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Operator: Greetings. Welcome to the Edible Garden AG Incorporated Full Year and Q4 2025 Business Update Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference you to Ted Ayvas, Investor Relations. The floor is yours. Ted Ayvas: Thanks, John. Good afternoon, and thank you for joining Edible Garden's 2025 Fourth Quarter and Full Year Earnings Conference Call and Business Update. On the call with us today are James Kras, Chief Executive Officer of Edible Garden; and Kostas Dafoulas, Interim Chief Financial Officer of Edible Garden. Earlier today, the company announced its operating results for the 3 months and year ended December 31, 2025. The press release is posted on the company's website, www.ediblegardenag.com. In addition, the company has filed its annual report on Form 10-K with the U.S. Securities and Exchange Commission, which can also be accessed on the company's website as well as the SEC's website at www.sec.gov. If you have any questions after the call and would like any additional information about the company, please contact Crescendo Communications at (212) 671-1020. Before Mr. Kras reviews the company's operating results for the quarter and year ended December 31, 2025, and provide a business update, we would like to remind everyone that this conference call may contain forward-looking statements. All statements other than statements of historical facts contained in the conference call, including statements regarding our future results of operations and financial position, strategy and plans and our expectations for future operations, are forward-looking statements. The words aim, anticipate, believe, could, expect, may, plan, project, strategy, will and the negative of such terms and other words and terms of similar expressions are intended to identify forward-looking statements. These forward-looking statements are based largely on the company's current expectations and projections about future events and trends that it believes may affect its financial condition, results of operations, strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to several risks uncertainties and assumptions as described in the company's filings with the SEC, including the company's annual report on Form 10-K for the year ended December 31, 2025. Because of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in the conference call may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. Although the company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievements. In addition, neither the company nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. The company disclaims any duty to update any of these forward-looking statements, except as required by law. All forward-looking statements attributable to the company are expressly qualified in their entirety by these cautionary statements as well as others made on the conference call. You should evaluate all forward-looking statements made by the company in the context of these risks and uncertainties. Having said that, I would now like to turn the call over to Jim Kras, Chief Executive Officer of Edible Garden. Jim? James Kras: Thanks, Ted. Good afternoon, and thanks to everyone for joining us today. 2025 was a defining year for Enable Garden as we continue to build on our foundation and expand our long-term growth potential. Over the past several quarters, we have executed a deliberate strategy to grow beyond our core controlled environment agriculture platform into a broader innovation-driven consumer packaged goods business focusing on higher growth, higher margin opportunities aligned with what consumers and retailers are actively seeking. During the fourth quarter, we continued to build momentum across our core business, securing new and expanded placements with key retail partners, including Kroger, Weis Markets, Safeway, The Fresh Market and Busch's, increasing our distribution to nearly 6,000 store locations. This reflects growing demand for our products, our ability to gain market share and the strength of our retail relationships. We saw a strong performance across both our core produce and CPG categories, including double-digit growth in cut herbs, driven by expansion in existing accounts and the onboarding of Kroger as well as continued strength in our vitamin and supplement portfolio, where demand remains robust, both domestically and internationally. We also saw significant growth in our condiment platform, supported by new customer wins such as Wakefern and Safeway. Importantly, these efforts, along with targeted investments in customer onboarding, resulted in incremental distribution of more than 700 additional retail locations, further expanding our reach across key markets. At the same time, we are expanding our portfolio of better-for-you brands, including Kick. Sports Nutrition, Jealousy GLP-1, Vitamin Whey, Pickle Party and Pulp and broadening distribution across domestic e-commerce and international markets, including placements with Amazon, PriceSmart, Target.com at Walmart.com. This expanded retail footprint and brand portfolio positions us to support our next phase of growth into higher margin, shelf-stable and ready-to-drink categories. This is not a shift away from what we've built. It's a deliberate evolution of our business, supported by our national retail distribution and infrastructure, much of which is already in place and positioned to drive scale across higher value categories. Key next step in our strategy is expanding into the ready-to-drink, or RTD category. The fast-growing market where demand for clean label, shelf-stable nutrition continues to outpace supply. We're leveraging our Farm-to-Formula approach, our sustainable manufacturing infrastructure and our established relationships with leading retailers to enter this category from a position of strength. Importantly, we are not starting from scratch. Our products are already carried across approximately 6,000 store locations, giving us the ability to deepen existing relationships while expanding into a category that aligns closely with our brand portfolio. To support this expansion, we recently announced the development of a state-of-the-art RTD manufacturing initiative at our Midwest facility as part of our Zero-Waste Inspired platform. We have selected Tetra Pak, a global leader in food processing and packaging solutions to plan, install and integrate proprietary processing capabilities, which we expect will enable us to meet growing retailer demand at scale. When you look at broader market, the opportunity is significant. The global RTD category is estimated at approximately $842.5 billion in 2025 and is projected to reach roughly $1.26 trillion by 2033. We believe this represents a durable opportunity and builds naturally on our platform, combining controlled environment agriculture, scalable aseptic capabilities and our portfolio of differentiated brands across sports nutrition, performance nutrition, adult nutrition, kids nutrition, GLP-1 supportive and functional categories. Looking ahead, we are focused on scaling our presence in higher-margin RTD, shelf-stable categories while continuing to build a more diversified consumer packaged goods business beyond fresh produce. As we execute on the strategy, Edible Garden is evolving into a more vertically integrated, innovation-driven company with the ability to deliver more predictable and scalable results. We believe this positions us as a differentiated player in the evolving food and nutrition landscape with a clear path to sustainable long-term growth. With that, I'll turn the call over to Kostas to review the financials. Kostas Dafoulas: Thanks, Jim, and good afternoon, everyone. Starting with the fourth quarter results. Revenue for the 3 months ended December 31, 2025, was approximately $4.1 million compared to $3.9 million in the prior year period, reflecting a strong quarter across the business. We launched our USDA Organic herb programs with Kroger in October and recorded our first international CPG segment of Kick. Sports Nutrition to PriceSmart, marking our entry into the markets beyond domestic retail. These wins reflect the growing demand we are seeing for our products and the continued strength of our retail relationships heading into 2026. Cost of goods sold in Q4 was approximately $5.3 million compared to $3.8 million in the year prior. The increase reflects the cost profile of the company that was actively onboarding new retail customers during a seasonally compressed period. We made a deliberate investment in these new accounts that secures 2026 shelf space and builds the fulfillment track record that major retailers require. We expect the cost structure to normalize as those programs mature and volume increases. Gross profit was approximately a $1.2 million loss compared to flat in 2024. Q4 was a quarter where we made a deliberate decision to absorb elevated costs to secure a 2026 shelf space and deepen relationships with retailers like Kroger, Wakefern and Safeway. Bringing customers of that caliber requires front-loaded investment and we see this as necessary to support future growth and operational scalability. Selling, general and administrative expenses were approximately $4.6 million compared to $2.6 million in the prior year. Primary drivers were depreciation and rent tied to the NaturalShrimp asset acquisition, higher legal and professional fees from that acquisition and our capital markets activities, along with higher compensation expenses in 2025. While the absolute number is elevated, a meaningful portion reflects nonrecurring or deal-related costs rather than ongoing run rate expense. Turning to the full year. Revenue was approximately $12.8 million versus $13.9 million in 2024. The headline decline is largely a function of our strategic exit from floral and lettuce which together contributed approximately $1 million of 2024 revenue but at low margins. Excluding those exits, core revenue was essentially flat year-over-year, and Q4 was a genuine growth quarter, up approximately 5%. That trajectory is what we consider most indicative of where the business is headed. Full year cost of goods sold was approximately $13 million versus $11.6 million in 2024. The increase was concentrated in the second half and driven by the same Q4 onboarding dynamics I described earlier. Gross profit for the full year was approximately a loss of $0.2 million compared to a gain of $2.3 million in 2024. The first half ran at margins more consistent with our historical range. However, the full year result reflects Q4 specifically and we do not view it as a representative of our ongoing cost structure. Gross margin recovery is a top priority for 2026. As new programs scale, third-party procurement cost decline and fixed costs are absorbed over a larger revenue base. Full year SG&A was approximately $15.3 million versus $11.6 million in 2024 with the increase driven primarily by the NaturalShrimp acquisition, along with other capital markets activity. The balance reflects continued investment in the team and infrastructure supporting our long-term strategy. On the balance sheet, we ended the year in a stronger position. Stockholders' equity improved through the preferred stock issuance associated with the NaturalShrimp acquisition and total debt declined approximately $0.6 million year-over-year as we continue to reduce our outstanding notes. We remain focused on managing costs while investing in the infrastructure and capabilities needed to support our transition to a higher margin, more scalable business model. With that, I will turn the call over to the operator for any questions. Operator: [Operator Instructions] Our first question comes from Jeremy Pearlman with Maxim Group. Jeremy Pearlman: Firstly, as you transition your business, you expanded away from -- not away from it -- from the fresh to include more shelf-stable CPG and now the RTD. How should we view the margin from the fresh to the CPG products? And what do you think the revenue expectation and breakdown for CPG versus fresh through 2026? James Kras: Kostas, do you want to -- I can do this with you? How do you want to... Kostas Dafoulas: You want to talk high level, and I can get into some detail. James Kras: Yes, that would be great. So first of all, thanks for the question. Our expectation, obviously, is there's going to be much more of a robust margin as it relates to the RTD business and the consumer packaged items. The fact that they are shelf stable, we don't have to worry about some of the shrink issues that we have with fresh. The fresh business has been great to us. It's really opened doors. It's built our relationships with major retailers such as Walmart, Meijer, whatnot, where we have great performance as it relates to our in-stocks and our delivery capabilities. So when you have a 98% in-stock rate and acceptance rate with major retailers, they tend to want to do more business. And this business is really all about availability. So on the margin end, what will be nice here is that there's a much more stable business because you control much more in manufacturing with the shelf-stable products that you may with fresh goods. And fresh goods, like I said, our -- have been our staple. And I think it's really showed our -- how we can execute and our operational excellence to be able to deliver on time in full in a really difficult category, and that's really paying out for us, that investment. So you'll see. But in this business, you're going to see the margins, they're going to be much more stable. There will be, like I said, more robust as a function of that. And then the revenue side of it, just based on the size of the market, which I outlined in the call earlier in our script, is more than meaningful. And this is a big category with a lot of pent-up demand, with a lot of capacity issues out there. And so we're stepping in really at the request of retailers who trust us and want these products, and they want it from somebody who they know who can deliver in time, on full, on spec. So for us, it's a great evolution, leveraging our Farm-to-Formula approach and our wherewithal as a strong supplier to major accounts. So Kos, do you want to add to that at all? Kostas Dafoulas: Yes, sure. Thanks, Jim. Yes, Jeremy. So just to kind of add to what Jim said, we can think about the portfolio kind of in 3 pieces, right, the core CEA business, which I think we'll see kind of return to steady growth in the high single digits sort of range, maybe even higher depending on customer wins and customer growth. In the CEA space margins, we can kind of look to return to like normalized margins that we saw earlier this year and last year. In addition to that, the nutraceutical business actually showed really strong growth in kind of double-digit, 20%-ish range year-over-year. And that, I think, is going to be a larger component of our revenue growth story going into 2026. The trade-off there is most -- a good portion of that product is co-manufactured. So while it gives us a lot of stability and visibility into our cost structure, the margins are not as rich as if we were to do it ourselves. So I think blended margin kind of low double digits to mid-teens is a reasonable expectation going forward. And then the biggest upside we have in the whole portfolio is around this RTD business where we're looking at pretty significant revenue opportunity with margins kind of in the 20% to 30% range. We're working through that right now as we start scoping this project out and understand the input cost a little bit better, but that's sort of first [ plus ] expectations there. Jeremy Pearlman: Okay. Great. And maybe while we're talking about RTD, it is a broad category. Where specifically do you expect to put out your products within there? I don't know, energy drinks, more like the healthy green drinks. Just -- and then is that also -- is that going to be produced at the Midwest facility that you talked about? And then I have another question to follow up about that facility afterwards. James Kras: Okay. It's going to be primarily in the protein segment. Obviously, we'll have a few different formulations, but we've been requested by a major retailer to help develop this for their private label as a start. And then it just opened up the floodgates. We're at a point now where our goal is -- I don't think it's lofty, but is to sell out the plant in the next 90 days or so, which when you think about we're looking at capacity into the hundreds of millions of units within a couple of years. This is transformative for Edible Garden. It's a huge opportunity. The fact that we've got the type of association that we have with Tetra Pak, that's driven by the major retailers saying, hey, we trust these guys. These guys do a great job, not only in fresh, but also in the nutraceuticals. I've been doing nutraceuticals, I grew up in the business, I've been doing it for almost 30 years. So kind of all points have led to this. And so for us, we're going to be playing in the sports nutrition, performance nutrition arena. I don't want to use anybody out there as an example. I just know we're going to do it cleaner, we're going to do it better, and we're going to do it at massive scale. We'll be not only driving our own Kick, high protein, lower calorie, lower carb type of product, that's going to be something that we'll be providing. We'll be doing clean label, of course. We have a GLP-1 formula, supported formula under our Jealousy brand. So we'll have our own higher-margin brands. We'll also be taking on [ co-man ] opportunities with brands that are out there that don't have their own manufacturing. But then obviously, I would say, half of the facility will be private label, ranging from all the major players, from -- you name them, all the chains. And the existing -- what's great about Edible is the existing relationships we have. I mean we service Meijer. We service Walmart, Wakefern, Ahold Delhaize, Kroger, Safeway. So the investment that you saw in Q4 serves a couple of purposes, one of which obviously is, it's great to get their businesses. Our competitors had issues and they turned to us and we picked up the phone and we made the investment to service their business and capture that opportunity. We have a nice business with Weis Markets right now. We have a nice business with Kroger. Those conversations, when they're happy with you, they turn to RTDs for them as well, not whether it's looking at what you're currently making for yourself or for your brands or doing it for them. And so when you look at our roster of accounts, Walmart and Target and Meijer and Wakefern, and like I said, Ahold Delhaize and the list goes on and on, CVS and Walgreens. I mean, these are -- they're coming to us for innovation. They're coming to us for -- because they know that we'll get the job done. So for us, we're going to start -- [ the answer was so long awaited ] but excited about it. The -- it's really in the sports nutrition, then we'll move to the adult type of products. Many of these you're familiar with out in the marketplace, whether it's Ensure or BOOST or Premier Protein product. We'll be doing similar type of products in Tetra Pak, which is the world leader in this packaging. So sustainable as well, which really goes to our core as a company and what we stand for with sustainable -- using sustainable materials, using less resources. It's why we're Giga Guru with Walmart. So that's the plan. It's exciting. And it's -- I got an exciting team here. So I hope that answers your question. Jeremy Pearlman: No, that's great. It really sounds like a really great opportunity for the company. And maybe just a final question just around the Midwest facility. What can we expect some of the CapEx requirements for that and the build-out time line and when you expect to be -- what's the total scale of that, what you're hoping for and when you could reach that? James Kras: Well, yes, I mean it's -- I don't want to give any specific numbers, but -- and there's -- some of it's also we just don't -- it's such a huge opportunity. We're not the only ones who would want it, right? So -- but look, this is a significant -- we're talking about a big facility with considerable velocity coming out of it. We're working closely with the local and state areas to be able to support this with incentives. We've already gotten the nod on a few things, which is great. Obviously, we're going to need to buy machines and retrofit a building. So you're talking some real CapEx. But we've been there before. And we've built a significant greenhouse in New Jersey, and we did a beautiful retrofit in Grand Rapids for Meijer. So we're prepared as a company to take on the challenge. And our plan is to really hopefully be out in the marketplace probably towards the tail end of 2027. Operator: [Operator Instructions] The next question comes from [ Nick Pincus with Forest Capital. ] Unknown Analyst: Congrats on the progress. A lot of my questions have already been asked. But you highlighted the strong fourth quarter momentum, including new retail placements and expansion to nearly 6,000 locations. My question is how sustainable is this level of growth? And should we expect similar distribution gains and category performance going forward? James Kras: Oh, yes, yes, yes. The expansion into doors, I mean that has -- that's been a lot of us getting kind of organized on the greenhouse business and getting focused and getting rid of some of the product lines that just didn't make sense like floral and lettuce at the time because of the lack of margin. We really shored things up this past year. It's been challenging and tough because we are in a growth sector. People are eating better. People are buying more fresh goods. People are cooking -- continue to cook more and more at home, whether it's pressures with cost of eating out or just people being more creative because that's been a trend line. We benefited from that. Herbs, they make any average dish that much better, right, using fresh herbs. And so for us, it's really just about making sure that we continue to take care of our current customers. They're the ones who got us here. They continue to give us opportunity not only within this category, which means more penetration and ideally more velocity, sales velocity at current doors. And then there's a great story around our organic growth, by the way, Nick. And that's where we've seen good same-store sales over the last year. So for us, that's great kind of exit velocity out of the year. We're going to continue to focus on our core because that's what's gotten us here. And now when you look at something like RTD, which is just a huge massive business with just so much untapped opportunity and there's just a shortfall of capacity. It's very rare in your career that, that does intersect, and you've got people asking you right, for -- to take on their business because they trust you. It's -- it makes me sleep a little better at night knowing that the money that we spent over the last couple of years has really gone to unlock these opportunities. So look, you're going to see more store count, I think across -- I know you're going to see it across the whole business, whether it's the herbs, whether it's the pickles, which, by the way, is a sleeper. And then RTDs, I think you're going to see doors, you're going to see new accounts, you're going to see all kinds of -- it's just incredibly -- I mean those are sold everywhere in all kinds of classes of trade, including classes of trade that we're not even in like convenience store currently, right? And there's -- so the beverage business, it's a great business. People love the convenience. These are great items. Protein is hot, has been hot for a while. No one sees that slowing down. And we're going to have a state-of-the-art facility cranking the stuff out for the betterment of our supermarket partners. So yes, it's going to continue, Nick. Operator: Okay. We have no further questions in the queue. I'd like to turn the floor back over to management for any closing remarks. James Kras: So thanks again to everyone for joining us today. We believe 2025 was a year of meaningful progress for Edible Garden as we continued to build our -- build beyond our CEA foundation and expand into broader, higher-margin consumer packaged goods platform. We're seeing that progress reflected in our momentum across our business, growing demand for our products and our ability to continue to gain market share with our leading retail partners. At the same time, we believe our expansion into the ready-to-drink category represents a significant opportunity for Edible Garden, one that builds on our existing infrastructure, retail relationships and our product development capabilities and positions us to scale into a large and growing market where demand continues to outpace supply. As we look ahead, we remain focused on executing against that opportunity while continuing to expand higher-margin categories and leverage our retail network to support long-term growth. We believe this continued evolution of our business is positioning us to deliver greater scale, improved margins and long-term value for our shareholders, and we're confident in the path that we're on as we continue to execute and deliver on the opportunity ahead. We're encouraged by the progress we're making and look forward to updating you on our continued execution and success in the months ahead. So thank you, everybody. Appreciate it. Operator: This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.
Operator: Good morning. At this time, I would like to welcome everyone to AlTi's Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] I would like to advise all parties that this conference call is being recorded, and a replay of the webcast is available on AlTi's Investor Relations website. Now at this time, I will turn things over to Lily Arteaga, Head of Investor Relations for AlTi. Please go ahead. Lily Arteaga: Good morning to everyone on the call today. Today, we will hear from Michael Tiedemann, Nancy Curtin and Mike Harrington. Nancy and Mike Harrington, along with Kevin Moran, our President and COO, will be available to take questions during Q&A. I would like to remind everyone that certain statements made during the call may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, comments made during the prepared remarks and in response to questions. Forward-looking statements can be identified by the use of words such as anticipate, believe, continue, estimate, expect, future, intend, may, planned and will or similar terms. Because these forward-looking statements involve both known and unknown risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these statements. For a discussion of the risks and uncertainties that could cause actual results to differ, please refer to AlTi's filings with the Securities and Exchange Commission, including its most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q. AlTi assumes no obligation or responsibility to update any forward-looking statements. During this call, some comments may include references to non-GAAP financial measures. Full reconciliations can be found in our earnings presentation and our related SEC filings. With that, I'd like to turn the call over to Michael Tiedemann. Michael Tiedemann: Thank you, Lily, and good morning, everyone. Before we begin, I would like to reflect on where AlTi stands today, 3 years since our listing. In early 2023, we entered the public markets with a clear ambition to build the premier global wealth management platform focused on the fastest-growing segment of the wealth landscape, the ultra-high net worth segment. I feel immense pride in what we've accomplished over this period and believe our team has created the most complete high-end investment solution set for large and complex families that exists. Today, AlTi delivers full-service global wealth management solutions in 19 cities across 9 countries. Since our listing, we've grown our AUM in our wealth platform by 70% while maintaining industry-leading client retention rates above 95%. We are established in the highest end of the wealth market with clients that average assets in excess of $50 million, a number that continues to rise as our prospects grow in size over time. Our team and the platform we have built is positioned to perform over both the near and long term. Now I want to turn to an important update, which also was announced earlier this morning with our earnings press release. After more than 25 years leading the company, I will be stepping down as CEO and Nancy Curtin, our Global Chief Investment Officer, will become Interim CEO. I've known Nancy for many years, and her leadership has been pivotal to the success of our business. I am confident the company is in capable hands and will continue to be supporting Nancy to ensure a smooth transition. Importantly, we've built a world-class team uniquely able to serve the most sophisticated client base in wealth management. I have immense respect and admiration for my colleagues all over the world for the dedication they have to serving our clients. Their relentless collaboration defines our corporate culture as a firm. And lastly, I would be remiss not to thank our incredible and loyal client base who've placed their trust in AlTi over the years, allowing us to serve their families across generations. With that, I will turn the call over to Nancy and the leadership team for their prepared remarks and today's subsequent Q&A session. Thank you. Nancy Curtin: Thank you, Michael. I'm grateful for the opportunity to step into this role and to work with our talented professionals and global leadership team as we continue to drive the business forward. I also want to personally thank Michael for his many years of dedication and focus, which has laid an excellent foundation to advance the company into its next chapter. As he mentioned, AlTi was built to serve the most sophisticated segment of the wealth market. This segment is looking for what we can deliver, holistic and independent approach to complex wealth management where client needs span family governance and education, tax and structuring and multiple generations and jurisdictions. We've been doing this for over 2 decades and are one of the few firms truly able to deliver customized solutions on a global basis. We're proud of what we've built. The same investment discipline and long-term client-centric approach also underpins how we serve clients on the platform today. Alongside our work with families, we have leveraged our institutional capabilities to build a leading global endowment and foundation or E&F business, using our institutional investment management platform and capabilities. This complementary and growing practice has grown to more than $8 billion in assets under management at year-end 2025, largely serving private and family foundations, and we view it as a natural extension of our wealth management business. Building on that foundation, growth across the platform has been strong. Since our listing, organic growth has been driven by both new client additions and continued expansion of existing relationships as families, endowments and foundations increase the scope of their engagement with AlTi over time. Over the past 3 years, we've generated over $9 billion of projected billable assets, including nearly $4 billion added in 2025 alone. Reflecting sustained demand from ultra-high net worth and institutional clients across our U.S. and international businesses. At the same time, we've been deliberate in where we focus the business. Over the past 3 years and especially in 2025, we have remained firmly focused on our core Wealth and Institutional Management business with continued emphasis on delivering excellence in client service. In parallel, we've taken meaningful steps to simplify the organization and address noncore costs, actions that are enabling continued investment in our platform and positioning earnings to scale over time as these initiatives progress. As part of that focus, a comprehensive strategic assessment led to the exit of our noncore international real estate business in 2025, eliminating the future costs and obligations associated with that platform. Complementing these efforts, we have adopted zero-based budgeting process as our budget methodology. Through the 2025 and 2026 process, ZBB has enabled us to identify approximately $20 million of recurring annual gross savings, with the majority expected to be realized by year-end 2026. Separately, our investments in alternative strategies continues to strengthen our capital and liquidity position and made a meaningful contribution to our results in 2025. Our interest in these internally and externally managed strategies provide a complementary source of cash flow to our core wealth and institutional management businesses and support future growth initiatives within that segment. With that context, I want to turn to our results highlights for the year. In 2025, AlTi generated $255 million in total revenues, representing 29% growth compared to 2024. Total revenues benefited from contributions from our alternative interest, while the core of our revenue base remained anchored in nearly $200 million of predictable recurring management fees. Adjusted EBITDA reached $35 million for the year. As we look ahead, we are increasingly excited by the opportunities to continue to grow organically while continuing to streamline the cost basis of the firm. With the platform now simplified following the restructuring of our noncore international real estate business, we expect our results to increasingly reflect the strong fundamentals of the company. In closing, I want to provide an update on our strategic review. As announced in December, a special committee was formed to review strategic options to maximize long-term value for shareholders. To date, the special committee has not received a proposal that it believes encapsulates the long-term value of the business, and it continues to evaluate a full range of alternatives with a clear focus on enhancing shareholder value informed by our clear strategy, strong management team and simplified platform. If any proposal received from any party, the committee will evaluate it consistently with its fiduciary duties. With that, I'll turn it over to Mike Harrington to walk through the financials. Mike? Michael Harrington: Thanks, Nancy. We made significant progress in 2025, and we expect to see the benefits that progress in 2026. The exit of noncore activities now complete and the impact of zero-based budgeting beginning to show, we believe the strength of our business will become increasingly evident in the years ahead. Total assets under management reached $50 billion at year-end, up 10% year-over-year, driven by strong investment performance and the acquisition of Kontora. That growth was achieved despite a more muted market impact in the international business stemming from foreign exchange headwinds related to the U.S. dollar depreciation, given that growth assets within these portfolios are typically unhedged. For the full year 2025, AlTi generated approximately $255 million of total revenue, representing a 29% year-over-year growth. The increase was driven by robust AUM expansion, along with meaningful contributions from incentive fees, reflecting the strong investment performance throughout the year across the alternatives managers in which we hold ownership stakes. Fourth quarter revenue totaled $88 million, up 71% from the prior quarter, reflecting continued AUM growth and a $29 million contribution from incentive fees associated with the strong performance of the arbitrage strategy in 2025, which generated an 11.3% return for the year. Stepping back from the contribution of incentive fees in the year, the underlying strength of our business continues to be reflected in the growth of our recurring management fees. Management fees totaled nearly $200 million in the year, up 9% year-over-year and $53 million in the fourth quarter, up 14% compared to the same period in 2024, supported by sustained asset growth. Before turning to expenses, I want to highlight some important nuances in our financials. The results we're presenting today continue to reflect the lag in actions taken and costs incurred in 2025. And as a result, the operating leverage of the business is not yet visible. That said, revenue growth remains strong, and we are seeing benefits from zero-based budgeting in areas such as occupancy, systems and marketing. At this stage, however, those benefits are being offset in our reported results by discrete onetime items, including temporary costs associated with the strategic review process. We expect these costs to subside in the coming periods and allow the underlying expense trends to become clearer. For the full year, reported operating expenses increased by $72 million to $329 million. The increase was largely driven by higher compensation costs, inclusive of an approximately $14 million bonus accrued associated with the arbitrage incentive fee recorded in Q4, the integration of Kontora in 2025 and other onetime items related to the strategic review process, zero-based budgeting program and the exit of the international real estate business. On a normalized basis, excluding nonrecurring and noncash items as well as the arbitrage incentive fee bonus accrual, full year operating expenses were $205 million compared to $182 million in 2024. The increase primarily reflects higher compensation costs, including the effect of the Kontora acquisition, increased professional fees and G&A expenses driven partially by the strategic review process as well as foreign exchange and VAT. Beneath these temporary and noncore items, our cost structure is improving as zero-based budgeting initiatives continue to progress and noncore items roll off, we expect these improvements to come increasingly visible in our reported results. For the full year, adjusted EBITDA increased 45% to approximately $35 million, reflecting the contribution from incentive-related performance during the year. Adjusted EBITDA for the quarter was $11 million, nearly doubling sequentially, largely driven by the net contribution from the incentive fee. Adjusted EBITDA margins were 14% for the year and 13% for the quarter. On a GAAP basis, we reported a net loss of $155 million for the year and $10 million, $15 million for the quarter, driven largely by noncash nonrecurring items. For the full year, other loss was $31 million, primarily attributable to a $35 million impairment charge of the arbitrage fund recorded in Q3. In the fourth quarter, we recorded a loss of $8 million, reflecting fair value adjustments on certain items. Looking ahead, we expect 2026 to mark a turning point for the business. As initiatives continue to take hold, progress should become increasingly evident in our normalized results, supported by additional savings from optimizing office occupancy and completing the wind down of legacy technology and vendor contracts. As revenues continue to grow and the platform scales, the impact of zero-based budgeting and platform efficiencies should become clear, allowing the financial profile of the business to reflect its underlying strength. With a focused strategy, durable client relationships and a simplified operating model, we believe AlTi is well positioned to deliver sustained growth and increased profitability over time. And with that, I'll turn it back to Nancy Curtin for her closing remarks. Nancy Curtin: Thank you, Mike. 2025 was a critical year for AlTi. While we continue to grow our business and deliver for our clients, we also made necessary decisions to simplify the business, sharpen our focus and position the firm for long-term value creation. As a result, we entered '26 with a cleaner structure, a stronger operating model the platform aligned around recurring revenue wealth and investment management. Thank you for your continued interest and support. We look forward to updating you on our progress in the quarters ahead. I'm now turning it over to the operator for questions. Operator: [Operator Instructions] And our first question will come from Wilma Burdis with Raymond James. Wilma Jackson Burdis: Could you provide a little bit more color on the decision to transition CEOs and just talk about what the search process looks like from here? Nancy Curtin: Well, first of all, well, it's Nancy, and thank you very much for your support of the company. I think it was a bit broken up, but I think you asked the question, can we give a little more color on the transition process? Is that right? Wilma Jackson Burdis: Yes. Nancy Curtin: Yes. Okay. Great. So it was a thoughtful discussion, as you can imagine, between the Board and management as part of AlTi's ongoing focus and next phase of growth. And I think we just decided it was the right time to appoint a new leader for AlTi's next chapter in growth ahead and continuing to execute our strategy. But I want to say upfront that while there's a change in leadership, obviously, myself our overall strategy of being a preeminent ultra-high net worth firm operating on a global basis with excellent client service, independent advice and all those characteristics that both Mike and I spoke to, that remains continuity, momentum and the strategy that's already in place is absolutely what we aim to continue to deliver on. And it might be helpful just to turn to Kevin, who's sitting next to me as well, and he can comment on it. Kevin and I are working side by side, and we look forward to the partnership together. Kevin Moran: Thanks, Nancy. Will, I've joined -- I've spoken to you in the past on some of these calls. So as I think you know myself, Nancy, Mike and Tied, like the management team here at the firm has been together for a very long time. I've been with the firm for about 18 years. That's the case for many at the management level. So as Nancy says, we believe in the strategy, there will be continued execution on the go-forward strategy that Mike Tiedemann put in place 25 years ago when he launched what was at that point, Tiedemann Advisors. And we, as the management team, it's a very cohesive, long-tenured team, and we remain absolutely focused on continuing to grow and execute the business strategy that Nancy and Mike Tiedemann laid out in their remarks. Wilma Jackson Burdis: Great. And I think you made a few comments on the process on the call, but can you just give us an update? I mean it sounds like is this more of a pivot towards focusing on operating. Can you just talk a little bit more about how that all fits together? Nancy Curtin: So let me take. I think what you're saying again, straight line. I think the strategy of being the preeminent global leader executing in a marketplace that is growing with ultra-high net worth, huge intergenerational wealth transfer and our already existing excellent clients that we have in place remains unchanged. But let me turn to Kevin because a core part of that is, of course, growing our business organically and from time to time, opportunistically and strategically looking at inorganic, but there's nothing on the horizon at the moment. But also continuing to be mindful of ZBB, which is a core part of our cost discipline and process and continuing to think about how we scale the business. So let me turn to Kevin to pick up on that because he's really led that over the last couple of years. Kevin Moran: Sure. Thanks, Nancy. So we're very focused, as we've talked about on previous calls, I think I'd like to talk again about today on further optimizing our cost structure. What we're really looking to do is make sure that our cost structure is as optimized as possible to allow us to continue to scale the business. So we're very focused on the cost structure. But at the same time, we're very focused on growth. So organic growth for us is really the hallmark of a really healthy business. So we're very focused on continuing to -- we think we have a terrific service model and one of the best platforms for servicing the ultra-high net worth client base that exists globally, certainly in the United States and elsewhere. So we're very confident in our ability to win business and bring on clients and service them in the best way possible in the industry. So that's on the growth side. Nancy said, we're uniquely positioned to also execute inorganic growth, both in the United States and elsewhere. So we have a just a terrific opportunity set in terms of both growing organically and inorganically. At the same time, we are really not taking our eye off the ball on the expense side. We're going to make investments. We're seeing that on the technology side. So we're making technology investments that we think will drive efficiencies over time. I think everything from mid to back office and even on the front office side, there's a lot to do in AI and technology initiatives. At the same time, looking to really streamline the rest of our non-comp costs. So we've been really proactive around occupancy as an example, and you're seeing that in the numbers. We're going to continue to make sure that we're rightsizing our occupancy expense. And then the major -- where you're going to see continued improvements is on tech spend. So I mentioned we're investing into technology. We are also actively managing the technology spend. So as some contracts were off, you'll see a continued improvement on the tech spend. And then professional fees, again, that's where Mike Harrington remarks talking about some of the noise that we've seen through from costs related to the strategic initiatives and elsewhere, as those onetime expenses come off, you also see improvement on the professional fees. So it's management team that's very focused on both the top line growth as well as bottom line improvement on the expense side. Wilma Jackson Burdis: Great. And then it look like you had pretty solid merger arbitrage performance in the quarter. Maybe give us a little bit more color on that. Kevin Moran: So the merger arbitrage strategy has been operating for a very long time. 2025 had a strong year. So I think performance was up a little over 11% for the year, and that correlated to the improving management fees, which took based upon improving AUM growth as well as a strong incentive fee. As you know, the incentive fees for that are crystallized at the end of the year. So those -- based on the performance for the full year, we earned a pretty strong incentive fee for 2025. We don't have a view on 2026 because again, we don't know what performance will be for the strategy, but that strategy has a very long track record of doing pretty well in most market environments. Nancy Curtin: I guess I would just add to that, Wilma I mean, we'll have to see what happens, of course, with the conflict in the Middle East, but M&A activity is broadly picking up both the volume and value of transactions, and this represents a pretty ripe opportunity for the arbitrage strategy. So we'll see what happens this year, but it's a good [indiscernible] he manages to produce performance in all sorts of years, but I would say M&A activity, it looks like, again, assuming we get through the conflict will be a strong year in 2026. Wilma Jackson Burdis: Okay. Great. And it looks like there were some pretty solid additions in AUA. Can you just touch on that a little bit? Kevin Moran: So I think you're seeing on the AUA growth, we did add Kontora acquisition, so was the acquisition of the German multifamily office that we completed last April that led to increased -- obviously, revenue -- our revenue numbers increased as a result of that transaction. But also, they have their business -- multifamily office, they have AUM and AUA. So you're seeing the uptick in the AUA really from that acquisition. Part of the business strategy behind that acquisition was over time to convert their AUA assets to AUM assets, which we have had a very long successful track record of be able to do with the rest of the business. That was really the main driver in the AUA uptick in 2025. Wilma Jackson Burdis: So I guess drilling into that a little bit more. I think there was some AUA that was added in 4Q. Just was curious on that. Kevin Moran: I think what you're seeing there is just the typical sort of movement of client assets in and out of their portfolios. We provide holistic services across a client's entire network. So everything from real assets like real estate to investment assets. And again, Nancy and the investment team have done a terrific job of managing client portfolios. So I think there's nothing unusual. It's just as we -- particularly if we can bring on large clients, they may have at times very large AUA as opposed to AUM assets. Just think of AUA is really nonfinancial assets, just anything else in ultra-high net worth clients could own. So real estate, hardware collectibles, those would all be flowing into our AUA as opposed to our AUM. But it's really core to the service model for us to be able to oversee and report and manage and advise on both the AUA and the AUM. Wilma Jackson Burdis: Could you give us a little more color on the 13D that was filed by Allianz. Nancy Curtin: Yes. Thank you for that question, Wilma. So as you know, Allianz has been a strategic partner of the firm for the last 18 months, and they filed a 13D. We have no further insight into what their intentions or plans are. But from a regulatory perspective, if they have any plans to increase their engagement, they are required to file a 13D. They've been a trusted and excellent partner. And if they decide to move forward, and we don't have any visibility into that at this point, that would -- could be welcome. Of course, in any event, as you're well aware, we have a special committee of the Board of Directors -- and any kind of proposal about the company strategically would go into our special committee who is committed of the independent directors to delivering the value for shareholders and representing all shareholders of the company. So that's all I can say at the moment, but thank you for the question. Wilma Jackson Burdis: And then could you just give us a little bit more detail on ZBB, where you stand with that? What's to come? What else you're doing there? Kevin Moran: Wilma, it's Kevin again. I can take that one, and Nancy or Mike may want to jump in. So zero-based budgeting is, I think, primarily one is the budgeting approach we're taking going forward. So the numbers -- the $20 million number that we talked about was based upon the zero-based budgeting approach that we used for the 2024 -- sorry, the 2025 budget. So of the $20 million, right, it's really -- it was across the entire scope of non-comp expenses. The expenses that we identified were expected to be realized over about 9 quarters going into the first quarter of 2027. The reason it's an extended period of time it's a lot of those expenses are subject to contracts. So think of anything from leases to technology vendors that as we identify and then we just don't renew the contract, we have to wait until the contract itself runs out. So what we saw in 2025 is really the noncontractual expenses. So what Nancy talked about or Mike Harrington we talked about things like marketing, travel and entertainment and tech expenses where we have contracts expiring in 2025. So that's what we've seen so far. Same thing with occupancy, we made a significant improvement in reducing our occupancy expense. So what we'll see in 2026 is continued cost reductions around technology and occupancy as we continue to move through leases and contracts that are expiring over the next 4 to 5 quarters. Wilma Jackson Burdis: Just following up on the earlier question on Allianz. Can you just remind us, it seems like I thought Allianz had a multiyear standstill. Can you just remind us where that stands, I guess, no pun intended. Nancy Curtin: Kevin take that, Kevin? Kevin Moran: Yes. So when Allianz invested, they did have a standstill, so they would need Board approval or Board consent for us to waive the standstill. So standstill can be waived. They do have one in place. So they will discuss that with the special committee in terms of how to move forward if they wish to do so. Wilma Jackson Burdis: Makes a lot of sense. And then could you just give us a quick reminder of where you stand with capital and potential to grow, acquire new advisers or new platforms? Nancy Curtin: So that's a core part of our strategy. It's both organic, which is the priority, but of course, inorganic as well. Let me turn to Kevin on that. It's -- so he can talk about the funding that we have and sources we have to continue to allow us to pursue inorganic opportunities. Kevin? Kevin Moran: Thanks, Nancy. So on the organic side, we don't see a need for funding to allow us to continue to execute on the organic growth initiatives. We have a terrific group of advisers and support staff business development teams globally to allow us to continue to pursue organic growth. We have -- in the event we identify an attractive sort of M&A opportunity or a larger lift out that would require capital. We have had discussions with capital providers and think that capital is readily available. For us, we can execute on a great idea, and we can show any capital provider, how accretive that transaction will be. So to sum it up on the organic side, we have -- we don't see a need for capital at this time to continue to execute. If and when we identify an inorganic opportunity, we are confident we'll be able to raise capital to fund and execute on that. Operator: [Operator Instructions] And this now concludes our question-and-answer session. I would like to turn the floor back over to Nancy Curtin for closing comments. Nancy Curtin: Thank you very much for joining us on the call this morning. Of course, we look forward to sharing updates on our progress on our first quarter call, and thank you for the excellent questions. Very much appreciated, and thank you for your time. Operator: Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day.
Operator: Good day, and welcome to the Dawson Geophysical Fourth Quarter 2025 Earnings Conference Call. Statements made by management during this call with respect to forecasts, estimates or other expectations regarding future events or which provide any information other than historical facts may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and include known and unknown risks, uncertainties and other factors, many of which the company is unable to predict or control, that may cause the company's actual future results or performance to materially differ from any future results or performance expressed or implied by those statements. Wherever possible, we will try to identify those forward-looking statements by using words such as believe, expect, anticipate, pursue, forecast and similar expressions. These risks and uncertainties include the risk factors disclosed by the company from time to time in its filings with the SEC, including in the company's annual report on Form 10-K, expected to be filed with the SEC on March 31, 2026. Furthermore, as we start this call, please also refer to the statement regarding forward-looking statements incorporated in the company's press release issued yesterday, and please note that the content of the company's conference call this morning is covered by those statements. During this conference call, management will make references to adjusted EBITDA and free cash flow, which are non-GAAP financial measures. A reconciliation of these non-GAAP measures to the most directly comparable GAAP measures can be found in the company's current earnings release, a copy of which is located on the company's website, www.dawson3d.com. The call is scheduled for 30 minutes, and the company will not provide any guidance. Shareholders who might have questions are encouraged to contact the company directly. I would now like to turn the call over to Tony Clark, President and CEO of Dawson Geophysical Company. Please go ahead, sir. Anthony Clark: Thank you, Olivia. Good morning and welcome to Dawson Geophysical's Fourth Quarter 2025 Earnings and Operations Conference Call. As Olivia said, my name is Tony Clark, President and CEO of the company. Joining me on the call is Ian Shaw, Chief Financial Officer. Before I start the call, I have a few items to cover. If you would like to listen to a replay of today's call, it will be available via webcast by going to the Investor Relations section of the company's website at www.dawson3d.com. Information reported on this call speaks only of today, Tuesday, March 31, 2026. And therefore, you are advised that time-sensitive information may no longer be accurate at the time of any replay listening. Turning to a review of our current operations, outlook and fourth quarter year-end December 31, 2025 results. I am proud of the continued progress the Dawson team made during 2025, generating $14 million in cash from our operations and reinvesting a portion of that into new single-node channels to increase our capacity and strengthen our foundation for profitability and our future. We purchased $24.2 million of new equipment, primarily new single-node channels, and received our first delivery in August 2025. Due to demand from our customers, we accelerated our delivery time line throughout the fourth quarter and received the final delivery in January 2026. This equipment has been highly utilized in our U.S. and Canadian operations. These single-node channels weigh approximately 1 pound, compared to our legacy equipment which weighs approximately 10 pounds. We believe this lighter-weight equipment will provide us with improved efficiency in our operations. Currently, we have over 180,000 channels of legacy and new equipment available to service the industry. And we are increasing our efforts to secure passive seismic monitoring with positive activity. We believe that we have a significant competitive advantage for larger seismic jobs due to our higher channel count and our quality of operated energy source units. While we continue to grow our top line and invest in our future, we are continually monitoring our cost structure and reduced our general and administrative expenses 9% in 2025 compared to 2024. We believe that the Dawson team has shown continuous improvement over the past 2 years, which is evidenced by the continued improvement in our profitability metrics. We expect that improvement to continue into 2026. I will now turn the call over to Ian Shaw, who will review the financial results. Then I will return with some final remarks on our operations and outlook into the first quarter of 2026. Ian? Ian Shaw: Thank you, Tony, and good morning. For the fourth quarter ended December 31, 2025, the company reported fee revenues of $22.9 million, an increase of 67% compared to $13.8 million for the fourth quarter of '24. The company reported net income of $0.6 million or $0.02 per common share, compared to a net loss of $0.8 million or $0.03 per common share for the quarter ended December 31, '24. The company reported adjusted EBITDA of $3.3 million, compared to $0.9 million quarter-over-quarter. Now I'll cover some results for the year ended December 2025. The company reported fee revenues of $16.9 million (sic) [ $61.9 million ], an increase of 16% compared to $53.5 million in 2024. In 2025, the company reported a net loss of $1.9 million or $0.06 per common share, compared to a net loss of $4.7 million or $0.13 per common share in 2024. The company reported adjusted EBITDA of $4.7 million for the year in 2025, compared to adjusted EBITDA of $2 million for the year in 2024, which was a 139% increase year-over-year. Regarding our capital budget and liquidity, in 2025, we generated $14 million in operating cash flow and increased our cash balance to $4.9 million as of the end of the year, compared to $1.4 million at the end of 2024. In October '25, we entered into a revolving credit facility with a maximum lender commitment of $5 million, and had a borrowing base of $4.9 million and no balance outstanding on our revolver as of December 31, 2025. The company's Board of Directors approved a capital budget of $3 million for 2026, which included the final payment under the equipment single-node channel purchase of $0.9 million, which was made in January of 2026. And with that, I'll turn the call back to Tony for some comments on our operations and outlook. Anthony Clark: Thank you, Ian. As indicated in our earnings release issued yesterday, activity levels during the fourth quarter increased with 4 crews operating in the Lower 48 and 2 crews operating in Canada. The company was operating 1 large channel crew and 3 smaller channel crews operating in the United States and into the first quarter of 2026. High crude utilization in the fourth quarter resulted in healthy margins and profitability. And we are experiencing an increase in utilization and revenue in the first quarter of 2026. We resumed our Canadian operations in the fourth quarter of '25 with 2 crews and moved to the first quarter of 2026 with 3 large channel count crews. We anticipate our Canadian operations to have a successful first quarter. We've expanded our customer base to include more unconventional exploration, such as carbon capture, geothermal and critical rare earth minerals, as well as other uses of seismic acquisition capabilities. And we are seeing an increase in bid activity for these projects, as well as oil and gas exploration. I wish to thank all of our hardworking employees, valued clients and trusted shareholders. Now we will open up the lines for any questions. Operator: [Operator Instructions] And we have a question coming from the line of John Daniel with Daniel Energy Partners. John Daniel: I've been away from the seismic market for some time so my question might show some ignorance, and for that, I apologize. But how would you characterize sort of the quality of the service technology that you all provide today versus maybe what you would have had 5 to 10 years ago? In other words, just what are some of the key developments that you all have accomplished over the last several years? Ian Shaw: Tony? Anthony Clark: I'm sorry. What was the question again? I'm sorry. You said that what are some of the key developments that we have the last couple of years? John Daniel: Well, I'll dumb it down for me. I haven't been super-close to this part of the space for a while. And so I'm just curious like how has the service, the technology, how has it evolved over the last, say, 5 to 10 years? Just a little bit of history would be hugely helpful. Anthony Clark: Okay. Well, obviously, the big factor is going to these single nodes, which I quoted going from a 1-pound node to -- from a 10-pound node to a 1-pound node, it certainly helps in our acquisition characterizations of mob and de-mob, getting the equipment to the job site, from the job site, reduces our footprint in the field with less personnel, less equipment, decreases the HSE portion of our operations. And it's a higher technology. We went down from a 10-hertz phone to a 5-hertz phone. So that's the main movement of our operations. John Daniel: Okay. And then an unrelated follow-up. I know you don't want to give guidance, and that's fine, but just in light of what's going on in the Middle East, have you seen any early signs or changes in demand for services as a result of the conflict? Anthony Clark: Well, we saw an uptick for the last 3 quarters of increase in bid opportunities and utilization, as shown in our quarterly reviews. We're not sure that the -- there's been a major uptick coming around because of the war or the conflict. These budgets were set last year for exploration this year, with projects identified. So there may be some. But we anticipate if this conflict would resolve soon, that the activity level would remain at its present consistency. Operator: [Operator Instructions] And I am showing no further questions in the queue at this time. I will turn the call back over to Mr. Tony Clark. Anthony Clark: We want to thank everybody for attending and listening this morning. We wish you all well. That concludes our call. Operator: Ladies and gentlemen, that does conclude our conference call for today. Thank you for your participation, and you may now disconnect.
Operator: Good day, everyone, and welcome to Sportsman's Warehouse Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded. Now it's my pleasure to turn the call over to the Vice President of Strategic Programs and Investor Relations, Riley Timmer. Please proceed. Riley Timmer: Thank you, operator. Participating on our Q4 and full year 2025 call today is Paul Stone, our Chief Executive Officer; and Jennifer Fall Jung, our Chief Financial Officer. I will now take a moment and remind everyone of the company's safe harbor language. The statements we make today contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which includes statements regarding expectations about our future results of operations, demand for our products and growth of our industry. Actual results may differ materially from those suggested in such statements due to a number of risks and uncertainties, including those described in the company's most recent Form 10-K and the company's other filings made with the SEC. We will also disclose non-GAAP financial measures during today's call. Definitions of such non-GAAP measures as well as reconciliations to the most directly comparable GAAP financial measures are provided as supplemental financial information in our press release included as Exhibit 99.1 to the Form 8-K we furnished to the SEC today, which is also available on the Investor Relations section of our website at sportsmans.com. I will now turn the call over to Paul. Paul Stone: Thank you, Riley, and good afternoon, everyone. Before we begin, I want to recognize our dedicated outfitters across the country. Every day, they deliver on our promise of great gear and great service, strengthening our connection with customers and supporting the progress to transform Sportsman's Warehouse. I'm pleased with our fourth quarter and full year results, which exceeded our revised expectations. While the first half of Q4 reflected a more pressured promotional environment, we turned our sales trends positive in the back half of the quarter, which contributed to our better-than-expected results. We also delivered positive same-store sales growth in each of the first 3 quarters of 2025, resulting in a 1% growth for the year. This is our first year of positive comps since 2020 and a meaningful milestone in our turnaround. This progress reflects disciplined execution of the 3-year strategy we launched in late 2024. While there's more work ahead, we are encouraged by the traction across many areas of the business. For several weeks prior and through the first week of December, sales softened, driven by external factors, including the government shutdown and weaker-than-expected Black Friday and Cyber Week performance. We moved quickly to adjust our holiday strategy with a more promotional cadence to meet a value-driven consumer. These actions helped reverse trends with sales turning positive in December with strength coming into January, February and March. While we are encouraged by these improving trends, we remain measured as the U.S. consumer remains under pressure. Within the quarter, performance across our core pursuits was strong. Hunting and shooting sports grew more than 5% with firearm units again outperforming adjusted NICS checks, indicating continued market share gains. We also believe January demand benefited from external event-driven factors accelerating our personal protection category. Throughout 2025, we strengthened our position in personal protection by building a more focused assortment aligned with growing customer demand for safety solutions. This work is supported by the expertise of our outfitters, many with law enforcement or military backgrounds who provide trusted service and credibility that we believe is difficult for competitors to replicate. By leaning into this category with expertise, service and a more disciplined assortment, we are attracting new customers and gaining share, which is accelerated given current external factors. Fishing delivered quarterly results of 3.2%. Warm weather in the West drove a double-digit decline in ice fishing, masking underlying strength. Excluding ice fishing, the department grew over 11%, highlighting the strength of our business and the share growth opportunities ahead. We are encouraged with our early start to the spring season with sales up double digits so far this quarter. While our key pursuits performed well, camping and softlines remain challenged, reflecting their discretionary nature. We continue to sharpen assortments, eliminate lower productivity SKUs and align these categories more tightly to our core pursuits. Inventory in these categories declined in line with sales, demonstrating improved discipline, efficiency and healthy inventory. Our e-commerce business outperformed again with sales up 8.3% in the quarter and 6.6% for the year. This underscores the strength of our omnichannel model and the growth potential in our core pursuits. We also saw improvements in both units per transaction and average order value, driven by regionally and seasonally relevant merchandise, better in-stocks and stronger attachment across categories. In 2025, we made meaningful progress across 4 strategic priorities. First, through stronger planning and merchandising discipline, along with strategic technology investments, we significantly improved in-stock levels in the core 20% of products that drive 80% of our business. This delivered faster turns, SKU reduction and improved seasonal alignment. Second, we re-anchored the business to our local market advantage by strengthening the roles of our outfitters as trusted local experts and expanding locally relevant brands and products. Our position remains clear, out local the big box players and offer more depth in merchandising authority than smaller competitors. Third, we strengthened our authority in personal protection by optimizing our assortment, increasing depth in key handgun brands and introducing a broader non-lethal offering, including an exclusive collaborative partnership with Byrna that brought in-store theater, innovation and a new customer in the Sportsman's. This reinforced our leadership and drove growth. Finally, we strengthened brand awareness and advanced our digital-first go-to-market strategy. We optimized our performance marketing approach, driving efficient traffic across our channels through targeting and a more powerful customer experience. Leveraging data-driven insights and personalization, we are reaching customers with greater precision to support profitable omnichannel growth. Now I'll walk you through the next phase of our 3-year transformation. In 2026, we are strengthening our leadership position in our core pursuits, Fishing, Hunting and Shooting Sports and Personal Protection. These pursuits define our brand and attract our most engaged, highest value customers. Building on the foundation we set last year, our focus centers on 3 initiatives to support our core pursuits. First, we are upgrading our loyalty rewards program. We are partnering with a leading strategy and platform design firm to build a more powerful program that directly connects loyalty and our credit card ecosystem. Our goals are clear: increase retention, expand lifetime value and drive higher AOV and frequency through compelling rewards and personalized engagement. This work is early, but grounded in new data capabilities and best-in-class design. We expect later this year to begin testing and plan to launch the enhanced program in early Q1 of next year. Second, we are developing firearm solution bundling, building on our strength in Hunting and Shooting Sports and Personal Protection. With over 75% of firearm purchase beginning online and significant firearm traffic already coming to our site, we see meaningful opportunity to convert more of that demand through an improved digital experience. This tool will help customers build a complete firearm solution tailored to the pursuit while improving our overall margins. Given our natural store moat, which requires the customer to pick up their firearms in-store, we are leveraging our e-commerce experience to improve attachment to these items relevant to a single firearms purchase. Third, we are reinventing the omnichannel Fishing experience. Fishing represents meaningful growth upside. We believe we have about 1% share of a large and growing category, and we have an ambitious omnichannel plan to double that share over the next 3 to 4 years. This strategy includes two pathways. First, we are elevating the in-store experience through locally assorted merchandise built around species, seasons and innovation. Second, we are strengthening our digital fishing experience with the new species and region-focused platform that integrates content and commerce. This will help anglers build their total solution more easily and quickly. While this work began in mid-2025, we are accelerating our pace given the category's appeal to new high-value customers and its margin accretive profile. Looking to the year ahead. The U.S. consumer remains under pressure. Rising fuel costs and broader macro dynamics are adding weight to discretionary spending. At the same time, however, we've seen bright spots. Since January, demand in Personal Protection and ammo has strengthened, driven by external factors. We are capturing that demand while remaining realistic about duration. We also see potential tailwinds ahead, such as America's 250th anniversary, which aligns well with our customer and categories. While early, we are seeing a strong start to the fishing season and believe we are well positioned to capture demand due to our strategic initiatives in place for this category. Given all of this, we feel optimistic about our positioning. Our strategy is working, our initiatives are gaining traction and the turnaround is firmly underway. The team is energized and disciplined, and our focus remains on driving profitable growth, disciplined management of inventory while executing against the priorities we've laid out. With that, I'll turn the call over to Jennifer. Jennifer Fall Jung: Thank you, Paul, and good afternoon, everyone. For the full year 2025, we delivered net sales and comparable store sales growth of 1%. We are encouraged by how the year finished with results exceeding our revised guidance following Q3. Importantly, this marks our first year of positive comparable store sales growth since 2020. Adjusted EBITDA for the year was $27.5 million. While modestly below prior year, this result exceeded our revised expectations, driven by stronger-than-expected sales in the fourth quarter. A key focus throughout the year was disciplined inventory management. We ended 2025 with inventory down $29.1 million or 8.5% year-over-year. We are pleased with the quality and composition of our inventory and believe we are well positioned to support growth in our key categories while continuing to improve productivity and turns. We ended the year with net debt of $90 million, a reduction of 6.1% versus the prior year and total liquidity of $107.8 million. We also generated positive free cash flow, reflecting improved operating discipline and improved working capital efficiency. Turning to full year department performance. Fishing remained our strongest growth driver in 2025, increasing 10.3% for the year and nearly 18% on a 2-year stack basis. This performance reflects more precise inventory timing, improved locally relevant assortments and continued strength in participation trends. We see this as a category with ongoing opportunity for both growth and share gains. Hunting and Shooting Sports increased 4.4% for the year, driven by improved in-stock levels in core firearms and ammunition, better alignment of inventory with key hunting seasons and continued traction in personal protection, including less-lethal alternatives. Our other categories declined for the year, reflecting pressure on discretionary spending. Importantly, we maintained inventory discipline in these areas with inventory reductions exceeding sales declines, supporting improved efficiency and margin structure over time. Turning now to fourth quarter results. Net sales were $334.9 million, down 1.6% versus prior year, with comparable store sales declining 1.8% Performance was led by Hunting and Shooting Sports, which increased 6.2%, driven by strength in firearms, ammunition and less-lethal personal protection, partially influenced by event-driven demand. Fishing increased 3.2% in the quarter, though performance was impacted by unseasonably warm weather in the Western U.S., which pressured ice fishing sales. Excluding ice fishing, sales in this category were up over 11%, reflecting its underlying strength. Our other categories declined, reflecting a more promotional environment, the impact of the government shutdown and continued pressure on the U.S. consumer. Gross margin for the fourth quarter was 28.4% compared to 30.4% last year. The decline was primarily driven by category mix with a higher penetration of firearms and ammunition, increased promotional activity and lower sales in higher-margin categories. SG&A expense improved to 28.7% of net sales compared to 29.4% last year, driven by disciplined cost control, particularly in payroll. We remain focused on managing expenses while continuing to support the business. Net loss for the quarter was $21.7 million or $0.56 per diluted share compared to a net loss of $8.7 million or $0.23 per diluted share in the prior year. Adjusted net loss for the quarter was $3.9 million or negative $0.10 per diluted share compared with adjusted net income of $1.6 million or $0.04 per diluted share in Q4 of the prior year. Adjusted EBITDA was $9.6 million compared with adjusted EBITDA of $14.6 million in Q4 of last year. Now I'll provide more details regarding the balance sheet and liquidity. We ended the year with inventory of $312.9 million, down $29.1 million from the prior year and better than our expectations exiting Q3. We exited the year in a healthier inventory position having worked through the majority of our seasonal product. As part of our ongoing inventory efficiency efforts, we are further refining the timing of receipts. As an example, for the upcoming spring season, inventory is planned to arrive later, which we expect will support improved turns and overall productivity. We expect to operate with lower average inventory levels throughout 2026 compared to last year, while still having sufficient levels of inventory to hit the top end of our plan. Capital expenditures for the full year were approximately $19.5 million, primarily focused on general store maintenance and strategic technology investments to support our operational and digital capabilities. We ended the year with net debt of $90 million and total liquidity of $107.8 million. We generated $8.9 million of free cash flow and used that cash to reduce debt. Debt reduction remains our top capital allocation priority as we continue to improve our leverage ratio. As we conducted a thorough review of our fleet of stores, we estimated we will be closing approximately 5 stores in the next 12 months. We expect these closures to happen after the holidays. Therefore, we do not anticipate a material impact to this year's results. Turning now to our guidance for 2026. Starting with our net sales outlook. We estimate same-store sales to be in the range of down 1% to up 2% over last year. This outlook reflects a balanced view of the current environment and the health of the U.S. consumer, which continues to be pressured. We expect adjusted EBITDA to be in the range of $30 million to $36 million. This improvement is expected to be driven by better gross margin performance, continued inventory discipline and ongoing expense management. We expect capital expenditures to be between $20 million and $25 million, primarily related to technology investments as well as normal store maintenance. To reiterate, our priorities for 2026 are driving profitable comp store sales growth through the execution of our strategic initiatives, managing our inventory efficiently and using excess free cash flow to pay down our debt and strengthen the balance sheet. That concludes our prepared remarks today. I will now turn the call back to the operator to facilitate questions. Operator: [Operator Instructions] It comes from Matt Koranda with ROTH Capital. Matt Koranda: I wanted to start out with the near-term demand trends that you highlighted. I know you mentioned sort of a shift that you saw at the end of December that carried through. And I think you said in the prepared remarks, all the way through March. Does that mean we're effectively comping positive in the first quarter to date? And maybe just how you think about the category strength. I would assume it's still kind of the usual suspects in terms of firearms, ammunition, personal protection that's doing well, but maybe just unpack category strength as well for us. Jennifer Fall Jung: Yes. Matt, this is Jennifer. Thanks for the question. Yes, what we made in our prepared remarks is that we were seeing the trends that really started in January continue through February and March, where you just called it as really strong growth coming from firearms and ammunition. And as we know and as you know, our industry tends to be really influenced by external events. And we think there's some tailwinds right now going on because of what is kind of going on externally. So yes, we feel good about the quarter. We gave guidance of a negative 1% to a positive 2% on the year, but we feel like we're coming out strong in Q1. Matt Koranda: Okay. Understood. And then maybe just for the EBITDA improvement that you're embedding in the guidance for the full year. Just wanted to hear how to think about the building blocks there because obviously, the comp guide is, let's call it, flattish at the midpoint. And I would assume that the mix of categories being more skewed toward firearm, ammunition probably puts a little pressure on gross margin. So where are the building blocks to get to the positive EBITDA outlook despite kind of the flattish top line and maybe a little margin pressure from category mix? Jennifer Fall Jung: Yes. So we do feel bullish about our fish category as well. That has been positive comping on a 1-year and a 2-year stack. So we're continuing to put our shoulder against fish, and we have a lot of initiatives that support it. And that with the exception of ice fishing in January, that category has bounced back nicely. So we will have some goodness there with the fish coming into play. That being said, Q1, just based on the penetration of firearms and ammunition, we expect margins to be down year-over-year. And then for the rest of the quarters, margins will be flat to slightly positive, slight improvement. And then with SG&A, a little bit of the same story, do expect slight -- flat to some slight leverage within that range. And that essentially kind of gets you to where our improvement in adjusted EBITDA comes in. Just the one thing to note that Q3 of last year versus Q4 of last year, there was a heavily weight of EBITDA in Q3 versus Q4, but we do think some of the Charlie Kirk effect influenced that. We expect those to be a little more balanced going forward. Matt Koranda: If I could sneak just one more in on the way to think about free cash flow this year, especially on, I guess, the inventory front. It sounds like the signal is we see more efficiency opportunity. Just wanted to hear about how you think about inventory balance throughout the year, especially as we're closing the 5 underperforming stores and how maybe there might be opportunity for inventory per store to improve further this year? Jennifer Fall Jung: Yes. We're definitely -- as part of our go-forward strategy in addition to executing on our -- against our core pillars, we do think there's opportunity to continue to find efficiency in inventory, everything from really about the timing of inventory, making sure that we're getting in similar to what we did in Q3 and Q4 of this year, getting in a little ahead of the season and definitely looking to take the marks before the season is over while the demand is still there. So that's what's really helped our inventory, especially towards Q4 and then how we ended up lean even though we came into the quarter with the first 6 weeks were a little bit tough. So definitely opportunity in inventory. From the stores that we discussed, which is an estimated 5 stores, it might be a few more, it might be a few less. We're still in negotiations on that one. Those we don't expect to close until after the holidays. So you're not going to see a material impact on those. depending on when we actually take action on those, we will transfer inventory and liquidate anything seasonal within the store when those, in fact, do close out. Paul Stone: Matt, I would just add, I think there's been a lot of learning on the inventory front as we went through last year. And I think from a seasonality standpoint, course correcting from '24 to '25, we're probably in seasons a little too early, carried inventory a little too long. So I think as we think of the discipline in the inventory approach this year, really, the rigor is going to be around being able to hit the mark, be able to improve the turns and to look at this improvement in inventory going through the quarters all the way through the year and be much more efficient with how we land the inventory and how we get out of the inventory. Operator: Our next question comes from Anna Glaessgen with B. Riley Securities. Anna Glaessgen: I guess I'd like to follow up on Matt's question about the first quarter here. I guess how should we be thinking about -- it sounds like the tailwinds from the external events are supporting demand offsetting maybe the con of gas inflation and the government shutdowns. How should we be thinking about the potential risk as the conflict extends? Do you think we should layer on an assumption of more consumer headwind if it extends into April, May? Jennifer Fall Jung: Yes. With the risk, we do think the health of the U.S. consumer is really the risk that we're seeing. Q1, we do have a couple of months behind us, so we're feeling pretty good. But with fuel prices and given where our customer is positioned, that's definitely something we've contemplated in our guide. On the offset of that, the tailwind really is the 250th anniversary of America, which we think resonates well with our customer. And also, if there's anything else from an external event-driven factors, a lot -- we were just looking at all the legislation, both state and federal that's out there, and there's 16 that are on the table right now, some good for our industry, some not so good, but that's just -- that also impacts consumer demand. So there's a lot of variables in there. So we've tried to make sure that as we're thinking about the quarter and the year that we've accounted for that the best we can. Anna Glaessgen: And then a bigger picture question. In the past, we've talked about potentially getting the mix back to pre-COVID, implying a lesser mix from firearms and ammo to help support margin recovery going back to the historical mid- to high single-digit adjusted EBITDA margin. Now we've seen hunt increase in penetration this past year, while, of course, it's great to see the outperformance versus the industry. I guess, how should we be thinking about the hunt penetration over -- in '26 and over the next few years and how that's being contemplated in the margin outlook? Jennifer Fall Jung: Yes. We've contemplated it in our margin. What we're trying to also do kind of going back to the mix question is, as I mentioned on the first question, continuing to put our shoulder against fish. In addition, we have been working on cleaning up the apparel business. There was a pretty big hangover in that category. And we're finally getting to the point where we're able to bring in some new and exciting brands and kind of get that -- the soft goods business back on track as well. Probably have a little bit more work to do with camp. But as we actually start taking these other categories, the soft goods and camp and gift bar and whatnot and make them more attached to our pursuits, we know that's also going to help get them back on track as well because right now, they're a little bit ancillary and doing their own thing, but it's really aligning everything to hunt, shoot, Personal Protection and fish. Paul Stone: Yes. I would just add, Anna, I think the website experience that I mean, we're really leaning into this year and the opportunity around the bundling component of it where we're not putting that complete burden on the outfit or when they come in to attach at that rate, but to be able to allow the consumer to be able to walk through an easy process to be able to have the complete package and solution that they need and then allow them to have that solution when they get to the store versus putting the complete burden on our outfitter in the store. We like what we're seeing and what we're putting into place with that. And then fish as well. We've started the work with fish. We know we're underpenetrated online with fish, even though we've seen growth over the last couple of years, we think we have a large opportunity to improve what our overall experience looks like online and to be able to allow us to be able to grow that penetration of fish as well. So the growth has really happened from fish. We need to accelerate it this year, and we think there's a huge opportunity for us to do that through investments we make on working online to allow the consumer to have an ease of experience. Operator: It comes from the line of Mark Smith with Lake Street. Mark Smith: Can you walk through a little bit more some of the different headwinds on gross profit margin in Q4? Any additional insights you can give us on kind of how much of the pressure came from mix versus promotional intensity maybe late in the quarter and anything like freight that was an additional headwind? Jennifer Fall Jung: Yes. It's a combination of mix as well as promotional cadence. We -- as we came out off of our third quarter call, we were still in the midst of having some pretty pressured sales. So as we discussed on that call, we had the inventory, and it was seasonal inventory that we needed to make sure that we were clean up into January. So we did take the opportunity to be more promotional to drive sales as well as to clean up our inventory. So that's definitely a component of it. But in addition to that, with ice fishing not performing, -- it's probably one of our weaker comps for fish was Q4 simply because of ice fishing, there was no ice to fish. So that put pressure on it as well. But that since has come back. That season is behind us. So fish is back on track now. So a little bit of both. But as we look forward, there's not a ton of tariff impact in here. There's some. We know what that is, but I wouldn't say that's putting the pressure necessarily on our margins going forward. Paul Stone: I think, Mark, I mean the big part of it, we had to play a lot of catch-up in the back half. I think we -- November was an extremely challenging month for us as we started December, we were seeing the same thing. And to Jennifer's point, we were going to clean up and lift our commitment to be able to get out of product in season and not carry it forward. We like the way clearance is year-over-year now and the health of the inventory. So we did have to take some steps being promotional at the same time being cognizant of getting out of the seasonal inventory within the season. So I think the slow start that we saw in November and carrying over into the 1st of December caused us to react. And we did that knowing that we wanted to be in a much cleaner position and not have this continuous carryover of inventory. Mark Smith: Okay. And I think, Jennifer, you may have said that you expect Q1 margin to be down a little bit year-over-year. Is that just some continuation post January of some of those same pressures and lack of snow and that's all mix. Jennifer Fall Jung: Yes, that's a mix. It's heavily penetrated towards firearm and ammunition. Paul Stone: I think that the way you think about it is with the mix, we're seeing a macro effect and February and March being lighter months for fish, not to help you there, then we get into the peak of fish, that helps to outweigh or at least to be able to take a little bit of pressure off of what the mix looks like, but to have February and March in there, especially with some of the temps that we saw on East and in particular, in the Southeast to start the year that we just don't have enough volume in those first couple of months of fish to be able to offset it. Mark Smith: Okay. And then I just wanted to dig in a little bit deeper on some of the store closures. You guys took impairments on 10 stores. It sounds like closing an estimated 5, but it's all going to come after kind of the holiday. Can you just walk us through the thought process, maybe of those 10 stores, how many are losing cash? And if any of these are kind of at the end of lease terms as you close it? Jennifer Fall Jung: Yes. So we -- I think we've always talked about how -- in general, our fleet is very healthy. If you go store by store, it's good. But really, it came time to take a hard look at those 5 underperforming stores that just don't have a long-term place in our fleet and make some calls on those. So the thought process there is these are long-lasting leases that we have because our leases are unfortunately, 10 years long. So these aren't all 10 years, but they're going out quite a bit. But right now, what we're doing -- and these are actually losing adjusted EBITDA stores. So we're working with some brokers to try to either renegotiate, get a subtenant in there, look at all different options, do a buyout, all of which financially makes sense for us just given where they are within the portfolio. I'd say the others, there's a lot of -- not a lot, but there are a few stores that are going to roll off within the next coming, call it, 18 or 20 -- excuse me, 12 to 24 months anyway. So those -- you really can't do much with landlords when you have that short of a time left on your lease. So those are ones we will -- that we may have impaired, but we will just let run off. And then there are some in there where if we're going to close some of these other stores that we know we want to close, there'll be some sales transfers to their neighboring stores, and that will actually help improve the overall productivity of those stores. So those might actually remain in the fleet. Operator: And as I see no further questions in the queue, I will pass it back to Paul Stone for closing comments. Paul Stone: By way of note, we posted an updated presentation on our Investor Relations website. Thank you for all joining the call today, and thank you to all the passionate outfitters around the country for their commitment to Sportsman's Warehouse. Together, we look forward to providing our customers with great year and exceptional service. Thank you. Operator: And this concludes our conference. Thank you for participating. You may now disconnect.
Operator: Good morning, ladies and gentlemen, and welcome to the Serica Energy plc Full Year Results Investor Presentation. [Operator Instructions] The company may not be in a position to answer every question it receives during the meeting itself; however, the company can review all questions submitted today and will publish responses where it's appropriate to do so. Before we begin, we would just like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to the executive management team from Serica Energy plc, Chris. Good morning, sir. Christopher Cox: Good morning, and welcome to our 2025 full year results presentation. I'm joined as usual by Martin Copeland, CFO; and Andrew Benbow, our Head of Investor Relations. Thank you to everyone who has submitted questions ahead of the call, but please feel free to post any further questions you have during the presentation. And should we not get time this morning, then please contact Andrew directly. We will respond promptly to every question we receive. Martin and I will now run through a short presentation and then answer as many questions as we can in the time available. This slide is a reminder of our strategy and our purpose. We're here to produce hydrocarbons safely and efficiently while creating value for shareholders and also helping to deliver energy security, jobs and investment for the country. You may be aware that this has been our purpose unchanged for some time now. And I know that such statements can sometimes sound like typical corporate speak. But as we speak today against the backdrop of the terrible events in the Middle East, the importance of our contribution to domestic energy security has never been more apparent. We are unapologetic about the role we play in providing much-needed energy products for society. We have a two-pronged strategy for creating value. Our DNA is taking on mid- to late-life assets and then extending their field life and optimizing production. We've been delivering on that strategy recently with a number of M&A transactions, and we expect that to continue. And we are well positioned at present with a highly cash-generative production portfolio with organic growth options fighting for capital allocation. Our strong positioning is partly as a result of strategic delivery last year. We invested in our existing portfolio, carrying out significant work on resilience and asset life extensions as well as completing a highly successful 5-well drilling program around Triton. These wells will help retain robust production at the FPSO, and the success of that campaign gives us confidence to continue to exploit multiple organic investment opportunities elsewhere in our portfolio. As we continue investing, we also continued our track record of shareholder distributions with dividends amounting to 16p per share. As announced today, these distributions are continuing in 2026, as we recommend a 10p final dividend in respect of last year, continuing to strive to offer investors a compelling mix of growth and returns. And of course, key to our strategic delivery in 2025 were multiple acquisitions. We were one of the more active M&A players in the U.K. sector last year, announcing multiple acquisitions that increased and diversified our portfolio, enhanced cash flows and added to our opportunity set. In total, we increased our reserves by 19%, adding some quality long-life fields to our portfolio. The impact on production will also be material, adding over 20,000 barrels a day to our production capacity. The deals were done at very attractive prices with reserves added at a low cost of $3.30 per barrel. The acquisitions, which we have completed, being Prax Upstream and now TotalEnergies, which completed today, have resulted in the net receipt of cash by Serica amounting to $75 million in aggregate. And the ones still to be completed, from ONE-Dyas and Spirit Energy, will also result in net cash receipts or only limited cash paid out on completion. Hence, these acquisitions will be cash flow accretive this year, thereby supporting further portfolio investment and returns to our shareholders. Looking ahead, our strategy remains unchanged as we seek to acquire assets that may be non-core to others, but can be enhanced by Serica through extending field life and delivering further value, both corporately and through the subsurface. We will continue to look for potential acquisitions in the U.K., although the amount of recent consolidation means there may be fewer opportunities in the near term. As a result, and as we previously signaled, we will continue to explore opportunities overseas, but only in areas where we are confident that we can deliver our clear value creation strategy. As we grow, we are ensuring that the capabilities of our team grow with us. We are confident in our strategy and confident that we have the right team to deliver it. Since joining, I felt there were some areas in which Serica lacked the expertise required to excel as a North Sea producer. And as our portfolio has grown, the need to strengthen our capability has grown with it. We've made a number of targeted senior appointments that have materially improved our decision-making, our talent management and our ability to deliver for shareholders. We have established a quality executive leadership team and are putting in place the wider organizational structure and processes to position us to deliver on our strategic and operational goals. We are not finished, but I believe we are close to achieving the goal of establishing the right team to lead a top-performing FTSE 250 company. We need a team with depth and breadth, as we are now building a broader and more complex business. Our portfolio is more diverse and robust with assets that will encompass the entirety of the U.K. continental shelf from the West of Shetland to the Southern North Sea. Our new assets will significantly enhance the predictability and quality of our overall production and cash flows with less reliance on the 2 main hubs and the number of producing fields set to more than double. By the end of the year, we will have equity in a total of 26 producing fields. We are growing our presence in the basin and keen to continue growing. We now operate around 10% of the U.K.'s natural gas production. And today, having assumed control of the Shetland Gas Plant, we have the potential to play a key enabling role in the most prospective gas basin in the UKCS. The projected decline in North Sea production, we often see reported, is one enforced by policy and not geology. As our Chairman has said today, we urge the government to unblock the logjam in its approval of the development of new oil and gas fields, change its stance to the award of new licenses, scrap the onerous and counterproductive EPL and replace it with the already announced OGPM as soon as possible and to change its tone towards the sector. The opportunities in our portfolio alone show there is more to be delivered from the UKCS, much of which is short cycle in nature, and we're keen to play our part. And we are set to increase our production materially in 2026. As you can see from the chart on the right, our expectation for 65,000 barrels a day by the end of the year is not aspirational. It is, in fact, less than what we would be delivering today had all the asset transactions completed. That figure does include Lancaster with production scheduled to cease in May as expected, when the FPSO moves on to its next project. But of course, we need to actually own these assets first. And I'm pleased to say that completions remain on track with the previously stated timetables. We targeted the end of the first quarter for the TotalEnergies acquisition, and that completed today, slightly ahead of schedule. This transaction brings into the portfolio over 5,000 barrels a day of unhedged gas production. We also remain on track for midyear completion for the ONE-Dyas transaction and later in the second half of the year for Spirit Energy. On our Core portfolio, production has increased in 2026 year-to-date compared with Q4 last year, but it's still not where we would want it to be. Production at the Bruce Hub has largely been robust, and we are regularly producing 20,000 barrels a day net from the hub, which is a real positive given the current gas prices. Unfortunately, some further unscheduled maintenance at Triton needed to be carried out in February and early March that required a shutdown for just over 3 weeks. The operator, Dana, concluded that due to overdue maintenance on some production and power generation systems, they could not wait until the summer shutdown to complete work on those systems. They, therefore, took the proactive step to fix the issues immediately rather than to continue to run the equipment that could potentially fail. This work was completed on the 9th of March, and Triton has been running continuously since that time. As indicated in our January trading statement, we also lost production from Orlando for much of the period due to wave damage caused to the Ninian host platform, but this is now also back online and producing over 3,000 barrels a day. Since production restart at Triton, we have seen a fortnight of stable production averaging over 50,000 barrels a day in that period. Over the last few days, we have also seen the first production from Belinda, the last field in the U.K. to receive development consent. It is too early to determine a stable rate for Belinda, but early indications are promising. Triton is currently running with a single gas export compressor as the second compressor is offline awaiting a spare part. Maximum production in this operating mode is roughly 25,000 barrels a day net to Serica. And as we now have excess well capacity, we can anticipate being able to flow at that rate at least through the end of 2027. Once the second compressor is available, we will need to decide with Dana whether it makes sense to keep the second compressor as a backup to give more stability at 25,000 barrels a day or to run the 2 compressors in parallel at a higher rate, but with more vulnerability to downtime. Our production guidance of significantly over 40,000 barrels a day was based on very conservative uptime, effectively building in a weaker month of downtime at Triton. As such, with a significant production uplift to come, we are comfortable in retaining our guidance is unchanged. Going forward, the predictability of our production will be enhanced by the new assets coming in with some, notably GLA and Cygnus having historically very high uptime. But for now, we continue to be focused on delivering improved performance from our existing assets where there's still plenty to do. We are working to embed a culture of operational excellence, where we are not satisfied if we produce anything less than the maximum possible on any given day. In the last few years, there have not been enough maximum production days, and we are reenergizing our entire workforce to pull together to deliver more. There is also work to be done this year to help deliver production well into the future. At the Bruce Hub, there is exciting subsurface potential, and we are doing the necessary work this year to prepare for potential drilling in 2027. At Triton, we are working closely with Dana, and the focus is very much on delivering stability of operations. Dana have been taking many of the same actions that we have taken at Serica to improve performance, in particular, with strengthening of their team with new offshore installation managers, maintenance team leaders and safety advisers as well as bringing in-house some key technical specialist roles, which were previously outsourced. We are also, of course, working hard to integrate our new assets, and I am delighted to welcome our new colleagues from TotalEnergies into Serica and those transferring across to our operations and maintenance contractor, px, today. Even without the addition of reserves from new assets, I'm pleased to say that our reserves replacement effectively achieved 100% in 2025. This was achieved through the excellent work of our subsurface team and largely by 10.2 million barrels being moved from resources into 2P reserves due to the maturation of the Kyle redevelopment, which has now been renamed Kyla. This effectively offset the 10.1 million barrels of production in the year. With the addition of the newly acquired assets, our 2P reserves rise 19% on a pro forma basis. We will continue to be balanced between oil and gas. But on completion of the acquisitions, we will become slightly more gas-weighted as our acquisitions are mostly gas fields. I'm pleased to say we have also delivered a 16% increase in 2C resources, indicative of our attractive opportunity set. This increase was driven by the extensive work on maturing the potential Bruce drilling program as additional infill well opportunities delivered an 18.2 million barrel increase in 2C resources. This outweighed the relinquishment of the Mansell license and transfer of Kyla to reserves. The addition of Wagtail, which we announced during the year, also provided an uplift of 8 million barrels of 2C resources. In total, we now have over 100 million barrels of 2C resources, constituting a diverse and attractive opportunity set. These are projects of various types and across our asset base, but are all tangible and deliverable opportunities. With prudent investment, there is plenty in the hopper to sustain our production at or above current levels into the next decade. We are continuing to high-grade the suite of opportunities and plan to share considerably more detail on these at a Capital Markets Day in early June. We are focusing at present on those opportunities that have the potential for rapid payback, and there are a number of projects that fit that description. One that we have talked about before is Bruce. Bruce is a huge field, and there is plenty of remaining potential there, as can be seen by the increase in resources we have been able to share today. There has been no drilling on Bruce since 2012, and drilling on the field, which sits with our -- within our subsidiaries that do not have tax losses, would be highly tax efficient. First hydrocarbons are possible within 1 year of drilling, and we see a first phase of wells that could add over 10,000 barrels a day to production. This is a significant opportunity to deliver greater production of critical gas supply to the U.K. in a relatively short-term time frame. This opportunity is the result of work done over more than a year now across the integrated disciplines within our exceptional subsurface team, which, as I may have mentioned before, is the best in the business. Market screening for a rig is currently underway to enable us to potentially take an investment decision later in the year, which could enable drilling to begin in 2027. There is still more work to be done, and there are other opportunities also battling for capital. Kyla also offers a material production uplift. This was a previously producing field, which ceased production due to the host infrastructure being decommissioned. A horizontal well drilled into the best part of the reservoir and producing into Triton could also, therefore, add 10,000 barrels a day to our portfolio. And then, we have the opportunities just welcomed into or to be brought into our portfolio via acquisition. Glendronach is a compelling opportunity, and there are others not even mentioned on this slide that we look forward to discussing at the Capital Markets Day. And we are very excited by the overall potential West of Shetland. I realize this is quite a busy map, so let me give you a quick overview. We've acquired the acreage, which is shown in blue, which includes the Laggan and Tormore and other producing fields as well as a number of exploration prospects plus the associated pipelines in orange and the Shetland Gas Plant. Further west and north of our acreage is an extensive area colored in gray. This acreage is owned by Adura and Ithaca, 2 of the largest U.K. producers who are bullish about the drilling prospects in the area. The industry consultant, Westwood Global Energy, recently published a report identifying that the West of Shetland Basin holds an estimated 5 trillion cubic feet of gas. Of course, that sounds like a big number, and it is. In fact, it's equivalent to supplying every household in the U.K. for 5 years. And yet some people continue to say that the amount of gas we can produce in the U.K. is not significant. With 1.5 billion barrels of discovered and prospective resources situated within tieback distance of our existing infrastructure, this is an area of material potential for the industry and for Serica. And the Shetland Gas Plant is an asset of strategic importance to the country. While we are not primarily a third-party infrastructure company, as well as processing our own gas through the plant, we are currently processing gas for Adura from their Victory field, which only started producing last September. And we hope soon to be doing the same for Ithaca and Adura, Tornado field, which they are looking to move to final investment decision by the end of the year. But as well as exciting third-party opportunities, which all add value for Serica, there are also opportunities for the GLA joint venture to develop and add value from the assets on which we have completed today. These include the Glendronach tieback and a possible infill well at Tormore. And now that these are in our portfolio, they will be assessed and ranked against the other development opportunities we have in the battle for capital allocation, about which, again, we will give more detail at our Capital Markets Day. And with that, I will hand over to Martin to give you more on our finances and how we are seeing things in the near-term market situations. Martin Copeland: Thanks, Chris. As we largely preannounced with our January trading statement, the story of last year is mostly that despite a challenging year operationally, our relative financial strength and our confidence in the resolution of those issues enabled us to continue delivering on investment in the portfolio and on healthy shareholder returns, including maintaining the full year dividend at 16p, inclusive of the 10p proposed final dividend we are announcing today. When it comes to how we generated and used cash during the year, this waterfall chart shows the picture of what actually happened to gross cash from our year-end 2024 to our year-end 2025 position. But the real story of the business potential lies in understanding what the deferred production cost us in foregone 2025 revenues from the unscheduled Triton interruptions. Based simply on adjusting for what would have happened if Triton had delivered operating efficiency in line with our 2025 budget and factoring in the actual prices of oil and gas, which prevailed, we estimate we missed out on some $250 million of revenues last year. And because those missed revenues were at Triton, where not only do we still have material tax losses, but we were also investing heavily, which is the key method of sheltering the EPL and that our cost base is very largely fixed in nature, those foregone revenues would have flowed almost directly to additional free cash flow generation. We were, however, helped last year by the receipt of $63 million tax rebate in respect of overpaid taxes from 2024, but also from a low cash tax bill during the year, given we were able to factor in the impact of group relief into the installment payments made during the year. These are the reasons why the tax bar is, in fact, a positive on this chart. So we very much do not see 2025 as representative. And indeed, as we indicated in January, we are confident of material free cash flow generation this year, and that outlook has, of course, only improved in the current market conditions. In fact, as it says on this page, with the completion of the TotalEnergies deal today, we have more than halved our net debt as compared to the year-end level and are on track to be in a net cash position by the end of H1. Turning in a little more detail to the income statement. While realized prices were generally not materially different than in 2024, being marginally lower in oil, but higher in gas, our revenues of $601 million were down 20% from the prior year, essentially in line with the lower volumes. But the truer comparison of the impact of Triton issues can be seen in the comparison with the 2023 pro forma levels. On this basis, production was down some 4.5 million barrels or approximately 30%. Our hedge book was in the money at year-end and delivered unrealized hedging gains of $75 million and just under $8 million in realized gains, as we benefited especially from protection against the lower prices seen in Q2 in the wake of the liberation day tariff announcements. Operating costs were roughly 10% higher than 2024, largely as a result of increased maintenance activity at the Bruce platform, as we sought to reduce maintenance backlogs, but also because of a slight weakening of the dollar versus our largely pound-denominated costs. G&A costs were up by just under $2 million, as we made choices to add capabilities to set us up for future success, and we incurred transaction costs of $5.5 million associated with the extensive M&A activity. Despite the challenges in the year, we still delivered a profit before tax of $80 million, but at half the level of the prior year. Our current tax charge was only $2 million, as we benefited from in-year group relief associated with losses made in the Triton subsidiaries. However, in common with all our North Sea peers, and as we also reported in our H1 results last year, we had a material deferred tax charge of $130 million, including a $65 million charge relating to the enactment in Q1 of the extension of the EPL from 2028 to 2030. The result of these noncash accounting impacts is that we reported a book tax charge of 165% and posted a loss after tax of $52 million for the year. Turning now to the balance sheet and notable changes in the year, which result mostly from acquisitions. Our exploration and evaluation balance doubled to $43 million, primarily as a result of the completion of the Parkmead acquisition, as we became operator and brought into a greater share of the Skerryvore exploration prospect. We also consolidated the acquisition of Prax Upstream, which completed on the 11th of December as a business combination. As preannounced in January, we ended the year with net debt of $200 million, being effectively 1x EBITDAX. But as already explained, we see this as something of an anomaly and would have been net cash pro forma for the deferred cash flow from the Triton issues. And as already noted, we have more than halved our net debt since the balance sheet date. Finally, inclusive of the impact of new drilling at Belinda and Evelyn as well as bringing Lancaster into the portfolio from the Prax Upstream business, we ended the year with the exceptionally low level of decom provisions of less than $2 per 2P barrel of oil equivalent. While we always update on our hedging with our results, given the dramatic events in commodity markets year-to-date, we felt that a slightly deeper dive is merited today. Before turning to how we positioned -- we are positioned and what we expect to be doing in the future, we wanted to give a bit of background on what's been happening in oil and U.K. wholesale gas markets year-to-date. We came into the new year with all market fundamentals in terms of physical supply of oil and, to a lesser extent, gas pointed to a weak Brent prices during 2026 and medium-term weakness in gas prices. Bearish sentiment was evident in the market, and this was apparent in that despite unusually low European storage levels, U.K. gas prices averaging around 84p per therm for January and February were roughly half the level of the equivalent mid-winter period in 2025. However, of course, things changed dramatically after the war in Iran commenced on the 28th of February. For the 3 weeks of March so far, NBP day-ahead pricing has averaged 127p per therm, and Brent has averaged $103 per barrel. But as the charts on this page, which show the shape of the forward curve for Brent and for NBP at various dates since early January right up to a week ago on the 19th of March, things really elevated in reaction to the de facto closure of the Strait of Hormuz and the physical attack on the Ras Laffan and Pearl GTL plants in Qatar. But although near-term prices, the front end of the curve have risen sharply, the prices further out in time have not risen nearly as much, and the forward curve for both oil and gas are in very steep and, in fact, unprecedented backwardation. These forward prices should not be seen as predictors of future prices, but they do represent the levels at which Serica would be able to hedge in the market through swaps. So with this backdrop in mind, we turn to where our hedge book stands today. We've been building our hedges materially during the first quarter, and the reason for that goes to the reasons why we hedge. Firstly, we have an ongoing requirement by our banks to hedge a certain amount on a rolling basis, being 50% of the current year and 30% of the following year. But beyond that, we are always striving, appreciating that we cannot predict events and prices to find the Goldilocks solution, not too little and not too much. On the one hand, we seek to ensure that we protect downside sufficiently to ensure that we can cover our cost base in tougher times as well as to support our capital allocation priorities, including the dividend. This also includes maximizing the liquidity available to us through the borrowing base under our RBL. But on the other hand, we do not want to overhedge so that events, even if they are the kind of tail risk events we have seen this month, which cause prices to spike, can benefit our shareholders. So we were always looking to protect the downside, but leave as much as possible of the upside potential. In common with our peers, we do this both by imposing policy limits on our absolute amount of hedging and by the choice of instruments that we use for hedging. As shown on this table, Serica is currently hedged for about 60% of our forecast production in 2026 and about 50% in 2027, which is inside our policy limits. When we combine the impact of the unhedged part with the use of zero-cost collars, which retain an element of upside exposure, we retain about 40% upside exposure in 2026 and around 55% in 2027. The position in gas is actually more exposed to upside than in oil with only around 50% of our gas volumes hedged this year and less than 40% for next year. While we have built the book since the beginning of the year, about 50% of the hedges we've built have been taken on since the start of facilities from the 2nd of March, and we've been able to capture some very attractive opportunities. For instance, although the table show averages for the quarter, we have, in fact, recently placed some swaps for March at levels up to $111 per barrel for oil, which is especially pleasing given our most recent Triton lifting concluded only earlier this week. We appreciate that it can be confusing to understand the intricacies of hedging approaches. And although we hope the floor prices are quite clear on this table, it is tough to figure out what the foregone upside price implications are. So, as a bit of a guide, we estimate that our current hedge book for 2026 with oil prices at a notional $100 a barrel, we realized roughly $80 a barrel. And at 150p per therm for gas, we realized roughly 130p per therm. Taking a look at this slide, you may think you've seen this before, and that is because you have. We're pleased to say that we are simply reiterating our guidance across production, OpEx and CapEx at the levels we set forth with our trading statement in January. What we have though updated on this page is the carry-forward tax loss balances that we've reported today as of the 31st of December 2025. As you can see from a combination of our own activities during the year as well as M&A that we completed during 2025, we ended the year with essentially double the level of tax losses as we started with. We now have roughly $2 billion of corporation tax and SCT losses and roughly $500 million of EPL losses. And using the simple math that we've applied before of corporation tax loss times 30%, SCT times 10% and EPL times 38%, then the notional value of these losses is around $1 billion. Finally for me, I wanted to say a few words to add what Chris has already covered in relation to the M&A we announced in the year. In my previous career as a banker, we would tend to consider that the M&A was done when the deal was signed. But what I've since learned is that to ensure we deliver value, we need not only to be capable of efficiently delivering complex operated asset transactions through to completion, but also to ensure that the businesses are integrated efficiently into Serica and set up to realize their value potential. Serica has, therefore, invested in human capital to ensure that we have the skills and processes that are needed to be successful in an M&A growth strategy. This includes being agile and opportunistic in the execution phase and ensuring that we always do what we say we will do. So we sustain Serica's good reputation in the M&A market as a credible and trustworthy counterparty. That also means having the people, processes and systems that are set up to deliver in a repeatable way to coordinate and drive forward the multiple work streams needed to get to completion and day 1 in the fastest possible time, all while also ensuring safe and reliable continuous operation of high-sensitivity assets and complex IT systems. The process we have just completed to see GLA and the Shetland gas plant come under our control today is a great example of this. Finally, this also means doing the necessary work upfront to protect value from the transaction and to ensure that the people and systems can be integrated as smoothly as possible to ensure that the value can be realized in practice. One example of this is the approach we've taken with the Spirit Energy deal, which is not yet completed. Although we only assume completion from around end September, we know that future gas prices were key to value realization on this deal. So based on a very constructive relationship with Spirit Energy and with their parent, Centrica Energy, we have been able to put in place deal contingent hedging for roughly 50% of the production, but on a basis which protects the value of our deal, but still leaves ample upside potential for Serica to enjoy. This was made possible in part thanks to Centrica Energy being a leading participant in gas markets and working through the complexities of a structure like this with us. With that, I will hand back to Chris for some concluding remarks. Christopher Cox: Thank you, Martin. This is another slide that should look quite familiar, and that's because our focus areas remain unchanged. Safety is, of course, the #1 priority and delivering reliable production this year that will generate material free cash flow. We are integrating acquisitions, progressing organic growth projects and still looking in the market to continue prudently adding to the portfolio to deliver for our shareholders. In addition, we continue to plan to move from AIM to the main market of the London Stock Exchange during the year. We are very excited by the opportunities ahead and look forward to updating you on progress throughout the year. And with that, I will hand over to Andrew to run the M&A (sic) [ Q&A ]. Andrew Benbow: The M&A, I hope not. Christopher Cox: Q&A, the Q&A. I'm sorry. Andrew Benbow: I think we'll keep other people with the Q&A -- with the M&A. Andrew Benbow: Right. So the first question actually is about the last thing that you mentioned. When are you anticipating being admitted to the main market? And what impact do you think this might have on the share price? Martin Copeland: So probably I'll take that one. Yes, we -- I think we put in our detailed announcement today that we expect now that will be in Q3. It's -- the work is ongoing for it. There's a lot of process. And I know, as Andrew often says, a surprising amount of process just to move from one part of the London Stock Exchange to another. But nonetheless, there is, and we are working it hard. We expect it will be during Q3 of this year. So very much on track to get there during the year. In terms of what it will do for the share price, I mean, it's very -- obviously, our main reason for wanting to do that is to get a greater degree of exposure for Serica to investors generally. And the wider the exposure we get, the better it is generally for support for our share price. And in particular, certainly at anything around our current market capitalization, we would be very comfortably inside the FTSE 250. So one of the 350 biggest companies in the U.K. And the benefit of that is once you get into the FTSE 250, there are a lot of tracker and index funds that have to follow stocks in that segment. So that's one of the main reasons why we see a benefit in moving to the main board, and we remain very much on track to make that move during the course of the year. Andrew Benbow: Moving on to Triton. We've had a few questions come in unsurprisingly. So I'll try and amalgamate in a way that makes sense. There's kind of 3 questions really. One is, why couldn't the maintenance have been done last year? Second is a similar one, which is, will the work at Triton reduce the maintenance period later this year? And then the general question, which I think is the one that everyone wants to know is, how much should the reliability of Triton concern shareholders? Christopher Cox: Thank you. I'll try and address all 3 of those. So the work that had to be done in February and March was not something that we actually even knew about when the last shutdown took place. What happened was in doing some inspections of key equipment, Dana discovered that they could not vouch for the status of some of that equipment. They could not prove that they've been maintained properly or inspected properly, and they didn't have the records to be able to prove that. So there wasn't necessarily evidence that there was anything wrong with the equipment. They just couldn't show from their maintenance systems that it had been inspected when it should have been inspected and maintained properly. And so what that meant was when they put all of that together, they felt that there was a risk that was intolerable and equipment could break before it got to the next shutdown. And so rather than take that risk, they took the decision that they would shut down and fix it now. I think you asked, does that shorten the shutdown in the summer? It doesn't because some of the things they discovered that need maintenance, they haven't done now and they haven't to the summer shutdown. However, I will say that in our planning for the year, we assumed that Triton would be off essentially for 3 months in the summer, whereas Dana is planning for a 65-day outage. So we've built in a buffer there to some extent. And as I said during the presentation, we've also assumed a week's downtime on Triton as we go through the year outside of that summer shutdown window. So we think we've made some fairly conservative estimates around Triton for the year. So how much should shareholders be concerned about Triton? Look, it's still not as reliable as we want it to be. That's clear. And we are working with Dana on a number of things to try and improve the reliability. And the key is, frankly, it's the power turbines and the compressors where we're reliant on one of each at the moment, and there are 2 of each on the vessel. And we need to get to a point where we've got 2 power turbines and 2 compressors available. And that's -- it's going to take a few months before we're in that position. In the meantime, we're quite vulnerable to outages. But as I've said, I think we've been quite prudent and put in place some fairly conservative assumptions this year such that we're confident with the production guidance that we've given. And we're going to be part of -- Dana has just formed a compression improvement task force, which is targeting getting 90% efficiency with a single compressor and figuring out what else needs to be done in order to have 2 compressor operations. And we're going to be involved in that work ourselves. So I think, as we move forward, things will get better. But for now, it's -- we still have that vulnerability. We can't shy away from it. Andrew Benbow: And just briefly to clarify, our guidance takes in effectively 1 week of downtime each month over the course of the year. Keeping on Triton for another one, would you be comfortable bringing Kyla into the FPSO? Christopher Cox: So -- yes, I'll take that one. So, Kyla, just to be clear, we've announced that we've moved the barrels from Kyla into reserves as of the end of last year. That doesn't mean we've taken a sanctioned decision on it yet. As I mentioned during the presentation, it's fighting for capital with a lot of opportunities in our portfolio. And we will make a decision on which ones we're going to pursue in which kind of time frame as we go through the year, and more detail at the Capital Markets Day. So we haven't taken FID on Kyla yet, but it's mature enough. We know enough about it. We like it as a development. So we were at a point where we could move it from resources into reserves. Now, of course, we're not going to bring in another field into Triton until we're comfortable that we can produce it safely and efficiently. And the fact is we've only just brought on Belinda in the last few days. And we had anticipated that at the end of January, and it didn't happen because we had a shutdown. So there's no way we're bringing another development into Triton until we get stable operations there. But as I've said, I think Dana is doing a lot of the right things to achieve stable production and 2 compressor operations. And I'm hopeful that we get to the point where, yes, we can sanction Kyla and bring it into Triton. Andrew Benbow: Somebody on the side actually has just said that they're a bit bored of talking about Triton's compressor... Christopher Cox: Me too. Me too. I'm fed up with talking about it, too, but it's what we get asked questions about and for good reason. Andrew Benbow: They do have a question with it as well, which is -- which I think I'll take the time to broadly think about it, which is what percentage of group production will come from Triton in 2027? Now, we obviously haven't guided for 2027 as yet. But if you look at analyst expectations, it's probably somewhere in between 1/4 and 1/3 of production will come from Triton next year. So it clearly becomes of significantly less importance to the portfolio, albeit still being highly cash generative. Next question, I think, is one for Martin, actually. Why do companies who acquire assets from [ TotalEnergies ] sometimes pay Serica rather than Serica paying for the assets? I presume they're concerned about the decommissioning costs at the end of field life. What value is it that you can see that vendors can't? Martin Copeland: Good question. So yes, there's a bunch of things embedded in that, obviously. One is companies like TotalEnergies makes a strategic decision that they basically want out of an asset like this. And you can understand why because we think it's got amazing potential, we're buying it as it is, but they thought it was going to be a lot bigger than it actually is. And so it's kind of got -- it's been something that's been strategically on the decision to exit. So, therefore, price is not the most important thing. But add to that, yes, why -- they're not -- obviously, they're a commercial and sensible company, and we are too. And therefore, they -- whilst we're receiving cash, that's because the effective date, the historic date at which the deal we economically owned it was the 1st of January 2024. So the $57 million odd that we received today is basically the after-tax cash flow from that asset for that period until today. So that effectively, we economically owned it, and we receive it today because we've legally completed today. And then, when you think about how that works, yes, we are taking on the decommissioning liability associated with that asset in the future. The thing about decommissioning liabilities are that they are obviously an obligation to decommission in the future, but the timing of that decommissioning, and indeed, the absolute amount of the cost of it are not certain. And absolutely, our objective, which is different than that of, say, TotalEnergies when they owned it, is to continue to invest in the portfolio through some of the things that Chris talked about, like maybe Glendronach, maybe a Tormore well, but also getting the benefit of third-party gas into the plant like Victory that's already there and Tornado that we hope to come in the not-too-distant future. All of those things would just push out the time at which decommissioning happens. And all of that is very significant in terms of additional value for us. So for us, it's about delivering on those things, which TotalEnergies was not going to do because the capital investment associated with them just didn't screen for them relative to all the other global opportunities they have. It does screen for us, and we, therefore, look forward to doing it. And it's a case of, again, as Chris indicated, it's right assets, right hands, and it's just the natural kind of food chain, I would say. One other little point is there's also a tax differential. And TotalEnergies was being fully taxed on it under their ownership. And indeed, the receipt of cash we've had today is after it's been taxed for that whole period at 78%. But when in our hands, we're buying it into some of the entities we acquired through Prax Upstream, and that means it will be sheltered from a large amount of the tax now as of from today when it comes into our ownership. So there's a different valuation reference point for us as well. So I hope that answers the question. And that's just using GLA as an example, but you could play that across to other things as well. Andrew Benbow: And speaking of some of the other things that we're acquiring, given the context of very high commodity prices, could you talk about the expected payments on closing of the acquisitions of the ONE-Dyas and Spirit's assets? Assuming oil and more particularly gas prices stay where they are, those payments could be very favorable to Serica. Martin Copeland: Yes. I mean, clearly, they will -- we do -- as we track them, they're going to be up versus where our original planning for them was when we did the M&A because we weren't planning for prices where they are right now. So yes, the net impact of that is going to be that we expect to get higher payments than we would have done or in the case of Spirit Energy to essentially probably the net payment by us will probably be lower. The exact numbers of those is obviously something that needs to be worked through based on what actually happens to commodity prices between now and when we actually complete. The only other cautionary note I'd say is that, again, just as I mentioned for TotalEnergies in the case of both ONE-Dyas and Spirit Energy, under their ownership, they're being fully taxed with the full EPL rate. And so whatever the increment is, it's going to have a higher tax rate against it than it would under us. So that does help to dampen the impact of higher prices a little bit. Andrew Benbow: A more general question on the M&A landscape in the North Sea. How is the current market? And how has the M&A dynamics changed after Adura and NEO NEXT+? Martin Copeland: Yes. I mean, I think Chris alluded to that in his remarks that -- we'll have to say that we think the opportunity set in the U.K. this year is going to be down on last year. And I guess, it's kind of easy to say that because there was a hell of a lot of activity last year, right? So the bar would be very high to be able to repeat the level of activity in the basin this year that we saw last year. But that impact of the significant consolidation that we've seen is probably a reason why we think there'll be less M&A this year. It doesn't mean to say there won't be any. And I do think in time, as the likes of an Adura or a NEO NEXT+ and some of the others, Ithaca, as they look at their portfolios, they may well see that there are assets within there that in the normal course, they look to divest and move on. And that's kind of normal course business that we would expect to carry on. But overall, we just think the activity in the U.K. is likely to be down. The other cautionary note on M&A is that whilst we see these very high prices, high -- not just high, but volatile prices, prices that move all over the place are very difficult to transact M&A in, right? It just makes doing deals really hard when prices are moving really fast. So that's not a comment specifically about the U.K. It's just a general comment about doing M&A in the upstream. Andrew Benbow: And while we're on the discussion about U.K. M&A, then how about overseas? You mentioned it's something that you're looking at. So what kind of areas could people expect an acquisition to be made in? Christopher Cox: Do you want me to take that one? So look, we are starting to look overseas and get a bit more serious about that. And there's really a couple of reasons for that. One is what Martin just mentioned, there are fewer and fewer opportunities in the U.K. We're still working on a few opportunities, but not as many as they were a year ago. And we want to have a sustainable business. And at some point -- the U.K. is in decline. And at some point, you'll get to a point where there's not enough production left for us to maintain the kind of size of business that we are. So sooner or later, we have to look overseas anyway if we want to have a sustainable business. So look, we don't want to limit ourselves too much to where we might go. We do quite like Southeast Asia. So why would that be of interest? Really, it's an area where we can see playing out our strategy in a similar way to we do in the North Sea. Southeast Asia in general is a bit less mature than the North Sea, but it's -- most of the fields are kind of mid- to late life now. So you're getting to the point where a number of the majors are thinking about exiting fields there or just reducing their exposure in the area. So we're at that point now where -- probably where we were in the North Sea 10 or 15 years ago, frankly, where opportunities are coming available for companies like us to go in. And as we said, push out the decommissioning, extend the life of fields, drill more wells, find more reserves. So we just see that it's a ripe area for that kind of an opportunity. Yes. And I don't really want to comment too much on other areas because as soon as we say we're ruling something out, and then, an opportunity comes up, who knows where we could go. So never say never, but I think Southeast Asia is probably first on our list of places that we like for the reasons I've just mentioned. Andrew Benbow: I'm aware we're running out of time. We've got quite a lot of questions still to go through, so I'll try and group them together. Dividends, quite a lot of people have asked about dividends. So a question for Martin. Do we see a return to dividend growth? The dividend looks quite small considering the free cash flow to come. Martin Copeland: It's a really good question. And look, the way we think about the whole capital allocation piece is we've got to balance the dividends to shareholders with investment in the portfolio and with M&A growth. And it's the -- we're not alone in that. That's kind of the conundrum for all of us and our peers that are involved in this. It's probably going to sound a bit like a stuck record in saying, wait for the CMD, but we are definitely planning to give a great deal more detail about how we balance all of those things at the Capital Markets Day. I guess, it's a sign of confidence we felt to show that we were able to continue the dividend at the same level as before despite the fact we had a challenging year last year, but -- now, but we expect to give a lot more clarity. And we've got to -- and show the really interesting and exciting returns can come from the investment in our portfolio, but it always while ensuring that we also pay a sensible amount of dividend. So I know that's not going to directly answer your question, but that's probably what we can give for now. Andrew Benbow: Another quick one for you, Martin, about tax losses. How long do you think they'll last for? And which of your assets do they cover? Martin Copeland: Really good question. And we -- you probably noticed that we've sort of stopped giving guidance on how long we think they're going to last for, and that's because we used to give it. And then, we found that they lasted for a lot longer. And as it happens last year, we created a lot more losses either through our own activity because the silver lining on Triton performance was that, as I probably indicated, we actually added to the loss pool there rather than reducing it during the year. But then, of course, we also did some transactions that brought some losses with them. So in terms of -- and then, of course, how quickly use it is also a function of what happens to the commodity price, which is incredibly difficult to predict. So it sounds like a bit of a cop out. We've got a lot of losses now. They basically will -- are reasonably balanced across our portfolio with the exception of Bruce, Keith and Rhum, which is in the entities that basically don't have any losses. But that, as Chris indicated, is one of the key areas we're looking to make investment into. And investment is not only needed to bring short-cycle gas to the U.K., which it desperately needs, but is also efficient when it comes to the use of tax because if we can invest, we get still strong capital allowances against the 78% tax rate that applies there. So we have a strategy which is kind of fit for all seasons in that respect. Andrew Benbow: And speaking of tax rates, I think we should finish with politics and apologies to people whose questions we haven't got around to, but please do e-mail them over to me directly if you'd like a response. Are you talking face-to-face with Ed Miliband or Rachel Reeves? With such pressure from so many sources, do you feel the logic of the message is getting through? And are there any milestones going forward? And do you feel more positive in the stance of Whitehall? Christopher Cox: So we're speaking with everybody that will listen, both individually and as part of industry bodies. I was personally in the meeting with Rachel Reeves, #11, whenever that was, just around the spring statement time. The message is definitely getting through about the need to stimulate the North Sea before it's too late. We have a tax regime that's been designed by this government in consultation with the industry. And yet, as we sit here today, that won't come into force until 2030. And our argument is just bring that in now. Treasury absolutely get that. I guess all I'll say is there are other parts of the government that are not necessarily sold on that idea. So I'm not going to try and predict where we'll end up on that because at the moment, I don't think anybody in government really knows where we're going to end up on that. Andrew Benbow: Martin, anything you want to add? Martin Copeland: No. I think Chris has covered it very well. I mean, look, everyone in this call will know, we've seen the volume of really quite broad-based sentiment now to recognize the importance of security of supply. And that's an argument that we've clearly been supporting for a long time. We just hope that a sense of pragmatism, the recognition of the importance of security of supply from a sort of defense and just national security perspective will begin to carry more weight than it perhaps does -- has done in recent times. Andrew Benbow: And with that, Chris, would you like to give any closing remarks? Christopher Cox: Well, just that we've got another exciting year ahead of us. We are integrating new assets into our portfolio. We're seeking to do more M&A still on top of that. We will be growing production as we go through this year, both on our existing portfolio and the new assets. We will be moving to the main market this year. And we've got lots of exciting investment opportunities in our portfolio, about which we will speak at the Capital Markets Day, which is the next time we will see you. Operator: Perfect, guys, if I may just jump back in there. Thank you very much indeed for updating investors this morning. Could I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback. On behalf of the management team of Serica Energy plc, we would like to thank you for attending today's presentation. That now concludes today's session. So good morning to you all.
Operator: Thank you very much, and good afternoon, ladies and gentlemen. Welcome, and thank you for joining our conference on the financial year 2025 results. My name is Jeroen Eijsink, and this is the first time I'm addressing you in my role as Chief Executive Officer of HHLA. I'm very pleased to be here today together with my fellow Executive Board member, Annette Geiss, to guide you through HHLA's performance in the 2025 financial year. Over the past 6 months since assuming the role on October 1, 2025, I've taken the time to get to know HHLA in depth. This has included spending a great deal of my time at our terminals in Hamburg as well as visiting our European subsidiaries such as Metrans and PLT Italy. Above all, I have met many of the people who ensure around the clock that supply chains continue to function. What I have seen during this time is a company with strong substance and committed teams. HHLA is operating in a challenging environment, but it is well positioned to address the challenges ahead. At the same time, I have also gained a clear understanding of where we need to improve and where we will focus our efforts going forward. Let me now briefly summarize the past year 2025. The year was shaped by a demanding market environment. Persistent geopolitical tensions and continued economic weakness in Germany weighed on supply chains and reduced planning certainty. At the same time, global trade flow shifted with declining volumes on North American routes and growth in Far East trades, particularly with China. Another factor during the year was the reorganization of liner services following the formation of new shipping alliances, most notably the launch of The Gemini Cooperation by Hapag-Lloyd and Maersk. In addition, MSC gradually shifted its Hamburg services to HHLA over the course of 2025. For the Port of Hamburg, this resulted in a noticeable reallocation of traffic flows, while all major alliances continue to be handled reliably by HHLA. In this dynamic environment, we focused on strengthening our operational base. We continued to modernize our Hamburg container terminals, building on our automation expertise at CTA and advancing our reorganization and expansion measures at CTB. At the same time, we strengthened our European Intermodal network by further expanding the activities of our Rail subsidiary, Metrans. For instance, we announced the modernization of our terminal in Slovakia and laid the foundation stone for a new site in Hungary in 2025. Most recently, we secured a 50% stake in a Romanian terminal to establish our first intermodal facility there. With investments like these, Metrans strengthened its position in Southeastern Europe. Even in a challenging geopolitical environment, we remain committed to our long-term strategic priorities. These include our continued engagement in Ukraine marked by the acquisition of a majority stake of 60% in the Intermodal Terminal Batiovo. Operationally, this all translated into solid growth. Container throughput increased by more than 5%, while Container transport rose by almost 11%. Supported by this volume growth, both revenue and EBIT made good progress. Revenue in the Port Logistics subgroup increased by about 10% and EBIT rose by more than 20%. At the same time, profit after tax and minority interests was burdened by a one-off and noncash tax effect. It was not cash-effective, but had a significant impact on net income for the year. Against this backdrop, the Executive Board, together with the Supervisory Board have decided to propose to the Annual General Meeting that no dividend will be distributed for the 2025 financial year. The focus remains on financing capabilities and a disciplined capital allocation to support the persistently high-level of strategic investments ahead. With that, I would now like to hand over to Annette, who will take you through the performance of our segments in more detail, starting with the Container segment. Annette Walter: Thank you, Jeroen, and good afternoon, everyone. Let's move directly to the performance of our Container segment. As Jeroen has already mentioned, we recorded overall growth in container throughput of 5.4%. Volumes at the Hamburg container terminals increased by 4.8% to almost 6 million TEU. The key drivers in overseas traffic were volumes to and from the Far East, especially China, as well as South America, Africa, Australia and the Middle East. By contrast, the North America shipping region declined strongly. Volumes in feeder traffic increased significantly year-on-year. This development was supported mainly by traffic with Finland, Poland and other German ports. However, cargo volumes from Estonia, Latvia and the U.K. declined. The proportion of seaborne handling by feeders was slightly above the previous year's level at 19.6%. At our international container terminals, throughput volume rose strongly by 19.2% to 339,000 TEU. Especially in Italy, we saw remarkable volume growth at the HHLA PLT Italy, which really makes us proud. At CTO, we resumed seaborne handling in the third quarter of 2024 and we were able to continue operations throughout 2025, also, still with certain limitations. This base effect leads to the significant year-on-year increase expected for 2025. Volumes at the multifunctional terminal at HHLA TK Estonia declined slightly on the other hand. Segment revenue climbed significantly by 9.0% year-on-year to EUR 843.2 million. This was supported by higher throughput volumes and beneficial shift in the modal split. On top of that, HHLA's international container terminals made a positive contribution to revenue growth with a strong performance of PLT Italy standing out once again. EBIT costs increased by 11.5% compared to the previous year. This was mainly driven by extensive automation efforts, the positive volume trend and correspondingly higher capacity utilization. Personnel expenses also increased, reflecting union negotiated wage settlement and the additional deployment of personnel from the general port operations pool. In addition, expenses for consultancy and related services as well for purchase services, rose strongly. As a result of necessary investments, depreciation expenses increased moderately. The earnings safeguard measures implemented at the Hamburg container terminal since March 2023 had an offsetting effect, but were not sufficient to fully compensate for the cost increases described. Against this backdrop, EBIT declined by 6.4% to EUR 73.6 million, while the EBIT margin decreased by 1.5 percentage points to 8.7%. So let's move on now to the Intermodal segment. Transport volumes in the Intermodal segment made particularly good progress over the year. As a result, container transport rose by 10.9% to 198,200 TEU compared to the previous year. Rail transport rose year-on-year by 11.2% to 171900 TOU. This strong volume growth was largely driven by traffic with the North German seaports as well as traffic in the German-speaking countries. Moreover, the transport volumes of Roland Spedition in the previous year were only included from June onwards. Road transport rose significantly by 8.7% to 263,000 TEU. This development was helped in particular by the recovery of transport volumes in the Hamburg region. With an increase of 12% to EUR 797 million, revenue outperformed the volume development. In addition to routine price adjustments, this was partly due to the further increase in Rail share of the total intermodal transport volume from 86.5% to 86.7%. EBIT increased by 23.9% to EUR 103.7 million. The main reason for this strong EBIT growth was the increase in transport volumes despite an opposing effect from ongoing operational difficulties caused by construction work on major transport roads and congestion at the North-German seaports. Let's turn briefly to the Logistics segment, where we have pooled for instant vehicle logistics consultancy as well as digital and leasing services. In the reporting period, the consolidated companies generated a revenue of EUR 92.8 million, representing an increase of 10.9% compared to the previous year. The rise is attributable to the leasing company for intermodal traffic and to vehicle logistics. After reporting a loss in the previous year, the segment returned to a positive operating result of EUR 6.5 million in 2025. The performance within the segment varied across the individual companies. Whereas the Leasing company and Vehicle Logistics made strong earning contributions, our Innovative business activities fell short of the prior year result. At-equity earnings also made encouraging progress, increasingly by 27.5% to EUR 5.7 million in the reporting period. Coming back to the Port Logistics subgroup as a whole, let's have a look now at our cash flow development. The reporting period, cash flow from operating activities of EUR 257 million mainly comprised earnings before interest and taxes as well as write-downs and write-ups on nonfinancial assets. The main items with an opposing effect were interest payments, trade receivables and other assets as well as income tax payments. Investing activities resulted in a net cash outflow of EUR 307 million, up almost EUR 26 million on the previous year. This development was largely due to payments for investments in large-scale equipment at the Hamburg container terminals as part of our efficiency program. As a result, free cash flow of the Port Logistics subgroup was a negative amount of EUR 50 million. Cash flow from financing activities totaled EUR 0.4 million. On the one hand, new financial loans of EUR 140 million, on the other hand, opposing effects from dividend payments and settlement obligations to shareholders of the parent company and to noncontrolling interest as well as from repayments on bank loans and payments for the redemption of lease liabilities. Overall, our available liquidity at the end of December 2025 remained at a robust level of EUR 180 million. Before I hand back to Jeroen, I would like to briefly address our dividend proposal. At this year's Annual General Meeting, the Executive Board and the Supervisory Board will propose, not to distribute a dividend for the 2025 financial year, neither for the Class A nor the Class S shares. As we already mentioned before, earnings per share are at a very low level. At the same time, we are currently investing at a high level in order to modernize our terminals and ensure that our infrastructure is fit for the years ahead. Against this backdrop, we have decided to retain the available funds within the company to safeguard our ability to invest and to finance our projects. This represents a responsible prioritization in favor of the long-term stability and future strength of HHLA. That concludes my remarks. For the review of our ESG performance, an update on the squeeze-out and an outlook for the 2026 financial year, let me now hand back to you, Jeroen. Jeroen Eijsink: Thank you, Annette. Let me start with the sustainability topic. Sustainability is not an image project for us. It's increasingly becoming a hard competitive factor. Our customers are paying much closer attention to low-carbon supply chains, and we are actively helping them achieve their targets. To do so, we are making investments in three key areas: energy-efficient systems, electrified equipment fleets and automated processes with significantly reduced emissions. There are already very concrete examples of this across our operations. At CTA, our tractor units are now fully electrified. At CTB, automated guided vehicles are helping us to significantly reduce diesel consumption, and at CTT, we are operating hybrid van carriers that are already designed to be converted to battery or hydrogen power. As a result, almost half of our total energy consumption is already covered by renewable sources today. This clearly demonstrates that technological innovation and sustainable solutions go hand-in-hand at HHLA. This is not only an ambitious aspiration, it's operational reality. Accordingly, this is also reflected in our EU taxonomy indicators, where we once again achieved very strong results. All of these measures are decisive steps towards our long-term objective to achieve climate-neutral production across the entire HHLA Group by 2040. Before we turn to the outlook for 2026, I would like to briefly address another topic that has been high on our agenda since the beginning of the year. In addition to our operational and financial performance, the squeeze-out request announced in early January by the Port of Hamburg Beteiligungsgesellschaft SE, HHLA's majority shareholder has required considerable attention. So where do we currently stand in the process? The amount of the cash settlement is currently being determined by an independent expert. Following this, the squeeze-out will require approval by the Annual General Meeting in June. Of course, the Executive Board will accompany this process in a responsible and constructive manner. Let me conclude by briefly addressing the current market situation and our outlook for the 2026 financial year. Recent developments in the Middle East once again pose significant challenges for international shipping. They continue to affect global trade routes, sailing schedules and supply chains and as a consequence, also have an impact on European ports and logistics corridors. At present, we are seeing a market rise in uncertainty. Shipping lines are adjusting schedules at short notice, opting for alternative routes and in some cases, accepting extensive detours. This results in longer transit times, higher operating costs and greater operational complexity along the supply chain. Against this backdrop, the outlook shown on this slide is subject to a degree -- a high degree of uncertainty. At the same time, the progress we've made in recent years in modernizing our infrastructure and expanding our European network provides a solid basis for our expectations for the current financial year. Overall, we expect a positive development for the current financial year. We anticipate a significant year-on-year increase in container throughput and a strong year-on-year increase in container transport. Moreover, strong revenue growth is expected from the Port Logistics subgroup compared to 2025. EBIT is likely to be between EUR 160 million and EUR 180 million. To further increase efficiency and expand capacity in the Container and Intermodal segments, capital expenditure in the Port Logistics subgroup will be in the range of EUR 400 million to EUR 450, around half of this amount will be invested in the Container segment with the majority going to the Hamburg container terminals. These investments will focus on the efficient use of existing terminal space in the Port of Hamburg and the expansion of our foreign terminals. The other half will be used primarily to further expand our own transport and handling capacities for our Intermodal activities. With this outlook for the current year, I would like to close my remarks on our 2025 financial results. Annette and I are both happy to take your questions now. Operator: [Operator Instructions] Ladies and gentlemen, there are no questions at this time. I would like to turn the conference back over to Jeroen Eijsink for any closing remarks. Jeroen Eijsink: Ladies and gentlemen, thank you very much for your interest in HHLA. Before we conclude, I would like to leave you with a closing thought. HHLA remains a central pillar of European logistics. Our international network strengthens our resilience, broadens our positioning, enhances our competitiveness. Our investments consistently focus on reliability, efficiency and sustainability, guided by our commitment to continuously improve customer satisfaction. We are determined to stay on this course. Thank you.
Operator: Good afternoon. My name is Dave, and I will be your conference operator today. At this time, I would like to welcome everyone to Jushi Holdings, Inc.'s Fourth Quarter and Full Year 2025 Earnings Conference Call. Today's call is being recorded. I will now turn the call over to Trent Woloveck, Co-Chief Strategy Director. Thank you. Please go ahead. Trenton Woloveck: Good afternoon, and thank you for joining us today on Jushi's Fourth Quarter and Full Year 2025 Earnings Conference Call. My name is Trent Woloveck, and I am the Co-Chief Strategy Director at Jushi Holdings, Inc. With me on today's call are Jim Cacioppo, our Chairman and Chief Executive Officer; Michelle Mosier, our Chief Financial Officer; and Jon Barack, our President and Chief Revenue Officer. This call is also being broadcast live over the Internet and can be accessed from the Investor Relations section of the company's website at ir.jushico.com. In addition to the company's GAAP results, management will provide supplementary results on a non-GAAP basis. Please refer to the press release issued today for a detailed reconciliation of GAAP and non-GAAP results, which can be accessed from the Investor Relations section of the company's website. Additionally, we would like to remind you that during this conference call, we will make forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. Although Jushi believes our estimates and assumptions to be reasonable, they are subject to a number of risks and uncertainties beyond our control and may prove to be inaccurate. We caution you that actual results may differ materially from any future performance suggested in the company's forward-looking statements. The risk factors that may affect actual results are detailed in Jushi's Form 10-K and other periodic filings and registration statements, which may be accessed via EDGAR and SEDAR as well as the Investor Relations section of our website. These forward-looking statements speak only as of the date of this call, and Jushi expressly disclaims any obligation to update this forward-looking information. I will now turn the call over to Jim. James Cacioppo: Thank you, Trent, and thank you, everyone, for joining our call today. This afternoon, I will provide a high-level overview of our performance for the fourth quarter and full year 2025, followed by an update on our recent refinancing. I will then discuss key regulatory developments, including progress towards adult use in Virginia before turning to our operational execution across the business and broader industry dynamics. I will conclude with a review of the regulatory landscape across our key markets before turning the call over to Michelle for a detailed financial review. Beginning with our financial results, revenue for the fourth quarter was $68.3 million, representing year-over-year growth of approximately 4% compared to the fourth quarter of 2024. On a full year basis, revenue increased to $262.9 million, up just over 2% from 2024. While the top line growth remains modest, these results reflect continued stabilization across our retail footprint. Contributions from new stores opened throughout the year and enhanced product availability and quality driven by improved operational execution at our grower-processor facilities. Gross profit for the fourth quarter was $28.6 million, representing 41.9% of revenue compared to $25.4 million or 38.6% of revenue in the prior year quarter. For the full year, gross profit was $114 million or 43.4% of revenue compared to $118.3 million or 45.9% of revenue in 2024. While margins were down modestly on a full year basis compared to 2024, the year-over-year improvement in the fourth quarter reflects the benefits of ongoing operational improvements at our grower-processor facilities, which have driven product quality improvements, yield and potency gains and better product mix. These benefits were partially offset by promotional retail activity amid ongoing pricing pressure in certain markets. Adjusted EBITDA for the fourth quarter was $13.9 million, representing a margin of 20.4% compared to $8 million or 12.2% in the prior year period. The improvement reflects the cumulative impact of the operational turnaround we began executing in late 2024, continued discipline around cost structure and better utilization of our production footprint as well as $3 million of employee retention credits recognized in the quarter. For the full year, adjusted EBITDA increased to $50.3 million, up from $46.2 million in 2024, with margin expanding to 19.1% from 17.9%. Full year results include approximately $10.6 million of employee retention credits recognized during 2025. Building on this strong operating foundation, we took an important step subsequent to year-end to strengthen our balance sheet and position the company for the next phase of growth. On March 27, 2026, we refinanced our existing term loan and second lien notes, which had outstanding principal balances of approximately $46 million and $86 million, respectively, and were scheduled to mature within the next 12 months. We completed the refinancing through the issuance of a $160 million first lien secured term loan due in 2029 with a 12.5% coupon structured as interest-only payments over the 36-month term. The proceeds were used to fully repay the existing term loan and second lien notes, including accrued interest and related fees with excess proceeds to be used for general corporate purposes. The transaction was completed with the participation from a syndicate of lenders, including our 2 largest shareholders, myself included. As part of the refinancing, I contributed additional capital, increasing my overall position relative to my prior participation in the first and second lien debt, reflecting my continued confidence in the strength of our business and our long-term strategy. Overall, the refinancing strengthens our balance sheet and improves our financial flexibility. Importantly, this financing was completed without issuing any warrants or equity-linked securities, unlike prior debt transactions, resulting in no dilution to shareholders. Additionally, the new term loan provides $13 million of incremental liquidity to our balance sheet and includes a single financial covenant requiring the maintenance of a minimum cash balance, which we believe provides a meaningful flexibility going forward. With a stronger balance sheet and improved liquidity in place, we believe the company is well positioned to capitalize on several growth opportunities ahead, including the anticipated transition to adult use in Virginia. In Virginia, several bills were introduced during the 2026 legislative session, including HB642 and a Senate companion SB542 as well as SB671 that established the framework and sequencing for a regulated adult-use market. Earlier this month, the Virginia legislature reconciled the competing bills via conference committee and sent the final bill to the governor for her signature. Under the reconciled bill, all existing medical operators will transition to a dual-use license with applications expected to be released on or before September 1, 2026, and license issuance on or before December 1, 2026. Converted licenses will pay a $10 million conversion fee subject to an agreed-upon payment plan with the regulator. Retail sales are expected to commence on January 1, 2027. We are encouraged by the regulatory process made and are very excited about the opportunity to transition Virginia to adult-use sales on January 1, 2027. In preparation, we are expanding cultivation capacity at our current facility and exploring development of a second cultivation site to support future demand. Importantly, our manufacturing and retail infrastructure are currently prepared to support adult-use sales with minimal incremental capital investment. In markets that have expanded from medical only to also allow for adult-use sales such as New Jersey, the overall market increased significantly following the transition. Based on publicly available data, when comparing annualized medical sales prior to the launch of adult-use with the first 4 full quarters of adult-use sales, total market revenue increased by approximately 3.2x. Assuming a similar market response, we would expect Virginia to experience comparable growth as adult-use sales begin. We also want to thank Speaker Scott, Madam Chair Lucas, Delegate Krizek, Senator Aird and countless others for their leadership in advancing this legislation and positioning Virginia to become the first southern state to pass an adult-use cannabis program. We are hopeful that Governor Spanberger signs the bill within the next couple of weeks. Stepping back, 2025 was a year of execution and recovery relative to 2024. We focused heavily on rebuilding operational consistency, improving product quality and aligning capital allocation with high-return opportunities. While the macro environment remains competitive and price constrained, particularly in adult-use markets, we believe the business is now meaningfully stronger than it was a year ago. From a macro perspective, the competitive landscape remains tight. Pricing pressure persists across most markets, driven by supply imbalances and consumer value sensitivity. At the same time, enforcement against illicit and intoxicating hemp products remains uneven in certain regions, and we continue to engage constructively with regulators and policymakers on these issues. Against this backdrop, our strategy remains centered on execution, quality and disciplined capital deployment, prioritizing margin, cash flow and long-term value creation. Operational execution at our grower-processor facilities was the most important driver of improvement in 2025. Investments in genetics, facility upgrades and enhanced cultivation and production practices translated into materially better yields, higher potency and improved product consistency. In the fourth quarter, average yield across the portfolio increased approximately 28% on a per square foot basis year-over-year, alongside an increase in [ AB bud ] flower production across the portfolio. Potency remained strong in the mid- to upper 20% THCa range. Together, these improvements supported a more favorable product mix across both our retail and wholesale channels. We continue to deploy high-return capital into our grower-processor footprint to meet current demand in Virginia, Pennsylvania and Ohio. In Virginia, we brought one additional flowering room online during the fourth quarter of 2025, adding approximately 3,000 square feet of canopy within our existing footprint. Additionally, we are planning to add 2 more flowering rooms of similar size within the existing footprint over the course of 2026 and early 2027, increasing canopy by approximately 33%. In conjunction with this canopy expansion, we are adding hydrocarbon extraction capabilities to support a broader mix of higher-value concentrate products, process more throughput and expand product selection for patients and consumers. We are also in the design phase for a new 65,000 square foot warehouse expansion in Virginia that would roughly double our canopy there and support expanded processing capabilities. In parallel, we are evaluating a potential expansion of our mortgage and other possible traditional financing options to support this build-out. In Pennsylvania, Phase 1 of our cultivation expansion involved converting a legacy flower room into 3 modernized flowering rooms, effectively creating new productive capacity. Two of those rooms completed their first harvest in January, and the third room is on track to complete its first harvest shortly. Phases 2 and 3 involve reengineering unutilized space with the potential to add approximately 4 additional flowering rooms and increase total canopy by roughly 40%. We have begun ramping up Phase 2 by completing targeted prework and other sequencing activities while deliberately limiting capital deployment at this stage. This approach is intended to shorten the time line required to bring capacity online once there is greater visibility into adult-use sales in Pennsylvania. Importantly, these activities are being funded from our existing balance sheet, and we would not pursue additional financing to fund these projects until there is clear regulatory direction. In Ohio, canopy increased approximately 2.4x year-over-year, allowing us to expand production capacity while maintaining quality and consistency across the facility. We are in the design phase for a warehouse expansion that would add additional canopy, though we would only proceed if market conditions and cost of capital are favorable. Turning to retail. Since the end of the third quarter of 2024, we have added 8 retail locations through the end of 2025, including Toledo, Oxford, Warren, Mansfield and Parma in Ohio, Linwood in Pennsylvania, Peoria in Illinois and Little Ferry in New Jersey. As of year-end, we operated 42 retail stores across our footprint. Subsequent to year-end, we opened an additional location in Springdale, Ohio in January of 2026, and we entered into an agreement to sell our Peoria, Illinois location, subject to regulatory approval. We are actively evaluating 4 to 5 potential store relocations to improve profitability, and we continue to evaluate retail license and store acquisition opportunities in Ohio, Massachusetts and New Jersey. We will not be moving forward with the previously contemplated Mount Laurel, New Jersey location following our termination of the underlying transaction. At year-end, Jushi had approximately 1,288 employees compared to 1,234 employees at the end of 2024. During this time, we grew from 38 stores to 42 stores while maintaining lean staffing levels and driving productivity improvements across the network. While our store count increased by approximately 11% year-over-year, headcount only increased by approximately 4%, reflecting our ability to scale efficiently. The performance underscores the effectiveness of our corporate and retail operating model and the execution of our leadership team. Commercially, we are evolving into what we believe is a genetics-driven product strategy. We've made substantial progress building a robust genetics pipeline and rolled out new strains across all our grower-processor facilities in 2025, with plans to refresh approximately 20% to 30% of our cultivator menu annually. We believe this disciplined approach to genetics supports product differentiation and strengthens our competitive position across markets. We also continue to see growth in our private label portfolio during the fourth quarter, supported by ongoing innovation across both emerging brands such as Hijinks and Flower Foundry and established brands such as Seche and The Lab. During the quarter, we added approximately 280 new unique SKUs, including new offerings across these brands. These launches reflect our continued focus on refreshing assortments, expanding premium and value offerings and meeting evolving consumer preference. As we aim to provide patients and guests with enhanced variety and as part of our ongoing focus on retail execution, we are exploring an e-commerce AI agent to drive growth, further optimize online ordering and recommend our expanded product offerings. On the regulatory front, in Pennsylvania, the state continues to face a significant budget gap and progress toward passing an on-time and balance budget remains an ongoing challenge. While adult-use legalization efforts have not yet produced enacted legislation, there has been movement on establishing a dedicated regulatory framework for cannabis oversight through SB 49. During the fourth quarter, bipartisan legislation to create a stand-alone Cannabis Control Board advanced out of the Senate Law and Justice Committee and is now awaiting consideration by the full Senate. The proposed Board would oversee the existing medical marijuana program and align state regulation of intoxicating hemp products with federal regulations. We continue to monitor these developments closely as regulatory clarity will be important for long-term planning. In Virginia, in addition to the adult-use bill, legislation was passed strengthening enforcement around intoxicating hemp products via SB 543, which enhances the enforcement authority and HB 26 and SB 62, which updates unlawful cannabis criminal penalties. In Ohio, the state enacted SB 56, which updates the regulatory framework for cannabis and hemp products and effectively restricts the sale of intoxicating hemp products to licensed marijuana dispensaries. This legislation, which was signed into law in December of 2025 and became effective in March 2026 is intended to close existing loopholes strengthen enforcement by state regulators and federal agencies and direct THC-containing products into the regulated dispensary channel. We believe these changes should support a more consistent and regulated marketplace over time. In Massachusetts, lawmakers have advanced proposals to update the state's cannabis regulatory framework, including legislation passed by the House that would increase the number of retail licenses a single operator may hold, potentially allowing up to 6 locations over time. The Senate has proposed a smaller increase and the chambers continue working toward a final version. If enacted, these changes could support greater consolidation and influence competitive dynamics in the market. At the federal level, there has been incremental progress toward addressing the hemp regulatory gap created by the 2018 Farm Bill. In November 2025, Congress enacted legislation that narrows the federal definition of hemp, restricts synthetic intoxicating hemp-derived cannabinoids and establishes new limits on THC and finished products. These changes are scheduled to take effect in November 2026. We believe these measures could help direct intoxicating THC products into the state-regulated cannabis markets over time, though the timing and broader regulatory framework continue to evolve. On rescheduling, the process to move cannabis to Schedule III remains underway with regulatory review continuing and no final rule issued as of today. While we view this as a constructive development, the ultimate timing and scope of impact remains subject to federal rule-making process. We'd like to thank President Trump for his leadership by signing the EO at the end of 2025. Finally, potential federal reforms that could improve capital markets access for U.S. cannabis operators, including proposals such as the ClimACT remain uncertain and no legislation has been enacted. We will continue to monitor developments at the federal level. With that, I will turn the call over to Michelle for a detailed review of our financial results. Michelle Mosier: Thank you, Jim, and good afternoon, everyone. I will now provide more detail on our fourth quarter results. Revenue for the quarter increased by $2.5 million to $68.3 million compared to $65.9 million in the prior year quarter. Overall, the year-over-year increase in revenue was driven primarily by retail growth, reflecting contributions from new stores in Ohio and strong sales performance from all our Virginia stores. Revenue in our retail channel was $60.4 million compared to $58.1 million in the fourth quarter of 2024. The increase was primarily due to growth in Ohio and Virginia. Ohio represented the largest contributor due to new stores, while Virginia delivered growth across all stores, primarily driven by increased units sold, while average selling prices remained relatively flat. This growth was partially offset by continued price pressure and competitive dynamics in other markets. In addition, our focus on retail execution and customer engagement continued to support stronger performance of our Jushi branded product sales, which represented approximately 58% of retail revenue across the company's 5 vertical markets in the quarter compared to 55% in the prior year. Our delivery business in Virginia continues to thrive both within our health services area and outside our HSA. For the full year, delivery sales increased approximately 29% year-over-year in our HSA II area and approximately 76% out of our HSA II area, driven by growth in the number of orders, which increased approximately 20% and 79%, respectively. Wholesale revenue was $7.9 million compared to $7.7 million in the comparable quarter of the prior year. Year-over-year increase reflects higher sales across several wholesale markets led by Massachusetts and Ohio. In Massachusetts, growth was driven primarily by increased bulk sales and expanded wholesale distribution, including placement in new dispensaries. In Ohio, the increase reflects expanded distribution and higher sales volumes. Pennsylvania also delivered steady growth across the wholesale channels. These increases were partially offset by a $1.2 million decline in Virginia, where wholesale partners continue to prioritize their own vertical sell-through. Gross profit was $28.6 million or 41.9% of revenue compared to $25.4 million or 38.6% of revenue in the fourth quarter of 2024. The year-over-year increase in gross profit and gross profit margin was primarily driven by higher production volumes, improved product quality and stronger performance across our grower-processor facilities, reflecting the operational improvements implemented over the past year, particularly in Pennsylvania, Massachusetts and Ohio. These benefits were partially offset by continued pricing pressure across our footprint, which led to increased promotional activity. Operating expenses for the fourth quarter were $27.8 million compared to $27.2 million in last year's fourth quarter. As Jim mentioned earlier, we continue to add new retail locations while scaling the organization efficiently. The modest year-over-year increase in operating expenses primarily reflects costs associated with new store openings and a larger retail footprint, partially offset by the impacts of continued cost discipline. Other income and expense included $10.4 million of interest expense, which is partially offset by an $800,000 fair value gain on our derivatives and by other net of $500,000. Other net was primarily comprised of $3 million related to employee retention credit claims, including interest received from the IRS, partially offset by a $2.6 million noncash adjustment to our indemnification asset related to acquisitions made in prior years. As with prior periods, we continue to recognize the ERC refund claims and income as the refunds are received from the IRS. As of the end of the fourth quarter, we had approximately $700,000 of remaining ERC claims outstanding, all of which were not factored. Our net loss for the fourth quarter was $15.6 million compared to $12.5 million in the prior year. Adjusted EBITDA was $13.9 million compared to $8 million in the fourth quarter of 2024, and adjusted EBITDA margin was 20.4% compared to 12.2%. Moving to the balance sheet. As of December 31, 2025, the company had approximately $26.6 million of cash, cash equivalents and restricted cash. Cash provided by operations was $6.1 million compared to $7.2 million provided in the fourth quarter of 2024. The change reflects working capital improvements. As of December 31, 2025, we had $193.1 million of debt subject to repayment, excluding the $21.5 million of promissory notes issued to Sammartino that remain in dispute as well as leases and equipment financing obligations. Our term loan with a principal balance of $46.1 million and our second lien notes with a principal balance of $86.2 million were scheduled to mature at the end of 2026. As Jim mentioned earlier, subsequent to year-end, we completed a refinancing of these facilities, which extends our debt maturities and further strengthens the company's balance sheet. For the full year 2025, capital expenditures totaled $16.1 million, consisting of $4.8 million of maintenance CapEx and $11.3 million of growth CapEx. As we consider capital expenditures for 2026, we currently expect maintenance CapEx to be in the range of approximately $4 million to $5 million, consistent with our ongoing focus on maintaining and optimizing our existing asset base. Excluding capital associated with potential regulatory changes, we currently expect 2026 growth CapEx to be in the range of $5 million to $8 million. These investments would support targeted initiatives across our grower-processor footprint and select retail build-outs. This would result in total projected capital expenditures of $9 million to $13 million in 2026. As Jim mentioned earlier, regulatory developments, particularly in Virginia, will influence the timing and scale of future capital investments. In the case of Virginia, we're developing plans for grower-processor expansion contingent on adult use. We believe a significant portion of any such expansion could be financed through an expanded facility mortgage, and we would expect the majority of construction-related capital spending to occur in 2027 rather than 2026. And with that, I will turn the call back to Jim for closing remarks. James Cacioppo: Thank you, Michelle. As we reflect on 2025, it was a year defined by execution, operational recovery and disciplined decision-making. We entered the year focused on continuing to stabilize the business, improving product quality and strengthening our operational foundation, and we believe the progress we delivered across cultivation, retail and commercial demonstrates that those efforts are taking hold. Across the organization, we improved yields, potency and consistency at our grower-processor facilities, expanded and optimized our retail footprint and continue to shift our mix toward higher quality and branded products. These operational improvements are translating into stronger margins and a more resilient business model, even as pricing pressure and competitive dynamics remain elevated across the industry. Importantly, we are approaching growth with discipline. As we discussed today, we are making targeted high-return investments to support current demand while carefully sequencing larger opportunities around regulatory clarity. In Virginia and Pennsylvania, we are preparing thoughtfully for potential adult-use expansion while remaining prudent in our use of capital and focused on protecting the balance sheet. Looking ahead to 2026 and 2027, we are particularly excited about the transition to adult use in Virginia. With our cultivation, manufacturing and retail infrastructure already in place, we believe we are well positioned to participate in what will be a meaningful expansion of the Virginia cannabis market. Our focus remains on preparing thoughtfully for that opportunity while continuing to operate with the same discipline that defined our progress in 2025. More broadly, our priorities remain unchanged. We will continue to execute with discipline, focus and operational excellence, allocate capital thoughtfully and build a scalable platform capable of delivering sustainable profitability and long-term value for shareholders. Before we conclude, I want to thank the entire Jushi team for their dedication and hard work throughout the year. Their commitment across the organization is the foundation of the progress we have discussed today. Thank you all for joining us and for your continued support. Operator, please open the call to questions. Operator: [Operator Instructions] Our first question comes from Frederico Gomes with ATB Cormarkets (sic) [ Capital Markets ]. Frederico Yokota Gomes: My first question, I guess, 2 questions on the gross margins. Was a decline sequentially from 46.7% in Q3. So could you maybe talk about it? Is it related to seasonality maybe or any onetime items impacting the gross margin? And then second, you did report an adjusted EBITDA margin expansion sequentially. So maybe just to clarify, is that related to some of the items you mentioned that are included in the adjusted EBITDA number? Or how do you square that with the adjusted -- with the gross margin decline sequentially? James Cacioppo: I'll do this. Gross margin -- on the gross margin, in the September quarter, the third quarter, we had a bulge of packaged goods and that created a lower cost per unit, and we pulled back a little bit based upon elevated inventories. It wasn't really market related. It was just production related, and we pulled back in October and November, which causes your cost per unit to go higher if you follow what I'm saying. So that was a lot of what had to do with. But also in December, you have discounting related to the holiday activity, both during Thanksgiving, things like Black Friday, which should be expand to 3 or 4 days of discounting. And then, of course, in Christmas, we do the 12 days of Christmas and it's a promotional time of the year for everybody in the spirit of Christmas. In terms of EBITDA, Michelle, do you -- I didn't quite catch that. Michelle Mosier: Yes. I think EBITDA improved. We had some ERC credit income during this quarter of about $3 million, which was a large contributor to the improvement in EBITDA. Frederico Yokota Gomes: Got it. I appreciate that. And then I guess the second question, just on -- you are increasing the percentage of branded sales in your own stores quite substantially on a year-over-year basis. So how much higher can this go? Do you have a target in mind? Any sort of rough guidance on that for this year? James Cacioppo: Yes. I mean we don't really target it as much as we focus in on consumer demand, patient demand. And -- but I think it's running sort of in the 60s, mid-60s in most of the markets. The market that brings the average down is Ohio, where we don't have supply or haven't been able to buy bulk at the right prices to do more branded products. And we have been talking over the last 6 months about wanting to do an expansion in Ohio, including on this call when we did this in prepared remarks. So one of our items that we have along with Virginia, Pennsylvania growth due to regulatory change is Ohio increasing the vertical in that market, which would increase margins in that market. We spent money in 2025 on expanding Ohio retail primarily, and we did some of that in 2024. And so we have a certain amount of budget to spend, and we decided to get the sales before we build out the core processor. Operator: The next question comes from Luke Hannan with Canaccord Genuity. Luke Hannan: I wanted to follow up on the conversation on Virginia. Jim, if I heard you correctly, I think you said that the CapEx budget -- the CapEx budget for this year is $9 million to $13 million in total, including maintenance and growth. How much of that, if any, includes a build-out in Virginia? You did mention, I think, all the -- assuming when adult-use lands, most of that CapEx is going to be coming in 2027, you're going to also draw on mortgage for that. Can you just frame up to us also what the size of that spend could be? I know it's in 2027, but I just want to get an understanding of the funds that you could have available for that. James Cacioppo: Yes. So I believe Jon will confirm this. I'll say it, but he's shaking his head that he will confirm if I'm right. But I think what we haven't planned in this year is $2 million to $3 million related to building out in warehouse. So we have grower rooms built that need to be equipped and updated these kinds of things because we haven't needed that capacity for the medical market. So we have 2 additional grower rooms. As a reminder, we have 6, are all roughly the same size. So it's 2 over 6 is the growth. That's I think will be primarily, if not all, for adult use. We don't think that will be needed for the medical demand, but it may be, some of it may be. So that's -- and we're also doing the hydrocarbon extraction. And then next year, which is not in this year's budget at all. There's not even sort of a budget item for like a deposit, but we're in construction diagram phase of the expansion of the warehouse. It's really another warehouse then we join it together. And so those of you that followed us for a long time realize that we have a lot of land that we purchased very well in Virginia during the COVID crisis. We bought the building and it was associated land, and we're going to build the warehouse on some of that land that doubles -- roughly doubles our canopy. That is not in the budget. And as Michelle noted in the prepared remarks, we believe a substantial portion of that would be paid by expanding our credit facility. And we did overfund our deal for existing cash. So we believe we'll be able to have the funding for that. We're waiting for the governor signature and then we need to get some regulatory approval as any construction project requires. Luke Hannan: Okay. And then I think you also touched on in your prepared remarks, all the medical stores there in Virginia will transition to dual use, but it is subject to a conversion fee. Did I hear you correctly that $10 million and then it's -- there's a payment plan that's set up for that as well? James Cacioppo: That's correct. Trent, do you want to comment on that? Trenton Woloveck: Yes, sure. So Luke, we get to propose a payment plan to the CCA for what we want to structure that payment -- $10 million payment to look like over 3 years. Luke Hannan: Okay. Got it. And there's no -- is there any implicit interest rate that's included in that? Or it's just a flat, you can chop it up 1/3, 1/3, 1/3? Trenton Woloveck: 1/3 -- we could do 1/3, 1/3, 1/3. We could propose whatever we would like to do. First payment would have to be made by December 1 of this year with expectation of sales starting on 1/1/27, and then we can space it out however we see fit and agree with the CCA on that. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Jim Cacioppo for any closing remarks. James Cacioppo: Great. Thanks everybody for attending. We appreciate it, and have a good day, and thanks again to all the great Jushi employees. We appreciate your effort. Bye-bye. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to the Inventiva Full Year 2025 Financial Report Webcast and Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, David Nikodem, Head of Investor Relationship. Please go ahead. David Nikodem: Good morning, good afternoon, everyone, and thank for joining Inventiva's Full Year 2025 Financial Results and Business Update. Our press release was issued yesterday evening, and this webcast and slides will be available in the Investors section on our website following the call. Joining us on the call today are Andrew Obenshain, Chief Executive Officer; Jean Volatier, Chief Financial Officer; and Dr. Jason Campagna, Chief Medical Officer and President of R&D. I would like to remind everyone that statements made during today's conference call and during the Q&A session may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Please refer to Slide 2 of the slides and our SEC and AMF filings for a discussion of associated risks. These statements reflect our views as of today and should not be relied upon as representing our views at any later date. With that, I will now turn it over to Andrew, starting on Slide 3. Andrew? Andrew Obenshain: Thank you, David. Good morning, good afternoon to everyone, and thank you for joining us. Since joining Inventiva 6 months ago, I've been struck by the depth of scientific conviction behind lanifibranor and the dedication of this team. Today, every resource, every decision and every member of this team is now aligned behind a single objective, advancing lanifibranor towards approval for patients with MASH. Let me start with our main focus, our global Phase III clinical trial NATiV3. Enrollment was completed in April 2025 and represented a landmark operational milestone for this company. Today, we are updating the expected timing of our top line readout to Q4 2026, reflecting the disciplined sequencing of our clinical and biostatistical milestones. We believe the data from the NATiV3 trial, if positive, has the potential to carry weight with regulators, physicians and most importantly, with patients. And we believe we are running this program with the rigor and precision all stakeholders deserve. On our pipeline and organizational focus, in the first half of 2025, we made the strategic decision to concentrate all of Inventiva's resources on lanifibranor and MASH. As part of this plan, in Q4 2025, we sold our global rights to odiparcil to Biossil and we may receive up to $90 million of potential regulatory and commercial milestone payments, as well as potential high single-digit royalties on future net sales if approved. While this transaction frees up our internal resources to fully focus on lanifibranor, we are pleased that odiparcil has found a new home where its development can continue, potentially in offering patients with MPS VI an opportunity for treatment. At the same time, we strengthened our leadership team to align with the level this opportunity demands. Jason Campagna joined as CMO and President of R&D. Martine Zimmermann joined as new EVP and Head of Quality and Regulatory Affairs; and Nazira Amra joined as our Chief Commercial Strategy Officer. We are building towards launch in a lean and targeted way, advancing our readout and NDA preparations while laying the early groundwork for commercialization in anticipation of potential approval of lanifibranor. And the opportunity is real. MASH has been underdiagnosed and undertreated for too long, but that is changing. More patients are being identified, more being diagnosed and entering care. Awareness is growing, screening is improving and metabolic disease is finally getting the attention it deserves. The numbers tell that story clearly. There are an estimated 18 million people in the U.S. living with MASH, but only around 10% have been diagnosed, and that number has grown by 25% compared to 2024 estimates. Among those diagnosed with clinically actionable F2 or F3 disease, only around 40% are currently under the care of a treating position. So while diagnosis rates are improving and the market is evolving, far too many patients with significant fibrosis remain without the care they need and face a real risk of progression to cirrhosis and liver failure. If our NATiV3 trial can replicate the 18% fibrosis improvement seen in Phase II, we believe lanifibranor could be well positioned as a potential best-in-disease oral therapy with significant commercial impact. Ultimately, our goal is to make a meaningful difference for patients and that is what drives everything we are doing. I will now turn the floor over to Jason, who will give a brief update on lanifibranor, our differentiated oral anti-fibrotic, and a potential new treatment option that we believe addresses the remaining unmet medical needs in MASH. Jason Campagna: Thank you, Andrew. Good morning and good afternoon, everyone. Let me start by reminding you of the mechanism of action and the development pathway of lanifibranor. Lanifibranor is a small molecule designed to induce anti-fibrotic, anti-inflammatory and beneficial vascular and metabolic changes by activating all 3 PPAR isoforms, alpha, delta and gamma in a balanced manner. This broad mechanism of action is designed to target the hepatic and extrahepatic drivers of MASH simultaneously and in one oral therapy. Lanifibranor was the first asset to achieve statistically significant improvement in the composite endpoint of both fibrosis improvement and MASH resolution in our Phase IIb NATIVE trial, after just 24 weeks of treatment with a favorable safety and tolerability profile. On the basis of these results from our Phase IIb the FDA granted lanifibranor breakthrough therapy and fast track designations. NATiV3, our pivotal Phase III clinical trial was designed to confirm and extend those findings in a larger, more diverse global population over 72 weeks and is intended to provide the data to enable successful marketing authorization in the United States and Europe. NATiV3 is a randomized, double-blind, placebo-controlled trial in patients with biopsy-confirmed MASH and stages F2 or F3 fibrosis, the core of the MASH treatment population. Those with significant disease burden and a high risk of progression to cirrhosis, liver failure and liver-related mortality. We specifically chose a clinically meaningful primary endpoint for NATiV3, fibrosis improvement and MASH resolution. And at 6 months in our Phase IIb the 1,200-milligram dose of lanifibranor showed a 24% treatment effect. NATiV3 was also deliberately designed to mirror the patient population of our positive Phase IIb and the real world as it exists today. A meaningful proportion of our patients have type 2 diabetes and other metabolic comorbidities, and a number are on background GLP-1 and/or SGLT2 inhibitor therapies, mirroring the patient's physicians actually see in their clinics, which we believe will ensure that we generate clinically meaningful data to support both NDA and MAA submission. In April of 2025, we completed enrollment, exceeding our original targets with over 1,000 patients in the main cohort and additional 410 patients with MASH and fibrosis stages F1 through F4 in an exploratory cohort. We anticipate sharing the top line results of our pivotal Phase III trial in Q4 of this calendar year, a moment, I believe, will be significant for the field and for the patients who need new treatment options. I will now turn the floor over to John for our financial review. Jean Volatier: Thank you, Jason. Good morning and good afternoon, everyone. So yesterday evening, we issued our press release with our full financial results for the year ended December 31, 2025. I will focus on the highlights. As of December 31, '25, we held EUR 230.9 million, close to EUR 231 million in combined cash, cash equivalents and short-term deposits. This position was built by 2 significant financing events in '25. First, the execution of the second tranche of our 2024 structured financing in May generating approximately EUR 108 million in net proceeds. And second, our U.S. registered public offering in November generating approximately EUR 139.4 million in net proceeds. We estimate that we are funded beyond our anticipated NATiV3 readout. Based on our current operating plan and cost structure, we estimate that our cash runway extends to the middle of Q1 2027 and to the middle of Q3 2027, assuming the full exercise of our tranche 3 warrants, which could generate up to an additional EUR 116 million. We confirm this way the cash guidance provided earlier. Our R&D expenses for the full year were EUR 87 million, primarily reflecting our pipeline prioritization and, to a lesser extent, the completion of NATiV3 enrollment in April 2025. Marketing and business development spend increased to EUR 5 million primarily due to expenses related to a planned pre-commercial investment as we prepare for a potential launch of lanifibranor if approved. G&A expenses of EUR 47.9 million include approximately EUR 20.3 million of noncash share-based compensation tied to the governance and organizational transition we implemented this past year. I will now turn the floor back to Andrew for closing remarks. Andrew Obenshain: Thank you, Jean. Inventiva enters 2026, well-funded, operationally focused and ready for a consequential chapter in this company's history. NATiV3 is fully enrolled. We've built a leadership team with deep medical, regulatory and commercial expertise, and our regulatory and commercial readiness work is progressing in parallel. Our anticipated top line readout in the fourth quarter of this year represents a genuine inflection point, not just for Inventiva, but for the millions of patients living with MASH, who still have no adequate treatment options. We are truly executing with the discipline and urgency this moment demands. Thank you for joining us today. We will now open the floor for questions. Operators, please go ahead and provide instructions for the Q&A session. Operator: [Operator Instructions] We will now take our first question. And our first question for today comes from the line of Seamus Fernandez from Guggenheim. Seamus Fernandez: Just a few quick questions. First, can you update us on how the performance of the trial has been in terms of dropouts? I know that there were some requirements from the tranches that were coming in that were successfully completed. But just wanted to get a sense of where the dropout rate was as you were kind of wrapping up enrollment. Second question is, can you help us understand how you're thinking about the performance of the 800 versus the 1,200-milligram dose in terms of both weight gain and then ultimately on fibrosis? Is the sort of change from a more typical 12-month endpoint to the 18-month endpoint geared to have the 800-milligram dose catch up to the 1,200 but also manage the potential tolerability or weight gain issues? And then to the last question is just what you're seeing in terms of the overall market interest. Madrigal continues to see very strong uptake in the U.S. How are you thinking about the opportunity to compete with Madrigal? What do you think is the threshold necessary? Andrew, you mentioned 18%. Just interested to know if you think 18% is the threshold where the impact is going to be substantial or is that more reference to the powering of the study? Andrew Obenshain: So, Morning, Seamus. Thanks for the questions. I'm actually going to take your third one first and then hand the first 2 over to Jason. So yes, just to be really direct, we think that if we replicate the Phase II trial and have an 18% effect on a fibrosis, we have an excellent drug. That is the clearing efficacy that we need for in order to have a very attractive market opportunity. We continue to see a lot of market growth, thanks to the entry of the 2 approvals and a lot of awareness around MASH. And there still continues to be unmet need, especially we see in that F3 diabetic patient population, where we think there'll be a very good entry point for lanifibranor. And then at 18% of fibrosis effect with our HbA1c lowering, we have a very good profile for that. Let me then turn the question over to Jason first on the drop-offs and what we've last discussed publicly there. And then the second question about the 800 catching up the 1,200 dose. Jason Campagna: Seamus. So let's take the first one. So you are correct. As part of the structured financing from 2024, there were covenants in there around the release of follow-on tranches that the early termination rate for the trial needed to be below 30%. That number was selected because the original powering analysis from the trial was built allowed for up to a 30% dropout rate. So that was the metric that was used, and we have disclosed publicly at the time of both the first and the second tranche release, which would have been in April of 2025, that we were below that threshold. I think now that we're tightening the guidance to Q4 of this calendar year, I think we were able to confirm we are well within that range and feeling quite good about where we've landed and are reaffirming that the trial is well powered to detect the primary endpoint with the size of the trial that we have and the early termination that we've seen. So the second question you asked about the 2 doses, I think you're landing sort of in the right mixture of elements that are important to us. So we agree with you that in theory, with additional time just because of the way PPARs work and the biology of the liver that that 800-milligram dose will have time to sort of catch up to the 1,200. It was already quite a good dose back in NATIVE, as you recall. But 6 months is relatively thin for a PPAR, which is a transcriptional modulator to sort of do its work. So the idea that you could see a deeper effect with that 800 dose at 18 months, it's very reasonable. But I think where you're landing around the potential dose responsiveness of the tolerability concerns, that is also very important to us. So take weight gain, which you mentioned. Weight gain is a traditional PPAR gamma mediated fluid retention event, and we know that, that fluid retention is highly likely to be dose dependent just from what's been shown with other PPAR agonists and our own data from NATIVE. So we think that potential to have really strong efficacy with both doses, which we were able to show in NATIVE, but may have a different tolerability profile at the lower dose could be meaningful for patients. So it's our hope that both will be positive, and we'll have that opportunity to discuss that with regulators. Operator: Our next question comes from the line of Yasmeen Rahimi from PSC. Unknown Analyst: This is Dominic on for Yas. The first one, we know that NATiV3 is a very large data set. As we're getting closer to top line data in 4Q, what are some of the quality control, I guess, protocols going on in the background to analyze the biopsy samples and what procedures are in place to ensure timely and thoughtful assessment of these biopsies? And then our second question is, can you just talk or help us understand, I guess, how you have how -- if you had any recent safety monitoring committed? And are you seeing anything on a blinded basis on the safety profile? Any color there would be helpful. Andrew Obenshain: Good morning, Dominic. So 2 questions. Let me take the second one first, and the first one over to Jason. Just on safety monitoring, there are periodic monitoring committee meetings every 6 months. You would know if they had said anything. Other than that, we really can't say anything about those meetings. Go ahead, Jason, on the biopsy. Jason Campagna: Yes. Thanks, Andrew. Dominic, so quality control and biopsy. Let me start by saying that the team we have here is outstanding. The clinical operation, the clinical development team have been immersed in the world of MASH clinical trials for the better part of a decade. So this is something that they know well and we carried that expertise forward. So you could think of quality control biopsy around 3 issues. Are we hurting the patient? Meaning at the bedside, are we doing the right things. Second, are we capturing the biopsy according to standard practice? So that's the length of the biopsy, the overall quality of the core, if you will. There's measurements and things that sort of go in and say check or not check. We have reviewed all of those and continue to do so right up until when we get to last patient, last visit later this year. And then lastly, finally, when the slides are sectioned prior to going off and being read, there's a quality control set there that looks at what actually gets made on to the slide. Afterwards, at that point, we are obviously blinded to all of that information. But there is a quality check in terms of are the reviewers, the readers staying on time and on track reading biopsies in the paired matter that's specified both in the protocol and the analysis plan. So I like the teams that we have in front of it and more importantly, I think that they are doing exactly the right work to keep us on track. Operator: Our next question for today comes from the line of Ritu Baral from TD Cowen. Ritu Baral: I want to drill down a little bit more upon final powering. You guys disclosed the over 1,000 final patient number. I think it's 1009 and the 90% powering. What's the effect size that, that powering is for on the primary combined endpoint? And what are your expectations for potential movement around placebo of that, I think it was 7% at the 6 month upon the final primary endpoint? And then I have a follow-up on market expectations around that F3 diabetic population that was mentioned. Andrew Obenshain: Thank you, Ritu. Jason, why don't you go ahead and answer that question? Jason Campagna: On the first one, we are not guiding to the actual effect size, but I can reiterate for you and for everyone what we have been saying. So first, we are with the sample size of over 1,000 patients. We are powered to over 90% on a primary endpoint of the composite fibrosis improvement 1 stage or more MASH resolution. That one has a higher placebo response than we showed in NATIVE, which as you know, was 7%; and two, a smaller treatment effect than we showed in NATIVE data about the 1,200 milligram dose. So that means the overall effect size that we are powered to is smaller. So a much more conservative view than the actual data that we showed in the Phase II program. We just talked earlier with Seamus that, that alongside our comfort with the early termination rates we have, we feel very good that the trial is structurally sound and that will give us an answer to the question one way or the other. Did lanifibranor work first at the 1,200-milligram dose? The testing is hierarchical. We can't get to the 800, unless you went on the 1,200. But that is the core question. We think the trial was well set up to deliver an answer to that question that is well powered and highly confident. I think to your second question around placebo response. The individual endpoints of fibrosis alone. I think everybody on the call knows this, fibrosis alone improvement or MASH resolution alone can be quite noisy. It's not clear after all these years of study why that is, but we do know that they're noisy. On the other hand, the composite endpoint, the primary endpoint of NATiV3, are with us and other sponsors have shown that, that endpoint is much less prone to placebo response. And that makes sense, Ritu, biologically, right? You have in 1 patient, they may on a placebo response move their fibrosis stage by 1 point or more, but the idea that they can also resolve their MASH spontaneously. What that 7% tells you was that in the wild, in the real world, that's incredibly uncommon and that makes total sense with the actual way that patients walk in. It's unusual if you leave them sort of sitting along without treatment, that both of those things will get better on their own. So the placebo response there actually reflects, we believe, the underlying biology, and it should remain very low. We've seen it by precedent, and it's our expectation for the trial that we're running. Ritu Baral: Very helpful. And then, Andrew, a question on how you guys and your own market research is viewing that F3 diabetic population. Do you have an approximate patient number? How is the diagnosis rate in that population changing versus the overall MASH population given the ADA focus on MASH and its messaging to diabetologists? Andrew Obenshain: Thanks for the question, Ritu. So in terms of size, there's about 375,000 patients total F2, F3, in under treatment of care right now. The largest segment is -- one of the largest segments is that F3 diabetic patient population, being 55% to 65% of the patients are diabetic, and about it splits roughly 50-50 in our market research between F2, F3. So that patient population is quite a large patient population overall. In terms of growth, we don't have the granularity down to that segment. However, I would just know anecdotally that F4 is one of the fastest-growing segments. And I think the diagnosis rates are increasing quite a bit overall for F2, F3, F4, just to the number of entrants into the market. So they are growing a minimally proportionate with the market in that segment. Ritu Baral: To that point, Andrew, can you tell us of the 410 expansion cohort patients, how many are F4. Do you know at this point? Andrew Obenshain: I'll pass that question. Jason Campagna: Yes. Confirming you're talking about the exploratory cohort, correct? Ritu Baral: The exploratory cohort, yes. Jason Campagna: We do have F4s in that cohort. They would have screen failed in that case, by histology, potentially other lab values for the actual main cohort in NATIVE. So they represent a sort of range of F4 from. They're all compensated by definition, meaning they have no clinical outcome events, decompensation events. But the range of severity with portal hypertension can be from none to evidence of clinically significant. And those -- that data is going to be quite interesting to us. We're not yet guiding on when we'll have an opportunity to get those data out. It's unclear right now if we have them at top line per se, or in the weeks that follow it in one way or another. But I think as we get closer to top line data, we should be guiding on that more tightly. Operator: Our next question today comes from the line of Thomas Smith from Leerink Partners. Thomas Smith: Just wanted to follow up on that F4 population. And I know you're capturing some of those patients in the exploratory cohort. Can you just expand a little bit on what you hope to learn from that exploratory cohort and how you're thinking about planning for the outcome study in F4s pending the NATiV3 data and perhaps how you're thinking about perhaps how some of those plans could change. We know we're going to get F4 outcomes data for Rezdiffra also in 2027. So some interesting timing around that data set relative to when you're planning on starting this F4 outcome study. Andrew Obenshain: Thanks for the question, Tom. Jason, go ahead. Jason Campagna: So there's a lot there. Let me make sure I get it all for you. So one, just in general, what are we expecting to learn from that cirrhotic population in the exploratory cohort. First, above all safety of lanifibranor in that population. Clearly, right, if you're going to bring in a new therapeutic into a more, let's say, sicker population, you want to obviously want to have safety headroom to do that. So approximately 75 patients we have in that cohort safety above all else. Second, it's not that, as you know, that cohort is not tracked systemically -- systematically, excuse me, for efficacy. That being said, we do anticipate having data of things on like LFTs, transaminases and other things that would point directionally towards whether the drug is biologically active. So really a pharmacology question, very important. We have done hepatic impairment studies with the drug, but looking at it in a real world and a clinical trial would be incredibly helpful. And I think lastly, it will give us a sense in our own hands of how those patients progress over time to later-stage disease. You could read about it, you can model it, you can look at other people's trial, but in your own trial we will see how many of those patients go on to actually have liver related or other events. And that will be incredibly helpful as we think about powering and sizing of an outcome-driven trial, which is what we're right now calling NATiV4, for lack of a better term. But make sure that, that gets to your question, Tom, on the value of that cohort to us? Thomas Smith: Yes, that's helpful. Jason Campagna: Great. So now look, you know the Madrigal data coming. I think yet we acknowledge that. We agree. I think our view is that positive data, if Madrigal were to show it, would only be helpful for the field period, full stop. The idea that we have now finally shown that the surrogate endpoint does correlate with clinical outcomes would be an enormous one for the field. Look no further than what happened in the cardio renal division with proteinuria in the last 6 years. Proteinuria was issued as a surrogate in 2019. I have 5 or coming 6 approved therapeutics for IgAN, that's an enormous win for patients. So we expect something like that would hope would happen here. But clearly, that would influence our thinking about how we think about populations and the ones that are most likely to develop liver-related outcomes because we want to get more of them since we know that the sort of door is open to show that the histology will map to clinical outcome. Operator: Our next question comes from the line of Michael Yee from UBS. Michael Yee: I have [ 32 ] myself. First question is on weight gain, can you remind or confirm the views that based on the phase II also, I think what you're sort of said in the ongoing Phase III that there is some initial weight gain, but that it plateaus and that you don't really see anything beyond a modest increase in some patients, at least in the phase II, and that plateaus and that was initially seen in the Phase III, and therefore, no concerns. The second question is, is there any view that either because of other drugs or because of longer time duration of 18 months versus 6 months here that, that could actually come down in some of those patients or at least come back down to baseline, is that possible? And then the third question is around getting the regulators comfortable with that, what I guess fluid retention effect in some patients and that there would be presumably no at least initial cardiac imbalance in any of the arms that you see and which you'll be able to talk about no imbalance in any cardiovascular events numerically or any SAEs of that nature when you disclose the data in the fourth quarter? Andrew Obenshain: Mike. You were a little soft, so I'm just going to repeat some of it. So there was a question about does weight gain indeed plateau and number one, if in the Phase II. Number two, does that weight gain -- is there a chance of that weight gain would actually go down in the Phase III, either due to concomitant medications or longer treatment? And then number three, some of the weight gain do -- if the weight gain is due to fluid is there any concerns about a cardiac imbalance in the trial. So for those 3 questions, I'll hand it over to Jason. Jason Campagna: Yes. Mike, good to talk to you again. So we have previously said and we'll reaffirm it here that the data that we have previously shown from the blinded look at NATiV3 back in September of 2024, and that we also disclosed at that time the FASST clinical trial in systemic scleroderma, which was a year trial with treatment of lanifibranor same doses in NATiV3, 800, 1200 milligrams, that the weight -- the fluid retention weight gain appear to plateau. I think we don't have any additional information to guide on that publicly, but I think that is what we've seen in both of the clinical trials so far. I think second, do we expect the weight to come down? It's well possible. I think there are a couple of factors at play. Take the LEGEND study, for example. We show that when patients are given SGLT2 inhibition in parallel with lanifibranor that there's almost no weight gain at all. There are many patients in the trial that are on SGLT2 inhibition and do not have the number for you off the top of my head. And we know that patients can be started on those therapeutics for management of diabetes or any other reason. So it is entirely possible and reasonable to believe that if patients are getting SGLT2 inhibitors or other diuretics to manage blood pressure, et cetera, that, that weight gain either the fluid retention, could be blunted or resolved so that the final landing spot, if you will, for any patient, might be lower than the peak weight gain that they had in the trial. But I think we'll see what the data show. Lastly, in terms of regulators, I think I can't speak for the FDA, but I can only speak to what I've read of everything they've put out. The fluid retention is a known phenomenon with PPAR gamma agonism, the thing about lanifibranor is it was designed to be different than other PPAR gammas, and we'll see what the data show. Our view is that it is a very different type of PPAR agonist. But that being said, the PPAR gammas is a known effect. It is on target. It is not idiosyncratic in any way. So FDA has shown with labeling and other work that they are comfortable with fluid retention, I think you're hitting on the right point, the cardiac. And as we've talked about and guided publicly over the years, we are not seeing congestive heart failure as a clinical issue in our program. It doesn't mean that we don't follow it. And it doesn't mean that you're thinking about how fluid retention may lead to that. That's certainly in the PPAR labels today, the gamma agonist, but it is just not something that we are generally seeing in our program, but we will be paying careful attention to it, and it's a dialogue we'll have with FDA. Operator: [Operator Instructions] Our next question comes from the line of Ellie Merle from Barclays. Unknown Analyst: This is Jasmine on for Elie. So as kind of a follow-up to Ritu's question. You talked about the overlap of MASH in type 2 diabetes as a segment where lanifibranor can be particularly attractive. But do you have a specific bar for what competitive data would look like in this population? And then specifically, how many type 2 diabetes patients do you think have undiagnosed MASH, and how do you plan to work to increase the diagnosis in this population and unlock that segment? Andrew Obenshain: So I'll take those 2 questions. First of all, just the diabetes and overlap with MASH, it is enormous, right? And there's -- I think there's about 18 million patients in the U.S. with undiagnosed MASH. At least half of those or more have diabetes at it's obviously way, way more than 375 under the treat or care. The way we see the market evolving is we've seen since about 2004 that market has grown about 20%. So it's clearly quite robust growth, and we do anticipate that to grow nicely. We, as a company, probably will not be pushing diagnosis, at least initially, there are enough patients coming in that we can focus on the patients being diagnosed -- the existing patients being diagnosed. That would obviously, maybe a later marketing strategy would be to actually increase diagnosis. And then your first question about -- I'm sorry, I forgot your first question already. Unknown Analyst: Just if you have like a specific bar in that population for what competitive data looks like? Andrew Obenshain: Yes. So the -- in terms of competitive data, the way we look at this is that the differentiated profile that we have is we work both on the liver and we're extrahepatic. We work on the body and we work on the liver. So we have direct anti-fibrotic effect. Again, as I said, that an 18% effect size, if we duplicated that in the Phase III trial, we feel it's a very competitive drug. And then the other thing we'll be looking at is HbA1c lowering, which was on average across the whole patient population, diabetic and nondiabetic in the Phase II, with just over 0.5 point, that would be an approvable diabetes medication years ago. So that combination of HbA1c lowering, combined with triglyceride lowering, HDL raising and the fibrosis effect, we think, has an extremely attractive profile for that diabetic F3 patient. Operator: Our next question comes from the line of Lucy Codrington from Jefferies. Lucy-Emma Codrington-Bartlett: Just one left, please. Regarding the confirmatory trial, just wanted to confirm, do you have an understanding with the FDA in terms of what underway means when it comes to granting accelerated approval? Is it enough just to have started that trial? And does this need to be by the time you file or by the time you get to approval? And then related to that, is starting that trial included in that mid 3Q cash runway with the third tranche of warrants? Andrew Obenshain: Yes. So yes, it is included. Starting that trial is included in the cash runway of that mid-Q3 runway. Jason, you want to talk about what's necessary for the trial? Jason Campagna: Yes. Lucy, I think you have the broad brushstrokes of it, right, but just something on the language. So accelerated approval is only at the time of the review. What we're looking to get is conditional approval under Subpart H, which is you've got marketing authorization and then the trial, as you note, confirms your surrogate and then you get full approval. Whether accelerated is only a question of how long it takes the FDA to actually review the file. With that, I'm just trying to make sure that we're all clear on that, that we -- you have the broad brushstrokes, right? But the individual rules are discussed with each sponsor at the time of the pre-NDA meeting and then during the mid-cycle review. But the general framework is you need to have most of the trials structurally in place, protocol approved at the time you were filing the drug and it needs to be moving on the definition of moving is going to be something FDA will define for us. We will be prepared. We have our CROs selected, the protocol is approved, may even have sites open. All of that is in the future. But at the time we file, we will meet the FDA position of trial meaningfully underway. And then at the mid-cycle review, you need to show continued progress on that. So they will check again that made a much more detailed look around enrollment nerves, site activation curves, et cetera. Again, each sponsor has their own detailed agreement with FDA on that, and it is our plan, of course, not only to have those conversations, but to make sure that we're meeting those requirements. So that when we are offered if we're fortunate enough to make it there, and we offered, the conditional approval, that trial will be well underway at that point. Lucy-Emma Codrington-Bartlett: Got it. Thank you, and thank you for clarifying on the terminology. Operator: Our next question for today comes from the line of Annabel Samimy from Stifel. Jayed Momin: This is Jayed on for Annabel. Congrats on the progress. Just 2 for me. The first one is around the use of background GLP-1 in the trial. What are your expectations on the potential impact of having that background GLP-1 use on [ lani ] effect size of those patients? And my second question is around the AIM-MASH tool that was nearly FDA qualified as a supportive tool to help with histological assessments. Do you have any plans to maybe leverage that to control or minimize variability? Andrew Obenshain: Yes. Thanks, and thanks for the question on the impact on the lani effect size based on background GLP-1 and the tools. So go ahead, Jason. Jason Campagna: Yes. So in confirming we do have, and we've previously shared that we have about 14% or so of the population in NATiV3, that's across both cohorts, that have background GLP-1 use at the time of randomization. That could be semaglutide, older drugs, liraglutide, dulaglutide, et cetera. So it's not only limited to the modern GLP-1. And I think its effect on treatment response should be minimal, and that should -- it will sound tongue in cheek, it's not intended to be. It's because that when you enter the clinical trial independent of what drugs you're on, whether you've lost weight by any other measure, independent of a GLP-1, you're entering the trial issue have that F2, F3 disease with active MASH. So whatever it is, one, those drugs are not doing it for you or your lifestyle modifications; and second, that the doses that we're using are really the diabetic doses. So they don't -- they are not anticipated to have much of an effect at all. We're simply seen that in the clinical trial data. I think to the second question about the tools, are you talking about PathAI specifically or just more general non-invasives? Jayed Momin: Yes, no, it's the PathAI tool. Jason Campagna: Yes. It's an interesting idea, right? But if you -- looking at it really simply, what PathAI lets you do is substitute one human pathologist for a digital pathologist and then you need a second pathologist to read. It's still the same idea of 2 plus 1 consensus. In this case, 1 of the 2 is PathAI. It's interesting. It's not something that in NATiV3, we anticipate taking much advantage of. But it is something we're thinking very closely about for NATiV4, potentially using that as the -- in the exploratory cohort presently from NATiV3 to see how we may be going to pull more data out of those patients that happen to have a biopsy. Operator: Our next question for today comes from the line of Rami Katkhuda from LifeSci Capital. Rami Katkhuda: I guess can you remind us of lanifibranor's FC and F2 versus F3 patients in the Phase II study and how those differences may impact expectations for NATiV3 just given the higher proportion of F3 patients enrolled? Andrew Obenshain: Go ahead, Jason. Jason Campagna: Rami, just to qualify, you want the proportion of patients in NATiV2 or the responses of the F2, F3? Rami Katkhuda: The responses, please, between the F2s and F3s. Jason Campagna: The sample sizes are simply too small to break out what we have done. We think the analysis that's more helpful, it's in our corporate materials, is that when you strip away the F1s in that trial. You get down to about 188 F2, F3 across all 3 arms. You can see that the effect size actually slightly goes up. What we guide to is that it remains unchanged. So the drug seems to work equally well in more advanced fibrosis in patients with earlier disease. So you're not getting much of a free glide on those F1s, if you will. I think second, when we look at NATiV3, as Andrew talked about earlier, this is a contemporary MASH market. The majority of patients showing up and clinics today that have F3 disease, will have diabetes. So we think that aligns pretty well with the outside world. And we're pretty comfortable with what we've seen from our Nature publication back in 2024, that the drug not only works equally well in earlier and late-stage disease, but the adiponectin levels actually go up equally well across all cohorts and it's that adiponectin that's really driving, we think, well correlated with the clinical response. So we like where we're landing with NATiV3 and the likelihood of efficacy in both those F2 and F3 patients. And as a reminder, we're stratified by fibrosis stage and diabetes and NATiV3, so we're going to cut those data in a number of different ways to sort of get where you're headed with your question. Operator: Our next question comes from the line of Srikripa Devarakonda from Truist Securities. Unknown Analyst: This is Anna on for Kripa. So 2 questions from us. First, looking ahead a little bit in terms of the MASH guidelines, would you expect an update on the MASH guidelines this year? And how are you thinking about getting [ lani ] into the MASH guidelines? And then second question, in terms of cash, what kind of needs to happen for you to have access to that third tranche? Is it based on kind of Phase III success only? And are you looking at any other non-dilutive sources of funding such as partnerships? Andrew Obenshain: Thanks for the questions. So on the MASH guidelines, I think we will wait -- we need to get data first before we have any conversations about putting lanifibranor into the MASH guidelines. On cash, the tranche 3 is a positive endpoint, and we hit a positive endpoint in our trial, and then when those 77 million shares of EUR 50 become exercisable, and the investors have 45 days to exercise them. So that's how that mechanically works. So positive trial equals cash coming in, so as long as the stock price is above the EUR 50. We are always looking for ways to increase our cash runway. And we've obviously in a very strong cash position right now. In terms of partnerships, right now, our plan is to commercialize lanifibranor ourselves. Going forward, we think that there's plenty of access to capital, either in the equity markets or other kind of capital sources that we don't necessarily need to partner lanifibranor. Operator: Our next question comes from the line of Sushila Hernandez from Van Lanschot Kempen. Sushila Hernandez: Could you elaborate on your regulatory and commercial infrastructure? What steps are you taking to act with speed once the data is here, also considering your cash runway? Andrew Obenshain: Yes, good question. So yes, so we are being very careful stewards of our capital right now before data. So a lot of -- the regulatory team is fully staffed, and I would include the quality team on that, too, because that's necessary, to make a really good filing with the FDA. So we have invested. We've increased the size of that team and the talent on the team in the course of this year. From a commercial standpoint, really focused on strategic commercial execution. So being led by Nazira Amra, really focused on market access, the market research. I'm going to include in the broad commercialization medical affairs there. So the strategic role that won't really set us up for success in the future. We will not staff up aggressively in commercial until we have positive data. Operator: This concludes today's question-and-answer session. I will now hand the call back to Andrew Obenshain, CEO of Inventiva for closing remarks. Andrew Obenshain: Thank you so much. Thank you, everyone, for joining the call this morning. We certainly have an exciting remainder of the year coming up for Inventiva, and we look forward to engaging with you all as we go forward. Thank you. Operator: This concludes today's conference call. Thank you for participating. You may now all disconnect.
Operator: Good morning. My name is Warren, and I will be your conference operator today. I would like to welcome everyone to the TD SYNNEX Corporation First Quarter Fiscal 2026 Earnings Call. Today's call is being recorded, and all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. At this time, for opening remarks, I would like to pass the call over to Nate Friedel, Head of Investor Relations at TD SYNNEX Corporation. Nate, you may begin. Nate Friedel: Thank you. Good morning, everyone, and thank you for joining us for today's call. Joining me on today's call are Patrick Zammit, our CEO, and David Jordan, our CFO. Before we continue, let me remind you that today's discussion contains forward-looking statements within the meaning of the federal securities laws, including predictions, estimates, projections, or other statements about future events, including statements about our strategy, demand, plans and positioning, growth, cash flow, capital allocation, and stockholder return, as well as our financial expectations for future fiscal periods. Actual results may differ materially from those mentioned in these forward-looking statements as a result of risks and uncertainties discussed in today's earnings release, in the Form 8-Ks we filed today, in the risk factors section of our Form 10-K, and our other reports and filings with the SEC. We do not intend to update any forward-looking statements. Also, during this call, we will reference certain non-GAAP financial information. Reconciliations of GAAP to non-GAAP results are included in our earnings press release and the related Form 8-K available on our Investor Relations website ir.tdsynnex.com. This conference call is the property of TD SYNNEX Corporation and may not be recorded or rebroadcast without our permission. I will now turn the call over to Patrick. Patrick Zammit: Thank you, Nate, and good morning, everyone. Thank you for joining us today. We are very pleased with how we started fiscal year 2026. In the first quarter, we delivered record non-GAAP gross billings and non-GAAP earnings per share while continuing to expand profitability and build on the execution and momentum established over the past year. Our results reflect strong performance across both our distribution and Hive businesses, as well as the continued alignment between our strategy and the needs of our partners. Together, this reinforces the strength of our operating model and our ability to create long-term value for our shareholders. Before turning to our operating results in more detail, I want to start by discussing my rationale for updating our reportable segments. These changes better reflect how I manage the business and allocate capital and resources. Going forward, we will primarily discuss our performance and strategies through two businesses: Distribution, comprised of our three regional distribution segments, and Hive. Each business has a distinct value proposition and operating model, with clear drivers of growth, profitability, and returns. We believe this structure provides clearer insight into how our businesses perform and how we create long-term shareholder value. With that context, I will start with our Distribution business. Within Distribution, we delivered a strong start to the year, with excellent results across all geographies and key technology categories. Performance was supported by continued customer investment in infrastructure, software, and security, as well as notable strength in infrastructure and PCs as we help partners navigate an inflationary cost environment and a dynamic supply chain. Leveraging our global reach, diversified sourcing, and close vendor partnerships, we are helping our customers manage supply chain constraints, navigate pricing, improve availability, reduce uncertainty, and plan deployments with greater confidence while helping vendors efficiently extend their reach and activate demand across markets. Our accelerated growth was accompanied by expanding gross and operating margins driven by favorable geography and product mix and disciplined cost management. These results underscore the strength and value proposition of our global Distribution business, delivering attractive returns today while positioning us to capture opportunity tomorrow. Last quarter, we outlined four strategic pillars that define how we compete, create value across our portfolio, and differentiate ourselves in the channel, and these continue to shape where we invest and how we execute moving forward. These pillars are omnichannel engagement, specialized go-to-market, best-in-class enablement, and expanding our brand visibility. I will highlight a couple of examples of how we are bringing this to life. Starting with omnichannel engagement, we are making it easier for customers to engage with TD SYNNEX Corporation in the ways that best fit their workflows. This approach is powered by our partner-first platform and suite of digital services that integrate billions of customer, vendor, and end-user data points to drive demand at scale, supporting continued growth within our SMB customer market globally. Our capabilities are translating into tangible results. By embedding predictive AI directly into our onboarding and go-to-market motions, we are meaningfully increasing the number of customers onboarding new vendor portfolios each quarter, helping vendors expand their reach within our ecosystem and accelerating profit-generating activity across the ecosystem. Our agenting AI systems are now supporting customers and internal teams across complex workflows, from multi-vendor solutions aggregation to intelligent quoting and cross-sell recommendations, helping shorten deal cycles and improve attach rates. Paired with our relationship-driven model, this allows us to scale expertise and engagement globally without compromising the high-touch experience that differentiates TD SYNNEX Corporation. This quarter, our progress was reinforced by achieving Microsoft Frontier Distributor designation across all of our regions globally, a recognition of excellence in support, security, channel enablement, platform innovation, and technical delivery. This designation highlights our ability to bring technologies to market in a consistent, scalable way across regions and digital platforms, marketplaces, and high-touch engagement models, and to do so consistently as customers move from AI experimentation to deployment. Building on that foundation, our specialized go-to-market strategy continues to deliver tangible results, particularly in security. Earlier this month, TD SYNNEX Corporation was named Palo Alto Networks fiscal year 2025 Distributor of the Year in North America, recognizing our ability to drive above-market growth while expanding customer participation and accelerating new customer acquisition. Importantly, this recognition reflects the value of our specialized distribution model. By combining deep market expertise by technology and customer segment with our global reach, we enable vendors to reach new customers, activate customers more effectively, and drive growth beyond what they can achieve on their own. Capabilities such as inventory management, seamless customer transitions, pre- and post-sales support, and higher levels of automation enable our vendors and customers to scale with speed and consistency, reinforcing the long-term benefits of leveraging the distribution channel. Now turning to Hive. We delivered an impressive quarter, driven by continued demand for cloud- and AI-enabled data center infrastructure across our hyperscale customers. Growth was broad-based across our programs and customer base. Our integrated engineering, manufacturing, and supply chain capabilities enabled efficient deployment of sophisticated rack-level solutions at scale, which translated into meaningful year-over-year operating income growth. These results reinforce Hive’s strategic opportunities within this fast-growing market. Building on this momentum, Hive is focused on evolving its strategy over time toward more complete system-level solutions across traditional compute, accelerated compute, networking, and storage offerings. Through targeted investments, engineering and manufacturing capabilities are helping customers simplify design, accelerate deployment, and reduce total cost of ownership. These ongoing investments have attracted a growing pipeline of opportunities, including signing programs with two new hyperscale customers in 2026, which we expect to contribute to results in future quarters. We have already started to ramp our third U.S.-based hyperscaler, and with these two wins, we now have at least one program secured with each of the top five U.S.-based hyperscalers. To close, we remain very confident in the long-term value creation opportunities across both Distribution and Hive. The addressable markets we serve are continuing to expand, and we believe our differentiated value proposition and strategy position us to capture a growing share of that opportunity while delivering attractive returns for shareholders. Now I will pass it to David to go over the financial performance and outlook in more detail. David? David Jordan: Thanks, Patrick, and good morning, everyone. We are pleased to report a strong start to our fiscal year with first-quarter results that exceeded our expectations across all key metrics. Walking through the numbers, our non-GAAP gross billings for the first quarter were $25.8 billion, increasing 24% year over year, or 20% year over year in constant currency, and exceeded the high end of our guidance range, driven by accelerated growth in both Distribution and Hive. Non-GAAP operating income was $590 million, an increase of 48% year over year, or 44% year over year in constant currency. Non-GAAP earnings per share were $4.73, an increase of 69% year over year, and above the high end of our guidance range. GAAP operating income was $489 million, an increase of 61% year over year, or 57% year over year in constant currency. GAAP earnings per share were $4.04, an increase of 104% year over year, and also above the high end of our guidance range. Together, these results demonstrate our ability to convert strong top-line growth into operating leverage and meaningful shareholder value. Turning to quarterly performance for each of our businesses, Distribution generated non-GAAP gross billings of $22.0 billion, increasing 17% year over year and exceeding our expectations, driven by broad-based strength across both product categories and geographies. Endpoint Solutions increased 14% year over year, supported by ongoing PC refresh activity and strong demand for premium devices. Advanced Solutions increased 19% year over year, driven by continued strength in infrastructure, security, and software. Distribution non-GAAP operating income was $431 million, increasing 42% year over year, and non-GAAP operating margin as a percentage of gross billings was 2%, an improvement of 34 basis points year over year. Overall, we estimate the Distribution gross margins benefited by approximately 10 to 15 basis points during the quarter, driven by incremental profit from strategic inventory purchasing. In addition, we estimate that approximately 2 percentage points of year-over-year gross billings growth were attributed to higher average selling prices and modest pull-forward activity, as we partnered with OEMs to pass through higher memory and component cost. Moving to Hive, Hive generated non-GAAP gross billings of $3.8 billion, increasing 95% year over year and exceeded expectations, driven by broad-based strength across both manufacturing and supply chain services. Manufacturing and assembly increased in the mid-70% year over year on a gross billings basis, driven by demand increases from all major customers in each of the major programs we support. Supply chain services grew in excess of 100% year over year on a gross billings basis, driven by increased demand for components supporting our customers' AI infrastructure deployments. Margins in this business can vary quarter to quarter depending on mix. Hive non-GAAP operating income was $159 million, increasing 66% year over year, and non-GAAP operating income margin as a percentage of gross billings was 4.2%, decreasing 72 basis points year over year, primarily driven by mix as discussed earlier. We are in a period of accelerated growth; however, we continue to remain disciplined in our cost management approach. Our teams are focused on driving operating leverage while ensuring we make investments that position both Distribution and Hive for sustained long-term growth. Shifting to cash flow and capital allocation, free cash flow usage for the quarter was approximately $929 million, consistent with our first quarter in the prior fiscal year. Over the trailing twelve months, we have generated $1.2 billion of free cash flow and returned $723 million to shareholders, demonstrating the strength of our model and our disciplined approach to capital allocation. As the business grows, we are focused on ensuring we maximize net-income-to-free-cash-flow conversion on an annualized basis. Return on equity is also a key financial priority for us, and beginning this quarter, we are highlighting return on equity as a key metric that we are focused on improving over time. During the first quarter, we returned $118 million through share repurchases and dividends. Net working capital ended the quarter at $4.2 billion, with a gross cash conversion cycle of 16 days, an improvement of 4 days year over year, reflecting our continued focus on strong cash conversion and efficient working capital management. We ended the quarter with $1.6 billion of cash and cash equivalents, and our leverage ratio finished at 1.5x, modestly below our medium-term framework, providing ample flexibility to invest in the business while continuing to return meaningful cash to shareholders. In addition, our Board of Directors approved a cash dividend of $0.48 per common share, payable on 04/29/2026 to shareholders of record as of the close of business on 04/15/2026. Turning to our outlook for 2026, we expect non-GAAP gross billings of approximately $25.1 billion, plus or minus $500 million, representing a year-over-year increase of approximately 16% at the midpoint; a gross-to-net adjustment of approximately 34%; revenue of approximately $16.5 billion, plus or minus $400 million; non-GAAP net income of approximately $322 million, plus or minus $20 million; non-GAAP diluted earnings per share of approximately $4.00, plus or minus $0.25, based on approximately 79.8 million diluted shares outstanding, representing a year-over-year increase of approximately 34% at the midpoint; and share repurchases to increase from the amount purchased in our first quarter. To close, we are encouraged by our start to the year and believe we are well-positioned to execute on the opportunities in front of us. Our global reach, differentiated capabilities, and expanding portfolio position us to perform well across IT market cycles and deliver long-term value to shareholders. With that, I will turn it over to the operator. Operator? Operator: We will now begin the question-and-answer session. We request that you limit yourself to one question and one short follow-up to allow time for the other participants to ask their questions. If there is remaining time, you are welcome to requeue with additional questions. If you would like to ask a question, please press 1 on your telephone keypad. To withdraw your question, press 1 again. Please pick up your handset when asking a question. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of David Paige with RBC Capital Markets. Your line is open. Please go ahead. David Paige: Hi, good morning, and thank you for taking my question. Congrats on the really great results here. I was wondering if we could just double tap into the Hive solution growth. Billings were up 95%, so I was curious if that was concentrated in your two main customers or was it more broad-based across the five hyperscaler programs? And then just as a quick follow-up, I think you mentioned two new customers coming on board, one maybe in 2026. But I guess, could you just size that opportunity relative to your other two large customers? Thank you. Patrick Zammit: Okay. Good morning, David. Thanks for the question. We are very pleased with the performance this quarter in Distribution and, of course, Hive. Yes, the growth came from the two main customers. As I mentioned, the diversification has started, but the ramp-up of the programs we won is going to take a little bit of time. We believe that we are going to see the impacts of the ramp-up more towards the end of fiscal year 2026 and in 2027. David Paige: That is great. Thank you. Maybe if I could stick one more in. I know the first quarter seems a seasonally weaker free cash flow quarter, but cash conversion did get better. So I was just wondering what all-in or inventory build you were seeing in PCs might need to benefit from higher ASPs. But just, I guess, puts and takes on how you are seeing the PC demand market evolve throughout the year. Thank you. David Jordan: Good morning, David. When you think about working capital and cash flow for Q1, there are a couple of dynamics. You rightfully pointed out that on a gross cash days basis year over year, we made significant improvements. With that being said, we also made sure in our first quarter that we had the right amount of inventory. We recognized that some products are on allocation and could potentially be short in supply, and so we went long on inventory to try and make sure we had adequate supply to support all of our customers on the Distribution side. On the Hive side, we are continuing to make investments in working capital as that business continues to grow. But overall, when you put the two together, we are quite pleased with the cash days that we were able to land given the growth rates in the business. Patrick Zammit: And on the PC side, we had a strong quarter on PCs. For Q2, we continue to be reasonably optimistic about the PC dynamic. A few thoughts. We continue across the world in all the regions, including Latin America and across the other regions, to be very focused on continuing to grow faster than the market when it comes to PCs, and we are seeing clear success there. I also want to mention that we are focused primarily on B2B when it comes to PC, and that is important because in the coming quarters, we are going to see a strong tailwind coming from the ASP increases. Obviously, it raises the question about the impact on elasticity on volumes. We foresee some reduction in units, but we think the reduction in units should be significantly less than in the consumer space. All in all, PCs should continue to be a good category for us in the coming quarters. David Paige: Thanks, Patrick. Thanks, David. Congrats again. Thanks. Operator: Your next question comes from the line of Adam Tindle with Raymond James. Your line is open. Please go ahead. Adam Tindle: Okay, thanks. Good morning. David, I just wanted to start, obviously, congrats on such a strong start to the year. As we think about the typical financial model for TD SYNNEX Corporation from an EPS progression standpoint, normally you kind of see sequential growth in earnings from here, but if we roll that out, we are going to be in the neighborhood of $18 or so of EPS for the year. I just do not want to get ahead of ourselves given the trajectory that you have been on. I guess the question would be maybe just helping to level set. I understand you are not seeking to give annual guidance, but maybe some color for us to think about our models, what might be similar or different this year from that normal EPS progression that we are used to, just so we can understand the models? And I have a follow-up after that. Thanks. David Jordan: Great question, and thanks for asking. For Q1 and Q2, we have provided guidance for Q2. We are not providing guidance beyond that. What I would share, which I think will help, is that for the moment, demand remains strong in our business. However, we are cautiously optimistic for the second half, and we will just remind people that the second half of last year for us was very strong. Thinking about the second half on a longer-term basis using the Investor Day framework that we laid out is a good place to start. It is true for the moment: Hive and our Distribution businesses are performing quite well. But given the broader macro environment, we are cautiously optimistic for the second half, and we do believe both businesses will grow. Adam Tindle: Okay, that is helpful. Patrick, just a follow-up. I am getting this question a lot, and it is related to core Distribution and the impact of inflation and memory costs and all those things to margins for the channel. There is a general fear from investors that the vendors will take margin away, and one of the big network vendors on their earnings call talked about changing contractual provisions with channel partners, and it kind of fired the gun on this fear. I thought this might be a good forum. I am looking at the Americas region results for Distribution, and there is clearly no evidence when I see gross and operating margin up meaningfully currently. But maybe just level set us on those comments that we are hearing from the vendors and what you are actually experiencing boots on the ground in the Distribution business? Patrick Zammit: Thanks for the question. Indeed, in Q1, there was no impact on margin. I would add that we built inventory at the end of last fiscal year to be able to smooth the introduction of price increases for our customers. We worked very closely with both the vendors and our customers in order for them to be in a position to anticipate some of the price increases and reflect them in their quotes. Across the board, we believe that the price increases will not impact our margin because of this close collaboration with vendors and customers. Adam Tindle: Thank you. Operator: Your next question comes from the line of Eric Woodring with Morgan Stanley. Your line is open. Please go ahead. Eric Woodring: Awesome. Thank you for taking my questions and congrats on a really strong quarter. More disclosures here. Patrick, I am unfortunately going to ask maybe a similar question that Adam just asked. My first-blush reaction to these results and guidance was it was almost too good to be true, right? Gross billings and revenue nearly 10% above the high end of your guide, growth accelerating across every technology category. Can you just help us understand how you ring-fence the risk around pull-forward? Because typically pull-forward and the ability to size that really is not clear until after the fact, and so when you talk about two points of benefit from ASPs and pull-forward, how do you come to that conclusion? What are you hearing from customers about their desire to accelerate purchases and whether that is a pricing dynamic or a supply dynamic? If you could maybe marry those two together, that would be super helpful. And then just a quick follow-up, please. Patrick Zammit: Good morning. Thanks a lot for the question. The approach we have taken is to look at seasonality in units. We compared, for example, sequentially between Q4 and Q1, how the units evolved for all our hardware categories and compared that with what we have seen in the past. That was the first indicator where we concluded that the seasonality was not skewed and was consistent with prior years. Second, we did a quick survey; we asked the teams to provide us some color, and we took it into account. Based on that, we believe that pull-forwards have been limited for Q1. The other thing I would add is to look at how fast the vendors are passing the increase of their component costs to the market, and today we have to deal with quote validity dates that are very short. The market had to react and adjust very rapidly. I think that has had an impact on some of the behaviors at the end users. At the moment, based on what we can see from our data and the feedback we receive from customers and the teams, that is the best we can share on pull-forwards. Eric Woodring: Okay, alright. Very fair. As my follow-up, Patrick, there is clear intent in breaking out Hive as a separate standalone. I am just curious: Today, Hive is 15% of gross billings; it is nearly 30% of operating income, at least in the last quarter. Is there a target that you have for either of those metrics if we think three years out—just the opportunity for growth and margin expansion at Hive? I am just curious, putting a longer-term hat on, how big do you think Hive can be for some of these key fundamental metrics? Thanks so much. Patrick Zammit: The reason we discussed Hive separately this year is that my management system is to empower my business unit owners and have a lot of autonomy, and it was justified to disclose Hive separately. We think it improves significantly the quality of the financial understanding of how results are being formed. When it comes to Hive, you should assume that Hive is going to continue to grow faster than Distribution. The margins—at the moment, we continue to invest in both engineering and manufacturing capabilities to cope with the rapid increase in demand—and the margins for the moment are relatively stable in that context. As we get more mature, investments will likely start reducing a little bit. For the foreseeable future, the margins you are seeing are reasonable. I should add that the operating expense for Hive is significantly lower than for Distribution structurally. The combination of that means the weight of Hive in the total business will continue to increase both on gross billings, revenue, and operating income. Eric Woodring: Awesome. Thank you. Best of luck. Operator: Your next question comes from the line of Joseph Cardoso with JPMorgan. Your line is open. Please go ahead. Joseph Cardoso: Hey, good morning. Congrats on the results, and thank you for the questions here. For my first one, I wanted to follow up on customer behavior relative to the Distribution business, but maybe less on pull-forwards and more on what you are seeing from customers placing orders much earlier relative to what they expect from deliveries as they navigate cost, and whether that is driving better visibility than you would typically see. And then I have a follow-up. Patrick Zammit: Backlog is increasing, so we are getting more visibility. Vendors have been very clear and explicit that price increases are going to continue over the year, driven in particular by both memory price increases and now also CPU price increases. Yes, we are getting more visibility. At the same time, end users have their budgets, and the timing of their budgets also has some influence on when they are going to place the orders. For the moment, we see very high activity in terms of quoting. We are trying to secure the prices as well as we can with some inventory to help our resellers serve their end users in the best possible way. Again, there is no indication of a major pull-forward at the moment when we look at our figures. It is not dramatic. Joseph Cardoso: Got it. Thank you, Patrick. Appreciate that color there. In light of the new Hive disclosures, which I think everyone is happy to see for sure, I wanted to touch on the strong variance between gross billings and revenue this quarter. It seems like a big change quarter over quarter, year over year, and I wanted to better understand whether that is being driven by the change in mix that you alluded to. As a second part of that question, how do you expect that to trend going forward? Given that you talked about new customers, any implications from a mix perspective we should think about as those start to onboard in the latter part of this year going into next year? Thank you. David Jordan: Joe, this is David. It is a good question, and I think you are thinking about it the right way. At a high level—and I am going to answer an additional question that you did not ask—when you look at Hive’s margins on a year-over-year basis, the decline was largely driven by mix. We put that in the transcript. The mix was related to some large GPU fulfillment deals that went through. A lot of those programs are recorded on a net basis, and so you have actually seen the opposite impact to margins on a net basis. For Hive, each one of the programs is set up slightly differently, and the gross versus net components can be different. That is why we have always looked at the business on a gross billings basis. Depending on how the mix will shift, you could have a higher margin on a net basis based on the relative weighting. We would likely expect as we move forward that some of these net programs are growing faster than the overall. Joseph Cardoso: Got it. Thank you, David. Appreciate the color, gentlemen. Operator: Your next question comes from the line of Catherine Murphy with Goldman Sachs. Your line is open. Please go ahead. Catherine Murphy: Thank you for the question. To ask another one on Hive, in the deck, you disclosed that supply chain services grew in excess of 100% year over year in the quarter. It would be helpful if you could talk more about the strength here. In the prepared remarks, you also noted a strategy pivot to selling more complete solutions in Hive. Is there any impact we should think about on the supply chain services business as it stands today? Thank you very much. Patrick Zammit: Good morning. Supply chain services is really a service we render to the customer. It is a relatively volatile business. The reason being that, taking into account the market environment, we may have more requests from our customers to support them in that space, buy inventory in advance, and store it. Clearly, there is a lot of demand at the moment driven by pricing volatility, and that explains why we had such growth in supply chain services. At the same time, you can see that our manufacturing activity is also growing extremely fast, and we believe faster than the market. I wanted to raise it here on the call. Catherine Murphy: Thank you very much. Patrick Zammit: I am sorry—and just to answer your second question, the growth through time. We are confident about the growth in manufacturing. It is more steady. You are talking about programs with better visibility. If the demand from the customer stays consistent, then we should continue to see stable growth in that space. Again, the supply chain segment is more volatile and really depends on the market environment. Here, I would be a little bit more cautious, and we will probably see more variations in the growth rates quarter by quarter, depending on the needs of the customers. Operator: Your next question comes from the line of Keith Housum with Northcoast Research. Your line is open. Please go ahead. Keith Housum: Good morning, gentlemen. Appreciate it, and thanks for the additional color here. As we think about the quarter and looking forward, investors are struggling with trying to understand the magnitude of price increases and the impact of demand destruction. David, as you look at the second-quarter guidance, how much does that grow in terms of what you think the impact is from the increased prices? The second part of the question is, at what point do you think we start seeing demand destruction? Is it when you hit 15% or 20% price increases? We have already seen a lot more than that in some different product categories right now. David Jordan: I will start and frame up the Q2 guidance, and then, Patrick, you can comment on unit elasticity. When we built the guidance for Q2, we did a full bottoms-up roll-up from the teams. What I can tell you is for the moment, demand remains strong. This is true both in the Distribution business and in Hive. One thing to think about as you consider price increases and how that makes its way into our P&L: we have a lot of revenue that is back-to-back, meaning it is billed, put into a backlog, and it might take two, three, four, five months to ship. You are not going to see a massive hockey stick into our P&L immediately from price increases. But we do expect as we move through the quarters to have price increases become slightly more meaningful than they were in the first quarter. Patrick, if you can provide a little bit of color on how you think about units and demand as it relates to the latter part of the year. Patrick Zammit: Let me look at the four main hardware categories for us. First, PCs. The refresh is not over, and that continues to be a tailwind for us. The other aspect is that the weight of AI PCs continues to increase. One of the drivers is that you will have more and more AI applications running at the edge. Having an AI PC is going to become more important in companies. For general compute—general servers—there is a refresh cycle going through at the moment, so it should continue to be a tailwind. Similar to PC, we see an acceleration of the purchase of AI-enabled servers. End users have now defined their use cases. They are starting to build their AI factories, and that is driving demand in the market, which we are benefiting from. For storage, this quarter we had a very good quarter. We believe that data center modernization has been a topic but not really materializing in previous quarters. Maybe we are going to see more of it going forward. Lastly, networking—after two very difficult years, networking is back. It is growing single to double digit depending on the regions, and I am quite optimistic when it comes to the networking category. Keith Housum: What we are hearing from some of our contacts is some of the equipment that you are selling is seeing price increases well beyond 20% to 30%, sometimes 60%, 70%, 80%. It would seem natural that there has to be some demand destruction, and people just going to the refurb market or pushing things off entirely. Are you hearing this from customers yet, and what are your thoughts or any color you can provide on the remainder of the year? Patrick Zammit: Based on what we see, and it is reflected in our guidance, our assumptions have been reflected. We have not seen demand destruction yet in Q1. We continue to be confident for Q2. For the rest of the year, I will leave you with this: there may be some demand disruption. Everyone is waiting to see how good or how bad the elasticity will be on volume. I shared some of the tailwinds which could mitigate the impact. From a revenue standpoint, when you have such ASP increases, the net between potential decline in units and the ASP increase should impact positively the growth in revenue. Keith Housum: Okay. Thank you. Operator: Your next question comes from the line of David Vogt with UBS. Your line is open. Please go ahead. David Vogt: Great, thanks for taking the question. I have two also. Patrick, historically, Hive has been a more traditional compute and networking-centric business in terms of billings and revenue. Can you share with us how that is evolving as you onboard incremental hyperscaler customers? You talked about having at least one program at the top five. How is that mix changing going forward to a more accelerated compute and networking mix? I will give David my question as well. David, when we think about the price increases, I know everyone is talking about PCs, but we are seeing incredibly strong development for traditional CPU-based servers generally in the industry right now. Would love to get a sense for how you are thinking about that demand ex the price increases because we are seeing relatively strong demand or hard-to-get CPU-based products. I would love to get your perspective on that. Thanks. Patrick Zammit: Good morning. Historically, Hive demand is driven by general compute and networking. Some of the wins will be accelerated compute wins, and we are going to start seeing that in the mix in the coming quarters. Zooming out, when you look at the Hive strategy for many quarters now—and we are starting to see the benefits—we had two objectives: diversify the customer base and go after the four main technologies we can serve, namely general compute, accelerated compute, networking, and storage. We have made investments in both our engineering and manufacturing capabilities to be well-positioned to go after those opportunities. Expect in the coming quarters to see a diversification of the customer base and diversification of the program types. David Jordan: David, to provide a little color on your question around general compute: we have worked hand in hand with both vendors and customers to raise pricing on a variety of infrastructure products. As Patrick said, for the moment, demand remains quite strong. It is true in some of these categories the price increases are double digits. Our current thesis is that while there will be some elasticity around unit demand, the price increases will more than offset that. We will continue to give you updates, but for the moment, demand remains strong, and there is less elasticity around pricing than people would initially have thought. David Vogt: Alright. Thank you. Operator: Your next question comes from the line of Ruplu Bhattacharya with Bank of America. Your line is open. Please go ahead. Ruplu Bhattacharya: Hi. Thank you for taking my question and thanks for all the details. Patrick, question on Hive. You mentioned that Hive has secured at least one program in the top five U.S. hyperscalers. Can you give us more details on what type of opportunities these are? Are they for full rack builds or for supply chain services? First, how should we think about CapEx for Hive? Do you have enough capacity to support these programs? Second, when I look at operating margin, it was 7.4% this quarter on a revenue basis. You said 4.2% on a billings basis. When we think about the AI server space and rack-building space, the industry itself is getting squeezed in terms of margins. Should we think that operating margin can take a dip initially as you ramp these new Hive programs, and what are you doing to offset some of that margin pressure? Thank you. Patrick Zammit: Thanks, Ruplu. I will answer the first question; David will take the second one. The programs we won are full racks, so it is really for the manufacturing segment. We also won some supply chain, but as I mentioned, the supply chain opportunities are more volatile. When we refer to those program wins, it is really for our manufacturing activity. Ruplu Bhattacharya: I was just going to follow up on that and ask about the CapEx question I had. Do you need capacity? Patrick Zammit: Obviously, we are constantly looking at our capacity requirements, and we are investing in increasing our capacity as we speak to be in a good position to serve our customers. Yes, CapEx is required. As you look at the amounts at stake, it is very reasonable. I want to insist on the fact that both Distribution and Hive continue to do a great job of reducing the cash days and improving working capital velocity. That is enabling us not only to finance the growth without any issues but also to finance investments in capital expenditure. No concerns from that point of view either. Ruplu Bhattacharya: Thanks. And then just on the margin side, David, do we expect any initial margin pressure from the ramp of these programs? How should we think about these margins going forward? Thanks for all the details. David Jordan: At a high level, when you think about Hive’s operating margins, we feel pretty good about where they are. It is true as you ramp new customers, especially in the early innings, there can be a slight headwind in operating margins as we make investments to get the programs up to speed. Each of these will ramp on a different timeline, and we will continue to provide updates. We feel very good about the current operating margins at Hive, the programs that they have, and how that will play out as we move forward. Let me clarify one thing for you, Ruplu. You mentioned accelerated compute. While we do have some accelerated compute programs, it is not the majority of our portfolio. Some of the margin pressure that you may have seen from others will not play out to the same degree in Hive just given the overall mix in the programs that we have. Ruplu Bhattacharya: Okay. That is helpful. Thanks, David. Operator: Your next question comes from the line of Vincent Colicchio with Barrington Research. Your line is open. Please go ahead. Vincent Colicchio: Yes. Can you talk to the relative distribution strength in Europe? Do you have legs there, and has there been any change in sentiment given the geopolitical environment? Patrick Zammit: Good morning, Vince. Thanks for the question. The market in Europe in Distribution grew mid-single digits in Q1. The market forecast for the rest of the year is between low- to mid-single-digit growth for the rest of the year. When you look at our results, we are growing at double digits. Market conditions continue to be positive, but most importantly, in that market environment, the team continues to grow much faster than the market. We have an end-to-end portfolio. We are very well-positioned on every technology, and we are well-positioned in all the key markets in Europe. We have a strong pan-European presence. We are taking advantage of some countries growing a little bit faster than the average in Europe. For example, Poland is growing faster; Spain is growing faster. It is a favorable mix, and we are well-positioned in those countries. Net-net, it explains the double-digit growth and the fact that we are growing significantly faster than the market. We have done so now for several quarters, and I am confident for the quarters to come. Vincent Colicchio: My follow-up is on acquisitions. What are your thoughts in terms of what you are looking at currently, and have the valuations come in with the more overall public markets? Patrick Zammit: M&A is at the core of the strategy. For us, M&A is a way to accelerate the execution of our strategy by geography, by technology, or to acquire vendors we are missing in some countries. We are looking at several opportunities in basically all the regions. In terms of valuation, we are very strict. Our objective is that the price we would have to pay would have the right return within two years of the acquisition and after completion of the integration. That is our north star when it comes to M&A. With that in mind, we are working on the projects, sticking to our strong financial discipline, and we will see if some of the opportunities materialize in the coming quarters. Vincent Colicchio: Thank you. Operator: Your next question comes from the line of Ananda Baruah with Loop Capital. Your line is open. Please go ahead. Ananda Baruah: Thanks, good morning. Thanks for taking the question. A couple if I could—apologies for any background noise here. First, Patrick, a few months ago, you talked about starting to see data center modernization. What customer base are you seeing that across? I would guess hyperscale, but also in non-hyperscale? Where are you seeing it as well—solo on-prem, other? Would love to get some context there, and then I have a quick follow-up as well. Patrick Zammit: Obviously, I am talking on-prem. We see enterprise but also the higher end of the mid-segment. We saw very promising activities. I am a little bit cautious, because that was not what we had seen in prior quarters, but this quarter we saw very solid demand. Ananda Baruah: Super helpful. The follow-up is just on Hive mix. Longer term, you are getting more into GPU-based. Is it as simple as saying over time, the mix begins to shift to include more of that, or would you also see more storage and networking as well given the resource requirements of AI builds? Also, just to add real quick, could Arm—given their announcement last week and the revenue ramp that they are talking about with CPU servers—become a Distribution partner of the company as well? That is it for me. Thanks. Patrick Zammit: Let me start with Arm. When you have a vendor who is changing its strategy and is starting to produce its own products, we believe that distribution in particular is a fantastic partner to accelerate the go-to-market. Nothing to disclose today, but in principle, if there is an opportunity to partner, we will absolutely do it. Back to Hive, what is important is that our customers are looking for support across all four technologies: general compute, accelerated compute, storage, and networking. That is why it is important for us to have the capabilities and expertise to respond to their needs and requirements. We will have more accelerated compute wins in our portfolio, but I think that going forward, general compute, networking, and storage will represent the majority of our total business. Ananda Baruah: Helpful context. I really appreciate it. Thank you. Operator: There are no further questions at this time. I will now turn the call back to Patrick Zammit, CEO, for closing remarks. Patrick Zammit: Thank you for joining us today. I want to close by thanking our coworkers around the world for their hard work and dedication, and our customers and vendors for the trust they place in us. To everyone on the call, thank you for your continued interest in TD SYNNEX Corporation. Have a great day. Operator: That concludes today's conference call. You may now disconnect. Have a nice day.
Operator: Thank you for standing by. My name is Jay, and I will be your conference operator today. At this time, I would like to welcome everyone to the J.Jill Fourth Quarter 2025 Earnings Call. [Operator Instructions]. Before we begin, I need to remind you that certain comments made during these remarks may constitute forward-looking statements and are made pursuant to and within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 as amended. Such forward-looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from such statements. Those risks and uncertainties are described in the press release and J.Jill's SEC filings. The forward-looking statements made on this recording are as of March 31, 2026, and Jill does not undertake any obligation to update these forward-looking statements. Finally, J.Jill may refer to certain adjusted non-GAAP financial measures during these remarks. A reconciliation schedule showing the GAAP versus non-GAAP financial measures is available in the press release issued March 31, 2026. If you do not have a copy of today's press release, you may obtain 1 by visiting the Investor Relations page on the website at jjill.com. I would now like to turn the conference over to Mary Ellen Coyne, Chief Executive Officer and President of J.Jill. You may begin. Mary Coyne: Good morning, everyone, and thank you for joining us today. 2025 marks the beginning of a strategic evolution for J.Jill. We embarked on a period of testing and learning in order to build a strong foundation for our business by expanding our customer file through product evolution, enhancing the customer journey and improving the way we work as an organization. While we delivered fourth quarter results that exceeded the updated guidance we provided in January, the period reinforced why this evolution is essential. We had an early assortment that did not resonate as hoped. We came up against earlier and deeper competitive holiday promotions. And we watch our direct customer continue to migrate towards the promotional end of the spectrum, taking value and discount rather than engaging at full price. Against this backdrop, our teams remained agile and reacted in season to ensure we ended the period with inventories in a clean position. As we enter 2026, we are taking the steps to transition and position the business for long-term growth. To achieve our objectives, we must expand our customer files. This requires patience and precision. We're expanding into new categories and modernizing our aesthetics to appeal to a broader customer base. but doing so in a way that helps holds the quality, fit and values that our loyal customers expect and trust from J.Jill. That's why our test-and-learn methodology is so critical. It allows us to validate new concepts with both new and existing customers before scaling, ensuring we're building sustainable growth rather than simply pursuing short-term gains. As we move through 2026 and beyond, you'll see us continue this balanced approach. And we believe the investments and strategic shifts we are making, will position us well to achieve our objectives. This evolution will take time, and we should not expect the path to be linear. But we are committed to maintaining a disciplined operating model, carefully managing expenses and leveraging our strong financial position and strengthen balance sheet as we pursue this course. None of this transformation would be possible without a best-in-class team. A combination of strong internal leaders with deep knowledge of J.Jill, and outside leaders bringing relevant experience and new perspectives. Throughout 2025, we've made deliberate decisions to strengthen our leadership bench by recruiting proven talent with deep expertise in brand transformation. We brought Courtney O'Connor onboard in July as Chief Merchandising Officer to support our product evolution. And [ VIVREDKey ] in November as the company's first-ever Chief Growth Officer to lead our e-commerce and AI initiatives. As we grow, we will continue investing in talent that complements our existing strengths and supports new capabilities. Turning now to our 3 key strategic pillars. First, evolving the product. In 2025, we analyzed our assortment and identified areas in which we needed to streamline remove redundancy and evolve to capture a greater share of our customers' wardrobe. We began testing categories and concepts to expand the relevance of our product assortments. In Q4, for example, we successfully tested small capsules in areas where we saw potential but wanted to validate customer response before making larger commitments. We also piloted a localized merchandising strategy, adjusting our assortment to better reflect the lifestyle needs of specific markets. What became clear through those tests is that when we gave our customer the newness she wanted, she responded even in a highly challenging promotional environment. These learnings shaped how we approach our 2026 assortment and are informing our broader merchandising strategy going forward. As a reminder, our summer 2026 assortment, which will be introduced in Q2, we'll capture the first influence from our strengthened merchant and design team. and we expect continued improvements in assortment as we move throughout the year. There will be more newness with silhouettes and fabrics as well as the beginning stages of expansion into areas of accessories such as bags and belts. Our goal is to continue to provide our loyal customer the quality and value she knows and loves us for, while introducing relevant and compelling products focused on the new customers who we aim to attract. Our second pillar is enhancing the customer journey. This past fall, we began to look at our marketing strategy differently and how we think about customer acquisition and engagement. Historically, our marketing spend has been disproportionately focused on our existing customer base. And while customer retention remains important, we know this approach was limiting our ability to expand our customer file and drive the kind of growth we're targeting. In 2026 and beyond, we plan to continue to rebalance our marketing investments to address the top of the funnel, building broader brand awareness and capturing new customers who may not yet be familiar with J.Jill. We believe these awareness building initiatives will help us reach a larger, more diverse audience. Our third pillar is operational improvements. Throughout 2025, we focused on strengthening our operational capabilities and leveraging new technologies that we expect to support future growth. We successfully implemented our new OMS system, providing us with a more modern platform, and created the Chief Growth Officer role to fully maximize e-commerce NII to help drive long-term success. As an organization, we are embracing the capabilities and efficiencies that AI can enable. With every potential use case, we ask ourselves: Will it increase revenue, will it increase efficiency and will it drive speed to market. As we begin 2026, we are introducing several new tools across the organization and have kicked off a significant project, the implementation of a new merchandise planning and allocation tool from Anaplan. We plan to leverage this predictive AI powered forecasting model to optimize how we plan and allocate inventory across the business. Thanks to the hard work of our team, we are on track late in the second half of 2026 with meaningful benefits expected to begin in 2027 and we will continue to improve as the system learns and we scale it to drive better demand forecasting, smarter allocation by location. As we look forward to 2026, we are confident in our strategic direction while being realistic about the current consumer environment, the impacts of tariffs and the work ahead. While the quarter has seen a challenging start largely driven by continued price sensitivity, particularly in our direct channel, we are encouraged by the performance in our stores supported by trained associates, providing personalized guidance and tactile experiences that excite both existing and new customers around the brand's product evolution. Importantly, we are taking key learnings from these first few weeks of the year to inform our go-forward plan, all of which is reflected in our outlook, which Mark will review. In closing, we're viewing 2026 as a period of deliberate accelerated change to expand our customer file while maintaining our operational discipline. We remain committed to our methodical test-and-learn approach, building on validated successes around new initiatives before scaling investments. I am confident that this measured approach, combined with our strong balance sheet and operational rigor, will position us to achieve our objectives and deliver long-term shareholder value. And with that, I'll turn it over to Mark. Mark Webb: Thank you, Mary Ellen, and good morning, everyone. As Mary Ellen outlined, 2025 marked the beginning of a strategic evolution for J.Jill, a deliberate period of evaluation, testing and learning, that began to build the foundation for expanding our customer file. As we enter 2026, we are deploying these learnings which, while we expect will take some time to fully take hold, we are confident we'll position the business well for long-term sustainable growth. Before discussing our 2026 outlook, let me provide context on fiscal 2025, which demonstrated the resilience of our operating model even as we began this evolution and despite significant external headwinds. We generated $23.2 million in free cash flow in the year, maintained a solid gross margin rate of 68.7% despite incurring approximately $7.5 million of incremental net tariff costs, we opened 4 net new stores, successfully upgraded our order management system and delivered adjusted EBITDA of $84.3 million on sales of $596.5 million cash interest expense. We repurchased $10.4 million or about 638,000 shares of J.Jill stock and paid approximately $5 million in ordinary dividends demonstrating our ongoing commitment of returning cash to shareholders and supporting total shareholder return. These results reflect the operational discipline and agility of our organization in navigating a complex environment. The tariff policy enacted in April created unprecedented operational complexity and we experienced a slowdown in our customers' shopping behavior throughout the year, contributing to a 3% decline in comparable sales for the year. I want to thank our vendor partners for their support amidst these challenges and recognize and thank our cross-functional teams for their agility and resilience adapting their work and processes in response to the changing business requirements. Many of the same team members manage the successful March 2025 cutover to our new OMS system, a major modernization of our technology foundation. As we move into 2026, we are planning for a year of strategic investment and measured transition. We're building the foundation for sustainable, profitable growth by expanding our customer file modernizing our product offering and further strengthening our operational capabilities. This requires deliberate investments that will pressure near-term profitability, but position us for stronger performance in 2027 and beyond. Our financial approach doesn't change. We're being disciplined about where we invest, measuring returns carefully and maintaining financial flexibility to adjust as we learn. Our strong balance sheet and cash position provide flexibility to execute this strategic evolution while continuing to return capital to shareholders. With that context, let me walk through our fourth quarter performance and then provide our outlook for fiscal 2026. Total company sales for the quarter were $138.4 million down 3.1% compared to Q4 of 2024. Total company comparable sales for the fourth quarter decreased 4.8%, driven by the retail channel. Store sales for Q4 were down 9% versus Q4 2024, driven by soft traffic and conversion, which were partially offset by stronger average unit retails and average transaction values in the quarter. Net new stores contributed approximately $2 million in revenue. Direct sales as a percentage of total sales were 53.5% in the quarter, compared to the fourth quarter of fiscal 2024, direct sales were up 2.6%, driven by markdown sales, which benefited from ship-from-store capabilities. Q4 total company gross profit was $87.3 million compared to $94.8 million last year. Q4 gross margin was 63.1%, down 320 basis points versus Q4 2024, driven by approximately $4.5 million of net tariff costs incurred during the quarter and deeper year-over-year discounting amidst a very competitive promotional environment. These headwinds were partially offset by favorable freight costs this year compared to last. SG&A expenses for the quarter were about $87 million compared to $89.3 million last year as increased selling expense and G&A overhead were more than offset by lower marketing management incentive, nonrecurring costs and stock-based compensation. Adjusted EBITDA was $7.2 million in the quarter compared to $14.5 million in Q4 2024. Interest expense was $2.2 million in Q4, down about $500,000 compared to last year, driven by the term loan refinance completed in December. Adjusted net income per diluted share in Q4 2025 was a loss of $0.02 per share compared to earnings of $0.32 per share in Q4 2024. Average weighted diluted share count in Q4 this year of 15.3 million shares reflected the impact of repurchasing 637,700 shares in fiscal 2025. Please refer to today's press release for reconciliations of non-GAAP financial measures to their most comparable GAAP financial measures. Adjusted EBITDA, adjusted net income and adjusted net income per diluted share to net income and free cash flow to cash from operations. Turning to cash. We ended the quarter and full year with $41 million of cash. For fiscal 2025, we generated $42.1 million of cash from operations and $23.2 million of free cash flow, defined as cash from operations less capital expenditures. We refinanced our $75 million term loan in December extending the term through December of 2030 and saving [indiscernible] approximately $10.4 million of share funded from cash on hand. As of January 31, 2026, a there was $14.1 million of availability remaining under the stock repurchase authorization that expires in December 2026. Looking at inventory. At the end of the fourth quarter, total inventory, excluding the impact of tariffs was about flat compared to the end of fourth quarter last year, including approximately $9 million related to net tariff costs reported inventory at end of Q4 was up 14% compared to end of Q4 inventory last year. Capital expenditures for the quarter were $10.1 million. Total capital expenditures for full year 2025 were $18.9 million focused on new store openings and the OMS project. With respect to store count, we opened 7 stores in the fourth quarter with no closures. We ended the year with 256 stores, a net increase of 4 for the year as 9 new store openings were offset by 5 closures. Turning to our expectations for fiscal 2026. As mentioned, we expect 2026 will be a year of deliberate investment. Our guidance reflects this along with the continued uncertainty in the consumer and geopolitical environment, the turbulent trade policy landscape and the expectation that it will take some time for new customers to respond to our evolving product assortments. As Mary Ellen mentioned, and as is reflected in our first quarter guidance, we have seen a softer start to Q1. We expect this performance to gradually improve in second quarter as the new assortment hit in their entirety [indiscernible] incurred and for products landed before for February 28, 2026, will expense through the P&L during the first half of 2026. As a reminder, these tariffs were an average rate of approximately 20% and net of vendor offsets are expected to result in about $5 million of added cost of goods sold in the first quarter compared to 0 tariffs incurred in Q1 2025. Going forward, we are now assuming 10% tariffs on goods received after February 28 through the end of the first quarter and 15% on goods received for the rest of the year. Given these rates we expect the second quarter to incur approximately $4 million of incremental net tariff costs compared to less than $1 million incurred last year in Q2 and Q3 and Q4 to incur approximately $3 million of net tariff costs each compared to $2.5 million and $4.5 million in Q3 and Q4 last year, respectively. Total tariff load net of vendor offsets in 2026 will be about $15 million compared to about $7.5 million incurred in 2025. Our assumptions related to tariff rates are all subject to any additional changes the U.S. may enact to global trade policies. Further, our guidance does not assume receipt of any refunds of tariffs paid to date. For the first quarter of fiscal 2026, we expect sales to be down approximately 5% to 7% compared to last year, with total company comp sales down approximately 7% to 9%. We expect adjusted EBITDA to be in the range of $15 million to $17 million, reflecting approximately $5 million of tariff pressure. For Q1, we expect gross margin to be down about 400 basis points compared to Q1 2025 as the annualized impacts of tariffs is incurred and product and marketing strategies are still evolving. While the quarter is off to a challenging start, as discussed, we are seeing relatively better performance quarter-to-date in our retail channel. For full year fiscal 2026, we expect sales to be down 2% to about flat compared to last year. Total company comp sales to be in the range of down 3% to down 1% and adjusted EBITDA of $70 million to $75 million. This guidance assumes full year gross margins down about 50 basis points compared to 2025 and as we expect headwinds related to tariffs in the first half to be partially offset by better full-price selling, lower promotions and lower year-over-year tariffs beginning in Q4. Regarding inventory, we will continue to take a prudent approach to inventory investments given the relative uncertainty we have discussed with unit purchases positioned down in the mid-single digits. Regarding store count, we continue to see opportunity to expand, but remain disciplined in our approach amidst our brand evolution. We are pleased with the performance of new stores opened to date and expect to grow net store count by about 5 stores by the end of fiscal 2026 of our planned openings, approximately half are in reentry markets. We expect reentry stores to ramp very quickly given the customer reception and brand awareness that exists in these markets, while new markets are experiencing a longer ramp period. We expect openings in new markets to experience about a 3- to 5-year ramp to maturity. New stores represent an attractive investment opportunity and we are excited to continue to expand our footprint at a disciplined pace. With respect to total capital expenditures, we expect to spend about $25 million in fiscal 2026 with investments focused on new stores and a new merch planning and allocation system that is projected to be completed toward the end of 2026. Regarding free cash flow, we expect free cash flow for fiscal 2026 of about $20 million. And finally, with respect to cash distributions we announced today that our Board of Directors approved a $0.09 dividend, reflecting a $0.01 or 12.5% increase in our ordinary dividend payable April 28 to shareholders of record as of April 14, and we have $14 million remaining on our fair repurchase program, which is authorized through December 2026. It is important to note that given the timing of year-end and Q4 earnings announcements, our Q1 repurchase window tends to be shorter than other windows during the year. In summary, we believe we are making the adjustments necessary to position the business for sustainable growth. We are confident the modernization and evolution of our product and marketing efforts will enhance and broaden the appeal and awareness of our incredible brand. And we believe the investments we are making in our front-end MP&A platforms will position us well and provide benefits into fiscal 2027 and beyond, all while continuing with our commitment to distribute excess cash to shareholders through our ordinary dividend program and share repurchases. Thank you. I will now hand it back to the operator for questions. Operator: [Operator Instructions]. Your first question comes from the line of Jonna Kim of TD Cowen. Jungwon Kim: Your customers are more sensitive to macro, how would you assess how much of the softness you're seeing in the first quarter is due to macro versus other factors? Would love any color there? And then second question, how will this year's Mother's Day differ from last year? What are key product and marketing changes ahead of the Mother's Day. Mary Coyne: Good morning Jonna, thanks for your question. So we are at the start of a very deliberate evolution. That being said, we do believe that Q1 had a challenging start was a midst of very tough macro backdrop, and we've talked about this consumer being impacted by that. We absolutely see that more in our direct channel, which is a continuation from what we saw in Q4. What is very encouraging to us is what we are seeing in stores with our talented store teams able to engage to have convert new customers and existing customers. But we do believe that the macro environment had an impact in this quarter for sure. With respect to Mother's Day, the marketing team has exciting initiatives in play. We are really focused on the timing of when we're launching our catalog when we are launching digital marketing. There is a whole program around it that we're super excited about, all backed up by product drop that is coming in the 10 days before. Operator: Your next question comes from the line of Dana Telsey of Telsey Group. Dana Telsey: A lot of work underway. As you think about the product assortment and the test and learn that is put in place, what is changing bottoms, tops, sweaters, style, look, print patterns, what is changing? And what do you expect to see and when will the new full assortment be there? And then with the customer acquisition strategies, who do you want to capture now that's different than your old customer? And as you think of the balance of the business, how much should be new versus existing customers go forward? And then lastly, Mark, just on the components of margins. What are you seeing from energy prices and the impact of freight costs. Mary Coyne: Good morning Dana. I'll start with the first question, which is what is changing in the assortment. So we are taking this time to really test and learn coming out of Q4 going into Q1. And what we are focused on is both new and existing customers achieving more of her wardrobe. We are moving with what we are calling a more modern aesthetic, which is really addressing her lifestyle, and that lifestyle will be built with core things that she has known and loved from the J.Jill brand for years. accentuated by newness, and we see her really responding to newness, but it's how we give her versatile wardrobing pieces that take her through every aspect of her day and her life. We see it being a very balanced approach, both in product and in marketing with everything we do, really benefiting the 3 customer segments that you referred to, right? So as we think about customers, we are focused on retaining the customers we have, we are focused on attracting new, and we are focused on reactivating people who have not shopped the brand recently. When we think about this customer segment, -- we love this customer segment. She's loyal. She's responsive. She is -- has money and time to spend on herself. When we look at the segment today, we -- 45 to 65 is our target audience. Today, our customer sits at the higher end of that and we know we have tremendous opportunity to target the middle of that range and bring very qualified women into this audience. Mark Webb: Great. And with respect to the gross margin, Dana, as we discussed on the last question, the macro environment is obviously very volatile right now and evolving quite real time. what we've included in our guidance is anything that we have seen concrete as of now with respect to gas or oil prices, et cetera. What that means is that in sort of the ocean container rate environment, we've seen some momentary spikes here and there, but it seems to be normalizing itself fairly quickly. And so right now, what we're seeing is more flat ocean container rates maybe up a tiny bit that we would have factored in that I mentioned in Q4 was the first quarter in a while where we actually had great -- small freight savings. And now, as I mentioned, more flat, maybe a little bit of pressure, but still watching it closely and it's evolving real time. In the expenses, we've seen some of the carriers, including the USPS pass-through fuel charge surcharges and we've reflected that in our SG&A included in our guidance going forward. Mary Coyne: Yes. And I just want to circle back for 1 minute, Dana and just reiterate, while we know we have a great customer, we also are now the #1 priority for us is to appeal to a broader audience, and we're excited about some of the testing that we've done with performance indicators that are encouraging as we move forward. Operator: Your next question comes from the line of Corey Tarlowe of Jefferies. Corey Tarlowe: Great. Can you talk a little bit about trends by month? And any color on what you're seeing quarter-to-date? Mark Webb: Yes, Corey, it's Mark. With respect to Q4, we mentioned, overall, it was a pretty promotional quarter it was markdown driven, particularly in the direct channel. The month themselves, January was the strongest, and it was sequentially better than December, better than November. I think we messaged some of that in some of our inter-quarter remarks that we've made around the guidance. The January performance was heavily sale. It's a sale period. It was heavily markdown driven as well. So the cadence was, as I mentioned, but with a deepening markdown support later in the quarter. And then I would say quarter-to-date, we've seen a challenging start. We mentioned that in our remarks. It's very much in line with how we've guided the quarter overall. -- and are committed as we exit all of these quarters through this learning period to manage our inventory as necessary during the quarter to exit as clean as we can entering the new quarter. Corey Tarlowe: Understood. And I think you mentioned a new merchandise planning system. I know that there have been other initiatives that you've undertaken, whether it was the OMS project or other items. Can you talk a little bit about the benefits of this what the costs are and then how we should think about other incremental projects that are coming in, in this year, which I think you called it an investment year? Mary Coyne: I mean, Corey, I'll start just by saying we are so excited about the MP&A project through out of plan. It will allow us to take what is today a very manual Excel-based system and move it to predictive AI forecasting, which will allow us to have inventory optimized in the right location, in the right step at the right time. So we're very excited about what this means from a customer service -- customer experience because the inventory will be where they need it, but also from a revenue and margin driving initiative. Mark Webb: Yes. And Corey, the one of the great advantages of the OMS project was taking a very old system and modernizing it, which then enables you to bolt in these newer technologies. So excited to be leveraging the newer platform to now start enhancing front-end systems, as Mary Ellen mentioned. With respect to the investments, I would say the investments this year continue to be new stores. We mentioned we're opening net 5. We also have some relocations in the plan in 2026. And then the Anaplan project is a more targeted projects than an OMS project would be an LMS project is far region, which allows us within the capital guide that we provided to also invest in other smaller systems enhancements, benefits. Mary Ellen mentioned a few of them in her remarks around driving direct -- the direct business, et cetera. So that's kind of what's behind the expectation of it being and investment here with respect to capital. And then in the SG&A side of things, the investments really start with marketing more in Q2 and forward. and then obviously, payroll and some of the investments we've made in talent. Operator: Your next question comes from the line of Dylan Carden of William Blair. Unknown Analyst: This is Ann bingo on for Dylan Carden. So the guide implies a softer first quarter with improvement as the year progresses, which I believe is a similar setup to this time last year. What would you say is different this year versus last year that gives you the confidence in the back half inflection? And how much of that outlook depends on macro stabilization or improvement? Mary Coyne: So I'll start you for the question. as we're entering 2026, we are in a period of evolution, and we are testing and learning every day -- what I would say is we are sitting today with an incredibly talented team who are aligned on our vision and are committed to our journey. So as we move forward, we will see product improvements through Q2, 3, 4 we will see learnings from our marketing initiatives that we're attaching where we are rebalancing spend where we are trying new things. And moving forward, we'll see that growth as we lean into the things that are working and equally as we pull away from those tests that don't. Mark Webb: Sorry, I was just going to add with respect to the Q4, as Marion mentioned, the product, obviously, it's -- we're still pre the new assortments in -- and we're also in that period of unanniversaried tariffs. So the first half of the year, currently, as we outlined in my remarks, carries $9 million of tariffs against less than $1 million last year. And then that tariff load actually evens and becomes again, assuming the assumptions that we laid out that the tariff rates for the rest of the year around 15% post the Q1 receipts. -- that Q4 would then turn to a small tailwind. So just with respect to the years over years, there's some elements of just that structural component of tariff that supports that as well. Unknown Analyst: Understood. And then on pricing, do you guys see additional opportunity for targeted price increases in 2026? Is this reflected in the current guide? Or does the current consumer environment or a more cautious approach? Mary Coyne: We will be taking a very measured approach to pricing. As we've said in our remarks, we have seen the overall consumer and specifically our direct channel be more price-sensitive. We're seeing incredible promotion out there in the market. So we will be very measured about any increases we take in price. Operator: And your next question comes from the line of Janine Stichter of BTIG. Unknown Analyst: You've got Eaton Sage on for Janine. Can you just provide some more color on which categories performed well and which may have lagged in Q4 and quarter-to-date? Mary Coyne: Sure. So in Q4, what we saw was that newness and novelty were driving the business. So where we had repeat programs from a year prior or 2 years prior, they were very soft. We also saw success in some of the tests we had out there. We saw success in our travel capsule we saw success in expanded categories in outerwear, we saw the start of accessories, which has really moved into Q1 as a success story. -- and we tested some price points, particularly in sweaters with Casimir and soft success. As we moved into Q1, a we are seeing newness rebounding. We are -- but again, Q1 is not indicative of our 2 product evolution. -- where we really see that evolution is in Q2, where newness in fabric and silhouette and category mix really starts to evolve based on our learnings. Clearly, with the goal to drive full price selling in both channels because we know that we've really seen the retail channel working. We've seen things like our dress business turnaround. It's exciting to see what's happening there. Operator: With no further questions, that concludes our Q&A session and also concludes today's conference call. Thank you for your participation. You may now disconnect.
Operator: Good morning, ladies and gentlemen, and welcome to the Constellation Energy Corporation Business and Earnings Outlook Conference Call. [Operator Instructions] As a reminder, this call may be recorded. I would now like to introduce your host for today's call, Tim Flottemesch, Vice President, Investor Relations. You may begin. Tim Flottemesch: Thank you, Carmen. Good morning, everyone, and thank you for joining Constellation Energy Corporation's Business and Earnings Outlook. Leading the call today are Joe Dominguez, Constellation's President and Chief Executive Officer; and Shane Smith, Constellation's Chief Financial Officer. They are joined by other members of Constellation's senior management team who will be available to answer your questions following our prepared remarks. We issued a presentation and 8-K this morning, all of which can be found in the Investor Relations section of Constellation's website. The release and other matters, which we discuss during today's call, contain forward-looking statements and estimates regarding Constellation its subsidiaries that are subject to various risks and uncertainties. Actual results could differ from our forward-looking statements based on factors and assumptions discussed in today's material and comments made during the call. Please refer to today's 8-K and Constellation's other SEC filings for discussions of risk factors and other circumstances and considerations that may cause results to differ from management's projections, forecasts and expectations. Today's presentation also includes references to adjusted operating earnings and other non-GAAP measures. Please refer to information contained in the appendix of our presentation for reconciliations between non-GAAP measures and the nearest equivalent GAAP measures. I'll now turn the call over to Joe. Joseph Dominguez: Thanks, Tim. Thanks, Carmen, for getting us started. Good morning, everyone. Thank you for joining us, and thank you for your continued interest in Constellation. We're thrilled to be speaking with you for the first time since closing the Calpine transaction. As you can imagine, both companies are filled with people who just want to get on with it. And so we talked for a while and getting on with it is fun for us. We're excited to be where we are. As always, I want to start by thanking the 16,000 women and men across the combined companies for all the hard work that brought us to this moment. We couldn't be here without them. Let's begin on Slide 6. Today, Shane and I intend to do more than provide 2026 guidance. We're going to provide a longer-term and more comprehensive update on the business, describe what makes Constellation special and explain why we think Constellation has unmatched opportunities to grow, beginning with a 20% CAGR on base earnings growth through 2029. As you will see, this longer-term visibility into how we see our earnings through 2029 admittedly uses some conservative assumptions. But what we're trying to do here is establish a baseline and then quantify and describe for you some of Constellation's many actionable opportunities to improve earnings materially beyond this baseline and ultimately to repeat double-digit annual base earnings growth into the next decade. In his part of today's talk, Shane will walk you through some of the EPS sensitivities that we think you will find very interesting. Before we move into the business update though, I want to say that we're not going to be announcing a new data economy deal today, nor can I comment much on Amazon's community night last week in Maryland, where they described a large data center project next to our Calver Cliffs Clean Energy Center. I recognize that the last time we spoke, I indicated that we expected to be done with an important transaction by this call, but we're not ready to announce anything today. There are 2 reasons for this. First, there is clearly more scrutiny on data center development. And so we think it's really important that data center announcements occur when all stakeholders, including supportive policymakers and community leaders, are present and prepared to discuss the elements of these important transactions so that all of the community benefits are clearly understood. Obviously, earnings calls give us a limited opportunity to do that. Second, since our last call, and as you're aware, hyperscalers have announced a new pledge in response to President Trump's executive order, which required us to rethink and renegotiate some of the terms of the PPAs we were working on to anticipate any outcomes of the PJM rule-making process. With regard to President Trump's executive order and the resultant PJM regulatory proceedings, our sense is that data center development will benefit from regulatory clarity, and we now have strong momentum to get just that. All of you know regulatory clarity helps deals get done. Importantly, for you, our owners, we're not waiting on regulatory clarity or certainty. Regardless of how the PJM proceedings resolve, Constellation can structure deals now to power America's growth in AI with our firm and clean nuclear power. But not every deal is going to look the same because our customers are expressing different approaches to how they intend to manage future regulatory requirements. Some of our customers will meet future regulatory requirements by pairing our nuclear power with Constellation's ability to bring incremental capacity through batteries, demand response, upgrades and gas-fired generation. I'll talk a little bit more about that capacity in a moment. This combination gives customers the clean firm power and price certainty they want and also allows them to meet any new regulatory requirement for peak energy capacity. Other customers are willing to pay for backstop capacity from PJM and buy power and attributes from us. This is the way we typically contract with our C&I customers where they buy capacity from the PJM market and buy energy and attributes directly from us. Finally, some customers are willing to flexibly respond or curtail during peak hours by using on-site backup generation or by reducing demand. And what excites us is that the very AI technology that we're powering is now being used to better dispatch the power system and manage data center load at peaks. You might have seen an announcement we made with NVIDIA, Emerald AI and other companies last week, where we are pioneering new technology that will allow the data centers to move data projects from one data center to another at a peak. So for example, if you have a data center operating in Philadelphia and you're approaching a peak demand hour, you would transfer that work through -- at the speed of light through fiber optics to other data centers around the country that aren't in a region that's experienced a peak energy demand. So we think these companies are evolving in the way they're able to manage their demand at peak through a lot of different resources. And it's important to get this right because there have been a number of recently released studies, the Brattle Group put out one just this last month, that says that the best way we can make bills more affordable for all customers is by ensuring that the grid is better utilized during the 99% of the hours of the year when there's surplus wires and generation capacity, while at the same time, providing flexibility during these less than 1% of the hours when system demand is at its highest. According to Brattle, getting this right can unlock tens of billions of dollars in annual consumer savings, and we believe will result in a paradigm shift in how policymakers and customers view data center development, changing the perception of data centers from cost causers to potentially cost reducers. Although sometimes it seems longer, we have to keep in mind that we remain in the early stages of the AI data center boom. People naturally question the durability of the demand and strategies like ours, from DeepSeek to FERC's rejection of the [ Talen ] interconnection agreement and now the executive order, we've had bumps in the road where enthusiasm and value momentum either stalls or retrenches. We see this as the natural course of things. But it's important that in each instance, we and our partners found solutions and momentum resumed. Two things are occurring simultaneously that give us great confidence. First, the growth we're seeing is like nothing we've seen before. And second, the cost of replacement megawatts for any kind of firm power generation is now multiples of what it was less than a decade ago. You're going to see this in one of our later slides. I talked in a previous earnings call about combined cycle machines having replacement costs at around $2,500 a [ KW ]. I now see that more like $3,000 based on what I'm hearing at CERA and other conferences. And we think both the demand being real and the cost of replacement generation means that an incumbent coast-to-coast fleet of the best and most unique assets like ours are going to do exceptionally well. And that's what we have here. Constellation's industry-leading balance sheet also gives us a competitive advantage in serving customers and protecting against increases in the cost of debt. We have the ability to opportunistically grow through M&A and fund growth capital projects [ like our operates ] that easily exceed 10% unlevered IRRs. Finally, our balance sheet and strong cash flows give us the ability to return value to you in the form of more buybacks. Today, I'm pleased to share that Constellation's Board has approved an increase in our buyback authority to $5 billion, underscoring our confidence in the strategy. The path ahead is exciting. The demand is real, and our competitive position is excellent. We're excited about the future we're building and confident in our ability to deliver. Turning to Slide 7. While market attention understandably focuses on the large hyperscaler deals, the value of nuclear energy is not limited to any single customer segment. That value is broadly accessible, and recent developments in New York reinforce that point. Since we last spoke, Governor [ Hochul ] in the State of New York extended the Zero Emission Credit Program, recognizing both the value of nuclear energy and the essential role that our Upstate facilities play in meeting New York's climate and reliability goals. This extension preserves more than 3,000 megawatts of clean, reliable energy that will power New Yorkers through at least 2050. This is a meaningful development, and the average pricing, which is shared in our appendix, is an important validation of the long-term value of our nuclear fleet to ordinary families and businesses as well as the data economy customers. As I mentioned at the outset today, we want to give you a baseline for Constellation's performance through 2029 as if we did nothing more, in the way of hyperscaler deals and the way of contracting investing growth, buybacks or refining our Calpine synergies. But of course, we expect to do more on all of these fronts. We know that signing long-term deals is a focus for our investors, and it's our focus too, and we will execute. We think our historic performance in executing these contracts is the best indicator of future results. So we show here on this slide that Constellation and Calpine have executed deals for over 10,000 megawatts of our fleet, serving a wide range of customers, all at compelling prices that provide the reliability and price visibility our customers are looking for, as well as the revenue certainty that we desire. These deals are not concentrated in 1 region or 1 type of customer. They span multiple generation technologies, deal configurations, customer types and markets. But it shows here that we have a proven ability in our teams to structure long-term agreements, particularly when it comes to clean megawatts. We have now signed long-term agreements with multiple hyperscalers, commercial customers, the U.S. government, the State of New York and municipal and utility customers across America. This is a level of customer diversity that reinforces the strength and flexibility of our platform. Our natural gas fleet has added even more optionality, and you saw that in some announcements from Calpine. We have successfully delivered solutions at both ends of the spectrum to meet speed to power and grid connection for data economy customers for long-term capacity and reliability agreements for our end-use customers. And while no deal is the same, all deals share 2 defining characteristics. First, trust. Customers trust that we're going to be able to deliver for decades. Second, fair and premium value. Each agreement reflects a tailored solution that meets a specific customer need and solutions that solve real problems in returning -- in return for good pricing. Moving to Slide 8. Over the past year, we have reached agreements for an additional 36 million megawatt-hours of our clean energy that will flow in 2030. As you see in this update, we've increased the total amount of energy we will have under long-term contract in 2030, from 12 million megawatt-hours to 48 million megawatt-hours or roughly 25% of our available clean firm output. But even after that, we still have about 147 million megawatt-hours available for contracting, an opportunity no one else can match. Indeed, if you combined all of the available nuclear power owned by all of the other competitive market participants in the U.S., the total amount would be about half of what Constellation still has available for clients. As we move forward and integrate Constellation and Calpine commercial teams this year, we're bringing together under one roof 2 of the preeminent teams in the business when it comes to meeting clients' needs with tailored long-term contracts. And clearly, they're going to have plenty of megawatts to work with. I would ask that you bear a few additional points in mind as you wait for this opportunity to manifest. First, all of our contracted nuclear generation is supported by the production tax credit which grows with inflation and is guaranteed by the federal government. This structure ensures stable, predictable revenue regardless of near-term economic conditions or market volatility, while at the same time allowing us to retain the optionality to fully participate in market upside as supply-demand fundamentals continue to improve. Second, as we face potentially higher inflationary environmental drivers, the PTC automatically adjusts for inflation, making Constellation stock a unique and safe investment in a pro-inflationary environment. The baseline of earnings growth that we're showing you today conservatively assumes 2% inflation. But if instead of 2% inflation were 3% or 3.5% as some are predicting in light of the Iran contract, the PTC cap for 2031, for example, would move from $50.88 per megawatt-hour to $52.88 at 3% and $56 at 3.5% inflation, a more than $5 a megawatt-hour jump in the tax credit available to our full open position. The third factor I'd like you to keep in mind is that the demand is real. And it's so big that really smart people are literally discussing shooting data centers into space to solve for energy and infrastructure constraints. I could assure you that despite some of the PJM rule-making complexities, we have far more efficient and achievable solutions than launching data centers into outer space. Fourth, we think the climate imperative is not going to go away. There is enduring value for being clean and being able to provide firm and clean energy together. Large customers are not wavering on their long-term commitments to clean and no one can better serve that need than Constellation. Moving to Slide 9. The quality and diversity of our agreements demonstrate our flexibility place megawatts where they create the greatest value. And I fully expect the team to continue reaching agreements with customers in multiple ways. For hyperscalers and data center developers, our offerings include virtual [ PDAs ] or co-located data centers at our site. If customers need load enabling support whether through new supply demand response or transitional power, we have the ability to answer that call. For enterprise-wide C&I customers, we offer long-term contracting options at scale that help them meet their sustainability goals with dependable zero carbon power. We can provide long-term energy capacity and clean energy agreements for states, utilities, government and co-op customers that desire visibility. Taken together, this is the broadest and most capable suite of energy solutions available in the competitive market today, and it gives us multiple pathways to place our clean megawatts at a premium. Turning to Slide 10, I want to pivot here to PJM. As I mentioned at the top of the call, there's a need for regulatory certainty. And we're finally seeing greater alignment among stakeholders on core priorities that need to be addressed. We see an engaged FERC that's rightly pushing for clarity on the rules. And we see a visible time line for resolution this year. We all agree on some key points. Demand forecasts have to be accurate. We need to ensure that large load customers cover their infrastructure costs. We need to provide avenues for competitive solutions, understanding that utilities alone can't do this. And we know that customers need to be flexible at peak. We're on a path between PJM and FERC to have these core issues resolved. We are also seeing efforts underway at EPA to alleviate constraints on the use of backup generation so that data centers can better manage peaks and agree to curtail at peaks. But make no mistake, as we await regulatory clarity, customers are moving forward, and we have solutions available that anticipate any reasonable outcome, from providing backstop generation to simply incorporating a PJM backstop capacity cost in our agreements. Moving to Slide 11. At the top of the call, I spoke about the importance of managing peak energy demand while taking advantage of the surplus we have in wires and generation capacity that exists in the system about 99% of the time. This chart shows PJM's low-duration curve and illustrates the point that the system has massive unused capacity for most hours of the year. Last year, half of all hours saw more than 40% of available generation sitting idle. And 80% of the time, 30% of our resources were unused. The same is true for the wire system where transmission capacity is designed, as you know, for a handful of peak hours, and therefore, by definition, is vastly underutilized when the system is not at peak. The Brattle report that I mentioned shows how small improvements in system utilization could drive meaningful benefits for existing customers, extrapolating that a mere 10% improvement in system utilization could yield up to $17 billion of annual utility bill savings. These are huge numbers for American families and businesses. The shadow box explains Brattle's point in their own words. So basically, what they're modeling here is spreading, like peanut better, some of the fixed costs of the system, whether they be wires [ or ] generation among many more kilowatt hours. And the reason we want to make you aware of these studies is because obviously, there's this growing narrative that data centers are bad for customers. It's based on the peak energy power issues we've been talking about. And that negative reaction is causing policymakers and investors to worry about grid-connected data centers. But we think that's an overreaction. We think a more nuanced view is that if we do this right, the opposite is true, that data centers could actually bring costs down. And I'm pleased to see this message starting to go through the policymaker communities. Turning to Slide 12, it's all about bringing solutions at peak, and Constellation is willing to bring new megawatts to the grid and Constellation has and will continue to do its part. Last year alone, we placed 750 megawatts of battery storage, renewable resources and expanded geothermal capacity into service. Calpine brings us that ability to use batteries and other devices we weren't fully using at Constellation. Looking at just the balance of the decade, we have the flexibility to add new megawatts through multiple channels. I'm not going to drain this, but you could see here the license extensions. You see Crane. I'm going to talk about Crane a little bit more here in a moment. We have 400 megawatts of new gas generation coming online this year, plus another 1,400 megawatts of idled turbines. We have 1,100 megawatts of uprates. We have 9,600 megawatts of additional batteries we could deploy. And we're trying to get to 1,000 megawatts of demand response that is actionable for data center customers to reduce peak demand concerns. On Crane, we talked this week about PJM studies that indicate interconnection could be delayed into the 2030s. I want to assure you we are working on that with PJM, and we continue to expect to start this unit in 27. Today we will be filing at FERC a request to be able to transfer capacity injection rights from our [ Eddystone ] unit to Crane to facilitate restart in '27 according to our plan. David Dardis is here and can talk more about that to the extent anyone has questions. But taken together, Crane and all of our capabilities have the inherent ability to add about 10 gigawatts of support to the grid at exactly the right moment. And we're excited to be able to offer this to our data center customers to pair with our clean and firm nuclear power. Now moving on to the next slides. Before I turn it over to Shane, I want to use the next few slides to remind you of the capability and scale we have at Constellation post the Calpine acquisition. Starting with integration, our efforts are well underway, and the enthusiasm across both teams is tremendous. The energy and engagement we're seeing gives us real confidence in what we're going to be able to accomplish together. With the combination, we now have true coast-to-coast scale and a platform that is the envy of every other player in the market. That reach, paired with the quality of our assets and duration of our assets, gives us a great foundation for growth. Our leadership team is aligned and moving quickly. A top priority is capturing the best of both organizations, aligning operational and commercial best practices to elevate performance across the board. This includes finding new ways for our commercial platforms to give customers unique and innovative solutions. And we're already realizing the benefits of upgrading Calpine's credit profile. Beyond lowering borrowing costs that Shane will talk about, an investment-grade balance sheet allows us to pursue commercial opportunities that were previously out of reach for the Calpine commercial team. In short, integration is progressing as planned. The momentum is real. The teams are energizing, and we're ahead of schedule. Turning to Slide 15, this chart shows you what being the most important player in every market looks like. We are the unrivaled leader in serving commercial and industrial customers, delivering more than 190 million megawatt-hours of energy, nearly twice as much as the next largest supplier in the competitive market. We serve more than 80% of the Fortune 100. These are strategic customers, and they want a partner who could solve complicated challenges in multiple jurisdictions for firm, low and zero carbon energy. And that's exactly what our platform delivers. Our suite of solutions, from short or long-term carbon offerings, access to renewables through our core product, or innovative demand response participation with partnerships with [ Grid Beyond ] and others, gives us strategic capability to meet regulatory requirements as well as customer needs. We can meet customers wherever they are on their sustainability journey. And importantly, demand for these advanced offerings continues to grow. Compared to 2024, we saw a 300% year-over-year increase in carbon-free product placements, a clear signal that our product offerings are appealing to the customers that need these services. Turning to Slide 16. Constellation is now the largest private sector power producer in the world, generating nearly 300 million megawatt-hours annually, with 2/3 of that being carbon-free. We produce over 35% more carbon-free firm power than the next largest producer whose output includes intermittent clean renewables. Importantly, even after integrating the largest natural gas portfolio, we still maintain the lowest carbon intensity among the top 10 power producers in the country. The reason for that is our nuclear assets as well as the fact that the assets that we bought from Calpine are efficient machines. This is a special portfolio of assets that provides a foundational competitive advantage that's durable for the long term. Moving to Slide 17. Everything we do at Constellation is supported by the bedrock of operational excellence, and it applies to everything we do. For our nuclear fleet, we run these assets better than anyone. We've been doing that for well over a decade, and we consistently outperform the industry in both capacity factor and outage duration. And that operational excellence delivers real tangible value to the grid and to our owners. On a fleet of our size, outperforming the industry's average capacity factor by roughly 4 percentage translates into roughly 8 million megawatt-hours of additional clean reliable generation every single year. That's effectively the output of 1 nuclear unit. And that's what happens when scale meets world-class operations, backed by a culture to keep doing it every single day. And we're not just running our plants better, we're innovating too. In 2028, Constellation will begin using new fuels to transition its remaining fleet of 8 pressurized water reactors from 18-month refueling cycles to 24-month refueling cycles, significantly reducing future O&M costs for outages and increasing the amount of power available on the grid. And pending NRC regulatory approvals in 2028, Constellation will load the first full core of accident-tolerant fuel, fulfilling a long-term promise that industry has made to America. Moving to Slide 18, I want to talk a little bit more about the gas fleet and some opportunities we see here. On the left-hand side of the slide, you'll see that 80% of our natural gas fleet is comprised of modern combined-cycle and co-gen assets. These are highly efficient, low heat rate units that operate far more hours than traditional peaking resources, and they form the backbone of the flexibility of the grid. As system conditions change, whether driven by load growth, renewable variability or tightening reserve margins, this is the fleet that's uniquely positioned to respond, delivering reliable, cost-effective power precisely when it's needed. On the right-hand side of the chart, I want to share an opportunity we see. Today, combined-cycle units across the ERCOT system have excess capacity roughly 90% of the time. That underscores the point I just made that these units today are underutilized. But as new load comes on, particularly these large baseload data centers, CCG utilization is expected to move significantly higher by 2030. This increase benefits the system by meeting rising demand in the most efficient way while also providing upside for us through increased economic output. That represents a significant value-enhancing shift for assets that have more to contribute to the grid, and Shane will quantify that sensitivity in his remarks. Over time, that increased utilization and improved dispatch economics translate into meaningfully higher and durable earnings. With that, I'm going to turn it over to Shane to provide the financial update. Shane Smith: Thanks, Joe, and good morning, everyone. Before I turn to the financial update, I want to take a moment to acknowledge our 2025 results. Last year, we delivered adjusted operating EPS of $9.39, that once again exceeded the midpoint of the guidance range we set at the beginning of the year. That marks 4 consecutive years every year since becoming a public company that we have beat. With 2025 now behind us, I also want to echo my appreciation for the collective effort of our teams that make these results possible, working tirelessly to position Constellation for long-term success. Beginning on Slide 20, we are initiating our 2026 adjusted operating EPS guidance at $11 per share to $12 per share. This range is consistent with the $2 of EPS accretion we shared when we announced the Calpine deal. But it doesn't tell the full story. Our underlying business is performing better than originally projected, allowing us to overcome 2 headwinds related to the acquisition. First, as part of the settlement with the DOJ, we were required to divest more assets than we originally anticipated, notably the highly efficient York 2 and Jack Fusco stations that are both meaningful earnings contributors. We are also assuming all of the asset sales close in the third quarter versus our original assumption of year-end, creating a bit of an earnings hole. Second, depreciation expense related to purchase accounting is higher than we expected at deal case as we had to mark the acquired assets to fair value at the time of close. As we have all seen, the value of generation assets has increased considerably since we announced the transaction in January of 2025 and that higher value is resulting in higher noncash depreciation expense. When we announced the deal, we also targeted at least $2 billion of annual incremental free cash flow, which we continue to expect even absent the cash flow from the additional asset sales. I'm also excited to share that we are increasing our share repurchase authorization to $5 billion, enabled by our strong balance sheet and significant free cash flow while still growing our dividend and reinvesting $3.9 billion in growth projects that deliver compelling returns of at least 10% on an unlevered basis. The increase in the buyback is a strong vote of confidence in the outlook for our business. Finally, Moody's and S&P reaffirmed our credit ratings, supported by our strong cash generation, long-term contracted cash flows and clear deleveraging trajectory. We remain committed to returning the balance sheet to our target credit metrics by the end of 2027. On the following slides, I will walk through our base and enhanced earnings outlook that now includes Calpine, how to think about upside earnings opportunities and our capital allocation strategy. Turning to Slide 21, I want to provide a short review of our base earnings framework and discuss how we are incorporating the Calpine portfolio. The goal of base EPS is to highlight our earnings that are consistent, visible, straightforward to calculate and that will grow over time. The components of our base earnings are well defined. First, long-term contracts from our generation fleet that provide durable and predictable cash flows. Second, our available nuclear generation that is priced at the PTC 4, assuming a 2% inflation adjustment over time. Third, for our nonnuclear fleet, we anchor to minimum expected gross margin and volume grounded in historical experience. And finally, commercial unit margins and volumes that use a 10-year historic and forward weighted average. Taken together, these elements provide a transparent and repeatable foundation that supports visibility today and growth over time. Detailed modeling tools for base earnings can be found starting on Slide 32 in the appendix. Constellation's enhanced earnings capture value generated above our base assumptions that we will constantly deliver but is not always easily modeled as a P times Q. This portion of earnings reflects contributions from a variety of sources, such as revenues from power and capacity above the PTC floor for our nuclear output, higher spark spreads in our base assumptions, commercial margins above the 10-year average and a host of other opportunities that come with the scale and depth of our portfolio and customer-facing business. In 2026, enhanced earnings will represent approximately 40% of total EPS. Over time, we expect enhanced earnings to represent more like 30% to 35% as base EPS grows, and hence, it contributes less on a relative basis. Turning to Slide 22, our base earnings are expected to grow from a range of $6.65 per share in 2026 to a range of at least $11.40 per share to $11.90 per share in 2029, representing at least a 20% compound annual growth rate over the period. As we have discussed in prior guidance updates, our growth will not be linear. Year-to-year results will fluctuate based on the timing of long-term contracts going into effect, the roll-off of Illinois CMCs, inflationary adjustments to the PTC and the impact of our nuclear refueling outages, which vary in number and costs depending on the year. Despite that variability, we have a highly visible path to base EPS growth at a 20% CAGR over the next 3 years and continued growth of at least 10% compounded annually on a rolling 3-year basis. Importantly, this outlook reflects only the long-term agreements for our nuclear and natural gas units that have already been announced, the base assumptions discussed on the prior slide and current market conditions for enhanced earnings. The optionality embedded in our fleet, which represents a meaningful upside opportunity, is not reflected in this guidance. Turning to Slide 23. Let me provide context and add dimension to the optionality that remains in our business beyond our base earnings starting point. Long-term contracts for our nuclear natural gas generation command a market premium from customers seeking reliable megawatt-hours, supported by the depth and strength of our portfolios. To put that into perspective, a deal on each gigawatt of nuclear could increase our base earnings between $0.40 per share and $1 per share at full run rate, translating to a 1% to 3% increase to our growth rate over the period. A reminder that the assumption in base earnings is at the PTC 4, so the sensitivity being reflected here is relative to that price, not to the forward curve. Our natural gas portfolio has significant optionality as well. Contracting an additional gigawatts through long-term agreements could also result in an incremental $0.20 to $0.50 of base earnings per share, adding another 1% to 2% to the growth rate. Additionally, as Joe discussed earlier, in a period of increased load growth, grid needs will be increasingly met through higher utilization across our fleet driven by dispatch economics. A modest 1% to 2% increase in natural gas fleet capacity factors would lift base EPS by $0.10 to $0.20, which is roughly 1% to our growth rate. This higher utilization translates directly into stronger and more durable earnings while also improving overall grid efficiency. As demand continues to grow, we expect more customers to see clean megawatt-hours and reliability solutions, both of which are in high demand, yet of finite availability. The optionality of our fleet, including the ability to combine clean generation with natural gas solutions, is unmatched, and it is a key reason for bringing Calpine onto the Constellation platform. Similarly, expanding the adoption of premium-priced products and cross-selling opportunities across our commercial business can drive higher unit margins that could have a meaningful impact on our 2029 base earnings and growth rates. The nuclear PTC inflation adjustment, a unique protection backstop by the U.S. government and particularly valuable in the current market environment, could provide a meaningful tailwind if inflation remains above 2%. A 100 basis point increase to our 2% inflation assumption would add approximately 100 basis points to EPS CAGR through 2029. Continued investment in compelling growth projects alongside disciplined share repurchases has the potential to drive meaningful value creation in a relatively short period of time. We are actively working to execute across all of these levers to deliver results beyond our current projections. Turning to Slide 24. Constellation's disciplined approach to capital allocation has been a hallmark of our success over the past 4 years. Since our time as a public company, we have consistently demonstrated an ability to create shareholder value while preserving the financial flexibility required to pursue strategic opportunities as they arise. This balanced approach has also allowed us to navigate evolving market conditions, address regulatory requirements and invest in growth at compelling returns. It also strengthens the long-term durability of the business. Going forward, we will continue to apply the same principles that have guided our decisions to date: maintaining balance sheet strength, prioritizing growth at double-digit unlevered returns, and returning capital to our owners through dividends and share repurchases. This continuity reflects both our confidence in the strategy and the results it has delivered. On Slide 25, the portfolio we own and operate today is significantly larger and more diverse than where we started 4 years ago, and we are confident we can deploy growth capital organically and through strategic acquisitions at compelling returns. Our strategic acquisitions of Calpine and the South Texas project have expanded our generation fleet, increased scale and enhanced our ability to serve a broader and more diverse customer base. We are growing organically through the restart of the Crane Clean Energy Center, nuclear uprates and operating license extensions, reinforcing our commitment to delivering clean, reliable and dispatchable power. These investments are particularly important as demand accelerates across a more data-driven and increasingly electrified grid where reliability, carbon-free electricity and long-term price certainty are becoming increasingly valued by customers. Looking ahead, our growth capital plan remains firmly anchored in value creation. We expect to invest approximately $3.9 billion during 2026 and 2027 to add new megawatts and enhance performance and longevity of the existing fleet across all fuel types. In addition to the nuclear investments, we are placing more than 600 megawatts of new natural gas, battery, wind and solar capacity into service in 2026, further diversifying our portfolio and supporting growing customer demand. Collectively, these investments reflect our continued focus on capital efficiency, asset optimization and long-term earnings durability while continuing to strengthen our unique position in the market. Turning to Slide 26. Our strong free cash flow over the next 2 years has some unique characteristics related to the acquisition. Let me take a minute to walk through 2026 and 2027 and then explain how to think about it on a forward basis. When accounting for the expected after-tax proceeds from the sales of the PJM and ERCOT assets, we expect to have $13.6 billion to deploy over the next 2 years. I spoke to the $3.9 billion of identified growth that will be accretive to long-run base EPS CAGR. Additionally, we will continue to grow our dividend at 10% per annum, and we have earmarked $3.4 billion to delever the Calpine debt stack to meet target consolidated credit metrics by the end of 2027. We then have authorization of -- we then have authorization for $5 billion in share repurchases, which, for planning purposes, we assume to happen by the end of 2027. We of course retain flexibility on execution, especially as we continue to prospect for strategic and accretive growth opportunities. On a forward basis, we expect free cash flow before growth to follow the trajectory of our base EPS. After rightsizing the balance sheet by year-end 2027, we expect to have additional leverage capacity supported by increasing cash from operations while maintaining our Baa1 and BBB+ leverage profile. Turning to Slide 27. We have long highlighted our investment-grade balance sheet as a core competitive advantage, one that enables us to capitalize on market opportunities and execute complex transactions. We have seen 2 recent tangible examples of how this strength continues to differentiate Constellation. In January 2026, as part of the $2.75 billion issuance to replace Calpine sub-investment grade debt at the Constellation level, we issued a 40-year tranche with a 5.75% coupon. This is certainly unique in the competitive power sector, demonstrating the strong vote of confidence from fixed income investors in the long-term cash flow generation and risk profile of Constellation. An additional vote of confidence came from the U.S. Department of Energy in its $1 billion loan in support of the historic restart of the Crane Clean Energy Center. The DOE highlighted Constellation's financial strength as a key determining factor in the award and underscores continued federal support for nuclear energy as a critical source of clean and reliable power. Finally, as expected, S&P and Moody's affirmed Constellation's credit ratings, reflecting the combined company's strong cash generation and our clear plans to deleverage by 2027. In addition, Calpine's ratings were upgraded to investment grade following the close of the transaction. The rating agencies emphasize the geographic diversification, irreplaceable asset base and the strength of the combined portfolio, as well as Constellation's track record of disciplined capital deployment and commitment to balance sheet targets. While expected, these favorable assessments position us well to pursue additional strategic opportunities going forward. Thank you all for your time today. 2026 marks the beginning of another new and exciting chapter for Constellation. I think we have a truly unique investment thesis, a highly visible and predictable trajectory for base earnings to grow 20% on a compounded basis through 2029, a coast-to-coast fleet of nuclear, gas-fired and geothermal generation assets ideally positioned to meet growing customer demand, and growing free cash flow that can continue to be deployed to create value for our owners, whether -- or both via accretive growth and by via returned to owners via buybacks and dividends. Put all this together and you can see why we have a truly compelling growth story into the next decade. With that, I will now turn the call back to Joe. Joseph Dominguez: Thanks, Shane. Good job. So folks, we couldn't be more excited about where Constellation is headed. We're built on a foundation of strong growth, unmatched scale, geographic reach and truly irreplaceable assets, all supported by a commercial platform that sets us apart. Our base earnings will grow more than 20% through 2029. And as Shane said, we intend to replicate double-digit growth after that. And we see a number of meaningful opportunities even through 2029 to improve and outperform our trajectory. We'll continue to take a disciplined, practical approach to capital allocation, deploying our substantial free cash flow in ways that create long-term value for you. We'll keep executing with customers across the data economy and beyond, securing durable premium price agreements for our clean reliable megawatts. We'll expand the contributions of our natural gas fleet, meeting customer needs in ways that were not possible before. We will preserve and expand generation supply in the markets we participate. And we will keep working closely with federal, state and local policymakers and market regulators to drive common sense solutions, solutions that will allow America to grow and also reduce the burden on American families. Thanks for your time. We have the whole management team here, and we look forward to your questions. Operator: [Operator Instructions] Our first question is from David Arcaro with Morgan Stanley. David Arcaro: Joe, could you maybe comment on, in maybe a little bit more detail, if you could, just what's the status of discussions you're having with other hyperscalers? You did mention 1 that may be possible opportunity in Maryland here. But just more broadly, if you could touch on what's the status, how close, how advanced how broad across your portfolio that you're in discussions here for in terms of data center contracting? Joseph Dominguez: Well, I want to avoid, David, promising delivery dates here because we all know that there are bumps that, unexpected and otherwise, that occur in these transactions. But I think it's fair to say that there continues to be strong interest in clean and reliable power. But look, the data economy customers are very conscious of either being flexible at peak, using backup generation, some of the AI technologies that move data demand around. And so we're certainly seeing that in our conversations. I think there could be a point in time where the flexibility that data centers have at peak will be substantially greater than what we've seen historically. And then we have ongoing conversations with customers that just want to buy energy and capacity from us. They'll absorb whatever the backstop proposal is. And here's what I would say. I would say that those conversations grew more complicated after the executive order as we found solutions, and delayed some of the transactions. But I see the momentum resuming. David Arcaro: Got it. That's helpful. And a bit of a follow-up on your comments there too. Is flexibility and/or additionality, is that really the path forward here? Curious if -- as we maybe think about the backstop procurement, just how does that interact with the potential to bring new megawatts onto the grid or being flexible? Joseph Dominguez: Yes. I think it is, David. I think there has been, since we announced the strategy, overhang of do we have enough peak capacity in the system. And so that ambiguity is going to be addressed, hopefully, here by FERC in a way that gives our customers clear line of sight that if they're going to rely on the backstop capacity auction, what the cost of that is going to be and what the terms are going to be for them. Other customers are going to look at the ability to either bring batteries, demand response, new gas-fired generation or some of this AI flexibility I just mentioned into play to manage the peaks. But if you manage the peaks, right, what we're really talking about is the capacity slice of what we have to offer. And I see a potential where we're going to do the same thing we've been doing with C&I customers historically. And that is we sell our capacity into the market, and our customers are buying a capacity product from PJM. That could be that backstop capacity, or they could bring their own capacity or flexibility, as I mentioned. But what is uninterrupted is the other 99% of the hours, the energy and the attributes they need to meet their goals for firm and reliable and clean power. Operator: Our next question comes from Steven Fleishman with Wolfe Research. Steven Fleishman: I'm sure there'll be other questions on that topic, so let me just maybe move to a different one. Capital allocation, so one point of clarity. In the plan to '29 and outlook that you have, what are you assuming or doing with cash in '28 and '29, just in the plan, the growth rates, et cetera? Yes. Shane Smith: Steve, it's Shane. There's nothing planned with regard to accretion relative to that free cash flow. So that's all upside opportunity for how we deploy it. It's essentially earning interest income at the current assumption. Steven Fleishman: You're just having it sitting cash effectively. So any use of capital better than that is accretive. . Shane Smith: That's right. Joseph Dominguez: Correct. Shane Smith: That's what leads to the $0.50 upside you see on the sensitivity table, is we think there's a meaningful opportunity to find opportunities above that low threshold. Steven Fleishman: That's helpful. And then maybe related to that then, Joe, over the last 3, 6, 9 months, you've mentioned renewables a couple of times. You did talk again here a little bit about nuclear. Could you just, maybe on those specific topics or others other than new gas, that you could talk to kind of what are you seeing there, what are -- how are you looking at that? Yes. Joseph Dominguez: No, no, I'm sorry, complete your question. I thought you were... Steven Fleishman: No, no, that's it. I'll leave it there. Joseph Dominguez: Okay. Yes. So look, on new nuclear, we're continuing to look at both large reactors and small modular reactors. I think the last time we talked, I commented that we have to have really clarity on 3 things. One is, what's it going to cost and what the schedule is going to be? Obviously, a number of the new reactor designs, particularly on SMR, still have a bit of work to be done in their design and regulatory approval journey. We've got to get to the other side to make sure that we understand that. We need to understand the operating cost of these machines. And while we continue to chip away at that, I am not yet at a confidence level where I could say to you that we are committed on a path to new nuclear. I think we just -- we need a lot more data before we could get there, and some of that is just going to have to play out over time. In the case of renewables, what I'm really looking for here, Steve, is to have the capability with battery storage and other renewables as well as gas-fired gen, to really facilitate these transactions that are the core of our growth strategy, these deals with hyperscalers and C&I customers. So what we're thinking about there is capability that gives us some peak capability or some incremental new capability. That is a deal sweetener. And that's kind of our focus on renewables, what platforms might we add to the business that give us that incremental capability to do the things our customers want. It is a secondary objective to have another means of deploying some of the vast amounts of free cash flow that Shane alluded to. But I've said this before and I stick with it, the returns on renewables are often underwhelming when we're looking at some of these deals. So in other -- in order for a platform to be something we're going to want, it has to come with it the ability to unlock our essentially contracting of 147 million megawatt-hours of nuclear. And that's where we see some potential value. But I don't yet see a platform that is attractive enough and is going to meet our threshold for 10% unlevered IRRs. We'll continue to search for that opportunity, but we're not there. Steven Fleishman: I have one last question on the capital allocation and I'll then turn it to others. Just going back to -- so obviously, your free cash 2029, you're just leaving in cash. How about just like balance sheet targets? Because your EBITDA is going up a lot, '28, '29, so just what should we be using? Because there could be just balance sheet cash or leverage capability too that grows. Just any view of kind of leverage targets? Shane Smith: Yes. I mean we'll continue in the long run kind of -- I think it's fair to assume that 2x debt to EBITDA, Steve. So with that rising EBITDA that will -- to follow the base EPS trajectory, if you will, from your modeling, you can assume that if we're levering at 2x EBITDA, we'll have significantly more leverage capacity in '28 and '29 than were reflected in '27. Operator: Our next question comes from Shar Pourezza with Wells Fargo. Constantine Lednev: It's actually Constantine here for Shar. You noted 9 gigawatts of additionality including the nuclear relicensing. Do you see that as enough offering for hyperscalers looking to contract? And maybe is there a rule forming around matching new and existing capacity 1:1? Or is there a lower mix [ palatable ] similar to the [ Vistra ] deal earlier this year? Joseph Dominguez: Yes. I think on what's going to ultimately come out of the PJM process, I think we're still -- we're going to still await clarity, I think it's more about just managing the peak and whether the customer is willing to take interruptible service or not. As to whether the 10 gigawatts is enough, I think there's going to be instances where we'll partner with another party. We've shown that with [ DR ], for example, where they bring the incremental capacity. And we have another company that's partnering with Constellation. I could see that happening with natural gas development projects or other things, where we'll be more aggressively working with other companies that have acute position in a particular area. And then we're going to fill in our energy and our attributes into that contract. So in answer to your question, I'm not sure that the 10 gigawatts is enough or rightly placed. We may have to supplement that. And I spoke a moment ago in response to Steve's question about continuing to search out platforms, renewable battery storage platforms, that may add some incremental capabilities. So I think it's a hell of a good start, but I don't think it's a finished story. Constantine Lednev: Excellent. And in regards to the 147 million megawatt-hours that you called out, obviously, a really big number, is there kind of a level of interest that you would highlight in more immediate term versus long term and maybe an order of preference by region, especially, as you mentioned, with the kind of reforms going on at PJM? Joseph Dominguez: I don't think we could get into that level of detail here yet. There's interest in kind of across the board in different places, and it's different types of interests that we get. But we don't yet have, hey, this is the number of megawatts we're going to be able to do at this point in time in a particular geography. Constantine Lednev: And maybe just quick follow-up on PJM, is there kind of a level of interest in the reserve backstop auction? What's CEG's position kind of going into the potential procurement later part of the year? Joseph Dominguez: Yes. I would simply say I think there is certainly a level of interest in it, but we have to see the details. Operator: Our next question comes from Angie Storozynski with Seaport. Agnieszka Storozynski: So my first question is about the free cash flow generation. I'm just wondering what kind of assumptions you're making about cash taxes in that $8.4 billion free cash flow assumption for '26 and '27? Shane Smith: We're in the low teens from an overall effective cash tax rate in the front 2 years, Angie. Agnieszka Storozynski: Okay. I mean that low teens as in like based on net income? So... Shane Smith: Yes. Actually, if you convert -- instead of using your book tax rate, if you use the cash tax rate, it would essentially be at that lower -- in the low teens. Agnieszka Storozynski: Okay. Because that number looks a little bit low, just as I was looking at your free cash flow generation for Constellation standalone, you were already in around, I think, $3.5 billion range on average per year. So the Calpine accretion with some tax benefit should have been -- should have boosted the free cash flow generation more. I mean so what am I missing? Is it the interest expense? Is it that there are no tax efficiencies related to this transaction? Shane Smith: Yes. I think one, the 3.5% is probably a little bit too high. Two, there's still some ongoing CTAs regarding the integration in the front years that we need to be mindful of. Three, there might be probably higher maintenance CapEx than you may have had in your model. So those are a few of the variables that I think are leading to some of that delta. But it's not off of what we anticipated. Agnieszka Storozynski: Okay. And then secondly, when I'm looking at Slide 32, the assumptions, the modeling assumptions for '26 and '27, so just wondering how you flow through the sale of PJM assets. It doesn't seem like it's having any benefit on either O&M or other like cost items. Is it just because, again, you're taking an additional time for Calpine's ownership and thus higher cost? Because I would have expected that there is some cost benefit by divesting these assets. Shane Smith: Yes, there's a little bit of a lumpiness year-to-year on O&M for some onetime things. It's dependent upon nuclear fuel outages and things like that. So it's not always easy to look at just a 2-year view and say, "Well, if these are coming out, I wouldn't see this material delta year-over-year." So there's some more intricacies to it that create some lumpiness besides just looking at 2 years and trying to adjust for inflation. Agnieszka Storozynski: Okay. And then just one big picture question, Joe. I mean we've had a lot of announcements -- semi-announcements about new build in PJM. How do you see those potential capacity additions? I mean as you said, the cost basis is pretty high. And I'm not quite sure if there is offtake agreement behind this potential CapEx on the gas-fired side. But are you concerned that there could be some, I don't know, noncompetitive entrants into the PJM market, which in turn would suppress both energy and capacity prices? Joseph Dominguez: Yes, Angie, I think 2 things have happened in that space. We saw kind of a wave of interest in legislation that would allow the utilities to return to building generation. And I thought that was a risk to the market. I think favorably, we haven't really seen that gain traction anywhere, and people seem to be rejecting that idea. So since the last time we talked, probably improvement in terms of that risk vector. There have been announcements for things that are, at least based on what we understand about the projects, that are going to exist off the grid. And so there doesn't seem to be to us any meaningful impact that those things will have on energy and capacity markets. But we're still looking at that. Frankly, what we have on some of this stuff is just press releases and not much more. So a more fulsome answer would require us to kind of understand what's going on. And I don't know what's real or not real. There's a lot of press release activity going on all over the place about different things that, I think you correctly point out, might add some noncompetitive supply, whether energy and capacity into the market. But who knows how long it's going to take to actually build that stuff or, frankly, whether it's real and it has offtake agreements yet. We're seeing the same thing, but I can't really give you anything meaningful on that because I don't understand the details yet. Operator: Our next question comes from James West with Melius Research. James West: Joe, thanks for all the great details this morning. One of the things I wanted to ask about that I think gets under-recognized by the market overall is the increased demand on your capacity is leading to much better durability in your earnings. And I wonder if you could comment on that. And one, if you agree with that. But two, if you could comment on how that creates -- is creating durability and how we should think about that durability. Joseph Dominguez: Yes. I mean -- so I think about it in a few ways. On the nuclear side, you all understand what we're doing. We're taking the production tax credit and we're modeling that as the base earnings. So there's obviously -- what we're seeing is power prices in certain regions exceeding that, and so giving us some additional opportunity above the production tax credit floor price. So we're seeing a bit of that. We're also seeing it in terms of the gas-fired generation being dispatched more often. So that would translate into what I would think of as a tailwind for enhanced earnings more than for base earnings. Where it kind of converges though is that in long-term contracting, in the mind of the customer, ultimately, it's about doing better than they're going to do over the long term with the variability in the market. So I think that -- I think the fundamentals that you're talking about are actually driving people to want to secure long-term contracts at prices that we would then put into base earnings and making the base earnings more durable in that sense. But I really think the way we've explained it here is probably the best way. And that's to give you this baseline that we think of as durable and then quantify for you some additional opportunities on top of that. And in terms of the way I kind of simply think about the stock and the value we're trying to deliver to owners is we're taking a look at the S&P, and we're saying, what's the average multiple in that S&P? And then underneath that, what are the growth rates for different companies? What are their cash flow capabilities? What's their long-term durability to have assets that are going to be around for decades? And that's where we're trying to distinguish ourselves, as always being better than that average. That's the philosophy of the company. So that when we show up and we present to you, look, in a very conservative way, we see a 20% CAGR. What we're saying is go look for other opportunities in the S&P, and we bet that our opportunity is going to be better than other things that you could find. And then you layer on top of that kind of catalysts for even better performance, some of which would land in base earnings, like PTC increases as a result of inflation, some of it would land in enhanced earnings. But to give you a page here, and Page 23 does this, to say, look, here are the opportunities we're going after. And if we realize those opportunities, here's what it's going to mean on top of what we just talked about. James West: Okay. Makes sense. And then maybe just a quick, Joe, a quick follow-up for me. You've mentioned the PJM clarity. When do you expect to have clarity in that market? I mean I know you're very close and you're working with the federal government and all state regulators and everybody is trying to come to that moment. When do you expect to see that happen? Joseph Dominguez: Look, I expect to see that this year. I mean that -- again, these things are out of Constellation's control. But what I'm seeing is a FERC that's highly motivated to get this done and administration that believes that leading in the data economy and this important part of innovation is essential to America going forward. So they want to have this clarity. And then obviously, have other market participants like us, the utilities, everybody's pushing for some clarity here so we know the rules of the road going forward. And so look, I'm hoping all of that pressure drives us to a place where we get that clarity from FERC this year and it clears up questions in the minds of customers and others. Operator: Our last question comes from Julien Dumoulin-Smith with Jefferies. Julien Dumoulin-Smith: A couple of things real quickly. First, some of the nuances here. I think it says that '27 assumes average shares outstanding are held flat. Are you guys assuming this $5 billion buyback is executed in the core EPS? I just want to clarify that real quickly. And then separately, I think Steve got at this a little bit, but how do you think about capital allocation and further buybacks as maybe a policy for beyond the '27 period, like '28, '29? Is there a ratio? Is there a payout? Is there something that -- to give people a heuristics on that front? And then I got a quick follow-up. Shane Smith: Julien, it's Shane. So let me take the first part. I mean we did not reflect an assumption on how many shares we would repurchase, in part to not overly signal to the market what our strategy is here. We want to preserve flexibility there. So I trust you all can make some assumptions on how we would probably allocate that over the next 21 months or so. But our '27 share count is not reflected on an assumption of what we take out before year-end '26. Secondly, let me make sure I hit your question there. But I think it's consistent with what we've done to date. I mean we're -- as Joe hit on, we think we have a number of opportunities to bring new megawatts to the grid in a variety of different areas. We obviously are looking for some policy clarity here as well as customers that want the long-term contracts. And so our priority is on identifying growth at double-digit unlevered returns. To the extent that doesn't present itself as an opportunity, we're very comfortable acquiring our shares at this price. And we think we have a lot of cash flow ultimately to end up doing both. But we won't make an ill-informed investment decision because we feel the money has got to go somewhere. We're very confident in reacquiring our shares. Julien Dumoulin-Smith: Awesome. So the EPS guidance per se doesn't include the buyback, but the 20% EPS CAGR in the more -- in the broader sense does. And then if I can, just to follow up on this, you have this 10% rolling CAGR. Can you describe a little bit about how to think about that? And obviously, you talked about a base EPS number there too. Is this 10% rolling supposed to be like off of that '29 that we should be thinking about, implicitly growing 10% from '29 onwards? Or is this more, hey, next year, when you roll the plan from '27 to 2030, you should be kind of thinking about it being more in the 10% ZIP code? I just want to clarify how you're thinking about that. I think I get the concept, but I want to make sure we're crystal clear about what you're suggesting here is growth kind of implied beyond '29. Shane Smith: Sure. So let me clarify on your first point, there is no benefit in the 20% base EPS CAGR from capital allocation for the share repurchase. So that is all upside. That's all reflected in the $0.50 upside on Slide 23. Secondly, when we recalibrated the base EPS CAGR of 20% on a 3-year view, we are projecting to roll that forward and a commitment to essentially grow base EPS CAGR at 10% each rolling 3-year cycle. And that's kind of our minimum target, Julien. What I'd say is, again, that Slide 23 that shows the optionality, we're assuming that we're going to execute on some of those levers and ideally have a higher growth rate than the 10%. But we're saying we have great line of sight that if you start next year, looking at following 3 years and so forth, that we have good line of sight into a rolling 3-year view of a 10% base EPS CAGR. Julien Dumoulin-Smith: All right. Perfect. So again, stress, no buyback reflected in any of this '26 onwards. More to the point, the rolling piece is truly genuinely a rolling 3-year average, and that's the minimum here. But if you thought about '27 to 2030 here, again, obviously, you've got a plus at the end of that 10%. Don't necessarily take it too literally. Shane Smith: I think you've got it. Julien Dumoulin-Smith: Awesome. All right. Excellent, guys. I really appreciate it. Operator: This concludes the Q&A session, and I will turn it back to Joe Dominguez for closing comments. Joseph Dominguez: Great. Well, thank you, again, all of you for joining us. We've got a lot of work still in front of us to integrate Calpine. The future is very bright. Hopefully, we've given you something here this morning that allows you to understand what the baseline strategy is for the company and what we intend to return to our owners in terms of value and the many upside opportunities. Thanks again for participating, and have a great day. Operator: And ladies and gentlemen, thank you for participating in today's call. This concludes today's program. You may all disconnect. Everyone, have a great day.
Operator: Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Buzzi S.p.A Full Year 2025 Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Pietro Buzzi, CEO of Buzzi S.p.A. Mr. Buzzi, you have the floor. Pietro Buzzi: Thank you, and good afternoon, everyone. Welcome to our conference call. And again, thanks for participating. We do publish a presentation, which I will follow at least in part, if not in full, that is available on our website. So I will mainly refer to that and to the page. So starting from the first page, we have a brief summary of what has been 2025 for Buzzi. Overall, a good year, although not as good as the 2 last one, so with some decline in profitability, but still showing, let's say, very strong results and very significant cash flow generation. So as you can see from here, we had a slight improvement in our revenues, in our net sales. This was already disclosed at the beginning of February with an impact -- positive favorable impact coming from the changes in scope. EBITDA is falling somewhat short of last year, minus 3% approximately, which would be actually minus 6% like-for-like. So the overall impact again of the Forex and the Scope changes was favorable. EBITDA margin, we are losing some profitability, which is mainly due to the fact that the additions, let's say, to the perimeter to the scope at least initially for the first year, they are coming in with an average profitability, which is below the one of the, let's call it, traditional scope perimeter and to the fact that one of the -- or the strongest country for us, U.S. declined somewhat. CapEx are, let's say, similar to last year in terms of industrial CapEx, a little bit lower than last year, considering also the equity investment, and we can let's say, enter into that later in the presentation. Net financial position also with the help of some lower CapEx improved significantly and cash flow generation was very close to last year regardless of the slight decline in profitability. We have -- we propose to the next AGM to keep the dividend unchanged versus last year. But -- and we will comment later the shareholders' remuneration in 2026 is anyway going up significantly, thanks to the buyback program, which is underway. As you can see on the following page, let's say, Page 2, one of the key feature, let's say, of 2025 was the Scope changes, which included an Asset Swap, if you wish, which occurred in Italy and Italy and its bordering country, in particularly Austria, where we sold, let's say, the Fanna plant in the Northwest, is in the Pordenone province for those that are a little more acquainted with the Italian geography. And Alpacem is the owner, is part of the Wietersdorfer group. This group, which acquired the Fanna plant is composed basically of 3 parts. It includes 1.5, let's say, plant in Austria, which is quite strong, let's say, locally. The Slovenian plant where we have already -- we used to have already a presence since some year, which is a very stronger plant just on the other side of the Italian border. And some Italian assets that now includes also the Fanna plant. So quite a strong and integrated group in the Northeast of Italy. And then we expanded our presence internationally between starting from March, April until December, it's an ongoing process, if you wish, by acquiring initially over, let's say, a 30% stake in a listed company in the Emirates name Gulf Cement Company, which is a single plant, let's say, entity, but with a quite significant capacity, very powerful in terms of machinery, let's say, and equipment. Then through the OPA, the ownership was increased. And later on, December and also something more will follow during this year. We achieved a gradual improvement in our ownership, which at the end of the year is around 66% indirectly is a little less because we participate to this investment together with a partner in a specific entity called TC Mena Holdings, where we see as 90% and the partner as 10%. So the, let's say, economic ownership is a little less than the 66% at the year-end. On the following page, you'll see the bridge, let's call it, of the turnover -- 2025 turnover by regions, so by main regions where we operate. And Italy had a fairly good year, I would say. If we do not consider -- so excluding the scope impact, actually, our volume and pricing will remain basically the same, prices slightly better. So this was quite a strong support in Italy coming from the infrastructure project of the so-called resilience plan of the European funds, let's say, allocated to Italy. Central Europe was kind of mixed. So there was a recovery in volume, but prices suffered mainly in Germany. And this translated into, let's say, an offset of the progress that we achieved in the volume in our cement, let's say, shipments. Eastern Europe, I would say, good results overall. There was a negative impact -- unfavorable impact coming from the deconsolidation from the sale of the of the Ukrainian assets. So this was the first year without Ukraine included in the scope of consolidation. But the remaining countries overall performed well, in particularly Poland and Czech Republic. And we did have also some benefits from the strengthening of the local currencies, both zloty, Czech koruna and also the ruble in Russia. U.S. was, in a sense, the worst performer also due to the size. So every time that something, let's say, negative happens to U.S. in our case, impact on our figures on our numbers is inevitably more significant. What happened in U.S., we had a minor, let's say, decline in volumes more in ready-mix actually than in cement. Pricing fairly stable, but no improvement if you look at the average or there were some improvements in specific geographic areas, but some declines in other ready-mix prices were a bit under pressure, particularly in Texas and the overall result was a little negative. And the dollar lost us some of its value affecting the translation. So around EUR 70 million or EUR 70 milliojn negative on our net sales figure. Brazil is coming in for the full year for the first time. So the comparison of the first 2 bars refers to the last quarter of 2024. But the impact is, I would say, overall positive with the exception of some unfavorable variances coming from the Forex. -- and is bringing in additionally, let's say, EUR 2,065 million of turnover. Same reasoning more or less for the UAE, which is smaller in terms of turnover and is also including -- included -- it's been included starting from May, so about 6, 7 months. And this brings us to the EUR 4.5 billion approximately level up to EUR 4.3 billion of last year that you see in the bar at the right. Not top, right side of the slide. And then if we move to the main, let's call it, operating figure for the results, which is the EBITDA. What you can see from here is, again, fairly simple, if you wish. So volumes good trend. A favorable variance of about EUR 44 million, but a number of, let's call it, negative items or unfavorable items associated, first of all, with the price environment, which was overall slightly negative besides what happened in the U.S., particularly, I would say, in Germany. So Germany and the U.S. were the 2 countries where we suffer actually Germany, more than U.S., we suffered the most in terms of pricing trend. Variable cost not so much coming from energy and fuel or electrical power. It was more related to raw material and other variable costs, for example, logistic ones. And fixed cost, typically labor, maintenance were also going up, difficult to fully, let's say, control versus the volume and price trend. Other mixed cost also showing a favorable figure. CO2, basically not an issue last year because we still remain -- this refers, of course, to the countries under the ETS scheme. And in those countries, we basically remain in line with the free allowances received with a few exceptions and a minor, let's call it, negative variance versus the previous year. FX overall negative, mainly in the U.S. And then Scope changes that refer to, okay, on the positive side, Brazil and Emirates on the negative to Ukraine, rebalancing somehow the negative impact that you see on the center of the slide by EUR 61 million. So overall, the decline is what we mentioned at the beginning, and this is the -- in brief, let's say, the explanation and more explanation can be given, of course, country by country or region by region where things did not behave, let's say, or happen in a consistent way. We had, of course, some regions more affected by costs, some regions more affected by prices, et cetera. In the following pages, the cash generation and capital allocation. You can see that operating cash flow, as I was mentioning at the beginning, remained very, very close to last year besides the EBITDA decline. CapEx industrial slightly lower than last year, not really because of our decision to decrease them was actually somehow related to the execution phase, which on more complex projects usually takes than you might budget or when you, let's say, translating the design in the engineering phase into implementation and execution usually takes longer. And remuneration of the shareholder was quite good, I would say. You can see the split between, let's say, dividend and buyback. We have an ongoing program, which started at the end of February, which has been more or less so far 50% completed and we should get to the end. We will see, of course, it depends on the liquidity of the shares on the daily trading. But normally, with this kind of trend, we should be able to complete it by the end of May or maybe even earlier. We will see. It's well advanced and likely to be completed in maybe 2 more months. There is also a proposed resolution taken today by the Board of Directors to cancel the shares that will be in portfolio, let's say, in treasury at the time of the AGM. So we don't know exactly the number. But anyway, both the shares that were already in treasury at year-end and the ones that are being bought currently will be canceled, which is also, I think, overall a positive news for the shareholders. Just to give you a little more color on the different geographic areas, we move to Page 7. The U.S. always, let's say, a very strong contributor to our results. But last year, they were not able to keep up with the same level of profitability that we enjoyed in 2024. Basically, in terms of EBITDA margin, as you can see, we went back to the level of 2023, which is anyway a very good one, both in absolute terms and also in relative terms when you compare to other peers operating in the U.S. But the trend was slightly negative. We faced difficult volume part of the year. Then in the second part, there was a recovery, but not full. So we were unable, let's say, to close with a favorable volume trend, minus 2.2%, I think, very similar to the overall market trend. And ready-mix volumes suffer like we were a little bit more in terms of shipment deliveries and also pricing ready-mix, as you know, as you recall, in our case, they are mainly in the Texas area, which was one of the -- yes, I would say, more difficult in terms of market environment also due to the presence of the significant presence of both incumbent and new importers into the -- along the coast from Houston to Corpus Christi, et cetera. So we have a structure in the U.S., a cost structure which is compared to our countries, skewed in a sense of more significant weight of the fixed cost. So when you lose also slightly volumes, this has an immediate impact on our profitability, which was the main case. So cost not really going down, volumes going down a bit, pricing not moving or more, let's say, moving unfavorable than the opposite. And this was the result. On top, we had the negative foreign exchange impact following the devaluation of the dollar, which on the EBITDA -- on the EBITDA means around EUR 26 million, not a small amount. Moving to Italy, which is the following page, more favorable situation, support, as I was mentioned before, mainly from the PNRR programs. So public building and infrastructure projects, which also are typically enjoying a greater cement intensity versus either new residential or residential renovation. So there is a decline in cement volume, but this is a direct consequence of the Scope changes that we were commenting at the beginning. Meanwhile, for example, our ready-mix concrete subsidiary has been able to increase volume by around 6%. Pricing performance was okay, some improvements. And our cost, both fuel and power were definitely under control. So we did not suffer any significant, let's call it, inflation -- energy inflation during 2025. The changes in scope on EBITDA means 13 million -- EUR 14 million let's say, about EUR 14 million of impact, which is not very different from what you see in the EBITDA variance actually. We are showing plus 3.5% like-for-like. So it was fully offset by the good trend or the stable trend in volume and favorable trend in pricing. In Central Europe, which means for us, basically mostly Germany plus Luxembourg and ready-mix operation in the Netherlands, quite a different trend if we look at Germany versus Benelux. Unfortunately, Germany has a much greater weight on the area because the performance of Luxembourg was -- and in the Netherlands was growing, was okay, was improving. Meanwhile, Germany did improve some. So there was a rebound in the volumes, but there was no rebound. Actually, there was a decline in prices, which started already on the previous year. Actually, we entered 2025, the exit price, let's say, of 2024 was already lower, and we were unable to recover or to change it significantly or just slightly to 2023 and '25. And this was the major impact on the -- I mean, the major reason for the EBITDA decline together with a cost situation, cost environment, which was not favorable or quite different from what we experienced in Italy, mainly on the -- we suffer mainly on the energy cost, on the power cost, not so much on the fuel. But yes, on power, this is also somehow related to the -- to an hedging, which was made in advance so to cover the purchases for 2025, which at the end was not, if you wish, successful in a sense that maybe it was a bad timing. But of course, I mean, the reasoning behind hedging is not to pick the right timing. Just in this year, I mean, in 2026, we will see a totally different trend because the market condition has changed in the meantime. So the change -- the favorable change in Benelux was able to help somehow the region. But Germany, clearly is waiting significantly on this specific portion of the business. And the performance in terms of EBITDA certainly was not was poor overall. I mean there are reasons behind it, which explains it, but was overall quite poor. In Eastern Europe, on the following page, we are, I think, continue to be on a steady, let's say, profitability outcome. Of course, these businesses are not as big and as significant. So their contribution, let's say, to the overall profitability of the company is not as significant as Germany or U.S. But the good news is that there is a positive momentum, both in Poland and in Czech Republic, which should also continue in the coming year. So strong cement volume dynamics in Poland was clearly -- I mean, it was quite meaningful. Czechia, it's smaller, but also stable. Our ready-mix business in Czechia performed very well. We lost cement volumes in Russia. That's the only area where I think also after some years of war, let's say, the impression is that the economy is starting to feel more, let's say, the pain than in the previous year. And also probably in Russia, the prospects for the next year are also quite difficult or more difficult than in other Eastern European countries. Ukraine is not part of the region anymore. So -- but its contribution was not very significant anyway. So if we exclude Russia, there is a margin expansion. And driven by higher production and also, in this case, lower energy cost, which did not as opposed to Germany that we commented before. Exchange rates also favorable, if you wish, not a minor, let's say, contribution, but anyway, a favorable contribution. And the impact of the deconsolidation of Ukraine was, I would say, totally absorbed and also the negative contribution from Russia was totally absorbed by the strong performance of Poland and Czech Republic. Brazil, which is a newcomer, let's say, first year in the group. So let's say that we are on a pro forma comparison here because last year, actually, only the last quarter was included in our figures. We had a volume trend, which was favorable, 2%, 3% up again compared to the full year 2024. Price trend in local currency also favorable. This translated into, I would say, significant margin expansion. Our cost also were particularly the energy costs are lower than the previous year. So -- as a first, let's say, year of full operation in the group, I think we can be fairly happy with the overall performance. There is room to do better in the coming year if the external condition and also the industry trend will go in a certain direction, which is possible. And the only negative factor, the only negative is the exchange rate trend, but not so impact. I mean, not so dramatic on our -- on the overall figure with minus EUR 5 million on net sales and minus EUR 1.5 million on EBITDA. And currently, actually, if we look at the -- of course, it's not necessarily a trend that will continue for the entire year 2026. But what we are seeing lately is actually a more stable real versus the euro since the beginning of 2026. So if the local currency -- if the trend in local currency will perform better, which is what we expect also in euro, we should have -- it should be reflected, I mean, also in euro terms in likely absence of negative FX impact in the coming -- in the current year. Mexico is not part, as you know, of the group is not line by line consolidated, but it remains a very important part in terms of, let's call it, also management involvement, but in particular, in terms of results -- net result contributed to the other company. The Mexican performance was mixed, but overall, still very good. We [ suf ] a bit on the turnover on the EBITDA in euro terms. But when we clean up, let's say, from the foreign exchange impact, actually, both figures were better than last year. And this is one of the few countries together with the Eastern European country, Poland and Czechia, that is -- was able to achieve an improvement in the EBITDA margin, which is already very, very high, as you can see. So I would say that we cannot complain about the Mexican performance. The only complaint is that it cannot be included in the line-by-line consolidation. But for the rest, very strong performance coming from this country. Some comments on how we see [ 2020 ] also on the light of what has happened so far and also recent change in the macroeconomic environment. I mean, we are -- we were, let's say, but we still are pretty confident that we can continue to perform fairly well during the year. There are uncertainties. There are certainly geopolitical tension, potential inflation pressure for how long this difficult, let's say, situation in the Middle East will last and will affect particularly the energy cost, but not only because there are anyway also impacts on the demand in part directly like in the Emirates or indirectly like in Europe or probably less in the U.S. and Brazil. But anyway. So by major, let's say, regions like we showed before, U.S., the expectation are for -- the association is, let's say, forecasting some additional decline in demand. probably in the range of 2%, 3%, something similar to what happened in the previous year. But of course, if this happens, it would be already the 3, 4, 5, 6, 4, at least fourth year in a row of decline versus the previous peak which was not historical peak, but anyway, the previous peak of the cycle in 2022. And this is something that clearly is not, let's say, helping the overall price environment because there's most of the regions of the state, some capacity available. And as I said before, due to our cost structure to lose some volumes almost immediately translates into a margin construction because the fixed costs are quite high in the area. On the other hand, we have seen also at the beginning of the year, particularly during the month of February, demand quite resilient. So it's true that on one side, you have residential weakening, but there are definitely in the nonresidential portion of the demand or yes, some kind of projects that are going well that require cement and concrete. Typically, just to mention one, which is, of course, very much on the fashionable the data center construction, but this is actually happening. It's happening and it's relatively intense in terms of cement consumption. So again, a mixed environment with the nonresidential segment and also the infrastructure probably supportive and maybe even better than what the association has been forecasting for the full year. So we will see. There are, of course, other factors to be considered in the U.S., which we mentioned in the comments of the press release that are a bit disturbing or potentially disturbing, let's say, the price environment. But okay, a situation or a scenario which is, I would say, moderately optimistic. I would be optimistic about the outcome for the U.S. in the current year. Italy should be a year very similar to the previous one as long as we continue to have demand coming from the infrastructure plan, let's say, or the European funds, there are good chances that we can more or less repeat last year results and also Italy is more likely probably than the U.S. to be able to improve somewhat the prices. There are underlying reason related to the introduction of the CBAM, the scarcity or the less availability of CO2 allowances, which also translate into a higher cost. So there are -- there's probably more room than in the U.S. on the pricing side to be a favorable variance. Central Europe, we should see some rebound. We are forecasting some rebound in Germany. The federal infrastructure plan should start -- will start to have some impact also on cement demand. We are coming from a year where the prices, as we were commenting before, remain fairly weak. So there is -- there should be a possibility also couple being within, let's say, the ETS system similarly to the -- to Italy, there should be a possibility to recover something on the pricing side. Clearly, this means also additional cost for CO2, but more chances, let's say, to gain something on the price level. Eastern Europe, with the exception of Russia, which is probably entering a much more difficult phase than what we faced in the last 2, 3 years. We don't see a reason why Poland and Czechia should be worse than the previous year. These are also countries where as opposed to Germany, Italy, we are operating at a very high capacity utilization level. And so we are definitely optimizing, I would say, our profitability, thanks to the capacity utilization, which is -- we think they have to stay. In Brazil, we mentioned it already, we see a positive trend overall, particularly in the Northeast, which has been growing in terms of volume and prices more than the Southeast. But if there is an easing of the monetary policy, which today represents significant constraints for the construction investment with interest rates at 15% or 16% the number of projects that are -- that have been on hold so far should start. And clearly, this has even more impact in the Southeast where most of the consumption and the population actually are because this is where the bulk, let's say, the cement consumption of the country is located. In the Emirates, we will certainly suffer from lower cement consumption until at least -- we will see until something different happens. But that's the country with more direct impact coming from the local, let's say, turmoil or conflicts going on. But on the other hand, we are -- we have a number of initiatives of projects that are -- that have been put in place last year and will continue this year to improve the profitability. So even with the lower cement volume, we may be able to do something better in terms of EBITDA. Mexico craze not affecting directly our numbers. But we are seeing -- we're, let's say, more positive versus last year in terms of volume trend and profitability should remain at a very, very high level. This is for the, let's say, the top line and the volume prices scenario. The risk or the, let's call it, the uncertainties are definitely more related to the cost side, where it is true that many components or many items are -- have been contracted for a certain number of months. So we have certainly some stability for a good part of the year. But it is clear that on the energy cost, in particular, the current situation is creating an environment of rising cost driven by renewed inflation like we mentioned here. So there is volatility, but volatility mainly on the high side in a sense of more expensive side. This is difficult to, let's say, assess completely right now. We ran some number, taking, of course, kind of sensitivity analysis. And there is certainly an impact that we don't know if we will be able to offset with the price improvement or not. It will mainly depend on the specific situation, demand, pricing demand, let's say, competitive environment, what is the attitude of the competitors, et cetera. So the idea is, of course, to try our best to preserve the margins. But how much we will be able to do that and how much actually the cost environment will be unfavorable is difficult to assess. In general, we do see a significant risk of rising cost, in particular, the energy component in the coming months. The FX foreign exchange is very difficult to somehow forecast. Initially, in our budget, we introduced an exchange rate for the dollar, which was definitely weaker than the 2025 average. Is this going to be true? It's not going to be true. We don't know. So far, again, not as much as we forecasted, but this could change in the coming months and can certainly move, let's say, the variance from positive to negative if the dollar will weaken more than what we expected or more than what is showing up to now. So overall, again, reviewing our numbers, reviewing our budget in a quick way, we think that it will be quite difficult or actually as of now impossible to achieve an EBITDA greater than in 2025. So our view right now is to as we wrote, let's say, marginally decline by how much is difficult to tell right now. But I think the message, which is important to give today is that looking at all the variables, looking at all the available information as of now, it is -- this is the best, let's say, forecast that we can make, and we think that is a correct one, which means that, okay, there our profitability will not improve in 2025. But if it is a marginal decline like we expect, will remain anyway at a very good level. And we would be happy, of course, to change this view as soon as possible. And -- but this, realistically speaking, is likely to occur if it does occur only after more months of actual results available. So with, say, 1 quarter or maybe let's call it, 6 months behind us, we will have definitely a clearer view on the full outlook. But I think it's important to give this message today, which has been, I mean, analyzed in a very deep and serious way with, again, running several sensitivity analysis that are giving us this kind of outcome at least at the current stage. So I think I spoke for almost 1 hour. So probably -- in order not to be tedious and to make the conference a little more interactive, I would let you read the following pages by yourself and open now, let's say, the Q&A session. Thank you for listening. Operator: [Operator Instructions] First question is from Ben Rada Martin, Goldman Sachs. Benjamin Rada Martin: I've had 3, please. My first one was on CapEx. I know in the release, you spoke to an increase planned in 2026 versus '25 and some of the buckets in terms of decarbonization and production. Would you be able to talk to what kind of quantum you expect for 2026 CapEx and then in terms of the medium-term CapEx expectations as well? And then the second would just be on the guidance assumptions and very much understand how uncertain the backdrop is currently and very helpful to kind of talk through some of those impacts. But if we look at that moderate decline or slight decline in EBITDA expected, is it right to assume that there's limited energy impacts so far in that number? Or I guess, what kind of pressure do you see embedded within that forecast? And then finally, would just be another quick one on energy. When would you expect to see, I guess, pressure come through the cost base? Is it more of a second half story at the moment? Pietro Buzzi: Yes. I mean the last 2 questions are, I think, related. And the answer, yes, is that definitely, we have -- as usual, I mean, we have in front of us about I mean, starting from January more than today because already 3 months past, but usually 5, 6 months of fairly stable energy cost or at least as we budgeted because of, let's call it, hedging policies, which is different from one country to another. So -- but if you look at the mix or the weighted average, in general, we have 40%, 50% more or less of our cost already hedged for electrical power or fuel. So yes, the trend if it changes, which I think it will change, unfortunately, will be more evident in the second half. By how much, it depends because we have, for example, also countries in Europe, typically Germany and in Europe, the debate about power cost is really significant. I mean there's a lot of political pressure on power cost being too high to reduce even talking about how to amend the ETS. Tomorrow [indiscernible] will speak about that. Let's see what he say. But -- so specifically in Europe, the big countries like Italy and Germany, we don't see a big risk on power cost. The [ famous ] also energy release has been approved. So there, we should be okay. On fuel cost is different, of course, also even if our share of so-called waste-derived fuel is increasing gradually, we are still strongly dependent on pet coke. So let's say, a price which is somehow linked or index to the -- to some extent, certainly to the oil price. So there, easily, you could see an increase of, I don't know, 20% or so. And unfortunately, this is well possible. It will impact only partially, as I said before, the full year results, let's say, 6 months, but it's well possible. On the CapEx, our trend, I think -- I mean, we are always very kind of ambitious. We are approving the budget. And then as I was explaining before, some of the biggest projects are actually taking longer to be executed to come to the execution phase. Engineering is more complex versus the initial -- I mean, at the time of the initial approval. So if you want to take an average of the next 2, 3 years, I would move it to between -- I mean, to be -- except for -- I mean, just the industrial CapEx, then there will be other kind of equity investments or M&A transaction is different. But I would move it to between 500 and 550 is probably a number that considering the major projects that we have underway, including some expansion projects is likely to be the right one. Operator: The next question is from Elodie Rall, JPMorgan. Elodie Rall: So maybe you could talk to us a bit on the price action that you're taking in Europe to start with to offset indeed the increasing inflationary environment. You talked about your hedging strategy. Are you pushing prices a bit more? Are you seeing the industry pushing prices and where are we at, at the moment in terms of price increases in Europe? And same question for the U.S. You talked about better demand year-to-date. So how do you see scope for price increases? I guess April will be the big start in the U.S. And then I had a clarification on your buyback plan. You did EUR 200 million very recently, I think. And now you announced another EUR 300 million plan. Is that the correct way to understand it? You can do another EUR 300 million from here? Okay. I'll stop here. Pietro Buzzi: Yes. On the buyback, in theory, well, first of all, we have to complete the -- undergo, let's say, EUR 200 million. And then the idea is to renew, let's say, the authority to ask for a renewal, to ask the AGM a renewal for the authorization to authorize an additional EUR 300 million. This EUR 300 million still will -- I mean it doesn't mean that we will necessarily, let's say. exercise the authorization. This is a preliminary authorization, which is given by the AGM, and then the Board will have to decide whether to actually start the program or not. What I think is likely to -- I mean this is unless, again, the market changes completely, but I think we will complete the undergoing EUR 200 million. And then we will have an opportunity or a possibility for another, let's say, EUR 300 million in the 18 months, -- is lasting, let's say, 18 months after the AGM resolution or authorization. On the price section, well, there are some countries, I would say, in Europe, mainly which are also -- the biggest one Italy and Germany. The winter has been difficult in Europe. In general, what we saw and what you also will see when we release our, let's say quarterly summary. There's been cold rain. So particularly January and February was not a good time, let's say, to go for a price increase and March is better. And also the weather has been improving. And of course, January and February are not big shipment months anyway. So the attempt in Europe to increase prices is driven yes, mainly by the cost trend, which includes an additional cost for CO2 like we mentioned in the beginning, probably an additional cost associated with the CBAM, let's call it, also a decline of allowances because you have the 2 components. And yes, more, let's say, today than yesterday, of cost pressure on the energy side, mainly fuel, as I said before, than power. The magnitude, I think, it's moderate. We have to make sure, let's say that we will not be, let's say, losing volume or market share, either against the import or local competitors. But I think there is at least in these 2 important countries in Europe, there is a chance to a price improvement and being able to offset the additional costs like we were commenting before, let's say, on the -- on our policies to at least keep the margins. In the U.S., very differentiated from area to area. There are -- okay, we don't have the ETS, but we have other issues that are associated with the, first of all, okay, the imports where they are strong. That continue to be, let's say, have a very competitive approach in terms of pricing. Second, the industry structure has changed quite significantly. As you know, in particular, I think, the growth, the presence of QUIKRETE as a cement player has changed the picture quite a bit. Also QUIKRETE being major customer of cement from us but also from other competitors. And the fact that the declining, let's say, capacity utilization is clearly for them, let's say, an opportunity to self-supply cement to their, let's say, mixing operation as much as possible. It has to be obviously, economically feasible. So if they are too far away from one of their plants, they will continue to buy from another competitor. But if they can, they will obviously buy from themselves. And this is something that is putting pressure because if you lose volume, you have to look for volumes somewhere else, to look for volume somewhere else maybe -- I mean, pricing is a tool. And this is one of the changes we have to -- which again is very regional, but can have a significant impact. Another point which we also briefly mentioned in the press release is the product mix. There was an effort 2, 3 years ago, particularly by the European player in the U.S. to move as quickly as possible to the so-called 1L product. So with a lower clinker content for limestone, which is actually a very good product, but more capacity available and again, players in the market that don't have maybe European parent, like, again, QUIKRETE, their interest in developing or in pushing 1L is much less. And this is also translating into a competitive pressure, which is different from the past where you compete not only on pricing, et cetera, but you compete also on the kind of product that you're selling. So again, a mixed environment. Anyway, if the demand stays, I think that maybe not everywhere, but some price improvement we can get also in the U.S. And then we will see how much the cost pressure -- how much cost pressure there will be on the margins. But it's a complex -- it's a more complex landscape than 2, 3 years ago certainly. Operator: Next question is from Emanuele Gallazzi, Equita. Emanuele Gallazzi: I have 3 questions. Well, the first one is on Germany. Can you just discuss a little bit more on your expectation for the German market in 2026. You mentioned a gradual recovery supported also by the infra spending plan. When do you expect the first contribution from it to kick in? The second one is on the capital allocation, very clear on the buyback. I was looking at, let's say, the M&A, can you just update us on your M&A strategy at this stage and the opportunities that you see in the current environment? And the last one is a clarification on the guidance. I probably missed it. But on which euro-dollar exchange rate is based your current guidance? Pietro Buzzi: Okay. We are at [ 120 ] right now as an average for 2026 versus [ 114 ] -- was [ 113 ] approximately in '25. So this of course, can be -- as I said before, can be better. If we look at the trend so far is better. Will it last? I don't know, anyway. M&A, yes, is the focus. I mean it is a focus in a sense that our idea is to be, of course, continue with a stronger financial discipline and consider only, let's say, targets that are -- can represent a real opportunity, not only on a strategic view, but also on the financial, let's call it soundness of the overall proposal. I think that today, but also before, it really hasn't changed much. The focus remains countries where we already are. So the opportunities -- if there are opportunities where we already have a presence, certainly they are -- we give them much more investigation, but much more, let's call it, focus than versus opening totally new country or venture with someone else. I say something that is publicly known publicly available, certainly in Brazil recently there have been movement announcement, CSN is announcing -- more than announcing, I think, it started actually a sales process of its cement division. And is it -- is this a real opportunity or not for us? Difficult to tell. I mean, we have to -- but certainly, again, looking at the main strategy, which is reinforced in a disciplined way. The presence where we already are, it could represent, let's say, an opportunity. It has to be investigated. I mean the process is at the beginning. So we need to understand a little better. But generally speaking, this kind of, let's call it, opportunities are more interesting than others. And basically, that's it. In Germany, it's not totally clear how much of the, let's call it, public infrastructure plan will translate into a greater consumption already this year. We think that something will show -- is starting to show, will start to be available. In terms of quantities, let's say, of cement coming from these kind of projects. It's difficult to tell, but maybe I don't know. I don't have -- I don't want to spend a clear number without support. But what we are seeing that, yes, there is a rebound due to the normal, let's call it, cyclicality. The fact that after 2, 3 years of declining consumption, it is rebounding. There is more, I think, also optimism let's call it, confidence within the country after the change of government. And there is a potential, but more than potential consumption coming from the infrastructure plan. So what we can do maybe is to look at -- again come back with some figure with you looking at -- because last year, the association was giving some information of some -- was somehow trying to assess the overall impact, but was more on a longer time horizon. So in the next, let's say, 5, 6 years. Maybe there are more recent, let's say, population assessment of what could be or what will be -- what can be, let's say, the impact already in 2026. But I think certainly, there is some. Operator: Next question is from Arnaud Lehmann, Bank of America. Arnaud Lehmann: So I have 3 questions, please. Firstly, on CO2. Do you have an idea how much reduction in free CO2 allowance you will get for '26 relative to '25, that's my first question. The second -- yes, go for it. Pietro Buzzi: No, no. Let's take... Arnaud Lehmann: So the other one is, I think you're announcing a stable dividend for 2025, even though your net cash position is above EUR 1 billion, it seems very comfortable. So maybe we could have hoped for a little bit of growth in the dividend. And lastly, on your assets in Russia, we've seen some competitors in different sectors are seeing their assets being seized. Do you think that's a risk for Buzzi as well? Pietro Buzzi: Well, it is a risk. It's probably the largest or the greatest or the biggest risk that we have also in our, if you call, enterprise risk management tool. The probability, extremely difficult to tell. I think -- because this thing really depends on one person now. He wakes up on a certain morning, and if you ask me, I don't see it very likely. I believe that we can continue this way, which is not great because, unfortunately, we are not able to manage the way we would like. But to see really political attack of this kind, in my opinion is unlikely. Anyway, the risk is certainly there. And it's, I think, yes, the biggest risk we have currently in our system, in our -- the second question, tell me again was... Arnaud Lehmann: So the other 2 were how much reduction in free CO2 allowances and why a stable dividend? Pietro Buzzi: Okay. Reduction is about 1 million less for the group, 1 million tons less. And I think we estimate to be in deficit, certainly in Poland and, I think, in Czechia too. And in Germany, I don't recall if we will be in a deficit also, yes. Yes. In Italy, probably slightly deficit, but not as important. And I think we will continue with our internal let's call it, guideline, which is to use the bank or the inventory of free CO2 allowances in the countries where they were coming from. So meaning in Italy, we will continue to use them and in the other country, also the way of somehow hedging the cost by CO2 rights to the extent needed. But we are also able to secure some already at the beginning of this year when the prices went down. So I think we should have a yes, of course, a cost -- additional cost versus last year, but probably a per ton cost, which is still, let's say, favorable. On the stable -- the idea behind a stable dividend was quite simple. Our net income is the same of last year. It is true that our payout is not that great, and there would be room for improvement. I think there is room also in the coming year is basically -- is basically -- and overall, to let's say, examine and to consider the overall shareholder remuneration. So it is true that on one side, we did not increase the dividend. But we do have the undergoing buyback, which makes the overall -- okay, maybe not for everyone because it depends if you're selling your shares or you're keeping your shares. But in general, I think the buyback is beneficial to everyone. And also the decision to cancel the share will adjust at least in -- finally, in a definite way the EPS with an improvement there, which should translate sooner or later, providing, let's say, that the markets are also becoming a little less volatile and improvement in the share price. So we thought that this would be a balanced decision. And also looking at the coming year, where our outlook is not for an improvement. It seems to us that to keep the dividend, which is, yes, same as last year was a balanced decision. Operator: Next question is from Yassine Touahri, On Field Investment Research. Yassine Touahri: I would have 3 questions. First, a question on pricing. I think in Germany and Italy, some of your competitors have announced price increase of 5% to 10% as soon as April. Have you seen price increase later -- in the U.S., I think it was outside of Texas. You had also price increase of like, I think, between $8 and $12 per ton sent by many of the largest players to ready-mixed concrete producer. Again, have you announced similar price increase? Then I would have a second question beyond the price development. On your vertical integration strategy in the U.S. I think that a lot of your competitors are vertically integrated. And you can see -- I understand from your comment that the lack of vertical integration, for example, versus QUIKRETE has been an issue. Is it something that you could consider addressing in the next 5 to 10 years with potentially more acquisition in aggregate of ready mix? And the last question would be on Russia. Could you give us the amount of cash which is currently in Russia when we're looking at your net debt position? Pietro Buzzi: Okay. Russia, I will check it and let you know quickly. In the U.S. as well, we are not totally, let's call -- let's say, without it, in some area, actually, our vertical integration in Texas and San Antonio, Houston, Austin, et cetera is quite significant. We don't have a presence in the aggregates. I mean, this is true. We have some aggregate production, but not -- never, never considered a business in itself and always somehow related to our ready mix activity. So as a way to supply our own ready mix activity. This will become more significant in the coming years. I would say yes. I think initially, at least more oriented towards ready-mix than aggregates because is the most important in terms of keeping your production levels steady, again, not losing customers or avoid losing customers. So it can be seen more, I would say, as a defensive move than strategy, devoted to additional vertical integration in a market which is -- has been shrinking, let's say, in a way or another in a market that's changed like we mentioned before and also changed in terms of big ready-mix producers that are importing cement for their own supply. The number -- I mean, the risk of losing customers and not being able to replace it with another customer, particularly in the ready-mix environment is great. So it can certainly make sense to add the vertical integration, as I said, more as a defensive move than something else. But it is a defensive move that will allow you to keep your volumes and also to keep your -- again, to keep your margins. On the pricing environment, I think, we moved that, but not by the same percentages there. Yassine Touahri: I think the percentages are mentioned, where the price increase announced. Not the price increase that are expected to be realized. I suspect that the message, I think, of the larger -- of some of the large cement players in the U.S. would be that a low single-digit price increase being expected which I suspect means like maybe half for the price increase... Pietro Buzzi: Yes, probably this is, again, not everywhere, but probably this is the most likely outcome, usually. You have protection, you have anyway, as I said, many players that are behaving maybe not exactly as the big ones that are particularly in this moment where the output is not going up. So clearly, looking very much to their capacity utilization than versus just even if economically speaking, it could make more sense sometimes to lower your production and increase prices in the long run. This is not necessarily a good move because if you lose a customer and you're not able to recover it in the long run, this will translate into lower profitability, too. So yes. Yassine Touahri: And another question was, have you sent a price increase letter for April in the U.S., Germany and Italy? Pietro Buzzi: In the -- so-called price increase letter is more a technique of -- more common in the U.S. than in Italy or Germany. In Italy and also in Germany is more case-by-case, customer-by- customer, let's call it, discussion or any way proposition. So... Yassine Touahri: If we look at -- if you look at your own vertical integration into concrete in Germany and Italy, are you increasing prices in April substantially to offset the higher fuel costs that you're expecting and the CO2 alone? Pietro Buzzi: Is not yet the higher fuel cost. It was more, let's call it, decision taken already at the beginning of the year. And yes, we have price improvement in place, which I don't think will be the magnitude that you were mentioning, right. Like I mean, for the reason that you were mentioning. But yes, we think it's likely to stick also because again, more recently, people are feeling pressure also on other cost factors. So it's more -- it's easier, let's say, to accept also an increase of the cement price if there is a general inflation rebound. Yassine Touahri: And maybe following on this situation. I think like the importer in Europe, especially in Italy, they will probably have to pay a CBAM cost, but it's a bit unclear they don't know. I think what kind of cost they will have to pay because the benchmark is not public. What do you feel? Do you feel that the independent importer are being a little bit careful because they might have EUR 10, EUR 15 extra cost, but they are not yet increasing prices? Pietro Buzzi: No, I think they've been already increasing in general. It is like you're saying, it's not totally clear what will be the -- it depends actually on their CO2 content. And yes, each importer can have a different impact according to the kind of product that is bringing in. But yes, I think everyone is considering just maybe as a conservative move to make sure that they are not losing, let's say, versus the previous price. So that they will be able somehow to offset the additional CO2 cost associated with the CBAM scheme. Yassine Touahri: And on the pricing as well, I think, on one side, you've got the imports that are making it difficult to increase prices. But at the same time, I guess, the cost of importing is probably increasing a lot with the oil price making shipping more expensive? Is it something that could be helpful for you to either increase prices or get back the market share that you lost versus especially the big bag imports? Pietro Buzzi: Yes, yes. It is a chance. The -- anything that makes the import more expensive will allow, let's say, or will help, let's say, domestic supply to be more and more competitive, certainly. Yes, it is a chance. Yassine Touahri: On the other side, on Texas, you've got a new cement plant. I think it's the first time there is a cement plant in Texas for many, many years in West Texas. It looks like it's 10% of the Texas capacity, so it's a lot. And the -- it looks like they're going to -- it looks like the cement plant could be -- I guess, do you see a risk for your market share in West Texas? I think where there is a lot of oil well cement. Do you see a risk as well in your market share in the Dallas Fort Worth area where I guess that if they want to ramp up, they will have to sell to Dallas and Fort Worth. Is there a risk for sure? Pietro Buzzi: Of course, there will be more competition, particularly on the oil well. On the other hand, it is true that GCC was already preparing, let's say, the commissioning of the plant by importing cement from Mexico in the area. So it's not totally new. I mean, of course, they have more capacity locally, so they are more competitive, and they can be more aggressive, but they were anyway preparing the commissioning already before. And on the oil well, yes, at the end, the oil well is really a matter of what is the oil price. So if the oil price stays or goes up, I think, yes, okay. There can be more comments. I think this kind of customer is a little different. I mean, being really special products with a very strong significant quality requirements, consistency must be difficult -- it's much more difficult for a customer of oil well to change supplier versus the normal ready-mix customers. So there must be -- okay, there is a huge pricing difference they will consider it, but then they have to test it. I mean they have to go through their quality department is quite complex. So -- and again, the demand is driven purely from the cost -- from the price -- oil price. Yassine Touahri: Okay. Is it fair to assume that in the U.S. in your forecast, you've assumed maybe a bit of a price increase in land, but no price increase in Texas at this stage? Pietro Buzzi: Correct. Yassine Touahri: Maybe on Russia, on Russia, you don't have the number on even approximately the amount of cash that you have in Russia? Pietro Buzzi: EUR 150 million. Operator: Next question is from Alessandro Tortora, Mediobanca. Alessandro Tortora: A few questions, if I may, as -- so the first one is on you made a comment on a very significant margin expansion. Clearly, volume were up, let's say, low single-digit prices, let's say, not slightly up. So the game changer not to stay in this, let's call it, new level, very good level. So you -- it was the work you did on the cost side. And the real mission of the market is I don't know, to be structurally above 30%. So just to understand that clearly, I understood your comment on we need, let's say, more, how can I say, disciplined competitive landscape and for the CSN deal could help on this. So just your thoughts on this because clearly, the margin expansion, especially in the second half was very, very good operationally. Pietro Buzzi: Yes, yes. It was driven, yes, by -- well volumes were good, let's say. So capacity utilization is some plant is really pro capacity, which is giving the best operating leverage. So this is always -- the energy -- power cost, in particular, we save some. We are also becoming in a sense, indirectly, but let's say, producer of renewable energy. We have now an investment into a renewable energy company, which is allowing us to enjoy, let's say, better -- lower, let's say, power cost. And pricing, not a great change. I mean you don't see such a significant improvement. But there are some improvements in prices. Also again, because the market is quite brilliant, let's say. And yes, CSN could be an opportunity besides -- I mean, whoever buys it, will buy anyway, we'll have to invest a significant amount of money because -- okay, relatively speaking can be cheap or expensive. It depends on how much we want to take. But in absolute term, is any way sizable company. So -- and yes, CSN has been certainly more aggressive, let's say, than other competitors on prices, particularly in the Southeast region. So we hope that this could translate into a more disciplined competitive environment that is certainly a chance, let's say. Alessandro Tortora: Comment on pricing strategy discussion client by client in some countries. So is there at least with some clients in some countries, some kind of indexing with, let's say, CO2 price and so on? Because we saw the decline in CO2 price recently. So just to understand if there is or not. Pietro Buzzi: No, there's not. It would be too dangerous in our -- I mean someone definitely did it in the past, but it's very dangerous. I think in our opinion, will not be the right commercial marketing strategy. Alessandro Tortora: Okay. Because there are different opinions on that. And on the CapEx side, the question is, first of all, you mentioned this run rate for the next 2, 3 years with EUR 500 million, EUR 550 million per year CapEx. Does this include the, let's say, U.S. expansion project you had in mind? Pietro Buzzi: Yes. Yes. Correct. Alessandro Tortora: And which is... Pietro Buzzi: I mean, which will start, but we'll start at a slow pace, let's say. But it will start, yes. Alessandro Tortora: Okay. Okay. And secondly, in theory, we should have, let's say, a second round of grants, let's say, in Europe also for, let's say, some innovative carbon capture projects. Is it something that you're still monitoring? Do you believe that maybe you can take, I don't know, a decision on developing at least one single project for this technology? Or let's say, the approach is to be extremely, let's say, conservative and maybe waiting a little bit for technology getting more mature? Pietro Buzzi: Monitoring, yes. Lorenzo, you want to add something? Lorenzo Coaloa: No, I mean, again, monitoring for sure and -- but let's say, at the same time, we need probably more clarity on the regulation and also on the criteria that will be, let's say, considered by the commission when it comes to the evaluation of the project. Pietro Buzzi: Let's see if there is -- what happens on the ETS side, I say tomorrow, but not tomorrow, I mean the so-called revised ETS by June, I know it's, if I recall correctly, let's see what happens there. Because still, we believe that the cost benefit of a carbon capture project is unjustifiable, let's say, today. So what you are focused much -- is -- and also to -- okay, if you build a totally new plant, but again, cost benefit very difficult to justify, it can make sense. I mean you build a totally new plant. You introduce also the carbon capture installation. But to add the carbon capture installation to an existing plant, which dates to maybe the 70s or the 80s, they are not bad, but let's say there's plenty of room for improvement in energy consumption and also fuel consumption before carbon capture installation. So we are a little bit shifting our focus on projects in countries like Poland or Deuna. Deuna, where we put on all the carbon capture projects to something that will reduce, let's say, maybe CO2 emission by 20%, 25% and modernize the plant. So being ready to possibly at a later time, which I think it will be inevitable because the deadline that are set today are realistic at a later time to introduce a carbon capture on a plant, which has already been optimized, instead of doing it on a plant, which is again 30 -- 40 years old. Lorenzo Coaloa: And maybe if I may add, with a return -- I mean, return on investment definitely much more interesting than a single installation, carbon capture installation with, let's say, a business plan, which is at the moment and with the current situation is not really flying. Pietro Buzzi: It's a better way to lower CO2 emissions for sure. Alessandro Tortora: Okay. Okay. Just if I may, sorry, you mentioned that the financial, let's say, income was not pretty high this year. Can you help us to quantify, sorry, the FX gain component in that number? Pietro Buzzi: Yes. Well, one item, which is included into that figure is also the bad will of the UAE acquisition, which is EUR 44 million positive. If you look at the fewer net interest expense and net interest income in this case, we have EUR 60 million and last year, it was EUR 55 million -- EUR 60 million, yes. Last year it was EUR 55 million. So it is EUR 5 million up. This is the cash portion. The noncash portion, the 2 big items are [ 75 ] of ForEx, so nonmonetary. And -- well, I don't know if it nonmonetary, the bad will because we paid anyway. So -- but we paid less than the equity -- book equity. And so we have [ 44 ] positive that we are also inside the same line item. Operator: [Operator Instructions] Mr. Buzzi, there are no more questions registered at this time. Pietro Buzzi: Okay. Good. Thanks, everyone, for listening. I don't know how many are still listening. But anyway, I hope it was somehow helpful. And we stay in touch, of course, with our Investor Relations team and looking forward to meet you personally in the coming months. Thank you. Operator: Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.
Operator: Greetings, and welcome to Aqua Metals Fourth Quarter 2025 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, [ Dan Scott ]. Thank you. You may begin. Unknown Attendee: Thank you, operator, and thank you, everyone, for joining us today. Earlier today, Aqua Metals issued a press release providing an operational update and discussing results for the full year ended December 31, 2025. This release is available in the Investor Relations section of the company's website at aquametals.com. Hosting the call today are Steve Cotton, President and Chief Executive Officer; and Eric West, Chief Financial Officer. Before we begin, I would like to remind participants that during this call, management will be making forward-looking statements. Please refer to the company's report on Form 10-K filed today for a summary of the forward-looking statements and the risks, uncertainties and other factors that could cause actual results to differ materially from those forward-looking statements. Aqua Metals cautions investors not to place undue reliance on any forward-looking statements. The company does not undertake and specifically disclaims any obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur, except as required by law. As a reminder, after the formal remarks, we will conduct a question-and-answer session. With that, I'd like to turn the call over to Steve Cotton, President and CEO of Aqua Metals. Stephen Cotton: Thank you, Dan, and good afternoon, everyone. I appreciate you joining us for Aqua Metals Fourth Quarter and Full 2025 Earnings Call. Today, I'll walk through what was an active and milestone-filled year for our company, covering how we evolved our technology, what we accomplished on the product side, how our strategic partnerships developed and the financial foundation we built heading into 2026. Eric will then follow with a detailed financial review. Let me start with the overall frame for 2025. It was a year in which discipline and execution went hand-in-hand. We made deliberate adjustments to our commercialization approach as market conditions evolved, cleared important technical hurdles, extended our platform with new strategic initiatives and put the balance sheet in meaningfully better shape than where we started the year. On the technology and product front, I would call 2025 the most expansive year in Aqua Metals' history in terms of what the AquaRefining process demonstrated that it can do. We grew the product portfolio. We raised the bar with product specs and proved the feedstock flexibility of our platform in ways that matter commercially and allow us to address the variability of material, not only in the battery recycling market, but beyond to include other markets like rare earths and undersea mining, for example. One of the most important strategic decisions we made this year was to sharpen the commercial scope of our first ARC facility. With the AquaRefining platform that's capable of producing a broader range of outputs, we made the deliberate decision to simplify the first commercial plant around 2 core feedstock streams, NMC black mass and LFP black mass. From those inputs, our initial commercial focus will be on 3 primary outputs: battery-grade lithium carbonate, nickel, cobalt mixed hydroxide precipitate or MHP, and iron phosphate. We have already successfully produced these materials at our innovation center, which gives us confidence that this is the right first commercial configuration. That decision is expected to reduce execution risk, shorten time to market, lower upfront capital requirements and support attractive unit economics and a stronger payback profile. In short, we are intentionally designing the first commercial ARC to be simpler, faster and more capital efficient to deploy while preserving the flexibility to expand the product slate over time as we scale. We believe that it is the right disciplined approach to commercialization and long-term shareholder value creation. On product quality, our team delivered results that we believe set a new benchmark for the recycling industry. Our lithium carbonate achieved fluorine levels under 30 parts per million, a specification that to our knowledge, places us at or above the quality standard for any recycled lithium source globally. Material meeting this threshold has been produced at meaningful scale and distributed to strategic counterparties for evaluation. The responses have been substantive and encouraging. On the broader product side, we generated product qualification representative volumes of multiple products and advanced those materials through partner qualification processes. We also developed nickel carbonate, producing initial samples calibrated to specific downstream partner requirements, which opens additional product pathways and gives us greater optionality as partner discussions mature. Now an LFP or lithium iron phosphate battery chemistry, which is cobalt and nickel-free, I want to get this attention it deserves because I consider proving that we can economically recycle this type of material is one of the most significant technical achievements in this company's history. We moved from engineering analysis and bench scale work on lithium iron phosphate recycling all the way through to processing an entire metric ton of LFP cathode scrap at our pilot facility. Recovering battery-grade lithium carbonate that was validated by OEM and third-party testing. That is not a lab result. That is demonstration at commercially meaningful scale. And because LFP chemistry is capturing an increasing share of both EV and stationary storage deployments, the ability to handle it gives our platform a decisive competitive advantage in terms of addressable feedstock. We also initiated trials on sodium sulfate regeneration, a process that could allow P-CAM producers to convert a problematic waste stream back into a usable chemical inputs, creating cost and sustainability advantages for our partners. And we extended our alternative feedstock testing to include nickel refinery residue alongside polymetallic nodule materials, rare earth-bearing magnets and e-waste, which underscores the core flexibility built into our electrochemical process. One achievement from 2025 stands out beyond the product and process milestones. We were central to producing the first cathode active material made entirely from recycled nickel sourced within the United States. That material has now entered qualification at a Tier 1 battery manufacturer. This matters not just as a technical accomplishment for Aqua Metals, but as a demonstration that a fully domestic closed-loop battery material supply chain is not a theoretical goal. It is something that can actually be built. As the field of players in this market continues to consolidate, we intend to be at the center of it. On the commercial development side, we advanced our ARC facility design to support a processing range of 10,000 to 60,000 metric tons of black mass input feedstock annually. That flexibility is intentional. It allows us to size the first commercial facility to the specific partner configuration and capital structure we ultimately bring together rather than being locked into a single predetermined scale. We also conducted structured due diligence on several candidate sites for the first commercial ARC, working through factors like feedstock proximity, offtake accessibility, utility infrastructure, permitting pathways and the strategic alignment of potential partners at each location. The process has been thorough, and we are in a good position to move forward with final site selection later this year as the remaining commercial conditions come together. And I want to be direct about the build decision because I think our approach is sometimes misread as a hesitation. In fact, this is exactly the opposite. We are not going to build before we are ready. And what ready means is contracted feedstock, committed offtake and project financing that is genuinely bankable. Our posture is simple: build once, build right and execute from a position of confidence. That approach protects shareholders and gives us the best possible path to a facility that ramps to profitability on a reasonable time line. We also remain actively engaged in diligence with Lion Energy around a transaction structure that we believe could be highly strategic and meaningfully additive to Aqua Metals. If completed, this opportunity would not only provide immediate commercial revenue and extend our reach downstream into branded energy storage systems across portable, residential, commercial, data center and industrial applications, but it would also position Aqua Metals and its shareholders to participate more directly in 2 of the fastest-growing segments of the electrification economy, distributed energy storage and domestic LFP battery manufacturing of cells. Importantly, through Lion's existing relationship with an equity stake in American Battery Factory, or ABF, this transaction would also bring with it a meaningful equity interest in ABF, creating exposure to the emerging U.S. GigaFactory build-out and LFP cell production market. We view this as a compelling strategic fit that could broaden our platform, advance our long-term circularity vision, enhance our commercial relevance and create additional pathways for shareholder value creation. We remain disciplined and thoughtful in our process, and we look forward to updating the market in the near term. Let me now turn to our partnership activity in 2025, which was broad and meaningful. I'll walk through the key relationships because the pattern they reveal is important. With 6K Energy, we formalized a multiyear supply agreement that establishes the commercial terms under which we would deliver battery-grade nickel metal and lithium carbonate into their domestic cathode active material manufacturing operations. This moves the relationship beyond technical collaboration and into a defined commercial framework, positioning Aqua Metals as a main supplier into a domestic CAM production chain. With Westwin Elements, we entered a nonbinding LOI outlining terms for a potential supply of recycled nickel carbonate that would support Westwin's efforts to build a domestic nickel supply chain. What makes this relationship particularly interesting is the downstream implication. We believe that a Westwin Aqua Metals commercial partnership and relationship can help stand up nickel production and refining capability on U.S. soil that simply does not exist at scale today. We also signed 2 MOUs that extend the AquaRefining platform into adjacent critical minerals territory. The first with Impossible Metals explores applying our refining process to material collected responsibly from the seafloor, feedstocks that contain nickel, cobalt, copper, manganese and rare earth elements. The second with Moby Robotics evaluates whether AquaRefining can be applied to polymetallic nodules with the potential to recover true rare earth elements as well. Both extend our platform well beyond battery recycling and into strategic areas of focus on critical minerals in today's world. I want to address the strategic logic here directly. These are not departures from our mission. The chemistry underlying AquaRefining, electrochemical refining of dissolved critical mineral streams is the same whether the feedstock originates from black mass, refinery residue, e-waste or deep sea nodules. The intellectual property travels. What these agreements do is extend our total addressable market and create optionality that a licensing and partnership-oriented business model can monetize without heavy incremental capital. Battery recycling remains our primary commercial path to these adjacencies, add strategic depth. We also continued active industry engagement at our Tahoe Reno-based Innovation Center and demonstration plant throughout the year, hosting the National Battery Conference, automotive OEMs, battery manufacturers, recyclers and upstream material suppliers for facility tours and technical reviews. The consistency of the feedback about the quality of our output and the operational sophistication of our pilot plant continues to build credibility in commercial discussions. And you can see some of that feedback on our blog, the current on our website. On the governance front, we made targeted additions to the Board of Directors, bringing in directors with specific expertise in growth strategy, commercialization and financial markets. These additions reflect where we are in our development, a company that is transitioning from technology validation to commercial execution, and the Board now reflects that stage appropriately. We also completed a CFO transition with Eric West stepping into the role of bringing both deep Aqua Metals institutional knowledge and a fresh financial perspective to this next phase. On intellectual property, the U.S. Patent Office granted allowance of a foundational patent covering key elements of our lithium battery recycling process. This is a significant addition to an already substantial IP estate and reinforces the long-term defensibility of the AquaRefining platform at commercial scale. We also filed a provisional application covering a novel low-cost leaching approach applicable to mined manganese ores and deep sea nodule feedstocks, which is further evidence of the expanding reach of our IP program. As we enter 2026, our priorities are well defined. We are advancing engineering and permitting work to support site selection for our first commercial ARC. We are deepening commercial negotiations with supply, offtake and project financing partners. And we are moving strategic partner qualifications for our lithium carbonate and MHP forward in a deliberate milestone-oriented way. The broader environment for domestic critical minerals has continued to shift in our direction. The policy and geopolitical case for building domestic battery material production capability has never been stronger, and we are increasingly recognized as a technically validated credibly financed player in that space. We have the process, the people, the operating demonstration plant and the strategic relationships to move from validation to commercialization. Now it is about refining that momentum into commercial results, and I am confident in our team's ability to deliver. With that, I will turn it over to Eric for the financial review. Eric, over to you. Eric West: Thanks, Steve. We'll now provide an overview of our full year 2025 financial results and balance sheet position. Given this is our fourth quarter and full year call, I will focus primarily on annual figures while noting fourth quarter specifics where relevant. Let me start with the balance sheet. We ended the year with cash and cash equivalents of approximately $10.8 million. The significant capital raise activity in 2025 is the most important context for understanding our year-end position. In October, we closed a $13 million investment from a leading institutional investor, combined with approximately $7 million raised through our ATM and equity line programs. Our total new capital raised in 2025 was approximately $20 million. This was a proactive raise made from a position of strength and strategic momentum, and it provides us with multiple quarters of operating runway and the resources needed to advance engineering, permitting and site selection work for our first commercial scale AquaRefining facility. I also want to highlight a key balance sheet improvement that I'm particularly proud of. We ended the year with no long-term debt. This is the result of the deliberate financial management decisions made throughout 2025, including the completion of the Sierra ARC asset sale in the second quarter and the associated retirement of the $3 million Summit Building loan. Having fully eliminated our debt, we entered 2026 with a cleaner, more flexible capital structure than we have had in years. Now moving to the income statement. I will cover the full year 2025 results with prior year comparisons where described. Total operating expense for the full year 2025 was approximately $23.3 million compared to approximately $23.8 million for the full year 2024. While total expenses were relatively consistent year-over-year, 2025 included approximately $9.1 million of impairment and loss on the disposal charges, compared to approximately $3.1 million in 2024. These impairment charges are nonroutine and noncash in nature. Excluding these items, underlying operating expenses declined meaningful year-over-year, reflecting the sustained cost discipline we have maintained throughout 2025, including the benefit of workforce reductions implemented in the prior periods while continuing to support our key technical and commercial development programs. We are running a lean, mission-focused operation. General and administrative expenses for the full year were approximately $10.5 million, down from approximately $12 million in the prior year. The decline was driven primarily by lower payroll and related costs following prior year workforce reductions, reduced professional fees and broader overhead efficiencies. For the fourth quarter, specifically G&A came in at approximately $3.8 million. Research and development expense for the full year totaled approximately $1.3 million, reflecting our continued investment in process optimization and product expansion, including lithium carbonate quality improvement, MHP production, nickel carbonate development and LFP processing capability. For the fourth quarter, R&D was approximately $0.4 million. While we maintain disciplined cost controls, we are intentional about funding the technical work that derisks commercialization and advances partner qualification. Every dollar spent in this area has a clear commercial purpose. Our full year 2025 net loss was approximately $22.6 million or negative $15.15 per basic and diluted share compared to a net loss of approximately $24.6 million or negative $38.25 per share for the full year 2024. For the fourth quarter, our net loss was approximately $4.4 million or negative $2.97 per share. These figures reflect the pre-revenue development stage of our business, and they continue to trend in the right direction as our cost structure matures. I want to take a moment on the year-over-year net loss comparison because the 2025 figures also reflect some noncash items that are worth noting for investors evaluating our underlying operating trajectory. Our 2025 results include noncash items associated with warrant liability remeasurement, impairment on disposal of property, plant and equipment and other noncash adjustments similar to prior periods. We are pleased that the core operating cash consumptions continue to trend lower year-over-year, which is a direct reflection of the cost discipline we have discussed on every call this year. Moving to the cash flow statement. Net cash used in operating activities for the full year 2025 was approximately $10.3 million compared to approximately $13.6 million in 2024. This improvement, a reduction of more than 24.8% year-over-year reflects our disciplined overhead management and the lower cost structure we have built over the past 18 months. Investing activities for the year primarily reflect the Sierra ARC building and equipment sale proceeds received in Q2, partially offset by minor fixed asset activity. In December of 2025, we also provided approximately $2.1 million of short-term financing to Lion Energy, which remained outstanding at the year-end as a note receivable. Subsequent to year-end in February 2026, we entered into a nonbinding term sheet contemplating the potential acquisition of Lion Energy and contributed the outstanding note along with an additional $2 million to acquire a subordinated position interest in its senior secured credit facility in connection with our evaluation of the potential transaction. On the financing side, the year was characterized by meaningful capital inflows from our October institutional raise and ongoing ATM and equity line activities, partially offset by debt repayment activity completed earlier in the year. Looking ahead, as Steve outlined, we anticipate a measured increase in cash usage as we ramp engineering, process optimization and site readiness activities in support of our first commercial facility. We will continue to manage our spending with rigorous discipline. Every dollar invested must advance a clear strategic and technical milestone. The focus remains on maintaining adequate liquidity, aligning investment pace with commercialization progress and ensuring we have the financial platform to reach our goals. The balance sheet improvements we achieved in 2025, eliminating debt, raising $20 million in new capital and continuing to reduce our operating cash burn has positioned Aqua Metals to approach 2026 from a place of genuine financial stability. We have the runway we need and we intend to use it wisely. That concludes my prepared remarks. I will now turn the call back to the operator for the question-and-answer session. Operator: [Operator Instructions] Our first question comes from Mickey Legg with The Benchmark Company. Michael Frederick Legg, Jr.: Congrats on another quarter. Just a couple here on the Lion Energy acquisition. Assuming that it does get approved and closes, just what are your main areas of focus near term and some of the most natural areas of synergy you see for Aqua Metals? Stephen Cotton: Yes. Mickey, good question. And yes, so first off, we're really been very deep in due diligence across all the key work streams associated with this acquisition. That's like inclusive of financial, legal, operational and commercial. And that's included everything from auditing the financials to completing a detailed independent market, product assessment across Lion's revenue, generating portable residential, commercial, industrial and data center offerings. So we've had -- the team is spending a lot of time talking about synergies with each other in each other's facilities and working closely through all the discussions. So on the process, it's been very active, very substantive, and we expect to bring it to a conclusion in the near term and update the market accordingly. And in a greater sense, what we see with the synergies is an integrated battery materials and battery energy storage company is much stronger than those that stand on their own. And that's because of the synergies you can get with the circularity with the ingredients that go into the batteries, the production of the batteries, inclusive of the ownership that Lion Energy has in American battery factory with their planned GigaFactory in Tucson, Arizona, and being able to put that all together and expose the shareholder, frankly, to the optionality of having a stock they can buy that is really a combination of energy storage, battery materials and GigaFactory production. It's much how it's done in China. And the one reason that China has been successful is by integrating these solutions and creating those kinds of synergies to reduce costs, increase efficiency and have a better story about the overall solution. So we're really excited about that opportunity to work everything out with Lion Energy and come out swinging is what we think will be the first integrated energy solution provider and battery materials provider in North America. Michael Frederick Legg, Jr.: Great. Okay. Okay. That's very helpful. And then just one more on the acquisition. And I want to understand a little bit better the equity stake it could bring in American Battery Factory, how does that fit in there? Does it just sort of align with your closing remarks there, your ending remarks about fitting into the domestic end-to-end battery ecosystem? Stephen Cotton: Yes. So definitely, the equity stake in American Battery Factory is a huge value creator and a huge synergistic opportunity. But American Battery Factory is planning a first GigaFactory in Tucson, Arizona. They've already secured the land about 270 acres, where we see synergistic opportunities as one of the sites we're considering to deploy our ARC facility at a commercial grade plus Lion Energy having some battery fabrication. So if you can think of like a single location that would have cells being generated, the agreement that we already have with American Battery Factory in an MOU form today, which is that we would take the scrap from that GigaFactory as an input to our recycling facility and get lithium carbonate right back to that GigaFactory. While right in that same area, you've got Lion Energy putting together really innovative battery energy storage products for the various segments of the marketplace I was talking about earlier. So the GigaFactory plays are large plays. And what American Battery Factory is seeking is the final phase of financing to get that GigaFactory started this year -- later this year. And those are hundreds of millions of dollars of investment -- based on project finance, we think our equity position would still be still quite meaningful post financing and a GigaFactory produces a heck of a lot of revenue and a heck of a lot of product that also adds to those synergies. So we really see that as a key aspect of our relationship with Lion Energy and American Battery Factories kind of tying that all together. Operator: I would now like to turn the call back to Dan to facilitate questions that were submitted online. Unknown Attendee: All right. Thank you very much. First question for Steve. Could you give us a site selection update? Where does the process stand? And when can we expect an announcement? Stephen Cotton: Sure, sure. So the biggest gating factors now are really site selection, project structure, lining up the right capital and commercial partners. And as we've already mentioned, we're in active due diligence on 2 specific potential sites, looking at things like feedstock access, logistics, utilities, permitting and of course, the overall economics of the project in that particular type of location. And our goal is to settle on and secure the lead site and then spend the balance of the year making real progress on site-specific FEL2 engineering. And that's really basically the stage where you move from concept into a much more defined and specific plant design down to every nut and bolt for that particular location, cost estimate and the execution plan to begin executing a bond. Unknown Attendee: Excellent. The second question, Steve, is what is the status of the feedstock market? There's been a lot of volatility in battery metal prices. How does that affect your commercial position? Stephen Cotton: Yes, great question. So today, effectively all of the black mass produced in the United States and really North America is being exported offshore, simply because there really aren't yet commercial scale refining options here domestically. And that's exactly the opportunity we're pursuing with the first build of our commercial ARC. The market does demand competitive payables for feedstock, but we believe our lithium AquaRefining process puts us in a very strong position because of its potential CapEx and OpEx advantages. And importantly, we're already working to diversify through both end-of-life batteries and GigaFactory scrap, as I mentioned earlier. And that includes our announced MOU, like I mentioned earlier, with American Battery Factory in Tucson. So we can take end-of-life and beginning of life batteries that didn't make it. And that's about half of the scrap of the overall material is GigaFactory scrap at this point in time. It's also important to note that the overall economics around refining black mass have improved meaningfully over the last year. A number of projects across the industry, which including ours, slowed or paused when lithium carbonate prices fell to around $8,000 a ton in 2024. With pricing now having recovered to roughly the $20,000 plus or minus range per ton, we think that creates a much healthier backdrop. And that's, in turn, a real opportunity for the remaining U.S. players and especially for Aqua Metals given the stage that we're at today. Unknown Attendee: Thanks, Steve. Next one we got is, can you talk about the LFP breakthrough in more detail? Why is it significant? And what does it mean for your business model? Stephen Cotton: Yes, great. As I mentioned in my prepared remarks, the LFP breakthrough is really about our ability to economically recover lithium while also recovering the iron phosphate into a reusable form. And that's really a big deal. LFP does not have nickel or cobalt to support the economics. So you really have to run an efficient process. And that's exactly where our lithium AquaRefining technology stands out. That matters not just for future end-of-life batteries, but for the growing volume of LFP GigaFactory scrap such as American Battery Factory already being generated today and what we expect from American Battery Factory as they come online. As LFP continues to scale across energy storage and EVs, we really think that puts us in a strong position to be a leader in the new LFP batteries. Unknown Attendee: All right. Eric, next one is for you. Can you expand on your liquidity position coming out of 2025? And how long is the current capital -- and how long your current capital supports your operations? Eric West: Yes, definitely happy to expand on that. Point to, we ended the year with $10.8 million of cash, no long-term debt and a lower operating burn. This has put us in a pretty strong position as compared to prior periods. We continue to exercise cost discipline as we continue to progress. And just to add some additional context, the capital raised during 2025 was about $20 million in total, which really helped us to strengthen the balance sheet and put us in a position to fund all of the work that we're doing now. So really that gives us the solid flexibility as we continue to move forward on the overall engineering site selection and our partnerships that we've discussed that really lead us to our first commercial facility. So overall, we feel good about where we are. The focus now is just continuing to be disciplined and making sure that we deploy the capital against the right milestones. Unknown Attendee: All right. A couple more. Steve, you've announced MOUs with Impossible Metals and Moby Robotics for deep sea mineral applications and also an LOI with Westwin Elements. How do these partnerships fit with Aqua Metals core business? And what do they look like commercially? Stephen Cotton: Yes. So at a high level, all of these partnerships are about applying our core AquaRefining platform to new sources of critical minerals and importantly, opening up to a very large high TAM market set access to that, where we can really monetize that capability. So we view them as directionally aligned and not a distraction at all. Whether it's black mass or GigaFactory scrap or primary resources like deep sea nodules or refining intermediates from partners like Westwin, the common thread is our ability to process these complex materials efficiently and with a lower environmental footprint and have access to the TAM of those gigantic markets in addition to battery recycling in our sites. Unknown Attendee: Okay. The last question we have is, Steve, how do you view the ongoing consolidation in the battery recycling industry? And does it create opportunity or risk for Aqua Metals? Stephen Cotton: So we view the consolidation overall as a net positive for Aqua Metals. The reality is that the lithium price collapse that happened in 2024 exposed which models were resilient and which were not. And at the same time, the industry is learning that simply copying China's chemical-intensive hydro approach into North America is really a very tough economic proposition. That's why we built AquaRefining differently from the beginning. And that is inclusive, again, as a reminder of vastly lower chemical intensity and costs, lower waste because we don't produce sodium sulfate waste streams. Whereas the incumbent China hydro process produces more sodium sulfate waste stream than product, we produce 0 sodium sulfate waste stream and don't have all the costs associated with it. And it's a process that we believe is much better suited to North American permitting and operating realities with safe jobs and a much more clean type of an operation without the cost in those waste streams. So as the weaker models fall away, we think that our position does become increasingly and interestingly more differentiated and stronger. Operator: Okay. Thank you. There are no further questions at this time. I'd like to pass the call back over to Steve for any closing remarks. Stephen Cotton: All right. Well, thank you, everybody, for listening in. And for those of you that are reading the transcript in the future, we look forward to continued communicating our updates in the near future as we continue to develop Aqua Metals and the rest of 2026. We're really excited to keep everybody in the loop. Thanks again. Operator: This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.
Operator: Good day, and welcome to the TOMI Environmental Solutions, Inc. 2025 Financial Results Conference Call. [Operator Instructions] It is now my pleasure to turn the floor over to your host, Zach Nevas from IMS Investor Relations. Zach, the floor is yours. Zachary Nevas: Thank you for joining us today for the TOMI Environmental Solutions Investor Update Conference Call. On today's call is TOMI's CEO and Chairman, Dr. Halden Shane; E.J. Shane, our Chief Operating Officer; and our Chief Financial Officer, David Vanston. A telephone replay of today's call will be available until April 7, 2026, the details of which are included in the company's press release dated March 31, 2026. A webcast replay will also be available at TOMI's website, www.steramist.com. Certain written and oral statements made by TOMI may constitute forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements should be evaluated in light of important risk factors that could cause our actual results to differ materially from anticipated results. The information provided in this conference call is based on the facts and circumstances known at this time. Please refer to our filings with the SEC, including our 10-K for the year ended December 31, 2025, for a discussion of these risk factors. The company undertakes no obligation to update these forward-looking statements after the date of this call. I will now turn the call over to TOMI's CEO and Chairman of the Board, Dr. Halden Shane. Halden Shane: Thank you, Zach, and thank you for joining us for our 2025 earnings report today. I am pleased to share our full year 2025 results and more importantly, our perspective on where TOMI Environmental Solutions is headed. While 2025 was a year that tested our patience, it was also a year that validated our technology, deepened our customer relationships and positioned us to execute on a meaningful revenue opportunity in 2026 and beyond. I want to walk you through the highlights with optimism I generally feel as I review the progress our team has made. The SteraMist Integration System, which is our SIS platform, achieved its first commercial installation at a leading CDMO in June of 2025. The milestone proved our concept and by year-end, we had 4 fully operational SIS enclosure installations. We closed the year with a signed purchase contract of $500,000 for a global biopharmaceutical leader in December for integration into sterile manufacturing pass-through fill boxes. In the same month, a leading cell and gene therapy manufacturer adopted SteraMist iHP for a commercial scale pharmaceutical facility, a landmark win in one of the fastest-growing sectors of life sciences manufacturing. We were selected by NASA Johnson Space Center for a biosecurity operation, and they have continued to express satisfaction with our technology's performance. We deployed critical resources to support wildfire recovery efforts in the California communities, demonstrating both our civic commitment and our operational agility. We secured a bid from a leading university in Rhode Island for our CES technology. That project has been completed and awaits factoring testing. In the eye health sector, one of our most prominent new platinum customers onboarded in Q1 2025 has grown to 2 active facilities, each using 5 SteraMist machines for sterilization procedures. A third site in Berlin, Germany is set to commence trials in June of 2026. This customer also operates under an open monthly BIT Solution order, exactly the recurring revenue model we are building. Our OEM partnership strategy is gaining serious momentum. Relationships with PBSC, ESCO and Steelco are embedding iHP directly into clean room enclosures, pass-through hatches and biosafety cabinets at the point of manufacture, creating a scalable distribution channel that expands our reach without proportionately increasing our direct sales cost. We successfully completed our first collaboration project with partner PBSC, the iHP pass-through, which exceeded decontamination cycle speed expectations and generated strong customer feedback. We have already begun a second PBSC project. We expanded into the agriculture industry through our partnership with Algafeed, who has committed to acquiring additional handheld units before the end of 2026 in food safety. The FDA's late 2025 approval of hydrogen peroxide as a direct food additive for multiple uses, including as an antimicrobial and bleaching agent is a watershed regulatory moment for us. We are now engaged with significant partners, including Danone and Nestle and are actively winning bids, both directly and through service providers. SteraMist iHP is demonstrating real-world efficacy across a wide range of food processing environments. We are actively pursuing a food contract notification or FCN and have identified 2 specific opportunities to enhance our efforts on a tailored FCN for powdered infant formula, which comes at the request of an existing customer. Additionally, we are awaiting approval of our -4 label from the EPA for our cannabis industry and other requested markets in our Food Safety division. We also plan to submit a -5 EPA label based on the studies conducted with Plum Island as previously announced. A landmark USDA study confirmed BITs efficacy against the formed wing virus for agricultural biosecurity in honeybees. In 2025, SteraMist was honored with the Disinfection Decontamination Products Company of the Year Award by MedTech Outlook. We achieved compliance, recognition across 3 safety vendor management platforms and are in the process of adding a fourth to support 2 ongoing integration projects at a well-known Baltimore hospital. Our customer service team is actively transitioning our larger base to open order policies for support service offerings and BIT Solution orders. The backlog of our orders for support services is up 16%, and BIT Solution is up 24% in the first quarter of 2026 compared to the same period last year, providing early and compelling indicators of increasing recurring revenue trajectory we are building. To our long-term supporters of our technology and company, we are pleased to announce that we're finally receiving approvals from the HSE and the BPR submissions, we are now officially recognized in the United Kingdom, including Wales and Northern Ireland as well as in the Netherlands. The recent approval in the Netherlands strengthens our confidence that other EU countries will soon follow suit. Our heart monitoring device project is nearing completion and is scheduled for factory testing next month. We are preparing to introduce our iHP device to the U.S. markets through the appropriate regulatory pathways, including the FDA 510(k) premarket notification process once testing is finalized. The success of receiving the FDA 510(k) means that we'll finally be able to go after the entire ethylene oxide sterilization market. The global ethylene oxide market was a $5.29 billion market last year. Key growth factors is a rising demand for sterilized medical consumables and improved healthcare infrastructure, particularly for hospital, labs and surgery centers. Our technology is protected by more than 30 utility and design patents through 2038, and is deployed in over 40 countries. We are entering 2026 with operational momentum, growing recurring revenue and expanding global customer base and a clear strategy to drive sustainable growth. Our focus remains on execution, converting our pipeline into recognized revenue while continuing to advance the technology platform that makes all of this possible. The pipeline that we have is the strongest we've ever had. Our first quarter 2026 revenue is greater than our first quarter of 2025. I will discuss some details in my conclusion today, but our entire opportunity book for integration projects remains at $16 million. The entire SteraMist iHP opportunity book is currently at $20 million. However, first, I will now hand the call over to our Chief Financial Officer, David Vanston, who will provide an overview of the financial results for the full year ended December 31, 2025, compared to the same period in 2024. David? David Vanston: Thank you, Dr. Shane. I will now walk you through our full year '25 financial results. Our complete audited financial statements are included in the Form 10-K we filed with the SEC and in today's press release. Revenue for the year ended December 31, 2025, was $5.6 million compared to $7.7 million in '24. The decline was driven primarily by the timing of customer equipment purchases. Service revenue remained relatively stable year-over-year, which we view as an indicator of the durability of our installed base. Gross margin improved to approximately 55%, up from 46% in '24, reflecting lower cost of sales and a reduction of inventory reserves compared to the prior year. Total operating expenses were $6.9 million, down approximately 10% from '24, reflecting disciplined cost management. The net loss was $3.7 million or $0.19 per share, an improvement from a net loss of $4.5 million or $0.22 per share in 2024. We ended the year with approximately $88,000 in cash. Working capital was approximately $1 million, and we used $1.2 million in operating cash during '25, an improvement from $1.4 million in '24. We have taken steps to address our liquidity position, including a $535,000 convertible note raise during '25, a $20 million equity line of credit with Hudson Global Ventures entered into November '25, from which we have made our first draw approximately $94,000 in February '26. We've done an effective S3 shelf registration for up to $50 million, and we've engaged Bancroft Capital to explore additional financing options. I encourage investors to review our Form 10-K in full. I will now turn our call over to our Chief Operating Officer, Shane to discuss upcoming business highlights. Elissa Shane: Thank you, David. As Dr. Shane highlighted earlier in the call, we are actively focusing on open BIT Solution orders and annual service offerings, leading to a higher open sales book metric. This initiative stems from our growth in personnel and operations, along with our enhanced comprehensive training program that prioritizes continuous recertification. This strategy not only elevates customer standards for implementation and safety, but also has the potential to drive additional revenue and foster deeper product adoption in the future. The sales performance of support services and BIT Solutions sales are expected to exceed 2025 levels as evidenced by the increase of 16% in the backlog of orders for TOMI Support Services and an increase of 24% in BIT Solution backlog of orders for the first quarter of 2026 compared to the same period last year. Dr. Shane also provided updated information on 2025 announcements for just a handful of customers. This includes anticipated orders from our aquaculture customer, a completed Custom Engineered System, or CES, for the Rhode Island University, 2 iHP chambers for the biopharmaceutical partner, a second order with our partner in Malaysia, and a third location in Berlin, Germany for the eye health company, which we expect will proceed with the same standard operating procedures as the first 2 sites. We anticipate approximately $3 million in sales among these 5 customers and the trends in support services and BIT Solutions sales for 2026. It's important to note that this projected $3 million in revenue includes approximately $920,000 that overlaps with the $3 million integration pipeline announced on November 26, 2025. When factoring in our iHP deployment services, which generates over $1 million consistently, we can confidently state $6 million in revenue just among 5 customers and 3 revenue streams for 2026. To date, approximately $800,000 has been recognized from the November 2025 $3 million integration pipeline. This amount originates from 10 distinct customer orders. Of these 10, 7 customers have formally placed the order. We anticipate final approvals from the remaining 3 accounts, and we have added 4 more integration projects moving towards CapEx approvals since the November announcement, which is anticipated to contribute another $2.3 million to our active immediate integration project pipeline. Our East Coast distributor, ARES Scientific, has been instrumental in securing multiple university wins for our SIS platform. We're actively collaborating with VWR, Avantor, engaging with all case managers and overhauling marketing initiatives with them. We are prioritizing the ongoing education and engagement of our international partners, investing in them to promote their own long-term customer base instead of expanding into new regions. This strategic focus, coupled with recent regulatory approvals, is expected to support our growth and positively influence our revenue. For example, we have successfully received HSE approval and announced a preferred partnership with Total Clean Air, or TCA in the United Kingdom, where we recently completed factory testing on a custom engineered project that they brought to us. TCA has also invested in mobile equipment in quarter 1, 2026 to support their demonstration and service deployment capabilities. The food safety sector is also beginning to gain momentum, and we're receiving valuable referrals and case studies from our current clients. This industry uses our SteraPak product or requires custom applications, indicating that we are still in the early stages of realizing significant revenue. Additionally, there remains much work to be done on the regulatory front. For example, Nestle's pending expansion waits for other international registrations outside the ones received in the European Union. One of the most exciting developments comes from our long-standing relationship with Disinfectant Care, which has secured a service contract at a major dairy facility in Mexico. Following customer-specific testing and studies conducted on site, SteraMist iHP not only demonstrated its efficacy, but also showed the preservation of cheese quality, a key finding that strengthens our credibility and served as a valuable referral for other new customers. In summary, we are now making strides across a diverse range of sectors in the food industry. We are used in cheese, eggs, coffee, ice cream, consumer packaged goods, cannabis, nutrition, vertical farming, pet food, food ingredient suppliers, refrigerated foods and specialty ingredient suppliers. This is broadening of our market presence positions us well in the industry. Another significant area of focus for us, which we believe is expected to see returns in 2026 is the biological safety cabinet or BSC industry, particularly regarding our service providers and the SIS stand-alone system. We have developed the necessary accessories and protocols for treating all classes of cabinets, a progress required as we prepare for NSF approvals this summer. Currently, we have certified service providers utilizing our SteraMist iHP technology, including [ Triumvirate ] and MarathonLS on the East Coast as well as HEPA in Canada. On April 2, we conducted a key demonstration with one of the most recognized providers in the industry who operates multiple locations across the United States. Triumvirate hosted a webinar this quarter where they showcased how iHP technology outperforms key competitors in the market, including Spor-Klenz, Formaldehyde, and Vaporized Hydrogen Peroxide. This webinar was well attended attracting approximately 250 participants. Ultimately, our goal is to enable these service providers to compete effectively by incorporating iHP technology into their offerings for BSCs. They appreciate this innovation because it allows them to complete more treatments in a single day compared to older technologies. In addition, we maintain a robust intellectual property portfolio, CE and UL listings and are preparing to pursue USP 1072 material efficacy, which will expedite our sales process in the life sciences market. Furthermore, we are committed and continued to conduct customer-specific studies that help us secure contracts and maintain the client roster we hold, such as those highlighted today. I will now return the call back to our CEO, Dr. Halden Shane. Halden Shane: Thank you, EJ. I want to take a moment, maybe even more of a moment and express deep appreciation to the majority of our shareholders who supported us and have believed in our mission through our highs and lows. You are the majority and our long-term investors. Thank you for supporting our team and most importantly, believing in our technology and products. I believe at the start, we all knew this was not going to be easy because we're creating a new standard in many industries, and it's very hard to accomplish being undercapitalized makes it even harder. But we are on the verge of accomplishing the impossible. To the handful of naysayers, we believe we'll be able to earn your support, and we continue to execute a deliberate strategy to expand our operations and improve our financial performance. If not, then maybe it's the wrong company or you need to see a professional. It was a tough year for us from the financial perspective, but we remain focused the whole time on the future. In my eyes, there are no excuses, but were definitely roadblocks. Those roadblocks included DOGE, tariffs, working capital and recently the war. We chose to become the standard in the pharmaceutical, life science and university vivarium market. Unfortunately, some of the negatives of becoming a standard in that market is the perfect storm that occurred in 2025. Like there was panic buying behind the 2020 COVID, there was a lack of buying in the 2025 due to the reasons I stated above. Just recently received an e-mail from a major university that everybody knows on the West Coast of the United States. They were putting off a purchase until the end of 2026. The reason they had to postpone the purchase was because of DOGE, tariffs and political uncertainty, including the war. Also, that person stated there was an uncertainty maybe about her job. But no matter, we are a team, and we can overcome situations like that. And I can assure it's all temporary. The university will purchase this year even if it's a new professional in that job position. I did a review of our stock over the last 10 years. I choose certain points because it was approximately when we received our hospital health care EPA registration and had marketing in place. The key metrics are pretty amazing. In 2014, revenue was about $2.2 million. Our stock price was $2.16. Our major clients was a Panamanian hospital and a group in Mexico trying to sell to Mexican hospitals. In 2020, we had a banner year. Unfortunately, it was due to the pandemic. We did $25 million, demonstrated that we're capable of handling that volume of business. It did take away from the focus on the life science industry, pharmaceuticals, et cetera, but most of that was temporary panic buying. Our stock price was $4.57. In 2024, our revenue was approximately $7.7 million. Our client list was pretty impressive compared to 2014, and our stock price ended up at $1.05. The next year, 2025, our sales was $5.6 million. The sales that we could recognize as revenue, obviously, as you know, the sales were much higher, as we stated, provided in our pipeline with open significant orders for the first time moving across into 2026. As stated previously, we were confronted with tariffs, DOGE, political uncertainty. We closed the year with a stock price of $0.78. Now we're in 2026. It looks like our first quarter, which includes recognized revenue and open orders, could be $3 million or higher. Not sure how this ends up playing out later today. But for sure, we're beating our first quarter 2025 revenue in the first quarter of 2026. Our stock price is around $0.55. We estimate our revenue for this year will be around $12 million, bearing any unknowns. In 2020, we did a reverse split. Today, that $0.55 comes out to be about $0.0688 pre-split. So here's a short list of our current clients. Pfizer, Merck, Thermo Fisher, Fresenius Kabi, [ Allogene ], Boehringer Ingelheim, Catalent, CSL, [ Seqirus ], ITH Pharmaceuticals, Nestle Purina, Mead Johnson, [ Ziegler ], Simplot, Perdue AgriBusiness, Kindred Health, Mercy Health, Novant Health, St. Jude Children, Gila River Health Care, FDA, USDA, CDC, NIH, DHS, USAMRIID, [ Armitron ], ESCO, [ Telestar ], ServiceMaster, First Onsite, Avantor, Tecumseh. In retrospect, do you think a company like TOMI with that list is worth $0.0688 only? My point here is our stock price was $2.14 when we had 2 customers, 1 in Panama and 1 in Mexico. I remember a statement from a very successful person, Warren Buffett, "be greedy when others are fearful." That statement couldn't be true today about our company. I choose to run this company making a decision that many CEOs will never make. And that's because it hurts before it pays. I stop relying on easy sales and onetime equipment and build something from a more potent recurring control over how customers operate. The shift does not show up cleanly on quarterly charts. It shows up as a service revenue climbs and consumables replace capital purchases. Our customers stop buying, they start attending. That is where the game changes. We are not growing very fast, but we are growing very smart. Our company has moved from episodic revenue to embedded revenue before a deal closes, the relationship reset. Not every deployment creates a tail, more usage, more replacement, more service. This is not a product business anymore. It's a system. Recurring revenue isn't about stability. It's about control. Most executives say they want predictable revenue. What they actually want is predictable revenue without sacrifice. We took the hit upfront. Volatility increased, revenue looked uneven. Margins had to be rebuilt. But underneath the engine changed. Short-term policy facility is often the price of long-term dominance. Instead of building expensive infrastructure scale globally, we use distribution channels and partnerships to expand and reach without expanding costs. International revenue became a large slice of the pie without dragging down the balance sheet. That's not expansion. That's leverage we used. Scale without cost is the cleanest form of growth. At the same time, we wanted the business towards higher-margin solutions and service -- services. That's our razor-razor blade model, not louder, not last year, just better economics. The following current numbers could possibly change, but the point I want to make is that at this moment, our economics, of course, is first based on sales of equipment revenue, but our scaling and cleanest form of growth is solution sales, support service and iHP in-house service. Quarter 1 of 2025, we did $299,000 change in solution sales. In quarter 1 of 2026, at this moment, our solution sales are $429,413. As far as support services in quarter 1 of 2025, we had 73,279. Currently, in the first quarter of 2026, we have 253,390. In support services, these are such things as training, certifications, qualifications, validation cycle developments, installations, et cetera. And the third part, iHP service. In the first quarter of 2025, we had $439,386. Currently, with invoice and open orders, we have a total of $729,440. Margins improved, mix improved, the business became more resilient without announcing it. We were able to figure out how to achieve success by having money actually compound. Do you keep chasing revenue to reset every quarter? Or do you endure short-term pain to build revenue that compounds without permission. That decision defines whether you're playing offense or playing survival. We didn't eliminate risk. We repositioned it. In doing so, we created something more valuable than growth. We created dependency in a world chasing speed. We chose structure and structure wins. I can't take the credit for all this writing. I want to thank [ Joel Block ] for understanding how we have created this company and understanding the suffering we've gone through. Once again, I want to thank everyone for their long-term commitment and support and for a small team of 20 working endlessly to achieve all the goals. I also want to thank our creditors who've been super as we go through the stage of growth. At the end, the warriors that have helped us achieve success. Also, I'd like everybody to pray for our brave soldiers that are in difficult situation. To all that are listening, we're excited about what's ahead. Operator, let's open the call to questions. Operator: [Operator Instructions] And the first question today will be from [ Carl Wright from Lonetown Capital ]. Unknown Analyst: So first question, could you provide some more insight into the global opportunities you mentioned in the quarter? Elissa Shane: Yes. Hi, Carl. Certainly. So the first of the EU registrations on the submission we did came in, so we expect many other EU states to follow suit within the next upcoming months. And with that, we have been positioned with current relationships and distributors from Poland, Germany, Netherlands that have been around our technology and really educated to be able to take on the opportunities that have been waiting for just that registration. So just as the U.K. did once the HSE came through earlier in this quarter with bringing on TCA and quickly being able to fulfill our first custom engineered system, I see that happening with the other regions in the EU. Unknown Analyst: Got it. And then congratulations on bringing down operating expenses by 10%. Could you provide a little more color about how we should think about operating expenses in the business just going forward? Halden Shane: Sure. David, go ahead. David Vanston: Sure. I think the -- again, as Dr. Shane mentioned earlier, as we grow, we will have to invest into our operating expenses, but we already have leverage in it. So we do not expect to see a significant jump in our operating expenses. You should -- if you're going to model it, you would model it as a percentage of revenue growth. But I would say it would slightly decrease as we grow as a percentage. Operator: [Operator Instructions] The next question is coming from John Nelson. John is a private investor. Unknown Attendee: Several questions. First one, I'm one of those long-term investors that... Halden Shane: I know you are. Unknown Attendee: Is -- confident that over the years you're going to deliver. So thank you. Thank you for your... Halden Shane: And I thank you for your help. Unknown Attendee: First question is, you mentioned in the press release in '25 versus '24 revenues, customers deferring, capital expenditure, projects due to uncertain economic environment with the impact of tariffs and Middle East crisis. Are you seeing any signs of -- and you must be seeing some signs of it improving because of your first quarter comments. But are you seeing any of those customers that were deferring CapEx projects starting to move on them? Halden Shane: We are. Unknown Attendee: Okay. And then the BIT Solution revenues for '25 versus '24. Can you provide any details on the comparisons there? Halden Shane: Sure. Are you talking '24 versus '25 or '25 versus '26? Unknown Attendee: No, '24 versus -- '25 versus '24. Halden Shane: Okay. EJ? Elissa Shane: Yes. There's an increase in the solution between '24 and '25, and we're seeing that continue into '26. A lot of it has to go in with Dr. Shan's closing and this moved into open orders. And this came in tandem. About 1.5 years ago, we mentioned a big push on different support services. And having us be able to go on site and speed up the use of our technology and qualify different areas, we're able to predict how much solution they're going to be able to use. So that, in essence, is now finally starting to pay off with them purchasing the orders that they need in advance and just get into more of an auto shipment. So that's the goal, and it's starting to come into play. It started at the end of 2025, and it's moving into this year as well. So that's the big difference. And the 2, why it's referenced in the script that way is because they go in hand. Our support services and our BIT Solution are definitely together in trends. Unknown Attendee: Okay. And then are most of your customers in '25 using more -- significantly more BIT Solution than they did the prior year? Elissa Shane: Yes, definitely. I mean there's always some fluidity to it because you'll have our service provider shift -- if there's -- the fires produced a lot of solution in Q1, different decommissioning of buildings if they get large -- large service contracts, then this definitely increases our solution. So that's a little harder to predict. But when we're able to go in and qualify different spaces or similar to the eye health company where we know how and exactly where they're using the equipment, that's a little easier. But the Q1 of last year certainly was due to some emergency use. So there's definitely an increase in solution. Unknown Attendee: Okay. And then on -- can you provide any more detail as far as how the application would be used to deal with the wing syndrome for honeybees? Elissa Shane: So we do -- we have the study, and we've done a few other lab type studies, and it's definitely a good use, and we're looking and are still speaking with a local university on trying to get live use case. Once we're able to reestablish that and actual application use, it will proceed from there. Halden Shane: So John, I've reached out to the associations, the honeybee associations, domestic, globally. I've reached out to the Board, and I've yet to get a reply and with overwhelming evidence of what we can do and how we can help the pollinators around the world. And right now I'm reaching out to the Department of Agriculture to see if they can help or at least get this technology in front of somebody that wants to make a change. Unknown Attendee: Okay. And then you had mentioned briefly the use for treating marijuana plants? Halden Shane: Right. Unknown Attendee: Is it mites -- or is it for the powdery mildew? Halden Shane: It's for powdery mildew funguses on the plants. We have an EPA label we're trying to get from the EPA just for that. Is that - 4, EJ? Elissa Shane: Yes, that's correct. Unknown Attendee: Okay. And -- but currently, you're not getting any revenues yet from that particular type of usage, correct, because of the need for the EPA label? Halden Shane: I think, EJ, you can answer that. I think there were some... Elissa Shane: There's a handful of customers. With them, it's scaling up. And right now, they're doing a lot of handheld treatments, but we do have a good partner that is promoting our product and even some international interest on the treatment. But we do have some wide use, which is great, and that usually is the first step. Unknown Attendee: Okay. Good. And then one thing that I've been curious about is and whether you've explored or thought about exploring it is uses of SteraMist in the military. And I was thinking about it with regards to the Middle East crisis with all of the Navy ships and the -- in the Gulf and how people are crowded together. It's got to be a potential breathing around for germs and potential infections transfer. So has that -- have you explored that at all or ever talked to the Navy about possible usage of SteraMist? Halden Shane: So the Navy has been -- are they still a customer, EJ? Unknown Attendee: No. Well, are they -- if they are a customer, that's new to me, but have you explored uses with it? And if you have, what response have you gotten from the military? Halden Shane: I think we're a little too small and overwhelmed with everything to go after that at the moment. But I believe there was a testing center that the Navy was involved with. It's a great idea and especially with the new COVID variant that seems to be running around and came from the Netherlands to the U.S., I'm sure that you're right of the close proximity on these ships, they do need to get a disinfectant. And I think this is something that we're going to go look into immediately. Elissa Shane: And we have completed some request for information on the grant government site for military vehicles and how to best implement SteraMist. So they are creating information that way, but that does take quite a bit of time. But we do complete those on a regular basis to get the [indiscernible] out there. Unknown Attendee: Okay. And I don't know if there is a particular certification required, but I was thinking the same thing about SteraMist application possibilities for military hospitals or the VA, which, as we know, has a number of problems with infectious disease transfers. Halden Shane: I think they're waiting for me to answer, John. Elissa Shane: Sorry, I don't -- not anything specific. I think [ almost ] to that. We do have a closed service provider been into military housing, but too early to speak about. Unknown Attendee: Okay. And my -- one of my final questions was going to be on scale up. If you do get a significant amount of new orders, how easy or difficult that would be for you? Halden Shane: Well, it's -- again, we probably need to raise some capital to scale up significantly. The 20 people we have do a hell of a job as a team. We were able to handle COVID pretty much with the same amount of employees, and we did really well. So I think we could handle the immediate scale up depending upon the equipment, but we definitely need to go ahead and increase the size of the company going forward in lots of divisions. Unknown Attendee: Okay. Good. And then last question was a number of -- have you actually total them up as far as the number of new customers added net in '25 versus '24? Halden Shane: I haven't -- David, EJ, have any of you done that? David Vanston: No. Elissa Shane: Not based on new customers, no. Definitely -- individual orders between the years, but... Halden Shane: I think we'll do that, John, and I'll talk about it on the call coming up soon in 6 weeks. Unknown Attendee: Okay. I mean you definitely have listed a number of new names that I hadn't heard on previous calls. So -- but I was just curious about... Halden Shane: Yes, I know. And I left out half of them, too, but it was impossible to go through them all. It's just frustrating to see what happens to the stock and what occurs with the difference. So the point, I think, was well made, and we'll see what goes on. Unknown Attendee: Okay. And then as far -- you've done an excellent job of adding significant distributors, both domestically and internationally. Do you -- is that still a significant part of efforts going forward to add even more distributors? Halden Shane: Absolutely. We're in talks right now with many. Operator: There are no other questions at this time. I would now like to turn the call back to Dr. Halden Shane for closing remarks. Halden Shane: Okay. I just want to thank everybody again and wish everybody a happy Passover and happy Easter. Thank you, operator. Operator: Thank you. This does conclude today's conference. You may disconnect your lines at this time, and have a wonderful day. Thank you for your participation. Halden Shane: You too. Thank you.
Operator: Good afternoon. My name is Dave, and I will be your conference operator today. At this time, I would like to welcome everyone to Jushi Holdings, Inc.'s Fourth Quarter and Full Year 2025 Earnings Conference Call. Today's call is being recorded. I will now turn the call over to Trent Woloveck, Co-Chief Strategy Director. Thank you. Please go ahead. Trenton Woloveck: Good afternoon, and thank you for joining us today on Jushi's Fourth Quarter and Full Year 2025 Earnings Conference Call. My name is Trent Woloveck, and I am the Co-Chief Strategy Director at Jushi Holdings, Inc. With me on today's call are Jim Cacioppo, our Chairman and Chief Executive Officer; Michelle Mosier, our Chief Financial Officer; and Jon Barack, our President and Chief Revenue Officer. This call is also being broadcast live over the Internet and can be accessed from the Investor Relations section of the company's website at ir.jushico.com. In addition to the company's GAAP results, management will provide supplementary results on a non-GAAP basis. Please refer to the press release issued today for a detailed reconciliation of GAAP and non-GAAP results, which can be accessed from the Investor Relations section of the company's website. Additionally, we would like to remind you that during this conference call, we will make forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. Although Jushi believes our estimates and assumptions to be reasonable, they are subject to a number of risks and uncertainties beyond our control and may prove to be inaccurate. We caution you that actual results may differ materially from any future performance suggested in the company's forward-looking statements. The risk factors that may affect actual results are detailed in Jushi's Form 10-K and other periodic filings and registration statements, which may be accessed via EDGAR and SEDAR as well as the Investor Relations section of our website. These forward-looking statements speak only as of the date of this call, and Jushi expressly disclaims any obligation to update this forward-looking information. I will now turn the call over to Jim. James Cacioppo: Thank you, Trent, and thank you, everyone, for joining our call today. This afternoon, I will provide a high-level overview of our performance for the fourth quarter and full year 2025, followed by an update on our recent refinancing. I will then discuss key regulatory developments, including progress towards adult use in Virginia before turning to our operational execution across the business and broader industry dynamics. I will conclude with a review of the regulatory landscape across our key markets before turning the call over to Michelle for a detailed financial review. Beginning with our financial results, revenue for the fourth quarter was $68.3 million, representing year-over-year growth of approximately 4% compared to the fourth quarter of 2024. On a full year basis, revenue increased to $262.9 million, up just over 2% from 2024. While the top line growth remains modest, these results reflect continued stabilization across our retail footprint. Contributions from new stores opened throughout the year and enhanced product availability and quality driven by improved operational execution at our grower-processor facilities. Gross profit for the fourth quarter was $28.6 million, representing 41.9% of revenue compared to $25.4 million or 38.6% of revenue in the prior year quarter. For the full year, gross profit was $114 million or 43.4% of revenue compared to $118.3 million or 45.9% of revenue in 2024. While margins were down modestly on a full year basis compared to 2024, the year-over-year improvement in the fourth quarter reflects the benefits of ongoing operational improvements at our grower-processor facilities, which have driven product quality improvements, yield and potency gains and better product mix. These benefits were partially offset by promotional retail activity amid ongoing pricing pressure in certain markets. Adjusted EBITDA for the fourth quarter was $13.9 million, representing a margin of 20.4% compared to $8 million or 12.2% in the prior year period. The improvement reflects the cumulative impact of the operational turnaround we began executing in late 2024, continued discipline around cost structure and better utilization of our production footprint as well as $3 million of employee retention credits recognized in the quarter. For the full year, adjusted EBITDA increased to $50.3 million, up from $46.2 million in 2024, with margin expanding to 19.1% from 17.9%. Full year results include approximately $10.6 million of employee retention credits recognized during 2025. Building on this strong operating foundation, we took an important step subsequent to year-end to strengthen our balance sheet and position the company for the next phase of growth. On March 27, 2026, we refinanced our existing term loan and second lien notes, which had outstanding principal balances of approximately $46 million and $86 million, respectively, and were scheduled to mature within the next 12 months. We completed the refinancing through the issuance of a $160 million first lien secured term loan due in 2029 with a 12.5% coupon structured as interest-only payments over the 36-month term. The proceeds were used to fully repay the existing term loan and second lien notes, including accrued interest and related fees with excess proceeds to be used for general corporate purposes. The transaction was completed with the participation from a syndicate of lenders, including our 2 largest shareholders, myself included. As part of the refinancing, I contributed additional capital, increasing my overall position relative to my prior participation in the first and second lien debt, reflecting my continued confidence in the strength of our business and our long-term strategy. Overall, the refinancing strengthens our balance sheet and improves our financial flexibility. Importantly, this financing was completed without issuing any warrants or equity-linked securities, unlike prior debt transactions, resulting in no dilution to shareholders. Additionally, the new term loan provides $13 million of incremental liquidity to our balance sheet and includes a single financial covenant requiring the maintenance of a minimum cash balance, which we believe provides a meaningful flexibility going forward. With a stronger balance sheet and improved liquidity in place, we believe the company is well positioned to capitalize on several growth opportunities ahead, including the anticipated transition to adult use in Virginia. In Virginia, several bills were introduced during the 2026 legislative session, including HB642 and a Senate companion SB542 as well as SB671 that established the framework and sequencing for a regulated adult-use market. Earlier this month, the Virginia legislature reconciled the competing bills via conference committee and sent the final bill to the governor for her signature. Under the reconciled bill, all existing medical operators will transition to a dual-use license with applications expected to be released on or before September 1, 2026, and license issuance on or before December 1, 2026. Converted licenses will pay a $10 million conversion fee subject to an agreed-upon payment plan with the regulator. Retail sales are expected to commence on January 1, 2027. We are encouraged by the regulatory process made and are very excited about the opportunity to transition Virginia to adult-use sales on January 1, 2027. In preparation, we are expanding cultivation capacity at our current facility and exploring development of a second cultivation site to support future demand. Importantly, our manufacturing and retail infrastructure are currently prepared to support adult-use sales with minimal incremental capital investment. In markets that have expanded from medical only to also allow for adult-use sales such as New Jersey, the overall market increased significantly following the transition. Based on publicly available data, when comparing annualized medical sales prior to the launch of adult-use with the first 4 full quarters of adult-use sales, total market revenue increased by approximately 3.2x. Assuming a similar market response, we would expect Virginia to experience comparable growth as adult-use sales begin. We also want to thank Speaker Scott, Madam Chair Lucas, Delegate Krizek, Senator Aird and countless others for their leadership in advancing this legislation and positioning Virginia to become the first southern state to pass an adult-use cannabis program. We are hopeful that Governor Spanberger signs the bill within the next couple of weeks. Stepping back, 2025 was a year of execution and recovery relative to 2024. We focused heavily on rebuilding operational consistency, improving product quality and aligning capital allocation with high-return opportunities. While the macro environment remains competitive and price constrained, particularly in adult-use markets, we believe the business is now meaningfully stronger than it was a year ago. From a macro perspective, the competitive landscape remains tight. Pricing pressure persists across most markets, driven by supply imbalances and consumer value sensitivity. At the same time, enforcement against illicit and intoxicating hemp products remains uneven in certain regions, and we continue to engage constructively with regulators and policymakers on these issues. Against this backdrop, our strategy remains centered on execution, quality and disciplined capital deployment, prioritizing margin, cash flow and long-term value creation. Operational execution at our grower-processor facilities was the most important driver of improvement in 2025. Investments in genetics, facility upgrades and enhanced cultivation and production practices translated into materially better yields, higher potency and improved product consistency. In the fourth quarter, average yield across the portfolio increased approximately 28% on a per square foot basis year-over-year, alongside an increase in [ AB bud ] flower production across the portfolio. Potency remained strong in the mid- to upper 20% THCa range. Together, these improvements supported a more favorable product mix across both our retail and wholesale channels. We continue to deploy high-return capital into our grower-processor footprint to meet current demand in Virginia, Pennsylvania and Ohio. In Virginia, we brought one additional flowering room online during the fourth quarter of 2025, adding approximately 3,000 square feet of canopy within our existing footprint. Additionally, we are planning to add 2 more flowering rooms of similar size within the existing footprint over the course of 2026 and early 2027, increasing canopy by approximately 33%. In conjunction with this canopy expansion, we are adding hydrocarbon extraction capabilities to support a broader mix of higher-value concentrate products, process more throughput and expand product selection for patients and consumers. We are also in the design phase for a new 65,000 square foot warehouse expansion in Virginia that would roughly double our canopy there and support expanded processing capabilities. In parallel, we are evaluating a potential expansion of our mortgage and other possible traditional financing options to support this build-out. In Pennsylvania, Phase 1 of our cultivation expansion involved converting a legacy flower room into 3 modernized flowering rooms, effectively creating new productive capacity. Two of those rooms completed their first harvest in January, and the third room is on track to complete its first harvest shortly. Phases 2 and 3 involve reengineering unutilized space with the potential to add approximately 4 additional flowering rooms and increase total canopy by roughly 40%. We have begun ramping up Phase 2 by completing targeted prework and other sequencing activities while deliberately limiting capital deployment at this stage. This approach is intended to shorten the time line required to bring capacity online once there is greater visibility into adult-use sales in Pennsylvania. Importantly, these activities are being funded from our existing balance sheet, and we would not pursue additional financing to fund these projects until there is clear regulatory direction. In Ohio, canopy increased approximately 2.4x year-over-year, allowing us to expand production capacity while maintaining quality and consistency across the facility. We are in the design phase for a warehouse expansion that would add additional canopy, though we would only proceed if market conditions and cost of capital are favorable. Turning to retail. Since the end of the third quarter of 2024, we have added 8 retail locations through the end of 2025, including Toledo, Oxford, Warren, Mansfield and Parma in Ohio, Linwood in Pennsylvania, Peoria in Illinois and Little Ferry in New Jersey. As of year-end, we operated 42 retail stores across our footprint. Subsequent to year-end, we opened an additional location in Springdale, Ohio in January of 2026, and we entered into an agreement to sell our Peoria, Illinois location, subject to regulatory approval. We are actively evaluating 4 to 5 potential store relocations to improve profitability, and we continue to evaluate retail license and store acquisition opportunities in Ohio, Massachusetts and New Jersey. We will not be moving forward with the previously contemplated Mount Laurel, New Jersey location following our termination of the underlying transaction. At year-end, Jushi had approximately 1,288 employees compared to 1,234 employees at the end of 2024. During this time, we grew from 38 stores to 42 stores while maintaining lean staffing levels and driving productivity improvements across the network. While our store count increased by approximately 11% year-over-year, headcount only increased by approximately 4%, reflecting our ability to scale efficiently. The performance underscores the effectiveness of our corporate and retail operating model and the execution of our leadership team. Commercially, we are evolving into what we believe is a genetics-driven product strategy. We've made substantial progress building a robust genetics pipeline and rolled out new strains across all our grower-processor facilities in 2025, with plans to refresh approximately 20% to 30% of our cultivator menu annually. We believe this disciplined approach to genetics supports product differentiation and strengthens our competitive position across markets. We also continue to see growth in our private label portfolio during the fourth quarter, supported by ongoing innovation across both emerging brands such as Hijinks and Flower Foundry and established brands such as Seche and The Lab. During the quarter, we added approximately 280 new unique SKUs, including new offerings across these brands. These launches reflect our continued focus on refreshing assortments, expanding premium and value offerings and meeting evolving consumer preference. As we aim to provide patients and guests with enhanced variety and as part of our ongoing focus on retail execution, we are exploring an e-commerce AI agent to drive growth, further optimize online ordering and recommend our expanded product offerings. On the regulatory front, in Pennsylvania, the state continues to face a significant budget gap and progress toward passing an on-time and balance budget remains an ongoing challenge. While adult-use legalization efforts have not yet produced enacted legislation, there has been movement on establishing a dedicated regulatory framework for cannabis oversight through SB 49. During the fourth quarter, bipartisan legislation to create a stand-alone Cannabis Control Board advanced out of the Senate Law and Justice Committee and is now awaiting consideration by the full Senate. The proposed Board would oversee the existing medical marijuana program and align state regulation of intoxicating hemp products with federal regulations. We continue to monitor these developments closely as regulatory clarity will be important for long-term planning. In Virginia, in addition to the adult-use bill, legislation was passed strengthening enforcement around intoxicating hemp products via SB 543, which enhances the enforcement authority and HB 26 and SB 62, which updates unlawful cannabis criminal penalties. In Ohio, the state enacted SB 56, which updates the regulatory framework for cannabis and hemp products and effectively restricts the sale of intoxicating hemp products to licensed marijuana dispensaries. This legislation, which was signed into law in December of 2025 and became effective in March 2026 is intended to close existing loopholes strengthen enforcement by state regulators and federal agencies and direct THC-containing products into the regulated dispensary channel. We believe these changes should support a more consistent and regulated marketplace over time. In Massachusetts, lawmakers have advanced proposals to update the state's cannabis regulatory framework, including legislation passed by the House that would increase the number of retail licenses a single operator may hold, potentially allowing up to 6 locations over time. The Senate has proposed a smaller increase and the chambers continue working toward a final version. If enacted, these changes could support greater consolidation and influence competitive dynamics in the market. At the federal level, there has been incremental progress toward addressing the hemp regulatory gap created by the 2018 Farm Bill. In November 2025, Congress enacted legislation that narrows the federal definition of hemp, restricts synthetic intoxicating hemp-derived cannabinoids and establishes new limits on THC and finished products. These changes are scheduled to take effect in November 2026. We believe these measures could help direct intoxicating THC products into the state-regulated cannabis markets over time, though the timing and broader regulatory framework continue to evolve. On rescheduling, the process to move cannabis to Schedule III remains underway with regulatory review continuing and no final rule issued as of today. While we view this as a constructive development, the ultimate timing and scope of impact remains subject to federal rule-making process. We'd like to thank President Trump for his leadership by signing the EO at the end of 2025. Finally, potential federal reforms that could improve capital markets access for U.S. cannabis operators, including proposals such as the ClimACT remain uncertain and no legislation has been enacted. We will continue to monitor developments at the federal level. With that, I will turn the call over to Michelle for a detailed review of our financial results. Michelle Mosier: Thank you, Jim, and good afternoon, everyone. I will now provide more detail on our fourth quarter results. Revenue for the quarter increased by $2.5 million to $68.3 million compared to $65.9 million in the prior year quarter. Overall, the year-over-year increase in revenue was driven primarily by retail growth, reflecting contributions from new stores in Ohio and strong sales performance from all our Virginia stores. Revenue in our retail channel was $60.4 million compared to $58.1 million in the fourth quarter of 2024. The increase was primarily due to growth in Ohio and Virginia. Ohio represented the largest contributor due to new stores, while Virginia delivered growth across all stores, primarily driven by increased units sold, while average selling prices remained relatively flat. This growth was partially offset by continued price pressure and competitive dynamics in other markets. In addition, our focus on retail execution and customer engagement continued to support stronger performance of our Jushi branded product sales, which represented approximately 58% of retail revenue across the company's 5 vertical markets in the quarter compared to 55% in the prior year. Our delivery business in Virginia continues to thrive both within our health services area and outside our HSA. For the full year, delivery sales increased approximately 29% year-over-year in our HSA II area and approximately 76% out of our HSA II area, driven by growth in the number of orders, which increased approximately 20% and 79%, respectively. Wholesale revenue was $7.9 million compared to $7.7 million in the comparable quarter of the prior year. Year-over-year increase reflects higher sales across several wholesale markets led by Massachusetts and Ohio. In Massachusetts, growth was driven primarily by increased bulk sales and expanded wholesale distribution, including placement in new dispensaries. In Ohio, the increase reflects expanded distribution and higher sales volumes. Pennsylvania also delivered steady growth across the wholesale channels. These increases were partially offset by a $1.2 million decline in Virginia, where wholesale partners continue to prioritize their own vertical sell-through. Gross profit was $28.6 million or 41.9% of revenue compared to $25.4 million or 38.6% of revenue in the fourth quarter of 2024. The year-over-year increase in gross profit and gross profit margin was primarily driven by higher production volumes, improved product quality and stronger performance across our grower-processor facilities, reflecting the operational improvements implemented over the past year, particularly in Pennsylvania, Massachusetts and Ohio. These benefits were partially offset by continued pricing pressure across our footprint, which led to increased promotional activity. Operating expenses for the fourth quarter were $27.8 million compared to $27.2 million in last year's fourth quarter. As Jim mentioned earlier, we continue to add new retail locations while scaling the organization efficiently. The modest year-over-year increase in operating expenses primarily reflects costs associated with new store openings and a larger retail footprint, partially offset by the impacts of continued cost discipline. Other income and expense included $10.4 million of interest expense, which is partially offset by an $800,000 fair value gain on our derivatives and by other net of $500,000. Other net was primarily comprised of $3 million related to employee retention credit claims, including interest received from the IRS, partially offset by a $2.6 million noncash adjustment to our indemnification asset related to acquisitions made in prior years. As with prior periods, we continue to recognize the ERC refund claims and income as the refunds are received from the IRS. As of the end of the fourth quarter, we had approximately $700,000 of remaining ERC claims outstanding, all of which were not factored. Our net loss for the fourth quarter was $15.6 million compared to $12.5 million in the prior year. Adjusted EBITDA was $13.9 million compared to $8 million in the fourth quarter of 2024, and adjusted EBITDA margin was 20.4% compared to 12.2%. Moving to the balance sheet. As of December 31, 2025, the company had approximately $26.6 million of cash, cash equivalents and restricted cash. Cash provided by operations was $6.1 million compared to $7.2 million provided in the fourth quarter of 2024. The change reflects working capital improvements. As of December 31, 2025, we had $193.1 million of debt subject to repayment, excluding the $21.5 million of promissory notes issued to Sammartino that remain in dispute as well as leases and equipment financing obligations. Our term loan with a principal balance of $46.1 million and our second lien notes with a principal balance of $86.2 million were scheduled to mature at the end of 2026. As Jim mentioned earlier, subsequent to year-end, we completed a refinancing of these facilities, which extends our debt maturities and further strengthens the company's balance sheet. For the full year 2025, capital expenditures totaled $16.1 million, consisting of $4.8 million of maintenance CapEx and $11.3 million of growth CapEx. As we consider capital expenditures for 2026, we currently expect maintenance CapEx to be in the range of approximately $4 million to $5 million, consistent with our ongoing focus on maintaining and optimizing our existing asset base. Excluding capital associated with potential regulatory changes, we currently expect 2026 growth CapEx to be in the range of $5 million to $8 million. These investments would support targeted initiatives across our grower-processor footprint and select retail build-outs. This would result in total projected capital expenditures of $9 million to $13 million in 2026. As Jim mentioned earlier, regulatory developments, particularly in Virginia, will influence the timing and scale of future capital investments. In the case of Virginia, we're developing plans for grower-processor expansion contingent on adult use. We believe a significant portion of any such expansion could be financed through an expanded facility mortgage, and we would expect the majority of construction-related capital spending to occur in 2027 rather than 2026. And with that, I will turn the call back to Jim for closing remarks. James Cacioppo: Thank you, Michelle. As we reflect on 2025, it was a year defined by execution, operational recovery and disciplined decision-making. We entered the year focused on continuing to stabilize the business, improving product quality and strengthening our operational foundation, and we believe the progress we delivered across cultivation, retail and commercial demonstrates that those efforts are taking hold. Across the organization, we improved yields, potency and consistency at our grower-processor facilities, expanded and optimized our retail footprint and continue to shift our mix toward higher quality and branded products. These operational improvements are translating into stronger margins and a more resilient business model, even as pricing pressure and competitive dynamics remain elevated across the industry. Importantly, we are approaching growth with discipline. As we discussed today, we are making targeted high-return investments to support current demand while carefully sequencing larger opportunities around regulatory clarity. In Virginia and Pennsylvania, we are preparing thoughtfully for potential adult-use expansion while remaining prudent in our use of capital and focused on protecting the balance sheet. Looking ahead to 2026 and 2027, we are particularly excited about the transition to adult use in Virginia. With our cultivation, manufacturing and retail infrastructure already in place, we believe we are well positioned to participate in what will be a meaningful expansion of the Virginia cannabis market. Our focus remains on preparing thoughtfully for that opportunity while continuing to operate with the same discipline that defined our progress in 2025. More broadly, our priorities remain unchanged. We will continue to execute with discipline, focus and operational excellence, allocate capital thoughtfully and build a scalable platform capable of delivering sustainable profitability and long-term value for shareholders. Before we conclude, I want to thank the entire Jushi team for their dedication and hard work throughout the year. Their commitment across the organization is the foundation of the progress we have discussed today. Thank you all for joining us and for your continued support. Operator, please open the call to questions. Operator: [Operator Instructions] Our first question comes from Frederico Gomes with ATB Cormarkets (sic) [ Capital Markets ]. Frederico Yokota Gomes: My first question, I guess, 2 questions on the gross margins. Was a decline sequentially from 46.7% in Q3. So could you maybe talk about it? Is it related to seasonality maybe or any onetime items impacting the gross margin? And then second, you did report an adjusted EBITDA margin expansion sequentially. So maybe just to clarify, is that related to some of the items you mentioned that are included in the adjusted EBITDA number? Or how do you square that with the adjusted -- with the gross margin decline sequentially? James Cacioppo: I'll do this. Gross margin -- on the gross margin, in the September quarter, the third quarter, we had a bulge of packaged goods and that created a lower cost per unit, and we pulled back a little bit based upon elevated inventories. It wasn't really market related. It was just production related, and we pulled back in October and November, which causes your cost per unit to go higher if you follow what I'm saying. So that was a lot of what had to do with. But also in December, you have discounting related to the holiday activity, both during Thanksgiving, things like Black Friday, which should be expand to 3 or 4 days of discounting. And then, of course, in Christmas, we do the 12 days of Christmas and it's a promotional time of the year for everybody in the spirit of Christmas. In terms of EBITDA, Michelle, do you -- I didn't quite catch that. Michelle Mosier: Yes. I think EBITDA improved. We had some ERC credit income during this quarter of about $3 million, which was a large contributor to the improvement in EBITDA. Frederico Yokota Gomes: Got it. I appreciate that. And then I guess the second question, just on -- you are increasing the percentage of branded sales in your own stores quite substantially on a year-over-year basis. So how much higher can this go? Do you have a target in mind? Any sort of rough guidance on that for this year? James Cacioppo: Yes. I mean we don't really target it as much as we focus in on consumer demand, patient demand. And -- but I think it's running sort of in the 60s, mid-60s in most of the markets. The market that brings the average down is Ohio, where we don't have supply or haven't been able to buy bulk at the right prices to do more branded products. And we have been talking over the last 6 months about wanting to do an expansion in Ohio, including on this call when we did this in prepared remarks. So one of our items that we have along with Virginia, Pennsylvania growth due to regulatory change is Ohio increasing the vertical in that market, which would increase margins in that market. We spent money in 2025 on expanding Ohio retail primarily, and we did some of that in 2024. And so we have a certain amount of budget to spend, and we decided to get the sales before we build out the core processor. Operator: The next question comes from Luke Hannan with Canaccord Genuity. Luke Hannan: I wanted to follow up on the conversation on Virginia. Jim, if I heard you correctly, I think you said that the CapEx budget -- the CapEx budget for this year is $9 million to $13 million in total, including maintenance and growth. How much of that, if any, includes a build-out in Virginia? You did mention, I think, all the -- assuming when adult-use lands, most of that CapEx is going to be coming in 2027, you're going to also draw on mortgage for that. Can you just frame up to us also what the size of that spend could be? I know it's in 2027, but I just want to get an understanding of the funds that you could have available for that. James Cacioppo: Yes. So I believe Jon will confirm this. I'll say it, but he's shaking his head that he will confirm if I'm right. But I think what we haven't planned in this year is $2 million to $3 million related to building out in warehouse. So we have grower rooms built that need to be equipped and updated these kinds of things because we haven't needed that capacity for the medical market. So we have 2 additional grower rooms. As a reminder, we have 6, are all roughly the same size. So it's 2 over 6 is the growth. That's I think will be primarily, if not all, for adult use. We don't think that will be needed for the medical demand, but it may be, some of it may be. So that's -- and we're also doing the hydrocarbon extraction. And then next year, which is not in this year's budget at all. There's not even sort of a budget item for like a deposit, but we're in construction diagram phase of the expansion of the warehouse. It's really another warehouse then we join it together. And so those of you that followed us for a long time realize that we have a lot of land that we purchased very well in Virginia during the COVID crisis. We bought the building and it was associated land, and we're going to build the warehouse on some of that land that doubles -- roughly doubles our canopy. That is not in the budget. And as Michelle noted in the prepared remarks, we believe a substantial portion of that would be paid by expanding our credit facility. And we did overfund our deal for existing cash. So we believe we'll be able to have the funding for that. We're waiting for the governor signature and then we need to get some regulatory approval as any construction project requires. Luke Hannan: Okay. And then I think you also touched on in your prepared remarks, all the medical stores there in Virginia will transition to dual use, but it is subject to a conversion fee. Did I hear you correctly that $10 million and then it's -- there's a payment plan that's set up for that as well? James Cacioppo: That's correct. Trent, do you want to comment on that? Trenton Woloveck: Yes, sure. So Luke, we get to propose a payment plan to the CCA for what we want to structure that payment -- $10 million payment to look like over 3 years. Luke Hannan: Okay. Got it. And there's no -- is there any implicit interest rate that's included in that? Or it's just a flat, you can chop it up 1/3, 1/3, 1/3? Trenton Woloveck: 1/3 -- we could do 1/3, 1/3, 1/3. We could propose whatever we would like to do. First payment would have to be made by December 1 of this year with expectation of sales starting on 1/1/27, and then we can space it out however we see fit and agree with the CCA on that. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Jim Cacioppo for any closing remarks. James Cacioppo: Great. Thanks everybody for attending. We appreciate it, and have a good day, and thanks again to all the great Jushi employees. We appreciate your effort. Bye-bye. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Thank you for standing by. My name is Jay, and I will be your conference operator today. At this time, I would like to welcome everyone to the J.Jill Fourth Quarter 2025 Earnings Call. [Operator Instructions]. Before we begin, I need to remind you that certain comments made during these remarks may constitute forward-looking statements and are made pursuant to and within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 as amended. Such forward-looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from such statements. Those risks and uncertainties are described in the press release and J.Jill's SEC filings. The forward-looking statements made on this recording are as of March 31, 2026, and Jill does not undertake any obligation to update these forward-looking statements. Finally, J.Jill may refer to certain adjusted non-GAAP financial measures during these remarks. A reconciliation schedule showing the GAAP versus non-GAAP financial measures is available in the press release issued March 31, 2026. If you do not have a copy of today's press release, you may obtain 1 by visiting the Investor Relations page on the website at jjill.com. I would now like to turn the conference over to Mary Ellen Coyne, Chief Executive Officer and President of J.Jill. You may begin. Mary Coyne: Good morning, everyone, and thank you for joining us today. 2025 marks the beginning of a strategic evolution for J.Jill. We embarked on a period of testing and learning in order to build a strong foundation for our business by expanding our customer file through product evolution, enhancing the customer journey and improving the way we work as an organization. While we delivered fourth quarter results that exceeded the updated guidance we provided in January, the period reinforced why this evolution is essential. We had an early assortment that did not resonate as hoped. We came up against earlier and deeper competitive holiday promotions. And we watch our direct customer continue to migrate towards the promotional end of the spectrum, taking value and discount rather than engaging at full price. Against this backdrop, our teams remained agile and reacted in season to ensure we ended the period with inventories in a clean position. As we enter 2026, we are taking the steps to transition and position the business for long-term growth. To achieve our objectives, we must expand our customer files. This requires patience and precision. We're expanding into new categories and modernizing our aesthetics to appeal to a broader customer base. but doing so in a way that helps holds the quality, fit and values that our loyal customers expect and trust from J.Jill. That's why our test-and-learn methodology is so critical. It allows us to validate new concepts with both new and existing customers before scaling, ensuring we're building sustainable growth rather than simply pursuing short-term gains. As we move through 2026 and beyond, you'll see us continue this balanced approach. And we believe the investments and strategic shifts we are making, will position us well to achieve our objectives. This evolution will take time, and we should not expect the path to be linear. But we are committed to maintaining a disciplined operating model, carefully managing expenses and leveraging our strong financial position and strengthen balance sheet as we pursue this course. None of this transformation would be possible without a best-in-class team. A combination of strong internal leaders with deep knowledge of J.Jill, and outside leaders bringing relevant experience and new perspectives. Throughout 2025, we've made deliberate decisions to strengthen our leadership bench by recruiting proven talent with deep expertise in brand transformation. We brought Courtney O'Connor onboard in July as Chief Merchandising Officer to support our product evolution. And [ VIVREDKey ] in November as the company's first-ever Chief Growth Officer to lead our e-commerce and AI initiatives. As we grow, we will continue investing in talent that complements our existing strengths and supports new capabilities. Turning now to our 3 key strategic pillars. First, evolving the product. In 2025, we analyzed our assortment and identified areas in which we needed to streamline remove redundancy and evolve to capture a greater share of our customers' wardrobe. We began testing categories and concepts to expand the relevance of our product assortments. In Q4, for example, we successfully tested small capsules in areas where we saw potential but wanted to validate customer response before making larger commitments. We also piloted a localized merchandising strategy, adjusting our assortment to better reflect the lifestyle needs of specific markets. What became clear through those tests is that when we gave our customer the newness she wanted, she responded even in a highly challenging promotional environment. These learnings shaped how we approach our 2026 assortment and are informing our broader merchandising strategy going forward. As a reminder, our summer 2026 assortment, which will be introduced in Q2, we'll capture the first influence from our strengthened merchant and design team. and we expect continued improvements in assortment as we move throughout the year. There will be more newness with silhouettes and fabrics as well as the beginning stages of expansion into areas of accessories such as bags and belts. Our goal is to continue to provide our loyal customer the quality and value she knows and loves us for, while introducing relevant and compelling products focused on the new customers who we aim to attract. Our second pillar is enhancing the customer journey. This past fall, we began to look at our marketing strategy differently and how we think about customer acquisition and engagement. Historically, our marketing spend has been disproportionately focused on our existing customer base. And while customer retention remains important, we know this approach was limiting our ability to expand our customer file and drive the kind of growth we're targeting. In 2026 and beyond, we plan to continue to rebalance our marketing investments to address the top of the funnel, building broader brand awareness and capturing new customers who may not yet be familiar with J.Jill. We believe these awareness building initiatives will help us reach a larger, more diverse audience. Our third pillar is operational improvements. Throughout 2025, we focused on strengthening our operational capabilities and leveraging new technologies that we expect to support future growth. We successfully implemented our new OMS system, providing us with a more modern platform, and created the Chief Growth Officer role to fully maximize e-commerce NII to help drive long-term success. As an organization, we are embracing the capabilities and efficiencies that AI can enable. With every potential use case, we ask ourselves: Will it increase revenue, will it increase efficiency and will it drive speed to market. As we begin 2026, we are introducing several new tools across the organization and have kicked off a significant project, the implementation of a new merchandise planning and allocation tool from Anaplan. We plan to leverage this predictive AI powered forecasting model to optimize how we plan and allocate inventory across the business. Thanks to the hard work of our team, we are on track late in the second half of 2026 with meaningful benefits expected to begin in 2027 and we will continue to improve as the system learns and we scale it to drive better demand forecasting, smarter allocation by location. As we look forward to 2026, we are confident in our strategic direction while being realistic about the current consumer environment, the impacts of tariffs and the work ahead. While the quarter has seen a challenging start largely driven by continued price sensitivity, particularly in our direct channel, we are encouraged by the performance in our stores supported by trained associates, providing personalized guidance and tactile experiences that excite both existing and new customers around the brand's product evolution. Importantly, we are taking key learnings from these first few weeks of the year to inform our go-forward plan, all of which is reflected in our outlook, which Mark will review. In closing, we're viewing 2026 as a period of deliberate accelerated change to expand our customer file while maintaining our operational discipline. We remain committed to our methodical test-and-learn approach, building on validated successes around new initiatives before scaling investments. I am confident that this measured approach, combined with our strong balance sheet and operational rigor, will position us to achieve our objectives and deliver long-term shareholder value. And with that, I'll turn it over to Mark. Mark Webb: Thank you, Mary Ellen, and good morning, everyone. As Mary Ellen outlined, 2025 marked the beginning of a strategic evolution for J.Jill, a deliberate period of evaluation, testing and learning, that began to build the foundation for expanding our customer file. As we enter 2026, we are deploying these learnings which, while we expect will take some time to fully take hold, we are confident we'll position the business well for long-term sustainable growth. Before discussing our 2026 outlook, let me provide context on fiscal 2025, which demonstrated the resilience of our operating model even as we began this evolution and despite significant external headwinds. We generated $23.2 million in free cash flow in the year, maintained a solid gross margin rate of 68.7% despite incurring approximately $7.5 million of incremental net tariff costs, we opened 4 net new stores, successfully upgraded our order management system and delivered adjusted EBITDA of $84.3 million on sales of $596.5 million cash interest expense. We repurchased $10.4 million or about 638,000 shares of J.Jill stock and paid approximately $5 million in ordinary dividends demonstrating our ongoing commitment of returning cash to shareholders and supporting total shareholder return. These results reflect the operational discipline and agility of our organization in navigating a complex environment. The tariff policy enacted in April created unprecedented operational complexity and we experienced a slowdown in our customers' shopping behavior throughout the year, contributing to a 3% decline in comparable sales for the year. I want to thank our vendor partners for their support amidst these challenges and recognize and thank our cross-functional teams for their agility and resilience adapting their work and processes in response to the changing business requirements. Many of the same team members manage the successful March 2025 cutover to our new OMS system, a major modernization of our technology foundation. As we move into 2026, we are planning for a year of strategic investment and measured transition. We're building the foundation for sustainable, profitable growth by expanding our customer file modernizing our product offering and further strengthening our operational capabilities. This requires deliberate investments that will pressure near-term profitability, but position us for stronger performance in 2027 and beyond. Our financial approach doesn't change. We're being disciplined about where we invest, measuring returns carefully and maintaining financial flexibility to adjust as we learn. Our strong balance sheet and cash position provide flexibility to execute this strategic evolution while continuing to return capital to shareholders. With that context, let me walk through our fourth quarter performance and then provide our outlook for fiscal 2026. Total company sales for the quarter were $138.4 million down 3.1% compared to Q4 of 2024. Total company comparable sales for the fourth quarter decreased 4.8%, driven by the retail channel. Store sales for Q4 were down 9% versus Q4 2024, driven by soft traffic and conversion, which were partially offset by stronger average unit retails and average transaction values in the quarter. Net new stores contributed approximately $2 million in revenue. Direct sales as a percentage of total sales were 53.5% in the quarter, compared to the fourth quarter of fiscal 2024, direct sales were up 2.6%, driven by markdown sales, which benefited from ship-from-store capabilities. Q4 total company gross profit was $87.3 million compared to $94.8 million last year. Q4 gross margin was 63.1%, down 320 basis points versus Q4 2024, driven by approximately $4.5 million of net tariff costs incurred during the quarter and deeper year-over-year discounting amidst a very competitive promotional environment. These headwinds were partially offset by favorable freight costs this year compared to last. SG&A expenses for the quarter were about $87 million compared to $89.3 million last year as increased selling expense and G&A overhead were more than offset by lower marketing management incentive, nonrecurring costs and stock-based compensation. Adjusted EBITDA was $7.2 million in the quarter compared to $14.5 million in Q4 2024. Interest expense was $2.2 million in Q4, down about $500,000 compared to last year, driven by the term loan refinance completed in December. Adjusted net income per diluted share in Q4 2025 was a loss of $0.02 per share compared to earnings of $0.32 per share in Q4 2024. Average weighted diluted share count in Q4 this year of 15.3 million shares reflected the impact of repurchasing 637,700 shares in fiscal 2025. Please refer to today's press release for reconciliations of non-GAAP financial measures to their most comparable GAAP financial measures. Adjusted EBITDA, adjusted net income and adjusted net income per diluted share to net income and free cash flow to cash from operations. Turning to cash. We ended the quarter and full year with $41 million of cash. For fiscal 2025, we generated $42.1 million of cash from operations and $23.2 million of free cash flow, defined as cash from operations less capital expenditures. We refinanced our $75 million term loan in December extending the term through December of 2030 and saving [indiscernible] approximately $10.4 million of share funded from cash on hand. As of January 31, 2026, a there was $14.1 million of availability remaining under the stock repurchase authorization that expires in December 2026. Looking at inventory. At the end of the fourth quarter, total inventory, excluding the impact of tariffs was about flat compared to the end of fourth quarter last year, including approximately $9 million related to net tariff costs reported inventory at end of Q4 was up 14% compared to end of Q4 inventory last year. Capital expenditures for the quarter were $10.1 million. Total capital expenditures for full year 2025 were $18.9 million focused on new store openings and the OMS project. With respect to store count, we opened 7 stores in the fourth quarter with no closures. We ended the year with 256 stores, a net increase of 4 for the year as 9 new store openings were offset by 5 closures. Turning to our expectations for fiscal 2026. As mentioned, we expect 2026 will be a year of deliberate investment. Our guidance reflects this along with the continued uncertainty in the consumer and geopolitical environment, the turbulent trade policy landscape and the expectation that it will take some time for new customers to respond to our evolving product assortments. As Mary Ellen mentioned, and as is reflected in our first quarter guidance, we have seen a softer start to Q1. We expect this performance to gradually improve in second quarter as the new assortment hit in their entirety [indiscernible] incurred and for products landed before for February 28, 2026, will expense through the P&L during the first half of 2026. As a reminder, these tariffs were an average rate of approximately 20% and net of vendor offsets are expected to result in about $5 million of added cost of goods sold in the first quarter compared to 0 tariffs incurred in Q1 2025. Going forward, we are now assuming 10% tariffs on goods received after February 28 through the end of the first quarter and 15% on goods received for the rest of the year. Given these rates we expect the second quarter to incur approximately $4 million of incremental net tariff costs compared to less than $1 million incurred last year in Q2 and Q3 and Q4 to incur approximately $3 million of net tariff costs each compared to $2.5 million and $4.5 million in Q3 and Q4 last year, respectively. Total tariff load net of vendor offsets in 2026 will be about $15 million compared to about $7.5 million incurred in 2025. Our assumptions related to tariff rates are all subject to any additional changes the U.S. may enact to global trade policies. Further, our guidance does not assume receipt of any refunds of tariffs paid to date. For the first quarter of fiscal 2026, we expect sales to be down approximately 5% to 7% compared to last year, with total company comp sales down approximately 7% to 9%. We expect adjusted EBITDA to be in the range of $15 million to $17 million, reflecting approximately $5 million of tariff pressure. For Q1, we expect gross margin to be down about 400 basis points compared to Q1 2025 as the annualized impacts of tariffs is incurred and product and marketing strategies are still evolving. While the quarter is off to a challenging start, as discussed, we are seeing relatively better performance quarter-to-date in our retail channel. For full year fiscal 2026, we expect sales to be down 2% to about flat compared to last year. Total company comp sales to be in the range of down 3% to down 1% and adjusted EBITDA of $70 million to $75 million. This guidance assumes full year gross margins down about 50 basis points compared to 2025 and as we expect headwinds related to tariffs in the first half to be partially offset by better full-price selling, lower promotions and lower year-over-year tariffs beginning in Q4. Regarding inventory, we will continue to take a prudent approach to inventory investments given the relative uncertainty we have discussed with unit purchases positioned down in the mid-single digits. Regarding store count, we continue to see opportunity to expand, but remain disciplined in our approach amidst our brand evolution. We are pleased with the performance of new stores opened to date and expect to grow net store count by about 5 stores by the end of fiscal 2026 of our planned openings, approximately half are in reentry markets. We expect reentry stores to ramp very quickly given the customer reception and brand awareness that exists in these markets, while new markets are experiencing a longer ramp period. We expect openings in new markets to experience about a 3- to 5-year ramp to maturity. New stores represent an attractive investment opportunity and we are excited to continue to expand our footprint at a disciplined pace. With respect to total capital expenditures, we expect to spend about $25 million in fiscal 2026 with investments focused on new stores and a new merch planning and allocation system that is projected to be completed toward the end of 2026. Regarding free cash flow, we expect free cash flow for fiscal 2026 of about $20 million. And finally, with respect to cash distributions we announced today that our Board of Directors approved a $0.09 dividend, reflecting a $0.01 or 12.5% increase in our ordinary dividend payable April 28 to shareholders of record as of April 14, and we have $14 million remaining on our fair repurchase program, which is authorized through December 2026. It is important to note that given the timing of year-end and Q4 earnings announcements, our Q1 repurchase window tends to be shorter than other windows during the year. In summary, we believe we are making the adjustments necessary to position the business for sustainable growth. We are confident the modernization and evolution of our product and marketing efforts will enhance and broaden the appeal and awareness of our incredible brand. And we believe the investments we are making in our front-end MP&A platforms will position us well and provide benefits into fiscal 2027 and beyond, all while continuing with our commitment to distribute excess cash to shareholders through our ordinary dividend program and share repurchases. Thank you. I will now hand it back to the operator for questions. Operator: [Operator Instructions]. Your first question comes from the line of Jonna Kim of TD Cowen. Jungwon Kim: Your customers are more sensitive to macro, how would you assess how much of the softness you're seeing in the first quarter is due to macro versus other factors? Would love any color there? And then second question, how will this year's Mother's Day differ from last year? What are key product and marketing changes ahead of the Mother's Day. Mary Coyne: Good morning Jonna, thanks for your question. So we are at the start of a very deliberate evolution. That being said, we do believe that Q1 had a challenging start was a midst of very tough macro backdrop, and we've talked about this consumer being impacted by that. We absolutely see that more in our direct channel, which is a continuation from what we saw in Q4. What is very encouraging to us is what we are seeing in stores with our talented store teams able to engage to have convert new customers and existing customers. But we do believe that the macro environment had an impact in this quarter for sure. With respect to Mother's Day, the marketing team has exciting initiatives in play. We are really focused on the timing of when we're launching our catalog when we are launching digital marketing. There is a whole program around it that we're super excited about, all backed up by product drop that is coming in the 10 days before. Operator: Your next question comes from the line of Dana Telsey of Telsey Group. Dana Telsey: A lot of work underway. As you think about the product assortment and the test and learn that is put in place, what is changing bottoms, tops, sweaters, style, look, print patterns, what is changing? And what do you expect to see and when will the new full assortment be there? And then with the customer acquisition strategies, who do you want to capture now that's different than your old customer? And as you think of the balance of the business, how much should be new versus existing customers go forward? And then lastly, Mark, just on the components of margins. What are you seeing from energy prices and the impact of freight costs. Mary Coyne: Good morning Dana. I'll start with the first question, which is what is changing in the assortment. So we are taking this time to really test and learn coming out of Q4 going into Q1. And what we are focused on is both new and existing customers achieving more of her wardrobe. We are moving with what we are calling a more modern aesthetic, which is really addressing her lifestyle, and that lifestyle will be built with core things that she has known and loved from the J.Jill brand for years. accentuated by newness, and we see her really responding to newness, but it's how we give her versatile wardrobing pieces that take her through every aspect of her day and her life. We see it being a very balanced approach, both in product and in marketing with everything we do, really benefiting the 3 customer segments that you referred to, right? So as we think about customers, we are focused on retaining the customers we have, we are focused on attracting new, and we are focused on reactivating people who have not shopped the brand recently. When we think about this customer segment, -- we love this customer segment. She's loyal. She's responsive. She is -- has money and time to spend on herself. When we look at the segment today, we -- 45 to 65 is our target audience. Today, our customer sits at the higher end of that and we know we have tremendous opportunity to target the middle of that range and bring very qualified women into this audience. Mark Webb: Great. And with respect to the gross margin, Dana, as we discussed on the last question, the macro environment is obviously very volatile right now and evolving quite real time. what we've included in our guidance is anything that we have seen concrete as of now with respect to gas or oil prices, et cetera. What that means is that in sort of the ocean container rate environment, we've seen some momentary spikes here and there, but it seems to be normalizing itself fairly quickly. And so right now, what we're seeing is more flat ocean container rates maybe up a tiny bit that we would have factored in that I mentioned in Q4 was the first quarter in a while where we actually had great -- small freight savings. And now, as I mentioned, more flat, maybe a little bit of pressure, but still watching it closely and it's evolving real time. In the expenses, we've seen some of the carriers, including the USPS pass-through fuel charge surcharges and we've reflected that in our SG&A included in our guidance going forward. Mary Coyne: Yes. And I just want to circle back for 1 minute, Dana and just reiterate, while we know we have a great customer, we also are now the #1 priority for us is to appeal to a broader audience, and we're excited about some of the testing that we've done with performance indicators that are encouraging as we move forward. Operator: Your next question comes from the line of Corey Tarlowe of Jefferies. Corey Tarlowe: Great. Can you talk a little bit about trends by month? And any color on what you're seeing quarter-to-date? Mark Webb: Yes, Corey, it's Mark. With respect to Q4, we mentioned, overall, it was a pretty promotional quarter it was markdown driven, particularly in the direct channel. The month themselves, January was the strongest, and it was sequentially better than December, better than November. I think we messaged some of that in some of our inter-quarter remarks that we've made around the guidance. The January performance was heavily sale. It's a sale period. It was heavily markdown driven as well. So the cadence was, as I mentioned, but with a deepening markdown support later in the quarter. And then I would say quarter-to-date, we've seen a challenging start. We mentioned that in our remarks. It's very much in line with how we've guided the quarter overall. -- and are committed as we exit all of these quarters through this learning period to manage our inventory as necessary during the quarter to exit as clean as we can entering the new quarter. Corey Tarlowe: Understood. And I think you mentioned a new merchandise planning system. I know that there have been other initiatives that you've undertaken, whether it was the OMS project or other items. Can you talk a little bit about the benefits of this what the costs are and then how we should think about other incremental projects that are coming in, in this year, which I think you called it an investment year? Mary Coyne: I mean, Corey, I'll start just by saying we are so excited about the MP&A project through out of plan. It will allow us to take what is today a very manual Excel-based system and move it to predictive AI forecasting, which will allow us to have inventory optimized in the right location, in the right step at the right time. So we're very excited about what this means from a customer service -- customer experience because the inventory will be where they need it, but also from a revenue and margin driving initiative. Mark Webb: Yes. And Corey, the one of the great advantages of the OMS project was taking a very old system and modernizing it, which then enables you to bolt in these newer technologies. So excited to be leveraging the newer platform to now start enhancing front-end systems, as Mary Ellen mentioned. With respect to the investments, I would say the investments this year continue to be new stores. We mentioned we're opening net 5. We also have some relocations in the plan in 2026. And then the Anaplan project is a more targeted projects than an OMS project would be an LMS project is far region, which allows us within the capital guide that we provided to also invest in other smaller systems enhancements, benefits. Mary Ellen mentioned a few of them in her remarks around driving direct -- the direct business, et cetera. So that's kind of what's behind the expectation of it being and investment here with respect to capital. And then in the SG&A side of things, the investments really start with marketing more in Q2 and forward. and then obviously, payroll and some of the investments we've made in talent. Operator: Your next question comes from the line of Dylan Carden of William Blair. Unknown Analyst: This is Ann bingo on for Dylan Carden. So the guide implies a softer first quarter with improvement as the year progresses, which I believe is a similar setup to this time last year. What would you say is different this year versus last year that gives you the confidence in the back half inflection? And how much of that outlook depends on macro stabilization or improvement? Mary Coyne: So I'll start you for the question. as we're entering 2026, we are in a period of evolution, and we are testing and learning every day -- what I would say is we are sitting today with an incredibly talented team who are aligned on our vision and are committed to our journey. So as we move forward, we will see product improvements through Q2, 3, 4 we will see learnings from our marketing initiatives that we're attaching where we are rebalancing spend where we are trying new things. And moving forward, we'll see that growth as we lean into the things that are working and equally as we pull away from those tests that don't. Mark Webb: Sorry, I was just going to add with respect to the Q4, as Marion mentioned, the product, obviously, it's -- we're still pre the new assortments in -- and we're also in that period of unanniversaried tariffs. So the first half of the year, currently, as we outlined in my remarks, carries $9 million of tariffs against less than $1 million last year. And then that tariff load actually evens and becomes again, assuming the assumptions that we laid out that the tariff rates for the rest of the year around 15% post the Q1 receipts. -- that Q4 would then turn to a small tailwind. So just with respect to the years over years, there's some elements of just that structural component of tariff that supports that as well. Unknown Analyst: Understood. And then on pricing, do you guys see additional opportunity for targeted price increases in 2026? Is this reflected in the current guide? Or does the current consumer environment or a more cautious approach? Mary Coyne: We will be taking a very measured approach to pricing. As we've said in our remarks, we have seen the overall consumer and specifically our direct channel be more price-sensitive. We're seeing incredible promotion out there in the market. So we will be very measured about any increases we take in price. Operator: And your next question comes from the line of Janine Stichter of BTIG. Unknown Analyst: You've got Eaton Sage on for Janine. Can you just provide some more color on which categories performed well and which may have lagged in Q4 and quarter-to-date? Mary Coyne: Sure. So in Q4, what we saw was that newness and novelty were driving the business. So where we had repeat programs from a year prior or 2 years prior, they were very soft. We also saw success in some of the tests we had out there. We saw success in our travel capsule we saw success in expanded categories in outerwear, we saw the start of accessories, which has really moved into Q1 as a success story. -- and we tested some price points, particularly in sweaters with Casimir and soft success. As we moved into Q1, a we are seeing newness rebounding. We are -- but again, Q1 is not indicative of our 2 product evolution. -- where we really see that evolution is in Q2, where newness in fabric and silhouette and category mix really starts to evolve based on our learnings. Clearly, with the goal to drive full price selling in both channels because we know that we've really seen the retail channel working. We've seen things like our dress business turnaround. It's exciting to see what's happening there. Operator: With no further questions, that concludes our Q&A session and also concludes today's conference call. Thank you for your participation. You may now disconnect.
Eyal Cohen: So good morning, and thank you for making the time to join our full year 2025 results call. Joining me is Mr. Moshe Salzer, our Chief Financial Officer. And I'm pleased to report that '25 was an outstanding year for Bosch on multiple metrics, and I'm grateful to our team for the hard work and commitment in achieving these results. We delivered strong revenue growth throughout the year, setting multiple record quarters and increasing our outlook 3x. Ultimately, we completed the year '25 growing 27% year-over-year to a record $51 million in revenues -- and our net income grew year-over-year by 57% to a record $3.6 million, demonstrating our ability to drive profitable growth leverage in our model. Even with this growth, we exited the year with a substantial contracted backlog of $24 million, giving us good visibility into the year ahead. Looking forward, I want to share the key trends that shape -- that will shape our trajectory in 2026. Demand in the defense sector remains robust and is expected to continue driving growth in our Supply Chain and Robotics division throughout the year. We maintain strong backlog visibility and healthy customer relationships across this segment. Alongside that, we are taking steps to extend our geographic reach. In March 2026, we appointed an Indian company to represent Bosch in the Indian market as India is emerging as a growing subcontracting hub for global defense programs. This is a meaningful step in our global expansion strategy. On the product side, our organic growth model is built around continuously broadening the portfolio of manufacturers we represent and embracing the new technologies they develop. Because our manufacturing partners invest heavily in next-generation solutions, we benefit from self-relenishing flow of innovative products to bring our clients. Turning to our RFID division. The ongoing geopolitical tension in Israel since October '23 have continued to weigh on the Israeli commercial market, which represent the primary revenue base for this division. Therefore, we recorded goodwill impairment charges of $700,000 in 2024 and an additional $1.2 million in year '25. To reduce our exposure to geopolitically sensitive Israeli civil market, our 2026 strategic plan focuses on growing our business RFID business by entering the hospital segment, more stable and higher growth vertical within Israel. Successful penetration of this segment will require broadening our product offering, hiring personnel with relevant domain expertise and establishing new customer relationships. We expect to make this investment throughout 2026 with revenue contribution expected to begin in 27. On the currency front, the USD to Israeli shekel exchange rate opened 2026 at ILS 3.18 per dollar, reflecting an approximately 13% devaluation of the dollar against the Israeli shekel compared to start of 2025. As a result, we expect our Israeli shekel denominated operating expenses to increase by approximately $600,000 in 2026 compared to 2025. Another effect of the dollar's weakness in 2025 was $800,000 in nonrecurring currency exchange income we recognized this year, which arose from the revaluation of the Israeli shekel denominated balance sheet items following the sharp dollar decline. The gain is not expected to repeat in 2026, assuming the rate remains at approximately ILS 3.18 per dollar. Combined, these 2 currency-related items represent approximately $1.4 million in headwinds going into 2026. Separately, the $1.2 million goodwill impairment charge taken in 2025 is not expected to recur in 2026, which partially offset the leaving a net year-over-year drag of approximately $200,000. Our financial foundation has never been stronger. Cash and equivalents have grown to $11.8 million, up from $3.6 million at year-end 2024. Shareholders' equity amount to almost $29 million, up from $21 million at year-end 2024. We have positive working capital of more than $22 million and bank debt amounted to only $1.7 million. This strong balance sheet gives us the flexibility to capitalize on opportunities as they arise, supporting both organic growth and strategic acquisitions. We are actively evaluating a range of acquisition opportunities, each of which must meet our strict criteria, including a proven track record of profitability and high revenue visibility. Turning to our outlook. Consistent with our established policy of issuing conservative initial guidance with updates provided as the year progresses, we are projecting revenues of approximately $51 million and net income of approximately $3.6 million for 2026. We look forward to updating you as the year progresses and our momentum becomes clearer. On the Investor Relations front, in 2025, I conducted nondeal roadshow comprising 44 one-on-one meetings with potential investors and presented at 2 investor summits. Our stock appreciated 42% during that year, year '25, yet a significant valuation gap remains related to our benchmark index Russell 2000. Over the past 4 years, both delivered compounded annual earnings per share growth of 60% compared to 12% of the Russell 2000, 5x the rate of the index. Despite this performance, we trade near book value, while Russell 2000 trade at roughly 2.4x book value. And our price-to-earning ratio stands at approximately 9x compared to 20x for the index. We attribute much of this discount to limited market awareness. To address this, we will shift our IR strategy toward digital marketing starting this April, engaging alecommunication and Investor Relations firm specializing in digital investor outreach. We believe this approach will meaningfully expand our investor reach and visibility in a significantly shorter time frame rather than the traditional IR method. With that, we are happy to take your questions. Unknown Analyst: Congratulations on a really good year. This is Todd Felty. I was wondering if you could talk about the current conditions over there and how you expect your business impacted if the war, let's say, last another 30 days compared to what happens if it drags on for another 6 months with your various divisions. Eyal Cohen: Yes. So thank you, Todd. First, most of our business linked to the Defense segment. As you know, the supply chain, which was -- which is a primary growth driver of both -- most of its business is related to the defense segment and the Robotics division as well. So in that aspect, if the war will continue, it will positively affect the growth of those 2 divisions. In regard with the RFID division, currently, it's very sensitive to the geopolitical tension. And if the war will continue, it will negatively impact its business. But as I mentioned before, we are working to shift our sales resources and business development resources towards the new segments which are less sensitive or even the opposite are growing in such period like the hospitals in Israel, defense as well, but we will focus on the hospital segment in Israel. In addition, as you know, if the war will continue, we learn how to work with that. The economy will gradually return to its normal course of business despite several attacks a day. It's not new for us. We are in this situation for 3 years. And still, we are doing good. But hopefully, it will be ended. Unknown Executive: Okay. And there was a gentleman who asked a question in the chat, which is I thought a good question. He spoke about the growth rate you've achieved and why there is no growth anticipated in the guidance. I think your guidance is for $51 million, and that's basically what you did last year. So can you kind of give us some insight on that? . Eyal Cohen: Yes. First, we reached to a record level of revenues, $51 million revenues, compared to $40 million revenues in the previous year, it's phenomenal. Our revenue growth depends on the consumption of our components by the different segment, mainly and the Israel aircraft industry, and there are 100 subcontractors around the board. I believe that there is high potential for continuing growth because the warehouses are empty. But we currently have and at the end of year '25, we have like $24 million backlog, which covers 50% of our outlook for year '26. So we have to be -- as we did all the time to be conservative. And we will update, I believe we will upgrade the outlook quarter-by-quarter. According to the progresses. And we have to remember that we are in a very sensitive period in geopolitical tension. Every day, there are news and we have to be a little bit conservative. And I think that still with $51 million revenues and the $3.6 million net income and all the ratios that I illustrated before, that was illustrated before, compared to the index to the Russell 2000 Index, we -- there is no need for any growth to justify this current valuation. I think we are undervalued with the $51 million revenues and $3.6 million net income, and there is a great upside. Unknown Analyst: Okay. My last question is just on the M&A front. I see your cash position is up to $11.8 million, can you just kind of go over your M&A strategy? I believe in the past, you plan there would be no dilution on any M&A that you did and that any acquisitions you did would be immediately accretive to revenue and earnings. Is that still the case? And do you plan on investing some of that cash maybe in short-term notes or securities if there's no M&A on the immediate horizon. Eyal Cohen: Yes. So first, as we have the $12 million cash in hand, I think there are opportunities of M&A are increasing because we can acquire a larger company that can move the needle. So it's great -- it's a great tool to have on hand, and we have several acquisitions that we are evaluating. Hopefully, we will close an acquisition during the year '26. Until then, we invest the cash on hand on on security funds. And that bear like 4% to -- 4%, 5% interest per year, something like that. So the money is working and waiting for utilization. And regarding the dilution, it's not on the -- it's not included in the plan. There is no plan for dilution with $11 million to do an acquisition, it's nice acquisition. And if we want to increase it, we can leverage it with the -- if it's a profitable company, we can leverage it with bank loans, long-term bank loans and together to reach to a significant amount of acquisition. It could be one, it could be two, so I don't expect for any dilution in that aspect in M&A in -- by the way, in any other aspect as well. Scott Weis: I have 2 questions. This is Scott Weis. How are you? Eyal Cohen: Fine. Thank you, Scott. Scott Weis: Good. Thank you. Regarding India, can you comment on if you've seen revenue in India to date? And what kind of numbers are you expecting for 2026? We see flow of revenues from India. We saw flow of revenues in year '23, in year '24, in -- and we opened the -- we established the officer, the agency there in order to urge it and to have more foot on the ground in India in order to increase this number. we didn't provide any outlook for how many revenues, but hopefully, it will increase significantly. During the year, it's not investment for 1 year, it's for long-term investment, and we will expand our investment in India as its progress -- according to the progress. so this is the -- our addressable market overseas. Can you share 1 or 2 of the larger customers from the Indian markets? Eyal Cohen: Yes. we are -- our clients, I believe, the biggest -- 1 of the biggest -- or the top 5 subcontractors of assembly subcontractors of electronic systems. They are working with the II. They're working with the Boeing, they are working with a global organization. Among the names are Cosmos, Vinas, DCX. I believe there is a long list of subcontractors that we have not reached yet. And this is a primary reason for having foot on the groud in India in order to go to visit more manufacturers, more assembly company and to start to do business with them because if we have a good offering for 1 -- for the competitors. So I believe we can increase ourselves we can increase our client base in India with the same offer. Scott Weis: My second question is regarding the RFID investment, what kind of investment spend are you expecting to add to the hospital market? Eyal Cohen: What kind of investment. Scott Weis: Both. Eyal Cohen: According to the initial plan, I believe it won't be a significant amount in the size of both, but it will be a significant amount for the RFID, it could be around $800 million to -- it could be -- in share, could be like $300,000 in year '26. And then in year '27, this new segment will be in breakeven and in year '28 to start to be perfect. But it is for the long term because in the intervision every time there is a geopolitical tension, it got impacted directly and immediately. So we have to -- and because we don't believe that in year -- going forward, there will be a long-term peace period. So we have to be ready for that, and we have to do this move. Scott Weis: Do you have existing relationships in the hospital segment? Eyal Cohen: Currently, no. But we have several candidates that we can hire with the related connections. By the way, it could be also through M&A of companies that are already in that field, and to use our system to support the sales and the sourcing of the product to this segment. Scott Weis: Okay. My last question is regarding the guidance. I realize we've been, but the guidance suggests that you've seen a slowdown. And I just want you to flesh that out a little bit. Have you seen any changes from Q4 to Q1 to where we are today? Eyal Cohen: No. The opposite, I see that the backlog increased. The backlog of the group increased in the first quarter. Scott Weis: Thank you very much. Eyal Cohen: You are welcome and hope to see you soon in Israel, Scott. Unknown Analyst: Hello. This is Igor oarletzo. Good afternoon and good morning for me. I have a question, and I think somebody else had the same question about your guidance. So you're projecting the same revenue and the same net income as you had this year. So I understand the revenue part, the net income was affected by 2 things this year, which I assume will not be going forward or maybe it will be. The second part, you paid no taxes are going to pay the taxes next year. So maybe you can just walk me through and say, on the EUR 51 million, how do you get exactly the same metric 1 you had 2 significant items affecting it this year. Eyal Cohen: Yes. Thank you for your question. I think that Moshe described that we had to point that was impacted year '26 report. And Moshe can return on what you just said regarding the currency exchange, the weakness of the dollar and what what was the impact in '26 is 5%? And what do we expect in year '26? Moshe Zeltzer: Yes. In the financial income, in 2025 cause of the Bonacia in Jan, we accepted that our Israeli shekel dominated operating expenses to increase by approximately $600,000 in 2026 compared to 2025. So another effect of the weakness in 2025 was $800,000 in nonrecurring currency exchange income we recognized last year, which arose from the a revaluation of the denominated balance sheet items following the sharp dollar decline. This gain is not expected to repeat in 2026. So the about the impairment of the goodwill, it will offset by the impact of the Israel retains the dollar, which is not supposed to impact in '26 like it was in 2025. Eyal Cohen: So I agree. In summary, there was a charge of $1.2 million of goodwill in 25 million that we don't expect -- you're right. We don't expect it to recur in '26, okay? But on the other hand, there were some benefits in year '25 if that in the -- because of the weakness of the dollar, the operational expenses in year '25 will be higher by $600,000 than it was in year '25 because we opened the year at 26 with a very low currency rate of 3.1 million is per dollar as compared to something like 3.5 per door at the beginning of year '25. So we expect higher operational costs on by $600,000. And another thing that we recorded the year 25 financial income because of the weakness of the dollar of $800,000. And as long as the currency exchange rate of 26 will remain at 3.18%, we don't expect to record the same income. So the benefit in the currency exchanges in and offset by the goodwill impairment in year '25. So who you compare -- you can easily compare the years of '25 and '26, okay? Unknown Analyst: Okay. My other question is, it's a little bit difficult to break down if you're paying any taxes. And I know you referred to that you have a tax carryover build unrealized losses. So could you tell me what you expect your taxes are going to be like this year and next year? Eyal Cohen: Yes. We have a plan to -- the taxes are a little bit tricky because the taxes we're going to use to utilize all the carryforward taxes in both the parent company by the end of year '26, and all of it recorded as an asset in the balance sheet, but we see a level of tax assets in tax carryforward losses in the subsidiary of division that we want to utilize, and we are considering different kind of solution tax solution for that in order to utilize it. because so that all the profit of all the group will be offset by the carry taxes losses of the elevated division. So we don't expect to have any significant tax expenses in year '26. Unknown Analyst: Okay. And for your '27 is it a little bit too early? Or are you also saying that the taxes keep on carrying over into the next years? Eyal Cohen: Can you repeat, please, again? Unknown Analyst: For year '27 going forward, do you see that you're going to still have tax carryovers in your divisions? Or it's probably going to expire? Eyal Cohen: No, no, there is no expiry date for those losses. Unknown Analyst: I mean it was that sorry. Eyal Cohen: Okay. If you will utilize -- if you will execute the tax planning as we wish. I believe we won't have tax expenses in the coming -- in the several coming years. Unknown Analyst: Okay. And my last comment, when you cannot have to take us a question. you referred to in this call agrees with this. I think there is no better way to more buyback or to have the executive buy some of your own stock because I think it would benefit everybody. So this is just a comment. And I don't know if you agree with this, but that would be, I think, many people's minds. Eyal Cohen: Yes. I think because we have just $11 million, and we are a very small company -- we have to invest this money by acquiring company in order to support the growth of the company and not to do an artificial financial act to support the stock Personally, I don't believe in in buyback stock, it didn't impose itself according to what I have read in during all the years. And we are very small to activate such plan. companies in big sites that have hundreds of million on cash on hand, they can do it. They can allocate part of it just for public relations. We don't have the space for it. We have to -- we work very hard to gain this money. And we have a lot of opportunities for acquisitions. And I believe this is the best thing to do for the company for the long term. Regarding buying stocks by the officers of the company, I think I can tell you, I know what are the compensation package of those officers. I think they cannot afford to do buyback. They are not -- they don't have a compensation -- huge compensation that they can allocate it. The part of their compensation, its options instead of cash bonus. And I think it's a sign of support from the officer that they believe in the company. Unknown Analyst: I have a question. It's James -- can in New York. You were talking about India, and I was a little unclear. You said that if I understood it, there were revenues in '23, '24 to '25 in and you're expecting India to grow. But can you quantify how much of your revenue came from India in '23, '24 and '25. Eyal Cohen: Several million dollars. It's around $3 million on average during that year -- in those years. And we expect to -- following the trends in the market and following our investment in India to grow significantly during -- gradually during the years. Any further questions? Okay. So thank you all for your thoughtful questions today. They reflect exactly the kind of engaged dialogue we value with our investors. Let me close with the final thought, year '25 was a milestone for both record revenues, record net income and record cash on the balance sheet. We enter 2026 with a strong foundation, a clear strategic road map and a team that has demonstrated its liability to execute. We are committed to delivering long-term value for our shareholders. And I look forward to continuing that dialogue with you. Thank you again for your participation, and please feel free to reach out at any time. Have a great day. Thank you.
Operator: Greetings. Welcome to the Abra Group's Q4 FY 2025 Performance Call. [Operator Instructions] Please note, this conference is being recorded. I would now like to turn the conference over to your host, Maria Ricardo, Head of Investor Relations. You may begin. Maria Cristina Ricardo: Thanks, operator. Good morning, and thank you for joining us today. With me are Adrian Neuhauser, Chief Executive Officer of Abra; Manuel Irarrazaval, Chief Financial Officer of Abra; Gabriel Oliva, President of Avianca; Nicolas Alvear, Chief Financial Officer of Avianca; Celso Ferrer, Chief Executive Officer of GOL; and Julien Imbert, Chief Financial Officer of GOL. Our financial statements for the year ended December 31, 2025, as well as the presentation we will reference today are available on our investor website, abragroup.net. This call is being recorded, and a replay will be available shortly after the call concludes. Before we begin, I would like to remind you that on June 6, 2025, GOL successfully emerged from Chapter 11 reorganization, at which point, Abra became the controlling shareholder of GOL and began consolidating its financial results. Accordingly, GOL's results are included in Abra's consolidated financial results from that date forward. To facilitate comparability of financial and operational performance, our remarks today will reference pro forma results as if Avianca and GOL were combined for the full year periods presented for both 2025 and 2024. Today's discussion may include forward-looking statements, which are not a guarantee of future performance or results and involve a number of risks and uncertainties that are outside the company's control, including those related to the company's current plans, objectives and expectations. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations. The company assumes no obligation to revise or update any forward-looking statements. We'll begin with an overview of the business, followed by a review of our operational and financial performance for fourth quarter and full year 2025 and closing remarks before opening the call for questions. With that, I will turn the call over to Adrian. Adrian? Adrian Neuhauser: Thank you, Cristina. Everyone, thank you for joining us. If we can turn to Page 4, please. This is the first quarter where we are presenting our consolidated results as a group. We're really excited about this and proud of what we're going to show you. Slide 4, for those of you that have not joined us before, is just a summary of really what we are. We are today the second largest airline group in Latin America with the result of the consolidation of 3 main carriers: Avianca, which is the #1 airline in Colombia, Ecuador and in Central America; GOL, the second largest airline in domestic Brazil; and Wamos, a European ACMI provider. By putting together those groups over a few short years, we've created -- or those airlines over a few short years, we've created the second largest group in the region with over 300 aircraft, 375 routes, over 70 million passengers a year, 30,000 employees. Importantly, the strongest order book in the region, both on the narrow-body and wide-body side and also an agreement in principle to acquire SKY, which would add to our footprint domestic Peru and domestic Chile. Turning to Page 5. What did we achieve this year? First of all, we -- as Maria Cristina highlighted, we successfully completed GOL's restructuring, emerging as the -- with GOL emerging from its bankruptcy as a more sustainable and competitive airline and with Abra resulting as the controlling shareholder of GOL. We continue driving synergies. Today, we have over $180 million cumulative in value creation by increasing coordination across fleet, procurement network, commercial and loyalty. And we strengthened our leadership team as we drive more coordination through the group. We now have a Chief Procurement Officer, Chief Loyalty Officer and Chief Corporate Responsibility Officers at the group level. On the operational side, we announced a robust incremental fleet plan and the expansion of our wide-body strategies, adding 330s and 350s to enable the future growth and drive more efficient operations. We enhanced our value by coordinating our airlines more and beginning the process of aligning our products to drive an improved travel experience and operational excellence. And we continue progress in sustainability, delivering ongoing improvements in fuel efficiency while improving connectivity in the region. What does this mean financially? It means we achieved a pro forma adjusted EBITDAR growth of 26%, $2.7 billion for the year at a 27.4% margin. That's an over 300 basis point increase. We ended the year with liquidity at over $2.5 billion, about 25% of our LTM revenues and net debt to LTM EBITDAR decreasing sequentially to 3.3x. Both of our important additional business units, Cargo and Loyalty delivered strong performance. Cargo, in particular, delivering approximately $1.6 billion revenue generation on a pro forma basis. And importantly, and we'll talk about this later on, we aligned accounting policies across the airlines in line with market standards. Turning to Page 6. So what are we today? As we said, second largest group in the region, both of the key airlines in the region performing admirably, 98.3% schedule completion for Avianca and 99.2% for GOL. Both airlines with some of the strongest on-time performance in the world, continue to drive brand loyalty, one of the largest loyalty programs in the world combined with over 46 million members, a 34% increase in premium customers through our networks, 7% increase in gross billings and the program member share of our total passengers on average at about 50%. We drove an enhanced customer experience. We upgraded our premium offering through Avianca and VIP lounges and Insignia check-in in Bogota, and we enhanced our long-haul Insignia experience on the transatlantic routes. We've rolled out Business Class across the entire Avianca network, and we announced the fleet expansion, adding 7 A330-900s to support international growth for the group. Up to 5 of those will initially go to GOL and 2 to Avianca. Turning to Page 7, consolidated business indicators. ASKs growing nearly 12% on -- for the group with load factors holding at above 80%, passengers increasing by 5%, average fare in the network increasing, PRASK holding almost flat and PAX CASK holding about flat. Turning to Page 8. If you look at the 2 carriers to understand what's going on in the underlying, both carriers showing strong growth in their networks. GOL, if you'll remember, putting its fleet back in the air and recovering its operations as it worked through its bankruptcy, but also an important redesign in the network with GOL increasingly focused on strengthening its Rio hub. Avianca continuing to grow by extending stage length and expanding flights out from Bogota into the rest of the region. Passengers in Avianca decreasing slightly as we extended the stage length over 7%, average fare increasing at GOL, passengers increasing pretty much in line with the growth of the network. PRASK at both companies holding in spite of the very strong network expansion and CASK at both companies -- at Avianca continuing to decrease slightly and at GOL holding basically flat, passing through a little bit of inflation at about 4%. Turning to Page 9, handing it off to Manuel Irarrazaval, our CEO -- our CFO, sorry, to continue with the conversation. Manuel Irarrazaval: Thank you, Adrian, and good morning, everyone. I'll walk you through our financial performance for the full year. Maybe we start in Page 9 on the pro forma revenues. Pro forma revenue for this year has increased 11% to $9.7 billion. That is driven in about 8% by passenger revenue and as Adrian was explaining before, and a very strong increase in other revenues in cargo and others with that increase is about 31%, right? In terms of EBITDAR, we -- the company delivered a very strong pro forma adjusted EBITDAR growing almost 26% to almost $2.7 billion for the full year with a margin of 27%. If you look at that number as of the fourth quarter, in particular, it had a margin of 30.6%, which is a very strong margin and reflects the great performance of bringing in GOL and the improvement of GOL's margin over the fourth quarter and a very favorable seasonality in the fourth. I would like to highlight that we are not highlighting the metrics below EBITDAR as depreciation and interest are available under our current accounting policies and therefore, kind of the year-over-year comparison is not very meaningful. However, the numbers are in the back of this deck. If we go to Page 10 and we look at the balance sheet, we have ended the year with a strong liquidity, almost $2.5 billion of liquidity, which implies a 25% ratio of liquidity over revenues for the year, which we believe is a very strong point. In terms of net debt, we had a 16.6% reduction of net debt over the year, mainly coming from the restructuring of GOL, right? That has taken our net debt to EBITDAR, the net leverage metric down from 5x before in '24 to 3.3x. And this is an important driver for us, and we will continue kind of deleveraging as time goes on. If we go to the next slide, Slide 11, you can see the performance for the fourth quarter in particular. You can see ASKs at 31.2 with a load factor of 82.6%, which has helped us deliver an EBITDAR margin of 30.6%, as I said before, and again, highlight to you the level of leverage and liquidity that we are finishing the year. Going next to Page 12 exactly. I will also I will also touch on the point of the fuel volatility. As you all know, we have been monitoring very closely the events happening in Middle East and the impact that fuel has on our operations. In general terms, in these months, a $1 increase in jet fuel price has resulted in a $70 million impact on our monthly fuel expense, which means that to compensate that, we would need to increase prices in about 10% for every dollar that has increased. What have been we doing? On the right side, you can see that we have hedged 50% of our fuel needs for the months between March and May. putting in place a zero cost collar with a call strike at $2.45. That was a very good protective measure that we took right before the war started. And we have increased that hedging recently with another 14% of the fuel needs until the end of August at a strike price higher, of course, because the market has moved up significantly. In Brazil, in particular, the fuel pricing mechanism going through Petrobras allows the companies to feel the impact of fuel with a month of delay, and that has given the company time to try to pass through some of this into price. We continue to work with -- our commercial teams continue to work very disciplinedly on price management and being able to pass prices over to the tickets and to compensate for the increases of cost. With that, I finish this section on the financial results, and I will pass it over to Gabriel so that he can cover Avianca's full year performance. Gabriel, all yours. Gabriel Oliva: Thank you so much, Manuel, and welcome you all. If you turn to Page 14, I will give you highlights of Avianca's full year performance in 2025. More on the operational level, as Adrian commented, we're pretty proud of what we achieved. We continue expanding our network. We launched 13 new international routes with 4 new, completely new destinations, reaching more than 160 routes finishing the year, 83 destinations in 27 countries. As it was commented before, we finished that reallocation of capacity, moving -- expanding our stage length, moving capacity from Domestic Colombia into international markets, driving more than 7% our stage length and a much more healthier and balanced supply-demand dynamics. We continue -- and we continue investing. We invested and we continue investing in our product and brand loyalty. Right now, we have completed our rollout of Business Class in the entire network, including all our domestic markets. We opened new VIP lounges and dedicated Insignia, which is our transatlantic business class check-in space in Bogota and strengthening our premium customer and loyalty value proposition. And in the operational level, as it was touched upon before, we delivered a very robust performance, which we are proud of, while we navigated 3 industry-wide challenges with the engines that affected most of our family types of aircraft. On the financials, we achieved at Avianca an adjusted EBITDAR of $1.5 billion, which was more than 20% growth year-over-year at 26.5% margin, more than 200 basis points growth year-over-year. As Manuel was saying, on Avianca, we continue reducing our net leverage sequentially to 2.7x and liquidity reached $1.4 billion, which is close to 25% of last 12 months revenues. And that includes a $1,200 million undrawn revolving credit facility. And our business units were very proud of the performance they achieved. Cargo, a strong performance with market dynamics supporting that, and we completed our strategy of a network redesign, refleeting our cargo network right now having 9 A330 freighters across our cargo network. And in Lifemiles, we reached 16 million members and customers by year-end, which is more than 14% growth year-over-year. And at Wamos, we delivered its full year -- first full-year performance within the group, supported by very strong widebody demand. So turning to Nico to get more into the financials. Thank you very much. Nicolas Alvear: Thank you very much, Gabriel, and good morning, everyone. Turning to Slide 15, delving deeper into financial performance. You can see that Avianca generated EBITDAR of about $1.5 billion, up 21% year-over-year, with margins expanding by over 200 basis points to 26.5%. Importantly, fourth quarter EBITDAR, which you can see in the appendix, reached $463 million at a margin of almost 30%, which is about 60 basis points stronger versus last year. So overall, this reflects the combination of disciplined capacity growth, improved network efficiency, continued cost control and higher premium revenue generation driven by the rollout of Business Class across our network and the strengthening of our loyalty program. Also, as Gabriel mentioned, our Cargo business, Lifemiles and Wamos posted remarkable performance during the quarter and the year. You can appreciate that EBITDAR generation translated into continued balance sheet strength with liquidity increasing $110 million to roughly $1.4 billion, representing about 24% of last 12-month revenue. And notably, our net leverage declined to 2.7x, down sequentially from 2.8x in the prior quarter and from 3.3x in the prior year, driven by EBITDAR growth and relatively stable net debt. Between early 2025 and early 2026, we continue to strengthen our capital structure, refinancing approximately $1.75 billion of debt, mostly our bonds to 2028, pushing out maturities to 2030 and 2031 and optimizing the use of our collateral. So overall, our operating performance is giving us greater flexibility to manage through the cycles, continue investing in our business and our customers and contribute to the broader Abra platform. And with that said, I'll turn it over to Celso to discuss GOL's 2025 performance. Celso Ferrer: Thank you, Nico. And moving forward to Page 17. I want to share the GOL highlights for 2025, which was a really transformational year for GOL, as mentioned, marked by a successful completion of the Chapter 11 process in June and strengthening the capital structure of the company, which provides a solid foundation going forward. Operationally, the focus has been on increasing capacity with discipline. We saw a strong year-over-year capacity growth in international markets, reaching more than 13 countries. Domestic growth was supported by 11 aircraft returning to service and improved fleet availability. Importantly, that capacity has been deployed where the demand is strong and where returns justify it, consistent with the strategy that GOL has outlined over the course of the year. At the same time, GOL continues to benefit from its leading position in Brazil with a strong presence in key markets such as Sao Paulo, now more than ever, Rio de Janeiro and Brazil, including slot-constrained airports that support frequency and commercial relevance. The network is a high frequency with strong connectivity that drives both cost efficiently and customer preference, supporting health load factors as capacity increases. GOL is also beginning to selectively expand its long-haul operation in international markets, including the recently announced Rio JFK service. Operational quality remains a clear strength. GOL was the #1 airline in Brazil for on-time performance for the second consecutive year, which supports both customer loyalty and commercial performance. From a commercial perspective, Smiles continue to be the core driving of earnings quality with a large engagement from its base and diversified partnerships ecosystem that supports recurring high-margin cash flow generations. In Cargo, GOLLOG continues to perform very well, supported by the addition of 2 dedicated cargo aircraft, totaling 9 aircraft at the year-end, strengthening the Mercado Livre partnership and benefiting from a strong demand in e-commerce and express logistics. So overall, what you see in GOL is a disciplined recovery, increasing capacity, maintaining strong operational quality and strengthening the business commercial and earnings profile. Julien will speak about our financial results. Julien Imbert: Thank you, Celso. Moving to Slide 18. We are very happy to report that once again, we're outperforming on our plan since emergence. So it's the third quarter that GOL has been outperforming the [ 50 ] that we had published at emergence. If you look at EBITDAR, we reached an EBITDAR of $1.2 billion, which is an increase of 32% versus last year and a margin of above 30%. This is driven mainly by our growth on capacity growth plus price growth in local currency and our continued control on our cost. Liquidity also is ever stronger at $1 billion in liquidity, representing 25% of our last 12 months revenue and a significant increase versus the position of last year with 43% increase versus 2024. Regarding net leverage, we've been able to reduce our net debt over EBITDAR to 3 turns in 2025, accelerating the deleveraging of the company and pursuing our commitment to a healthy balance sheet. We are very happy with those results that underline our purpose of being the first airline for everyone, our clients, our investors and our teams. And we continue to deliver on our plan with consistency and discipline, building an ever stronger goal. With that, I will now turn the call back to Adrian for closing remarks. Adrian Neuhauser: Thanks so much, Julien. So to summarize, and as I said, really, really proud of the network of the results we're delivering this quarter. First of all, a continued focus on customer experience, boosted by differentiation and brand loyalty as we integrate the power of the 2 brands, but also take advantage of the increased connectivity and frankly, of the know-how that each of the 2 companies brings in creating a unified customer experience. Number two, revenue growth and disciplined cost management that drove higher margins; three, adjusted strong adjusted EBITDAR and liquidity and continued balance sheet deleveraging and very, very proud of the results our business units are delivering through the year. With that, I'd like to turn it over to I'd like to turn it over to Q&A. Operator: [Operator Instructions] Your first question for today is from Mike Linenberg with Deutsche Bank. Michael Linenberg: Great way to finish up 2025. And obviously, now as we look into 2026, the high energy prices are kind of the front and center of focus. I saw that you have these hedges, clearly opportunistic. What are you currently paying for jet fuel? I mean I saw that in the context of that $4 per gallon jet fuel hedge. What are we seeing today? And then can you kind of give us a view on how you're thinking about your capacity plan for this year? I mean I know we're starting to see other carriers sort of rethink near-term growth plans as they deal with higher fuel prices. Manuel Irarrazaval: Thanks, Mike, for the question. And yes, I mean, it's been an interesting start of the year with these movements. In terms of what are we paying for fuel today, there is a certain delay in kind of the cost of fuel as kind of our suppliers have some inventory. So we are today kind of spot price today where kind of outside of Brazil, I would say, is around $4, a little bit under that. In terms of the -- that is the fuel price that we're paying without kind of taking into account the hedging, right? In Brazil, it's going to be lower. I don't have the exact number here, but it's going to be lower than that. Then on top of that, you have the compensation that is coming from the hedges, right? From March, April and May, we have -- half of our volume is capped at the $2.45 that I referred to before. So that's what we're paying. And that is mostly -- that is the fuel that is being consumed outside of Brazil, right? And Brazil still hasn't seen -- we're just starting to see kind of the new price -- the price reset now on the 1st of April, right? So you're going to start to see an effect of the price increase going forward, right? Adrian Neuhauser: And so with regard to capacity, Mike, if you were to look at our sales curves today, what you'd see is the following, right? We've started pretty aggressively passing through the increased cost of fuel, right? So we're not relying on the hedges to boost margins. We're basically using them as a way to soften the transition to new pricing as we drive the pricing up. And obviously, there's a lag there, right? If you were to look at pricing in Brazil today, we're up, and I think the industry broadly is up about 30% from where we started a little over a month ago, which if that holds, right, that's pretty much a full pass-through of [ mid-4 ] fuel. Now obviously, because you've sold lots of bookings forward, there's a mix of bookings that you sold at lower prices, bookings that you sold at high prices, and it's going to take the better part of 3 months even with the new pricing levels for your average pricing to catch up. And then the second part of that is how much of that turns into reduced demand because that will ultimately answer your question, right? What we're seeing so far is that the short end of the booking curve is holding up pretty well. And -- but you're seeing the later bookings not come in, right? And the question is, do they show up later? Or do they -- which interestingly, if you think about what later means today, later sort of means the beginning of summer high season, right? And so it's not a crazy bet to assume that they will or do they fall off, right? We've started in Brazil, in particular, thinking about some tactical reductions sort of in the single -- low single-digit percentages of ASKs. But the reality is we don't know yet, right, how elastic is that going to prove and how much we need to react to that, right? So we're looking at it constantly. And as soon as we sort of start to see near-term bookings taper off, that will be a strong sign that we need to cut back on supply, right? On the Avianca side, the pass-through has been, I'd say, less effective. It's a more complex competitive set, right? You have over 20% of your ASKs deployed into Europe. The Europeans are largely hedged. You have 35% of your ASKs deployed into the U.S. The U.S. carriers, in spite of their big talk have actually been slower at sort of driving pricing up, at least in our region [indiscernible] and they've been slow followers as well. So we're slightly under 10% increase in pricing at Avianca. And again, we need to get to sort of the mid-20s, right? So call it 1/3 of the way there. And sort of the same dynamic, right, less to no impact on the near-term bookings, which is interesting because we've been in a low season. But a pretty strong drop-off in the long-term bookings, which is interestingly because -- which is interesting because those are high season bookings, right? So right now, I don't want to sound sanguine because this is obviously an unexpected sort of shock to the system, right? And it's not a positive shock. But between the hedges, between the effectiveness of our ability to pass through and between the near-term booking curve holding up even in low season, we're pretty optimistic about summer demand. You may see us pull back a little bit of capacity here and there, but we haven't yet decided to sort of make wholesale reductions, certainly not into the summer, right? If we see this dynamic holding up for a few more months and then sort of have to extend higher pricing into the much more elastic sort of post-summer shoulder season, that's a different discussion. Michael Linenberg: All right. Well, very encouraging that you guys are -- you appreciate the elasticity and are considering tactical moves if this fuel regime or environment continues, or it persists. So thanks for the thorough answer. Manuel Irarrazaval: Mike, to go back to your question around the fuel, in Brazil, in particular, the price announced by Petrobras for April is BRL 6.85 per liter, right? That translates into about $4.9 per gallon, which remember, that includes a non -- insignificant amount of taxes. And that -- so you have a reference is about a 55% increase against the price that was -- that we paid during March, right? Remember that in Brazil, the price kind of reflects the average of the previous month, right? So you're seeing -- you saw 55% increase when kind of world jet fuel prices increased kind of on spot is more, it's double, right? So it's a moderated increase by Petrobras for the month of April and then probably May, you're going to see the pull back, right? Adrian Neuhauser: And Mike, one more comment on your comment. We are cautious on elasticity. Again, like I said, we're monitoring it. The bigger concern, I think, for everybody should be less the price elasticity side, if you think. If you think about -- and this is an interesting data point, right? Because both GOL and Avianca have been pretty effective in keeping their costs in line and in driving higher loads, a 30% pass-through to fares would put 2026 fares on real terms at the same price we were charging in 2019, right? So you're actually interestingly not talking about sort of taking pricing to where it's never been, you're really sort of catching to inflation. So we are concerned about elasticity, but we're not panicked about it on the price elasticity side, right? If you have to think about what are we monitoring more long term, we're monitoring economic slowdowns and then income elasticity, right? Because that would have a much more significant impact, we believe, on demand than the fare pricing that we're passing through, in particular, when the entire market passes it through as well. Operator: Your next question for today is from Savi Syth with Raymond James. Savanthi Syth: I just -- maybe I appreciate the tactical capacity adjustments you might make. But I was wondering if you could talk a little bit about maybe the core capacity plan at Avianca and GOL this year and kind of where that kind of growth might be focused? Adrian Neuhauser: Sure. Celso, do you want to start with GOL and then we'll hand it to Gabriel for Avianca. Celso Ferrer: Yes, Adrian, I can. Savi, thanks for the question. And we have -- as I mentioned, 2025, we were like catching up the capacity that we lost during the pandemic. And basically, by creating connectivity, design the new network with the entire Abra team focused in regions where GOL used to be strong, but we see even higher potential for the company right now. I can give you two examples. One is Rio, the other one is Salvador that we are -- that both concentrates more than 86% of our growth in 2026. In Rio International, we have created a very strong position, high frequency where we believe if we need to do some tactical reductions, we will be able to recapture most of the demand as the whole industry continues to be and follow the rationalization. So we are monitoring very close. As Adrian mentioned, no decision, and we are not looking for restructuring of the network. We are confident. You saw our results, I mean, with ASK growth and unit revenue growth. So we are, I mean, monitoring close and doing these adjustments so far, okay? Gabriel Oliva: Sorry, Celso, go ahead. Celso Ferrer: No, no, please Gabriel. Please, go ahead. Gabriel Oliva: So on the Avianca side, as we commented and we were talking last year, we did this capacity shift to have a more healthy supply and demand balance, right? We extended the stage length more on the international side, and we did some adjustments in Domestic Colombia. As we think about 2026, our initial plan was a modest growth within the mid-single digits, right? And that comes on really not getting so much narrow-body fleet this year. So adjusting the network throughout the same pattern, but not a high growth. And on the wide-body side, it's really, as I said before, and we commented before, right, last year, we had this -- all these disruptions due to the wide-body engines that we commented on the last call. So it's more about putting our network on the wide-body side that getting all the [ 78s ] and all the 2 A330s that Adrian commented. So in a nutshell, we were not thinking on a high growth in the network this year, and it's basically keeping kind of the same pattern that we were having last year into this year. Operator: [Operator Instructions] Your next question for today is from Pablo Monsivais with Barclays. Pablo Monsivais: Just a quick question in terms of OpEx and CapEx. At this point, are you thinking of any measures to reduce the cash outlays, assuming the situation continues with a very high oil price? Manuel Irarrazaval: Pablo, thank you for the question. We are always looking at ways to optimize our OpEx and CapEx in particular, where kind of the amount of the CapEx around engines has turned to be more significant. We're also looking at ways, Pablo, of taking advantage of facilities or kind of using local facilities to be able to fix engines in Brazil, for example, which would give us also some kind of support in terms of being able to finance those. But yes, we are, of course, working on optimizing the CapEx and the OpEx plans. Operator: Your next question for today is from Guilherme Mendes with JPMorgan. Guilherme Mendes: I appreciate the comments on the first question about the demand outlook. Just following up into that, if you can break it down between different segments, think about leisure and corporate and domestic and international. When you say that you're increasing prices by 30% in Brazil and roughly 10% in Colombia, is this across the board for different segments? Or there's a difference between leisure and corporate and domestic and international? Adrian Neuhauser: No. What I'd say, we can dig into this more, right, offline. But what I'd say is, look, conceptually, it's across the board, right? We've tried to increase across the board. Obviously, there's some self-segmentation, right? If we're saying the shorter end of the booking curve is holding up very strong, the longer end of the booking curve is where we've seen some still TBD, if it's reduced demand or simply delayed demand. The shorter end of the booking curve tends to be more business focused, right? So we're passing through on everything. But what you're seeing is the leisure customer not book up as early as they would. And that's sort of natural, right? You'd expect the people that they thought the summer ticket was going to cost X, right now it's costing 1.3x. They look at it and they say, well, let's wait a bit before we book it and see if it drops, right? So I think there's some sort of self-selection there that's not us segmenting where we raise prices and where we don't, but sort of how people -- how different parts of the market react to changes in our pricing curves. In Colombia, as I said, it's a little different because even though we raise fares across the network and we intend and push for our pricing to go up and hope that our competitors will follow. The nature of the network means that you've got different competitive sets, right? So when you say international, again, our U.S. fares, we've been through -- don't quote me on this, but 3 or 4 price increases. I'd say 3 have stuck and we've had to pull back. And it has to do with whether competitors follow or not, right? And that has to do with sort of the competitive set you're playing against, right? In Europe, the European carriers have been much less willing to raise fares. I think that the position they're taking is they're more hedged and they're using that to try to capture market share. They're also driving some pretty extraordinary margins on their Far East routes, right, as connectivity sort of goes through Europe and avoids the Middle East, that's also giving them some incremental margins and allowing them to not pass through as quickly on the Americas route. So in those cases, we're probably 25% of the way passed through instead of 30%, right? So it depends more on who you're competing against than us segmenting international versus domestic versus what have you. Does that make sense? Guilherme Mendes: Very clear. Operator: Your next question for today is from Gavin McKeown with Amundi. Gavin McKeown: Just last question I have is in relation to the additional hedge that you mentioned. Can you give us any color as to whether or not that was at GOL or at Avianca? Manuel Irarrazaval: No. Look, the hedges themselves, we take them at Avianca, which is the company that has less -- has a more direct impact from changes in fuel prices, right? And of course, the company that has more ease to find with banks and other things, right? So -- but yes, they're being taken at Avianca today. Operator: Your next question for today is from Nicolas Fabiancic with Jefferies. Nicolas Fabiancic: Just had a few quick questions here. On GOL, if you could please expand a little bit about liquidity, especially when we look at liquidity without the credit card receivables, any thoughts there in terms of alternatives, things you could do with the intercompany loan or any contemplated reshuffling of the GOL capital structure at this stage? Regarding Abra, similar question. We have the '29s bond. I see that it's callable in October. So just any updated comments around liability management or refinancing for the Abra '29s or the term loan? And then at Avianca, you've made great progress with the refis there. There is the stub left over for the '28. If you could give us an update on liability management at Avianca. And also, I just wanted to ask about Avianca, the CapEx plan if you could give a little bit more detail on CapEx for 2026. Manuel Irarrazaval: Listen, let me -- thanks, Nicolas. Let me start by addressing Abra in general, and then we can go into the different points, right? The liquidity position that we have across each of the companies is very strong. In the case of Avianca, we have -- we finished the year with $1.4 billion of liquidity. That includes the revolving credit facility. At the level of GOL, we have about $1 billion, which includes the receivables, which, as you know, in Brazil, is a fairly liquid asset that you can get -- you can sell off. It's like having a revolving credit facility. Now in terms of kind of you're asking about the capital structure of GOL itself, there is no plans today to do anything around that. The company is in a strong position and has been deleveraging over time. Of course, we are looking at CapEx and OpEx and kind of how do we make sure that we keep our liquidity levels and our cash levels, in particular, at a reasonable amount going into this. But there is no plans or kind of things that I would comment on doing liability management at this point, right? And that's in general for the group. I think that given kind of the market environment today, I think liability management are not in discussions today. Same thing with Avianca, right? In Avianca, if you remember, we did a couple of refinancing at the beginning of the year. We brought down -- we repaid a big part of the '28 notes with a bond that we did at the beginning of the year and recap that we did in later in January. And there's about $400 million of the '28 notes outstanding. We have no plans on doing anything with those in the short term, right? And our financings at Abra, yes, we're approaching kind of the end of the non-call period, but that's a bigger question. In the market that we have today, I don't see that we're doing anything in the short term. And just to be clear, on the GOL liquidity that you see and the cash that you have there, that is real cash and liquid facilities, right? I mean, and liquid assets. So it's not -- we're just showing you there the cash and the factorable receivables. Anything -- any kind of receivables that is not factorable, we will not include there. Operator: [Operator Instructions] We have reached the end of the question-and-answer session, and I will now turn the call over to Adrian for closing remarks. Adrian Neuhauser: Thank you, everyone, for the time you spend looking at us. Again, really proud of the quarter we've delivered of the evolution of the company as we put it together in a very short time. The synergies we're driving, the growth that we've driven, the margins that we think are second to none in the region. We're really proud of what we've delivered. We're working through the fuel situation, as you can see, pretty effectively, the hedges have put us in a great position to work through it and pass through pricing as we head into summer high season. So all in all, even with the geopolitical backdrop that we're dealing with, very, very excited for what the year will bring. So again, thank you all for spending the time, and we'll be talking to you shortly. Manuel Irarrazaval: Thank you very much. Operator: This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.
Operator: Good morning, ladies and gentlemen. Welcome to the Ceres 2025 Full Year Results Investor Presentation. [Operator Instructions] I'd now like to hand over to the management team, Stuart, Phil, good morning. Philip Caldwell: Good morning, everybody, and thank you for joining us for the 2025 full year results presentation. I'll talk you through an update on the company and the strategy to begin with, and then Stuart will obviously talk you through the financial numbers, and we'll obviously go into Q&A at the end as usual. So at Ceres, we're operating on 3 strategic imperatives. The first one is signing more licensees. So new manufacturing license partners is a key focus for us as a business. The second is once we have those partners, bringing those partners to market. So that's obviously assisting them as they scale up and put in capacity, but also actually helping to stimulate demand, which actually helps pull through the products that we're developing with partners. And the third is obviously technology leadership. We believe we have the best solid oxide technology in the world. We have a single stack platform, which we're actually going to be launching in April. And we need to maintain that technology leadership advantage because that's what our partners come to rely on from Ceres. So over the last 12 months, we've made significant progress on all these activities. The first thing to say is there is an acute need for power driving the commercial interest in our technology right now and particularly for SOFC technology in the wider landscape. As we go into partner progress, in the past 12 months, we signed a new manufacturing license agreement in China with Weichai, our partner. We'll give you a little bit more on that today, but that's going extremely well, extremely rapidly. In Taiwan, Delta is also scaling and starting to produce first prototype products and is also investing significantly in land and facilities to do that scale up as well. In South Korea, a big milestone for us in the past 12 months with Doosan starting production at the factory there, both for SOFC stacks and power systems, and that also generated first royalties for the company in this period. In Japan, our partnership with DENSO on the electrolysis side began production of first hydrogen with JERA and also led to government funding recently with an estimated value of about JPY 35 billion, approximately GBP 165 million to continue the advancement of SOEC technology. Great progress in India with Shell. The megawatt scale electrolysis demonstrated actually exceeded performance expectations, high efficiency but capacity as well. And we're progressing now towards the pressurized systems as well with Thermax and Shell and Thermax developing a new pilot facility for testing of those systems. We also undertook a business transformation plan around those 3 strategic imperatives that we talked about. And we've restructured the business, very much focused on accelerating the commercial opportunities. So after 25 years of developing this technology, we are now at that point of commercialization and the point of first production and scale up. We'll talk more about this business transformation, but there's a cultural change there, but also it's anticipated it will drive cost savings of around 20% this year compared to the 2025 cost base. And we finished the year with a very strong cash position of over GBP 83 million at the end of the period. So again, we'll talk in more detail about financial management in the second half of the presentation. We had some news this morning as well, which is very pleasing, partnership with Centrica here in the U.K. It's fantastic to be able to actually bring this British technology to the U.K. And this really is part of our second pillar of that strategy, which is how do we stimulate demand and how do we bring this technology forward at scale. Centrica, as you all know, FTSE 100 leading energy integration company. The statement there is about a multi-gigawatt opportunity that we see in the U.K., Centrica sees. And that's on this gap that we're seeing as we have more need for electrification. We have a time to power need that's becoming quite acute. And this modular high-efficiency technology can really service that market, both in terms of the data center needs, commercial and industrialization partners as well. So the purpose of this is we're introducing our licensing partner network to Centrica, the whole ecosystem of manufacturing partners. And we will support Centrica in terms of bringing that forward, if you like, acting as their technical advisory arm, helping them to set up this model of how they go to market with this. So that will include our expertise in things like installation, commissioning, remote monitoring, maintenance, recycling, all of those good things that we at Ceres know how to do. The initial focus will be the data center market, commercial customers and industrial power. So that's a fantastic step forward for us today, and we'll have more details on that. We have an upcoming Capital Markets Day on April 15, and we'll be able to provide you with more detail on that and from Centrica as well. But that's just in very exciting development today. I mentioned also the single stack platform. So we're going to launch that also at our Capital Markets Day. One of the things that's unique about Ceres is the solid oxide platform, the same stack, the same cell technology can run in both directions, both for power generation and for green hydrogen. That's an amazing benefit to our partners because as they develop the supply chain, as they scale up, that investment that they're putting into factories now for power generation also has this dual use aspect in the future for hydrogen as well. And as you can see in the chart here, that same stack technology is now going into products, Doosan, Weichai, Delta, but also we're using that on the hydrogen side with partners like DENSO, Thermax, Shell and Delta as well. Just wanted to spend a little bit of time on what we're seeing as the emerging demand for power. Our estimate is we see an opportunity for power generation using solid oxide of around 22 gigawatts by 2030. And we see that market roughly split about 50% the data center opportunity, but also a very significant part in the industrial and commercial applications as well. So around 50-50 kind of split. Geographically, it's an interesting split as well. About 25% of that is the U.S. market, which gets a lot of attention right now. I'm sure you're all covering data center applications in North America. But just under 20% of that is here in Europe as well. And the U.K. is a great market opportunity when you think about we have some of the highest power prices anywhere in the world. This is a market that really lends itself well to this application. And then about 50% of that market we see is Asia, the wider Asian opportunity as well. And with our partnership network, we're able to access all aspects of this market. So our aim here is to really establish the service technology as the industry standard, and we're doing that by embedding it in these global partners that are accessing and servicing these different parts of the market. Why is that becoming a critical factor? Well, today, if you need power generation, you're waiting about 6 to 7 years for a gas turbine. Small modular reactors are also coming down the pipeline, but they're about 7 to 10 years away. And then high-voltage grid connections, 5 to 15 years away. So right now, with this acute need for power generation, behind the meter or on-site generation is becoming a really viable alternative because there just isn't the conventional power generation equipment available. I think it also opens a window for us in terms of the technology today is good enough. It's viable in terms of its lifetime, its performance and its cost to actually enter the market. And as we scale, we anticipate these costs coming down significantly. Just to show you some of the progress that's being made. These are the first units developed by Delta, took a license just under 2 years ago. So this is a Thai power in Taiwan. So you can see here the first prototype units being made using car stacks, but all the systems done by Delta. Delta are fitting out their production as well, and they're on track. Delta is a very exciting partnership for us because when we talk about that data center market, Delta are already very much in that supply chain. I think by market cap now, they're the second or third biggest company in Taiwan after NVIDIA and Fox. And where we fit in is they make solid-state transformers, they make power conditioning, they make UPSs, et cetera. So by adding in the power generation capability of the solid oxide, they're developing a complete offering from fuel in all the way through to power out. And that power out can either be AC power or in the data center application, 800-volt DC. So don't forget that the fuel cell technology is actually generating DC power and the way that you actually combine stacks, you're very close to being able to match up that 800-volt DC power direct from the power generation unit, which is the SOFC. It's fuel flexible. So we run on natural gas today. We can run on biogas. We can run on hydrogen in the future. It lends itself extremely well to things like carbon capture. And also, if you want to, you can capture the heat or convert that heat into cooling through absorption chilling as well. So you have the option to go from low carbon all the way through to zero carbon and also push very high efficiencies. In Delta's case, the same market applications apply. It's microgrids, AI data centers, even for the semiconductor industry and manufacturing in general. So I think this is a really good illustration of how our partners take this technology and put it into a complete offering for these kind of market opportunities. Weichai is an exciting partner for us. We've been working with them on system level for about 7 or 8 years now. Their systems are very impressive, I have to say. And I'm expecting this year, they'll launch their latest system, which is going to be a very impressive unit. We've taken the step with them. We've done the technology transfer. So we signed last November. already, we're going very quickly, and there will be more to come from Weichai this year, but they're probably going, I would say, faster than any of our partners have ever gone before. Doosan factory, I was privileged to go around the factory. I've been a couple of times, but this was in July with Doo-Soon Lee, the CEO of Doosan. First production was there. And when you actually get in there to see the realization, the single piece flow end-to-end, it's about the size of 3 football pitches, semi-clean room, it's an impressive facility. And they've actually fulfilled their first capacity orders in the past few months, and that factory is now up and running. So that's a big, big milestone for us going full circle. So Doosan is the first. We expect Delta starting to come on stream and then Weichai. So we are building out this ecosystem. On the hydrogen side, I think it's been fair to say that over the past 12 months, there's been more headwinds on the hydrogen side. But at the same time, I think that opens up an opportunity for, again, higher efficiency technology like the Ceres technology. And as I mentioned, all of the investments that are going in now are directly applicable on to the hydrogen side of the business. So extremely pleased with our partnership with Shell. We've exceeded expectations there. We've met all the targets that we set. And that's leading on to the pressurized development, which is now underway. So taking this one, which was the first atmospheric SOEC that we did and now actually putting that into a pressurized system that can be scaled to megawatt scale. And we're doing that engineering ourselves to begin with, but then in partnership with Thermax in India who can really drive down cost. And India is one of the big markets that we see for this green hydrogen in the future. So we see green hydrogen, particularly opportunities in China and India as those areas come on stream. We also did this with DENSO very quickly. So similar to the Shell container, DENSO actually deployed this on site within 18 months of actually taking the license, and that's using Ceres' technology. That's putting in hydrogen into a thermal power station to reduce emissions from conventional power generation. And that's unlocked further funding for DENSO as well. So great progress on all aspects of the hydrogen side as well. In terms of where we are as a business, we're building out this ecosystem of partners. And really, our aim is to be the technology provider of choice. So we now have manufacturing in Korea. We're seeing manufacturing being built now in Taiwan. That will come on stream in China as well and with DENSO in Japan. So really strong ecosystem of partners. Shell is more in the end user category, and we can add Centrica to that list of partners today as well for U.K. and Europe. So our aim is embed this technology to become the industry standard. So with that, I'm going to hand over to Stuart to give you the financial update for the past year. Stuart Paynter: Thanks, Phil. Good morning, everyone. I'm just going to take you through a few slides, just to give you a bit of an update on where we are from a financial position and financial planning position and some of the actions we've taken to put ourselves in a strong position to be able to execute the strategy Phil has laid out. So here's the headline numbers you can see. As you all know, the revenues of Ceres are largely dependent on how successful we can be in terms of signing MLAs. We signed Weichai in 2025, but towards the end of the year, we in sufficient time to recognize any revenue at all from that contract. So we're rolling that into 2026. But you can still see that the margins remain high, right? That's the asset-light model we retain, and we have good financial discipline around that. The other thing to note here is cash. We're still very strong on the cash side. You can see that the cash burn in the year was just under GBP 20 million. And like I said, that was without the benefit of having an MLA. So we're pretty efficient now. I believe we've got the optimized cost base, which I'll take you through. And you can see that the restructuring that we've been going through in the last few years has fed through to the cost saving in 2025 from 2024. There's more to come on that, but we'll take you through that and be very clear, we now believe we have an optimized cost base. So the actions we took towards the end of '25 will flow through to '26, but we really do think now we've got the correct team to prosecute the strategy, which we've chosen. So here's just a graphical representation of the revenue and gross profit. Gross profits remain industry-leading with the asset-light model we have. And of course, the success and the health of those are maintained by signing new MLAs, and we retain the confidence that we have the opportunities to keep on chasing that Pillar 1 on Phil strategy of signing new MLAs and be successful in doing that in 2026. So Phil mentioned business transformation earlier, very important to us. We now have that single stack platform commercially viable to get out into the market, and that started in earnest with Doosan with others to follow. And now we need to make sure that we are still innovating. Pillar 3 was keeping a technology lead, very, very important to a licensor. -- and we'll continue to do that with one of the biggest solid oxide expertise pools in the world. But now we believe we've reached a point where we need to just look at the focus of the company and be very, very commercially disciplined, commercially focused and make sure we have the right people in the background, giving the R&D sufficient attention that we have something to license in the future. And we believe during the end of Q4 2025, we've realigned the business to be able to do that. The flow-through of that will be a 20% cost saving in 2026, but all the actions needed to do that have been taken and are now finished. So now we're into a business transformation for this year, which is all about culture, team and making a cohesive unit so we can make sure that we succeed and our teams succeed at the same time. So we -- this is all crystallizing, as Phil said, in the Capital Markets Day where we're launching this single stack platform. We're very proud of it. And hopefully, that will make sense to everyone when they see it, and it's something we can go out and actively -- more actively sell into the marketplace. In terms of the cost base, so this is the optimized cost base we see for the next commercial phase. All the actions we've had to take have been taken. There will be a natural flow through into 2026 of this cost saving, but we are essentially building from here. We've still got a world-class R&D team. They're very focused on the things we need to do to be successful. That's cost down, that's lifetime. And we've strengthened the commercial teams in order that we can make the biggest impact we can on the top line. So we really do think we've got the right team, the right place, the right assets in place to make real success for the next few years. And why are we doing that? Well, you can see that commercial momentum essentially over the last few years has reduced our cash outflows. And we're very clear, we've now got the model of our business. If we can sign MLA on average every 12 months on that sort of cadence, we will be very close to breakeven and cash flow neutral. And that's important. That gives us control of our own destiny without having to rely on the capital markets. And it's building that MLA base so we can become that industry standard that Phil talks about. And why is that important? Well, the end goal for any company that's ultimately a licensing company is to build your royalty streams. As Phil mentioned, we're just at this orange blob stage here today. Doosan has fulfilled their first order at the very end of last year led to our first royalty revenues, a big milestone after 20, 25 years of development of this project. But we need now to push on if we can become the industry standard, essentially have a portfolio effect of many, many partners building, we're really going to be able to build these royalty streams, power first, hydrogen second. As Phil mentioned, this is the same technology, but you can attack 2 markets, one right and acute now and the other coming several years after. So we're in this in order to keep on signing licensing agreements, which we know we can for the next few years, and then it's all about building the royalty base. So we like the model. Every time we make progress with Centrica and partners, we think it reinforces the success we need to have that model. But importantly, we need to show that we're financially disciplined to keep this asset-light model, which we're doing. So with that, I'll hand back to Phil. Philip Caldwell: Yes. Look, I think we have a very clear strategy. I think the steps we took last year put us in an extremely good position with the asset-light model. The 3 priorities for this year remain unchanged. We're working hard on signing new manufacturing licenses. I think we're at an exciting stage now where you'll probably hear more from our partners this year as they're starting to actually scale and launch things, but also helping to drive that demand as per the announcement with Centrica today, that also helps stimulate that demand for our partners as well. And then the single stack technology platform launch is a key milestone for us. We do believe we have the world's best solid oxide technology. And we're now at a point where we can actually bring that forward rapidly to new partners and existing partners to scale both for power first and then for hydrogen as that follows. And we're starting this year with a strong cash position. We have around GBP 45 million of contracted revenue based on existing contracts from today for 2026. So we're in good shape. And I think the market opportunity has probably never been stronger, particularly on the power side. And I think now we need to get on and actually grab that opportunity, and we're well positioned to do so. So with that, I think we'll probably move on to questions. Operator: That's great, Phil. Thank you very much indeed. Before we go to those online, Phil, if it's okay, I'm going to come to the room. If you do have a question, just raise your hand and I'll give you the microphone. Christopher Leonard: Chris Leonard from UBS. Maybe 2 questions from me. And to start with, can we go into Centrica. And obviously, you spoke to the time to power and the need there. You also spoke in the presentation to the evolution of cost and what you see is feasible here. It will be really helpful to get a gauge on where you think your partners when they first push out these fuel cell products, where you think they'll land at on CapEx price and where you think that evolution can get to? Philip Caldwell: Yes. I have to be very careful here because whenever I start forecasting our licensees prices, I get into trouble. But let's just -- if we talk in general terms, the SOFCs that are out there at the moment are available at around $3,500 a kilowatt. If you take that in the U.K. market context, and you look at the spark spread of gas and power, then you can generate power very efficiently in the U.K. I mean, obviously, gas prices are moving around a bit at the moment. So I don't want to be precise on this. But given we pay in the U.K., the highest energy bills probably anywhere in Europe and even worldwide, when we map the U.K. out, when we look at market attractiveness, spark spreads, cost of power, et cetera, the U.K. is right up there, Northern Europe, et cetera. So it's a very significant opportunity. To go back to your question, Chris, we think that we can significantly generate power at a lower cost, even at a relatively high entry-level CapEx compared to turbines and other generation because we're so efficient, because of the OpEx, et cetera, and because of the lifetimes that we can achieve. So we think that there's a big opportunity there in terms of that deployment. And then the thing I would add is I think that kind of level is a starting point because I think what we see is a window that's opened up. So people need power. I think SOFC can now fulfill that power. And as our partners scale, we expect the cost of those SOFC units to come down quite significantly. Christopher Leonard: Yes, that was the second part. And then following up on Centrica. Obviously, you spoke to the contracted revenue for this year at GBP 45 million in the books, but presumably, I don't know, but I presume that maybe didn't include Centrica's potential contribution. Like what should we think about for engineering revenues and consulting fees, et cetera? Philip Caldwell: Yes. Look, the role that we're playing with Centrica is more in the advisory support side. So at the moment, that's going to be fairly modest revenue. So it's not like -- don't think of this like an MLA, they're not an MLA partner. The big value add of Centrica, obviously, we generate some engineering support fees, et cetera, there. But really, it's the deployment of our technologies through our partner network that drives that demand that ultimately drives royalties. That's -- we see them in that Pillar 2 category, not in the Pillar 1. So that's where we see that. So the thing that would really move the needle for us this year is new MLAs. Alex Smith: Alex here from Berenberg. Just a quick one on the next-gen kind of stack technology. You kind of mentioned it in your kind of closing comments. Kind of what the real benefit you think that could have to offer? And is that like a key milestone for the business going forward? And then second one is just kind of a new licensee pipeline, how the discussions are going to kind of bring new people in and new manufacturing products. Philip Caldwell: Okay. So look, the stack launch is the culmination of several years of effort. Over the years, we've increased the cell footprint. We've increased the stack height. There's a lot of focus on the simplicity to manufacture. We will continue to drive that in terms of getting down the actual installed manufacturing CapEx of what it takes to build those factories. But that stack itself represents what we believe to be the building block that all our partners will now scale on. And our technology teams, our R&D teams are really focused on driving cost and lifetime, cost as in the unit cost of stacks, but also the manufacturing cost and then the lifetime of the product. So that's where we see that technology evolving. And I think it's a significant milestone for the company because we've been in that investment mode for quite a while on the core technology and R&D. I think by launching this product now, you can see from the optimized cost base, we've got the right team to keep on innovating around that particular platform. In terms of the pipeline. I think it's grown considerably in the past 12 months. I think we're getting incoming from most of the kind of players that are in the power system market, in particular, because I think that's the acute need that people see. Obviously, we're very strong in Asia, but we're looking at how we build out that ecosystem as well. So it's grown considerably in the past 12 months. I would say on the hydrogen side, it tailed off a bit towards the end of '24, et cetera. But I think the -- as I look at the pipeline now, I would say it's about 70%, 80% driven by the power demand side of things as well. Alexandro da Silva O'Hanlon: Alex O'Hanlon from Panmure Liberum. A couple of questions for me. Firstly, well done on the Centrica deal. I'm interested if you could give some more color on how that came about? And is there scope for similar type deals in the pipeline? And the second question is just on the cultural change. You mentioned a couple of times in the presentation. Clearly, you're shifting towards being more commercial now. How are you tracking that and making sure that the change that you want to see is actually permeating throughout the business? Philip Caldwell: Okay. So on the Centrica deal, I reached out and I saw what was happening in the U.K. we saw the opportunity in the U.K. market. It's like this market if this technology is so good, why are we not deploying it in probably one of the most attractive markets for this in the world. So Centrica was a logical choice for that. One of the biggest LNG importers, they're looking to diversify. They're making investments in small modular -- advanced modular reactors for nuclear, et cetera. And I think once we started talking with Centrica, they saw the same thing that we did, which was this acute need for power, et cetera. So we were very, very much aligned. And so I think they're an excellent partner for us in the U.K. I think the other thing we didn't talk too much about today is not just on the power generation side, but also there is the potential to combine this with nuclear in the future to do hydrogen generation on the back of modular reactors. So there's a lot of good synergies there between the 2 companies. And we're very excited about that partnership. And as part of that process, what I did is with Centrica I took them and they've actually visited our partner factories. So they've been to Korea, been to Taiwan, been to China. And at that point, I think they realized this is real. And I think this is the key thing is the question we get asked time and again is, well, yes, fuel cells have had about fuel cells. Yes, but is it real? Does it really scale? -- aren't they expensive? How long do they last, et cetera? And then you go and you walk around the Doosan factory and it's like, oh, right, got it. This is real. Even before they went into the factory, it's like, okay, we know what you're talking about now. Is there potential to do that with other partners? I don't think we need to in the U.K., but it's an interesting model. We have so if we can stimulate demand and then we can introduce our ecosystem of partners, I think it's pretty powerful. So as part of that commercial discipline in the future, we will probably look to replicate this in maybe in other parts of the world. But in the U.K., it's Centrica. So in terms of the commercial progress, how we're tracking it, et cetera, our Chief Commercial Officer, Filip Smeets, joined us last year. There's a lot of rigor now in terms of the pipeline progress. We put more people in regions. We're just getting better, better and better at it through some discipline as well. And also demand helps. So we're getting incoming, but also people are starting to realize who we are. And I think in the industry, already, we've got a very good reputation. I think people, competitors, they respect our technology. I think the thing that people have always maybe had the question mark on is, well, how does Ceres scale and go to market. And I think that's what we're going to see coming through this year. Lacie Midgley: Lacie Midgley here, Bloomberg Intelligence. Just a couple from me. Stuart, your comment on securing the one partnership every 12 months and that triggering the breakeven point. I mean, clearly, that's the place we need to be to before the royalty scale. But I mean, I'd be interested in both your comments really, but what in your mind is a realistic number there because no doubt the demand is there to have as many MLAs as you can across geographies. But presumably, your current partners won't want that number going too high given the competition that they'll likely face in certain geographies. I mean what kind of number are you thinking there on kind of a longer-term view? Do you have anything around that? I mean... Stuart Paynter: Well, if you look at recent history, we've signed 3 in the last 2 years from the beginning of '24 to the end of -- we have set ourselves up that on an average cadence every 12 months, we will achieve what you said, Lacie, sort of breakeven and cash flow neutrality, right? But that's not exciting for anyone. That's just a stop gap until the royalties come along and it helps us diversify, build a portfolio of clients. We think there's really plenty of room to play. Phil showed a 22 gigawatt solid oxide market by 2030. Even if Bloom have scaled to 3 to 5 gigawatts by that, that's 15% to 20% of the market. There's plenty of room for plenty of people to play with plenty of applications and with a much bigger market coming along later in hydrogen. So we really don't feel like there's downward pressure on this number. It's a case of execution for us, building a pipeline, instilling commercial discipline and executing. These are big agreements. So they're very -- it's difficult to predict. But we believe we've got the right team in place now, led by Filip, as Phil said, with some really, really strong people sort of backing his team up to give us the best chance of executing. It's still difficult to do, but we -- given our recent history and new commercial discipline, we believe we can as -- the short answer to your question is as many as possible. Lacie Midgley: I mean as the royalties are stacking, that makes the commercial proof point easier to sell, right? So that all becomes a lot easier. Philip Caldwell: Yes. I think also, we've done this now 5 or 6 times. So building factories is something that we're getting we're getting pretty good at, but it's a learning curve. The first time you do it, second time you do it, et cetera. So -- but we also -- what's good to see is when you -- when our first licensees came on, they had to take a fairly immature supply chain and scale that as well and equipment builders. So when somebody takes a license, it's not just to the technology, it's to that whole ecosystem of partners. And so new license discussions now are much faster, much easier because in some ways, you'd say, well, okay, this is where you would get equipment builders from. This is your choices in supply chain, et cetera. So we started off with a very European-centric supply chain. And now we've added to that to our partnerships with Doosan, but now with the Taiwanese and the Chinese, we're building out quite a formidable set of supply chain partners as well. So that -- in terms of that credibility, not only do we know how to build factories and help our partners to do that, but we can also introduce them to a whole ecosystem of very willing suppliers as well. Lacie Midgley: That's helpful. And then just lastly, on Weichai, I mean, you talked about them moving very quickly, quickest out of all your partners so far. Just trying to kind of work this out. So how much of that is because maybe of the historical work that you had with the sort of legacy partnership? And how much of that is kind of versus your own kind of technology developments, maybe reducing time frames there or just Weichai's desire to get to market more quickly? Just trying to understand, firstly, how quickly they can get to royalties, but then I guess, the time frames from MLA signing to actually getting to royalties, future partnerships? Philip Caldwell: Yes. So when we're talking to new partners, we kind of give a guidance of less than 3 years. And we're obviously looking to reduce that all the time. But some of that's incompressible in terms of technology transfer, the time it takes just to actually build either greenfield or brownfield factories and equip them. But we roughly talk about that kind of time frame. Now in parallel with that, you've got not just the stack manufacturer, which for us now is becoming more like a blueprint. We can take people around our own facility in the U.K. And like I mentioned, we can -- we've got blueprints of how you build factories, and we've got an ecosystem of partners there. But then they also have to develop the product, the power system product as well. I think we started the relationship with Weichai with a system license, and we've developed that system with them over a number of years. But now what they're doing is very impressive in terms of their own system development. So I think they can go fast because the system level maturity is very good. And then it's that desire to get to market is how quickly you build out that capacity. And I think that's -- that's what's happening extremely fast. It's a fairly typical approach in Asia, in particular in China, but they set incredibly aggressive time frame. So they're looking to obviously reduce that 3 years quite significantly. Christopher Leonard: Just a follow-up on that actually in terms of the royalty outlook and thinking about Delta scaling up this year, the target to be online end of '26. Has that changed at all? Are you still looking at that time frame? And Doosan as well? I mean, how are you feeling about them looking into '26? Obviously, you recognize right at the end of '25, some royalty perhaps, but is there more to come? And how should we look at this year? Philip Caldwell: Yes. Look, I think on this year, fresh royalties are there, but they're still pretty modest. So I don't think it's that material into '26 is our guidance. Yes, Delta is on track, but really, that's going to be like '27 type time frame and then obviously, new partners coming on. So in the near term, we're really focused on the license fees, the engineering services still through 2026 and probably into '27. And then -- but royalties build from that point. So that's how we see it. We're not changing guidance on that really. Unknown Executive: It looks as though we're doing well for much into the room. So we've got a couple online that we might start to tackle. So the first one is regarding the Centrica deal. And given they're based in the U.K., you mentioned that there's going to be revenue from U.K. and Europe. And what is the likely spread for revenue, be it U.K.-centric or more broad? Philip Caldwell: I think that's really one for Centrica to look at. But their presence predominantly, it's U.K. and Ireland as well is a very attractive market. So U.K. and Ireland, and then they're active across Europe as well. But I think initially, our focus is predominantly U.K. and Ireland. Unknown Executive: Another question coming from the supply chain. So given the fact that the technology transfer includes quite a bit of the supply chain upgrades, do we have any concerns for material, rare earth material accessibility or scaling up to match our partners for the supply chain potential constraints that you see in other industries at the moment? Philip Caldwell: No, we don't because the nature of our technology, we use Ceria where the company gets its name from the major rare earth material, which is the most abundant. We're not using Scandia. We're not using where we use other rare earths, we're using very small amounts. So we're not concerned about constraints in any of those kind of materials. Unknown Executive: We also have a question on the pipeline, which is wondering when and if there's opportunity for U.S. partners? And have there been any constraints of why we haven't signed any EU partners either recently? Philip Caldwell: There's no constraints. And look, as and when I can update you on commercial activities, I will, but I can't give specifics on particular opportunities or geographies at this point. I think there is interest in the U.S. I can say that clearly, given the market opportunity there. And yes, that's an area of focus for us as well. Unknown Executive: Switching topics slightly. We've got a question on hydrogen. So wondering if we can -- you can expand upon what the pressurized modules are, those and the balance of plant and how Thermax is looking to scale and what the time lines would be for that? Philip Caldwell: Okay. So the pressurized modules are basically taking the core cell and stack technology, putting them inside a pressure vessel. And the reason you do that is by working with OEM partners like Shell, you save a very significant compression cost even on first stage compression, just a couple of bar makes a big difference. So as we look at hydrogen at a refinery kind of level or in an industrial application like steel or fertilizers, et cetera, it makes a lot of sense to have modules that are pressurized and can be scaled. The reason for the partnership with Thermax is twofold, really. One is they're an EPC, so a contractor -- engineering contractor based in India, which is one of the key markets that we see for green hydrogen. And secondly, compared to European suppliers, et cetera, there's significantly lower cost in terms of the engineering and actually driving the unit cost of these things down. So again, we're always looking at what's the most economically advantageous way to bring this technology to market. And that's why we have the relationship with Thermax. Unknown Executive: Great. And Stuart, I'm conscious you've already touched on it, but we've got a couple of other questions on when we expect theirs to reach profitability or break point even. I'm just wondering if there's anything else you'd like to add to clarify. Stuart Paynter: Yes. I mean -- so hopefully, we've made it clear that if we can achieve a cadence of 1 MLA every 12 months, that's where we get to. These aren't as predictable as sometimes we'd like. But that would be the goal. So the moment we can continually execute the pipeline to MLA every 12 months, that's when we're going to reach that sort of profitability level. But that's not long-term sustainable profitability. That comes when the royalty streams become the dominant player in our revenues, and that's going to be a few years out. So the idea now is to have a cost base where we can maintain a technology advantage, execute the commercial strategy whilst preserving cash. And in the end, that getting new partners on board and pushing the technology forward will drive the royalties in the long term. So we think it's a really viable business strategy as Phil laid out those 3 pillars, both for the short to medium term, and it also benefits the long term when we get to royalties as well. So it's a really nice business strategy we're pursuing. Unknown Executive: Great. The only final question that's come up is regarding RFC and wondering what has happened to that investment? And are we continuing to pursue that technology? Stuart Paynter: Yes. So RFC was something we supported in the middle of the year and bought it into the Ceres Group. We're still looking to give that really, really viable long-term energy storage technology life. And we're pursuing some opportunities to see whether we can get that business funded. And when we got more news, we'll share. Unknown Executive: Great. I think that wraps up everyone. So Phil, I'll hold -- hand back to you for any final comments. Philip Caldwell: Yes, sure. Well, Yes. Thanks, everybody, for your time today. I think that we've got an exciting 2026 ahead of us. The company is extremely well positioned. We have a Capital Markets Day on 15th of April, where you'll hear more from the industrial applications with a guest speaker, hopefully from Centrica attending from that side of things. We'll have our new product launch. And then I think you'll hear more from our existing partners as well this year as they hit some key milestones. So the market opportunity is definitely very live, and we need to capitalize on that opportunity right now. But I think Ceres is extremely well positioned to do so. Operator: That's great, Phil. Thank you very much indeed. We will now redirect investors.
Operator: Good morning, ladies and gentlemen, and welcome to the Serica Energy plc Full Year Results Investor Presentation. [Operator Instructions] The company may not be in a position to answer every question it receives during the meeting itself; however, the company can review all questions submitted today and will publish responses where it's appropriate to do so. Before we begin, we would just like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to the executive management team from Serica Energy plc, Chris. Good morning, sir. Christopher Cox: Good morning, and welcome to our 2025 full year results presentation. I'm joined as usual by Martin Copeland, CFO; and Andrew Benbow, our Head of Investor Relations. Thank you to everyone who has submitted questions ahead of the call, but please feel free to post any further questions you have during the presentation. And should we not get time this morning, then please contact Andrew directly. We will respond promptly to every question we receive. Martin and I will now run through a short presentation and then answer as many questions as we can in the time available. This slide is a reminder of our strategy and our purpose. We're here to produce hydrocarbons safely and efficiently while creating value for shareholders and also helping to deliver energy security, jobs and investment for the country. You may be aware that this has been our purpose unchanged for some time now. And I know that such statements can sometimes sound like typical corporate speak. But as we speak today against the backdrop of the terrible events in the Middle East, the importance of our contribution to domestic energy security has never been more apparent. We are unapologetic about the role we play in providing much-needed energy products for society. We have a two-pronged strategy for creating value. Our DNA is taking on mid- to late-life assets and then extending their field life and optimizing production. We've been delivering on that strategy recently with a number of M&A transactions, and we expect that to continue. And we are well positioned at present with a highly cash-generative production portfolio with organic growth options fighting for capital allocation. Our strong positioning is partly as a result of strategic delivery last year. We invested in our existing portfolio, carrying out significant work on resilience and asset life extensions as well as completing a highly successful 5-well drilling program around Triton. These wells will help retain robust production at the FPSO, and the success of that campaign gives us confidence to continue to exploit multiple organic investment opportunities elsewhere in our portfolio. As we continue investing, we also continued our track record of shareholder distributions with dividends amounting to 16p per share. As announced today, these distributions are continuing in 2026, as we recommend a 10p final dividend in respect of last year, continuing to strive to offer investors a compelling mix of growth and returns. And of course, key to our strategic delivery in 2025 were multiple acquisitions. We were one of the more active M&A players in the U.K. sector last year, announcing multiple acquisitions that increased and diversified our portfolio, enhanced cash flows and added to our opportunity set. In total, we increased our reserves by 19%, adding some quality long-life fields to our portfolio. The impact on production will also be material, adding over 20,000 barrels a day to our production capacity. The deals were done at very attractive prices with reserves added at a low cost of $3.30 per barrel. The acquisitions, which we have completed, being Prax Upstream and now TotalEnergies, which completed today, have resulted in the net receipt of cash by Serica amounting to $75 million in aggregate. And the ones still to be completed, from ONE-Dyas and Spirit Energy, will also result in net cash receipts or only limited cash paid out on completion. Hence, these acquisitions will be cash flow accretive this year, thereby supporting further portfolio investment and returns to our shareholders. Looking ahead, our strategy remains unchanged as we seek to acquire assets that may be non-core to others, but can be enhanced by Serica through extending field life and delivering further value, both corporately and through the subsurface. We will continue to look for potential acquisitions in the U.K., although the amount of recent consolidation means there may be fewer opportunities in the near term. As a result, and as we previously signaled, we will continue to explore opportunities overseas, but only in areas where we are confident that we can deliver our clear value creation strategy. As we grow, we are ensuring that the capabilities of our team grow with us. We are confident in our strategy and confident that we have the right team to deliver it. Since joining, I felt there were some areas in which Serica lacked the expertise required to excel as a North Sea producer. And as our portfolio has grown, the need to strengthen our capability has grown with it. We've made a number of targeted senior appointments that have materially improved our decision-making, our talent management and our ability to deliver for shareholders. We have established a quality executive leadership team and are putting in place the wider organizational structure and processes to position us to deliver on our strategic and operational goals. We are not finished, but I believe we are close to achieving the goal of establishing the right team to lead a top-performing FTSE 250 company. We need a team with depth and breadth, as we are now building a broader and more complex business. Our portfolio is more diverse and robust with assets that will encompass the entirety of the U.K. continental shelf from the West of Shetland to the Southern North Sea. Our new assets will significantly enhance the predictability and quality of our overall production and cash flows with less reliance on the 2 main hubs and the number of producing fields set to more than double. By the end of the year, we will have equity in a total of 26 producing fields. We are growing our presence in the basin and keen to continue growing. We now operate around 10% of the U.K.'s natural gas production. And today, having assumed control of the Shetland Gas Plant, we have the potential to play a key enabling role in the most prospective gas basin in the UKCS. The projected decline in North Sea production, we often see reported, is one enforced by policy and not geology. As our Chairman has said today, we urge the government to unblock the logjam in its approval of the development of new oil and gas fields, change its stance to the award of new licenses, scrap the onerous and counterproductive EPL and replace it with the already announced OGPM as soon as possible and to change its tone towards the sector. The opportunities in our portfolio alone show there is more to be delivered from the UKCS, much of which is short cycle in nature, and we're keen to play our part. And we are set to increase our production materially in 2026. As you can see from the chart on the right, our expectation for 65,000 barrels a day by the end of the year is not aspirational. It is, in fact, less than what we would be delivering today had all the asset transactions completed. That figure does include Lancaster with production scheduled to cease in May as expected, when the FPSO moves on to its next project. But of course, we need to actually own these assets first. And I'm pleased to say that completions remain on track with the previously stated timetables. We targeted the end of the first quarter for the TotalEnergies acquisition, and that completed today, slightly ahead of schedule. This transaction brings into the portfolio over 5,000 barrels a day of unhedged gas production. We also remain on track for midyear completion for the ONE-Dyas transaction and later in the second half of the year for Spirit Energy. On our Core portfolio, production has increased in 2026 year-to-date compared with Q4 last year, but it's still not where we would want it to be. Production at the Bruce Hub has largely been robust, and we are regularly producing 20,000 barrels a day net from the hub, which is a real positive given the current gas prices. Unfortunately, some further unscheduled maintenance at Triton needed to be carried out in February and early March that required a shutdown for just over 3 weeks. The operator, Dana, concluded that due to overdue maintenance on some production and power generation systems, they could not wait until the summer shutdown to complete work on those systems. They, therefore, took the proactive step to fix the issues immediately rather than to continue to run the equipment that could potentially fail. This work was completed on the 9th of March, and Triton has been running continuously since that time. As indicated in our January trading statement, we also lost production from Orlando for much of the period due to wave damage caused to the Ninian host platform, but this is now also back online and producing over 3,000 barrels a day. Since production restart at Triton, we have seen a fortnight of stable production averaging over 50,000 barrels a day in that period. Over the last few days, we have also seen the first production from Belinda, the last field in the U.K. to receive development consent. It is too early to determine a stable rate for Belinda, but early indications are promising. Triton is currently running with a single gas export compressor as the second compressor is offline awaiting a spare part. Maximum production in this operating mode is roughly 25,000 barrels a day net to Serica. And as we now have excess well capacity, we can anticipate being able to flow at that rate at least through the end of 2027. Once the second compressor is available, we will need to decide with Dana whether it makes sense to keep the second compressor as a backup to give more stability at 25,000 barrels a day or to run the 2 compressors in parallel at a higher rate, but with more vulnerability to downtime. Our production guidance of significantly over 40,000 barrels a day was based on very conservative uptime, effectively building in a weaker month of downtime at Triton. As such, with a significant production uplift to come, we are comfortable in retaining our guidance is unchanged. Going forward, the predictability of our production will be enhanced by the new assets coming in with some, notably GLA and Cygnus having historically very high uptime. But for now, we continue to be focused on delivering improved performance from our existing assets where there's still plenty to do. We are working to embed a culture of operational excellence, where we are not satisfied if we produce anything less than the maximum possible on any given day. In the last few years, there have not been enough maximum production days, and we are reenergizing our entire workforce to pull together to deliver more. There is also work to be done this year to help deliver production well into the future. At the Bruce Hub, there is exciting subsurface potential, and we are doing the necessary work this year to prepare for potential drilling in 2027. At Triton, we are working closely with Dana, and the focus is very much on delivering stability of operations. Dana have been taking many of the same actions that we have taken at Serica to improve performance, in particular, with strengthening of their team with new offshore installation managers, maintenance team leaders and safety advisers as well as bringing in-house some key technical specialist roles, which were previously outsourced. We are also, of course, working hard to integrate our new assets, and I am delighted to welcome our new colleagues from TotalEnergies into Serica and those transferring across to our operations and maintenance contractor, px, today. Even without the addition of reserves from new assets, I'm pleased to say that our reserves replacement effectively achieved 100% in 2025. This was achieved through the excellent work of our subsurface team and largely by 10.2 million barrels being moved from resources into 2P reserves due to the maturation of the Kyle redevelopment, which has now been renamed Kyla. This effectively offset the 10.1 million barrels of production in the year. With the addition of the newly acquired assets, our 2P reserves rise 19% on a pro forma basis. We will continue to be balanced between oil and gas. But on completion of the acquisitions, we will become slightly more gas-weighted as our acquisitions are mostly gas fields. I'm pleased to say we have also delivered a 16% increase in 2C resources, indicative of our attractive opportunity set. This increase was driven by the extensive work on maturing the potential Bruce drilling program as additional infill well opportunities delivered an 18.2 million barrel increase in 2C resources. This outweighed the relinquishment of the Mansell license and transfer of Kyla to reserves. The addition of Wagtail, which we announced during the year, also provided an uplift of 8 million barrels of 2C resources. In total, we now have over 100 million barrels of 2C resources, constituting a diverse and attractive opportunity set. These are projects of various types and across our asset base, but are all tangible and deliverable opportunities. With prudent investment, there is plenty in the hopper to sustain our production at or above current levels into the next decade. We are continuing to high-grade the suite of opportunities and plan to share considerably more detail on these at a Capital Markets Day in early June. We are focusing at present on those opportunities that have the potential for rapid payback, and there are a number of projects that fit that description. One that we have talked about before is Bruce. Bruce is a huge field, and there is plenty of remaining potential there, as can be seen by the increase in resources we have been able to share today. There has been no drilling on Bruce since 2012, and drilling on the field, which sits with our -- within our subsidiaries that do not have tax losses, would be highly tax efficient. First hydrocarbons are possible within 1 year of drilling, and we see a first phase of wells that could add over 10,000 barrels a day to production. This is a significant opportunity to deliver greater production of critical gas supply to the U.K. in a relatively short-term time frame. This opportunity is the result of work done over more than a year now across the integrated disciplines within our exceptional subsurface team, which, as I may have mentioned before, is the best in the business. Market screening for a rig is currently underway to enable us to potentially take an investment decision later in the year, which could enable drilling to begin in 2027. There is still more work to be done, and there are other opportunities also battling for capital. Kyla also offers a material production uplift. This was a previously producing field, which ceased production due to the host infrastructure being decommissioned. A horizontal well drilled into the best part of the reservoir and producing into Triton could also, therefore, add 10,000 barrels a day to our portfolio. And then, we have the opportunities just welcomed into or to be brought into our portfolio via acquisition. Glendronach is a compelling opportunity, and there are others not even mentioned on this slide that we look forward to discussing at the Capital Markets Day. And we are very excited by the overall potential West of Shetland. I realize this is quite a busy map, so let me give you a quick overview. We've acquired the acreage, which is shown in blue, which includes the Laggan and Tormore and other producing fields as well as a number of exploration prospects plus the associated pipelines in orange and the Shetland Gas Plant. Further west and north of our acreage is an extensive area colored in gray. This acreage is owned by Adura and Ithaca, 2 of the largest U.K. producers who are bullish about the drilling prospects in the area. The industry consultant, Westwood Global Energy, recently published a report identifying that the West of Shetland Basin holds an estimated 5 trillion cubic feet of gas. Of course, that sounds like a big number, and it is. In fact, it's equivalent to supplying every household in the U.K. for 5 years. And yet some people continue to say that the amount of gas we can produce in the U.K. is not significant. With 1.5 billion barrels of discovered and prospective resources situated within tieback distance of our existing infrastructure, this is an area of material potential for the industry and for Serica. And the Shetland Gas Plant is an asset of strategic importance to the country. While we are not primarily a third-party infrastructure company, as well as processing our own gas through the plant, we are currently processing gas for Adura from their Victory field, which only started producing last September. And we hope soon to be doing the same for Ithaca and Adura, Tornado field, which they are looking to move to final investment decision by the end of the year. But as well as exciting third-party opportunities, which all add value for Serica, there are also opportunities for the GLA joint venture to develop and add value from the assets on which we have completed today. These include the Glendronach tieback and a possible infill well at Tormore. And now that these are in our portfolio, they will be assessed and ranked against the other development opportunities we have in the battle for capital allocation, about which, again, we will give more detail at our Capital Markets Day. And with that, I will hand over to Martin to give you more on our finances and how we are seeing things in the near-term market situations. Martin Copeland: Thanks, Chris. As we largely preannounced with our January trading statement, the story of last year is mostly that despite a challenging year operationally, our relative financial strength and our confidence in the resolution of those issues enabled us to continue delivering on investment in the portfolio and on healthy shareholder returns, including maintaining the full year dividend at 16p, inclusive of the 10p proposed final dividend we are announcing today. When it comes to how we generated and used cash during the year, this waterfall chart shows the picture of what actually happened to gross cash from our year-end 2024 to our year-end 2025 position. But the real story of the business potential lies in understanding what the deferred production cost us in foregone 2025 revenues from the unscheduled Triton interruptions. Based simply on adjusting for what would have happened if Triton had delivered operating efficiency in line with our 2025 budget and factoring in the actual prices of oil and gas, which prevailed, we estimate we missed out on some $250 million of revenues last year. And because those missed revenues were at Triton, where not only do we still have material tax losses, but we were also investing heavily, which is the key method of sheltering the EPL and that our cost base is very largely fixed in nature, those foregone revenues would have flowed almost directly to additional free cash flow generation. We were, however, helped last year by the receipt of $63 million tax rebate in respect of overpaid taxes from 2024, but also from a low cash tax bill during the year, given we were able to factor in the impact of group relief into the installment payments made during the year. These are the reasons why the tax bar is, in fact, a positive on this chart. So we very much do not see 2025 as representative. And indeed, as we indicated in January, we are confident of material free cash flow generation this year, and that outlook has, of course, only improved in the current market conditions. In fact, as it says on this page, with the completion of the TotalEnergies deal today, we have more than halved our net debt as compared to the year-end level and are on track to be in a net cash position by the end of H1. Turning in a little more detail to the income statement. While realized prices were generally not materially different than in 2024, being marginally lower in oil, but higher in gas, our revenues of $601 million were down 20% from the prior year, essentially in line with the lower volumes. But the truer comparison of the impact of Triton issues can be seen in the comparison with the 2023 pro forma levels. On this basis, production was down some 4.5 million barrels or approximately 30%. Our hedge book was in the money at year-end and delivered unrealized hedging gains of $75 million and just under $8 million in realized gains, as we benefited especially from protection against the lower prices seen in Q2 in the wake of the liberation day tariff announcements. Operating costs were roughly 10% higher than 2024, largely as a result of increased maintenance activity at the Bruce platform, as we sought to reduce maintenance backlogs, but also because of a slight weakening of the dollar versus our largely pound-denominated costs. G&A costs were up by just under $2 million, as we made choices to add capabilities to set us up for future success, and we incurred transaction costs of $5.5 million associated with the extensive M&A activity. Despite the challenges in the year, we still delivered a profit before tax of $80 million, but at half the level of the prior year. Our current tax charge was only $2 million, as we benefited from in-year group relief associated with losses made in the Triton subsidiaries. However, in common with all our North Sea peers, and as we also reported in our H1 results last year, we had a material deferred tax charge of $130 million, including a $65 million charge relating to the enactment in Q1 of the extension of the EPL from 2028 to 2030. The result of these noncash accounting impacts is that we reported a book tax charge of 165% and posted a loss after tax of $52 million for the year. Turning now to the balance sheet and notable changes in the year, which result mostly from acquisitions. Our exploration and evaluation balance doubled to $43 million, primarily as a result of the completion of the Parkmead acquisition, as we became operator and brought into a greater share of the Skerryvore exploration prospect. We also consolidated the acquisition of Prax Upstream, which completed on the 11th of December as a business combination. As preannounced in January, we ended the year with net debt of $200 million, being effectively 1x EBITDAX. But as already explained, we see this as something of an anomaly and would have been net cash pro forma for the deferred cash flow from the Triton issues. And as already noted, we have more than halved our net debt since the balance sheet date. Finally, inclusive of the impact of new drilling at Belinda and Evelyn as well as bringing Lancaster into the portfolio from the Prax Upstream business, we ended the year with the exceptionally low level of decom provisions of less than $2 per 2P barrel of oil equivalent. While we always update on our hedging with our results, given the dramatic events in commodity markets year-to-date, we felt that a slightly deeper dive is merited today. Before turning to how we positioned -- we are positioned and what we expect to be doing in the future, we wanted to give a bit of background on what's been happening in oil and U.K. wholesale gas markets year-to-date. We came into the new year with all market fundamentals in terms of physical supply of oil and, to a lesser extent, gas pointed to a weak Brent prices during 2026 and medium-term weakness in gas prices. Bearish sentiment was evident in the market, and this was apparent in that despite unusually low European storage levels, U.K. gas prices averaging around 84p per therm for January and February were roughly half the level of the equivalent mid-winter period in 2025. However, of course, things changed dramatically after the war in Iran commenced on the 28th of February. For the 3 weeks of March so far, NBP day-ahead pricing has averaged 127p per therm, and Brent has averaged $103 per barrel. But as the charts on this page, which show the shape of the forward curve for Brent and for NBP at various dates since early January right up to a week ago on the 19th of March, things really elevated in reaction to the de facto closure of the Strait of Hormuz and the physical attack on the Ras Laffan and Pearl GTL plants in Qatar. But although near-term prices, the front end of the curve have risen sharply, the prices further out in time have not risen nearly as much, and the forward curve for both oil and gas are in very steep and, in fact, unprecedented backwardation. These forward prices should not be seen as predictors of future prices, but they do represent the levels at which Serica would be able to hedge in the market through swaps. So with this backdrop in mind, we turn to where our hedge book stands today. We've been building our hedges materially during the first quarter, and the reason for that goes to the reasons why we hedge. Firstly, we have an ongoing requirement by our banks to hedge a certain amount on a rolling basis, being 50% of the current year and 30% of the following year. But beyond that, we are always striving, appreciating that we cannot predict events and prices to find the Goldilocks solution, not too little and not too much. On the one hand, we seek to ensure that we protect downside sufficiently to ensure that we can cover our cost base in tougher times as well as to support our capital allocation priorities, including the dividend. This also includes maximizing the liquidity available to us through the borrowing base under our RBL. But on the other hand, we do not want to overhedge so that events, even if they are the kind of tail risk events we have seen this month, which cause prices to spike, can benefit our shareholders. So we were always looking to protect the downside, but leave as much as possible of the upside potential. In common with our peers, we do this both by imposing policy limits on our absolute amount of hedging and by the choice of instruments that we use for hedging. As shown on this table, Serica is currently hedged for about 60% of our forecast production in 2026 and about 50% in 2027, which is inside our policy limits. When we combine the impact of the unhedged part with the use of zero-cost collars, which retain an element of upside exposure, we retain about 40% upside exposure in 2026 and around 55% in 2027. The position in gas is actually more exposed to upside than in oil with only around 50% of our gas volumes hedged this year and less than 40% for next year. While we have built the book since the beginning of the year, about 50% of the hedges we've built have been taken on since the start of facilities from the 2nd of March, and we've been able to capture some very attractive opportunities. For instance, although the table show averages for the quarter, we have, in fact, recently placed some swaps for March at levels up to $111 per barrel for oil, which is especially pleasing given our most recent Triton lifting concluded only earlier this week. We appreciate that it can be confusing to understand the intricacies of hedging approaches. And although we hope the floor prices are quite clear on this table, it is tough to figure out what the foregone upside price implications are. So, as a bit of a guide, we estimate that our current hedge book for 2026 with oil prices at a notional $100 a barrel, we realized roughly $80 a barrel. And at 150p per therm for gas, we realized roughly 130p per therm. Taking a look at this slide, you may think you've seen this before, and that is because you have. We're pleased to say that we are simply reiterating our guidance across production, OpEx and CapEx at the levels we set forth with our trading statement in January. What we have though updated on this page is the carry-forward tax loss balances that we've reported today as of the 31st of December 2025. As you can see from a combination of our own activities during the year as well as M&A that we completed during 2025, we ended the year with essentially double the level of tax losses as we started with. We now have roughly $2 billion of corporation tax and SCT losses and roughly $500 million of EPL losses. And using the simple math that we've applied before of corporation tax loss times 30%, SCT times 10% and EPL times 38%, then the notional value of these losses is around $1 billion. Finally for me, I wanted to say a few words to add what Chris has already covered in relation to the M&A we announced in the year. In my previous career as a banker, we would tend to consider that the M&A was done when the deal was signed. But what I've since learned is that to ensure we deliver value, we need not only to be capable of efficiently delivering complex operated asset transactions through to completion, but also to ensure that the businesses are integrated efficiently into Serica and set up to realize their value potential. Serica has, therefore, invested in human capital to ensure that we have the skills and processes that are needed to be successful in an M&A growth strategy. This includes being agile and opportunistic in the execution phase and ensuring that we always do what we say we will do. So we sustain Serica's good reputation in the M&A market as a credible and trustworthy counterparty. That also means having the people, processes and systems that are set up to deliver in a repeatable way to coordinate and drive forward the multiple work streams needed to get to completion and day 1 in the fastest possible time, all while also ensuring safe and reliable continuous operation of high-sensitivity assets and complex IT systems. The process we have just completed to see GLA and the Shetland gas plant come under our control today is a great example of this. Finally, this also means doing the necessary work upfront to protect value from the transaction and to ensure that the people and systems can be integrated as smoothly as possible to ensure that the value can be realized in practice. One example of this is the approach we've taken with the Spirit Energy deal, which is not yet completed. Although we only assume completion from around end September, we know that future gas prices were key to value realization on this deal. So based on a very constructive relationship with Spirit Energy and with their parent, Centrica Energy, we have been able to put in place deal contingent hedging for roughly 50% of the production, but on a basis which protects the value of our deal, but still leaves ample upside potential for Serica to enjoy. This was made possible in part thanks to Centrica Energy being a leading participant in gas markets and working through the complexities of a structure like this with us. With that, I will hand back to Chris for some concluding remarks. Christopher Cox: Thank you, Martin. This is another slide that should look quite familiar, and that's because our focus areas remain unchanged. Safety is, of course, the #1 priority and delivering reliable production this year that will generate material free cash flow. We are integrating acquisitions, progressing organic growth projects and still looking in the market to continue prudently adding to the portfolio to deliver for our shareholders. In addition, we continue to plan to move from AIM to the main market of the London Stock Exchange during the year. We are very excited by the opportunities ahead and look forward to updating you on progress throughout the year. And with that, I will hand over to Andrew to run the M&A (sic) [ Q&A ]. Andrew Benbow: The M&A, I hope not. Christopher Cox: Q&A, the Q&A. I'm sorry. Andrew Benbow: I think we'll keep other people with the Q&A -- with the M&A. Andrew Benbow: Right. So the first question actually is about the last thing that you mentioned. When are you anticipating being admitted to the main market? And what impact do you think this might have on the share price? Martin Copeland: So probably I'll take that one. Yes, we -- I think we put in our detailed announcement today that we expect now that will be in Q3. It's -- the work is ongoing for it. There's a lot of process. And I know, as Andrew often says, a surprising amount of process just to move from one part of the London Stock Exchange to another. But nonetheless, there is, and we are working it hard. We expect it will be during Q3 of this year. So very much on track to get there during the year. In terms of what it will do for the share price, I mean, it's very -- obviously, our main reason for wanting to do that is to get a greater degree of exposure for Serica to investors generally. And the wider the exposure we get, the better it is generally for support for our share price. And in particular, certainly at anything around our current market capitalization, we would be very comfortably inside the FTSE 250. So one of the 350 biggest companies in the U.K. And the benefit of that is once you get into the FTSE 250, there are a lot of tracker and index funds that have to follow stocks in that segment. So that's one of the main reasons why we see a benefit in moving to the main board, and we remain very much on track to make that move during the course of the year. Andrew Benbow: Moving on to Triton. We've had a few questions come in unsurprisingly. So I'll try and amalgamate in a way that makes sense. There's kind of 3 questions really. One is, why couldn't the maintenance have been done last year? Second is a similar one, which is, will the work at Triton reduce the maintenance period later this year? And then the general question, which I think is the one that everyone wants to know is, how much should the reliability of Triton concern shareholders? Christopher Cox: Thank you. I'll try and address all 3 of those. So the work that had to be done in February and March was not something that we actually even knew about when the last shutdown took place. What happened was in doing some inspections of key equipment, Dana discovered that they could not vouch for the status of some of that equipment. They could not prove that they've been maintained properly or inspected properly, and they didn't have the records to be able to prove that. So there wasn't necessarily evidence that there was anything wrong with the equipment. They just couldn't show from their maintenance systems that it had been inspected when it should have been inspected and maintained properly. And so what that meant was when they put all of that together, they felt that there was a risk that was intolerable and equipment could break before it got to the next shutdown. And so rather than take that risk, they took the decision that they would shut down and fix it now. I think you asked, does that shorten the shutdown in the summer? It doesn't because some of the things they discovered that need maintenance, they haven't done now and they haven't to the summer shutdown. However, I will say that in our planning for the year, we assumed that Triton would be off essentially for 3 months in the summer, whereas Dana is planning for a 65-day outage. So we've built in a buffer there to some extent. And as I said during the presentation, we've also assumed a week's downtime on Triton as we go through the year outside of that summer shutdown window. So we think we've made some fairly conservative estimates around Triton for the year. So how much should shareholders be concerned about Triton? Look, it's still not as reliable as we want it to be. That's clear. And we are working with Dana on a number of things to try and improve the reliability. And the key is, frankly, it's the power turbines and the compressors where we're reliant on one of each at the moment, and there are 2 of each on the vessel. And we need to get to a point where we've got 2 power turbines and 2 compressors available. And that's -- it's going to take a few months before we're in that position. In the meantime, we're quite vulnerable to outages. But as I've said, I think we've been quite prudent and put in place some fairly conservative assumptions this year such that we're confident with the production guidance that we've given. And we're going to be part of -- Dana has just formed a compression improvement task force, which is targeting getting 90% efficiency with a single compressor and figuring out what else needs to be done in order to have 2 compressor operations. And we're going to be involved in that work ourselves. So I think, as we move forward, things will get better. But for now, it's -- we still have that vulnerability. We can't shy away from it. Andrew Benbow: And just briefly to clarify, our guidance takes in effectively 1 week of downtime each month over the course of the year. Keeping on Triton for another one, would you be comfortable bringing Kyla into the FPSO? Christopher Cox: So -- yes, I'll take that one. So, Kyla, just to be clear, we've announced that we've moved the barrels from Kyla into reserves as of the end of last year. That doesn't mean we've taken a sanctioned decision on it yet. As I mentioned during the presentation, it's fighting for capital with a lot of opportunities in our portfolio. And we will make a decision on which ones we're going to pursue in which kind of time frame as we go through the year, and more detail at the Capital Markets Day. So we haven't taken FID on Kyla yet, but it's mature enough. We know enough about it. We like it as a development. So we were at a point where we could move it from resources into reserves. Now, of course, we're not going to bring in another field into Triton until we're comfortable that we can produce it safely and efficiently. And the fact is we've only just brought on Belinda in the last few days. And we had anticipated that at the end of January, and it didn't happen because we had a shutdown. So there's no way we're bringing another development into Triton until we get stable operations there. But as I've said, I think Dana is doing a lot of the right things to achieve stable production and 2 compressor operations. And I'm hopeful that we get to the point where, yes, we can sanction Kyla and bring it into Triton. Andrew Benbow: Somebody on the side actually has just said that they're a bit bored of talking about Triton's compressor... Christopher Cox: Me too. Me too. I'm fed up with talking about it, too, but it's what we get asked questions about and for good reason. Andrew Benbow: They do have a question with it as well, which is -- which I think I'll take the time to broadly think about it, which is what percentage of group production will come from Triton in 2027? Now, we obviously haven't guided for 2027 as yet. But if you look at analyst expectations, it's probably somewhere in between 1/4 and 1/3 of production will come from Triton next year. So it clearly becomes of significantly less importance to the portfolio, albeit still being highly cash generative. Next question, I think, is one for Martin, actually. Why do companies who acquire assets from [ TotalEnergies ] sometimes pay Serica rather than Serica paying for the assets? I presume they're concerned about the decommissioning costs at the end of field life. What value is it that you can see that vendors can't? Martin Copeland: Good question. So yes, there's a bunch of things embedded in that, obviously. One is companies like TotalEnergies makes a strategic decision that they basically want out of an asset like this. And you can understand why because we think it's got amazing potential, we're buying it as it is, but they thought it was going to be a lot bigger than it actually is. And so it's kind of got -- it's been something that's been strategically on the decision to exit. So, therefore, price is not the most important thing. But add to that, yes, why -- they're not -- obviously, they're a commercial and sensible company, and we are too. And therefore, they -- whilst we're receiving cash, that's because the effective date, the historic date at which the deal we economically owned it was the 1st of January 2024. So the $57 million odd that we received today is basically the after-tax cash flow from that asset for that period until today. So that effectively, we economically owned it, and we receive it today because we've legally completed today. And then, when you think about how that works, yes, we are taking on the decommissioning liability associated with that asset in the future. The thing about decommissioning liabilities are that they are obviously an obligation to decommission in the future, but the timing of that decommissioning, and indeed, the absolute amount of the cost of it are not certain. And absolutely, our objective, which is different than that of, say, TotalEnergies when they owned it, is to continue to invest in the portfolio through some of the things that Chris talked about, like maybe Glendronach, maybe a Tormore well, but also getting the benefit of third-party gas into the plant like Victory that's already there and Tornado that we hope to come in the not-too-distant future. All of those things would just push out the time at which decommissioning happens. And all of that is very significant in terms of additional value for us. So for us, it's about delivering on those things, which TotalEnergies was not going to do because the capital investment associated with them just didn't screen for them relative to all the other global opportunities they have. It does screen for us, and we, therefore, look forward to doing it. And it's a case of, again, as Chris indicated, it's right assets, right hands, and it's just the natural kind of food chain, I would say. One other little point is there's also a tax differential. And TotalEnergies was being fully taxed on it under their ownership. And indeed, the receipt of cash we've had today is after it's been taxed for that whole period at 78%. But when in our hands, we're buying it into some of the entities we acquired through Prax Upstream, and that means it will be sheltered from a large amount of the tax now as of from today when it comes into our ownership. So there's a different valuation reference point for us as well. So I hope that answers the question. And that's just using GLA as an example, but you could play that across to other things as well. Andrew Benbow: And speaking of some of the other things that we're acquiring, given the context of very high commodity prices, could you talk about the expected payments on closing of the acquisitions of the ONE-Dyas and Spirit's assets? Assuming oil and more particularly gas prices stay where they are, those payments could be very favorable to Serica. Martin Copeland: Yes. I mean, clearly, they will -- we do -- as we track them, they're going to be up versus where our original planning for them was when we did the M&A because we weren't planning for prices where they are right now. So yes, the net impact of that is going to be that we expect to get higher payments than we would have done or in the case of Spirit Energy to essentially probably the net payment by us will probably be lower. The exact numbers of those is obviously something that needs to be worked through based on what actually happens to commodity prices between now and when we actually complete. The only other cautionary note I'd say is that, again, just as I mentioned for TotalEnergies in the case of both ONE-Dyas and Spirit Energy, under their ownership, they're being fully taxed with the full EPL rate. And so whatever the increment is, it's going to have a higher tax rate against it than it would under us. So that does help to dampen the impact of higher prices a little bit. Andrew Benbow: A more general question on the M&A landscape in the North Sea. How is the current market? And how has the M&A dynamics changed after Adura and NEO NEXT+? Martin Copeland: Yes. I mean, I think Chris alluded to that in his remarks that -- we'll have to say that we think the opportunity set in the U.K. this year is going to be down on last year. And I guess, it's kind of easy to say that because there was a hell of a lot of activity last year, right? So the bar would be very high to be able to repeat the level of activity in the basin this year that we saw last year. But that impact of the significant consolidation that we've seen is probably a reason why we think there'll be less M&A this year. It doesn't mean to say there won't be any. And I do think in time, as the likes of an Adura or a NEO NEXT+ and some of the others, Ithaca, as they look at their portfolios, they may well see that there are assets within there that in the normal course, they look to divest and move on. And that's kind of normal course business that we would expect to carry on. But overall, we just think the activity in the U.K. is likely to be down. The other cautionary note on M&A is that whilst we see these very high prices, high -- not just high, but volatile prices, prices that move all over the place are very difficult to transact M&A in, right? It just makes doing deals really hard when prices are moving really fast. So that's not a comment specifically about the U.K. It's just a general comment about doing M&A in the upstream. Andrew Benbow: And while we're on the discussion about U.K. M&A, then how about overseas? You mentioned it's something that you're looking at. So what kind of areas could people expect an acquisition to be made in? Christopher Cox: Do you want me to take that one? So look, we are starting to look overseas and get a bit more serious about that. And there's really a couple of reasons for that. One is what Martin just mentioned, there are fewer and fewer opportunities in the U.K. We're still working on a few opportunities, but not as many as they were a year ago. And we want to have a sustainable business. And at some point -- the U.K. is in decline. And at some point, you'll get to a point where there's not enough production left for us to maintain the kind of size of business that we are. So sooner or later, we have to look overseas anyway if we want to have a sustainable business. So look, we don't want to limit ourselves too much to where we might go. We do quite like Southeast Asia. So why would that be of interest? Really, it's an area where we can see playing out our strategy in a similar way to we do in the North Sea. Southeast Asia in general is a bit less mature than the North Sea, but it's -- most of the fields are kind of mid- to late life now. So you're getting to the point where a number of the majors are thinking about exiting fields there or just reducing their exposure in the area. So we're at that point now where -- probably where we were in the North Sea 10 or 15 years ago, frankly, where opportunities are coming available for companies like us to go in. And as we said, push out the decommissioning, extend the life of fields, drill more wells, find more reserves. So we just see that it's a ripe area for that kind of an opportunity. Yes. And I don't really want to comment too much on other areas because as soon as we say we're ruling something out, and then, an opportunity comes up, who knows where we could go. So never say never, but I think Southeast Asia is probably first on our list of places that we like for the reasons I've just mentioned. Andrew Benbow: I'm aware we're running out of time. We've got quite a lot of questions still to go through, so I'll try and group them together. Dividends, quite a lot of people have asked about dividends. So a question for Martin. Do we see a return to dividend growth? The dividend looks quite small considering the free cash flow to come. Martin Copeland: It's a really good question. And look, the way we think about the whole capital allocation piece is we've got to balance the dividends to shareholders with investment in the portfolio and with M&A growth. And it's the -- we're not alone in that. That's kind of the conundrum for all of us and our peers that are involved in this. It's probably going to sound a bit like a stuck record in saying, wait for the CMD, but we are definitely planning to give a great deal more detail about how we balance all of those things at the Capital Markets Day. I guess, it's a sign of confidence we felt to show that we were able to continue the dividend at the same level as before despite the fact we had a challenging year last year, but -- now, but we expect to give a lot more clarity. And we've got to -- and show the really interesting and exciting returns can come from the investment in our portfolio, but it always while ensuring that we also pay a sensible amount of dividend. So I know that's not going to directly answer your question, but that's probably what we can give for now. Andrew Benbow: Another quick one for you, Martin, about tax losses. How long do you think they'll last for? And which of your assets do they cover? Martin Copeland: Really good question. And we -- you probably noticed that we've sort of stopped giving guidance on how long we think they're going to last for, and that's because we used to give it. And then, we found that they lasted for a lot longer. And as it happens last year, we created a lot more losses either through our own activity because the silver lining on Triton performance was that, as I probably indicated, we actually added to the loss pool there rather than reducing it during the year. But then, of course, we also did some transactions that brought some losses with them. So in terms of -- and then, of course, how quickly use it is also a function of what happens to the commodity price, which is incredibly difficult to predict. So it sounds like a bit of a cop out. We've got a lot of losses now. They basically will -- are reasonably balanced across our portfolio with the exception of Bruce, Keith and Rhum, which is in the entities that basically don't have any losses. But that, as Chris indicated, is one of the key areas we're looking to make investment into. And investment is not only needed to bring short-cycle gas to the U.K., which it desperately needs, but is also efficient when it comes to the use of tax because if we can invest, we get still strong capital allowances against the 78% tax rate that applies there. So we have a strategy which is kind of fit for all seasons in that respect. Andrew Benbow: And speaking of tax rates, I think we should finish with politics and apologies to people whose questions we haven't got around to, but please do e-mail them over to me directly if you'd like a response. Are you talking face-to-face with Ed Miliband or Rachel Reeves? With such pressure from so many sources, do you feel the logic of the message is getting through? And are there any milestones going forward? And do you feel more positive in the stance of Whitehall? Christopher Cox: So we're speaking with everybody that will listen, both individually and as part of industry bodies. I was personally in the meeting with Rachel Reeves, #11, whenever that was, just around the spring statement time. The message is definitely getting through about the need to stimulate the North Sea before it's too late. We have a tax regime that's been designed by this government in consultation with the industry. And yet, as we sit here today, that won't come into force until 2030. And our argument is just bring that in now. Treasury absolutely get that. I guess all I'll say is there are other parts of the government that are not necessarily sold on that idea. So I'm not going to try and predict where we'll end up on that because at the moment, I don't think anybody in government really knows where we're going to end up on that. Andrew Benbow: Martin, anything you want to add? Martin Copeland: No. I think Chris has covered it very well. I mean, look, everyone in this call will know, we've seen the volume of really quite broad-based sentiment now to recognize the importance of security of supply. And that's an argument that we've clearly been supporting for a long time. We just hope that a sense of pragmatism, the recognition of the importance of security of supply from a sort of defense and just national security perspective will begin to carry more weight than it perhaps does -- has done in recent times. Andrew Benbow: And with that, Chris, would you like to give any closing remarks? Christopher Cox: Well, just that we've got another exciting year ahead of us. We are integrating new assets into our portfolio. We're seeking to do more M&A still on top of that. We will be growing production as we go through this year, both on our existing portfolio and the new assets. We will be moving to the main market this year. And we've got lots of exciting investment opportunities in our portfolio, about which we will speak at the Capital Markets Day, which is the next time we will see you. Operator: Perfect, guys, if I may just jump back in there. Thank you very much indeed for updating investors this morning. Could I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback. On behalf of the management team of Serica Energy plc, we would like to thank you for attending today's presentation. That now concludes today's session. So good morning to you all.