Ferrovial SE

AEX:FER

Q1-2025 Earnings Call

[Silvia Ruiz, executive]

Good afternoon, everybody. This is Silvia Ruiz speaking, and I would like to welcome you to Ferrovial's Conference Call to discuss the financial results for the first quarter of 2025. I'm joined here today by our CFO, Ernesto Lopez Mozo. Just as a reminder, both the results report and the presentation are available on website since yesterday evening after the U.S. market was closed. [Operator Instructions]. With all this, I will hand over to Ernesto. Ernesto, the floor is yours.

[Ernesto Lopez Mozo, executive]

Thank you, Silvia, and welcome, everybody, to the first quarter of 2025 operating results update from Ferrovial. Well, starting with the growth in all business divisions, I would like to highlight the strong revenue performance in highways of the North American assets.

In terms of airports, we highlight that construction advances in NTO. And in construction, we have shown a steady profitability with adjusted EBIT margin reaching 3.3%. At the end of the quarter, we have a solid net debt ex-infra projects really a net cash position of EUR 1.9 billion. And the main items in this number are the divestment of AGS of EUR 538 million and on the other hand, equity injections in NTO for EUR 152 million and the buyback program, where we invested EUR 156 million.

In terms of corporate events this quarter in March, we announced an agreement to acquire up to a 5.06% stake in the 407 ETR from AtkinsRéalis for a maximum of CAD 2.09 billion, and the close of this transaction is expected in the second quarter of 2025.

In April, we announced the opening of Silvertown Tunnel. This is a highly complex infrastructure project that is expected to really enhance transportation in East London. If we move on to the performance in highways, we see that the division has significant growth, driven, of course, by the U.S. managed lanes, in the revenue growth of 14.1%, we have the influence of the U.S. highways revenue that grew 19.1% versus the first quarter of 2024 is making up close to 90%, 88% of the highways revenue.

In terms of adjusted EBITDA, the U.S. highways represent 98%, and they were growing at 14.6%. Let's move now into each asset summary, starting with the 407 ETR. The 407 ETR had an outstanding performance with double-digit EBITDA growth. Here, I would like to highlight several items, starting with the toll revenue that grew 23.6%, here, we need to bear in mind that the tolls were raised before the beginning of the year. So we had January with the new toll rates whereas in 2024, we didn't have this effect, right? So January has a favorable comparison vis-a-vis 2024.

Then in February, we -- I guess we had the effect of that comparison in March. What we have is that we launched some promotions that affected the March performance. This traffic promotions help also to steer traffic and really are favoring our consumers in the peak hours, that is where its most needed, right? So March has traffic promotions, and this affected the traffic performance.

If we look into the breakdown of the mostly traffic. I mean, we need to bear in mind that there was substantially worse weather in the first quarter of 2025 than in the first quarter of 2024 that had mild weather. And also, we had a leap year with the extra day in February, right? So -- this comparison has to bear that in mind. So the performance in terms of traffic is outstanding.

In terms of the fee revenue, of course, I mean the weight of the revenues is in total revenues. But in fee revenues, we see a higher growth and here, we have to remind you that in 2024, some of the account fees remained unchanged. So I mean there has been an update in 2025, that brings this additional growth and also other activity has been influenced in the higher fee revenue as we described in this slide.

So very strong underlying performance. Please bear in mind what I mentioned that really March probably is the month that there will be more business as usual in the coming months because of this comparison I mentioned. Regarding dividend distribution, I mean we didn't receive any dividends in the first quarter of the 407, but CAD 200 million dividend was approved and was paid in the second quarter, right?

So we already have that cash in the second quarter. In terms of the Schedule 22, we see that in the EBITDA we have included close to CAD 26 million of Schedule 22 provision. And here, of course, you will have to see other quarters to get a better idea but the way it's calculated is that we -- I mean, the 407 does the estimate for the full year. And that estimate as a percentage of the estimated revenues for the for the full year. I mean, that percentage is applied to the first quarter, right? So in terms of percentage, it can be extrapolated, but of course, you will have to wait to see the quarters of higher traffic to get a better idea of the impact.

Moving on to the next slide, in the Dallas-Fort Worth managed lanes. Here, we have an outstanding performance in terms of revenue per transaction. Also in January and February, there was a negative weather impact compared to last year. And even with that impact, the traffic performance has been very solid. Of course, NTE is still affected by the capacity improvement construction works and this means that traffic in terms of transaction is lower than last year. But we have an outstanding performance in terms of revenues helped by Mandatory Modes. Here Mandatory Modes and revenues are also benefiting from better traffic mix in terms of a higher percentage of heavy traffic. Also, you need to bear in mind that for the likelihood of Mandatory Mode events that you know that there's kind of traffic threshold. Let's say that for 2 lanes, you have like 3,300 vehicles per hour. The heavy traffic implies like 2x what a light vehicle implies, right? So in that calculation, you can get an idea that if there's higher heavy traffic, you are more likely to get a more Mandatory Modes.

In LBJ, traffic grew this pipe construction activities in the nearby corridors. And in the 35 West, we also had solid traffic growth. And yes, we have a revenue share according to this performance in the first quarter 2024, we didn't have any because the accrual was done at the end of the first half, right? So the second quarter 2024 included 6 months of revenue share and now we are doing that quarter by quarter. Okay. So I mean here at the bottom of the slide, we have the revenue per transaction growth that is a mixture of all these things are mentioning more activity, more big activity, better traffic mix and more Mandatory Modes this has helped this revenue per transaction performance. We also have the update on the slide of the soft cap that grew by 2.9% in 2025.

If we move on to the following slides, we have the I-66 that saw increased mobility in peak hours, activity in rush hours is much higher that combined with really dynamic pricing, it means that the revenues grow very healthily and revenue per transaction as well. So a very solid performance from this highway. And also, remember that all the traffic figures compared to 2024 that had one day more, right? So bear that in mind when comparing traffic.

If we look into I-77, also very strong performance. Traffic is still favored. I mean they're not as much as in the last quarter 2024, but this is still favored by the closure of the alternative I-40 that has reopened with limited capacity. So I mean, there's more heavy traffic in the I-77 and that's helping the performance of the asset. But also on the negative side, it was affected by severe weather and also you have to compare with the leap-year effect.

So very strong performance from the asset. We also have revenue share here and the same explanation that I commented in Dallas - Fort Worth applies here. Last year, the revenue share was accounted for in the second quarter for the full first half. Now we're doing it quarter by quarter. So we had $4 million of revenue share. And we have an additional EUR 2 million of extended vehicles payments. And here, I would say this is good news because in the last year, we had the extended vehicle agreement that was expiring at the end of 2024. The rental was receiving 50% of the revenues from these extended vehicles that were not part of the original concession agreement.

Now the agreement to allow extended vehicles has been extended till the end of the concession. And the flip to that is that the grantor gets 2/3 of the revenue from extended vehicles. But it goes till the end of the concession. So it's good news. But when you're looking into the comparison, please bear that in mind.

Okay. Moving on to airports at JFK development is ongoing. In the first quarter, we had a physical progress relevant, 6% advancement and also advancement with airlines, there's agreement with 18 airlines, 13 executed and 5 are Letters of Intent we continue investing. As I mentioned at the beginning, EUR 152 million have been invested in the first quarter, and we have pending EUR 167 million. So as we mentioned, this is a crucial year for JFK, it's advancing on budget.

In terms of Dalaman, it's really a quarter that is not that representative because this is an airport activities based around the tourist season that starts in the second quarter. Nevertheless, domestic traffic was also higher than expected and it grew against -- versus last year.

Okay. Moving on to construction. In construction, we see a steady profitability. I mean, across the board, you see that Budimex were Ferrovial construction are showing solid margins. Budimex, the profitability is slightly lower than the previous year. But remember that in 2024, there was updating of the indexation cap in public contracts. So there was like a -- let's say, retractive capture of that part, if I may say so. So that was a higher impact, but the margins remain very, very solid. And both Webber and Ferrovial Construction have higher margins than in the first quarter last year.

In terms of order book, I mean it's at a big level and we have a lower weight of large design and build projects with -- I mean, our focus is to be on local markets and with lower weight of large design and build projects that are not with group companies. The order book reflects that, and we'll talk in the closing remarks about the uncertainty that could affect performance. We are comfortable with this order book, more on that in the closing remarks.

When you look into the breakdown by geography, we see that is concentrated in the U.S. and Canada and the second Poland. In terms of outlook, we remain with our long-term target of 3.5% adjusted EBIT margin.

Okay. So the summary in the next slide of the main figures, strong growth in revenue, 7.4%, adjusted EBITDA 19.1% and adjusted EBIT to 28.3%. So very solid start of the year. Moving on to the net debt position. Well, we have the breakdown of the effects on cash. I mean, dividends for projects are very small. I mean the main component in the EUR 19 million that we have, there is dividends from Heathrow, then we have the operating cash flows from construction and other activities and useful to have this sort of working capital effect at the beginning of the of the year.

And then we have tax payments that are basically related to our operations in Poland. And then we have the cash flows just in the investment activities, the interest received and divestments that I mentioned at the beginning, together with the treasury serve repurchase, I mean the cash flow invested in financing -- sorry, used in financing activities is related to repayment of external debt that has the counter in the reduction of debt, right? So very solid net cash position and negative net debt at the end of the first quarter.

So just concluding before grading into the Q&A. I think this is a very solid set of results where we a benefit from the performance of our North American infrastructure assets. And this performance is benefiting from increased customer segmentation. I mean we are tailoring more to our customer needs. The underlying growth in the assets locations, I mean, this is something that is kind of long-term underlying trends.

And then, of course, we are looking forward really to -- with a great appetite for the pipeline that's coming, and I-24 is still pending the prequalification results. The I-85, the prequalification was published and all these bidding are expected in the first half of 2026.

In terms of construction order book, it has limited exposure to macroeconomic uncertainty. We have a lot of backlog in the U.S. and Canada, but it's in a much more comfortable position. And in the past in the sense that the percentage of design and build projects in the early phases that is basically when you are finalizing design and you need to really quantify what is going to be bid by subcontractors and with all the supplies you need to get for the final design, we don't have that. I mean the biggest one in the backlog that is the Ontario line project has price protection, and we don't have any sort of big design and build like any Managed Lane in the early stages where really you have to derisk the project with final design and procurement.

So with this condition and also with price indexation in other areas like Poland, Spain and so on, we think that we have limited exposure to the macroeconomic uncertainty. Okay. So thanks for bearing with me through the presentation. Let's get into the Q&A.

[Silvia Ruiz, executive]

Yes, thank you very much, Ernesto. Let's go into the Q&A. Operator, please go ahead.

[Operator]

[Operator Instructions] Our first question comes from the line of Luis Prieto from Kepler.

[Luis Prieto, analyst]

Today, I had a couple, if I may. The first one I was wondering if you could help us with the math of Schedule 22 extrapolating the rest of the year on the basis of revenue seasonality leads to a full year payment figure that I suspect is in the lower part of the consensus. Is there anything we need to take into account to better understand what is behind this figure?

And the second question, if I look at U.S. wide construction sector indicators in Q1 of structural macro indicators. Where as double-digit revenue growth suggests very strong outperformance versus the rest of the industry in the context of adverse weather? How should we interpret the situation?

[Ernesto Lopez Mozo, executive]

Luis, thanks for the questions. So I mean basically, what you said is regarding Schedule 22, is probably right. I mean, the construction is wide. I mean, it's not that it has, let's say, a low variance. It has quite a wide variance. If you look at the just the mean probably, you are right that, I mean, revenues estimates that -- the Street has with this kind of percentage would be lower than what the Street has.

But as I said, there's a lot of variance and as you rightly said, it will depend on performance going forward. But as a percentage of revenues, yes, I mean, there's nothing to add to your way of reasoning. In terms of the second one, the weather performance, I think that the backlog of weather is what we could call our -- well, bread and butter is a little bit of our exaggeration because it's the typical size of contract in road construction and civil construction that is where we excel.

And probably, it has had less complexities in that regard. And also that relates to, let's say, our perception that the risk in our order book is much more limited than maybe in past years.

[Operator]

Our next question comes from the line of Graham Hunt from Jefferies.

[Graham Hunt, analyst]

Just two from me. First one, I just wanted to dig into this exceptionally strong pricing you've reported in Q1 across both 407 and the Managed Lanes. And you referenced customer segmentation as being a key driver of being able to achieve this. Can you just speak to a little bit more color on that in terms of maybe what you're doing differently? And also how you're seeing elasticity if it's changed at all for those assets given the very strong pricing we saw.

And then second question, just on the U.S. line sort of seeing volumes starting to pick up more meaningfully there from a low level, I guess. But -- is there anything that you're seeing on the ground, you're hearing from U.S. investors that you can speak to in terms of getting more interactions there? And also given we're, I guess, around 12 months away from new Terminal 1, starting to open? Is there a Capital Markets Day that we could look forward to in 2026?

[Ernesto Lopez Mozo, executive]

Okay. Thanks, Graham. So yes, when we're talking to customer segmentation, promotions in the 407 are tailored. I mean they are along rush hours, all of them, but for instance, you would have some that you can use, if you have, let's say, a minimum consumption. So heavy users use that. Others that are more infrequent users could have more of possibility to taste and use.

So we are kind of addressing promotions in a slightly different manner to different segments. And that's for the 407. In the U.S. Managed Lanes, also with differentiated more accurately heavy traffic in different components and that also has helped. And as I said, we have a higher percentage of heavies or similars in our roads, and that's also, of course, helping, as I mentioned before, the math around the Mandatory Mode. So that is probably all I want to comment at this point in time.

In terms of elasticity, really, people make the trips that they need to do, and that's where our capacity is available when it's most needed, right? So I guess that elasticity is low just because of that. I mean it's really needed. The second question that was regarding the U.S. line, I think that several things are coming into position.

Right now, if you notice the trading that has extended to different platforms in the U.S. is above the levels needed to qualify for NASDAQ indices inclusion and probably also that is positively affecting some kind of circularity there. And together, of course, with a wider outreach, so the feedback from U.S investors remains the same. I mean, they like the business and the pricing dynamics of our assets is, if on top of that, you have the possibility of growing with the pipeline that's that has -- I mean, that compounds, right?

So regarding the U.S. line, that's all I had to comment now. And then regarding NTO, you like, it's a crucial year. We haven't discuss any capital markets day, but sure that in -- I mean after opening and ramping up, I mean more information will be needed to be discussed about NTO.

Right now, it's about delivering and just pressing on the schedule and the negotiating with airlines to ramp-up, right? So it's early days to talk about when, but I mean, what you say is natural. I mean, after opening, it would be natural to discuss more of the dynamics of the business.

[Operator]

Our next question comes from the line of Ruairi Cullinane from RBC.

[Ruairi Cullinane, analyst]

The first question on I-77, would you be able to comment on sort of how revenue or revenue per transaction growth in March compared to the 1Q average, given the reopening of I-40? And secondly, [indiscernible] with the comments on exposure to geopolitical risk in construction. I was just wondering if you thought -- I was seeing any sort of labor availability issues given the new administration's approach to immigration?

[Ernesto Lopez Mozo, executive]

Thanks. Well, the I-77, really the reopening of the I-40 was totally, let's say, a full reopening. So we still benefited early on in the quarter of more heavy traffic around the corridor of the I-77 and then, of course, our dynamic pricing took advantage of that, right?

And that's what drove the good performance in the revenue per transaction. And overall, the underlying performance of the region. Even though, as I mentioned, all our North American roads had worse weather than in 2024. And of course, they didn't have the February additional day, right?

Regarding what you were talking about geopolitical risk in terms of resources in construction. Well, we have probably more on resources recently, and we haven't seeing really pressure there. So it certainly this, we will have to see later on. And if there's all activity, and there's some limitations, but not in our workforce that it's all, let's say, validated workforce with all the permits and so on. So we don't see really pressures now? I mean who knows in the future.

[Operator]

Our next question comes from the line of Elodie Rall from JPMorgan.

[Elodie Rall, analyst]

So I have a couple. First of all, on the 407, I was wondering if you could give us a bit of insight about your overall expectations for the year, if we could be seeing traffic heading back the 2019 level? And still on the 407, we've seen that you increased your stake there, but you still remain below 50% and you don't want to -- you don't seem to want to consolidate the asset whereas maybe it would be helpful for maybe U.S. investors to simplify the structure of the group and have that included in the EBITDA. So I was wondering what your thoughts were on that if you ever would want to try to consolidate?

And then on -- generally on the feedback from U.S. investors, I was wondering how is liquidity progressing with regard to the potential NASDAQ listing? Do you think there's a chance there to be including this year and if not, what kind of pushback you're getting from U.S. investors? Are they asking maybe for more forward-looking guidance on your side?

[Ernesto Lopez Mozo, executive]

Okay. Thanks, Elodie. So yes will cover them. Hopefully, I won't forget any of them. Well, regarding traffic for the 407, we don't provide guidance here. If it could come back to 2019 levels. As I said we don't provide this kind of guidance. It's true that mobility has increased back to the office mandates and also traffic promotions.

In general, there's more mobility in the region. We'll see. We don't provide guidance and also we'll see how the GDP performs in the remainder of the year, so far, so good, but we'll have to see. Regarding the 407 transaction and participation. Well, there is an opportunity to do a grade investment. I would say a little bit agnostic about the more or less of the 50% because in terms of simplifying to U.S. investors, I think that these assets need to have disclosure of their performance in an independent manner, right? So the 407 policies and MD&A. We give information about it. And with U.S. investors, we really show where to focus on for analyzing these assets.

So I mean this -- I wouldn't say it's a driver just for cosmetic reasons, all our decisions would be based on financial attractiveness of any investment. The asset is in great shape, as you see, but I mean no specific appetite for being above or under 50%. Regarding liquidity in the U.S., if you follow the liquidity. Yes, we are trading above the minimum required by NASDAQ. Of course, the aim is to increase that much further and there is outreach with U.S. investors.

U.S. investors is true that they focus allowed on dividends, dividend expectations. We have dividend guidance for three years. And probably after that is, let's say, exhausted, we would need to revisit that again going forward. That's probably the likely ask that we get from them, right? So they are really warming up to, let's say, a business that they don't have in any other company in the in the U.S. So I think that the outreach is working, but we need to go much further. So I think I covered everything Elodie, don't know if I missed anything?

[Elodie Rall, analyst]

No, that's fine. Thanks very much.

[Operator]

Our next question comes from the line of Marcin Wojtal from Bank of America.

[Marcin Wojtal, analyst]

I have a couple of questions. Again, going back to the acquisition of an additional stake in the 407 ETR. Could you explain if you actually gives you anything incremental in terms of governance. Do you get an incremental influence over ETR price increases and dividend payments since you are now the largest shareholder in the assets.

And my second question relates to equity IRR. I believe you have previously commented that generally on new projects, you're looking for double-digit equity IRRs. So can you confirm that this transaction at the price that was agreed also generates a double-digit equity IRR for Ferrovial?

[Ernesto Lopez Mozo, executive]

Thank you, Marcin. Regarding the 407 governance, I mean, the transaction has to be finalized before any sort of common, right? So no comments on the transaction, will wait until it's closed.

In the IRR component, yes, we aim for double digit when there's construction risk, it has to be higher than when it's brownfield, but yes, I can confirm that we were aiming for the levels you were mentioning, but I mean, tighter than when you have a greenfield risk.

[Operator]

Our next question comes from the line of Dario Maglione from BNP.

[Dario Maglione, analyst]

I have four. The first one on U.S. Managed Lane. How sensitive do you think traffic is to U.S. GDP. Second question, which is linked to this question before. Could you give us some color on the profile of people who use the U.S. Managed Lanes? Third question on the 407 ETR, of course, it's great to see tariff and revenue going up. Is there like a political backlash improving? And if you give us an update on this? And finally, fourth question on the NTO JFK. Ferrovial might be able to replicate this model in other airports. In terms of financial attractiveness of IRR, how do these projects in airport compared to U.S. Managed Lanes?

[Ernesto Lopez Mozo, executive]

Okay. Thanks for the questions. I mean, the first one was how traffic is related to U.S. GDP. Of course, traffic is always positively correlated to the regional GDP, I would say, more than the country GDP, okay? So I mean we don't provide exact details of how it's -- I mean, that kind of number, but it's positively correlated.

The second one that was regarding the profile of users. Well, it's different on each Managed Lane, but I would say it covers all the segments, in all of them, right? But I mean, let's say that the 35 West is more related to, let's say, a more commercial heavy traffic that maybe has longer routes. The NT12 has a variety, but also has commercial traffic, probably more and more local and also connectivity to the airport.

The LBJ is -- probably has a higher component of people that live in suburbs, but also -- I mean ring road that connects to the airport. But I mean, having that sort of let's say more of a profile. I mean they will have a variety of profiles and they usually a high percentage of the customers. And you see several times each week, right, up to 3%. So there's a little bit more information of this on the Factbook what I would say that -- I mean, they cover all the spectrum of customers with -- I mean, higher share of some type of customers on each road according to its profile.

Then the 407, you were talking about political backlash. I mean the only thing that is public is that they have asked to start the feasibility study of tunnel under the 401 that is the parallel route to the 407, so that has started. No other public comments that I'm aware of, let's say, in the quarter, in the end of the quarter.

Regarding the NTO, the JFK, well, in the U.S., there could be opportunities with terminals in other airports along the road, but I mean there's not say anything that could be readily available or public right now closing time. It could be replicated.

Regarding the attractiveness vis-a-vis Managed Lanes where they are different. All of them are needed assets and all the attractiveness also moves a long time depending on how much of capacity is used and the demand is coming up, right? So in terms of airports and in particular, in JFK, the medium- to long-term prospects of international travel are very strong and the ICAO and all these agencies are forecasting important growth and that's where a lack of capacity kicks in and makes them more attractive.

In the Managed Lanes, normally, the capacity is more limited at the beginning, but I won't comment on IRRs. So this, in the end, depend on this performance regarding offer and demand that I was mentioning.

[Operator]

Our next question comes from the line of José Manuel Arroyas from Banco Santander.

[José Arroyas, analyst]

I have three, if I may. On NTO. You mentioned the company has agreements with 18 airlines, which seems a very fine number of contracts. How many more agreements are needed before the airport can be full. I know this can be a bit subjective, but I want to get some kind of assessment from you.

On the Managed Lanes, you mentioned a number of effects that influence the traffic and pricing in the quarter. But I was wondering if there was an unusually high share of heavy vehicle traffic in the quarter. Maybe trucks coming from Mexico in anticipation of higher tariffs and maybe this is something we should consider for the quarters ahead, if there is a normalization in this respect?

And lastly, on the acquisition of 5% stake in 407 ETR, I think in March, you mentioned the transaction included 2-steps. And maybe this is not as clear in yesterday's earnings materials. I mean you mentioned that the closing could happen in the Q2. I was wondering if these 2-step transaction still holds or if it can conclude it in one go? And if it is the former, if it will take up to 18 months what needs to happen before Ferrovial can buy the full 5% stake? Can it be bought earlier? And if so, could Ferrovial lower price than the price you quoted?

[Ernesto Lopez Mozo, executive]

Okay. And let's see if I cover them all, if not you let me know. Yes, in terms of NTO, yes, 18 is a lot of airlines really new Terminal 1 is not based on a dominant domestic carrier combined with international. It's fully international. So you should expect a bigger number right? And in terms of capacity, I think that the JFK will be more constrained in capacity, some years down the road, not in this -- let's say, 3 1st years of operation, I would say, probably you will start seeing something closer to capacity beyond that year. So no, in the initial stages, there's going to be capacity and terminals competing for this international traffic, right?

In terms of the Managed Lanes effects that you were mentioning. I would say that the Mexico effect that you were commenting, if anything would affect the 35 West, we don't have any specific indication in this regard, if it would have been flattered a little bit. We haven't seen patterns very different from what we expected, right? So it's difficult to tell.

The others are not affected by this type of traffic, right? So the fact that we are seeing more heavies as a percentage is something that I wouldn't see as unusual going forward. Of course, we'll have to monitor. But I mean, the effect you mentioned could-- if anything, would only have applied to 35 West but we don't have specific data that I could outline to you.

In terms of the transaction of the 5% or 6% of the 407 ETR, yes, what we mentioned is still holds. It's a twisted process. The second one, there is an incentive to pay earlier rather than wait for the 18 months. The details, you will see when it's executed, right? So as I said, there's an incentive once it's approved, you'll see the details when the transaction effectively closes financially. I'm sorry, I cannot comment more at this point in time. But I mean the press release holds still.

[Operator]

Our next question comes from the line of Cristian Nedelcu from UBS.

[Cristian Nedelcu, analyst]

Maybe the first question on the 407. We have the average revenue per trip up 22% in Q1. It's obvious that January was higher. But could you help us a bit month by month and how did March look in particular in terms of average revenue per trip growth year-over-year in the context of the discounts that you introduced. Just trying to get a better feel going forward, how we should think about this line. Secondly, for the U.S. lanes, could you give us -- could you help us a bit with the mix between heavy and light vehicles on revenues or on volumes for the U.S. lanes?

And if I understood well, coming back to the previous question. So are you saying that what you're seeing in Q2 despite the U.S. tariffs and despite the freight disruptions, you still see the heavy traffic persisting. So it's still sort of -- the mix is positive. There's more heavy traffic coming in. Is this that the message you're trying to convey at the prior question? And the last one, if I may. just on FX, could you talk a little bit about the P&L translation headwind as the dollar and the Canadian dollar depreciated versus the euro. Now I know you have FX hedges in place that cover you well. But could you elaborate a little bit on the duration of those FX hedges? And when do we actually start to see a headwind to your P&L due to the FX translation?

[Ernesto Lopez Mozo, executive]

Okay. Thanks. So well, the first thing to clarify, what I mentioned is when you talk about heavy traffic from Mexico and so on, probably the road that could be more exposed to that is the 35 West but we don't have the granularity to determine if this was caused by an activity of, let's say, pre-stocking ahead of tariffs, right? So we didn't see anything that really stood out in the data we have, but that would need further analysis. What I say is that probably the NTE A 1-2 and the LBJ don't see that kind of traffic, right? So it's more of the normal activity and the types of heavies that we see are not all this kind of heavy long distance, right? So that's what I mentioned that -- I mean, this kind of mix probably in LBJ and NTE 1- 2 is not something that could be punctual. It's something that we are probably more likely to see going forward.

And with the 35 West, we will need to monitor data and analyze that going forward. That is what I mentioned. Regarding FX, basically, you do have in the note, the comparison. The reason the translation was slightly better is that the average was slightly appreciated in the first quarter of 2025, even though the dollar depreciated at the end the average was, let's say, better this year than last year, in particular, in U.S. dollar. That's the reason why translation affects, right? In terms of FX hedges, our FX hedges that hedge may cash flow on and investment are -- I mean, I'm just giving bulk numbers, like $2.2 billion, and they are around EUR 600 million, give or take on Canadian hedges for dividends, right? But these are for cash flow and for investment, right? So we don't hedge accounting results. We do that for cash and net investment purposes, right? So that -- I mean, those should be helping the, let's say, net debt figures going forward rather than the accounting translation.

[Cristian Nedelcu, analyst]

And on the 407, the average revenue per trip, and any more color?

[Ernesto Lopez Mozo, executive]

Okay. Yes, sorry. Well, that -- yes, the 22% is high. We don't provide any guidance, but definitely, 22% cannot be extrapolated. It has to be something lower. I mean, we're not providing specific guidance here, just sorry for that, but definitely don't extrapolate the 22% it has to be definitely lower.

[Operator]

Our next question comes from the line of Nicolas Mora from Morgan Stanley.

[Nicolas Mora, analyst]

Ernesto, so just a couple from me, please. Just on looking big picture of the North American motorways, I mean, on a proportional basis, you've pushed prices around mid-double-digits in Q1. And that's again a pretty tough traffic backdrop. Do you feel comfortable you can flex -- continue to flex pricing at such levels for a lot longer even with quasi-zero traffic growth just with mix of traffic, with dynamic pricing. I mean NTE has been up for, what, 11 years, LBJ 10 years, NTE35 8 years. So we're way past the ramp-up here. So just wondering how long we can extrapolate that kind of performance. And then question number two, just on dividend stream from the U.S. Managed Lanes, where do we stand on potential for any refinancing or releveraging? What's your stance right now with U.S. 10-year yields at 4.5%?

[Ernesto Lopez Mozo, executive]

Thank you, Nicolas. Well, really the pricing dynamics in the Managed Lanes really are around Mandatory Modes on top of the -- let's say, the inflation of lift that we get every year. Mandatory Modes are not easy to forecast.

The truth is that the underlying -- I mean, not getting into the macro uncertainty, but the underlying trends of these areas are for continued population and business growth, right? So that's more activity and our available capacity is more valuable, right? So yes, you could see that going forward, but it's not that you can extrapolate any of these trends, but you're likely to see Mandatory Modes because of these underlying trends that I that I mentioned, we're producing in the future.

I guess it's complicated for you guys to forecast this, but it's is the way it is. I mean a lot about the activity in the region and concentrating in peak terms is even more and more valuable, right? So look at the -- always at the long-term trends in terms of population and business and those underlying trends remain strong in Dallas–Fort Worth. Of course, now we have this macro uncertainty. We'll see in the coming months how it works. But definitely, the long-term underlying trend is there.

Regarding the [indiscernible], and we usually don't comment on this when there's an opportunity, what we think is feasible, we just take it and communicate that. But at the moment, there's nothing to announce, right? So we will be commenting a long time. Sorry that we don't provide the specific guidance. But the only guidance we have provided here is the dividends from the from projects that we gave in the Capital Markets Day. And of course, that holds. So [indiscernible], we will be telling once we do some we will be telling to the market.

[Nicolas Mora, analyst]

Okay. And if I may, just a follow-up just on the mandatory pricing. So from the pricing you show on the web, I mean you've got NTE and NTE35W switching a few times during the week to monitor pricing. We -- you expect that in the short term to expand, especially LBJ into next year with more feeder traffic -- coming from the Department of Transport management?

[Ernesto Lopez Mozo, executive]

Well, as I said, we don't provide guidance here. LBJ still has to see how the adjacent roads are finished to see more of the traffic growth. But still, I mean, the adjacent roads -- they will have a works throughout 2026, if I am correct. So maybe in 2027, we will see the opening. And from there on, we could see some ramp up, right? So right now, we haven't been there. We haven't been close to the Mandatory Modes. We don't provide guidance, but I mean, definitely, still, there's works around the LBJ, right? So we will need probably to see the reopening to start gauging more the Mandatory Modes.

[Operator]

Our next question comes from the line of Nicolo Pessina from Mediobanca.

[Nicolò Pessina, analyst]

I have a couple of questions again on the 407 ETR. I'm wondering if you could provide any qualitative comment on the promotions underway, maybe how many potential users have been targeted so far, and below level of acceptance and utilization of these promotions.

And second question on the -- I understand that the 22% increase of the average ticket that cannot be extrapolated, does it suggest that the positive impact from a double toll increase in January is larger than the dilutive impact from the promotions in March.

[Ernesto Lopez Mozo, executive]

Well, let's talk about the first of all, the number of customers under promotions. I mean, we've approach something like I mean, 1 million customers to give you a round number. Okay. So we'll keep covering the customer base along the year. So promotions go on and off. It's not that customers keep having promotions throughout the year. They will come on and off for some, but the idea is to really address the customer base as a whole.

In terms of the 22% increase, I mean we don't provide that detail, if one thing is superior to the others. What we really look is that if we forego some revenues because there's some, let's say, cannibalization, is being quite small and many times overtaken by the positive effect of more traffic is in the Schedule 22 charge, right? So we monitor that. I won't get into if the 22% is more share than the effect of the promotions.

[Nicolò Pessina, analyst]

Okay. And if I may, how many of those 1 million users, customers targeted with the promotions have used when?

[Ernesto Lopez Mozo, executive]

That we are not providing, among other things, because that keeps evolving, they go on and off. And this is something that it's early days. I mean, there's no point in us providing numbers now there.

[Operator]

Our next question comes from the line of Dario Maglione from BNP.

[Dario Maglione, analyst]

Its actually on the 407 ETR, the Schedule 22 payment. Of course, your comment on the expectation for the full year. But in terms of how it will develop over the next few years, how do you see this developing will at some point stop the payment? Or we should expect a long-term cash outflow.

[Ernesto Lopez Mozo, executive]

Okay. Even though we don't provide a specific guidance, you should expect a Schedule 22 to keep going on? Even just for one reason, I mean, the 407 provides a quality product that they have a speed of travel and that means that you cannot overdo that with traffic. We were expecting before the pandemic and the Schedule 22 being the flavor of the month we were expecting the Schedule 22 payments that were substantial just because you have to keep providing that quality product. Otherwise, people will say, why are we paying for something if I'm surrounded by hundreds of cars, right? So yes, expect Schedule 22 to be an ongoing thing of the nature, at least in the coming years.

[Operator]

There are no further questions from the conference call at this time. So I'll hand the conference back to Silvia Ruiz.

[Silvia Ruiz, executive]

Thank you. There's only one question coming from the webcast. Question coming from Fernando Lafuente from Alantra. Can you please provide more details on the pipeline for new assets, specifically motorways and U.S. Managed Lanes, but also airports and other potential ventures?

[Ernesto Lopez Mozo, executive]

Okay. Well, the only thing that we can comment is on what's public pipelines. So the Managed Lane pipeline that is public, you have in Atlanta, the I-285 East and I-285 West big projects, you have another 2 in Tennessee, the I-24 is the first one to come out. Then you have the I-77 in North Carolina in Charlotte and also potentially the I-495 in Virginia, right? And all this is what is kind of the public pipeline. We have details of this in the Factbook. There is that hinges around competitive dialogues and so on and bespoke opportunities, I mean, can only be commented at the moment they become public pipeline, right? So there's nothing to comment beyond that.

We are really excited about this Managed Lanes opportunities. This infrastructure is really needed and the customer appreciation also fits positively into this business building up, and that's what we're looking forward that's the main aim.

[Silvia Ruiz, executive]

Thank you very much, Ernesto, and everyone. There are no further questions.

[Ernesto Lopez Mozo, executive]

Okay. Thanks a lot. I hope to see you all in the near future and stay tuned. Thank you. Bye-bye.