Earnings call transcript: Atlas Corp sees steady Q3 2025 with strategic acquisitions

Atlas Corp, an industrial equipment manufacturer, reported its third-quarter earnings for 2025, revealing steady financial performance and strategic acquisitions aimed at future growth. While specific EPS and revenue forecasts were not disclosed, the company highlighted a 1% organic revenue growth, driven by strong performances in North America and Europe. The stock currently trades at $0.31, and according to InvestingPro analysis, appears undervalued based on its Fair Value metrics. The company maintains a FAIR financial health score, with a moderate beta of 0.9, indicating lower volatility compared to the broader market.

Key Takeaways

• Atlas Corp reported total revenues of SEK 41,600 million with a 20.5% operating margin.
• The company acquired ABC Compressors and ShareWay to expand its market presence.
• Strong performance in North America and Europe, each showing a 10% increase.
• The semiconductor market showed mixed signals, with positive investment in leading edge nodes.
• The company is cautiously optimistic about the stable semiconductor market in Q4.

Company Performance

Atlas Corp’s Q3 2025 performance was marked by strategic acquisitions and organic revenue growth, despite challenges in the semiconductor and automotive markets. The company maintained a strong presence in multiple market segments, leveraging its expertise in semiconductor, compressor, and vacuum technologies. While revenue showed a year-over-year decline of 19.11%, the acquisitions of ABC Compressors and a 70% stake in ShareWay are expected to bolster its market position, particularly in hydrogen, CO2 applications, and the Chinese market. The company’s financial stability is reflected in its healthy Altman Z-Score of 5.32, suggesting low bankruptcy risk. For deeper insights into Atlas Corp’s financial health and growth prospects, InvestingPro subscribers can access comprehensive analysis and expert ProTips.

Financial Highlights

• Total Orders Received: SEK 40,500 million
• Total Revenues: SEK 41,600 million
• Operating Margin: 20.5% (21.3% adjusted for restructuring costs)
• Operating Cash Flow: SEK 7,300 million
• Profit for the Period: SEK 6.7 billion
• Basic Earnings per Share: SEK 1.37

Outlook & Guidance

Atlas Corp anticipates customer activity to remain stable in the near term, with no dramatic changes expected. The company remains cautious due to global economic uncertainties but is optimistic about the semiconductor market’s stability in Q4. The guidance for FY2025 and FY2026 includes an EPS forecast of -0.01 USD and revenue forecast of 52.77 USD. With a current P/E ratio of 28.21 and a debt-to-equity ratio of 1.35, investors seeking detailed valuation analysis and peer comparisons can find extensive research in the Pro Research Report, available exclusively on InvestingPro.

Executive Commentary

CEO Wagner Rego noted, "The world continues with a lot of uncertainty that are not supporting our customers to take decision," reflecting the cautious outlook. He also emphasized the company’s readiness to capture market movements, particularly in the semiconductor sector: "We are well positioned to capture any movement in that market."

Risks and Challenges

• Semiconductor market volatility, with overcapacity in advanced and legacy nodes.
• Global economic uncertainties impacting customer decision-making.
• Integration challenges and costs associated with recent acquisitions.
• Tariff impacts, though minor, could affect profitability.
• Challenges in the Chinese market despite strategic acquisitions.

Atlas Corp’s strategic focus on acquisitions and innovation, coupled with its strong market presence, positions it well for future growth despite current market uncertainties.

Full transcript - Atlas Corp (ATCO) Q3 2025:

Peter, Presenter/Moderator: Thank you, operator, and a very warm welcome, good morning, good afternoon, or good evening to all of you attending this third quarter twenty twenty five earnings call. Together with me is Wagner Rego, who will guide you through the presentation together. But before we start, I will repeat the same topic I always say when we start the call, and that is when we start after the presentation with the question rounds. Please only ask one question at a time, so we make sure that all participants have the opportunity to raise their most important question. Is there more time available afterwards?

You are of course more than welcome to line up again to ask your next question. With that, I hand over to Wagner Rego, who will start the presentation.

Wagner Rego, Executive/Presenter: Thank you very much, Peter, and welcome to this conference call. We’re quite happy to be here once again. So if we go straight to the summary of this quarter, we have seen a mixed demand with stable orders, pretty much aligned with what we have said on the guidance for Q3 during the Q2 conference call. So and then you can see industrial compressors flat, Gas and process, we see a decline in the orders received when you look to year to year comparison. Was good on the industrial vacuum side, but negative on the semiconductor vacuum side.

When it comes to industrial assembly and vision solution, there we saw a negative development mainly driven by automotive due to the conditions in the market. We had a solid growth for power equipment that we were quite happy to see that. And again, good growth on our service business. We see that our efforts to further develop our service business and implementation of the installed base, I think we managed to capture that installed base that has been deployed over the years. When it comes to revenues, it was somewhat up and we had two business areas with a good organic reasonable, let’s say, development and two business areas with the negative development that led us for to a growth of 1%.

The profit margin has been affected by restructuring costs. We will come back with more details. And acquisitions, we have done six acquisitions. There are two acquisitions I would like to highlight because they are very important for our strategy. The first one is ABC Compressors that is increasing our ability to serve customers in hydrogen and c o two applications.

And the other one is ShareWay, which is a joint venture. We acquired 70% of the company, and it’s gonna be a very important one for our development in China, adding as well technologies that we didn’t have in our portfolio. So cash flow was quite solid. We were very happy to see we continue to generate very good cash flow. So going to the next, if we look into the financials, how was that translated?

We reached 40,500,000,000.0 Swedish krona in terms of orders received, as you can see, and 41.6. In revenues, orders received more or less aligned with previous quarter, but then changed it organically. And like I have mentioned, 1% organically in the revenues. Operating margin was 20.5, but then if we readjust for the restructuring costs, we end up at 21.3. And the operating cash flow, we have mentioned already, 7,300,000,000.0, which is quite solid and we were quite happy to see that development.

If we then move how we have performed all over the world, if I then start with the North America, we saw still the environment that is, let’s say, has challenges, uncertainty, but we are happy with the quarter with plus 10 if you correct for currency. So and there, we see very strong development in compressor technique and power technique that we it was really good to see. And vacuum and industrial technique were slightly negative impacted by semiconductor and the automotive market. When it comes to Europe, was also good to see 10% development. And here again, compressor technique had a good development, positive development, power technique the same and we had the negative development in vacuum technique and industrial technique.

When it comes to Asia, basically, all business areas had a good development, positive development. The only headwind we had was in compressor technique mainly due to large gas and process compressors and some large industrial compressors where we saw negative development. But combined, we still had a positive development of 1%. Latin America continues, not Latin America, but South America being more specific, had a positive development almost basically most of business area with positive development on industrial technique, negative. And then Africa, Middle East, they had a quite big comparison to beat.

And there we saw a negative development that is mainly influenced by compressor technique and power technique. Overall, if we adjust for currency plus two in orders which is more or less aligned with what we have seen year to date. If we then move, if we combine again all the figures, we can see that we had plus 2% in structural change. That is basically our acquisitions. In revenues, the acquisitions performed better plus 3%, quite a lot of currency headwind minus six percent in orders, minus 7% in revenues, growth, unchanging orders, like we have mentioned.

We end up at 40,500,000,000.0 Swedish krona in orders received and SEK 41,600,000,000.0 in revenues. So if we then see the split among the business areas, we can see now that Compressor Technique in the last twelve months has an order developed has contributed to 46% of our orders received and this quarter with 0% growth or no growth. Basically, vacuum technique, 21% of our orders with 1% growth, very good contribution from industrial vacuum and service. Power technique continues a good development in orders, 17% now of our business, plus 5% in the quarter, and industrial technique with minus 3% in orders received. If we then move to compressor technique, it’s what we have seen industrial compressors were basically unchanged.

Let’s say, a little bit more negative towards the larger compressors, a little bit more positive towards the smaller compressors. That is not a big indicator, but that’s just what happened in the quarter. We saw decreased order intake year on year on gas and process compressor, but sequentially, we saw a good development and improvement compared to q two. Service business continued to develop very well. Once again, I’m quite happy to see that.

Revenues as well, that shows that with the quality of our order book is good and we continue to develop 4% organic growth. Profitability, we are quite happy with this level of 25.3%. We should have in mind, we have done slightly larger acquisitions that has a bigger impact, and we are focused to do more integration items at at the beginning, meaning deploying our IT, our to especially when it comes to cybersecurity. So a little bit more cost at the beginning to safeguard our acquisition. So a bit more cost, but we are happy with that level of 23.5%.

So ROS remains at a good level, and we continue our innovation pipeline with compressor technique. And here, today, we brought an example of our development in China that sometimes you have to develop to come with more features that you can come with with with a different value proposition to the customer. Sometimes you have to innovate to cost reduce, and this is a good example of how we innovate also to to cost reduce, to be competitive in China, but also to create options as well in other regions. A very good achievement now with this new innovation. Then if we go to vacuum technique, we saw 1%.

It’s good to see positive development, Although it’s not in the semi market, but it’s very good to see that industrial and scientific vacuum in terms of equipment continues to develop very well. We still don’t see we are yet to see positive development in the semi market, but we still have headwinds especially for North America when it comes to the semi. In the other hand, it’s very good to see the service business developing very well, especially in the semi part of the business. New fabs being built coming into operation and we managed now to get the aftermarket from these fabs. But also not only on the semi service, but also the industrial service is developing quite well.

And then we have headwinds in the revenue. Revenues were down 6% organically. That put pressures in the bottom line, but we see good traction on the restructuring activities that we have announced and performed during the year. But this quarter, we felt that we could, because of the headwinds we have in the North American organization when it comes to some markets and semi as well. We decided to further optimize our footprint there without damaging our ability to grow, to sell, to further develop the business.

I think that we we didn’t touch, but we we have reorganized our North America that includes to reorganize one factory to adapt one of our service centers to integrate and also to to work in our customer centers, try to optimize, decrease management structure and safeguard that our ability to support our industrial and semi customers are not touched. I think that was the main target and that’s why we decided to do a new round of restructuring in vacuum technique to make sure we safeguard our bottom line. So then the adjusted operating margin was 20.1%. So return on capital employed 18%. And we continue to innovate in the semi market.

You know that the real estate is very important in the semi market. I mean, the footprint that your product utilizes is very important and we managed to come now with this integrated abatement system that we occupy 30% less space in the fab. That’s also important to support our customers in that market segment. If we then go to Industrial Technique, we saw order decline of 3% and is mainly driven by the headwinds in the automotive. And I would say not everything is negative in the automotive.

We still get quite a good level of orders when it comes to flexible production lines or meaning if the production line needs to be more flexible, we can support our customers on that. We have more products, more software driven products as well that can support our customers. And we also see more demand for automation, that is good. But in the other hand, we see less production lines being built and that means less project. And the project business is having more headwinds.

So and that’s what we have seen. And service was basically unchanged. That has also that’s also influenced by the number of car cars produced, and that’s why we see a stable level in service in industrial technique. Revenues were down 1% organically. Operating margin were at 18.8, excluding the restructuring cost, a minor restructuring cost of 53,000,000 compared to to Vacuum Technique.

So we we keep on fine tuning our organization in Industrial Technique because we have the headwinds. And and it’s the same concept. We have optimized management structure and we try to adapt to the circumstances that we see today in the market. And again, the innovation efforts continue. Here we develop a product that is reducing the dispensing time in about 50% that definitely can support some of our customers and and we are also quite happy with that development.

So if we then move to power technique, that is more a positive picture when it comes to the orders development, solid growth in equipment. Basically, most of the equipment division had a positive development. Good growth in rental, I think that we continue to develop. Revenues also were up 3% organic and operating margin at 17%. And here we have a higher functional cost and then a little bit of dilution from the acquisition, but I think the main topic here is higher functional costs.

We have created a new division to sell industrial flow products. We are building up competence in our customer centers. I think that will bring is bringing good organic growth, but I think we haven’t seen we are yet to see translation in an improved margin that will will come over time. We believe we can operate in a higher margin in with a higher margin in power technique. And now it’s important as well, the acquired companies, we also invest in innovation on the functional cost that is also a component of higher R and D because also the acquired companies, we buy technology, but we believe we should continue innovate.

And this is one example of an innovation of one of our acquired companies, Bungan, that they managed to come with a new twin twin screw pump for applications, pumping high disc discus media in demand, high flow rates. So also there, very good to see our innovation. So with that, I will transfer to you Peter to talk about our profit margin.

Peter, Presenter/Moderator: Okay. Thank you, Magnus. So from the operating profit of €8,500,000,000 we go through the net financial items which are slightly lower due to somewhat lower exchange rate financial exchange rate differences to profit before tax of €8,500,000,000 compared to 9,200,000,000.0 last year and an income tax expense of €1,800,000,000 That means that we have an effective tax rate of 21.1% for the quarter, which is on the low side. Main reason for that is that besides the normal things that we see recurring that we also had a lowering of deferred tax liabilities linked to the lower announced tax rates for the German market. Therefore, this is a fairly low tax rate.

It also still includes some of the revision provisions from the past from China high-tech we used to have. And so for the next quarter, we think the effective tax rate will be somewhat higher, probably around 21.5% to 22% in the near term. And that gives us a total profit of the period of SEK6.7 billion and basic earnings per share of SEK1.37 for the quarter. Then I will move on to slide number 12, talking a bit more about the profitability in detail. I would say first of all overall, I think we were quite pleased with the overall profit level that we managed to achieve in these quite turbulent and difficult circumstances.

As already explained by Wagner, we had some restructuring costs. Actually also last year we had some restructuring costs. So therefore you see here in the bridge the net. For this year the total cost was about SEK205 million. For last year, we had a cost of SEK123 million leading then to the net SEK82 million in the bridge, slightly diluting the margin as well as the impact of the LTI programs also having a small negative impact.

But the main headlines of the profitability development, would say, were on the one hand, a slightly positive currency development. As you remember, last quarter we had quite significant impacts of currency, but this month this quarter it’s much more mild and actually slightly positive. So I will not go into more detail like I did last time. The acquisitions however are then detracted of about 0.6%. And also the tariffs had a bit of a negative impact on the profitability for the quarter.

Nothing dramatic, but I have to admit that we did not manage to completely compensate for the tariff impact and the turmoil in that particular area throughout the quarter. And so I think that is main contributors to the profit development for the quarter. Talking about currency also for next quarter, we do expect actually in absolute terms a continued negative development of the currency contribution due to the fact that the average rate continues to lower all things being equal. And therefore, we would expect anywhere around 800,000,000 potentially of cost impact. Also depending of course and that remains to be seen on the value on the revaluation assets on the balance sheet.

If we then take the profitability and dive a little bit deeper into each of the business areas, highlighting the main contributors to the respective profit developments on slide number 13. Then starting with Compressor Technique, first of all, 5.3% continuing at a very good and solid margin. There was a slight detraction from the acquisitions, which is in our belief a very important investment in future growth. We also front load a bit more with costs in order to safeguard a good speedy integration process from the beginning onwards. And that is the reason why we see a bit more of detraction from the acquisitions.

Otherwise, I don’t think anything else was very strong. Secondary, maybe also of course the tariffs had to have a minor impact as well. On Vacuum Technique, here a bit of a mixed picture, a bigger impact from currency as you can see. The main reason is that last year we had quite a big negative impact and that in the bridge then turns into quite a significant positive. Otherwise, it would be relatively comparable to the other business areas.

But that’s the reason for the high positive. On the other hand, volumes were the main detractors. We see of course the top line going down with SEK $591,000,000 and that has an impact on the profitability on the bottom line. That’s the main contributor. But also here tariffs are part of the equation.

Again, a minor impact, but still an impact in our profitability development. And of course, we already mentioned the restructuring net impact in the profit bridge as well. Industrial Technique also here the impact of the restructuring cost as I already mentioned further than also revenue volumes being negatively affecting the profitability. The currency also slightly negative impact from a margin point of view. Also the acquisitions were a bit dilutive.

So overall going to 18%, but I think with the restructuring activities we are also there working hard to try to turn the corner and improve the profitability. As already indicated, we evaluated quarter by quarter how things develop and whenever needed we take the necessary measures. And we need to do it cautiously because for example in vacuum technique you’ve seen the very solid development of service. So obviously we cannot just cut away everywhere in the organization. We need to do it in a careful way, so we don’t jeopardize the growth of the respective businesses.

And then last in the table here Power Technique with delivering a solid margin of 17% again. Here as we already mentioned, the main topic of the lower profitability from an organic point of view was more the functional costs. We are investing in a new division as one aspect of it. We are also working on a number of transformation projects rejuvenating some of the old ERP systems we have for specialty rental for some of our production entities for example. And that also triggers a number of additional costs for the time being.

But over time, of course, we expect them to become more efficient and as a result also improve the margin coming from those different investments. Also investments in dedicated salespeople in power and flow, also within IFD, the industrial flow division, we are working hard to build that organization so we can leverage the sales of all different technologies we have acquired in the last few years. So I think that explains the overall profitability business area by business area. If I then move to the balance sheet, I would say relatively uneventful. Of course, on the one hand, intangible assets go up due to the acquisitions.

On the other hand, we amortize, so basically quite stable. We see some impact on the inventories, for example, which is beneficial. We are actually indeed improving the inventory levels across the organization with all the different actions that we have ongoing. The receivables overall fairly quite stable, especially from a relative point of view. So we are quite happy with maintaining that good performance on the receivable side.

On the equity side also there, not so much to mention mainly the equity is changing because of the fact that we are generating more profit, while on the other hand of course we are also paying dividends. And on that point I would like to just highlight the fact that tomorrow we will actually pay the second installment of the dividend related to twenty twenty four SEK one point five zero per share, roughly in total volume an amount of SEK 7,300,000,000.0. And with that I turn to the cash flow. In the cash flow also there, I think a solid performance. You could say, well, yes, it’s a little bit lower than last year.

But on the other hand quarter over quarter or over the different quarters, I think this is quite a significant value of operating cash flow we are generating. On the one hand, we have a little bit lower operating cash surplus, but we have a little bit less taxes paid. On the other hand, we have a slightly less positive impact from the change in working capital compared to the same quarter last year. But we also see a gradually slight slowdown in the increasing rental equipment, but also in the investments of property and plant. We continue to do a number of investments that are necessary for the future to replace some of the old assets, but also to build some new capacity, but at a slower pace than we used to a while ago.

Also of course given the current climate, I think that makes a lot of of sense. And with that we end up with the CHF7.3 billion operating cash flow. And with that, I think we have come to the end of the comments to the financial statements. And I would like to hand over back again to Fragin who will comment a

Wagner Rego, Executive/Presenter: bit more on our near term outlook. Good. Thanks, Victor. And once again, I would like to repeat that our forward looking statement when it comes to the outlook is not is a sequential guidance. It’s not a straight projections of our orders received.

And again, to to do that, to come to that statement, we we look to the external world. And once again, we don’t see a change in the environment. The world continues with a lot of uncertainty that are not supporting our customers to take decision, especially on large orders. So and then when we also look to our business internally, we don’t see a dramatic change. We talk with our 24 divisions, look to the pipeline, different market segments, and we see no reason to believe that there will be a dramatic change compared to q three.

So that’s why we continue with our statement that we expect that our customer activity to remain at the same level, to remain at the current level. And then I would like to invite you for our Capital Markets Day that will happen in Germany. We will first go to Stuttgart and there we will have some presentation. And after lunch, we will go to our innovation center in Breton where we will share some of our innovations related to industrial technique and vacuum technique. And I’m looking forward to see you there.

Peter, Presenter/Moderator: Yes. Thank you, Wagner. And we actually have still a few places left. So if you’re really eager to see those profits, then please come forward so we can reserve your seats. With that, we come to the end of the presentation, and we would like to start the question round.

Again, I would like to repeat, please refrain yourself to only asking one question at a time. And then we are looking forward to receiving your questions. Back to the operator.

Operator: The next question comes from Daniela Costa from Goldman Sachs. I

Daniela Costa, Analyst, Goldman Sachs: want to ask a question about sort of what you mentioned regarding the margin still and the fact that you didn’t fully compensate the tariffs entirely. Is this do you see that has sort of delayed impact? We should see sort of eventually the full compensation within the coming quarters? Or is it more sort of an intention to not fully compensate it, I don’t know because of competitive reasons or anything else? Can you elaborate a bit there please?

Thank you.

Peter, Presenter/Moderator: Sure, Daniela. Thank you for your question. No, first of all, it’s definitely not intentional not to fully compensate for the tariffs. I think it has been very turbulent quarter with a lot of changes, towards the August with Section two thirty two being added to the equation and asking quite a lot of efforts from big parts of the organization to investigate more deeply and to qualify a number of products, etcetera. So that has caused of course a bit of delay in being able to answer fully to some of these issues.

And therefore we have somewhat higher tariffs. I wouldn’t say that it is necessarily so that in the very short term we would be able to fully compensate, but we are quite confident that over time, the quarter that we will be able to compensate for the tariffs as they exist today. With that, I also need to immediately apply some caution because as the changes are happening overnight very often, we don’t know of course what’s coming, but we continue to monitor it very closely. Maybe one thing to underline as well is that I did indicate that the tariffs did have an impact on the profitability for the quarter. But I also want to underline that the impact was not humongous that it was not totally destroying the profitability level.

But we did, we do admit that we did not manage to fully compensate for the tariff impact for the time being.

Daniela Costa, Analyst, Goldman Sachs: Thank you.

Operator: The next question comes from Michael Harlow from Morgan Stanley. Please go ahead.

Michael Harlow, Analyst, Morgan Stanley: Good afternoon. Thank you for the presentation and thank you for taking our questions. I’ll limit myself to one as requested. On the large gas and process category, will it be possible for you to help us understand where we are in the LNG ordering cycle? Thank you very much.

Wagner Rego, Executive/Presenter: Well, I think to say exactly where we are in the cycle, I think it’s a bit more difficult. What I can say is this our presence in the market, we cover several market segments, including LNG, particularly this quarter, we did have orders on LNG as well. We had orders for fewer gas boosters. There are quite a lot of investments ongoing to increase the energy production capacity with the gas fired turbines. So and we do have products for that.

And but we also saw good order development in industrial gases, for instance. So it’s a quite diverse market, let’s say, segments that we recover, and we saw good development this quarter, including in LNG.

Klaus Berglund, Analyst, Citi: Thank you. That was very helpful. The

Operator: next question comes from Klaus Berglund from Citi. Please go ahead.

Klaus Berglund, Analyst, Citi: Yes. Thank you. Hi, Wagner and Peter. Klaus at Citi. So I just want to come back on the impact from tariffs.

You mentioned Section two thirty two added through the quarter, but that was August 18. And then you probably had some inventory to cover you through September, right? So shouldn’t Section two thirty two hit you harder Peter in the fourth quarter when the full effect kicks in from steel and aluminium? So shouldn’t we see a weaker drop through here in the fourth quarter? Or can you take out enough cost to raise prices to mitigate that incremental impact?

Thank you.

Peter, Presenter/Moderator: Thank you, Claus. I think a very fair question and logical reasoning of course. But I think it’s also fair to say that the introduction of two thirty two didn’t allow us immediately to get to lower tariffs with the section two thirty two. There’s also documentation required to pass the customs in order to prove that you don’t need to pay 200% tariff or that you pay 50% tariff. So as a result, I think we had a bit of a spike, you could say maybe in September towards the end of the quarter when it comes to the impact of February.

While now of course, we have worked with a lot of people in the organization on trying to sort out both through our suppliers, both through our engineering departments, throughout different locations, How we can document all the products in the best possible way in order to be able to get the best possible tariff so to say under the present rules. So as a result, I think in quarter four, are better placed to pass the products to custom duties. That being said, I think on the on the other hand, of course, there will be more products going through the the the full quarter as you indicate, and therefore, you could say that in absolute terms, the the cost will be higher. But I think overall, and it’s hard to really estimate, of course, but overall, I don’t think it would result in a dramatic increase of the of the tariffs in the in the fourth quarter for us.

Klaus Berglund, Analyst, Citi: Thank you very much. Thank you.

Operator: The next question comes from John Kim from Deutsche Bank. Please go ahead.

John Kim, Analyst, Deutsche Bank: Hey, good afternoon. I’m wondering if you could give us some color on what you’re seeing in semiconductor demand. I’d say fairly recent news flow has been positive both on the memory side, plus you have better clarity on what Intel is going to do or not do. You just tell us what you’re seeing in VT right now and how we should think about development into next year?

Wagner Rego, Executive/Presenter: What I can say, I think when it comes to leading edge nodes, I think the the market environment is very positive, very good, a lot of investments ongoing. Players that are some that are more mature on scaling up really the leading edge nodes. Some are trying and there I really cannot say where they are. So we also not we don’t comment in specific customers. We are not allowed to talk about specific customer.

But one thing that is important to remind, leading edge node is going well and we get orders. We are happy with that business. But of course, the entire market still has quite a lot of capacity. So and if you take a little bit advanced nodes and legacy nodes, there there is overcapacity. And of course, we need the entire market developing very well in order we can see a bend in the trend when it comes to orders received in that market.

John Kim, Analyst, Deutsche Bank: Okay. And can you comment on memory, please?

Wagner Rego, Executive/Presenter: Sorry. I didn’t get the last comment.

John Kim, Analyst, Deutsche Bank: Could could you offer a similar comment on memory? Memory customers?

Wagner Rego, Executive/Presenter: No, we are a bit more agnostic when it comes to memory and logic. We are present in both markets. And I think if there is a good development in that market, we will be able to capture that development. I think we are well positioned to capture any movement in that market.

John Kim, Analyst, Deutsche Bank: Okay. Thanks very much.

Peter, Presenter/Moderator: Thank you, John.

Operator: The next question comes from Sebastian Kuhn from RBC. Please go ahead.

John Kim, Analyst, Deutsche Bank: Yes. Thank you for taking my question. I spoke recently to some of your competitors in Europe, and they speak of a more aggressive pricing behavior of some of your American competitors inside of Europe. Could you maybe give us an idea of what the pricing situation is and whether that’s related to the currency differential?

Wagner Rego, Executive/Presenter: Yeah. I cannot really comment what is happening with our competitor. I must say we do have positive price development in our if you are referring to our compressor business, for instance, we do have positive price development, including in Europe. We also have positive development in The US that we try to compensate as well for the for the tariffs. That’s what I I can say.

It’s difficult for me to judge what’s happening. I think our position in Europe remains quite solid. I think we had a good development in q three. As you could see, I mentioned that we had positive development in Europe. So we are quite happy with the development and the orders that we have had in q three.

So good. That’s what I so let’s say you’d like to comment when it comes to price.

Michael Harlow, Analyst, Morgan Stanley: That’s sufficient. Thank you very much.

Operator: The next question comes from Magnus Kruber from Nordea. Please go ahead.

Michael Harlow, Analyst, Morgan Stanley: Good morning, Peter Marzia from Nordea. I’m sorry to label the point about the tariffs. I think you had a 40 bps headwinds on the organic part of the bridge margin bridge this quarter. Could you help us frame the tariff impact within that? I’m not sure if you want to comment exactly what it was, but some help on the magnitude would be helpful.

Peter, Presenter/Moderator: Yes, I think it’s hard to pinpoint exactly of course because okay on the one hand we do follow-up quite closely what is the exact impact of the tariffs. As such, the custom duties that we need to pay when we clear the goods. On the other hand, there’s of course a lot of indirect costs as there’s a lot of people in the organization working hard on the whole topic. Secondly, there’s also additional storage costs when you are holding goods for a longer time before clearing them into waiting for maybe additional information or other type of things. And then last but not least, of course, we also work a lot with with extra support external to help us make sure that we don’t make big mistakes in the way we assess the value on which the custom duties will be paid.

But like I said, overall, I think the tariff impact was not dramatic. It didn’t turn around the profitability completely. It was one of the contributing factors. So as you say, minus 0.4% overall on the group from an organic perspective. Tariffs were a contributor to that, but not the only one in there.

There was also volume mix and price combined you could say. So I think like I said, no very substantial impact, but altogether still an impact and that I think we didn’t we don’t want to shy away from so to say that there is a minor negative impact from tariffs in the profit margin.

Michael Harlow, Analyst, Morgan Stanley: Got it. Okay. Thank you.

Operator: The next question comes from Alexander Jones from Bofa. Please go ahead.

Alexander Jones, Analyst, BofA: Thank you for taking my question. You mentioned that industrial compressor orders in Europe were up in the quarter, whereas last quarter, you talked about stable. Could you highlight for us whether that’s driven by any particular areas? And how are you thinking about that European outlook

Peter, Presenter/Moderator: in

Alexander Jones, Analyst, BofA: the coming quarters? Thank you.

Wagner Rego, Executive/Presenter: I think it came especially from our effort in we have created as well a new division that we call Air and Gas Solution, And they managed to to have a quite good development for some gas generation project. I think we did quite well. Also, medical air did quite well. There are some pockets where we can find good opportunities for growth. But the industrial market in general, there was not a huge uptick.

But in some pockets, we managed to have good business. I think it’s also fair to say smaller compressors developed quite okay as well. That was important. So but not something that I would like to say. The overall market is bouncing back.

It’s more driven by the activities that we have done to try to gain market share and in some areas to have a to capture the opportunities in a market segment that is developing a little bit better.

Michael Harlow, Analyst, Morgan Stanley: Thank you.

Operator: The next question comes from Rizk Maiti from Jefferies. Please go ahead.

Rizk Maiti, Analyst, Jefferies: Hi, Wagner and Peter. Thanks for the time. So the question is, can we double click, please, on compressor technique in two regions, North America and China? If you could just walk us through how you’ve done in small to medium sized compressors, gas and process and large industrials and how you feel your competition has done as well, how you feel you’ve

Michael Harlow, Analyst, Morgan Stanley: done versus the market? Thank you.

Wagner Rego, Executive/Presenter: I think in North America, to to say against the market, I think it’s a bit difficult. But in North America, we are quite happy with the development in q three because we have all these uncertainties around tariffs and and session two t two. And the teams, they did a very good job, very solid job. We had a double digit growth in North America when it comes to compressors. We also had good development in in gas and process compressors, and there is more around the industrial gases and fewer gas boosters that they go to gas fired power plants.

So that was the the pockets that we’re doing quite well. And then if I comment a little bit more about China, that is a little bit more challenging. It seems the scenario has not changed. We see less projects in in industrial compressors, but also in gas and process. Gas and process is a little bit more difficult than industrial compressors.

Klaus Berglund, Analyst, Citi: Perfect. Thank you.

Operator: The next question comes from Rory Smith from OXGAP. Please go ahead.

Michael Harlow, Analyst, Morgan Stanley: Good afternoon, Wagner and Peter. It’s Rory from OXCap. Thank you for taking my question. I just wanted to sort of double click on that industrial compressor piece. And if you could add any more color to the difference you’re seeing in the quarter between the sort of small and medium sized industrial compressors and the large industrial compressors.

Is that by market, by region? Any color there? And I might try my luck with a follow-up, if that’s okay.

Wagner Rego, Executive/Presenter: I think overall, like I said, it’s a bit more difficult in Asia, particularly in China that we have mentioned already. There is a very small difference between small and large, little bit more favor in favor of the smaller compressor, but there is not a huge difference. It’s not something that is becoming an indicator. I would not use as an indicator because the difference is very small. But it was more in favor of the smaller compressors.

Michael Harlow, Analyst, Morgan Stanley: Understood. Thank you. And if I could just follow-up on that, you obviously called out the investment you’re making to innovate to cost compete in China. I was just wondering if you’d be able or willing to put some numbers around that R and D piece, yes, for the investment in sort of, I guess, not lower spec, but yes, innovating to cost compete. Any numbers around that?

That would be the question.

Wagner Rego, Executive/Presenter: No. I I don’t have a a number to share, but I what I can say, we we are focused as well to be competitive in China. We have done an investment in in our facility in Wuxi, we that we call now the Wuxi campus where we have concentrate most of the the compressor technique facilities in one place. And that gave a lot of r and d capabilities to the team we have in China. Capabilities that we didn’t have before with more test sales, with more r and d facilities to do test, to do design.

We we are increasing the autonomy that our Chinese teams they have in terms of design, still with good collaboration with with our Belgium team, but little bit more independence. And I think that is going well and that’s why we would like to share that product because I think that comes out of that reorganization and that’s investments.

Michael Harlow, Analyst, Morgan Stanley: Thank you very much.

Operator: The next question comes from Johan Sjoberg from Kepler Cheuvreux.

Michael Harlow, Analyst, Morgan Stanley: My question is also regarding semi CapEx. I understand your near term comments on leading edge and also the overcapacity. I think that is sort of comments you made before, Varnum, if I’m not mistaken. But given all these, a lot of news flows in during Q3 here, when you’re talking to your customers about sort of 2026 and beyond, how have they responded to these news and also especially the future CapEx plan from their side? Because that’s not there.

Wagner Rego, Executive/Presenter: Yes. It’s difficult to talk about 2026. We only talk about the Q four first. In q four, we believe that it’s gonna be stable. I think it’s it’s You know this market how it works.

It’s key account business when they decide to place order to populate a fab when they first, do the R and D stage and then they do the the pilot, then they need to try to nail nail that production facility with the right yields, and then they scale up and sometimes can come very fast. I think it’s difficult for me to comment looking at 2026 or even 2027. What I can say from q three to q four, we see the market we will we don’t see any reason to change the trajectory that we have seen lately.

Operator: The next question comes from Anders Ijbjerg from ABG. Please go ahead.

Michael Harlow, Analyst, Morgan Stanley: Good afternoon. Just wanted to ask about acquisitions. So we’ve seen a very nice flow of bolt ons. I’m just a little bit surprised when we look at the over the last, well, six quarters, basically, there’s been very little of EBIT contribution on the bridge. And I don’t have really the impression that you bought unprofitable companies here.

So what is the reason? Is there some just initial cost restructuring going on? Or could you would you care to explain that? Thank you.

Wagner Rego, Executive/Presenter: Yeah. Thank you for the question. I think we definitely we try to add good businesses to our portfolio of technologies and companies that we have definitely. But we also have an effort to integrate these companies faster. And and I mentioned during the presentation that we we for instance, cybersecurity is very important and we try to that the kind of non nonnegotiable.

We try to bring that to our spec as soon as possible. We have deadlines to to meet because I think it’s very important to to protect the assets that we we have bought. And of course, that incurs in some cost at the beginning. We have seen now with the acquisition of Shareway, for instance, there was quite a lot of costs that we had at the beginning. So but of course, companies are profitable and that happened that has happened as well in the years before.

So the first year is a bit more challenging and then we recuperate over time deploying synergies. And acquisition is very important for us. We are also reorganizing our post acquisition process to be able to capture the synergies in a good and structured way. We are reinforcing the teams there because we have acquired more companies that required a more even more structured process than what we used to have. So we are investing on that as well to be able to capture this capture this value that we believe when we before the acquisition.

So I think we we are happy with the companies, a lot of activities. And year one, we see that is normally challenging because we want to do some of the integration items quite fast.

Klaus Berglund, Analyst, Citi: Okay. Thank you.

Operator: The next question comes from Sebastian Kuhn from RBC. Please go ahead.

Michael Harlow, Analyst, Morgan Stanley: Yeah. Thank you for taking

John Kim, Analyst, Deutsche Bank: my follow-up. I have a question on VT. You mentioned lower volume as one of the key reasons for the lower margin. But at the same time, you have competition that sits in Japan like Evara, you have Bush in The U. S, Viper in Germany.

Is the price situation in the global vacuum pump market stable? Or do you see there pressure from manufacturers in lower cost countries effectively? Thank you.

Wagner Rego, Executive/Presenter: What is key for the price development is technology. And we need to continue to develop our products to come with better products to be able to exercise some pricing power. And I think that’s our focus. And we will continue to develop the products that we will allow that can deliver superior value to our customers and that could help us with our price efforts. So and I think that’s where we are focused on now.

Michael Harlow, Analyst, Morgan Stanley: Okay. So no change in pricing. Okay. Thank you.

Operator: The next question comes from Magnus Kruber from Nordea. Please go ahead.

Michael Harlow, Analyst, Morgan Stanley: Magnus here again. Just reverting to some of these announcements that’s been in the media over the past couple of months with respect to some big framework agreements, particularly on the memory side. Is there any way you can sort of help us scope what these opportunities could mean to you if they come to fruition over the coming years? How can you frame them, for with respect to sort of how big that potential is compared to your your legacy semi semi semi business?

Wagner Rego, Executive/Presenter: What what I can say about market, we we let’s say, we know all the players in The U. S, in Asia, including China. So we are present in all these players. We have good position in most of the players. If this comes to fruition, we will be there to to capture.

I I think that is our main focus. We don’t know which one we rescale up first or or later. That that we we we don’t know. I think the most important for us is what give us confidence as well is the fact that we are very well positioned. Any movements, we will be able to capture.

Michael Harlow, Analyst, Morgan Stanley: Got it. Thank you. And can you just have an additional question? You talked a little bit about ramping up on R and D in Compressor Tech going forward to drive additional growth. Is that sort of a China focused initiative?

Or could you highlight a little bit potentially how much you would be willing to interest invest in in which pockets?

Wagner Rego, Executive/Presenter: I would say the investments were more in capabilities, in facilities, better places where they can test the machine testing environment. So those capabilities we have we have created, we have increased actually. We always had, but we have increased in China. And I think we we continue that this is not a dramatic increase in r and d in compressor technique. They they have been focused.

They will continue being focused. But I think we we can get more out of our Chinese organization. That’s what we are doing, getting ready for that.

Michael Harlow, Analyst, Morgan Stanley: Got it. Thank you so much.

Peter, Presenter/Moderator: Okay. Thank you very much Magnus for that question. And actually with that, we have also answered the last question on the call. I would like to thank you all for your presence and for listening to our presentation. As always, of course, should you have any further detailed questions on any of the business areas or the group overall, you’re more than welcome to contact our IR department as as always.

So with that, thank you very much for attending, and have a great rest of the day. Thank you. Bye bye.

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