Valvoline (VVV) Q3 2025 Earnings Call August 06, 2025 09:00 AM ET Speaker0Hello, and welcome, everyone, to the Valvoline's Third Quarter Earnings Conference Call and Webcast. My name is Becky, and I'll be your operator today. I will now hand over to your host, Elizabeth Klavanger with Investor Relations team to begin. Please go ahead.Speaker1Thank you. Good morning, and welcome to Valvoline's third quarter fiscal twenty twenty five conference call and webcast. This morning, Valvoline released results for th ...

Financial Data and Key Metrics Changes - The company reported net income of $34.1 million for Q2 2025 and $61.4 million for the first half of the year, resulting in an annualized return on average equity of 20.8% for Q2 and 18.6% for the first half [6][31] - Book value per share increased by 3.4% to $15.36 in the first half of the year, with a total of $77 million returned to shareholders through dividends and share repurchases [7][31] - Gross premiums for Q2 2025 were just under $190 million, reflecting a decrease of 8.7%, while for the first six months, gross premiums were up almost 2% to around $395 million [15][16] Business Line Data and Key Metrics Changes - In the short tail segment, gross premiums decreased by 8.5% for Q2 and 4.2% for the first half, with underwriting income up almost 21% in Q2 due to lower losses compared to the previous year [21][22] - The reinsurance segment saw flat gross premiums compared to Q2 last year, but a growth of about 33% for the first half, driven by strong renewals and new business [22][23] - The long tail segment faced challenges, with gross premiums down almost 12% in Q2 and 5% in the first half, resulting in an underwriting loss of $3 million for Q2 [26][27] Market Data and Key Metrics Changes - The company noted competitive pressures in various areas of its portfolio, particularly in the long tail segment, which is most affected by foreign currency movements [10][11] - The underwriting portfolio is diversified geographically, with about half transacted in non-U.S. Dollar currencies, impacting the revaluation of loss reserves [12][14] - The overall market conditions remain generally healthy, but certain areas are experiencing increased competition, particularly in property and energy lines [32][38] Company Strategy and Development Direction - The company focuses on cycle management, moving capital to areas with strong rate momentum and high margins while reducing exposure in less profitable areas [7][10] - There is a commitment to not sacrifice bottom-line profitability for top-line growth, emphasizing sustainable value generation for the long term [36][43] - The company is expanding its capabilities in specific markets while maintaining a cautious approach to underwriting in competitive segments [37][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating headwinds and highlighted the importance of a diversified strategy to manage cyclicality and volatility [42][43] - The outlook for the remainder of 2025 includes continued contraction in certain areas of the portfolio where profitability does not meet targets [32][34] - Management remains optimistic about finding profitable opportunities across various lines despite competitive pressures [32][39] Other Important Information - The company repurchased over 1.34 million shares at an average price of $23.28 during Q2, with approximately 800,000 shares remaining on the repurchase authorization [31] - Total assets increased by over 4% to about $2.1 billion, with total investments and cash at $1.3 billion [30] Q&A Session Summary Question: Net to gross retention on a written premium basis was 64% in the quarter, down from 73% year over year. Can you speak to that? - Management indicated that the decrease was primarily due to opportunistic buying of facultative reinsurance in a softer market, aiming to generate higher fee income [46][47] Question: Regarding the professional indemnity portfolio that will be non-renewed, what was the session level a couple of years ago versus now? - Management noted that the quota share has hovered between 60% to 85% over the years, with the intent of non-renewal aimed at improving overall profitability [48][49]

Aura Minerals (AUGO) Q2 2025 Earnings Call August 06, 2025 09:00 AM ET Speaker0Good morning, ladies and gentlemen. Welcome to Second Quarter twenty twenty five Earnings Call. This conference is being recorded, and a replay will be available at the company's website at oraminerals.com/investidoires. The presentation will also be available for download. This call is also available in Portuguese.To access, you can press the globe icon on the lower right side of your Zoom screen and then choose to enter the Por ...

Financial Overview - The third quarter net income was $63.4 million, with diluted earnings per share (EPS) of $1.22, reflecting a 2% growth in net income but a 2% decline in diluted EPS compared to the prior year due to additional shares outstanding [5][44] - Operating revenues reached $1.024 billion, up 12% year-over-year and 7% sequentially [5][6] - Total compensation and other expenses increased by 5% year-over-year and 3% sequentially, with fixed compensation and related costs up 6% year-over-year [6][7] - The trailing twelve months results showed operating revenues up 17%, net income up 26%, and EPS of $5.87, with a return on equity (ROE) of 16.6% [8] Business Line Performance - Growth was observed in securities, payments, and FX CFDs, while declines were noted in listed and OTC derivatives, physical contracts, and interest and fee income on client balances [8][9] - Operating revenues from physical contracts decreased by 17% year-over-year, primarily due to tariff-related uncertainties [9][10] - Securities operating revenues increased by 30%, driven by a 25% increase in volumes and a 15% rise in rate per million [10][11] - The commercial segment's net operating revenues declined by 24%, primarily due to a 44% drop in physical contracts [12][13] - The institutional segment saw record net operating revenues and segment income growth of 27% and 41% respectively [13][14] - The self-directed retail segment's net operating revenues increased by 18%, with segment income up 49% [14][15] Market Data - Interest and fee income on client balances decreased by 11% year-over-year, primarily due to lower short-term interest rates [11][12] - Average daily volume in FX CFD contracts increased by 34%, contributing to the growth in the self-directed retail segment [15][16] Company Strategy and Industry Competition - The company closed the RJO and Benchmark acquisitions, which are expected to be transformational and position the company as a market leader in global derivatives [18][19] - The RJO acquisition is anticipated to enhance earnings and margins, with a focus on integrating capabilities and expanding market reach [19][22] - The Benchmark acquisition is expected to provide robust sales and trading platforms, enhancing the company's investment banking capabilities [25][26] Management Commentary on Operating Environment and Future Outlook - Management noted that the commercial segment faced challenges due to tariff uncertainties and diminished volatility in key agricultural markets [50][51] - The company remains optimistic about the potential revenue synergies from the RJO acquisition, particularly in the commercial segment [56][58] - Management highlighted the ongoing uncertainty in the macro environment but noted that volatility can be beneficial for trading activities [78][79] Other Important Information - The company is focused on expanding its custody and clearing capabilities, including launching digital asset custody solutions [31][34] - The company reported a 27% year-over-year increase in correspondent clearing balances, indicating strong growth across major business lines [33][36] Q&A Session Summary Question: Can you provide more detail on the weakness in the commercial segment? - Management attributed the weakness to tariff uncertainty and lack of volatility in the agricultural sector, impacting trading volumes and revenue capture [50][51][52] Question: Any updates on revenue synergies for RJO now that it's closed? - Management indicated that while it is difficult to quantify revenue synergies immediately, they believe the potential is significant, particularly in the commercial segment [56][58] Question: What are the longer-term plans for the retail segment? - Management discussed plans to expand the retail segment beyond FX trading, focusing on a multi-asset class offering [63][66] Question: What are the priorities for the integration of RJ O'Brien? - Management outlined a focus on realizing synergies quickly, particularly on the international side, while ensuring a seamless integration process for U.S. operations [72][75] Question: Are there any changes in behavior from large financial institutions? - Management noted no significant changes in behavior from banks regarding investment in the FCM business, indicating a continued focus on other strategic priorities [84][85]

Financial Data and Key Metrics Changes - The company reported adjusted EBITDA of approximately $212 million during the quarter, with adjusted free cash flow of $64.6 million, reflecting over 70% growth quarter over quarter [12][13] - Net cash provided by operating activities before changes in working capital totaled approximately $198 million during the second quarter, exceeding capital expenditures and common share repurchases while maintaining balance sheet strength [12][13] - Trailing twelve-month net leverage as of June 30 was approximately 0.85 times, down from the prior quarter, indicating improved financial momentum [15][16] Business Line Data and Key Metrics Changes - Average daily production totaled 1,006 million cubic feet equivalent per day, an increase of 8% year-over-year, despite midstream outages impacting production [7][8] - The company executed across all five development areas, achieving strong well performance, particularly in the Utica condensate pad in Southwest Harrison County, which delivered approximately 65% more cumulative oil than Gulfport's lake pad [9][10] Market Data and Key Metrics Changes - The all-in realized price for the second quarter was $3.61 per Mcfe, which is $0.17 above the NYMEX Henry Hub index price, highlighting the benefits of the company's differentiated hedge position and marketing portfolio [14] - Rising natural gas demand is driven by LNG expansion and increased power generation needs, presenting opportunities for Gulfport and its peers [14][15] Company Strategy and Development Direction - The company plans to allocate up to $100 million toward discretionary acreage acquisitions to secure future drilling opportunities and strengthen its inventory runway in the Utica Shale [5][11] - The share repurchase program authorization has been increased by 50% from $1 billion to $1.5 billion, demonstrating a commitment to returning value to shareholders [6][18] - The company aims to redeem all outstanding preferred stock, which could accelerate share repurchase efforts and simplify its capital structure [16][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate a dynamic commodity environment while focusing on financial and strategic objectives [12][19] - The company anticipates continued efficiency across operations and plans to bolster its resource base, positioning itself for long-term success [12][19] Other Important Information - The company has invested approximately $17 million on maintenance leasehold and land investment through June 30, 2025, focusing on near-term drilling programs [11] - The company expects its cash tax position to be negligible for 2025, benefiting from a significant NOL position [19] Q&A Session Summary Question: Can you elaborate on the leasehold spend and its geographical focus? - The company is targeting 40 to 50 wells in Belmont County, Ohio, and Northern Monroe County, focusing on low breakeven high-quality acreage [21][22][23] Question: What are the mechanics of the preferred stock redemption? - The company issued a notice for preferred stockholders to decide on conversion or repurchase by September 5, with plans to lean on liquidity for cash redemption [24][26] Question: How will the company allocate free cash flow post-redemption? - The company aims for a leverage target around one times and will continue to evaluate opportunities for high-quality locations while considering shareholder returns [31][32][33] Question: What is the competitive return outlook for the condensate area? - The condensate area remains strong with above 70% IRR, and the company plans to maintain a balanced portfolio while monitoring commodity prices [37][38] Question: Will Gulfport participate in power contracting momentum? - The company is likely to participate through intermediaries and expects rising in-basin prices due to increased demand [54][55] Question: How will the company treat preferred equity post-redemption? - The company plans to absorb cash repurchase under its RBL, with a focus on maintaining leverage around one turn [61][62] Question: What is the expected production trajectory heading into 2026? - The company anticipates a 10% uptick in Q3, with a relatively flat Q4 leading into 2026, focusing on gas and wet gas production [68][69] Question: Will the company consider instituting a base dividend? - The management is monitoring the situation and is satisfied with the current share repurchase strategy, but is open to changes in the future [70][72]

Financial Data and Key Metrics Changes - Net income for Q2 2025 was $62 million or $1.25 per diluted share, with adjusted net income at $50 million or $1.02 per diluted share, and adjusted EBITDA at $102 million [4][17] - The company announced a combined dividend of $0.77 per share, maintaining a payout ratio of at least 75% for four consecutive quarters [5][4] - Total liquidity at the end of Q2 was over $700 million, with $149 million in cash and $560 million in undrawn revolver capacity [9][10] Business Line Data and Key Metrics Changes - The lightering business generated over $9 million in revenue with EBITDA contribution of about $2 million in Q2 [18] - The company sold two vessels for proceeds of $28 million and has four more expected to deliver in Q3 for around $57 million [6][20] Market Data and Key Metrics Changes - Demand fundamentals for seaborne transportation remain solid, with upward revisions to GDP forecasts potentially increasing oil demand [11] - Crude storage levels are historically low, and product inventories are also at low levels, particularly for middle distillates [11][12] Company Strategy and Development Direction - The company is focused on fleet renewal, having sold six older vessels and planning to purchase a modern scrubber-fitted VLCC [6][8] - The strategy includes maintaining a balanced capital allocation approach while returning cash to shareholders [27][24] Management's Comments on Operating Environment and Future Outlook - The geopolitical environment remains fluid, impacting trade routes and tanker demand, with potential for increased rates due to tensions in regions like the Strait of Hormuz [12][13] - The company expects to continue generating significant free cash flows and building on its track record of returning cash to shareholders [25][29] Other Important Information - The company has secured financing commitments for up to $240 million for newbuild vessels, with a twenty-year amortization profile [8][23] - The net loan to value ratio is comfortably under 15%, indicating a strong balance sheet [9][10] Q&A Session Summary Question: Clarification on vessel sales proceeds - The $57 million expected from the four vessels should be considered as debt proceeds [32] Question: Impact of recent sanctions on trade patterns - India is taking compliant tonnage for export and has increased imports of US Gulf crude, indicating a tactical trading approach [34] Question: Benefits of OPEC+ production cuts unwinding - Increased crude flow will benefit smaller tankers as VLCCs will be more engaged in moving crude, reducing competition in smaller segments [39] Question: Future vessel refinancing - The company is evaluating various options for refinancing older vessels, with sufficient revolver capacity to fund repayments [48][49] Question: Expected financing terms for older vessels - Financing for older vessels is expected to be shorter than the twelve-year term secured for newbuilds, likely around five to seven years [52]

Financial Data and Key Metrics Changes - The company achieved record quarterly revenue of $142 million, representing a 13% year-over-year increase [13] - Adjusted net income increased by 59% to a record $39 million, up from $25 million in the previous year [14] - Adjusted earnings per share grew significantly to $0.45 from $0.29 year-over-year [14] - The net charge-off rate improved to 32% of revenue compared to 33% in the prior year [7] - Total expenses before interest expense declined to 39% of revenue from 45% in the same quarter last year [13] Business Line Data and Key Metrics Changes - Total net originations increased by 14% year-over-year [6] - The auto approval rate improved to 80% in Q2 2025, up from 76% in Q2 2024 [7] - Finance receivables increased by 13% to $438 million year-over-year [12] Market Data and Key Metrics Changes - The company noted a strong performance in the small business lending space, capitalizing on supply-demand imbalances [9] - The average loan size increased by approximately $100 year-over-year, reflecting a 10% increase [25][27] Company Strategy and Development Direction - The company plans to migrate to a new loan origination system named LOLA, designed to enhance customer experience and operational efficiencies [8] - The focus remains on becoming a leading tech-enabled digital finance platform collaborating with banks to offer financial products [10] - The company is exploring opportunities for investment and acquisitions to expand its product offerings in the alternative credit space [51] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued healthy revenue momentum and profitable growth throughout 2025 [10] - The company is cautious about macroeconomic factors such as inflation and unemployment but remains optimistic about its growth trajectory [20][32] - Management indicated that they are closely monitoring consumer health and charge-off trends while maintaining a disciplined credit approach [32][34] Other Important Information - The company ended the quarter with $78 million in cash and cash equivalents, alongside $306 million in total debt [15] - Total funding capacity was reported at $633 million, including $219 million in unused debt capacity [15] Q&A Session Summary Question: Long-term margin structure and ROE expectations - Management indicated satisfaction with current performance and mentioned a target margin of around 20% as healthy [20][22] Question: Average loan size increase context - The average loan size has increased by about $100 year-over-year, with a focus on adjusting for inflation [25][27] Question: Macro trends and credit quality - Management remains cautious about macroeconomic indicators but has seen strong early data regarding repayment rates [32][44] Question: Marketing expenses and competitive factors - Marketing expenses have increased, but management is optimistic about the results from new initiatives [35][36] Question: Expectations for yields - Management expects yields to remain stable with slight increases due to risk-based pricing strategies [38] Question: LOLA initiative rollout and success metrics - Success will be measured by maintaining current performance levels while integrating new technologies [56] Question: Seasonal trends in guidance - Management expects typical seasonal trends for Q3 and Q4, with no extraordinary macro factors anticipated [61]

Financial Data and Key Metrics Changes - Non-GAAP operating earnings were $352 million or $1.1 per share, down 23% year over year on a per share basis [5][20] - Adjusted for notable items, non-GAAP operating EPS was $1.41, down 8% compared to the prior year, primarily due to elevated individual life mortality claims [5][20] - Total assets under management and administration rose 8% year over year to $1.1 trillion, indicating strong future earnings growth potential [22] Business Line Data and Key Metrics Changes - Retirement businesses produced $1.9 billion of net inflows in the second quarter, driven by strong rider sales and $250 million of BlackRock LifePath paycheck net inflows [6] - Wealth Management had $2 billion of advisory net inflows, with a trailing twelve-month organic growth rate of 12% [6] - Asset management reported net outflows of $6.7 billion, but returned to net inflow in June, with AUM up 20% year over year to $77 billion [7][15] Market Data and Key Metrics Changes - The company experienced a strong recovery in markets, which is expected to support future growth in spread and fee-based earnings [6] - The trailing twelve-month organic growth rate in Wealth Management was 12%, indicating robust market demand [15] Company Strategy and Development Direction - The company is focused on organic growth across retirement, asset management, and wealth management businesses, leveraging an integrated business model [4][33] - The individual life reinsurance transaction with RGA is expected to reduce earnings volatility and enhance returns on capital [10][29] - The company aims to grow annual cash generation to $2 billion by 2027 and maintain a payout ratio of 60% to 70% [11][32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving financial targets for 2027, with expectations for EPS growth to accelerate in 2025 due to recovering markets and reduced mortality exposure [33] - The company anticipates a strong second half of the year, driven by record AUM levels and higher investment portfolio yields [28][33] Other Important Information - The company returned $318 million to shareholders in the second quarter, representing a 74% payout ratio, above the target range [8][31] - The company plans to execute at least $500 million of incremental share repurchases and repay some debt before year-end [9][32] Q&A Session Summary Question: How should we think about the growth in earnings beyond the third quarter baseline? - Management indicated that the baseline for third quarter earnings is $220 million to $225 million, with expectations for growth supported by equity market rebounds [36][38] Question: Is there sensitivity to the outlook if the Fed starts cutting rates? - Management clarified that profitability is more influenced by ten-year treasury rates and corporate spreads rather than short-term rates [45] Question: How do the economics of products sold through Wealth Management compare to third-party sales? - Management noted that products sold through Wealth Management have better persistency and higher margins due to closer client relationships [46] Question: What is the plan for capital management post extraordinary dividends? - Management plans to use excess capital for share buybacks and debt reduction, with a disciplined approach to any potential acquisitions [50][55] Question: How long is the RILA roll-off dynamic expected to continue? - Management expects the older business to run off over the next few quarters, with a focus on maintaining growth momentum [72][74] Question: What benefits does the Bermuda entity provide? - The Bermuda entity allows for better management of cash flows and reduces volatility related to hedging, enhancing consistency in cash flow [75][79]

Financial Data and Key Metrics Changes - The company reported revenue of approximately $1.3 billion, an increase of 4% with 5% organic growth, partially offset by currency effects [23] - Adjusted EBITDA was up 3% in total and 5% on a constant currency basis to $232 million, with record operating margins of 12.6% [23][24] - Earnings per share (EPS) of $1.79 was flat compared to the prior year, with a diluted share count reduction of 6% year over year [24][26] - Free cash flow for Q2 was $102 million, a year-to-date increase of $36 million, with a conversion rate of 48% of adjusted EBITDA [7][10] Business Line Data and Key Metrics Changes - The ATM Managed Services and Digital Retail Solutions (AMS DRS) segment experienced 16% organic growth, while the North America segment grew by 5%, marking the fastest growth rate in nine quarters [5][6] - The Cash and Valuables Management (CVM) business saw stable organic growth of 1% year over year, impacted by the conversion of traditional customers to AMS DRS [19][20] - The company expects continued strong growth in AMS and DRS, with a robust pipeline and record installations in the quarter [21][60] Market Data and Key Metrics Changes - The total addressable market for AMS is estimated to be around $8 billion, with potential for significant expansion if banks outsource their ATM networks [17][18] - The company noted that the current cash logistics market is valued at $28 billion, indicating substantial growth opportunities in both AMS and DRS [17] Company Strategy and Development Direction - The company is focused on delivering organic revenue growth primarily from higher margin subscription-based services of AMS and DRS, with expectations for margin expansion in the second half of the year [8][9] - Strategic investments, including a partnership with KAL, aim to enhance AMS capabilities and expand the customer base [13][28] - The company is committed to maximizing shareholder value through disciplined capital allocation, including a share repurchase program [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to deliver accelerated margin expansion and EBITDA growth, supported by strong performance in AMS and DRS [32][31] - The company anticipates a strong second half of the year, with expectations for revenue and EBITDA increases based on first half performance [30][31] Other Important Information - The company has reduced its share count by 4% year to date through its share repurchase program, with remaining capacity of $166 million [12][28] - The effective tax rate increased to 28%, primarily due to the lapping impact of one-time tax benefits from the prior year [26] Q&A Session Summary Question: Adjusted EBITDA margin performance - Management noted that strong organic growth and productivity improvements contributed to the higher adjusted EBITDA margin, exceeding guidance [37][38] Question: AMS DRS growth expectations - Management indicated that while they are guiding for high teens growth, they expect acceleration in the second half due to large customer rollouts and previous equipment sales lapping [46][47] Question: BGS performance and tariff impact - The BGS business moderated to mid-single digit growth in Q2, with expectations for similar performance in the near term due to tariff-related volatility [50] Question: Internal initiatives for AMS and DRS - The company is focusing on pulling customers towards AMS and DRS by enhancing value propositions, rather than pushing them away from CVM [55][57] Question: North America segment expectations - Management expects continued upward trajectory in the North America segment, supported by a strong pipeline in AMS and DRS [63] Question: Differentiation in growth between AMS and DRS - Management stated that both segments are expected to grow at balanced rates, with visibility into booked business and sales velocity supporting this outlook [67][69] Question: CVM growth rate catalysts - Management noted that the BGS business could drive CVM growth, while conversions to AMS DRS could also positively impact overall growth rates [71][72]

Financial Performance and Key Metrics - The company reported revenue of $1,030 million in Q2 2025, a 0.6% increase year over year, with nearly half of the revenue outperformance driven by foreign exchange [10][11] - Organic revenue declined by 0.5%, primarily due to a low single-digit decline in the DSA segment, partially offset by low single-digit increases in RMS and manufacturing segments [11][12] - Operating margin improved to 22.1%, an increase of 80 basis points year over year, reflecting cost savings from restructuring and better sales volume [11][12] - Earnings per share were $3.12, an increase of 11.4% from the previous year, driven by operating margin improvement [12] Business Segment Performance - DSA segment revenue was $618 million, a 2.4% decrease year over year on an organic basis, driven by lower revenue for discovery services [14] - RMS revenue increased by 2.3% on an organic basis to $213.3 million, primarily due to timing of NHP shipments and higher revenue from research model services [22][24] - Manufacturing segment revenue was $200.8 million, a 2.9% increase on an organic basis, driven by microbial solutions and commercial CDMO clients [25][27] Market Trends and Key Indicators - Demand trends in global biopharmaceuticals appear to have stabilized, with mid-sized biotechs performing better than smaller ones, which remain cash constrained [7][11] - DSA backlog was $1,930 million at the end of Q2, a slight decline from the previous quarter, with gross and net bookings improving at mid-single-digit rates year over year [14][15] - The net book to bill ratio dipped to 0.82 times in Q2, reflecting an increase in cancellations and DSA revenue outperformance [7][15] Company Strategy and Industry Competition - The company is focusing on expanding its NAMS portfolio, which generated approximately $200 million in annual DSA revenue, and aims to enhance its capabilities through partnerships and internal development [20][21] - The strategic review is ongoing, evaluating avenues for value creation while balancing the strength of the company's scientifically distinguished portfolio [29] Management Commentary on Operating Environment and Future Outlook - Management noted that the demand environment is stabilizing, with no significant impact from tariffs or drug pricing concerns observed to date [10][11] - The company raised its revenue and non-GAAP earnings per share guidance for 2025, reflecting outperformance in Q2 and favorable foreign exchange rates [12][34] - The outlook for the second half of the year includes expected revenue declines of 2% to 4% year over year, with a focus on maintaining operational efficiency [44][45] Other Important Information - Free cash flow for Q2 was $169.3 million, an increase from $154 million last year, driven by higher earnings and improved working capital [43] - The company expects total net interest expense to be lower than previously anticipated, benefiting from diligent capital planning [40] Q&A Session Summary Question: Current demand environment and pharma's perspective - Management indicated that the demand situation is stabilizing for pharma, with improvements in proposals and bookings, although cancellations have increased for longer-term work [50][51] Question: Clarification on revenue guidance and book to bill - Management clarified that the current book to bill ratio is expected to remain in the range of 0.8 to 0.93, supporting the guidance without needing to return above one [56][57] Question: CDMO performance and impact of NHP supply clearance - Management confirmed that the $20 million revenue from a client will not repeat in the second half, impacting overall CDMO performance, but the clearance of NHP shipments provides operational flexibility [62][63] Question: Dynamics of cancellations and margin implications - Management noted that cancellations are not expected to significantly impact margins, as the nature of work varies and is driven by client prioritization [91][92]