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Good afternoon everyone and a warm welcome to the Verbio earnings call for the first quarter of the fiscal year 2025-26. Today's speakers are Olaf Tröver, CFO of Verbio and Alina Köhler, Head of Investor Relations and Corporate Strategy. They will walk us through the company's performance, touching on key milestones and current market trends. But before we dive in, a quick housekeeping note. The conference is being recorded and all participants are in a listen-only mode. If you have questions, please submit them using the chat box. We will address all the questions in the Q&A session after the presentation. Please make sure to preface each question with your name and the name of your company in order to be considered. An equity analyst can also ask questions directly via the microphone. Please type the word question into the chat box to be considered, and we will open your line at the beginning of this session. Let me pass the word to Ms. Köhler and Mr. Trüber. The floor is yours.

Thank you, Harald, and good day, everyone. Welcome to Verpio's earnings conference call. We will be discussing our first quarter 2025-26 financial and operating results. I'm also delighted to welcome Alina Köhler, Head of Investor Relations, who is joining me today. Slide, please. We've got a bit of a problem with the slide. Give me a second. Yeah, there. Okay. So for that one, we achieved a record biodiesel production in our first quarter. Biodiesel production reached close to 167,000 tons, and the capacity utilization rate was close to 94%. Meanwhile, ethanol production grew by 10% year on year to 154,000 tons. This was purely driven by the ramp up in Nevada and efficiency gains at our ethanol plant in South Bend, Indiana. Biomethane production grew by 24% year on year, also thanks to Nevada. Our APDA increased strongly to 15.4 million Euro from minus 6.6 million Euro. The year-on-year increase was driven by the main segments. Higher co-product revenues and favorable developments in commodity forwards and Forex valuations supported our results. The North American business also contributed positively to these developments as outlined before. The increase in net debt primarily reflects negative free cash flow, steaming from reduced operating cash driven by working capital and investments in our strategic projects. The working capital effects mainly reflect a lower reduction in receivables and a decrease in payables, both related to cut-off date effects. The strategic investments in the amount of around 20 million euros include investments into the speciality chemicals unit here in Bitterfeld. as well as into the production plant in South Bend, Indiana. Overall, the development of net financial debt is in line with the planned temporary cash outflows related to inventory changes and the investment program. Here, equity ratio remained at 58% and well, it's at a comfortable level. Overall, these results are reassuring. We haven't fully reached our goals yet, but the progress towards Q2 strengthens our confidence in the path ahead. Next slide. Here you can see our cross margin per ton of liquid fuels versus the sales volume weighted reference spread. The spread is basically the difference between the biofuel price and the feedstock costs per ton of biofuel. Overall, and it shows the capabilities of VIRPU, we achieved a greater premium versus the market in Q1 2025-26 compared to Q4 the previous year 2024-25 and Q1 last year. This was supported by co-products revenues and the non-recurrence of inventory write downs and lower costs and net realizable value impacts. Our co-products generate additional value and reduce the effective cost base compared to producers of the main product alone. Quarter on quarter, we appear also benefited from positive market momentum that gives you a sense of our position in the market. Let's now move on and see how the segments performed. I will begin with a quick overview of EBITDA development across the quarters. What stands out again is that the biodiesel segment, shown as a dark green bar, continues to deliver strong earnings support. This increase in EBITDA to €22.6 million in the biodiesel segment was primarily due to an improved gross margin. Also, we managed to cut our losses by more than half in the bioethanol and biomethan segment to minus €9.5 million, which is represented by the light green bar. Year on year, this has been driven by the positive development in North America. Earnings below the cross margin improved mainly because last year's negative effects from the weak US dollar. Open commodity positions did not reoccur. Quarter on quarter, one offs, including write downs on inventory. which had discussed during our earnings call in September, did not repeat. The other segment shown in the green, which harbors our logistics and trading activities, reported an FEDA of I will repeat it. So the other segments shown in the green, which comprise our logistic and trading activities reported an EBITDA of 2.3 million euro and reflects in particular the positive development of our commodity forward contracts. Now let me hand over to Alina and I will be back to give you the financial outlook later on.

Thank you, Olaf, and apologies for the microphone again. And good afternoon to everyone else. Let me walk you through the segment performance, focusing on how things have developed quarter over quarter. In the biodiesel segment, which I want to start with, as you should see on the slide, can we please? There we go. Thank you. In the biodiesel segment, we have generated revenues of 244 million Euro in the first quarter, which is in line with the previous quarter, our Q4, as you can see in the chart on the left side. Our production volumes increased slightly, while sales volumes, which are not depicted here in the chart, remain stable. This underpins the steady market demand that we're seeing for a product as well as our consistent operational performance. Our EBITDA also grew quarter over quarter thanks to a slight improvement in the gross margin. And now let me give you some more market context and we will have a look at the reference charts. Does that work? There we go. There we have it. On the left, you can see the biodiesel spread chart, which shows the difference between biodiesel prices and rapeseed oil prices per ton of biodiesel. And as you can see, the spread has widened during our first quarter. On the right side of the slide, we show how the biodiesel and rapeseed oil prices have driven this development specifically. As always, and we mentioned that during each conference call that we have, these charts do not reflect our sourcing strategy, but rather give us a good indication of how the broader market has moved. We, on the other hand, we typically purchase our rapeseed oil two to three months in advance. That's just as a heads up. So with that, let's move to the bioethanol and the biomethane segment. We recorded an increase in revenues to 191 million, which is a new quarterly record for us. And this record has been driven by an increase in sales volumes, specifically for biomethane. On the slide, we usually say RNG, which is short for renewable natural gas, and the recovery in the markets. So the biomethane production actually also reached a new record at 336 gigawatt hours for the first three months, and this is a utilization rate of 68%. Whereas the production volumes for biorethanol fell slightly in comparison with our last quarter, so Q4, due to maintenance work we had to do here in Europe. Overall, our bioethanol utilization stood at 77%. The significant increase in earnings that you can see in the chart on the right side is primarily driven by the positive development in North America and the non-recurrence of one of items which Olaf had just discussed a minute ago. Let us now move to the reference graphs. And here it's a bit more interesting than what we've seen with the biodiesel. So again, the reference graphs, they illustrate how ethanol market spreads have moved and what has been driven that price-wise. Like with biodiesel, they don't mirror our exact purchasing or our feedstock strategy. We show wheat on the slide, but mostly we can also use corn, for example, or triticale, anything that's available and that comes cheaper than wheat due to availability, for example. So this is rather indicative for the market. Looking at the price chart on the right, you can see that ethanol prices actually jumped during our first quarter, but wheat prices fell slightly thanks to a strong harvest. So this move in ethanol prices was likely due to short-term imbalances in the market. However, looking ahead into 2026, the fundamentals should also remain strong for ethanol. A key factor here that we're seeing is the transposition of REC3 in the Netherlands, which restricts the use of denatured ethanol. So what is denatured ethanol? Denatured ethanol is ethanol that is treated with additives to make it unfit for human consumption. Undenatured ethanol, on the other side, is pure ethanol, and that's what's typically produced here in Europe. So that's also what we produce here in Europe. By restricting denatured ethanol, the regulation reduces the supply that's available mainly from North America, which then helps support the ethanol prices in Europe. European producers like us also benefit from higher import duties for undenatured ethanol, which then limits the competitiveness of ethanol imports and strengthens the domestic market prices. so overall all of these factors should create a favorable market environment as we had into 2026. um coming down to the us market you will find some similar sorry Coming up to the U.S. market, you will find some similar charts as ethanol prices bounce back by about 30 U.S. dollar cents per gallon, which is roughly 80 euro per ton in August and September from the summer lows that we have been seeing specifically in our Q4. The increase was supported by tighter supply, and you can see this increase in the chart on the right-hand side. Meanwhile, the corn prices stayed relatively low, thanks to good weather also and larger yields. Hence, quarter on quarter, market spreads improved strongly, as you can see on the chart on the left-hand side again. So year on year, the market spreads were nevertheless slightly behind, as the summer market remained below its usual seasonal pickup, which also carried into our first quarter, or calendar Q3, and that we had discussed in a bit more detail in our last earnings call. So with the fall maintenance done now and peak summer driving also behind us, ethanol prices are now closer to historical levels again. So last but not least, let me now turn to the GHG quarter price development. Here we go. And here you can see that prices have increased over time. Much of the movement that we have witnessed has been driven by news and discussions around the red three transposition in Germany. Since the first draft was released at the end of June, we have seen an increased market activity and further policy clarifications have then strengthened the confidence in the sector. One of them being the ministerial agreement that has been reached, confirming that double counting will now be eliminated. This change is actually a really positive step for the market, especially combined with the restriction of the protection of trust, which we call the Einschränkung of Vertrauensschutz here in Germany. Also, as some of you may have already seen in the news, the adoption of the new draft in the cabinet has been delayed multiple times now. But importantly, ministries still expect retroactive application. And while these delays have temporarily shown activity – sorry, slowed the activity in 2025, which we see here in the graph, which is shown there, the 2026 demand has particularly remained very strong, and prices only know one way, and that is up. It's also encouraging that a new draft version has been leaked, which also some of you might have seen. I think it was covered in the press also on Monday, which we actually overall view very positively at this time. And now with that, I hand back to Olaf for the financial outlook.

Thank you, Alina. Well, let's come to our guidance. It might disappoint some of you, but our guidance remains unchanged. We expect to achieve an EBITDA in the high double-digit median range in the financial year 2025-2026. I'm not going to work through the detailed assumptions, which we already discussed during our full year earnings call six weeks ago. The strong bioethanol market works in favor, but we are still early in the year and eagerly awaiting the German decision regarding the RED3. While overall the preliminary information that look promising, as discussed by Alina. We don't want to get ahead of ourselves. And I believe you got the message and the message is clear. The next is the. The improved results and lower investments compared to the previous year are expected to lead to at least a balance free cash flow. and a moderate reduction in net financial debt year over year, as outlined in the September call. CapEx is under tight control, as we have demonstrated this quarter. Working capital will be optimized through the year. And now with this, we would like to open the line for the Q&A. Thank you.

Thank you for these insights, and we will now move on with the Q&A session. As a brief reminder, we'll start with equity analysts who can ask questions directly via the microphone. Please type the question into the chat box to be considered, and we'll open your line. And to support the technical process, please follow the instructions on the slide that is now visible. All other participants, please submit your question via the tip function and make sure to state your name and the company name and we'll consider as many questions as possible in the time we have. So let's dive in and we go for the first question. Olaf, Alina, how are the new contract negotiations going? If we see the development of the GHG quotas, shall we expect that the FDA will increase significantly in Q1, Q2 in 2026?

Well, We concluded a few contracts already at market prices, but the large chunk of agreements will be done beginning of December, rather mid-December, or concluded beginning December, mid-December. And EBITDA increase, well, I outlined it with my comments regarding the guidance. We are rather a little bit more on the cautious path. What I can say overall, the downside risk is reduced. The upside potential has been increased, but so far we stick with our guidance.

That said, I mean, the next question is going into the similar direction. The guidance is conservative. Are we expecting adjustments in the EBITDA to the levels of 120, 260 million? No further comments. No further comments. so for the time there is no further question in the line but I can see that somebody is typing so let's wait a moment And let's have a look on the USA and the business there. Can you provide more color on the outlook in the U.S.? And what assumptions underline your current forecast for market pricing and earnings? Just to let you know.

Yeah, I think most important is the utilization at Nevada because that's in the end driving our increase in EBITDA year over year in North America. And with that, we stick to what we have said just in our last earnings call that we still expect the full utilization in Q4 and we're on track to reach that. We have actually a very good utilization at this point of time. In terms of market pricing, we have looked at historical data there and are pretty much on par with historical margins.

Thank you. And still waiting for the next questions. And here we go. Can we run through the potential impact on this year's guidance if bioethanol spreads stay at this level?

Well, I mean, that's a simple mathematic calculation. We provide the volumes we produce per quarter and per year. and then simply multiplied by the increase we have seen the last six weeks. The point is why I'm stressing this, that we are not going to adjust our guidance. The year has 52 weeks and we are seeing just the six weeks now elevated bioethanol prices. And if this is going forward, We of course have to adjust our guidance, but for the time being, we had six weeks of elevated bioethanol prices or bioethanol margins. But we also had two weeks of compressed or lower biodiesel margins. So right now, as I pointed out, the downside risk decreased and the potential upside potential increased. That's all.

Thank you for answering this question. Maybe let's have a look again to the the Vader plant. How is ramping up going on and is it almost to its peak levels of 90%?

Well, I had a call at first of all Alina already provided some color on this one. I had a call yesterday with Doctor Lütke in a Vader. He is. on the path so we are in the as yeah as we planned we reached the 80 percent already of capacity utilization not on hourly basis rather on a daily and now we are getting to a weekly basis and peak capacity utilization was temporarily also exceeding the 80 percent but not for a longer time. So nothing of concern right now. And I hope that we really achieve the 100% stable capacity utilization beginning of spring, summer next year.

Thank you for answering this question. Moving on to the next one. In which area are you currently focusing your management capacities in particular? Which areas require your greatest attention and where should we as investors focus our attention in particular?

Maybe clearly communicated our focus. Our focus is on the more or less stable production with respect to the existing plants, also capacity increase in the capacity utilization of our German plants, getting more out of the raw material. So it's all what you can do. on a common basis without facing larger investments. With respect to the US, we also clearly communicated that our focus is on making our investments profitable. So the main focus is right now on Nevada, but not neglecting the South Bend Ethanol plant. So it's really focused on these ongoing approaches. Oh, I forgot one. It's the ethylenolysis plant in Bitterfeld. So we are also making progress there. And yeah, Alina outlined, we also had a larger chunk of investments there already. And I'm quite confident that we complete the investment mid-end of next year and then starting with the ramp up phase. What you should have in mind as an investor, well, it's always the ID3 development quota prices. We are quite dependent. We had a cautious planning regarding the quarter prices, so if they might go up substantially, there is an upside potential. Also, what one of the investors mentioned before, the margins with respect to bioethanol remain that high. I don't expect it, but if they remind that high, that would also have a positive impact. And with respect to the U.S. business, well, as long as you stay within our plan, then everything is fine.

Let's have a closer look to the US activities. How smoothly are your US operations running at the moment and do you anticipate any technical challenges in the upcoming winter period?

We managed last winter quite nicely. We had some minor technical issues, but the plant was running through the entire winter time, both South Bend and Nevada. So with increased production, you produce more heat, so the likelihood of facing any technical issues will decrease. But you never can be certain. I mean, there might be a meteor hitting one of our facilities or whatever, but really the likelihood is small that something might happen right now. We are making progress. Everything will be... A lot of people there are taking care of all the insulation, of all the external heating. So from a common perspective, the plant should be safe.

So it's U.S.? Yeah. Speaking about U.S., what's the current share in the European market, speaking in percent, of U.S. ethanol imports, which might be diminished next year? We have a figure on that.

I don't have it on top of my head, but the volumes that came from the U.S. to the Netherlands were around 450 million tons. Sorry, 1,000 tons. 450,000 tons. And the Netherlands and the U.K. were the only markets that could receive denatured ethanol here in Europe.

Okay, thank you. Moving on to India, could you say a few words about the market there, what's going on in India and your activities?

Nothing changed substantially in India. We are collecting the straw, we are producing the biomethane capacity utilization. has increased a bit. We are positive on ABDA, but still not there where we would like to be. So no negative. I would say no negative news from India. all with respect to India.

Thank you. Quite quick answer. Let's move on to the next question. Rapeseed oil prices have risen sharply since June 2025. Do you see any risk to EBITDA for biodiesel segment?

I mean, if you would go back a little bit in the presentation, you can see that we are talking about spreads. It doesn't matter if the rapeseed oil price increases, doubles, whatever. We are always talking about a margin. And if I have the figures in mind correctly, then the rapeseed oil price right now is approximately 1,080 or 1,090 euros per tonne. And the biodiesel IME price is 1,240 euros. So it's a good margin. We're just talking about margins and not a price development of one leg of our spread. So the margin is okay. Regardless where the raw material price is.

Okay. Thank you for this. The next question. Let's have a look. There we go. Within the next three years, does Verveo plan to invest in a new plant in other countries outside Europe?

Yes, we would like to, but. As outlined before, we currently be focused on our current projects. It doesn't make sense to have. So many projects not completed, so we focus on Nevada. Here the ethylenolysis blend and just keep in mind there's also a blend in South Bend. where we face a larger investment with respect to the biomethane facility. So the answer right now would be no, we are not going to purchase another plant in somewhere else okay thank you and let me check the question but still it depends on the price of course so

Another question, but I thank you for the information, Olav and Alina. And as far as I can see, this could maybe conclude our session for today. If there are no further questions coming in, but I can see again that somebody want to type. There we go. Let's open the topic with the RAT 3. How important is the RAT 3 for Verbius Outlook and which parts of the framework do you expect to benefit your business the most? Lina.

yeah so most important is the fraud prevention and we have the inspection of plans also outside of europe in in the new draft but also the old draft which is very important then what we had highlighted in the call as well is the abolishment of the double counting which has always been a good idea like Klaus also mentioned during our last call but unfortunately the way that it was implemented hasn't been exactly going how it was planned and then what's also important for us is the is the Vertrauensschutz, that that's going away, which is not part of the V3, but it comes together as a package, basically. And all of those things that really help the fraud to stay out of the biofuels market is what's important for us. Of course, the mandate itself is critical, but it's very ambitious anyways. And then in the new draft, they have even hired the mandate. So that's why we are, like, very optimistic going forward.

Okay. Thank you for this answer. And as far as I can see, there's no further question. And so I guess this concludes our call today. Just waiting a brief moment.

Well, just a side note, maybe one or other investor is still eager to type a question. So what I would like to summarize is simply, we had now many, many quarters of headwind. And I'm happy or a little bit relieved that we face now a decent tailwind for our business. And just wait a little bit, give us a chance to demonstrate what we are capable of. I think the Q2 should be a good quarter so look forward and see how it might affect our guidance later on but not now but the questions Harry no no further no further questions but I guess there were some good and final remarks I would say so

Thank you all for the insightful question, and a big thank you to Alina and you, Mr. Drüber. To all participants, we appreciate your time and the interest in Verbio, and we kindly ask you to share your feedback with the company, so a short email has been sent to your inbox. for this purpose and we really would appreciate if you give us a feedback and with this i want to say goodbye from my side but i'm now handing over back to you for some final statements alina well i am i already made my final statement i i really

Appreciate you guys listening to our conference call. Also, thanks for the questions. And, Harry, really thank you. Much appreciate your support. You're welcome. Managing, moderating everything. So I wish everyone a good day, hopefully a sunny day, and then move forward. Thank you.

Thank you.