Verbio Se

Good day, ladies and gentlemen, and a warm welcome to today's earnings call of the Verve U.S.E. following the publication of the half-year and second quarter figures of the financial year 2025-2026. The CEO, Klaus Sautter, as well as CFO, Olaf Tröber, will speak in a moment and guide us through the presentation and the results. And after the presentation, we'll move on to a Q&A session, which we will be happy to take your questions. And having said this, Mr. Sautter, the stage is yours.

Thank you very much, Sarah. Good afternoon, everyone, and thanks for joining our half-year and second quarter 2025-2026 earnings call. Building on the momentum from the first quarter, we delivered a strong first half of the year. Even though we had to work through quite a bit of regulatory noise, the underlying tailwinds are clearly moving in our favor. We are heading in a very positive direction and we'll keep doing the work that positions us well for what is ahead. As always, We will walk you through the regulatory developments and what they mean for us later in the call. Given VIRBIO's solid results in the first six months, we are now expecting our full-year EPTA to come in at the upper end of our prior guidance range, which was indicated to be at a high double-digit Euro million level. With that, I'll hand it over to Olaf to review the financial and operational results. Olaf, the floor is yours.

Well, thanks Klaus and good afternoon everyone. As you can see in the chart on the left, our biodiesel output was slightly below the level of the same period last year. With 311,000 tons in the first half of 2526. In Europe. Well, we once again reached a record production volume. which highlights the strong operational stability of our plants. In Canada, we shook production towards the end of the reporting period as planned for the winter. This was a pure commercial decision. Regulatory changes in the US and the protective measures in Canada in response have shifted the seasonal cash flow profile of the plant. Overall, we still expect good full year results, but during the winter months, we will most likely not produce. Ethanol and Biomethane production also increased year over year to 307 000 tons and 672 gigawatt hours respectively. The increase in production came from the ramp up of our bioethanol biomethane plant in Nevada and also better uptime at the ethanol plant in South Bend. That more than made up for the lower volumes in Europe due to maintenance. And despite the extreme weather conditions in Iowa, our Nevada plant hit a new production record in December, which was great to see. With overall higher production and sales volumes, Verbu was also able to increase its revenue. This was supported by a renewed rise in demand for greenhouse gas quotas, both in terms of volume and price. Auto material costs were also above the level of the same period last year. Their increase was disproportionately lower compared to revenue growth. And this in turn means that our EBITDA increased mostly thanks to a higher cross margin. Lower operating costs, first. Higher auto operating income and gains from commodity forward transactions. also contributed to the increase in EBITDA. And therefore, on a year-over-year basis, we still felt the impact of lower greenhouse gas premiums in our yearly term contracts, which expired end of December last year. But this was more than offset by the recovery in the sport greenhouse gas market prices. And thanks to the improved operating dynamics, supported by more attractive market conditions, we saw a year-to-date operating cash swing of Euro 21.7 million, bringing operating cash flow to Euro 35.6 million. Meanwhile, CapEx amounted to Euro 47.8 million, resulting in an increase in net debt to Euro 173 million. And we had already flagged that net debt would increase over the course of the year due to our strategic investments. But compared to Q1, net debt already came down substantially from its peak as we have hit the turning point and delivered a positive free cash flow in Q2. Investments itself, they are directed towards the speciality chemical units here in Bitterfeld as well as into the production plant in South Bend in Indiana in the United States. The equity ratio remained at 58.2% and hence at a comfortable level. And now we can head, let's take a closer look at the quarterly. performance our group fda increased both year over year and quarter over quarter to euro 30.1 million from euro 20.8 million in q2 last year and euro 15.4 million in the previous quarter with this We are finally back in the black also at the earnings per share level. As depicted on this slide, the bioethanol biomethane segment was the main driver behind this movement. Thanks to the stabilization of the greenhouse gas quota market and the attractive ethanol spreads in Europe. Merpi was able to report a positive segment EBITDA in the second quarter of 2025-2026 for the first time. The first time in five quarters coming in at Euro 5.8 million. Year over year the capacity ramp up in North America also helped. Now let me Give you a bit more color on the segment performance. Here we are focusing on quarter over quarter changes rather than year over year. In the biodiesel segment, production in Europe reached record levels in the second quarter of 25-26. And in Canada, as I have outlined before, volumes were deliberately scaled back during the reporting period due to changes in the regulatory environment in North America. As a quick refresher, last year's change from the blenders tax credit to a production tax credit in the US. Along with the lack of guidance has caused many producers to scale back biodiesel production across North America. And such uncertainty has made it harder to run at full rates during the summer. we have resumed production thanks to good demand in Canada and our prime location there. In Gewinde, however, biodiesel use in Canada is very limited, so production naturally comes down. Importantly, with some form of production tax credit in place and solid summer demand further supported by domestic blending requirements, We assume summer margins should be strong enough to make the overall year attractive despite this seasonal slowdown. Now, taking together these developments led to a lower overall production compared to the prior quarter. We produced 144,000 tons versus 167,000 tons in Q1. And due to this revenue also decreased in the second quarter of 2526. It generated Euro 223.8 million compared with Euro 244.1 million in the previous quarter. As can seen from the chart on the left. But still, our EBITDA in the segment increased to EUR 24.1 million, and this is thanks to higher selling prices in Euro, compared with only a moderate raise in material costs. For some market context now, let's take a look at the reference charts. I think most of you are familiar with these charts already, but I will still go into the details. These charts illustrate how biodiesel spreads have developed by spread itself. We mean the difference between the biodiesel price and the rapeseed oil price. While the charts actually don't capture our specific sourcing strategy, they still give you a useful snapshot of the broader market trends. And to remind you, we typically buy our rapeseed oil two to three months in advance. Yeah, that's actually the difference. So now with respect to the spreads towards the end of the year, You can see the spread picking up, but came back again a bit in the last few weeks. And after the cabinet decision on the 10th of, yeah, it was the 10th of December 25, confirmed that a double counting would end going forward. Market players actually used the remaining window to increase the share of a trans-biodiesel still eligible for double counting. And this in turn actually required more rapeseed oil-based biodiesel or R&E or rape oil material ester. because advanced biodiesel itself has weaker cold flow properties and therefore needs RME to meet winter great specs. But the seasonal push supported RME margins while rapeseed oil prices came off slightly. Moving on to the bioethanol and biomethane segment. We recorded an increase in revenues to Euro 228 million, which is actually again a new quarterly record. Revenues are shown by the green bar on the left-hand side of the left chart. The main drivers were the recovery of the greenhouse gas quota market, higher sales volume in bioethanol and biomethane, and increased selling prices in Europe. Lower selling prices in North America had an offsetting effect. Meanwhile, bioethanol and biomethane production volumes were roughly flat compared with the previous quarter, mainly due to maintenance work in Europe, not US, to be clear, in Europe. Overall, bioethanol utilization stood at 76.6% and biomethane utilization at 67.9%. Thanks to the stabilization of the greenhouse gas quota market and improvement in ethanol spreads in Europe, we were able to report an EBITDA increase of €15.4 million in the second quarter of 2025-2026 compared with the previous quarter. And just as we discussed in our previous call, the margins between ethanol prices and feedstock costs had widened just for a few weeks at the beginning of the quarter. And here again, next slide, also take a look at the reference graphs. They show how ethanol market spreads have developed over time. As with biodiesel, they don't reflect our exact purchasing of feedstock strategy. They don't reflect our purchasing feedstock strategy, but they do give a good indication of the broader market environment. On the slide, we use wheat. as the reference feedstock, but production wise. We also can use corn, rye or triticale. Essentially anything that's cost competitive or offers better CI values. Now looking at the price chart on the right. Ethanol prices increased towards the end of the first quarter. and into the beginning of the second. While wheat prices is slightly thanks to its strong harvest in October and November spot ethanol prices traded above 1,000 euros per ton reflecting some short term imbalances, but also support from tight supply due to maintenance at European plants, steady demand and lower import volumes. And as you might recall, the discussions we had in Q1 regarding future margin spread development. Looking back, I believe sticking with a conservative margin spread approach turned out to be smart. Now looking ahead to 26, ethanol fundamentals remain positive and margins have increased in recent weeks. Additional support comes from the ID3 transposition in the Netherlands, which now restricts the use of denatured ethanol. So good feedstock availability in countries such as France also supports production. Now moving from Europe to the US. In the US, ethanol margins were strong in late summer, helped by low inventories, lower production and solid export demand. As you move into the fall and our Q2, margins came down a bit, which is actually normal for this season. But the margins were still higher than in 24, thanks to strong industry fundamentals. As a result, production was high for this time of the year. and inventories started to build up. Stocks are still below last year's levels and near the lower end of the usual seasonal range. Now, looking ahead, margins are supported by these tight inventories and the US corn crop, which is helping keep feedstock costs under control. And on the top of that, domestic blending demand is still healthy and ethanol exports as well. Which reached record levels last year and expected to grow again in 26. Now going back to Germany. Let's turn to the development of the greenhouse gas quota, which, as mentioned earlier, is a key earnings driver, both directly and indirectly, as it also reflects the overall health of the biofuel markets. Let me briefly explain why the greenhouse gas quota actually is for anyone who may be joining us for the first time. here in this call in Germany. The greenhouse gas quota system requires full suppliers in the truck. In Germany, the give me a second. In Germany, the greenhouse gas quota system requires full supplies in the transport sector to reduce the greenhouse gas emissions of the fuel they sell. And Germany is one of the largest biofuel markets in Europe, so this system has a big impact on the market. Fuel suppliers can meet their targets in two main ways. They can blend more renewable fuels into their products, or they can buy greenhouse gas reduction credits from low-carbon fuel producers like WorldFuel. So how does it work? In our case, we supply biomethane in the transport sector, thereby generating emission reductions that fuel suppliers then can use to meet their own legal obligations. And the price of the greenhouse gas quota is driven by supply and demand for these emission reductions. Sprout cases in the market artificially increased the supply of reductions in the past which caused prices actually to collapse. As a result, at the end of 24, a political decision was made here in Germany to suspend the use of surplus quotas in the obligation years 25 and 26 last year and this calendar year. The surplus filled up until the end of 24 will remain in place but they can only be used again starting in 27. And this initially pushed prices lower, but 25 prices began to recover as the market adjusted to the suspension. And now the transposition of the ID.3 into national law. provides an opportunity to implement tighter compliance rules and additional controls to prevent fraud going forward. Since the first draft was published at the end of June, a ministerial agreement has confirmed that double counting will be eliminated. And this is a positive development, especially combined with the restriction of trust protection. Klaus will explain the removal of the double counting and its impacts in a bit more detail later on. So that brings me to a recap of what has happened during the quarter under review. The cabinet finally adopted a draft in December 25. after several several delays that had waited on prices uh this had been a bit late then yeah this was actually a little bit later than we had initially hoped uh but overall the sector is finally moving under the right direction the Bundesrat has now already discussed the legislation and the final parliamentary debate in the Bundestag is scheduled for March this year. Once passed, the law is expected to enter into force retroactively from 1st of January 2026. 1st of January this year. Now with this, let me turn to our guidance. While the strong bioethanol market has worked in favor. Which allows us to specify our APTA guidance to the upper end of the previous expected range. The range, the previous range has been communicated to be in the high double digit million amount. And we expect a lot of questions regarding this. So to be clear, the guidance reflects the prudent expectations, our prudent expectations. The improved results and lower investments compared to the previous year are expected to lead to a moderate increase in free cash flow and reduction in net financial debt year over year. CAPEX continues to be under tight control, as we have again demonstrated this quarter. A key part of our CAPEX right now is the construction of our Aeternalysis plant in our Bitterfeld site. We are fully on track. starting in the second half of 26, we will produce the first renewable molecules for the chemical industry. So we are fully on track with our construction here in Bitterfeld. These speciality chemicals are essentially building blocks for detergents, cleaning products, high performance lubricants and plastics. And with this project, we are helping drive the shift from fossil-based to renewable raw materials in the chemical sector. And now, I will hand back to Klaus, who will provide further insights into the regulatory environment and our broader outlook. Thanks, Klaus. Go ahead.