SATS Ltd.

Good morning, everyone. Welcome to the SAS Results Briefing for the first quarter of our 2026 financial year. I'm David Bui, Group Head of Strategic Communications. Before we begin, I turn your attention to the forward-looking statement now on screen. I would also like to share a safety reminder. Whether you are joining us from the office, from home, outdoors or on the road, please be aware of your surroundings at all times. If you have loved ones who need your attention or something to watch on the store, please make this a priority before joining this call, a recording of which will be available on our website. Without further ado, let me introduce Cary Moss, Tax President and CEO, Activity Tank CFO. I will hand over to Cary to take you through the business update. Cary, please.

Thank you, David. Very good morning, everyone, and thank you for joining our call this morning. I'll just jump straight into the executive summary. I think you can see here, We had a very good solid first quarter. I think despite the initial what I call volatility from the tariff situation, I think the group managed to get our act together and really still drive the profitable growth. Needless to say that it is showing about 9% growth on our year-on-year net profit. So it's a good set of results. From our perspective, revenue continues to do well. We're growing almost 10% in terms of top line. So it's showing good momentum in terms of new wins and getting more market share from our customers. And of course, at the same time, the food business continues to trend very well in terms of the passenger traffic that we see out of Asia itself. EBITDA margin is sustained at 18.2%, part of it, which Tim can go deeper later, part of it is obviously the initial volatility we had that gave us a little bit of challenge, but I think as we figure things out, we are able to get it back to the 18.2% margin and we'll continue to look at how we can improve I am confident that as we continue to scale, this improvement will continue to move towards the 20% target that we set for ourselves. You can see from operations stats, cargo, tonnage, very good growth, double digit 10%. I'll show you a slide later. We are growing much faster than what IATA numbers are showing. So this is a seven quarter of above IATA market growth. And I think it again boils down to the network that we have and ability to bring new customers as well as existing customers that are not in stations that we operate in. So we continue to do very well in that element. Plex handles a modest 2.6%. But importantly, it's aviation meals at 5.6% growth. That part, as you all know, has always been our staple business and one with the best margins for us in terms of food. Let me go to the next slide. This is just some of the wins that we have. I am pleased to say, you know, customers like Emirates and Cathay continues to grow with us and we have been Very, very fortunate that we are able to grow in some of the key hubs like Frankfurt, Dallas, even for Cathy, a new hub in Portland. In there, there's actually quite a lot of fashion product in Portland itself. You heard yesterday, I think in the start of the week, we've also won Riyadh Air. That obviously is more second quarter announcement, but I do want to highlight that that is a strategic win for us because that really puts our Saudi Arabia business on a very very firm footing going forward and because they are a new airline we have the ability to shape a lot of new processes and all that together with Riyadh Air so we're actually very excited by that win and we think that's going to be one where we can really shape the growth of our cargo business together with Riyadh Air. We continue to do well in a lot of the Exhibitions, I think you read we've won Global Air Cargo Handler of the Year in Air Cargo Europe. It's a very prestigious once every two year event and I think it's the first time we've won that award. So I think again recognition from the industry that our strategy of growing the network and our excellence in operations around the world is being recognized by the industry. In closer to home in Singapore, we just launched a new BUP handling center that will offer us greater flexibility and also offer additional throughput right through our Singapore cargo hub and this is going to be good for both The shippers, cargo agents, as well as for us, is just increasing our capacity to really support the growth of cargo over the next 10 years as we wait for T5 to come on. So we do need to make sure that we continue to be very efficient here in Singapore to drive the throughput through our cargo warehouses. On a good front, I'm pleased to say we've won international gourmet food challenge representing SETS and at the same time Singapore. I think we're the only Singapore team there. Pleased to say that our chef did really well and they were able to take a top prize with completing 10 global teams in Indonesia itself. Now in between, in terms of technology, this is something that is very important. Everybody all talks about AI and all that. For us, we are working closely as an ecosystem to ensure that our processes and our business model here in Singapore continues to adopt AI and bring new innovation into the way we do things here in Changi. And it's an important development for us because we need to actually work as an ecosystem in order to drive the efficiency of the AirHub here in Singapore. So we're pleased to sign that agreement amongst the key stakeholders in AirHub and we think this is going to put us in a good position for T5 operations in the future. These are the usual numbers that I show. I think this time round we have added additional number in there for including share of our associates and JVs. So that gives you a more holistic picture of our network itself, how we're growing across cargo, flights handled, meals and of course the number of employees is really just our own subsidiaries. So we continue to do well across all metrics. Maybe one call-out I'll have is the meals for non-evasions dropped slightly because we actually consolidated our kitchen in Shanghai, Kunshan, into Tianjin itself. So that's why the numbers dropped. Other than that, actually most of it is still showing good progress in terms of the non-evation meals. But I think those key steps around cargo, Flights and aviation meals are those are important steps because they are main driver of our possibility as well. We continue to keep watch on our headcount. Yeah, clearly there are some increases because of new operations that we expanded, but something that we are watching out for and will continue to maintain a lookout on how we manage our workforce. Next. This is a slide that we added some additional information for everyone. Here you can see at the top left corner, seven consecutive quarters of growth above IATA. First quarter this year, you can see 10%, but last year at the same time, we grew 19%. So the compounded growth here is actually showing a very good momentum and we are pleased to maintain that growth momentum that we set for ourselves. Again, IATA, you can see again, for both fights handled It is still doing trending well both for America's as well as Changi Airport. Maybe I just highlight the bottom left corner. This is our carnage growth. We have now added in a new analysis to allow you to really understand the power of the network and how we are growing on organic basis. On a light for light, you can see we're growing at 5.1%. These are all current networks that we have, the customers that we are dealing with in existing station, Again, even just on a light-for-light, we are going 5.1% against IOTA's 2.9%. The non-light-for-light are new winds that we have brought on. So these are new winds or additional stations that we have opened or added to our network, and that's driving another 5.3% growth. So all in all, it adds up to 10.4% in terms of Tinex growth. Next slide. With that, I will hand over to Tim. He will take you through the financials. Tim.

All right. Well, thank you, Kerry. Let me start off by saying great to be here and obviously join the team. I've been listening to a lot of feedback both from the market, our stakeholders, and obviously the analyst space that we have. And I do think that we continue to have a lot of opportunity to enhance our market message. to really showcase how we, SaaS, operate and obviously the competitive advantage we have. I think something like what Kerry noted around the like-for-like trajectory of the business representing our network is really things that we're looking at internally and I think we will endeavor to continue to enhance the way we broadcast that and bring light into what we do. You know, hang on to that for a little while, and then as we move through, we'll continue to update the base here. Okay, so let me dive into the financial information, first of all, on Site 7 here. I think overall, Kerry has noted our volume and our revenue, obviously, are growing very, very strongly. The main point here across both Food and Gateway, positive growth, and in particular, I think you can see that it really shows the resilience of the business model in the sense that we are still growing revenue And in particular, underneath the revenue number for Gateway, we actually still have tonnage growth across all the major geographies, including Americas. Which is really, ultimately, we do believe there is a little bit of front-loading impact into Q1. But despite that, I think the volume shifts across the region into EMEA and into H-Pacific have more than made up for that and we are definitely still seeing the reasons in America's market as well. That's the first thing to note on the financial summary here. Overall, I think just a quick point also, if you really look at the revenue growth year-on-year 10%, if you Take away some of the US dollar impact. In fact, it is more than 11% growth on a more sort of stable currency, if you will, not necessarily constant currency. So just bear in mind that we are certainly impacted from weaker US dollars, given the global exposure here. But nonetheless, the company is obviously performing strong. Last note, maybe perhaps before we jump to the next one, is that Overall, if you look at the MIA market, we are getting close to 20 plus percent growth in cargo volume, which I think we've also highlighted in the appendix there, which shows really showing the scale of the network benefiting our results overall in Q1 here. Okay, on to the next slide, on to slide eight. I think the main thing to note as we dive deeper into across all the lines of the business and the region is that you can see that reflected in the strong revenue numbers as the team continue to take advantage serving the customers around the world. I think Kerry's dived into a few of these already, so I won't repeat him, in the sense that a lot of these are proven by volume. We are seeing the positive for both cargo, and flight service. Overall, if you look at the food growth, there's no doubt that we do see a slower growth. That's really reflective of the, in particular, Singapore base. Overall, Singapore flights managed was between 5% to 6% growth versus last year. So that really drives the food results in terms of how it compares to the cargo business. But overall, we are certainly growing above the market. And we continue to be very, very strong across all the segments that we operate in around the world. Next slider. Let me highlight a few key metrics across the board. So firstly, we've already noted the revenue, and in particular also revenue, including 100% AJVs. As Kerry's noted, it is a much, almost a truer Reflective of our overall scale, as you can see there, we are over $2.1 billion in total revenue, if you include all our partners' revenue contribution to the business as well. Underneath of that, obviously the SOHAV number deserves a mention. It does show a decline, but on a like-for-like basis versus last year. We did have a one-off adjustment in Q1 2020 FY25, if you will. It excluded that one-off gain that was in last year. In fact, we're growing at plus 7% on SOHAB. Now within that number though, we also continue to have divestments that have benefited with the way we look at recycling our capital. So we had divestments in our Macau business, for example. There's also within that mix. But despite all of that, the positive growth is obviously reflective of the continued strength of our network and working with our JV partners as well. Let me move down a little bit of the page on the left-hand side there. The next one that jumps out again that requires a little bit of clarification, of course, is the operating cash flow and that impact versus last year. As we've noted in the last evening's media release, we have an award impact just significantly with some customer payment delays, which was settled in 1st of July. So we do have a one-off timing difference here that we don't expect to necessarily repeat And outside of that impact, if you will, the overall operating cash flow will be flat versus last year. And this is likewise with free cash flow. This is in spite of the higher CapEx number versus Q1 last year by close to $9 million as well. Okay. Further down the page, a little bit of a quick note on our overall debt profile and and our borrowings. We have already, in Q1, repaid close to $100 million. In Q1, we've repaid $100 million of our overall borrowings, and in fact, year-to-date, we are already at $125 million in overall, paring down our debt. So the organisation and the management team are obviously going to focus on, one of our focuses on paring down our debt as well as capex and returning, obviously, Returning to shareholder returns, enhancing our shareholder returns, if you will. There is a need to continue to address our net current assets, and that number of wallets has improved. Majority of that net current liability, if you will, at the end of Q1 is really related to a term loan that's due to mature in March 2026. And ultimately, we've already started some work on reshaping what that will look like post-March, and we have a very, very good avenue towards extending that sort of tenure, if you will. And of course, I think as many of you may know, we launched our Singapore dollar 300 million note in August. Very, very well received on the market. And it really does show and reflect the reputation and the status in the market and our ability to go to market with such an attractive rate and a very strongly subscribed note. Seven times over subscribed in that particular note. A couple of notes then finally on the right-hand side. I think all the metrics and ratios continue to progress exactly as the management team has predicted. targeted, including our goals to continue to maintain and enhance our ratings remedies across the leverage ratios. Within the details of the EBITDA margin, whilst the organisation has sustained it, in spite of a lot of volatility in Q1, particularly in cost structure, I think you'll note that, as Terry noted, Our employee base was actually quite flat in Q1 over Q4. This is in spite of the significant volume growth still across the declared cargo. So you can see how that relationship has, at least in terms of balancing and reflective of the management actions. But actually, within that volatility, we can continue to do more and we will obviously, that's going to be something that we have our close eye on as we move into Q2 and the rest of the year. Lastly, we are, as you can see at the bottom left-hand corner of the right-hand side, continuing to enhance our return on equity and ROIC there in our overall financial metrics. So positive improvement is something that we are continuing to... We believe we'll have a good path towards our 2029 targets of 15% in that metric there, on ROE, that is. Okay, next slide, please. A couple of notes, final notes, no major new news down here. I think we've seen now, if you look at the overall shape of the P&L, it's just reflective of what I've noted. I think what we can say on this slide here, a couple of notes, is that number one on the OPEX, if you look at the shape of the year-on-year change, we obviously grew our revenue the same as OPEX for Q1 on a year-on-year basis. So we've at least maintained that relationship. The aim obviously here is always to grow our revenue faster than our cost and that's core to our beliefs in the way we run the organisation. We were certainly scheduled with some volatility in particular around the labour still. Despite our flexibility in the America's labour trajectory, there is still always going to be lag as there was such a soft start in action across the tariff impact in the America's market. Despite all that, we were able to maintain that growth at the same rate as the revenue, which already speaks to the resilience of the operating model and the flexibility of our management team. And then lastly, maybe on this one here, I think Below the EBIT line there from a tax standpoint, effective tax wise, we're continuing to maintain our rates and improve it slightly actually over Q1 last year. We're hovering around the 25% mark now from an effective tax standpoint. We do believe that we continue to have some efficiencies there and likely to end up this year anywhere between 25% to 27% at this stage, depending on how the markets shape out, which will still be an improvement versus last year.