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Operator: Ladies and gentlemen, welcome to the HOCHTIEF 9 Months 2025 Results Conference Call. I'm Serge, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mike Pinkney. Please go ahead.
Mike Pinkney: Thanks very much, operator. Good afternoon, everyone, and thank you for joining this HOCHTIEF 9 Months 2025 Results Call. I'm Mike Pinkney, Head of Capital Markets Strategy. I'm here with our CEO, Juan Santamaria; and our CFO, Christa Andresky; as well as our Head of IR, Tobias Loskamp; and other colleagues from our senior management team. We're looking forward to taking your questions. But to start with, our CEO is going to run us through the details of another strong set of HOCHTIEF numbers, our guidance increase and provide you with an update on the group's strategy. Juan, all yours.
Juan Cases: Thank you, Mike, and thank you, everyone, and welcome to everyone joining us for this results call. HOCHTIEF has achieved an outstanding performance during the first 9 months of 2025. The successful implementation of our growth strategy is reflected in the group's strong and sustainable financial performance. We are delivering significant sales growth, rising margins and a positive evolution of the group's derisked operational profile as the proportion of advanced tech projects continues to increase. Due to our expectations of a Q4 acceleration, we are raising HOCHTIEF's operational net profit guidance for 2025 to EUR 750 million to EUR 780 million versus the EUR 680 million to EUR 730 million previously. The new range implies a year-on-year increase of 20% to 25% compared with EUR 625 million in 2024 and versus the previous indication of an increase of up to 17% year-on-year. The higher net profit expectation for the group are driven mainly by the outperformance of Turner, where we now anticipate an operational PBT of EUR 850 million to EUR 900 million in 2025 compared with the previous guidance of EUR 660 million to EUR 750 million. In addition to achieving a strong financial performance during the first 9 months of the year, we have made further important advances on the strategic front. We are increasingly harnessing our geographic footprint and engineering know-how on a group-wide basis to access additional growth and value creation opportunities. Before providing you with an update on the strategic front, let me give you an overview of the key numbers. Group sales during the first 9 months of the year increased by 24% FX adjusted to EUR 28.1 billion, driven in particular by the group's focus on its strategic growth markets. HOCHTIEF's operational net profit rose by 19% to EUR 537 million or plus 26% FX adjusted, above the top end of the 2025 guidance range we provided at the start of the year. Nominal net profit stood at EUR 656 million. Operating cash flow last 12 months of EUR 2.1 billion shows a strong performance, up EUR 400 million year-on-year pre-factoring, driven by a sustained high level of cash conversion and supported by firm revenue growth and margin expansion. The first 9 months of the year incorporate the characteristic impact of seasonality during the first quarter, but show a $163 million increase in net operating cash flow year-on-year adjusted for factoring. Adjusting for capital allocation effects, net cash would show a strong EUR 1 billion plus year-on-year increase. The movement in the group's net debt position since December 2024 has been driven by strategic investment decisions and their consolidation effects as well as seasonal factors. The new orders level of EUR 36.6 billion represents a significant rise of 19% year-on-year, adjusted for FX effects with all operating segments reporting increases. New work includes important project wins in our strategic growth markets such as advanced technology, critical metals, energy and sustainable infrastructure. On a last 12 months basis, new orders represented 1.2x work done, giving you a sense of the continued growth trajectory. At the end of September 2025, the group's order book stood at EUR 70 billion, up by 12% year-on-year, FX adjusted. Now let's take a brief look at our performance at the segment level. Turner delivered an outstanding performance during the first 9 months of 2025. Sales increased by 38% year-on-year to EUR 18.8 billion, driven by very strong growth in data centers as well as high revenues in health care and education. The acquisition of Dornan Engineering, a rapidly growing advanced tech mechanical and electrical business included in the consolidated figures since January '25, further enhanced growth. Turner delivered very strong operational PBT, reaching EUR 629 million, an increase of 60%, supported by a further increase in the operational PBT margin to 3.4%, up 50 basis points year-on-year and driven by Turner's successful advanced tech-focused strategy. Turner's new orders in the period of EUR 23.4 billion showed a very significant increase of 21% year-on-year with particularly strong growth in data center contracts as well as increases in areas such as biopharma, aviation and commercial. As a consequence, the period-end order backlog of EUR 34.3 billion was 20% higher in local currency terms compared to September '24. Due to Turner's strong growth momentum, we now expect an operational PBT of EUR 850 million to EUR 900 million '25 compared with the previous guidance of EUR 660 million to EUR 750 million. The new profit range represents a year-on-year increase of between 49% and 58% compared with 2024. Moving on to CIMIC. CIMIC delivered a steady performance in the 9 months period. On a comparable basis, sales were stable year-on-year with operational PBT of EUR 351 million, up 3% or 10% FX adjusted. CIMIC's solid order backlog of EUR 23 billion was up by 3% FX adjusted with growth across several segments, including data centers, defense and sustainable mobility with a 4% increase of new orders in Aussie dollars. We expect CIMIC to achieve an operational profit before tax for '25 in the range of approximately EUR 480 million to EUR 510 million. Let's take a look at our engineering and construction activities, which continued their positive momentum during the first 9 months of the year. Sales of EUR 1.2 billion increased by 13% year-on-year, and operational PBT grew by 14% to EUR 61 million, both on a comparable basis. In the January to September '25 period, Engineering and Construction secured new orders of EUR 3.9 billion, 21% higher year-on-year, and this strong development supported a further increase in the order backlog, which showed a solid rise of 10% to EUR 12.2 billion. For '25, we continue to expect an operational profit before tax of EUR 85 million to EUR 95 million from the business. Next, we have Abertis, which achieved a solid operational performance in the first 9 months of '25. Average daily traffic at the Toll Road company increased by 2% year-on-year with revenues and EBITDA on a comparable basis, up 6% and 7%, respectively, reflecting a solid underlying business performance. The operational net profit pre PPA amounted to EUR 543 million, with the year-on-year variation, including adverse tax effects in France. The profit contribution from our 20% stake in Abertis after PPA amounted to EUR 48 million. Let me now give you an update on HOCHTIEF's strategic development. As a global leader in end-to-end advanced tech infrastructure projects, HOCHTIEF is in a unique position to benefit from multiyear demand for infrastructure investments driven by the megatrends of digitalization, demographics, defense, deglobalization and demand for energy. HOCHTIEF's strategy is focused on capitalizing on the very attractive opportunities in its strategic growth markets as well as increasing its share in the value chain by investing equity, applying its O&M capabilities and enhancing its engineering value proposition to drive margins and at risk financial profile. Furthermore, the group is combining its global footprint with its local presence and technological know-how to maximize its delivery capability. By leveraging shared digital platforms, procurement networks and design engineering capabilities across Turner, CIMIC and HOCHTIEF Europe, the group is delivering global scale with local excellence. Turning to our strategic growth markets. HOCHTIEF has taken important strides to further strengthen and expand its leading presence. We command a strong competitive position in the digital infrastructure and advanced tech sector. After the exponential surge we've seen over the last 2 years, growth in the global data center market remains very strong driven by soaring demand for cloud services and artificial intelligence. Data centers and compute CapEx in '25 is expected to reach USD 600 billion, double the 2023 level. Industry observers suggest annualized global AI infrastructure spend could reach USD 3 trillion to USD 4 trillion by the end of the decade. North America remains the largest data center CapEx market in the world, and we expect it to continue expanding at a 15% to 20% annual rate over the next several years. Turner's strong position with the leading hyperscalers give us outstanding visibility with major contracts identified for '26 and '27, driving revenue growth through at least '28. Europe is entering a period of acceleration. We're seeing opportunities that will convert into new orders in '26, fueling revenue growth in the following years. Asia Pacific is poised to be the fastest-growing region. We're seeing a sharp rise in investment driven by the rapid adoption of AI-powered technologies and the continued expansion of digital infrastructure across Southern and Southeast Asia. Across all regions, the story is the same. Demand remains high. Schedules are tightening and clients are turning to us because we can deliver more complex projects rapidly and at scale. HOCHTIEF has the capacity to address the strong sector demand growth through our global scale and ability to mobilize resources. This is complemented by our global sourcing capability through Source Blue and the use of modularization to deliver construction products more quickly, safely and with enhanced quality. The group has been awarded several new large-scale data center projects in the period, more than doubling the value of new orders secured in the first 9 months of '25, underscoring the group's leading presence in these strategically critical markets. In July, for example, the artificial intelligence hyperscaler CoreWeave announced its intent to commit more than $6 billion to create a new state-of-the-art data center in Pennsylvania, purpose-built to power the most cutting-edge AI use cases. The initial 100-megawatt data center with potential to expand to 300 megawatts will be delivered by a Turner JV. Earlier this week, OpenAI, Oracle and Vantage as part of the USD 500 billion Stargate program announced a USD 15 billion data center CapEx in Wisconsin, where Turner is one of the selected construction managers. And in Asia Pacific, we have been awarded projects in Malaysia and Singapore, adding to Leighton's Asia expanding portfolio of data center developments in the region where it is also working on or has completed work in Hong Kong, Indonesia, Thailand, the Philippines and India. The group is also advancing in the semiconductors area as a strong demand for AI and increasing digitalization drive investment levels with double-digit growth expectations going forward. Together with the reshoring trend, this is producing a rapid increase in semiconductor-related opportunities. As part of the strategy to expand the group's presence in the entire AI ecosystem, HOCHTIEF aims to establish a pan-European network of sustainable edge data centers. In September, we announced the integration near Essen of the first YEXIO branded edge data center developed, owned and operated by HOCHTIEF, a major milestone for the group's data center strategy. The previously created joint venture Yorizon will operate HOCHTIEF's edge data center network with innovative cloud computing solutions that support digital sovereign net. Another 4 edge data centers are currently being developed in Germany with several further sites identified. Furthermore, HOCHTIEF is looking to expand the business into other European countries, including Austria, Switzerland and the U.K. Energy-related infrastructure is another strategic growth market for HOCHTIEF with substantially rising demand driven by the global energy and supply security needs. HOCHTIEF is strategically focused on building the infrastructure that underpins a low-carbon future from electricity generation and storage to transmission and advanced technology. The company is embarked in projects as a high-voltage transmission upgrades, regional electricity fortification and the delivery of firming assets that strengthen the grid. In October, HOCHTIEF secured a major nuclear and civil works framework contract worth up to EUR 685 million as part of the infrastructure delivery partnership at the U.K. Sellafield site. The alliance style contract lasting up to 15 years involved design engineering and delivery of civil infrastructure works in support of nuclear operations and decommissioning in collaboration with Sellafield and its partners. This strategic long-term partnership reinforces HOCHTIEF's unbroken legacy in the nuclear sector since the 1950s as a trusted partner in engineering and construction for some of the world's most critical nuclear programs. HOCHTIEF has several decades of experience designing and building nuclear power plants and facilities across the world for renowned global energy companies like RWE. We deliver end-to-end services across nuclear market, and we are well positioned to support the deployment of best-in-class small modular reactor technologies. As these technologies evolve and emerge, we're leveraging our global project and engineering capabilities for new build, SMRs, storage and dismantling in an industry, which could see over $500 billion in investments in Europe by 2050. If we turn to renewables, we represent an ever more important energy source. Battery energy storage systems are becoming a crucial element to balance electricity networks. Global BESS capacity is expected to rise by 67% in '25 to 617 gigawatt hours and to tenfold by 2035. In Australia, for example, CIMIC subsidiary UGL was again selected by Neoen, a world-leading producer of exclusively renewable energy and Tesla, a global leader in battery storage and sustainable energy solutions to construct another battery project of 164 megawatts near Perth. The battery is Neoen's first 6-hour long-duration storage asset and will be equipped to support the region's energy reliability and a greater penetration of renewables into the energy mix. Investment in transmission and distribution networks is set to grow strongly in coming years as renewable power supplies an increasing proportion of electricity generation. Overall energy demand is being boosted by the exponential growth in data centers, electric vehicle usage and other megatrends. The group is strongly positioned in Australia, where CIMIC JV is delivering the 148-kilometer HumeLink West project, which will form the backbone of the power transmission network from South Australia through to Northern Queensland. In the U.K., the HOCHTIEF JV is currently completing a 32-kilometer power supply tunnel for the energy supply of London as well as a power supply project in Wales, and we are also very well placed in other markets such as Germany, which is seeing substantially higher grid investment. Global demand for critical minerals and mineral resources is set to increase significantly as a consequence of the exponential growth of clean energy technologies, digital infrastructure and defense investments. HOCHTIEF has developed a unique position in critical minerals globally, primarily through Sedgman, integrated minerals processing solutions and Thiess global mining services, and is growing its geographical footprint and scale. During the period, Sedgman, which has over 100 critical minerals engineering projects globally started work on an innovative critical minerals processing project in Queensland for vanadium and other rare earth metals as well as a 5-year gold project contract extension in Western Australia. Last month, Leighton Asia secured a 3-year extension to an asset integrity contract in Indonesia for critical production assets to extract nickel, a key component in battery technologies and high-performance alloys. Furthermore, we're also carrying out a process design and project implementation for a copper zinc plant in Western Australia, a 3-year nickel and copper's full-service mining project in Ontario and a 4-year contract to deliver on the ground services at a copper mine in Queensland. HOCHTIEF through Sedgman is also expanding its European footprint in critical minerals. We've been working in Germany with Vulcan Energy on the EPCM validation of what will be the Europe's largest lithium extraction plant. The company's integrated lithium renewable energy project will allow it to deliver a local source of sustainable lithium for the European EV battery industry enough for an initial 500,000 electric vehicles per annum. The awarding of European Union strategic project status under the Critical Raw Materials Act highlights its transformative potential for Europe's clean energy future and lithium independence. And Sedgman has also won a contract to provide a feasibility study and front-end engineering design work for a major lithium project in France, and we're also currently working on or have worked on a number of other lithium projects and studies this year in Portugal, Brazil, Australia and Canada. Global lithium demand growth is expected to fivefold by the end of the decade, pushing the market into deficit by the 2030s, and our natural resources company, Thiess has been awarded a contract extension for mining and asset management works at a magnetite mine in Western Australia. The project is a key part of Australia's iron ore export profile, introducing magnetite, a premium product line with lower inherent emissions and which supports our ongoing strategy to diversify our commodities portfolio. Investment in defense infrastructure is expected to substantially increase globally. HOCHTIEF sees this sector as strategically attractive due to the synergies with the group's leading position in civil works, its engineering capabilities and its sector presence in Europe, the U.S. and Australia. Furthermore, and supported by our key security credentials, the visibility afforded by multiyear public investment plans supports the group's long-term strategy of sustainable value creation. We delivered projects for ministries of defense, police agencies and border authorities across our geographical footprint. At the end of the third quarter, the group had a defense order book of around AED 2 billion. In September, for example, civil company CPB contractors began building works for a Royal Australian Air Force base in Queensland and defense infrastructure upgrades in South Australia. These contracts continue the long-standing partnership between the groups and the Australian Department of Defense and support the objectives of the country's defense strategic review. Australia plans AUD 765 billion in defense spending over the next decade, increasing by AUD 70 billion in the upcoming years. In the U.S., the FlatironDragados joint venture is leading the construction of the dry dock at Pearl Harbor, this project is part of the U.S. Navy's Shipyard Infrastructure Optimization Program, which is modernizing government owned and operated public shipyards. Furthermore, Turner's offered Air Force base flood recovery program in Nebraska is progressing strongly. In Europe, major multiyear defense investment plans, including in Germany, present substantial opportunities in defense-related capital works and potentially via the PPP model. In October, for example, the German Defense Minister announced plans to quickly construct 270 new barracks for the Armed Force starting in '27 based on a modular construction concept in order to accommodate a significantly growing active force in reserve. HOCHTIEF's more mature core infrastructure business remains a solid foundation underpinning the group's growth strategy. Turner was again named ENR's top U.S. general contractor, holding leading position across 13 segments, including health care, aviation and data centers. During the quarter, Turner began work on the 46-story 343 Madison Avenue Tower in New York and was selected alongside AECOM Hunt to deliver the USD 2.4 billion Cleveland Browns Stadium. Other major projects for the group include the Metropolitan Museum of Art expansion and aviation upgrades at L.A. and Memphis airports, underscoring our continued leadership in high complexity sustainable projects. The group has been a global leader in transport infrastructure and sustainable mobility for several decades. The outlook for the sector is very positive due to several infrastructure stimulus packages in key geographies. In Germany for instance, in Germany, the EUR 500 billion infrastructure fund approved by the Bundestag Parliament this year will see its first full year deployment in '26 when federal investments are budgeted to rise to a record level of EUR 127 billion, steep increase compared to the around EUR 75 billion level in '24. Furthermore, the current coalition has provided visibility for this record investment level to be sustainable over the coming years. HOCHTIEF is well positioned to benefit due to the scalability of its business model and its core expertise in bridges, tunnels and rail as illustrated by the EUR 170 million rail infrastructure contract win to modernize a section for Deutsche Bank as part of the integrated plan to upgrade the country's rail network. The HOCHTIEF joint venture was also recently awarded a major contract for the construction of the second main line of the S-Bahn rail network in Munich. Overall, during the last 3 years, our order book for German projects has almost doubled to EUR 5.2 billion, and we expect it to continue to rise. Let me turn now briefly to capital allocation, where shareholder remuneration continues to be a key priority for HOCHTIEF. We regularly assess strategic M&A opportunities with our capital deployment focused on growth markets such as digital infrastructure, energy transition assets and concessions. HOCHTIEF's solid balance sheet, strong cash flow generation and increasing revenue profile supports the group's strategic expansion in these high-return areas. Earlier this year, HOCHTIEF closed approximately EUR 400 million for the acquisition of Dornan, marking a major milestone, which will enable the group to accelerate Turner's European expansion strategy. The start of the year also saw the completion of the FlatironDragados transaction, creating the second largest civil engineering and construction play in North America with an unparalleled track record in delivery of large infrastructure projects. HOCHTIEF holds a 38.2% equity consolidated stake in the new business. In October, a EUR 400 million capital injection was approved for Abertis with HOCHTIEF subscribing its EUR 80 million contribution to support the growth of the international toll road operator. In addition to M&A, we also continue to develop and invest equity in greenfield infrastructure projects in strategic growth areas where we see significant value creation opportunities. In Australia, for example, we're further leveraging the group's capability and leadership position in data centers after the acquisition last year of a site to develop a facility with a 200-megawatt capacity. CIMIC also is investing in and developing renewable assets, transmission lines, grid enabling infrastructure and battery energy storage systems. In Europe, we're investing in a network of edge data centers, as I mentioned earlier, and we continue investing in other core infrastructure via PPPs. Another increasingly important pillar of the group's strategy is the adoption of AI at scale across the group, which is allowing us to enhance the value we offer for our clients whilst also improving productivity and safety. Focus on optimizing our core tech platforms and systems as well as supporting our talent management, AI and digital systems are transforming how we work. For example, autonomous drones and AI-powered image analysis now enhance site safety and planning. Digital tracking platforms streamline workflows and provide real-time transparency into progress and resources. And custom GPTs are simplifying daily operations, while our production control system standardizes delivery and reduces operational risk. The group's focus on environmental, social and governance priorities remain on track. On this front, it is notable that HOCHTIEF was awarded prime status for its ESG performance and achievements by ISS, the International ESG Consultant and rating agency. So let me wrap up. The HOCHTIEF numbers published today show an outstanding performance with a 19% increase in operational net profit to EUR 538 million backed by strong cash conversion. New orders have strongly increased, up 19% FX adjusted to over EUR 36 billion with a period-end order book of EUR 70 billion, which is 12% higher year-on-year and with over 85% of this backlog lower risk in nature. HOCHTIEF's growth trajectory is a consequence of our strategy to first reinforce and expand our presence in key growth markets such as digital and advanced energy, defense and critical minerals, which will provide long-term cash flow visibility for the group; two, harness our geographic footprint and engineering know-how group-wide; and third, further leverage our competitive strength. We will continue to deliver on our strategy underpinned by our solid balance sheet and derisked order book. And as indicated earlier, we're raising HOCHTIEF's operational net profit guidance for '25 to EUR 750 million to EUR 780 million, implying a year-on-year increase of 20% to 25% versus the previous indication of an increase of up to 17% year-on-year. Thanks, everyone, for listening and happy now to take questions.
Mike Pinkney: We're ready for questions, operator.
Operator: [Operator Instructions] And we have the first question coming from Luis Prieto from Kepler Cheuvreux.
Luis Prieto: I had 3 questions. The first one is you have raised the guidance for Q4 for the full year on an accelerated rate of growth for Turner in Q4 that I would assume should continue next year and potentially much longer. Could you help us quantify Turner's actual earnings potential in the medium, long term? You talked about all the opportunities, and that's extremely useful. But can you quantify over the longer term? And in this context, what do you think is the right multiple to use for the valuation of Turner? The second question is that I would expect you to cover this in next week's Investor Day, but let me squeeze in this cheeky question now. How should Turner benefit from ACS' data center development activities? Should I assume that everything will be built by Turner for ACS? And the final question and even cheekier than the previous one. Would it make any sense now that things are going pretty well and the momentum has accelerated, would it make any sense to list Turner in the U.S. market as an independent company?
Juan Cases: Thank you so much, Luis. So let me start with the first one. So yes, we have increased guidance. Turner is overperforming. Certainly, they are increasing margins. They increased -- they achieved 3.4% in the first 9 months period. We expect Q4 to get to around 3.7%. So basically, the 3.5% margin average that we announced for '26, it's happening in '25, and we expect further growth in '26. So again, we expect further growth in '26 and '27. I mean, as much as we have visibility, we see growth in both revenues and margins. And also, and I link to your second question, they will get the benefit on top of this of the ACS data center platform. So in general, that is very positive. Turner is helping significantly the development in data centers of the rest of the company, FlatironDragados, HOCHTIEF and CIMIC. So Turner is contributing to that, not just through knowledge, supply chain, but also client relationships. So that also is going to help. Now giving a guidance of how much is hard right now, and probably I shouldn't. Are we talking about double digits, for sure, right? Now how much? I don't dare to provide a guidance. I prefer to follow the right milestones at the right time to be providing guidance. But certainly, we're optimistic about Turner performance, and that will continue. There's no doubt looking at the market and the visibility we have right now at Turner. Listing Turner in the U.S., so at this stage, we -- I mean, we are not -- I mean, we are considering all options. We don't have a plan, but we are not rejecting any possibility, but not much I can say at this point.
Operator: The next question comes from Marcin Wojtal from BofA.
Marcin Wojtal: Firstly, regarding your, let's say, strategic update, you mentioned that you're open to strategic M&A and bolt-on M&A. Is there actually something new in that message? Are you more actively looking for opportunities? That would be my first question. Second, can you indicate what percentage of the backlog of that EUR 68 billion, I believe, or EUR 69 billion that is actually in data centers? And do you have data center exposure and anything meaningful as well outside of the U.S. in terms of backlog? And maybe my question number three, in terms of cash flow, Q4 last year was pretty strong, right? But should we expect a repeat? Should we expect a similar performance in terms of cash flow in Q4? Or it was a bit exceptional in Q4 last year?
Juan Cases: Thank you, Marcin. So let me start with the M&A. No, it's not a new message. It's not a change in strategy. Let me go again through the same strategy when it comes to capital allocation and M&A for the last 3 years, right? Two types of investments. The first one is everything that is infrastructure. greenfield, especially and brownfield, specifically in Abertis that give us sustainable EBITDA and dividends, right? That's where we put anything that is a PPP, and in North America, that's where we put our data centers or specific industrial opportunities at dock, right? Nothing changes. This is the, call it, development infrastructure, what we've been doing for the last 50 years. The second one is the bolt-on acquisitions, right? When you look at all what we've been doing in the critical minerals space this year, and I provided a lot of examples, right? All of that has been possible because of the acquisition of Prudentia, MinSol, Novopro, PYBAR, Mintrex, all of that. And we've been announcing a lot of different acquisitions, very small in nature, but very, very relevant in terms of knowledge, right? All of that is what allow us to be going through all these projects with lithium, rare earth, vanadium, nickel, gold, copper, mineral sands, and some of these projects are becoming EPCM opportunities. One example that we believe could become an EPCM opportunity is the Vulcan project in Germany, where we've been working 3 years on the engineering and now it could potentially become a big EPCM, right? So that's -- at the end of the day, that's the end game. And when you look at critical minerals, we have more than 100 projects of engineering developed by us as we speak that could potentially turn into EPCMs or not, right? So this is why it's so important the bolt-on acquisitions. Now this is the example in critical minerals, but in data center, Dornan was another example. And potentially, we will need to continue seeing other opportunities. That on the engineering space. On the metal and minerals capabilities that is also needed for some of these balance of plants, you look that we have been also making some progress. I mentioned Mintrex was one example, but you've seen other, so we're not talking about very big opportunities. We're not talking about anything crazy, but it's very, very strategic, and little things can provide big multipliers for us, and if you analyze individually every bolt-on acquisition that we've been doing in the last 3 years, you take a look at them individually, we have multiplied from 2 to 3x EBITDA almost each month, right? So this is key. Now asking about backlog data centers, it's USD 12 billion in the U.S., USD 2 billion out of the U.S., more around CIMIC, mainly a little bit in Europe. But we are going to see -- well, first in the U.S. will continue to grow. I do not dare to say for how much, but significantly. But we expect a lot of growth in Europe and in Asia Pacific, right? So we do not see a limit to the data center strategy as much as visibility we have in front of us. And then when it comes to the cash flow, I mean, we are quite comfortable with the full year 2025. We expect strong delivery in cash conversion and the fourth quarter cash flow providing the characteristic strong seasonal performance. So yes, we are very comfortable in that sense. We're not expecting anything different.
Operator: The next question comes from Dario Maglione from BNP.
Dario Maglione: Congratulation for the great momentum. First question, actually, you mentioned the order backlog in data centers for 9 months. Could you actually repeat that number and confirm whether it is USD or euros? Second question kind of related to what was the order intake in data centers Turner in Q3? And maybe last question, looking medium term, so '26, '27, still remains quite impressive, the growth in data centers that Turner is achieving. Do you see any shortage in skills and labor or anything, any other bottleneck that we should consider that could be -- that could limit the growth rate in the medium term?
Juan Cases: Good question, Dario. Can you repeat the second question? I didn't get it.
Dario Maglione: Yes. The order intake for data centers in Turner in Q3.
Juan Cases: Okay. So let me start with the first one. I think that you were asking -- I mean, the figures that I gave you before are in euros, the EUR 12 billion and the EUR 2 billion in euros, okay? Then we get into the order intake in Q3. I don't have in front of me. Let me see if we have it. If not, I'll send it to you, right? But I mean, certainly, we are -- I think that it was more than doubling what we had, but we can provide that figure exactly to you. So now any short-term skills or bottleneck? We're not seeing that at the moment. At the end of the day, the key for a lot of what we do is, first, our -- I mean, availability -- I mean, there are a few things that I believe give us an opportunity or gives Turner or gives us globally an opportunity, right? At the end of the day, the potential constraints in any market, it's always availability of skilled labor, the availability of material equipment and the speed to market, right? These are typically the 3 things that could jeopardize the growth of any sector. Why we believe that we are very uniquely positioned to navigate those 3, right? So let's start with the first one, right? Availability of skilled labor. The beauty of our 150 years managing civil works and general building that's exactly our specialty. That doesn't say that it's easy to get people. But certainly, that's one of our biggest advantages, right? A lot of the big projects we're getting, let me give you the example of Louisiana, but also the latest one awarded as part of the target program in Wisconsin or the one in Ohio or some of the big projects we're doing in Australia is because we have the ability to provide lots of people in a very short period of time in remote locations, right? And that's as important as having the engineering knowledge and as important as having a supply chain. So it is very important. The other thing that is key is what we've been doing with Source Blue on the global sourcing expertise, which has a lot of different components. The first one is hundreds of dedicated supply chain experts that are always stabilizing and accelerating the supply chains, but also access to very -- to manufacturing of specific components to make sure that they are -- I mean, that they are delivered on time at any given time and do not rely on international global supply chains. But also, a big part of what is coming is not just supply chain engineering and mobilization is the ability to start modularizing and manufacturing of site a lot of these things. And that's where we are putting a lot of strategy globally, right, not just in the U.S., but we are I mean, I will advance at some stage what we're doing in that sense, but that's also allowing to build more faster and attract more revenues and larger margins, and that's an important part of the strategy. Most of those workshops are being reconverted. It's not new workshops. We have those workshops. They used to be for precast facilities. They used to be for girders. They used to be for rings in tunnels, and now we're going to be using them for advanced technology building manufacturing, whether it's data centers or semiconductor fabs or we're talking about battery fabs, defense barracks. I mean there's a lot of different things that we can apply those, and we are putting a lot of effort into that sense. So overall, I would say that we are in a good position, and I think that I did answer the 3 questions.
Operator: The next question comes from Filipe Leite from CaixaBank BPI.
Filipe Leite: I have 2 questions, if I may. First one, if you can give us an update on sale process of the Transportation division of UGL in Australia? And when do you expect to have it completed? And second question on CIMIC and because sales and EBITDA drop in this quarter, how do you see CIMIC business evolving in the next quarter and during next year?
Juan Cases: Okay. So starting with UGL transaction, that continues evolving, I think, in a good way, nothing we can announce at this stage, but we're comfortable the way it's going. And CIMIC, how do we see that evolving? So let me talk a little bit about CIMIC. So when you look at CIMIC, growth, if you just look at the reported PBT, FX adjusted CIMIC would have grown 20%. If you don't look at the FX comparison, then it's about 12%. If you look at the comparable, which is the one we should look, FX-adjusted growth would have gone from 3% to 10%, right? So this is relevant because it's true that you cannot compare with the growth of Turner or the growth that we're expecting potentially for '26 in Germany, right, that we are doubling work in hand, and that's going to continue to increase. But we are seeing in CIMIC 2 offsetting market trends. The first one is -- and that explains part of this slow growth. One is the transportation infrastructure in Australia that is coming off, and -- number one. But number two, we are not pursuing a lot of the projects because we are focusing on lower risk product opportunities, and you see that in the slower growth when it comes to civil and transport, and you see that in the unwinding of our net working capital in Australia, coming 100% from that, right? The Leighton Asia is performing, increasing growth income of new orders, cash flow, same thing UGL, Sedgman, but CPB is consuming a lot for all the reasons that I explained. On the other side, the big increase that is going to be bringing the region will come from Leighton Asia and will come from UGL, and it's not at peak, right? I mean, Leighton Asia sales have increased 66%. So we're comparing with the same level of Turner. The only thing is that the volume is still low. We are expecting that to grow. And UGL that is working a lot of the energy projects that there has been some delay. But I believe that, that will come back. So overall, I would say that the big next thing in terms of growth could potentially be Germany, but I do think that Australia is next. Now I'm comfortable that this will start happening soon. But again, we are making sure we -- we're making sure that we derisk the balance sheet.
Operator: The next -- we have a follow-up question coming from Dario Maglione from BNP.
Dario Maglione: Okay. Actually, two, if I may. First one is on margin for the data centers. How do they differ compared to a typical margin on nonresidential construction in the U.S. like very ballpark figure will be helpful to understand the opportunity for margin expansion at Turner. And second question regarding Germany. You mentioned a doubling working end. What do you think -- is this coming -- I mean, do you already see a positive impact from the German infrastructure fund? Or do you think that this will come later on top of the growth in the market?
Juan Cases: Thank you. So let's start with data centers. I mean, unfortunately, it's very difficult for us to give specific margins on projects and sectors, basically because it could jeopardize a lot of our day-to-day commercial activities, right? And also it changes a lot. It's not the same -- every sector or even data centers, it depends a lot on the risk profile of the project. It depends on the relationship with the client. Some clients, they give you permanent orders for their expansion to secure their time to market, and there's a relationship. So typically, I mean, there's a trust relationship with lower margins because it fits you with a lot of work. In other cases, there's a unique one-off opportunities, which probably are considered in a different way, and there's as many -- I mean, prices are complex, different complexities, et cetera. Overall what I can say and putting aside data centers, but in general, that a big part of the increase of Turner's margin is being the delivery of high-tech projects. That's a change. That's what has gone from the type of margins that Turner had a few years ago with the ones we have right now, have come from in the extreme 1-point something or even 2-something 3 years ago to where we are right now of finishing the year of 3.7% and growing next year, right? So all of that is the composition. Now if you look at Turner, right now, backlog, 32% -- sorry, 32% of the backlog is data centers with another 4% in biopharma and another 5% in our high tech. So we're still low in the most advanced technology projects, and that's going to continue changing, right? So that percentage will continue growing. Source Blue as a supplier of services that has high margins will continue growing, and all of that is what is driving the overall margin of Turner. And then when it comes to Germany, so the EUR 500 billion infrastructure fund will see the first full year deployment in '26. So the federal investment is budgeted to rise to a record level of EUR 127 billion, and that compares with the EUR 75 billion level in '24. All of that is going to be driven mainly on rail through Deutsche Bahn, on highways through Autobahn and defense, right? So transport infrastructure is a major contributor or will be getting a lot of these investments. And the coalition government has recently reinforced their willingness to accelerate transport infrastructure spending by creating an extra EUR 3 billion funding on top of what it was already -- what I already mentioned, right? So there's a strong pipeline of opportunities, and I do think that, that will start getting reflected in the HOCHTIEF P&L in the coming years, right? Now also in that budget for '26, there's a significant spending by NATO, and that is also, I mean, as I said before, going through defense, but potentially other nondefense projects, but anyway, we'll be looking at that. But Germany, I mean, I believe, I'm optimistic and especially to HOCHTIEF infrastructure, that we will see the effects of all what I just mentioned through its books very, very soon.
Operator: Next question comes from Nicolas Mora from Morgan Stanley.
Nicolas Mora: Just a couple. So starting with -- maybe with the guidance upgrade. So I think at the midpoint, you're increasing your operating net income by around EUR 60 million, 6-0. But you basically upgraded Turner's guidance by EUR 120 million. So I was just wondering where the delta, the EUR 60 million have gone. It seems there's been quite a lot of rise in overhead costs. Is that down to new projects or especially in the data center space? So that's question number one. Question number two, outside of advanced tech in the U.S. at Turner, how do you see the rest of the, let's say, more plain vanilla market going? I mean, you've booked a few large tower projects, more in sports and leisure. I mean what's doing well? What's struggling? I would be interested to get a little bit more color on the non-tech side of the business.
Juan Cases: Thanks, Nicolas. So let me start with Turner guidance versus the overall guidance. So well, I mean, I'm sure you realize, but the Turner guidance is an operational activity guidance from which taxes need to be deducted. But at the end, the difference between -- in addition to what I just said, there's the FX impact from CIMIC Asia Pacific and Australia region, which obviously comes to play. We had an increase in Turner, offset by some FX impact, but we had a deterioration in some of our business from an FX perspective, and there's other consolidation. So there's around EUR 20 million just from CIMIC Flatiron that you have to take into account just from an FX perspective, and then we have provided an overall assessment, right? At the end, guidance are guidance, so we always need to be careful with what we say. Now when we get into the other, what else besides data center? So let me give some figures specifically for the U.S. market. I think you're referring to the U.S. market. If not, let me know. But yes, the data center market in the last 9 months has grown the order book, 111%. So that's like EUR 14.2 billion. New orders have grown 141%. But if you go to biopharma, and yes, we were talking about lower figures, but new orders in biopharma have reached 400% increase and an order backlog of 234%. Now we're talking about much lower figures, but that shows that there is a big increase and it's going to continue ramping up. The other areas where we are seeing growth in the U.S. is the commercial market. So 12% order book increase. The aviation market with 17% in the order book or 28% in new orders. Sports have increased by 25%. So we saw -- sorry, hotels, plus 21% in order book. What are we seeing going down? So the battery market, we continue seeing that absolutely stopped, right? We -- I think that is minus 58%. But this is a timing effect. Eventually, the battery fabs and the battery projects, and I'm talking about battery fabs, will need to come back, right? It's a matter -- there were a lot of investments in EV vehicles. Demand is not there. All of that is driving all of that supply/demand have to adjust before all of that continues. But if you add all the future plans of all the EV vehicle producers, there's significant spend. The question is that they will continue delaying until demand supply stabilizes. Then we get to semiconductor market. There's -- that has stopped significantly or slowed down, but we are waiting. We're waiting on 5 projects. We're waiting on 5 projects for the clients to get financing, and that there's geopolitical discussions around it, and obviously, there's funding allocation. So we are waiting. Manufacturing is more or less stable, more or less. Health care, not the biopharma part, but the hospitals, we're seeing it at least in the first 9 months going down by 18%, first time that we see that going down. So probably that will change. Education, our new orders were minus 4%. I mean, not a big number, but went down minus 4% and Public/Justice market, a little bit down, minus 18% on the order book. And so yes, that's more or less one by one.
Operator: The next question comes from Alvaro Lenze from Alantra Equities.
Alvaro Lenze Julia: Just one. I was just thinking on -- you mentioned scalability and flexibility, and I think there is some concern from investors that there is right now a big investment cycle, especially in data centers. I know that right now, it seems like those should continue to increase over the coming years. But I just wanted to know how flexible is your workforce to change activity, imagine if in the future, the investment in data centers goes through a downturn, can it be shifted to other sectors? Or is the capabilities you have are very sector specific to data centers? I wanted to know how scalable and flexible are you both on the way up as you are demonstrating now or on the potential way down in the data center space in the future?
Juan Cases: So let me -- well, first of all, thank you so much, Alvaro. Let me answer the question in 3 different ways, right? The first one, a very straight answer. We do have flexibility. At the end of the day, the same flexibility that we've shown moving people from certain projects into our projects. So it will work in the other way, right? So a lot of our people right now working in data centers, we are getting from other sectors and other fields. That's one of the reasons, there's multiple reasons why we put together the ACS University. But one of the reasons is has a very well structured plan of training people from different jurisdictions, different companies, different parts of the world from one sector to different sectors. So we have accelerated training programs for people, if you are going to jump into a semiconductor fab or you're going to jump into a big data center or you are going to jump into a battery, into nickel, so we have special programs that will move people around with special visas with a lot of investment. So this was one of the few reasons why we put the university, right? The university is -- it has a lot of different angles, right? Now let's talk about the investment cycle. I'm going to give my personal reflection on the cycle because, yes, we're talking about trillions and from every day, people say, well, it's going to be more trillions or less trillions or 20% more, 20% less, 50% more, 50% less. For us, 10% of infinite, it's infinite, 20% of infinite is infinite, right? I mean they are talking about so many trillions that it doesn't matter for how much you divide that. It's still trillions, especially because the bottleneck is not the demand, it's the supply of projects. You can argue all the different things that are going to contribute to demand, and there's a lot of literature writing about the demand, right? What's going to influence the demand. But there's no -- there's nothing talking about the restriction on the supply. And that's where the bottleneck is. No matter what figure you take from the demand, the problem is the supply, how you are going to build all those projects. And that's where in my opinion, the few engineering construction companies that are positioned in building a lot of the large programs, I mean, that's where we can provide value, and that's where we can provide our input. And that's why -- I mean, I'm not going to repeat myself all the things we're doing to try to be flexible and to try to move things. But certainly, we have a lot to say and to help. So in other words, as much as we have visibility of the next years, I don't see any reduction in the growth, right? And again, no matter what worst-case scenario you get, still trillions. I mean, how you build all of that, I don't know, right? But if that happened for whatever reason, because there was, I don't know, something a black swan somewhere, we would show the same flexibility that we've been addressing up to now.
Operator: Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to the company for any closing remarks.
Juan Cases: Just wanted to say thank you to everyone again for following us for -- I mean, following our figures, our strategy. I look forward to seeing all of you very soon. And anyway, Mike, do you want to add anything?
Mike Pinkney: No. Thanks to everyone. And if you need to follow up on any detailed questions, obviously, just contact us here at the Investor Relations department. Thanks.
Juan Cases: Thank you.
Operator: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.