Good afternoon, everybody. This is Silvia Ruiz speaking. I would like to welcome you to Ferrovial's Conference Call to discuss the Financial Results for the Third Quarter of 2022. Just as a reminder, both the results report and presentation are available to you on our website. As in previous results, our domain restrictions to mobility have been lifted, we would like to highlight that the financial information included in our report is still impacted by the COVID-19 outbreak. Given the uncertainty regarding the speed and the extent of the full resumption in activity, it is not possible to predict how the health crisis will affect Ferrovial's group information and performance in 2022. In addition, the uncertainty caused by the Ukraine-Russia crisis is affecting global markets. Ferrovial will continue to closely monitor trading conditions and further evidence of wider economic impact. I am joined here today by Ernesto Lopez Mozo, our CFO, and the CFOs of the different business divisions. If you have any questions, you may ask them through the form included in the webcast. During the Q&A session at the end of this call, we will be reading out your questions and who they are from. With this, I will hand over to Ernesto. Ernesto, the floor is yours.

Yes, thanks, Silvia. Hello, everybody. Okay. So we are going to review the results down to the EBIT level. I mean the full financial results for the year will be discussed in February. So I mean, starting with the overview of the first 9 months with toll roads, we have seen very strong revenue growth in all the assets. I mean, the traffic has performed very well during the quarter, with September showing a good performance and peaks coming back and in general, that flowing into the revenues and EBITDA growth. Of course, this has also been helped by the strong currency, the U.S. dollar. The 407 ETR also showed similar patterns with traffic improving along the quarter, improving along the general trend of recovery since Toronto reopened. And also, the results are helped by a stronger Canadian dollar. In airports, we also saw very strong performance during the summer and also with improvement of operational and quality service during the quarter. Construction manage the inflationary pressure, keeping stable margins. The important thing is that construction is delivering infrastructure that is going to create a lot of value. And therefore, the recent developments like the [I-66] reopening is thanks to that excellent management and acceleration of production. The I-66 opened in advance a 9-mile segment. We're really encouraged by the initial data we are seeing. Of course, we will be publishing a data along 2023. We won't publish data until the full segments are opened. Also, [indiscernible] Ferrovial prequalified for the SR-400 in Georgia, we're looking forward to this process. In terms of strategy, we can say we completed the services divestment with the agreement to sell Amey and well, this should close in the coming weeks, months. In terms of new business opportunities, also, we achieved in June the…

Okay. Thank you very much, Ernesto. Q&A session will begin shortly. Please stay tuned.

Okay. So let's start with the Q&A session. First set of questions comes from Luis Prieto from Kepler Cheuvreux. First question. How should we think about the cost inflation dynamic on the construction front in 2023? Is it fair to assume a full normalization of margins by 2024, recession allowing?

This is Inaki Garcia, CFO of Ferrovial Construction. Yes. I mean the big part of the huge increase in inflation is already in our backlog and a big part of that will recover in 2022. I mean remember that, that is not only in the contracts that have profit, but also in loss-making contracts. And this cost of inflation has been already accounted for. So for 2023, of course, I mean, there is inflation in the final result of the contract. So because of the percentage of completion, a part of this much less, I mean, that in 2022 will be considered. And for 2024, we don't see impact unless, I mean, a very huge impact on inflation that has been covered also in some of the latest contracts signed now. So my question will be -- my answer will be 2023 small inflation impact. 2024, we don't see inflation impact in this moment. So we can keep the guidance of 3.5% EBIT at the end of the year.

Next question from Luis. Could you shed light on how you will account for cost inflation and/or volatility in your bids for feeder management projects like the SR-400 in Georgia? How does the approach change in a potential much more adverse economic and financial environment?

This is Inaki again. In every new contract that we are signing, we are being prudent. I mean, in terms of finding the ways to have this protection through index formulas or considering in our cost or whatever escalation of prices that we could [go].

Next set of questions coming from Sathish Sivakumar from Citi. First question, can you comment on traffic trends into October across ETR and other managed lanes?

This is [Timo] from [Tintra]. We are seeing similarities of traffic patterns in October with no relevant changes. The traffic trend is pointing in a right way. So further information will be provided in the next quarter.

Next question from Citi also. What percentage of order book is inflation-protected?

Inaki Garcia again. About 80%, 90% of inflation is protected in our order book. Remember that is not only in the section formulas that you have in Spain or in Poland, but also kind of contracts, the type of contracts that you have in some of them, you have caps in some others, some materials are included. And in some others, I mean, there are habits that in the moment, they are reading you know exactly, I mean, which bases can be closed.

Next question coming from [Anna Aarko] from BBVA. Following [indiscernible] recent decision to call and not replace its non-call 2022 hybrid, could you please provide any color as to what options you may be considering at the moment regarding your own EUR 500 million, EUR 3.124 per hybrid bond?

Thanks, Anna. Well, I mean, the purpose of having a hybrid bond is that it sits nicely in the capital structure, right? I mean, it's a hybrid. This has subordinated -- deeply subordinated issue, right? So I mean we would be looking at the different alternatives. If calling of the bond is too expensive at the time, we would extend and we would look forward to other opportunities. I mean, after 2023, you can be calling that recurrently. So we would be looking at other opportunities. But as I said, it sits very nice in the capital structure, okay? So we will be considering all the different opportunities that there are, issue a new one, calling it with cash or the most likely probably would be in this current environment of uncertainty to keep it because it has value from its [cost] equity characteristics.

Next set of questions coming from Robert Joynson from BNP. First question regarding the 407 force majeure agreement, Slide 5 of the presentation stated that average traffic is as good an indicator for the expiry of the scale on '22 waiver as peak hours traffic. But Ernesto subsequently said that average traffic is likely to recover ahead of peak traffic. The 2 statements seem inconsistent. Could you please clarify which is correct?

Yes, hi Robert, thanks for the question. Well, basically, the 407 ETR does not disclose a peak hour traffic. I mean this is very sensitive for commercial reasons, right? So if you are not going to release that for commercial reasons, probably for the public, the first thing is to provide the most readily available traffic that is the average one. The reason I'm saying is as good a proxy is because weekend traffic, it has recovered than the other one. Of course, it's true that all the growth now is coming from the acceleration of the weekday traffic, right? But I mean, it's, I would say, prudent to say because it would lead to maybe an earlier date. So that's the reason why we think it's a good proxy and it's prudent. Okay? So that's maybe a little bit inconsistent as you say, but this is probably the right way to proceed if you don't want to provide the peak hour traffic.

Next question from BNP. By how much was average peak hour traffic below the 2017, 2019 average level during September?

We don't provide this information, as I mentioned, is commercially sensitive.

Last question from BNP. Concerning the duration of the force majeure agreement, is there any time limit? Is it feasible that the force majeure event will still be deemed valid if peak traffic has not recovered to the 2017, 2019 average level by let's say 2030?

I mean you can take the agreement, as I mentioned is in the website. I mean, there's 2 conditions and they are not time-related. So there's no time limit. But of course, I mean, probably things will move much faster than the days you are suggesting.

Next set of questions coming from Jose Manuel Arroyas from Santander. First question, 407 ETR, when you look at the traffic patterns during the day in 407 ETR, how far is traffic from the 2019 level at different times of the day, in particular, with the increase in e-commerce, is there upside to increased tariffs during the midday hours of the day?

Thank you for your question, Jose Manuel. This is Timo from Tintra. As Ernesto said, we cannot provide any information about peak hours for commercial-- because it's commercial sensitive information. And in the end, but what we can see, as you see in the presentation, the performance in this quarter is quite good, mainly driven by the war days and again in peak. So we are in the right direction. In the case of the e-commerce, what is important here is how is the evolution of the right traffic. The e-commerce is important, but the traffic is key for the war days and the peak hours.

Next question from Jose Manuel Arroyas [indiscernible]. Can you update us on the liquidity situation of these 2 entities? How much cash is available for dividend distribution in the second half 2022?

Okay. The performance of these 2 entities is quite good. The cash at the end of the year will depend on the traffic performance in the last quarter. But we can say that the liquidity is in line with the performance of the asset. We are expecting, if everything goes well, more than $100 million of dividends in the 2 entities for the end of the year.

Next set of questions coming from Marcin Wojtal from Bank of America. First question, when is the soft cap for U.S. managed lanes going to be updated for 2023? And what revision do you anticipate?

The soft cap will be escalated by CPI in January 2023, with the CPI at the end of the year, the December compared with the December of the previous year. So it will depend on the CPI evolution, but we -- according with the consensus will be higher than 6%.

Next question from Marcin. What gives you the confidence Ferrovial is well-positioned to win the SR-400 project in Atlanta, considering 2 other consortia are also competing?

Hi, Tim again. We have 2 competitors. It's going to be a really good competition in this project. But as you know, Ferrovial has an integrated business model with a construction company who is working with us and we will be able to allocate the rigs separately and be as competitive as possible in this project. If the competitors are so aggressive, so it's something that we need to see. But we have all the skills and all the things that we need to be competitive in this grid. We are confident.

Next set of questions coming from Filipe Leite from BPI CaixaBank. First question, why LBJ traffic recovery is still lagging significantly when compared with the other managed lanes?

Thanks for your question, Filipe. It's true that LBJ traffic is lagging compared to 2019 significantly, okay, compared with NTE you can have this perception, but the main reason of this is because we have as Ernesto mentioned before, construction works in the 65 is -- this is taking out volume of traffic, mainly in light traffic from this area. There's -- and you know this 65 is a good figure of LBJ. There's something related to the working from home because the area where LBJ is has more exposure to people who can work from home. But mainly we think that the main impact is the construction work that is temporary, will finish in 2024. We are expecting to see after this construction is done how the -- as performance of traffic in this asset evolve.

Next question from Filipe. Selling your stake at Heathrow is a possibility or the investment in the airport is core for you?

David Kenny here from Ferrovial Airports. Airports are a core area of Ferrovial's business and we're committed to growing our airports portfolio. In respect of Heathrow, strong focus at the moment is on supporting the Heathrow team in delivering a best-in-class major airport in terms of quality and service. And also we're currently supporting the airport in the process of finalizing a fair and sensible outcome on 87 user charges. We're not considering any change in the approach to our investment in Heathrow in the short term. And that's all that's the case for our other airport investments.

Next question from Filipe. Can you give us any visibility regarding pipeline for 6, 12 months?

Here's Tim again from Tintra. I'm going to answer this question on the side of Tintra. We are very optimistic with the pipeline in the following 12 months regarding the high complexity projects that we are ahead of us in U.S. One of these is the SR-400 and it's part of the yield Georgia realty program and the other one is the I-10 in Louisiana. As you know, we are prequalified by -- for these 2 projects. We have -- we also have -- or we expect it to be -- to present a bid in outside the U.S. in a couple of contracts in Chile and Colombia. We have India. As you know, we have an investment in -- we have a stake in a company in India is called IRB and India is booming in terms of pipeline and we have a lot of projects ahead in the following 12 months. So as I said, we are optimistic with this pipeline.

Last question from Filipe. What is the total cash consumption expected for 2022 from U.S. construction projects? Should we expect also cash consumption in 2023?

Thank you, Filipe. Inaki Garcia. Well, cash consumption by the end of 2022 is going to be around the EUR 300 million, EUR 350 million. I mean, more or less, this is the numbers. For 2023, our main contracts, I-66 probably will be almost closed, I-285 will have some consumption. But remember how is our business. I mean, on the other hand, we have contracts, our new contracts. These contracts usually have advanced payments. So this is part of our life. So in 2023, probably there will be further compensation. Thank you.

Next question from Stephanie D'ath, RBC. Well done on completing the Services division sale. Any other parts of the business you could consider divesting, in particular, in construction?

No, we're not concerned at the moment or having any process to sell any other business. Construction is really been key in delivering the fantastic infrastructure that we can give us a greenfield or yellowfield, if I may. So no, we're not considering anything. Of course, it's true that we rotate assets and we receive from time to time interest from buyers that we have to consider each at a time. But I mean, we are not in the process of divesting anything at the moment.

Next set of questions coming from Graham Hunt from Jefferies. First question, can you provide some details on the actions you're taking to mitigate cost pressures in construction projects in the U.S.? Are you seeing material and labor headwinds is at all?

Thank you, Graham, Inaki Garcia again. Well, I think we have explained the main actions that we are taking that they go from hedging some of the materials, more sales performance, also closing long-term contracts, I mean, with subcontractors. So these are the things that we can do. I mean as a sample in San Antonio, I mean, we are still in the design phase, but we have closed most of the concrete beams that we'll put in place. And regarding material and labor, yes, of course, I mean, we see that the cost of labor is increasing. In material, in certain states, I mean, like Texas, I mean, for example, shortage of cement, but we are leading this. Thank you.

Next question from Jefferies. When are the works mentioned around the [FDA] expected to be completed?

This is Timo from Tintra. TxDOT assumes a substantial completion in late 2024. So it's expected to be open in 2025.

Last question from Jefferies. Can you remind us of the phasing of equity contributions for the GFK for 2022, '23 and '24?

Sure. David Kenny here from Airports again. Can I refer you to Page 46 of our June investor presentation, but also just to give you those numbers which appear in that previous disclosure, in 2023, it's around EUR 230 million; in 2024, around EUR 500 million; 2025, EUR 260 million; and in 2026, around EUR 70 million. The total commitment for Ferrovial is at around USD 1.14 billion.

Next set of questions coming from Antonio Rodriguez from ODDO. First question, in the first half results presentation, you provided a positive message regarding working capital expectations for full year 2022. Are you still positive in this respect? What should we expect?

Well, rather than a positive message, we talked about seasonality, right? And usually, the fourth quarter tends to have more inflows in terms of working capital. So we'll have to see. As we mentioned in the presentation, we have contract spending to be incorporated into the backlog at quite a substantial amount compared to what is customary. And while it does materialize, we will have some inflows from there. But at the same time, we also mentioned that in the U.S., we will keep consuming cost from the delivery of these projects, right? So we'll have to see how that's balanced, but definitely some seasonal inflows will happen as in what happens normally. But I mean I won't basically provide any specific guidance on the final sign of the quarter.

Next question from Antonio Rodriguez. LBJ traffic in your estimates, has the impact of the works in feeder motorways being higher in the third quarter than in previous quarters?

Thanks for your question, Antonio. We are not seeing more impact. We had to take into account what Ernesto mentioned in his presentation that we are comparing with 2019. And there are some construction works that were ended in that year. So there has some distortion in the comparison. So you have to take into account this impact not only the construction works when we are talking about the comparison of this 3 quarter with the previous ones.

Next question coming from [Carolyn Bruger] from Allianz. What is the purpose of keeping the hybrid bond outstanding as you are not getting any equity content from S&P, given the cost of reset, wouldn't be senior debt cheaper?

Well, I mean, S&P is not providing equity content now because we are in a very solid position with a lot of cash, right? But I mean, if there were to happen investment opportunities, we could use that cash, then it would make sense. I mean, the purpose of the hybrid, it fits in the -- as a layer in the capital structure that optimizes the capital structure, right? So we'll keep an eye on that to see the best outcome. Maybe the best outcome is senior debt, but it's not the fact that it's cheaper implies that is the best solution because as I said, it fits well in the capital structure.

Next question coming from Nicolas Mora from Morgan Stanley. Traffic [indiscernible] at NTE35 West in June, July, slowly recovering in August, more strongly in September. Is this due to the phasing of construction work on Segment 3C? Until when do you expect such works to weigh on traffic?

This is Timo from Tintra. [Ph] I think that the traffic that you see stronger in September is part of the trend that we are seeing in the area, that's better mobility, thanks to back-to-the-school or back-to-the-work in September. We are doing our best working with our contractor in order to mitigate the impact in traffic during this construction at the Segment 3C, but you have to understand that our priority is to develop and finish this project in time, which is very relevant for us. Thanks.

Next set of questions coming from Elodie Rall from JP Morgan. First question, in contracting, what kind of inflation protection do you have in your contracts? What proportion is fixed cost? And are you using cost plus fee mechanisms?

Yes, I think I mentioned that 80%, 90% of our backlog is inflation-protected. This protection comes from different kind of potentials. I mean, countries like Poland or Spain is indexation formulas also type of contracts that you have, where, as I mentioned, part of the materials can be covered. Can you include formulas -- indexation formulas with your client? So I mean this is the protection you have. Of course, I mean, we have contracts, cost-plus. I mean, as you include in your question, this basically, for example, target costs in the U.K., but there are other countries that this is not the case, no. And for new contracting of what I mentioned, I mean, the escalation is considered and the main big contracts that we are signing, some of them, all of them -- some of them, sorry, are including any protection, no.

Next question from Elodie. On the [Forward 7], do you think traffic recovery is getting close to a level where you feel comfortable increasing tariffs?

Well, we are seeing that in September, we saw an improvement in [Vortex] traffic and AMP, which is positive, but we need to still monitor the traffic because we need to see some -- we have to have more visibility of the usage patterns related with the working from home and there are some construction works and alternatives that we need to take into account as well. So for the moment, we are in the right track, but we need -- it's early to say, we need time.

Last question from Elodie. On the I-66, could you give a rough idea of the expectations for 2023 revenue and EBITDA?

As you know, we cannot provide information for 2023. But as Ernesto said, we are receiving information from the first segment that we opened a few months ago, the information that we are receiving is encouraging. Thank you.

Next set of questions coming from Augustin Cendre from Stifel. First question, will the losses that for [indiscernible] construction Agroman continue in early 2023 as the I-285 project is being finished?

Well, the I-285 is not finished by the end of this year, we'll finish mid next year. But as you know, it's a contract with losses. So losses are provided in previous years. And the only thing that you can have is internal fees that you cannot provide for and there will be a small amount of losses coming from this contract.

Sorry, next question from Stifel also. Why is Budimex Q3 2022 EBIT margin so strong, 7.4% versus 5.8% year-on-year. What drove the division's drop in revenues during the quarter?

Yes. Well, Budimex basically is -- some contracts are finishing. Some of the contingencies due to the occurring work that were in the contracts have been released at the end of these contracts. And basically this is the main reason. The other one is that the climate in the third quarter has been better than expected. So that gives you a better margin, no. And regarding the drop in revenues, this quarter compared with the previous is quite similar. I mean, so I don't know if you are referring to the previous year when you know, I mean, that there were other businesses like SEC or the real estate business that give us also some sales. But there are no -- there is no real drop in revenues. And with the backlog we have, there is not going to be a drop in the future, no.

Next question from Stifel. The airports' top line performance looks strong. How much of that can be attributed to Dalaman?

Excellent question. Dalaman is the only airport within our portfolio that we consolidate. So for that reason, it does account for around 80% of that top line revenue number that you can see.

Last question from Stifel. When Schedule 22 resumes, do you intend to recover the tariff growth loss during the COVID-19 crisis? Or should we expect a lower rate of increase in line with inflation?

Yes. Once it makes economic sense to raise it all and we made the decision, the most likely scenario is a fast catch-up with inflation. Thank you.

Next question from Sathish Sivakumar from Citi. Can you quantify the impact of currency on earnings given a strong U.S. dollar?

Okay. So -- I mean, since we report down to the EBIT level, I will report to the EBIT level, right? So you have 2 impacts, a positive one on concessions of EUR 32 million equivalent of improvements thanks to the strength of the dollar. And you have a negative of EUR 10 million in construction. The reason I separate that is because we see construction as temporary and finalizing these important assets is not something that should be recurrent. So I would suggest you to stick to the concessions positive impact of EUR 32 million. As I said, to the EBIT that is up to the level we are reporting today.

Next set of questions coming from Marcin from Bank of America. First question, do you anticipate 407 ETR to distribute any further dividends in calendar 2022?

Yes, it's likely to see further dividends, but is subject to the performance of the asset. That trend is positive. We will see what happened at the end of the year and what is the decision of the Board, but we are positive on that. Thank you.

Next question from Marcin also. Can you remind us how 407 ETR peak hours defined for Schedule 22 penalties calculation?

Summarizing how it's working in the scale of '22, it's taking into account the 60% of the business days of the year and inside of this -- and taking into account this is 60% of this stage, the 2 business hours. And this -- you are setting a record with this traffic during these days that I just defined. And if you are below this threshold in terms of traffic is when you have to pay this penalty. But I think that is better if you -- one more detail and understand better fiscal '22, you have the provision in the [407 West] and you can check it out. Thank you.

Okay. It seems that there's no more questions.

Well, thanks a lot guys for bearing with us and I hope you enjoyed the results as we did. Thank you. Take care.