Hochtief Ag

Gentlemen, welcome to the Hochthief Half-Year 2025 Results Conference Call. I am Moritz, the call's call operator. I would like to remind you that all participants will be in a listen-only mode and the conference has been recorded. The presentation will be followed by a question-and-answer session. You can register for questions at any time by pressing star and 1 on your telephone. For operator assistance, please press star and 0. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mike Pinkney. Please go ahead, sir.

Thanks, operator. Good afternoon, everyone, and thanks very much for joining this HAWCTIF first half 25 results call. I'm Mike Pinckney, head of capital market strategy, and I'm here with our CEO, Juan Santamaria, and our CFO, Chris Zandreschi, as well as the head of IR, Tobias Loskamp, and other colleagues from the senior management team of HAWCTIF. We're looking forward to your questions, but to start off with, as is traditional, our CEO will run us through the details of another strong set of HoCTIV numbers and provide you with an update on the group strategy. Juan, all yours.

Thank you, Mike and Adim, and welcome to everyone joining us for this results call. HoCTIV has delivered an excellent performance during the first six months of 2025 with significant growth in revenues, profits, and orders, as well as a solid cash flow result. In addition to achieving a strong financial performance during the period, we have made further important progress on the strategic front. We are increasingly harnessing our geographic footprint and engineering know-how on a group-wide basis to achieve additional growth in value creation for all our stakeholders as we continue to deliver on HoCTIV's growth strategy. And our growth trajectory is supported by a solid balance sheet, a strong order book, and a strongly cast generative business. So let me give you an overview of the key highlights of Octee's performance during the first six months of the year. The group has seen an acceleration in its top line. Group sales increased by 25% year-on-year to 18.4 billion euros or 29% if it's adjusted. This is mainly driven by strong organic revenue growth and was accompanied by solid margins. Operational net profit rose by 18% to 355 million at the top end of our guidance range for 2025, of an increase of up to 17%. And if we adjust for Forex headwinds, the underlying profit growth rate was even higher at 22%. Nominal net profit of 481 million includes net 126 million euros in one-off gains, mainly reflecting the non-cash Q1 2025 flat iron evaluation impact. The quality of our profits, is underlined by solid cash generation performance. Looking at cash flow during the last 12 months, the strong performance is driven by a sustained high level of cash conversion with net operating cash flow of 1.3 billion euros. The first half of the year incorporates the characteristic impact of society during the first quarter, but shows an increase in net operating cash flow year-on-year adjusted for factoring. The movement in the group's net debt position since December 2024 was driven by strategic investment decisions and their consolidation effects as well as FX impacts. Considering the last 12 months and adjusting for capital allocation, dividends and FX, net cash would show a strong 1 billion year-on-year increase. The new order's level of 26.1 billion euros represents a very substantial rise of 26% year-on-year adjusted for FX movements. with all operating segments reporting increases. The work includes important project wins in our strategy growth markets, such as data centers, critical metals, energy, as well as other core infrastructure markets. At the end of June 2025, the group's order book stood at 69 billion euros, up by 15% year-on-year effects adjusted. Let's take a brief look at our performance at the segment level. In terms of order growth and indeed other metrics, Turner has had another standout performance. Very strong sales growth of 41% to 12.2 billion euros was organically driven, 37% effects adjusted, with operational ability nearly 60% higher at 392 million. This remarkable rise in profits was also a consequence of the positive margin evolution, which increased by 30 basis points activity level to 3.2%, driven by Turner's successful strategy of focusing on advanced technology projects. New orders were another highlight, with a 23% rise to 16 billion euros, including a doubling in the level of data center work. We expect Turner will continue its strong growth driven by, firstly, its strong position in advanced tech, including a rapidly expanding data center market globally, with Turner growing in Europe. Secondly, further margin progression as the share of advanced tech projects steadily increases and aided by source blue supply chain services of offering. And thirdly, the structural long-term growth in several of its key markets, such as healthcare, education, airports, and sports stadiums. We reaffirm our guidance of $660 to $750 million operational activity for Turner in 2025, an increase of between 16% and 32%. Moving on to CIMIC, revenues were stable, adjusting for the timing effects of the disconsolidation since Q2 2024. The business achieved solid growth in strategic market segments, particularly across the data center, social infrastructure, and energy transition markets, upsetting the winding down of large transport projects. Operational ability was 4% higher on a comparable basis at $232 million. Cash flow exhibits the effects of seasonality, the ongoing working capital profile adjustment, and higher factoring during the first half of 24. On a comparable basis in adjusting for factoring variations, net operating cash flow shows a 101 million improvement year-on-year. CEMIC ended the period with a robust order backlog of 23.2 billion, which is 5% higher year-on-year on an effects-adjusted basis. Operational PVT guidance for CIMIC of 480 to 510 million implies an increase 7 to 13% for 2025. At our engineering and construction segment, sales of 800 million euros were 14% higher year-on-year on a comparable basis, adjusting for the impact of the deconsolidation of our North American serial business following the Flatiron drug house transaction. Operational PVT showed an 18% comparable increase to 40 million euro, and cash flow also improved on the same basis. A key highlight here was the strong rise in the orders to 3.4 billion euros, 64% higher year on year. Our engineering and construction guidance range for operational pivot in 2024, five of 85 to 95 million implies sustained strong growth of up to 24% on a comparable basis. Looking at Abertis, the Torwood company continues to perform in a solid manner. Operating revenues rose 6% on a comparable basis to 3 billion euros, with EBITDA similarly higher at 2.1 billion euros. Operational net profit pre-PPA of 383 million compares with 402 million in the first half of 24 and includes the adverse foreign tax impact. The operational contribution to Cocteau for the six-month period of 36 million included positive second quarter growth. As a consequence of its solid cash flow performance, Abertis distributed a total dividend of 600 million euros in the second quarter of 25, in line with the previous year. And we anticipate Abertis will deliver a similar operational result in 25 to 81 million of 2024. Let me provide you with an update on HoCTIV's strategic development. As a global infrastructure leader, Octiv's strategic delivery has continued in the first six months of 2025. It gains a background of unprecedented multi-year demand for infrastructure investments driven by the mega trends of digitalization, graphics, defense, deglobalization, and demand for energy. From a strategy perspective, the best way to look at the group is on a global sector basis. Octiv has positioned itself as a leading global digital advanced tech infrastructure and services solution provider. to meet the strongly rising demand. This is being achieved by expanding our presence in the value chain with our construction engineering know-how complemented by the group's equity investment and O&M expertise. We're one of the world's leading providers for development and construction of data centers with around 60 a watt of successfully implemented projects. The group's approach combines comprehensive expertise in planning, enhancing construction operation. According to several sources, the global data center CapEx market could grow at close to 20% annually until at least 2030. Octiv has secured several notable project wins in data centers during the period. Turner has doubled the value of new orders booked, underlining the group's strong presence in this rapidly expanding market. In the Asia-Pacific region, a similar joint venture is delivering the first tranche of a multi-phase data center development project in Philippines and has recently delivered projects in Malaysia and Singapore, whilst in Germany with loans. As developers, contractors and operators, our fifth Edge Data Center project, this time near Munich. And earlier this week, CoreWeave, the AI hyperscaler, announced its intent to commit more than $6 billion to equip a new state-of-the-art data center in Pennsylvania. purpose-built to power the most cutting-edge AI ES cases. The initial 100 megawatt data center with potential to expand to 300 megawatts represents one of the first large-scale data centers of its kind in the region and will be constructed by Aterna JV. As part of the group's broader strategy to establish a pan-European network of sustainable decentralized edge data centers, Octivi is looking to expand the businesses into other European countries, including Austria, Switzerland, and the UK. We previously created a joint venture, Jorison, which enhances Hocktee's Jixia data center with innovative cloud computing solutions that support digital sub-ranging. The first data center will open in Germany this summer, and sites for several additional centers are being developed. The group is also advancing in the semiconductor area, where strong demand for artificial intelligence and increasing digitalization is boosting investment level. Global sector sales in this market are expected to reach $700 billion in 2025, with double the growth expectations going forward. Together, with a reshoring trend, this is driving a rapid increase in semiconductor-related construction work. This is a strategic growth market for HoCTIF, and we're actively analyzing a very sizable pipeline of potential projects. Recent project awards include a significant construction contract for the expansion of an assembly and test facility for cheap photography machines in the US, an important semiconductor project in Malaysia, and a semiconductor-related construction facility in Germany using clean room technology. Another priority for HoCTIV is this radically vital critical metals in natural resources sector, where we have been developing a leading global position in recent years via a combination of organic growth and M&A. Global megatrends are driving strong demand growth for metals such as copper, aluminum, and nickel, but also critical new economy and battery minerals, including lithium, cobalt, and rare earth. The global metals and mining market, currently worth $1.2 trillion, is expected to reach over $1.7 trillion by 2033. Octif, through Setsman, is a leader in engineering for critical minerals and mineral processing with expertise in copper, high purity alumina, vanadium, lithium, cobalt, rare earth, uranium and nickel. In the period, we have started work on a new innovative critical minerals processing plant in Queensland from vanadium and other rare earth metals, and has also been awarded a five-year gold project contract extension in Western Australia, as well as another gold project in the region. These latest awards come in addition to several important projects we're executing in this sector, including a major lithium extraction plant in Germany, the process design and product implementation for a copper sink plant in Western Australia, a three-year nickel and copper full-service mining project in Ontario, Canada, a four-year contract to deliver underground services at a copper mine in Queensland, and the provisions of mineral processing services as part of a major Australian iron ore contract. Furthermore, we are currently working on a number of lithium projects in Portugal, Brazil, and Canada. In addition to our engineering expertise, Octivi is also a leader in the natural resources sector via TIS, which provides a full suite of mining, asset, and rehabilitation services across Australia, Asia, and the Americas. The company is steadily expanding its metal and minerals capabilities via its strategy to continue to diversify its commodity portfolio and geographic footprint, as well as expanding its services offering. Last month, TIS won a $2.3 billion contract extension in Queensland to continue providing full mining services at Lake Vermont, where it has been working since 2007. This project win highlights the recurrent nature of the business, which supports this solid cash generation. Looking forward, this is very well positioned for sustainable growth within the evolving global resource sector. As you will be aware, Octave has been a global leader in transport, infrastructure, and sustainable mobility for several decades. The outlook for the sector is very positive due to several infrastructure stimulus packages in key geographies. In Germany, for instance, the 500 billion infrastructure investment package approved by the Bundestag Parliament offers enormous opportunities to accelerate the modernization of the country. The plan is focused on transport, energy, and social sectors, including healthcare education, R&D, and utilization, with 400 billion euros federal and 100 billion state-level investment. Octiva is well-positioned to benefit due to the scalability of its business model and its core expertise in bridges, tunnels, and rail. But even before we see the benefits from this infrastructure investment boost, already in the last few years, order book for German projects has doubled to over 5.3 billion euros. During the first six months of 2025, HOCTIV was awarded a 170 million rail infrastructure contract to modernize a section for Deutsche Bahn as part of the integrated plan to upgrade the country's rail network. The HOCTIV Dream Venture was also recently awarded a major contract for the construction of the second mainline of the southbound rail network in Munich. Another significant European transport project win was secured during the second quarter with a DAS highway project worth initially 1.2 billion euros. In addition to the planning and construction, the BP contract also provides for the financing, operation, and maintenance of the road until 2051. In North America, a Flatiron Dragado JV was awarded a one billion contract for Long Bridge North Rail infrastructure project, which will modernize critical transportation links between Washington DC and Virginia. And in Australia, a Simic JV has been selected to build a Logan and Gold Coast faster rail project with work scheduled for completion ahead of the Brisbane 2032 Olympics. OPTIV continues to command a leading position in the biopharma, health, and education infrastructure sectors. Driven by demographics, including urbanization, as well as digitalization megatrends, significant structural demand growth for healthcare and education infrastructure is anticipated. OCTIV has a strong record and industry leading expertise in the healthcare sector, where, for example, in the U.S., Turner renewed its bold position in healthcare, being once again named the number one construction manager. And the group has delivered award-winning major hospital facilities across the Asia-Pacific region. In the first half of 25, CIMIC signed a letter of intent to construct the new Dunedin Hospital in Patients Building in New Zealand. In the education sector, where Turner is a leader, The company is building the college of veterinary medicine in South Carolina with completion plan for 2026. And in Germany, Octiv secured a contract to build a new research building at the University of Duisburg, Essen. Investment in defense is expected to strongly increase in our key markets. Octiv is well positioned globally for higher defense spending given our sector presence in Europe, U.S., and Australia, supported by our key security credentials. At the end of June, the group had around 2 billion euros of defense-related work in its order book. During the period, CIMIC was awarded a $317 million OC contract to upgrade of infrastructure and facilities for the Royal Australian Air Force in Queensland. In the U.S., a flat-iron drug allergy inventory is in the construction of a dry dock at Pearl Harbor. The project is part of the U.S. Navy Shipyard Infrastructure Optimization Program to modernize government-owned unoperated shipyards. And we're very well-placed to participate in major multi-year defense investment plans in Germany with opportunities in defense-related capital works, new or renovation projects, infrastructure buildings, et cetera, and potentially via the PPP model. In energy infrastructure, OCTIV is playing a key role globally. For example, in Australia's energy transition, by leveraging our global expertise in local capability and footprint to deliver significant projects. A strong growth is being driven by the increasing demand for energy in general and, in particular, for clean energy. UGL and Setsman are pioneers in delivering engineering-led integrated solutions for clients' energy, mobility, and natural resources. During the period, CIMIC won several contracts to expand electricity infrastructure in Western Australia, as well as a major project in the LNG sector. And in Germany, Hochtief Engineering has been awarded a planning contract for four high-performance onshore 2 gigawatt converter stations, which will be key to bring wind power generated energy to the Ruhr area. Elsewhere, it is worth underlining Hochtief's longstanding leading position in the commercial and general building sector. including airports, sports stadiums, and offices. In the second quarter, Turner was named the lead builder for Republic FC's new 12,000-seat stadiums in downtown Sacramento. In addition, a Turner joint venture was selected for the first phase of a $3.7 billion convention center project as part of a multi-billion dollar investment in the future of downtown Dallas. Let me now briefly turn into capital allocation. A key pillar of the group's strategy. In January, Hochtief closed the approximately 400 million euros per day acquisition of Dornan, the rapidly growing advanced tech engineering business headquartered in Orlan. This acquisition is a major milestone which will enable the group to accelerate Dornan's European expansion strategy. Apertis, where Hochtief holds a 20% stake, announced earlier this year that it would acquire a majority stake of the A63 highway in France as for the corridor between Spain and Northern Europe. Investment in a concession with 26 years of remaining life enhances Avertis' portfolio duration in financial strength. And we continue to develop and invest equity in greenfield infrastructure projects in Australia growth markets where we see significant value creation opportunities. In Australia, for example, We're further leveraging the group's capability and leadership position in data centers after the acquisition last year of a site to develop a data center with 200 megawatt capacity. CIMIC also is investing in and developing renewable assets, transmission lines, grid enablement infrastructure, and battery energy storage systems. And in Europe, we continue investing in core infrastructure via PAPs, as highlighted by the Dutch Highway Project win I mentioned earlier. Overall, at the end of June 25, we had committed equity investments of close to 800 million euros, of which over 400 million are in strategic growth markets, including data centers, renewables, battery energy storage systems, electric vehicle charge networks, and critical metals. The group's focus on environmental, social, and governance priorities remain on track. On this front, it is notable that HoCTIF has been awarded primary status for its ESG performance and achievements by the ISS International ESG Consultant and Rating Agency. So let me wrap up. OCTIV's H125 results show an excellent performance with an 18% increase in operational net profit at the top end of our guidance and backed by strong gas conversion. New orders have a strong increase of 26% effects adjusted to over 26 billion with a period and order book 69 billion up to 15% year-on-year, and with over 85% of this backlog lower risk in nature. And we're increasingly harnessing our geographical footprint and engineering know-how on a group-wide basis to continue leveraging our competitive strengths and delivering on Hoogtieff's group strategy, with our growth trajectory underpinned by a solid balance sheet. Looking forward, we continue to deliver on our strategy by focusing on the spotting growth markets we have identified. Octave is increasing its presence in the value chains by equity investments, and we're expanding our opportunities to create value in market where we have leading positions. We reaffirmed our 25 guidance to achieve an operational net profit of between 680 and 730 million euros, an increase of up to 17% year-on-year. Thanks, everyone, for listening, and happy now to take questions.

Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and 2. Questionnaires on the phone are requested to disable the loudspeaker mode while asking a question. Anyone who has a question may press star and 1 at this time. One moment for the first question, please. And the first question comes from Luis Prieto from Kepler Schiffer. Please go ahead.

Good afternoon, everyone. Luis Prieto here. I have three quick questions, if I may. The first one is if we should expect any acquisitions similar to Dorne in Europe in the near future. And in this respect, if you have any comments on press reports on potential interest in defense investments, I would assume both ACS and Hockney levels, if there's anything to it. The second question is if you can give us an idea of what sort of land investment there could be at HoCTIV level for data center development, if any. And the third one is taking advantage of Juan, you've been here. Can you give us an idea, ACS's view on the remaining free float of HoCTIV at the moment?

Thank you. Thank you, Luis. So starting with Ornan. I mean, certainly Doran has been a very, very good acquisition for us, for Hochtief and for Turner. In New Orleans particularly, because it's giving us a very strong performance in Europe and the potential for Turner's expansion in Europe, but also because financially the sales in the first half of $642 million of Dornan is, I mean, it's almost double last year. So, it's developing very, very well, and I think that it's going to develop even better. So, obviously, when you look then at the acquisitions with the previous years, especially all the Bolton acquisitions on critical metals, remember NOAA Pro, Codentia, Minsell, or Setsman, that has given us, it's a change of game, right? If you look at what I just went through in my presentation, you can see that through Setsman, which is our engineering critical metals and natural resources processing plants, has gone from almost a few years ago doing doing coal to right now pretty much working on all kind of critical metals, from cobalt to copper to gold to lithium to uranium. I mean, it's very, very well diversified. And more importantly, from working almost all in Australia to working all over the world, right? So, in Americas, in Europe, in Asia Pacific, in Australia, and that will continue growing. So, in summary, our investments are working very well for the group, right? So, yes, we're looking at other possibilities. Yes, our goal continues being having energy, industrial, high-tech, digital, engineering, and construction capabilities in all geographies. And we continue analyzing what we can grow organically and what do we need. inorganically to enforce the group. So, at this stage, we haven't identified any objective, but certainly, we see that there's value in continue pursuing our strategy because it's being paid off. In terms of land investment at hoctic level, you see the edge strategy that we are following. So, we are running right now five edge low latency data centers. across Europe, and we started in Germany, but we are moving forward Europe and potentially North America and Asia Pacific, so that's one strategy. And then you saw, for example, the project in Australia where there was an acquisition last year and we've been developing. But at this stage, HoCTIV is not pursuing further big land plots opportunities in data center space. Yeah, and the heads at the end of the day are small land plots. And then in terms of ACS view of the free float of octaves, as I always said, we will be opportunistic. That's all what I can share about that from an ACS perspective. I'm changing hat for a minute. Excellent.

Thank you very much, Juan. Lítera de Caixa Banco.

And the next question comes from Felipe Leite from CaixaBank BPI. Please go ahead.

Hi, hello, everyone. I have two questions, if I may. The first one is actually a clarification on tax because tax rate in this quarter was so high, close to 30%, when in first quarter it was just close to 20%, if you can explain the reason for this significant increase in tax rate. Second question on CIMIC. And because if we exclude teeth, the sales remain flat both in first quarter and second quarter. And if you can clarify the reasons for CMIC X teeth not growing this year and your expectations for the remaining of the year. And last one on teeth put option, just if you can give us an update on the agreement and when should we expect acquisition of the remaining stake, if it could happen this year or only next year. Thank you.

Okay, Felipe. So, on the tags, it's just quarter variation. So, nothing in particular. In the case of CMXTs, what we're seeing in Australia is that there is a big wave of energy projects, including transmission lines, substations, um i mean renewables uh including projects around a gas lng so we're seeing a lot of that coming into the pipeline um but on the other side we've been the last two years because of changes in elections because discussions are on there that a lot of the induced projects have been delayed and a lot of the civil projects are have been unwinding right and with without So all of that is stopping, in our opinion, Australia growth momentarily, but we remain comfortable. It's also true that that situation of growth in the market has been affecting us not just in terms of the backlog, but in terms of the unwinding of some of the old projects and not being able to replace the new ones. And also as we, because of our strategy to go for low-risk contracts, we haven't been going to a lot of EPCs or big design bills. So that's why you see Australia in a situation where some of the cash flow is unwinding and some of the growth is not happening. But I believe that it's going to be temporary. On the put option, at this stage, I can only speculate, but if I had to speculate, I will believe that the put option will be exercised by the end of 26, which is the contract period and probably the end to be effective at the beginning of 27.

Okay, perfect.

Thank you. Then the next question comes from Graham Hunt from Jefferies. Please go ahead.

Thank you very much for the questions. I'll ask three if that's okay. First one just on DAWN and in the European data center outlook. The acquisition, as you say, has been extremely good I think originally you were discussing around 20 billion pipeline of data centers that was visible to you. Has that outlook changed, improved? You know, how are you seeing that market today given the performance has been so good? Second question, a bit longer term on data centers. You spoke to 20% growth annually out to 2030 in sort of the overall market. But my understanding, which is a basic one, but this is also comes with a bit of a shift towards more of the inferencing demand from the hyperscalers away from training. And I just wondered if you had any thoughts on does that change the economics at all from these projects perspective for Turner and the Hochtief group? And then third question, straightforward one, you maintain your full year guidance but the half year obviously was right at the top end of that. So maybe just talk through your thinking there in terms of how you're seeing second half and what you're holding back a little bit perhaps being conservative. Thank you.

Okay. Thank you, Juan. So starting with Dornan. So let me talk in general about data center market, right? So the data center market continues to grow significantly. And And it's not just that when you add up all the hyperscalers and all the clients and all the investments announced, you get up to pretty much the 62 gigawatt capacity right now to 257, 260, even 300 gigawatts, depending what you include in the announcement in the next 10 years. And this is around $2 trillion investment. Now, a big part of that is in North America. but a big part of that is in Europe. In Europe, what we're seeing is, so in general, first is that the pipeline continues being big. And second, we are not seeing a change in the metrics because hyperscalers move from one type of data center to a different type of data center. So that would be in summer. When we get into the 20 billion that we announced in Europe, every time we're talking about 20 billion, it's not just data centers, right? It's data centers. If a lot of industrial manufacturing, biopharma projects that require mechanical leg, expertise in advanced buildings, as Turner is used to perform. And we believe that that's growing significantly, even above the 20 billion. So, we are very confident in Europe, in general, and Dornan, but we're also very confident about the German market for HOPTIF infrastructure. I mean, we're still working around the 500 billion announcement, or the 800 billion, if you take into consideration everything, we're still trying to figure out specific projects, but we're seeing that recently we have double our backlog in Germany, and the prospects are very good. We see a lot of investments in Germany, and we want to make sure that we are prepared to capture a lot of that growth. And then on the guidance. You saw, yes, we're on the top end of our guidance. We're aware that the market consensus for the end of the year is that we'll remain on the top end of the guidance. The uncertainty we have right now is FX, right? FX ended in US dollar, euro, ended in 1.17. And the question is, what's going to happen? Is it going to continue to rate it? which is our potential assumption. But that's why we prefer to be cautious. We prefer to continue in the guidance. We are comfortable at this stage with where we are. But let's monitor the effects before we do anything.

Understood. Thank you very much.

And just to add, I mean, we're expecting this strong performance to continue in the business, by the way. Turner will continue with very good quarters and years ahead of us. And we see we're optimistic about Europe. And we also believe that the Australian situation will improve as soon as all this energy and big jobs will start coming to life.

Then the next question comes from Nicholas Mora from Morgan Stanley. Please go ahead. Mr. Moore, your line is open.

Sorry. Just coming back on the data center theme, you stated that the order intake at Turner had doubled over the period, so I suspect it's at the first half. You're putting the order intake in Q2 at what, around 5 billion dollars, if I'm correct? Just like the confirmation there, I mean, it looks like a huge step up from even what we saw in Q1. And number two, outside of data centers, what are you seeing in the U.S. market? I mean, there's ample debate in the street as to whether things are improving worsening so what are you seeing in your in your core verticals just to help us understand a little bit what's what's ahead of you considering you have uh nine to 12 months visibility and just last one on summit um when we look at the projects winding down and your order intake it still looks there's a bit of a cliff full coming into 26. Would you say today that there are any large projects that will continue to struggle into next year? Just trying to understand a bit where the, how to calibrate the models in the future. Thank you.

Thank you, Nicolas. So, let me start with the data centers in general and the rest of North America. So, in data center, there's two things happening. The first one is what I explained before, market is booming. But the second one is projects are more complex. More complex in terms of size, in terms of gigawatts, in terms of energy requirements, in terms of cooling systems, in terms of energy, in terms of logistics, in terms of remote areas because they are bigger. And the bigger, larger, and complex they get, the better for firms like Toronto. or for Lighten Asia, for UGL, or for Hoctis, basically, right? And that's why we are – that continues being a good market for us where we can continue providing value. And that's why when you look at the data center backlog in the first half of 25, right now it represents 32% of Turner. And, yes, it's a step up. But we believe that it will continue to grow, right? The prospects are very good. But when you look at overall North America and Turner, we are seeing improvements in a lot of different areas, not data centers. So in biopharma, for example, in the order backlog, it's pretty much have increased versus 25 by 100%. Or in new orders, 295%. When you look at the industrial and manufacturing market, it's growing at 16%. And I'm just referring to the U.S. In the education market, it's increasing 13%. In the case of sports, it's increasing 12%. But in the hotels and our commercial building, the new orders are growing 100%. Right? So we continue being bullish in the North American market. The other thing that I would say about the North American market is we're expecting to see the results of the beautiful bill that is being published. Basically, on the extent of tax, but there's a potential, as a consequence of the bill, a reduction of tax rates. And that would have a very direct benefit in internal, and therefore, octave. So we continue being very, very bullish, and we are very comfortable with the North American market. Although, as I said before, Germany, we're expecting an important growth in Germany. And now let's move into Australia. So, I mean, there's a lot of things, and I said part of that in talking about CIMIC, right? And before I spoke about energy projects, civil projects, but I would add one thing. This has been underperforming for the last two years. And this has been underperforming for the last two years, and this is not because operational issues. This is basically natural resources, commodity pricing. This is about exports. So, it's a macro thing, but we're seeing that recovery. There was a very, I mean, bad 2024. about Q1 2025, and the prospects are good moving forward with good prospects for 2026. So that's on this, which is an important part of CIMIC. We see a good evolution in Asia, very good evolution in Asia that will continue in 2026. UGL, as soon as right now it's steady, but it's steady not for a long time because as soon as the energy projects will go up, And then CPV, which is the one suffering the windings, I mean, we expect to hopefully to finish the city project right now being at 1, 25, and being at 26, and therefore should be, I wouldn't say that it's going to grow, but it's going to be steady, right, versus 25 on the P&L side and more stable on the cash. So that's what I would say about scenic paths. But it's not that there's any underlying problem. We have one job, M6, which is stopped. I mean, that's the one that I would mention. And we are talking to the client about different ways to sort out the underground conditions. That's M6 in New South Wales, Australia. Right now, that job is stopped. But besides that project, the rest is the unwinding typical at the end of the works.

And the next question comes from Alvaro Lentz from Alantra Equities. Please go ahead.

Hi, thanks for taking my questions. Just a couple. The first one would be on how concerned are you on execution risk with all the growth you are seeing in Turner? I don't know if you have any capacity constraints or whether you see the ceiling to continue to take in new orders. And also you mentioned that projects are now becoming more complex. in terms of size and cooling and all the other stuff. I don't know if that represents an additional execution risk. And my second question would be if you could run us very quickly on the effect exposure and not just on the P&L, but also on the balance sheet, how much are your debt balances with your business exposure?

Thank you. I mean, when I talk about complex projects, I always say in a positive way, right? For us, complex means larger, and for us, larger is an opportunity. The more commoditized is a job, the more we face the risk of things going to tier twos and tier threes, the more bigger and complex, the better chances it comes to firm like us. So from that perspective, it's a positive. Now, execution risk, I mean – We're not concerned about existing risk. One of our advantages, and this is what, I mean, and this is not just in the U.S., but in general, is to be able to capture, I mean, and to mobilize people and to mobilize engineering sources. And that's why the big jobs, when they are really, really big, and I will put the example in the Louisiana job, the meta job in Louisiana, which is, huge, a huge percentage in equivalent terms as the Manhattan Island in the middle of Louisiana. Those jobs require large or a lot of work in terms of logistics and mobilization, and that's where we can make a difference and where we can generate value. So from that perspective, we are very, very comfortable. So now the other thing, so in other words, I mean, we're not concerned about execution risk. On the contrary, the other thing is that these jobs take a long time to develop. So once we announce a project, typically we've been one year and a half working on engineering design, mobilization people with the clients, right? They are very long in the making. And there's a lot of jobs that we are right now on that engineering project. phase and design phase and working on potential resources to mobilize before they come to us. That's why typically we do have a long-term visibility about what's coming next for us. And that's when I say we're comfortable. It's not just because of macro . It's because we know while we are currently working with our clients that eventually we will end up in signing a contract, right? We're not concerned with execution and we're comfortable with the pipeline. When it comes to effects, I mean, obviously, again, we don't want to change guidance because we want to see how effects evolves. But the business is going to continue performing. And what I can say as a minimum is that we're comfortable that any effects Continued iteration is going to be offset at large by the overperforming of the business. How much? Well, it depends on how much the FX goes, right? And that's where I want to be careful not to speculate, right, or to give numbers. But certainly, the business is going very well, and we believe that we can offset the FX. We will look at the FX. before we can announce anything different.

Thank you. And just a quick follow-up in terms of capacity. Do you have any in terms of, I don't know if you have any bottlenecks in terms of talent acquisition, especially with the specificity of the large project that you are executing? Are you facing any bottlenecks there, or you could continue to increase your from current levels?

We are good. We are good. And I mean, just to give you an example in the US, in the US, we have 40 persons in 47 states with average of 20 offices per state. So we are very, very much mobilizing in the states. But in general, throughout the scope, and this is one of our biggest advantages, right? I mean, and I open parentheses, because this is not so much related to your question. But one of the key one of the biggest advantages and a strength that we do have about the business is our global presence, right? I mean, what I just said on the 47 states in the U.S. and 20 of these per state, our presence in Europe, our presence in Asia Pacific, from India to Hong Kong, our presence in Australia and New Zealand, our assets in South America, that's what gives a lot of confidence to our clients because they're all global. Hyperscalers are global. Semiconductor companies are global. Battery companies are global. The big industrial partners are global. Defense is global, et cetera, et cetera. So that's why we provide value. And that's why we are so much focused on increasing the value added, our knowledge, our engineering capabilities, our systems, to make sure that not just with our global presence, but also with our knowledge and technology, and systems and engineering capabilities, we can serve our clients. But the big advantage we have is exactly that, that we can deliver, and it comes back to your question about execution, that we can deliver and mobilize people in a lot of parts in the world. And typically, we have time to do it, right? Because the process during the design, it takes time, and we can use that time to deliver. So answering your question, we're good with execution at these states.

Thank you. As a reminder, anyone who wishes to ask a question may press star and 1 at this time. So it seems there are no further questions. So I would now like to turn the conference back over to the company for any closing remarks.

Thank you so much, everyone. Once again, thank you for your time, your questions. And if you have any questions that have not been answered, please give us a call. We'll always be happy to help. Thanks again.

Ladies and gentlemen, the conference is now concluded. Thank you for choosing Coruscore and thank you for participating in the conference. You may now disconnect your lines. Goodbye.