Good evening, everyone. Welcome to the SATS Third Quarter Results Briefing for FY 2026. I'm David, Group Head of Strategic Communications. Before we begin, I turn your attention to the forward-looking statement now on the screen. Now for our safety reminder. Whether you're joining us from the office, at home, or on the road, please be aware of your surroundings at all times. Do make your safety a priority before joining this call, a recording of which will be available on our website. With me today are Kerry Mok, SATS President and CEO, and Timothy Tang, our CFO. I will hand over to Kerry to take you through the business update. Kerry, please.
Thank you, David, good evening, everybody. I appreciate you guys taking time out on Friday evening to join our earnings call. Let me just quick go into the third quarter performance. Pleased to say that the third quarter performance was really solid. We have record cargo volume driven, obviously, by a seasonal peak. You would recall that last quarter we did say there was some forward loading as well. We benefited from that. You know, despite that, the number for this quarter was record. In fact, in our history, this is probably the highest quarter we've ever got in our history. Year-on-year growth is across all lines of business.
We also continue to outgrow, outperform IATA's number for the ninth straight quarter, that's driven a lot by APAC and EMEA growth, which more than offset some of the de minimis impact in Americas and tariff impact as well. We continue to show good commercial progress. We won a new cargo and ramp contract with China Cargo in Paris and with Saudia Cargo also in Americas, I'll share a bit more new wins in my updates later. From a revenue standpoint, 8% growth against last year. Very pleasing to see the margin expansion to almost SGD 300 million EBITDA, to 18.1% margin. PATMI has grown 20% to SGD 84.7 million.
Really, you know, what is pleasing for us is the resilient network continues to capture trade flows and it shifts. All the uncertainty in the geopolitical environment and the tariff situation, so far we have been benefiting from all the different shift primarily because of the network that we have. Just on the food side, aviation meals have grown 4.5% year-on-year, and the non-aviation meals has also shown a 7% growth to 10.5 million meals this quarter. Next slide. Just some, as I mentioned, you know, we also won two new wins. One is Allegiant Air in Sanford Airport, which is the hub airport in the U.S., and Azul in Viracopos Airport, which is actually in São Paulo.
Azul is actually the largest low-cost carrier in Brazil, and we are actually their hub provider for ground handling in Brazil. That's a fantastic win for our team in Brazil as well, and we continue to grow our presence in Brazil with some of these wins that we have locked in. On the food side, very pleasing to say we have won a multi-year inflight catering contract with Turkish Airlines. Turkish Airlines is leveraging on a halal-produced meal out of Narita and Haneda, and it's been a win. It's been a contract they've been aiming for quite some time, and very happy that our team in Japan managed to secure the contract with Turkish Airlines. We continue to reinvest in our infrastructure.
We recently signed a 20-year lease for a new warehouse in London Heathrow. This is really to grow our business in Heathrow. As you know, if you look at Heathrow Airport at the Horseshoe area, many of the facilities are actually aged as well. This will be a first new facility in Heathrow, and we believe that's gonna help us gain more business in London, but at the same time allowing us to put a more modern warehouse in Heathrow to support the growth of air cargo over there. We have also expanded our e-commerce and freight forward handling business in Frankfurt Airport. We took a facility, old facility previously from DHL, and we converted for usage, and we're now starting to roll out those services for freight forwarders in Frankfurt.
You know, Frankfurt is the biggest cargo hub in Europe, our ability to provide additional services for our targeted customers in freight forwarding is actually a very important part of our specialized services focus. In Singapore, closer to home, we just broke ground on a extension of our maintenance center. Again, this is in preparation to put more capacity so that we can actually service more of our ground units here, GSE equipment here in Singapore. You know, we have also announced the refreshment of our equipment here in Singapore, therefore, we need this extension to service the additional capacity that's required. On the technology side, our investments in AI continues to reap benefits.
We have launched our first AI control tower to monitor our supply chain on the food side. This is a very important milestone for us because the system that we develop here can have different usage going forward. Control tower using AI is gonna be a big part of how we're gonna run our business globally going forward. On the employer side, we are pleased that we are recognized as one of top 20% employers in the SG Opportunity Index that's led by Minister of Manpower, and we've also been certified as a top employer in Singapore by the Top Employers Institute.
This continues our focus on making sure that we are a great place to work for many of our employees. We really wanna make sure that this aspect is taken care of so that we can continue to attract our share of talent here in Singapore. Next slide. This is just to show you all the business drivers. As you can see from a tonnage standpoint, that last quarter we hit almost 3.5 million tons. That's almost 6% growth over the previous quarter. Flights handled continued to show modest growth as well. Meals is now above 50 million in terms of the meal serve.
Likewise for employee standpoint, there's a slight growth in there, primarily driven by the hiring in Brazil to take care of the ground handling operation itself. Next slide. This slide shows you the like-for-like tonnage growth and versus non-like-for-like. Again, a growth of about 7.3% over last year. The pleasing thing is the non-like-for-like growth, where we're showing additional new wins of 7.1%, is continuing to power our growth in air cargo. Next slide, please. Maybe I'll hand it over to Tim to take you through the financial summary. Tim?
Yeah. Thanks Kerry, and good evening everyone as well. Great to be here to obviously announce on our results again. Let me add a bit more color to the high level that Kerry's obviously covered. Obviously, I'm very pleased with the overall results as well, as Kerry's already noted. Primarily, I would say the main themes are that actually both year-on-year growth in revenue and earnings have been actually very, very consistent, and directionally very consistent with the year to date our first half results.
What's pleasing, of course, is that we do know that disruptions are taking place, in particular, with trade flows around the world, but our network is definitely very resilient in capturing that rerouting, and that continues along with the, obviously the capturing of the new customers as well. We have seen the results, in particular from a margin standpoint, normalize in Q3, in particular versus Q2. I think many of you on the call would have remembered that we did say that our Q2 results benefited from pull forward volume, which actually went ahead of our cost structure. Some of that cost structure definitely was not sustainable in order for us to fully serve our customer in the right way as we continue to develop our relationship with them.
The Q3 results is a normalization into our what a peak cost structure should look like. I think we're very pleased to see that on a year-on-year basis in particular. You can see the continued growth of our business, both in top line and bottom line, along with margins. If I dive into the details of the next slide, on slide eight there. More color than as you can see along all the lines of the business. Cargo, very quick step-by-step on the businesses. Obviously, cargo continues to be driven by both the organic and inorganic growth. In particular, continue to be very strong in Europe and Asia Pacific.
Weaker in Americas, but we are seeing that business supported by our service of Amazon in that market, which we've talked about in the past that it is a, you know, we are the largest third-party contractor for Amazon across nearly 13 stations in the U.S. That business actually has continued to grow as Amazon activity continues to grow as well. Our ground business is obviously moving along very, very well. Still a lot of contribution there, obviously from our Singapore market. A little bit more stable. Obviously with the, in particular, the results are aligned with a lot of our main customers or our major customer in Singapore.
That is likewise the case for the aviation, on the food side, on our food, on our aviation food solutions. I think many of you would have seen that our main customer in Singapore had their passenger growth outside of Scoot, roughly around 2%-3%. It's very indicative of some of the trend that drives our aviation food as well. Non-aviation is more, obviously the year-on-year continues to be a focus obviously of ours to fill the capacity. We are obviously looking at that at a, as a, just a sub-segment that supports our overall results from a group perspective. Next slide, please.
Diving into a bit more on the Q, on the year-on-year result, which is the one that shows the, the more, the real trend of the business. On a year-on-year basis, as I've noted, obviously revenue-wise, outgrowing our operating costs. We are getting that margin ex-expansion, given that the peak is really comparative over year on a year-on-year standpoint. We are, we saw great growth around the world that supports that third quarter peak. When I, when I say that the, our results show that the, that there was brought forward in Q2, we do see that Q-on-Q basis from second quarter to third quarter. The growth was definitely more muted versus prior years.
That was the benefit of then that cost structure in Q2. Having normalized down now, you will all observe that our third quarter margin is actually very similar to our first quarter margin. Obviously both quarters showing that positive year-on-year growth, which represents the business model working and obviously leveraging on our overall scale. Moving down the page, obviously there is a normalization also on our SOA JV. You would all recall that in the last quarter we also noted there was some upfront cost impact in our SOA JV, where some additional costs that we invested into, in particular in picking up and starting new customers in our SOA JV.
Suffice to say that's normalized out also in Q3 , and our results show, a strong year-on-year growth there, in the third quarter, which I think we do see that third quarter performance, will obviously continue from here on from a season- seasonality basis. Lastly then on the... all the way to the bottom line, once again, I would remind everyone that we did say the last quarter we had a one-off adjustment on our tax line in the Q2 results. Once again, as you look at the third quarter results, that in itself has also normalized.
Overall then, if you put all that into play, obviously we're getting the natural margin, you know, accretion obviously on a year-on-year basis and the results are showing good momentum. Obviously heading into our fourth quarter, which is traditionally our lower quarter of the year, which we'll touch on in a minute as well with Kerry, to finish up. Next slide please. Diving into a few more metrics. I will leave the cash flow a little bit to the next slide. I'll highlight a little bit of context. I think no major surprises now. I think most of the metrics on the left-hand side there are just consistent with the announcement of the results.
I think we all would agree it's a good set of numbers to see the business deliver. From a cash flow perspective, the third quarter year-on-year is impacted by a significant timing and working capital that actually occurred last year. I will recommend that we look at the year-to-date cash flow as a more true representation of where we are at the moment, which I'll touch on in the next slide. I think beyond that, obviously the organization continues to you know, address our debt and, you know, we continue to pay down, the borrowings.
We do see that number as progressing towards a target that we believe probably end up in the full year at around this sort of SGD 160 odd million range. Ultimately, we do believe our now, going forward, our debt level continues to, you know, be at now a level that's much more manageable. We see then good opportunity for us to re-deploy that capital into CapEx. Obviously, there's the dividend conversation coming up at the end of year, and any excess cash returning to the shareholders, which we can certainly address in more details later on. Overall, I think the on the right-hand side then, no major call-outs here.
I think all of the metrics then are obviously moving in the right direction, given the set of operational and financial results that we're seeing across the business. Outside of the cash conversion on the bottom right there, primarily driven by higher CapEx on a year-on-year basis. If you, if you look at that cash conversion on a like-for-like comparison with the same CapEx as last year, we are up just a little bit above 70% on that metrics, if you normalize that out. If I move to then the... my last slide here on the cash flow. Let's take a look at that on a year-to-date basis. Overall I think operational cash flow year-on-year is obviously positive given our overall results. That number is actually negative impact by two areas.
Number one, excuse me. Number one, there is a timing on working capital, and obviously, the team and I continue to manage that and we believe that we do see that timing coming back to us as we work through that in Q4. But there is another impact in there in the sense that there is a higher tax component for cash bases this year versus prior year, mainly because last year's tax was benefited from some COVID-related carryforward losses still, which then have were fully utilized in FY 2025. Therefore once again, I would say that the FY 2026 is the clean number. We do see that obviously, that delta then contributes to the overall year-on-year cash flow from operations there.
Beyond that, beyond that then it's really down to higher lease payments, and obviously, related to our new facilities both in Amsterdam and, at the Menzies facility and our new warehouse in particular in London and a few other small ones. Obviously outside of that then you can see that the CapEx is also certainly a significant increase on a year-on-year basis. The primary components of some of that CapEx is because of our food facility in Thailand, and also the finishing up of our Singapore cruise terminal, of which that's largely been completed. Beyond that, you know, it is as expected our CapEx.
We are still traveling at around this 4.5% of revenue range, which is obviously within our guidance that we have talked about in the past, sort of between this 4%-6%. Overall then, given the given the CapEx profile, that is obviously what's driving our overall free cash flow to be lower, in particular, at the very bottom of the page. I'll hand it back over to Kerry to finish us up on the on the outlook.
Thank you, Tim. Let me just go quickly on outlook. I think we'll break it down to the three areas of cargo, ground and food. Cargo, you know, as we have said previously, fourth quarter we expect our demand to moderate. It's our traditionally weakest quarter for the whole year, so we're expecting the same momentum as well. I think overall cargo trends remains very resilient. You know, there's still a lot of support for high value time sensitive cargo and e-commerce shipment as well, especially with Asia Pac leading that in terms of the export. Semiconductor and AI related cargo in tech product is still very much in play as well.
We do have a healthy pipeline of growth opportunities with our customers, and we believe that's gonna help us sustain our above market growth. IATA has predicted a growth forecast of 2.6%. We believe we can beat that number as well this year. We are, we're actually quite optimistic for cargo for the whole year ahead. Yeah, fourth quarter we'll see some traditional slowdown. You know, Chinese New Year, you know, freighters were not flying as well, so those are numbers that we expect to have impact on the fourth quarter. On the passenger service side, I think APAC is gonna be the leading light.
Continues to show growth of over 7% and we're well placed in APAC with many of our ground handling stations and key hubs performing well. We expect that to continue. U.S. domestic market remain very soft and that's how we are seeing it in our current estimates as well, which is in line with what's happening overall in the U.S. market. We are making good progress with our units in Brazil, and I think the wins in Azul and all that will continue to be a big focus. We are looking to try and win more share of wallet with our existing customer to help mitigate some of the flattish numbers that we're seeing in the U.S.
On the food side, again, fourth quarter is also typically softness as well after Chinese New Year. We believe international travel will support a lot of demand, particularly out of Singapore. Our central kitchen net was getting traction. In China, we've onboarded a large customer in our Tianjin facility that I think whilst it's still initial stage in terms of the volume, but the momentum in developing products and all that in serving the Chinese market is going well and we hope to ride on the momentum to do more with the customer there in China. With that, maybe I just one last bit to just showcase where are we progressing in terms of FY 2029 ambition.
I think you can see from across all metrics I believe we are progressing well. EBITDA margin is now year to date 18.6%. Our EBIT margin is 9.2%. SOG run rate is now 114, and I think our PMI margin is now coming at 5%. Clearly we're not gonna stop here. We continue to drive more improvements, and we believe that there are still improvements coming in our margins that we can show going forward. Q4 will dampen the margin a little bit but, you know, again, longer term, we believe we are still some ways to go to drive some synergies and well, cost down effect as well. ROE is well, made an improvement.
Now it's at 10.4%, we hope to still make improvement in this area. From a debt perspective and cash flow perspective, again, progressing well against all the targets that we set for ourselves. With that, I end our presentation. We open for Q&A.