Verbio Se

Good day, ladies and gentlemen, and a warm welcome to today's earnings call of Vervio SE, following the publication of the Q3 figures of 2025 and 26. CFO Olaf Trüber and Head of IR Alina Köhler will speak in a moment and guide us through the presentation and the results. After the presentation, we will move on to a Q&A session in which you will be allowed to place your questions directly to the management. We're looking forward to the presentation, and with this, I hand over to you, Mr. Trüber.

Thank you, Martha. Good afternoon, everyone. Thanks for joining our nine months and third quarter 25-26 earnings call. Well, we had a very strong third quarter, supported by improving market conditions. Our teams executed well in a fast-moving environment and the strength of our diversified portfolio did the rest. We also saw an important positive industry development year-to-date with the final implementation of the Renewable Energy Directive 3 in Germany and the finalization of the largest renewable volume obligations in the US ever for 26 and 27. Now, given the ongoing strength in market supported by the favorable regulatory environment and geopolitical factors, We are now expecting our full year EBITDA to come in at the upper end of our prior guidance range, which we had lifted to 100 to 140 million Euro in our ad hoc release in March. Let me now walk you through the key metrics of the first nine months of 2025-2026. which showed a strong performance across the entire board. Starting off with production volumes. As you can see from the chart on the left, our biodiesel output was at the same level as the same period last year with 458,000 tons in the first half of 2025-2026. Our ethanol and biomethane production increased year on year to 431,000 tons and more than warm terawatt hour for the first time after nine months respectively. The increase in production came from the ramp up of our bioethanol biomethane plant in Nevada and better uptime at the ethanol plant in South Bend. And that more than made up for the lower volumes in Europe due to maintenance and an infection in the fermentation process, which temporarily affected production in Q3. With overall higher production and sales volumes, Virpi was also able to increase its revenue. Another key factor was the rising demand for greenhouse gas quotas in an increasingly stabilized market environment, which was reflected in both rising trading volumes and higher selling prices. Although material costs were also above the level of the same period last year, their increase was disproportionately lower compared to revenue growth. Hence, our EBITDA increased mostly thanks to a higher cross-margin. Lower operating costs, higher operating income and gains from commodity forward transactions also contributed to the increase in FEDA. Also, thanks to the improved operating dynamics, supported by more attractive market conditions, we saw a year-to-date operating cash swing of more than €100 million, bringing operating cash flow to €96.4 million. Meanwhile, investments in PPE amounted to 63.4 million euro, resulting in a positive free cash flow of 33 million euro after nine months. This led to a decrease in net debt to 126.8 million euro. Our investments are directed towards the biobio-based Specialty Chemical Unit in Bitterfeld, as well as into the production plant in South Bend, Indiana. The equity ratio improved slightly to 59.3% following debt repayment, despite quasi-equity investment grants being recognized as liabilities. Now turning to our quarterly performance, I will start with FEDA as our key measure. Our group FEDA increased both year-over-year and quarter-over-quarter to €60.2 million from €8.2 million in Q3 last year and €30.1 million in the previous quarter. As depicted on the slide, the bioethanol biomethane segment was the main driver behind this development. Thanks to the ongoing greenhouse gas quota market recovery, combined with seasonally high demand for greenhouse gas quotas, as well as increased biomethane sales values, Virpio was able to report a strong APDA in the third quarter of 25-26. With that overview, I will turn the call over to Alina to discuss our segments in detail. Alina, the floor is yours.

Thank you, Olaf, and good afternoon from my side as well. As always, we focus on the sequential performance and discuss quarter-over-quarter figures. So let's kick it off with the biodiesel segment. In the third quarter, again, we achieved a record production volume in Europe. Meanwhile, in Canada, we kept our production volumes at a low level, so a similar level to the Q2 of 25, 26. And actually, stopped producing during the winter months of November through February. This was due to commercial reasons and why we had this crisis in the previous earnings call that we quickly reiterate here. So in the past, we have actually used our product from Canada and sold it in the US market. But with fundamental changes in the regulation, as well as now protective measures in Canada, the Canadian market is now much more attractive for us. But with that comes the seasonal cash flow profile of the plant that's now changing because in Canada there's no demand for biodiesel in the winter months. However, with the renewable volume obligations that have been just recently announced and that Olaf will discuss in a minute, we actually also see upside to that that we actually can produce during our winter months. Overall, with the new change in the cash flow profile, the annual earnings remain unchanged, and we actually expect a similar earnings profile than previously. But now with that information, let me return to the production volumes in the third quarter. Overall, this means that we could still increase our production quarter over quarter to 147,000 tons. Despite this, our revenues decreased to $203 million. This was driven by lower sales volumes and particularly because we reduced the use of third-party molecules. This also shows in our earnings because we reduced our third-party molecules because of the market conditions. In fact, we achieved still a solid 18.5 million APTA in Q3 25-26, but the reduction versus the previous quarter comes from a change in market conditions and it has been slightly less favorable than previously. But with that, let's have a look at the market context. As you can see, we have in the first quarter a decrease in biodiesel prices. You can see that in the graph on the right side of the slide. We, as always, depict here the price development of biodiesel and rapeseed oil, and on the left side you can see the spread. The spread is essentially the difference between the biodiesel price and the rapeseed oil price. So during our third quarter, you can see a pull-forward effect in demand into Q4, which is the calendar Q4. When market players still benefited from the old regulations, then double counting was still in place. So with this, inventory levels were lifted. And this coupled with a delay on mandate votes, weight on demand early in our third quarter, we're in calendar Q1. So this is also shown in the biodiesel price development. Biodiesel prices have come down at the start of the quarter. Later in the quarter, the Iran war disrupted the fossil fuel supply chain, and our biodiesel premiums could absorb a large share of the gas oil price movement. In fact, Blending economics have been negative at times, which drives demand of biodiesel. The full utilization of blend walls can still be expected, or exactly because of that can be expected, because if the blend economics are negative, you would want to increase your biodiesel in the mix. But let's move on to the bioethanol and biomethane segments. So again, we achieved a record segment revenue. This was driven by the seasonal strength of the GHG quota market and explicitly because of the attractive market conditions. And I will discuss that in a minute. In the revenues, this was partly offset by lower selling prices in the US and reduced sales volume in Europe. our biomethane production reached new highs as well. And this was driven by the continued ramp-up in Nevada. Meanwhile, as you can see on the slide, depicted by the dark green bar on the left graph, our bioethanol production decreased. And there are two reasons. One being the disruptions in the biological processes that Olaf already has mentioned in Europe. and the second being that our production margins in the U.S. or in general production margins in the U.S. turned negative in early January. This was actually due to higher natural gas prices, and this led us to scale back our ethanol volumes but increase renewable natural gas volumes or biomethane volumes, as you can see and as we had already just discussed. So overall, this led us to show an EBITDA improvement to 34.2 million, which is largely driven by the structurally tighter GHG quota market and the seasonal demand. So let's have a look at that. On this slide, you can see the GHG quota price development. In December of last year, the cabinet approved the draft for the RET3 implementation, and this already gave some more visibility and clarity in the market. In our third quarter, the calendar first quarter, we also got some more clarity when the first reading took place in the Bundestag. As a result, the buying activity of 2025 quota picked up This was then further supported by the approaching GHG quota compliance deadline. So what is this deadline? The oil companies, which are the obligated parties, have until June 2025 to close their GHG balances for the year 2025, for the quarter year 2025. And hence, this is typically when they increase their buying activity closer to the deadline. So this is what we have seen specifically during our third quarter. At the same time, the initial demand for 2026 quota picked up. And here on the chart, you can also see that 2026 GHG quota prices already reflect the removal of double counting. And prices even did that before the law was finally approved just this May. As we had discussed during our last earnings call, this lifts the competitiveness of biofuels, of conventional biofuels. And if you're interested to hear more about that, you're invited to hear into the last earnings call again, because we did some explicit explanations on this topic. But now let's have a look at the EU and US ethanol Overall, you can see that there was a steep ethanol price depreciation on the graph on the right side. This was driven by a tightening supply due to limited imports and also supported global lending policies as well as lending economics. So let's talk about the imports first. declined at the start of the year because in the past, Netherlands was an attractive entry point for bioethanol. But with changes in regulations there, the import tax advantage disappeared and hence the arbitrage is closed. So lower imports met healthy demands and this especially picked up with the geopolitical tensions. However, due to high strike rates, also linked to those geopolitical tensions, they discourage the imports of spot volumes. Now, since our feedstocks do not pass through the straight open moose, they keep largely stable. And you can also see on this slide how wheat has remained stable throughout the period. With this, the spread increased very strongly, as you can see on the left-hand side of the chart. and margins remain very attractive. So this bullish sentiment goes into Q2, and unless the logistical conditions ease, we expect that the arbitrage remains closed. So let's jump across the pond and have a look at the US ethanol market. So in the US, you see that after the seasonal easing of spreads on the left-hand side, they have settled around the low level in January. What you cannot see on the slide is the high natural gas prices that made production margins go negative during the month of January or at least early on. And as I said before, due to those negative production margins, We scaled back ethanol, but at the same time increased our renewable natural gas production. As we moved through February and March, demand conditions improved again, particularly on the export side. So more countries increased their blending rate, and this trend gained momentum. At the same time, oil prices remained elevated, especially in the regions that are dependent on the Middle East, which then further supported the ethanol's competitiveness versus Gavoline. But Ola will touch on this topic later on as well, and with that, I will turn back to him so he can give you some comments about the outlook.