Verbio Se

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.