Hochtief Ag

Ladies and gentlemen, welcome to the Hoogh Teeth 9 Months 2025 Results Conference Call. I'm Sergan, the Chorus Call Operator. I would like to remind you that all participants will be in listen-only mode and the conference being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and then 1 on your telephone. For operator assistance, please press star and 0. The conference must start to be called for publication or broadcast. At this time, it's my pleasure to turn it over to Mike Hinkley. Please go ahead.

Thanks very much, operator. Good afternoon, everyone, and thank you for joining this Hawk Teeth nine-month 2025 results call. I'm Mike Hinkley, head of capital market strategy, and I'm here with our CEO, Juan Santamaria, and our CFO, Chris D'Andreschi, as well as our head of IR, Tobias Loskamp, and other colleagues from our senior management team. We're looking forward to taking your questions, but to start with, our CEO is going to run us through the details of another strong set of HawkTeeth numbers, a guidance increase, and provide you with an update on the group strategy. Juan, all yours. Thank you, Mike, and thank you, everyone.

And welcome to everyone joining us for this results call. HawkTeeth has achieved an outstanding performance during the first nine months of 2025. Its successful implementations of our growth strategy is reflected in the group's strong and sustainable financial performance. We are delivering significant sales growth, rising margins, and a positive evolution of the group's due risks operational profile as the proportion of advanced tech projects continues to increase. Due to our expectations of a Q4 acceleration, we're raising HoCTI's operational net profit guidance for 2025 to 750 to 780 million euros versus the 680 to 730 million previously. The new range implies a year-on-year increase of 20 to 25% compared with 625 million euros in 2024 and versus the previous indication of an increase of up to a 17% year-on-year. The higher net profit expectations for the group are driven mainly by the outperformance of Turner, where we now anticipate an operational PVT of 850 to 900 million in 2025, compared with the previous guidance of 660 to 750 million euros. In addition to achieving a strong financial performance during the first nine months of the year, we have made further important advances on this strategic front. We are increasingly harnessing our geographic footprint and engineering know-how on a group-wide basis to access additional growth and value creation opportunities. Before providing you with an update on the strategic front, let me give you an overview of the key numbers. Group sales during the first nine months of the year increased by 24% if it's adjusted to 28.1 billion euros. during in particular by the group's focus on its strategic growth markets. Actives operational net profit rose by 19% to 537 million euros, or plus 26% FX adjusted, above the top end of the 2025 guidance range we provided at the start of the year. Nominal net profit stood at 656 million euros. Operating cash flow last 12 months of 2.1 billion shows a strong performance up 400 million year-on-year pre-factoring, driven by a sustained high level of cash conversion and supported by firm revenue growth and margin expansion. The first nine months of the year incorporate a characteristic impact of seasonality during the first quarter, but show a 163 million increase in net operating cash flow year-on-year adjusted for factoring. Adjusting for capital allocation effects, net cash would show a strong 1 billion plus year-on-year increase. The movement in the group's net debt position since December 2024 has been driven by strategic investment decisions and their consolidation effects, as well as seasonal factors. The new orders level of 36.6 billion euros represents a significant rise of 19% year-on-year, adjusted for FX effects with all operating segments reporting increases. New work includes important project wins in Australia's growth markets, such as advanced technology, critical metals, energy, and sustainable infrastructure. On a last 12-month basis, new orders represented 1.2 times work done, giving you a sense of the continued growth trajectory. At the end of September 2025, the group's order book stood at €70 billion, up by 12% year-on-year FX adjusted. Now, let's take a brief look at our performance at the second level. Turner delivered an outstanding performance during the first nine months of 2025. Sales increased by 38% year-on-year to $18.8 billion, driven by very strong growth in data centers, as well as high revenues in healthcare and education. The acquisition of Dora Engineering, the rapidly growing advanced tech mechanical and electrical business, included in the consolidated figure since January 25th further enhance growth. Turner deliveries from operational PVT reaching 629 million euros, an increase of 60% supported by a further increase in the operational PVT margin to 3.4% up 50 basis points year on year and driven by Turner's successful advanced tech focused strategy. Turner's new orders in a period of 23.4 billion euros billion showed a very significant increase of 21% year-on-year, with particularly strong growth in data center contracts, as well as increases in areas such as biopharma, aviation, and commercial. As a consequence, the period and order backlog of 34.3 billion euros was 20% higher in local currency terms compared to September 24. Due to Turner's strong growth momentum, we now expect an operational PBT of 850 to 900 million 25 compared with the previous guidance of 667 million. The new profit range represents a year-on-year increase of between 49% and 58% compared with 2024. Moving on to CIMIC, CIMIC delivered steady performance in the nine months period. On a comparable basis, sales were stable year-on-year with operational PBT of 351 million euros, up 3%, or 10% effects adjusted. CIMIC solid order backlog of 23 billion euros was up by 3% effects adjusted, with growth across several segments, including data centers, defense, and sustainable mobility, with a 4% increase of new orders in aussie dollars. We expect CIMIC to achieve an operational profit before tax 425 in the range of approximately 480 to 510 million euros. Let's take a look at our engineering construction activities, which continue their positive momentum during the first nine months of the year. Sales of 1.2 billion increased by 13% year-on-year, and operational PPT grew by 14% to 61 million, both on a comparable basis. In the January to September 25 period, engineering and construction secured new orders of 3.9 billion euros, 21% higher year-on-year, and this strong development supported a further increase in the order backlog, which showed a solid rise of 10% to €12.2 billion. For 2025, we continue to expect an operational profit before tax of €85 million to €95 million from the basis. Next, we have Abertis, which achieved solid operational performance in the first nine months of 2025. Average daily traffic at the toll road company increased by 2% year-on-year with revenues and EBITDA on a comparable basis up 6% and 7% respectively, reflecting a solid underlying business performance. The operational net profit pre-BPA amounted to €543 million, with a year-on-year variation including adverse tax effects in France. The profit contribution increased from our 20% stake in Abertis after PPA, amounted to 48 million euros. Let me now give you an update on HoCTIV's strategic development. As a global leader in end-to-end advanced tech infrastructure projects, HoCTIV is in a unique position to benefit from multi-year demand for infrastructure investments driven by the megatrends of digitalization, demographics, defense, deglobalization in demand for energy. Active Strategy is focused on capitalizing on the very attractive opportunities in its strategic growth markets, as well as increasing its share in the value chain by investing equity, applying its O&M capabilities, and enhancing its engineering value proposition to drive margins and at-risk financial profile. Furthermore, the group is combining its global footprint with its local presence and technological know-how to maximize its delivery capabilities By leveraging short digital platforms, procurement networks, and design engineering capabilities across Turner, CIMIC, and Hoctiv Europe, the group is delivering global scale with local excellence. Turning towards Friday growth markets, Hoctiv has taken important strides to further strengthen and expand its leading presence. We command a strong competitive position in the digital infrastructure and advanced tech sector. After the exponential surge we've seen over the last two years, growth in the global data center market remains very strong driven by soaring demand for cloud services and artificial intelligence. Data centers and compute gap in 2025 is expected to reach $600 billion, double the 2023 level. Industry observers suggest annualized global AI infrastructure spend could reach 3 to 4 trillion US dollars by the end of the decade. North America remains the largest data center CapEx market in the world, and we expect it to continue expanding at a 15 to 20% annual rate over the next several years. Turner's strong position with the leading hyperscalers give us outstanding visibility. with major contracts already identified for 26 and 27, driving revenue growth through at least 28. Europe is entering a period of acceleration. We're seeing opportunities that will convert into new orders in 26, fueling revenue growth in the following years. Asia Pacific is poised to be the fastest growing region. We're seeing a sharp rise in investment driven by the rapid adoption of AI-powered technologies and the continued expansion of digital infrastructure across Southern and Southeast Asia. Across all regions, the story is the same. Demand remains high. Schedules are tightening. And clients are turning to us because we can deliver more complex projects rapidly and at scale. Octif has the capacity to address the strong sector demand growth through a global scale and ability to mobilize resources. This is complemented our global sourcing capability through SourceBlue, and the use of modularization to deliver construction products more quickly, safely, and with enhanced quality. The group has been awarded several new large-scale data center projects in the year, more than doubling the value of new orders secured in the first nine months of 2025, underscoring the group's leading presence in these radically critical markets. In July, for example, the artificial intelligence hyperscaler CoreWeave 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 use cases. The initial 100-megawatt data center, with potential to expand to 300 megawatts, will be delivered by a Turner JV. Earlier this week, OpenAI Oracle Advantage, as part of the $500 billion US Stargate program, announced a $15 billion data center complex in Wisconsin, where Turner is one of the selected construction managers. In Asia Pacific, we have been awarded projects in Malaysia and Singapore, adding to Leighton's Asia expanding portfolio of data center developments in the region, where it is also working on or has completed work in Hong Kong, in Venetia, Thailand, the Philippines, and India. The group is also advancing in the semiconductors area, As a strong demand for AI and increasing digitalization drive investment levels with double-digit growth expectations going forward. Together with the reshoring trend, this is producing rapid increase in semiconductor-related opportunities. As part of this strategy to expand the groups present in the entire AI ecosystem, Hoctiv aims to establish a pan-European network of sustainable edge data centers. In September, we announced the inauguration, near-essen, of the first GEXA-branded edge data center developed, owned, and operated by Hoctiv, a major milestone for the group's data center strategy. The previously created joint venture, Horizon, will operate Octave's edge data center network with innovative cloud computing solutions that support digital sovereignty. Another four edge data centers are currently being developed in Germany with several further sites identified. Furthermore, Octave is looking to expand the business into other European countries, including Austria, Switzerland, and the UK. Energy-related infrastructure is another strategic growth market for Hoctiv, with substantially rising demand driven by the global energy and supply security needs. Hoctiv is radically focused on building the infrastructure that underpins a low-carbon future, from electricity generation and storage to transmission and advanced technology. The company is embarked in projects such as high-voltage transmission upgrades, regional electricity fortification, and the delivery of firming assets that strengthen the grid. In October, Hocty secured a major nuclear and civil works framework contract worth up to 685 million euros as part of the infrastructure delivery partnership at the UK Sellafield site. The alliance-style contract lasting up to 15 years involved design engineering and delivery of civil infrastructure works in support of nuclear operations and decommissioning in collaboration with Sellafield and its partners. This is what takes long-term partnerships reinforces Hochtief's unbroken legacy in the nuclear sector since the 1950s as a trusted partner in engineering and construction for some of the world's most critical nuclear programs. Hochtief has several decades of experience designing and building nuclear power plants and facilities across the world for renowned global energy companies like RWE. We deliver end-to-end services across the nuclear market, and we are well positioned to support the deployment of best-in-class small modular reactor technologies. As these technologies evolve and emerge, we are leveraging our global project engineering capabilities for new build, SMRs, storage, and dismantling in an industry which could see over 500 billion investments in Europe by 2050. If we turn to renewables, we represent an ever more important energy source. Battery energy storage systems are becoming a crucial element to balance electricity networks. Global best capacity is expected to rise by 67% in 2025 to 617 gigawatt-hours and to tenfold by 2035. In Australia, for example, Simicab Sierra UGL was again selected by Neon, a world-leading producer of exclusively renewable energy, and Tesla, a global leader in battery storage and sustainable energy solutions, to construct another battery project of 164 megawatt-year-per-hour. The battery is Neon's first six-hour long-duration storage asset and will be equipped to support the region's energy reliability and a greater penetration of renewables into the energy mix. Investment in transmission and distribution networks is set to grow strongly in coming years as renewable power supplies an increasing proportion of electricity generation. Overall energy demand is being boosted by the exponential growth in data centers, electric vehicle usage, and other megatrends. The group is strongly positioned in Australia, where CIMIC-JV is delivering the 148-kilometer Hume-Link-West project, which will be formed the backbone of the power transmission network from South Australia through to northern Queensland. In the UK, EHOC-TJV is currently completing a 32-kilometer power supply tunnel for the energy supply of London, as well as a power supply project in Wales, and we are also very well placed in other markets such as Germany, which is seeing substantially higher grid investments. Global demand for critical minerals and natural resources is set to increase significantly as a consequence of the exponential growth of clean energy technologies, digital infrastructure, and defense investments. Hoctiv has developed a unique position in critical minerals globally, primarily through SETSMA, Integrated Minerals Processing Solutions, and TEAS, global mining services, and is growing its geographical footprint and scale. During the period, SESMEN, which has over 100 critical minerals engineering projects globally, started work on an innovative critical minerals processing project in Queensland for vanadium and other rare earth metals, as well as a five-year gold project contract extension in Western Australia. Last month, Light and Ice has secured a three-year extension to an asset integrity contract in Indonesia for critical production assets to extract nickel, a key component in battery technologies and high-performance materials. alloys. Furthermore, we're also carrying out the process, design, and project implementation for a copper sink plant in Western Australia, a three-year nickel and copper full-service mining project in Ontario, and a four-year contract to deliver on the ground services at a copper mine in Queensland. Octis Roussetman is also expanding its European footprint in critical minerals. We'll be working in Germany with Vulcan Energy on the EPCM validation of what will be the Europe's largest lithium extraction plant. The company's integrated lithium renewable energy project will allow it to deliver a local source of sustainable lithium for the European EV battery industry. Enough for an initial 500,000 electric vehicles per annum. The awarding of European Unispratig project status under the Critical Raw Materials Act highlights its transformative potential for Europe's clean energy future and lithium independence. And Setsman has also won a contract to provide a feasibility study and front-end engineering design work for a major lithium project in France. And we're also currently working on or have worked on a number of other lithium projects and studies this year in Portugal, Brazil, Australia, and Canada. Global lithium demand growth is expected to five-fold by the end of the decade, pushing the market into deficit by the 2030s. And our natural resources company, TEEZ, has been awarded a contract extension for mining and asset management works at a magnetite mine in Western Australia. The project is a key part of Australia's iron ore export profile, introducing magnetite, a premium product line with lower inherent emissions. And with supports, our ongoing strategy to diversify our commodities portfolio. Investment in defense infrastructure is expected to substantially increase globally. HoCTIV sees this sector as strategically attractive due to the synergies with the group's leading position in civil works, its engineering capabilities, and its sector presence in Europe, the U.S., and Australia. Furthermore, and supported by our key security credentials, the visibility afforded by multi-year public investment plans supports the group's long-term study of sustainable value creation. We deliver projects for ministries of defense, policy agencies, and border authorities across our geographical footprint. At the end of the third quarter, the group had a defense order book of our own to build. In September, for example, semi-company CBB contractors began building works for a Royal Australian Air Force Base in Queensland and defense infrastructure upgrades in South Australia. These contracts continue the longstanding partnership between the groups and the Australian Department of Defense and support the objectives of the country's defense strategy review. Australia plans $765 billion in defense spending over the next decade, increasing by $70 billion in the upcoming years. In the U.S., a flotillion drug advisory venture is leading the construction of the Dry Dock at Pearl Harbor, the brightest part of the U.S. Navy's shipyard infrastructure optimization program, which is modernizing government-owned unoperated public shipyards. Furthermore, Turner's Offwood Air Force Base flood recovery program in Nebraska is progressing strongly. In Europe, major multi-year defense investment plans, including in Germany, present substantial opportunities in defense-related capital works and potentially via the PV model. In October, for example, the German defense minister announced plans to quickly construct 270 new barracks for the armed force starting in 27, based on a modular construction concept. order to accommodate a significantly growing active force in reserve octis more mature core infrastructure business remains a solid foundation underpinning the group's growth strategy turner was again named enr's top u.s general contractor holding leading position across 13 segments including healthcare aviation and data centers during the quarter Turner began work on the 46-story 343 Madison Avenue Tower in New York and was selected alongside Acom Hunt to deliver the $2.4 billion Cleveland Brown Stadium. Other major projects for the group include the Metropolitan Museum of Art expansion and aviation upgrades at LA and Memphis airports, underscoring our continued leadership in high-complexity, sustainable projects. The group has been a global leader in transport infrastructure and sustainability 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, in Germany, a 500 billion euros infrastructure fund approved by the Bundestag parliament this year will see its first full year deployment in 26 when federal investments are budgeted to rise to a record level of 127 billion euros. Steep increase compared to around 75 billion level in 24. Furthermore, the current coalition has provided visibility for this record investment level to be sustainable over the coming years. HOCTIV is well positioned to benefit due to scalability of its business model and its core expertise in bridges, tunnels, and rail, as illustrated by the 170 million rail infrastructure contract win to modernize a section for Deutsche Bahn as part of the integrated plan to upgrade the country's rail network. A HOCTIV joint venture, was also recently awarded a major contract for the construction of the second main line of the S-Bahn rail network in Munich. Overall, during the last three years, our order book for German price has almost doubled to 5.2 billion, and we expect it to continue to rise. Let me turn now briefly to capital allocation, where shareholder remuneration continues to be a key priority for Octave. We regularly assess and predict M&A opportunities with our capital deployment focus on growth markets such as digital infrastructure, energy transition assets, and concessions. HOCTIV's solid balance sheet from cash flow generation and increasing revenue profile supports the group's strategy expansion in these high-return areas. Earlier this year, HOCTIV closed approximately 400 million euros for the acquisition of Dorna, marking a major milestone, which will enable the group to accelerate their North European expansion strategy. The start of the year, also saw the completion of the flat iron drug house transaction, creating the second largest civil engineering and construction play in North America, with an unparalleled track record in the delivery of large infrastructure projects. Cocteau holds a 38.2% with the consolidated stake in the new business. And in October, a 400 million euros capital injection was approved for Abertis, with Cocteau subscribing its 80 million contribution to support the growth of the international toll road operator. In addition to M&A, we also continue to develop and invest equity in greenfield infrastructure projects in strategic growth areas, 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 facility with a 200 megawatt capacity. SIMC also is investing in and developing renewable assets, transmission lines, grid-enabling infrastructure, and battery energy storage systems. In Europe, we're investing in a network of edge data centers, as I mentioned earlier, and we continue investing in other core infrastructure via PAPs. Another increasingly important pillar of the group is the adoption of AI at scale across the group, which is allowing us to enhance the value we offer for our clients, whilst also improving productivity and safety. Focused on optimizing our core tech platforms and systems, as well as supporting our talent management, AI and digital systems are transforming how we work. For example, autonomous drones and AI-powered image analysis now enhance site safety and planning. Digital tracking platforms streamline workflows and provide real-time transparency to progress and resources. And custom GPTs are simplifying daily operations while our production control system standardizes delivery and reduces operational stress. The group's focus on environmental, social, and governance priorities remain on track. On this front, it is notable that Cocteau was awarded prime status for its ESG performance and achievements by ISS, the International ESG Consultant and Rating Agency. So let me wrap up. The Cocteau numbers published today show an outstanding performance with a 19% increase in operational net profit to €538 million backed by strong cash conversions. New orders have strong increase, up 19% of facts adjusted to over 36 billion euros with a period and order book of 70 billion, which is 12% higher year-on-year, and with over 85% of this backlog, lower risk in nature. Octave's growth trajectory is a consequence of our strategy to first reinforce and expand our presence in key growth markets such as digital advanced tech energy, defense, and critical minerals, which will provide long-term cash flow visibility for the group. Two, harness our geographic footprint and engineering know-how group-wide. And third, further leverage our competitive expertise. We will continue to deliver on our strategy under PIMBAR's solid balance sheet and the risk order book. And as indicated earlier, we're raising Cocteau's operational net profit guidance for $25 to $750 to $780 million, implying a year-on-year increase of 20% to 25% versus the previous indication of an increase of up 17% year-on-year. Thanks everyone for listening and happy now to take questions. We're ready for questions, operator. Thank you.

Ladies and gentlemen, we'll now begin the question and answer session. Anyone who wishes to ask a question may press star and then one on their telephone. You will return to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to stay in loudspeaker mode while asking a question. Anyone with a question may press star and one at this time. And we have the first question coming from Luis Prito from Kepler Chevrolet. Please go ahead. One second.

Hello. Hello. Good afternoon. Juan and the rest of the team. I have three questions. And by the way, thanks for taking the questions. But I have three questions. The first one is, you have raised the guidance for Q4. for the full year on an accelerated rate of growth for Turner in Q4 that I would assume should continue to next year and potentially much longer. Could you help us quantify Turner's actual earnings potential in the medium-long term? You talked about all the opportunities and that's extremely useful, but can you quantify over the longer term? And in this context, what do you think is the right multiple to use for the valuation of time? The second question is that I would expect you to cover this in next week's Investor Day, but let me squeeze in this cheeky question now. How should Turner benefit from ACS's data center development activities? Should I assume that everything will be built by Turner for ACS? And the final question, and even cheekier than the previous one, is would it make any sense, now that things are going pretty well and the momentum has accelerated, would it make any sense to list Turner in the U.S. market as an independent company? Thank you.

Thank you so much, Luis. So let me start with the first one. So, yes, we have increased guidance. Turner is overperforming. Certainly, they are increasing margins. They increased, they achieved 3.4% in the first nine months period. We expect Q4 to get to around 3.7%. So basically, the 3.5% margin average that we announced for 26, it's happening in 25, and we expect further growth in 26. So again, we expect further growth in 26 and 27. I mean, as much as we have visibility, we see growth in both revenues and margins. And also, and I link to your second question, they will get the benefit on top of this, of the ACS data center platform. So in general, that is very positive. Turner is helping significantly the development in data centers of the rest of the company, like Donatia, Dragadas, Hochti, CIMIC. So Turner is contributing to that, not just through knowledge, supply chain, but also client relationships. So that also is going to help now. giving a guidance of how much is hard right now. And probably I shouldn't. Are we talking about double digit? For sure. Right now, how much? I don't dare to provide a guidance. I prefer to follow the right milestones at the right time to be providing guidance. But certainly we're optimistic about Turner performance and that will continue. There's no doubt. Looking at the market and the visibility we have right now at Turner. Listing tournament in the US. So at this stage, I mean, we are not, I mean, we are considering all options. We don't have a plan, but we are not rejecting any possibility. But not much I can say to this point.

Thanks a lot.

The next question comes from Marcin Worschtal from BOFA. Please go ahead.

Hello, good afternoon. Thank you for the presentation. Firstly, regarding your, let's say, strategic update, you mentioned that you're open to strategic M&A and Bolton M&A. Is there actually something new in that message? Are you more actively looking for opportunities? That would be my first question. Second, can you indicate what percentage of the backlog of that 68% 68, I believe, or 69 billion euros that is actually in data centers. And do you have data center exposure and anything meaningful as well outside of the US in terms of backlog? And maybe my question number three, in terms of cash flow, in Q4 last year was was pretty strong, right? But should we expect a repeat? Should we expect a similar performance in terms of cash flow in Q4, or it was a bit exceptional Q4 last year?

Thanks. Thank you, Martin. So let me start with M&A. No, it's not a new message. It's not a change in strategy. Let me go again through the same strategy when it comes to capital allocation and M&A for the last three years, right? two types of investments. The first one is everything that is infrastructure, greenfield, especially, and brownfield, specifically in Abertis, that give us sustainable EBITDAs and dividends, right? That's where we put anything that is a PPP, a managed lane in North America, that's where we put our data centers, or specific industrial opportunities, a DOC, right? Nothing changes. This is the call it development, infrastructure, what we've been doing for the last 50 years. The second one is the Bolton acquisitions, right? When you look at all what we've been doing in the critical minerals space this year, and I provided a lot of examples, right? All of that has been possible because of the acquisition of Prudentia, MinSol, NovaPro, Pybar, main tracks, all that. And we've been announcing a lot of different acquisitions, very small in nature, but very, very relevant in terms of knowledge, right? All of that is what allow us to be going through all these projects with lithium, rare earth, vanadium, nickel, gold, copper, mineral sands. And some of these projects are becoming EPCM opportunities. One example that we believe could become an EPCM opportunity is the Vulcan project in Germany. We've been working three years on the engineering and now it could potentially become a big EPCM, right? So that's at the end of the day, that's the end game. And when you look at critical minerals, we have more than a hundred projects of engineering developed by us as we speak that could potentially turn into EPCMs or not, right? So this is why it's so important, these bolt-on acquisitions. Now, this isn't an example in critical minerals, but in data centers, Dornan was another example. And potentially, we will need to continue seeing other opportunities. Not only in the engineering space, on the mechanical capabilities that is also needed for some of these balance of plans, you look that we have been also making some progress. Lightenation Mintrix was one example, but you've seen other... we're not talking about very big opportunities. We're not talking about anything crazy, but it's very, very strategic and little things can provide big multipliers for us. And if you analyze individually, every Bolton acquisition that we've been doing in the last three years, you take a look at them individually. We have multiplied from two to three times EBITDA almost each one of them, right? So this is, this is key. Now, Asking about backlog data centers, it's 12 billion turnover in the U.S., 2 billion out of the U.S., more around SEMIC, mainly a little bit in Europe. But we are going to see, well, first in the U.S., we will continue to grow. I do not dare to say for how much, but significantly, significantly. But we expect a lot of growth in Europe and in Asia-Pacific, right? we do not see the limit to the data center strategy as much as visibility we have in front of us. And then when it comes to the cash flow, I mean, we are quite comfortable with a full year 2025. We expect strong delivery in cash conversion and the fourth quarter cash flow providing the characteristics from seasonal performance. So we are very Yeah, we are very comfortable in that sense. We're not expecting anything different.

The next question comes from Dario Magone from BMP. Please go ahead.

Hi, everyone, and congratulations for the great momentum. First question, actually, you mentioned the order backlog in data centers for nine months. Could you actually repeat that number and confirm whether it is USD or euros? Second question, kind of related to what was the order intake in data centers, TARNAV and Q3. And maybe last question. I think medium term, so 26, 27, still remains quite impressive, the growth in data centers that TARNA is achieving. Do you see any shortage in skills and labor or any other bottleneck that we should consider that could limit the growth rate in the medium term? Thanks.

A quick question, Dario. Can you repeat the second question? I didn't get it.

Ah, yes. The order intake for data centers in Q3.

OK, so let me start with the first one. I think that you were asking, I mean, the figures that I gave you before are in euros, the 12 billion and the 2 billion in euros, OK? Then we get into the order intake in Q3. I don't have in front of me let me see if we have it. If not, I'll send it to you, right? But I mean, certainly we are, I think that it was more than doubling what we had, but we can provide that figure exactly to you. So now any short-term skills or bottleneck? We are not seeing that at the moment. At the end of the day, the key for a lot of what we do is first our, I mean, availability. I mean, there are a few things that, I believe, give us an opportunity or gives Turner or gives us globally an opportunity, right? At the end of the day, the potential constraints in any market, it's always availability of skilled labor, the availability of material equipment, and the speed to market, right? These are typically the three things that could jeopardize the growth of any sector. Why we believe that we are very uniquely positioned to navigate those three, right? So let's start with the first one, right? Availability of skilled labor. The beauty of our 150 years managing civil works and general building is that's exactly our specialty. That doesn't say that it's easy to get people, but certainly that's one of our biggest advantages, right? A lot of the big projects we're getting, let me give you the example of Louisiana, but also the latest one awarded as part of the Stargate program in Wisconsin, or the one in Ohio, or some of the big projects within Australia is because we have the ability to provide lots of people in a very short period of time in remote locations, right? And that's as important as having the engineering knowledge and as important as having the supply chain. So it's very important. The other thing that is key is what we've been doing with SourceBlue on the global sourcing expertise, which has a lot of different components. The first one is hundreds of dedicated supply chain experts that are always stabilizing and accelerating the supply chains, but also access to manufacturing or specific components to make sure that they are delivered on time at any given time and do not rely on international global supply chains. But also, A big part of what is coming is not just supply chain engineering and mobilization, is the ability to start modularizing and manufacturing off-site a lot of these things. And that's where we're putting a lot of our strategy globally, not just in the U.S., but we are. I mean, I will advance at some stage what we're doing in that sense, but that's also allowing to build more, faster, and attract more customers. revenues and larger margins. And that's an important strategy. Most of those workshops are being reconverted. It's not new workshops. We have those workshops. They used to be for precast facilities. They used to be for girders. They used to be for rings in tunnels. And now we're going to be using them for advanced technology building manufacturing, whether it's data centers or semiconductor fabs, or we're talking about battery fabs, defense barracks. I mean, there's a lot of different things that we can apply those and we are putting a lot of effort into that sense. So overall, I would say that we are in a good position. And I think that I did answer the three questions.

Thank you. The next question comes from Philippe Leite from CaixaBank BPI. Please go ahead.

Hi, hello, everyone. I have two questions, if I may. First one, if you can give us an update on the sale process of the transportation division of UGL in Australia and when do you expect to have it completed? And second question, on CIMIC, and because sales and debits are dropping in this quarter, how do you see CIMIC business evolving in the next quarter and during next year?

Thank you.

Okay, so starting with UGL transaction, that continues evolving, I think, in a good way. Nothing we can announce at this stage, but we're comfortable the way it's going. And CIMIC, how do we see that evolving? So let me talk a little bit about CIMIC. So when you look at CIMIC, growth, if you just look at the reported PVT growth, FX adjusted CIMIC would have grown 20%. If you don't look at the FX comparison, then it's all about 12%. If you look at the comparable, which is the one we should look, FX adjusted growth would have gone from 3% to 10%, right? So this is relevant because it's true. You cannot compare with the growth of Turner or the growth that we're expecting potentially for 26 in Germany. right, that we are doubling work in hand and that's going to continue to increase. But we are seeing in CIMIC two offsetting market trends. The first one is, and that explains part of this slow growth. One is the transportation infrastructure in Australia that is coming off. And number one, but number two, we are not pursuing a lot of the projects because we are focusing on lower risk pride opportunities. And you see that in the slower growth when it comes to civil and transport. And you see that in the unwinding of our networking capital in Australia. Coming 100% from that, right? Lightning is performing, increasing growth, income of new orders, cashflow, same thing, UGL, T's, Sedgeman. But CBB is consuming a lot for all the reasons that I explained. On the other side, The big increase that is going to be bringing the region will come from Leighton Asia and will come from UGL, and it's not at peak, right? I mean, Leighton Asia sales have increased 66%. So we're comparing with the same level of Turner. The only thing is that the volume is still low. We are expecting that to grow. and UGL that is working a lot of the energy projects, that there has been some delay. But I believe that that will come back. So overall, I would say that the big next thing in terms of growth would potentially be Germany. But I do think that Australia is next. Now, I'm comfortable that this will start happening soon. But again, we are... we are making sure that we do risk the balancing.

We have a follow-up question coming from Dario Magone from BNP. Please go ahead.

Okay. Thanks for taking a follow-up. Actually, two, if I may. First one is on margin for the data centers. How do they differ compared to a typical margin on non-residential construction in the U.S.? A very ballpark figure would be helpful to understand the opportunity for margin expansion at ARNAB. And second question, regarding Germany, you mentioned a doubling working end. What do you think, is this coming, I mean, do you really see a positive impact from the German infrastructure fund, or do you think that will come later on top of the growth in the market? Thanks.

Thank you. So let's start with data centers. I mean, unfortunately, it's very difficult for us to give specific margins on projects and sectors, basically because it could jeopardize a lot of our day-to-day commercial activities, right? And it also changes a lot. It's not the same every sector or even data centers. It depends a lot on the risk profile of the project. It depends on the relationship with the client. It Some clients, they give you permanent orders for their expansion to secure their time to market. And there's a relationship. So typically, I mean, there's a trust relationship with lower margins because it fits you with a lot of work. In other cases, there's a unique one of opportunities which probably are considered in a different way. And there's as many... I mean, price are complex, different complexities, et cetera. Overall, what I can say, overall what I can say, and putting aside data centers, but in general, that a big part of the increase of Turner's margin is being the delivery of high-tech projects. That's a change. That's what has gone from the type of margins that Turner had a few years ago with the ones we have right now, have gone from in the extreme one point something or even two something three years ago to where we are right now of finishing the year of 3.7 and growing next year, right? So all of that is the composition. Now, if you look at Turner right now backlog, 32% of the backlog is data centers with another 4% in biopharma and another 5% in our high-tech. So we're still low in the most advanced technology projects, and that's going to continue changing, right? So that percentage will continue growing. SourceBlue, as a supplier of services that has high margins, will continue growing, and all of that is what is driving the overall margin of turner. And then when it comes to Germany, so the 500 billion infrastructure fund will see the first full year deployment in 26. So the federal investment is budgeted to rise to a record level of 127 billion. And that compares with a 75 billion level in 24. All of that is gonna be driven mainly on rail through Dodge-Bahn, on highways through Autobahn and on defense, right? So transport infrastructure is a major contributor or will be getting a lot of these investments. And the coalition government has recently reinforced their willingness to accelerate transport infrastructure spending by creating an extra 3 billion funding on top of what I already mentioned, right? So there's a strong pipeline of opportunities. And I do think that that will start getting reflected in the Hockley P&L in the coming years, right? Now, also in that budget for 26, there's a significant spending by NATO. And that is also, I mean, as I said before, going through defense. but potentially other non-defense projects. But anyway, we'll be looking at that. But Germany, I mean, I believe, I'm optimistic, and especially the collective infrastructure that will see the effects of all what I just mentioned through its books very, very soon.

Okay, thank you. Next question comes from Nicholas Mora from Monk Stanley. Please go ahead.

Yes, good afternoon, gentlemen. Just a couple. So starting with maybe with the guidance upgrade. So I think at the midpoint, you're increasing your operating net income by around 60 million, 6-0. But you've basically upgraded Turner's guidance by 120 million. So I was just wondering where the delta, the 60 million have gone. It seems there's been quite a lot of rise in overhead costs. Is that down to new projects or especially in the data center space? That's question number one. Question number two, outside of advanced tech in the U.S. at Turner, how do you see the rest of the, let's say, more plain vanilla market going? I mean, you've booked a few large tower projects, more in sports and leisure.

um i mean what's what's doing well what's struggling uh interested to get a little bit more color on the on the non-tech side of the business thank you uh thank you thanks to you nicolas so let me start with with with donor guidance versus the overall guidance um so well i mean i'm sure you realize but the turn of guidance is an operational pvt guidance from which taxes need to be deducted and But at the end, the difference between, in addition to what I just said, there's the FX impacts from Asia Pacific and Sweden region, which obviously comes to play. We have an increase in Turner, offset by some FX impact, but we have a deterioration in some of our business from an FX perspective. And there's other consolidation. So there's around, 20 million just from semi-flat iron that you have to take into account just from an FX perspective. And then we have provided a raw assessment, right? At the end, guidance are guidance, so we always need to be careful with what we say. Now, when we get into the other, what else besides data center? So let me give some figures specifically for the US model. I think you're referring to the US market. If not, let me know. But yes, the data center market in the last nine months has grown, the order book, 111%. So that's like 14.2 billion. New orders have grown 141%. But if you go to biopharma, and yes, we're talking about lower figures, but new orders in biopharma have reached 400% increase and an order backlog of 234%. Now, we're talking about much lower figures, but that shows that there's a big increase and it's going to continue ramping up. The other areas where we are seeing a growth in the U.S. is the commercial market, so 12% order book increase. The aviation market with 17% in the order book or 28% in new orders. Sports have increased by 25%. So we saw hotels plus 21% in order book. What are we seeing going down? So the battery market, we continue seeing that absolutely stopped, right? I think that is minus 58, but this is a timing fact. eventually the battery fabs and the battery projects, and I'm talking about battery fabs, will need to come back, right? It's a matter, there were a lot of investments in EV vehicles, demand is not there, all of that is driving, all of that supply demand have to adjust before all of that continues. But if you add all the future plans of all the EV vehicle producers, there's significant spend. The question is that they will continue delaying until demand supply stabilizes. Then we get to semiconductor market. That has stopped significantly, or slowed down, but we are waiting. We're waiting on five projects. We're waiting on five projects for the clients to get financing. And that there's geopolitical discussions around it, and obviously there's a funding allocation. So we're waiting. Manufacturing is more or less stable, more or less. Healthcare, not the biopharma part, but the hospitals, we're seeing it at least in the first nine months going down by 18%. First time that we see that going down, so probably that will change. Education, our new orders were minus 4%. I mean, not a big number, but went down minus 4%. And public drastic market, a little bit down, minus 18% on the order book. And so, yeah, that's more or less one by one.

The next question comes from Alvaro Lenz from Alantra Equities. Please go ahead.

Can you hear me all right?

Hello? Yes, we can hear you. Thank you for taking my question. I was just thinking on, you mentioned scalability and flexibility. And I think there's some concerns from investors that there is right now a big investment cycle especially in data centers. I know that right now it seems like closing should continue to increase over the coming years. But I just wanted to know how flexible is your workforce to change Imagine if in the future the investment in data centers is also a downturn. Can it be shifted to other sectors, or is the capability that you have very sector-specific to data centers? I wanted to know how scalable and flexible are you both on the way up, as you're demonstrating now, or on the potential way down in the data center space in the future? Thank you.

So let me, well, first of all, thank you so much, Alvaro. Let me answer the question in three different ways, right? The first one, a very straight answer. We do have flexibility. At the end of the day, the same flexibility that we've shown moving people from certain projects into our projects, so it will work in the other way, right? So a lot of our people right now working in data centers, we are getting from other sectors and other fields. That's one of the reasons. There's multiple reasons why we put together the ACS University, but one of the reasons is it has a very well-structured plan of training people from different jurisdictions, different companies, different parts of the world from one sector to different sectors. So we have accelerated training programs for people if you are going to jump into a semiconductor fab or you are going to jump into a big data center or you are going to jump into a battery, into nuclear into, so we have special programs that will move people around with special visas, with a lot of investments. So this was one of the few reasons why we put the university, right? The university, it has a lot of different angles, right? Now, let's talk about the investment cycle. I'm going to give my personal reflection on the cycle because yes, we're talking about trillions and from Every day people say, well, it's going to be more trillions or less trillions or 20% more, 20% less, 50% more, 50% less. For us, 10% of infinite, it's infinite. 20% of infinite is infinite, right? I mean, they are talking about so many trillions that it doesn't matter for how much you divide that. It's still trillions, especially because the bottleneck is not the demand, it's the supply of projects. You can argue all the different things that are going to contribute to demand, and there's a lot of literature writing about the demand, right? What's going to influence the demand? But there's nothing talking about the restriction on the supply. And that's where the bottleneck is. No matter what figure you take from the demand, the problem is the supply. how you're going to build all those projects. And that's where, in my opinion, the few engineering construction companies that are positioned in building a lot of the large programs, I mean, that's where we can provide value and that's where we can provide our input. And that's why, I mean, I'm not going to repeat myself all the things we're doing to try to be flexible and to try to move things, but certainly we have a lot to say and to help. So, in other words, as much as we have visibility of the next years, I don't see any reduction in the growth, right? And again, no matter what worst case scenario you get, it's still trillions. I mean, how you build all of that, I don't know, right? But if that happened for whatever reason, because there was, I don't know, something a black swan somewhere, we would show the same flexibility that we've been addressing up to now.

Thank you. Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to the company for any closing remarks.

Just wanted to say thank you to everyone again for following us for, I mean... following our figures, our strategy. I look forward to seeing all of you very soon. And anyway, Mike, do you want to add anything?

No, thanks to everyone. And if you need to follow up on any detailed questions, obviously just contact us here at the Investor Relations Department. Thanks.

Thank you. Ladies and gentlemen, the conference is now over.

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