Verbio Se

Good afternoon and a warm welcome to everybody. Thanks for joining the Verveo Q4 fiscal year 23-24 earnings call. I'm very honored to have with me the management of Verveo SE, Mr. Klaus Sautter, the CEO, and also Mr. Olaf Treber, who is the CFO. Both will be hosting and presenting the results today. The presentation will be followed by a Q&A. Please use the chat box in the lower right-hand corner To answer your questions, we will address them during the Q&A in the aftermath of the presentation. I'm looking forward to interesting insights and then happily hand it over to Mr. Salta and Mr. Troeber.

Thank you very much. Good afternoon, everyone, and a welcome to today's earnings call. I'm here with Olaf Troeber. our CFO and with Alina Köhler, our Investor Relations Manager. It's great to have you join us on the call. We'll cover our fourth quarter and full year 2023-2024 results. Despite the challenging market environment, I'm pleased that we were able to post a good set of results for the full year and in q4 especially in line with our latest expectations that we shared in our q3 earnings call in may we will go into more details later but now let me first reiterate some of our highlights from the past year. At the end of the call, we'll give you an idea of what to expect for the running business year. So first of all, the group highlights. Turning now to focus on our delivery for 2023-2024. We were able to make significant progress and with this implemented the elements of the strategy presented at the Capital Markets Day in September 2023. First, we have achieved record production volumes exceeding one million tons of liquid biofuels for the first time. We also grew our RNG production to a new record of 1.1 terawatt hours. With these products, as well as any trading products, we increased the CO2 savings that our customers can achieve through our products by 1 million tons to 4.4 million tons of CO2 savings. Second, we were making great progress in scaling our own technology abroad. Following initial hiccups and delays, we have announced that Nevada is now running on small volumes. We had started the second RNG production line in March using corn as a feedstock. After Commencing the commercial manufacture of ethanol this summer, we have now switched to using stillage to produce RNG. Meanwhile, we have managed to increase the production availability at South Bend, Indiana, South Bend ethanol, by approximately 20% in 2024 versus 2023. which none of the previous owners managed to do. We have also started the build out of the RNG facility and take all our learnings from Nevada to ensure a smooth journey at South Bend Ethanol. In Europe, we have held our groundbreaking ceremony for the Speciality Chemicals Facility in Bitterfeld, which will be using our biodiesel based on rapeseed oil as input. This is a major step for us as well as we will tap into new and very promising market going forward. Lastly, I want to highlight the launch of a trading unit based in Geneva in Switzerland, in order to better map the global flow of goods, of product, of feedstocks, and to anticipate them more quickly. Now let's switch to the key figures in the financial year. Let me now give you a quick overview of our 2023-2024 key figures. As mentioned, we achieved record production volumes for all our main products. Our biodiesel production volumes increased by 4% year-on-year, mostly driven by a better utilization in Canada. bioethanol volumes increased by 64% year on year, mainly due to the acquisition of South Bend in May, but also some production growth in Europe. Our EBITDA for 2023-2024 was 121.6 million euro. While the results didn't meet our initial expectations of 200 to 250 million due to continued pressure from fraudulent Chinese biodiesel imports and the associated supposed CO2 reduction, we are in line with our most recent guidance. Please keep in mind that in 2023-2024, our European business had to stommage not only the distortion of markets in Europe, but also the costs of our growth investments in the United States, which totaled approximately 25 million euros. Our net debt at the year end was up to 32.9 million euros, due to mainly growth investments of more than 180 million euros. Importantly, we improved our cash generation significantly. The equity ratio at the year end stood at 67.4% and remained largely stable. The investment tax credit for our RNG facility in Nevada that we successfully sold in Q4 impacted the equity ratio negatively as it is accounted for as an investment grant and hence increases the liabilities. Let me now hand over to my colleague Olaf to run through our Q4 results.

Thanks Klaus and good afternoon everyone. Turning to our fourth quarter. In the fourth quarter, we reported an EBITDA of Euro 39.5 million in line with expectations. This is an impressive improvement year over year and quarter on quarter. And these improvements are primarily due to the widening of biodiesel spreads. The bioethanol spreads in Europe and North America also contributed to the positive trend compared to the previous quarter. Although sales prices increased strongly and our volume sold, we are also slightly up year over year. sales declined to euro 197 million for two reasons firstly due to permanent accounting changes in the recognition of trading revenues which are now presented on a net basis within the results from commodity forward contracts led to a correction in revenues and costs of materials of euro 74 million and euro 72 million respectively for the nine month period 20 23 24. um please note um this affected both segments but had no effect on the EBITDA level. Secondly, as also discussed in our last earnings call, Canada currently operates through processing contracts, which reduces revenues and material costs alike, and hence clearly lifts our EBITDA margin. There was a significant improvement in EBITDA to Euro 28.5 million from a negative Euro 10 million in the previous year, thanks to higher sales prices for biodiesel in Europe and beneficial rapeseed oil procurement. lower greenhouse gas quota prices and premiums had a negative impact on earnings in comparison with the same quarter in the previous year as i said prices have strongly recovered in our fourth quarter which you can see in the right chart It depicts the development of FAME minus 10 biodiesel prices and rapeseed oil prices. As we buy our feedstock approximately two to three months in advance, it becomes quite clear that our own spreads outperform the market spreads, which are shown on the left side. This dynamic also explains our quarter-on-quarter EBITDA improvements, the background to the firming up of price levels, where the higher prices of raw materials as well as declines in the volumes of imports from China. Beyond this, there is continued demand for biodiesel based on rapeseed oil, in particular because the quality of the product from China does not meet European specifications for blending purposes and hence needs to be upgraded. Let me turn to the bioethanol biomethane segment. the decline in ethanol and greenhouse gas quota prices compared to the same quarter of the previous year was almost offset by the higher sales volumes. Nevertheless, Virbio did record a decline in revenues due to the trading related correction as I described previously. EBITDA fell year over year from Euro 36 million to Euro 10 million. As better ethanol spreads, we are not able to offset the fall in greenhouse gas quota prices and premiums and the ramp up costs in the United States. However, in comparison with the previous quarter, um there was a notably effect in particular from the attractive margin margin situation in europe and in north america as a result the bio ethanol biomethane segment generated the best segment result in the of the financial year 2023 24 in the fourth quarter um Let's have a quick look at the price and spread development for bioethanol. These spreads were holding up at an attractive level, thanks particularly to the bioethanol prices, as you can see in the chart on the right hand side, reflected by the top light green line. The recovery of prices in Q4 can be explained by the decline in imports in the first quarter of 2024, primarily from Brazil, which led to a fall in the volumes of inventories of ethanol in Rotterdam. The increasing demand also supported which meant better spreads year over year, but also quarter on quarter. As explained before, the greenhouse gas quota surplus led to a sharp fall in prices. The greenhouse gas quota price, which according to market information was still at 250 euros per tonne of CO2 savings in mid 2023, was most recently down to well below euro 100 per tonne for the 2024 quota. So far for the past, let's now turn to our guidance, which we had already published in a talk release on September 10th. We expect an EBITDA of Euro 120 million to 160 million. At the midpoint, this implies 15% growth year over year. To bridge last year's assault with this year's guidance, we need to take into account our key drivers. While we expect to post a slightly positive ABTA result in North America, part of these gains will be offset by a negative impact from the greenhouse gas quota. Please keep in mind that the entire calendar year 2023, and hence also our first half of 2023, 2024, we are still benefiting from very attractive locked in prices, which are at much lower levels in calendar year 2024. And while we do foresee a recovery of market prices in the future, um as klaus will address in a minute the timing is difficult to forecast in detail in the bioethanol biomethane segment the ramp up of the plant innovator iowa and the increased production in south bend indiana will have a positive effect on earnings compared to the previous year in view of the attractive I would say very attractive margin situation in North America. Back to Europe, we expect an increasing plant capacity utilization accompanied by a stable margins for ethanol. And it's well to note our RNG production is also expected to increase further. so that the one terawatt hour mark will be exceeded in europe for the first time ever um the for the biodiesel in europe we expect the capacity utilization to remain high in the 2024-25 financial year which already has begun average margins are expected to fall compared to the previous year due to the tense vegetable oil situation. Contracts guaranteeing a good margin are in place for the Canadian biodiesel production for the current calendar year 2024. Overall, we expect to have a net debt position of no more than Euro 190 million by year end. CAPEX will be focused on our key projects for the South Bend Ethanol and the Ethanolysis plant here at the Bitterfeld site. But now back to Klaus who will give you an overview over the current status of the greenhouse gas quota market and will have some final words on the strategy execution.