Cabka N.V. (7GW.F) Earnings Call Transcript & Summary

Good afternoon and a very warm welcome to the Cabka 2025 Capital Markets update. We have invited you here today to share more detail with you and our Commercial Strategy and road map to our 2030 goals and beyond. In addition to the usual presentations by myself and our CFO, Mark, joining us today are members of our commercial innovation and sustainability teams who will be giving you a deeper insight into the group and its processes. First of all, I would like to take the opportunity to introduce our new CFO, Mark Letterie, who has been with us since beginning of September and brings over 15 years of international finance experience across manufacturing, distribution and corporate finance. Mark brings Cabka direct experience in the plastic and chemical sector through his role at Vinmar International, one of the world's largest plastics and chemical distributors. His career also includes leadership roles at Caterpillar and Royal Haskoning. Mark's strong track record in financial strategy, governance, transformation and post-merger integration makes him ideally suited to support our next phase of growth. As I mentioned, in addition to the usual strategy and the finance presentations by Mark and myself today, you will also hear from members of our wider team, including our Chief Innovation Officer, Javier Fernandez; our CCO, Naiara Lorono; and our Sustainability Director, Katrin Poirier. However, before we get started on the presentation, I would like to take a few minutes of your time to share a short film, which we have recently produced in collaboration with CNBC as part of their sustainability growth transformation initiative. They call it SGTI. We are very proud of this video, which showcases Cabka's commitment to sustainability, innovation and circular economy. The film highlights the journey from waste to wood where we at Cabka transform hard recycled plastics into resilient transport packaging that can power modern supply chains. Please join me now while we watch the film together. [Presentation]

In terms of structure, our presentation today, I'll begin with an overview of our performance and discussion on the wider market and our positioning. We will then move on to look from our Sustainability Director. Katrin Poirier and the current legislative landscape with regards to European transport packaging and the opportunities that -- and challenges that this presents for Cabka and the wider packaging industry. Following on our Chief Commercial Officer, Naiara Lorono, will take you into more detail on our commercial strategy. While our Chief Innovation Officer, Javier Fernandez will guide you through our innovation strategy and processes. Finally, Mark will take a deeper dive into the financial and our targets to 2030 and beyond. We would ask that you keep your questions until the end of the presentation when both Mark and myself would be delighted to answer any questions that you might have. I don't want to spend too long on this slide as it contains a lot of detail on events that we have covered extensively in previous presentations, particularly with regards to historic events. But I would like to highlight to you is that we have taken a number of measures throughout this year to address the macro and geopolitical headwinds of recent years and to bring stability to the group. These have been implementing cost-cutting and efficiency programs as we have flagged before our SHIFT program. Overhauling our sales teams, focusing on diversifying our end market exposure and taking decisive action on pricing and securing long-term supply contracts. These contract actions have enabled us to stabilize our top line while improving our EBITDA margins from their lows. As Mark will discuss in more detail later, our CapEx is controlled and focused, and we have managed to make significant progress in our working capital management. I can say to you with confidence today that our business recovery strategy is well underway, and our focus now is on improving utilization and efficiency to drive the next stage of our looking at the global RTP bucket today. I'm sure that you have all seen this slide before, but it bears repeating that plastic remains a small part of our overall total. The transport packaging market today remains dominated by wooden pallets. However, looking to the future, the trends are still pointing a shift towards reusable alternatives, predominantly plastic. Some of those trends that you see on this slide will be discussed further by my colleagues later in the presentation. I do find it worth emphasizing to you how our customers are addressing and making this shift. Although even here, there are market differences in their approach. On one hand, you have large blue-chip premium customers that want to fully control our intelligent logistics. I'm talking here about customers such as Tesla, BMW and even Lidl, who are using our solutions to better manage and optimize their internal logistics. This kind of clients are also extremely focused on their environmental footprint and are closely measuring their sustainability metrics. Then there are customers who are typically buy their Cabka pallets from distributors. These tend to be clients with less complex supply chains or smaller customers who are now ordering at the same volumes as they offer aforementioned examples. And then finally, a major part of the market is dominated by the pooling companies. You will hear this term often and to avoid confusion, I just want to explain exactly what we mean by this and how this sector of the market works. The poolers essentially lease pallets to the customers. The customers are very often large international and clients. You can think about companies like Heineken and Albert Heijn here, who deal with a lot of in and outbound traffic in their supply chains and have chosen not to make the investment in their own logistics chains of reasons of capital efficiency. As such, they lease pallets and boxes, et cetera, from pulling companies such as CHEP and IFCO. They both are major customers of Cabka. Looking at the growth dynamics for the plastic pallet market which I already mentioned, is the largest part of RTP market. As you know, Cabka is mostly active in Europe and to a lesser extent in North America and growth across these two regions averaged roughly 5% give or take, depends on which research you pick. As you can see, growth in Asia Pacific is much higher, but it's much less driven by sustainability. We do see selective opportunities to expand production in that region as our customers are already using our projects in the Asian markets. We are laying the groundwork as we speak, but this is a target for the longer term. Looking at our geographical footprint in more detail, you can see that Europe represents the bulk of our production assets. With our existing footprint, we can easily serve the whole of the region. In the U.S.A., obviously, we have experienced pressure after the St. Louis flood in 2022 and subsequent in rebuilding. In 2025, we have managed to stabilize the business, but there is obviously still work to be done as utilization rates are still substantially below our target. Europe is running much closer to full production capacity, but even here, we see opportunities to optimize output. I'll go into this in more detail in one of the following slides. So how do we position ourselves with our competitors? The answer is that we have a number of key advantages relative to the competition. Firstly, we have a better cost profile due to the fact that we are backward integrated. 50% of our raw materials come from our own recycling lines. The advantage that this brings is, of course, dependent on market conditions and recyclate prices. But over the cycle, we see this as a clear advantage. Secondly, it's already an advantage for a select number of customers that we can offer them standardization across continents. Finally, and perhaps most crucially, what sets us apart from our peers is our ability to innovate, combined with our raw material knowledge and expertise and design for customer manufacturing. I would also like to emphasize to you that our innovation strength is stronger by the fact that we own our own recycling lines. What this does is gives us material knowledge that is in short supply elsewhere in the industry. Looking to the future for Cabka, we see 2 distinct phases for the company. The first phase is all about utilizing our existing production footprint better and maximizing the returns on our existing assets. And of course, that means different things in different geographies. Starting with Europe. I have already explained to you how production lines are running at high utilization rates. However, we still see substantial improvements ahead. Firstly, we believe that we can optimize our portfolio mix further, both on price and margin. Secondly, I'm not entirely satisfied with our curing forecasting and planning abilities, and we are in the process of hiring to strengthen our skill set in this area. Finally, there are still automation-driven and other cost-cutting measures to be exploited. Moving to the U.S., the situation is somewhat different as our production lines are currently underutilized. Obviously, that means we can be more opportunistic with regard to new business prospects. In the past year, we have made substantial adjustments to our commercial team, and Naiara will go into more detail later. Aside from geographical initiatives, we have also made conscious decisions to refocus our efforts on new verticals to offset weakness in some other traditional verticals. I'm thinking here of well-documented European automotive industry weakness. We have instead been focusing our efforts on increasing our exposure to areas such as pharma and e-commerce where growth rates are much higher and our more premium solutions are better suited to the end product. Looking beyond full utilization, where do we want to go? First of all, it's safe to say that global RTP market will remain a largely cyclical market, which is driven by the [ebb] and flow of global trade growth. The past few years have been tough for Cabka but have been even harder on some of our competitors. As a result, we are being continuously approach by smaller players who are interested in selling their business. Also, let's not forget, this is a very fragmented market with a lot of small regional and national players. As such, it's fairly obvious that in the medium to longer term, consolidation will become a theme and one that we would ultimately explore and exploit. What is also obvious, however, is that our balance sheet does not currently offer us the capacity to be able to participate in this theme. This is why we see Phase 1 is essential to repair our balance sheet and thereby restore our firepower for future acquisitions beyond our immediate goals. Of course, we also have a major organic initiatives in the -- looking firstly at chemical recycling. This represents our first major organic growth initiative in a EUR 5.5 billion market growing at 49% annually. This growth will be driven by 2 critical EU regulatory mandates under PPWR. First, the 30% recycled content requirement in all plastic packaging by 2030, will, on its own, create massive demand for recycled materials. But secondly, and more specifically relevant to chemical recycling, household waste plastic destinated for food content application must be purified via chemical recycling. Mechanical recycling alone does not meet food safety standards for converting post-consumer household waste into food-grade packaging. This requirement fundamentally elevates the role of chemical recycling from optional to essential. The strategic insight here is simple. Chemical recyclers are currently building large pyrolysis plant, but they are facing a critical feedstock shortage. They need pretreated regrind, which is basically flakes at scale and current supply can't meet demand. Cabka's position would be simple, namely to be the essential feedstock partner. In this scenario, we would process the post-consumer plastic into shredded material ready for pyrolysis. This requires EUR 7 million in equipment upgrades. We are ideally positioned here to leverage 30 years of waste processing expertise, which translates directly into meeting chemical recycler's quality requirements. Our competitive advantage is obvious as our Weira plant sits in Germany's chemical recycling hub, and we have established collection networks a long time ago. Our second major organic initiative is about extending our ECO platform into premium applications. By premium minification we mean specialized construction systems and green infrastructure components, and these are products that command significantly higher pricing than our current ECO products. Although I cannot give you too much detail on individual products due to competitive reasons, what I can say is that the pricing differentiation here translates directly into meaningful margin expansion. What enables this transition, well, there are 3 main factors. Firstly, our existing capabilities transferred directly. We are already producing large format mixed plastic components at scale. Premium applications require the same core competencies, just applied to higher specification products. Secondly, these markets are growing. EU green infrastructure and sustainable building initiatives are both creating demand for recycled content solutions. We are responding to already proven customer requirements without having to speculate on market development. The third point is on capital efficiency. What we are doing is utilizing existing recycle capacity and manufacturing assets. The transition from standard to premium product is minimal incremental investment and is related primarily to tooling and product development, not new facilities. I would now like to move to the next part of our presentation and introduce you to our Director of Sustainability. Katrin Poirier, who will give you more insights into legislative landscape in the European transport packaging and the opportunities this presents for Cabka. Following Katrin, our Chief Commercial Officer; Naiara Lorono will take you into more detail on our commercial strategy. And Javier Fernandez, our Chief Innovation Officer, will then guide you through our innovation strategy and processes. Katrin?

I'm delighted to take a few moments today to talk to you about how Cabka is positioned at the intersection of compliance and sustainability. Our business has been built on circular principles. And as regulation and market expectations evolve, we see that this foundation is proving to be a real differentiator. My name is Katrin Poirier. I'm the Sustainability Director at Cabka, I am with Cabka since 2018. I've got 20 years of experience in B2B markets and I focus currently our ESG strategy development and communication as well as advocacy and regulatory topics. Let's look, first of all, on our ESG framework. Cabka's ESG strategy is fully integrated into our business model. So it's not treated as 5 subject, but it's very much embedded on how we design products, how we manage our operations and how we make investment decisions. It's based on 3 core pillars. On the environmental side, we focus on material secularity, ensuring that the plastic reprocess are reused again and again, together with carbon reduction, full use of recycled material, but also through energy transition. This is supported by our people strategy and that first and foremost aims to provide safe and inclusive workplaces and help us to retain and attract talent. Our company values and ethical principles are very present, continue to nourish our strong company culture. Over the past years, we have built data-driven reporting systems, which are supported by robust governance and traceability. This has allowed for full auditability in the past year, and that's something which investors do increasingly value. The performance of our sustainability management framework is recognized by EcoVadis and CDP. These are 2 reputed assessments for our customers and investors at EcoVadis, we have managed to achieve platinum in the past in 2025, and that's something we are very proud of because that means we -- our performance is among the top 1% of all rated companies. How does Cabka approach maximize sustainability? Our mission is simple but powerful. We turn waste into value. Every product Cabka designs, produces, embodies reduce, recycle and reuse. We deliver superior durability, full recyclability and a measurable carbon. So we're positioned really at the top of the waste. Let's look at the numbers. In 2024, we have taken in 127,000 tonnes of plastic waste. That corresponds to 88% of recycled material intake and translates directly into a great volume of carbon avoidance, that's 262,000 tonnes of carbon avoided in 2024 that in fact, exceeds the carbon emissions of our own operations. And that is coming from the fact that we use secondary material instead of primary materials. So we replace the use of virgin plastic and we also help to divert plastics going into landfill and incineration. Carbon reduction and then on top comes our energy transition, which will help us from carbon neutral in our own operations by 2030. That's something I also want to highlight, we are very well on the way to achieve our first milestone of 50% of renewable energy in the year of 2025 and continue to work on 2030 to provide also an additional carbon benefit to the customers, who are the users of our products. Now let's turn to regulation, specifically the EU Packaging and Packaging Waste Regulation or PPWR. This regulation is transforming how Europe thinks about packaging [indiscernible] system to circular models and products that prioritize reuse recyclability and recycled content. Cabka did not wait for the PPWR. In fact, we have kind of integrated it already since our very inception. So we feel that when it comes to the PPWR, we are ahead of the curve. Our reusable transport packaging solutions directly support the PPWR core objectives. Products are designed for full recyclability and most of our products considerably exceed the PPWR recycled content requirements. Looking forward, we see that Cabka plays an enabling role across the value chain. Our priorities are clear. We want to promote reuse models and infrastructure. We continue to engage with industry association to promote a practical PPWR application. We also promote traceability material and product identification in circular packaging. Now what is new in the regulation? That's something I want to specifically highlight. First of all, it notably extends from the previous focus on sales packaging and good packaging, also to tertiary or transport packaging. The PPWR also extends responsibilities of packaging towards all economic operators from raw material suppliers to producers. And these producers, as you see in the graph, can be manufacturers, distributors or importers. That depends on where the packaging will become waste. So this transition towards also tertiary packaging and responsibilities across the value chain require collaboration across the entire packaging ecosystem. We see that Cabka is well prepared our existing circular infrastructure with in-house material expertise and partnerships position us to support customers on every step of the way. Let's just look at the timeline. By 2030, packaging will need to demonstrate recyclability, reuse performance and minimum recycled content. For the packaging user, in particular, the users relying highly automated system, 2030 is basically too long. Unfortunately, we only see the secondary legislation, which will define the detailed requirements to implement these targets in the coming years. For example, from 2026 to 2028, for some selected items, there will be methodologies available on how to calculate the recycled content, the recyclability evaluation and on reuse targets. So we know already what the targets are on how they are implemented that will require a lot more guidance. Some of the regulation entered into force in beginning of 2025. And we do see still a lot of voices which are raised against the positions by the PPWR. Again, some of them are even the full PPWR. We know, however, the alternative to the PPWR will be the national -- continued national implementation of packaging waste regulation and initiatives. But that, however, is for everyone involved, the least favorable scenario, and this however is expected to happen if the PPWR is not going forward as planned. Thank you very much for taking the time listening to me. Let me now hand over to my colleague, Naiara. Thank you.

Good morning, everyone. My name is Naiara Lorono, and I'm a Chief Commercial Officer at Cabka. I have worked for the group since 2018. And today, I would like to take 10 minutes of your time to tell you more about our commercial strategy and the way we are positioning Cabka in the market. So when we do a poll to ask our customers what's the most critical issues they face in packaging and their supply chain operations, we typically get 5 answers. First, on cost, rising input prices, fuel cost and inflationary pressures are making logistics more expensive and unpredictable. Then regulatory compliance is also an issue. And increasingly complex regulations such as CSRD and PPWR, require companies to track and report sustainability metrics across their supply chains. Meanwhile, regulation will also mean they have to introduce recycled content into their packaging, as well as introducing reusable products that are fully resectable at the end of their life. On sustainability, there is still pressure to decarbonize and our customers continue to focus on reduction of emissions. Availability, customers have struggled to predict demand and there is pressure to reduce inventories. Therefore, supply chain needs to remain flexible and without interruptions. In terms of quality, we see increasing demand for higher quality, longer lasting and more sustainable logistics assets, which are optimized for new automated and autonomous systems. However, these are not isolated changes, but they are deeply interconnected and their relative importance varies over time. Let me give you an example. During 2022, most companies invested in equipment RTPs to warranty supply chain security. Survivability took priority over cost and prices rose by 20%, 30% as the demand was picking up, and good materials were sorted at that time. However, in 2023, the focus shifted to regulation and sustainability. And many companies started the studies on how to comply with optimize on this regards. While today, we see that economic circumstances and other factors have made them drop several notches on the scale of importance. Currently, since mid-2024, the focus is primarily on cost and quality and durability which is largely due to automation trends. Still, I would say that we at Cabka are well positioned, because we can tackle all of these challenges at once with our solutions. The regulatory environment is clearly in our favor and increases our competitive advantage. Reduced, all our products already have high reduced rates with durability up to 10 years. We have 30% recycled content already with only a few exceptions for the food industry. Our products are already at 85% to 100% recycled materials. In terms of recyclability, we closed the loop at the end of life, and our products are 100% recyclable. On automation, the global warehouse automation market will reach $55 billion by 2030. A CAGR of 15%. Cabka has been focused on the so-called system integrator vertical warehouse and equipment builders since early 2024. And all our new products development are especially designed to be compatible. On digitalization, the point is that digitalization in RTP is no longer optional, particularly in automated environments is now a functional requirement for trustability, uptime and carbon reporting. We now see corporates embedding this tech at the scale and OEMs, retailers and poolers now expect RTP suppliers to provide clearly enabled assets and data services. Finally, on hygiene and sustainability. We can combine all the needs and benefits of the previous points. The real benefit of plastic is that it offers greater accuracy in robotic automated environments and they are cleaner and safer. And this is not just true in the food industry. We see other industries are also adopting plastic RTPs, such pharma, commerce and retail. As you can see from this slide, at Cabka, we serve a wide range of blue-chip customers across a diverse range of sectors. This also give us the benefit of the portfolio diversification. As for example, while there is softness in the European automotive market, we are exploiting opportunities in other industries such as the pharmaceutical, where there is more growth on both European and U.S. markets today. Looking at our geographical exposure. Our 7 production sites in Europe and in the U.S. plus one innovation center allow us to target customers globally. Combining our consistent quality and service across continents, with our deep understanding of sector-specific needs, we are currently serving customers in over 80 countries. And our sales force is a split accordingly to support the different market segments and customers. I would like now to move and to focus more closely on the evolution of our Commercial Strategy. When markets have contracted, we at Cabka have been able to adopt rapidly via several different approaches. First, on the industries. We have been able to ship to different target segments with bigger growth. For example, we adjusted our focus from mainly [purely] automotive towards general mobility and defense or from food and beverage towards pharma and e-commerce. To accompany this, we have created new specific segment verticals with dedicated sales team and reinforce those already existing in pooling and automotive. The second pillar, talking about markets. We have also been able to put more focus on key target markets. While Germany and France have been most impacted by economic contraction in Europe, we have reinforced our sales efforts in Central and Eastern Europe and Italy, where we still see growing demand. At the same time, we continue to invest strongly in the U.S. New sales team members, increase of marketing activities and more product offering. Finally, on the customer side, we also see changes. We continue to target large and diversified customers. During the recovery from COVID and supply chain issues, there was excess of demand, which pulled forward a lot of CapEx in 2022. As a result, the market is now currently experiencing a period of indigestion with larger corporations hesitant to dedicate fresh CapEx to new investment. Then our focus is participating and gaining RFQ's, enabling our customers' cost to be as much competitive as possible and to serve them globally. Looking now at some of our commercial initiatives, one of the things I would like to highlight is how RTPs are becoming smart careers with embedded RFID, GPS and IoT sensors. This will become increasingly relevant as robotization and automation increases and according to IDTechEx forecast, over EUR 300 million of logistic assets such as pallets, beams, crates will be RFID or IoT enabled by 2030 with the Smart RTP market exceeding $4 billion. Cabka Technology allows clients access to real-time location tracking for intralogistics and between facilities, automated identification and hand shake with robots WMS ERPs. Cycle time and asset utilization analytics, also on preventive maintenance, detecting weird, contamination or damage. And finally, CO2 and life cycle reporting. We are already seeing this technology being adopted by large corporations across a number of industries. Some examples, in automotive and industrial, who have been early adopters, BMW, Volkswagen, Stellantis and Toyota, all require serialzed RTPs that integrate with MES and VMS systems. Most OEMs are now digitizing inbound RTP fleets for EV. In the FMCG, retail, grocery sector, Unilever, Nestle, Carrefour, Lidl, all use RFID-enabled foldable crates and pallets, integrated into automated warehouses. In the post industry, we also have recently completed projects on a European level for example, imports tracking our [Cabka's] with RFIDs. Finally, for the pull-in and closed loop operations, CHEP and IFCO are now also digitizing poolers assets with embedded RFID chips, millions already tucked and cloud-based visibility portals. By 2026, CHEP expects to have more than 50% of its European pallet pool IoT-enabled helping customers track loss, damage and carbon footprint. As you can see from this slide, the process of innovation lies at the core of Cabka and isn't limited to the example we just discussed in the previous slide. Our commercial and product innovation teams are constantly collaborating to serve our customers, both on portfolio or customized solutions. Portfolio is the Cabka general offering. You can see on the upper part. We find the latest product launches that are especially targeting what we mentioned before. Example, U.S. retail market, general automated warehouse optimized solutions or new footprints on the sleeve pack containers. Below on the customized solutions, which are the tailor-made products, every of these developments, we're targeting specific benefits in different industries such as retail, food, automotive for pooling. As Cabka, we will help our customers to reduce cost, be more sustainable and efficient along their supply chain. And now I would like to hand it over to Javier, who will tell you more about Cabka innovation process.

Hello, everyone. I'm Javier Fernandez, Chief Innovation Officer at Cabka. Today, I would like to show you how we turn waste into value with a model that the [derisk] investments accelerate time to market and drives profitable growth. I lead Cabka innovation from our innovation center in Valencia, adding more than 50 years experience in plastic across automotive, aerospace and packaging industries. My focus is simple: connect the strategy with execution, make data driving decisions and deliver profitable products to extend both customer value and circularity. But how we do this in Cabka and how we create real impact? Well, we do this with the 3 integrated pillars. Product development, material engineering and tooling and automation. In product development, we designed products with recycle materials and engineering them for reuse. They are modular, repairable and fully recyclable, truly circular innovation that reduced our customer total cost of ownership. In material engineering, we turn waste into high-performance raw materials at lower cost, but at the same time, ensuring stable quality and supply. And finally, in tooling and automation is where we move from prototypes to production with tools specifically designed for recycled materials to get faster cycles, less scrap, high ROE and consistent quality. All these 3 pillars work together and connected under One Roof. And this integration removes silos, compressed cycle times and the risk CapEx and expands our market to deliver faster launches, better outcomes and profitable growth. And this One Roof is our innovation center in Valencia, a 2,500 square meter facility across 2 floors. On the ground floor, we have our material laboratory, prototyping area and test center to properly validate our materials and our products. On the first floor, our design and engineering offices. In this single place, we bring every capability together to turn waste into value, recycled materials, intelligent design and evidence-based validation. The result, shorter cycle, low risk, higher accuracy and continuous learning cycles to faster our time to market, landing in a better ROI on every single euro we invest. Now let's take a look on how we turn an idea into real product in the market. This is our innovation funnel. It's a structural evidence-based process designed to drive both excellent in execution and capital efficiency. Each project follow standardized deliverables and checklists, involving all our key stakeholders from the start. We prototype first and invest later, validating every step with data before committing CapEx. Through this process, we maintain continuous feedback look between all areas, including our production plans. So issues architecture in the early stages, lesser lengths are captured to incorporate in future products and launches are more predictable. In short, capital-efficient innovation that connects direct to the P&L. And now let me illustrate with the real case. The CabCube Euro 1208 launched to the market this year. The project started in October 2024 with initial [sketches] and design has been completed by December. Starting this year, we have a full scale prototype tested and validated to get consistent data before any major investment. After that confirmation, we approved the CapEx based on solid evidences, not only In the assumptions. By June, after completing the injection tool construction and initial injection setups, the product was fully validated. And finally, in July, the Home Line production setups was done in our facilities in Weira, Germany, where the product starting the production in August. That means less than 1 year from the initial concept to the market, and that's how our integrated innovation model delivers, faster launches, lower risk and higher confidence in returns. And this discipline doesn't just deliver products faster, it's also deliver products that win. I'm really proud to share that this year, Cabka has been awarded with the Red Dot Design Award in 2 categories, sustainability and packaging. This is an independent and global jury confirming not just a good design, but also a disciplined roadmap that delivers sustainability and a robust product performance. For the investor, the impact is demonstrable. This milestone confirm our innovation process and also reinforce our ESG credibility. We are proving circularity with data while lowering our customers' total cost of ownership. This is an external proof that our model creates value. With this inspiring award, I finished the presentation in our innovation way, and I hand over to Mark. Thank you.

Welcome to the Cabka financial update. I'm Mark Letterie, CFO of Cabka since September 1. My aim today is to provide you, our shareholders and other stakeholders, with a clear view of where Cabka is today, and where -- what the direction is that we are going. It has been a transformational year. At the beginning of the year, Cabka had run into an issue with its financing facility, leading to material uncertainty in the assessment of our auditors, to continue on a going concern basis. A month or so ago, we were able to secure an adjustment in the covenants of this facility, thereby making our external financing secure again. Now we are on the road to further recovery, and I will discuss our plans to strengthen our balance sheet and generate profitable growth in the markets we operate in. Transformation is at the core of Cabka. We transform plastic waste into sustainable pallets and containers. Now we aim to transform the financial performance of the company as well and future-proof the organization. Where are we today? 2025 was a year of stabilization for Cabka. After several years of revenue declines, we managed to stabilize our revenues and EBITDA. For both of these headline numbers, we expect to end up at a roughly similar level as 2024. Execution of our SHIFT plan helped the company maintain its profitability at an estimated full year EBITDA of EUR 20 million, closely in line with last year. The high-level numbers show a roughly comparable performance year-over-year. However, when we take a closer look at the results, it becomes clear that some important improvements have been made. Most notably is the reduction in the personnel and operating expenses by EUR 4 million. This provides a lower cost base, which will drive higher profitability in the years to come. Unfortunately, the impact of this cost reduction is not immediately visible when we look at the total EBITDA. This is because it is balancing out against a lower operating performance. Being a production company, we measure operating performance by what is produced, which can be quite a bit different from what is sold. In an effort to improve the balance sheet this year, we have both reduced capitalized services, which is internal CapEx spend and inventory, adversely leading to lower operating margin. Still, for the future, the lower cost base will make it possible to achieve higher profitability. Where are we going next? The syndicated loan covenants have been adjusted and financing is secured until 2027. Net debt over EBITDA range has been extended. This removes the material uncertainty to continue as a going concern. From a situation of balance sheet repair in 2025 and 2026, we now need to further strengthen the balance sheet. The metric we use is net debt over EBITDA since improving this is key to securing financing after 2027, thus ensuring solvency and financial health. We will adopt a flexible CapEx budget where we require visibility on cash generation, before we commit to the CapEx budget for the next quarter. Supplier payment terms have deteriorated because our bank covenants were not all met. Now adjusted covenants are in place and financing has been secured until 2027. Therefore, we are working with our suppliers to restore payment terms to where they were before, thereby improving our working capital position. Where are we going next? The focus shifts from top line growth to top line conditional on bottom line growth. General market uncertainty and capital rationing does not allow Cabka to rely on top line growth only. Revenue growth that does not clearly support the bottom line in the near term cannot be supported. Entrepreneurship, however, is about taking risks. Not taking risks is the greatest risk because it guarantees a lack of growth. And we understand that Cabka needs to continue to improve its product portfolio, support customers with solutions and take decisions that will commit Cabka financially and where the results are uncertain, still the focus will be very much on prudence and taking calculated understood risks in areas we have expertise and can mitigate or hedge risks we do not want to take. We can grow to EUR 215 million in revenues with the current installed production capacity. That should increase our EBITDA margin pull-through from 11% to 13% to 15%. We can even grow revenues to EUR 240 million by only making investments in our current factory footprint. So without new factories would be required. That should increase our EBITDA margin pull-through even more to more than 15%. This is our revenue forecast for 2025 to 2028. Cabka is expected to grow with a CAGR of 6% compared to the market CAGR of 4% to 5%. Higher utilization of our production capacity will drive up EBITDA margins to 13% to 15%. Combining both the sales growth and margin growth could lead to 40% to 60% higher EBITDA in 2028 compared to 2025. This is our updated guidance for 2026 to 2028 with our key performance indicators. In terms of growth, we aim to grow towards full capacity in the next 3 years with sales above EUR 215 million. This will support higher capacity utilization and will ensure higher margin pull-through with an EBITDA margin of 13% to 15% as a result. We aim to invest EUR 10 million to EUR 15 million in CapEx annually and that is split between EUR 4 million to EUR 7 million maintenance CapEx and EUR 6 million to EUR 8 million strategic or growth CapEx. Net working capital, we aim to keep between 15% to 20% of revenue. This will provide adequate liquidity but also will ensure high operational efficiency. We will maintain our dividend policy with the ambition to return to 30% to 35% payout ratio as a percentage of net profit. This policy will be restored when the balance sheet allows. These are our long-term aspirations. By 2030, we aim to grow the company to more than EUR 300 million. From EUR 215 million of sales, we can grow organically with a 6% CAGR to EUR 240 million by the end of 2030. Then we will engage in M&A to grow inorganically to a bigger company of more than EUR 300 million. Because we will be at full capacity utilization, EBITDA margins should be above 15%. In terms of CapEx, we expect to spend less than EUR 20 million per year, 1/3 of which will go to maintenance CapEx and 2/3 will go to growth CapEx. Net working capital, we aim to keep it below 20% of revenue. And we maintain our dividend policy at 30% to 35% payout of net profit. This is our staged growth plan. In the coming years, we aim to grow the top line organically to EUR 215 million. That will also increase the capacity utilization in our factories and leads to a margin improvement to 13% to 15%. From there, we will continue to grow the company organically to EUR 240 million by the end of 2030. And that will also further strengthen the balance sheet and make it possible for Cabka to engage in M&A activities to grow the company even more. We believe that this financial plan will put Cabka on a firm foundation to achieve its longer-term ambitions. And with that, I would like to hand back to Alex for his closing remarks.

Thank you very much, Mark. As you have heard today, 2025 has been a year of stabilization, and we are now ready to look forward from a more stable base to take up Cabka to the next level of its development. We hope that we have been able to explain clearly to you the distinct competitive advantages of Cabka, be it in our batteries ESG profile, be it the competition in our innovation leadership and in our customer-centric commercial approach. To reiterate, we see 2 distinct phases ahead of us. The first is to better utilize our current capacity, both in Europe and in the U.S. and maximize our efficiency. This should result in higher margins and a much stronger balance sheet, especially as we keep CapEx at low level. We're also laying the ground for Phase 2 in several key initiatives in ECO and chemical recycling that should further drive our organic growth. All of this should enable us to move into the second phase where Cabka can take advantage of the numerous consolidation opportunities that exist in the market today. Thank you very much, and operator, would you be so kind as to open the lines for our Q&A.

[Operator Instructions] We will now take our first question from the line of Usama Tariq from ABN Amro ODDO BHF.

I hope I'm audible. I had just a few set of questions as a start, starting with Phase 1. You have indicated quite extensively with regards to the chemical recycling. My first set of question would be how big of an operation can we visualized going forward? Do you require some investment for it? Is there any agreement in place? And if more concrete, when do we see some commercial revenues coming from it? So that would be chemical recycling. Second question, if I may, I could quickly squeeze in with regards to the contract manufacturing part. Initially, maybe I understood it wrong, but the strategy was that the contract manufacturing was not really something that you strongly focused on. Has that changed now and your focus on pharma, e-commerce and even defense is what you mentioned? Could you provide some examples there or do you already have some clients, so just some color there would be extremely helpful?

Thank you, Usama. Let me answer that. So regarding chemical recycling, in Phase 1, this is intentionally a small and capital-light operation. We're not building chemical recycling plants. Our role is to act as high-quality fixed stock partner for the pyrolysis players who need cost consistent input of materials. The infrastructure we already have sorting preparation, blending is sufficient to start. At most, we expect maybe minor upgrades, but nothing that changes our CapEx involved. We're already in active discussion with several chemical recycling players, and the alignment is strong, because their biggest bottleneck is reliable feedstock. We will not disclose agreements at this point of time. Regarding commercial revenues, those will start probably in Phase 2. Phase 1 is about securing partnership, whether it be the material streams, as PPWR requirements for food-grade recycled plastic come into force, demand will accelerate. So we really believe in it. We expect several millions of euros of revenues contribution and in Phase 2 growing as the market scales up. And I hope that answers the questions on chemical recycling. Regarding the -- your question on contract manufacturing, let me clarify this point because it often creates a confusion. There is no vertical shift and no strategic repositioning. So contract manufacturing has always been existing in Cabka. The difference now is that we are commercializing it more actively and more intelligently. This is purely an operational excellence level. So we use contract manufacturing to balance seasonality, some capacity footprint that we have, it generates incremental revenue, and without adding any complexity or acquiring any additional CapEx. So no, this is not about building a new strategic segment. It's about better asset utilization, not strategically repositioning. I hope I answered the question.

We will now take the next question from the line of Patrick Stefan Roquas from Kepler Cheuvreux.

I've got a couple of questions. And the first one is related to your sales target for Phase 1. You need around 6% to 7% organic sales growth. Are the improved momentum that you see for sales in the U.S. together with the initiatives that you just highlighted, the main drivers to get to that 7% or does it also assume an overall improvement in market conditions? Or to what extent is the growth back loaded towards 2028? That's the first question. And I'll wait for your answer for the second question.

Well, to your question, of course, U.S. is part of the organic growth as well. Although we are, as you know, much more integrated in Europe. So a lot of the growth comes from Europe. We are just in the initial stage into growing in the U.S. We are seeing a certain growth this year. We'll continue to see that growth. Do we take into account market conditions? Yes. So if you look at the market growth rate, there are slightly about 4% to 5%, but this is cycle. So for some regions, it's more, for some regions it's less. We're more focused on specific customers and specific channels rather than market conditions because as I said in the presentation, when we see a downscale in automotive, we focus more on pharma and others. So it's really different from a channel to a channel market conditions, I would say.

Okay. And then still going back to the U.S., can you be a bit more specific here? Because I think in your aim to get your group EBITDA margin back to around 13% or 13% to 15%. U.S. is important. What are your expectations for U.S. to be more specific here?

Yes. Well, to be successful in the U.S., we need a broader portfolio. And ESG is less of a selling point, not big enough commercially. So what we need to do is [indiscernible] to strengthen our portfolio in the U.S. This is why we have started to invest in the U.S. more precisely in 2025, where we see some results in 2026, and we also have a CapEx allocation for the North American market in the '26 plans and where the main idea is to broaden the portfolio of products, that's from a product perspective, but that comes enhanced restrengthening the commercial team. So obviously, the commercial team is quite narrow at this moment in the U.S. And part of what you heard from Naiara is to rebuild that team and add more, let's say, sales commercial people to that team together with the product is the way we see increasing the sales in the U.S. So there is CapEx for '25 and '26. From a product perspective, there is also allocation to commercial efforts in terms of people in '26.

Okay, Then I have a final question or, let's say, to give others in the room as well. So on the dividend, I mean is it fair to say that in the coming years, shareholders should not expect a dividend also because you want to strengthen the balance sheet first, which I think is fair? It's the right way. And then after 2028, you would be willing to participate in consolidation from which you then need some room on the balance sheet? So what's your view on the dividend?

Yes. Thank you, Patrick. And so we want to create value for our shareholders and dividend distribution is an important factor in providing a return to the shareholders. But at the moment, yes, the balance sheet does not allow a dividend distribution. When we will start again with the dividends is when we make a bottom line profit, simple as that. Once we have that profit again, the balance sheet should also be in a better shape. So those go hand-in-hand. But we have a clear focus on our shareholders, and we are committed to paying out the dividend when the company is able to.

We will now take the next question from the line of Luuk Van Beek from Degroof Petercam.

Two questions. One thing you mentioned that in Europe, you wanted to see as one of the -- see as one of the opportunities to optimize the mix and the pricing. So can you give an indication of which part of your revenues is coming from products a little lower added value that you would like to replace with higher added value? And also, have you identified any areas where you feel that your that the pricing that you're offering is well below the actual value of the product to your customers, so where you can do smart pricing? And my second question is on your leverage targets. You mentioned net debt-to-EBITDA as your target. Do you have a range in mind where you would feel comfortable to start paying dividends and also to do acquisitions?

Yes. Thank you, Luuk. So to answer your last question first, when do we feel comfortable to use debt to finance any acquisitions is when it's closer to 2 net debt over EBITDA. And so currently, we want to drive it closer to 2, that is the ultimate aim. Of course, we have a possibility to use equity finance as well. But once we are significantly below 3, debt financing becomes a possibility again. In terms of price differentiation, we are currently working on a project to look at the pricing, mostly focused on our European markets. And we see an opportunity to increase revenue by having a more diverse pricing policy. So that's something we are focusing on at the moment. And going back to your first question, what kind of products do we see our product mix improvements, do we need to have to come to higher margins. A lot has to do with utilization. So even in Europe, we see a lot of opportunities to increase margins by having a slightly higher utilization. We are currently at an inflection point. Some of our factories are profitable. Others have difficulty but we see that when we increase the utilization from here, the margins are very high, 20% to 30% of revenue. So that will increase the margin as a total. We are also looking at the products or product scope and we are trying to analyze which products are making higher margins. And we want to -- yes, have that reflected in our strategy going forward as well. So to focus more on developing those products with higher margins instead of more commodity type of products. I hope that answers your questions,.

We will now take the next question from the line of Elis Atkin from First Berlin.

Thank you for the very detailed presentation. I'll just start off with one for now. I've heard you mention in the past a number of times that you really feel like you're underutilizing your ECO segment. And early in the presentation, you talked about the launch of premium products to really some -- to unlock some upside there. So I'm just curious, is that like a live initiative now? Or is that something that is on the planning table for a couple of years down the road? And then tying into that, I assume also that the CapEx budget that was discussed -- includes getting those premium products into the portfolio. So just some color on that whole initiative would be appreciated.

Yes. So let me just clarify, when I said the premium positioning, I meant ECO product premium positioning. This is another initiative that's part of our ECO business that's mainly has to do with us developing more and more products out of our recycling lines. And we do expect an increase in revenue by 2027 because we are constantly looking at more and more product that we can produce out of our recycling lines, which are not part of our, let's say, [Vallador] RTP business. We cannot even identify the opportunities ahead of us in that commercial spectrum. But we are working as part of our ongoing development in the innovation center we sit today, to develop those premium products out of recycled content that we have, and there are major other aspects, not only RTP. So when we talked about premium positioning, this is -- we're talking about the ECO products and...

Yes, yes, yes. Okay.

And yes, we are expecting revenues already to come in 2027. We actually are expecting also to see growth already in 2026, but minor. In terms of general development, of course, there is a constant development in our core business of offerings across RTP business in pallets and in Cabcube boxes for different customers, including automotive and pooling, and that's just our core, which we have to invest in.

Can you repeat your question about CapEx for the audience please?

No,no. I'm not sure if I mentioned ECO at the very start. But yes, thank you for clarifying. That's exactly what I was focused on here. So just to make sure you do have the launch of those products or the development of those products, that is part of the CapEx budget, which you've discussed this afternoon.

Of course, CapEx allocation to new products is essential to what we do here in Cabka. I think this is -- the core of Cabka has been for years, and we are not -- we are just increasing it. This is why we also choose to do this CMD from our innovation center in Valencia actually, as you can see behind us.

We will now take the next question from the line of Luuk Van Beek from Degroof Petercam.

Yes. I have one follow-up question on the PPWR. You mentioned last year that it was coming. Obviously, it needs to be detailed in the regulations. But do you see that customers are now really taking concrete steps to prepare for it by doing, for example, pilots with you to see how they can respond to this upcoming regulation and the impact on the companies?

Great question. And I think it's natural that it takes time, so we are very active in everything that has to do with these legislations, also part as a company we try to lobby as much as we can. There are certain customers, specifically in Europe, that are a little bit ahead of the curve and they are more attentive to the legislation coming. I think not everyone is as much as we would like to. I think the opportunities are ahead of us when customers will understand, it's not must to happen 3 years, but it's a to have in a year or 2, so I -- the interest is getting -- the attention that they're getting is higher and higher year-by-year, but it's far from being where it needs to be to complete to complete with the PPWR legislation by 2030. I mean, the gap is too high from where we are today to where we need to be. And some customers understand it earlier than others. PPWR is not a strategic -- it's not a strategy for us. It's a very important tailwind but we don't build our strategy on the commercial legislation.

I would like to turn the call over to the speakers for webcast questions now.

We have a couple of questions on the webcast. I'll start with a question from Julio Struck at Tesla Capital Management, who asks, how do you defend against pricing power of larger similar players and competitors such as Schoeller Allibert, which currently has a larger geographical footprint and may benefit from economies of scale?

Well, pricing is always a fight. It's a tough fight, and I think we are doing it very good. I think our gross margin says that, and we are defending our business, and it's a very tough market, as you also heard from Naiara. Specifically to Schoeller, I would say that they are in the middle of the merge. So I wouldn't say that they are our toughest competition at this moment of time. However, there are enough players out there, which are fighting with price. I think we have enough innovation power and backward integration to protect our margins. And as you can see in the results, it's a day-to-day business. This is what we do. I mean, competition will always be there.

Okay. And then we have a question from Martin [indiscernible] Oakland, who is asking what is the current capacity utilization in the U.S. and what is the outlook for filling this factory with your own products?

As I said before, U.S. capacity is built from two main initiatives, how we build it up. One is from our own business, which requires more product portfolio that we are investing in. The second is not a strategy, but contract manufacturing initiatives that we have. We have already in 2025, signed 2 contracts for contract manufacturing in the U.S., and our utilization went by 10 points up. It's not where we would like to be, but it is 10% better than we have been a year before. And we are looking at 2026 exactly with those initiatives and bringing more products and signing more contract manufacturing contracts.

Okay. And then I have a question from Felix Schulte at First Berlin, who is asking, are there any opportunities to take out further costs?

Yes, I can take that one, Alex. Yes, so in 2025, we have seen significant cost reductions. About EUR 4 million was reduced in personnel and operating expenses. So that will provide a lower cost base for our future. For 2026, and 2027, the priority is not on reducing costs further, but on cost control. So we want to manage the cost base going upwards in volume, and we want to prevent our costs from increasing at the same rate. But we are very focused to keep the costs under control and let them go up by significantly less than our volumes, and that will lead to higher margins. But at the moment, we are not viewing significant cost reductions.

And then maybe one last question from the webcast before we go back to online. There's a question here. You mentioned an ambition to make acquisitions in the future. Are there any prospects of Cabka being acquired or merged with a substantial partner?

Well, we are not actively looking to merge with anyone. Partnership is something we don't exclude. If we look in our Phase 2 M&A focus, we have to stay disciplined. So the priority is to strengthen our core RTP business acquisition that can add scale, I don't know, expand our product offering. Given our position in Europe and North America, selectively, when we look at some opportunities, partnership is something we will, of course, not exclude, stays on the radar.

Okay. And I have one question here from Stefan Maninagar. Can you please shed light on how the order intake and sales are developing since the summer?

So in terms of sales, I think we are continuing to head the guideline we have provided the middle of the year. So clearly, looking at the same outline of keeping the top line at the level of last year a bit higher and keeping the EBITDA margins exactly as we said before. We stay much more disciplined in terms of our cash outlook and our capital. And I think this is just according to plan, I would say. And this is the most important we need to stay according to plan.

Okay. Thank you very much. We'll hand back to the operator now for any remaining questions on the phone lines.

[Operator Instructions] The next question comes from Patrick Stefan Roquas from Kepler Cheuvreux.

So one question was just answered. But I would be interested what has been the growth of the global RTP market in 2025, albeit it's not over yet the year, but an -- what are the expectations for market growth in '26? And then also you provided us the slide, which you've seen before, size of the global RTP market, but that's a figure out of 2022. Are there any updated figures for the size of the global RTP market?

Yes. Well, it's a very cyclical market. And I think in 2025, it depends which channel you're looking at. We can't say that the market, I think, was mainly flat. Most of our competitors have been under pressure. At some points, the market grew up to 4% and 5%. At some point, the market went down 10%. I think it's bringing deals as often smart balance of how you use available cash resources and where you invest. So when you see some channels going down, you invest in other channels that what we tried to do. As we look at '26, we do see a certain recovery in some channels. So if we need to give a guideline as to what the market is looking at is probably 4% to 5% on average. Although we have seen growth that has been much higher and much lower. Again, it's very difficult to predict, I would say, at this moment in time. Could you just repeat the question from '22 again? What was the question?

Yes, Alexander, there's a slide where you kind of show the size of the global RTP market, USD 86 billion, but that's a 2022 figure.

It is. And we don't have a better figure to show at this moment of time because we just don't know. I have to say that, for example, in the U.S., we see certain customers walking away and coming back to wood, which is very surprising. And sometimes it's the other way around. So I don't have a better number to share this moment of time.

I would now like to turn the conference back to management for closing remarks.

Well, I would like to thank you all for joining. I hope you have received the information as detailed as we could have shared them on the online platform. Obviously, we will welcome any questions. We'll do this again and again as soon as we have more updates for you. Again, thank you very much for joining. I would like to also thanks the team for helping me in preparing this commercial market update, to Mark, Naiara, Javier and Katrin, who joined me together in this presentation. Thank you all, and I wish you all a great week.

This concludes today's conference call. Thank you for participating. You may now disconnect.