Good day, and thank you for standing by. Welcome to the Hexagon Report, third quarter 2024 conference call. At this time, all participants are in a listen only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Paolo Guglielmini. Please go ahead. Thank you everyone for joining our Q3 2024 earnings call. Before discussing the group's performance in the last three months, I wanna refer back to the press release that's been published earlier this morning in slide four. The board of directors of Hexagon has authorized management to evaluate the potential separation of the Asset Lifecycle Intelligence Division, ALI, into a NewCo. NewCo will also include businesses with strong customer, technology and operational synergies with ALI, and namely ETQ, the enterprise quality management software platform that currently resides into Manufacturing Intelligence. Bricsys, a provider of CAD and BIM software currently in Geosystems, as well as Utilities & Infrastructure, a business currently in the SIG division, providing network engineering software. So what are we setting out to do with this strategy? The ambition is to create two public companies at scale with distinctive strategies and financial profiles, and to create additional value for all the stakeholders involved. From slide five, we start looking at what these two global players would look like after a potential separation. Hexagon would be a global market leader in building digital twins at any scale, with an impressive span of innovation, customer footprint, and install base. Our core mission, which is one of deploying robotics, sensors, software, and AI to capture and create insights from digital twins, will become simply more and more relevant in the future. Regardless of the industries that we operate in, we see customers grappling with labor shortages, sustainability challenges, competitive demands on quality, safety of communities and operators. To achieve all those goals, building a digital ground truth of reality to then improve that through workflows and insights is essential. That's a massive opportunity for growth for Hexagon in the future. But it's also one that requires focus of intent and dedication of resources. With revenues above EUR 4 billion, world-class margins and recurring revenues that are growing across all divisions, Hexagon will have a very strong and resilient financial profile, will have the focus and the resources to build an even stronger market leadership towards this mission. In slide six, this is what NewCo would look like. NewCo would be a pure software player with great scale, with EUR 1 billion in sales, market-leading margins and recurring revenues, and a fantastic roster of blue-chip customers, and of course, great opportunities ahead. NewCo's portfolio would be best in class when it comes to managing digital projects and assets, and would have the technology, the innovation, the financial and geographic scale to tackle massively important challenges. Think about energy transition, think about grid distribution, think about the modernization of infrastructure, aging workforces, the design of the operation of data centers, and their own cyber integrity. Regarding transaction details in Slide seven, these will obviously emerge over time. The separation of NewCo would happen in a tax-efficient manner for shareholders. Shareholders would receive shares of NewCo in proportion to their existing holdings in Hexagon. Hexagon is evaluating listing options for NewCo in the U.S. and in Sweden. The separation, spin-off, and listing will be subject to the approval of the board and the shareholders, as well as being subject to other conditions and regulatory approvals. Obviously, there cannot be any assurances that a separation, a spin-off or a listing will occur. What the timeline could look like in slide eight. Well, we expect this to be a 12- to 18-month process. The reason for the disclosure today is that we value transparent communication with the markets, and we thought it was important to disclose the board's interest in this potential transaction, which could be, of course, significant if executed. And of course, we wanted to be proactive as well to prevent inaccurate market rumors and speculation. During the course of these 12- to 18 months, we will be transparent with the market in a variety of ways and setups, from quarterly calls to specific updates and potentially capital market days into next year. But for today, this is very much all the detail that we have to share with you on this project. Now, moving on to the performance update for Q3 2024 in slide 10. As anticipated, Q3 has been challenging because of muted demand in several end markets, but also it was a quarter in which we progressed very much in terms of business model, in terms of operational improvements and innovation. In Q3, we have recorded sales of EUR 1.3 billion, down by 2 percentage points organically. Growth in recurring revenues remained very strong, 7 percentage points up to EUR 565 million. Gross margins continued to be strong at 67% versus 65.5% in prior year, as a result of innovation to drive pricing and cost structure of our products, of favorable mix and operational improvements. The operating margin was solid at 29%, despite the effects supported by gross margin progression, but also by the rationalization program that has now come to conclusion, delivering savings at the top end of the initial expectations. The cash conversion in Q3 typically is weaker, but came in at 70%, and so far we are at 81% for the first three quarters of the year, and will conclude 2024 well within the guidance range of 80%-90%. We're very happy with the reception that's been received at events like Intergeo in Germany or MINExpo for the mining industry in Vegas, as well as IMTS in Chicago. At those events, we have launched products, as well as earlier in the year, of course, that got great reviews by customers and specialists. So even if in the short term we expect demand to remain challenged in Q4, we're very confident that we are positioned well for growth into 2025 as the market environment improves. Moving to slide eleven. A few comments by geography. We observe broad weakness that's persisting in the construction market across the globe and in China, across multiple industries, although now more stable in terms of deal flow and possibly benefiting from the announced stimulus package over the course of 2025 and gradually. Looking at areas that are driving positive demand, I would single out the manufacturing in the public sector in the U.S. for sure, the aerospace market globally, as well as growth markets like Middle East and India. Looking at slide twelve, this is where we show divisional performance. On an organic basis, MI declined by two percentage points, ALI was up by six, Geo down by five, AS by twelve, SIG was up by two percentage points. So as you can see, some divisions experienced strong growth in Q3 2023 with tough numbers to beat, notably MI, ALI and AS. If you look at slide 13, this is where, as ever, we show quarterly developments in sales and EBITDA by division. But going more in the detail of the specific division, starting with slide 14 for Manufacturing Intelligence. We delivered revenues of EUR 464 million at an operating margin of 25.5%. We have seen a noticeable slowdown of activity in automotive, particularly in Europe, and certainly the fact that our Chinese business stayed very strong throughout 2023 makes for a tough set of numbers to beat right now. But we do see good traction in software, with recurring revenues up 4% in MI, and particularly in automation solutions that are driven by aerospace investments and large-scale applications. I think that these markets will remain cautious for the foreseeable future, but we see nothing that's pointing to a loss of market shares, rather the contrary. The team in MI keeps on doing well to deliver margin and cash in the meantime. Looking at ALI now in slide 15. We recorded revenues of EUR 208 million, up 6% year-on-year. We probably could have done more, but also in these industries, there is a tendency for projects approvals to slip and be extended, and for customers to be cautious in deploying capital. In ALI, SaaS grew by 16% and overall recurring revenues by 6%. Very importantly, we are rolling out in ALI the new version of our platform that's called SDx, to upgrade customers and capture share of wallet in their own design and operations software ecosystems. The ALI margin is slightly softened in Q4 as a result of the growth market investment that we are executing to capitalize on this innovation. But I think here we're gonna have a very solid outlook for 2025 and beyond. Looking at Geos ystems now in slide 16. In Geo, we have recorded sales of EUR 373 million in the quarter, down 5 percentage points. As you know, this market is globally impacted by interest rates, by low confidence, so customers are cautious before investing in new systems. The portfolio and the innovation pipeline in Geos ystems is strong, and in Q3, again, recurring revenues grew by 13%, also driven by HxDR, which is our digital reality platform. On HxDR, we are onboarding plenty of customers. We have users of our scanners, creators and consumers of geospatial content, and this is a great opportunity for us into the future as the platform scales to build a sizable SaaS business organically. I am expecting that the outlook for Geo gradually will improve from here, but in the meantime, margin performance, as you can see, has remained very healthy. Now to Autonomous Solutions in slide 17. AS recorded sales of 135 million EUR in Q3 at an operating margin of 34%. The drop in Q3 mostly is down to an exceptional performance last year, with more than 30 percentage points of growth. Despite some delays, the demand for autonomy in mining and in defense will remain solid for the foreseeable future and offset the weakness in the agriculture market. For those of you who attended MINExpo, it's clear that the electrification, autonomy, and long-term demand for commodities will create stable demand for our positioning and safety portfolio in the future. Also in AS, recurring revenues grew by 11%, driven by our positioning correction services. Looking at the SIG division now in slide 18. SIG recorded sales of EUR 120 million, up two percentage points year-on-year, with an operating margin of 21%. Within SIG, our business of services for the U.S. federal agencies declined materially, but we are pleased to see continued growth in the Public Safety software portfolio as we roll out the new dispatch platform OnCall that now is live at multiple sites. It's very well appreciated by customers, it's building very strong references, and is supported by a great pipeline into the future. Public Safety grew in double digits within SIG. Slide 19. As discussed in several occasions, we are in the middle of a multi-year innovation push to position Hexagon optimally for growth into the future, and in this view, in slide 18, we have tried to single out a few of these releases, starting with 2023 on the left. The launch of the new lineup of precision automation cells in MI, called PRESTO, has created in 2024 opportunities and has helped mitigate weakness in other areas of the portfolio already. ALI maintains good momentum this year, also thanks to the work that's been done on EAM, on its design portfolio, and now rolling out this data backbone called SDx to connect these various solutions. We of course have already talked about the good growth on OnCall, and as you know, HxDR is behind the strong recurring revenue momentum in Geosystems. In Q3 recently, we have just released the new ATS800 laser tracker for MI and a brand new motorized 3D measurement and layout tool called iCON for Geosystems, and both of these products will pay back their investment within two years of launch. 2025 will be another strong year for product launches, and these investments will put us in a position of real strength, particularly as the macro environment improves. David, can you now take us through the final section? Certainly. Thank you, Paolo. In the following Q3 financial slides, I'd like to take you through what was a continually resilient performance, considering the ongoing challenging economic conditions of the quarter. We consequently impacted organic growth, with the business delivering consistent EBIT margin and improved cash flow is seasonally weaker than the preceding quarters. On to slide 21. Starting with the Q3 2024 income statement. Stepping through the sales bridge. Sales of EUR 1,299.8 million is a reported growth of -4%, negatively impacted by FX of -1% and equally a -0.4 net impact from structure, giving -2% organic growth. Notably, the year-over-year gross margin improvement seen in Q2 continued into Q3 at 67.1%, and again was delivered by a broad-based divisional improvement. Operational earnings decreased by 4% in line with the reported negative growth rate to EUR 37.6 million, with a 10 basis points decline in the margin to 29%. The elements of which I'll break out in the following profit bridge. Interest expense and financial cost of EUR 44 million versus EUR 43 million gave a delta on earnings before tax of -5%. Taxes being 18% in line with for our year bring us down to an EPS of 10.1 euro cents. For reference, the EBITA, including PPA, includes EUR 28 million of amortization and dilutes the EBITA percentage by 212 basis points to 26.9%. Moving to slide 22. Q3 delivered a further strong gross margin of 67.1%, and this brings the rolling 12 months to 66.9% from 65.9%, up by 90 basis points, continuing the important upward trends that we've discussed in previous calls. The strong quarterly performance being from improved margins in the majority of divisions, and therefore with multiple drivers, as mentioned last quarter, including pricing discipline, the rationalization program, product innovation, and enhanced by both the positive divisional and product mix, and further improved by the structural divestments taken up during various quarters. Into slide 23, we have the profit bridge. In Q3, profitability bridge currency has a -1% diluted EBITA impact. This is due to the combination of the negative currency translation on sales of EUR 13.6 million, having a corresponding -EUR 5.6 million EBIT at a margin of 41%, combined with the net year-over-year transaction impact, which is a negative of EUR 10.7 million, from a current year loss of 7.7 against the prior year gain of 2.9. Negative translation movements this quarter were driven mainly from a return to the trend of the depreciation of the U.S. dollar by 0.9%, where sales exceed cost and continued depreciation of the Swiss franc by 1.1%, which has the opposite characteristics. Whereas the CNY this quarter was relatively neutral, at an appreciation of just 0.2%. The structural element was marginally accretive and reflects the net impact of acquisitions less disposals, and in the quarter, the disposal of the hand tools business in MI and two months of the ITS business in SIG exceed the incremental acquired sales, of which the material elements were by Voyansi and Xwatch in Geosystems. The organic sales evolution being negative this quarter due to the challenging macro backdrop, but with no negative EBIT impact due to the gross margin improvement in connection with the cost mitigation through the rationalization program, which was therefore accretive by 0.7%. So excluding the dilutive impact of currency, we would have delivered an incremental eighty-five basis points improvement in EBITA in Q3. Moving to slide 24, the cash flow. Moving on to Q3 cash flow, which shows improvement in the cash generation conversion over the prior year, Q3, but is seasonally weaker than delivered in Q2. The adjusted EBITDA demonstrates a similar cash generation to the prior year, despite the minus 4% decline in EBIT, as the depreciation and amortization add-back continues to increase. Capital expenditure is sequentially down EUR 4 million, but increased over the prior year, which was a lower quarter due to two asset disposals in 2023. Net working capital, lower EUR 56 million build, was significantly lower versus the prior year build of EUR 98 million, which generated an operating cash flow of EUR 264 million, an increase of 5%, which is a cash conversion of 70% versus 64% prior year. Including cash, taxes, and interest payments, which both marginally reduced, the improvement in cash flow before non-recurring items is 13%. Non-recurring items of 22.7 brings an operational cash flow of EUR 143 million, up 10%. Moving on to slide 25. The Q3 net working capital, as I mentioned, was a build of EUR 56 million due to the cycle, as mentioned in the Q2 call. This increased the proportion of rolling twelve month sales to 8.3%, but still 120 basis points below the Q3 prior year. The constituent elements of the movement being receivables and prepaid increased by EUR 9 million, with the resulting DSO at 84 days, which is in the normal range. Inventory increased by EUR 13 million and will be a continued focus during Q4, which is seasonally the strongest trading quarter for the group. Liabilities decreased by EUR 14 million, with the trade DPOs at a level of 55 and a good improvement over the prior year. A decrease in deferred revenue of EUR 35 million, which is reflective of the billing cycle and in line with the prior year Q3 change. Accrued expenses are increasing as expected, but at a tempered rate based on performance. In conclusion, despite the continuation of the challenging macro environment and consequential negative organic growth, the EBITDA performance has remained resilient due to the continued improvements in gross margin, coupled with the cost management through the rationalization program, which has now achieved its expected returns. Cash conversion, though seasonally weaker in Q3 than earlier quarters, improved over the prior year and on a year to date basis remains in the target range. With that, I'd like to hand over to Ben. Thank you, David, and good morning. If we go to slide 27, firstly on sustainability, we have the good news during the quarter that our greenhouse gas emission reduction targets, which are described here, have been approved by the Science Based Targets Initiative. To achieve these ambitious targets, we have many ongoing programs, facility upgrades, employee and supplier training, expanding renewable energy use, and setting stringent criteria for product development and logistics. So we have good momentum, right across the group, and we'll update our progress towards these targets in upcoming annual sustainability reports. If we go to slide 28, here we have a very important customer win. A customer win for SIG during the quarter. The Malaysian Emergency Response Services have selected the OnCall suite of products to upgrade Malaysia's 999 emergency services communications. This large project will enhance collaboration and data sharing among Malaysia's five key Public Safety agencies, improving their efficiency and response times. If we go to slide 29, a large project win for ALI during the quarter. A leading European EPC has selected SDx2 to manage their engineering project documentation, which will boost efficiency and productivity. As we described last quarter when it was formally launched, SDx2 is a cloud-native multi-tenant SaaS solution that will make it easier to integrate project and operational data, create a digital twin of a large industrial facility for use throughout the asset's life. If we go to slide 30, we have a large follow-on order with one of our key accounts in China, at BYD, a global leader in electric vehicles and renewable energy solutions. To support their cost reduction, efficiency, and quality goals, we provide a large number of CMMs, measurement arms, and laser trackers, plus the associated software during the quarter. If we go to slide 31, we have a customer example from Geosystems. If you've ever wondered at a major athletics event how they get the precise measurements you need in events like the javelin, shot put, discus, and long jump, then here is your answer. Swiss Timing chose Hexagon's total stations at the Paralympic Games this summer to ensure fairness and accuracy in all high-stakes events. If we go to slide 32, as Paolo mentioned earlier, we had a very important product release in MI during the quarter, the ATS800 Absolute Tracker. We see this as a very important launch, which integrates a laser scanner and a laser tracker into one solution, which is unique in the market. This will allow for more detailed feature extraction from large objects, which are measured at the distance, faster scanning and data processing, and you do not need to be an expert operator to get good results. Shipments of the ATS800 will start next year. Slide 33, we wanted to highlight a white paper or industry report that Hexagon published this week on the topic of digital twins. Based on a survey we did, six hundred and sixty companies across eleven different verticals. The report looks at how and why organizations are using digital twins, the potential return on investment from using them, and the pace of adoption of these technologies. As we highlighted at last year's Capital Markets Day, we see this as an important long-term driver for demand for Hexagon's technology, which will be relevant for both Hexagon and in a spin scenario, NewCo. The Hexagon customers use our suite of reality capture sensors to digitize the real world and build digital twins of assets, and then add layers of analytics on top. The NewCo, the digital twin, starts with data-centric design and engineering tools, which is taken through construction and into operations, providing customers real-time access to contextual data, flowing through the asset life cycle, so please use the link on the slide to learn more about this important growth driver for Hexagon, and with that, I will hand back to Paolo. Thank you, David and Ben. In conclusion, in slide 35, we will see how the market environment will develop in the short term, but we stay focused on execution, on innovation, customer engagement, financial delivery, and as announced earlier, we constantly look at ways to drive more focus and more value creation. With that, operator, we are available to take questions. Thank you. Thank you. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. We will now take our first question. Please stand by. And the first question comes from the line of Joachim Gunell from DNB Markets. Please go ahead. Your line is now open. Thank you. So, two questions from my side. On ALI, you consider yourself here a number one or two player in CAD and EAM. So can you discuss a bit on how good business that is really in relation to the competitors and comment a bit on what other players you actually need to listen? Yeah, sure. Hi, Joachim. Good morning. We do believe that when you look at the entirety of NewCo, we have solutions that are truly market leading. And on top of that, we now with SDx have the right strategy to link the data and build a digital backbone, which is essential because customers want to buy into an integrated ecosystem, have access to data that's integrated. And the very lion's share of that work in terms of innovation has been done. This is why we all think that NewCo has a very powerful and appealing kind of growth profile. We also think that this business will operate into very interesting areas of growth into the future. And does this mean, the news today, that you are back at the drawing board here, looking over strategic options for other parts of the business as well? I would say that this, the definition of this perimeter comes as a result of having looked at, strategic options. We've done a lot of work with the leadership team and with the board to review the strategy, and we saw that there were these two missions that were emerging from the business. The core mission of Hexagon, that lives in the construction site and in the shop floors with the operator, where you're actually building reality, where physical construction takes place, and then a second mission, that needs to be serving with digital products, designer and information technology experts in a way that's integrated, and so this is why we feel very good about the opportunity that we have outlined. But of course, this morning we have announced an investigation, and this is the starting point of a journey of evaluation, really. Okay, perfect. Just on the combined entity then, since you now split out software and services on a quarterly basis, it's very helpful, thank you. But I would have thought that the growth rates here in the software and services business would have been higher than what we have seen year to date, say at 3% or up to 5% if we strip out the FX effects. ... just unpack this trajectory, and then in your organic growth targets through the cycle, and what's the assumption for quality underlying software business versus sensor and robotics? Yeah, great question. Look, I think the clearest KPI that I can point you towards is the recurring revenue that we have tried to talk about very transparently by division, starting at Capital Market Day. At the end of the day, we are in a low point of the cycle, which is why there's a cautiousness from customers in investing in new CapEx. But you do see recurring revenue uptick at a good pace, which is on par or above with the software peers, and that's across divisions. It's also one of the reasons why we feel very good about the way we've defined these perimeters, because we see gross margin trajectory and recurring revenue trajectory on both. Lovely. Thank you. Thank you. We will now go to our next question. Please stand by, and the next question comes from the line of Mikael Laséen from Carnegie Investment Bank. Please go ahead. Your line is now open. Thank you. Good morning. So what prompted Hexagon to evaluate the potential spin-off of ALI at this time? Hi, Mikael. I think the timing is more driven by work that's been done internally. I mean, on the one hand, we have worked very collaboratively in the last years, which has allowed us to see more clearly, I think, through the synergies between the various elements. We've always had good synergies between the BricsCAD team and ALI. We've recently built, eighteen months ago, a sales team within ALI, dedicated to the ETQ portfolio. We see good opportunities for EAM in terms of selling to the infrastructure customers of the utilities and infra business that we're moving into that perimeter. So I think having experience firsthand, those synergies coming together has been important. And then the board has been very close to us and very supportive, and we have come together in the definition of this parameter. Okay, and a follow-up on this. Could you say something and elaborate on how ALI is collaborating and integrating with Hexagon's other four segments? So specifically, what software that are shared in the group that originates from ALI and how this integration creates value within Hexagon. Yeah, I mean, we certainly have touch points in terms of capabilities between technologies that we sell through the ALI channels and the rest of the organization. I mean, I've talked about HxDR a couple of times in the call today. Part of the deals that we have closed with HxDR also come from the ALI side. But the way in which we have defined the perimeter comes from the confidence that those elements of collaboration will stay into the future, and they don't necessarily require for those technologies to be under the same management structure. All right. Got it. And then one finally, if I may, can you just provide insights into how the order intake developed for the MI segment this quarter? Yeah. Hey, Mikael. I mean, the order intake was pretty similar to the revenue or shipment growth figure, so there wasn't a big difference between the two in Q3. Okay, thank you. Thank you. We will now take our next question. Please stand by. And the next question comes from the line of Erik Golrang from SEB. Please go ahead. Your line is now open. Thank you. Two questions, or rather, sorry, three questions. First one on NewCo. How much extra costs do you think you would have to add to that business to make it standalone? And then second question, just a combination here, ALI, ETQ, Bricsys, and the SIG part. What's the... I guess ALI and ETQ, I understand, if you could just help up with the rationale there with also bringing Bricsys and the other asset into this. And then thirdly, I assume you're open to potentially also divesting NewCo if there were bidders at the right price, or is that the path that you've already explored? Thank you. Yeah. Thank you, Erik. So first, when it comes to the cost that's associated with stepping up that entity, I think these are some of those details that we'll come back to in the foreseeable future. In terms of BricsCAD, we see opportunities for selling into the ALI customer base, BricsCAD, and that's something that's been already in the works in the last couple of years. We see a chance to intensify that, if ever in terms of providing very good quality CAD and BIM technologies to owner operators, and EPCs. Your third question, Erik? Divesting NewCo rather than a spin-off, or is that something you have looked at already? Now, look, we, we've come together with the board to the conclusion that the strategy that we have outlined and we are investigating is the best course of action. So this is where we are. ... Thank you. And then if we could just throw in one more on the business in the quarter to follow up to the MI book-to-bill there. If you look, I assume the main drop on hardware in the quarter is in Geosystems. Could you just sort of help out sort that out a bit? What are the main variables in that, and what trends are you seeing there into the fourth quarter? Yeah. Hi, Eric. No, I would say that the drop in sensors was probably spread across Geos ystems. So Geos ystems was similar to last quarter. For Manufacturing Intelligence, we saw a drop in China as we flagged last quarter. We expected Q3 to be weaker than Q2 in China. So I'd say on the sensor side, it was fairly evenly spread across the two businesses. If you're looking for Q4, you know, I think on the Geos ystems side, the demand environment looks fairly similar. Comparatives are probably slightly easier, reflecting the comp from Q4 last year. If you look at Manufacturing Intelligence, I think there's probably still slight negative momentum in North America and Western Europe, but I think that's offset by a probably slightly better development in China. Thank you. And is it fair to summarize that heading into the third quarter, you sort of indicated a bit weaker growth rates, but you're thinking about the more stable development into the second quarter, into the fourth quarter? Yeah, based on what we know now, it looks like a similar market environment. Yeah. Thank you. Thank you. We will now take our next question. Please stand by, and the next question comes from the line of Sven Merkt from Barclays. Please go ahead. Your line is now open. Great. Good morning. Thank you for taking my questions. So maybe just one question on the various assets that you plan to include in the new scope of ALI. Could you just remind us the growth profile of ETQ, Bricsys, and this Utilities & Infrastructure business? Yeah. Hi, good morning. Broadly, I would say ETQ is growing ten to fifteen percentage points in total revenue and faster than that when it comes to SaaS. I think Bricsys is going through as we speak a transition towards subscription, but it probably grew around the ten to fifteen percentage points also in Q3 and has good momentum. There's dynamics in that market that make the outlook, we think, very positive. When it comes to Utilities & Infrastructure, which probably is one of the least known part of our portfolio, but we think has a lot of potential when it comes to selling EAM onto telecommunication providers and utilities providers. That business is growing in between single and high, mid and high single digits. So these businesses are at different levels of maturity and growth profiles, but we feel very strongly about those synergies that, of course, we have tested over the course of the last quarters. And this is also why, as of today, not only we externally announce this investigation to the market, but also internally, we announce movements of these teams under the same management structure, because we want to pursue immediately that commercial potential. Okay, perfect. As you said, this Utilities & Infrastructure business is not so well known, so could you just give us a rough indication how large it is from a revenue perspective? Hi, Sven. No, we'll come back on that. Not obviously that we don't know, but it is a carve-out from one business to another, so it depends a little bit on the perimeter of customers that you transfer. We've given you the overall scope of NewCo. You know, you can probably back it out to some degree. Okay. Perfect. And then, just when you look at the R&D capitalization, how will they roughly be split between the new and the remaining business? Yeah, I think this is one of those elements that we will come back to. It's part of a further definition of the financial elements of the transaction. Okay. And then just a final question on the spin out. From a revenue mix, when you look at it from a cloud, on-premise, subscription, license maintenance part, how will it directly split between the different types? Yeah, look, we have given a broad parameters of the transaction. I mean, I think you know enough about the size and the pace of growth in both EAM and ETQ to kind of work out the SaaS, the pure SaaS multi-tenant element of the parameters. What's important for the NewCo is that it has vast amounts of recurring revenue. There's growth that's happening across the board, and that's growth that's happening across customer profiles and industries, which is why we think this is a very high potential move. Perfect. Thank you. Thank you for all the details. Thank you. We will now take our next question, and the next question comes from the line of Himal Bhundia from UBS. Please go ahead. Your line is now open. Thank you, Paolo, David, and Ben, for taking my questions. Himal Bhundia from UBS. I wanted to ask about your view on the construction and markets going into 2025. When in 2025 would you expect this to pick up? And secondly, could you give us some color on your expectations for China in 2025, please? I'll follow up with my second question after. Thank you. Yeah. Hi, good morning. You know, I think the construction markets, when you look at it by region, you know, I think Europe, Europe's been weak now for a few quarters. It varies a lot by different country. I'd say in aggregate, we don't really see it sequentially getting much worse, and as I said earlier, we will start to get some easier comparatives as we go into 2025. We don't see the benefits of lower interest rates yet starting to feed into improved activity. US, the market has been stronger. We saw a little bit of a softening in some of our businesses, machine control and geomatics during Q3. Whether that's the market deteriorating or that's uncertainty ahead of the election, you know, we'll have to see. But I'd say the U.S. generally remains better than the European market. And then if you look at China, the construction market there has been weak for almost a couple of years now. And we've seen the government announce stimulus measures through Q3, and I think they are more geared at construction than maybe the discrete manufacturing part of our business. When we speak to our teams on the ground, they think it'll take some time to feed into their activity. It's more of a 2025 tailwind than something that we'll see in Q4. Thank you. And my second question, I appreciate it's still a review process, but could you tell us what the spinoff could mean for your capital allocation strategy, should the spinoff be pursued, or is it still relatively early? Thank you. So if by capital allocation strategy, you're implying M&A, I think we have opportunities that are very important in both parameters, should we decide to go in this direction. I find also that our M&A activities probably would become more focused and targeted and successful because you are carving out two communities and user groups that need to be addressed with business models that are different and with portfolios that are targeted, right? So for simplicity, really look at it from the outside in, right? We're talking about the community of designers, the community of information technology experts versus the community of makers, right? And these require digital tools that are deployed in a very different fashion. M&A is important for the group, but I think it's gonna be important for both AB in this potential future and for NewCo, but possibly in an even more targeted way. Great. Thank you. Thank you. We will now take our next question, and the next question comes from the line of Balajee Tirupati from Citi. Please go ahead. Your line is now open. Thank you very much. Good morning, all. Balaji from Citi. Two questions from my side, if I may. Firstly, on the spinoff plan, you mentioned creation of structure under which collaboration between proposed new company and Hexagon would continue in future. If you could elaborate on that. Also, if you could share color on the voting right distribution in the new company. And second question, if you could share view on what you saw in the mining segment during the quarter, and did the decline come as a surprise, and what your view is on demand here in coming quarters? Thank you. So in terms of collaboration, I think there's gonna be two elements, right? One is the utilization in an optimal way of technology components that are important also for ALI, that are coming from the rest of the group at the moment, and that's gonna be, of course, no issue at all. And then the second one is: What could we do from a Hexagon portfolio, to be in terms of selling onto the ALI, customers and industrial sectors of reference? And that too, should we go down this road, will be a very fruitful partnership. Can you please repeat your second question? Second part of this question was if you can also share the voting right distribution in new company. Will it be similar, A share and B share, the way current Hexagon business has? Yeah, as I said earlier, I mean, the detail that we have shared in slide seven is pretty much what we can talk about for today, so we'll come back to you on those aspects. And then your third question when it comes to mining, I think mid to long term, nothing changes in terms of demand. I was stunned by the speed of progress on electrification in our economy that I saw at the mining show in Vegas. It's a good thing that they organize it once every four years because the amount of technology and capital and assets that you see is incredible. The scale of transformation is incredible. But so we're very convinced that we have the right portfolio, and we're gonna invest further in mining. It's a brilliant use case for deploying robotics and AI to make an industry more productive. I think in the specifics of Q3, A, we had very tough numbers to beat. B, there's a little bit of cautiousness in that market. You've also seen it in the way commodities are priced, in the short term. And then third, I'd say some of the deals that we expected in Q3 slipped, but we still have a very strong position there. Very clear. Thank you. Thank you. We will now take our next question, and the next question comes from the line of Viktor Trollsten from Danske. Please go ahead, your line is now open. Yes, thank you, operator, and good morning, everyone. Exciting times indeed. And perhaps my first question is, I guess, on the industrial logic. You could expand a bit. It obviously seems to make sense, you know, putting all this entities together in the NewCo. But could you, you know, remind us a bit on the interconnection between NewCo and call it Remaining Co? I think we have spoken about synergies, you know, with other parts of Hexagon as well, but could you remind us on that please? Yeah, sure. Hi, good morning. As I said earlier, the most crisp way to look at this is through the lenses of the personas that you wanna serve, right? The users that you wanna serve. And I think that's the best way to identify why the perimeter is being crafted in the way it has. For Hexagon into the future, we're gonna have data creation that, of course, takes place where physical realities take place. So, our sensors and our robotic technologies will be capturing data, 3D data, for anything that's real, and our recurrent revenue primarily will come from consuming that 3D data. So that will be software and platforms and AI that's very much tied to where data creation takes place. So the best way to look in simple terms at the logic is really through those two lenses. This is not about software and hardware. This is about integration of software and hardware on the one end, and software tools that serve designers and IT specialists on the other. Okay, no, it's... Yeah, I understood. I guess it, you know, aligns with what I think Ben has been speaking about for quite some time, you know, going from technology centric to customer centric. And then perhaps on your financial targets, which I guess is, you know, could be under review with the entity. But as Hexagon stands today, you have spoken about that you know incorporate the downturn in your forecast for organic growth, let's say. Just, you know, philosophically, I do say that this is a difficult answer, but the downturn that we are currently in, is that sort of you know, the downturn that you have thought about? Is it worse than you have thought about? Just any, you know, color on that. I guess the context is that, you know, what we know for 2024 now. We're looking at since 2022, we have had organic growth of, let's say, 4% or 5% in the low end of your target. Just, you know, any color on that would be helpful. Yeah, I think as you say, this is the type of downturn that I think all I had in mind, a couple of years back. I think the group has grown well in the first part of the planning process, and I'm sure we're gonna come back to good growth rates into the future. But the environment is what it is. And then when it comes to targets in relation to the potential separation, as we said, this is a 12- to 18-month process. So, we know what we need to do and deliver all together into next year. And then if there's gonna be a separation, we're gonna have more than enough time in 2025 to talk about numbers and targets. Okay. No, that's clear. Thank you very much. Thank you. We will now go to our next question. And the next question comes from the line of Johannes Schaller from Deutsche Bank. Please go ahead, your line is now open. Yeah, good morning. Thanks for taking my question. I just wanted to go back firstly, just on the decision between a spinoff and maybe an IPO or a sale of the NewCo. I mean, you said that M&A for both businesses is still gonna be part of the strategy going forward, so I guess you could have raised maybe some cash through a sale or an IPO. Just why did you decide for the spinoff instead? And just a technical question, how much of the voting right approval do you need for this from your shareholders to proceed? And then I have another question on the business after. Thank you. Okay. Yeah, hi. On the logic, I mean, we've looked at a variety of elements and options with the board, and we're still gonna be very much open-minded about it, but we think that this on the table now is the best solution. And then, when it comes to all the rest and the timeline and the path and the approval processes, we will come back in due course. Understood, and then maybe could you just zoom in a little bit on your automotive business? Obviously, you made comments around Europe being weak. I guess that's not surprising. China, maybe it's a bit mixed. You had a strong deal with BYD. Just how do you look at these two regions for your auto business, maybe as we go into next year as well, directionally? Yeah, I think, at the moment, we have good traction in the U.S., also in the supply chain of the automotive sector. We feel we have a good competitive positioning in incumbents and entrants, right? So we feel that we are in good shape across the board. Europe is difficult to call. As you know, there's something that's more structural that's going on, and the outlook, we think it's more uncertain. What we feel very good about is that we have positions of strength in China for sure, but we also are very well positioned in places like Eastern Europe or Turkey, where places in which potentially there could be set up of manufacturing facilities in the scheme of how these OEMs will share volumes into the future. Just, a clarification on China. I mean, you had China quite weak as on a group level, but automotive was not weak in this quarter. Yeah, I think automotive specifically was not a standout weakness. We all see that the market, specifically the smaller customers, tend to be very cautious in the way they buy in China. I think the downturn in construction was already happening last year. I do think that MI was particularly strong last year compared to specifically the industrial peers, and that's also why in 2024 comparably, some of those growth rates are slow. That's clear. Thank you. Thank you. We will now take our next question. And the next question comes from the line of Alexander Virgo from Bank of America. Please go ahead. Your line is now open. Thanks very much indeed for the opportunity. Hi, Paolo. I wondered if you could talk a little bit about the operational side of the business, just in terms of gross margins. Normally, we see a step up in Q4 at sixty-seven already. So I wondered if you could just give us a little bit of a sense of what you're expecting into the end of the year, and how that, how we can think about that sustainably into 2025. And in particular, I guess, dropping that through to the EBIT margins in Geo, which, despite the headwinds are that you're facing there, are over 30%, over 32%, I beg your pardon. And then second question, just around free cash flow conversion. Obviously improved year-on-year, but weaker Q on Q, thinking about how strong that ends up being in Q4, and again, thinking about it, the trajectory into 2025. I guess maybe that's a bit more for David. Thank you. Okay. Hi, Alex. Good morning, so from a gross margin perspective, the good news for us is that we've seen gross margin pick up in pretty much all of the divisions, so for us, what's important is that this is not a by-product of less hardware and more software. This needs to be a by-product of all of the divisions working on their margin profile, using innovation, driving pricing, and making sure the gross margin for new products are accretive, and that was the case, so we think also when it comes to Q4, and then we'll see about next year. David, do you have comments on cash? Yeah, the comments on cash, and yeah, I agree. I mean, look, the position is good on cash. We had the seasonal change in Q3, which we knew about, but year to date, the cash conversion being at 81% is materially above the 71% that we were at the same point in time last year. We reached 80% last year, and you know, we expect to be in the 80%-90% target. We don't give, obviously, quarterly cash, but we expect to be well within the target range. Okay, thanks very much. Thank you. We will now take our last question. Please stand by, and the last question comes from the line of Daniel Djurberg from Handelsbanken. Please go ahead. Your line is now open. Thank you, operator, and thank you for squeezing me in. And good morning, Paolo, David, Ben. Yeah, interesting times. First question is if this evaluation also is about, you know, to, to counteract potentially a political risk and also the fact that cybersecurity makes, you know, more of a one-to-one integrated solutions more vulnerable than historically? That's the first question. I don't think we had that specifically in mind. Daniel, good morning. I just think there's an incredible opportunity to build not one, but two, global leaders that are exceptionally focused on what they need to do. Perfect. And if I may also, would it be fair to assume that you could do some kind of joint venture to create or secure the, you know, common projects, customers, in AI and other stuff that you have jointly? Yeah, for sure. I mean, we would have very tight collaboration. That's already ongoing, and that certainly would be very fruitful. Thank you. And also on operations and on, can you comment a bit on the ATS800 tracker? Can you just remind me about timing, when you go to market, and if we should expect some, you know, support that we have seen historically from new products also, from these new products, i.e., the ATS and also the iCON iCS50. Thanks. Yeah, thank you for asking. We're all excited about that project, and to be honest, I believe that development hasn't been started in MI by me, but my predecessor. That's how much technology there is that went into that development. It's basically a productivity tool, right? More than a measuring and positioning tool. It's gonna be, we think, accretive and non-cannibalizing. We got a lot of positive perception during the beta testing, but also IMTS. Q4 is the quarter for us to build pipeline. Typically, these complex systems require a six months sales process, and we're gonna start shipping into Q1, and we think the ATS 800 will be commercially significant into 2025. Perfect, and a super quick follow-up. You mentioned BYD as a customer win, obviously a follow-up order since a long time ago. But can you comment if you do follow BYD into the new fabs they build in, you know, Brazil and Turkey, or if this is still within China? I mean, specifically the opportunity that Ben has talked about was within China, but yeah, we feel very good about the relationship with them and the partnership and the executive connectivity. And actually, one of the positions of strength that we are is the fact that locally, wherever they will go, we're gonna have teams to be able to support them, right? At the end, it's one of the key elements of differentiation rather than working with possibly local partners for them. Perfect. Thank you. Thank you. Thank you. As we will no longer be taking any questions, I would like to hand back to Paolo Guglielmini for any closing remarks. Yeah, thank you very much for attending this Q3 review. I'm sure we're gonna be talking soon again. Have a good weekend. This concludes the conference call. Thank you for participating. You may now disconnect.