Talgo Stock

Hello. Good morning everyone. Thank you very much for joining this call, and we aim to present the results of the third quarter of 2025. Gonzalo Urquijo, CEO, will go through the presentation that was released yesterday. At the end of the call, we will open a Q&A session. [Operator Instructions].

Thank you, Javier, and good morning to all. Welcome to the call once more. Just to reminder in third quarter, as we do first quarter, we only present down to EBITDA, and we don't present the balance sheet. Can we go to the first page, please?

Okay. First of all, I'll start with safety. You can see that our accident frequency rate is 5.54, which is better than the previous quarter, and severity has also made progress. So we are doing progress with a tremendous effort on that, which is very important and especially with our subcontractors and we're doing better.

Now if I go to this executive summary. First of all, we see it in the following page, we will talk about the extraordinary shareholders meeting where we are in terms of a change in shareholdership, the financial new transaction basically has 3 points: the first one, which will all be submitted to the General Shareholders' Meeting that will take pace the 12th of December.

Now the basis points of that General Shareholders Meeting is the capital increase done by -- and fully subscribed by Citi. The second one would be the first issuance of convertible bonds that is EUR 30 million, but the increase in capital was EUR 45 million. So this would be EUR 30 million.

And third would be the convertible bonds issued for the Basque investors. That is where we are and those are -- will be the main points.

Second, in terms of business performance, I think it's been a good quarter in the sense that we have seen an increase in the revenues on one side and especially, I think we've had 2 key achievements. The first one has been the delivery of the trains to DB and we'll see after and the same to Denmark. Now as we do believe and we hope that in this quarter, we will be able to close at least 1 more commercial transaction, clearly.

Financial results. You see we are at EUR 443 million. Now we take away the German impact, the DB impact, it would be around EUR 480 million. And in terms of EBITDA, we are at minus EUR 3.3 million. We are coming from minus EUR 16 million. And if we wouldn't have the German impact, we would be at 36.6% positive, of course. And in terms of the outlook, we see it in the last page, but it hasn't changed since the last one. We informed and we showed to you like a few weeks ago.

In the next page, let's go to the General Shareholders' Meeting. And as I said, it will take place the 12th of December. And the idea is the following. The first part will be the equity reinforcement, we are reinforcing our structure of our capital that comes through the 3 ways. One of them -- one of the routes is the increase in capital for EUR 45 million, and SEPI that is this government investment vehicle will take 7.87% of the capital. Additionally to that, SEPI, we'll also take EUR 30 million in convertible bonds. And last but not least, the Basque investors, we'll do a convertible bond issue. So we will have [ 2 ] of EUR 75 million.

Now these investors are so different from the ones that are buying the shares to Trilantic because we have a gap in private equity, who is part of this investors who is not part in the acquisition of the shares to Trilantic [ Operaso ] so in this sense, it is EUR 150 million put into new EUR 105 million in convertible bonds and EUR 45 million an increase in capital. So we will reinforce our equity in EUR 150 million. And of course, that will bring us the cash that will be out of those EUR 150 million.

The second point is the financial strengthening. That is what we've done is benefiting from this situation. We negotiated with all the banks in terms of increasing of funding capacity. It has increased. We have a tranche that is EUR 650 million coming from around EUR 350 million. That is a syndicated loan that goes up to maturing in 2031.

Now this is covered by CESCE and 60% of it. We have a second tranche that is not covered by CESCE. That is our revolving credit line of EUR 120 million for 5 years. I insist this one has no CESCE coverage.

Last but not least, we have a new line of bonds. We already have bonds up to EUR 1.2 billion. This is 500 additional bonds, and it's covered in the 75% by CESCE, okay, maturing in 2031 also. Additionally to that, and the Board of Directors, we have a maximum members -- as of today, we have 6, but we have maximum members of 10. And with the idea is proposing to the chair -- to the AGM, reducing it to a maximum of 8 members. Why? Because we think a company of the size of ours, it makes much more sense in terms of governments, governance to reduce it from 10 to 8. Additionally to that, we're also sending a message of cost reduction, clearly.

Next page. In terms of the business performance, our backlog is around EUR 4.8 billion. Now if we do close a couple of at least one more deals, we will get closer to the EUR 7 billion but we're still waiting. Basically, we have 2 deals there. One of them is, I don't know, we see Flix will -- to increase from the amount we have today to 65. So that's from 35 to 65. And that is where we are additionally to that. We are -- and with the latest news we have in Saudi Arabia is very positive. So we do think that should come before the end of the year.

Now second point is clearly, we have 2 trains already accepted in Germany. We hope to have 2 more by the end of the year. So that would be 4. And in December, they will start working with passengers. They're already doing trial launch with passengers but it's not commercial passengers. So that should be working by December.

Additionally to that, we already have 3 trains in Denmark. We have to deliver 4 more by the end of the year. They're already with passengers. They're very happy with them, and they're working very well. And it's doing basically -- first, it started with internal routes in Denmark, but now it's turned Copenhagen to Hamburg.

And the third point to this page, we hope to finish the settlement agreement with DB in the following weeks, as we already told you in the last investor Board. So that's working in progress, I would say.

Now in terms of the market, the market remains strong. We see it strong. We have a lot of deals in North Europe and East Europe and also Middle East and Africa. Additionally, we are, as always, being extremely cautious and very strict in what we accept as deals, all of them have to have indexation as for number one, positive cash flow, reduce our abilities in terms of penalties and similar things, and we've been extremely strict with...

Next page. In terms of revenues, as you can see, we were last year at EUR 497.8 million. This year, we are EUR 443.1 million. Now we adjust to DB that is plus EUR 37.5 million, it would be around EUR 480 million. So that's where -- we have seen a good growth in the last 3 months which we are very satisfied. We think things are coming in terms of, we're doing better, industrially, clearly. In terms of EBITDA, we are minus EUR 3.3 million. We are coming from minus EUR 16 million if you remember. So we have had EBITDA -- we wouldn't have the German impact and LACMTA, in this case, it should be plus EUR 40 million, so we would be at EUR 36.6 million that's where we will [indiscernible].

Last page, the outlook and the outlook, as you can see, it remains constant to what we presented a few weeks ago. That is the order intake at EUR 2.3 billion. In terms of revenues between EUR 560 million, EUR 590 million, it would be if we take or we had the EUR 37 million of the DB adjustment, it would be between EUR 600 million and EUR 630 million.

In terms of financial debt, it's between EUR 350 million and EUR 400 million. But that is taking into account that we have already done the cash in of the equity and the convertible bonds clearly, okay? Now we believe this transaction, everything goes well in the shareholders' meeting, that is the 12th. In the following week, everything should be aligned in order to close the deal and that is where we are. The banks have given all of us a green light, and that's where we are as of today. So now if you agree, we thank you very much once more for joining, and we will open to questions and doubt. Thank you very much.

The first question coming from Iñigo Recio from GVC. Iñigo Recio, please go ahead.

Thank you, Gonzalo. Good morning to you. Do you plan to present any business plan to investors, for example, in 2026. And the second question, is there any news regarding Renfe's penalty?

Okay. Thank you very much, Iñigo, as always for your questions and your interest. In terms of the business plan, I have to tell you, we have our internal projections, more than a business plan. That is a fact. But for the moment, we are very reluctant to show that to the market basically for 2 reads.

One of them is, at the end, that is giving our guidance for the next years. And therefore, it's a matter of concern. And second, we are giving tips to our competitors. So that's why we are reluctant to present it. And as of today, our idea is not to present. But I mean, we'll have to review it and rethink this point. That's for your first question, Iñigo.

For your second question, in terms of Renfe, we have no further news. As you know, we have a penalty that we put through our P&L last year. It's EUR 116 million. We thought we don't have to pay that penalty because it went through COVID, there was force majeure. We had all the raw materials. Additionally, to that, we had other elements that we didn't have enough drivers for the change. We didn't have enough -- enough trains -- availability of -- to use the trucks in order to do the trial launch and the testing. So that is where we are. But Renfe disagreed with us. So they have to take -- should take into court.

Additionally, they haven't taken it as of today to court, there's nothing new. In terms of the payments, they have not paid us the last [ EUR 22 million ]. What we have -- we will do -- what we call the [indiscernible] provisional, the provisional reception of the trains and other EUR 60 million. And that is -- pending, I would say, and we've already taken clear feat to court in the sense we believe he cannot use pending bills on the EUR 106 million to net with the penalties. You have to be a judge and a court who tell us if we have to pay or not. So nothing new on that front, and we are where we were a couple of weeks ago, Iñigo.

[indiscernible]. Think we have another one...

Yes, last question coming from Jaime Escribano, Santander. Jaime, please go ahead.

I'm sorry because I'm late, hopefully, this is not been asked. Regarding margins, can you provide us a little bit of visibility on what could be recurring margin in order to estimate for at least -- I don't know, between '26 to 2030, growth figures because it's been a little bit lumpy because of many reasons this year. And I'm a little bit lost on what should I assume going forward? And the second question is regarding the Deutsche Bank negotiation. Maybe you can give us an update where do you stand? And what are the main outcomes from this negotiation?

Thank you very much, Jaime, for your questions. I'll start by the second one. In terms of the DB negotiation, to tell you, we are where we left it in the sense that we are in the negotiation, but the negotiation, you know we had an LOE signed and we are negotiating on all those points in order to close off. That is the reduction from EUR 79 million to EUR 60 million. And that is this orders, as we already announced. There's other elements to that. There's a new maintenance contract. There's other element. There's a reduction in terms of penalties to 1/5. Additionally, there's other elements that we're still in the closure of that in order to have the final agreement, okay, Jaime? And that's where we are. And I hope it finishes in the following weeks, clearly.

As for your first question, it's a difficult one because if we gave you -- I would link it with Iñigo question. You would have the business plan. So in terms -- and that would be giving you guidance from '26 to '30. But I do think there are some elements that for your model, this should be taken into account. On one side, on the side of the income, we do see that there will be new contracts coming in. Those -- and we already have new contracts. Those contracts have a better margin on one side and those contracts we've been extremely strict in terms of indexation, positive cash flow, in terms of reduction of liabilities that is.

So that going forward, in terms of the income, you should see more and additionally to that, we should see more at the end, turnover. And we're working hard on that. I'll come back to that, in order to have more increase our revenues clearly and have more turnover. So the new projects should have different margins, and we will be finishing the past ones, which have, they know this, that didn't have the burdens of the past.

Now other points, which I think are very important. And so, industrially. I think we're doing a big work in optimization of our manufacturing and increase the production capability that we have in our facilities. Additional to that, we're working hard and we work hard on the 2 platforms. It's the platform of the Avril of the high-speed and the platform of the German one, the 230, in that sense, and we do believe that becomes recurrent. It was, first, it was DB, then it was Denmark. Now it has been fixed. Now we have a lot of interest for those 2 platforms.

So at the end, that should reduce our risk and ensured at the end, we should have many of the costs that were done to create these 2 new platforms have already been done. So we do believe that should improve our EBITDA clearly going forward. We should have our EBITDA should improve.

And as you know, in terms of maintenance, it's a good business, safe business or current business. So in that sense, we are doing big work in order not to lose margins there and be efficient also through an optimization program. So I can only tell you that we should see it improving going forward, clearly. And our road would be then much less bumpy. And I think we're basically getting over the impacts.

Okay. Thank you very much.

Gracias. Further questions?

[Operator Instructions]. It seems that there are no additional questions. In this case, if after the call, there's any additional thing to discuss, we will, as always, open, we'll be open to -- through the IR channel to answer any further questions. Thank you very much. Have a good one...

Thank you very much to all. Have a good day, and thank you very much for attending. We count on you. Thank you. Bye. Good day.