Hello, and welcome to the call on the acquisition of Universal Stainless and Alloy. My name is Jess, and I'll be your coordinator for today's event. Please note, this call is being recorded, and for the duration of the call, your lines will be on listen only. However, there will be the opportunity to ask questions. This can be done by pressing star one on your telephone keypad to register your question at any time. If at any point you require assistance, please press star zero, and you will be connected to an operator. I will now hand over to your host, Tim Di Maulo, CEO, to begin today's call. Thank you. Hello. Welcome to our conference call regarding the announced acquisition of Universal Stainless & Alloy Products. I'm really delighted that the transaction gives Aperam its first U.S. manufacturing footprint, and we have an immediate expansion into the attractive aerospace market in the United States. Universal has a production technology that is well known to us, is perfectly complementary with a good cultural fit. What is not to love about an acquisition that is also EPS, free cash flow, and shareholder value accretive? I trust you have listened to our podcast, where we were explaining the combination in detail. It is available on our website. Now, I propose that we jump straight into the Q&A, and I hand back to the operator. I will be with the CFO, Sudhakar Sivaji, who will be in the conference with me. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. Please ensure your line is unmuted locally, as you will be advised when to ask your question. Now, first question, it comes from the line of Ioannis Masoulas from Morgan Stanley. Please go ahead. Hello. Thank you very much for the presentation, and congratulations on the transaction. A couple of questions from my side. First, on the strategic rationale, can you talk about the preference to enter into the specialty stainless and tool steel market? What's the attractions relative to nickel alloys, where you already have a strong presence? That'd be the first question, and maybe I can take the second question afterwards. Okay. So, I think that the rationale is very straightforward. There are elements which we have started since a few years, a transformation of the company, saying that we are not anymore a simple stainless steel producer, European stainless steel producer, and this is a fact. The fact is that today, the stainless steel production is a part of the business, it's still important, but just as if I give you the number, it is in terms of FTE only 25% of our FTE. We have a lot of activity, and one of the activity in which we have invested a lot and we have extremely good success is alloys. The alloys business, which is doubling, as we have promised during the different capital market day and coherently with our leadership journey. Because alloys has a security of reduced exposure to cycle, has higher margins, and is fitting perfectly in our focus and capability to propose to customer sophisticated solution like we are doing in the alloys in Europe, but also in stainless, where the focus is more and more to go for high grade, high-end high-end stainless steel solution. So it fit perfectly. And on top, the opportunity is to be exposed to one of the area in which we have a very small activity, which is United States. In United States, we have already a company there, which is ELG. And in the complement with this activity or alloys is perfect. Moreover, in a sector which is the aerospace, which is a strong one, and with a good perspective for the next year to come. So it is perfectly aligned with the strategy that we are pursuing. Also, in strategy of making M&A, when they have a sense, they have synergy with Aperam, and you see that the level of synergy is significant, and the price is correct. Very clear. Thank you very much for that. And, my second question around the leverage, you show on slide 15, target leverage of 1.2x net debt to EBITDA by 2025. But if we were to use consensus estimates for EBITDA and net debt, we get closer to perhaps 1.5x. Can you potentially discuss what's your assumption on free cash generation over the next 18 months to get to 1.2? Thank you. Hey, this is Sud here. How are you? That's a question which is important to understand. So there's two parts to the discussion. We are taking Bloomberg estimates as the assumption on EBITDA, right? But we also want to set a target for ourselves to deleverage as soon as possible, and that's the reason we set that target, okay? Two underlying factors in that. One is that there is a deleveraging target which you have said. And the second one is that you have to consider the fact that existing net debt of Aperam, as reported for Q3, for example, is completely net working capital of our recycling trading business. So the raw material prices play an important assumption into that going into. Based on those assumptions, we've set ourselves an aggressive target, just to be very clear. Okay, so it's a function of working capital normalization, essentially? Price normalization. Price normalization, right? And an additional target which we have set for ourselves to deleverage quickly. Our goal is the three years return back to the one, EBITDA by net debt, leverage ratio of one. Very clear. Thanks very much. Yeah. Your next question comes from the line of Tom Zhang from Barclays. Please go ahead. Hi, good afternoon. Thanks very much for taking our questions. Two from me as well, please. Just the first one on recognizing synergies. You point out part of the synergy recognition is going to be building and growing the U.S. platform. Could you give any color on what kind of CapEx might need to go into the U.S. business? I mean, I know you guys spoke, it's already well invested. There was a new VIM that went in recently, but yeah, just curious what kind of CapEx plans there are. That's the first one. Thanks. So for the moment, we will not give any detail on the strategic plan before the closing, of course, but this part is what we have estimated until now, and that is, let's say, a clear view that being already in alloys, we have a lot of advantage on every part. What is clear, it is not based on plant closure, on the reduction of the big reduction, et cetera, because we will, on the contrary, expand, and the target is to expand the activity in the United States. Okay. Fair enough. And then just the other question was around on the podcast, you were talking about this five to seven year certification timeline that you normally need for the aerospace business. You wrote a little bit about how the acquisition helps you, you know, enter the market, particularly with the nickel alloy side. I mean, how does having that customer relationship, like, how does it really shrink that five to seven year certification timeline, if you were trying to, you know, introduce more nickel alloy products or, or, or shift up towards the premium products into the aerospace division? I'm trying to get a sense of how much quicker it is for you to expand your existing alloys and specialties products into U.S. aerospace now that you've made the acquisition, versus if you were trying to do it organically. Thank you. So, fundamentally, it is a question of process, competencies, and customer relationship. Before, if you start from zero, remember that in our alloys, we are not at all in this segment. So if you start from nearly zero, from very low, you have to establish a lot of things that we find already established into Universal, okay? And this is from, as I repeat, customer relation, the process, the people which has the know-how, the qualification of this or that tools, et cetera. This will significantly shrink the possibility to be homologated into a few years instead of the five, seven that will be needed if you start from zero. Okay, that's clear. Thank you. I'll turn it back. The next question comes from the line of Krishan Agarwal from Citi. Please go ahead. Hi, thanks a lot for taking my questions. I've looked through the financials of the company because they are publicly available, and then the pre-COVID, you know, four to five years EBITDA range for the group has been between, like, EUR 15 million-EUR 35 million. So my question is, what has changed in the business to justify the, you know, sustainable EBITDA at around EUR 70 million-EUR 75 million, which is essentially the three times of the previous cycle? And also, I mean, the related question is, you're buying this business at the peak of the share price. So what sort of discussion you would have in the board to justify that, which is something you know, which is not priced in by the market, into the current share price for you to go and buy this business at this point of time? Thanks. Okay. So, first question. Fundamentally, what has to be understood is that, this company has gone through, a very deep transformation. And this transformation has positioned themselves into, a segment and high grade products with investment that they have done in the last 10 years. Now, you-- as we said before, to stay in the aerospace is a long process, and this is, once again, the demonstration, the fact that they've started in 2014, 2015, their transformation. They've gone through all the transformation industrial, because industrial is very important. They've invested massively, and we are finding all the tools which are current with the new positioning of the company. And then they enter into the deep crisis of the stop of everything which was about aerospace. Now, they are showing that what they have done was solid. It has a sense, and results are there to, let's say, to prove it. We have gone through all this company. We have had management call, we have visited, and we are convinced that this is a solid business, so the actual results are there to stay. And, of course, we have been able to convince the board that this is the right transaction for our shareholder, which creates value, and which is in line with our strategy of having, let's say, a consistent, attractive value for this M&A. Understood. And then, the EBITDA per ton, if I were to calculate, I mean, you sort of have confidence in sustaining those EBITDA per ton as well? When you look at this activity, you are far from discussing in a EBITDA per ton, because you have products which depends a lot on the size, on the quality, on the specific, let's say, it's not a volume business. It's not like in stainless steel. We are not speaking of big volumes, but we are speaking of value and TCO for our customers. Now, maintaining this, yes, we are confident that we are in a market where, first of all, the specification are of the specification of very high end. We are speaking of aerospace. We are speaking of an Aerospace which is in a very good trend, is very healthy in terms of growth, and the perspectives are very good. And we are expecting that with the contribution of Alloys and the mutual synergy, this will expand. So we are very confident about what we have seen. Understood. And then, a slightly different question. I mean, you have disclosed the order backlog for Universal at $300 million, which essentially works out to close to a year worth of order book. How does that order book compare to your alloy business in Europe? Does Europe have a longer sort of order book than a year? I tend to say that they have a slightly longer, but even in our alloys, we have a long order book, but it depends a lot on the business. So remember that in alloys we have, for example, and we have said many times, that we have the LNG application, and they have order books which are, they can go up to three years. They are in aerospace, and in aerospace, typically there is a long lead time because the supply chain is very long for aerospace, so they tend to have a long order book. But the real, let's say, success of this company has been to be flexible and to provide customer on the short term the right service and the right quality, and we are very happy that they have this kind of philosophy. So it is not comparable with alloys, because in alloys we have also products that for the supply chain that exist in our customer, it is shorter, or other, but which is even longer, as I told you, for the LNG. Fantastic. That's very helpful. And the final question, probably for Sud. You've already mentioned that you have, you know, five core banks for the bridge facility. Is there any way you can help us to understand kind of what sort of interest rates you are looking, maybe in the range? It's market levels, Krishan. That's all I can say. It's nothing too high compared to the market or too low compared to the market, so I cannot disclose more than... But it is definitely market standards. Okay. Okay, thanks a lot. Before we take our next question, as a reminder, please press star one if you would like to ask a question... and our next question, it comes from the line of Tristan Gresser from BNP Paribas Exane. Please go ahead. Yes. Hi, thank you for the presentation and taking my questions. The first one is on the process. Maybe I missed in the presentation or the podcast, but has the transaction been approved by the board of Universal Stainless? That's my first question. And also, I believe there is a unionized workforce in the U.S., have you started to engage with the USW, and how confident are you getting the union on board? So I think, yeah, yes, they have approved what is called the share purchase acquisition. So this has been done. Then on unions, what I can say is that, differently from many other transactions, what it is very clear is that there is absolutely no overlap in terms of product, customers, or capacity into the United States. So, I think that the fact that there is no restructuring, but on the contrary, we want to use all the capacity to further grow in United States, is very welcome from the unions. And so, the first feedback are very friendly from them. And management is on board, local management is on board and share the vision that this is a transaction which create a lot of value and sense for all the stakeholders, including people in the company and unions. Okay. That's, that's very clear. And my second question is, so you will be acquiring a company operating in a strategic sector in the U.S., and we've seen over the past year that in the steel space, that it could have proven, you know, sensitive. So I understand you're confident on antitrust, but what about national security grounds? Do you plan to file CFIUS? Is there any breakup fee as well with the transaction? And finally, if you could remind us the share of sales of the company that is tied to the defense industry. So, hey, Tristan, so, firstly, it is an aerospace, end user application. So we've said clearly that it's an aerospace, and, most of that, goes into commercial aerospace. Okay, so that's the first thing. The second thing is that, they do not supply, as is common in the United States, directly to these applications. It is distribution channel which picks this up, and, end of the day, Universal actually, consciously, does not determine into which channel and which end application it goes through, it is the distributor who does it. Of course, the qualifications necessary are present. And the third thing is that, I just want to make sure that any of these filings, these are regulatory filings, which we need to do, and we will look at it as and when the discussion happens. But we remain confident that, compared to probably other items you've seen in newspapers, that this should not be a big cause for concern. Also, given the track record that, Aperam is the world's largest recycler of aerospace alloys, headquartered in the United States, and we did close a transaction there also, filing and obtaining all regulatory clearings in a record time two years ago. I just want to remind you that, right? So it is the same set of profiles, so we believe we can be confident in this discussion. Second, yes, there is a breakup fee, but obviously I cannot disclose the breakup fee, but it is not because of anything specific with respect to regulatory approvals. It is a typical, you know, as part of such a transaction, you do have a breakup fee in the discussion. But I think we do believe the breakup fee is not going to be the principle on which this transaction is going to be run on. Both their management and our management feel that this is the right way to go for both companies: for Universal to gain scale and international access, as Tim has specified, and for Aperam to have a footprint in the United States. So I think it's not a discussion which will be run because of the breakup fee. Okay. No, that's very helpful. Thank you. And maybe a quick follow-up. So you mentioned that a good chunk of the business goes via distributors. Any precise number? Is that more than 50% or? It's the industry average, and it is, that's how it goes, right? Because it keeps changing over cycles, and it always shifts, and we would like to keep our flexibility also there, so we don't wanna specify that number typically. Okay. Then, a question on the market development. I mean, 80% of the sales are aerospace. The news flow has been pretty poor of late. I'm just curious to what you make of it. Do you see any risk? I've looked at the filings, and I've seen that one customer for Universal is 30% of sale, and there is a big customer in the U.S. that currently has some issues. So yeah, wanted to have your view on the outlook, near-term outlook, and maybe medium-term for the aerospace in the U.S., that'd be, I'd do appreciate it. So, fundamentally, when you look at these kind of figures, you have to take in mind that we are the producer, or Universal is the producer of the metallic part, but not of the intermediate parts. So all this is going through a long supply chain. Some of these, I don't-- I frankly don't remember why you are considering one so big, because I have in mind the smaller, but in any case, going through this, these are, let's say, intermediate transformer, that they can serve many customers. So the activity, and this is in our slide, the activity of Universal is very diversified in aerospace. So you go from all the parts which are going from the landing gear to the part, which are the cold part in the motors. They are going into planes, but also going into the helicopter. So it is aerospace, but it's very diversified. Okay. All right. That's- The beauty is that with alloys, this diversification will continue to expand. Okay. That's, that's helpful. And maybe one last one. When you mention in your slide a potential growth in the U.S., down the line, is it just tied to the alloys business, or it could be recycling business, it could be stainless business? It doesn't have to be... Now that you have a footprint directly in the U.S., it could be all sorts of things. So, as we said before, we have not, we are not still disclosing our business plan. But you have to take in mind that this, the subject of the alloys is that you need many complementary tools to fill all the capacities. And so we see that there is existing capacity that can be the bottleneck for both company. There is a full complementary, for example, in size. So in the long product, alloys, the alloys business in Aperam has a limit in the different size, and this is totally complementary with Universal. So these kind of things will create the synergies and the possibility to expand, evidently. All right. Perfect. Thank you very much. Appreciate it. You're welcome. The next question comes from the line of Ioannis Masoulas from Morgan Stanley. Please go ahead. Hello again. Just a quick follow-up. When we look at the slide where you show the EBITDA profile from the combined business, you show EUR 100 million. That's slide 13. But if we were to take Universal Stainless EBITDA expectations for 2025 and add the full synergies, we get closer to a EUR 100 million contribution instead of the EUR 80 million. Can you perhaps explain the difference? Is it because you think that the EBITDA expectations for next year are above normalized levels, and you expect some normalization? Thank you. No, it's purely ramp up, and I've explained it in the podcast, the ramp up profile, Ioannis. So I said first year we have EUR 10 million, right? So, like we said, we expect to close this somewhere in the first half of 2025, so we can start working after that together. So there is a ramp up. That's the only reason. The Bloomberg profile is the number which we have to base on. Okay, so we should expect at full run rate of synergies, we should expect around EUR 100 million EBITDA accretion? Yeah, 2027. Yes, yeah. Great. Thanks very much. Yeah. We have no further questions in the queue, so I will now hand the call back over to your host to close today's call. Okay. Thank you to all of you for having participation to this special conference call. I am quite sure that you know, as convinced as we are, that the acquisition of this company is a transformational acquisition for Aperam, and will give access to what was still missing in our footprint. So United States aerospace business, and increase our exposure to alloys and to less cyclical activities. Also, the synergies will show up. You have seen that we have been able to leverage them into the precision acquisition. We are at the beginning of our journey. As in the previous acquisition, we believe that a lot will be discovered on the way and will be beneficial to the two companies and to our shareholder. We are committed and strongly committed to normalize the balance sheet within these three years, and the additional cash generation allow us to reward our shareholders by maintaining, and this is our commitment also, an effective dividend. We will be back on November eighth with the Q3 results. Until now, I wish you all the best and a nice autumn. Of course, Thorsten and Eric will be at your disposal in case you need our IR for further discussion. Thank you very much to all of you, and see you. Thank you for joining today's call. You may now disconnect your line.