Ferrovial SE Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Overview: Continued strong momentum across business divisions in first 9 months of 2025. Highways had strong revenue and EBITDA growth from North American assets. Airports saw progress at JFK's New Terminal One. Construction maintained solid profitability. Net debt excluding infrastructure projects was net cash EUR 706 million. Main cash inflows included dividends and sale proceeds; main outflows related to acquisitions and equity injections. Shareholder distributions totaled EUR 426 million in first 9 months.
• Highways details: U.S. highways benefited by North American assets. 407 ETR had traffic growth, revenue and EBITDA up, dividend increases. Dallas-Fort Worth Managed Lanes had varying traffic and revenue per transaction growth. I-66 and I-77 saw traffic and EBITDA growth.
• Airports: New Terminal One at JFK on track for June 2026 opening, Dalaman saw steady performance despite softer international traffic.
• Construction: Adjusted EBIT margin solid, order book healthy, focus on growth investments.

Segment Performance

• Highways: In the first 9 months of 2025, U.S. highway revenue grew 16.4% in like-for-like terms with adjusted EBITDA up nearly 15.1%. 97% of highways adjusted EBITDA and 88% of revenue come from North American assets. The 407 ETR had traffic growth, 18.6% revenue growth in Q3 and 19.3% in first 9 months, EBITDA surged 20.1% in Q3 and 15.8% in first 9 months; CAD 450 million in dividends paid in first 9 months with Q4 dividend of CAD 1.05 billion approved. Dallas-Fort Worth Managed Lanes had varying traffic and revenue per transaction growth. I-66 saw 13.2% traffic growth in Q3 and 8.5% in first 9 months, revenue per transaction up 12.1% in Q3 and 18.3% in first 9 months; I-77 had traffic growth despite adverse weather, revenue per transaction up 25.7% in Q3 and 24.4% in first 9 months.
• Airports: New Terminal One at JFK making steady progress towards operational readiness, project on budget, 78% complete with 21 airlines committed. Dalaman saw steady performance with adjusted EBITDA growth supported by commercial upgrades despite softer international traffic.
• Construction: Adjusted EBIT margin 3.7% in first 9 months, 4.2% in Q3; order book at EUR 17.2 billion at end of September, up 9.1% from end of 2024 December.

Guidance

• Expect bid submissions for I-24 in Tennessee, I-25 in Georgia in first half of 2026 and RFQ submission for I-77 South in North Carolina by end of 2025.
• Anticipate substantial improvement in construction working capital in last quarter of 2025.
• 407 ETR approved a CAD 1.05 billion dividend to be distributed in Q4 2025.
• NTO has no additional equity injections scheduled for the year.

Risks

• Potential delays in NTO opening could lead to liquidated damages and delay in revenue perception.
• Impact of U.S. government shutdown on operations not significant so far but needs monitoring.
• Uncertainties regarding Schedule 22 penalty projections as it depends on product performance and market dynamics.

Question and Answer

Q: What are the potential financial consequences in a scenario where there is a delay to the launch of Phase A at New Terminal One and what about the widening of operating losses in the other segment?

A: If there were delays beyond June 2026, the contractor would face liquidated damages; for the other segment, it was related to commissioning and start-up of a plant in the U.K. needing overhaul before divestment.

Q: Should we expect any impact from the U.S. government shutdown in Q4?

A: Up to date, no significant impact on I-66 seen, bidding processes mainly at state level not affected.

Q: The provision reversal in Q3 for Schedule 22, what drove this reversal and what does it mean for Schedule 22 penalty decreasing to 0?

A: Reversal driven by more mobility in the area and successful promotions; won't comment on projections of Schedule 22 penalty decreasing to 0.

Q: Any color on the NASDAQ 100 inclusion?

A: Determined at end of November based on relative market cap, not for management to comment on chances.

Q: On the ETR, any color on pricing for next year and direction of discounts?

A: Pricing announcement in November similar to last year timing, won't comment on specific logic of discounts; focus on revenue and EBITDA growth.

Q: On NTO, color on fees and revenue structure with 21 airlines?

A: Commercial sensitive stage, focus on operational readiness now, will update later.

Q: On managed lanes, any specific events or disruption in Q3 driving mandatory mode events?

A: Likely effect of more peak hour activity and mandate to go back to offices.

Q: On competitive backdrop in construction, how is competitive intensity?

A: Construction sector has more activity, rational market environment, no tightening in winning contracts at margins.

Q: On potential to deleverage managed lanes and customer segmentation in 407 ETR promotions?

A: Possibility of relevering some managed lanes like I-66 in coming years; segmentation in 407 ETR promotions relates to tailoring offers to different user segments.

Q: On share buyback and business plan targets?

A: Committed to EUR 2.2 billion cash to shareholders by end of 2026, need to catch up on buybacks; will update business plan as important bids are awarded next year.

Q: On data centers acquisition, strategy?

A: Acquisition adds capabilities for Construction division in data centers, remains opportunistic with piecemeal approach.

Q: Reasons behind acceleration in highways headquarters and other costs and if trend continues?

A: Due to engineering for bidding pipeline and IT developments, both for good reason, expect trend to continue as part of growth investments