse weather conditions, particularly in August. Revenue per transaction increased by a strong 25.7% in the quarter and 24.4% in the first nine months. Adjusted EBITDA grew 21.1% in the first nine months, with 5.4 million of revenue share for Q3 2025, and this includes revenue share from extended vehicles. The revenue sharing, including extended vehicles, totaled $15.7 billion for nine months of 2025, compared to $6.9 billion in the first nine months of 2024. And the I-77 distributed $22 million in dividends since the beginning of the year. Now let's move to the airport's division. At new Terminal 1, we are making steady progress towards operational readiness. The project remains on budget. In terms of a schedule, we are discussing acceleration measures with the contractor to guarantee that the official opening date of June 2026 is achieved. Construction is 78% complete, and we have commitments from 21 airlines. As a reminder from previous quarters, we achieved an important milestone in July, completing the refinancing of Phase A to the issuance of a $1.4 billion long-term bond. In Dalaman, we saw steady performance, adjusted EBITDA growth in the first nine months is supported by commercial upgrades and despite softer international traffic during the summer that was affected by geopolitical situation in the Middle East. In the first nine months, traffic declined by 1.5%, jet revenue grew 2.9% and EBITDA 1.8%. Dalaman distributed 7 million euros in dividends during the third quarter. This is Ferrovial's share. Now let's move to construction that keeps showing solid profitability. The division delivered a 3.7% adjusted EBIT margin for the first nine months of the year, aligned with the long-term target of 3.5%. And it recorded a solid 4.2% adjusted EBIT margin in the third quarter. Budimex and Weber maintained a steady profitability with very healthy adjusted EBIT margins of 7.6% and 3%, respectively, in the first nine months. Ferrovial constructions adjusted EBIT margin was 1.7% in the nine months, and this is down slightly versus the same period last year due to significant design activity in bidding for projects in the U.S. and costs related to digitalization. and IT systems, while partially offset by increased margins in projects approaching completion. So these expenses should be for the good growth that we're seeing ahead. Our order book stands at $17.2 billion at the end of September. This is up 9.1% in like-for-like terms compared to the close of 2024 December. The composition of the order book remains very healthy, given the lower weight of large design and build projects with non-group companies it does not reflect um approximately 2.3 billion euros in contracts that are pre-awards or are pending financial close and almost half of our backlog um half of our backlogs is in our core us and canada market which spec will continue to support future growth Now let's move to the next slide just to have a look at the main figures. You see the strong revenue and profitability performance for the first nine months of the year. I mean, strong across the board, revenue growing 6.2%, adjusted EBITDA 4.8%, and adjusted EBIT by 6.0% in like-for-like terms. Let's move now into the consolidated net debt position. In the next slide, the net debt excluded infrastructure project companies, as I mentioned in the introduction, was negative $706 million or net cash of $706 million at the end of the third quarter. This reflects a strong cash generation and also disciplined investment and the impact of recent divestments. Here we have the bridge where we see that we collected strong dividends. Please remember this figure does not include the latest dividend announced by the 407 ETR that will be paid in the fourth quarter. The cash flow from construction is affected by the lack of significant advance payments during the first nine months. You know that there's usually seasonality in construction. We expect to see a substantial improvement in working capital in the last quarter of the year. Then in this operating section, we also have tax payments that are mainly related to Budimex and to a lesser degree, construction projects in Australia and Canada. We also look into the investment bucket. We see significant activity in terms of investments for growth. I mean, the main one being the 5.06% acquisition additional stake in the 407%. and also the equity injections in NTO. Just a reminder, NTO has no additional equity injections scheduled for the year. Additionally, in this blog, we also reflect the interest received in cash and deposits, right? And also here we reflect the divestments from the sale of Heathrow and AGS primarily. Then we have the shareholder distributions, including cash and share buybacks, amounted to $426 million. Here we are on track, remember, to deliver across the years, 2024 through 2026, $2.2 billion in cash to shareholders. So we are on that track. And then we have the cash flow from financing activities related to external debt repayments, interest, and so on, and also the FX translation of the cash balance sets. So, it's a very solid net cash position. So, let's move to the… I mean, closing remarks I would like to make before moving into the Q&A session. Really, the performance in the first nine months of 2025 demonstrates, I mean, shows the strength and resilience of our portfolio. The North American assets continue to drive growth, supported by increased customer segmentation and favorable market dynamics, dynamics where the assets are located. Looking ahead, we're really looking forward to the attractive pipeline of opportunities in North American highways mainly. I mean, we expect to have big submissions for the I-24 in Tennessee, I-25 in Georgia in the first half of 2026. And also at the end, before the end of this year, the submission of the RFQ for the I-77 South in North Carolina. The construction order book remains healthy and the division ready to enable delivery on the growth opportunities that the infrastructure construction pipeline shows. Well, thank you, and let's move into the Q&A session.

Okay, thank you very much, Ernesto. Let's start with the Q&A session. Operator, please go ahead.