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Operator: Good afternoon, and welcome to Fractyl Health Fourth Quarter and Full Year 2025 Financial Results and Business Update Call. [Operator Instructions]. I'll now turn the call over to Brian Luque, Head of Investor Relations and Corporate Development at Fractyle. Brian, you may now begin. Brian Luque: Thank you. This afternoon, we issued a press release that outlines the topics we plan to discuss today. The release is available at www.fractyl.com under the Investors tab. Joining us on the call today are Dr. Hartih Rajagopalan, Chief Executive Officer; and Lara Smith Weber, Chief Financial Officer. During this call, we make forward-looking statements, which involve risks and uncertainties that may cause actual results to differ materially from our forward-looking statements. We provide a comprehensive list of risk factors in our SEC filings, including the annual report on Form 10-K filed today, which I encourage you to review. Any forward-looking statements on the call are subject to substantial risks and uncertainties, speak only as of the call's original date, and we undertake no obligation to update or revise any of the statements, even if subsequent events cause the company's views to change. It is now my pleasure to pass the call over to Harith. Harith Rajagopalan: Thank you, Brian, and good afternoon, everyone. Millions of Americans are starting GLP-1 therapy. Most of them will stop within a year. Data show that when they stop, the weight comes back, approximately 10% of their body weight within 6 months and approximately 15% within 12 months. Every one of those patients faces a moment with no durable off-ramp, no alternative to either resuming chronic pharmacotherapy or accepting the risk of regain. Revita is being built for that moment. For those of you who are new to the Fractyl story, Revita is our lead asset. It's like LASIK for obesity, an endoscopic procedure designed to durably maintain weight loss after GLP-1 discontinuation. And Rejuva is our smart GLP-1 platform targeting long-term metabolic remission from a single dose. Today, I want to tell you where we stand in the development of Revita for post- GLP-1 weight maintenance, what we have learned since we last spoke to you about the clinical data and share new favorable feedback we have received from the FDA on our filing strategy. I'd like to start by naming something directly. In January, we reported 6-month data from the REMAIN-1 Midpoint cohort. The past several weeks of analysis have given us a level of precision about which patients benefit most from Revita and at what procedural profile that we did not have before. This clarity has strengthened our conviction in Revita and has helped us finalize the pivotal study's key design elements to ensure we are set up for regulatory and commercial success. Today, we will share what we now know and why the picture is both more precise and more compelling than the headline p-value initially suggested. Let me walk you through 4 key pillars that give us conviction in the opportunity in front of us. Number one, the clinical signal is real. Number two, the pivotal is built to succeed. Number three, the path from data to commercial value is clearer than ever. And four, we have the runway to get to the definitive pivotal data without any planned incremental capital raise. Now let's start by discussing the clinical signal. You will recall that the Midpoint Cohort was a pilot randomized, double-blind, sham-controlled study that enrolled 45 patients with obesity who were GLP-1 naive. They were started on tirzepatide to achieve at least 15% total body weight loss and then randomized 2:1 to Revita versus sham. This 45-patient study was designed as an interim read to validate the design and the powering assumptions for the REMAIN-1 pivotal study, not as a powered stand-alone efficacy study. Nonetheless, the 6-month Midpoint Cohort data did not look as strong as the 3-month data. Early analysis that we shared at the time of data release was that site level heterogeneity appeared to account for the attenuation of the clinical signal in some patients. Further investigation has revealed that the site level heterogeneity is, in fact, differences in ablation length or treatment dose at early clinical sites and that these differences in ablation length are a key driver of efficacy differences between patients. Critically, we have not identified site level operational issues. What we did find was even better, a strong dose response relationship between ablation length and weight maintenance after GLP-1 discontinuation. This is a strong positive signal for the Revita mechanism of action and for the potential success of the pivotal study. We have long understood from our work in type 2 diabetes that Revita's treatment effect is proportional to the extent of duodenal resurfacing. Our first-in-human feasibility and dose escalation pilot study in type 2 diabetes was published in Diabetes Care in 2016 and prospectively demonstrated a clear relationship between ablation length and glucose lowering. Since that time, we have been systematically optimizing the procedure profile across successive clinical studies to deliver longer ablation length from 9 centimeters in the first in human to over 16 centimeters on average in REMAIN, and have seen greater potency in our studies without compromising patient safety. And because of this experience, our pivotal study already prespecified an ablation length dose response secondary endpoint. When we applied this dose response analysis to the Midpoint Cohort 45 patients, we observed a statistically significant p less than 0.05 monotonic and clear relationship between ablation length and weight maintenance treatment effect at 6 months. Participants who received more than 14 centimeters of ablation regained approximately half the weight of sham, whereas those individuals with subthreshold ablations accounted for the apparent narrowing of treatment effect between month 3 and month 6 that we saw in our January data release. This finding is consistent with our prior evaluation of ablation length on patients with type 2 diabetes, and it makes sense biologically. The duodenum is lined with enteroendocrine cells that drive key metabolic signaling pathways. The density of that cell population is distributed along the length of the duodenal mucosa and duodenal dysfunction from high fat high sugar diet extends along the length of the entire duodenum in animal models. A longer ablation resurfaces a greater proportion of that signaling surface, producing a more complete metabolic effect, which is exactly what our dose response data confirmed. In the REMAIN-1 pivotal study, we trained physicians to ablate from the ampulla of Vater to the ligament of Treitz, which are anatomical landmarks toward the beginning and the end of the duodenum, respectively. Based on our work in type 2 diabetes, we aim for an ablation of at least 10 centimeters, but encourage physicians to ablate more if they deemed it appropriate. In the pivotal study, the mean and median ablation length are more than 16 centimeters, providing ample opportunity to demonstrate an enhanced clinical signal reflecting more complete duodenal ablation. Notably, all pivotal investigators were successfully trained to achieve more than 14 centimeters of ablation, confirming procedural scalability and feasibility across diverse operators and patient anatomies. So taking a step back, what we have is a clear monotonic dose response, which is exactly what you would expect to see from a true biological intervention. All drugs and all procedural therapies that work like drugs should show a dose response relationship. That's what biological activity looks like. And ablation dose is a specific, measurable, controllable and standardizable metric for repeatable outcomes in a broad population. So having established ablation length as a key procedural driver of Revita's potency, let's turn to patient selection. The scientific community has long understood that the magnitude of initial weight loss on GLP-1s is proportional to the magnitude and speed of weight regain upon discontinuation. So we designed REMAIN-1 with a greater than 15% total body weight loss threshold at run-in, specifically because we expect the treatment effect to scale with the degree of pre-randomization weight loss. Midpoint Cohort results at 6 months confirm this relationship. Participants with greater than 17.5% weight loss showed an early, sustained and compounding separation from sham through 6 months. The pivotal has enrolled a population that is built to capture a large effect size that scales to the magnitude of initial weight loss as well with a mean run-in weight loss of 18.3% in the Pivotal Cohort. So when we now consider the right dose in the right patient, we observed the signal to be strongest among participants with higher weight loss who received longer length of duodenal ablation. And in these individuals, Revita-treated patients experienced only 2.9% weight regain at 6 months compared to 9.9% in the sham arm, approximately a 70% reduction in post GLP-1 weight regain. Like ablation length, the treatment effect scale monotonically with the magnitude of weight loss as well. Another way to think about it is that in this optimized patient cohort in the midpoint study, patients retained about 88% of their body weight loss on tirzepatide compared to only about 60% in the sham arm at 6 months. We believe this degree of weight loss maintenance will be highly compelling to key commercial stakeholders. It is a prospectively definable, commercially significant population. It is the exact population that the pivotal study has enrolled and will enable efficacy endpoints in our pivotal study later this year. This is also classic translational pharmacology applied to a procedural therapy, identification of the right patients and the right dose to optimize the clinical profile and achieve a large treatment effect. Turning now to the pivotal study statistical analysis plan and operational progress. Our plan was always to analyze the 6-month Midpoint Cohort to inform our understanding of the key drivers of effect size and then to use this information to prespecify the Pivotal Cohort statistical plan. The pivotal SAP, which we will file with FDA shortly, incorporates these parameters as prespecified analyses, and this will enable clarity on effect size and durability as a function of treatment dose and patient selection in the pivotal study. I also want to provide clarity about our endpoint structure. REMAIN-1 has 2 co-primary endpoints. The first is percent body weight regain in the Revita arm versus sham at 6 months. This is the data we expect in early Q4. The second co-primary is the proportion of Revita-treated patients who maintain at least 5% total body weight loss at 1 year after GLP-1 discontinuation. Both co-primaries are required to be met at p less than 0.05 for overall study success and we believe the pivotal is well powered at over 90% to achieve that result even under conservative assumptions. In addition to these co-primaries, we will present a comprehensive set of secondary endpoints, including a dose response analysis, a high responder population analysis, cardiometabolic markers and patient-reported outcomes, including reduction in cravings for sugary foods. In February, we completed randomization in the full study of the Pivotal Cohort with over 300 participants across more than 30 sites and over 20 operators across the United States, making this the largest sham-controlled GI endoscopy pivotal trial ever conducted. Every operational metric that predicts pivotal success is tracking favorably. Retention exceeds 95%. Medication resumption rates are below our model assumptions. The blinded adverse event profile remains encouragingly consistent with what we have seen in prior studies. And we remain on track to deliver top line 6-month primary endpoint data in early Q4 2026. Turning now to regulatory progress. Earlier this month, we received favorable FDA feedback on our De Novo classification request. You may remember that we aim to get that feedback in Q2, but our most recent discussion with FDA revealed that they have reviewed safety data to date, and they acknowledge that Revita's safety profile is consistent with a Class II device classification or a moderate-risk De Novo device. With this positive feedback now in hand, ahead of schedule, we are on track for De Novo submission in late Q4 2026 with 6-month pivotal data in hand. There are several advantages to the De Novo pathway compared to the PMA pathway. It is a more capital efficient, faster and strategically superior path. So now let's turn to the commercial opportunity because the landscape is evolving in ways that reinforce the urgency of what we are building and the path from clinical data to commercial value is becoming clearer and nearer than ever. With an anticipated filing via the De Novo pathway at the end of this year, we're also preparing ourselves for our potential commercial launch. There is a large and growing population on GLP-1 drugs with estimates projecting over 30 million users in the next several years. We estimate that as newer agents become more effective, more than 50% of patients are expected to lose more than 17.5% of their total body weight on GLP-1s and more than half of these are likely to discontinue. As a result, the post-GLP-1 unmet need is intensifying rather than abating. A large study published in BMJ Medicine last week following over 330,000 patients showed that GLP-1 cardiovascular benefits erode rapidly after discontinuation with the authors coining the term metabolic whiplash. Resuming treatment did not fully restore lost benefits, underscoring the need for durable maintenance solutions. Meanwhile, the payer landscape is shifting. CMS has expanded Medicare coverage of GLP-1s, driving a massive increase in the addressable patient population, but also intensifying the economic pressure on payers who are now grappling with the long-term cost of chronic therapy. This creates an unprecedented window for Revita, the first FDA breakthrough device designed for post-GLP-1 weight maintenance as a potentially durable, cost-effective solution that gives people an off-ramp from chronic pharmacotherapy while preserving the metabolic benefits they work so hard to achieve. On reimbursement, we now have a clear and validated pathway. We plan to file a Category III CPT code application this summer with a code expected to be effective in the summer of 2027. The payment economics work for hospitals from nearly day 1. Transitional pass-through payment by a CMS provides a separate incremental mechanism to cover the cost of the Revita disposable device on top of the facility rate, ensuring that hospitals can maintain a positive contribution margin while offering the procedure to patients. Revita is the only potential procedural therapy in development for post-GLP-1 weight maintenance, and we believe the commercial infrastructure will be ready to move quickly upon clearance. Briefly, let's turn to Rejuva, our smart GLP-1 platform targeting long-term metabolic remission from a single dose. We submitted clinical trial applications for RJVA-001 in type 2 diabetes to regulators in the EU and Australia, and we anticipate regulatory feedback in Q2 2026, expect reporting first-in-human dosing and preliminary data in the second half of this year. The Rejuva program is advancing within a disciplined spending framework that does not compete with Revita for capital, and we will share more on the platform at an upcoming Investor Day. Let me frame the anticipated catalyst-rich path ahead before I hand it to Lara. In Q2, we will see 1-year REVEAL-1 open-label data and receive CTA regulatory feedback on RJVA-001. In Q3, we will see 1-year REMAIN-1 Midpoint Cohort randomized data, and we expect to be able to demonstrate continued compounding treatment effect and durability at that time in a randomized data set. In early Q4, we will anticipate seeing top line 6-month randomized data from the REMAIN-1 pivotal study. This is the single most important catalyst in our company's history. And in late Q4 this year, potential De Novo marketing application submission for Revita in post-GLP-1 weight maintenance. In the second half of this year, we will also see human dosing of RJVA-001, subject to CTA authorization and preliminary safety and PK data. Each of these milestones move us closer to delivering the first potential procedural therapy for maintenance and weight loss after GLP-1 discontinuation, and it is a catalyst-rich year ahead. Lara? Lara Weber: Thank you, Harith. Research and development expenses were $16.5 million for the quarter ended December 31, 2025, compared to $20.3 million for the same period in 2024. The decrease was primarily due to our strategic reprioritization in Q1 2025, resulting in lower personnel-related costs and reduced costs associated with the pausing of the REVITALIZE-1 study, partially offset by continued investment in REMAIN-1 and Rejuva. SG&A expenses were $6.8 million for Q4 2025 compared to $4.9 million for the same period in 2024. The increase was primarily due to underwriters commissions associated with our August 2025 financing. We reported a net loss of $43.7 million for Q4 2025 compared to $25 million in Q4 2024. However, the $20.2 million of the increase was a noncash accounting change in the fair value of our warrant liabilities, which does not reflect a change in our underlying operating performance. Stripping that out, our operating expenses for the quarter were $1.9 million lower than the same period in 2024. Adjusted EBITDA was negative $21.2 million for Q4 '25 compared to negative $22.1 million for Q4 2024, reflecting the decrease in operating expenses. As of December 31, 2025, we had approximately $81.5 million cash and cash equivalents. Based on our current business plan, we believe this cash position, combined with the $4.1 million subsequent proceeds from warrant exercises received in January 2026 will fund operations into early 2027. Importantly, this funds the company beyond the anticipated REMAIN-1 pivotal data readout in early Q4 2026 and through a potential De Novo submission in late Q4 2026. With that, I'll turn it back to Harith for one specific item on capital strategy and a few closing remarks before we open for Q&A. Harith Rajagopalan: Thank you, Lara. Before we open Q&A, I want to address capital strategy directly and remove any ambiguity. We have closed our ATM facility, and we do not have plans to raise capital before we have pivotal data in hand. Our runway extends into early 2027. This is a deliberate commitment grounded in conviction. We expect the pivotal data will be positive, and we will operate with discipline within our existing capital envelope as a signal of management's alignment with shareholders through a key moment. A few final comments. First, we believe the clinical signal is real with a strong dose response and a clear GLP-1 responder target population. Second, the pivotal is built to win with strong powering on the full cohort and enrichment in an optimized cohort of patients with high running weight loss and longer ablation lengths. Third, we see a clear path to commercial value with favorable De Novo feedback and a large, defined and growing market opportunity. And lastly, we are funded to the key pivotal value inflection point without planned incremental capital raise between now and then. We have the science, the runway and the team to prove it. We look forward to sharing more data this summer and into the fall. I want to express my deep gratitude to our employees whose dedication and focus through a challenging year has been nothing short of extraordinary, to the physicians and investigators who believe in the science and bring it to patients with skill and care to the patients who trust us with their health and their hope and to you, our shareholders, whose conviction fuels everything we do. Operator, we are ready to take questions. Operator: [Operator Instructions]. And our first question comes from the line of Whitney Ijem of Canaccord Genuity. Angela Qian: This is Angela on for Whitney. Can you guys just remind us how the ablation length is determined again, is that it's after the patient is already like during the procedure, right? And so yes, I guess like how is that length determined? And then it sounds like 16 centimeters is the cutoff now like going forward, is that the target minimum ablation length? Harith Rajagopalan: Yes. Great question, Angela. Happy to clarify this point because it's important to how we think about standardizing this procedure as we go forward and how we are going to analyze the pivotal data as well. When we looked at the type 2 diabetes patient population, we saw a dose response where ablation was defined as the length of the total amount of duodenum that was ablated. When we did our first-in-human study, we saw that about 10 centimeters of ablation had more glucose lowering efficacy than 3 centimeters. We are seeing the same thing now in obesity, but at higher lengths of ablation. Our ablation balloon is 2 centimeters long. In the procedure, we count the number of ablations that are performed longitudinally along the length of the duodenum, and that allows us to calculate the ablation length. What is clear is that the ablation length for weight effects is greater than or equal to 16 centimeters. That will be our operating standard going forward and will be built into the key secondary endpoints in our pivotal study. And in those patients, we see a clinically meaningful and compounding treatment effect in the Midpoint Cohort. We believe this to be the reason for heterogeneity that we saw back in January, and we're very gratified to have the data to be able to give us clarity on the precision of what is needed in order to deliver benefit to patients. Angela Qian: Great. Maybe just a quick follow-up. I guess, does this impact how doctors are going to be trained in the future in terms of length of ablation? And was it -- were they conducting less ablation because they were less comfortable with it? Or if you could just provide more color around that? Harith Rajagopalan: Well, in the pivotal study, we advise patients -- doctors to ablate at least 10 centimeters and from the anatomical landmark at the beginning of the duodenum towards the end of the duodenum. But it was less to the physician's discretion how much ablations to perform. In that study, everyone was trained to be able to successfully perform greater than 14 centimeters of ablation across the board. And so we believe that we can easily train physicians to do that consistently now that we have the data to support that length being the efficacious dose. Operator: Our next question comes from the line of Michael DiFiore of Evercore ISI. Michael DiFiore: One on the De Novo pathway. It seems that you're increasingly more confident that the FDA could accept your De Novo submission based on early feedback. And I guess my question is, to what extent does efficacy play in the final determination here? Or is it all about safety? And then I have a follow-up. Harith Rajagopalan: Well, I think the De Novo pathway determination versus, say, a PMA determination is principally a safety consideration because what the FDA is thinking about is whether this is a moderate risk device in De Novo versus a high-risk device in a PMA. And then the efficacy threshold for PMA and De Novo are also nuanced -- have nuanced differences. The efficacy threshold for PMA is valid scientific evidence, whereas the efficacy threshold for a De Novo is reasonable assurance of safety and effectiveness. Michael DiFiore: I see. That's helpful. And then just back on the ablation length. I think I and a lot of other folks were under the impression that this was already standardized. But now you made it clear that in the pivotal studies, physicians were instructed to ablate at least 10 centimeters. And I guess my question is in the real world, based on the average patient, is 16 centimeters readily achievable? Or is the average patient's anatomy more conducive to less centimeter ablations? Harith Rajagopalan: In the Pivotal Cohort, mean and median ablation length was greater than 16 centimeters and is readily achievable by all of the investigators that we've trained, and we believe that will be translatable to the broader population. Operator: Our next question comes from the line of Jason Gerberry of Bank of America Securities. Chi Meng Fong: This is Chi on for Jason. Maybe a follow-up on the ablation length. Can you provide more color on the post-hoc analysis for the midpoint data set? More specifically, can you remind us the ablation length and GLP-1 induced weight loss from the Midpoint Cohort and how that compares to the metrics you provided for the Pivotal Cohort? And secondarily, how much variability in the ablation length you saw in the Midpoint Cohort compared to the Pivotal Cohort? And I guess, ultimately, how does this post-hoc analysis impact your confidence for the pivotal readout later this year? Harith Rajagopalan: Well, this is a post-hoc analysis in the Midpoint Cohort. It was already a prespecified analysis in the pivotal study and is consistent with prespecified studies we've conducted on dose in type 2 diabetes in the past. In the Midpoint Cohort -- sorry, in the Pivotal Cohort, mean and median ablation length are greater than 16 centimeters and the average ablation length is longer than it was in the Midpoint Cohort. And we feel confident that we can train physicians to perform longer ablations in the pivotal. All of this translates to a high degree of conviction in the pivotal study. Number one, we are very well powered at well over 90% for the full cohort, and we have key secondary endpoints that we have prespecified that will interrogate patients who receive more than 16 centimeters of ablation and in patients who receive -- who have more running weight loss on the GLP-1. And we are confident that each of those independently and collectively will drive larger and compounding treatment effects in the pivotal study and will provide clarity on how Revita can be used in which patient and at what dose in order to achieve a clinically meaningful signal that can translate to commercial utilization. Chi Meng Fong: Got it. So the ablation length for the Pivotal Cohort is what you have observed is longer than the ablation length in the Midpoint Cohort? Harith Rajagopalan: That's right. Chi Meng Fong: Okay. And given you have already fully randomized the Pivotal Cohort, basically, is it fair to assume that all the ablation had already occurred and you're talking about ablation length you have observed for all the procedures that conducted? Harith Rajagopalan: Yes, that's locked. And I think we're saying that we're more than 1 month out from the last randomization now. And the safety signal in our blinded analysis continues to be very encouraging. And so we feel quite confident that the efficacy is the question in the pivotal study and the data that we're sharing with you today meaningfully increase the probability of success on the efficacy angle as well. Operator: Our next question comes from line of Mike Ulz of Morgan Stanley. Michael Ulz: And maybe just another one related to ablation. Just curious how long it takes to sort of train these physicians to be able to do the procedure to ensure adequate ablation. Is that something that's fairly quick? Or how much experience does it take to kind of make sure that they're hitting that mark? Harith Rajagopalan: This training that we've built is -- works very well. It takes less than 3 to 4 cases to train a physician to perform ablations. The shorter length of ablations that we sometimes see in the Midpoint Cohort and the Pivotal Cohort are often reflective of the first couple of cases that the physician is performing and yet very soon, they get very comfortable with it and then are consistently delivering longer ablations. The huge advantage of a prospectively defined dose response in the pivotal is that it allows us to standardize the treatment -- the training regime and the treatment recommendation in commercial use. And I think that's going to help standardize real-world outcomes. Operator: Our next question comes from the line of Jeffrey Cohen of Ladenburg Thalmann & Company. Jeffrey Cohen: Sorry to be redundant. So on the -- in Q3, when we see the 1-year remain Midpoint Cohort, will we see further analysis by length as far as the data that you're reading out? Harith Rajagopalan: Yes. Jeffrey Cohen: Got it. And then could you talk a little bit about the energy delivery and the temperatures involved? Has anything changed as far as the delivery from the generator between the Midpoint Cohort and the Pivotal? Harith Rajagopalan: No, nothing has changed. And I think one point that you should take confidence in is that even though we went from a small number of sites in the midpoint to a much larger number of sites and operators and patients, the treatment that we've been able to train physicians to perform has been remarkably consistent and standardized over the course of time. The only difference that we are sharing with you now is that we can give specific guidance on what length of duodenum to aim for in obesity. And that is very useful information. We're glad to have it. Jeffrey Cohen: That's helpful. And then can you talk about the CPT code. So as I understand it, if you file during the midpoint somewhere in 2027 that, that could or would take effect January 1, '28. Are you also suggesting that it's possible that you'll have a T code that would take effect sometime in 2027? Harith Rajagopalan: We're anticipating filing for the Category III CPT code in June of this year. It's reviewed in September and should go into effect in the summer of '27, July 1. And we are also intending to file for a transitional pass-through payment through CMS immediately upon FDA authorization, and that's a quarterly review cycle. So that can go into effect very quickly upon launch. That's why we said that there was essentially no daylight between potential clearance authorization in the United States and reimbursement authorization for hospitals to begin to use it. Jeffrey Cohen: OOkay. And I'm assuming you'll also take on payer discussion late this year, commencing late this year as far as payer discussion? Harith Rajagopalan: That's right. And when you think about it, we will have a fully formed clinical profile by early Q4. 12-month randomized data from REMAIN-1, 12-month open-label data from REVEAL-1, 6-month randomized data from the full Pivotal Cohort of 300 patients. That's a fully derisked clinical package that we could then use to inform our payer discussions and drive towards our regulatory submission calendar. Operator: Our next question comes from the line of Joe Pantginis of H.C. Wainwright. Joseph Pantginis: So my first question is shorter, but maybe a more complex answer. So first, with the De Novo filing positive feedback, how would we view the totality of regulatory submissions over the next -- over the next year or so with regard to is it a multistep process? Or is it similar to a rolling BLA? Or how should we view it? Harith Rajagopalan: There are 3 main packages to the regulatory submission. There is a design history file, which is the device design. There's a manufacturing file, which reflects how we manufacture our systems. and then there will be clinical data. We will have a full package of 6-month data by the end of this year. There's -- we will also be ready to submit 12-month data in the first quarter of 2027, should that be necessary. Joseph Pantginis: That's great. And then if I heard you correctly, correct me if I'm wrong, it sounded like you're going to be filing the SAP relatively soon. So with regard to the ablation length that we've been discussing today, and it's very intriguing data, by the way, how would you look at -- and you mentioned it's a prespecified population. How would that factor into the statistical analysis plan and also the role of the secondary endpoints that you mentioned and the hierarchy of them? Harith Rajagopalan: Great question. Obviously, details on the hierarchy are going to be pending our conversation with the FDA, and we'll share that with you when we have it. I would make 2 points right now. Number one, the sweet spot of the enrollment and randomization of the pivotal study are exactly the patients in whom Revita appears to be working best. The mean ablation length was more than 16 centimeters, which is where Revita's efficacy is very clear based on the midpoint cohort. And the mean run-in weight loss was over 18% total body weight, which is where Revita's efficacy is also very clear. So the right down the middle of the fairway of our pivotal enrollment is exactly the sweet spot of where we are seeing efficacy. And so we're confident in that. And we have designed key secondary endpoints in order to be able to demonstrate that very clearly. Operator: Thank you. I'll now like to turn the call back to Dr. Rajagopalan for closing remarks. Harith Rajagopalan: Well, thank you, everyone. The science is working. The pivotal is on track and we look forward to delivering the definitive data this fall. Thank you all very much. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Good day, ladies and gentlemen, and welcome to Kingfisher plc Full Year 2025-'26 Results Presentation. [Operator Instructions] I would like to remind all participants that this call is being recorded. I will now hand over to Thierry Garnier to start the presentation. Thierry Dominique Garnier: Good morning, and thank you for joining us today for Kingfisher's Full Year Results Presentation. Bhavesh and I will take you through our full year results, our outlook for the coming year and provide an update on our key strategic initiatives. Following this presentation will be the usual Q&A. So let's start with the key messages. 2025 was a strong year for Kingfisher as we continue to execute our strategy at pace and delivered on all our financial priorities. And there are three points I want to highlight. First, our strategic growth initiatives are driving market share gains, a key indicator of our progress. We grew market share across each of our banners in the U.K., France and Spain, and maintained share in Poland. Our sales growth was high quality, led by growth in volume and transaction. We delivered double-digit growth in both trade and e-commerce sales during the year, while our 1P commerce sales were strong. I am particularly pleased with our progress in our marketplaces now reaching GBP 518 million on a GMV basis and up 58% year-on-year. Second, we maintained strong financial discipline amidst significant cost pressure. We grew gross margin by 80 basis points in the year, leveraging Kingfisher scales and sourcing power and benefited from marketplace and retail media, both of which are gross margin accretive. We delivered strong growth in adjusted profit before tax and in EPS. When excluding the business rates refund at B&Q in the prior year, profit is up 13%. And our profit growth, combined with a sharp focus on working capital management enabled us to deliver strong free cash flow. Third, we delivered attractive returns to shareholders. We completed our GBP 300 million share buyback program in March. And today, we announced our fifth GBP 300 million share buyback program, reflecting the momentum in the business. We also announced today a dividend of 12.4p per share, in line with last year. And let me now hand over to Bhavesh for the financial review and outlook. Bhavesh Mistry: Thank you, Thierry, and good morning, everyone. Let me start with an overview of our performance for the year. Total sales for the group were GBP 12.9 billion, with like-for-like sales up plus 1.4%, excluding a negative calendar impact of minus 0.3%. Our sales growth was led by strong performance from our U.K. banners. Adjusted profit before tax was GBP 560 million, up 6%. Adjusted EPS was 23.8p, up 15%, underpinned by our strong earnings growth in the year and supported by a 6% uplift from our share buyback program. Free cash flow generation was GBP 512 million. We delivered this while also increasing CapEx by GBP 71 million as we stepped up our investment in our stores, technology and property. Net leverage now stands at 1.4x, and we maintain a very healthy balance sheet. Turning now to our markets. B&Q reinforced its market-leading position with total sales growth of plus 3.9% or plus 5.9% when we include marketplace GMV sales. Like-for-like growth is plus 3.3%, significantly outperforming a flat market with our market share at record levels. From a product category perspective, core remained resilient with 12 consecutive quarters of underlying like-for-like growth. Big-ticket delivered strong growth of plus 6% in the year and seasonal was plus 30% in Q1, benefiting from favorable weather, which we will lap this quarter. We successfully captured the transference of customers from Homebase to B&Q and acquired 8 of their stores, which our team rapidly opened in time for peak trading. TradePoint sales grew by plus 5.2%, fueled by our enhanced loyalty program and an increased investment in trade sales partners. E-commerce sales grew by plus 21.5%, supported by marketplace growth. B&Q's marketplace is gross margin accretive and generated GBP 15 million of profit in the year. Looking to the year ahead, we will further enhance our trade offering with investment in our people, our offer and our stores, and scale marketplace as we onboard cross-border vendors. You'll hear more on this from Thierry later on. Screwfix delivered consistently strong performance throughout the year with total sales growth of plus 4.5% and like-for-like growth of plus 3.2%, significantly outperforming the market. Our Screwfix team have executed at a high level, enhancing the customer proposition through targeted marketing and promotional campaigns, competitive pricing, range improvements and deeper engagement with trade customers via app-driven reward initiatives. Screwfix opened 27 stores on a net basis during the year, further growing our footprint and convenience for customers. Looking forward, our focus is on growing our share of the trade wallet. We also see further range and space opportunities. Our U.K. banners generated GBP 575 million in retail operating profit, representing 78% of our group total retail profit. Profit grew by plus 2.9% in the year or plus 9.4%, excluding the impact of last year's B&Q business rates refund. We delivered this profit growth despite the significant increases in wages, higher national insurance contributions and the impact from EPR packaging fees. In France, against a subdued consumer backdrop and a home improvement market decline of around minus 3%, we are encouraged to see both of our banners outperforming the market. Castorama like-for-like sales were minus 2.2% in a year of significant change, particularly from the restructuring of several stores. I'll speak more on the progress of our Castorama plan shortly. From a strategic perspective, Castorama delivered a rapid rollout of its trade proposition across the estate, introduced CastoPro zones in 50 stores and implemented a trade loyalty program. Trade penetration reached 9% by the end of the year, up from below 1% a year ago. Good progress was also made on marketplace with 1.6 million SKUs now available to customers. Brico Dépôt delivered total sales of minus 1.8% and like-for-like sales of minus 2.3%. Brico improved its price positioning by 2 points over the year and delivered strong progress in its trade proposition with trade sales up 26% and trade penetration increasing to 17% at the end of the year. This performance was driven by an expanded trade-focused range, investment in dedicated trade colleagues and enhancements to its loyalty program. Brico also successfully opened 1 store transferred from Castorama, doubling sales densities. We feel good about Brico Dépôt, a capital-light model with a clear customer offering of discounted prices and high product availability. Our French banners delivered GBP 97 million of retail operating profit with a margin of 2.5%, up 10 basis points year-on-year. This was a strong performance as both banners offset sales deleverage from a declining market and higher social charges through gross margin expansion and structural cost reductions. Turning now to an update on our restructuring plan for Castorama. Since the plan was announced in March 2024, the new management team has moved at pace to improve competitiveness and efficiency, delivering good progress despite a weaker market, which declined by over 7% in 2024 and a further 3% in 2025. We've already talked about our progress in trade and digital. In addition, the team undertook a significant number of range reviews, which benefited several core categories, including surfaces & décor, tools and tiling. We took cost price and supplier management actions, streamlining the head office organization and rationalized the distribution network space by 15%. The reduction since 2019 was over 35%. Our store restructuring and modernization program is delivering tangible results. Right-sized stores are seeing much higher sales densities, while revamped stores are outperforming the Casto average. The two franchise stores have returned to profitability. This progress has been delivered against a backdrop of significant people change, including a 50% refresh of store managers and regional directors and a 40% change in category directors. We will continue to drive this agenda at pace in 2026, positioning the business to fully benefit when market conditions improve. For France, overall, we remain confident in delivering our medium-term margin target of circa 5% to 7%, with the timing and trajectory of reaching this target dependent upon the pace of the market recovery. In Poland, we remain optimistic about the medium-term growth opportunities. Castorama is a market leader with potential to increase space whilst building on both trade and e-commerce. Poland experienced a slow start to the year with unfavorable weather and political uncertainty weighing on home improvement spending. Like-for-like was minus 1.1% for the full year, though conditions improved in Q4 with a return to growth in both the market and our business. We continue to make good progress with our strategic initiatives, about GBP 1 in GBP 3 comes from trade customers, supported by the rapid rollout of CastoPro zones in more than half of the estate, the recruitment of specialized sales partners and a new trade loyalty program. And e-commerce sales increased 30% year-on-year, benefiting from the launch of marketplace in January 2025. Poland generated GBP 87 million in retail operating profit, representing around 12% of group retail profit. During the year, we accelerated technology investment, resulting in a one-off circa GBP 5 million impairment of legacy systems. Excluding this charge, Poland retail profit was up and profit margin was broadly flat year-on-year. Iberia had an excellent year with plus 8.8% like-for-like growth, outperforming a growing market, driven by competitive price positioning and strong progress in trade. Moving now to our profit performance in the year. Adjusted profit before tax rose by 6% or plus 13% when excluding last year's GBP 33 million business rates refund at B&Q. A key driver of profit growth was gross margin expansion, which increased by 80 basis points, driven primarily by group buying and sourcing benefits, progress in marketplace and retail media with FX also providing a tailwind. We also delivered significant operating cost reductions. Some specific examples include a reduction in our supply and logistics network space of around 10% in France and nearly 30% in Poland, efficiencies in our stores from the rollout of self-service checkouts and the implementation of new store operating models and property cost reductions through store rightsizing and regears. For the year, we delivered 30 basis points of retail operating margin expansion to 5.7% and adjusted profit before tax of GBP 560 million. Turning now to our group cash flow. Starting on the left of this chart. We generated adjusted EBITDA of GBP 1.3 billion. Working capital delivered a net inflow of GBP 74 million, driven by higher payables and our focus on inventory management. Tax, interest and other items amounted to GBP 13 million, including a GBP 60 million benefit from tax prepayment true-ups, which we will lap in H1 2026-'27. CapEx spend totaled GBP 388 million, an increase of GBP 71 million as we continue to invest in technology and our stores. Together, these drove free cash flow of GBP 512 million. We returned GBP 474 million to shareholders through dividends and share buybacks, and total net cash inflow for the year was GBP 107 million. Our dividend payments and share buybacks in 2025-'26 build on our track record of attractive returns to shareholders. Over the past 5 years, we have returned GBP 2.4 billion, equivalent to around 40% of our market capitalization. Looking ahead, we'll continue to build on this track record with a proposed dividend of 12.4p per share to be paid in July and the launch of our fifth share buyback program of GBP 300 million commencing shortly. Looking ahead, we see further opportunities across gross margin, costs and working capital. On gross margin, we expect continued benefit from group buying and sourcing, marketplace, retail media and logistics efficiencies. On the other hand, we expect mix effects from our growing trade penetration and from maintaining competitive prices. We see further opportunities through cost action. At store level, we will deliver savings through operating model enhancements and technology. We also see additional opportunities from improving head office efficiency and to further leverage our shared services center. Inventory also continues to be a priority. Our supply visibility tool is enabling us to reduce lead times and minimum order quantities with our OEB vendors. Coming out of a strong year, we are confident in our ability to capitalize on the attractive growth opportunities in our markets and are well positioned to continue growing sales ahead of our markets, profit ahead of sales and to generate strong free cash flow. For the financial year '26-'27, with a mixed consumer environment, we expect adjusted profit before tax in the range of GBP 565 million to GBP 625 million, and are targeting GBP 450 million to GBP 510 million of free cash flow. We remain mindful of the heightened macroeconomic and geopolitical uncertainty in recent weeks. Where we stand today, we estimate that the in-year direct impact on energy and freight cost is limited. As you know, the situation remains fluid. In similar situations, our markets have behaved rationally on pricing and margin. We have a strong track record of maintaining competitive prices, managing gross margin effectively and flexing our cost base. You can expect us to maintain our disciplined approach. Let me now hand back to Thierry. Thierry Dominique Garnier: Thank you, Bhavesh, and I want to start by outlining the strategic growth drivers, which underpin our current performance and position us for future growth. You can see these priorities on this page. And let me start with trade. We continue to grow our exposure to trade customers, a segment that shops more frequently, spends more and exhibits more predictable purchasing patterns. Our trade strategy leverages our existing store footprint and supports both market share growth and higher store sales densities with little to no incremental CapEx. As a result, trade is both revenue and margin accretive at retail operating profit level. Screwfix treat penetration already stands at 75% across the rest of the group, trade sales grew by 23% and trade customers now account for GBP 1 in every GBP 3 of group sales. With this rapid progress, we are updating our medium-term ambition and now target GBP 5 billion of group sales from trade customers. So looking at some of our initiatives in a little more detail and starting with our stores. We are expanding dedicated trade space within our stores and now have trade zones live across all our banners. We made particularly strong progress in Castorama France during the year as we rolled out our trade proposition across the entire estate and opened 50 new CastoPro zones. We're also excited to announce our first stand-alone TradePoint store opening in London this week. We also continue to invest heavily in our people, 279 dedicated trade sales partners are enrolled across our banners, circa 3x more than last year. We are empowering our trade sales partners and see this as a key lever to unlock additional share of wallet. At Screwfix, our new rewards program provides an industry-leading proposition for our trade customers and is driving strong engagement via the Screwfix app. Customers who sign up to the program receive exclusive and personalized offers, but also surprise perks and gamified engagement. We now have 2.2 million active rewards customers showing higher frequency of visits and higher average order values. Screwfix is also a great example on how we have succeeded with an app-first approach with 41% of e-commerce sales now coming from the app. Another example of where our trade focus comes to life is Brico Dépôt France, a capital-light model with a strong discounter DNA. Trade customers like the efficient shopping experience, competitive pricing and high product availability. We trialed new Pro zones during the year and signed up over 210,000 trade customers to a Pro loyalty program. We also improved price competitiveness by 2 points and introduced bulk-buy discount. These actions enabled Brico Dépôt to grow trade sales by 26% and reached a trade penetration of 17% at the end of last year. We will further build on our trade proposition this year with more Pro zones and enhance our trade value offering through additional volume discounts. Moving now to the digital ecosystem we are building and it starts with a strong 1P e-commerce proposition with our stores at the center. In 2020, we made the strategic decision to leverage our store network to fulfill online orders. This enables us to offer market-leading fulfillment speed for click & collect and home delivery, while also driving incremental traffic to our stores. We continue to improve our core platform by transitioning of our e-commerce legacy systems towards modular and agile technology. This enables rapid feature innovation, faster site load times and market-specific feature deployment. We have developed a digital app store model to ensure excellent product availability for online orders, 94% of 1P orders are picked in-store and we offer rapid fulfillment options from store through our click & collect and home delivery propositions. All this, in turn, drives increased traffic, which supports the growth of our 3P marketplace. Our marketplace offers a broad choice with several million SKUs, which in turn generates more traffic to our websites and fuels additional 1P sales. Our stores also play a critical role for our marketplace. All stores accept marketplace returns and B&Q now offers in-store click & collect for marketplace items, driving additional footfall. Our loyalty programs provide us with rich customer data, enabling personalized offers and targeted promotions. The market is increasingly shifting towards mobile-first and app-based engagement, which provides us with access to data that allows us to improve and personalize customer interaction, and this leads us to monetization. With scale, traffic and comprehensive data, we can sell and grow retail media. As you know, there is lots of current news flow when it comes to agentic commerce. Our platforms are ready to connect to agentic commerce apps, and I will come back to this topic shortly. So to summarize, our digital ecosystem drives a virtuous cycle of value, leveraging our store assets, our web traffic and is powered by Kingfisher technology. So moving to Slide 22, which highlights our group e-commerce performance this year. Screwfix already generates 60% of sales from e-commerce. In the other banners, we grew e-commerce by 20%, and you can see progress in every one of our banners. At the group level, GBP 1 out of GBP 5 now come from e-commerce. Our target in the medium term is to reach e-commerce sales penetration of 30%, out of which 1/3 from marketplaces. So moving to our marketplaces, and I'm going to focus here on B&Q, which is most advanced and provides a clear blueprint for scaling across our other banners. We launched our B&Q marketplace in 2022 and have already achieved a cumulative GBP 1 billion of GMV sales since launch. We have scaled our platform significantly over the past 4 years, adding 2,800 vendors and 3.7 million SKUs while also improving convenience for our customers with the introduction of click & collect, a first for our marketplace in the U.K. B&Q's marketplace has generated GBP 50 million retail profit contribution last year and the marketplaces in France and Iberia have now reached breakeven early in their journey. So looking forward, we have ambitious growth plans, including the onboarding of more international cross-border vendors. And for context, cross-border accounts for broadly 50% of sales at mature pure-play marketplaces and only a few percent for us. An emerging income stream for us is the monetization of our customer data and our traffic. Our insight platform, Core IQ, underpinned by Kingfisher's first-party data enables us to monetize our data with our corporate vendors, having successfully built this capability in Castorama France, we plan to roll it out across all banners in 2026. So moving to retail media. We have brought capabilities in-house, build a group Center of Excellence, and each banner now has a dedicated retail media team. We have also started piloting advertising on digital screens in stores. While at an early stage, we are very excited about this new income stream as adoption of retail media is strong. We target 3% of our e-commerce sales as additional revenues with a significant drop-through to profit. Kingfisher is also a rapid adopter of AI. We see AI as a tailwind for our business and ourselves as leaders in this space. Our in-house AI agent, Hello Casto, was the first agentic agent in the global home improvement industry when we launched it in 2023, followed by Hello B&Q in 2025. Those early investments are paying off. We have seen an increase of over 60% of customers visiting Hello Casto online with conversion increasing by 95%. Last week, we announced a new strategic partnership with Google Cloud. Through this, we'll introduce AI-powered search across all our banner websites and apps, helping customers find products more intuitively. We have also done extensive work to enable AI agents to discover our products and to transact autonomously when this functionality becomes available in the U.K. and in Europe. This partnership will expand our capabilities further, allowing customers to complete purchases via Gemini and other AI agents. Underlying our business are strong own exclusive brands where we provide innovative solutions at affordable prices and which are accretive to our margin. In 2025, within our power tool categories, we launched our next-generation Erbauer range with best-in-class performance in power, in control and durability. Since launched, it has achieved plus 43% sales growth compared with the previous range, and Erbauer is now our #1 tool brand sold across the group. Our new Ashmead kitchen range delivers standout style at entry-level pricing. While our Pragma lowest-priced kitchen range, retails for less than EUR 200 and is 15% cheaper than branded alternatives. Our new kitchens have been a key driver of our strong big-ticket performance in the year. And alongside product innovation, we are developing a growing portfolio of complementary services that support customers with their project such as kitchen and bathroom design to rental, installation service and project finance. Our banners hold leading positions in their markets, each with a distinct model and clear customer proposition where attractive space opportunities exist that meet our investment criteria, we continue to complement our existing store estate. Our mid- to long-term ambition for store space remains at 1.5% to 2.5% sales contribution per annum, and 27 new store openings are planned for the coming year. We believe compact stores will play a more important role in the future across our markets, allowing us to meet customer needs in high-density urban areas and offering convenience and fast fulfillment through click & collect and home delivery. Let me now turn to Screwfix France, which is delivering plus 49% like-for-like store sales growth, in line with our expectation. Momentum continues across all KPIs with a 52% increase in unique customers year-on-year and growing national brand awareness. We continue to see good growth in our older cohorts after 3 years and particularly strong momentum in the north of France where we observe a network effect. So this performance gives us confidence in the future of Screwfix in France. The strategic growth drivers I have outlined underpin Kingfisher's attractive investment story. We have leading positions in our markets, and those markets have attractive structural growth drivers. We operate a diverse portfolio of banners, each with distinct formats and propositions that address a wide range of customer needs. Our strategic growth drivers are allowing us to grow our market share and give us confidence in our continued delivery against our financial priorities, growing our sales ahead of our markets, increasing our profit ahead of sales and generating strong free cash flow. So to summarize, '25-'26 was a strong year. We have clear and attractive growth drivers, and we are confident in our continued delivery in '26-'27 and beyond. With that, let's move to Q&A. Thank you, everyone. Operator: [Operator Instructions] I would like to remind all participants that this call is being recorded. We will take our first question from Richard Chamberlain with RBC. Richard Chamberlain: A couple of questions from me please to start. Can you hear me okay? Bhavesh Mistry: Yes, very good. Richard Chamberlain: Yes. Excellent, excellent. Yes. So first is on the space target you're setting out for the longer term. I think you're talking about 1.5% to 2.5% per year net. I wondered if you can just talk through what the key drivers of that space ambition will be? And also what would the gross space growth be in that scenario? That's the first question. Thierry Dominique Garnier: Thank you, Richard. So I think, first of all, indeed, that's our medium-term target. We believe that Screwfix first is our -- this area where we have a lot of potential. In the U.K., with a format like Screwfix City, but moreover in France. We know that today, we are happy with the store maturity, we will go for a large number of stores in France. In Poland, we have said that we'll probably cover about 50% of the city where we want to be. We have more store to open, not only big boxes as well as medium boxes, around 4,000 square meters of format, we really believe in and as well as smaller format, we call it Castorama Smart, about 2,000 square meters, a lot of potential in Poland. But in France, Brico Dépôt 1,000 is the format we are having high expectations upon that we have a few stores. We're still looking at the results, but it could be an attractive format as well as Iberia. So obviously, Richard, the expansion is not linear. Sometimes you have opportunities, sometimes you have up and down, but clearly, that's our medium-term target. Richard Chamberlain: Great. Very helpful color. And my second question is on the marketplace. Obviously, growth very strong last year. Can you give us a sense of how much that's being driven by newer vendors and how much by a sort of broader range of SKUs from existing vendors on the platform? Thierry Dominique Garnier: I think it's both. We are -- now B&Q, it's the third year in '25, will be the fourth year this year. So we keep increasing the number of SKU, if you compare year-on-year, the number of vendors. In the other countries, you have really a very strong scale up in France, in Poland, in Iberia, we really continue to grow the vendors. I think the big new things that started in '25 and that will be a bigger thing in '26 is what we call cross-border of vendors. In fact, today, when you look at the B&Q marketplace, we just have a few percent of our vendors that are not legally located in the U.K. And we know countries like Germany, for example, or other European countries, you have a very strong base of industrial vendors. It took us a while to find the tech solution to onboard and there is VAT and payment challenges. And now we are able to do that. So you will see a lot more cross-border vendors in the future. And for large marketplaces, I will not give you names, but you can guess the names, in Europe and in the U.S., it's broadly 50% of their vendors are not local vendors. So we feel that's a big opportunity for us looking forward. Bhavesh Mistry: Maybe a couple of things to add, Richard, why we like marketplace, it extends our ranges, lets us play in categories, we wouldn't align with our proposition, but it wouldn't make sense for us to stock directly. So things like white goods, bulky things that take a lot of space in stores, maybe lower margin cap products. But the other thing is marketplace that gets us to reach new customers, right? We have half of the customers that come to B&Q marketplaces are new to diy.com. And then they go on to buy 1P product as well. So we're attracting more customers onto our website to be able to sell them more 1P. Operator: Our next question comes from Tim Ramskill with Bank of America. Timothy Ramskill: I've got a few, so I'll maybe go one at a time. The first couple are kind of cash flow related. So I guess, you obviously highlighted the benefits delivered on inventory. But at the same time, looking at the balance sheet, that's sort of not immediately obvious numbers wise. So maybe you can just help me out. I think there may have been some Chinese New Year effects at play there. So maybe you can just sort of help us sort of square the kind of improvement of 5 days of inventory, please? Thierry Dominique Garnier: Maybe let me start and then we'll give you a few detailed color. I think we are very happy with our inventory program. You have seen it's not the first year we are decreasing our inventories days. I think number of days is really the way we are looking at it. And we had multiple programs from reducing the space of our DCs. And if you look at the past 5 years, we have been consistently reducing the number of DCs and the number of square meters, using better software to have real-time visibility on inventory across the group, from factories in China, ship DCs, providing real-time data to our vendors that allow us to negotiate lead time, minimum order quality. And now we are starting to really work on forecasting with AI and more software. So I would say, you have seen that in the past few years, and we are still very confident looking forward to work hard on our inventories and being able to reduce inventories. Bhavesh Mistry: Yes, not much to add. It's a key focus area for us. As Thierry said, we took out 5 days this year, 7 days last year. We expect continued steady progress. It's a key driver of our working capital improvement. And as Thierry mentioned, we try to focus on structural things, not tactical. So for example, we've got the supply chain visibility tool that we know where our stock sits. And so that means when we work with our factories in China, we can give them better data to better plan their production, and that means that we order less, we have shorter lead times. We order fewer sort of our minimum order quantity sizes are lower. So we're getting the product we need when we need it. That really helps. Just one example, but just gives you a bit of color on some of the structural initiatives that we're taking. Timothy Ramskill: Okay. Excellent. That's very helpful. The next sort of cash flow question was just a little bit around CapEx. Obviously, the guidance for GBP 400 million. What, if anything, is driving a little bit of a step-up? Is that just linked to the sort of store opening plans? And then maybe just some thoughts on how that sort of trends over the next few years, please? Bhavesh Mistry: Yes. So we spent GBP 388 million in CapEx this year, about 3% of sales, which is in line with our guidance. I guess the way we thought about it this year is as we navigated through, we had a good first half. And we're in constant dialogue with our businesses around where could we look for opportunity to deploy and invest more in our business first. That's the first pillar of our capital allocation strategy. That's what we focused on stores. So B&Q, for example, bought a freehold store that was opportunistic that came up, wasn't in our plan, but we felt the right thing to do. We also felt continued investment in maintenance of our stores. That's important. So customer-facing things like LED lighting, entrances, et cetera. So we sort of navigated through the year. And as we saw, we're having a good first half, we chose to take some of that performance and reinvest it, obviously, in the right project parts of the business that drive good returns and help our customer experience. Timothy Ramskill: Great. And then last one for me, if that's okay. Just in terms of marketplace, just help us think about how -- clearly, you've laid out ambition for where that gets to from a revenue contribution perspective. But what would be -- well, how do you expect to grow the costs to deliver that? So when should we start to see perhaps a sort of more dramatic drop-through to profitability? Just some parameters around that would be great. Thierry Dominique Garnier: Yes. Thank you, Tim. I think, first of all, I remind you that the market -- the B&Q marketplace delivered GBP 15 million of retail profit this year. So that starts to be meaningful. When I start from top line, the take rates, the commercial margin we are taking is around industry average for home improvement between 10% and 15%, and we are happy to see this margin across all our different countries. Then you have a bit of tech, but broadly, the investment has been done. We are working with Mirakl. So that's relatively -- it's a SaaS model. So we are -- it's really a small amount. They are small teams. If you take B&Q, we speak about 20 people for over GBP 400 million GMV. So the main variable is the marketing cost. And so when you start the marketplace, you want to be probably around 8% to 10% marketing investments. And then gradually, over time, you will decrease this marketing spend. And after a few years, you are at, let's say, a stable and standard level of marketing investment. So we are gradually decreasing our market investment. And overall, when you do the math, we are seeing very strong flows through to profit. To give you even more color, we will probably be able in the future to increase the take rates because we'll be able to sell more services to our vendors, retail media, fulfillment option, advisers. So a lot of things on the table as well on the take rates in the medium term. Operator: Our next question comes from Adam Cochrane with Deutsche Bank. Adam Cochrane: A couple of questions. First of all, you talked about the compact stores as being an area of growth. Can you just give us an idea of the dynamics on the compact stores. Are they -- despite a lower sales base, are they actually more profitable on a contribution margin than the larger stores? So where I'm going is, are they margin accretive across each of the different banners compared to where you currently are? Thierry Dominique Garnier: Maybe I'll start, and I think Bhavesh will give other views. I think firstly, you remember, we have started this journey a few years ago where we believe compact store format in DIY is an important trend. It's not an obvious format, there are countries that exist. When you look at France, we have in the market companies like Mr. Bricolage or Weldom that are, in fact, small format. In the U.K., you have less small format. So in the U.K., we have B&Q locals, and that's really a high street format. And we will start to open more B&Q locals this year, and we have a target in the medium term about 30 stores. We have a format that is called B&Q retail park, around 2,000 square meters. We have Screwfix City, very successful, and we believe we can open 100. We have Brico Dépôt 1,000 in France. I mentioned that it's a very important format for the future. In Poland, we have a great medium box, around 4,000 square meter, and we are working hard on the 2,000 square meter box that is not fully ready yet. And we are still working on our small format for Poland. And obviously, B&Q, we are as well very pleased with the medium box format. So I would say, on average, our medium box and smaller formats are in line or better than the average of their markets. There are a few exceptions. For example, if you tell me in Poland, smaller format, we are not up yet, so Brico Dépôt 1,000, there's still some improvement to do. But overall, what you see is sales density and profit in line or slightly better than the average. Bhavesh Mistry: And not much to add there, Adam. I think on B&Q Locals, we've got 11, 8 of them are working pretty well. The other 3 are not. Of the 8 that are working well, we look at what are the right ranges, what's the right delivery into a city center location, logistics, how are consumers engaging with us. So we're constantly learning as we build and adopt these. Adam Cochrane: And the second question I've got is, if we look at the B&Q performance as the year progressed, there may have been some drivers from Homebase customer transference. Did that make a material difference as each quarter went on? Can you just remind us of maybe when that annualizes? And the second part of that question is, if we assume that some of the B&Q like-for-like was from Homebase, and a decent proportion is coming through from the growth in trade, is there a question mark over the core U.K. DIY customer, which appears to be in reasonably low to mid-single-digit decline if you take into account the Homebase and your trade customer growth? And are you focusing so much on the trade customer that the DIY customer is getting less of a service than they were historically? Bhavesh Mistry: Let me -- thanks, Adam. Let me start with Homebase, and then I'll get Thierry answer the second one. So we haven't disclosed specifics on Homebase, but a couple of data points. Firstly, Homebase went to admin in November 2024, and then stores closed in January and February of 2025. And the way we sort of modeled and looked at it was one of the stores that are with -- B&Q stores that are within 20 minutes of a Homebase, and how are they performing versus the rest of the portfolio. And there -- that's where we did see an uplift. Obviously, the teams executed well. The 8 stores that we acquired, we made sure we're open for peak. We made sure we have the right product availability. As you know, we had a super strong seasonal last quarter 1. But Homebase was one of a number of drivers of B&Q's performance, right? We had good performance in big-ticket, continued growth in our core categories. We've got profitable growth in trade and e-commerce. And then obviously, the strong seasonal that you saw in H1. So yes, it benefited us, but one of many levers. Thierry Dominique Garnier: Yes, Adam, a few more comments. I think, first of all, we have to look at B&Q, including marketplaces. So we have indeed the store, we have trade, we have marketplaces. So when we add marketplaces, what we call the GMV, the B&Q sales growth is plus 5.9% in 2025-'26 versus the flat market. So yes, trade is growing. But you can't say that the rest of the perimeter is having difficulties. And it's all based on the same assets. So we are leveraging our assets to grow e-commerce and to grow trade. Another data I can give you is services installation. We're on 22% at B&Q. So clearly, we see a lot of good news on interaction with the customer. So you really have to keep looking at B&Q altogether, including marketplace. Bhavesh Mistry: And just to add, we performed above the market in the U.K. Well, that gives you a data point. Adam Cochrane: Okay. And final question is, you talked about growing sales ahead of the markets and profit ahead of sales. Your midpoint of the guidance implies a 6% increase in profits. Given that one number that today surprised me slightly was the OpEx growth, particularly in the U.K. is the implication to get to your midpoint that there's a low single-digit like-for-like in order to leverage that up to get to your 6% at the midpoint profit growth? Thierry Dominique Garnier: I think maybe to start, Adam, I think in the mixed consumer environment, we feel good with a 6% increase in the midpoint. We feel it's a good plan. It's predicated on continued progress in our strategy on trade and e-commerce and as well a lot of discipline on gross margin and costs. So in the current environment, we rather feel good around this midpoint guidance. Operator: Our next question comes from Grace Gilberg with Jefferies. Grace Gilberg: Can you hear me? Thierry Dominique Garnier: Yes. Grace Gilberg: Perfect, perfect. First one is around gross margin actually. I mean, obviously, it was a pretty good year in terms of your gross margin expansion and continuing in the second half after what was a pretty good first half, and that was quite impressive. You've mentioned that these have to do with primarily better sourcing as well as just getting better deals with your suppliers. How structural is -- or how structural are these gains? And what is -- what are the things that your suppliers are seeing that are having you to be able to have these better deals, for example? That's the first question. The second one is actually around France. It was a little bit weaker than the other two regions. Obviously, the market has been down, and it's very difficult to see, that hasn't been very helpful. But it seems from your perspective that the model is working particularly at Brico Dépôt. What are the benefits that we maybe haven't seen yet just because of the market? And what are you expecting to see going forward? I'll start with those two, and then I have one or two others. Bhavesh Mistry: Grace, so on gross margin, yes, look, we're really pleased with the performance in the year, right? We grew by 80 bps as we flagged. And as we look into the year ahead, we have different puts and takes. So on one hand, you're going to continue to see further expansion of marketplace, as Thierry mentioned earlier, that's margin accretive. We continue to look at the store as the heart of our digital ecosystem. So a lot of preparation and picking is done in the store. That means we need less logistics space. And so you'll see continued focus on logistics efficiencies. And then buying and sourcing was quite successful in this year that helped drive our margin, and we expect to continue to see that in the year ahead, particularly the insight that we get from our private label business. We look at something called should-costs. We understand the components of all of our products, and that gives us real data to negotiate with our branded suppliers. And that will continue. And then we expect further FX tailwinds based on our hedging. We hedge 100% of our committed orders into next year. So we have a pretty good read on FX. On the other hand, we have growing trade. We're really pleased with what we're doing with trade for all the reasons you heard us talk about. But at a gross margin level, it is dilutive. We always focus on maintaining competitive prices. And then freight is starting to turn into a headwind. So those are some of the pluses and minuses that we think about as we look at the year ahead on gross margin. Thierry Dominique Garnier: Now, I think to France, I think overall, I think we feel good about the progress in '25. Just to tell you what I have in mind. First, market was around minus 3%, so pretty difficult market. We did around minus 2%. So we overperformed the market. In a year where Castorama had significant disruption from store work, a lot of range reviews. We had a big head office restructuring. We were changing a lot of the team in the store. You heard in Bhavesh's comment that we changed about 50% of the store manager, 40% of the category manager. And as well in France, we have to remember that it's a lot of new tax and high wages in '25, like in the U.K. So in this environment, being able to gain market share in all banners, to have a profit up, to see the strategic progress on trade, on e-commerce, to deliver on the Casto plan, but as well on the Brico plan, to answer your question on Brico, probably the two biggest progress we made was continue to have an even lower price index because it's a discount -- discounter banner. And we did a lot, a lot of progress on the Pro sales. You saw that. And at the end, the team are in a good place. We see team engagement in France growing really in a strong position. So overall, I think it's a very strong year in a very difficult market. So indeed, we need the market to recover. But for me, the market recovery, the French market recovery is a question of time. Grace Gilberg: Okay. All clear. And then I suppose my last question is around the full year guidance for FY '27. Obviously, you do have some tough comparatives heading into Q1 given how strong B&Q was last year. And then many of your competitors have as well or just peers within the home market have cited that it's been pretty wet weather and hasn't been helpful for trading into the beginning of the year. What makes you confident in reaching your full year PBT numbers, given that you're facing some of these headwinds potentially? Bhavesh Mistry: Well, as you know, Grace, we don't provide current trading. So we don't guide for the current quarter. But factually, you're right, we had a very strong seasonal, so B&Q's Q1 seasonal last year was 30%. So it's a pretty tough comp to lap. But as we look ahead to sort of our guidance for the full year, we look at sort of what are of the drivers from a top line perspective. We've got a mixed consumer backdrop. But in the U.K., we expect continued momentum from our two banners, notwithstanding the tough comp in Q1 on Homebase transfers as we talked about earlier. Top line in France, it's still a weak market. It's improving, but very slowly. Savings rates are still elevated, 400 to 500 bps above the long-term average. So very much in France is focused on what we can control, differentiated proposition, discount proposition of Brico, all the heavy lifting we're doing at Casto. You heard us talk about in our prepared remarks. And then Poland was flat last year. Q4 was good, but I'd say we need to see more quarters of good sustained consistency in Poland. So that's sort of how we think about the top line when we set our guidance. And then we talked about in your earlier question, what things that we will continue to manage effectively got some puts and takes. And those will be the same things next year as we saw this year. And then continued focus on cost. We've got a track record of managing our costs pretty well. As and when trading environments change, we have the agility to flex our cost base. So those are some of the component parts that sort of set our full year guidance on profit and cash. Hopefully that adds. Thierry Dominique Garnier: Just to add a few words around general, how we feel, obviously, looking at the Middle East crisis. I think, obviously, we are very mindful. But we look at our top line first with resilient business. We have about 2/3 of our business is repair and maintenance, so less discretionary. We now have reached 30% of the group sales is delivered through trade. So as well more resilient. We really see the benefit of our strategy on e-commerce and trade. Looking again at B&Q in 2025, real growth, plus 5.9% in the flat market. So you start to see the benefit of the strategy. And as Bhavesh said, we have had a strong track record of discipline, margin management, cost management in all the past years. Operator: Our next question comes from Yashraj Rajani. Yashraj Rajani: I've got three, please. I'll ask them one by one. So the first one is on the cross-border vendor e-commerce, which you have fully highlighted. So is that just an element of introducing a different price point? Or do you think that you're missing something in the range architecture there, which is now being complemented with this cross-border vendor e-commerce? And how do you think about the right balance so that it doesn't cannibalize your own 1P sales? Thierry Dominique Garnier: So I think we -- thank you for the question, Yash, first of all. I think it's -- we really see that more as a range topic, as choice. In fact, we are already selling on our marketplaces, I think you should take the U.K., U.K.-based vendors. So you have a lot of very strong countries in the world with very strong industrial base. Germany, but even and as well China, we'll open gradually our marketplace to Chinese vendors. We see the potential here. But it's not around price competition. To give you another color, we are working hard on what we call buy box. And I will not enter into the tech detail, but we could do that off-line, if you want. That will allow us as well to have more price competition between the same SKUs from 2026. So cross-border is really around choice. Bhavesh Mistry: And what I said earlier, right? Yes, there's probably a little bit of cannibalization, but look at our 1P sales, it's stronger than our store sales. And 3P traffic brings new people to diy.com that we wouldn't otherwise get, and a lot of them go on to buy 1P product. So that's a benefit of having the choice that Thierry talks about. Yashraj Rajani: Sure, that's super helpful. And then the second question is, again, on France. So I appreciate you commented that the market is difficult, but there's obviously all the self-help initiatives that you highlighted. So even if you assume that the market stays where it is, what is the absolute margin improvement you can see from all the things that you control even if like-for-likes are negative? Thierry Dominique Garnier: Yes. I think, Yash, we are still confident in our 5% to 7% profit margin for France in the medium term. We always said part of it is really our self-help action, and we are progressing on this. To remind you as well that some of the self-help action, you have very short-term impact, when you do a head office restructuring, you have short-term impact. Some other, like range reviews or the store network restructuring, you need a bit of time to realize, to crystallize all the benefits. So one, self-help actions. Second part is the market improvement. Personally, I'm convinced that we'll see market improvement. It's a question of time, and we need both to achieve those 5% to 7%. Yashraj Rajani: Got it. Got it. Super helpful. And the last one from my end, maybe quite a topical one is the Middle East. So can you just sort of quantify any sort of freight headwinds or more broadly disruption that you're seeing, which would probably create some availability issues, if any? Or just anything else you'd like to highlight on the Middle East? Thierry Dominique Garnier: So maybe I'll start with supply chain, and then Bhavesh will come on the cost side. First, it's obvious that we have no operation in the region. We have nearly two suppliers in the region. So you see it's really a very, very limited direct impact. And before Bhavesh will comment on gross margin and costs, again, remind you that 2/3 of our business is repair and maintenance and 30% is trade. We are high expectation to deliver on our strategy on trade and e-commerce in 2026 and beyond. So we expect this to give us resilience looking forward. Bhavesh Mistry: Yes. I mean you heard me mention it in my prepared remarks, but the direct impacts, based on what we know today, and as you know, things are changing every day, but the impact for us is fairly limited energy. On energy, our quantum energy costs are less than 1% of our sales, and the majority of that is hedged. And then on freight, again, a small proportion of our COGS, about 20% of our COGS are sourced from Asia, and we typically lock in annual contracts with carriers. So those contracts have what we call like a fuel index, so there may be a little bit of a headwind, but we've locked in those contracts for the year. We looked at previous situations, the markets have behaved pretty rationally on pricing and margin. And we continue to stay focused on managing our margin and being super disciplined on cost. And so that's our focus, right, to continue to do that as we navigate our way through. Operator: Our next question comes from Mia Strauss with BNP Paribas. Mia Strauss: I just want to check a few. I think last year, you talked maybe about doing consumer surveys for your trade sales partners. And what sort of pipeline they're seeing over the next few weeks. Maybe if you can just give us a comment on that for the current year? Thierry Dominique Garnier: Yes, absolutely, Mia. And by the way, you will see that in the appendix of our document we released, Page 34. Indeed, we do a monthly survey for Screwfix. What you see on the Page 34 is that 93% of our trades people are working. So it's 2 points year-on-year. So slightly higher than last year. But we have a second category that is working and have more work to come, 79% of the survey and is 6 points up year-on-year. So we do this survey every month for the past few years. So it's pretty reliable. So we feel those results will remain strong. Mia Strauss: And then maybe just on your share of the trade wallet. What share do you currently have? And essentially, what is the realistic opportunity of what share you could get in the future? Thierry Dominique Garnier: I think Screwfix, our estimate is around 15%, 1-5. So for our trade business, you could say it's still relatively low, and that's why we believe we have a lot of opportunity ahead on Screwfix share of wallet on the range, the size of the range, B2B. We have a plan that will address more of this share of wallet growth in the future. And you have seen as well in the presentation, the rewards program. For all the big boxes, our estimate that is a few percent. Our share wallet in B&Q in France, in Poland is just a few percent of a very large market. Very often, the trade people, they already come to our stores, but mainly for urgencies. And that's why all this plan is finally leveraging your assets to sell more to people that are already in your stores through your loyalty program, traders sales partners. So we really feel starting from this very low base of share of wallet in our other big boxes, there is significant opportunities. Bhavesh Mistry: And look, in the U.K., it's a big market, right, it's GBP 30 billion, total trade market. TradePoint sales are close to GBP 1 billion. So a lot for us to still go after. Mia Strauss: That's helpful. And then maybe just for you, Bhavesh, on the free cash flow. So the guidance is a little bit lower year-on-year. And I think it's -- last year, you also talked about achieving over GBP 500 million over the full current year. I guess, last year, you saw about a GBP 91 million increase in payables. What was that from? And I guess, going forward, why is it a little bit lower? Bhavesh Mistry: So look, yes, pleased with our free cash guidance. We've delivered more than GBP 500 million over the last 3 years. And our focus this year will be continued on the profit drivers we talked about and working capital, and particularly inventory. So again, some of the stuff we mentioned earlier, some of the structural initiatives. We set a range of GBP 450 million to GBP 510 million, midpoint GBP 480 million. That's about GBP 30 million higher than the midpoint we set last year. And so confident that we'll continue to deliver cash flow well. We also still have spent more on CapEx this year. The question somebody asked earlier, as we saw and navigated through the year that we are trading well and had a good cash performance, we chose to redeploy some of that both in buying freehold, but also at our maintenance and tech. So we kind of navigate through the year. And then you always get fluctuations, right, in year-on-year. So sometimes one-offs. But over the medium term, we're still guiding to around GBP 500 million per annum free cash and have done that in the last 3 years. Mia Strauss: Great. Maybe just on the -- if we look back to '25, what was the reason for that significant increase in payables maybe? Bhavesh Mistry: I think timing, largely. We look -- as you'd expect any retailer, we kind of look at payment terms as well as something we navigate, but also, our sales was higher, right? So that sort of drives our payables. Operator: [Operator Instructions] Our next question comes from Georgina Johanan with JPMorgan. Georgina Johanan: Everyone, can you hear me okay? Thierry Dominique Garnier: Yes, Georgina. Bhavesh Mistry: Yes. Go ahead. Georgina Johanan: I've got three quick ones, please, really just following up some questions that have already been asked. The first one is very much appreciate that you prefer not to give current trading trends. But just in the context of maybe the consumer more broadly, particularly in the U.K., I think one of the early surveys that's been done since the start of the crisis and headlines around higher energy prices and so on, actually, we saw an 8-point fall in consumer confidence. So just wondering if you can kind of comment on how you're seeing consumer behavior rather than trading trends necessarily. The second one was, I appreciate you don't provide a like-for-like guidance, and of course, there are changes that will be made depending on trading performance. But if you were to see perhaps only a flat like-for-like this year, can you just confirm that you'd be able to hold profits in that scenario, please? And then finally, you very helpfully at the half year, I think, quantified some of the gross margin benefits from buying and sourcing initiatives. If I remember correctly, around 60 basis points. Is it reasonable to assume that you can actually achieve a similar level again in fiscal '27? And indeed, where did that land for fiscal '26 overall, please? Thierry Dominique Garnier: Thank you, Georgina. Let me start with the first one, and then Bhavesh will cover the two and three. So to be direct, indeed, we don't want to comment on the current trading. But I think it's an important topic, we have not seen up to now real impact on the customer. We have not seen a change of trend following the start of the Middle East crisis. Bhavesh Mistry: On your second question, we have different levers that we pull as we navigate through the year, margin, cost, investment in the business. We set our guidance range or profit range is the same as we said previously, GBP 60 million, around that midpoint, and we'll navigate and push and pull levers as trading evolves as you saw us do this year. On gross margin, I'm not going to quantify it, but I'd refer you to my previous response on the various puts and takes. We've got lots of things that are tailwinds, but we also have some things that are headwinds on gross margins. Operator: At this time, there are no further questions. I will now hand back to Thierry for closing remarks. Thierry Dominique Garnier: Just to thank you for joining us this morning, for your questions. Again, we are confident in our delivery of this year and our strategic progress. Confident in the fact we stay very disciplined on the thing we can control well as we did in the past. So again, thank you, and we are always available with the team if you have any questions. And for some of you, I think we'll meet in the coming days. Thank you very much. See you soon. Operator: Thank you for joining today's call. We are no longer live. Have a nice day.
Operator: Good morning, and welcome to the Dollarama Fourth Quarter and Fiscal Year 2026 Results Conference Call. On today's call is Neil Rossy, President and CEO; and Patrick Bui, CFO. They will begin with brief remarks followed by a Q&A with financial analysts. Before we begin, please note that today's remarks may contain forward-looking statements about Dollarama's current and future plans, expectations, intentions, results or any other future events or developments. Forward-looking statements are based on information currently available to management and on reasonable estimates and assumptions made by management. Many factors could cause actual results, future events or developments to differ materially from those expressed or implied. You are cautioned not to place undue reliance on these forward-looking statements. Forward-looking statements represent management's expectations as of March 24, 2026. Except as may be required by law, Dollarama has no intention and undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You are invited to consult the cautionary statement on forward-looking statements and Dollarama's management's discussion and analysis dated March 24, 2026. All forward-looking statements on today's call are expressly qualified by this cautionary statement. In addition, Dollarama may refer to certain non-GAAP and other financial measures during the call. Please consult the non-GAAP and other financial measures section of Dollarama's with MD&A dated March 24, 2026, for definitions, reconciliations with the appropriate GAAP measures and other information. The disclosure documents related to this call are available in the Investor Relations section of dollarama.com and on SEDAR+. I will now turn the call over to Neil Rossy. Neil Rossy: Thank you, operator, and good morning, everyone. For fiscal 2026, we are pleased to have met or exceeded our financial guidance on all metrics, while we also advanced our growth ambitions. We generated same-store sales of 4.2% in Canada for the year and delivered strong earnings growth with EPS increasing nearly 14% year-over-year. Fiscal 2026 also marked a significant milestone in our international expansion with Dollarcity entry into Mexico and our acquisition of a national discount chain in Australia. In Canada, our compelling value continued to resonate in a economic environment that is weighed on consumer sentiment and discretionary spending. As Canadians face pressures on their household budgets, they turn to Dollarama for a year-round value and everyday convenience. Throughout the year, our full assortment contributed to solidifying Dollarama as a destination for affordable goods across our product categories. We experienced solid demand for general merchandise and seasonal items which speaks to the strength of our buying team and direct sourcing platform. We also saw continued sustained demand for consumable products, which speaks to our ability to offer strong value for sought after every day essentially. Unfortunately, the weather did hamper our fourth quarter performance, which was off to a good start. Unfavorable weather conditions across Canada directly impacted both store traffic and peak sale periods through to the end of January. However, we nonetheless generated 1.5% same-store sales growth in the quarter with basket growth driven by a positive seasonal performance. In Canada, we successfully opened an exceptional 75 net new stores in fiscal 2026. This brought our network across the country to 1,691 stores by the end of January. For fiscal 2027, we are returning to our historical cadence of annual net new store openings in the range of 60 to 70. This past February, we had another real estate milestone with the opening 1,700 store in Canada. We are making steady progress towards our long-term target of 2,200 stores by 2034. Reaching this threshold of stores requires us to grow our distribution and warehousing capacity in tandem. The development of our logistics hub in Western Canada is moving along well, having made significant progress building the structure. With everything moving along on time and on budget, we are on track to have our Calgary hub operational by the end of 2027. Having a 2-node logistics model support our long-term growth in Canada and bring added resilience to our logistics through redundancy. By applying our proven business model Dollarcity continues to generate strong top line momentum, margin expansion and footprint growth across our core markets in Latin America. This is translating into impressive year-over-year network and earnings growth. Consistent with the prior year, Dollarcity opened 100 net new stores in 2025 bringing into total store count to just over the 700 store threshold at year-end. This includes 11 stores in Mexico since entry last summer, where we are now building a new growth platform. Dollarcity is well on its way to achieving its store target of 1,050 stores by 2034. As a reminder, this excludes Mexico for which we have not yet set a long-term target. In fiscal 2027, Dollarcity will continue to grow in its first 4 countries of operation in LatAm with a focus on growth in Colombia and Peru. At the same time, we will be carefully scaling our presence and operations in Mexico. While it is still early days, we continue to be pleased with the team's execution and initial customer reception. Over the last few months, we have been firming up our plans in fiscal 2027 priorities for our multiyear transformation of our retail platform in Australia. We have several initiatives underway across 3 main pillars: merchandising, store experience and network growth and operational excellence. Deploying aspects of our model is impacting just about every facet of the business. In the near term and through fiscal 2027, this work will be both gradual and disruptive but it is a prerequisite to setting up our Australian operations for future success. Changing the merchandising strategy is the most important pillar of the transformation and the most complex to implement. We expect our first Dollarama in port SKUs to start hitting shelves during the second quarter of fiscal 2027, with imports primarily comprised of general merchandise and seasonal items. The target is to have about half of the Dollarama import SKUs sourced by the end of fiscal 2027. On the domestic side, which is primarily consumables, we are also looking at products SKU by SKU to deliver increased value to our customers. Under store experience and network growth, our goal is to renovate the layout and change fixtures in 60 to 80 stores this year, having done 4 last year. We also aim to open 15 to 25 net new stores, all with the dollar MLA out in fixtures, having opened 7 in fiscal 2026. On operational excellence, we are strengthening the IT infrastructure and optimizing various processes. Notably, we are working on migrating Australia's ERP system to ours to get all our business processes integrated to the same platform. On the logistics front, we are finalizing our plan to optimize operations and support long-term growth. We are also adding team members as we built the bench strength of the local team. Once a store feels like a Dollarama shop and reflects our value proposition through both the offering and open experience, we will convert that store to the Dollarama banner. By fiscal year-end, we will be in a better position to evaluate our progress on this front and initial customer reception. The objective is to build our brand equity in the market by introducing our strong and differentiated value and convenience position as we have done over time in all of our other markets. As you can see, the year ahead is shaping up to be both busy and exciting for Dollarama. Today, we have strong teams across 3 continents working to execute on their respective growth plans with each market bringing its own unique set of characteristics, priorities and opportunities. While the path may differ from one market to the next, the long-term vision guiding our efforts remains the same: to deliver unbeatable value to consumers in every market where we operate and to create long-term value for our shareholders. As we enter fiscal 2027, the macroeconomic and geopolitical backdrop is evolving rapidly and remains uncertain. Considering the current economic environment in Canada, we expect that consumers will continue to be cautious and deliberate in their spending. In this context, the importance of value is only increasing. And we believe that the value, convenience and affordability we offer will continue resonating with consumers. Looking at the broader geopolitical environment, the conflict in the Middle East is beginning to have ripple effects on transportation and production costs. Our business model is resilient and provides us with a number of levers to help mitigate these impacts in the near term. The key variable will be the duration of the conflict which will determine how persistent these cost pressures will be. As always, we remain highly disciplined as price followers. We will only pass on price increases were absolutely necessary and while staying true to our year-round value proposition. Across the business, our focus is on the disciplined execution of our plans maintaining our strong value proposition and leveraging the strength of our business model to deliver for our customers and our shareholders. With that, I'll pass it over to Patrick. Patrick Bui: Thank you, Neil, and good morning, everyone. Let's start with a brief overview of our consolidated results before turning to segment performance. Q4 sales, which included 1 less week compared to last year, increased by 11.7% to $2.1 billion. For fiscal 2026, sales increased by 13.1% to $7.3 billion positively impacted by contributions from Australia as well as greater number of stores and SSS growth in Canada. Diluted EPS increased by 2.1% in Q4 to $1.43. This included a positive $0.03 impact from Australia. For the full fiscal year, EPS rose by 13.7% year-on-year to $4.73. Our Canadian segment met or exceeded all financial guidance targets. SSS came in at 1.5% for Q4 over and above SSS of 4.9% in Q4 last year. The increase was primarily driven by demand for seasonal products, offset by 2 important factors. The first is a calendar shift caused by a 52-week fiscal year following a 53-week fiscal year. In the quarter, this resulted in one less historically strong pre-holiday sales week and an additional historically low sales week at the end of January. It also included 4 less pre-Halloween shopping days compared to Q4 last year, which we recorded in Q3. Excluding the calendar shift, SSS would have been 3.5%. The second factor was the weather. As mentioned by Neil, a high volume of weather events, including cold temperatures and precipitation impacted store traffic and resulted in lost sales. This is reflected in the 1.6% decrease in the number of transactions. Despite this, Basket growth was healthy, growing 3.1%, and we met our annual SSS guidance for the year coming in at 4.2%. While the weather resulted in softer-than-anticipated SSS as weather conditions improved, so did traffic patterns. Store traffic continued to recover nicely as we entered fiscal 2027. Looking ahead to fiscal 2027, we anticipate generating SSS growth in Canada of between 3% and 4%. Consistent with our outlook last year, we continue to expect sustained demand for the compelling value we offer, which remains particularly relevant in the current environment. At the same time, we also remain mindful of the macro environment and the uncertainty it creates. Gross margin for the Canadian segment came in at 46.6% of sales in Q4 compared to 46.8% last year. The variance is primarily due to the 53rd week in fiscal 2025, with the 14th week in fiscal 2025, providing additional scaling benefits. Full year gross margin was 45.6% of sales, slightly exceeding the top end of our guidance. For fiscal 2027, our guidance range for gross margin in Canada is in line with last year at between 45% to 45.5% of sales based on our ability to actively manage product margins. Looking at early fiscal 2027 and given the current macro context, we are closely monitoring pressures in the global supply chain which may negatively impact gross margin during the year. SG&A for the Canadian segment in Q4 was 14.5% of sales compared to 14.7% last year. The improvement reflects the positive impact of scaling. Full year SG&A came in within guidance at 14.4%. For fiscal 2027, we expect scaling to help offset the impact of higher store labor and operating costs. As a result, our annual guidance range for SG&A in Canada is slightly better than in the prior year at between 14.1% and 14.6% of sales. Finally, CapEx for fiscal 2027 in Canada is between $420 million to $470 million. The year-over-year increase primarily reflects capital spend for our logistics hub project, a portion of which shifted over from last year. Turning to Dollarcity. Our share of their net earnings in Q4 increased by 22% to $70.5 million. For the year, our share reached $191.5 million, an over 47% increase. This was driven by SSS and store network growth, offset by the ramp-up of operations in Mexico. On a 100% basis, the Mexico business realized a net loss of USD 5.4 million and USD 11.7 million for Q4 and the full year, respectively. As the business is still in ramp-up mode, we expect a loss in fiscal 2027, consistent with the range provided last year of between USD 10 million to $20 million for 100% of the business. On February 5, Dollarcity declared a dividend of USD 125 million, with our share coming in at USD 75.1 million. The doubling of the dividend compared to the previous one declared speaks to Dollarcity's strong free cash flow generation with its profitable growth trajectory continuing to mirror Dollaramas. In early fiscal 2027, we made a capital contribution of USD 38 million towards Mexico expansion plans. This follows 2 USD 18 million contributions made last year. As with previous capital contributions, we allocated a portion of our share of the latest Dollarcity dividend. Looking now at Australia. For the approximately 6-month period since our acquisition in late July, the business had a neutral impact on consolidated net earnings for fiscal 2026. For perspective, looking at the full year and on a pro forma basis, Australia generated approximately $916 million in sales and a net loss of $10.6 million, all in Australian currency. Turning to fiscal 2027. It is expected to be an investment year as we ramp up the integration process. Neil spoke to our priorities across our strategic pillars. As a result, the Australian segment is expected to generate a net loss in fiscal 2027. These impacts are presented in our financial documents and in our investor presentation, which is available on the Event page, but I'd like to call out the main ones. First and most significant is the anticipated negative impact from the merchandise changeover and transition to lower-priced items. As you can appreciate, it is also the hardest to quantify at this stage of the transformation as it will depend on several factors. These include the timing of the product transition. The speed at which sales of incumbent higher-priced SKUs will be compensated by sales of the lower-priced Dollarama SKUs and impact on store traffic. That said, we anticipate a negative impact on sales for the year. The second is related to capital expenditures for store renovation and net new store openings. These are estimated at between AUD 400,000 and AUD 600,000 per renovated store and between AUD 800,000 and AUD 1 million per net new store. There is also a direct impact on sales during renovation related store closures. Third is P&L related. We expect to incur about $35 million to $45 million in incremental costs related to integration, IT transformation, additional head count and labor costs. These transformational changes are essential to set the business on a path for profitable growth. There's a lot of work to be done, but we are excited and motivated by the upside potential once we work through some of these major changes to the business. Our vision is to build a leading value retailer with a strong and favorable margin profile compared to global peers. The work we are undertaking in fiscal 2027 will represent a critical first step in our multiyear path to deliver attractive return on investments. Back to Dollarama, in terms of returning capital to shareholders, we repurchased over 4.4 million shares for cancellation during fiscal 2026 for a total cash consideration of $834.2 million. We also announced today that the Board has approved a 13.4% increase to the quarterly cash dividend, bringing it to $0.12 per share. Looking ahead, our priorities are clear. We will continue to allocate capital in a balanced manner as we pursue our profitable growth in Canada and LatAm and as we embark on the transformation of our Australian platform. Consistent with past practice, we also intend to allocate the majority of excess cash towards share buybacks and a dividend subject to quarterly approval. While the broader economic environment remains uncertain, the underlying fundamentals of our business are strong and our value proposition as relevant as ever. As we enter the next fiscal year, we are focused on disciplined execution to advance our growth initiatives across multiple geographies and support long-term value creation for our shareholders. With that, I'll now turn the call back to the operator for the Q&A. Operator: [Operator Instructions] Our first question is from Irene Nattell with RBC Capital Markets. Irene Nattel: I was wondering if we could spend a minute just unpacking that same-store sales number. You called out weather, you called out strong seasonal. Can you give us an idea of what the cadence was through the quarter, what the exit rate was, where we are quarter-to-date and what the demand is like across the store, please. Patrick Bui: Sure. Thanks for your question, Irene. Look, starting at a high level, we believe the overall consumer environment remains exactly the same, right? Canadians are faced with pressure on their household budgets and they turn to Dollarama for year-round value and everyday convenience. So if you look at it sequentially, we had strong momentum as we exited the third quarter. We had strong momentum as we started the fourth quarter in November. And then traffic then dropped off when we encountered unfavorable weather conditions in December and in January. But once those conditions were behind us, traffic resumed nicely in February and as we kicked off fiscal 2027. So it seems to suggest that the consumer environment that we've seen in the past few quarters, the past many few quarters is exactly the same that we're seeing as we start the new fiscal year. Operator: Our next question comes from the line of Brian Morrison with TD Cowen. Brian Morrison: The second focus, I think, this morning is Dollarcity leverage with your sales up 28% and equity income up 22%. But when you look at the disclosure, the Mexico loss, I think you even called that on the call, would the LatAm growth have been 30% to 35% illustrating leverage, Patrick. Is that correct? And I know there was a pricing structure in Colombia. It was a positive driver last year that will be lapped but looking forward, how should we think about leverage drivers at LatAm and what your breakeven store target is for Mexico? Patrick Bui: Sure. So it is true when you look at those numbers of top line of 28% and bottom line of 22%. That does include Mexico. And so if you were to exclude Mexico, I think you're correct in saying that bottom line growth is over 30%. You need also to consider that when you look at the top line growth, it includes sales from Mexico this year. and we didn't have those sales obviously last year. So you would conclude that the Dollarcity business, excluding Mexico is still benefiting from leverage and scale as we move in time. So to conclude that the business is still growing at a good pace, and there is still scaling benefits to come in the future. I believe before I forget, there was a second part of your question about Mexico, we've provided in our financial statements the loss for 100% of Mexico this year. We've also commented that Mexico, while we're very happy with the progress is still in ramp-up mode. So we do expect a loss similar -- a range similar to last year, so about USD 10 million to USD 20 million. After that, hopefully, EBITDA losses will shrink, but a little too early, Brian to be -- to have a clear view on when that business will break even. Operator: Our next question comes from the line of Chris Li with Desjardins. Christopher Li: Maybe just a 2-part question on Australia. First is, I know it's still super early, but for the stores that have been renovated so far, what's been the sales lift? And is it trending in line or better than your expectation? Patrick Bui: Yes. And just to take a step back. So what we're doing when we're converting stores, right? So we talked about renovating the layout of the stores, having the appropriate racking, lighting, flow of shopping as well. But it also provides us a higher density of products in the stores, which is an important condition when you're selling low price items and high-volume sales. And so one would expect a positive uplift. And even if all the products are currently all TRS products, if I could say, we did see a pickup in unit sales. That being said, the real power of the conversion is really when you combine the conversions with a good density of Dollarama SKUs, and we're not there yet. As Neil commented, we're going to start introducing some SKUs in the first part of -- the first part of the second half of the year. Operator: Our next question comes from the line of Mark Petrie with CIBC. Mark Petrie: Neil, you touched on this in your prepared remarks, but obviously, the macro picture has gotten significantly murkier in the last month or so. Can you just add some color to what you said already with regards to the impacts that you've seen on your supply chain, costing and consumer demand. And obviously, as you said, the longer this goes on, the higher the risk is to affecting costs more materially. But what's the sort of over under on when you would expect this to affect your outlook and guidance. Neil Rossy: So it's still early days. And unfortunately, higher energy costs will permeate throughout the supply chain for all retailers and for consumers over the next few months to a year. The duration of the conflict will decide the scale of the effect. But certainly, inbound costs, outbound costs production costs, raw material costs are all being affected by the increased cost of oil. And that will eventually make its way down the supply chain. Our job as low-cost retailers and value retailers is to ensure that we're price following and to ensure that we are offering the best value -- relative value in the market that we can. But I don't believe that any retailer will be -- will escape the reality of global economics. And we just -- we all hope for the consumer and for the world, I would go so far as saying that the conflict ends as quickly as possible. Operator: Our next question comes from the line of John Zamparo with Scotiabank. John Zamparo: Perhaps a follow-up or 2 on that same topic. I wonder if you can elaborate on the ripple effects you've seen. It would be helpful to get a sense of some magnitude on how impactful you expect this to be? In other words, what the gross margin guide would have been prior to the start of the war? And just to clarify, have you seen any deceleration in same-store sales subsequent to the start of the war? Patrick Bui: Yes. Look, I mean, as Neil alluded to, this is early days, right? So we are seeing some increased costs in transportation. We're seeing some cost increase and even product costs. But if we're under the context of this is short term, all of this is -- some of it is included in our guide, right? So if you look at our guide, we're saying 45%, 45.5% million same as last year, recognizing that there might be some incremental costs that we're seeing right now. But very important is to Neil's point, if this is prolonged and/or deepens, well, there will be potentially over time, consequences on gross margins that we may or may not be able to pass on. But generally speaking, we have a resilient business model and we're in a good position to offset some of those costs. So I would say we've included some of what we're seeing in the guide. But obviously, if this gets prolonged and gets worse, well then there might be negative consequence on our gross margins and frankly, ripple effects throughout the whole industry and the whole economy. Operator: Our next question comes from the line of Etienne Ricard with BMO Capital Markets. Etienne Ricard: Patrick, to circle back on Mexico. If you look at your experience in other markets for Dollarcity, at what level of scale from a store count perspective, do you typically reach breakeven levels in a given country? Patrick Bui: Every -- I would start out by saying we're following a recipe in all countries we open. So this is arguably the fifth time, but there are some nuances, right? Like certainly, in this case, Mexico is a bigger country, so does might take bigger investments to start off with. And so it's hard to compare with other countries. But just to give you some elements, think of the pace at which we're ramping up Mexico to be pretty much in line with the experience that we've had in a country like Colombia or Peru. So it gives us -- we'll give you a sense of what we're thinking in terms of ramp-up and related to that and a little bit to an earlier question, we're not breakeven. We weren't breakeven last year. We don't expect to be EBITDA positive next year. So maybe in the following year, we might be starting to curb EBITDA losses, but this is not bottom line, right? So you would need incremental time to derive a breakeven on the net income. But like I said, a little too early to say, have a look at the other countries, we'll give you a sense of direction but every country is slightly different. That's all we could say on that. Operator: Our next question comes from the line of Ed Kelly with Wells Fargo. Edward Kelly: I wanted to dig in on Australia. I've heard you say a couple of things this morning around -- it sounds like a little bit of a comp headwind. You're going to be doing remodels. There's some transition costs. I'm not sure about the gross margin opportunity. But when you put all this together for a business that, I don't know, maybe it was a small loss in fiscal '26. Does the loss in this business grow to a range of sort of $30 million to $40 million in EBIT? I'm just kind of curious if you could help us frame that because it does look like maybe could matter from an earnings perspective. Patrick Bui: Sure. So let's take it piece by piece. As we think about the potential impact to fiscal year '27. So first point is the business on a stand-alone basis, so without transformation from Dollarama, you look at last year on a full year basis, what had a loss of AUD 10.6 million. So you need to start from that base to which when you look at the 3 pillars that we've laid out in our investor presentation, there are incremental integration costs. So we talk about $35 million to $45 million that you would need to factor in. Then you move to -- and I'm moving from third bucket and coming to the first, but the second bucket is a lot about CapEx. So we provide some color in terms of store renovations and new stores. There is a small P&L impact for the period during which we're going to close a source for the renovation. So we would need to factor that potentially a little bit of DNA. And then the first bucket is really the most uncertain. So this is about transitioning the products, and we talked about all the factors. But this one, as you might appreciate, we barely have a Dollarama product in the country. And so to start guessing the impact of the transition is a little dangerous at this point. But certainly, once we get greater clarity there, we'll be happy to share with you. But that's how I would think about framing the net income loss for this year. Operator: Our next question comes from the line of Mark Carden with UBS. Mark Carden: I wanted to touch quickly on the competitive backdrop. Are you guys seeing any shifts in intensity, particularly from some of the mass merchants? And then population growth has also pulled in meaningfully any shifts in how you approach unit growth placement going forward in same-store sales, just given the change in dynamics there? Neil Rossy: No. I think the market in Canada is quite stable. Competition remained stable. There's no real new entrants to talk about. Overall, I would say it's business as usual in Canada. Operator: Our next question comes from the line of Martin Landry with Stifel. Martin Landry: I would like to touch on your same-store sales guidance for fiscal '27. I would like to know a little bit what assumptions you've used in terms of traffic and basket size? And also if you can talk a little bit about price increases quantify maybe what you've done in terms of price increases in '26? And what's implied in your guidance for '27? Patrick Bui: Yes. Taking from a high level, the 3% to 4%, if you recall, it's the same guidance as we provided last year. And so to an earlier comment, when we think about the economic and demand side, it's a very similar setup than what we have seen last year. The slight nuance perhaps compared to last year is towards the end of fiscal '26. We started seeing some price increases from the domestic side, which will trickle into fiscal '27. So there's a little bit of an uplift when we think about the beginning of fiscal '27 but other than that, we expect a context that is very similar to this year. So the last year, sorry. I mean certainly, as we start the year, there's a lot happening out there and a lot of unknowns. And so we think it's prudent to start with the same guide as we've had last year at 3% to 4%. Operator: Our next question comes from the line of Zhihan Ma with Bernstein. Zhihan Ma: I wanted to circle back on the Australia side. I think initially, you were kind of saying that it probably takes 3 to 4 years in that range to turn profitable in Australia. I'm wondering if that's still the right time line to think about it? And I'm assuming that probably means you'll have enough time to convert all the merchandising in stores, but probably not remodel the stores. How should we think about what does it take to turn profitable on the ground? Neil Rossy: Yes. Thanks for the question. So consistent with what we said in the past, this is a multiyear transformation, i.e., 4 years. And what the 4 years takes into account is think of the conversions being an important part of this transformation. So 400 stores, going at an average clip of 100 per year, that takes 4 years. So for us to say the transformation is complete. We need to make sure that we're well advanced, if not completed on the conversion side. And one is, hopefully, what we'll see in 4 years is that we'll have our stores converted and a strong assortment of Dollarama SKUs in the stores. And so yes, we remain consistent with that 4-year time line. Operator: Our next question comes from the line of Luke Hannan with Canaccord Genuity. Luke Hannan: Patrick, you touched on the first bucket as it relates to the Australian business transformation as being the most important and talked about refreshing the assortment through the balance of this year. Just curious to know how did you target that initial cohort of SKUs that you're looking to swap out and put in your own? Are they concentrated within any particular price points or category as we think about your assortment? Neil Rossy: So the initial study was on, of course, Dollarama's strongest SKUs, taking into account, of course, the SKUs that are transferable to Australia since they have different compliance rules different standards and different products, different voltages in their electricity grids, different sizing in their note pads that they follow a U.K. standard on things in the stationary lines. So barring the exceptions that are different between Canada and Australia. The balance of the items we started with a focus on compliance first and foremost, the items that we were able to do compliance quickly on because the Australian compliance centers are entirely different from Canada. So an entire compliance study has to be done on every single SKU that goes into the country. But the goal is to get all dollar and the SKUs into Australia within the next 2 years or so. The priority started with our best SKUs and the most transferable SKUs. Operator: Our next question comes from the line of Corey Tarlowe with Jefferies. Corey Tarlowe: Great. Patrick, you made a comment that around a $10 million loss from Australia and then, I think, building to like $35 million to $45 million as an investment or starting point I think that's like $0.15 to $0.25. Can you just clarify kind of the glide path on that and on the investments, I just wanted to double click on that. Patrick Bui: Yes. Sorry. Part of your question I cut off. But yes, you're starting from that $10 million base just as the business operating as normal. And then you would add on top of that $35 million to $45 million of incremental integration cost. And then I also talked about the 2 other buckets, the impact of the store opening. So there is some incremental P&L impact there, but that's mostly CapEx. And then you would need to factor in something. We're guiding that it will lead to a net loss in sales. So that would have an impact on your bottom line but you would need to add all those pieces. And so all of that transformation, especially when you think about integration costs, have started as we kicked off the new year, and the team is working very hard to transform the business, but also as a necessary condition are also incurring incremental costs. Neil Rossy: And I just wanted to add that clearly, the Dollarama team feels strongly that in the long term, this is a very exciting project and that bringing value to the Australian consumer has merit, both for the consumer and for our shareholders. So while this is a 4-year project, once you've established a low-cost retail platform in Australia with -- by that point, over 500, 600 stores, we feel very confident that being the 800-pound gorilla in the market will play very well for our shareholders. Operator: Thank you. And I'm showing no further questions at this time. This does conclude today's call. Thank you all for your participation. You may now disconnect.
Jason Honeyman: Thank you. Good morning, and welcome to Bellway's half year results. As usual, I'm joined by Shane and Simon. We've lots of our senior management team also with us today. If I could take you to the first slide. We delivered a good first half performance despite a softer selling period through much of 2025. Half year volume increased to 4,700 homes. That delivered an operating margin of 10.5%. We have an order book of 4,400 homes and a strong land bank largely unchanged at 94,000 plots. Now since the start of the calendar year, trading conditions have markedly improved with a notable pickup in both homebuyer interest and reservations. However, the ongoing conflict in the Middle East clearly has the potential to dampen customer demand and clearly increases the risk of higher inflation. That said, to date, we have not seen any material impact upon sales rates. And for FY '26, given our half year results and our order book, we remain on target to deliver operating profit in the region of GBP 320 million to GBP 330 million. The full year is likely to deliver a higher volume than previous guidance with an operating margin similar to the half year. And while margin headwinds may well continue delivering higher volumes will certainly drive cash generation, and that very much supports our program to be more capital efficient. I will provide the usual detail on ops and outlook later, but first, for our results and update on capital allocation with Shane. Shane Doherty: Thank you, Jason, and good morning, everyone. As Jason said, we've delivered a robust performance in the first half despite ongoing challenges in our industry, supported by the order book at the start of the year and despite subdued trading throughout the autumn, volume output increased by 2.7% to 4,702 homes. There was growth in both private and social output and the proportion of social completions was in line with prior year at around 21%. The ASP was up by 3.7% to just over GBP 322,000 and in line with expectations. The increase in the ASP was driven by geographic and mix changes with headline pricing remaining broadly stable. Turning to gross margin. There was a 20 basis point reduction to 16.2%. This slight reduction reflects the benefit of higher-margin land in the mix, which was offset by incremental incentive usage, the absence of any HPI and low single-digit build cost inflation. These factors are also reflected in our order book and combined with the expected contribution of bulk sales in the second half, we currently expect gross margin in FY '26 to be similar to that achieved in the first half. These margin dynamics, together with embedded cost inflation carried in our work in progress are likely to remain a headwind to margin, at least in the near term. And there are clear risks of potentially higher build cost inflation stemming from the ongoing conflict in the Middle East. We'll be in a better position to comment on the potential impact of FY '27 when we report in our June trading update. Looking further ahead, we are working through our WIP balance and growing proportion of our output will benefit from newer high-margin land. With a stable market supported by a more favorable HPI BCI dynamic as seen in previous cycles, we are well positioned to drive ongoing improvements in our margin in future years. In line with our strategy to invest across the group to deliver greater efficiencies and long-term growth, the admin overhead increased to GBP 86 million, and the full year number is expected to be between GBP 170 million and GBP 175 million. Our investments include our new timber frame factory, combined with strategic investments across IT and strength in commercial and finance teams, which means we now have the right structure in place to effectively deliver on all of our strategic priorities. We expect that, that level of increase will not repeat in future years, whilst obtaining operating leverage from it as we drive towards 10,000 units if market conditions improve into the medium term will obviously be a key focus also. The effect of the increased overhead investment, together with the movement in gross margin led to a 50 basis point reduction in the underlying operating margin to 10.5%. Underlying PBT was slightly higher at GBP 151 million, and I'm pleased to report that the interim dividend has been increased by almost 10% to 23p per share. This slide has covered the group's underlying performance. Adjusting items shown in more detail in the income statement in Appendix 1. These include GBP 300,000 to admin expenses relating to the previously announced CMA investigation. The other adjusting items relate to build safety, which I will cover later in the presentation. Turning to our balance sheet. It is robust and well capitalized with a strong land bank and WIP position at its core foundation. These are key focus areas for our capital efficiency drive and critical to our plans for increasing cash generation. I will cover this in more detail shortly as part of our capital allocation strategy. First, to highlight the key balance sheet movements, reflecting our largely land replacement only land strategy, the land balance of GBP 2.5 billion has reduced slightly by around GBP 38 million since the year-end. During the first half, we entered into new land contracts on deferred terms totaling around GBP 130 million, and settled line creditor payments of around GBP 180 million. This led to period-end land creditors of GBP 290 million, representing 12% of our land balance. As previously guided, and as part of our strategy to run the business with a more efficient capital structure, there will likely be an increase in the use of land creditors over the medium term. The range is expected to be between 15% and 20% of land value, which is similar to historic norms. Jason will cover our land bank in more detail later. The work in progress balance, which includes site WIP, show homes and part-exchange properties reduced by GBP 39 million to GBP 2.3 billion. Breaking that movement down into 3 component parts. Firstly, the value of show homes remained flat, reflecting our broadly stable outlet position. The value of part-exchange properties rose by just over GBP 20 million. Part-exchange is an important selling incentive for customers. And whilst its usage increased, it has remained disciplined and represents a relatively modest 6% of our completions. Finally, site WIP reduced by GBP 61 million to just over GBP 2.1 billion. And this highlights some good early progress with our capital efficiency drive, which we spoke about to you in detail last October. To finish on the balance sheet, as you will see from the bottom of the slide, our adjusted, our adjusted gearing, including land creditors, remains low at 10.3% and our net asset value per share has now risen to just over GBP 30. We've continued to make good progress on build safety, and I'm pleased to report that the overall provision remains broadly stable. With regards to movements in the provision, in addition to the GBP 6.5 million adjusting finance expense, which was in line with previous guidance, there was a very modest net increase of GBP 4.2 million in the build safety provision through cost of sales, which relates to the refinement of overall cost estimates. We have now completed the terminations on all of our legacy buildings in England and Wales in accordance with the joint plan. Our provision is based on robust assumptions and prudent cost estimates for both internal and external works on the 457 buildings in scope for remediation. We have started our completed work on 172 buildings with the majority of spend expected by FY '30. We've spent GBP 212 million on legacy build safety since the start of the program, including GBP 21 million in the first half of FY '26. The strengthened team at our dedicated Build Safety division is focused on completing works as promptly and as efficiently as possible. For FY '26, we continue to budget for total spend of over GBP 150 million, although I must caveat that this level of spend remains dependent on receiving requests for payment from the government for works carried out on our behalf for the build safety fund totaling around GBP 90 million. I think it's important to point out today that for prudence, our shareholder returns capital allocation modeling assumes significant disbursements around build safety over the next 3 years. The provision at the 31st of January '26 was GBP 507 million, and I'm confident that we are well provided for the remediation works required across the legacy portfolio. In terms of recoveries, we've recognized GBP 81 million to date. We do, of course, continue to actively pursue further supply chain recoveries. But as these are not virtually certain at the balance sheet date, no additional reimbursements have been recognized. Turning next, just to remind you of our priorities for capital allocation, which we covered in detail last October. In short, it is a flexible framework with our strong balance sheet and well-invested land bank as the foundations of the business, which support our balanced approach to continue to invest for growth and delivering enhanced returns for shareholders from increased cash conversion and generation. As part of our strategy, we are sharply focused on driving greater efficiencies and our WIP balance presents a significant opportunity for much greater cash generation, which I will cover next. We generated good operating cash flow in the first half. The cash flow bridge chart shows the movement from a small net cash position to ending the period with modest net debt at GBP 72 million, in line with our plans to run a more efficient balance sheet and increase returns to shareholders. To run through our key movements, you can see the decrease in total WIP that I referenced earlier amounted to GBP 39 million. In relation to land, the monetization of land through cost of sales was GBP 283 million. This was slightly lower than the cash spent on land and together with the movement in land creditors, this led to a GBP 38 million decrease in land on the balance sheet in the period. After other working capital movements and tax, the operating cash generated before investment in land, build safety spend and distributions to shareholders was GBP 314 million. As a result, the conversion of operating profit to adjusted operating cash flow was 2x. As I highlighted in October, we are aiming to maintain the conversion level at a minimum of 2x over the 3 years to FY '28. As I've said previously, adjusted cash flow is the fuel for future investment opportunities in the business and ultimately, greater value creation and returns for our shareholders. In this regard, we invested GBP 302 million in land, including settlement of land creditors and dividend payments and share buybacks totaled GBP 105 million. We also spent GBP 21 million on build safety, which I referenced earlier. After taking account of all of these disbursements, we closed the half year with net debt at a modest GBP 72 million. I will now cover our cash generation targets for the second half, which I think is important in the context of what we're discussing this morning and the tougher trading backdrop that may emerge, together with our longer-term ambitions in the context of driving shareholder value against this potential backdrop. As I've said many times, driving WIP efficiency is a key area of focus across all of our 20 operating divisions and a significant opportunity for the group to deliver cash generation. We've increased our volume guidance for the year by between 100 and 300 units on our original volume guidance of 9,200 units. And the combination of this increased monetization with tighter controls around WIP spend will see us increasing our operating cash flow conversion targets significantly year-over-year. As the chart shows, operating profit will grow by between GBP 20 million and GBP 30 million year-on-year in FY '26. But we expect operating cash flow will increase substantially more than that by between GBP 100 million and GBP 150 million year-on-year. This leaves the company in a strong position to drive future value for shareholders by continuing to drive volume appropriately against this tougher trading backdrop. This will provide greater opportunity to invest in more high-margin land and potentially returning more excess capital to shareholders. Overall, we are targeting adjusted operating cash flow of between GBP 750 million and GBP 800 million for the full year. Looking beyond FY '26, we have a greater proportion of units at an advanced stage of build than a couple of years ago, which should support a faster monetization of our WIP balance. This drive for improvements in WIP turn and to lower our WIP balance will enhance asset turn and support cash generation. This will help fund our build safety disbursements, further land investment and returns for shareholders. We'll maintain our underlying dividend cover of 2.5x, and this will be supplemented by returns of excess capital. In this regard, we are making good progress on our GBP 150 million share buyback launched in October with around GBP 64 million completed so far, and we have a clear intention of returning excess capital in future years. To finish my section, a summary of guidance for FY '26. We, of course, recognize the risks to inflation and customer demand from the ongoing situation in the Middle East. Notwithstanding this and supported by a robust first half and our current order book, we are well placed to deliver FY '26 underlying operating profit in the range of GBP 320 million to GBP 330 million. So for guidance, we are targeting volume of between 9,300 and 9,500 homes, the final outcome of which is dependent on completions from our bulk sales pipeline. The average selling price will be around GBP 325,000 with the increase over FY '25 driven by mix. It's important to point out when we give that guidance, we are not in any way giving that guidance in the context of any potential negative impacts that it might have on FY '27. It's all based on the strong work that we've been doing, monetizing our WIP and broadening the pipeline of opportunities that we see both in private sales and potential bulk sales. The admin overhead will be between GBP 170 million and GBP 175 million. We currently expect the operating margin to be similar to the first half level at around 10.5%. The finance expense will be around GBP 20 million, and adjusted operating cash flow is expected to be strongly ahead of prior year at between GBP 750 million and GBP 800 million. Finally, land spend is expected to be in the region of GBP 500 million to GBP 600 million, reflecting our largely replacement-only land strategy. Despite the headwinds facing our industry, I'm confident that our self-help and drive for capital efficiency will mitigate the impact on our strategy to increase cash generation and value for shareholder returns. I'll now pass back to Jason, who will cover the operational review and outlook. Jason Honeyman: Thank you, Shane. But now for trading. In the first half, we achieved a private sales rate of 0.47 with January being our strongest month at 0.6, and that momentum has continued to build into the start of the spring selling season. With regard to the mortgage market, improved affordability and changes to lending criteria have both contributed to those better trading conditions. That said, recent increases in mortgage rates due to the events in the Middle East clearly has the potential to impact upon future demand. And that brings me on to current trading. In the first 6 weeks since the 1st of February, we have achieved a private sales rate of 0.66 and bulk sales made an additional but modest contribution of 57 homes. And from a geographical and mix point of view, the picture hasn't really changed much with Scotland, the North of England and the Midlands all remaining stronger than the South. But those regional differences are quite pronounced with Midlands and upwards all delivering a strong sales rate of around 0.75, significantly higher than the 0.5 being achieved in the South. Headline pricing remains firm, although incentives are full at 5%. And we find that prices for houses are more robust or more resilient than those for flats. And as I referenced in my introduction, the last 2 weeks of our current trading period have coincided with the conflict in the Middle East. Both of those weeks have delivered a consistent sales rate of 0.65 or the equivalent of 155 private homes per week. We continue to progress bulk sales to support both this year and next. We are over 85% sold for FY '26, hold an order book of over GBP 1.5 billion or 5,300 homes as at the 13th of March. The next slide shows our land bank totaling some 94,000 plots, half of which are owned and controlled and half are strategic. Now I'm happy with the size and the shape of the land bank. It supports our short-term growth ambitions. We are still buying land but with caution. In the period, we contracted on 4,700 plots across 15 sites including 1 site in Scotland for 1,900 homes that was converted from our strat pipeline. And strategic land continues to play an important role in our growth ambitions. Within this financial year, we will have 80 strat planning applications or around 17,000 plots in the system. And to put that into context, that has increased threefold in just 2 years. And that is a significant change in our business. And these strat plots will support both margin recovery and outlet numbers from FY '28 onwards. Overall, we have detailed planning consent on over 95% of our plots to meet our volume for FY '27. And as a consequence, we've got good visibility on outlets. We're on target to open 55 outlets this year and a further 55 to 60 next year. And we expect average outlet numbers to hold at around 240 for both this year and the next with growth up to 250 in FY '28. With regard to planning, I would describe planning reform as positive rather than perfect. Overall, and outside of London, the planning environment is generally supportive. Moving on to costs. Overall, cost inflation remains modest at around 1% or 2% and we currently have no issues with regard to availability, either labor or materials. That said, we are very mindful of the heightened inflationary risk caused by the events in the Middle East. And as a consequence, our focus on being more cost efficient seems ever more relevant today. And I'll give you a few examples of our approach to saving costs to support margin. Firstly, we intend to phase out the Ashberry brand as it is proving too expensive to fund a separate brand to sell just 9% or 10% of our volume. We plan to adopt a single brand approach that will play on our 80-year history. It will be clearer to the customer, a digital-first approach, less expensive and without any overall impact upon outlet numbers. Secondly, we will shortly launch our new house type range, the Bellway Collection, which has been designed to be timber-frame friendly. And by that, I mean, optimize panel widths and ceiling heights to improve both speed and efficiency and also reduce waste in the process. And with our new house type range, our single brand approach, we have the perfect platform to personalize homes and offer extras and additions on a much greater scale to drive incremental revenue and profit growth. And thirdly, we successfully opened our timber frame facility, Bellway Home Space back in January. And we have already started delivering timber kits to our divisions. Our investment in technology that supports Category 2 closed panel systems is hugely important as I firmly believe that Cat 2 is a key part of the future of housebuilding. And one final point before outlook, build quality and customer service. I'm pleased to report that we are rated as a 5-star housebuilder for the 10th consecutive year. But more important is our position with HBF's new scoring system, which has been designed to be more challenging. Housebuilders are now measured by their customers at both 8-week and 9-month intervals and based upon both quality and service. Bellway have achieved an overall score of 4.38, the highest of any national listed housebuilder, a phenomenal effort by our ops teams and a direct result of their hard work. And finally, outlook. We're on track to deliver a volume of 9,300 to 9,500 homes. As you've heard from Shane, regardless of the wider backdrop, we have a sharp focus on improving cash generation, and we expect to deliver a significant increase in operating cash flow this year. And should we find ourselves in a prolonged turbulent period. Our business is in good shape. We have a flexible capital allocation framework and a strong and experienced management team and are well able to navigate our way through any challenges. Thank you. Now happy to take questions. Allison Sun: Allison from Bank of America. Two questions from my side. So first, if the -- let's assume the market activity will be muted given all the impact. Are you guys ready to give out more incentives or not? I think are we expecting maybe incentives will go beyond 5% for the rest of this year? And the second question is what type -- what kind of inflation assumption you put in your fire safety remediation work? Jason Honeyman: Sorry, I didn't get the second question. Allison Sun: The inflation assumption you have for the fire safety remediation work. Jason Honeyman: So I'll take the first and you take the second. With regard to incentives, it was our intention at the start of the year to tighten up that incentive level to support margin growth into '27. Today, that looks a little bit too optimistic. But no, I don't have any plans to increase incentives. They're at a level that we're happy with, and we're delivering a sales rate that we're quite comfortable with. Can I hand over to you? Shane Doherty: Yes, 3% on the inflation, [ build ] safety. Aynsley Lammin: Aynsley Lammin from Investec. Just two for me, please. Just trying to understand the change in guidance a bit more, more volume and obviously less margin. Is that driven by kind of changing view of the market, what you expect going forward? Or is it just more opportunities to do some bulk sales and you can release some of that WIP? Any color around that would be quite interesting. First question. And then just on the second question, I guess, a bit more color again last couple of weeks, have you seen any change in cancellation rates, the vibe on the ground in terms of the sales rates? Is it kind of beginning to feed through in confidence what we're seeing in the mortgage market? Jason Honeyman: Thanks, Aynsley. Shall I'll start with the last question and I'll hand back to you. No, sales rates, Aynsley, have held up and likely to hold up through March. And when I think about it in a little detail, it's probably not too much of a surprise. If you're planning to buy a home now, you probably made a decision a month or 2 ago, and you've already got the benefit of a mortgage offer, which probably looks quite good value Aynsley at the moment. So no -- we've seen no immediate impact. And I think our buyers and customers in the market have got a little bit of crisis fatigue. We've been through Brexit and pandemics and Ukraine and Middle East. So there's a bit more resilience amongst our buyers. But I would expect that sales rates to soften into April, not now because you'll see the impact of the margin increase. And I don't think it will be material. I just think it will dampen a little bit. And all that's caveated to what's going on in the Middle East. But you'll probably see a softening into April, but not significant. Shane Doherty: Yes. In terms of the guidance, it's probably along the lines and what we flagged when we came out in early February. It's very much probably reflective of what we were seeing in the first half of the year. It's probably easy enough to forget that now because I like the crisis fatigue. That's what it feels at the minute. But the run-up to the budget was a difficult time for everyone. And what we did in the run-up to the budget was we traded appropriately in relation to the value creation thesis that we set out last October, which is that we will drive pricing as appropriately as we need to. But sales rates in the run-up to Christmas were less than 0.5% across the sector. So what you're seeing is the margin uptick that we're seeing coming through is really just reflective of the fact that with good visibility with good forward order book coming into the year, sales rates have picked up. And whilst the kind of 50 basis point margin reduction seems quite significant, those margin reductions become exaggerated, unfortunately, in a market like this where there is very little HPI for the reasons that Jason has outlined and you have kind of BCI running even at 1% or 2%, that is going to hit you to the tune of about 50 basis points on your margin. So that's all you're talking about. It's probably GBP 2,000 per unit in overall terms. It's a pretty small number. The market has picked up quite significantly in the early part of this year across all of our divisions. And if that sales rate was to maintain, I think it's important to make that point, notwithstanding the caveat we put around the emergent situation, that sales rate was to hold at kind of 0.65. We will be looking at a kind of -- we never gave formal guidance into next year, but we did talk about the fact that we were going to get to 10,000 units. So if you storyboard that from the original guidance that we gave, 9,200, 96,000, maybe 10,000, we would have assumed off the current sales rates that we would still be forward sold to the tune of probably 35% of getting to a 9,000, so a flattish volume next year, notwithstanding the emergent situation. So that volume uptick that we're seeing is not at the expense of the overlying market growth opportunity that's still there. And it's very easy to kind of talk yourself into a doom loop because of what might happen at the moment. But the broad reality is as you look out beyond maybe whether it's the end of this year or beyond next year, the demand-supply imbalance still holds. Jason talked about the strat land margin coming through. There will be good, strong underlying margin progression coming through our business. And we've got good volume opportunity, and we've got 20 outlets. So really, what you're seeing at the moment is just us trading appropriate through what has been a challenging environment and emerging from that with little debt and the ability to return capital to shareholders. Zaim Beekawa: Zaim Beekawa, JPMorgan. The first is just to come back on the incentives. Can you give some indication on the cash, noncash portion? And then secondly, in light of the mortgage volatility you sort of alluded to and potential impact, what's your view on your own shared equity scheme like some of your peers? And then third, if I could go on the bulk sales, sort of any indication on the discount on those bulk sales compared to maybe a year ago or 6 months ago? Jason Honeyman: Should I start with? Shane Doherty: Yes. Jason Honeyman: Sorry, on incentives, it's mostly cash and some additions. I did want to set out a chart to show you the regional differences across -- because you can understand there's probably more in the South than there is in the North at the moment. But nothing surprising in what you see regarding incentives. And in terms of -- shall I do shared equity products. We don't think they're a big part of the market. I get a little bit frustrated because they can confuse customers when you've got a whole series of schemes across the industry. And I've always preferred a housing association on something government backed that people can trust and look into. So we look at it and watch with interest to see if that market moves, but I've got no ambition to bring out a bespoke shared equity product at the moment. Sales are good enough. Shane Doherty: What I'd say in relation to bulk is -- I'm not trying to dock the answer. What we do is we tend to take an NPV approach to bulk pricing, and that's kind of using a 10% hurdle rate because whilst you may need to reduce your baseline pricing, you will find savings in other areas, not least your sales costs will be lower and also your running cost as a site can be lower as well, and you may have forward funding opportunities. So looking at it through all those lenses, when we baseline that against private pricing and sales rates and if it has -- and using a hurdle rate of 10%, if that's NPV accretive, then we'll go after that deal. What I'd say in broader macro terms in terms of buyer appetite, it's a lot stronger now than it was 12 months ago, insofar as a lot of the indicative pricing that probably was coming back 12 months ago was reflective of where interest rates were, and you could be looking at maybe 20% discounts on pricing, which is not something that we'd be interested in. But certainly -- and it's not reflected in the numbers at the moment, but it's certainly reflected in our pipeline of opportunities. The gentleman sitting in front of you there is actually living and breathing it at the moment, the 2 actually. We've got a significant pipeline of bulk opportunities, and we'd be confident that we'll see some of that coming through between now and year-end. Jason Honeyman: Can I just add to that? So there's lots of questions here about incentives. But from a bulk point of view, we did about 600 homes last year. This year, we'll probably do something similar. It's not a major part of our business. And incentives across the board, we've got a strong order book. Our sales rates are good. We were very well organized as we come out into January in the new year. So we've maximized what opportunity is there in the market. And I've got no intention to start discounting properties and being desperate. We can make good decisions. We're in a good place. So I think we're fine at the moment. William Jones: Will Jones from Rothschild & Co Redburn. Three as well, please. First, around build costs, if that's okay. Just what you've heard from manufacturers since Iran kicked off, visibility you've got generally and whether you have any framing of how you might look at your build cost basket in an energy context, any sensitivities around that? Second, on the balance sheet and the returns, helpful guidance on the operating cash flow for the full year. Do you have any view at the moment as to how that might shake out, net cash net debt, please? And when you think about the ongoing buyback, hopefully, beyond the current year, how would you think about the sensitivity of that to -- broadly speaking, to a lower profit environment if it came through? Or do you think that actually continuing to optimize the assets would mean that, that buyback can carry on? And then the last one just around Ashberry, just a reflection there. What, I guess, proved different to your expectation to make it too expensive? And any implications do you think on sales rates as that winds down? Jason Honeyman: Okay. I'll pick up build cost in Ashberry and I'll hand back to Shane, Will, if that's okay. On build costs, most of our supplier agreements are fixed from the start of '26 and generally last for around 12 months. If it gets really bad, Will, that counts for nothing. We know that we've been through the pandemic. All we've seen to date is lots of suppliers asking for increased delivery charges, haulage costs, fuel surcharges, those sorts of things, which is all manageable. What has got our interest is where you've got high energy-dependent materials such as bricks, blocks, concrete chips and those sorts of things. So that's where we'll keep an eye on to see if there's any movement there. And like everyone, Will, we look every morning for a quick resolution to the problems in the Middle East to hope they don't transpire, but time will tell. So at the moment, mostly delivery and haulage costs is what's coming our way. And on Ashberry, we did a thorough review of our brands. And I don't want to suggest for a moment that a one-brand approach is better than a multi-brand approach, but it certainly is for Bellway because Ashberry, after our research, our customers were confused with the product. And some people in this room used to get confused when you ask me about what is Ashberry and what does it do? And I found that Ashberry was confusing our customers because it was asking for or selling the same product on the same site, and it was more expensive. So we decided to refresh that Bellway brand. We're going to offer 3 tiers of specification going up to Bellway premium. It's going to be very digital focused, both in our sales offices and on the Internet. And we think we'll make savings and be less confusing to our customers and deliver the dual outlets where we can. And you must remember, Will, we don't have lots of large sites. We've got handfuls of them where we can offer a dual outlet without making any sort of serious impact on outlet numbers. Shane Doherty: So in terms of net debt, I mean, I anticipate at the moment, like it's probably worth just saying stripping out the build safety component, if I just assume that's constant, even though I expect that might come in slightly lower, even allowing for that, I think our net debt figure is probably going to be in the region of GBP 100 million, GBP 120 million type range between now and year-end. And that would probably see the buyback running at probably close to maybe GBP 100 million, GBP 120 million by year-end as well. So you have a decent clip of that coming through within that. So we're in good shape from a cash perspective. The only thing, as I say, Will, I could bring that down would be if the build safety spend is lower. But I think it's important to talk about it in the context of it being at normal run rate. So I think that gives us a lot of confidence in terms of the fact that the capital allocation strategy is working against the backdrop of kind of 2 tough economic events running in the background and lower margins, we're still throwing off cash, and that is the underlying strategy going forward. We'll have plenty of cash to buy land. We'll buy land probably -- I won't quite say on a net replacement basis. We may make some incremental investment if we do it, though, it's because it's a compelling opportunity. So we'll be very much focused on the returns to shareholders, I think, in the context of the cash that we'll continue to generate. And the fact that we've identified between 100 and 300 units this year, that's effectively ring-fenced upside from an operating cash perspective, even if it's not necessarily coming through on profitability. But as we all know, the share price is trading at a fundamental discount at the moment to what its net asset value is. And we look at our strat land opportunity. We look at the land margin upside that's coming through. And so it's very compelling for us to continue to look at buyback opportunities in that context. Rebecca Parker: I'm Rebecca Parker from Goldman Sachs. Just 2 questions. In terms of your outlet opening program, just wondering if you could talk to a bit around why you're expecting, I guess, outlets to be flat into '27. And I think the guidance for '28 has slipped by about 10 outlets there. And then secondly, on that increased proportion of higher margin land coming through, when do you expect that contribution to have more of a material impact? Is that more into 2028? Or can we start to see that come through in '27? Jason Honeyman: Rebecca, I'll start on outlet numbers. The growth -- let's start with '28, we'll go back to '27. So the growth is a product of our strat land coming through the system. Those 17,000 plots. So if that comes good, we'll get a natural increase in outlet numbers. Outlets are flat this year and next, probably because we had a big jump back in '23, '24, where we opened 80 outlets in 1 financial year. And we've just been buying replacement land. So it's difficult to see how we can grow outlets without that strike coming through. So we've held them flat. And then as long as we get a decent run through the strat planning system, then we're likely to see a little bit of growth again. Shane Doherty: In terms of margin progression, again, it's probably easier to talk about that in the context of how we were planning this before. And we have to take note of what we're hearing at the moment in terms of all the stagflation risks that are there in terms of potential BCI risk and interest rates going up. But we know that, that can also change quickly. So therefore, I think to answer your question most effectively, it's probably worth just talking about what the underlying margin upside that we were seeing coming through on the land bank. So in simple terms, gross margin this year is going to be around 16.3%. We had in our head that, that could be probably getting up to 18%, maybe even 18.5% over the next 2.5 years as you get to FY '28. So you would have been looking at margin progression of probably 17% and then 18%. And I think the big question, Rebecca, that we're all asking is what impact is that 17% now coming under as a result of what's happening globally. I think the comfort that you can take today is that hedging, it seems to be order the day at the moment. Everyone is talking about hedging in the context of BCI and stuff like that. I think our land margin uptick that you're seeing coming through is an effective hedge for what's potentially coming down the track in terms of higher interest rates and potentially higher costs. So that's the most effective way I can answer that question at the moment for you. Jason Honeyman: Can I -- sorry, Rebecca, can I just add to that because we've taken a more sober view of the outlook. We take the view that even if the war stops in the morning, there's still going to be a ripple of cost inflation in the system. That's already in existence. It's unlikely that the trading environment is going to change from a deal led market. So there's no house price inflation in the market. So we've just taken a more cautious realistic view of what's happening in the world. And then we see margin progression probably feeding through back end of '27 into '28. That's a sensible view to take today. Alastair Stewart: Alastair Stewart from Progressive. A couple of questions, please. First, in terms of the trading over the last 2 or 3 weeks, I think we're on week 4 now from what I hear. But in terms of that, you've been clear in terms of the weekly sales rates been holding up. But in terms of anecdote from sites, if there is any reticence anywhere among your potential buyers, is there a trend? Is it more traders up are more comfortable than the first-time buyers? And is there a regional disparity in terms of comfort about the situation? That's the first question. In terms of the second, it's more of a sector-wide question. You're chasing the supply chain for recoveries. Everybody says that. But in terms of the bigger picture, are you and other housebuilders chasing -- do you see more upside in terms of recoveries from, say, big materials groups who have strong balance sheets, but also very strong lawyers? Or is it from the supply chain that probably have very little legal status, but no balance sheet to depend on really? Jason Honeyman: I'm just going to start recoveries with Simon, who can talk -- turn around without a microphone it would be fine. Simon Scougall: Hear me now? That's better. So it's aimed at not just the supply base and their insurance, of course, it is also aimed at the larger suppliers and manufacturers. So we're very actively considering our options there. And there's quite a bit going in that space. I can't say any more at this moment in time, but we are very determined to secure as much recoveries as we can from as wide a pool as possible. Alastair Stewart: But just if you had to take one side of the divide, the big guys, the small guys, who do you think you've got most chance to get? Simon Scougall: Well, it's a real mixed bag because even the small guys as it were, we're looking at them from their insurance position. So it's big guys behind them. So it's a real wide pool that we're looking at. But just to reassure, there's lots going on in that area. Jason Honeyman: And I'll come back to your trading point, Alastair. And I'm not sure I was surprised, but there's certainly resilience amongst our buyers because they have got crisis fatigue. It seems to be -- it's just too often, but I'm not naive enough to think it won't come and get them in the end, but everyone is very sensitive to the news at the moment. So I certainly think that March will continue with -- until we get to the end of March, there will be some decent sales rates we'll deliver. And there's new spring buyers coming to the market, there may be a little more caution where people take the view, well, I might just wait for this war to end because mortgage offers are going to -- mortgage rates are going to come down. So there will be more caution in the market. I don't think significant, but I think it will just take the gloss off the very good sales rates that people in this room have been delivering so far this year. Christopher Millington: Chris Millington, Deutsche. First one, just following on what you just said there, Jason. If we're going to see a slowdown in April, do you think you would have seen anything in inquiries, visitor levels? Is anything happening to that extent at the moment? Well, let's go one at a time. Jason Honeyman: Yes. We've just noticed visitor rates slowed down this week, which leads me to think that's not inquiries. It's what passing traffic. So serious buyers are still there, Chris. So just starting to moderate. And when you say sales start to slow down, I don't think we're going to move back to 2025. I just think the gloss will come off ourselves. We've been working quite hard to deliver that sales rate. But it seems to me it's a little bit inevitable unless something changes in the news, Chris, in the short term. That's my view. Christopher Millington: Next one is about buying land. I mean as you say, you're on replacement, but you're still expending a lot of money. How do you deal with kind of the price cost inputs when you're going through trying to work out whether or not you should be committing to this stuff in times like this? Jason Honeyman: I think that's a very good point. And last October, I spoke to you about we're going to adopt a replacement-only policy, Chris, for land because that was going to help Shane's capital efficiency program. I'm not sure we'll ever do that this year. That's the level of caution. And you're quite right, until I can understand what that ripple of cost inflation that is almost inevitable going to come into the market, it's probably best to buy as little as possible or just the good deals that you've got on the table. That's probably my approach. Christopher Millington: Sorry, I've got 2 more, but one is pretty quick. Affordable. Any sign that market is starting to wake up at all? Or is it still pretty? Jason Honeyman: Yes, murmuring. And certainly, the new grant round that comes into play now and next month has got the housing associations more active. I mean we'd like to materially move that market and start delivering more affordable homes and get building, Chris. But it's moving better. It was stuck. It's now got some life in it. Christopher Millington: And sorry, my last one. Just about this land bank evolution. You've hopefully given that slide about pre-'24 plots, post '24 plots. Perhaps you can give us a little bit of help with the margins in each category or just talk around kind of what benefit that would have given you. Jason Honeyman: Well what I was going to do in -- I might get Simon to do a presentation to you on strat land in October, so we can show in a bit more detail. But sometimes on strat land, there's lots of hope. So I'd like to see those 17,000 plots come through the system. So that crystallizes the land value and the margins, Chris. So certainly, it's margin accretive. I'm not sure we can spell out today what that all means. Can you add anything on that, Shane? Shane Doherty: Simon, do you want to? Simon Scougall: I'll add one quick one there. Back to the margin point that Jason was talking about. Strat land obviously has the benefit to us because you get a discount to market value in the option terms we agree. But the other benefit is that we're not agreeing land value until we've got planning permission, a detailed planning permission. So half of our land bank there hasn't got a land value yet ascertained, which clearly benefits from what we're talking about with the risk in Middle East and build cost inflation, et cetera. We'll agree a price relevance at the time. So it would be better margin protection as well as a consequence of that. Charlie Campbell: Charlie Campbell at Stifel. Just one actually, just on the WIP and obviously, well plans in place to reduce that. And as you said, you've made good progress. Does that get more difficult in a slower sales environment where buyers are more choosy, more careful and maybe want to see more finished stock on the ground. Just wonder how you juggle the WIP reduction in a more difficult market. Jason Honeyman: Can I start? May be you can look at the headlines. Yes. We put the properties on the market, Charlie, that are more advanced. So that's what's for sale. So we're not particularly selling anything other than stock. So we engineer what we sell on those sites. And I wouldn't describe today's market as bad. A selling rate in 2/3 of the U.K. at 0.75. It's not bad at all. It's in the South of England and the Southwest of England, where we're probably a little bit more sensitive to the investment in WIP and sales rate. Are you okay to talk about the headline numbers, please, Shane? Shane Doherty: Yes. Well, I mean, I think you've probably answered the bulk of the question insofar as, look, clearly, there's a volume correlation in terms of how many units you're selling. That's the tightest control you can have around WIP. But we have put a lot of hygiene -- additional hygiene controls in place around WIP spend in itself as well. So clearly, if we're in a situation where unit output wasn't where we anticipate it's going to be next year, that would actually have an impact on with monetization. But we are well set up to manage our WIP spend proactively in relation to that. And we can see that in terms of KPIs that we have in place around a number of foundations, number of unreserved production. All of those percentages are substantially lower than where they were a couple of years ago. So if we maintain those at that level and run our business that way, you will see a commensurate reduction in WIP spend vis-a-vis what you're monetizing. But clearly, the opportunity to get to 10,000 units and doing that without overspending on WIP is where the significant cash monetization opportunity is. Kate Middleton: A few from me, if possible. So Kate Middleton, Panmure Liberum. The first one is just on timber frames and vertical integration. So just wondering how many of the business units are currently utilizing timber frames and whether the rollout is phased or more discretionary and perhaps how that will link in with the new house types that you're bringing in? The second is on cancellation rates and if you've seen any movement on those since the beginning of this year? And just finally, I know you've alluded to no real house price inflation, but just wondering whether on a regional perspective, you're seeing any underlying variation in ASPs at all? Jason Honeyman: Okay. I'll do those. On timber frame, we've started on our journey, and we've got 7 divisions out of 21 feeding into our facility. And we'll -- until we get up to speed and more proficient at it, we'll keep it with just those 7 surrounding the factory. The next step for us was to scale it up within the factory, work 2 or 3 shifts in a day and possibly in the future, build another factory somewhere else in the U.K. That's our thoughts. In terms of cancellations, we've not seen anything yet. Who knows what's going to happen in the month of April? I certainly don't. And sorry, your third question was on. Kate Middleton: Whether you're seeing any regional underlying movements in ASPs? Jason Honeyman: No, we haven't. You always get a good site that's selling really well that you might be a bit braver on. I think the market is sensitive. It's deal led. Our next step won't be to push house prices. It will be to reduce incentives, which is sort of the same thing, but you're keeping your headline the same. So it will be in those better selling areas in Scotland and the North of England, we've discussed as a team, should we reduce incentives down to 2%, for instance. I'm not quite brave enough to do that just yet, but maybe across the spring, early summer. Is that okay? All done? Thank you very much, indeed. Thank you. Shane Doherty: Thank you.
Zach Spencer: Good morning, and thank you for joining Comstock Inc.'s Full Year 2025 results and business outlook. I'm Zach Spencer, Director of External Relations. Today is Tuesday, March 24, 2026, we are streaming live and this session is being recorded. A recording will be posted shortly after we adjourn in the Investor Relations section of our website. Today, we filed our Form 10-K for the year ended December 31, 2025, and issued a press release summarizing year-end results. Both documents are available on our website. As a reminder, Comstock is listed on NYSE American with the ticker LODE. Joining me today are Corrado De Gasperis, Comstock's Chief Executive Officer; and Judd Merrill, Comstock's Chief Financial Officer. After their prepared remarks, we will take questions. We received more than 35 questions in advance of the call. If you have additional questions during the call, please use the Zoom Q&A window, and we will address as many as time allows. Today's discussion will include forward-looking statements. Actual results may differ materially due to risks and uncertainties detailed in our SEC filings. Full risk disclosures can be found in our filings on the Investor Relations page and on the SEC website. With that, it is my pleasure to introduce our Chief Financial Officer, Judd Merrill. Judd you may begin. Judd Merrill: Thanks Zach and thanks for everyone being on this call. I have a few remarks, and then we'll turn it over to Corrado, but I just want to look at the company dashboard here and just announced from a CFO's perspective, 2025 was really a transformational year for Comstock. We really doubled the size -- doubled our asset base. We strengthened and simplified our balance sheet. We eliminated legacy debt and other legacy obligations and we fully positioned the company for its next phase of growth. And our balance sheet really is the strongest it has been and it's positioned to be even stronger as we monetize noncore assets, and it's giving us kind of a speed advantage on our recycling competitors. Our capital structure is also very clean and our shareholder base continues to strengthen. We continue our targeting and our outreach for what is still relatively a less known story. Less known metal story, less known financial execution and monetization priorities. And at the same time, we are beginning to see the early results of that investment, particularly in metals. Our commercialization efforts are moving us into a second more sophisticated phase. Here are some specifics that all freeing up cash and cash equivalents are stood at 56-point -- or approximately $56 million at March 20, 2026. And our common shares outstanding are 74 million shares at March 20, 2026. And this is reflecting the recent offering which ended up being really outstanding, if not transformational. It's a change in our shareholder base with significant Hood River, Gratia, MA Capital, those are just 3 that represent the top -- some of the top investors that we have an engagement with them and support has been amazing, including what we just recently announced enhancements to our Board. And really, all this is critical part of our foundation for building a global multibillion potential company and a testament of the capabilities that we have positioned. We did complete that second oversubscribed equity offering earlier this year, which brought in about $57.5 million gross proceeds, which was approximately $53 million net of offering expenses. And again, this was really driven by the demand from leading institutional investors. And what it does is it removes the largest single risk to the spend needed to capture the solar market. These funds allow us to deploy our first industry scale metals recycling facility without distraction. Secure and permit and fund facility #2, which positions us to corner the entire Southwest market right here from Nevada. We announced and build additional permitted storage sites like California, Ohio, Texas and others accelerate our refining solution and capability, including strategic partners and really position us for the best, fastest monetization of SSOF and our other noncore assets. When we look back when we started 2025, it was with huge developed potential, but really no capital resources and many, many counterparty obligations that we required to able to develop our platforms. We have effectively eliminated those obligations from our balance sheet. We did have revenues too. Comstock Metals had revenues for 2025 that was approximately $1.4 million compared to 2024 which was about $0.4 million. In addition to the reported revenue, we did generate additional billings, approximately $2.2 million in 2025. We call it deferred revenue and that's associated with our early operations. So about $3.5 million for all of 2025, just as we guided to. It's also important to note that our 2025 results included several nonrecurring items associated with the transformation of our balance sheet. These costs include debt conversion and extinguishments as well as noncash impacts from changes in the fair value of derivative instruments, which is all now behind us. So last year was a deliberate effort to simplify our capital structure and eliminate legacy obligations. And these actions, we believe, significantly strengthen the company going forward. And from a liquidity standpoint, we are in a strong position. We believe our current cash, combined with expected revenues from metals recycling later this year and priority asset sales and monetization, all that keeps us strong and in a leading position as we execute on the metals plan. And lastly, we are lining up and diligent seen and positioning more traditional nondilutive sources, which includes grants and industrial bonds, which we will qualify for and we'll have access to once our first facility is up and running this year. So those are my remarks. I'll turn it over now to Corrado to dive deeper into our metals progress and monetization. Corrado De Gasperis: Thanks, Judd. Thanks, everyone, for being here. We probably have a record attendance for this call. So I'm really -- I'm excited about the update. Let me start with the announcement that we made just after the market closed today, which for us is incredibly exciting and encouraging. As Judd mentioned, at the end of January, we had a robustly oversubscribed offering. We had tremendous quality of institutional investors. He named a few, Hood River, MA Capital, Gratia. I mean the list continues on down to a solid 25, 30 institutions that joined. What was even more encouraging was Steve Pei, Gratia, Craig and Mike Kaufman, the interest that was taken in the company is very, very high, including site visits, including reviews and tours of all of our assets and quite frankly, extremely constructive engagement about support and help for how do we position this company to be a truly global, truly dominant, metal recycling company. I think that reflects a view that our technology is differentiated. I think it reflects a view that we have a really, really early adopter head start. I think it reflects a view that we did make good progress with this balance sheet. If you go back to the shareholder letter from last January, it was a tough letter, but the message was we need to clean things up. We need to get recapitalized and we need to fund these growth businesses. So if people go back and look at that letter, we could say, wow, we made huge progress. But now we have that posture. So the hard work is now the execution. And how do you take a platform that's regional? Sure, half of the end-of-life market is in the Southwest region. United States, absolutely Nevada and these Nevada permits and platform positions us to capture it. But it's much bigger than that. The United States has over 1.3 billion panels deployed. They're coming end of life rapidly, and that's only 1/8 of the world. The world has just as big of a dilemma, 8x relative to the U.S. So the conversation was around expanding governance, expanding international business competency, accessing capital markets competency. So we're thrilled to announce the addition of 3 new independent directors. Donald Colvin, who has extensive and frankly, complex financial management background, but a very, very strong solar industry experience being the Chair and a Board member of a public solar manufacturer of global footprint and just the global public company governance posture from chairing boards to chairing audit committees. And then Steve Pei, as I mentioned, with extensive, I mean, quite remarkable capital markets background, entrepreneurial, what was intriguing was the notion of investing in smaller early-stage companies and watching them become national or international successes and watching those values increase dramatically. And then Bob Spence, who has an exceptional background in refining, in recycling and electrification recycling to boot, including international operations, 30-plus international sites in public and international governance experience, both from audit, from acquisition, from oversight. We really could have spent a couple of years working on the searching and recruiting and aligning and onboarding of our Board. We really jump-started that. So I think from a perspective of really, really strong platform that can really handle all of the things that are coming, sweeping across the U.S. We've got a really good plan for that. But this won't stop there. This market is just extraordinary. So we're welcoming our expanded Board. And I guess the final takeaway is when 2 of your top 4 investors are represented on your Board, that screams a lot. We couldn't be more thankful Steve Pei of Gratia. Michael Kaufman at MAK, Craig and the rest of the team that just worked so, so diligently to make all this happen for us. We thank you very, very much. And for 2026, that team, that governance structure, that capital base is aligned, right? We're aligned on these objectives, which is very, very much, first and foremost, to monetize our noncore legacy mining assets. We've gone from a few years ago talking to less than credible people to talking to marginally capable people to now being engaged with very, very serious mining counterparties that absolutely like what we have here, what we've maintained here, which is a great mining district, great resources. If there's any question about this decision, let me put everybody's mind at rest. Every dollar that we take from the mining assets and put into the recycling assets multiplies exponentially. And let's be clear, if we were going to mine these assets it would take $30 million, $40 million, maybe $50 million of capital to put a mine into production. That's with an existing resource and a permitted platform. There would still be a lot to do. So in that context, it's money that doesn't go to solar recycling. That's a nonstarter for us. It never was a starter for us, frankly. But every dollar that we can then pull out of that nonproductive asset and put into the recycling business, I think a few of you heard me say, our mining assets, which we believe have good value and are very attractive, have about 2.5 million ounces of silver in situ just in the Dayton resource alone. And yes, that would take 6 or 7 years to mine once the mine got up and running. 2 of our facilities in Nevada, which we now know where they're going to be and they're up and getting up and running, would produce that much silver annually, okay? That's just 2, not 7. So you can see the difference in throughput and cash generation from what you could call 2 different silver mines. We also want to monetize our noncore legacy real estate. I'm going to give you more transparency on that today simply because we finally came to sufficient progress, both with Sierra Springs' Board and company and with third parties that are very, very interested in these assets. The value is higher, the ownership is higher. So the amount that we're going to monetize here, hopefully, will be pleasantly higher than anyone might have been expecting. So we're going to do both of those things. Green Li-ion, we also want to monetize. It's less within our control. The company is making extraordinary progress, truly exceeded my expectations in terms of their journey to profitability. They have an operating facility in Oklahoma. We own 13% of the company. And they've announced that they're going to move into a public listing in Australia sometime later this year. So once Green Li-ion is successful in its endeavor to becoming a public company, then we'll have a much easier and clearer exit strategy for that investment. We've worked very, very hard on all these monetization items. This is the crux of the corporate objectives. We've had to put more capital into Sierra Springs but at great gain. That wasn't clear before because the deals weren't structured and they weren't announced, but they are now structured. And we've already taken effectively what was just under 17% of Sierra Springs to well over 36%, 37%. That number could end up easily at well over 50% for something that we think has hundreds of millions of dollars of value. We don't think that based on conjecture, there is monster engagement in Northern Nevada right now because if you're able to secure sufficient power to the land, it's in immediate demand. If you're not able to secure sufficient power to the land, there's no interest, okay? So we're on the verge of something very meaningfully here. I think 2026, credibly now, we'll see monetization of mining, monetization of noncore real estate. And frankly, timing couldn't be better. So we're really all about supporting the exponential growth of the metals business, not just for national dominance really for setting the global standard in this recycling business. We crushed it in '25. And when I say we, I mean the metals team, Fortunato, Paul, Kayla, I mean, they got the permits, first of its kind. Leo was absolutely instrumental in supporting us, one of our Board members in navigating through that regulatory regime. We didn't only get first-of-its-kind permits. We were held to what we originally thought was a ridiculously high standard. But now with hindsight, it looks like it will be very difficult for any existing competitor that we know of to even set foot in Nevada and even get permits within 2 years. So to the extent Nevada sits on 50% of the end-of-life market, certainly between now and 2030, now and 2035, wow, we're literally on the beachhead of a battle that doesn't see any competitors anywhere near of what we've positioned here. We don't want to stop in the Southwest region because that's only half the market. We want to get to the rest of the U.S., and that will come, as Judd said, with less resistance and much more rapidly. We also have designed the engineered process for recovering the metals from our tailings. I'll give you a little bit more color on that. But we did that with leveraging a handful of partners between universities and companies that have existing assets and existing infrastructure that allows us to take Fortunato's engineered design and very efficiently test up to a demo, which we hope to have here by the end of this year. So all that work in 2025 really positioned us to move fast, right? So what do we want to do? We want to get this facility up and running. Substantially all of the equipment has arrived. The ovens are arriving now and the ovens literally represent -- I just looked at the final truck schedules, represents 20 full 18-wheelers. So you start to get a sense of the magnitude of this process and these systems. Some of you have come and visited and I'll show some pictures of some of the equipment as it's getting assembled here. But it's all coming in, we're on schedule. It wouldn't be right to say that 3 or 4 weeks of slippage hasn't occurred, but that was already buffered in our schedule. So commissioning in Q1, operating in Q2 holds. We're very happy about that, bringing the thing online. And another thing that's happening is that we're starting to see -- it's almost like if you're in the fourth quarter of a football game, you're starting to see some of our competition, take a knee or move aside. Really, that's an analogy to say that our customers, the true utility scale companies that are now very seriously engaged in a very big end-of-life problem. They're almost only -- they're certainly not talking to the 2 or 3 people that we previously talked about as showing up most often. So there's a really good trend there. Something even more strategic is happening. Some of these institutions are either very, very large or part of even larger organizations, and they've engaged us for more strategic things. You've heard me talk about co-locating on one of the sites or venturing into a third or fourth site. This all ties to getting market share, right? So we want to dominate the market share. We're very happy with how those underlying conversations are going. And we've identified the second site. We are pinning it down, final stages. The permits actually have already been submitted. So we're excited about it. It will be in Clark County. It will be just outside of Las Vegas, exactly where we wanted to position the second site for this Southwest region. And California is permitted up and running. Ohio is coming up in line. Those right now are primarily either storage and/or transition activities, prep activities, logistics activities. There's no processing. There's no processing that we're planning at all for California, but certainly, Ohio would evolve into that, and we're looking as well at a specific site in Texas. So that side of things are moving very, very quickly and we're continuing all of those efforts. '26 is going to be -- as foundational as '25 was '26 is going to show the light. '26 is going to show the large industrial system running. It's going to show it turning profitable. It's going to show volumes increasing. And you're going to see revenue goes from $100,000 a month to $200,000 a month to $1 million a month to $2 million a month. That's our profile for 2026. And we don't see any reason why that isn't going to come together just like that. So we don't need to talk that much about silver demand. Every one of you that I've talked to seems to understand the supply and demand equation for silver and is very bullish on it. Even with some pullback, we're sitting at $70 silver, which is above anything that we've modeled in our process. As I mentioned previously, even at $60 silver, our offtake revenue isn't $125 a ton. It's $375 a ton. So we already have an enhanced profile given the current realities. You see the inside of 600 Lake in this picture, that was 7 months ago. Now when you look at the inside of 600 Lake, it's assembling equipment. That shine that you see on the floor there is an epoxy that we had to lay down that outlines perfectly the footprint of the large system. You can't see the ends of the footprint. It's extremely large, 80, 90, 100 feet of processing, fully integrated, fully automated. We are testing the robotic arms. We are assembling the front-end crushers. We are pulling together all of the equipment. And we're heavily finalizing the grading and the preparation. Fencing is going to go up next week for the storage. And it just gives you some context here. If you're looking at this picture, hopefully, that building there in the background is where our demo facility sits, okay? So we're talking about major -- I kept saying like this enormous expansion or massive expansion for storage, you're starting to get a sense of it. I was annoyed earlier, one of our investors posted 4 beautiful pictures. They must have been circling the site or something. I criticized my team and said, these guys are getting better pictures than I'm getting. So if you're on Twitter or X, you can see some even more elaborate pictures of this development that's happening real time. And the holy grail is not getting $125 a ton for tailings or $375 a ton for tailings. Those numbers reflect us capturing 50% or 60% of the silver value and leaving the silicon metal and leaving the copper and depending on the types of panel, leaving the gallium or the tellurium or the iridium behind, what we've applied it for a grant on and what we've already started the development work on is being able to capture the substantial majority, we'd love to say substantially all of the value from those critical metal recoveries from the tailings. So we've been ridiculously busy site preparing. We've been ridiculously busy receiving equipment. We've been busy expanding the market, and that would be satisfactory. But it's been exceptional that the team has made and forced the capacity to design this refining solution. We don't -- when we say we feel like we're a couple of years ahead in recycling, we're humble about that. We're not arrogant about it. We want to expand it. We want to assume we're 1 day ahead. We don't want to assume we're 2 years ahead. But we're talking about recycling. We're not talking about refining. We don't see anybody even talking about these types of refining solutions. And the reason this is so important, and I think the reason our capital base is so interested is 3.5 million panels last year would load one of our production lines. In 4 years, that number is going to be 33 million. We would need 10 production lines to do that. And I'm not sure if people appreciate it. One production line that $13 million of one production line can do 3.3 million panels a year. But that facility that you just saw, it was permitted for 2.5 production lines, really 3 production lines with the capacity of doing 250,000. So if this Southwest region does anything close to what we think it's going to do, it's doubling the capacity, 2.5x in the capacity of that facility will have literally 0 permitting lead time. 0 permitting lead time. It's already permitted. What it will require, of course, is equipment ordering lead time, which we can let the market tell us when to trigger that. And this is the old map that most of you have seen. But for any of you that haven't, here's Arizona, Nevada, California. These are the 1.3 billion, 1.4 billion panels that are deployed in the U.S. The fatter the circle, the older the panel. That's why these 2 facilities in Nevada are so critical and why we're going after this half of the market so diligently, so vigorously. But an enhanced metal value, you're not talking about $55 million or $60 million of cash flow from one facility running full. You're talking about $75 million to $80 million for one facility running full. And that doesn't consider the enhancement that would come with the refining solution. Now let me just spend a little bit more time on this monetization of noncore assets. Some of you may have seen previously a higher NPV that we calculated for our mining assets. That number was correct. It stays correct. But as I said earlier, these assets take some capital to put into production. As I said earlier, we're engaged with some very, very serious counterparties. They have capital. That's, I guess, the litmus test for me on, are they serious? They have capital. They have capital to deploy, and we're talking about a range of value of, let's say, $50 million or $60 million. We're not necessarily talking about all cash upfront, but we are talking about full monetization. What we would like to do is sell it for all cash or we'll sell it for cash with some very relevant or meaningful milestones. Any dollar that we pull out of nonproductive assets to put in our solar business, we believe, is a home run. With the Sierra Springs, we have been allocating capital to that. You'll see that it increased. But we have agreement now to convert that into ownership at extraordinary values. And I'm going to talk about that a little bit more. I'm going to give you a little bit more color. But I've been busy with this because it's super active, right? Nevada went through a monstrous hyperscale data center expansion. It's listed right now as fifth or sixth in the U.S. with projects under construction with 29 projects under construction, and it's every big name. We have an industrial park very, very close to us, not the Tahoe-Reno Industrial Park. Everybody knows about that. Another one that's very close to us in Silver Springs that is out soliciting industrial lands for this purpose, and they secured access to power other than the grid. The grid is tapped out. The grid is not available until God knows when. So we secured similarly access to that power required some small financial commitment initially, a small bond, $1 million, $1.5 million of posting, which was easy, but it opened up the whole world for us. Now we've got -- I'll be very frank, like I'm behind in being responsive to them. And if that's annoying to you, it should be because it's annoying to me. But the dollars that we're talking about are not $45 million or $50 million like we talked about before. It's a couple of hundred million. And that doesn't include our properties that we own 100% and directly. So as you can see, it's in everybody's interest for us to prioritize and monetize these assets. The mining assets last year, we acquired the Haywood quarry. You see it right here, this Haywood target on the map. We also sold some of the northern properties, which are now taken off of this map. But in selling those northern properties, we also got these green -- there's about 240 acres that we added that fully support and surround both the mining of the Dayton asset and the processing for the Dayton asset. We have those 230 acres at no additional consideration. So between the Haywood property, which is ideal for processing Dayton and those other properties, which fully support the mining and the processing of Dayton, we've made this much more salable much more monetizable. And as I said earlier, we're fully engaged. When we first announced that Haywood purchase, some people were like, I thought we weren't interested in mining. I thought we were trying to monetize the mining. And I just want to make it clear, that's exactly what those moves were designed to position us for. And these properties, they're flat, they're expansive and they're very, very attractive to real miners. So we're really having productive conversations. Judd is getting very, very close, and I really appreciate that helping that support. Now just more transparency on Sierra Springs because there's approval on the Sierra Springs side, right? There is approval for Comstock to take the lead, for Comstock to drive this thing to the finish line, for Comstock to enable this bigger monetization. And of course, Comstock needs to benefit dramatically from that capacity. What where we are is we're sitting in the largest opportunity zone, if not the largest, one of, by far, the largest opportunity zones in the United States. It's not only an expansive amount of land sitting right by Lake Tahoe, the fact that it's 10 miles from the California border and maybe more importantly, 1 truck day away from 7 different states and 75 million people is one of the biggest reasons that all of these data centers and all of these manufacturing companies are locating here. The other reason is that it's the environmental climate is almost perfect for optimal cooling of these data centers. But it's even more than that. It's literally Nevada -- Northern Nevada is literally one of the safest places in the country when it comes to the hazard map or the disaster avoidance map. We don't have hurricanes. We don't have hailstorms. We don't have all of these impediments. And so it's not coincidence that Google, Apple, Microsoft Switch, Tract and at least 2 dozen more are locating here for mega hyperscaling. And for us, it was when USA Parkway was built from a nonexistent road to a dirt road to a 4-lane super highway, connecting Reno right down into Silver Springs where my better lucky than good comment keeps coming out. We were sitting right there ready to receive that ball. It's still somewhat pioneering 2 years ago. Everything was happening in the Tahoe-Reno Industrial Center. Everything is happening up in Fernley. And people kept saying, well, what about Silver Springs? What about Silver Springs? Well, if you look at the map this way, you see this connecting highway. Tesla's gigafactor is really what put us on the map, but the data centers are really what exploded the map. It comes right down to our properties. You see the Comstock load here just 30 minutes down the road, Highway 50, and then you see the congregation of this asset here. I haven't spoken about this much because we spend -- Fortunato and the team spent 110% of their time on Comstock Metals. I like to think I spend 50% of my time supporting Comstock Metals. I want that to be 90% of my time. Judd is handling the monetization of the mining assets. I'm handling the monetization of Sierra Springs. And I think it's also important to say I've never took a penny from Silver Springs. I've never gotten any compensation from Sierra Springs. I only own stock there because I bought it with my own money, and I've agreed to rectify that. Like we are going to align my interest only and solely with LODE. There is no even debate or discussion about it. I've already committed to it, right? What you're going to see with hopefully some foresight, but certainly soon with hindsight is that load investors own something very, very valuable here. As exciting as monetizing something that's worth a couple of hundred million potentially would be, what can be done with that money in solar recycling is a whole other level of excitement. You can read up all the articles about what's happening in Northern Nevada. It's very easy to see them. But what's really important to see is that -- when I talk about these values, I'm not pulling them out of the air. When we first started this thing, we were getting these properties for dirt. I mean, literally dirt cheap with almost like water rights coming for free. But Industrial Park was at $2 to $3, $4 a square foot. Then it was $4 to $5 a square foot. Then it was $6 to $8 a square foot. Then Microsoft lands and starts pushing $10 a square foot. Those are incredible numbers. If those numbers -- if we're even close to those types of numbers, my numbers will be understated. So when Tract CEO came out and said that they're going to invest $100 billion in the next 10 years in Northern Nevada. And that means from the Peru shelf right up here by Switch to right across the street from our properties in Silver Springs. There's 3 major developments that they're breaking ground on right now. If you don't understand it or if you'd like to see it, it will only take you 20 minutes for Reno to see Monster trapped platforms being built and positioned. So that only enhances the value like everything in this area. And if you look at this map, the airport being the blue center, everything else in color around us is part of our portfolio that I want to monetize for us, except the top of #11 here. That's where Microsoft came in. And then right alongside of it, Tract is coming in. So you go from literally being out in the middle of nowhere on the loneliest highway in America to USA Parkway plugging into us to track and Microsoft coming in across the street. I mean it's extraordinarily exciting, but none of it would mean anything if the he Great Basin natural gas transmission company didn't show up 4 months ago and say, we're going to spend a couple of billion dollars, and we're going to expand gas into this area, into firmly into Tri-Center, literally right into Silver Springs. If they didn't come out and say that, we'd still be talking about why the hell are we going to -- why can't we sell these properties. But with that power commitment, the game has changed dramatically, and we're going to see something really exciting happen. So it took a little bit longer than I was expecting. I apologize. But Zach, please let's just jump into Q&A. Zach Spencer: All right. Thank you, Corrado. As I mentioned at the beginning of the call, we received more than 35 questions prior to the call. And I can see that we have a number of additional questions coming through Zoom. And Corrado, you did touch on a lot of these questions that we have. So perhaps you can just provide a little more color. And pardon me if I do repeat the question. Okay. The first question is, how do you allocate your time versus Judd's time versus the rest of the team's time. Corrado De Gasperis: Yes. So I think right now, in fairness, Judd's spending -- obviously, you can see the time we spent from a corporate perspective on recapitalizing and funding and now over the last month or so on the governance. So that's really positive and took a little bit more of our time critically, critically constructive and needed. I think probably I will spend 40% to 50% of my time, and I expect Judd the same on monetizing these noncore assets, okay? It's a priority. And thank God, the metals team is full, and they'll spend 110% of their time. They do nothing but metals all day long and all night long. But I do feel like if we were directly just a solar panel recycling company, just a metal company, we would go from having a strong, capable, sufficient management team to overwhelming force. And so I think ultimately, we'd like to see 80% metals, 20% corporate. But that will only happen once we monetize the assets. So 50% ours, 50% corporate, but that 50% is heavily dedicated to monetizing these assets. And the prerequisites needed to monetize those assets. Zach Spencer: All right, Corrado, thank you for that. What is the pipeline of solar panels that will be available to recycle through the Silver Springs facility once it is open? Corrado De Gasperis: Yes. So that's one of the most major fronts of our efforts. We're signing master service agreements. We're signing master service agreements all the time right now. We've signed a couple of extraordinary ones with e-recyclers, the folks that have already established recycling businesses. That's about 10% to 15% of the market. We generally think about the major utilities as being 80% of the market. And so what's happening right now is we're signing up -- we're -- I don't -- I can't think of a major utility that we've had a setback on -- and that includes NextEra, Florida Light and Power, everyone is pretty familiar with RWE, Nevada Energy, which is a Berkshire Hathaway, Berkshire Energy company, Brookfield. Edison. I mean we're really making hay with signing these folks up, right? The second point is we're signing up. I think we may have just signed up. We're not yet allowed to release it specifically, but one of the largest, if not the largest e-recyclers in the country, right? So those are the people we want to engage. We've also signed up our first actual solar manufacturing company, which I was talking to Don about this as we were going through the Board process. But the solar manufacturers are not really our customers. They do have some amount of breakage and waste. So they're steady Eddie. They ship us a truck or 2 a week, but they're a very, very small part of the end-of-life market. Of course, they're the beginning of life market. But they also point us to their customers, and they also integrate us with their returns. And so that's all coming along. But to answer your question, locking in the customer is the most critical prerequisite, making sure that we're qualified through their audits and their certification processes. It's not a super long lead time process, but it's a pretty meaningful lead time process. So we've been doing that steadily for the last 2 years. And so as I think I mentioned earlier, and there is a breakthrough, too. There's a number of customers who -- their attitude is where you're certified, you're qualified, you're wonderful. When the big machine is up and running, we'll start sending more panels because we want our certificate of destruction pretty rapidly, okay? So but the profile should be a couple of hundred thousand dollars a month to $0.5 million a month to $1 million a month to $2 million a month. $2 million a month is $25 million -- $24 million, $25 million run rate of revenue that will be remarkably profitable, and then we just grow it from there. We still believe that by the end of 2027, Facility #1 will be running full. Facility #2 should be in the 20% to 30% capacity utilization range. But those are really rough estimates, right? Because we don't see a smooth linear up progression here. We see a lot of spiking. We see a lot of deferred maintenance. We see a lot of deferred recycling. So once we click in, then the spikes will be bumpier. We have the capacity to handle it, and then we have the storage to handle it. Now one critical point here. We are now being engaged by not just the largest utilities, but the owners of the largest utilities, very strategic discussions. There is a recognition here that they need to lock up some capacity, right? So it's finally coming through and those hope to have some very meaningful discussions this year. What I mean to say is we're having very meaningful discussions now, very meaningful outcomes this year in terms of what specifically that will mean, right, to forward volumes. It's coming, right? It's just -- it's slower than anyone would ever hope, but the -- setting the foundation is the critical thing. One of the ways I've described this to people is if our business this year was 20,000 or 30,000 tons, the same exact customer flow in 2030 would be 300,000 tons. Right? These are the customers who are going to see a 10x increase in their end of life. They may even be higher because they're going to lead that increase in end of life, the 3.5 million from last year to 33 million in 2030. So we're positioning for great -- almost organic growth. It's kind of a perverse or backwards way of thinking about it, but locking in the customers that really have the biggest installations means locking in the biggest end-of-life replacement scheme. Sorry for that. It was a little long-winded, but... Zach Spencer: This might be a short one for you. Where do we stand with the delivery of the first recycling facility in terms of timing and cost? Corrado De Gasperis: So we have -- I think we received all of our equipment and started to receive the components for the oven. I just -- It was mentioned it earlier, I just looked at the shipping schedules for the ovens. It's literally like 20 monster 18-wheel truckload containers. I was surprised at the magnitude of the logistics, right, to get those ovens to us. Those are starting -- the schedule said they start coming next week. They stop coming within 2 weeks, then we have everything. And then we've already started installation. We've already started testing and commissioning the equipment. If those ovens had arrived 4 weeks ago, they would be sitting around because the sequence is pretty precise in terms of what needs to be installed and tested and then processed. So in that regard, we feel again, maybe 3 or 4 weeks of slippage that was fully buffered in our plans, right? So we'll be up and running in Q2, and I think that's going to be a huge milestone. Zach Spencer: And speaking of Sequence, please review the timetable for the second recycling project. So its initial revenue and probable location. Corrado De Gasperis: Yes. Yes. It's going to be outside of Vegas. Clark County for sure. That's where all the infrastructure is. There's more infrastructure in Clark County in Vegas than there is in Silver Springs, frankly. We have a site. We're in final stages of locking down the terms. We've already submitted the permit because we know where the site is. I think the question is when do we order the equipment. Last time I asked Fortunato, he said as soon as we possibly can because the equipment lead times from -- when we first -- we raised the money in August, we ordered the equipment the next day. We were looking at a 5- to 6-month lead time. It turned out to be 7 to 8, okay? So if 7 to 8 is the real lead time, although I think there's some arguments now that we've gone through this process that it would be shorter, then we probably want to order the equipment sooner rather than later. So if you're quoting equipment in May, you could have it arriving in December, the process should look and feel maybe 3 months faster from a calendar perspective than the first facility or could mirror it very closely, right? Commissioning in Q1, operating in Q2. I'd love to see commissioning in Q4 operating in Q1. And as soon as we order the equipment, we'll be able to communicate that. Zach Spencer: Okay. And sticking with Comstock Metals, you've outlined a 7-facility national model with a central refinery hub. What is the capital requirement per facility at the scale you're targeting? Corrado De Gasperis: So we've always said recycling facility 12 to 15, okay? And really, that range is tied to if we're leasing a facility, it's $13 million. That's where we're ending up, right, with facility #1. If we had to buy a facility, you might have to put a deposit down, it might be $15 million, maybe $16 million at the most. So it's a nice tight range. It's not a lot. $12 million to $15 million, we'll stick with, maybe $13 million to $16 million is buffered. That's a good number. And that's for each facility. As you heard earlier, $75 million plus in cash flow and they're running full. So that profile is beautiful. The central refinery, though, is still conceptual, like we are certainly not going to build 7 refineries. Ideally, there could be 1 maybe very centrally located. For the math on that is if a recycling facility is taking in 100,000 tons and 10% to 15% are tailings, you're going to get midpoint, 12,500 tons of tailings per year per facility. If you have 7 facilities, that's 100,000 tons of tailings. That's a pretty good sized refining operation. You could start with one in Nevada, and that would be -- if you did that, you'd probably either have one big one there or you might have one on the West Coast, Nevada-based, one on the East Coast, then you'd have 2. We don't know the answer to that yet. We still need to get to FID on the engineering, but we're projecting the capital for one large refining operation like that 100,000 ton of intake level to be about $30 million, right? So in the scheme of -- in the universe of refining capital, it's low, right? When people talk about aluminum refineries and pyrolytic refineries and smelters, they think in the billions, like not in our scenario. We're very precise, very fine industrial tailing. So that's more what we're looking like. I hope that answers the question. Zach Spencer: Corrado, pivoting to SSOF. The values sound high. What are the prerequisites for monetizing these assets? And what's the time line? Corrado De Gasperis: Yes. So I think, look, there's probably 5 prerequisites. Let's just think them through. industrially zoned land, check, flat developable land, super check, water rights, check, fiber check, electricity, right? That fifth one is where as we sort of hit the wall, if I could give people context, right, the Great Basin Transmission Company came out with an open bid. This is a FERC-regulated utility bid. We committed to like 50,000 dekatherms a day. I think they got bids for 800,000 dekatherms. So if our number is 300 megawatts, their number is 15x that, 13x that. So that's real. That's certified. That tells you what's happening in Northern Nevada in terms of people needing, wanting and committing capital to power. So what we need to do is we need to close out on the land position. There's still some capital required to do that, close out on the land position, have clean title, clean and final environmental reports. We've already done Phase 1 previously, super clean, so no issues. You just need to be updated, right? Water rights certification we have thousands of acre feet of water rights. That allows for a lot of flexibility with the data centers. Some are -- there was a phase of all electric cooling, then the grids ran out of electricity. Now everybody is hell bent on the technologies that reduce water in data cooling, but you got to have water rights, right? So if we do those 3 things, right, just perfect the land, perfect the power, I feel there's a little capital there, but there is also administrative work, like probably 60 days' worth of work. That timing would be perfect, data room would open up and then 60- to 90-day process. So we're looking at -- we're absolutely looking at 2026, getting this done in 2026. Zach Spencer: Thank you, Corrado. We do have a question on Bioleum management. Please provide an update on the Bioleum team. Corrado De Gasperis: Absolutely. So I think most people appreciate that in March of last year, Marathon Petroleum invested directly into what was previously known as Comstock Fuels. And then in May, a large investor came in with another direct investment. It's about $35 million in total of, call it, Series A investment directly into the newly reestablished Bioleum Corporation. There's a really strong core group of founders, I say 10 people, David Winsness, Rahul Bobbili, but there's Chad, Michael Black. There's a strong group of founders there, but there's an even bigger group. There's probably 40 professionals. And let me just say this. Their whole claim to fame, they're equivalent of Fortunato's zero landfill, highly efficient thermal solution is their ability to unlock lignin in woody biomass. So we call it lignocellulosic technology. But that company's roster includes like Dr. Christian Dahlstrand from Sweden, Dr. Marcus Jawerth from Sweden, Dr. Colin Anson from Madison, Jordan Thutt from Wausau, Dr. Elvis Ebikade from New York, originally from Nigeria, Dana Hatch, Bob Rzmirek, Andrew Hell, these are all chemists and chemical engineers. And then you have Dr. Gregg Beckham at the National Laboratory of the Rockies, previously known as NREL, Dr. Yuriy Roman at MIT. Like you're literally talking about the top 10 lignocellulosic professionals like in the world. And what their coming out with here is the highest yielding lowest carbon ability to take waste into low carbon fuels. But it kind of -- people probably feel -- so that's the management answer, right? Chad Michael Black is the President. Chad is leading this incredible group, right, of primarily engineers and material scientists, right, to final investment decision that allows them to move into biorefining. We haven't gone stealth per se with Bioleum, but there was a concerted effort for them to be independent for them to have their own capital source, for them to ultimately go Series B and IPO. So as you hear me talk about monetizing assets, I don't -- I'm happy to be supportive. I'm happy to be helpful and I am intimate with what they're doing. But their success will be our success, right? We want to put our calories into growing a literally international dominant metal recycling business. Zach Spencer: Thank you, Corrado. Looking at our mining assets, what is the timing on the potential monetization of the mining assets? Would it be a JV deal or something different? Corrado De Gasperis: I think I'm hopeful that the timing is sooner. We are in pretty deep conversations. We are pretty specific around terms. And we're only talking to people that have credible and immediate -- not immediate, but credible and almost immediate access to capital. Like we're not talking about people who are blue skying possibilities here. So the people that we're talking to have done quite a bit of diligence, like, I would say, a tremendous amount. But just from a legal, administrative final processes, you're probably looking at 75 to 90 days. Is it guaranteed -- could something bust for sure, but we're feeling pretty good about it. Zach Spencer: Thank you for that. Pivoting again, is there any intention for issuing additional shares in the near term, resulting in any more dilution? Corrado De Gasperis: No. I would like to repeat, though, what I had said earlier. We had 7 or 8 years of excruciatingly poor access to the capital markets, bad structures, bad efforts, probably with hindsight, using a junior mining penny stock structure to capitalize to high-growth innovative technologies was not the smartest thing in the world. But at the same time, we did it, right? We created an incredible opportunity. And I think our investors that stuck with us and our new investors that came in are really, really, really going to profit from that scenario. If there's a perception that we enjoyed raising the capital that way or the dilution that resulted and even more painfully, the low valuation that comes from having other than intermediate and longer-term capital partners, we hated it. So just in case anybody is curious, like we hated it. But we did get this business launched, and we're running now. But what's more important is we have capital partners. We have capitalized and funded. And I think if we had no noncore assets, the positive of that would be that we would be more fully dedicated to metals. But the positive of having them is, as I said earlier, if we monetize those assets and redeploy them, if we monetize those assets and redeploy them, then we have a bonanza on our hands here. We are derisked from distraction. We are derisked from having to slow down. We see some of our recycling competitors struggling to raise capital. We've seen some take capital from very bad sources and do a 180-degree turnaround on their strategy. So we're just going to keep flying forward, and we don't see any -- we have no -- we don't see any reason looking forward, right, that we would have to raise money. If something unknown happened, and we can talk about it, but like we don't see it unequivocal, no. Zach Spencer: Thank you, Corrado. We're coming up on time, and I think we've covered several important questions. If we did not get to your question, please send it to ir@comstockinc.com. and we'll do our best to respond either directly or we'll post the response on X. For anyone who is not following us on X, our main account is at Comstock Inc. Please follow us. Corrado, before we wrap up, please give us some final thoughts for the final week of Q1 and the rest of 2026. Corrado De Gasperis: Yes. I'm super excited about our new Board members. They've already reached out wanting to start engaging and coming back out to visit. I'm super excited about the work leading up to the annual meeting in May. I think that if you can come to the meeting in person, we're going to take a bus down to Silver Springs. And on the way to Silver Springs, we'll go to the Tahoe Reno Industrial Center and you'll see about 10 million square feet under construction on the way to it. It's probably relevant to point out that 600 Lake Avenue, this incredibly ideal location for solar panel recycling and 800 Lake Avenue, the Monstrous like storage facility right next door, our Sierra Springs properties. Sierra Springs owning those properties allowed us to pivot very, very quickly into the solar recycling business. And I think with hindsight, speed is the winner in all fronts here. And then stay tuned for customer announcements, stay tuned. We're going to -- we'll be more active next week, the week after the week after and the week after with pictures of the ovens, the assemblies, the commissioning and then panels starting to go through the machine. We're really at the inflection point here of 3.5, 4 years of incredibly hard work. So pretty exciting. Zach Spencer: Thank you very much, Corrado. That concludes Comstock's year-end 2025 earnings call and business update. Thank you all for joining us. Corrado De Gasperis: Thank you all.
Operator: Good morning, everyone, and welcome to the Perma-Fix Fourth Quarter and Fiscal 2025 Business Update Conference Call. [Operator Instructions]. Please note, this conference is being recorded. I will now turn the call over to your host, David Waldman of Crescendo Communications. David, the floor is yours. David Waldman: Thank you, Jenny. Good morning, everyone, and welcome to Perma-Fix Environmental Services Fourth Quarter and Year-end 2025 Conference Call. On the call with us this morning is Mark Duff, President and CEO; Dr. Lou Centofanti, Executive Vice President of Strategic Initiatives; and Ben Naccarato, Chief Financial Officer. The company issued a press release this morning containing fourth quarter and 2025 financial results, which is also posted on the company's website. If you have any questions after the call or would like any additional information about the company, please contact Crescendo Communications at (212) 671-1020. I'd also like to remind everyone that certain statements contained within this conference call may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and include certain non-GAAP financial measures. All statements on this conference call other than statements of historical fact are forward-looking statements that are subject to known and unknown risks, uncertainties and other factors, which could cause actual results and performance of the company to differ materially from such statements. These risks and uncertainties are detailed in the company's filings with the U.S. Securities and Exchange Commission as well as this morning's press release. Company makes no commitment to disclose any revisions to forward-looking statements or any facts, events or circumstances after the date hereof that bear upon forward-looking statements. In addition, today's discussion will include references to non-GAAP measures. Perma-Fix believes that such information provides an additional measurement and consistent historical comparison of its performance. A reconciliation of non-GAAP measures to the most directly comparable GAAP measures is available in today's news release on our website. I'd now like to turn the call over to Mark Duff. Please go ahead, Mark. Mark Duff: All right. Thanks, David, and good morning, everyone, and thank you for joining us today. 2025 was an important year for Perma-Fix as we focused on strengthening our operational foundation and positioning the company for the next phase of growth tied to the Department of Energy's Hanford cleanup mission. For the full year, revenue totaled approximately $61.7 million, reflecting stronger performance in our Treatment segment and improving waste volumes across several of our treatment facilities. While the timing of certain government programs affected activity levels during the year, we made significant progress preparing our facilities, workforce and infrastructure to support the increased waste volumes expected as the Direct Feed Low-Activity Waste or DFLAW, program transitions into its operational phase. Throughout the year, we also made targeted investments in personnel, infrastructure and plant capabilities to ensure we're fully prepared to support the next phase of activity at Hanford and across other DOE cleanup programs. As many of you know, the DFLAW program and the Hanford tank waste program represents one of the most significant environmental remediation efforts currently underway in the United States, and we believe Perma-Fix is uniquely positioned to support this mission, given our specialized treatment capabilities and our long history of supporting DOE waste management programs. One of the most significant milestones in the year was the renewal of the permit for our Perma-Fix Northwest facility. This permit significantly expands our permitted processing capacity to approximately 1.2 million gallons of liquid mixed waste annually, effectively tripling our liquid processing capacity and also authorizes treatment of up to 175,000 tons of waste through macro encapsulation annually. Combined with our investments in automation, facility upgrades and workforce expansion, these improvements meaningfully strengthen the role Perma-Fix Northwest can play in support of multiple Hanford-related waste streams and other DOE emission objectives as activity ramps in the coming quarters. In the recent press release, DOE announced the need to extend the DFLAW hot commissioning phase. However, waste is expected to be received through the DFLAW liquid waste treatment processes beginning in May at our Northwest facility with dry waste expected to be received in April. The liquid waste streams are -- anticipated waste streams are expected to grow above original estimates by as much as 20% as described by DOE based on changes made and the process flow, which will include grouting a portion of the effluent waste instead of using DFLAW vitrification processes as originally designed. Our regulatory supplemental analysis is under review that includes using Perma-Fix Northwest grouting capacity, to treat the affluent to enhance production levels at the DFLAW facility. The DFLAW facility has processed about 50,000 gallons of tank waste through February and the melters remain hot which produces steam resulting in generation of waste to be included as affluent to Perma-Fix Northwest. For investors trying to better frame the timing of the DFLAW opportunity, DOE planning documents indicate the system is expected to ramp progressively through hot commissioning, beginning -- which began in October of of 2025. And within 12 to 18 months of that start date debut plans to reach operational phase at approximately 40% capacity before increasing towards 80% capacity as additional systems come online and that's required to be done within 3 years based on the tri-party agreement at Hanford. We view this as an important indicator of the size and durability of the opportunity in front of us, while also recognizing the exact pace of that ramp remains completely dependent on DOE execution and site operating conditions. Initial estimates regarding revenue potentials remain at about $1 million to $2 million per month beginning in Q2 and ramping up through the year. At a recent Waste Management Conference in March, DOE leadership specifically addressed the importance of implementing a grouting program to supplement DFLAW towards meeting the department's goals for diving tank closures by 2040. DOE stated that this program is working towards treating up to 200 million gallons of waste by 2040 from the Hanford tanks through the DFLAW program and supplemented by the Grouting program to be initiated in 2026. The number has grown from the original 56 million gallons estimated based on the expectations due to the fact that they will be generating 1 to 3 gallons of wastewater from each gallon retrieved due to the need to add liquids to the tank to retrieve the waste. Over the past several months, Perma-Fix Northwest has continued to make significant investments in automation and information systems of personnel training to ensure the facility can operate efficiently at high throughput levels and meet or exceed expected production rates as a broader range of waste streams begin to arrive. The Hanford remediation programs are expected to generate sustainable waste streams over time, which we believe can create consistent long-term treatment demand and recurring activity for our facilities. In addition to supporting DFLAW program, we expect to participate in several other Hanford related waste streams and site programs that will generate additional treatment demand over time. These increases in receipts include providing solidification, treatment support to high-volume contaminated water from the Hanford site as well as increasing our Transuranic Waste Processing program by 100% beginning this month, supported by additional shifts at the Perma-Fix Northwest facility. As waste receipts increase, we expect to utilize the expanded capacity to support a growing volume of treatment activity tied to both Hanford Mission and other DOE programs. Operationally, our Treatment segments delivered meaningful improvement during the year. We saw higher waste volumes, improved plant throughput and stronger waste mix, which together drove significant year-over-year growth in treatment revenue. As a result, treatment revenue increased approximately 29% year-over-year, reflecting both higher activity levels and stronger pricing dynamics associated with the waste streams we processed. Importantly, our treatment backlog increased by approximately 51% year-over-year and approximately -- to approximately $1.9 million in revenue, providing improved visibility as we enter 2026. This backlog growth reflects increasing demand for our specialized treatment capabilities across both government and commercial waste streams. Another area of progress during the year was international activity. Revenue from foreign entities increased approximately 163% year-over-year to approximately $6.4 million, reflecting growing global demand for our specialized waste treatment services. Our international markets continue to represent an attractive growth opportunity for us as many countries face similar challenges related to complex nuclear and hazardous waste management and we continue to see an expanding pipeline of potential treatment projects in Canada and other international markets. Turning to productivity more broadly. We have seen a number of encouraging developments over the past several months that we believe support our growth outlook for 2026. These include opportunities tied to Soil Sorting, work for a commercial uranium mining client, additional treatment work related to Canada and other international markets, our weapons production-related waste treatment programs and remediation work supporting a major university laboratory environment. Some of these opportunities are already moving into execution, while others remain in final [indiscernible] and start-up phases and together, they reinforce our confidence in improving activity as we move through the year. We also want to set expectations appropriately for the first quarter. While Perma-Fix does not typically provide formal guidance, it's important to recognize that factors are expected to make the first quarter softer than the stronger activity we tend to expect to begin for the second quarter. These factors include recent delays in the DFLAW affluent receipts, which shifted expected waste receipts out by several months, also normal seasonal weaknesses in field activity during January and February and ongoing efforts at Perma-Fix Northwest to process stored waste and prepare all -- to prepare all of our resources for the increase in Hanford-related activity expected later in the coming months. While the Q1 numbers are not finalized, losses in Q1 will likely exceed $4 million in negative EBITDA on about $13 million in revenue. Despite those near-term impacts, we've seen strong activity in March and I believe the second quarter should represent an inflection point as additional waste receipts and project activity begin to ramp. The focus on stored waste, I mentioned has resulted in timing-related shift in revenues from Q1 to Q2 due to applicable revenue recognition rules, resulting in a movement of approximately $2 million in revenue generated at Perma-Fix Northwest to be recognized in Q2, while they're actually processed in Q1. We also continued advancing the development and commercialization of our PFAS destruction technology. During the quarter, our engineering team focused on completing construction and installation of our new generation 2.0 PFAS Destruction System at our Oak Ridge facility, the upgrade system -- the upgraded system is designed to increase our PFAS destruction capacity by up to 3x our current rate, while incorporating engineering improvements intended to reduce operating costs and improve reliability and production rates. PFAS continues -- PFAS contamination continues to receive increasing regulatory and environmental attention worldwide, and we believe technology is capable of permanently destroying these compounds will play an important role in the future of remediation efforts. We also continue to see strong interest in our technology as an alternative to incineration with our PFAS Perma-FAS system, providing permanent destruction of PFAS compounds at a lower total cost, while affording air emissions. We believe the ability to permanently destroy PFAS compounds and eliminate long-term environmental liability represents a compelling advantage for our customers evaluating alternatives, traditional -- to traditional disposal methods. Over the past several months, we've secured several field projects supporting PFAS remediation at regional airports and continue to see additional airport-related opportunities currently moving through procurement processes. More broadly, we're continuing to develop strategic relationships with companies involved in PFAS remediation and AFFF removal as we work to expand the deployment of our technology across both government and commercial markets. Taken together, we believe these developments position our PFAS platform to support increasing demand for cost-effective permanent PFAS destruction solutions as remediation activities continue to expand. In our Services segment, revenue declined during the year, primarily due to the timing of project mobilizations and procurement cycles, including delays earlier in the year associated with the transition to the new administration and related policy adjustments. The partial federal government shutdown in October also impacted procurement for timing of government-related customers. In addition, we've seen the normal seasonal timing efforts of weather and delayed project mobilization is during the first quarter. Importantly, our Services business remains project-based and therefore, quarterly activity levels can vary depending on project timing and scope. Nevertheless, we continue to see opportunities in this segment tied to nuclear services, decommissioning work and government remediation programs, and we believe the progress we've made during the year positions us well as activity levels increase. In fact, I'm pleased to report we've won over $30 million in new Services backlog and submitted over $40 million in new bids just during Q1. We look forward to providing further updates on our bid pipeline in the future. Finally, I want to highlight what we believe is one of the most significant long-term opportunities in front of the company. In December, the Hanford tank contractor issued an RFP tied to the tri-party agreement to retrieve 22 tanks over approximately the next 12 years for commercial grouting and offsite disposition of the waste as part of a long-term remediation effort tied to the retrieval and stabilization of tank waste at the Hanford site. The RFP estimated that this contract will begin in January '28 for total -- for a volume of tank waste up to 50 million gallons to be grouted at commercial facilities. Perma-Fix Northwest is exceptionally well positioned for this opportunity given its location within the mile of the Hanford site as currently permitting -- its current permitting profile and its expanding processing capability currently available. While this opportunity is not expected to begin until later in the development cycle, we believe it underscores the scale of the long-term duration of Hanford-related work and is now taking shape and the strategic advantage Perma-Fix can provide and is recognized by DOE. So when we step back and look at the broader picture, we see the recent delays in DFLAW effluent receipts from hot commissioning activities as relatively modest in relation to the size of the opportunities in front of us. Between the DFLAW ramp, additional Hanford related-waste streams, the grouting program now in development for up to 200 million gallons of waste to be treated, expanding international work, a growing treatment backlog and advancing PFAS and remediation opportunities, we believe the opportunity for Perma-Fix to deliver meaningful growth and improved profitability beginning in the second quarter and continuing into the coming years has never been stronger. Thank you, and I'll now turn the call over to Ben for the financial discussion. Ben Naccarato: Thank you, Mark. Beginning with revenue, our total revenue from the continuing operations in the Fourth Quarter was $15.7 million compared to last year's fourth quarter of $14.7 million, an increase of $1 million or 6.9%. Our Treatment segment revenue increased by $2.6 million, while Services segment was down $1.6 million. In the Treatment segment, the increase was a result of higher volume, offset by lower average price, which was the result of a change in waste mix. Reduction in the Services segment revenue was due to lower start-up of new projects to replace completed projects from prior year. For the year ended 2025, our revenue was $61.7 million compared to $59.1 million in 2024, an increase of $2.6 million or 4.3%. In the Treatment segment, revenue was up $10.1 million, while the Service segment dropped by $7.6 million. As with the quarter, the Treatment segment benefited from increased volume and it also had higher average pricing related to waste mix. The Services segment continued to feel the effects of reduced project work related to timing of project start-ups and awards. Turning to our gross profit. For the fourth quarter, gross profit was $1.2 million compared to $594,000 in Q4 2024. Gross profit in the Treatment segment increased by $983,000 as a result of increased revenue, offset by higher labor and maintenance expense. Services segment gross profit was below prior year by $365,000 due to lower revenue and lower margin projects. However, that was offset, partially, by reduced fixed overhead costs. For the year ended 2025, gross profit was up by $6 million. Most of the improvement came from the Treatment segment where higher revenue and improved margins were partially offset by the increase in fixed cost at the plants. Gross profit from the Services segment was relatively flat as the impact of lower revenue was offset by drops in both variable expenses and drops in fixed overhead. Our total SG&A costs for the fourth quarter were $4.2 million compared to $3.9 million in the fourth quarter last year, while SG&A for the full year was $16.4 million compared to -- in 2025 compared to $14.4 million in 2024. Our SG&A expenses in the quarter were up from higher marketing costs related to payroll and trade shows, while administrative expenses increased due to payroll and legal expenses. Our SG&A costs for the fiscal year 2025 were up by $1.9 million from higher payroll expenses in both marketing and admin as well as higher trade show and legal expenses. Our net loss for the quarter was $5.7 million compared to last year's net loss of $3.5 million. Note that the current year results include an adjustment to one of the company's discontinued operations of $2.7 million related to a long-term remediation cleanup. For the year ended December 2025, net loss was $13.8 million compared to a net loss of $20 million in the prior year. Again, our net loss for 2025 included the $2.7 million recorded in the remediation reserve for our discontinued operations, as previously discussed. And note also that in 2024, our net loss included approximately $8.2 million of income tax expense related to the full valuation allowance established on our U.S. tax deferred tax assets. Our basic and diluted net loss per share for the quarter was $0.31 compared to a loss per share of 22% in the prior year. This includes the impact of $0.15 per share from the adjustment to the remediation reserve within our discontinued operations. Loss per share for the year ended December 31 was $0.75 per share compared to a loss per share of $1.33 per share in 2024. EBITDA from continuing operations, as we described in this morning's press release, was a loss of $2.7 million compared to a loss of $3 million last year. For the year ended 2025 EBITDA was a loss of $9.7 million compared to a loss of $13.8 million in 2024. Turning to balance sheet in comparison to 2024. Cash on the balance sheet was $11.8 million compared to $29 million in the year ended 2024. Unbilled receivables were higher in '25 compared to '24 by $3.8 million, primarily due to the timing of waste shipments in the Treatment segment. Our net property and equipment was up $3.5 million, primarily from capital spending which included the construction of our PFAS reactors. Intangibles and other assets were up $1.4 million from interest earned on the finite risk sinking fund as well as increase to permits and joint venture investments. Our waste treatment backlog for the year-end was $11.9 million compared to $7.9 million in the prior year. Long-term liabilities related to discontinued ops were up $2.7 million, again, due to the increase in the remediation liability at one of our [indiscernible] discussed facility. Total debt at quarter end was $2 million, excluding debt issuance costs, which is mostly owed to PNC Bank. Finally, I'll summarize our cash flow activity, cash used by continuing operations was $10.3 million, cash used by discontinued operations, of $441,000. Cash used for investing in continuing operations was $4.9 million, primarily for cap spending and permits. Cash used for investing of discontinued ops was $54,000. And cash used for financing was $981,000 representing monthly payments to our term and capital loans of $631,000, payments related to finance lease and other debt of $327,000. The payment of offering costs from last year's equity raise of $195,000 and offset by net proceeds from option exercises of $172,000. With that, operator, I'll now turn the call over for questions. Operator: [Operator Instructions] Our first question is coming from Howard Brous of Wellington Shields. Howard Brous: I just have a couple of quick questions. You started talking about Q2 and the performance. Can you give us a better sense of what you're referring to? Mark Duff: Sure, Howard. Yes, we have a lot of confidence in Q2, Howard, based on a couple of things. One is, as you know, it's really been about 2.5 years since our Services Group has really established a strong backlog of projects. And for numerous different reasons, a lot of it was just a cyclical thing with the changing of contractors at the prime levels and other market conditions. But that's really changed significantly in the last several months, and we're excited about where the Services Group is going. First, we just received a new contract award for a demolition project for a radiological facility at a National Lab. We hope to be announcing that in details -- some details on that in the next few days. We've also mobilized 3 new projects into the field in the last 2 weeks that will generate waste that we'll receive in process. There's projects that have better margins than most. And we've also got a pretty significant backlog of -- probably I should say, pipeline of opportunities we've submitted bids on, with -- squarely within our core competencies for radiological facility demolition and remediation as well as decontamination. So those looked really good for the summer, and it puts services in -- back in a position of carrying more weight than it has. And that typically bolsters our treatment shop as well. But along with that, we're also -- the other component or why we believe Q2 will be better, is related to Northwest. Just a little more detail on Northwest. There's a project up there that includes taking all the surface water waste that Hanford accumulates in selling ponds on site. And the -- evaporate that and make a brine out of it and they sent us the brine. And that program will start up, as we plan to start April 1, and we'll start receiving waste a few days after that. That's about $1.5 million or so a month revenue stream that's very important to us, and that will go for an extended period of time. It's a very sustainable waste stream as a runoff and from rainfall as well as from groundwater treatment activities and those types of things all comes to us, and we treat it and send it back. Secondly, DFLAW, as I briefly mentioned in this somewhat complicated, but bottom line is that they're in high commissioning now and they're run -- they're still running waste through the facility in smaller quantities not at a sustainable level. But they do generate what they call blowdown water. That's the water they use in the scrubber systems to address their effluent requirements. That waste was going to be pumped back into DFLAW and make glass out of it. In a press release a couple of weeks ago, about a month ago, I do -- we said, instead of us making glass out of that blowdown water why don't we treat it, and then we can do more tank waste, 20% more. And so they work with us, and they're going to be shipping us that waste here as soon as their supplemental analysis gets through the public comment period, which is mid -- late April, and then we should start seeing that sometime in May. So that should also be an additional waste stream from DFLAW along with some dry waste from processing. And lastly, the TRU waste program, as I mentioned, has doubled in size. So going from 1 shift to 2 shifts. That's added about $750,000 to $1 million a month as well. All this together, along with the $2 million I mentioned is going to be bumped from Q1 to Q2 due to revenue recognition rules. April looks like a great month and the Q2 altogether and Q3, looks like a very sustainable return back to profitability based on what we're seeing right now. So we're excited about Q2, Howard. Howard Brous: Going back to grouting. It seems that the -- excuse my voice, the 200 East area where the waste treatment plant is, they have a plan to grout the waste of the 200 West area. Can you comment about that? Mark Duff: Yes. It's important to understand there's 2 different components of the Hanford site. The West area is where there's -- the DFLAW does not have an infrastructure included. It's a distance, a good distance from the actual DFLAW plant. So as determined they're going to basically commercially grout all the tanks out there. And under the Trump administration, they're being very aggressive about it. And that's what the large RFP I mentioned in my script is all about. It's basically a $4 billion estimated value. There's a lot of flexibility in it. In other words, they may use other contract vehicles that may make multiple awards. But the bottom line is they're set up to really begin high-volume grouting at about the 3 million to 4 million-gallon a year range, but it does expand a little beyond that in the next 2 to 4 years. And we're in a great position for that being the only local facility local. And I'm sure they want backups to us or maybe supplementals to us. That remains to be awarded here sometime in the third quarter. But in parallel with that, the East side where DFLAW is, DOE has been somewhat vocal that instead of all the waste going to DFLAW that's currently being pumped into staging tanks to go to DFLAW, they can start grouting some of that waste. In other words, they have 1 million gallons of storage for DFLAW while that's sitting there, they could be pumping it out for grouting as well as probably get the DFLAW. So there's an opportunity for supplemental grouting to occur and we're in a really good position for that as well. And that's something we're looking at doing in the third quarter or fourth quarter if they get to the regulatory hurdles they're planning to. So both those components could start impacting us in the next 12 months and certainly in the next couple of years, but presents a very significant backlog opportunity for the company. Howard Brous: Last question, I want to address PFAS. In terms of volume and capacity, where are we headed? Mark Duff: Yes. With new systems have been delayed a couple of months due to supply chain issues, which we seem to be facing all the time. Everything is on site now. We're going through the installation process. We poured concrete and things are rolling. So we're really on track for late April, early May to start testing. And once that new system comes online, we'll be basically in a position to do about 3,000 gallons a day. And backlog has been pretty good at the Gen 1 system. We've made some improvements through the last quarter, 2 quarters, really, where we are able to start recycling our chemistry, and that allows us to lower our rates. As I mentioned before, our target is really to undercut incineration. We can do PFAS treatment cheaper than the incinerators can and that's been kind of the shift in the industry to total destruction. It's kind of our competition. So our sales focus is squarely right now on making sure we're getting as much incineration competitor waste as we possibly can. And it's going really well. And again, we continue to do a lot of partnering on that. And we believe once we get the capacity up to 3,000 gallons a day total capacity with the new system and the old system as well that we'll be able to get even greater backlog because we can store more and commit to higher our throughput. So that's really where we're going. We're still doing some R&D on the smaller components, smaller systems to be field deployed. Right now, we're really focused on the new system and getting it operationally ready and rolling. Operator: [Operator Instructions] And our next question is coming from Aaron Spychalla of Craig Hallum. Aaron Spychalla: Maybe first on DFLAW, can you just kind of speak to the visibility into that waste stream starting. You mentioned some solids in April and liquids in May. And it sounds like still expecting that $3 million to $6 million a quarter as that ramps. Maybe just kind of walk through that timeline as well. Mark Duff: Sure, Aaron. It's been difficult. DOE has not been real public on the operations of DFLAW overall other than it's operating. And so it's difficult to understand how much waste is going in. What the issues are they're dealing with to get to an operational phase. In other words, getting through their punch list to make everything -- make sure everything is working at capacity. So it's difficult to project it. But we do know that, that blowdown water, the EMF water I mentioned should be -- as soon as this supplement analysis is done to change the direction where it was originally tended ongoing. We should start to see that in -- at about 10,000 gallons a month and ramp to 4x that as operations gets underway. So that's an important waste stream for us. That's a big portion of the overall DFLAW waste incineration itself. Not all of it, probably not even half of it. And there's a lot of other waste that are being generated that are basically being stored with -- at the Bechtel facility that we expect to start receiving in April. We don't have a lot of clarity on that at this point, Aaron, in regards to volumes and that type of thing, what the overall impact will be. But we know between the 2, we should be, as I mentioned, in $1million, $1.5 million to $2 million a month here, particularly by mid-quarter of Q2. And the clarity on that, I think, will increase as they get through some of these punch list items. DOE is totally dedicated to getting this facility up and running as fast as safely possible. And so it's difficult to really nail down schedules on when the waste really beginning to flow like we anticipate it will. Aaron Spychalla: Understood. And then maybe on international volumes, you kind of highlighted growth there in 2025. Just how are you thinking about the opportunities there as we look to 2026 and beyond? Mark Duff: Yes. We just wanted some work, Aaron, from Canada again to do some liquid treatment and at our Florida facility as well as the DSSI facility here in Oak Ridge. That's going to be a pretty good backlog. That will begin here mid-April and run pretty much through the summer and could be going longer than that. We've also got several other projects for different clients throughout Canada that would be likely to begin in Q3. The Mexico waste we did last year, there'll be another tranche of that out for bid here. It's already been out for bid. That won't likely get rolling probably until Q3 or Q4. And we continue to get strong waste from Germany, and that also is expected to be sustainable here through the latter part of the year. Then our TRC project is going very well in Italy. Unfortunately, even though it's ahead of schedule, actually, the remediation process is for pulling the is for pulling the drones out of the ground that will start here in April. So all the permits are done, all the paperwork is done and now it's actually a field work. That's not our scope. That's another company, another contract. And our scope will be to characterize as drums as come out, they come out and that won't start until Q3. And we'll start seeing any of that waste probably until Q1 of '27. So to answer your question, we probably won't see the same revenue levels as last year, but they'll be close, but probably 25%, 30% less than we saw last year with it ramping up in Q4 and have a stronger '27 of international waste. Aaron Spychalla: All right. And then on the permit, the expanding the capacity with everything going on at Hanford, just maybe talk about -- you've made investments, but just how you're preparing to handle all the volumes there? Mark Duff: Yes, Aaron. We just submitted our proposal on that a few weeks ago, and we've been pretty vocal about what our capacity expectations are. Right now, as I mentioned, we can do 1.2 million gallons a year of liquids. And what we're proposing DOE is that we will be submitting a permit mod through that permit here in the next few weeks and that permit mod will include ramping that up to an additional 3 million gallons on top of that. So worth a total of 4.2 million gallons total capacity for liquid treatment. That will cover all the waste streams we're talking about, plus the 3 million or 4 million in grouting for the tanks. And that permit mod is expected to take 6 to 9 months to get through the system. And we will be beginning to install or modify our facility to support that as well with investments here beginning in the second half of the year to get to that level. So the big deal about that permit renewal is a lot of things that are important to it, but the one that's probably most important since it's approved, now we can do permit mods. While they were reviewing that permit application, renewal application. For the last 16 years, we couldn't do mods to it because they kept saying, if you want to do a mod, we're going to stall on you or put your renewal down and pick up your mods, so you won't get your renewal. Now we have a renewal, we can do mods, and they'll be quicker and more efficient because they're not that complicated and allows us to be flexible on these things and to implement some new technologies, expand our current capacities and those kinds of things. So we really feel like being at a capacity of 4.2 million gallons a year based on the fact that the new administration is looking at such a large volume of waste that we should be able to get pretty much full capacity in the future. I don't know when that will be, a lot of it depends on how fast they can get it out of the tanks. But our capacity is not going to be a critical path, and we'll be very aggressive on what we can produce and what we can treat based on our capability. Aaron Spychalla: And then just maybe one last one on the balance sheet. Can you kind of talk about cash flow expectations? It sounds like there's some receivables at year end? And then just how you're thinking about CapEx and investments in '26, you kind of talked about some maybe in the back half. Ben Naccarato: Aaron, yes, the balance sheet, we still have a number of capital initiatives to support the increased productivity expected. And -- but our working capital remains in good shape. We don't normally comment on any kind of cash raises at this time. So right now, we're comfortable with our balance sheet at 12/31, and we will evaluate that as the opportunities and the capital needs come above. Operator: Our next question is coming from Walter Schenker of MAZ Partners. Walter Schenker: Just to get back to PFAS. So the original unit is -- it's a question, is operating commercially and treating waste streams currently, while you build the second unit? That's the first question. Mark Duff: That's correct, Walter. It runs -- it does about 650 gallons a day, and it's running about 4 days a week consistently. There was some downtime associated with it, our average is around 4 days a week. And again, we've taken what we've learned from that system and engineering issues with that and perfected it to the next system. So that next system will be more efficient in operations. But yes, it does about 650 for the gallons today. Walter Schenker: And as a range, not a specific number, for your ability to eliminate those PFAS chemicals, pricing is roughly where? For gallons? Mark Duff: Really, it depends on volume, but if we get a big volume, we typically discount, and it also depends on the characteristics of the PFAS concentrations and those types of things. But to give you a range, for bigger totes, we can do between $11 and $15 a gallon. For smaller quantities like a drum or buckets, a lot of that AFFF comes in smaller quantities, it can be above $30 a gallon. So it just depends on the quantities we're getting. As we get to the larger volumes that we can handle with the new system, we'll be pushing for larger volumes to receive, so we don't have to handle as much. But just to kind of give you a range, Walter, $10 to $15 a gallon is a pretty good range for higher volumes. Walter Schenker: And on higher volumes with that price range, a range for some sort of operating profit margin? Mark Duff: It's typical -- we try to design our system from the very beginning to stay in alignment with our other waste treatment margins, which incrementally our target is 60% to 70% incremental margins on average. So some maybe more, some maybe less depending on a lot of different factors, but it's generally alter in line with our treatment margins across the company. Walter Schenker: And my last question, the second unit to get you up to 3,000 gallons, the CapEx to build that was roughly what? Or is roughly what? Since it's not up yet? Mark Duff: Yes. It's in the -- correct me if I'm wrong, Ben, the $5 million -- $4 million to $5 million range, yes. Operator: Thank you very much. While we appear to have reached the end of our question-and-answer session. I will now hand it back over to the management team for their closing comments. Mark Duff: Okay. Thank you, Jenny. And overall, we believe that Perma-Fix is entering a period where the strategic investments we've made over the past several years are beginning to translate into meaningful growth opportunities. We've significantly expanded our treatment capacity at our Perma-Fix Northwest facility strengthened our operational infrastructure, increased our treatment backlog and expanded our international project activity. At the same time, we continue to advance our additional opportunities across government and commercial markets, including projects related to nuclear remediation, weapons production and waste treatment, international waste streams and emerging PFAS destruction solutions. Importantly, the transition of the DFLAW system into its operational phase along with several additional infra-related waste streams and long-term remuneration initiatives currently under development represent meaningful catalysts for increased activity at our Northwest facility. While the timing of certain waste receipts and project mobilizations may create some variability in near-term quarterly results, we believe the second quarter should mark the beginning of a broader ramp and activity as additional waste streams begin moving through the -- and for cleanup system and new product work begins contributing to the revenue. As activity levels increase and we utilize more of this expanded treatment capacity, we believe higher throughput across our facilities should allow us to better absorb fixed operating costs and achieve meaningful margin improvement. When we consider the combined impact of the DFLAW ramp, additional Hanford cleanup programs, the tank retrieval and grouting initiatives currently under development, expanding international opportunities and the continued advancement of our PFAS technology, we believe the long-term opportunity for Perma-Fix has never been stronger. With that operator, thank you. Operator: Thank you very much. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. We thank you for your participation.
Laurence Tam: Good morning, everyone, for those who are based in China and Hong Kong; and good evening for those based in the U.S. This is the 2025 WuXi AppTec results call. My name is Laurence Tam. I'm a China health care analyst at Morgan Stanley. We're honored today to have the full team from WuXi AppTec to present the 2025 results in English. The format of the call will be 2 parts. First, I'll let management go through their prepared remarks. You can refer to the slides on the webcast. And then the second part will be a Q&A session. [Operator Instructions]. With that, let me now pass it on to the Head of IR at WuXi AppTec, Ms. Tang Ruijia, to introduce management and to start the prepared remarks. I'll pass it on to you, Ruijia. Ruijia Tang: Okay. Thank you, Laurence. Welcome, everyone, to WuXi AppTec's 2025 Annual Results Conference Call. We released our financial results last night and have posted the latest on our company website. During today's call, we will make forward-looking statements. Although we believe that our predictions are reasonable, future events are uncertain, and our forward-looking statements may turn out to be incorrect. Accordingly, you are strongly cautioned that the reliance on any forward-looking statements involves known and unknown risks and uncertainties. In addition, to supplement the company's consolidated financial statements presented in accordance with IFRS, we provide adjusted IFRS financial data. We believe the adjusted financial measures are useful for understanding and assessing our core business performance, and we believe that investors may benefit from referring to these adjusted financial measures by eliminating the impact of certain unusual and nonrecurring items that are not indicative of the performance of our core business. However, these adjusted measures are not intended to be considered in isolation or as a substitute for the financial information under IFRS. All IP rights and other rights pertaining to the information and materials presented are owned by WuXi AppTec. Audio recording, video recording or disclosure of such materials by any means without the prior consent of WuXi AppTec is prohibited. This call does not intend to provide a complete statement of relevant matters. For relevant information, please refer to the company's disclosure documents and information on Shanghai Stock Exchange, Hong Kong Stock Exchange and the company's website. As usual, in today's call, there will be a Q&A session after our presentation. Please kindly share with us your name and institution before asking questions. With that, please allow me to introduce our Co-CEO, Dr. Minzhang Chen, to present our 2025 annual results. Minzhang, please? Minzhang Chen: Thanks, Ruijia. Good morning, and good evening. Thank you for joining our 2025 annual earnings call. We will begin on Slide #5. In 2025, WuXi AppTec beat full year guidance and achieved record performance in both revenue and profit. Total revenue achieved RMB 45.46 billion. Notably, revenue from continuing operations grew 21.4% year-over-year to reach RMB 43.42 billion. Our adjusted non-IFRS net profit grew 41.3% year-over-year to RMB 14.96 billion with non-IFRS net profit margin further improved 5.9 percentage points year-over-year to 32.9%. Next slide, please. The company remains focused on enhancing our core capabilities and capacity to better meet customer demand. With continuous capacity expansion by end of 2025, our backlog for continuing operations reached RMB 58 billion, growing 28.8% year-over-year. This does not include business operations we sold or discontinued such as clinical research services. Next slide, please. Slide 7 shows our diversified revenue streams of continuing operations. Based on customer headquarters, revenue generated from U.S. market grew 34.3% year-over-year. Japan, Korea and other regions grew 4.1%. Europe and China saw some decline, mainly due to fluctuations in project delivery timing. This diversified revenue structure reflects our global footprint and capabilities to enable health care innovations. We believe it will continue to underpin the stability and the resilience of our performance. Slide 8, please. So as an enabler of innovation and a trusted partner and contributor to the global pharmaceutical and life science industry, the company continues to drive sustainability, embrace initiatives with sustained recognition by leading global ratings. In 2025, we achieved our first MSCI AAA and CDP Climate Change A Rating, maintained CDP Water Security A, and EcoVadis Gold rating, and were included in the S&P Global Sustainability Yearbook for the fourth consecutive year. And meanwhile, our near-term greenhouse gas emissions reduction targets have been successfully validated by SBTi. As a committed UNGC participant and PSCI supplier partner, we actively embrace global initiatives and are dedicated to integrating sustainability into our business strategy and operations. Next slide, please. For over 2 decades, WuXi AppTec has remained steadfast in our commitment to safeguarding customers' IP and adhering to the highest standards for quality and compliance. In 2025, we completed 741 quality audits and inspections from global customers, regulatory authorities and independent third parties as well as 60 information security audits by global customers. This means, on average, we welcome 3 quality audits per day and over 1 information security audit per week, all with no critical findings. Currently, 20 of our main sites are ISO and IEC 27001 Certified, covering all main sites in China. IP is a lifeline for both our company and our customers. We uphold integrity as our foundation and enforce a zero tolerance policy against any infringement. This is our core value and our highest responsibility and commitment to our customers. Now let's move on to the segment performance. So please turn to Page 9. WuXi Chemistry's CRDMO business model drives continuous growth. In 2025, WuXi Chemistry revenue grew 25.5% year-over-year to RMB 36.47 billion, benefiting from continued process optimization and enhanced capacity efficiency driven by the growth of late-stage clinical and commercial projects. Our adjusted non-IFRS gross profit margin steadily improved 5.9 percentage points year-over-year, reaching 52.3%. Our Small Molecule Drug Discovery (R) business continues to generate downstream opportunities. In 2025, we have successfully synthesized and delivered over 420,000 new compounds to our customers. Meanwhile, 310 molecules were converted from R to D in 2022 (sic) [ 2025 ]. As we continue to strengthen the capabilities of our integrated CRDMO platform, we consistently enhance the internal conversion of molecules at different stages. Our Small Molecule D&M business remains strong, and the Small Molecule CDMO pipeline continued to expand. In 2025, Small Molecule D&M business revenue grew 11.4% year-over-year to RMB 19.92 billion. Meanwhile, the company continued to build small molecule capacity. In 2025, our Changzhou, Taixing and Jinshan API sites all successfully passed FDA on-site inspections with no single observation. By year-end, total reactor volume of small molecule APIs reached over 4,000 cubic meters. WuXi TIDES, our New Modalities business, sustained rapid growth. With the sequential ramp-up of new capacity released in 2024 and 2025, TIDES' revenue almost doubled to reach RMB 11.37 billion in 2025. As of year-end, TIDES' backlog grew 20.2% year-over-year. TIDES' D&M customers increased 25% year-over-year and its number of molecules increased 45% year-over-year. In September 2025, we completed Taixing peptide capacity construction ahead of schedule. The company's total reactor volume of Solid Phase Peptide Synthesizers has reached over 100,000 liters. Next page, please. So driven by Following the Molecule and Win the Molecule strategies, WuXi Chemistry's Small Molecule CRDMO pipeline efficiently converts and captures high-quality molecules and delivering sustained business growth. This reflects our customers' strong trust in our technical capabilities, our service efficiency and our quality system. In R stage, we delivered more than 420,000 new compounds in 2025, representing a significant scale. At the same time, the complexity of these molecules continue to increase, demonstrating the sustained demand from early-stage R&D customers for high-quality services. Building on this strong foundation, we continue to enhance the synergy between our R and D capabilities by strengthening the conversion of molecules from R to D. The new compounds synthesized in R stage serve as a continuous funnel, driving downstream demand for our D&M services. Moving to the D&M stage, we added 839 molecules to our pipeline in 2025 with 310 of them converted from R to D. As of year-end, our Small Molecule D&M pipeline reached 3,452 molecules, including 53 (sic) [ 83 ] commercial projects, 91 in Phase III, 377 in Phase II and 2,901 in Phase I and preclinical. Notably, commercial and Phase III projects increased by 22. As our late-stage pipeline grows, the complexity and the quality of molecules continue to grow. This deepens our collaboration with customers and lays a solid foundation for sustained long-term growth. Next page, please. Our TIDES business has maintained rapid growth over the past few years. So in 2025, TIDES' revenue grew a strong 96% year-over-year to reach RMB 11.37 billion, nearly double. We have been continuously enhancing our capabilities and capacity to better meet customer demand. Now I will hand over to our Co-CEO, Dr. Steve Yang, to talk about WuXi Testing and WuXi Biology. Steve, please. Qing Yang: Thanks, Minzhang. Please turn to Slide #14. In 2025, WuXi Testing revenue returned to positive growth, increasing 4.7% year-over-year to RMB 4.04 billion, of which revenue from drug safety evaluation service grew 4.6% year-over-year, maintained its leadership position in Asia Pacific. Adjusted non-IFRS gross profit margin declined year-over-year as the impact of market pricing were gradually reflected in revenue through backlog conversion. However, with our differentiated capabilities and enhanced operation management, margins continue to improve sequentially quarter-over-quarter. We actively enable customers in global licensing deals, supporting nearly 40% of the successful out-licensing projects from Chinese customers since 2022. Our new modality business continued to expand with revenue contributions exceeding 30% in 2025, maintaining a leading position in multiple areas. Meanwhile, we continue to advance automation. Our DMPK team launched a proprietary all-in-one compound identification software solution, improved efficiency by 80% (sic) [ 83% ] in spectral interpretation and metabolite identification for nucleic acids and peptide test articles. Finally, in 2025, our Suzhou and Shanghai facilities successfully passed multiple regulatory inspections by FDA, by OECD, NMPA and PMDA. This underscores the high quality of our GLP operations and our quality systems. Let's turn to Slide #15, please. WuXi Biology follows the science, strategically builds differentiated capabilities in emerging areas, and we actively expand our global customer outreach. This allows us to efficiently generate downstream opportunities for our CRDMO model, continuously contributing more than 20% of our new customers. We efficiently enable global customers through our integrated in vitro and in vivo drug discovery capabilities for biology, the cross-regional collaboration, end-to-end point in emerging areas. WuXi Biology revenue resumed positive growth in 2025, growing 5.2% year-over-year to RMB 2.68 billion. The adjusted non-IFRS gross profit margin was 36.9%, down 1.9 percentage point, reflecting market pricing dynamics. We closely follow market conditions with a flexible pricing strategy, maximize our value in generating downstream opportunities. Our revenue growth was driven by advancement in our comprehensive in vitro screening platform and enhanced in vivo pharmacology capabilities. Our non-oncology in vivo business maintained a competitive edge, serving as a key growth contributor to WuXi Biology. Our new modality business continued the momentum with the revenue contribution exceeding 30% in 2025, supported by rapid new customer expansion in multiple areas. Now I would like to turn the call to our CFO, Florence, to discuss our financial performance. Florence, please? Florence Shi: Thank you, Steve. Let's turn to Slide 17. We would like to recap on the company's financials. In 2025, we beat our full year guidance and achieved record high performance in revenue, profit and cash flow, all aspects. Thanks to the visibility provided by our CRDMO business model, we proactively planned our capacity and capabilities. As new capacity ramped up efficiently quarter-over-quarter, we timely supported the growing demand from late-stage clinical and commercial projects. Meanwhile, we continued to drive quality growth, strengthen our technological expertise and improve operational efficiency. In 2025, our adjusted non-IFRS gross profit reached RMB 21.89 billion. Adjusted non-IFRS gross profit margin expanded to 48.2%, up 6.6 percentage points year-over-year. Adjusted non-IFRS net profit grew 41.3% to RMB 14.96 billion. Correspondingly, adjusted non-IFRS net profit margin improved by 5.9 percentage points to reach 32.9%. Net profit after deducting nonrecurring items grew 32.6% to RMB 13.24 billion and net profit attributable to the owners of the company surged 102.6% (sic) [ 105.2% ] to RMB 19.15 billion (sic) [ RMB 19.19 billion ]. Building on our robust business growth, we sharpened our focus on the CRDMO core business and continue to enhance our investment management capabilities. This resulted in pretax investment gains exceeding RMB 8 billion in 2025. further boosting our net profit attributable to the owners of the company. Consequently, our diluted earnings per share reached RMB 6.61 (sic) [ RMB 6.63 ], more than doubling year-over-year. Please turn to Slide 18. With sustained business growth, particularly the rapid increase in late-stage clinical and commercial projects, combined with enhanced operational efficiency and financial management, our 2025 adjusted operating cash flow reached a record high of RMB 16.67 billion, growing 39.1% year-over-year. This fully demonstrates the sustainable momentum driven by our high-quality molecules and projects. We continue to actively advance our global capacity expansion as planned with CapEx payment of RMB 5.54 billion in 2025. Now I'd like to hand over to Minzhang to share the company outlook. Minzhang, please. Minzhang Chen: Okay. Please turn to Slide 20. Okay. We remain focused on our unique integrated CRDMO core business, accelerating the growth of our global capabilities and capacity. We provide highly efficient and exceptional services to our customers, benefiting patients worldwide and driving long-term growth. We will also drive the O in our CRDMO model operations. By driving optimized management and operations, we aim to continuously improve, improving efficiency and strengthen organizational resilience to navigate dynamic market conditions. With customers' ongoing demand for enabling services, our CRDMO business model and management execution, the company is confident to sustain rapid business growth. We expect total revenue to reach RMB 51.3 billion to RMB 53 billion in 2026, with continuing operations revenue growing 18% to 22% year-over-year. By continuously driving quality growth, realizing scale efficiency and enhancing operational excellence, while proactively managing new capacity ramp-up and exchange rate challenges, we are confident in maintaining a stable and resilient adjusted non-IFRS net profit margin in 2026. Finally, CapEx for 2026 is expected to reach RMB 6.5 billion to RMB 7.5 billion. Along with business growth and efficiency improvements, we expect adjusted free cash flow to reach RMB 10.5 billion to RMB 11.5 billion. Next page, please. While accelerating the growth of our global capacity and capabilities, we remain committed to rewarding shareholders and actively upholding the company's value. The Board proposes a cash dividend distribution plan totaling a record RMB 5.7 billion in 2026. Specifically, we plan to maintain the 30% annual cash dividend payout ratio, expecting to distribute 2025 dividend of RMB 4.71 billion, while continuing our interim dividend plan of RMB 1 billion in 2026. To continuously attract and retain top talent, we proposed the 2026 H-share incentive Trust plan. Under this plan, no more than HKD 1.5 billion worth of H-shares will be granted if 2026 revenue reaches RMB 51.3 billion. An additional HKD 1 billion worth of H-shares will be granted if revenue reaches RMB 53.0 billion or above. This aims to strengthen management resilience and align our team for long-term shared growth. Importantly, all underlying H-shares will be purchased in the open market at prevailing market prices with no dilution to existing shareholders. Thanks for your attention, and we are now open for questions. Laurence Tam: Thanks a lot, Minzhang Chen, Steve Yang, Florence and also Ruijia. We will now enter the Q&A session. [Operator Instructions] So let me start off with the first question. First of all, let me congratulate management on a fantastic 2025 and a very positive 2026 guidance. Obviously, this year, there's a lot of uncertainty in the markets and also, we have experienced a lot of volatility. Despite that, the company delivered a very positive 2025 and a continuing operations revenue growth range expected for 2026 of 18% to 22%, which means that the midpoint is 20% growth in 2026 for continuing operations, which gives investors a lot of visibility. One of the key concerns this year from investors for the CXO industry is the exchange rate. Year-to-date, the U.S. dollar has depreciated against the RMB. So the first question is, in the context of this renewed guidance, how does management think about the impact of currency exchange? And what is your outlook or guidance for each of the 3 business units? Ruijia Tang: Yes, thanks. We do consider the FX movement and the challenges. So I also would like to appreciate everyone who recognize, even with not only the FX, but with all the complexity and the volatility in the macro environment we are navigating, every company is navigating today, we still provide a very clear and narrow guidance range of our total revenue, which is only about like 3% of our top line, at the beginning of the year, which is pretty consistent with our historical practice. Basically, that reflects the strong visibility in our CRDMO business model and our confidence in our execution capabilities, same as the management capabilities on the FX movement as well. Laurence Tam: Thanks a lot, Ruijia. So the second question is a little bit on geopolitics. Obviously, the situation in the Middle East has escalated in recent weeks, and investors are worried about the rise in oil prices and the impact on raw material costs. Your margins improved significantly last year. And this year, the guidance is that margins would be stable. How would you think about the impact of geopolitics and oil prices on your margins going forward? Florence Shi: Yes, I will comment on the cost fluctuations that could be impacted. So first of all, our global operations are running smoothly as usual, okay? We acknowledge there are potential risk to certain upstream raw material costs, but it takes time to transmit through the broader supply chain. We haven't seen any direct or quantifiable impact on our operations or cost, but we will closely monitor the situation and the market dynamics as everyone did. We have mature and diversified procurement network in place in past 25 years. On top of that, we are constantly optimizing our manufacturing process, driving operational efficiency, which helps us focus on the certainty of meeting the customer demands in need and remain committed to deliver exceptional services. Laurence Tam: Thanks, Florence. So we get to sell-side and investor questions now. So I will first start with 2 questions from Goldman Sachs, Chen Ziyi. So his first question is the company continued to be highly committed to TIDES' CapEx. So he would like to understand a bit more on the pipeline behind the CapEx budget beyond injectable peptides, which has been a key driver in the past 3 years? And what would be the next key modalities that could potentially be the new focus, for example, siRNA, antisense oligos, oral peptides or any new modalities that biopharma is thinking about at the early stages? Minzhang Chen: Well, so right now, there are many modalities. It's a combination. So there is no single modality that can replace all. So we have small molecules, we have peptides, and we have oligos, and we have all kinds of conjugates. But currently, the demand for peptides itself is so high, so we continue to build the capacity and to meet the market demand for the peptides. At the same time, we're also seeing oligonucleotide is growing. And although the market is still small, but we see that there are many, many molecules in the pipeline, and also it's going from rare disease now to a very broad to general disease. So the growth will be fast. And also small molecule. Now the molecules became more and more complex. So to manufacture, in large scale, very complex molecules, needed very technical capabilities as well as manufacturing capacities to meet the market demand. So we are doing all this. Laurence Tam: Thanks, Dr. Chen. So Ziyi's next question is there's been some debate on what will be the impact of pharma's announced big CapEx on building internal capacity, particularly in the U.S.? What is WuXi AppTec's view on that? Have you sensed any change on client outsourcing strategy in the past 6 to 12 months? Minzhang Chen: Yes. So in the pharmaceutical industry, historically, all the API drug products are manufactured internally. And then some of the work is done by the CMO, CDMO. And so this has a long history. So it's nothing new that the large pharma is also manufactured internally, nothing new. But we just committed continuously to improve our capabilities and to invest in capacities and provide the best service and meet the customer needs. Laurence Tam: Thanks, Dr. Chen. So the next few questions are coming from Michael Luo of CLSA. His first question is, can WuXi AppTec give us some color on the current utilization rate of the company's 4,000 cubic meter small molecule API capacity? And also, do you still have any plan to expand capacity in this area this year? Minzhang Chen: Yes. Our current capacity is highly utilized. And we have the -- well, because we don't really talk about the capacity for the -- we are building the capacity for small molecules, but actually, we have the land and we continuously build the small molecule capacities to meet the demand. So we grow double digit, over 11% last year, to almost RMB 20 billion for the Small Molecule D&M. So that means a lot of capacity. And this year, we expect accelerated growing from the Small Molecule D&M. So there will be more capacity. So we continue to build new capacity for small molecules. And if you go to our Taixing site, we have the land and we continue to build the new plants all the time. Laurence Tam: And his next question is, beyond obesity and diabetes-related projects, can management highlight any pipeline products or areas that may become meaningful contributors to revenue growth in the next 3 to 5 years? Minzhang Chen: Yes. So our business model is a CRDMO business model. So we have a very broad pipeline. So for example, currently, our D&M pipeline for small molecules, we have more than 3,000 molecules. And so, as a funnel, we continuously have the project moving to the late phase and the commercial projects. And many of those projects are very high-quality molecules. Clearly, GLP-1 right now has the most demand in terms of volume. But also, we have quite a few very promising high-quality molecules into the late phase and the commercial stage. For example, the PCSK9 molecule, autoimmune molecule, pain, neuroscience. So we have a number of that. Just the number I gave in the Investor Day last year, 2024, the Drug Hunter named top 10 molecules, and we work on 8 of them. Again, just a few days ago, they published 2025 top 10 molecules, and we work on 7 of them; and the best-selling small molecules, the top 10, we work on 4 of them. So we work on many of the high quality as big large volume molecules. But of course, right now, GLP-1 is still the #1, no doubt about that. Laurence Tam: Thank you. His next question is, can management share how you're thinking about CapEx allocation this year, in particular, which business areas or capacity building are likely to be the key focus going forward? Florence Shi: Yes. I think the CapEx spending really reflects our business model and our global expansion strategy. So a majority of our CapEx spending will be put on the CDMO capacity expansion, because our business generates more and more downstream D&M projects. And also, we're accelerating our global expansion in U.S., Europe and also the Middle East in future. But at the same time, we are also expanding the capacity for both small molecule and new modalities in China as well. Laurence Tam: Okay. Thank you, Florence. His last question is, given the recent volatility in the Middle East, has the company's strategic approach to the region changed in any way? And also which types of business or operations, if any, do you see as potentially suitable for the Middle East over time? Qing Yang: Yes, our global capacity and capability building is our long-term strategy. Clearly, that will continue. And we have announced a memorandum of understanding with government agencies with Saudi Arabia late last year. And our strategic initiatives in Saudi Arabia continue to proceed. We are engaging with relevant stakeholders and develop tactical plans for the next step. So that continue. Our CRDMO business model and our globalization of our capacity and capability is really the key to our continued growth, and we will continue to build the global capacities. In terms of what suitable area in Saudi Arabia, we are going through a deep dive with the advisory of local strategic advisory firms to understand local regulatory requirement and what are the suitable capabilities we should localize. Based on our preliminary feedback, clearly, there are lots of opportunities. We will likely start in the discovery space and then gradually expand to other part of our global platform. Laurence Tam: Thanks, Dr. Yang. Next, we have 3 questions coming from CICC's Wanhua. First question is, what is the current capacity utilization rate of the company's solid phase peptide capacity, which now exceeds 100,000 liters? What level of utilization does the company expect to reach in 2026? Are there any plans for further capacity expansion? Minzhang Chen: Yes. The peptide capacity currently is highly used. So as a result, actually, we just started 2 new TIDES buildings, so for both peptide and oligo, we just started 2 TIDES building construction in our Taixing site. In the meantime, we also built a new plant in Singapore for TIDES. So in short, yes, our capacity is highly utilized right now, and we are building new capacities to meet the growing demand. Laurence Tam: Thank you, Dr. Chen. Her second question is, what is the progress of U.S. and Singapore sites? And is it currently in line with expectations? How will these new facilities coordinate with the company's domestic capacity? And has there been any change to the expected time line for commencing operations? Minzhang Chen: Both projects are on time, on schedule and on budget. So our U.S. plant, which is in Middletown, Delaware, is for drug products. So it will have both oral solid dosage and injectables once completely operational. So hope Q4 this year, we're going to start the operation of the oral solid dosage, and a year later, Q4 next year, we're going to start the injectable business. Yes, this is the U.S. plant side. For the Singapore side, it's also on schedule and on budget, and the first plant will be operational next year, '27, and that is for API. So this way, then we will have a dual supply chain for the customers, so they can either get made in China or made outside China, which is in Singapore, for API. On the drug product, U.S. side is mainly for the U.S., North American market customers. And we also have a drug product facility in Switzerland, which is mainly for the European market. Laurence Tam: Thanks, Dr. Chen. Her last question is, the company has seen a significant increase in inventory. Is this mainly related to stocking for large orders? When are the corresponding orders for these inventories expected to be recognized as revenue? Florence Shi: Yes. I think this truly reflects our business model of our CRDMO business. Our inventory is being built based on the orders in hand. At the same time, as we have the capabilities to capture the high-quality molecules, which is more complex and takes longer manufacturing process, so that's why the inventory growth is higher than the revenue growth. I think that's a further validation of the high-quality growth trajectory of our business. Laurence Tam: Thanks, Florence. So next, we'll go back to Ziyi Chen from Goldman Sachs. He has a question on AI. So in the past 2 months, U.S. CRO company share prices have been hit hard by concerns on AI and how it could pose competitive pressure on pricing or volume for lab services and clinical services. What is WuXi AppTec's view on the impact of AI, particularly on its Testing and Biology segments? Qing Yang: So first of all, our Biology and Testing business remain robust, both in terms of the return to positive growth, as we reported, and also our outlook for 2026. We actually believe AI in combination with human intelligence could be a huge enabler, not only for our industry, but specifically for our company, and help us to increase efficiency, at the same time, increase our ability to anticipate and forecast the future in terms of customer needs and in terms of capacity utilization. This is an area we have invested heavily in terms of our ability to using operational data to make our animal room scheduling, study scheduling, reactor cleaning as well as other aspects of work become more efficient. The example we cited during the presentation on spectral resolution and interpretation for our DMPK team is a good sign. That situation is obviously very different from as we have seen in other sectors such as in enterprise software. Secondly, we do believe our wet lab capabilities to generate massive data and with high quality and consistency is actually very important for companies who are interested to build a new model and algorithms to increase their prediction capabilities. And we had opportunity to work with many leading companies in this space. And so while they may have models that have the potential to generate new hypothesis, at this stage most of those models require high-quality data, and we are uniquely positioned to provide those data. So this is actually a driver to more business for our Biology and Testing business. And finally, we believe, for our CRDMO model, with more advancement in ability to unlock either target space or come with new hypothesis to design molecules, it will only accelerate the flow of new ideas into project start, and that will ultimately benefit the funnel, the CRDMO funnel, in a world where research and discovery become even more globalized and decentralized. Laurence Tam: Thanks, Dr. Yang. So now we have 2 questions coming from Chen Chen of UBS. First, U.S. FDA has announced that it plans to drop the standard requirement of 2 Phase III or pivotal trials. Instead, the FDA's default position will be for Phase III trial for drug approvals. Do you think that it would accelerate drug approvals and benefit your new orders growth? Qing Yang: I will start and then invite Minzhang for additional comments. So first of all, any regulatory streamlined process will benefit from patients. Secondly, any acceleration in clinical development potentially will drive more demand and more timely demand for drug substance and drug product to supply clinical trial. And if that shortens clinical development time frame, it will help actually accelerate the commercialization drive. So we think all of those initiatives that shorten the time to patients will be beneficial for our CRDMO model. Minzhang, any additional comments? Minzhang Chen: No, I think that's well said. Laurence Tam: Thank you, Dr. Yang, Dr. Chen. So her next question is, one of your biggest clients announced a 10-year plan to invest USD 3 billion in expanding its oral dosage supply chain in China, focusing on oral GLP-1 manufacturing. And one of your peers, a CDMO, has received part of this investment, actually USD 200 million initially. Do you think you can also benefit from this multinational investment in China and to what extent? Minzhang Chen: Well, so we all know that GLP-1 drugs, no matter it's peptide or small molecule, has a huge demand and so this announcement, this investment just further proved that, yes, the demand is very high for the molecule. So because the demand is very high, and we are the major player in this field, so we believe we will benefit from the opportunities. I don't want to comment on the specific partnership or collaborations, but -- so the USD 3 billion investment, right now it's only USD 200 million, so we have to spend the rest. Laurence Tam: Thanks, Dr. Chen. So the next question comes from Huang Yang of JPMorgan. What is WuXi AppTec's positioning in oral small molecule GLP-1 CDMO business? Minzhang Chen: Well, we had a double-digit growth last year, and we are accelerating the growth for the small molecule this year. And part of the contribution of this growth is from the GLP-1 small molecule. Laurence Tam: Okay. And his next question is, it seems that Small Molecule D&M business will have better growth in 2026 versus 2025. What would be the main drivers for that? Minzhang Chen: Well, it's just demand, high demand, because the drug will be approved this year, I believe. Laurence Tam: Okay. Next, we have 2 questions coming from an investor from Franklin Templeton. "Hi, this is Harry from Franklin Templeton. Congrats on the robust performance. So firstly, what is the revenue breakdown? What is the mix do you see? And how do you see the geographical mix changing? Growth, obviously, is very strong in the U.S., while Europe and China are showing some recovery." So let's first address this question. Minzhang Chen: Florence, do you want to comment on the mix? Florence Shi: Okay. Yes. I think because we follow the customer, follow the molecule, and follow the science. So the geographic revenue growth really demonstrates where the innovation comes from, where's the customer need, our capabilities and the capacities. We do see the strong growth from across all the regions, and we believe that we can better deliver and execute in 2026. Minzhang Chen: Thanks, Florence. Yes, we see the PO growth across all the regions for 2025. So we believe that's growth for all the regions in 2026, but particularly the growth was strong last year in U.S. So that's why the percentage of the other regions relatively becomes smaller, but we expect the growth for all regions this year. And the small decline in China and Europe last year was mainly due to the delivery schedule of some large projects, but the growth momentum is there. Florence Shi: Yes. I think that's basically proof we have very good position everywhere. And we continue to see the strong growth in U.S., in China, and Europe and all the other regions. Laurence Tam: Okay. And his next question is on the TIDES business. How do you see sustainability of its growth? Minzhang Chen: Yes. So the largest product that we are making, the demand will continue to grow in the next many years by market forecast. So the demand will continue to grow. We also are working on quite a few late phase, very promising projects, which potentially could be big products as well. One more step back, we are a CRDMO, so we have a very big pipeline, not only in small molecules, but also in peptides and also in oligonucleotides. We have a pipeline and that pipeline continues to funnel the projects into the late phase and commercial projects. And that's where our sustained long-term growth comes from. Laurence Tam: Okay. And on oligonucleotides, what is WuXi AppTec's differentiation from the other oligo CDMOs or manufacturers? Minzhang Chen: Yes. So like all other modalities like peptides small molecule, if you can find a place that has quality, speed, cost, technical capability and the capacity, you tell me. So I think it's the same. So we put all this together, and I think that's our unique advantage. Laurence Tam: And his last question is, can you give us some color on the general time line that it takes for a new facility to be built and to contribute in a meaningful way to earnings? Minzhang Chen: So in China, we can do that in less than 12 months from start to fully operational. Laurence Tam: So we have 2 questions next coming from Nomura's Zhang Jialin. So firstly, what is the range for the TIDES business gross margin? Do we calculate over 60%, is this about the right range? And how should we think about the margin trend for TIDES? Minzhang Chen: Well, I don't believe we disclose the margin for TIDES. Florence, can you answer that? Florence Shi: Yes. We don't disclose the specific margin. But I think the margin naturally reflects our capabilities, the capacities and the value creation to the customers. Laurence Tam: Okay. His next question is, how is the current Middle East situation or conflict impacting the company's investment view in Saudi Arabia in the midterm? Qing Yang: As I already mentioned earlier, we don't see any near-term disturbance changing our long-term strategy. Our long-term strategy is strengthen CRDMO model, build global capacity wherever there is a customer need. And we're continually engaging with stakeholders in Saudi Arabia and proceed with evaluation of different localization options. Those continue to proceed based on our plan. Laurence Tam: Thanks, Dr. Yang. So next, we'll go to Citi's John Yung. You initially guided continuing operations revenue to grow 10% to 15% for 2025, and you delivered 21% plus. Now the same guidance for 2026 is a range of 18% to 22%. Should we also expect this guidance to be prudent and that you are confident to beat it? Florence Shi: Rather than calling our guidance prudent, I would view it as responsible to the market, right? And I appreciate you track our records. We are navigating a lot of the complex and volatile macro environments today, but we do have the confidence to execute the guidance we provide to the market. Of course, we will closely monitor and give the updated time line to all the investors if we see any different situation. Laurence Tam: Thank you, Florence. So next, we'll go back to Ziyi Chen's question. So 2026 guidance has been very clear and exciting. He would like to understand the growth sustainability a bit more. What is the reasonable growth expectation beyond 2026, when the TIDES business will be slowing down given the large base and key product cycles. What could be the key growth driver beyond 2026? Florence Shi: I think we have the confidence to keep the sustainable growth. And basically, we follow the molecules, and the CRDMO model really gives us the confidence. We will continuously capture the high-quality molecules and follow the science. And we do have the capabilities and capacities to better serve our customers. Laurence Tam: Okay. And going back to Nomura's Zhang Jialin, he has a follow-up question. Can management help us understand the competitive landscape of siRNA CRO space and the growth outlook? How much will it contribute to the current TIDES segment? Minzhang Chen: Yes. So there are many players out there that have provided the CDMO service on the oligonucleotides, specifically, I think siRNA. And also siRNA has a very large percentage in our pipeline as well. Like I said, we continue to focus on the service we provide, and we continue to focus on both the quality service, the capacity, the speed and the competitive cost. So I think with our unique advantage, we just focus on providing the best service and win the competition in the end, just like we do in every modality in our business. Laurence Tam: So next, we have an investor question. WuXi AppTec has RMB 42-plus billion of backlog expected to be converted in 2026, but you're guiding for RMB 51.3 billion to RMB 53 billion of total revenue. So that means roughly an extra RMB 9 billion to RMB 11 billion will need to come from new orders signed and delivered within the year. In the current environment, with trade policy uncertainty, how confident are you in that year booking assumption? And has Q1 2026 order activity remained consistent with that trajectory? Florence Shi: Yes. I think you're right. You noticed. Actually, in our total backlog, it is expected to convert -- like 70% of our total backlog is expected to convert into the revenue in 2026, which is within the next 12 months. I think our ability to convert orders into revenue with speed and efficiency actually reflects our strong execution capabilities across our whole organization. And if you compare with the historical number, actually the percentage is significantly improved, which also demonstrates we have more and more late-stage clinical and commercial projects on hand. That really enhances the near-term visibilities and the certainty of our growth trajectory. As I mentioned, with all the efforts we are making, we do have the confidence to deliver our guidance. And of course, we always try to beat it, right? So I don't see there is any big concern about the new orders coming in the conversion. Laurence Tam: Okay. Great. Thanks, Florence. So last question, let me wrap up by touching a bit on geopolitics. We haven't really talked about the 1260H list from the U.S. Pentagon. Obviously, it was released shortly in February and then withdrawn within like an hour. And a lot of investors looked at that list and saw WuXi AppTec being on there together with a lot of big Chinese companies. Does the company have anything to say on that? Obviously, Sino-U.S. relations were moving in a positive direction in the months prior to that with obviously, the BIOSECURE bill not naming the WuXi companies. What is the company's view on relations between the 2? Qing Yang: Yes, I'll take that question. So as you mentioned that we have seen that in February the list was put on and withdrawn. So at this time, the final 1260H list for 2026 has not been officially published. And there's no definitive timetable at this time as to when this is going to publish, no one actually knows, and we won't make any prediction or speculations for the timing of the U.S. government's actions. At the same time, they are very confident that WuXi AppTec shall not be included in the 1260H list. We are a publicly traded company listed in Hong Kong and Shanghai with a transparent corporate governance. The company is not owned or controlled by any government or affiliated with any government or military organization. So at this moment, the company will continue to monitor the situation and take all necessary actions to correct any misinformation and clarify any misunderstandings. And in terms of BIOSECURE Act, you mentioned that -- we all know that the bill was passed as part of the NDAA at the end of last year. Since then, there's no recent development on the implementation. So we'll continue to monitor. Laurence Tam: Thank you very much. So we're coming up to the time limit. So let me pass it back to management to do concluding remarks. Minzhang Chen: All right. Thank you all for joining today's earnings call. So 2025 is the 25th anniversary of WuXi AppTec. So for the past 25 years, WuXi AppTec has been dedicated to lowering the barriers to R&D and advancing health care innovation worldwide. Entering 2026 with a sharpened focus on our core CRDMO strategy, we are accelerating the growth of our global capabilities and capacities, further improving production and operational efficiency and delivering greater value for customers and shareholders. Staying true to our founding aspiration, we will remain committed to doing the right thing and do it right, enabling our partners to deliver life-saving therapies to patients in need and advancing our vision that every drug can be made and every disease can be treated. Thank you all. Laurence Tam: Thank you very much to WuXi AppTec's management and the IR team. This will conclude the presentation. Thank you all for joining. Florence Shi: Thank you. Ruijia Tang: Thank you. Qing Yang: Thank you. Laurence Tam: Bye.
Operator: Good evening, and good morning, ladies and gentlemen, and thank you for standing by for 17EdTech's Fourth Quarter 2025 and Full Year Earnings Conference Call. [Operator Instructions] As a reminder, today's conference call is being recorded. I'll now turn the meeting over to your host for today's call, Ms. Lara Zhao, 17EdTech's Investor Relations Manager. Please proceed, Lara. Lara Zhao: Thank you, operator. Hello, everyone, and thank you for joining us today. Our earnings release was distributed earlier today and is available on our IR website. Joining us today are Ms. Sishi Zhou, Chief Financial Officer; and myself, Investor Relations Manager. Sishi will walk you through our latest business performance and strategies and I will discuss our financial performance in more detail. After the prepared remarks, Sishi will be available to answer your questions during the Q&A session. Before we begin, I'd like to remind you that this conference call contains forward-looking statements as defined in Section 21E of the Securities Exchange Act of 1934 and the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon management's current expectations and current market and operating conditions and relate to events that involve known or unknown risks, uncertainties or other factors, all of which are difficult to predict and many of which are beyond the company's control. These risks may cause the company's actual results, performance or achievements to differ materially. Further information regarding these or other factors -- other risks, uncertainties or factors is included in the company's filings with the U.S. SEC. The company does not undertake any obligation to update any forward-looking statements as a result of new information, future events or otherwise, except as required under applicable law. I will now turn the call over to our Chief Financial Officer, to review some of our business development and strategic direction. Sishi? Sishi Zhou: Thank you, Lara. Hello, everyone. Thank you all for joining us on our fourth quarter and full year 2025 earnings conference call. Before we begin, I would like to note that the financial information and the non-GAAP numbers in this release are presented on a continuing operational basis and in RMB, unless otherwise stated. Let me begin with our latest business update. In the fourth quarter of 2025, we continued to deliver steady progress in our core business with top line growth on a year-over-year and quarter-on-quarter basis. Our school-based subscription model business continued to expand, contributing a growing share in total revenue, emerging as a key contributor during the quarter. Meanwhile, we successfully launched our new consumer-facing product, [ ETIC, ] which is closely aligned with the National AI plus education initiative. Leveraging the brand recognition and user trust cultivated over the past decade. Our new AI membership products have achieved strong presale orders and received highly positive market feedback since its launch, demonstrating its robust growth prospects in the quarters ahead. Notably, the robust preseale demand for our new products generated a significant increase in free cash flow. At of quarter end, we maintained a healthy cash balance of RMB 407 million, reflecting the promising trajectory of our new AI-powered offering and the positive expectations for future cash flow. Now let me go into more details. In the fourth quarter of 2025, we recorded net revenues of RMB 38.9 million an increase of 94.6% on a quarter-on-quarter basis and a 6.4% growth on a year-over-year basis, driven by the growing contribution of recurring revenue under subscription model as well as our consistent commitment to cost control. Gross was restored to a normalized level of 46.1% in Q4, a 12.5 percentage point increase on a year-over-year basis, benefiting from sustained efficiency improvements, our net loss narrowed by 16.8% year-over-year. We also generated positive net operating cash inflow in the quarter driven by the strong momentum of our new [ CN ] business and continuous improvement in operational efficiency. During the quarter, our school-based subscription model business maintained positive progress, contributing a growing share of total revenue. The increase in net revenues from this segment reflects its recurring nature as it continues to scale effectively. The steady progress of our school-based subscription business has not only strengthened our financial health, including gross margin and other key metrics, but also helped us reach a broader base of potential users and enhanced brand influence, laying a solid foundation for the launch of our [ CN ] business. In response to the national initiative of embedding AI throughout the entire educational process and guided by our mission to make learning a wonderful experience, during the quarter, we successfully rolled out AI personalized learning membership product, [ ETIC ] targeting [ CN ] users. Levering to the user trust built over years, strong brand endorsement from our district level and school-based projects as well as mature smart hardware capabilities and solid AI foundation with new AI membership product has garnered a strong market enthusiasm and a robust preorder volume. In the design of this product, we are committed to enabling users to achieve a more personalized, effective and enjoyable learning experience in less time. It deeply integrates our hardware and software capabilities together with the exclusive content resources we have built over the past decade. Our Smart Pen captures full process writing data while respecting traditional play and paper habits. It efficiently digitalized handwritten notes and exercise responses, visualizing users thinking process rather than simply uploading final answers. By visualizing these thinking patterns, we are able to deliver personalized learning diagnostics, generate AI-powered customized practice nodes and intelligently recommend similar learning exercises, enabling highly efficient and focused learning practice. Users' own notes taken with this [indiscernible] with support for custom tag, categorization and quick search. As a result, users can quickly identify their learning areas for improvement without spending extra time manually organizing paper notes comparing practice notes or searching for relevant problems. In addition, our AI panel provides study supervision based on personalized diagnostics and over tailored learning plans aligned with the local learning schedules and individual progress. This allows users to focus on their growth areas and improve efficiently. These personalized practice and planning capabilities are backed by our 10 years of deep insight into local learning profiles supported by massive data from large-scale regular full scenario usage across our platform. The product also features interactive tools, including AI Q&A and AI transmission, et cetera, along with a suite of value-added learning resources. Notably, we have introduced Toby Smart Rabbit, an intelligent learning companion that provides emotional support through natural voice interaction. It reminds users to study, offers encouragement and makes the learning experience warmer and more engaging, helping users stay consistent with the personalized learning journeys. Looking ahead, we will continue to explore innovation practices in AI plus education and steadily reiterate and upgrade our products. Our business segments, serving [ GN, BN and CN ] users will grow in synergy as we further strengthen our brand influence and enhance user value. The above concludes the business update. Now I will turn the call over to Lara to walk you through our latest financial performance. Thank you. Lara Zhao: Thanks, Sishi, and thank you, everyone, for joining the call. I will now walk you through our financial and operating results. Please note that all financial data I talk about will be presented in RMB terms. We are pleased to announce healthy financial results for the first -- for the fourth quarter of 2025 with top line growth of 94.6% on a quarter-on-quarter basis. Gross margin for the fourth quarter of 2025 was 46.1%, representing a 12.5 percentage point increase on a year-on-year basis compared to the same period last year. Meanwhile, our continued focus on operational efficiency resulted in narrowing losses in the fourth quarter and the fiscal year of 2025. Despite an increase in sales and marketing expenses in support of the launch of our new AI-powered consumer business, we achieved a reduction in total operating expenses for the fourth quarter and full year of 2025 by 10.9% and 24.3%, respectively, resulting in narrowing losses by 16.8% and 20.0%, respectively, on a GAAP basis. Next, I will walk you through our fourth quarter financials in greater detail. Net revenues in the fourth quarter of 2025, we recorded net revenues of RMB 38.9 million compared with RMB 36.6 million in the fourth quarter of 2024, representing a 6.4% increase on a year-on-year basis which was primarily due to the increase in net revenues from the school-based subscription model business, which is demonstrating its recurring nature as it continues to scale. Cost of revenues for the fourth quarter of 2025 was RMB 21.0 million, USD 3.0 million, representing a year-over-year decrease of 13.6% and from RMB 24.3 million in the fourth quarter of 2024, which was mainly due to the fewer district level project deliveries for our teaching and learning SaaS offerings as a result of a new -- as a result of growing proportion of recurring revenue and the subscription model that requires fewer hardware and software deliveries. Gross profit for the fourth quarter of 2025 was RMB 17.9 million, USD 2.6 million compared with RMB 12.3 million in the fourth quarter of 2024. Gross margin for the fourth quarter of 2025 was 46.1% compared with 33.6% in the fourth quarter of 2024, representing a 12.5 percentage point increase on a year-on-year basis. The increase was largely attributable to higher contribution from the school-based subscription business with higher margins as well as enhanced operating leverage as our subscription model business growth. Total operating expenses for the fourth quarter of 2025 were RMB 72.5 million which is USD 10.4 million increased RMB 8.9 million of share-based compensation expenses representing a year-over-year decrease of 10.9% from RMB 81.4 million in the fourth quarter of 2024. Sales and marketing expenses for the fourth quarter of 2025 was RMB 40.2 million, including RMB 1.7 million of share-based compensation expenses, representing a year-over-year decrease of [ 99.0 ] from RMB 20.2 million in the fourth quarter of 2024. This was primarily attributed to the increased market workforce and related expenses in support of the launch of our new AI powered consumer business. Research and development expenses for the fourth quarter of 2025 were RMB 16.3 million, USD 2.3 million, including RMB 2.9 million of share-based compensation expenses representing a year-over-year decrease of 3.8% from RMB 17.0 million in the fourth quarter of 2024. The decrease was primarily due to the decrease in the share-based compensation compared with the same period last year. Generating and administrative expenses for the fourth quarter '25 were RMB 16.0 million, USD 2.3 million, including RMB 4.3 million of share-based compensation expenses, representing a year-over-year decrease of 63.8% from RMB 44.2 million in the fourth quarter of 2024. This was primarily due to the decrease in share-based compensation and the effect of one-off expenses in impairment loss provision in the fourth quarter of 2024. Loss from operations for the fourth quarter of 2025 was RMB 54.86 million, USD 7.8 million compared with RMB 69.1 million in the fourth quarter of 2024. Loss from operations as a percentage of net revenues for the fourth quarter of 2025 was negative 142 -- 140.2% compared with negative 188.8% in the fourth quarter of 2024. Net loss for the fourth quarter of 2025 was RMB 53 million compared with net loss of RMB 63.7 million in the fourth quarter of 2024. Net loss as a percentage of net revenues was negative 160 -- 136.1% in the fourth quarter of 2025 compared with negative 174.2% in the fourth quarter of 2024. Adjusted net loss non-GAAP for the fourth quarter of 2025 was RMB 44.1 million, which is USD 6.3 million compared with adjusted net loss non-GAAP of RMB 40.1 million in the fourth quarter of 2024. Adjusted net loss, non-GAAP, as a percentage of net revenues was negative [indiscernible] in the fourth quarter of 2025 compared with negative 109.5% of adjusted net loss as a percentage of net revenues in the fourth quarter of 2024. Please refer to the table captioned reconciliations of non-GAAP measures to the most comparable GAAP measures at the end of this press release, for reconciliation of net loss under U.S. GAAP to the adjusted net loss non-GAAP. Cash and cash equivalents, restricted cash and term deposits were RMB 407.0 million which is USD 58.2 million as of December 31, 2025, compared with RMB 359.3 million as of December 31, 2024. Going forward, we will continue to strengthen our core strength with the advancement of AI capabilities serving as a key driver of our sustainable growth. At the same time, we will further enhance cross-business synergies and reinforce our business resilience to support long-term development. These integrated efforts enable us to combine our respective strengths and deliver consumer-centric offerings that truly resonate, creating a sustainable growth pathway that generates lasting value for both learners and shareholders. With that, we conclude our prepared remarks. Thank you. Operator, we are now ready to begin the Q&A session. Operator: [Operator Instructions] I'm showing no questions. I'll now turn the conference back to Ms. Lara Zhao for closing comments. Lara Zhao: Thank you, operator. In closing, on behalf of 17EdTech's management team, we'd like to thank you for your participation on today's call. If you require any further information, please feel free to reach out to us directly. Thank you for joining us today. This concludes... Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect your lines.
Operator: Ladies and gentlemen, welcome to the 2025 Results and 2026 Outlook Conference Call. I am Mathilde, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Stefan Weber, CEO. Please go ahead. Stefan Weber: Thank you, Mathilde, and good afternoon, everybody in Europe. Good evening, everybody in Asia, and good morning and early 6:30, have a good starting to the day from Dana Point, California. As usual in the past years, we are spread over the world. The only person right now in our Milan offices is the CFO as he should be. He's sitting on the money that we need to spend in the upcoming period. Our Chief Medical Officer, Ravi Anand, is right now preparing for the SIRS, Schizophrenia International Research Society Conference that starts tomorrow. And I am attending the conference of ROTH Capital at Dana Point. So welcome to this call. I hope you have had a chance to download the slide deck that we are going to guide you through, and I will start with Slide #4. So if we look back at the last 15 months and the period that we are reporting about, and I will then do the outlook for '26 and hand over to Ravi for the new science and R&D progress and then to Roberto for the financials and the AGM EGM that is upcoming. If we look back, this has really been a period that couldn't have been much better. We practically hit all the quick points. We made all the milestones. But what I want to tell you already now is that for the upcoming 12 to 15 months, we might see even better outcome. So be prepared for that. If we look back, and that is all about evenamide and schizophrenia for the moment. We have to start with the deal that we signed in December 2024, the validating deal with EA Pharma from the Eisai Group. We did that deal with one of the top 10 Japanese pharma groups with a CNX experienced company, and there were some reasons. We wanted to validate our unique mechanism, the only drug that modulates glutamate in schizophrenia. We wanted to validate being the first add-on therapy in schizophrenia. We wanted to validate our claim that this is the drug that is the only one that qualifies to work in the vast majority of schizophrenia patients who are poor responders or treatment resistant to the current medication. We wanted to get an indication of the intrinsic value of that compound, which by analysts was after that deal was signed, estimated to be more than EUR 1.5 billion. And finally, we wanted to get the cash to perform our Phase III study because at that time, the markets were very challenging on equity. We got all that and since we signed the deal, and that is the starting point of the 2025 success story, we collected EUR 48 million, which was exactly the money we needed to advance our evenamide into the decisive pivotal study program called ENIGMA-TRS. And as you know, that is split in 2 studies. One is ENIGMA-TRS 1, that is a 600 patients, 1-year double-blind placebo-controlled study, which was finally enrolling first patients in August after we had gotten the approval for the overall program in May. This study is right now actively enrolling on all target continents, and Ravi will give you more update on the status. Importantly, in December then, we could start ENIGMA-TRS 2, the second pivotal study. So 2 shots at target even if 1 sufficiently positive study should do to get this drug approved. We started ENIGMA-TRS 2 in the U.S. study centers with UCLA and since then have added Johns Hopkins and the other studies centers are ready to initiate, and we have submitted the documentation in all the other countries in which we want to enroll patients. So this study is up and rolling now. And again, Robbie will give you an update. And then importantly, just by the beginning of this year, 2026, we could inform markets that also our partner, Eisai Group has initiated their Phase III program. So right now, I can say this is the most advanced clinical program in schizophrenia. We are right now running 3 pivotal studies in total with more than 1,300 patients in the world. And as you will hear later on, we expect results from the 12 weeks readout within this very year. Now we did have absolutely thrilling. I'm moving to Slide 5. We did have absolutely thrilling 1-year results from a study in treatment-resistant schizophrenia when evenamide was added to best-selling antipsychotics. And we did have the first highly statistically significant efficacy results from Phase III study called 8A, but there was plenty of questions given the new mechanism and the new positioning. So it was very important that all the clinical results of the past have by now been peer reviewed and published in the papers. We have presented them at numerous conferences. All the space is now being educated about the benefits of this drug in those patients in which today's medications just don't do good. But it was very important last year in August that Pittsburgh University came up with a piece of research, which could explain for the first time why in the pivotal -- why in the Phase II and Phase III studies, we saw that ever increasing efficacy, doubling, tripling responder rates by 1 year, 50% patients no longer qualify as treatment resistant and for the first time ever, treatment-resistant patients being reported to be in remission for 6 months. We didn't know why and how our drug would do that. And I think Pittsburgh has provided substantial explanation how this drug does so by qualifying schizophrenia as a disease that is substantially caused a hippocampus, a section of the brain where today's drugs simply don't hit, and that is why they do not improve negative symptoms, neuro cognition and why they only have limited benefits in symptoms. So that work of Pittsburgh now peer-reviewed and substantial support for the positioning of our compound and the explanation of the benefits we have shown. Again, starting this year, early 2026, we got another validation that is on a new composition of matter patent on crystalline forms of evenamide, which has the potential to extend our exclusivity to 2044. That would be 17 years post the expected approval of our compound, which we expect by end of '27. This patent has been submitted a year before, but ahead of time, the European Patent Office declared their decision to grant this patent in Europe in early January. The same patent is right now in the process of being reviewed, and we expect it to be approved also in all the other key territories, importantly, including the United States, where, again, this would give us exclusivity until 2044 and thus 17 years post the expected approval of this drug. On the corporate ends, moving to Slide 6. All the excitement about our results and the initiation of the U.S. study triggered 3 U.S. analysts to start covering Newron and the fourth one joined from Europe. So we got plenty of new coverage. We saw doubling or tripling liquidity in the stock. We are right now trading between 0.7% and 1% of the stock every day, which is clearly showing us that we get better coverage around the world and more people looking at our stock. This is a process that must be continued and even further improved. Very importantly, we also resolved 2 key issues on funding. Number one is that with existing shareholders and new shareholders from Europe and Asia, we signed a funding agreement in February this year, which will give us access to up to EUR 38 million, of which EUR 15 million are already in the bank, EUR 11 million will come before this year is over with no milestones attached and then the EUR 12 million remaining will come conditional to positive results of our pivotal studies by end of the year. That money being in the bank, we now have the funds to complete our ENIGMA-TRS 1 and 2 studies to the 12-point readout. So we will have all the money to report on the primary endpoint after 12 weeks and the secondary endpoint, and we will be able to advance our drug into NDA submission, and we will have a number of months of reserves beyond that point in time. And the second component of improving our financial situation was that we reached agreement with the European Investment Bank that all future payments under our loan agreement would be delayed at least by 2 years and a quarter to not before June 2028. So we are now in a very good financial situation. We have 3 pivotal studies rolling, and we have all the cash required to get to read out. On the corporate end again, our Board of Directors is already 1 year that Chris Martin has become our new Chairman. And I have to say that it is a marvelous cooperation between management and Chris, very much appreciated. He succeeded Ulrich Kostlin who was our Chairman for the 12 years before. In order to now complete the new setup of our Board of Directors and have completely independent directors on the Board, both Patrick Langlois after 18 years of service on the Board and Luca Benatti, after 12 years of service on the Board. Luca was the last founder of the company, have declared they will not stand for reelection in this year's shareholders' meeting. And I think we can say that we have found 2 outstanding new candidates for the Board, George Garibaldi, who is a highly respected industry [indiscernible] with years of experience and Paolo Zocchi, senior ex-partner in the top 4 audit company who are proposed for election by our shareholders as independent nonexecutive directors in the upcoming shareholders' meeting. So what should we expect for this year, 2026 and early 2027? And I'm moving to Slide #7. I think it is worth to start from the end. If you look at where we want to be in the end and you remind yourself what are our peers. And the peers, the latest companies with one product nature in schizophrenia were Karuna and Intra-Cellular. And Karuna was acquired once they had submitted the NDA for their 1 product company -- for their 1 product to the FDA. They were acquired for $14 billion by Bristol-Myers and Intra-Cellular were acquired after they had launched their own compound in the United States, commercialized it for a few years up to $680 million sales with a market cap of $9 billion. They were then acquired by J&J for $15 billion. We are now the most advanced follow-up to those companies. So what are we missing? Well, to be fair, we are missing positive results from our Phase III program, and we will be getting to those results in the next 12 months. Then what they had, what we do not have, they were listed on NASDAQ. And that is something we cannot ignore because as we have lately seen again, about 2/3 of the global biotech money is traded in the United States. So clearly, if you want to have full access to capital markets and you want to get a fair price, you should also have your shares listed on that largest stock exchange. So what we need to do is we need to work the path towards the results of our pivotal program. We need to prepare our NDA dossier. The initiation of the work must start way ahead of the results. Then something which is important that evenamide does not only work in schizophrenia, but like all the other compounds like Intra-Cellular's drug that has gone big in bipolar. This drug will also work in additional indications, and I'm also thinking of the elderly patients with dementia and psychotic episodes. This should be a perfect drug for those patients. And that is where additional indications should be pursued and Newron should start working on those. Clearly, on the corporate side, we should strengthen our institutional shareholder base, and we are working with a number of supporting agencies to do that. And now this all takes us to the shareholders' meeting of April 2023 of this year because there is things that we can do on our own with the means we have and the tools we have and there's steps where we need the support by our shareholders, and we need to get the tools from our shareholders. And you have probably seen the agenda of the shareholders' meeting. There's the usual household stuff like approval of financials, then there's the important elections of the Board. And then you will see that we have also put on the agenda of the shareholders' meeting a capital increase authorization for 15% of the capital. I do believe this is a moderate request, and it's clearly a compromise between aggressive strategy and the wish of some shareholders not to see any dilution. Clearly, the intention is that those shares would be used to advance evenamide in indications beyond schizophrenia and to support us towards submitting the NDA dossier and getting our drug approved. Clearly, also those shares might be used for a listing of our shares on a U.S. stock exchange like NASDAQ. And these are all procedures that need months and months of preparations. So what we are asking our shareholders for right now is not to approve a capital increase that will be put in place tomorrow, but what we ask them for is to give us the tools and the instruments that we need to start preparations and execute transactions at the right time, which also clearly means at the right share price to the right parties. So if the question is, is an IPO and uplisting of Newron stock to NASDAQ an option today, the answer is probably not because we are missing key ingredients, including share price results and other components. What we ask our shareholders for is support, providing us the tools and allowing us to initiate the process. So your question might well be, so is it worth? What is the opportunity, and that takes us to Slide #9. What we have to offer today is truly the opportunity to transform schizophrenia treatment with evenamide. This is the first compound that offers glutamate modulation in schizophrenia, and we start understanding how much more important it is to go beyond the dopaminergic pathway drugs that have dominated schizophrenia in the last 70 years. This is a huge market opportunity. We talk about 1% of the global population, but the vast majority of patients is not well treated by today's medication. The vast majority of patients is poorly responding or treatment resistant. So what it needs is a completely new mechanism of action, that is what we offer. And what we need is the first ever add-on treatment to be approved in schizophrenia. What we need is the option for doctors not to change the current medication, but to add a drug with no additional side effects of relevance, but with additional incremental benefit. No risk of relapses, reduced risk of hospitalization, suicidality. That is the promise of such a new mechanistic drug, an add-on to the current medications. As evenamide is the first and so far only drug that qualifies as an add-on to any antipsychotic of relevance, including importantly, including clozapine, and Roberto will talk to that. What we offer is highly exciting 1-year Phase II results of evenamide as an add-on to antipsychotics as well as highly statistically significant first Phase III results in a 4-week study in poorly responding patients. What we have seen is excellent tolerability, the most prevalent side effect being nasal pharyngitis in the Phase III study. I have already spoken about the potential of evenamide beyond schizophrenia that must clearly be evaluated. And we have also covered the topic of the strong IP protection. Right now, we have a Composition of Matter in the U.S. of 2035 and Process Patents to 2042 -- this new Composition of Matter 2044, that would be 17 years of a truly innovative treatment in schizophrenia, protection and market exclusivity post approval. That all said, it's my pleasure to hand over to Ravi on Slide 10 for the update on science and clinical. Ravi Anand: Thank you, Stefan, and good morning and good afternoon to everybody else. So I think I'm going to start with Slide 10, and I think this is a schematic presentation of how we currently view schizophrenia. And this has been brought out by the University of Pittsburgh and some of the universities. Contrary to common belief, the schizophrenia symptomatology does not begin in the basal ganglia, but in the hippocampus. The hippocampus controls the rate of abnormal firing from the dopamine receptors in the basal ganglia. When it's not working, there is hyperfiring from the dopamine receptors, and that leads to some of the symptoms of schizophrenia. What has also become very clear is that the hippocampal nuclei control negative symptoms, control cognition. So you need to have a drug working there. All current antipsychotics work at the level of the basal ganglia where you have the dopaminergic receptors. And therefore, they will never be able to reach the hippocampal nuclei, and that is one of the reasons why we don't see any benefits in negative symptoms or cognition with currently available drugs. Evenamide at the level of hippocampus, it has no activity at the basal ganglia at all. And the data that I'll show you will convince you based upon the work done by Pittsburgh University that it works on all these facets. I'm moving now to the next slide, Slide #11. So this is the experiment done. I'm very briefly describing this experiment. You should really take the effort to read the paper, which is fully published and it's on the Newron website. In this experiment, what was done by Pittsburgh University Research is they take rats, they give them a DNA alkylating agent called MAM. MAM changes the brain structure, changes the cytoarchitecture. The progeny, which are born basically show many of the symptoms and signs of patients with schizophrenia. So it's a neurodevelopmental hypothesis model of schizophrenia. You see hyperactive firing from the hippocampal pyramidal neurons, and that is reduced in this -- that this model creates and then basically get reduced by evenamide. What we see is the ventral pigmental area, dopamine neuron population activity is hyper and again, that is normalized by evenamide. Some of the most important findings are that the effects of evenamide outlast its presence in the brain and there's no way to explain it because the drug has a very short half-life, and this is way beyond that. This suggests that we are having the induction of long-term plasticity, which would be a very welcome thing for patients with schizophrenia. And then as I said before, you will see data which suggests that basically evenamide improves cognition and improves negative symptoms in these animal models and likely, we'll be able to do that in patients. If I move to Slide 12. This is a wonderful experiment, a little difficult to understand, so you need to just concentrate on it. If you look at the first bucket, that's looking at the effects of neurons. We're looking at the active dopamine neurons per track and how they're firing. If you look at the first 2 bars, there's no difference because it's only normal animals, so there's no effect of evenamide. The next 2 bars, you see the black bar, which is high up. That's because that's showing you increased abnormal firing in the MAM-treated animals. But the same MAM-treated animals, when they get evenamide, you can see there's a significant reduction. This is within 1 hour and the drug half-life is about 25 minutes. If you look at the second hour, there's no drug remaining. The drug has no active metabolite. There's no sequestration. But you see that the activity is actually increasing. The difference between the black bar and the blue bar is increasing. So even when the drug is not there, it's producing a benefit. And if you look at the third hour where there's no chance even of getting the drug around, the effect of evenamide is going on increasing. It's reducing further and further the abnormal dopaminergic file. Nobody is able to explain this. We can't really fully explain this, except that this is a very welcome finding because what it suggests is that patients will continue to benefit from this drug for long periods of time. Moving on to Slide 13. Now negative symptoms are present in all patients with schizophrenia. Even when patients improve from positive symptoms, negative symptoms don't improve. And one of the main reasons why patient functioning does not improve is because of the presence of negative symptoms. Now in this model what you're seeing out here, we have a rat in the middle. The rat has a choice to go to a toy chamber where there's a toy or to a social chamber where there's a real rat. Rats are very inquisitive animals. They love to interact with each other. So therefore, what will happen? Next slide, if you see now what is in the next slide is happening is, we are looking at the MAM-treated animals. There, there is no difference between the toy chamber rat, the time spent sniffing or the real one. But if you look at the second -- the third and fourth bar, you can see the MAM-treated animals are not able to distinguish between the toy, whereas the evenamide-treated animals recognize, which is a real rat and they're spending a significantly more time on that. And this is not because there's any effect on locomotion, which is shown by the other graphs, but because the animal now which is socialized. Any socialization is a prominent feature in patients with schizophrenia. And this suggests that this drug will improve social interaction. If I now move to the next slide. This is now looking at novel object recognition. This is a test of cognition. We take the rat, we give it an object. It familiarize it cells by sniffing. We then take it away, 1 hour later, we introduced the old object and the new object. The rat which is inquisitive, will memorize that, oh, this is the old object. I'm not interested. I want to go to the new object. Does this really happen? In the non-treated animals who have lost a lot of the neural architecture, there is no difference between the vehicle and the evenamide-treated animals -- in the evenamide treated because there's no deficit. But if you look at the non-treated animals, cognitively, these animals are impaired. The amount of time they spent on the wrong model, which is the Toy, the old object has gone down. Evenamide is able to protect against that, and there's a significant improvement. So you're seeing an improvement in negative symptoms, you're seeing an improvement in cognition. We've already seen an improvement in firing rates. All this leads us to the clinical data, which is shown in the next slide. And then basically, I will walk you through that. So what have we seen until now? This is Slide 18. Evenamide has shown efficacy in virtually every study performed, whether it be a 4-week study, in early patients, a 4-week study in patients who are inadequate responders and a 1-year study in patients with treatment-resistant schizophrenia. In all these studies, it was given as an add-on treatment. The benefits of our ranging, they are seen on positive symptoms, they are seen on negative symptoms. The drug is very well tolerated. The attrition rate is less than 5%. The most common adverse event is nasopharyngitis, which means missing and the same incidence as placebo. What we've seen in the first Phase III study that we did in patients with inadequate response more or less confirm the results that we saw in the open-label study in treatment-resistant schizophrenia. It's one of the very few first times that I've ever seen that I -- all efficacy endpoints came out significant in the Phase III study, which is the 8A study, and this is published also. All the endpoints reach statistical significance. And basically, what we are seeing is the side effect profile is so benign that you cannot tell the difference. Now we are basically looking at this, these results and the animal results because we are doing a 1-year study, where you expect to see efficacy continuing to improve over 1 year. Just to remind everybody, in schizophrenia, we generally have improvements in 3 weeks, 4 weeks, but rarely after that. That's why the FDA advises the sponsors nowadays to limit the study to 4 weeks because after that, there's no real improvement. I move on to Slide 19 to show you the study 8A, which I talked about, the potentially pivotal study, which has now been published everywhere. It's a 4-week study done in 11 countries, 291 patients were patients who are on second-generation antipsychotic, received either 30-milligram bid of evenamide or placebo. All second-generation antipsychotics were allowed in this study, and the patients had to be psychotic. The design is shown on the next slide. What we did in this study is at the very beginning of the study, we took blood samples to make sure that patients were really poor responders and noncompliant patients. We had the blood samples analyzed to make sure the concentration of the antipsychotic was at the right level to be able to ensure that they were getting a therapeutic dose. 30% of the patients had no measurable plasma levels, which tells us that they were noncompliant rather than inadequate responders. This study took us much longer to do because of this of the difficulty of finding patients who are compliant with medication. Ultimately, we got 291 patients. And as you can see, the study went up to 4 weeks, which was the endpoint of the study. The drugs that were allowed in the study, the second-generation antipsychotics are listed at the bottom, and they constitute about 90% of all second-generation antipsychotics in the market. Slide 21 shows you the side effect profile of the drug. If you just look at the bottom part of the table where you see preferred term, the most common adverse event is nasopharyngitis. The incidence is almost the same as placebo. Again, then headache, which seems to be more -- almost the same as in placebo. What is more important is what you do not see [indiscernible]. You do not see any extrapyramidal symptoms. You don't see tremor, you don't see rigidity, you don't see akathisia. You don't see weight gain, you don't see diabetes. You don't see sexual dysfunction, no abnormal changes in the ECG or in the liver function test or kidney function test. No blood pressure changes at all. No severe sedation, no severe excitation. So it's a remarkably silent drug, which is ideal as an add-on treatment. If we now go to the next slide, Slide 22. This gives you the primary results for the study. In line with the expectations from FDA and from ICH requirements that the primary measure should be the PANSS total score. So we designated the PANSS as the primary estimate for the study. The analysis are done in the ITT population. And as you can see from the fourth row, the null hypothesis, meaning there's no difference between drug and placebo is rejected with a p-value of 0.006. And the core secondary measure, which is the CGI of severity, meaning clinical global impression of severity is also significantly reduced with a p-value of 0.037. But that's not all. If you look at the next slide, this is showing you now the slope of the curve over a 4-week period of time. Obviously, this is not long enough. But you can imagine that if this study were to go on longer, the placebo group will keep on flattening, the drug group keeps on improving. And based upon this, we have designed the next studies. This is the next slide is showing you the simulation in which we are imagining what would happen at week 12 and what would happen at week 26 and 24. What you can see is based upon the data from the previous studies, it seems like at week 12, we would have about a 10 to 14 point difference -- a 12- to 14-point difference from baseline, that is likely to be highly significant. Similarly, if you go to 26 weeks, we expect that basically we'll have a difference between 14 and 19 points compared to baseline, and that's likely to be highly significant. Now I'm showing you some very interesting data. These have been published again. We looked at what happens to other antipsychotics when evenamide is added. Firstly, to our surprise, the clozapine patients, clozapine is the most effective antipsychotic. And even those patients when they get evenamide improved by about another 3 points compared to clozapine alone. But more surprising than that is olanzapine. Olanzapine is probably one of the most effective antipsychotic, has never come out second to any antipsychotic in the trial. And those patients, when they receive evenamide, they improve by about 5 points more than they get olanzapine alone. And this difference is statistically significant. Overall, it looks like whenever you get patients receiving evenamide on top of a second-generation antipsychotic, they improve. And this leads us to believe that this could be a drug which could help all patients who are not doing well on their current medication. But what are the other results like in this study? So you can look at this, Slide 26, where basically we're showing you the PANSS responder analysis, clinically significant. In other words, 20% improvement, which is considered clinically significant in treatment-resistant patients with poor responders. You can see the effect is increasing over time and at day 29, which is significant. This rate, if it continues, you can imagine at week 12, we will have a very large difference between patients who are responders on current treatment as well as those who are current treatment and evenamide. But it's not only on the PANSS, we now look at the CGI of change. This is an analysis, which looks into account -- takes into account only those patients who show much improvement, not minimal improvement, only much improvement. And once again, by day 29, you can see almost a doubling of the number of patients who are responders on evenamide. Again, a very nice outcome. And if we continue this projection forward to week 12 and 26, we will have a very significant outcome. Now I'm now going to just very briefly mention the pivotal ENIGMA trials which are currently ongoing. And I'm now on Slide 29. This is the TRS 1, the treatment of schizophrenia 1 study. This is a 52-week study. The first study ever done in treatment-resistant patients, which is placebo-controlled and 52 weeks. All patients have to be on treatment -- have to be diagnosed as treatment resistant. They are -- we confirm this by taking blood samples at the beginning, 3 times in 42 days to make sure that they are really taking their medication and even then they are not responding. Then the data are going to an independent eligibility committee, which really decides that these patients are actually treatment resistant. Then only the patients get randomized to 15 or 30 milligram of evenamide or placebo add-on. And the study is very tightly monitored, and we will look at the primary results at 12 weeks and the next results at 26 weeks and the last results at 52 weeks. And these results are the basis for which we will get the registration. The 12-week endpoint is really necessary for showing the drug in an antipsychotic and will be the basis with which we file for regulatory approval, the first regulatory approval, both in CHMP in Europe as well as in the U.S. The second TRS study is a shorter study. It's a 12-week study that is currently ongoing also, but that study has only got 400 patients into the 600 patients. And that study has just started. It's got approval in virtually all of the countries that we wanted to. And then basically, we expect that this study will also complete fairly quickly. We expect the TRS-1 study to complete enrollment by the end of August, which will provide us results by the end of the year and lead to hopefully to an NDA filing around the first to second quarter of next year. The TRS study will come in close behind that, so we will be able to include the results in that package. With that, I turn it over -- we have done a lot of congresses this year, sorry. And you can see that on the Slide 32, we have a listing of all the congresses that we are presenting at. It's been a very busy season for us. Everybody is recognizing the value of evenamide and making up to a new mechanism of action. And all this paper, we have published a lot of papers, which you can also get from there. With that, I turn it over to Roberto. And thank you for your attention. Roberto Galli: Thank you, Ravi, and good morning and good afternoon to everybody else. So I'm on Slide 34. As you know, Newron is listed at SIX since December 2006. And since June 2019, we are also traded at Dusseldorf Stock Exchange, et cetera. By the end of the year 2025, we had 20 million -- around 20 million shares outstanding. Currently, they are EUR 20.8 million because of the capital increase Stefan was mentioning to you before. And always at the end of December 2025, we have outstanding call option and derivative or warrants, if you prefer, of up to 1.6 million, of which 50% more or less were related to call options and the remaining 50% were the warrants that we granted to EIB. Let me welcome 3 new U.S. banks among our analysts, and I'm talking about Wainwright, ROTH Capital and Lucid, and they are on top of the already existing ones, so Baader, RX Securities, ValueLab, Edison and Octavian. I'm now moving to Slide 35. Let's just talk about a few numbers. License income decreased. But of course, in 2024, we booked the downpayment of the Eisai deal. So no surprise here. And the value you can see are mainly related to the Myung In deal down payment and certain milestones that we got from the TRS 1 study progression. The other income, even if it's not a big amount, I want to talk about those because I'm referring the R&D tax credit benefit that we were able to book after 4 years of no additional benefit. And I'm talking about a couple of million, so EUR 1.9 million. What I want to tell you on top of this R&D tax credit is that accumulated, so since 2025, we got EUR 25 million of benefit. And so far, we have used EUR 22 million. The financial results net decreased by about EUR 3 million. And the main reason is a technicality and IFRS technicality because according to IFRS, we are supposed to evaluate the warrant fair value and this value because of the increase in the share into increased by EUR 2.5 million. Please note that there is no cash impact related to this effect. On the very last, I want to talk about the income taxes. Last year, for the very first time, we paid income taxes, while this year, the amount you see are only the withholding tax paid on the milestone and now payment received from the deals I was mentioning to you before. In Slide 36, so I'm showing you the balance sheet on the left and the cash flow on the right. So let me start from the balance sheet. What you see in the current asset in 2024 that is EUR 51 million is mainly the receivable related to the 8A Pharma deal that became cash. And this is why you see the increase in cash in 2025. While in the liabilities, the EIB loan last year was booked mainly in the noncurrent liabilities. And this year, you see everything in the current liabilities. But as Stefan was mentioning to you before, 1 week ago, we obtained from EIB the chance to delay the debt till end of -- sorry, till June 2028. On the right, you can see mainly the bar on the working capital and the green -- it's green because it's generating cash and it's exactly the effect that I was mentioning to you before. So the cash in -- the cash we received in January and of the revenue that we booked in December 2024, partially compensated by decrease in brand and other payables. If we move to the last slide. So on April 23, 2026, at 10 a.m. CET, we will have our general meeting. In the agenda, in the ordinary part of the agenda, the first point, as usual, is the approval of the financial statement. The second point is the approval of the new member of the Board of Directors. Stefan has already thanked both Patrick and Luca for being with us for so many years. And let me reiterate this concept because we really well appreciate their work and then I'm also willing to introduce to you, George Garibaldi and Paolo Zocchi as new nonexecutive directors. On the extraordinary part, we will amend -- slightly amend, let me say, the bylaw in a few articles, and this is due because after 20 years and COVID, a few laws have changed and so we are willing to align the text of our bylaw to the new and amended shareholder laws. The second and the third point are a capital increase. On the second point, we are asking shareholders to grant 5% for option plans of capital increase. And in the third point of the agenda, we are asking for 15% of capital increase also potentially for an uplisting at NASDAQ and the point 4 is strictly related to point 4, 3 because the creation of ADR serves for the NASDAQ listing. Everything has been already uploaded or will be uploaded in our website. So if you want to look for additional information, please do not hesitate to visit the website. And with that, I think I'm done. Stefan Weber: So I guess it is time for the Q&A session. I hand over to Mathilde from Chorus Call to introduce us to the questions by the parties who have registered for such. Operator: [Operator Instructions] The first question comes from the line of Ram Selvaraju from H.C. Wainwright. Raghuram Selvaraju: Congratulations again on a landmark year in 2025. You really are to be congratulated on how many fronts Newron advanced on. Firstly, I wanted to ask about your feelings regarding additional indications for evenamide beyond schizophrenia. In particular, we have seen evidence that other antipsychotic drugs, while perfectly serviceable in schizophrenia, actually turn out to be even better in other indications that are ancillary to schizophrenia that may constitute even larger markets. So I was wondering if you could perhaps comment on this. If there are other indications in which you believe evenamide is particularly well suited to have a therapeutic effect, what might these be, whether that would be bipolar disorder, patients with mixed depression and schizophrenia symptoms or others? Ravi Anand: Thanks, Raju. You basically took my hands away from me. I would expect this drug to be highly effective in patients with bipolar disorder. Secondly, I think I would definitely like to go for treatment-resistant depression with psychotic features. And lastly, patients who have behavioral symptoms of dementia but cannot take second-generation antipsychotics. There, I think this drug, because it doesn't affect any neurotransmitter system will be very well tolerated and not have the increase in mortality that we see with all the other drugs. Raghuram Selvaraju: That's very helpful. And I think we're all familiar with the intracellular therapies example that demonstrated just how large a market opportunity there could be for an antipsychotic with applicability beyond schizophrenia. Secondly, I wanted to ask about the information you presented regarding the ability of evenamide to augment the efficacy profiles of multiple second-generation antipsychotics. And if you could perhaps drill down on that a little bit further for us and give us a sense of whether there is a particular subclass of those second-generation antipsychotics that you consider evenamide to be particularly well suited to be combined with? And if so, what might be the kind of your top 1 or 2 choices? Obviously, you furnished a lot of information, in particular on clozapine, but I was wondering if you had additional granularity to provide. Ravi Anand: Sure. I think clozapine because it's the most obvious candidate because when you talk about treating schizophrenia and clozapine, all the drugs, even though it's not used that much. Second, I think what has really been surprising for me and not just in 1 study, but in almost 2 to 3 studies has been the effect in combining it with olanzapine. And as you know, olanzapine and clozapine share certain features. So then the question comes up, really, is it basically because of the fact that both of these drugs are affecting D2 and D1. And -- but then what we see also is that is also affecting risperidone. It's also improving patients with aripiprazole. So I think this improvement facet is probably unrelated to the neurochemistry. It's a generalized effect on brain where it is acting in a way it's more like an antidepressant and produces some degree of configuration change in the brain receptors, which makes them amenable to treatment with the other drugs. I think we are monitoring this very carefully now in the Phase III study, and we're trying to collect plasma levels to exclude pharmacokinetic interaction as a reason for this. Raghuram Selvaraju: With respect to the effect you showed of evenamide kind of having a long-term persistent impact even when the drug is no longer necessarily biologically circulating in the system. I was wondering if you could comment on, first of all, the long-term strategic plans at Newron to potentially explore the possibility of developing a long-acting injectable of evenamide. And if that is the case, how this information indicating long-term persistent effect of evenamide might dovetail with those efforts? Ravi Anand: No, absolutely. I think as you probably know, some of the companies in Europe, which have been led the charge to develop formulation changes, especially in France and for TEVA, for instance, we are going to be in early discussion with them soon. I think to me, it's really a mystery almost that a drug which has only got a half-life of 25 minutes is affecting changes beyond 3 hours. But also in patients, we have a short half-life of 2.5 hours, but the effect seems to persist for more than 12 to 14 hours. So I think a long term, a depot formulation would have to be a very different type, but it would be a fantastic thing because a drug which is very well tolerated, doesn't produce EPS, doesn't produce sexual dysfunction could be ideal for giving long term, not only to the confirmed schizophrenia patients, but to those patients who are early on in their career, like the first episode patients or the at-risk patient population, that would be the way to go for those new formulations. And we would definitely explore that once we are done with the NDA. Raghuram Selvaraju: And I think it's well documented that the long-acting injectable segment of the schizophrenia market is by far the fastest growing and at this point, probably the most lucrative. One last question from me. When do you expect U.S. office action on the COM patent that was already granted in Europe that would extend protection to 2044? Ravi Anand: Stefan? Stefan Weber: Yes. Ram, thank you for joining. Thanks for the questions. So we are right now in discussions with one of the leading U.S. IP consulting firms, and we are in discussion with the leading expert on crystalline form and solid formulations in the United States. We are discussing the strategy. As you know, there is 2 ways of getting a fast-track treatment of the Composition of Matter application in the United States. We are right now evaluating both. And I guess we will take a decision within the next few months. Depending on that decision, we might well see this patent being treated and decided upon before this year is over. And that means we might get that same patent application approved in the United States as per our expectation in this year still, which would be remarkable. Operator: The next question comes from the line of Joris Zimmermann from Octavian. Joris Zimmermann: Joris Zimmermann from Octavian here. Two from my side. The first one on your cash reach guidance throughout 2027. You mentioned that this includes EUR 50 million already received from the new financing plus another EUR 10 million that you expect later in the year. Question is on the remaining, I think, EUR 12 million from that new financing that is not reflected in this guidance. So that would provide you a further extension of the cash reach. And also in terms of the amended European Investment Bank repayment schedule, I would assume that this is already included in the guidance. Roberto Galli: Okay. So let me start from EIB. Yes, EIB is absolutely included in the guidance, of course. As per the additional EUR 12 million, I am a very cautious CFO. So given that we are talking about something that is related to the data, I have kept this upside from these projections. So if data will be positive, most likely, we will see an additional injection of EUR 12 million. And this will, of course, increase the availability of cash in Newron most likely till the end of 2027. So this will give Newron additional, let's say, 6 to 9 months of time to strike the most appealing deal because of the positive data, yes. Joris Zimmermann: One more question on the potential new indications and also a bit on the funding in that regard. You outlined the potential indications where you expect most benefit of evenamide. So in terms of your plans, how would that likely impact funding in the near to midterm? Is that already something in the plans? Or is that still to be decided upon? Ravi Anand: I think it largely is still to be decided upon, but some initial activities are already included in the plans. Operator: We now have a question from the line of Arron Aatkar from Edison Group. Arron Aatkar: Just two for me here. First of all, I just wanted to confirm that the ENIGMA-TRS 2 top line readout will also be in Q4 '26. I think I've seen some approaches where it's specified and others where it's not mentioned. And for this as well, would this come simultaneously with ENIGMA-TRS 1 if so, or will they be separate announcements? Ravi Anand: Okay. Let me answer this. I think ENIGMA-TRS 1 is very, very, very, likely to be within this year. ENIGMA-TRS 2 is a borderline case, whether it's towards December or early January, things of this time. But both of them would be available to be included in the filing for regulatory approval. The announcements would definitely be separate. Arron Aatkar: Okay. Perfect. And my second question, I think you kind of covered it, but I was just looking at the licensing income of EUR 8.6 million. It sounds like that includes upfront payment from Myung In Pharma and also some milestone payments from both partners. Just wanted to clarify if you could provide like a breakdown on how much of the licensing income was upfront versus milestone payments from the 2 partners. Roberto Galli: Yes. So the EUR 8.6 million are more or less 50-50, let's say, 30% related to Myung In and the remaining part related to additional milestone coming from EA Pharma. Sorry, I cannot be much more precise because I cannot disclose the final figures. But these are more or less the percentages. Arron Aatkar: Okay. That's very helpful. My other questions have sort of been covered off already. So no more from me. I just wanted to say congratulations again on the recent progress. Look forward to following the story. Operator: The next question comes from the line of Joseph Hedden from Rx Securities. Joseph Hedden: Just wondered if you could say a little more on recruitment into the ENIGMA studies. Any information on how many patients today or progress in terms of are you on track with where you expect to be? Ravi Anand: Yes. That's always a challenge. As you know, the regulatory process has become very prolonged nowadays especially the one in Europe, which takes forever and then the contracting progress though. So at present moment, I would say that 75% of the sites that we wanted to have initiated have already initiated. And we are basically just about coming up to where we should be. We have over 300 -- approximately 300 patients who have been enrolled in the program in the TRS 1. The TRS 2, as I said, has just got approval. So it's a little bit behind. But I think keeping the progress of TRS 1 in mind, I think we're very, very confident that we should be able to complete the enrollment on time for TRS 1 and then subsequently, the effort for TRS 2. The TRS 2 is a shorter study. It's only a 12-week study, and it's a smaller number of patients, only 400 patients compared to the 600 plus for TRS 1. So we should be okay with the enrollment time lines. Joseph Hedden: Okay. And then on the BD side, just wondering what you think the likelihood of any other regional deals ex U.S. for the ENIGMA results later this year, what's the likelihood do you think? Stefan Weber: Thank you, Joseph, for the question. This will clearly depend if any interested parties will be willing to pay fairly and dearly for the new patent life that we have just added. And we understand that some parties might want to see the patent being granted first. But at the same time, clearly, with the European patent office decision to grant our patent, our expectations have increased. And as we have no cash urgency or lack at this point in time, we would be confident to go full steam ahead towards the results from both pivotal studies and then decide on how to deal with all those territories at the maximum value for our shareholders. So that's the good news after getting all the funding done. We do not depend on income from licensing. But if there are fair offers, we will absolutely consider them. And yes, there could be other deals, but conditional to fair value, including the new patent life. Operator: [Operator Instructions] Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Stefan Weber for any closing remarks. Stefan Weber: Thank you, Mathilde. Thank you all for joining this call. I hope we have been able to explain to you why we believe this was an extraordinary 15 months in the past. But let me be clear, you please should stay tuned for the next 15 months because this could be much more exciting even than what we have seen in the last 15 months. This is really the opportunity to turn this company into a completely different size of company with a drug that might be approved and with a drug that we might decide ourselves to commercialize to get to the peak value for our shareholders and to secure the sustainable future of this company. So please stay tuned. We are happy to keep you updated. Looking forward to the next opportunity. Have a great day. Goodbye. Ravi Anand: Thank you. Roberto Galli: Goodbye. Operator: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.
Operator: Ladies and gentlemen, thank you for standing by. I am Geli, your Chorus Call operator. Welcome, and thank you for joining the Public Power Corporation conference call to present and discuss the full year 2025 financial results. At this time, I would like to turn the conference over to Mr. Georgios Stassis, Chairman and CEO; Mr. Konstantinos Alexandridis, CFO; and Mr. Ioannis Stefos, Chief Investor Relations Officer. Mr. Stefos, you may now proceed. Ioannis Stefos: Hello, everyone, and thank you for joining today's conference call for PPC's full year 2025 results. We will begin with an overview of the group's results from our Chairman and CEO, Georgios Stassis, followed by a review of the financial performance for the period by our Group CFO, Konstantinos Alexandridis. After the conclusion of the presentation, we will open the floor for your questions during the Q&A session. The IR team will be available after the call for any follow-up discussions. With that, I will now turn the call over to Georgios. Georgios, please go ahead. Georgios Stassis: Hello, everyone, and thank you for joining us for today's earnings call. PPC had a strong performance for another year, in line with the strategic targets set in the business plan with adjusted EBITDA increasing to EUR 2 billion and net income at EUR 0.45 billion, demonstrating the extent of the transformation and the growth that has been achieved during the last years. This significant growth in profitability has allowed us to keep increasing dividend distribution in line with our plan, which provides for further improvement of shareholders' remuneration with a gradual increase of dividend to EUR 1.2 per share in 2028. Investments stood at EUR 2.8 billion, with the majority allocated to renewables, flexible generation and distribution projects, supporting a further step-up in profitability going forward. Despite high CapEx, our balance sheet position remains solid with a net debt-to-EBITDA ratio at 3.2x at the end of 2025, providing the necessary room to implement our investment plan in the next years. Moving to Slide 7. The last years have been directing capital towards renewable energy, flexible generation and distribution. As a result of these investments, we have been able to increase both the regulated asset base, as we will see later, but also the renewables and flexible generation capacity, which now represents 80% of our total capacity. In this way, year after year, we are increasing our renewables footprint, combining it with flexible generation assets, while at the same time, we have made significant progress in phasing out lignite, a process which is at the final stage, with the last unit of 700-megawatt plan to cease its operation by the end of this year. Deep diving now to Generation business on Slide 8. As you can see, we have increased the total installed capacity to 12.4 gigawatts, led by the continuous rollout of new renewable projects, which has outweighed the reduction of lignite capacity during the last year. Our total generation output has remained practically stable, however, with increased participation of renewables on the back of reduced production from lignite and oil. More specifically, renewables output increased to 6.9 terawatt hours, driven by wind and solar generation, reflecting the addition of new capacity, which outbalanced the weak performance of large hydro power plants for last year. As a result, renewables increased its share to 33% of our total output. On the flip side, lignite generation declined at 2.7 terawatt hours and oil at 3.6 terawatt hours, corresponding to 13% and 17% of total output, respectively. 2026 is a milestone for PPC generation activity since it marks the end of lignite-fired generation after many decades, making PPC coal-free. Last, gas generation had no change versus 2024, being, however, a very important component of our energy mix today, corresponding to 37% of our total output. As a result, CO2 Scope 1 emissions declined by 0.5 million tonnes compared to last year. And going forward, we expect further improvements since we will cease our lignite operations by the end of the year. Now moving to Page 9. Let me briefly describe the progress in renewable projects that we have achieved in the fourth quarter of 2025. Executing our strategic plan with discipline, we completed the construction of an additional 800 megawatts of capacity across Greece and abroad. The majority of these additions were solar projects, which exceeded the 700 megawatt in total, complemented by the first 59 megawatts of battery energy storage installed in Greece and Romania as well as 36 megawatts from a wind farm in Northern Greece. In summary, 546 megawatts of renewable projects across various technologies were completed in Greece, along with 272 megawatts internationally in the fourth quarter, leading to total additions for 2025 at 1.7 gigawatts, as we will see in more detail in the following slides. Going to Slide 10, let's see in more detail the additions that we concluded in the fourth quarter of 2025. First, in Greece, major projects totaling 550 megawatts were completed since the November Capital Markets Day. Specifically, we completed the last 30 megawatt of a 550-megawatt solar project located in the former lignite area of Ptolemais in Northern Greece. In the same region, in cooperation with RWE, we completed the final 623 megawatts of a 938-megawatt solar project. In the Ptolemais region, again, in the former lignite area, we completed the first 125 megawatt of a 490-megawatt solar project. The second 125-megawatt cluster is currently under construction, and the third cluster is scheduled to begin construction later this year. For wind, we successfully completed 36.4 megawatts in Central Greece in the region of Fokida. And last, an important milestone was also the completion of our first battery project in Greece in the former lignite areas of [ Ptolemais ] as well. Outside of Greece, in the fourth quarter, we added 272 megawatts of capacity from renewable projects, mainly solar across Southeast Europe, as depicted in detail in Slide 11. Starting with Romania, we completed solar projects of 215 megawatts in total in various locations, along with 9 megawatts of batteries, which will enable us to enhance dispatch optimization and capture value from balancing services and price arbitrage. At the same time, we completed 17.5 megawatts of photovoltaics in Italy and 30 megawatts in Bulgaria, increasing our footprint in these countries. Overall, as you can see, we keep a good pace of additions, delivering significant renewable capacity while continuing to expand our construction pipeline. All of the above are summarized in the next slide, Slide 12, which shows that we remain on track to achieve our 2028 renewables target of 12.7 gigawatt, as presented in our last Capital Market Day. We have added 1.7 gigawatt in 2025, standing now at a total of 7.2 gigawatts. And we have another 3.7 gigawatts that are either in construction, ready to build or in the tender process, having secured, in essence, 86% of the capacity that we target for 2028. There has been further progress in our pipeline also in terms of maturity, having moved during the fourth quarter -- last fourth quarter, approximately 600 megawatts into the under construction and ready-to-build stages from the permitting and engineering stage. And this process of adding new capacity, maturing additional projects is something that we have been doing many quarters now, and we will continue to do so as we advance multiple projects across Greece and internationally. Let us now move to Slide 13, which provides key highlights of our retail activity and the overall environment in Greece and Romania. Electricity demand was slightly decreased in both countries by minus 1.3% in Greece, reflecting milder average temperatures compared to 2024 and by 0.6% in Romania. Our electricity sales decreased by 1.9% compared to 2024, primarily driven by lower demand in Greece and a slight market share reduction in both countries. Deep diving in the retail activity in Slide 14, despite this intensely competitive environment throughout 2025, we successfully defended our market share while expanding beyond the commodity segment, demonstrating our ability to diversify and deliver impactful results. Customers remain our top priority. This is reflected in our strong top line performance across all customer satisfaction metrics and the continued improvement in the quality of our customer base. Notably, bad debt exposure decreased by 14%, as shown in the bottom right graph, driven by improved penetration and more effective management of higher-risk customer segments. On top of various targeted propositions that we launched during the year, SME, family and other and as artificial intelligence continues to shape market developments; we launched in Greece a virtual assistant support our customers. This is the first AI-powered digital assistant in the market, designed to elevate the customer experience by providing clear explanations of bill charges in simple language. For our activities in Romania, 2025 was a transitional year following the lifting of the price caps. As competition has been growing, we focus on protecting and strengthening customer relationships through targeted retention actions. Looking ahead, we expect 2026 to remain highly competitive. We will continue to focus on delivering value, strengthening customer engagement and maintaining resilience in an evolving market landscape. Just a few words for several synergy streams in the retail activity that we set up in 2025, we are in Slide 15. Kotsovolos has been key for this, providing the opportunity to launch a broad range of initiatives. Our collaboration has evolved from establishing a strong in-store presence and developing dedicated PPC shop-in-shop corners featuring our products to extending field services coverage that delivers essential energy solutions to customers and households, services that are fundamental to everyday living. Looking ahead to 2026, we plan to further strengthen our footprint within PPC shops while expanding our product and service portfolio to reach additional customer segments, addressing a broader spectrum of needs. Next, in Slide 16, a few words of certain KPIs of our Distribution business. We continue to invest significantly in 2025 with CapEx increasing by 2% year-on-year, in line with our strategy to enhance and digitalize our electricity distribution networks. The total regulated asset base now stands at EUR 5.7 billion from EUR 4.9 billion last year, mainly driven by the increase in Greece following material investments. The strong investment activity is also reflected in the improvement of the reliability indices of our networks in both Greece and Romania, while smart meters penetration continues its upward trend with further room to grow, especially in Greece. Turning to Slide 17. We can see how the implementation of our strategic initiatives, combined with active engagement have resulted to actual progress in several ESG ratings and scores within 2025. Specifically, our efforts have been recognized by S&P Global, EcoVadis, MSCI, ATHEX ESG and ISS, all of which upgraded PPC's ratings and scores. These improvements reflect tangible progress in several key areas such as environmental management, renewables portfolio expansion, corporate governance, ESG integration and transparent reporting. These advancements underscore our commitment to sustainability, mitigating business risk and fostering long-term value for all stakeholders. Let me now pass it on to Konstantinos for the financial performance analysis. Konstantinos Alexandridis: Thank you, George, and good afternoon to all. Moving next to Slide 19 for an overview of the trends for the main energy-related commodities. To begin with TTF, gas prices in early 2025 were initially strong, supported by reduced Ukrainian transit and cold weather conditions before easing as demand weakened and geopolitical concerns softened. Subsequently, prices declined under the milder weather conditions, strong LNG inflows and lower storage targets from EU with a brief rebound driven by firmer demand and tighter Norwegian supply. Later in the year, gas prices remained broadly stable before falling to their lowest levels towards year-end. Overall, gas prices recorded a moderate year-on-year increase of 5%. Turning to carbon. EUA prices opened the year sharply, but reversed after mid-February, pressured by declining gas prices and uncertainty around U.S. tariffs. Prices later recovered on the back of easing trade tensions and a U.S.-China agreement, although gains driven by geopolitical developments proved short-lived. The market remained relatively balanced for a period before a rally emerged towards September driven by compliance buying with prices peaking towards the end of the year. Overall, carbon prices also recorded a moderate year-on-year increase of 12%. Finally, looking at power prices, they spiked early in 2025, driven by higher TTF and EUAs, easing later in Q1 on the weaker demand and the higher solar performance. Prices rose in Q2, tracking TTF and EUAs, but stayed stable in June, though elevated despite geopolitical tensions, thanks to record renewables output. In the second half of 2025, weather-driven demand and lower renewable output led to a steady rise in prices. Moving now on Slide 20, where we can see the key financial figures for the period, showcasing the strong financial performance recorded in 2025 with increased revenues mainly due to higher power prices and the contribution of Kotsovolos. Adjusted EBITDA reached EUR 2 billion, up by 13% year-on-year, an uplift driven by higher contribution of integrated activities in our two key countries, Greece and Romania. Adjusted net income post minorities stood at EUR 0.45 billion from EUR 0.36 billion in 2024, up by 23% year-on-year. The proposed dividend for 2025 is EUR 0.60 per share from $0.40 per share in 2024, demonstrating our strong commitment towards the increase of distributable profits for our shareholders and in line with our commitment in the latest Capital Markets Day. A more detailed overview of EBITDA and net income evolution will follow later in the presentation. Investments at EUR 2.8 billion, focusing mainly on renewables, flexible generation and distribution. Free cash flow continues to be driven by elevated investment levels in line with our business plan. Net debt at EUR 6.5 billion at the end of December 2025, with net debt-to-EBITDA ratio at 3.2x as anticipated, given the progress in our investment plan. Proceeding to Slide 21 for the revenues evolution of the group, which recorded an 8% increase. The largest part of this increase is driven by energy sales, which are up by approximately EUR 0.5 billion as a result of higher power prices we experienced both in Greece and Romania for the full year. The rest is mainly driven by sales of merchandise coming from the operations of Kotsovolos, which have a full year effect in 2025. These two factors have been able to more than offset the impact of our revenues from volume decline related to market share reduction and a slightly reduced electricity demand in both countries, as George mentioned before. All this resulted to a total revenue of EUR 9.7 billion in 2025, up by EUR 0.7 billion versus 2024. Moving to Slide 22 for the EBITDA performance by business activity. As you can see in the left side of the slide, EBITDA has recorded a 13% increase year-on-year with the integrated business being the key driver for this growth. I will provide more color on this in the coming slides. International contribution at 22%, mostly driven by Romanian operations, which stood at EUR 440 million. Next, on Slide 23, a few words on the evolution of the integrated business. The improvement that has been recorded versus last year has been taking place on the back of improved performance in the retail business and green and energy mix throughout our footprint as we increase renewables capacity. In addition, this improvement has been also supported by the reduction of fixed costs associated with lignite activity as we progress with the phasing out of the relevant units. All these factors have been the basis of our commitments in our Capital Markets Day some months ago to improve our profitability in the integrated business by EUR 0.2 billion year-on-year. Now proceeding to Slide 24 for a view of the distribution activity. With regards to Greece, the demand decrease of 1.3% versus 2024 negatively affected the approved network usage revenues that will be compensated in 2027. In Romania, the Distribution business marked a slight decrease versus full year 2024, but this was driven by seasonal effects. Adjusting for construction works that have already been included in the 2026 allowed revenues, the 2025 performance would be higher than last year. Proceeding to Slide 25 for a deep dive on the EBITDA-to-net income bridge. The improved performance in terms of EBITDA that we've discussed in the previous slides has also been reflected in the bottom line with adjusted net income after minorities standing at EUR 448 million, that is a 23% increase versus last year. In terms of EPS, the year-on-year increase is slightly higher, reaching the 24% given the ongoing share buyback program. Adjustments included in the net income includes special one-off items with the largest being the provision for incentives for volume direct exit schemes that we implemented, the PPAs revaluation as well as the incremental depreciation from the asset revaluation of December 2024. Moving on to Slide 26 for the analysis of the investments. We continue to keep a high level of investments reaching EUR 2.8 billion in 2025 despite the reduction of 9% year-on-year. Importantly, 87% of our investments are directed to our distribution networks, renewables and flexible generation in line with our strategic priorities. Distribution has been the largest component, reflecting our focus on network utilization and resilience in both Greece and Romania. At the same time, we are significantly expanding our renewables footprint along with increased investments in flexible generation to support the stability and monetizing the surplus of generation. Geographically, the majority of investments are concentrated in Greece, accounting for 72%, while Romania represents a growing share of 23%. Overall, our investment program is clearly aligned with the energy transition, strengthening our asset base and supporting long-term earnings visibility. Let's now move on to Slide 27 for the free cash flow analysis of the group. The strong operational performance, combined with the positive working capital resulted to a significantly positive FFO of EUR 1.9 billion. The change in working capital had a positive impact of EUR 161 million over the period, supported mainly by CO2 and our hedging activities. With regards to CO2, we had a positive impact in 2025, which is mainly attributed to timing of payments and the overall working capital management. With regards to our hedging activities, initial margin requirements related to new positions declined, mainly as an effect of lower and less volatile gas prices towards the year-end, while at the same time, prior periods positions continued to wind down. Looking at the trade receivables and excluding state-related entities, we had a positive change in working capital by EUR 70 million, partially offsetting the increase of trade receivables from the state-related entities. We have been working with the state to reduce the overdue amount, and we expect in the first half of this year to have positive results. Finally, within category Other, we had a negative impact of EUR 92 million as a result of last year's overperformance in December '24, where some payments were shifted to 2025. Overall, free cash flow is in line with our estimates, given the significant capital deployment that we are doing throughout Southeast Europe and across technologies. Turning to Slide 28. Let me walk you through our debt profile and liquidity position. Despite the acceleration of our investment program, liquidity remains robust, supported by a well-balanced mix of fixed and floating rate debt. We also maintained strong liquidity headroom with $4.6 billion of undrawn committed credit lines as of year-end 2025. At the same time, ongoing refinancing initiatives and favorable interest rate trends have contributed to a reduction in our average cost of debt, which stood at 3.8% by the end of 2025. Our debt maturity profile remains well spread with no material concentration risks. Over the next 3 years, maturities amount to $2.6 billion, including $500 million related to our sustainability-linked bond maturing in July 2028. In October 2025, we successfully issued a EUR 775 million green bond due in 2030 priced at 4.25% coupon with strong investor demand and 3.4x oversubscription. The proceeds were used to redeem in full the aggregate principal amount of sustainability linked senior notes due in 2026 and support eligible green investments in line with our financing framework. The remaining maturities primarily relate to long-term loans and committed facilities, which we expect to refinance in the normal course of business. Finally, our credit profile remains at BB- with both rating agencies with S&P recently revising the outlook to positive, while Fitch affirmed the stable outlook. Next, on to Slide 29 for the net debt evolution and our leverage position. Net debt and consequently, net leverage increased in 2025 as anticipated, reflecting the acceleration of our investment program in line with our business plan. Net leverage currently stands at 3.2x and is expected to evolve in line with our plan. We remain fully committed to our financial policy, including the 3.5x ceiling we have set. Let me now pass it on to Georgios for his concluding remarks. Georgios Stassis: Thank you. Now moving on Slide 31. Before I conclude my presentation, let me reaffirm our guidance on key figures for this year. Our expected adjusted EBITDA is at EUR 2.4 billion, and we anticipate more than EUR 700 million in terms of adjusted net income after minorities, leading to an EPS of EUR 2.1, demonstrating a 58% increase versus 2025. We are on very good track to achieve these targets for several reasons, as we saw at the right-hand side of the slide. First, we have been experiencing mild weather conditions in the first quarter of 2026 so far, which have led to improved margin in our retail activity. Second, wind conditions have been quite strong from the beginning of 2026, benefiting our assets both in Greece and Romania, which combined with better hydrological conditions in Greece, contribute to a good start of the year. And third, we are at a quite advanced maturity stage for the 1.8 gigawatts of new renewables that we are targeting to conclude in 2026, being already at an approximately 50% readiness. Moreover, we feel very comfortable in delivering our targets for 2026 as well. Once again, we highlight our strong commitment for our dividend policy that is expected to reach EUR 0.80 per share from $0.60 per share in 2025, an increase of 33%. In our concluding slide, Slide 32, let me now wrap up with a few final points. Overall, we are delivering on our strategy with strong execution across all key pillars. Our 2025 performance reflects the benefits of our integrated business model. We continue to deploy capital in a disciplined manner with EUR 2.8 billion invested in renewables, flexible generation and distribution, supporting our future growth. We have made significant progress in our renewables installed capacity, adding 1.7 gigawatts in 2025. And at the same time, we are building strong visibility on our targets going forward, with 86% of the capacity that we target for 2028 being already secured. Our transition away from lignite is progressing as planned with full phaseout expected by end of this year, further improving our environmental footprint. This shift is strengthening the resilience and flexibility of our portfolio, enhancing our position in a challenging and evolving energy landscape. We are very confident in delivering our 2026 targets, and we prepare ourselves to be able to meet our targets beyond this year, aiming at sustainable value creation for our shareholders, our customers and the market in which we operate. Thank you all. And now looking forward to get your feedback and your questions. Operator: The first question is from the line of Di Vito Alessandro with Mediobanca. Alessandro Di Vito: I have three. First question is on the general energy outlook. I wanted to understand which could be the implications for PPC in case the current escalation in Middle East extends for a longer period of time? And on this matter, if you could remind us the sensitivity you have to power prices. The second question is around the political debate to lower power prices in Europe. I wanted some color on your contribution to this debate. And if you see the risk some political intervention, both at national and at European level? Third question is on your procurement strategy. I wanted to understand if the current disruption in LNG supplies could affect the procurement for your CCGT plants or for your gas supply clients? And maybe just the last one, a clarification during the explanation of the guidance, I heard 2026 net income above EUR 700 million. So I wanted to understand whether this is confirmed or not. Georgios Stassis: Okay. Thank you very much for the questions. Now let me start from the general outlook. Of course, we cannot estimate how this will end and when it will end. And nobody is able to do that right now. However, there are -- because we have some experience now and our experiences from 2022, where we had a major energy crisis and impacting very much also our continent. I want to outline some points. First of all, we do not have any physical delivery issues because we are not procuring from that area, from the Strait of Hormuz. While in 2022, you remember when the pipe was interrupted, we had to handle physical delivery problems as well, which was really a big mess. But we are not in this situation. Therefore, and as far as I understand, this is the situation of Asia, in particular, or some other companies, maybe in Europe, but not ourselves. And then, of course, you may understand that then we need to handle the issue of prices. Today, we think that -- I mean, if we take the today news, every day is a new situation, of course, it is at 60 -- around 60, 62, 63 in the gas TTF. Gas is of our interest. So if you remember, 2022, we handled prices of 350. So I hope we will not see these prices, of course. But still, it is -- we have the experience and the management to handle the situation, first point. Second point, we are -- I mean, we are -- we have an overall portfolio that has -- part of it is fixed. Our fixed customers is already fully hedged. So there's no impact in that situation. And of course, one could question if things go really high, how this will pass into the market. I believe that starting from as you know, from 2023, there was a European directive, which defined when Europe will be considered on crisis and has the limit reaching gas prices at 180. So we are far away from that level, thankfully. And I don't think we will be needed right now to handle any situation like that. In any way, however, this, because of our vertical integration is not -- has been proven also in the past that we never had a problem into managing this situation. If even in the scenario of infra marginal caps, it simply means that we will not have, let's say, huge windfall profits. And those will be used by the governments of Europe to be -- to supporting the citizens of Europe. So what I'm trying to say is that point one, right now, we are not in this situation at all. I'm not sure if we will be. And if and if we will go in a very extreme situation, the tools are available to be used also at the European level, have been used in the past, and we proved that we were not affected by that, and we don't believe we'll be affected as well. Now the other thing is that the timing of this crisis is coming in a period of time, which is spring. And this is very important because we just closed winter. And this is a period of time where renewables are boosting very much. We are mostly of low prices. So I think that there is time in front of us before we move to the heart of the summer where we will have another peak or when we will reach the point that the European storage facilities will start to be having the need to be, let's say, filling up. And that would be possibly an issue which will impact 2027. We don't believe we will have a major impact in 2026 also in such a situation right now. So we wait and see how the situation will develop. But I think we are extremely protected as PPC right now, having worked in our overall vertical integration and our own capability to manage our overall customer base. Now going -- to the second part of your question about the discussion that has emerged in Europe about the energy prices, this is a valid point, I believe. It is a concern for everybody. And I believe it is also a valid point for the industry, which is an important parameter. I have the impression that -- I mean, we will know today, tomorrow, how things will develop in the council, but I have the impression that mostly the discussion will focus around an ETS reform for the future. As you may be aware, ETS is supposed to be formed in July, and there is today already taken decisions from the past to remove quantities from the ETS market from the quote that would tighten the market further and would result in a price increase in ETS. I see personally that there is room in the discussion of the European leaders to make this transition smoother and not so steep in the coming years. And I think, and this is the most important thing, that this is exactly how we were forecasting the development to happen even before this discussion becoming relevant. If you look on our slides on the Capital Market Day in November, you will see that the kind of path we have for ETS prices are reasonable because we were assuming from that time that we don't believe that the current situation will be activated in the sense that we don't believe we will see crazy prices of the ETS market. So we have already budgeted with a very smooth pattern from 2026 to 2028, even beyond 2030. And I think the conclusion of the discussions in Europe will more or less go in that direction. And then having said that, there is another element as well, which is very important, which is our region, because we put all this into a perspective, but we need to think of our region as well because every geography is different. In the Southeast European region, the corridor between Italy, Greece, Bulgaria, Romania, Hungary, Poland, up to Ukraine, Moldova, all these kind of countries, Croatia; this is a corridor which is very tight from the capacity point of view. And on top of that, it has very old fleet. So because you have a sensitivity, even in our calculations with a lower EPS from our projections, we don't see the dam changing significantly because the assets that will be activated are quite mature and old fleet and into an area which is having a very old fleet. For all these reasons, I believe that we have been very prudent in managing our assumptions. And I think gradually, we are going in that direction. So we feel that not only for 2026, we are absolutely certain that we will deliver properly, but also for the coming years, we will be in line with our projections. Last, procurement. I didn't quite understood the last part of your question, but I can tell you that we don't feel any procurement issue as a result of the crisis right now in the rate. But if you can elaborate more of what you meant, I will be able to answer. Alessandro Di Vito: Yes. No, I think you already answered. I was asking about your procurement strategy and whether you would be affected by the disruption in the Middle East. But you already said that the fixed portion of supply is secured and you have no procurement from Middle East. The last question was on the net income for 2026, whether it is going to be around EUR 700 million or above EUR 400 million during the presentation, I had above, but I just wanted to make sure about the detail. Georgios Stassis: Okay. Listen, we just closed the year at EUR 450 million net result. I can tell you certainly that we will be in the area of 700. I could even tell you that we're having a good year today. So I would be most probably able to verify a number higher than this. But of course, we have -- we are in an environment of huge volatility. So the only thing I can confirm is the 700 level right now. Operator: The next question is from the line of Nestoras Katsios with Optima Bank. Nestor Katsios: Congratulations for your great set of results. So two questions from my side. The first one has to do with the data centers. Is there any update with your discussions on the data center front? And the second one is about [ Ptolemais ] 5. I understand that you will shut down this year. Are there any final investment decision for the future of [ Ptolemais ], I mean, some gas plant? Georgios Stassis: Okay. Let me start from the last because I think it's the easiest. I mean, for [ Ptolemais ] 5. I think we have already announced that we will convert it to gas, and we are already working in that direction. I think we will see it already in operation in gas from 2028 because we are already working in that direction. We have already secured the equipment we need. And I think we have sufficient time to do this transformation by 2028 early. So this is for [ Ptolemais ]. Now for the data centers, for those of you who are following our company, you may remember that we have announced our intention to develop a data center last April. It's almost a year, not even a year yet. And I told you from that day that I would expect -- I was expecting end of '26 to have some sort of real development. And this is our vision right now. However, we are in discussions with hyperscalers and those discussions are going a little bit better from what I thought. So I mean, we have progress. We have significant progress, but we are not there yet. This is the thing I can say right now. Operator: The next question is from the line of Karidis John with Deutsche Bank. John Karidis: I have four quick ones on just the telco business, please. The first question is, what was the CapEx in FY '25 in millions rather than billions? Secondly, how many customers did you have at the end of 2025? And how many do you have now? Thirdly, during the CMD, I asked you about the timing of the launch for voice services, and you said very soon. Could you please update me on that, hopefully, give me something like a date? And then lastly, a year ago, I asked you whether you were interested in mobile, and you said you were not. Has your view changed there at all? Georgios Stassis: Thank you very much for the questions. I can tell you that we have spent around EUR 200 million until now on this project. We have delivered more or less a network of 1.7 million, but only 1 million is commercially available. First, you create the backbone and then you make the remaining pieces. So very recently, we launched at the end of last summer, the service with a footprint of 500,000, let's say, households passed. And very recently, we opened from 500,000 to 1 million. I can tell you that we are currently connecting around 200 customers per day. This is the current pace we have. So you can calculate. I think we are quite happy with that because in that level, I think this in the coming months because it's too young, not even 6 months that we are working on that. In the current pace, we will probably reach a level of 250,000 in the coming months. And when we will open the remaining 500,000 and so on and so forth, I mean, going gradually as per our plan to 3.5 million; this means that with this trend, we will be reaching a level of around 700, 800 customers, maybe more per day. So we are very happy. We are learning as well from that. As you might have noticed, we are not pushing a lot advertising because we want to have a very good service on our customers. But very shortly, we will start pushing more commercially. So I'm expecting these numbers to pick up. But so far, so good. I mean, we are doing very well. We are very happy, and we will reach the target -- the number of target customers we have in our mind by the end of '28, beginning of '29. About voice, I think we are ready to launch it probably in June, June, July, we will launch voice. About mobile, we are not investing in mobile because our project is a very specific project. That's why we are so relaxed. I mean we are doing this -- we found this opportunity to roll out this fiber project only in Greece. It's not a big project for us versus our total CapEx. And we are in line exactly with the numbers we want to have day by day. So we will go gradually. We are not investing in the mobile. I can verify this 100%. Thank you. John Karidis: I'm sorry, could you please tell me how many customers you had in total at the end of 2025? Georgios Stassis: We have more than 12,000 customers. Operator: The next question is from the line of Walker-Hunt Ella with Citigroup. Ella Walker-Hunt: My first question relates to hedging. So in terms of power price exposure, could you tell us what's your hedge position at the end of the year? So how much in terms of terawatt hours have you sold forward and what duration? And then my second question is about the full-year results. So if you -- if we look at it on a quarterly basis, so the fourth quarter earnings were actually down almost 20% if you compare to the last year. So I was just wondering, what was driving that earnings contraction in the fourth quarter? Georgios Stassis: Okay. The first part -- what was the first part? The hedging, the hedging, we are at a level of more than 40% to 45% right now for the year for everything, all our position, not accounting the fixed customers, of course, that we have 100%, as I told you, on our fleet. Now for the fourth quarter, I mean, we navigated -- I mean, we have a sort of -- every year a sort of seasonality, and we are trying to govern the company also taking into account the market in general. So we chose to support more our customers at the end of the year. And -- but still, we brought our results. So -- but this has happened in many of our years, I mean, in the past years. There is a thin line where you need to keep the pace of growth in a reasonable level. And from quarter-to-quarter, we have and we have had differences like that in the past. This is normal. In the contrary, you will see that if you will compare this quarter, this current quarter when we will announce it because it's going well. With the quarter of last year, you will find exactly the opposite. But it is part of our -- the nature of our business. Operator: The next question is from the line of Pombeiro Mafalda with Goldman Sachs. Congratulations on the results. Mafalda Pombeiro: I only have two left, if possible. The first one would be any indication or guidance on the net debt levels for 2026, if you can share at least the main moving pieces? And the second one is just a clarification. Out of your retail sold volumes, could you please -- I understand that the part that is fixed contract fixed customers. So what percentage is that of the overall sold volumes? Georgios Stassis: Our fixed part is around 20%. And now Konstantinos will take the first one. One second, give us. Konstantinos Alexandridis: Yes. So the way we have set up the business plan that we discussed back in November is asking for additional investments. So we do expect that the more we are progressing, of course, leverage ratio will remain at the area of 3.3x to 3.4x. So that would be at an area in terms of net debt close to EUR 7.5 billion to EUR 7.7 billion. Operator: The next question is from the line of Anna Antonova with JPMorgan. Anna Antonova: Just a few from our side. So first, on the CapEx outlook for this year for 2026. I see that last year, you spent just a little bit lower than you guided below the EUR 3 billion. Is the CapEx for this year still expected around your target, which I think from the end of last year was EUR 3.8 billion? That's the first question. Georgios Stassis: Yes. We -- of course, from last year, the big deliveries of renewables started to arrive in our company. On the other hand, last year, we did our CapEx also with an acquisition. as we have noticed. But the last quarter, we brought 800 megawatts. So it's ramping up. And right now, we are going to deliver 1.8 gigawatt, and it's going fantastic. So we are able to confirm exactly our CapEx for this year. Anna Antonova: The second question is on the outlook for hydropower this year. I remember you commented during the call that in Q1, the weather conditions were quite favorable. So if you could maybe comment where you currently see the upside for hydro generation for this year compared to last year's maybe level, which was, I think, 3.4 terawatt hours. Georgios Stassis: Yes. Finally, we are having a good year on hydro after several years. We had the 3 bad years on hydro levels, and this is coming back this year. So I mean, I cannot predict exactly, but it's going to be for sure, more than last year. Operator: We have a follow-up question from Anna Antonova, JPMorgan. Anna Antonova: Just a quick follow-up question. So with all the events happening this year and higher power prices and kind of regulatory debate in Europe, can you comment if you see any downside to your targets for this year from the current conditions, both on the financials and on especially the lignite phaseout? You mentioned earlier the event of 2022, and I remember that at that time, the lignite decommissioning was a bit delayed due to everything that has been happening. So do you expect kind of any potential risks to the targets for this year? Georgios Stassis: Yes. And what was the lesson in 2022? We kept lignite because why? Not for economic reasons, because of lack of physical deliveries at that time in 2022. And what was the lesson? It was still more expensive than anything else. So we are not intending to keep it back by no means, especially now that we don't have any physical delivery issues. Other than that, I mean, knock wood, this is going very well this year. If it wasn't the Iran conflict, we would be able to be more optimistic, but we stay at this level right now. Operator: Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Mr. Stassis for any closing comments. Thank you. Georgios Stassis: Maybe we have a question. Operator: Yes. We have one more question from Mr. Alderman Richard with BTIG. Richard Alderman: Can you hear me? Georgios Stassis: Yes, please go ahead. Richard Alderman: Just one follow-up question on the hedging there. Just so we don't misunderstand what you're saying about the gas element of the hedging within your retail book, are you essentially hedged for what you see would be your average demand through the rest of the year from your retail book at this point? And then obviously, if there are variations within that and that costs you more, you would pass that through to customers who are not on fixed contracts. I'm just trying to understand... Georgios Stassis: This is indeed -- this is exactly correct what you said. Richard Alderman: Okay. Because there's been some discussion in the market as to whether you had exposure to that, but that's reassuring to hear. Operator: Ladies and gentlemen, there are no further questions now. I will now turn the conference over to Mr. Georgios Stassis for any closing comments. Thank you. Georgios Stassis: I think 2025 has been an important year. because this company proved that it reached a level of significant net result versus the past years. 2026 will be another year like that. Our growth is very important versus last year. And we feel confident we are exactly on target, maybe a little bit more. We will see how the year will develop. But so far, so good. So we are excited with the development of the company. We are already working very much for 2027, 2028. I believe 2026 is secured. And I think the coming years will be very interesting. Thank you.
Operator: Greetings, and welcome to the Achieve Life Sciences Fourth Quarter and Full Year 2025 Earnings Conference Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded. [Operator Instructions] It's now my pleasure to turn the call over to Nicole Jones, Vice President, Strategic Communications. Nicole, please go ahead. Nicole Jones: Thank you, operator. Good morning, everyone, and thank you for joining us today. From Achieve Life Sciences, we are joined by Rick Stewart, President and Chief Executive Officer; Dr. Mark Rubinstein, Chief Medical Officer; Jaime Xinos, Chief Commercial Officer; and Mark Oki, Chief Financial Officer. The management team will be available for Q&A following the prepared remarks. A replay will be available later today using the information in the earnings press release or by visiting the Achieve Life Sciences website. Today's conference call will contain certain forward-looking statements, including statements regarding the goals, strategies, beliefs, expectations and future potential operating results of Achieve. Although management believes these statements are reasonable based on estimates, assumptions, and projections as of today, these statements are not guarantees of future performance. Time-sensitive information may no longer be accurate at the time of any telephonic or webcast replay. Actual results may differ materially as a result of risks, uncertainties, and other factors, including, but not limited to, the factors set forth in the Company's filings with the SEC. Achieve undertakes no obligation to update or revise any of these forward-looking statements. Please refer to Achieve documents available on our website and filed with the SEC concerning factors that could affect the company. I'll now turn the call over to Rick. Richard A. Stewart: Thank you, Nicole, and good morning, everyone. The NDA submission in June 2025 started the transformation of Achieve from a pure-play clinical development company into a commercially focused enterprise. Our primary objective now is to make cytisinicline available to the 25 million patients who smoke and nearly 18 million who vape. The need for a new nicotine dependence treatment like cytisinicline has never been greater. Achieve is committed to providing the new therapeutic tool to patients seeking to break free from the cycle of nicotine dependence. I'm incredibly impressed by the commitment and resilience of the entire Achieve team and their dedication to addressing the nicotine dependence public health crisis in the U.S. Key highlights in 2025 include: firstly, the submission of the New Drug Application or NDA for the smoking cessation indication and its acceptance by the FDA, moving us one important step closer to becoming the first new FDA-approved treatment in 20 years. Secondly, Achieve's vaping cessation indication was one of the first recipients of the Commissioner's National Priority Voucher. Recognition of cytisinicline as a national priority is an incredible achievement of the work conducted by Achieve and the importance of cytisinicline in tackling the previously intractable problem of nicotine dependence. The Commissioner's voucher gives us an accelerated pathway to be the first and only FDA-approved vaping cessation treatment. Thirdly, our clinical team delivered on all planned regulatory milestones and generated encouraging clinical data across our program during the year. This includes concluding the ORCA-OL long-term exposure trial, which underlined cytisinicline safety profile, demonstrating strong tolerability and excellent patient satisfaction data. We should not underestimate the importance of the findings from the ORCA-OL safety study, which demonstrated the tolerability of cytisinicline over long-term, 52-week exposure to treatment. Dr. Mark Rubinstein will elaborate in a minute. And lastly, post-hoc data published in Thorax, a leading peer-reviewed medical journal, demonstrated that cytisinicline significantly improved smoking quit rates compared to placebo in adults with chronic obstructive pulmonary disease. There are 6 million COPD smokers in the U.S. today with few options to help them quit. Their level of nicotine dependence must be high, as continued smoking exacerbates COPD symptoms and impairs the efficacy of COPD drugs. The positive data on COPD patients highlights the expansive scope of opportunities for cytisinicline in terms of the range of comorbidities that could potentially benefit from treatment, and broad range of health care providers who would be interested in its benefits. Our commercial team has moved forward decisively towards building a scalable, data-driven commercial model that will position us to launch successfully. Our model is built to address the rapidly evolving health care environment, where approximately 75% of primary care physicians will no longer meet with medical reps. Achieve's omnichannel digital platform provides precision targeting of physicians and patients, which will allow us to identify high-volume prescribers and the patients motivated to quit, deploying resources efficiently and maximizing impact per dollar spent. AI is a critical enabler in this evolution. We'll be using advanced analytics and machine learning to enhance decision-making, automate customer engagement, and generate predictive insights about which messages will resonate most with target audiences, positioning us to continue building an efficient commercial organization that punches well above its weight. We also just announced that we have selected Adare Pharma Solutions, a U.S.-based manufacturing organization that will produce cytisinicline drug product as we prepare for potential commercial launch and future demand. We believe this partnership will secure our supply chain, reduce risks associated with international pharmaceutical importation, and may lower overall costs, including the risk and uncertainty for tariffs on international imports of drug product. I'm pleased to report that work has commenced and our technology transfer to Adare is already underway. The Adare partnership provides redundancy in our supply chain, allowing contingency capacity in the U.S. The manufacturer named in the cytisinicline NDA recently had an FDA Good Manufacturing Practices inspection with 2 observations related to solid oral dose manufacture, which are being addressed through an ongoing communication of its remedial action plan with the FDA. By establishing U.S.-manufacturing with Adare, we increase confidence in our supply-chain security as we advance towards a planned commercial launch of cytisinicline expected in the first half of 2027. We remain focused on bringing cytisinicline to patients as quickly as possible, and our decision to work with Adare positions us to launch with the manufacturing reliability and the operational readiness our patients and stakeholders expect. Now, let me take a moment to remind you why our team is so passionate about bringing cytisinicline to market. Recent data issued by CDC estimated that in 2024, approximately 25 million adults in the United States smoked cigarettes. It's estimated that more than 15 million attempt to quit every year. Smoking remains the leading cause of preventable death in the U.S., claiming approximately 500,000 lives annually and costing over $600 billion each year in health care cost and loss productivity. The comorbidities are devastating. To name a few, respiratory disease, cardiovascular disease, metabolic disease and cancer. We also know that 60% of the nearly 18 million adult e-cigarette users in the U.S. want to quit, and adult nicotine e-cigarette use is on the rise. However, there is no FDA-approved treatment for e-cigarette cessation. Patients are frustrated, physicians are frustrated. The narrative around nicotine dependence needs to change. We've seen this transformation happen with obesity. When GLP-1s emerged, they helped society recognize obesity for what it truly is, a medical condition, not a personal failure. Nicotine dependence deserves the same recognition. It's a neurobiological condition rooted in how nicotine alters brain chemistry and creates physical dependence. It's a medical condition and it demands medical treatment. That's why we launched our Will Power awareness campaign in January. This is the beginning of us reframing the conversation to help people understand that quitting takes more than Will Power alone and an effective treatment exists. The bottom line is that Achieve is not quitting on people who smoke. The parallels between obesity and nicotine dependence are not lost on many investors. unmet medical needs, same physician call points, same cost to society. In summary, our science is strong. We're advancing through the regulatory review process with the FDA, working constructively towards approval. Our commercial infrastructure is taking shape with real progress in 2025, and we're actively building for launch. With that, let me turn it over to Dr. Mark Rubinstein, who will detail our regulatory progress and the data that continue to reinforce cytisinicline across patient populations. Mark Rubinstein: Thank you, Rick, and good morning, everyone. We have made tremendous progress in 2025 for cytisinicline from a clinical and regulatory standpoint. Since our last earnings call, we've continued to validate cytisinicline's clinical profile through peer-reviewed publications and scientific conference presentations. We were pleased to present findings from a pooled analysis of over 1,600 participants from our Phase III trials at the Society for Research on Nicotine and Tobacco or SRNT conference a few weeks ago. This analysis examines cytisinicline's efficacy across participants with different prior treatment histories and quit-attempt patterns. Regardless of whether the participants had previously tried varenicline, Bupropion or nicotine replacement therapy, or whether they had made 4 or fewer quit-attempts versus many more, we saw consistent efficacy. These data show that if approved, cytisinicline will offer a new quit option for patients, including those for whom medications have failed. This consistent efficacy across patient subgroups shows that past setbacks should not discourage people from trying again. For millions of people who have tried and failed, cytisinicline offers real hope. We also presented late-breaking survey data from our year-long ORCA-OL study that demonstrated voluntary, self-reported patient experiences with extended cytisinicline use up to 52 weeks. This survey of data from people who chose to continue treatment beyond the 6- or 12-week standard courses offers insight into long-term tolerability and impact. Patient experience is hugely important for those trying to quit smoking, and is encouraging to see trial participants describing meaningful benefits, including successful quitting and improvements in physical health. We have also been accepted to present research at the 2026 American Thoracic Society Conference in May and look forward to updating you in the coming months. On the e-cigarette front, we received the FDA Commissioner's National Priority Voucher for cytisinicline in e-cigarette or vaping cessation, a significant recognition of the public health urgency. The CNPV is designed to provide enhanced FDA communications and an expedited NDA review time line to 1 to 2 months compared to a typical 10 to 12 months. We are now laying the groundwork for our ORCA-V2 Phase III trial for vaping cessation, including selecting trial sites and identifying principal investigators. In summary, 2025 has strengthened our clinical and regulatory position significantly. We're advancing through the FDA's review process with an active dialogue with the agency. We remain confident that cytisinicline has the potential to deliver the first FDA-approved treatment for nicotine dependence in 2 decades. With that, let me turn it over to Jaime. Jaime Xinos: Thank you, Mark. When I look back at where we started at the beginning of 2025 and where we stand today, I'm struck by the incredible progress our commercial team has made in just over a year. We've built the foundation for a launch-ready infrastructure from the ground up while remaining lean and right-sized for our current stage requirements. We've established partnerships, deployed advanced analytics, created an AI-powered asset factory, and are positioning ourselves to execute at scale. I'm deeply grateful to the entire team who have been instrumental in bringing this vision to life. As a reminder, our commercial execution rests on 3 critical priorities: availability, or ensuring supply-chain readiness so that cytisinicline can reach the patients who need it; access to secure coverage and affordability; and awareness, which is educating the right patients and health care professionals at the right time about this transformative new option. Every initiative is data-driven, and every decision is tied to measurable impact with the goal of making cytisinicline accessible to the millions of Americans struggling with nicotine dependence. Now, I'll provide updates on each of our 3 priorities. First, let's look at availability. Implementation with our third-party logistics provider is well underway. We are on track with our state licensing and have secured more than half of the required licenses to date. Additionally, we have now completed the administrative and logistical setup with our specialty pharmacy hub partner. We believe these foundational steps will be critical to ensure patients can obtain cytisinicline and that prescriptions written are prescriptions filled. On the access front, our focus remains on securing rapid, broad, and affordable coverage for cytisinicline. In Q1, we continued discussions with prioritized payers to share our clinical data. Feedback from these ongoing discussions will be critical in finalizing our pricing, access, and contracting strategy as we move closer to launch. On awareness, our focus is establishing Achieve's reputation as a trusted, science-driven partner and shifting how patients and providers think about nicotine dependence. As Rick mentioned, we launched our Will Power campaign, which directly challenges the outdated narrative that quitting smoking is simply a matter of personal determination. The campaign featured visuals that reimagine vintage cigarette advertising, but instead of selling cigarettes, they're selling Will Power as a miracle product. It is deliberately provocative because the message is clear. Will Power alone is not enough. We will continue to strategically deploy this campaign throughout 2026 to drive ongoing conversation and awareness around nicotine dependence as a medical condition requiring a medical solution. Beyond this, we are leveraging technology and AI tools to generate rapid, evidence-based and regulatory-compliant content that will fuel our launch. To use a bit less marketing jargon, this means we are able to build things faster using fewer resources. Through our partnership with Omnicom, we developed a marketing engine designed to shave weeks off the development, review, and approval of brand messaging, promotional, and educational materials. This is just one example of how modern tech and data are improving our ways of working at Achieve. We've also established our unified data ecosystem and our custom-built marketing technology foundation to support hyper-targeted, personalized customer engagement and measurement. Finally, we've completed detailed customer segmentation to better understand how to reach and meet the needs of our future patients and prescribers. As we look ahead, we are building plans for optimizing sales deployment and non-personal promotion to key audiences at launch and beyond. We will look to deploy the Will Power campaign in select audiences, complete our data and performance-measurement capabilities, and finalize media channels and plans. We are confident in our ability to execute and scale effectively and deliver long-term value for patients, providers, and shareholders. I'll now turn it over to Mark Oki for financial updates. Mark Oki: Thank you, Jaime. Let me walk through our financial position and results. As of December 31, 2025, cash, cash equivalents, and marketable securities totaled $36.4 million. Total operating expenses for the 3 and 12 months ended December 31, 2025, were $14.7 million and $54.9 million, respectively, reflecting our ongoing investment in regulatory, clinical, pre-commercial, and commercial infrastructure activities. Our total net loss for the 3 and 12 months ended December 31, 2025, was $14.7 million and $54.7 million, respectively. As always, we continue to evaluate financing options and cash management strategies, and we will provide updates if and when appropriate. I'll turn it back to Rick for closing remarks. Richard A. Stewart: Thank you, Mark. In closing, I'm pleased with our regulatory, clinical, and go-to-market efforts, which underscores the momentum behind Achieve Life Sciences and our unwavering commitment to addressing the critical unmet needs of nicotine dependence. As we look ahead, I want to highlight 3 critical value drivers for our Company. First, receiving NDA approval and successfully launching cytisinicline for smoking cessation. This is our near-term priority, and the team is executing with discipline and purpose. Discipline is important to ensure there is a controlled and successful launch. Second, the growing recognition of the significant opportunity represented by our vaping indication. With the Commissioner's National Priority Voucher and the urgent public health need around e-cigarette cessation, we have the opportunity to be first to market with a treatment for an indication where no approved options currently exist. Finally, both of these are underpinned by our digital commercial platform, the AI-powered data-driven infrastructure we built that positions us to launch efficiently and scale rapidly with precision targeting and measurable impact. To the millions of Americans who are ready to break free from nicotine dependence, Achieve Life Sciences is not quitting on you. We are dedicated to this urgent need. The standard of care in smoking cessation has not evolved in 2 decades, and we are about to change that. I'm grateful to our patients, clinical investigators, regulatory partners, investors, and our incredible Achieve team for their unwavering dedication to this mission. Together, we're building something meaningful. We're not quitting on you. We will not quit until we deliver a treatment that changes the standard of care for nicotine dependence and helps people live free of nicotine. Lastly, we're limited in what we can say about our interactions with the FDA while the NDA is under review. And as I said earlier, the communications are normal for this stage of the review process. I look forward to updating you on our progress. Thank you for your time, attention, and continued confidence in Achieve Life Sciences. Operator: [Operator Instructions] Our first question is coming from Thomas Flaten from Lake Street. Thomas Flaten: Perhaps for Jaime, the launch timing for the first half of '27, can you talk a little bit about the critical path between a late June NDA approval and the first-half launch? Is this primarily scale-up on the commercial side? Is it potentially product supply? Can you just talk a little bit about that gap that's created there? Jaime Xinos: Sure. Thanks for the question, Thomas. So obviously, we need drug in order to be able to go to market. And so that is our first consideration is when can we get drug into the supply chain to get it out into the hands of patients. So everything that we need to do on the trade and distribution side will be ready to go as soon as we have drug. So we have our 3PL setup, as I mentioned during the call, serialization, our specialty-pharmacy vendor, all of those requirements for copay and access, all of those will be aligned and ready to go at launch. The rest of the time that we'll be spending over the next 6 months with a little bit of -- or the additional 6 months gives us an opportunity to get some additional data into the marketplace and to the scientific community, and also work on -- work towards additional partnerships with advocacy and potentially policymakers. So it does afford us a bit more time to get a few other operational things activated as well. Richard A. Stewart: If I can add to that, if you look at it from a strategic standpoint, given the scale of the market that we're actually addressing, we took a decision that we need to make sure that we have got all of the processes in place to maximize or optimize the product launch. So, I think Jaime and the team are doing a terrific job on that front and Craig on the manufacturing side is doing an excellent job. So I think taking time to get it right is critically important for the success of the launch. Thomas Flaten: And then with respect to manufacturing, you did mention the observations during the GMP inspection. And did you imply -- maybe perhaps I'm reading too much into it, that the manufacturer in the NDA will not be supplying commercial product rather Adare will? And then, what implications does that have for folding Adare into the process now during the NDA review? Richard A. Stewart: Yes. I think the critical part of this is that the PDUFA date remains the 20th of June of this year. That is what the FDA has set, and that's what we're working toward. But of course, any time that there's any observations, we've already made the decision to transfer manufacturing to the U.S. given the geopolitical situation. So, we basically just accelerated that. So, at the moment, the PDUFA date remains exactly the same. And I think, given the scale of this opportunity, it's prudent to ensure that we have contingency supply. It's prudent to ensure that we've got onshored manufacturers here in the U.S. Operator: Our next question today is coming from Jason Butler from Citizens Bank. Jason Butler: On all the progress in 2025. Two from me. Can you just talk a little bit more about where you believe awareness currently is with health care providers and what additional work you'll be doing in 2026 to continue to build awareness of cytisinicline and the data? And then second, is there anything you can say about FDA dialogue on the vaping indication since you got the CNPV? Richard A. Stewart: Jaime, do you want to address the commercialization? Jaime Xinos: Sure. Thanks for the question. Regarding HCP awareness, I would say it's not been a priority to date to do broad-spread awareness about the product. And a lot of that has to do with what you are allowed to say in a pre-approval environment. So obviously, disease state education is one channel that we can provide information in a regulatory-compliant way, but one of the decisions that we've made is that we understand that everyone knows that smoking is bad for you, and there's really not a huge need to go out and spread that message. And so what we've been doing is conserving our resources so that when we get closer to launch, we can do a stronger push from an educational perspective that is specific to data about the product and when the product is going to be in the hands of physicians so they can use it with their patients. So we're scaling it adequately based on the need to do disease-awareness education, or lack thereof, in a smoking-cessation indication. I think as we get closer to launch, we will be ramping up more opportunities, and you're already seeing us do that around some of the conferences where we will be presenting data and where we have. So, ATS is a huge opportunity that Mark mentioned, where we're going to have some new data that we want to get out into the hands of -- into the medical community and into the hands of physicians. So, it's something that we are scaling up as we get closer to launch, but we've been very conservative in our efforts so far in how we spend money prior to them having the solution in their hands to give to their patients. And then, Rick or Mark, I'll turn it back over to you to discuss FDA dialogue on vaping. Mark Rubinstein: Sure. So right now, to date, our discussions with FDA around vaping have largely been around approval for the protocol itself. And we hope to continue engagement as the study progresses. Richard A. Stewart: I think if I can add to that, we're already in site-selection. So, it is progressing at a pace. So I think the key is that we're anticipating a commencement in the first half of this year. So, yes, it's moving along at the pace. And I noted also the public forum that the FDA is putting together the 20 -- I think it's the 14th of June coming up. So, I think there's some debate around the validity of the CNPV. But for us, we think that the opportunity is huge as being the first-in-market for a vaping-cessation product. And that's clearly an underserved market, as there are no treatments there. But -- so I think that's going to be a real area of focus and interest. Operator: [Operator Instructions] Our next question is coming from Brandon Folkes from H.C. Wainwright. Brandon Folkes: Congrats on all the progress. So, just coming back to the manufacturing, does your U.S. commercial launch time line of 1H 2027, does that assume a June 2026 approval or potential later approval? What level of flexibility should we think about in terms of when in 1H '27 you may launch? Anything to read into in that broad time line? And then, maybe on a similar vein, are you looking to add Adare to the NDA before the June approval? Or is this potentially something to qualify them post-approval? Richard A. Stewart: I'll take the answer in reverse order. Yes, it's going to be post the June approval. I think the key now is to focus in on the approval and also to ensure that we put a stake in the ground, frankly, in terms of the first half of '27 for the product launch quite simply because of all of the activities that need to go into it to ensure that we've got product to go into channel to make sure that all of the commercial operations have completed their activities. So, I think there's nothing to read into it other than we got a couple of observations that our third-party manufacturer is currently addressing with the FDA. There's a little bit of opacity around that, of course, because it's a discussion between the FDA and the manufacturer. But as far as we're concerned, on the flip side, we're always in favor of transparency. So we'll keep you in the picture with respect to that as things move along. Brandon Folkes: That's very helpful. Maybe lastly from me, just given the lead time between a potential June approval and a 1H 2027 launch, how should we think about insurance coverage at launch? Should we think about this similarly to normal launches? Or could we have better than normal insurance coverage at launch, obviously, given the indication, but also given that lead time to have those discussions? Jaime Xinos: Thanks. I'll take that question, Rick. So regarding payers, yes, we have been out actively having conversations in the regulatory compliant pre-approval information exchange opportunities that we do have. So we've had about 40 touch points with payers in the first quarter. We've attended PCMA. We've actually had inbounds from payers who want to have conversations with us. So, we are obviously on the radar. They are very interested. They recognize the differentiated profile of cytisinicline and the clear unmet need. Obviously, we know there's still 25 million people who smoke in this country who need treatments that will help them stop. So, the ongoing conversations are very encouraging. We also know that the Affordable Care Act requires coverage of smoking-cessation treatments. So, that certainly helps in our favor at launch and beyond. And regarding timing, the actual clock really starts building for the demand when the drug is in channel. So, we will have more time to have more conversations, but we won't start building demand. Any initial restrictions to access, such as new-to-market blocks, those still will require a ramp period from time of drug being distributed and in hands of patients to the timing of the bleed out that it takes in order to get on formulary for some of those plans. So, we're still tracking a slow ramp for the initial 6 months of launch. Operator: Our next question is coming from Justin Walsh from JonesTrading. Justin Walsh: I'm wondering if you can provide additional color on the robustness of the raw plant material supply-chain. Are third-party suppliers able to meet expected demand if Sopharma is unable to do so? Richard A. Stewart: Excellent question, Justin. Yes, as I mentioned before, we have been stockpiling the starting material for some considerable time. And by the time we get to launch, we believe we'll have more than 3 years supply of starting material for the amounts required for in-market sales. So -- and we will continue to add to that stockpile. We don't really see the inventory going much below 3 years for the foreseeable future. We've been buying in for quite a few years now. And the starting material has a 3-year shelf life, but we basically will reprocess it as we -- as it's required to be used. Justin Walsh: And one more for me. I'm wondering if you can comment on the cytisinicline dosing schedule and if there's any concern that a potential pill burden could limit real-world compliance or commercial uptake. Richard A. Stewart: I'll hand that one over to Dr. Mark Rubinstein stage. Mark Rubinstein: Sure. That's a great question. We actually have found, just after completing our ORCA-OL, where people actually use the pill 3 times a day for up to a year, that not only did people not find it excessively burdensome, but our completion rate and the number of people who adhered to the protocol was incredibly high. A lot of participants reported that they felt that their highest cravings were around mealtime. And so actually, even though you don't have to take cytisinicline with meals because it's TID, it's perfectly -- it can be perfectly timed around meals. And they found that it was reassuring to take something to address their cravings right around the time periods that they would have their highest cravings. And again, our adherence rates in all of our trials and our OL trial, which was 52 weeks was incredibly high, over 75%. Operator: Next question is coming from John Vandermosten from Zacks. John Vandermosten: In December, there was an ICER report that came out that calculated some prices for cytisinicline. And I was wondering if you've seen that. And then wondering how that compares with your internal calculations and what prices you're thinking about when that comes about next year. Richard A. Stewart: Jaime? Jaime Xinos: We have definitely seen the report -- thanks for the question. Yes, we have seen the ICER report. We were involved in the process, providing information when requested that was appropriate for their consideration. I think, importantly, what it did highlight is that they have affirmed there is a substantial unmet need despite currently available treatments, and that payers should make cytisinicline immediately available. And as far as pricing goes, we're not going to comment on our pricing because we've obviously not set that yet, and we're not ready to have those conversations with payers on an exact price. So, we'll leave it at that, but we are pleased with the recommendation that ICER made. John Vandermosten: And then a few questions on manufacturing. I guess I wanted to frame it first. Where does it stand with a synthetic manufacturer of API? And then I believe there are 3 different entities, perhaps, that you're working with. There's Adare. I believe there's a European manufacturer and then there's Sopharma. How does that all fit together? Richard A. Stewart: Right. So, some pieces of a jigsaw puzzle. Look, I think the key here is that the synthetic is an end process, put it that way. It's not an easy process, and I think I've stressed this before, we're making substantial progress on that front. But I think in terms of the 3 manufacturers, we start off with Sopharma. Sopharma was not included in the NDA because we had concerns over their FDA inspection-readiness. I was down in Sofia about 3 weeks ago, and Sopharma have made substantial progress with respect to their inspection-readiness. And we'd expect -- we're going to intend to add them to the NDA once it's approved. I think in terms of the third-party manufacturer, the key there is that, as I mentioned, we've got these observations that we're monitoring very, very carefully, and they're collaborating with the FDA to rectify any kind of observations and the remedial action associated with it. And then ultimately, the transfer of manufacturer to the U.S. has largely been driven by a desire to have contingency and redundancy in our overall supply chain. And given the uncertainty around tariffs in particular, and also MFN and that kind of stuff, we decided some time ago to actually move manufacturing into the U.S. So, timing-wise, we're anticipating that Adare should be available to be added to the NDA in the third quarter, that kind of time frame. So does that answer the question? Operator: Yes. We reached the end of our question-and-answer session. I'd like to turn the floor back over for any further or closing comments. Richard A. Stewart: Well, I'd just like to thank you all for your continued interest in Achieve Life Sciences. We've made terrific progress this year. And I just want to put it into context, 15 years ago, Tony Clarke, who is the Co-Founder of Achieve and I have this idea that cytisinicline could do immense societal benefit with a desperate need for a new treatment for nicotine dependence for smoking cessation. At that point, vaping didn't even exist. Over the years, we've worked tremendously hard. The initial 8 years was Tony Clarke and I actually funding the company ourselves. And since we -- over the last 7 years, we've made fantastic progress to address this huge unmet medical need. And we really do believe that we're at this brink -- on the brink of actually great success and having the ability to treat patients who have got very few options to quit. So, I'd just like to say thank you for your continued interest in the company, and we look forward to updating you. Operator: Thank you. That does conclude today's teleconference and webcast. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.
Operator: Good morning, and welcome to Cadeler's Third Quarter 2025 Earnings Presentation. Presenting today are Mikkel Gleerup, Chief Executive Officer; and Peter Brogaard, Chief Financial Officer. Please be reminded that presenters' remarks today will include forward-looking statements. Actual results may differ materially from those contemplated. The risks and uncertainties that could cause Cadeler's results to differ materially from today's forward-looking statements include those detailed in Cadeler's annual report on Form 20-F on file with the United States Securities and Exchange Commission. Any forward-looking statements made this morning are based on assumptions as of today, and Cadeler undertakes no obligation to update these statements as a result of new information or future events. This morning's presentation includes both IFRS and certain non-IFRS financial measures. A reconciliation of non-IFRS financial measures to the nearest IFRS equivalent is provided in Cadeler's annual report. The annual report and today's earnings presentation are available on Cadeler's website at cadeler.com/investor. We ask that you please hold all questions until the completion of the formal remarks, at which time in you will be given instructions to the question and answer session. As a reminder, this call is being recorded today. If you have any objections, please disconnect at this time. Mikkel Gleerup, you may begin. Mikkel Gleerup: Thank you very much, and thank you to everyone dialing in to listen to our presentation this morning/afternoon. Yes, I will ask everybody to read through the disclaimer in the presentation. So annual report 2025 and first, taking you through the highlights of 2025. Financial performance in Cadeler in 2025 were above our expectations. We ended at the top end of the range that we guided last year, ending the year with a robust contract backlog of EUR 2.8 billion, which really gives us that earnings visibility into the future that we have been discussing with our investors over the course of the last couple of years. We had 4 newbuilds scheduled for delivery in 2025, and they were all delivered on time and on budget. We added Wind Keeper to the fleet to support Nexra and our partners and really this new O&M service platform. We continued exceptional execution with significant progress made towards the delivering on the Hornsea 3 project. Wind Keeper upgrade successfully completed and multiple campaigns supported with vessel swaps. We have had strong utilization with vessels operating across the world in markets as Europe, U.S. and in APAC. Commercial highlights for the financial year '25. Scylla continued to work in the U.S. on Revolution Wind for Ørsted and have since shifted over to Sunrise Wind. The Wind Orca has been mobilizing for the Hornsea 3 project for Ørsted, where she will be executing the secondary steel scope. On Wind Osprey, we have been mobilizing for the EA3 turbine installation, which is a project we do for ScottishPower Renewables. On Wind Mover, we will shortly be commencing the turbine installation on the Baltic Power project, where she is taking over from another vessel that we previously had working on that project. The Wind Maker stays in Asia. And as we have announced over the course of the last couple of weeks, we'll be executing O&M campaigns for clients in Taiwan this year. Wind Pace came back from the U.S. after having supported the Vineyard Wind project and is also now mobilizing for the EA3 turbine installation project for ScottishPower Renewables. Wind Peak will continue to install turbines on the Sofia project for Siemens Gamesa. The Wind Keeper has been delivered to the client on an up to 5.5-year contract and is currently installing on the He Dreiht project for Vestas. Wind Ally is completing the last phase of the mobilization in Europe in Rotterdam and is preparing to go to the U.K. to start putting in monopiles for Ørsted on the Hornsea 3 project. And the Wind Zaratan project, for her 2026 is a transition year. We have decided to do some upgrades to Wind Zaratan, do some O&M work in Asia and then take the vessel back to Europe to start working both on O&M, but also on support jobs for foundation projects. At a glance, we now stand at 362 office-based employees, more than 800 seafarers. We have now installed more than 1,700 wind turbines, more than 900 foundations, a number that will go up significantly during this year due to the Hornsea 3 project and also have been working on more than 275 locations for operations and maintenance. So all in all, very busy and continuing to grow the business in the industry that is also growing with us. We have been discussing a lot with our investors and other stakeholders in the company, the transition to full scope T&I campaigns for the foundation work. And we have prepared a few slides to go through where we are now on the Hornsea 3 project and where we are as a company on the transition to taking on these full scope T&I campaigns. The company came from a charter-based day rate model where we could add services as requested by the client to now having a more integrated project delivery and construction platform, as we say, it's a solution-based offering to the clients. We have -- we used to have a very compact organization and moderate complexity in the organization, but also in the offerings we were offering to the clients. And now we are going into a much more complexity -- complex environment and really also where the organization has to deliver many different scopes from transport on heavy lift vessels to handling equipment in port, offloading, unloading very, very large pieces of equipment, storing them safely, Q&A on these products while we have them in our custody for the clients. We came from a utilization-driven model with a higher relative percentage margin to an execution driven with a higher absolute return and upside model on the T&I scopes. The vessels in the previous model was the primary revenue stream and where we today see vessels as strategic enablers to capture more scope as we take on these bigger projects for our clients. On Hornsea 3, trying to give you an overview of the time line for the first full T&I scope that we have embarked on. The project was signed in early '23, a very busy year for us signing both that project, but also working on the merger with Eneti, preparing for taking delivery of the vessel, a lot of supplier scopes starting to transport monopiles and secondary steel, starting to install monopiles and secondary steel and then also embarking on installing 50% of the turbines on the project and then commissioning and closing the project somewhere in '27. It is a very, very complicated project and something that we go into with a great deal of humility. But I think that I'm pleased to say that we are exactly where we want to be. And the Wind Ally delivered early, we were able to mobilize her in China directly from the newbuild yard and have taken her successfully back to Europe, finalizing mobilization now in Rotterdam before, as I said, starting to put in monopiles in April this year. Hornsea 3 really requires a lot of coordination. And we are also now experiencing being in the middle of the project, the complexity of the project and also the benefit of having built up the team and having worked close with our clients in terms of what was required to execute this because a project like this never goes to plan, I think it's fair to say. And we have also been met with requirements from our clients to change different things as we have worked since '23 and until today. But I'm pleased to say that we have taken on these challenges with our can-do attitude in the company, and we are exactly where we want to be in terms of being ready to install the project from April of this year. And a total capacity of 2.8 gigawatt when it's installed, 197 monopiles, 60 office-based staff working on it, 120 port and construction staff working out there for us in somewhere where there's a yellow dot on this map. We have 10 vessels in total, 3 from Cadeler working on the project. We are transporting more than 400,000 tonnes of material on the project. We have 10 ports involved and 12-plus partners involved in this. So in all fairness, a very complicated project, but also one where we are learning a lot. We've taken some pictures from the project to also demonstrate the scale of this project because I think it's hard to understand the size of these monopiles. All of them are the same size as the Los Angeles class submarine, and we are installing 197 of those in the U.K. from April this year and until 2027 and into 2027. We have also been working with our client to do a mockup trial of the secondary steel. These foundations are TPless, meaning that they don't have a transition piece on top. And that means that all the secondary steel is being installed by a tool that is being carried on board the Wind Orca that carries storage towers for secondary steel and then she's lifting the secondary steel on board on to the foundation in one lift with this tool. And together with our client, we build a mockup for this, a full-scale mockup in the port where we were able to test this tool and the functionality of this tool before going offshore. And it's been a pleasure to work with our client on these mockups and really refining the whole rehearsal of concept before we go into the actual execution offshore. And we have added some pictures on that as well. As we have been discussing, the changes in the project time line has led to increased, but delayed revenue for the foundation T&I. So Cadeler will earn more money on the Hornsea 3 project compared to what was originally envisaged when we signed the project. Not due to things that have happened on the Cadeler side, so to speak, but because our clients have had to change what they originally anticipated in terms of, for example, monopile delivery, whereas the monopiles coming from. Originally, we expected two fabrication yards, today we are working with four fabrication yards. That all means that we are receiving the monopiles in a different pace, but it also means that the project is stretching over a longer time and that we will be involved with some of the suppliers that we have on the project for a longer time. So what it means is that it's an increased revenue and an increased margin to Cadeler, but the project will stretch over a longer period of time. In terms of our commercial pipeline across the globe, I think I have to say that we are still continuing to grow, and we are still involved in a lot of projects and a lot of bidding on projects globally. Obviously, the European market is really the front runner in terms of new projects that we are working on. And as you can see from this slide, we are working on more than 50-plus open commercial opportunities in the market, and we are discussing projects with our clients, both for '27, '28, '29, 2030, but also well into the next decade, which gives us a very great deal of confidence in the market as such, but also a positive outlook for where we are going as an industry. And I'll come back to that a little bit later in the presentation. Asia continues to perform as well. We see new markets opening in Asia as we progress the ongoing market, which is Taiwan, Korea and Japan. We see also development now in the Philippines, but also development in Australia. And all in all, we are active where our clients want us to be active, and we are continuing to bid for projects in the region -- in a region that I would say is developing as expected. The U.S. market, it is what it is, and we have discussed it many times before. We don't see any short-term opportunities in the U.S. market, but we are still executing in the U.S. market. We sent the Wind Pace back to Europe from completion on Vineyard Wind, and we are now installing with the Scylla on the Sunrise Wind project. All in all, we expect to be busy in the U.S. for the years to come. And also, we are happy to engage with our clients for new projects in the U.S. region when that time is coming. We still sit on a significant backlog. Our backlog year-on-year has grown. We are standing at EUR 2.8 billion in backlog, which, as I said, really provides the earnings visibility that we would expect and also what we have communicated to our clients. We have things also that we are working on here that we have discussed in the market where we are preferred supplier on a foundation project that is not counted in our backlog, and it's also not sitting in our vessel reservation agreements because it has not reached that stage yet. But we still have work that will hit the backlog, and we are sure that in the coming quarters that we will have positive announcements around backlog development. As I said, the backlog stands at EUR 2.8 billion at the moment and 80% of the total backlog has reached FID. And we have discussed that before. And I think that that's really a sign of the quality of the backlog where we know that 80% has already been approved for the final investment decision at the client side, meaning that, that project has also reached a contractual milestone that is important for us. And as I said, we do have a preferred supplier agreement, a sizable preferred supplier agreement. And one of the things that we discussed around our Q3 announcement was that we had some projects in the site that we would like to secure. And one of them is what we have now a preferred supplier agreement on. It's for a significant foundation project in Europe and one of the projects that was important for us for our 2028 campaign. And I'm pleased to say that we have been moving ahead as we expected on that one with our client and that we are also now in the negotiation with the client to make this preferred supply agreement into a real contract. And on '27, '28 that we discussed at length in the Q3 presentation, I'm happy to say that in '27, we consider ourselves fully booked now. We are currently working with the yard to potentially deliver the Wind Apex slightly earlier because we have a client that is ready to take the vessel straight from the yard and into a project, meaning that we are -- with a few white spaces we have left in '27, we do consider that time that we want to keep available for clients should they run into some sort of supply chain issue and really have built a solid '27 for ourselves. In '28, we are also much more positive now than we were in Q3 due to the fact that we have secured the preferred supplier agreement on this large-scale foundation project and overall are seeing positive momentum for the '28 campaign overall. In terms of the progress on the newbuilds, Wind Ace, we are at 94% completion. The naming ceremony for the Wind Ace, the official naming ceremony will be on the 15th of April, and we are looking to deliver the vessel on time. On the Wind Apex, as I said, we are 34% completion, and we are currently discussing with the yard to do up to 1 month early delivery due to the fact that we have a client who would like to take that vessel straight from the yard and into a project for a sizable project on turbine installation. In terms of the progress from the yard, a few pictures as we always have. I think that I can say that on the Cosco shipyard side, things are progressing as planned. Not many surprises there and really pleasing to see that the collaboration we have with Cosco Shipyard continues to develop, and we are very, very pleased to work with Cosco Shipyard, the quality partner for us and for the development of the company. The fully delivered Cadeler fleet as it stands today with an average fleet age of 5 years, which I believe is a very good number to have, and really also shows that we have been building a young fleet that is ready to take on the positive developments of the future. Now, I will hand over to Peter for the financial highlights of 2025. Peter Hansen: Yes. Mikkel Gleerup: Peter Brogaard... Peter Hansen: Thank you very much. Yes, the financial highlights for '25. It was really a strong year seen from a financial and operational point of view. As Mikkel said, we ended in the high end of the range that we have guided revenue of EUR 620 million as compared to EUR 249 million. Equity ratio is now at 44%. It's a decrease as compared to last year. But it's also where we see it bottom out, the equity ratio and starts to increase again. Utilization also very high, 88.9% adjusted utilization as compared to 75% last year. And that is -- the adjustment is where we say, okay, we take out what is planned dry docking and transportation from the yard. We think that is a meaningful number to look at when we get all these new vessels delivered. Market cap of EUR 1.8 billion. EBITDA, EUR 425 million as compared to EUR 126 million last year. Net profit, important number for the shareholders, of course, EUR 280 million as compared to EUR 65 million last year. And as elaborated on a backlog of EUR 2.8 billion. Three months daily average turnover EUR 7.1 million on the stock exchanges. If we first look at the last 3 months of the year, Q4 '25, very, very strong quarter, EUR 167 million in revenue, an increase of EUR 82 million compared to Q4 '25, '24 and with the adjusted utilization of 87% cost of sales is, of course, going up with the delivered vessels. And SG&A also is up because of the ramp-up that we have talked about at previous releases where we build up the organization to be able to manage these foundation projects with increased complexity. Finance net isolated for Q4 is EUR 20 million, and that is a shift you see here in Q4 finances because we have capitalized borrowing cost to a greater extent while we had more vessels under construction. Now that the vessel has been delivered then a bigger part of the finance interest is going to the P&L, and that is something you will see in '26 as well. Of course, it's the same cash outflow, but it's just whether it's in P&L or it is in CapEx. EBITDA, I think very, very strong, EUR 104 million in a quarter where Ally and also Mover were not in operation as such, but in transport to first project. That was Q4 isolated. For the full year, some of the same remarks that we had in Q4, but also what we have seen during the year, it's fair to say everything has played out exact to plan. Revenue in the higher end of the guidance. Cost of sales, everything is as according to plan. SG&A the same. So we are very, very pleased with the financial result for '25, but also the underlying operation where we have control of the important things. EBITDA, EUR 425 million. Vessel OpEx per day is EUR 36.3 million, a small increase towards last year and I think also under control. Headcount onshore average 307. The consolidated balance sheet, now we have an equity of EUR 1.5 billion. an increase of nearly EUR 300 million as compared to last year. And we see the equity ratio of 44%. I think that is something we have all along said that approximately there where we will bottom out. And of course, it's a natural consequence of taking delivery of the vessels where your assets go up and your liabilities also go up correspondingly. We still have a CapEx program now on the Wind Ace and the Wind Apex, these installment with the yard that we show here. We have signed commitment for A Class Wind Ace and we are also having ongoing RCF facility of 148 million. So together with what we expect to raise of financing on the Wind Apex, we are EUR 637 million of total financing. We are in advanced discussion with Apex and are confident that we'll be able to sign that during '26. As you may recall, it's delivered in late Q2 '27. So we have really had the goal of signing a facility -- sign commitment 1 year ahead. So we are not paying unnecessary fees in commitment fees and so forth. Interest from banks are strong. So is it from the ECA. So it will be on similar term as you have seen on previous transactions. Cash, EUR 152 million. And you can see with the A Class payments we have outstanding, that's still a significant cash surplus. This is the financing overview. You can see here that we have the RCF A and B, we have not drawn up fully yet. And since Q3, September, we have signed a Holdco financing, a second one with HSBC and Clifford Capital unsecured loan, EUR 60 million with an accordion of EUR 0 million, and it was made on very similar terms as the original Holdco with HSBC and Standard Chartered. With Apex, I have talked to that, but that is progressing according to plan. We are very confident on that financing. Then there is the outlook for '26. I think what we guide is in revenue, EUR 854 million to EUR 944 million, and EBITDA, EUR 420 million to EUR 510 million. We have put up the comparison here, of course, '25 includes revenue that you are supposed to get in '28, but was postponed and we got termination fees for that. So of course, that should be adjusted for in the comparison, but a very strong outlook for '26. What is important to understand about the outlook in '26 is exactly what Mikkel has talked about earlier in the presentation. First of all, it's a transition year for Wind Zaratan, so isolated on '26, you could argue it is financially a transition year, but it will improve the returns in '27 and onwards. So it's actually a good year for Zaratan as it is an investment year. Wind Ally and Wind Ace will be delivered in Q3 '26, but will not go on any contract and have any contractual revenue in '26 simply because we will sell direct to first projects EA2 North. We have seen in the past that on some of the wind turbine installation vessels that we can do some work before first project, but it's simply not possible on a foundation project. And it's -- again, it's a good sign because the customer wants us to be at the site as early as possible. So we are simply doing everything that we can to arrive as early as possible we can in '27. And then this Hornsea 3, when -- Hornsea you can't look at Hornsea 3 isolated in one year. First of all, it's a project where you have revenue across several years we already had in '24, '25. But as illustrated by the slide, maybe the precent, we now see that the revenue on the project goes up due to changes on the project, not due to Cadeler-speific things, but due to something designed by the developer. But that means for Cadeler, two things. The total project goes up, earnings goes up, but the timing is different. So some is pushed into '27. So when you look at '26 and the outlook, you should also remember that. [indiscernible] evaluating that year. And back to you, Mikkel. Mikkel Gleerup: Thank you, Peter. As this is something that still remains very important between '24 and '25. We are -- we have been working on biofuel -- fuel blending in our fuels, and that has been successfully introduced across the fleet in 2025, together with our clients and our sustainability team. We have developed a new circularity strategy. We have more than 30% women in leadership, and that was achieved in 2025. We have set a new target of 40% women in leadership by 2030, and also on governance, the CSR leadership group established to execute key ESG priorities. In terms of our path to zero, we have set a target of a net zero target in 2035 and a 2030 target of 50% intensity reduction. Obviously, we are going up in intensity in the beginning, and that's largely due to the fact that we are delivering lots of vessels that are still burning fuel. But we have a path towards achieving our targets here, and we have maintained our targets. And it is as -- what is described on this slide, it's adoption of green fuels, it's enabling electrification, optimizing energy consumption, which we believe is one of the big things because really education and training of teams on board and clients is one of the real big savers here. And that is how we will achieve the first part of this journey. Second part of the journey is continuing to enable electrification and again, optimizing the energy consumption. And also as we start to see it, getting the green fuels on board, which will form a larger part in the second part of this journey. At the moment, the reality is that the green fuels are not available to us. So although we have a portion of our fleet on the newbuilds that can burn these green fuel types, we are not able to buy them at the quantity that we need them, and it would more be an R&D project at the moment. So we believe that the second part of the journey will have a greater availability of this fuel type, and that is something that we at least will support that with the demand for these green fuel types when it is available to us. In terms of commercial outlook, which, of course, is important because I think in all honesty, we are coming from a 2025 where we were facing a very negative narrative in general in the industry due to a lot of factors. We are seeing milder winds blowing over the offshore wind space and also continued growth of the industry and the deployment of offshore wind globally. And as we say here, after '28, '29, we expect a very strong growth towards the end of the decade. Europe has been raising the bar and as declared by the North Sea Summit, the 9 member states of the North Sea Summit have declared a target of 15 gigawatts per year outbuild between 2030 and 2040, and we are very, very pleased with a target like that, because that is, in our opinion, how you build a supply chain that you actually set a target what should the supply chain be able to push out per year in this region. And this is not the entire European target. This is for the member states of the Green Sea -- the North Sea Summit, sorry. So in all Europe will be a higher number than this. Outside the fact that there's an annual outbuild target, there's also a financial plan to how to achieve this. And that is also what has been lacking in the more arbitrary targets that were more setting a target for 2040, 2050 in the past. So all in all, we really are pleased with seeing these targets, and we believe that, that's a very strong data point for the future and also for the demand situation for the future. Another very real data point is the U.K. auction round 7, where the U.K. government awarded record volumes. Really, it was 70% above what was expected and the budget went up to 200% of what was the original budget. So also a very strong data point. But another strong data point is that the U.K. auction round 8 has already been shifted forward, so we can expect that already to happen in July 2026. And these are projects that are happening towards the end of this decade and the beginning of the next decade. So already today, we are in dialogue with clients for work that is taking place in '29, 2030, 2031, 2032, 2033 and so on. So that is a very, very positive data point for us. And then we also do see a lot of private capital coming back into offshore wind, Apollo committing USD 6.5 billion to acquire 50% of Hornsea 3 and KKR forming a joint venture with RWE for offshore wind projects, and there are many, many other examples of this. Altogether, strong growth in the space and in the industry. And as we have said, a much better feeling about the '28 situation for Cadeler, although we still recognize that for the industry, '28 for some can be a difficult year, then we say today that we have a much better feeling about 2028. We still believe that there will be an undersupply of capable vessels in the market, and that will start in '29, 2030. We believe that, in particular, on the foundation side to begin with, of course, because they go in first and then secondly, on the VTG side. It happens for a multitude of different reasons. It's efficiencies. It's the efficiency on the larger turbines. It's the more complicated projects. It's the raw efficiencies in terms of how many turbines and foundations these vessels can transit with, but it's also the fact that there are a lot of vessels that are reaching the end of the useful life in the beginning of the next decade. So vessels that are counted today because they, in theory, can install a turbine, they will not be counted after the beginning of the 2030 because simply they are falling out because they are coming to end of useful life. As the fleet stand today, Cadeler still sits on the largest fleet in the world, and we believe we have the most versatile fleet of really the Tier 1 assets that can support our clients with the targets they have for continued outbuild of offshore wind. We have also decided to distribute this slightly different and first look at which vessels do we believe are able to efficiently install 15-megawatt turbines, and the picture looks somewhat different here. And with the targets that are being set in the North Sea Summit by European government, by Asian governments at the moment, then we believe that there is still a significant undersupply as we come into the next decade of the capable vessels that will always be chosen first by the clients. And if we look on the foundation side, the picture is even more problematic if we want to deliver the targets that are currently being set and also backed up by auctions in many different countries around the world. A few words on Nexra, our business platform for the aftermarket services in offshore wind. We believe that the O&M market will continue to demand -- the demand increase will continue to grow, and we believe that the market is shifting towards long-term agreements. We have seen that with our agreement on Wind Keeper with Vestas, and I think there are other examples in the market as well. So we believe that the whole O&M story and strategy for Cadeler is an important strategy because it will create a longer and more transparent revenue stream on part of the fleet and also it will be able to generate utilization on the installation fleet if there are small gaps between installation projects. And that is important because we have always talked about the importance of keeping a high utilization. And hence, that is something that we really believe is a strong advocate for the whole development of the Nexra business platform. We also believe that Nexra will grow as a business and also at some point in time, potentially even be a bigger business than the installation business, but that is in the years out in the future. But of course, every time we install a turbine, the whole ecosystem for turbines installed grows, meaning that there are more work to do for the Nexra platform to service our clients with -- as it stands today, mainly -- the main component exchanges that we do from a jack-up. In terms of the development of Nexra and an update on that, I think that we saw it and have always seen it as a very strong market, a market that can stand on its own 2 feet, a market that is profitable and it's also a diversification of income streams for Cadeler. We signed the first contract for an O&M campaign in Taiwan and showing that when a vessel is sitting in a region that is complicated to transit back to, for example, Europe from, then you can do these O&M campaigns in the spot market and still upkeep a very healthy financial year for the asset. And I think that, that is something that is important because after this, we have also announced another project yesterday morning in the same region for the same vessel. There's a dedicated team for Nexra today, we are continuing to build the team. I think that it's also fair to say that we get positive feedback from our clients and the fact that we are now having a dedicated team to discuss aftermarket services with them because they have dedicated teams to handle that part of the value chain for them. We believe that as we grow, we will also be better at understanding the needs and the execution requirements and really a very, very strong mandate from all over this company here and from top to bottom to grow Nexra into the strength vehicle we believe it can be. We did strategic fleet expansion in Nexra last year with the acquisition of Wind Keeper, we believe that we did a very, very strong deal and executed very, very fast on this, but also was able to pin a contract -- a commercial contract to that vessel very, very soon after the acquisition of the asset. We took the vessel back to Europe. We did the modification to the vessel that we believe was necessary, and we are now working with the client on a project with the vessel and very pleased to see that. And O&M services in 2025 forms around 1/5 of our total revenues, and that also shows the significance of what we already are doing in O&M. Continuing the growth journey, as we have said, we are in an industry that growth and as we're also saying to you today, we are more positive and have a very positive and optimistic view about the years out in the future. And that is also why that we are looking at continuing the story of Cadeler. We evaluate opportunities to expand into attractive and synergetic systems -- segments, sorry, like, for example, the strategic O&M offering. We are open to both organic and nonorganic growth. We believe that scaling the organization and have a bigger, more versatile, more flexible offering to our client is something that the client is willing to pay a premium for and something that will also secure that Cadeler will always take more than our proportional share of projects in the industry simply due to the derisking of our clients' projects that we can provide. In terms of regional expansion, we are where our clients want us to be, and we are working with the projects that we believe in and the projects that we believe will go from development to FID and to finally execution. That is how we look at it. That's how we have always looked at it, and that's how we'll continue to look at it. We are monitoring and applying new technologies, and we believe that efficiency still will be driving a lot of the value in the industry and also a lot of the sustainability in the industry. So we are very open to discussing efficiency gains with our clients. And we are also willing to do our part in what was the North Sea Summit, which was really trying to make a more competitive offshore wind industry by being more efficient with what we do. And we believe that, that is definitely something we can do if we work together in the whole value chain. And then strategic partnerships have been one of the foundation and one of the pillars that Cadeler is standing on really making sure that we are developing structure -- strategy to strengthen our key strategic partnerships with our clients, including the long-term agreement that we believe is out there and also doing the scopes with the clients that, that they are asking for. So really trying to understand, be early with our clients, trying to understand what it is that they require from us and then be able to deliver that quality-wise and safety-wise when they need it. That is very important. In terms of key investment highlights, largest and most capable and versatile fleet. We believe that, that means redundancy for our clients. And as I already said, that is something that our clients are willing to pay a premium for and also what we believe will secure a more than proportional share of market to Cadeler. We believe that strong relationships and partnerships and our industry-leading position is also something that will be continuing to support the whole growth of the company. We have global reach and experience. We have worked in all key markets, and we are happy to continue to work in all key markets if our clients want us to do so. We believe there's a structural undersupply and an increasing market demand, and we are already starting to see signs of very, very, very strong demand as we move into the next decade. We have a strong track record and backlog, and we are very, very much looking forward to continue to work with our clients in the future. With that said, I think that we are moving into Q&A. Operator: [Operator Instructions] Our first question comes from Martin Karlsen from DNB Carnegie. Martin Karlsen: I understand that -- can you hear me okay, sorry, it was some... Mikkel Gleerup: We can hear you, yes. Martin Karlsen: I think I heard during the prepared remarks that you said the Wind Apex would be delivered early and do turbine work. Could you talk a little bit about the background for using the vessels for turbines and not foundations and the decision process behind that? Mikkel Gleerup: Yes, that is a good question. The reason we are discussing it directly that we are looking at delivering the Wind Apex early is because we have been asked whether we were looking at potentially delivering her late. And just to make clear that that is not a thought at all, it's the opposite. We have evaluated opportunities in the industry and the best opportunity, we believe, for Apex right after the yard is to embark on a turbine installation project. The reason for that is that working with the client on a turbine installation project potentially opens up opportunity for other things. And hence, we have decided that here, the best use of the capacity we do have available, as you also heard in my presentation, I said that we consider ourselves fully booked in '27 now. So basically, what we have available for clients now is becoming limited. And this is the opportunity we have for the client, and hence, we have decided to go with the client because we believe that it's the best overall decision for Cadeler to start with a turbine installation project. It doesn't mean that Apex will stay on turbine installation projects, but the first project will be a turbine installation project. So what it means is that she will earlier generate revenue compared to if we did a foundation project. And with the long -- duration of the contract we're looking into, that will also run into a significant part of 2028, but also a potential for something coming on the back of that with the same client. Martin Karlsen: Could you remind us about how much time and cost there would be to get it back to foundation mode? Mikkel Gleerup: So there is a mission spread, but that is typically part of the project. When you sell a foundation project, the client is contributing to the mission spread there. And typically, it would take somewhere around 2 to 4 months to put her into foundation mode with mobilizing all the equipment on the vessel. Martin Karlsen: And for 2028, you definitely came across as more optimistic, but it seems to be more Cadeler specific than for the industry as a whole. Can you talk a little bit to why Cadeler have been more successful than the industry for '28 and what has changed since last quarter? Mikkel Gleerup: Yes. I think that what we do say, when we talked about '28 after the Q3 announcement, we also said that it looked like a year that could be challenging for the industry. And what we are saying now is that we -- that is still the case. We believe that there are still some companies that will have challenges in 2028, but that we today feel much better about '28 than we did around the Q3 because there were still some things that we believed in at that point in time, but that had to happen. And now we are saying that we are seeing that, that is happening. And hence, we are much more confident on 2028. And one of them is, of course, the preferred supplier agreement on a large-scale foundation project. That is important for '28, but that's not the only thing. It is also how other things we are working on have progressed. So all in all, we are much more positive about '28. But it doesn't mean that everybody else will have the same feeling. But for Cadeler, that is the case. But I also think there is a progression from the Q3 call to now where we are saying today that 2027, we can say we're fully booked now. Martin Karlsen: And last question, you're about to get into a real cash-generating mode with all the newbuilds and delivered. Could you talk to how you look to allocate capital ahead between shareholder returns, delevering, and you also spent some time in the presentation today talking about growth opportunities. Mikkel Gleerup: Yes. I think that, as we have said before, capital allocation ultimately is a Board decision. But I think it's realistic to believe that we will be spending our capital in 3 buckets. One is to delever the company. One is to continue to maintain the position we have in the industry. And then the last bucket is, of course, returning capital to shareholders in some shape or form. And I think that if we look at where we are moving in terms of generating capital, all 3 buckets are possible at the same time. And I think that, that's where I will land it at this point in time. Operator: Our next question is from Jamie Franklin from Jefferies. Jamie Franklin: So firstly, I just wanted to clarify on Hornsea 3 and appreciate the useful slides in the presentation. If I look at Slide 12 specifically, as you understand it correctly, essentially, we're now going to have a much more progressive ramp-up in revenue through the year from that project. So it's going to be very back half weighted. And it looks like the expectation is first turbine installed around 3Q. So if I assume that the margin and EBITDA contribution should really start to sort of kick in from the second half. Is that a fair assumption? Mikkel Gleerup: Yes. I think overall, what you're saying is a fair assumption. And as we are saying that -- and of course, this is what is complicated to sometimes explain when you have projects and calendar years because overall, Hornsea 3 for us is a more value-creating project today than it was when we signed it. But the way the revenues and profits are stretched over time is different. And I think that, that is what we are trying to explain today, and it's due to decisions that have been made by others than Cadeler, but where -- it's in our interest, but also where we are contractually obligated to deliver on this new method. And I think one of the key things on the project without diving too much into the detail is that the flow of the foundations when they come into the project is slower. So we are not building up the buffer we had in the beginning. So the monopile delivery is over a longer period of time, and that is out of Cadeler's control. And it's due to things that is related to the fabrication yards on the monopile foundations. Jamie Franklin: Okay. Got it. And then secondly, just on operations and maintenance. So obviously, you've announced a few shorter duration awards to Nexra platform recently. And as you mentioned, there's been this 10-year O&M contract announced by one of your peers. Could you give us a sense of how you expect to balance the sort of longer-term agreements with the shorter-term contracts? Is the idea to sort of keep Zaratan and Scylla available for more spot O&M while Wind Keeper kind of takes the longer-term contracts? Or could we see you enter into a longer-term contract with a specific one client on those assets? Mikkel Gleerup: The question is, yes, that could be expected that, that would happen, but it all depends on the project economics. There are limits where we believe that it's better to stay in the spot market rather than to sign up to a long term. And for us, that is an internal evaluation that is happening between us and the team that is dealing with the clients on these long-term opportunities because obviously, there are benefits of having a long-term contract, but the benefit of that can be outweighed by, let's say, what you're sacrificing in terms of annual revenues. So for us, it's a balance. And if we believe that we can generate more money by having the vessel in the spot market and being available to our clients when they need us, then that is the decision we will go for. And I think we have discussed it before as well that one of the real benefits of being, let's say, active in the O&M market is the social capital you're building with your client because when they have problems, if you are able to come and help them and fix them, that is something that is very much appreciated and also where you're able to generate stronger relationships and partnerships with your clients. So I -- per se that the long-term agreement is not just what we are aiming for, but of course, if they are good enough, if they live up to our criteria, then we are happy to enter into them. Jamie Franklin: Okay. Very clear. And finally, there was a wind turbine installation vessel order announced by shipyard Hanwha Ocean for about $530 million last month, very high price tag, obviously, relative to what you paid for your newbuilds. Is there anything you can say in terms of what is driving those higher vessel prices? Is it simply a function of kind of shipyard capacity or material inflation? Any thoughts there would be helpful. Mikkel Gleerup: I think the reality that we are looking at today is that the shipyards are incredibly busy. So even if you wanted to deliver a vessel in short time, you were not able to. I know that this vessel is it looks on paper like a short time line, but that is mainly because they have been working on it a long time before they actually announced it. It's a vessel targeting the domestic Korean market with a lot of Korean companies going together in that vessel. It's a repeat M-Class vessel more or less that they have paid $530 million for. I think that the underlying practice for the price is a real tightness in the yards, but also in general, what it costs to build a jack-up today. And I think that there are, let's say, that is -- if you look at the price for ordering one vessel, I think that, that is -- you're probably seeing significantly increased prices to what we built at back in -- when we ordered our vessels. Operator: Our next question comes from Anders Rosenlund from SEB. Anders Rosenlund: Could you break down the order backlog indicatively on '26, '27, '28 and '29 and beyond? Mikkel Gleerup: Unfortunately, we don't do that, Anders. We only give guidance 1 year ahead. So we don't give guidance year-by-year on the backlog. Anders Rosenlund: Also, do you expect to see more of your competitors to place newbuilding orders for '29 and 2030 or beyond delivery given the outlook comments that you coming with today? Mikkel Gleerup: I believe that based on the supply and demand balance we are looking into in the beginning of the next decade and the tightness in the yards that I would be surprised if there were not several companies already looking in the yards. Operator: Our next question comes from Daniel Haugland from ABG Sundal Collier. Unknown Analyst: This is [indiscernible] from China Securities. And thank you for taking my questions. I have 2 questions. The first question is about the foundation installation business. And I noticed that actually the foundation business includes quite large preparation works and it has larger amount. And could you please share with us what's your target of the foundation business in the future? Would the volume or the amount be higher than next year? You just mentioned that next year, the future revenue would be -- maybe would be higher than the installation revenue. So could you please share with us about the foundation business in the future? And your target or your strategy? This is my first question. And the second question maybe for... Mikkel Gleerup: Can we take them one by one. Can we just take them one by one. Unknown Analyst: Okay, okay. Mikkel Gleerup: Thank you. I think that to answer your question, we have had a humble approach to the full scope foundation C&I projects. And in 2026, we will be executing the Hornsea 3 project. In 2027, we will be embarking on the EA2 project with ScottishPower Renewables. So we are on a journey here where we are building up together with our clients, two of the biggest developers in offshore wind worldwide. And together with them, we are building up these capabilities to ensure that we do this safely and with the quality that both we and they expect fairly. But our long-term target is, of course, to execute several foundation projects in parallel in a year. That is how we have built the fleet, and that is how we are building the team and, let's say, the protocols around this. So let's say, we have a fully delivered capacity three A Class vessels that are targeting the foundation market. And we would certainly expect that these three A Class vessels would all be doing foundation work in parallel at some point in time in the future. But when I address the fact that I believe that the O&M market could be as big as the installation market, it is because with the outbuild targets that we are seeing in the industry, there will be a lot of requirements for O&M. And hence, we say this, but we cannot say when it will happen or whether they will inflect or whatever. But we do believe that there will be a case for the fact that the O&M market as such will be a very value-creating market to be in and also potentially bigger than the installation market. Operator: Okay. Great. And the second question is about the financial expenses. And I noticed that in 2025, the financial expenses are a little bit higher. Could you give us some color about the financial expenses in the near term or in the 1 to 3 years? Because with our 2 vessels delivered in 2026 and 2027, these expenses cannot be go into the -- cannot be capitalized and this should be go to the P&L. And could you give us some colors about that? Peter Hansen: That is absolutely correct, and also what I talked to in Q4 where you saw net or -- finance net was around EUR 20 million. And that is what you should expect to see going forward and then less and less goes to CapEx when we get one vessel delivered here in '26, then it will be less '27, we get the last one delivered and then it will be to current plans, nothing that we can capitalize. So that is the picture we see. So Q4 is more representative for '26 than the full year. Unknown Analyst: Okay, great. Thank you so much. That's very helpful. Thank you. Mikkel Gleerup: Thank you. I don't know whether we missed Daniel from ABG. Operator: Yes, we have a question from Daniel. Daniel Vårdal Haugland: I was a little bit back in the line there. So I have a couple of questions on 2027 that you maybe can kind of enlighten me on because I think you now say that 2027 is getting fully booked from your perspective. So what type of utilization level are you kind of targeting or at least some kind of range when you're talking about kind of fully booked this because I think based on announcements, it looks like there's a lot of white space, but obviously, you guys have looked it through. So... Mikkel Gleerup: Yes, so I think... Daniel Vårdal Haugland: Any commentary on that would be helpful. Mikkel Gleerup: Yes. No, that's a totally fair question. I think we have guided from the beginning of the journey of utilization between 75% to 90%, and that is also the target in 2027. And that is an adjusted utilization because, obviously, to assume that a vessel is busy when it's transiting from Asia and back to Europe, for example, that is not possible, even though we would love to install turbines all the way. But -- so that's how we look at it. And then as Peter also said, when he went through his numbers that we exclude planned dry dockings and stuff like that. So the adjusted number, we are expecting between 75% to 90%. And for '27, yes, it is correct that we are considering ourselves to be at the moment fully booked. Daniel Vårdal Haugland: Yes. And just to clarify, then you kind of include this potential contract that you talked about for the Apex. Mikkel Gleerup: Yes, that's how we have to do it because there is a potential contract that is negotiated. And -- but of course, nothing is firmed before it's signed and there's ink on paper. But of course, when we are in a process where we believe that this is something that will materialize, then it's also something where we are saying with what we know today, we think that we are in a situation where we don't have much other stuff to sell. Daniel Vårdal Haugland: Okay. And one question on the Orca. It seems like that will be working together with the Ally on Hornsea 3 on secondary steel. It seems from the slide that you kind of indicate that going through Q1, maybe into Q2. Is that kind of correctly assumed? Mikkel Gleerup: Yes, it's correct that Orca is starting almost side by side with the Ally being mobilized now for the campaign to go to -- on to Hornsea 3, sorry. It was a valuation we did when we secured the project because it was our option to either go with an offshore construction vessel or with one of our jack-ups. There were benefits in the jack-up in terms of the weather downtime during the winter and hence, the progression on the project. And that's why -- and with the project economics, of course, that we were able to provide to our -- one of our own assets that we decided that the O Class vessel was the best option for the task. Operator: Thank you. That's all we have time for today, and thank you for your participation. I will now hand the floor back to Mikkel Gleerup for any closing remarks. Mikkel Gleerup: Yes. Thank you, everybody. And if we did not have time to take your questions, then you all know where to reach Peter and myself or Alexander. And we are, of course, happy to take offline discussions with all of you. But thanks a lot for taking the time to listen to us today. We're looking forward to catch up with you as we move ahead. Thank you.
Operator: Good morning, ladies and gentlemen. Welcome to Fennec Pharmaceuticals' Fourth Quarter and Full Year 2025 Earnings and Corporate Update Conference Call. [Operator Instructions]. As a reminder, today's conference call is being recorded. Now I'd like to turn the conference over to Fennec's Chief Financial Officer, Robert Andrade. Robert Andrade: Thank you, operator, and good morning, everyone. Thank you for joining us today. We are pleased to host Fennec Pharmaceuticals' Fourth Quarter and Full Year 2025 Earnings Conference Call during which we will review our financial results as well as provide a general business update. Towards the end of the call, we will conduct a Q&A session, hosted by myself starting with frequent questions that the company receives from investors, followed by our traditional open Q&A session. Joining me from Fennec this morning is our Chief Executive Officer and Board member, Jeff Hackman. I am also pleased to welcome our Chief Medical Officer, Dr. Pierre Sayad. Pierre is an accomplished industry executive with proven success leading global medical teams and oncology launches at companies such as Onyx Pharmaceuticals, Karyopharm Therapeutics, Oncopeptides and CTI Biopharma. Dr. Sayad is a graduate of the School of Medicine of Loma Linda University as well as a Harvard Business School alumnus. Since joining Fennec in the fourth quarter of 2024, Pierre has been instrumental in advancing our medical strategy and clinical evidence strategy, expanding engagement with leading institutions and key opinion leaders and strengthening the independent data foundation supporting PEDMARK. Later in the call, Pierre will speak to the substantial progress being made on the medical front and the importance of the medical team in the education process of CIO and PEDMARK. Before we begin, I would like to remind you that during this call, the company will be making forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ from the results discussed in the forward-looking statements. References to these risks and uncertainties are made in today's press release and disclosed in detail in the company's periodic and current event filings with the U.S. SEC. In addition, any forward-looking statements made on this call represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligation to update or revise any forward-looking statements. This conference call is being recorded for audio rebroadcast on Fennec's website, www.fennecpharma.com, where it will be available for the next 30 days. And with that, I'll turn the call over to our CEO, Jeff Hackman. Jeffrey Hackman: Thank you, Robert. Good morning, everyone. Thanks for joining us today on a very special earnings call. 2025 was a transformational year for Fennec. We delivered record net product sales of $44.6 million compared to $29.6 million in 2024. But most importantly, this growth was really driven by quarter-over-quarter expansion with our active patients as well as new and existing accounts. This reinforces the durability and demand and the effectiveness of our overall market development strategies. In the fourth quarter, given the positive momentum we saw in 2025, we made the strategic decision to further enhance our execution by increasing our customer-facing team and to try to achieve a much greater reach and frequency with our customers, so we can ultimately help more cancer patients protect their hearing. We expanded our capabilities to include new territories and high-prescribing targets in the AYA or adolescent and young adult market. We strengthened the company's financial health during the year with disciplined operating decisions and efficiency measures, including the closing of public offerings, raising over $42 million in net proceeds, which resulted in a full redemption of our debt. We were intentional on our capital allocation, focused on high-impact initiatives and continue to enhance our operating leverage as our business scales. This balanced approach in investing in growth while maintaining financial rigor has positioned us well for long-term value creation with the strongest balance sheet right now in the company's history. Our full service patient support program, I've mentioned before in the past, Fennec HEARS, which is designed to simplify access and support continuity of care by guiding patients through coverage, reimbursement and providing free product for eligible individuals as well as coordinating a nurse-led administration and at-home infusion services achieved a record performance in the fourth quarter. The program reached all-time highs in patient enrollments, prescribed and infused vials, active patients and conversion rates. In fact, conversion rates were up 70% in Q4 compared to 50% in the first quarter. These results reflect not only patient need, but the exceptional execution of our field organization and our operational infrastructure that we have built to ensure appropriate and efficient access for our patients. Now as we continue to increase the awareness and use of PEDMARK through our sales activities, our marketing team has been busy as well, expanding focus to activate young adult testicular patients, for example, on a broader scale. In the coming quarter, we're excited to launch an initiative around the Indy 500 race in May in close partnership with a testicular cancer advocacy group. Following that, we will also have a significant presence this year at the ASCO meeting in Chicago. We look forward to providing more updates on these initiatives and others in months ahead. Beyond commercial performance and our activities, we also made significant progress advancing our clinical evidence strategy. Shortly, you're going to hear from Pierre. He'll provide you much more details on the progress and how we are moving these forward in our medical affairs initiatives. Finally, top line results from our investigator-initiated Phase II/III, we call it STS-J01 clinical trial for PEDMARK in Japan is progressing well. This -- as you guys know, this is -- we believe it's still early, but this clinical milestone is very important for Fennec and reinforces the broader applicability of PEDMARK and the opportunity to expand our impact globally, partnering and registering this product in Japan and potentially broader in Asia. As a reminder, PEDMARK is currently approved for pediatric patients 1 month of age and older with localized non-metastatic solid tumors and is also recognized by the National Comprehensive Cancer Network or the NCCN with a 2A recommendation for use in AYA patients. Now I'd like to just take a moment to thank our dedicated employees for their focus this past year. Their resilience and their belief in our mission, it's been instrumental in driving our performance. We've built a very strong organization with strong revenue growth and notable milestone achievements during the quarter and the year further will validate our strategic plans and objectives and market development strategies and importantly Fennec's ability to execute our plans. Further, I'm proud of our executive team and each of their respective operating functions at Fennec. Overall, we have strong performance and strong foundation that we built in 2025 and that is going to propel us and propel Fennec into the next chapter of this organization. One is going to -- and this next chapter is going to be defined, as I mentioned, with execution, global expansion and sustained growth. So with that, let me turn it over to Pierre. Pierre Sayad: Thank you, Jeff, and good morning, everyone. I'm pleased to be joining today's call to share an update on the significant progress we've made across our evidence generation and medical initiatives. Over the past year, we have strengthened our medical affairs team significantly, building a high-performing organization capable of delivering on our strategic priorities. We expanded capabilities across clinical, field and real-world evidence functions ensuring that we can engage effectively with key opinion leaders in both academic and community settings while supporting new evidence generation initiatives in the U.S. and globally. This robust foundation positions us to execute efficiently and meaningfully in 2026 and beyond. Our 2025 efforts were focused on 3 priorities. First, key opinion leader development, engaging with influential clinicians to deepen understanding of our product's clinical value and real-world applicability. Second, institutional engagements partnering with leading academic institutions to advance independent research, generate new clinical data and expand insights across additional tumor types and patient populations. And finally, improving patient and clinician experiences, driving key customer enhancements, such as the revamp of our Fennec HEARS program, designed to simplify access, support adoption and ensure a positive experience for both the patients as well as the clinicians. These activities created meaningful traction in 2025 and into 2026 with multiple studies underway and strong collaborations forming with both academic and community oncology centers. The insights we have gained from KOLs during the year are highly encouraging. Clinicians report increasing confidence in our products, particularly in better understanding the mechanism of action of cisplatin and then recognizing the feasibility and ease of incorporating PEDMARK into routine practice without compromising cisplatin's antitumor activity. These discussions are not only reinforcing clinical confidence, but also supporting broader adoption and integration into guidelines and standards of care. For example, last month, Fennec announced that new data supporting the potential use of PEDMARK in adults with head and neck cancers were presented at the 2026 Multidisciplinary Head and Neck Cancer Symposium, that's the MHNCS meeting. It is worth noting that these are the first new data supporting the potential use of PEDMARK since the pivotal clinical program. The findings from the multi-institutional retrospective review of 15 adults with head and neck cancers show that PEDMARK could be safely given at 6 hours after cisplatin dosing and was easy to incorporate into the real-world care plan. This strict post-cisplatin timing is a validated approach intended to preserve cisplatin antitumor activity and no disruption to curative intent cisplatin-based treatment delivery was observed as part of the study review. These new findings are critical to demonstrating the feasibility, scalability and long-term value of PEDMARK beyond those studied in our pivotal clinical program. These findings also helped strengthen the case for broader clinical adoption in a sizable patient population at risk for permanent hearing loss. Additionally, as Jeff mentioned, at the start of 2025, we outlined a very focused strategy to expand and deepen the clinical evidence supporting our product via institution-led initiatives. Our objectives were clear. First, generate new data across additional tumor types and patient populations; second, validate and expand the product's real-world clinical value. Third, address unmet need in vulnerable groups such as AYA and adult patients. Next, strengthen guidelines and practice adoption through independent evidence. And then finally, deepen our collaboration with influential institutions shaping oncology standards of care. I am proud to report that we have made meaningful progress across each of these priorities. Within the last 3 months, we have announced the initiation of 2 new studies with respected academic and community oncology centers. The first is with City of Hope, one of the largest and most advanced cancer research and treatment organizations in the United States. City of Hope is evaluating PEDMARK for the prevention of cisplatin-induced ototoxicity, CIO, in adult men with Stage II-III metastatic testicular germ cell tumors. And our intention is to not stop here. Cisplatin has truly transformed outcome for patients with germ cell tumors, turning what was once a highly fatal disease into one of oncology's true success stories. However, as many as 4 out of 5 survivors are left with permanent hearing loss, which impacts the quality of life long after the treatment ends. And we are pleased to see that centers like City of Hope recognize that oncological care needs to focus on both the survival as well as the quality of life. The second study we announced earlier this month is with Tampa General Hospital Cancer Institute, that's TGH. TGH is initiating a study evaluating the real-world clinical utility at PEDMARK and reducing the risk of ototoxicity in AYA and adult cancer patients receiving cisplatin-based treatment. This evaluation will examine real-world clinical data and audiology monitoring that will help to reinforce the message that tumor efficacy is not compromised by the use of PEDMARK. Over time, this expanding data set will help to strengthen physician confidence and support the broader clinical adoption. Additional investigator-initiated studies supporting the use of PEDMARK have been submitted to Fennec and are currently under review. We continue to be very encouraged by the robust conversations and engagement we've had with key opinion leaders at some of the nation's leading oncology centers and look forward to sharing additional updates on evidence generation in the very near future. In summary, our medical efforts in 2025 laid a strong foundation for future growth through expanded evidence generation and meaningful KOL development in the academic setting. The combination of a robust organization, focused priorities and positive KOL feedback ensures that we are well positioned to continue driving clinical confidence and impact in 2026. With that, I will turn the call over to Robert to take us through the financial highlights. Robert Andrade: Thank you, Pierre, and a very big thank you to our entire medical team for their energy and strong momentum going into 2026. Now to the financials. Our press release contains details of our financial results for the fourth quarter and full year 2025, which can be viewed on the Investors and Media section of our website. My comments today will focus on some key financial results. For the fourth quarter of 2025, the company recorded a net product sales of $13.8 million compared to $7.9 million in the comparable period in 2024, representing an increase of approximately 75%. Fourth quarter demonstrated continued momentum in delivering PEDMARK to patients with net product sales up for the fifth consecutive quarter, since Jeff joined as CEO; and our new leadership team took stewardship. For the full fiscal year 2025, the company recorded $44.6 million in net product sales compared to $29.6 million in 2024, representing an increase of approximately 50%. The increase in net product sales is attributable to growth across both new and existing accounts with notable success and progress in conversion and adherence of PEDMARK patients. The company recorded $6.1 million in selling and marketing expenses in the fourth quarter of '25 compared to $3.9 million in the comparable period in '24. The increase in selling and marketing expenses in the quarter is largely related to increased payroll and additional marketing expenses as we focus on expanding our commercial team and augmenting our outreach to community oncology centers and the adolescent and young adult population. For the fiscal year '25, the company recorded $18.6 million in selling and marketing compared to $18.4 million in fiscal year '24. For the full fiscal year, selling and marketing expenses were in line largely as increased payroll and additional marketing expenses in the comparable period were offset by the elimination of European expenses after the announcement of the Norgine transaction in March of 2024. On the G&A front, the company recorded $8.9 million in the fourth quarter of 2025 compared to $4.2 million in the comparable quarter of '24. For the fiscal year 2025, the company recorded $28.8 million in G&A compared to $23.1 million in '24. G&A expenses across both periods, quarters and comparable fiscal years increased with higher intellectual property and legal expenses, increased payroll expenses as headcount increased and increased noncash expenses associated with equity-based remuneration. Noncash stock-based compensation increased about $2 million year-over-year. Cash and cash equivalents were $36.8 million as of December 31, 2025. The net increase in cash was primarily due to the approximately $42 million in net proceeds from equity offering and cash collected from net product sales offset by operating expenses and $21.8 million (sic) [ $21.5 million ] debt paydown in November of '25. As Jeff mentioned, the company has 0 in debt outstanding and has the strongest balance sheet in the history of Fennec. Importantly, we anticipate generating positive cash flow in the first quarter of 2026 as the timing of receivable collections impacted the Q4 cash flows, but on a positive note, we collected the receivables early in the first quarter of 2026 that will benefit our cash position in Q1 of 2026. Lastly, and the major milestone for Fennec, we are pleased to have announced last week the settlement of patent litigation regarding PEDMARK in the U.S. Under the terms of the settlement, Cipla will not enter the market with its generic sodium thiosulfate product until September 1, 2033 or earlier under select circumstances. We believe this settlement will save multiple millions of dollars in annual G&A that will largely be redeployed to help contribute to the expansion of the commercial team, and importantly, provide market exclusivity for many years as we continue to establish PEDMARK as standard of care for patients to be administered cisplatin. With that, we will now commence with a Q&A format by addressing top questions that we most frequently receive from investors within the categories of medical, financial and commercial. Robert Andrade: Starting with medical, Pierre. Number one, what is the biggest challenge or pushback from physicians or institutions when it comes to PEDMARK such as the notion that it interferes with cisplatin treatment? Pierre Sayad: Yes. Thank you for the question, Robert. It's an understandable concern, and it's an important question to address. The primary historical question from oncologists has been whether sodium thiosulfate could reduce the cisplatin antitumor activity. And this concern is understandable given the importance of maintaining such high cure rates in cancers where cisplatin is used. And I'll show 2 specific explanations. First, what has been encouraging is that long-term follow-up from both the COG and SIOPEL 6 trials continues to show preservation of survival outcomes while significantly reducing the risk of cisplatin-induced hearing loss. That evidence base has been critical in shifting physician confidence. In the COG ACCL0431 study, long-term follow-up approaching approximately 8 years has shown no difference in overall survival between the PEDMARK plus cisplatin arm, and the cisplatin alone arm. Similarly, the SIOPEL 6 study in hepatoblastoma has demonstrated consistent overall survival outcomes with follow-up extending beyond approximately 5 years while still showing a substantial reduction in hearing loss. So what this means is, importantly, if PEDMARK were meaningfully interfering with cisplatin antitumor activity, we would expect to see a divergence in those long-term survival curves. Yet, instead, the curves remain essentially overlapping, which provides strong clinical reassurance that the anticancer efficacy of cisplatin is fully preserved. Second, and aside from this long-term durability data, as physicians become more familiar with the pharmacology and the 6-hour delayed administration strategy, it's the mechanistic rationale, which becomes clear. Cisplatin has already entered tumor cells and has already formed the DNA adducts before PEDMARK is administered. We are seeing this discussion move away from skepticism and toward implementation logistics such as the institutional protocol and pharmacy workflow. As awareness grows, many institutions are recognizing that hearing loss is a lifelong toxicity and are becoming more proactive about [ prevention ]. Robert Andrade: Thank you, Pierre. Second question. What is Fennec's regulatory strategy for the AYA population? And are you speaking with the FDA regarding the revised or supplemental indications or working with NCCN regarding stronger guidelines placement? Pierre Sayad: Yes, Robert. As I mentioned earlier, we're building a robust evidence generation pipeline through recent data from our study in Japan, new real-world data supporting the potential use of PEDMARK in adults with head and neck cancers, 2 ISPs already underway and other ISPs in additional tumor types and patient populations, including AYA cancer have been submitted to Fennec and are currently under review. We are focused on expanding the clinical evidence base that demonstrates consistent protection against cisplatin-induced ototoxicity across additional tumor types and patient population. So stay tuned for more updates over the coming months. In parallel, from a regulatory standpoint, we maintain ongoing dialogue with regulatory authorities regarding the potential pathways for label expansion as the data package matures. From a clinical practice perspective, guideline recognition is a very important milestone. As the evidence grows across different disease settings that positions PEDMARK more strongly for future guideline inclusion for strengthened recommendations. The AYA population represents a meaningful opportunity because these patients frequently receive cisplatin-based regimens and face decades of potential hearing impairment if toxicity occurs. Our strategy is evidence first. Once the clinical and mechanistic data are sufficiently robust, we have a plan and look forward to regulatory and guideline pathways naturally becoming more achievable. Robert Andrade: Thank you, Pierre. Moving to financial. Question one, can you provide an estimate on cash operating expenses for 2026 versus 2025 in light of the commercial expansion and other awareness initiatives? With the growth of our commercial team territories and the strategic marketing initiatives to drive further awareness, specifically in AYA, we anticipate cash operating expenses to grow from approximately $35 million in 2025 to approximately $50 million in 2026. The increase in spending is across both commercial and medical. On the commercial front, we have increased headcount, expanded awareness initiatives, a few of which you heard today, and focus on execution. On the medical front, we expect additional ISPs commencing and enrolling, expanded advocacy initiatives and a focus on positioning Fennec for additional guideline recognition and expansion. Further, from a cash EPS perspective, we anticipate a clean P&L in 2026, with a similar gross to net drop down of approximately 85% of gross sales to net sales, COGS in the mid-single digits and noncash stock compensation in line with 2025. Important to note, the increase in spending is focused with rigor and accountability with specific [ curves ] to grow PEDMARK utilization and net product sales. We increased spending and expanded the customer-facing teams with the expectation that they will be making material contribution by the second half of 2026. We remain intent on growing cash flow from operations in '26 and we can expect the same cadence of spending with over 60% of total cash operating expenses to be spent in the first half of the calendar year. Question two. Can you provide an update on the Norgine partnership and ex U.S. progress? After our Norgine deal in March 2024, PEDMARQSI, the branded name for PEDMARK in Europe, was launched in the U.K. and Germany, just last year in '25 and was just approved in Switzerland last week. Importantly, Norgine is planning 8 to 10 launches in 2026 including some major EU countries in addition to the U.K. and Germany. Regarding pricing, the U.K. price was set in 2025 at approximately GBP 8,000. And the final pricing in Germany, we expect to be able to share more by the middle of this year and give you an update related to the potential milestones attached to that pricing. The key takeaway here is that Norgine is just getting started. We expect PEDMARQSI momentum to build meaningfully throughout 2026 as additional countries get launched and commercial activities expand and royalty contributions and related potential milestones impact Fennec's financials will really start to hit us in the second half of 2026. Final financial question. When will you provide revenue or EBITDA guidance in 2026? As a reminder, every additional 100 patients per year on PEDMARK has the potential to benefit Fennec's financials by approximately $30 million. That's 100 patients per year with an approximate addressable market in the AYA market segment alone of greater than 20,000 patients annually. The opportunity is significant as we ramp up our commercial teams presence in the field here in the first half of 2026. As the year progresses, we intend to evaluate the potential for issuing both revenue and EBITDA guidance as we monitor the impact of our growth initiatives. In addition, directionally in terms of EBITDA and free cash flow, every additional 100 patients, as mentioned, can add $30 million in net revenue, but with our fixed cost base has the potential to add an estimated $0.70 per share of free cash flow or cash EPS. Moving on to commercial. Jeff, question one. You've announced the recent field force expansion in Q1. Can you elaborate on these hires and how we should be thinking about the impact to sales? Jeffrey Hackman: Sure. Thanks, Robert. The expansion that we announced in the first quarter here was a very targeted step for our growth. These are really focused on building our territory managers and we've seen the productivity of our current territory managers to be significant, but limited in their reach and frequency. So our territory managers with our accounts that they have focused on high Tier 1 accounts and we're going to continue to see that with the increase of these folks that we brought in, so we will not only increase our reach, but we'll increase our frequency. These additional hires are going to be focused on expanding coverage in regions where demand and account density support incremental investment. We believe this approach will allow us to further penetrate these Tier 1 accounts while also supporting activation of high-potential new centers. Given the productivity that we've seen from our existing territory managers in 2025, we're confident that these hires will contribute new and continued growth and ramp up through 2026 throughout the year and in the future. Robert Andrade: Thank you, Jeff. Question two, you highlighted record enrollment and conversion rates for the quarter. To what extent is that program driving commercial demand versus addressing access barriers? And how should we think about its impact on revenues going forward? Jeffrey Hackman: Thanks, Robert. The primary purpose of our Fennec HEARS program is to address access barriers and to ensure that appropriate patients are able to start and complete their therapy rather than just to create demand. What we're seeing in the data is that this revamped program is functioning exactly as we intended it by helping physicians and patients navigate reimbursement and affordability challenges while also simplifying the overall access experience for PEDMARK. The record enrollments as well as prescribed and infused vials in active AYA patients are growing and they reflect both strong operational execution as well as growing familiarity with our providers and how to utilize this program efficiently. Most importantly, though, the demand for the product continues to originate from clinical adoption and physician decision-making. The patient assistance program supports that demand by removing friction from the access process as well as helping convert appropriate prescriptions into treated patients. From a revenue standpoint, we view that this program is an important enabler for our sustained growth going forward. By improving this patient and clinician experience and ensuring conversion and prescribed vials to infused vials, this helps us capture appropriate utilization, which might otherwise be delayed or even lost due to administrative and financial barriers. Robert Andrade: Thank you, Jeff. And operator, with that, we'll open it up for questions. Operator: [Operator Instructions] Our first question coming from the line of David Amsellem with Piper Sandler. Alexandra von Riesemann: This is Alex on for David. We wanted to dive more into the germ cell tumor and testicular cancer group of patients. Can you maybe refresh us on what you're seeing in the field from advocacy groups and the new field force? And how is penetration in this segment? And then also, are you seeing strong uptake in academic centers or community oncology practices or both? And what's the mix between pediatric patients and older segments at present? Jeffrey Hackman: Yes. Let me take the first part just real quick because I think it relates to some -- on the commercial side, and then I'll hand it over to Pierre. It's a good question. Germ cell tumors continue to be the largest opportunity that we see for PEDMARK. And while the efficacy of cisplatin is fantastic in a lot of these tumors, what we see is a significant amount of ototoxicity in these patients. And so we continue to focus ourselves there. We are partnering with advocacy groups. We have some initiatives throughout this year, and I mentioned a few in our call. But I think driving kind of a two-pronged approach, we have to educate our physicians on the importance of PEDMARK, but we also have to educate patients that they -- and by partnering with advocacy groups, this gives us an opportunity to be able to get that education out to our patients. The second part of that, I'll give it over to Pierre, if he would like to answer. Pierre Sayad: Thank you, Jeff, and thank you for the question. Certainly, we have seen a very substantial, I think, interest, if you will, from both the community as well as the academic settings in terms of driving PEDMARK research. And where this is coming from is maybe twofold. So on the one hand, frankly, it's our substantial medical team. So we had in the field, a group of trained MDs, PhDs, PharmDs, true experts, if you will, engaging daily with top KOLs and academic institutions as well as very important HCPs in the community setting. They are driving very deep and robust conversations. I think the second thing is how these conversations are actually unfolding. These conversations go extremely down deep into the mechanistic rationale first of cisplatin. How does cisplatin actually cause the damage to the hair cells inside the cochlea. We are really able to demonstrate through data, through science, what's happening with CIO and then on the backside of that is explaining the molecular mechanisms, the biochemistry of how PEDMARK prevents the ototoxicity. So you combine the talent of the team with these very mechanistic biochemistry, organic chemistry types of discussions, and yes, we are absolutely seeing an increase in KOL interest and I would say, enthusiasm for working with PEDMARK. Operator: Our next question coming from the line of Madison El-Saadi with B. Riley Securities. Madison Wynne El-Saadi: Maybe if we could double-click on the growth of the number of treated patients in 4Q, making certain assumptions about pediatric revenue, it looks like the AYA patient treated count rose materially in 4Q, at least by, say, 20% versus 3Q. Is that a fair assessment? And do you expect the slope to increase in the coming quarters? And then relatedly, are you seeing an increase in high frequency prescribers? Jeffrey Hackman: Yes. We'll continue to see that trend grow. You see a shift in our focus in our organization towards the AYA market. Obviously, it's much larger. I think Robert has mentioned on numerous occasions. It's 10x the size of the pediatric market. So where we're seeing the significant growth is in our AYA patients. That's where we'll focus. And that's where our efforts have been. That doesn't mean that you walk away from these pediatric institutions and the ability to be able to grow it there. We have some great relationships, and we continue those. In the institutions, you see it mixed, both in the academic and community settings for AYA. We see academic centers in certain areas of the country play a much more important role, but we also are seeing, and we've mentioned in the past that PEDMARK was put on formulary in a large community practice, oncology community practice, and we're going to continue to expand, and we have initiatives working with some very large community practices throughout the country. So stay tuned. We'd love to announce more in the future about how we grow our business in the community setting. Robert Andrade: And just to dive a little deeper, Mad, and maybe touching on your question in terms of some key prescribers. What we saw in Q4, and we expect to continue is a nice mix of both existing accounts and new accounts. And in particular, what got us very enthusiastic is the existing accounts growth. So not only growth in the amount of patients but growth in the amount of vials of PEDMARK administered. And so that's something that we're watching closely to keep that balanced mix between both existing and new. Operator: Our next question coming from the line from Ram Selvaraju with H.C. Wainwright. Raghuram Selvaraju: Congratulations on all the 2025 progress. The first question is from an international commercial perspective, and there are two parts. First, when would you expect during 2026 to start to see initial revenue coming from the Norgine partnership? And with respect to Japan, can you comment on when you would anticipate having a potential partner, local regional distributor in place and how that might relate to the time line for potential approval and market entry? And then lastly, I was wondering if you could comment on the current overall situation vis-a-vis generic filers in the wake of the Cipla settlement. Do you anticipate pretty much everything else to more or less fall in line with that settlement? To what extent is their remaining litigation pending? How many other generic filers do you expect? And any other information on that topic that you could provide that might be germane. Robert Andrade: Sure, Ram. I think I'll start with taking all 3. On the Norgine front, as I mentioned, there are a number of launches happening this year. And also really once we get the -- once Norgine gets the pricing in Germany, you're going to see Germany starts to take off. So we anticipate a material contribution to Fennec's financials in the second half of 2026 from Norgine. On Japan, front and center, as Pierre mentioned, we're really excited about the results that we announced in Q4, all very consistent with what we know that it protects your hearing and doesn't impact the efficacy of cisplatin. Those conversations and dialogues are ongoing. It's in our best interest to get a deal done sooner rather than later. We want to be with a partner similar to what we have with Norgine in Europe -- in Japan, so we can get the regulatory process kicked off. And we have a lot of enthusiasm, not only from strategic but from the investigators themselves in Japan to get PEDMARK approved there. Lastly, and thank you for the question on the settlement. It was many years in the work, lots of dollars spent. So we are very excited to have that behind us. We have no other outstanding litigations currently at this time. I think you're very familiar with the generic and the settlement process. Generally, it's one and the first one that you settle with. If it's two, it means that you have an enormous market or a sizable market. So to a certain extent, that's a good problem to have. But nevertheless, we are very excited to have resolved our only outstanding litigation with Cipla and look forward to establishing PEDMARK as the standard of care well into the '30s and go thereafter. So thank you, Ram. Operator: Our next question coming from the line of Chase Knickerbocker with Craig-Hallum. Chase Knickerbocker: I wanted to get your thoughts maybe and I think it would be helpful kind of however you guys kind of break it out internally, but potentially a number of kind of unique AYA accounts or prescribers. And then you kind of mentioned those accounts that are writing more vials in Q4 over Q3. Maybe just -- is that the exception is that the rule can maybe kind of elucidate that further as far as kind of how many repeat prescribers you're seeing in that AYA population? Jeffrey Hackman: Thanks for the question. We're seeing -- first off, let me take the last part of that question. One of the areas that is really sticky for us now and what we're seeing is prescribers prescribing again, right, and multiple times. And I think that's probably the biggest impact that you see on our growth if these prescribers now being comfortable with the regimen, being comfortable with using Fennec HEARS with using nurses coming into the home of the patient, being comfortable with getting reimbursement. One of the things I know you're interested in also is can the product get reimbursed in the AYA space. And the 3 top plans in the country, we're seeing upwards of 95% to 100% reimbursement rates for the product. So that's not limiting us either. All of those are factors that allow our physicians now to be much more comfortable with the product and use it multiple times. But one of the reasons why we wanted to increase the size of our commercial footprint was to get to more customers. There was just a limit to who we could call on with the size of our commercial team. We've now expanded that reach significantly. I believe that the size of our team now is good enough to get us to the future of where we need to go, especially with the expansion of the number of calls that we're seeing already with these folks in the field. And so that growth is going to be evident, and you'll see that really quickly start here in 2026. So while we don't kind of get numbers of new accounts, as you know, but the area -- the breakdown of both new existing accounts are very balanced right now. It's probably like what we'd like to see in the field is kind of a balance of both. I don't want to see physicians walking away from using the product because they didn't have a good experience, but we also want to see us reaching out to new customers as well. So it's a very balanced approach. Chase Knickerbocker: Maybe just being most of the way through Q1 here. You kind of called out that kind of per patient revenue is pretty significant, that does introduce a little bit of lumpiness, right? And so as we go into Q1, most of the way through the quarter, I think it would be helpful just to get some kind of goalpost or thoughts as far as kind of current trends? I mean you grew about 11% sequentially in Q4. Maybe just a goalpost there would be, do you expect that to accelerate in Q1? Or is there some seasonality in Q1 that we should be thinking about for the business? Jeffrey Hackman: Well, I'll let Robert comment on some of the numbers. But Chase, we've grown this business 5 straight quarters. My plan is not to slow down here. Robert, if you want to comment on. Robert Andrade: Yes, I'll just -- similar to Jeff's comments, we have a strong momentum into 2026. Importantly, we did add significant amount of FTEs and commercial hires and as well as medical hires. They don't contribute day 1. But as mentioned in my prepared remarks, we anticipate that material, call it, step up in the back half of 2026. So we're not going to stop here by any means in Q1 and Q2, but the material contribution that we've done from this expansion we believe is going to really start to impact our financials starting in Q3. Operator: Our next question is coming from the line up Sudan Loganathan with Stephens. Sudan Loganathan: Congrats on the great year and quarter. My first question, I just wanted to ask how are you thinking about the business development going forward, particularly in terms of priority and maybe potential areas of focus? And then the second one I have, you kind of touched on this a little bit on the prepared questions, but can you elaborate on how institutional-led research is expected to impact Fennec in both the near and long term over the long term? Robert Andrade: Yes. The first question, Sudan, was on business development. And I'll let Jeff add here. But as you know, our opportunity in PEDMARK is very, very large, 20,000 patients in the AYA alone with the opportunities that Pierre spoke to in potentially expanding both the initiatives into metastatic and into additional populations. So that being understood as we expand our sales team, there's always the opportunity to evaluate potentially late-stage assets or commercial assets. But with our team in place, we are very enthusiastic just about the opportunity to invest in ourselves and this opportunity in front of us. Jeff, do you want to add anything? Jeffrey Hackman: I'll just add, yes, I mean, now we're -- the scale that we've added now and the expertise, and I talked about this, Sudan, before, is now we've created and we're showing significant execution, 5 straight quarters in a row here. So this organization now has shown that it can deliver and execute on its strategies. And so yes, now it opens up some doors. So it's a good question. The second part of your question, I'll answer a little bit of it, and then I'll let Pierre jump in. But the growth in our partnerships in these medical institutions are kind of twofold, right? So you can start to think about the relationships that we build and the importance of these studies and the data that we're going to get from these studies, but having a partnership, for example, with City of Hope, as Pierre discussed earlier, is essential for the entire organization and our relationship with City of Hope, not just those physicians doing the study. And do you want to expand on that just a little bit? Pierre Sayad: Sure, sure. Thank you for the question. As Jeff is commenting, absolutely, you got City of Hope, TGH, they're critical academic centers that are going to help us drive our understanding into new patient populations, as previously mentioned, adults, metastatic disease, et cetera. And there's many more ISPs that we are currently reviewing. So stay tuned for some more press releases here hopefully very, very soon. All that to say is that as new data is coming in, that defines our regulatory strategy. Our immediate priority is expanding the clinical evidence base that demonstrates this consistent protection against cisplatin-induced ototoxicity, yet additional tumor types and additional patient populations will allow us to drive these regulatory conversations. So in terms of expanded labels, perhaps new guidelines, new relationships with NCCN, the new data coming in will help define that entire... Jeffrey Hackman: So in closing, what I -- yes, thank you for the questions, everyone. I think we'll close it here. And I just want a few comments here at the end for me on this. And I -- 2025 was a record-setting year for the company. It's -- we've come an incredible -- and we've overcome incredible things this past year in 2025, but we're not stopping here. We're set up to strengthen our commercial execution going forward. We've deepened our medical engagement. We've expanded our global reach. We're now seeing the impact of this focus and this disciplined execution focus in this organization. We've built real momentum going into 2026 with a revitalized and expanded team with clarity and purpose. We know exactly where the business is and where our efforts need to be focused. Our field and medical teams are deeply engaged. We're educating physicians. We're supporting our patients and we're expanding awareness of cisplatin-induced ototoxicity. The organization is aligned, and we are energized, and we're excited and we are hitting on all cylinders as we go into 2026. So I'd like to thank you all for your continued support and partnership and we're looking forward to a fantastic progress in 2026 and beyond. Thank you. Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation, and you may now disconnect.
Operator: Good day, and welcome to the Cheetah Mobile Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Helen Jing Zhu, Investor Relations of Cheetah Mobile. Please go ahead. Jing Zhu: Thank you, operator. Welcome to Cheetah Mobile's Fourth Quarter 2025 Earnings Conference Call. With us today are our company's Chairman and CEO, Mr. Fu Sheng; and our company's Director and CFO, Mr. Thomas Ren. Following management's prepared remarks, we will conduct the Q&A section. Please note that the management's prepared remarks are presented by AI agent. Before we begin, I refer you to the safe harbor statement in our earnings release, which also applies to our conference call today as we will make forward-looking statements. At this time, I would now like to turn the conference call over to our Chairman and CEO, Mr. Fu Sheng. Please go ahead, Fu Sheng. Sheng Fu: Good evening, everyone. Thank you for joining us. In 2025, we finished stabilizing the business and built a stronger foundation for Cheetah Mobile. During the year, our total revenue grew 43% year-over-year, driven by continued growth in both our Internet business and AI and Others segments. In the fourth quarter, AI and Others already accounted for half of total revenues, reflecting the increasing contribution of our new growth initiatives. More importantly, we achieved full year non-GAAP operating profitability, our first time in 6 years. Our Internet business remained resilient in 2025, generating approximately RMB 460,000 in adjusted operating profit every working day. This consistent operating cash flow forms the financial backbone of the company and allows us to invest in robotics and AI in a disciplined and sustainable way. Our second highlight is robotics, which is emerging as a key structural growth driver. For full year, robotics revenue grew approximately 31%. In the fourth quarter alone, robotics revenue reached about RMB 60 million, up 94% year-over-year and 43% quarter-over-quarter. A voice robot in China achieved 100% year-over-year growth for 3 consecutive quarters, accounting for high single digits of the fourth quarter's total revenues. This progress is driven by our strategic focus on core strength in voice robotics and the integration of AI agent technology to enhance product experience. We are now seeing our voice robot become a must-have solution in receptions, guided tours, retail environment, hospitals and service halls as they deliver proven measurable value. We recently introduced a new version of our voice robots, which comes with built-in skills like guiding, patrolling and advertising, enabling end customers to start using them right away, our robotic arm business mainly in serving overseas markets is making up high single digit of the first quarter's total revenues. We focus on long-term demand from research institutions and the R&D teams that value openness and the customization. This customer base is sticky and repeatable, supporting long-term demand, building on our proven indoor autonomous mobility technologies. We are introducing a smart wheelchair, targeting developed regions such as Western Europe and North America. This product is positioned as a premium solution for users who value safety, independence and confidence in daily mobility. We are seeing a clear shift in demand as users increasingly value safety, assistance, and intelligent features in mobility products, while scalable solutions in the market remain limited. By applying our experience in service robots we are able to meaningfully improve the user experience. During my own recent recovery, I personally used our smart wheelchair and saw a clear improvement in safety and convenience. Importantly, we can deliver these benefits without significantly increasing the costs compared to traditional high-end electric wheelchairs, making this a more practical and accessible product for users. We have entered into framework agreements with established mobility brands who will manage branding, distribution and aftersales services. Initial shipments are expected to begin in the second quarter of 2026, representing an early-stage commercial validation of this product category. Across the industry, more companies are starting to test and deploy service robots. We believe the next 1 to 2 years will be a validation phase, where ROI and reliability will matter most. You don't need a robot that looks like a human. You need a robot that works every day, delivers measurable value and it's easy to operate at scale. This is exactly where our current products are positioned. Our Internet business remains strong, generating steady cash flow, which allows us to invest in AI in a disciplined and sustainable way. For more than a decade, we have built utility applications serving hundreds of millions of users. This product DNA shapes how we approach AI, rather than competing in model development we focused on turning AI capabilities into practical tools that help users complete real tasks. During the Chinese New Year, I spend a lot of efforts experimenting with an AI agent system built on the OpenCloud framework starting from a single agent that could barely complete basic tasks, the system evolved into a multi-agent team capable of running tests continuously. In one scenario, the system generated personalized New Year messages for more than 600 colleagues and managed the entire sending workflow automatically. What we see emerging is not simply a new AI tool but a new way to organize digital work. AI agents can automate entire workflows from information gathering to processing and distribution, significantly improving productivity. Building on these learnings, we introduced EasyClaw based on OpenCloud and open source agent framework for both domestic and overseas markets. EasyClaw is our AI coworker platform that helps users create and deploy task-oriented AI agents capable of executing real-world tasks autonomously. At this stage, we focus on execution capability rather than scale. We are already seeing a continued increase in user engagement as reflected in the rapid growth of our total token usage. We are building EasyClaw into an agentic operating system that changes how users interact with software and machines. By integrating EasyClaw into our PC products, we are improving user experience and driving higher conversion and ARPU. In robotics, EasyClaw allows users to program and customize robots using natural language, lowering customization barriers. This helps us deploy faster, reduce cost and scale more easily, making our products more competitive. Some investors may ask how we compete with our training foundation models. We believe the real advantage in the agent era lies not in the model itself, but in the systems built on top of it, including task orchestration, tool usage and cost management. By leveraging open ecosystems and leading APIs, our product can evolve as models continue to improve. Finally, our global DNA remains a core competitive advantage. We continue to expand both our AI tools and robotics businesses internationally with a disciplined approach. Looking ahead to 2026, we do not provide specific financial guidance, but we see continued structural improvements. We believe our robotics business will maintain strong growth momentum as commercial validation deepens and become a more important part of our revenue mix. At the same time, AI-enabled products will gradually enhance engagement and monetization efficiency across our software ecosystem. We will increasingly apply AI internally to accelerate the development, aiming to further improve operational efficiency. As we grow, we will continue improving transparency and disclosure, credibility to data and our focus remains clear. Execute with discipline and net results compound over time. Cheetah is entering its next phase of development combining digital coworkers through AI agents and physical coworkers through service robots supported by real operating cash flow and disciplined financial management. We are building the foundation for our next stage of growth. Thank you. Thomas Jintao Ren: Thank you, Fu Sheng. Hello, everyone, and thank you for joining us. Unless otherwise stated, all financial figures are presented in RMB. 2025 marked a year of meaningful operational recovery and improved financial discipline for Cheetah Mobile. During the year, we continued improving operating discipline and cost structure across the company. We concentrated resources on commercially validated use cases in robotic products and practical AI applications, while leveraging open source ecosystem and third-party models to improve R&D efficiency and optimize infrastructure costs. This approach allows us to accelerate iteration without significantly increasing fixed costs. For the full year 2025, total revenue grew approximately 43% year-over-year to RMB 1,150 million. Although we reported a GAAP operating loss of RMB 179 million for the year, this represented a substantial improvement compared with operating loss of RMB 437 million in 2024. On a non-GAAP basis, operating profit reached RMB 14 million compared with a non-GAAP operating loss of RMB 232 million, in the prior year, reflecting improved operating leverage. We ended the year with USD 215 million cash and cash equivalents. Turning to our segment performance. Our Internet business continued to serve as a stable cash generating platform for the company in 2025. Revenue from Internet business increased 19% year-over-year to RMB 615 million with Internet revenue, Internet value-added services revenue increased 21% year-over-year in 2025, contributing 65% of segment revenue, supported by both paying user growth and ARPU expansion. In addition, we observed that many users subscribe for periods longer than 12 months, reflecting the recurring nature of our utility applications and strengthening revenue visibility. In terms of profitability, the Internet business generated approximately RMB 115 million in adjusted operating profit in 2025, maintaining healthy margins and strong operating cash flow. As Fu Sheng mentioned earlier, the Internet business generates roughly RMB 460,000 in adjusted operating profit per working day which provides predictable cash flow to support strategic investments in new initiatives. Looking ahead, we expect the Internet business to remain stable and profitable while continuing to provide financial flexibility for the company to invest in long-term growth opportunities. Turning to our AI and Others segment. Revenue from this segment increased 85% year-over-year to RMB 535 million in 2025, as a result, this segment accounted for 46.5% of our total revenue compared with 35.9% in 2024, reflecting the growing contribution from our emerging businesses. Within the segment, the robotics business continued to scale since the second half of 2025, making up 27% of the segment's revenue and 13% of total revenue in 2025. Robotics revenue increased 31% in 2025 driven by deployment of voice robot in China and continued demand for robotic arms in overseas markets. Other businesses, namely overseas advertising agencies, service and multi-cloud management platform within this segment also contributed significantly to revenue growth, benefiting from increasing overseas expansion by Chinese enterprises. At the same time, we continued to improve operating efficiency to more selective investment and disciplined cost control. For the full year, adjusted operating loss from the AI and Others segments reduced by 42% year-over-year to RMB 274 million as we continued scaling the business while maintaining disciplined investments. Turning briefly to the first quarter performance. Total revenue reached RMB 309 million representing a 30% year-over-year increase and a 7% quarter-over-quarter increase, while Internet revenue declined slightly year-over-year, in the fourth quarter it increased quarter-over-quarter as we continue shifting toward a subscription-driven business model. In addition, user subscription revenue within the Internet segment increased 32% year-over-year and 16% quarter-over-quarter as we chose to focus on subscription business model, which supports a healthier product and user experience. Revenue from the AI and Others segment reached RMB 153 million, accounting for nearly half of total revenue in the quarter. With this segment, robotics revenues increased by 94% year-over-year and 43% quarter-over-quarter to about 19% of the fourth quarter's total revenue. Other than that, our revenues from overseas advertising agency service and multi cloud management platform also contributed to this segment's year-over-year growth. On a non-GAAP basis, the company generated operating profit of RMB 15 million in the fourth quarter compared to RMB 42 million operating losses in the same period last year. We believe the improvement we achieved in 2025 reflected structural improvements in both our cost structure and revenue mix. Looking ahead, our priorities remain clear: disciplined growth, continued improvement in operating efficiency, balanced and disciplined capital allocation with stronger financial discipline, clearer strategic focus and increasing contribution from our emerging businesses, we believe the company is entering a more stable and predictable operating phase. Thank you. We are now ready to take your questions. Operator: [Operator Instructions] The first question today comes from Thomas Chong with Jefferies. Thomas Chong: [Foreign Language] Unknown Executive: [Foreign Language] Jing Zhu: Operator, can we move to the next question? Operator: The next question comes from [ Nancy Lu ] with JPMorgan. Unknown Analyst: [Foreign Language] Unknown Executive: [Foreign Language] Jing Zhu: Operator, please move to the next question. Thank you. Operator: The next question comes from Cheng Ru Li from Guoyuan Securities. Cheng Ru Li: [Foreign Language] Unknown Executive: [Foreign Language] Jing Zhu: Operator, please move to the next question. Thank you. Operator: The next question comes from [ Yongping Diao ] with Guotai Haitong. Unknown Analyst: [Foreign Language] Unknown Executive: [Foreign Language] Jing Zhu: Thank you, operator. Please move to the next question. Operator: The next question comes from [ Jie Zhu ] with GF Securities. Unknown Analyst: [Foreign Language] Unknown Executive: [Foreign Language] Jing Zhu: Operator, please move to the next question. Operator: The next question comes from [ Wei Feng ] with Mizuho Securities. Unknown Analyst: [Foreign Language] Unknown Executive: [Foreign Language] Jing Zhu: Operator, please move to the next question. Operator: The next question comes from Lydia Lin with Morgan Stanley. Chenyueya Lin: [Foreign Language] Unknown Executive: [Foreign Language] Jing Zhu: Operator, please move to the next question. Operator: The next question comes from Vicky Wei with Citi. Yi Jing Wei: [Foreign Language] Unknown Executive: [Foreign Language] Jing Zhu: Operator, please move to the next question. Operator: The next question comes from Zeping Zhao with ICBC. Zeping Zhao: [Foreign Language] Unknown Executive: [Foreign Language] Jing Zhu: Yes. Thank you. Operator, please check if we have any further questions. Operator: We have no further questions at this time, which concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks. Jing Zhu: Thank you so much for joining our conference call today. And if you have any further questions, please do not hesitate to let us know. Thank you so much. Bye. Sheng Fu: Bye-bye. Operator: The conference has now concluded, and we thank you for attending today's presentation, and you may now disconnect your lines.
Operator: Good morning, ladies and gentlemen, and welcome to the NRx Pharmaceuticals Q4 2025 Results Conference Call. [Operator Instructions] This call is being recorded on Tuesday, March 24, 2026. I would now like to turn the conference over to Michael Abrams, CFO. Please go ahead. Michael Abrams: Thank you, Joelle, and welcome, everyone. Before we proceed with the call, I would like to remind everyone that certain statements made during this call are forward-looking statements under the United States federal securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations. Additional information concerning factors that could cause results to differ from statements made on this call is contained in our periodic reports filed with the SEC. The forward-looking statements made during this call speak only as of the date hereof, and the company undertakes no obligation to update or revise the forward-looking statements. Information presented on this call is contained in the press release issued today and in the company's Form 10-K, which may be accessed from the Investors page on the NRx Pharmaceuticals website. Joining me on the call today is Dr. Jonathan Javitt, our Founder, Chairman and CEO. Dr. Javitt will provide an overview of our company's progress as reported yesterday on Form 10-K, following which, I will review our financial results. Following their prepared remarks -- these prepared remarks, we will address investor questions. I will now turn the call over to Jonathan. Jonathan? Jonathan Javitt: Thank you, Mike. Good morning, everyone. Thank you for joining us. 2025 was a pivotal and transformative year for NRx and for its HOPE Therapeutics subsidiary. We've advanced each of our programs with a drug approval anticipated for KETAFREE over the summer potential for drug approval this year for NRX-100 and a dramatically expanded opportunity for NRX-101. Our HOPE therapeutics clinics are demonstrating EBITDA positive revenue growth. Most importantly, given our low cash burn, we only need to be successful on one of those fronts to reach pro forma profitability by the end of the year. Of course, the 10-K only demonstrates the impact of first quarter of clinical operations, i.e., the fourth quarter was our first quarter of operations so you can interpolate that over a full year. We've ended 2025 a far stronger company than when the year began. Our 10-K documents a year-over-year reduction in expenses from operations even as we move far closer to potential FDA approval. We eliminated all convertible debt from our balance sheet and ended the year with a $7.8 million of cash on hand. More importantly, with the growing revenues from operations and ongoing ATM activities, we anticipate adequate cash resources to support operations at least through 2026 by which time we aim to be a fully commercial pharmaceutical company and to own a substantially larger clinical network. Let's start with an overview for each of our development programs beginning with our Abbreviated New Drug Application or ANDA for preservative free ketamine, which we call KETAFREE while we're waiting for a final trade name from FDA. In August 2025, FDA approved our suitability petition for our proposed strength of preservative-free ketamine. We filed the ANDA in September 2025. And in November, received notification that FDA noted no significant deficiencies and agreed to review the file. Last week, we were notified by FDA of a preliminary determination of bioequivalence to the reference branded drug, which is Ketalar. This is a key determination in any generic application. Our room temperature stability data has continued to support at least 3 years of room temperature stability. And we've manufactured 3 registration batches of KETAFREE in anticipation of summer 2025 approval -- 2026 approval. The company has additionally submitted a citizen petition seeking to have benzethonium chloride, a toxic preservative included in all currently approved ketamine products and it's really in there for antiquated reason, we've petitioned to have it removed from all presentations of ketamine. The FDA has just notified us that their review of expectation is ongoing. This preservative is the subject of a detailed toxicology report that we posted on the public record, which casts a considerable doubt on the assumed safety of this chemical including potential cytotoxicity and neurotoxicity. Notably, benzethonium chloride is not categorized by FDA as GRAS or generally recognized as safe. And the law requires that all ingredients of drugs must be safe. This report has been submitted to FDA in support of our citizen petition. As a preservative-free version of ketamine is an important invention, we filed a patent application with USPTO to protect our intellectual properties surrounding this product. The existing market for Ketamine has been projected at approximately $750 million a year, and we believe KETAFREE made in the United States and offered without any toxic preservatives offers patients and clinicians a superior option. As you know, we're also pursuing an innovative new drug application under FDA Fast Track Designation for Ketamine, which we've designated NRX-100. When we met with you in Q4, our intent was to submit this NDA based only on data from existing clinical trials which we've summarized for you in the 10-K and various other presentations. However, in Q4, FDA announced a significant policy change for the first time inviting companies to submit real-world evidence and supportive effectiveness without a requirement that the evidence submitted be personally identifiable. In our estimate, this provided an important opportunity to strengthen our case for approval and to substantially broaden the indication we were seeking, whereas we originally anticipated seeking only accelerated approval as we shared with you at the time, the FDA policy change to open the path to seek full approval. Accordingly, we partnered with Osmind Inc. to leverage their database on more than 65,000 patients treated with intravenous ketamine, and approximately 6,000 patients treated with intranasal ketamine. Summary data are presented in the 10-K and demonstrate the benefits that thousands of Americans have already received in reducing depression and suicidality with intravenous ketamine. As we shared with you, we were granted an in-person meeting at FDA headquarters with the leadership of the FDA Division of Psychiatry Products, the Office of Neurosciences and the leadership of the FDA Center for Drug Evaluation research. The minutes of that meeting demonstrate FDA's willingness to review not only the clinical trials data, but also the real-world evidence. More importantly, FDA guided us to seek full approval rather than accelerated approval and to seek a substantially larger indication for depression in patients who may have suicidality rather than only those who already have suicidality, an indication that we believe applies to more than 10 million Americans. Our aim is to package the data FDA have requested by the end of Q2 with the potential for decision date otherwise known as a PDUFA date by the end of the year or in the opening months of 2027. We're confident that seeking FDA's alignment on this expanded pathway was the right thing to do for our patients and our shareholders. As we shared last year, the product is already manufactured. The manufacturing modules are complete and already in the hands of the FDA and 3 registration batches are manufactured and in the warehouse in anticipation of approval. Again, we have stability data to support at least 3 years of room temperature shelf stability. In August 2025, FDA granted us an expanded Fast Track designation for NRX-100. This expanded designation goes beyond the prior grant simply for suicidal bipolar depression to now include all patients with suicidal ideation in depression including bipolar depression. Suicidal depression is a massive problem in the United States. In fact, the Center for Disease Control estimates that nearly 13 million Americans seriously consider suicide each year and this leads to an American dying from suicide every 11 minutes. In June, the FDA created the Commission's National Priority Voucher program that affords substantially faster review times of once 2 months versus the standard 10- to 12-month review, enhances communication throughout the review process and creates potential for accelerated approval, and full approval of NRX-100. The first 2 tranches of vouchers have been granted. We remain optimistic for NRX-100's chance to receive a voucher, given that CMS targeted drugs other than bulk ketamine, have been underrepresented to this point. Further, we're confident that NRX-100 meets the program's criteria and is a prime candidate to receive a voucher. Moving on from ketamine. We've experienced what we believe to be transformative change in our NRX-101 program. As you know, we originally developed NRX-101, a fixed-dose combination of D-cycloserine and lurasidone to address the needs of patients with suicidal bipolar depression. While we hope to get back into the clinic with a pivotal trial to prove the value of NRX-101 at high doses to treat patients with that condition. A near-term opportunity appeared that offers a far broader potential application for D-cycloserine the active ingredient of NRX-101. As we illustrated in the 10-K, there's a rapidly emerging body of evidence suggesting that D-cycloserine or DCS at low doses has the potential to drive neuroplasticity which is the process by which brain cells form connections to other brain cells and especially to augment the clinical effect of transcranial magnetic stimulation or TMS. Accordingly, we appointed Professor Joshua Brown, MD PhD of Harvard McLean as our Chief Medical Innovation Officer. Dr. Brown is a principal investigator on NIH funded and DARPA-funded projects that highlight the future of neuroplastic care including the use of D-cycloserine and transcranial magnetic stimulation or TMS, for treating depression, PTSD and suicidality. Today, we're announcing that we're on the path to developing a patentable sustained release presentation of D-cycloserine to provide an extended release profile suitable for enhancement of TMS efficacy. Prior clinical trials have shown a doubling of clinical response in patients with depression and an eightfold increase in remission from depression versus standard TMS therapy. However, DCS, D-cycloserine, which is a tuberculosis drug has always been a somewhat unstable and problematic molecule that degrades rapidly, if not carefully formulated and it is stable in our current formulation. Moreover, its absorption profile in the human body more closely resembles a sharp spike rather than a steady state. We're excited that after a long period of research and development, we found a path to an innovative modern version of DCS that is better suited to maintaining a steady state in the blood during TMS treatment. NRx has more than 25,000 manufactured doses of NRX-101 at the appropriate strength and has launched a nationwide expanded access program to enable physicians who are performing TMS and want to add the benefit of D-cycloserine to access this medication at no charge to the patient under expanded access and federal right to try laws while we await a confirmatory Phase III trial of NRX-101 to augment the effects of TMS. That trial is planned to start this summer, and we expect non-dilutive federal sources to support that trial. The market estimate for this newly validated indication for NRX-101 is in excess of $1 billion. We're collaborating with Dr. Brown and his DARPA-funded initiatives related to D-cycloserine and TMS that have attractive support because of the clear implications for supporting the needs of military personnel, veterans and first responders in addition to the tens of millions of civilians who need this treatment. In recent months, we've had the opportunity to brief on these activities at senior-most levels within the Department of War, the Department of Veterans Affairs and both House and Senate leadership who are concerned about the welfare of our troops and veterans. That's why some of you noticed my attendance in the gallery at this year's State of the Union address. Our clinics have contracts to treat military personnel through TRICARE and to treat veterans through direct contracts with the VA. We first established a cooperative research and development agreement with the VA in 2018. In September 2025, HOPE Therapeutics initiated revenue generation upon closing its first acquisition of Dura Medical located in Naples and Fort Myers, Florida. HOPE subsequently added Cohen & Associates in Sarasota, another revenue-generating site, an EBITDA-positive clinic that's now part of our HOPE network. Dr. Rebecca Cohen, Founder of Cohen Associates has been appointed as HOPE Medical Director. In December, HOPE was the first organization in Florida to launch 1-day TMS treatment for severe depression combining D-cycloserine and TMS. The 1D protocol has been reported in the peer-reviewed literature to achieve 87% response and 72% remission from severe depression in 6 weeks following a single day of TMS treatment combined with D-cycloserine. By way of comparison, if you look at the SPECT-D trial, antidepressants have been reported only to demonstrate about half that response. We're currently opening additional clinics in West Palm Beach, Sarasota, Boston, Denver, with the expectation that we'll have a far more robust network by the end of the year with revenue to match. Although there are many more milestones described in our 10-K, I'll end with our newly declared partnership with Neurocare AG of Munich and Atlanta, Georgia. Neurocare manufactures the top-selling TMS device in the U.S. today, the Apollo machine, which has installed at more than 400 clinical locations in the U.S. with many more internationally. Our aim is to leverage our mutual strengths to achieve the benefits of integrated care in neuroplastic integrated psychiatry that were achieved in renal dialysis through integration. Those results were achieved several decades ago by DaVita and Fresenius Medical. Those 2 organizations demonstrated that combining integrated pharmaceutical and medical device development with a quality-driven approach to patient care could transform clinical outcomes for patients with end-stage kidney disease, and they created organizations that are currently valued at $15 billion and $30 billion, respectively. We aim to take that same model into the future of interventional psychiatry for the treatment of PTSD, depression, autism, traumatic brain injury and Alzheimer's. Working together with our academic partners, our government partners and now with the leading medical device partner we'll do everything in our power to bring hope to life. I'll now turn it over to Michael Abrams, our CFO, to review our 2025 financial results. Mike? Michael Abrams: Thank you, Jonathan. For the year ended December 31, 2025, NRx Pharmaceuticals reduced its loss from operations by approximately $2.3 million to $16.2 million from $18.5 million for the year ended December 31, 2024, which was primarily driven by a decrease in research and development expense. For the year ended December 31, 2025, research and development expense decreased by approximately $2.4 million to $3.8 million as compared to $6.2 million for the year ended December 31, 2024, primarily driven by a decrease in clinical trial and development expense. Finally, general and administrative expense for the year ended December 31, 2025, decreased by approximately $0.4 million to $13.1 million as compared to $13.5 million for the year ended December 31, 2024, primarily driven by certain ongoing cost reduction initiatives. As of December 31, 2025, we had approximately $7.8 million in cash and cash equivalents. Management believes that the current available cash resources in concert with anticipated growth in total clinic revenue, ongoing cost reduction initiatives and current availability and trends in connection with the company's active at-the-market offering, will be sufficient to support ongoing operations through the end of 2026. Our singular focus remains advancing our primary drug development initiatives and planned clinic acquisitions to build long-term value for our shareholders. With that, I will turn the call back over to Jonathan. Jonathan? Jonathan Javitt: Thank you, operator. We're now ready to take questions. Operator: [Operator Instructions] Your first question comes from Tom Shrader with BTIG. Thomas Shrader: Congratulations on all the progress. Just an update on how you see building KETAFREE inventory? Is that something you will wait to do? You will do externally? Or do you have a lot already? And then you're quoting the generic value of ketamine. Do you think if you have -- I mean, I guess, how confident are you that if you had the only available ketamine that maybe the current generic price isn't so relevant. And how much increase in price do you think the market would bear. And then I have a DCS follow-up. Jonathan Javitt: Thank you, Dr. Shrader. You always ask wonderful questions. As far as inventory goes, as I said earlier, we've already manufactured 3 registration batches. Those batches are in the warehouse. KETAFREE is up on what's called a blow-fill seal assembly line. So for those of you who don't deal with pharma manufacturing every day, most injectable drugs are sold in glass bottles. To do that, you have to actually buy glass bottles somewhere. You have to clean them, sterilize them, fill them, put a stopper and put a crimp on. Both those seal works very differently. You take a hopper full of polyethylene pellets, you melt them down into molten polyethylene. You blow them with air into the shape of a vial, the machine fills that vial automatically seals that vial with a little more polyethylene, puts a wrapper on it, puts it in a box, puts it on the pallet all without any human being touching it. You can make 1 million units of drug in the same time and at about half the cost as you can make 10,000 vials of traditional glass-filled injectable product. So we've just asked our manufacturer to do a first production run, we anticipate having a couple of hundred thousand units in the warehouse at the time of generic approval. With regard to the effect of having the only preservative-free ketamine on the market, should the citizen petition be granted, probably Wall Street analysts will do a much better job of projecting what that might do to pricing models than we can. But I agree with you that if it's a product the market wants, the market will probably pay for it. Thomas Shrader: Great. And then a quick question on the extended release D-cycloserine. Is there -- is it known that, that would have the same effect? Is there a clinical data that you don't need the spike? Or do you think you have a little clinical work to do? Jonathan Javitt: I think that, that's work that can be done in vitro. Really, what we're looking for is a neuroplastic effect from D-cycloserine and there's a lot of reason to believe that continued exposure of the neurons to the drug is what matters. But we have the ability in brain slices to look at the dendritic sprouting and to look at the effects. In general, you do want a steady state of drug to create a biological response. But I agree with you, it's certainly something worth continuing to look at. And as you know, from Dr. Brown's resume, he's probably done more of this than anybody in academia. Operator: Your next question comes from Patrick Trucchio with H.C. Wainwright. Patrick Trucchio: Congrats on the progress. Just a couple of questions on each program. Just first on NRX-100. I was just wondering if you can talk a little bit more about the Type C meeting with the FDA and how that now enables an NDA filing for NRX-100 without additional clinical trials? And specifically, how is the FDA viewing the role of the 65,000 to 70,000 patient real-world data set in this submission? And then separately from that, as we think about the broader treatment-resistant depression label, how should we think about the expansion of the addressable patient population impact on payer coverage and prescriber adoption if approved? Jonathan Javitt: So to start with the Type C meeting, the most important way it enables FDA review of existing clinical trials data and real-world data without the need for additional clinical trials is that that's what the FDA told us. They did not demand additional clinical trials as a precondition to reviewing an NDA filing. And when you look at the data available, there are now multiple clinical trials that have demonstrated that intravenous ketamine is far superior to placebo, far superior to active placebo and noninferior on efficacy to electroshock therapy. But of course, there's a huge safety difference between NRX-100 between ketamine and electroshock in that the electroshock group had 30% memory loss, whereas memory loss was not seen in the ketamine group. So while technically, you would say it's not inferior because the design was noninferiority based on the MADRS scale. From a patient's perspective, it's a far superior treatment. Do me in favor and restate your second question? Patrick Trucchio: Yes. Just on the broader treatment-resistant depression label, how should we think about the expansion of the addressable population and the impact on payer coverage and prescriber adoption if the drug is approved? Jonathan Javitt: Well, if you look at the narrower indication, we were originally forecasting which would have been people with active suicidality. That would have been about 3 million, 3.5 million patients a year reporting to CDC numbers. But if you look at the much broader population of people with depression who may from time to time have suicidal ideation, the CDC numbers would suggest that you're talking about an addressable population of 12 million or so people. In terms of payer coverage. Payers have told us in the past that as long as our course of treatment is less than about $10,000 a year, it's unlikely to have substantial formulary restrictions. Mental health is one of the most rapidly growing challenges that payers face in insurance coverage and a treatment that has the potential to rapidly stabilize people, keep them out of the hospital, keep them at work, keep them productive is highly attractive to payers. And you've seen that with SPRAVATO, you've seen SPRAVATO rapidly grow to what's estimated at a $2 billion market today. And that's the market that we would seek to share if NRX-100 is approved as we've expected. Patrick Trucchio: Right. And with the ANDA showing favorable preliminary bioequivalent determination, I'm wondering what remains before final approval in the third quarter of this year? Jonathan Javitt: Well, the Office of Generic Drugs has to do its process. They're going to continue to examine our stability data. They'll have to do a pre-approval plant inspection. They'll have to go through the whole litany of final checks associated with any drug approval. But we think clearing the bioequivalence hurdle is a major turning point. Operator: [Operator Instructions] Your next question comes from Edward Woo with Ascendiant Capital. Edward Woo: Congratulations on all the progress as well. Assuming that you get the approval for the ANDA in Q3 2026, can you talk a little bit about your commercial strategy and how you expect to commercialize it? Jonathan Javitt: Well, there are 2 large segments of buyers for ketamine under the existing label. One is hospital surgery centers, et cetera, that already buy ketamine and then there are the clinics who are using it for psychiatry for pain control, et cetera. On the former side, we've been approached by a number of organizations that already sell to those hospitals. Their names are well known and anybody who's currently selling into that marketplace is interested in a modern preservative-free presentation. So we'd be unlikely to build our own sales force to go into hospitals because the average person selling injectable drugs into a hospital is representing a number of drugs, not just one. On the other hand, the clinics that use ketamine are much smaller number. They're well known, they tend to belong to the same associations, and we do expect to set up a medical liaison service relatively small number of representatives can cover a large swath of the clinics. So we believe that it's a very compact commercial footprint, one that's easily financeable within our available resources. Operator: There are no further questions at this time. I will now turn the call over to Jonathan for closing remarks. Jonathan Javitt: Thank you. So thank you for joining our call today. As you can see, we've made progress towards 3 potential drug approvals in the near term. And we have this new pipeline target that could be a much larger use for NRX-101 than we ever anticipated. With the continuing development of the HOPE Therapeutics network for care delivery, we believe that we've really taken transformative steps to turn NRx Pharmaceuticals into a commercial stage company that has the potential to save lives on a daily basis and to bring a return to our investors. We finally reached that long-awaited inflection point where we're generating revenue, we expect to increase revenue and we really appreciate the extraordinary dedication and hard work of our team to support that long-term initiative and the patience of our investors and the support of our investors while we've made that turn. Our goal of bringing hope to life is closer than ever. Thank you so much for participating. Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.
Operator: Hello, everyone. Thank you for joining us, and welcome to the Concentrix First Quarter 2026 Financial Results Conference Call. [Operator Instructions] I will now hand the call over to Elise Brasell, Corporate Communications. Please go ahead. Elise Brasell: Thank you, operator, and good morning, everybody. Welcome to the Concentrix First Quarter 2026 Earnings Call. This call is the property of Concentrix and may not be recorded or rebroadcast without the written permission of Concentrix. This call contains forward-looking statements that address our expected future performance and that, by their nature, address matters that are uncertain. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements as a result of new information or future expectations, events or developments. Please refer to today's earnings release and our most recent filings with the SEC for additional information regarding uncertainties that could affect our future financial results. This includes the risk factors provided in our annual report on Form 10-K and in our other public filings with the SEC. Also during the call, we will discuss non-GAAP financial measures, including adjusted free cash flow, non-GAAP operating income, non-GAAP operating margin, adjusted EBITDA, adjusted EBITDA margin, non-GAAP net income, non-GAAP EPS and constant currency revenue growth. A reconciliation of these non-GAAP measures is available in the news release and on the company Investor Relations website under Financials. With me on the call today are Chris Caldwell, our President and Chief Executive Officer; and Andre Valentine, our Chief Financial Officer. Chris will provide a summary of our operating performance and growth strategy, and Andre will cover our financial results and business outlook. Then we'll open the call for your questions. Now I'll turn the call over to Chris. Christopher Caldwell: Thank you, Elise. Hello, everyone, and thank you for joining us for our first quarter 2026 earnings call. Today, I'd like to start by giving you an overview of how we're thinking about the quarter, and then I'll turn it over to Andre to talk more about the specifics of our results. Overall, in the first quarter, we continue to win the right business, drive the right revenue mix and execute on our strategy, allowing us to come within our guide for both revenue and profit. Our solutions are driving value both from automating work or when combined with the human to drive performance. Our overall wins with technology are up more than 61% year-over-year in the first quarter, highlighting the shift in our go-to-market offerings and client acceptance. When we look at our bookings quarter-on-quarter, our signed annual contract value for solutions, including AI, more than doubled, and we're seeing sequential increases in expanding AI license consumption across our client base. Our pipeline of opportunities to continue to be solid and represent a continued progression and shift to a higher solution mix. Our proprietary iX suite of AI products our third-party technology partners and our deep domain expertise continue to be differentiators that open the door for us to win larger, more transformative deals with our clients. While this might initially compress some existing revenue and margin, when these programs reach scale and full production, the margin is accretive, and we generally see revenue growth across our portfolio of services into these clients. As an example, we closed, close to 60 enterprise iX suite deals in the quarter including our largest iX Hero contracts to date with 2 Fortune 50 companies. Both clients will use our proprietary AI technologies to modernize their ability to create more efficient personalized and effective interactions with their customers while allowing us to sell additional solutions into these accounts. Looking forward, we are continuing with our focus of securing complex work and high-value services in our client base, growing our share of wallet, using our extended offerings, allowing clients to consolidate work with us, leveraging our own IP and third-party platforms to differentiate ourselves in the market and driving internal efficiencies to fuel continued investment in areas of new growth. In summary, we delivered another quarter with revenue growth, and we are on track to meet our expectations for the year. We are winning the right business and successfully executing while making the right investments in the business for long-term revenue and margin growth. I would like to thank our game changers for their tireless pursuit of excellence with our clients and their trust and partnership that we have with our clients. With that, Andre, I'll turn it over to you. Andre Valentine: Well, thanks, Chris, and good morning. I'll review the details of the first quarter and then discuss our outlook for the second quarter, remainder of 2026. We delivered revenue of approximately $2.5 billion, an increase of 1.9% on a constant currency basis and over 5% on a reported basis. Looking at constant currency growth by vertical. Revenue from banking and financial services clients grew 13% year-over-year. Revenue from retail, travel and e-commerce clients grew 6% largely driven by growth with travel and e-commerce clients. Media and Communications revenues grew 3%, largely with clients outside the U.S. and global entertainment and media companies. Our technology and consumer electronics vertical and our health care vertical both decreased about 6% driven by lighter volumes than clients expected and shore mix. Turning to profitability. Our non-GAAP operating income was $295 million. The midpoint of the guidance range we provided on our last call. Adjusted EBITDA in the quarter was $348 million, a margin of 13.9%. Non-GAAP diluted EPS was $2.61 in line with the guidance range we provided in January. GAAP results for the first quarter reflect a $6 million loss on the sale of 2 small nonstrategic businesses. One of these sales closed in the quarter with the second expected to close later this year. The assets and liabilities of the pending sale are reflected in the balance sheet as assets held for sale. Total net proceeds from the 2 sales will be approximately $20 million. Our GAAP results for the first quarter and our expectations for GAAP results for the second quarter also reflect restructuring charges related to cost actions that we're taking to align our cost structure and invest in higher growth and higher profit areas. We expect the combination of the actions taken in the first and second quarters of 2026 to drive approximately $40 million in annualized savings over and above investments in growth. This will contribute to sequential profitability growth in the second half of 2026. Complete reconciliations of non-GAAP measures to the comparable GAAP measures are provided in today's earnings release. Adjusted free cash flow was negative $145 million [ in the ] quarter, reflects an increase in accounts receivable at the end of the quarter, resulting from the timing of cash receipts. The related receivables were all collected in the first week of March. As a reminder, free cash flow in our business is seasonal with negative free cash flow in the first quarter and robust free cash flow generation in each subsequent quarter. This pattern is expected to recur in fiscal year 2026. We're confident in repeating our previous guidance for between $630 million and $650 million in adjusted free cash flow this year. We returned approximately $65 million to shareholders in the quarter, which included repurchasing $42 million of our common shares or approximately 1.05 million shares at an average price of approximately $40 per share. The remaining $23 million in shareholder return was in the form of our quarterly dividend. In February, we issued $600 million of 3-year senior notes maturing March 1, 2029. The new notes carry an interest rate coupon of 6.50%. The proceeds from the new notes were used to retire $600 million of 6.65% senior notes that mature in August 2026. $200 million of the 6.65% senior notes maturing in August 2026 remain outstanding, and we expect to repay them with strong free cash flow in the second and third quarters. At the end of the first quarter, cash and cash equivalents were $234 million and total debt was approximately $4.75 billion, bringing our net debt to $4.51 billion. Our off-balance sheet factored accounts receivable borrowings were approximately $129 million at the end of the quarter. At the end of the quarter, our liquidity was nearly $1.4 billion including our $1.1 billion revolving credit facility, which was undrawn. To summarize, in the first quarter, we delivered revenue and profitability in line with our guidance range. We also took proactive steps to manage upcoming debt maturities while continuing to invest in growth. Now I'll turn to our outlook. For the second quarter, we expect the following: second quarter revenue of $2.46 billion to $2.485 billion. Based on current exchange rates, we expect an approximate 75 basis points positive impact of foreign exchange rates compared with the prior period. The guidance implies constant currency revenue growth for the quarter, ranging from 1% to 2%. As we've said, our goal is to be conservative in our revenue guidance, and we are being prudent with the current geopolitical situation. We expect second quarter non-GAAP operating income of $290 million to $300 million, this implies a non-GAAP operating margin of 11.8% to 12.1%. Second quarter non-GAAP earnings per share will be expected to be $2.57 to $2.69 per share, assuming approximately $67 million in interest expense, 60.9 million in diluted common shares outstanding and approximately 4.9% of net income attributable to participating securities. The non-GAAP effective tax rate is expected to be approximately 25% for the second quarter. Our expectations for the full year non-GAAP metrics remain unchanged from our earnings call in January and can be found in today's release. As I mentioned earlier, we continue to expect to generate between $630 million and $650 million in adjusted free cash flow this year. In addition to our strong free cash flow, we expect aggregate proceeds for approximately $40 million from asset sales, including the sale of the 2 businesses I mentioned earlier. The remaining proceeds will come from the sale of owned properties that are no longer being utilized. We are committed to reducing our net leverage to below 2.6x adjusted EBITDA by the end of fiscal 2026. In summary, our overall demand environment remains solid. The margin headwinds we have seen in recent quarters are being managed, and we are confident in our ability to drive year-over-year profitability growth in the second half of 2026. We're confident in the continued strong free cash flow generation of the business and our plan to reduce net leverage over the balance of the year and we are in a strong competitive position to drive long-term outperformance. Now operator, please open the line for questions. Operator: [Operator Instructions] Your first question comes from the line of Ruplu Bhattacharya with Bank of America. Ruplu Bhattacharya: Chris, can you specify approximately how much revenue in 1Q was related to AI and the iX suite? And how are you pricing these solutions? And can you give us an idea of how you're looking at investments related to AI in 2026? Christopher Caldwell: So let me answer the questions in a bit of a backwards way. So just in terms of how we're pricing these solutions, our iX Hello solution, which is the fully autonomous solution that we have basically is priced by consumption. So we put it in for very small or de minimis fees. And then based on how many contacts that are fully automated, we get paid for. And so as you can imagine, when we put it in, we see a negative margin for the first little while. And then as it scales and grows, we see a positive margin similar to what you'd expect from a SaaS or software type of business. On our Hero product, it is a subscription basis, where we sell on a per-seat subscription of how many humans are actually using the product to drive the business. And as we talked about, at the end of last year, we ended Q4 at $60 million of ARR. We continue to add to that. We're not releasing numbers on a quarterly basis, but our expectation is to be at or above $100 million by the end of this fiscal year. If we reach that sooner, we will update you on that. But so far, we're actually a little ahead of plan from where we expected based on what we've sold within the first quarter. And we have a very, very strong pipeline going into the second quarter that we've already started to see some good uptake with -- on our proprietary AI products. In terms of the percentage of our business with AI within our business in Q1. Ruplu, the challenge that we have is that what we're seeing in the marketplace is that as you think about AI solutions, we're seeing clients adopt more than one AI solution, and sometimes they're adopting more than one AI solution from us. Sometimes, they're doing some things internally. So the way we look at it is of the revenue we service -- of the clients we service, how much of that has AI involved in it? And the reality is it's the vast majority of our clients are using our AI, their own AI, some other bits and pieces of AI. What we also look at is our success rate of AI implementations because in the marketplace, there's a lot of people who are talking about AI, but they're not getting the success rate. And we're seeing very, very high success rates. Very, very high success rates on our AI implementations driving real tangible value for clients. And so that's what we're very excited about as we're going into the second quarter. Ruplu Bhattacharya: Okay. details there, Chris. For my follow-up, Andre, can I ask you a question related to the cadence of margin improvement. If we look at the guidance, the implied operating margins go from 11.8% this quarter to about 12.5% in the -- for the full fiscal year. You mentioned a couple of things like there's cost reduction actions you're taking. I think Chris mentioned like the pipeline indicates a better mix. And I think you also said that margins improve over time in contracts. Can you help us get comfortable with how we should think about this margin progression? It looks like the EPS guide for next quarter is slightly below the Street estimates. So can you help us just think about how you're thinking about the ramp and what's giving you confidence that you can get to 12.5%, which would mean above 13% operating margin for the fourth quarter? Andre Valentine: Sure. Happy to do that, Ruplu. And the guidance is very much consistent with what we said entering the year, which was we thought that margins would be somewhat compressed in the first half, and then we would see sequential margin expansion in the second half of the year that would get us to year-over-year margin increases in the second half of the year. Driving that is certainly the result of the cost actions that we're taking in the first half. Other drivers are -- if you look at the revenue guide, there's roughly, depending on where you are in the guide, $100 million to $150 million of additional revenue coming online in the second half of the year over the first half. That's going to flow through at absorb the capacity that we've added into the business and will certainly drive revenue at a fairly high flow through as we go forward. Then you have some of the transformational deals, as Chris alluded to, getting to kind of full scale and full production and reaching the intended margins on those projects. And then that's really it. And so we have a great deal of confidence in our ability to drive the expansion in margin that begins. First, you see kind of stable to slightly expanding margin here in Q2, a bigger uptick in Q3 as we go sequentially, thanks to revenue coming online and the cost actions and then a further step up in the fourth quarter, which is kind of a traditional pattern of a step-up in margin as you go from Q3 to Q4. Ruplu Bhattacharya: If I can just ask a clarification on that. Andre, you had also mentioned in prior quarters that some customers, both in Europe as well as North America. We're looking to move operations offshore, and that was impacting revenues in the near term and the margins would have improved over time. Can you update us on how that is impacting results currently? Also, you had talked about supporting some customers whose volumes were not materializing and you had laid out 2 or 3 options that you had. Can you give us an update on where that stands? And are customer volumes coming back as you had expected? Or are you taking some remedial actions? Andre Valentine: Sure. Happy to do that. Well, yes, absolutely, the trend towards moving work offshore continues. As we talked about, I believe, on the last call, we have as we see it roughly 15% of our revenue is delivered out of North America and Western Europe that we think over time, as the capacity to perhaps move offshore, we provided in our revenue guide entering the year. for roughly a 2-point headwind from shore movement. We think we're still in line with that. And as we think about what that means from a margin perspective, particularly the commentary that I made about utilizing capacity that we've built ahead of revenue. A big piece of that is that shift offshore filling up capacity that we've added over the last couple of quarters in advance of that revenue. So that is how we would think about the impact of shore movement. Obviously, when those programs get offshore, margins are improved. When they get -- when the programs get the full run rate. Back to the commentary about volumes not materializing. As you recall last year, second half of the year, actually starting in the second quarter, we saw impacts from tariffs, delaying some programs. We said that, that would eventually -- we've worked that through the system through either having the volumes materialize or shedding the excess capacity that we've added in advance of those programs. That is pretty much playing out in line with our expectation. We saw improvement in that situation as we expected in Q1, and we think that's fully out of our system kind of as we exit Q2. Operator: Your next question comes from the line of Luke Morison with Canaccord Genuity. Lucas Morison: Starting with Andre. So you sold those 2 small nonstrategic businesses in the quarter for, I think you said, $20 million combined, obviously, pretty small, but can you just talk about the philosophy behind those divestitures? Is this potentially the beginning of a more active portfolio pruning effort? Were those more opportunistic? Are there other parts of the portfolio that you consider noncore? Just any help there. Andre Valentine: Yes, happy to do that. Yes, so we're not really looking to shed anything else at this point in time. We're always kind of looking at the portfolio of what we have in the business. These 2 businesses were quite small, not strategic, not growing, not accretive to overall margins. And so it just made sense to exit those. We'll continue to look at the portfolio over time and see if there are other things that make sense, but I wouldn't expect certainly nothing imminent there and nothing really that we're working on. Lucas Morison: Got it. Helpful. And then, Andre, the 2 verticals you mentioned that were down 6% in the quarter. I wonder if that was related to the customers that you were referencing in your last question. And then maybe double-clicking there. You attributed that to lighter volumes than clients expected and shore mix. Can you just help us disaggregate those 2 factors and then whether or not you have line of sight to those verticals stabilizing in the back half of this year? Andre Valentine: Yes. So I'll bifurcate the 2 because they're not exactly the same. So health care, we actually saw lighter volumes than expected, largely related to changes in Medicare membership for some of our clients as well as participation in the Affordable Care Act program. And so that impacted our revenues in the health care vertical. We don't see that really returning to growth here for a couple of quarters. And so that is kind of where that vertical stands. With respect to tech and consumer electronics, there -- the impact is a little bit around underlying volumes. Even as we consolidate a share within some of those clients, underlying volumes are down, a little bit of impact of automation there. That's about half of the revenue change there and then shore mix being the other half of that kind of 6% constant currency reduction. That vertical, you've seen some volatility in the past 8 quarters. Some quarters we grow a little bit, some we shrink. We think that could go up or down as we go through the second half of 2026 based on what we see in the pipeline and opportunities to continue to gain share within the client base. Operator: Your next question comes from the line of David Koning with Baird. David Koning: I guess my first question, just longer-term margins. I know you've had some puts and takes, but if we think back to, I think, '22 to '24, you had 14% or so margins. We're lower than that now. And I know there's some factors. But things that should make it go up, the Webhelp synergies, scale, shift to AI, offshore, like all those should be positive tailwinds can those tailwinds drive margins back to at least where margins have been or hopefully higher? And how fast could they get there? Christopher Caldwell: David, it's Chris. You're right. I mean when we look at the business and kind of some of those AI; implementation, the transformational implementation and look at sort of programs that are running at scale, running the way we'd expect and everything else that kind of goes along with it. We're in that range. And our expectation is we continue to build on that as we get some of these other programs up to scale as we put in the new AI. A lot of the Webhelp synergies we've invested in developing our AI and changing our go-to-market platform, which we talked about last year and this year. And as we talked about in the prepared remarks in terms of the annual contract values effectively doubling as we went into Q1 as we talk about sort of our attach rates increasing, all of those are going to kind of give us some momentum and leverage. I don't want to guide past 2026, but it's very clear to Andre and I, that our expectations is we get this back to historical margins and then we can progress past there. Timeline, I think, as earlier question around where we see our margins at the end of Q4 this year, you can start to see kind of how we're incrementing up to get back to those historic margins. David Koning: Yes. Okay. That's helpful on that. And then, I guess, banking was very strong in the quarter as was the retail segment. Maybe just refresh a little bit on those, is growth in those 2 sustainable? And is it some market factors happening right now or any one-off impacts that are happening? Maybe just kind of walk through those again. Christopher Caldwell: Yes. So banking, you saw last quarter was quite strong, and we expect there to be fairly strong strength through the course of the year, sort of high single-digit, low double-digit growth based. And what we like about it is that it's very widespread. We're doing very well in banking, BFSI across both fintechs, top kind of 200 global banks, sort of the traditional enterprise banks and some new entrants who are trying to disrupt the market. And so really, we're seeing broad-based success in that. What's really driving a lot of the growth is actually this combination of the solutions of the banks now coming to us for more complex work. So very large transformational deal we won last year that we talked about is in the BFSI. That's starting to come through to fruition this year and driving the performance and profitability as we expected. And we're seeing more of that coming through where traditionally, we haven't been able to sell some of our tech solutions into the banking and BFSI sector, and now we are. So we see that kind of sustained growth. In the travel, transportation and e-commerce sector, it's really both e-commerce and travel that are doing well. In the e-commerce side, we see that quite sustainable. We are winning net new clients as well as consolidating share in that. And again, it's a mix of the new solutions we're bringing to the table as well as people looking at our footprint and seeing benefit in how we can deliver consistently around the world. And then on the travel side, we've got a strong travel portfolio, both in short-term stays portfolio to longer stay portfolio to airlines, to consolidators to e-commerce platforms that deal with travel. And again, we're seeing broad-based support. And what we like is what's going into those accounts is, again, these kind of complete solution sets that's allowing us to get spend that historically hasn't been outsourced. Technology spend, which historically hasn't come to us and then consolidation as well. So we see that as sustainable as well. Don't ask me if jet fuel goes up to $200 a barrel. But at this point, we're very confident in what we can see with the pipeline in that -- in those verticals. Operator: Your next question comes from the line of Vincent Colicchio with Barrington Research. Vincent Colicchio: Chris, did you see any change or any signs of sentiment change or client behavior once the geopolitical issues started recently here? Christopher Caldwell: Yes. So Vince, we've talked to a significant amount of our clients. Some are being impacted, but very de minimisly so far, things have been fairly robust. Our exposure to this is about 1% of revenue, give or take, which is sort of our Middle Eastern operations. And so far, we haven't seen sort of an impact at this point in time. I think people are just being very, very cautious right now. But so far, it's fairly steady. Vincent Colicchio: And Andre, to what extent did excess capacity negatively impact margin this quarter? Andre Valentine: Yes. It's in the 20 to 40 basis point range. And so that as we think about opportunities to improve profitability as we get into the second half of the year, we think that -- and here I'm just really talking about the physical capacity mostly. As we grow into the physical capacity, we think we see a 20 to 40 basis point improvement in second half. Operator: There are no further questions at this time. This concludes today's call. Thank you for attending. You may now disconnect.
Operator: Good morning, and welcome to Cadeler's Third Quarter 2025 Earnings Presentation. Presenting today are Mikkel Gleerup, Chief Executive Officer; and Peter Brogaard, Chief Financial Officer. Please be reminded that presenters' remarks today will include forward-looking statements. Actual results may differ materially from those contemplated. The risks and uncertainties that could cause Cadeler's results to differ materially from today's forward-looking statements include those detailed in Cadeler's annual report on Form 20-F on file with the United States Securities and Exchange Commission. Any forward-looking statements made this morning are based on assumptions as of today, and Cadeler undertakes no obligation to update these statements as a result of new information or future events. This morning's presentation includes both IFRS and certain non-IFRS financial measures. A reconciliation of non-IFRS financial measures to the nearest IFRS equivalent is provided in Cadeler's annual report. The annual report and today's earnings presentation are available on Cadeler's website at cadeler.com/investor. We ask that you please hold all questions until the completion of the formal remarks, at which time in you will be given instructions to the question and answer session. As a reminder, this call is being recorded today. If you have any objections, please disconnect at this time. Mikkel Gleerup, you may begin. Mikkel Gleerup: Thank you very much, and thank you to everyone dialing in to listen to our presentation this morning/afternoon. Yes, I will ask everybody to read through the disclaimer in the presentation. So annual report 2025 and first, taking you through the highlights of 2025. Financial performance in Cadeler in 2025 were above our expectations. We ended at the top end of the range that we guided last year, ending the year with a robust contract backlog of EUR 2.8 billion, which really gives us that earnings visibility into the future that we have been discussing with our investors over the course of the last couple of years. We had 4 newbuilds scheduled for delivery in 2025, and they were all delivered on time and on budget. We added Wind Keeper to the fleet to support Nexra and our partners and really this new O&M service platform. We continued exceptional execution with significant progress made towards the delivering on the Hornsea 3 project. Wind Keeper upgrade successfully completed and multiple campaigns supported with vessel swaps. We have had strong utilization with vessels operating across the world in markets as Europe, U.S. and in APAC. Commercial highlights for the financial year '25. Scylla continued to work in the U.S. on Revolution Wind for Ørsted and have since shifted over to Sunrise Wind. The Wind Orca has been mobilizing for the Hornsea 3 project for Ørsted, where she will be executing the secondary steel scope. On Wind Osprey, we have been mobilizing for the EA3 turbine installation, which is a project we do for ScottishPower Renewables. On Wind Mover, we will shortly be commencing the turbine installation on the Baltic Power project, where she is taking over from another vessel that we previously had working on that project. The Wind Maker stays in Asia. And as we have announced over the course of the last couple of weeks, we'll be executing O&M campaigns for clients in Taiwan this year. Wind Pace came back from the U.S. after having supported the Vineyard Wind project and is also now mobilizing for the EA3 turbine installation project for ScottishPower Renewables. Wind Peak will continue to install turbines on the Sofia project for Siemens Gamesa. The Wind Keeper has been delivered to the client on an up to 5.5-year contract and is currently installing on the He Dreiht project for Vestas. Wind Ally is completing the last phase of the mobilization in Europe in Rotterdam and is preparing to go to the U.K. to start putting in monopiles for Ørsted on the Hornsea 3 project. And the Wind Zaratan project, for her 2026 is a transition year. We have decided to do some upgrades to Wind Zaratan, do some O&M work in Asia and then take the vessel back to Europe to start working both on O&M, but also on support jobs for foundation projects. At a glance, we now stand at 362 office-based employees, more than 800 seafarers. We have now installed more than 1,700 wind turbines, more than 900 foundations, a number that will go up significantly during this year due to the Hornsea 3 project and also have been working on more than 275 locations for operations and maintenance. So all in all, very busy and continuing to grow the business in the industry that is also growing with us. We have been discussing a lot with our investors and other stakeholders in the company, the transition to full scope T&I campaigns for the foundation work. And we have prepared a few slides to go through where we are now on the Hornsea 3 project and where we are as a company on the transition to taking on these full scope T&I campaigns. The company came from a charter-based day rate model where we could add services as requested by the client to now having a more integrated project delivery and construction platform, as we say, it's a solution-based offering to the clients. We have -- we used to have a very compact organization and moderate complexity in the organization, but also in the offerings we were offering to the clients. And now we are going into a much more complexity -- complex environment and really also where the organization has to deliver many different scopes from transport on heavy lift vessels to handling equipment in port, offloading, unloading very, very large pieces of equipment, storing them safely, Q&A on these products while we have them in our custody for the clients. We came from a utilization-driven model with a higher relative percentage margin to an execution driven with a higher absolute return and upside model on the T&I scopes. The vessels in the previous model was the primary revenue stream and where we today see vessels as strategic enablers to capture more scope as we take on these bigger projects for our clients. On Hornsea 3, trying to give you an overview of the time line for the first full T&I scope that we have embarked on. The project was signed in early '23, a very busy year for us signing both that project, but also working on the merger with Eneti, preparing for taking delivery of the vessel, a lot of supplier scopes starting to transport monopiles and secondary steel, starting to install monopiles and secondary steel and then also embarking on installing 50% of the turbines on the project and then commissioning and closing the project somewhere in '27. It is a very, very complicated project and something that we go into with a great deal of humility. But I think that I'm pleased to say that we are exactly where we want to be. And the Wind Ally delivered early, we were able to mobilize her in China directly from the newbuild yard and have taken her successfully back to Europe, finalizing mobilization now in Rotterdam before, as I said, starting to put in monopiles in April this year. Hornsea 3 really requires a lot of coordination. And we are also now experiencing being in the middle of the project, the complexity of the project and also the benefit of having built up the team and having worked close with our clients in terms of what was required to execute this because a project like this never goes to plan, I think it's fair to say. And we have also been met with requirements from our clients to change different things as we have worked since '23 and until today. But I'm pleased to say that we have taken on these challenges with our can-do attitude in the company, and we are exactly where we want to be in terms of being ready to install the project from April of this year. And a total capacity of 2.8 gigawatt when it's installed, 197 monopiles, 60 office-based staff working on it, 120 port and construction staff working out there for us in somewhere where there's a yellow dot on this map. We have 10 vessels in total, 3 from Cadeler working on the project. We are transporting more than 400,000 tonnes of material on the project. We have 10 ports involved and 12-plus partners involved in this. So in all fairness, a very complicated project, but also one where we are learning a lot. We've taken some pictures from the project to also demonstrate the scale of this project because I think it's hard to understand the size of these monopiles. All of them are the same size as the Los Angeles class submarine, and we are installing 197 of those in the U.K. from April this year and until 2027 and into 2027. We have also been working with our client to do a mockup trial of the secondary steel. These foundations are TPless, meaning that they don't have a transition piece on top. And that means that all the secondary steel is being installed by a tool that is being carried on board the Wind Orca that carries storage towers for secondary steel and then she's lifting the secondary steel on board on to the foundation in one lift with this tool. And together with our client, we build a mockup for this, a full-scale mockup in the port where we were able to test this tool and the functionality of this tool before going offshore. And it's been a pleasure to work with our client on these mockups and really refining the whole rehearsal of concept before we go into the actual execution offshore. And we have added some pictures on that as well. As we have been discussing, the changes in the project time line has led to increased, but delayed revenue for the foundation T&I. So Cadeler will earn more money on the Hornsea 3 project compared to what was originally envisaged when we signed the project. Not due to things that have happened on the Cadeler side, so to speak, but because our clients have had to change what they originally anticipated in terms of, for example, monopile delivery, whereas the monopiles coming from. Originally, we expected two fabrication yards, today we are working with four fabrication yards. That all means that we are receiving the monopiles in a different pace, but it also means that the project is stretching over a longer time and that we will be involved with some of the suppliers that we have on the project for a longer time. So what it means is that it's an increased revenue and an increased margin to Cadeler, but the project will stretch over a longer period of time. In terms of our commercial pipeline across the globe, I think I have to say that we are still continuing to grow, and we are still involved in a lot of projects and a lot of bidding on projects globally. Obviously, the European market is really the front runner in terms of new projects that we are working on. And as you can see from this slide, we are working on more than 50-plus open commercial opportunities in the market, and we are discussing projects with our clients, both for '27, '28, '29, 2030, but also well into the next decade, which gives us a very great deal of confidence in the market as such, but also a positive outlook for where we are going as an industry. And I'll come back to that a little bit later in the presentation. Asia continues to perform as well. We see new markets opening in Asia as we progress the ongoing market, which is Taiwan, Korea and Japan. We see also development now in the Philippines, but also development in Australia. And all in all, we are active where our clients want us to be active, and we are continuing to bid for projects in the region -- in a region that I would say is developing as expected. The U.S. market, it is what it is, and we have discussed it many times before. We don't see any short-term opportunities in the U.S. market, but we are still executing in the U.S. market. We sent the Wind Pace back to Europe from completion on Vineyard Wind, and we are now installing with the Scylla on the Sunrise Wind project. All in all, we expect to be busy in the U.S. for the years to come. And also, we are happy to engage with our clients for new projects in the U.S. region when that time is coming. We still sit on a significant backlog. Our backlog year-on-year has grown. We are standing at EUR 2.8 billion in backlog, which, as I said, really provides the earnings visibility that we would expect and also what we have communicated to our clients. We have things also that we are working on here that we have discussed in the market where we are preferred supplier on a foundation project that is not counted in our backlog, and it's also not sitting in our vessel reservation agreements because it has not reached that stage yet. But we still have work that will hit the backlog, and we are sure that in the coming quarters that we will have positive announcements around backlog development. As I said, the backlog stands at EUR 2.8 billion at the moment and 80% of the total backlog has reached FID. And we have discussed that before. And I think that that's really a sign of the quality of the backlog where we know that 80% has already been approved for the final investment decision at the client side, meaning that, that project has also reached a contractual milestone that is important for us. And as I said, we do have a preferred supplier agreement, a sizable preferred supplier agreement. And one of the things that we discussed around our Q3 announcement was that we had some projects in the site that we would like to secure. And one of them is what we have now a preferred supplier agreement on. It's for a significant foundation project in Europe and one of the projects that was important for us for our 2028 campaign. And I'm pleased to say that we have been moving ahead as we expected on that one with our client and that we are also now in the negotiation with the client to make this preferred supply agreement into a real contract. And on '27, '28 that we discussed at length in the Q3 presentation, I'm happy to say that in '27, we consider ourselves fully booked now. We are currently working with the yard to potentially deliver the Wind Apex slightly earlier because we have a client that is ready to take the vessel straight from the yard and into a project, meaning that we are -- with a few white spaces we have left in '27, we do consider that time that we want to keep available for clients should they run into some sort of supply chain issue and really have built a solid '27 for ourselves. In '28, we are also much more positive now than we were in Q3 due to the fact that we have secured the preferred supplier agreement on this large-scale foundation project and overall are seeing positive momentum for the '28 campaign overall. In terms of the progress on the newbuilds, Wind Ace, we are at 94% completion. The naming ceremony for the Wind Ace, the official naming ceremony will be on the 15th of April, and we are looking to deliver the vessel on time. On the Wind Apex, as I said, we are 34% completion, and we are currently discussing with the yard to do up to 1 month early delivery due to the fact that we have a client who would like to take that vessel straight from the yard and into a project for a sizable project on turbine installation. In terms of the progress from the yard, a few pictures as we always have. I think that I can say that on the Cosco shipyard side, things are progressing as planned. Not many surprises there and really pleasing to see that the collaboration we have with Cosco Shipyard continues to develop, and we are very, very pleased to work with Cosco Shipyard, the quality partner for us and for the development of the company. The fully delivered Cadeler fleet as it stands today with an average fleet age of 5 years, which I believe is a very good number to have, and really also shows that we have been building a young fleet that is ready to take on the positive developments of the future. Now, I will hand over to Peter for the financial highlights of 2025. Peter Hansen: Yes. Mikkel Gleerup: Peter Brogaard... Peter Hansen: Thank you very much. Yes, the financial highlights for '25. It was really a strong year seen from a financial and operational point of view. As Mikkel said, we ended in the high end of the range that we have guided revenue of EUR 620 million as compared to EUR 249 million. Equity ratio is now at 44%. It's a decrease as compared to last year. But it's also where we see it bottom out, the equity ratio and starts to increase again. Utilization also very high, 88.9% adjusted utilization as compared to 75% last year. And that is -- the adjustment is where we say, okay, we take out what is planned dry docking and transportation from the yard. We think that is a meaningful number to look at when we get all these new vessels delivered. Market cap of EUR 1.8 billion. EBITDA, EUR 425 million as compared to EUR 126 million last year. Net profit, important number for the shareholders, of course, EUR 280 million as compared to EUR 65 million last year. And as elaborated on a backlog of EUR 2.8 billion. Three months daily average turnover EUR 7.1 million on the stock exchanges. If we first look at the last 3 months of the year, Q4 '25, very, very strong quarter, EUR 167 million in revenue, an increase of EUR 82 million compared to Q4 '25, '24 and with the adjusted utilization of 87% cost of sales is, of course, going up with the delivered vessels. And SG&A also is up because of the ramp-up that we have talked about at previous releases where we build up the organization to be able to manage these foundation projects with increased complexity. Finance net isolated for Q4 is EUR 20 million, and that is a shift you see here in Q4 finances because we have capitalized borrowing cost to a greater extent while we had more vessels under construction. Now that the vessel has been delivered then a bigger part of the finance interest is going to the P&L, and that is something you will see in '26 as well. Of course, it's the same cash outflow, but it's just whether it's in P&L or it is in CapEx. EBITDA, I think very, very strong, EUR 104 million in a quarter where Ally and also Mover were not in operation as such, but in transport to first project. That was Q4 isolated. For the full year, some of the same remarks that we had in Q4, but also what we have seen during the year, it's fair to say everything has played out exact to plan. Revenue in the higher end of the guidance. Cost of sales, everything is as according to plan. SG&A the same. So we are very, very pleased with the financial result for '25, but also the underlying operation where we have control of the important things. EBITDA, EUR 425 million. Vessel OpEx per day is EUR 36.3 million, a small increase towards last year and I think also under control. Headcount onshore average 307. The consolidated balance sheet, now we have an equity of EUR 1.5 billion. an increase of nearly EUR 300 million as compared to last year. And we see the equity ratio of 44%. I think that is something we have all along said that approximately there where we will bottom out. And of course, it's a natural consequence of taking delivery of the vessels where your assets go up and your liabilities also go up correspondingly. We still have a CapEx program now on the Wind Ace and the Wind Apex, these installment with the yard that we show here. We have signed commitment for A Class Wind Ace and we are also having ongoing RCF facility of 148 million. So together with what we expect to raise of financing on the Wind Apex, we are EUR 637 million of total financing. We are in advanced discussion with Apex and are confident that we'll be able to sign that during '26. As you may recall, it's delivered in late Q2 '27. So we have really had the goal of signing a facility -- sign commitment 1 year ahead. So we are not paying unnecessary fees in commitment fees and so forth. Interest from banks are strong. So is it from the ECA. So it will be on similar term as you have seen on previous transactions. Cash, EUR 152 million. And you can see with the A Class payments we have outstanding, that's still a significant cash surplus. This is the financing overview. You can see here that we have the RCF A and B, we have not drawn up fully yet. And since Q3, September, we have signed a Holdco financing, a second one with HSBC and Clifford Capital unsecured loan, EUR 60 million with an accordion of EUR 0 million, and it was made on very similar terms as the original Holdco with HSBC and Standard Chartered. With Apex, I have talked to that, but that is progressing according to plan. We are very confident on that financing. Then there is the outlook for '26. I think what we guide is in revenue, EUR 854 million to EUR 944 million, and EBITDA, EUR 420 million to EUR 510 million. We have put up the comparison here, of course, '25 includes revenue that you are supposed to get in '28, but was postponed and we got termination fees for that. So of course, that should be adjusted for in the comparison, but a very strong outlook for '26. What is important to understand about the outlook in '26 is exactly what Mikkel has talked about earlier in the presentation. First of all, it's a transition year for Wind Zaratan, so isolated on '26, you could argue it is financially a transition year, but it will improve the returns in '27 and onwards. So it's actually a good year for Zaratan as it is an investment year. Wind Ally and Wind Ace will be delivered in Q3 '26, but will not go on any contract and have any contractual revenue in '26 simply because we will sell direct to first projects EA2 North. We have seen in the past that on some of the wind turbine installation vessels that we can do some work before first project, but it's simply not possible on a foundation project. And it's -- again, it's a good sign because the customer wants us to be at the site as early as possible. So we are simply doing everything that we can to arrive as early as possible we can in '27. And then this Hornsea 3, when -- Hornsea you can't look at Hornsea 3 isolated in one year. First of all, it's a project where you have revenue across several years we already had in '24, '25. But as illustrated by the slide, maybe the precent, we now see that the revenue on the project goes up due to changes on the project, not due to Cadeler-speific things, but due to something designed by the developer. But that means for Cadeler, two things. The total project goes up, earnings goes up, but the timing is different. So some is pushed into '27. So when you look at '26 and the outlook, you should also remember that. [indiscernible] evaluating that year. And back to you, Mikkel. Mikkel Gleerup: Thank you, Peter. As this is something that still remains very important between '24 and '25. We are -- we have been working on biofuel -- fuel blending in our fuels, and that has been successfully introduced across the fleet in 2025, together with our clients and our sustainability team. We have developed a new circularity strategy. We have more than 30% women in leadership, and that was achieved in 2025. We have set a new target of 40% women in leadership by 2030, and also on governance, the CSR leadership group established to execute key ESG priorities. In terms of our path to zero, we have set a target of a net zero target in 2035 and a 2030 target of 50% intensity reduction. Obviously, we are going up in intensity in the beginning, and that's largely due to the fact that we are delivering lots of vessels that are still burning fuel. But we have a path towards achieving our targets here, and we have maintained our targets. And it is as -- what is described on this slide, it's adoption of green fuels, it's enabling electrification, optimizing energy consumption, which we believe is one of the big things because really education and training of teams on board and clients is one of the real big savers here. And that is how we will achieve the first part of this journey. Second part of the journey is continuing to enable electrification and again, optimizing the energy consumption. And also as we start to see it, getting the green fuels on board, which will form a larger part in the second part of this journey. At the moment, the reality is that the green fuels are not available to us. So although we have a portion of our fleet on the newbuilds that can burn these green fuel types, we are not able to buy them at the quantity that we need them, and it would more be an R&D project at the moment. So we believe that the second part of the journey will have a greater availability of this fuel type, and that is something that we at least will support that with the demand for these green fuel types when it is available to us. In terms of commercial outlook, which, of course, is important because I think in all honesty, we are coming from a 2025 where we were facing a very negative narrative in general in the industry due to a lot of factors. We are seeing milder winds blowing over the offshore wind space and also continued growth of the industry and the deployment of offshore wind globally. And as we say here, after '28, '29, we expect a very strong growth towards the end of the decade. Europe has been raising the bar and as declared by the North Sea Summit, the 9 member states of the North Sea Summit have declared a target of 15 gigawatts per year outbuild between 2030 and 2040, and we are very, very pleased with a target like that, because that is, in our opinion, how you build a supply chain that you actually set a target what should the supply chain be able to push out per year in this region. And this is not the entire European target. This is for the member states of the Green Sea -- the North Sea Summit, sorry. So in all Europe will be a higher number than this. Outside the fact that there's an annual outbuild target, there's also a financial plan to how to achieve this. And that is also what has been lacking in the more arbitrary targets that were more setting a target for 2040, 2050 in the past. So all in all, we really are pleased with seeing these targets, and we believe that, that's a very strong data point for the future and also for the demand situation for the future. Another very real data point is the U.K. auction round 7, where the U.K. government awarded record volumes. Really, it was 70% above what was expected and the budget went up to 200% of what was the original budget. So also a very strong data point. But another strong data point is that the U.K. auction round 8 has already been shifted forward, so we can expect that already to happen in July 2026. And these are projects that are happening towards the end of this decade and the beginning of the next decade. So already today, we are in dialogue with clients for work that is taking place in '29, 2030, 2031, 2032, 2033 and so on. So that is a very, very positive data point for us. And then we also do see a lot of private capital coming back into offshore wind, Apollo committing USD 6.5 billion to acquire 50% of Hornsea 3 and KKR forming a joint venture with RWE for offshore wind projects, and there are many, many other examples of this. Altogether, strong growth in the space and in the industry. And as we have said, a much better feeling about the '28 situation for Cadeler, although we still recognize that for the industry, '28 for some can be a difficult year, then we say today that we have a much better feeling about 2028. We still believe that there will be an undersupply of capable vessels in the market, and that will start in '29, 2030. We believe that, in particular, on the foundation side to begin with, of course, because they go in first and then secondly, on the VTG side. It happens for a multitude of different reasons. It's efficiencies. It's the efficiency on the larger turbines. It's the more complicated projects. It's the raw efficiencies in terms of how many turbines and foundations these vessels can transit with, but it's also the fact that there are a lot of vessels that are reaching the end of the useful life in the beginning of the next decade. So vessels that are counted today because they, in theory, can install a turbine, they will not be counted after the beginning of the 2030 because simply they are falling out because they are coming to end of useful life. As the fleet stand today, Cadeler still sits on the largest fleet in the world, and we believe we have the most versatile fleet of really the Tier 1 assets that can support our clients with the targets they have for continued outbuild of offshore wind. We have also decided to distribute this slightly different and first look at which vessels do we believe are able to efficiently install 15-megawatt turbines, and the picture looks somewhat different here. And with the targets that are being set in the North Sea Summit by European government, by Asian governments at the moment, then we believe that there is still a significant undersupply as we come into the next decade of the capable vessels that will always be chosen first by the clients. And if we look on the foundation side, the picture is even more problematic if we want to deliver the targets that are currently being set and also backed up by auctions in many different countries around the world. A few words on Nexra, our business platform for the aftermarket services in offshore wind. We believe that the O&M market will continue to demand -- the demand increase will continue to grow, and we believe that the market is shifting towards long-term agreements. We have seen that with our agreement on Wind Keeper with Vestas, and I think there are other examples in the market as well. So we believe that the whole O&M story and strategy for Cadeler is an important strategy because it will create a longer and more transparent revenue stream on part of the fleet and also it will be able to generate utilization on the installation fleet if there are small gaps between installation projects. And that is important because we have always talked about the importance of keeping a high utilization. And hence, that is something that we really believe is a strong advocate for the whole development of the Nexra business platform. We also believe that Nexra will grow as a business and also at some point in time, potentially even be a bigger business than the installation business, but that is in the years out in the future. But of course, every time we install a turbine, the whole ecosystem for turbines installed grows, meaning that there are more work to do for the Nexra platform to service our clients with -- as it stands today, mainly -- the main component exchanges that we do from a jack-up. In terms of the development of Nexra and an update on that, I think that we saw it and have always seen it as a very strong market, a market that can stand on its own 2 feet, a market that is profitable and it's also a diversification of income streams for Cadeler. We signed the first contract for an O&M campaign in Taiwan and showing that when a vessel is sitting in a region that is complicated to transit back to, for example, Europe from, then you can do these O&M campaigns in the spot market and still upkeep a very healthy financial year for the asset. And I think that, that is something that is important because after this, we have also announced another project yesterday morning in the same region for the same vessel. There's a dedicated team for Nexra today, we are continuing to build the team. I think that it's also fair to say that we get positive feedback from our clients and the fact that we are now having a dedicated team to discuss aftermarket services with them because they have dedicated teams to handle that part of the value chain for them. We believe that as we grow, we will also be better at understanding the needs and the execution requirements and really a very, very strong mandate from all over this company here and from top to bottom to grow Nexra into the strength vehicle we believe it can be. We did strategic fleet expansion in Nexra last year with the acquisition of Wind Keeper, we believe that we did a very, very strong deal and executed very, very fast on this, but also was able to pin a contract -- a commercial contract to that vessel very, very soon after the acquisition of the asset. We took the vessel back to Europe. We did the modification to the vessel that we believe was necessary, and we are now working with the client on a project with the vessel and very pleased to see that. And O&M services in 2025 forms around 1/5 of our total revenues, and that also shows the significance of what we already are doing in O&M. Continuing the growth journey, as we have said, we are in an industry that growth and as we're also saying to you today, we are more positive and have a very positive and optimistic view about the years out in the future. And that is also why that we are looking at continuing the story of Cadeler. We evaluate opportunities to expand into attractive and synergetic systems -- segments, sorry, like, for example, the strategic O&M offering. We are open to both organic and nonorganic growth. We believe that scaling the organization and have a bigger, more versatile, more flexible offering to our client is something that the client is willing to pay a premium for and something that will also secure that Cadeler will always take more than our proportional share of projects in the industry simply due to the derisking of our clients' projects that we can provide. In terms of regional expansion, we are where our clients want us to be, and we are working with the projects that we believe in and the projects that we believe will go from development to FID and to finally execution. That is how we look at it. That's how we have always looked at it, and that's how we'll continue to look at it. We are monitoring and applying new technologies, and we believe that efficiency still will be driving a lot of the value in the industry and also a lot of the sustainability in the industry. So we are very open to discussing efficiency gains with our clients. And we are also willing to do our part in what was the North Sea Summit, which was really trying to make a more competitive offshore wind industry by being more efficient with what we do. And we believe that, that is definitely something we can do if we work together in the whole value chain. And then strategic partnerships have been one of the foundation and one of the pillars that Cadeler is standing on really making sure that we are developing structure -- strategy to strengthen our key strategic partnerships with our clients, including the long-term agreement that we believe is out there and also doing the scopes with the clients that, that they are asking for. So really trying to understand, be early with our clients, trying to understand what it is that they require from us and then be able to deliver that quality-wise and safety-wise when they need it. That is very important. In terms of key investment highlights, largest and most capable and versatile fleet. We believe that, that means redundancy for our clients. And as I already said, that is something that our clients are willing to pay a premium for and also what we believe will secure a more than proportional share of market to Cadeler. We believe that strong relationships and partnerships and our industry-leading position is also something that will be continuing to support the whole growth of the company. We have global reach and experience. We have worked in all key markets, and we are happy to continue to work in all key markets if our clients want us to do so. We believe there's a structural undersupply and an increasing market demand, and we are already starting to see signs of very, very, very strong demand as we move into the next decade. We have a strong track record and backlog, and we are very, very much looking forward to continue to work with our clients in the future. With that said, I think that we are moving into Q&A. Operator: [Operator Instructions] Our first question comes from Martin Karlsen from DNB Carnegie. Martin Karlsen: I understand that -- can you hear me okay, sorry, it was some... Mikkel Gleerup: We can hear you, yes. Martin Karlsen: I think I heard during the prepared remarks that you said the Wind Apex would be delivered early and do turbine work. Could you talk a little bit about the background for using the vessels for turbines and not foundations and the decision process behind that? Mikkel Gleerup: Yes, that is a good question. The reason we are discussing it directly that we are looking at delivering the Wind Apex early is because we have been asked whether we were looking at potentially delivering her late. And just to make clear that that is not a thought at all, it's the opposite. We have evaluated opportunities in the industry and the best opportunity, we believe, for Apex right after the yard is to embark on a turbine installation project. The reason for that is that working with the client on a turbine installation project potentially opens up opportunity for other things. And hence, we have decided that here, the best use of the capacity we do have available, as you also heard in my presentation, I said that we consider ourselves fully booked in '27 now. So basically, what we have available for clients now is becoming limited. And this is the opportunity we have for the client, and hence, we have decided to go with the client because we believe that it's the best overall decision for Cadeler to start with a turbine installation project. It doesn't mean that Apex will stay on turbine installation projects, but the first project will be a turbine installation project. So what it means is that she will earlier generate revenue compared to if we did a foundation project. And with the long -- duration of the contract we're looking into, that will also run into a significant part of 2028, but also a potential for something coming on the back of that with the same client. Martin Karlsen: Could you remind us about how much time and cost there would be to get it back to foundation mode? Mikkel Gleerup: So there is a mission spread, but that is typically part of the project. When you sell a foundation project, the client is contributing to the mission spread there. And typically, it would take somewhere around 2 to 4 months to put her into foundation mode with mobilizing all the equipment on the vessel. Martin Karlsen: And for 2028, you definitely came across as more optimistic, but it seems to be more Cadeler specific than for the industry as a whole. Can you talk a little bit to why Cadeler have been more successful than the industry for '28 and what has changed since last quarter? Mikkel Gleerup: Yes. I think that what we do say, when we talked about '28 after the Q3 announcement, we also said that it looked like a year that could be challenging for the industry. And what we are saying now is that we -- that is still the case. We believe that there are still some companies that will have challenges in 2028, but that we today feel much better about '28 than we did around the Q3 because there were still some things that we believed in at that point in time, but that had to happen. And now we are saying that we are seeing that, that is happening. And hence, we are much more confident on 2028. And one of them is, of course, the preferred supplier agreement on a large-scale foundation project. That is important for '28, but that's not the only thing. It is also how other things we are working on have progressed. So all in all, we are much more positive about '28. But it doesn't mean that everybody else will have the same feeling. But for Cadeler, that is the case. But I also think there is a progression from the Q3 call to now where we are saying today that 2027, we can say we're fully booked now. Martin Karlsen: And last question, you're about to get into a real cash-generating mode with all the newbuilds and delivered. Could you talk to how you look to allocate capital ahead between shareholder returns, delevering, and you also spent some time in the presentation today talking about growth opportunities. Mikkel Gleerup: Yes. I think that, as we have said before, capital allocation ultimately is a Board decision. But I think it's realistic to believe that we will be spending our capital in 3 buckets. One is to delever the company. One is to continue to maintain the position we have in the industry. And then the last bucket is, of course, returning capital to shareholders in some shape or form. And I think that if we look at where we are moving in terms of generating capital, all 3 buckets are possible at the same time. And I think that, that's where I will land it at this point in time. Operator: Our next question is from Jamie Franklin from Jefferies. Jamie Franklin: So firstly, I just wanted to clarify on Hornsea 3 and appreciate the useful slides in the presentation. If I look at Slide 12 specifically, as you understand it correctly, essentially, we're now going to have a much more progressive ramp-up in revenue through the year from that project. So it's going to be very back half weighted. And it looks like the expectation is first turbine installed around 3Q. So if I assume that the margin and EBITDA contribution should really start to sort of kick in from the second half. Is that a fair assumption? Mikkel Gleerup: Yes. I think overall, what you're saying is a fair assumption. And as we are saying that -- and of course, this is what is complicated to sometimes explain when you have projects and calendar years because overall, Hornsea 3 for us is a more value-creating project today than it was when we signed it. But the way the revenues and profits are stretched over time is different. And I think that, that is what we are trying to explain today, and it's due to decisions that have been made by others than Cadeler, but where -- it's in our interest, but also where we are contractually obligated to deliver on this new method. And I think one of the key things on the project without diving too much into the detail is that the flow of the foundations when they come into the project is slower. So we are not building up the buffer we had in the beginning. So the monopile delivery is over a longer period of time, and that is out of Cadeler's control. And it's due to things that is related to the fabrication yards on the monopile foundations. Jamie Franklin: Okay. Got it. And then secondly, just on operations and maintenance. So obviously, you've announced a few shorter duration awards to Nexra platform recently. And as you mentioned, there's been this 10-year O&M contract announced by one of your peers. Could you give us a sense of how you expect to balance the sort of longer-term agreements with the shorter-term contracts? Is the idea to sort of keep Zaratan and Scylla available for more spot O&M while Wind Keeper kind of takes the longer-term contracts? Or could we see you enter into a longer-term contract with a specific one client on those assets? Mikkel Gleerup: The question is, yes, that could be expected that, that would happen, but it all depends on the project economics. There are limits where we believe that it's better to stay in the spot market rather than to sign up to a long term. And for us, that is an internal evaluation that is happening between us and the team that is dealing with the clients on these long-term opportunities because obviously, there are benefits of having a long-term contract, but the benefit of that can be outweighed by, let's say, what you're sacrificing in terms of annual revenues. So for us, it's a balance. And if we believe that we can generate more money by having the vessel in the spot market and being available to our clients when they need us, then that is the decision we will go for. And I think we have discussed it before as well that one of the real benefits of being, let's say, active in the O&M market is the social capital you're building with your client because when they have problems, if you are able to come and help them and fix them, that is something that is very much appreciated and also where you're able to generate stronger relationships and partnerships with your clients. So I -- per se that the long-term agreement is not just what we are aiming for, but of course, if they are good enough, if they live up to our criteria, then we are happy to enter into them. Jamie Franklin: Okay. Very clear. And finally, there was a wind turbine installation vessel order announced by shipyard Hanwha Ocean for about $530 million last month, very high price tag, obviously, relative to what you paid for your newbuilds. Is there anything you can say in terms of what is driving those higher vessel prices? Is it simply a function of kind of shipyard capacity or material inflation? Any thoughts there would be helpful. Mikkel Gleerup: I think the reality that we are looking at today is that the shipyards are incredibly busy. So even if you wanted to deliver a vessel in short time, you were not able to. I know that this vessel is it looks on paper like a short time line, but that is mainly because they have been working on it a long time before they actually announced it. It's a vessel targeting the domestic Korean market with a lot of Korean companies going together in that vessel. It's a repeat M-Class vessel more or less that they have paid $530 million for. I think that the underlying practice for the price is a real tightness in the yards, but also in general, what it costs to build a jack-up today. And I think that there are, let's say, that is -- if you look at the price for ordering one vessel, I think that, that is -- you're probably seeing significantly increased prices to what we built at back in -- when we ordered our vessels. Operator: Our next question comes from Anders Rosenlund from SEB. Anders Rosenlund: Could you break down the order backlog indicatively on '26, '27, '28 and '29 and beyond? Mikkel Gleerup: Unfortunately, we don't do that, Anders. We only give guidance 1 year ahead. So we don't give guidance year-by-year on the backlog. Anders Rosenlund: Also, do you expect to see more of your competitors to place newbuilding orders for '29 and 2030 or beyond delivery given the outlook comments that you coming with today? Mikkel Gleerup: I believe that based on the supply and demand balance we are looking into in the beginning of the next decade and the tightness in the yards that I would be surprised if there were not several companies already looking in the yards. Operator: Our next question comes from Daniel Haugland from ABG Sundal Collier. Unknown Analyst: This is [indiscernible] from China Securities. And thank you for taking my questions. I have 2 questions. The first question is about the foundation installation business. And I noticed that actually the foundation business includes quite large preparation works and it has larger amount. And could you please share with us what's your target of the foundation business in the future? Would the volume or the amount be higher than next year? You just mentioned that next year, the future revenue would be -- maybe would be higher than the installation revenue. So could you please share with us about the foundation business in the future? And your target or your strategy? This is my first question. And the second question maybe for... Mikkel Gleerup: Can we take them one by one. Can we just take them one by one. Unknown Analyst: Okay, okay. Mikkel Gleerup: Thank you. I think that to answer your question, we have had a humble approach to the full scope foundation C&I projects. And in 2026, we will be executing the Hornsea 3 project. In 2027, we will be embarking on the EA2 project with ScottishPower Renewables. So we are on a journey here where we are building up together with our clients, two of the biggest developers in offshore wind worldwide. And together with them, we are building up these capabilities to ensure that we do this safely and with the quality that both we and they expect fairly. But our long-term target is, of course, to execute several foundation projects in parallel in a year. That is how we have built the fleet, and that is how we are building the team and, let's say, the protocols around this. So let's say, we have a fully delivered capacity three A Class vessels that are targeting the foundation market. And we would certainly expect that these three A Class vessels would all be doing foundation work in parallel at some point in time in the future. But when I address the fact that I believe that the O&M market could be as big as the installation market, it is because with the outbuild targets that we are seeing in the industry, there will be a lot of requirements for O&M. And hence, we say this, but we cannot say when it will happen or whether they will inflect or whatever. But we do believe that there will be a case for the fact that the O&M market as such will be a very value-creating market to be in and also potentially bigger than the installation market. Operator: Okay. Great. And the second question is about the financial expenses. And I noticed that in 2025, the financial expenses are a little bit higher. Could you give us some color about the financial expenses in the near term or in the 1 to 3 years? Because with our 2 vessels delivered in 2026 and 2027, these expenses cannot be go into the -- cannot be capitalized and this should be go to the P&L. And could you give us some colors about that? Peter Hansen: That is absolutely correct, and also what I talked to in Q4 where you saw net or -- finance net was around EUR 20 million. And that is what you should expect to see going forward and then less and less goes to CapEx when we get one vessel delivered here in '26, then it will be less '27, we get the last one delivered and then it will be to current plans, nothing that we can capitalize. So that is the picture we see. So Q4 is more representative for '26 than the full year. Unknown Analyst: Okay, great. Thank you so much. That's very helpful. Thank you. Mikkel Gleerup: Thank you. I don't know whether we missed Daniel from ABG. Operator: Yes, we have a question from Daniel. Daniel Vårdal Haugland: I was a little bit back in the line there. So I have a couple of questions on 2027 that you maybe can kind of enlighten me on because I think you now say that 2027 is getting fully booked from your perspective. So what type of utilization level are you kind of targeting or at least some kind of range when you're talking about kind of fully booked this because I think based on announcements, it looks like there's a lot of white space, but obviously, you guys have looked it through. So... Mikkel Gleerup: Yes, so I think... Daniel Vårdal Haugland: Any commentary on that would be helpful. Mikkel Gleerup: Yes. No, that's a totally fair question. I think we have guided from the beginning of the journey of utilization between 75% to 90%, and that is also the target in 2027. And that is an adjusted utilization because, obviously, to assume that a vessel is busy when it's transiting from Asia and back to Europe, for example, that is not possible, even though we would love to install turbines all the way. But -- so that's how we look at it. And then as Peter also said, when he went through his numbers that we exclude planned dry dockings and stuff like that. So the adjusted number, we are expecting between 75% to 90%. And for '27, yes, it is correct that we are considering ourselves to be at the moment fully booked. Daniel Vårdal Haugland: Yes. And just to clarify, then you kind of include this potential contract that you talked about for the Apex. Mikkel Gleerup: Yes, that's how we have to do it because there is a potential contract that is negotiated. And -- but of course, nothing is firmed before it's signed and there's ink on paper. But of course, when we are in a process where we believe that this is something that will materialize, then it's also something where we are saying with what we know today, we think that we are in a situation where we don't have much other stuff to sell. Daniel Vårdal Haugland: Okay. And one question on the Orca. It seems like that will be working together with the Ally on Hornsea 3 on secondary steel. It seems from the slide that you kind of indicate that going through Q1, maybe into Q2. Is that kind of correctly assumed? Mikkel Gleerup: Yes, it's correct that Orca is starting almost side by side with the Ally being mobilized now for the campaign to go to -- on to Hornsea 3, sorry. It was a valuation we did when we secured the project because it was our option to either go with an offshore construction vessel or with one of our jack-ups. There were benefits in the jack-up in terms of the weather downtime during the winter and hence, the progression on the project. And that's why -- and with the project economics, of course, that we were able to provide to our -- one of our own assets that we decided that the O Class vessel was the best option for the task. Operator: Thank you. That's all we have time for today, and thank you for your participation. I will now hand the floor back to Mikkel Gleerup for any closing remarks. Mikkel Gleerup: Yes. Thank you, everybody. And if we did not have time to take your questions, then you all know where to reach Peter and myself or Alexander. And we are, of course, happy to take offline discussions with all of you. But thanks a lot for taking the time to listen to us today. We're looking forward to catch up with you as we move ahead. Thank you.
Operator: Good day, and welcome to the Smithfield Foods Fourth Quarter 2025 Financial Results Conference Call. [Operator Instructions] Please note today's event is being recorded. I would now like to turn the conference over to Julie MacMedan, Vice President of Investor Relations. Please go ahead. Julie MacMedan: Thank you, operator, and good morning, everyone. Welcome to Smithfield's Fourth Quarter and Full Year 2025 Earnings Call. Earlier this morning, we announced our results. A copy of the release as well as today's presentation are available on our IR website, investors.smithfieldfoods.com. Today's presentation contains projections and other forward-looking statements that are being provided pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all comments reflecting our expectations, assumptions or beliefs about future events or performance that do not relate solely to historical periods. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, the factors identified in the release, in our annual report on Form 10-K, our quarterly reports on Form 10-Q and our other filings with the Securities and Exchange Commission. The company undertakes no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events or other factors. Please refer to our legal disclaimer on Slide 2 of the presentation for more information. Today's presentation will also include certain non-GAAP measures, including, but not limited to, adjusted operating profit and margin, adjusted net income, adjusted earnings per share and adjusted EBITDA. For a reconciliation of these and other non-GAAP measures to the corresponding GAAP measures, please refer to our earnings press release and our slide presentation on our website. Finally, all references to retail volume and market share are based on Circana, MULO+ data. With me this morning are Shane Smith, President and CEO; Mark Hall, CFO; Steve France, President of Packaged Meats; and Donovan Owens, President of North America Pork. I will now turn the discussion over to Shane. Shane? Shane Smith: Thank you, Julie. Good morning, everyone. 2025 was an outstanding year. Solid execution on our strategies drove record profits, expanded margins and increased cash flow. We set the foundation for multiyear growth while maintaining a very strong financial position, investing in our business and returning value to our shareholders. Last January, we returned to the U.S. equity markets through an IPO that reintroduced us as the new Smithfield. While our history spans 90 years, the transformation underway over the past decade has fundamentally reshaped Smithfield into a leaner, more profitable and strategically focused company. We streamlined our Packaged Meats portfolio, exited non-core and high-cost operations, accelerated automation and built an accountable culture focused on profitable growth. This hard work prepared us for the IPO. In 2025, our first year as a public company, we delivered on our commitments, record operating profit, record net income, strengthened margins and disciplined execution across all segments. Importantly, these results were broad-based, reflecting the power of our diversified product portfolio, our vertically integrated model and our relentless focus on operational excellence. The advantages of our model were clear in 2025, and we see further opportunities for coordination across the value chain. I'm pleased to announce that we have named Donovan Owens, President of North America Pork. Under Donovan's leadership, the Fresh Pork segment adjusted operating profit increased to $209 million in 2025 from $30 million in 2022. This performance demonstrates our improved agility, channel mix and disciplined operating focus. Under the new structure, Fresh Pork, Hog Production and Commodity Risk Management will report to Donovan. Donovan will also oversee our Mexico operations, which are an integral part of our North America growth strategy. We are excited about the opportunity to unlock additional synergies across our upstream businesses in this new structure. Now, I'd like to review our fiscal 2025 accomplishments in more detail. On a consolidated basis, adjusted operating profit increased 30% to $1.3 billion, with profit margin expanding to 8.6%, up from 7.2% in 2024. Each segment executed effectively. Packaged Meats delivered its fourth consecutive year of operating profit above $1 billion and its second highest profit year despite higher raw material costs and a cautious consumer spending environment. Fresh Pork demonstrated strong execution amid a compressed industry market spread and trade disruptions due to tariffs. And Hog Production achieved its highest profit year since 2014, reflecting improved operations and market conditions. Across the company, continuous improvement and productivity initiatives delivered meaningful cost savings. Our rock-solid balance sheet with net debt to adjusted EBITDA of just 0.3x at the end of the year provides us with the financial flexibility to support our growth strategies and return value to our shareholders. In 2025, we returned value to shareholders through dividend payments of $1 per share. Today, we announced a quarterly dividend of $0.3125 per share, and we anticipate paying annual dividends of $1.25 per share in 2026. In January, we entered into a definitive agreement to acquire Nathan's Famous for $102 per share. Successfully closing this acquisition will be immediately accretive and will secure a core national brand and create meaningful growth and synergy opportunities. In February, we announced that we have initiated the approval process to invest up to an estimated $1.3 billion over the next 3 years to build a new state-of-the-art packaged meats and fresh pork processing facility in Sioux Falls, South Dakota. Building this innovative new plant from the ground up will represent one of the largest investments in American agriculture and will modernize our manufacturing footprint and unlock long-term cost and efficiency benefits. Now, let's turn to our growth outlook for fiscal 2026. Protein demand is strong and growing across consumer demographics, value for its nutrition and health benefits. Pork, which is not our only protein, but is our primary offering, is well positioned within the protein complex. Pork presents a strong relative value to beef and its nutritional profile with lean cuts like pork tenderloin offers a superior nutritional alternative to chicken breast. Pork is also central to Asian and Latin cuisines, which are popular with U.S. consumers, particularly among Gen Z and Millennials. We believe all these factors serve as a long-term tailwind for pork, and we expect 2026 to be another year of increased profitability, driven by margin expansion, disciplined cost management and continued execution of our core strategies. Our 5 strategic priorities remain unchanged, increase Packaged Meats profit through mix, volume growth and innovation, grow Fresh Pork profit by maximizing the net realizable value across channels in a best-in-class cost structure, achieve a best-in-class Hog Production cost structure, drive operating efficiencies in manufacturing, supply chain, distribution, procurement and SG&A and evaluate synergistic M&A opportunities. First, in Packaged Meats, which is our largest and most profitable segment, we are meeting the demand for protein with convenience, flavor and value through our strong brand portfolio as well as our private label offerings. Our strategy to grow Packaged Meats operating profit centers on 3 levels: mix improvement, volume growth and innovation. So first, product mix. We remain focused on accelerating the shift toward higher-margin, value-added product categories and expanding unit velocity while reducing volume of lower-margin commodity type product categories. Coming out of 2025, we saw strong momentum in these value-added categories. In the fourth quarter, we grew units and market share in our core higher-margin focus areas of lunch meat and cooked dinner sausage, among others, and we expect these higher-margin categories to again achieve strong volume growth in 2026. Second, volume growth. We participate in 25 key Packaged Meat subcategories at retail, 10 of which are valued at over $1 billion. In 2025, we grew branded volume share in 6 of these $1 billion-plus categories. This volume growth reflected strong increases in our points of distribution led by our national brands. Looking ahead, we see continued white space opportunities to grow volume and increase market share in each of these categories. We are driving volume in today's economy by delivering quality protein at a good value. Our portfolio of quality branded products spans multiple categories and price points and is an important competitive advantage for Smithfield. A great example is lunchmeat. We are attracting and retaining consumers within our branded portfolio even as they trade up and down the value spectrum. If they choose private label, we benefit as well. Over the past several years, we have improved private label profitability, which represents just under 40% of our retail channel sales. We are also supporting our brands by investing in direct-to-consumer advertising and effective trade promotion. In 2025, we increased foodservice sales by 10%, driving higher sales volumes with both new and existing customers. Our success in foodservice reflects our position as a scaled, trusted provider of high-quality products as well as our ability to deliver value-added solutions that save our foodservice customers time and money. We are also very agile in helping foodservice customers launch limited time offers, which help drive traffic. In 2025, we introduced 57 new limited time offers, which gave consumers reasons to keep coming back. Despite food away-from-home inflation nearly double that of food at home, we successfully grew foodservice volume 2% in 2025. In 2026, we expect to increase Packaged Meats volume across the retail and foodservice channels, driven by product innovation, strong marketing, advertising and trade investment. Next, product innovation. Innovation is an important pillar of our Packaged Meats growth strategy. We focus on introducing new flavors, convenient and easily prepared offerings and premium offerings. We have numerous innovative product offerings planned for 2026 in the retail channel for our 3 national brands: Smithfield, Eckrich and Nathan's. So in summary, we expect to grow Packaged Meats profitability by focusing on 3 levers: mix improvement, volume and innovation. Now, let's talk about our second core growth strategy, increasing Fresh Pork profitability. We are focused on maximizing net realizable value across channels and continuing to improve operating efficiencies. 2025 was a dynamic year for Fresh Pork due to both compressed market spreads and trade disruptions. Historically, compressed market spreads, the price between hogs and meat significantly reduced profitability. However, our Fresh Pork team demonstrated agility and delivered strong profitability even in tighter markets due to our improved cost structure and diversified channel strategy. In 2025, Fresh Pork profitability was strengthened by sales and volume growth in the U.S. retail channel, with profit enhanced by value-added case-ready items. We also grew volume and profitability in our pet food and pharmaceutical channels, executing well on our next best sales strategy. In addition, we continue to deliver operating efficiencies and cost savings, which helped mitigate the impact of the compressed market spread on segment profitability. In 2026, our priorities include growing volume in the U.S. retail channel, emphasizing higher-margin, value-added, case-ready and marinated offerings, expanding adjacent channel opportunities such as pet food and pharmaceuticals, increasing automation, plant efficiency, yield optimization and supply chain savings and optimizing harvest levels across our network. By focusing on these priorities, we will continue to outperform the market. Now, to our strategy to optimize Hog Production. We continue to progress toward a best-in-class cost structure in Hog Production. In 2025, we outperformed the Iowa State benchmark for hog grower profitability, reflecting improved genetics, feed management and herd health. In 2026, we will continue to focus on improving our operations, including herd health and feed conversion. We're also excited about unlocking more opportunities across our Hog Production and Fresh Pork segments under Donovan's leadership. With respect to the number of hogs internally produced, in 2025, we produced 11.1 million hogs, which is down from 17.6 million at the high point in 2019 and from 14.6 million in 2024. This reduction reflects the transfer of 3.8 million hogs to our external joint ventures, which was consistent with our rightsizing strategy. Over the medium term, we continue to target producing approximately 30% of Fresh Pork's needs internally. We believe this will provide an optimal balance of assured supply and cost risk management. Next, our strategy to optimize operations and deliver operating efficiencies in manufacturing, supply chain, distribution, procurement and SG&A was a meaningful contributor to our improved profitability in 2025. In 2026, we are looking to accelerate the use of innovative technologies across all aspects of our business. We are increasingly leveraging advanced technology to become a more efficient business and to further strengthen our competitive position. We deploy this technology to drive innovation, productivity and optimize performance on our farms in our processing facilities and across our corporate functions. For example, we recently formed a co-sourcing partnership with a third-party technology provider that will provide the benefits of artificial intelligence and robotic process automation for administrative and transactional work in our finance operations. This partnership gives us immediate access to the latest technology and provides flexibility as technology change continues to accelerate. Finally, we continue to evaluate opportunistic M&A to support our growth strategies. In January, we entered into an agreement to acquire one of our top national packaged meats brands, Nathan's Famous. Successfully closing the acquisition will secure our rights to this iconic brand into perpetuity and enable us to maximize Nathan's Famous brand growth across the retail and foodservice channels. With this acquisition, we will own all our major Packaged Meats brands. We will remain disciplined in evaluating additional complementary and synergistic M&A opportunities. In summary, we have returned to the U.S. equity market well positioned to deliver reliable, repeatable earnings and cash flow growth. Our business model has never been stronger. Our high-performing vertically integrated model led by Packaged Meats provides a competitive advantage and supports sustainable margin expansion over the long term. We are investing capital in a disciplined manner to support our growth strategies, to generate attractive returns and to build sustainable long-term value for our shareholders. With that, I will turn it over to Mark to review our financials in more detail. Mark Hall: Thanks, Shane, and good morning to everyone joining the call. Our strong 2025 results reflect the consistent execution and resilience of our teams. We closed the year with an outstanding fourth quarter. Total company sales increased 7% for the fourth quarter and 10% for the year with growth across all segments, reflecting higher market prices across the pork value chain and Packaged Meats ability to maintain pricing discipline through innovation and brand power. Record fourth quarter adjusted operating profit of $402 million fueled our record full year 2025 adjusted operating profit of $1.3 billion. Full year adjusted operating profit margin increased an impressive 140 basis points to 8.6%. Fourth quarter adjusted net income from continuing operations attributable to Smithfield was $329 million, which was our second highest on record. This helped us deliver a record $1 billion for the full year. Adjusted diluted EPS for the fourth quarter was $0.83 per share, up from $0.52 per share in 2024 and for the full year was $2.55 per share, representing a 36% increase from 2024. Now, on to our fiscal year 2025 segment results. Packaged Meats delivered fiscal year 2025 adjusted operating profit of $1.1 billion, which was the second highest profit on record and an adjusted operating profit margin of 12.4%. This strong profitability in the face of raw material input cost increases of $525 million and a challenging consumer spending environment demonstrates the success of our Packaged Meats segment strategy. Packaged Meats fiscal 2025 sales of $8.8 billion increased by 5.3% compared to fiscal 2024. This was driven by a 5.6% increase in average selling price with roughly flat sales volume. Industry-wide, volume growth has been challenged due to inflation and consumers' tight budgets. As Shane mentioned, we were able to maintain volume through the power of our strong branded portfolio, complemented with private label options and our diversified product portfolio offering convenience, flavor and value. The higher average selling price was driven primarily by higher market prices across the pork value chain with key raw materials such as bellies, up 19%; trim, up 19% to 35%; and ham, up 9% year-over-year. Next, Fresh Pork. For 2025, we delivered $209 million in adjusted operating profit despite $135 million year-over-year decline in the industry market spread, truly an outstanding job by the Fresh pork team. As Shane mentioned, Fresh Pork executed well on maximizing the net realizable value of each hog and continue to deliver operating efficiencies and cost savings, which largely mitigated the impact of the compressed market spread and export market disruption on segment profitability. Fresh Pork sales of $8.3 billion increased 6% year-over-year, primarily driven by a 5.8% increase in the average selling price and roughly flat volume. The higher average selling price was driven primarily by higher market prices across the pork value chain. Turning now to Hog Production. Hog Production generated $176 million in adjusted operating profit, the highest since 2014. The strong results were driven by improved commodity markets as well as actions we've taken to optimize our operations. 2025 Hog Production sales of $3.4 billion increased by 13% year-over-year. This was despite a 23% or approximately 3.4 million head reduction in the number of hogs produced as part of our planned rationalization strategy. The sales increase was primarily due to higher external sales to our new joint venture partners, both from ongoing sales of grain, feed and other services as well as from the initial transfer of commercial hog inventories. Our average market hog sales price was up 8.9% year-over-year, inclusive of the effects of hedging. Adjusted operating profit for our Other segment, which includes our Mexico and Bioscience operations, of $45 million increased $10 million compared to 2024. We see the Mexico market as a big opportunity for future growth. Our corporate expenses came in $26 million below the prior year, reflecting our disciplined cost management strategies. In summary, we delivered a record 2025 operating profit and net income due to solid consistent execution across our operations. Next, let's review our strong financial position and cash flow generation. At the end of 2025, our net debt to adjusted EBITDA ratio was 0.3x, well below our policy of no less than 2x. Our liquidity at the end of the year was $3.8 billion, including $1.5 billion in cash and cash equivalents. This is well above our liquidity policy threshold of $1 billion. During 2025, we generated cash flows from operations of over $1 billion, and it would have been a record of nearly $1.3 billion when adjusted for the repayment of an accounts receivable monetization facility. Capital expenditures for 2025 were $341 million compared to $350 million for 2024. Approximately 50% of our planned capital investments each year are to fund projects that will drive both top and bottom line growth. This consists primarily of various plant automation and improvement projects, as we continue to lower our manufacturing cost structure and better utilize labor. Reinforcing our commitment to return value to shareholders, we paid $1 per share in annual dividends in 2025. And as Shane mentioned today, we announced that our Board declared a quarterly dividend of $0.3125 per share and that we anticipate paying annual dividends of $1.25 in 2026. Our ample liquidity, including sizable cash balance and robust cash flow supports our investment in business growth and shareholder return while maintaining a strong financial position. Now, on to our outlook for fiscal 2026. First, I'd like to share our thoughts on potential market tailwinds and headwinds that could impact our 2026 results. First, tailwinds. We expect protein to remain in high demand in 2026 and for pork to be well positioned as a healthy, affordable option for consumers. We also see raw material costs as a tailwind. While we expect input costs to remain elevated by historical standards, they should be slightly lower than in 2025. Our raw material assumptions are supported by the USDA outlook for pork production to be up 2.5% in 2026. That said, we're monitoring herd health as a key variable impacting the outlook for U.S. pork production and raw material costs. Potential headwinds that we're monitoring include a continued cautious consumer spending environment and a dynamic geopolitical environment. It's still too early to predict the full impact from the conflict in Iran, but there are 3 main components of our business that this could impact. First, the direct impact of fuel costs such as diesel; second, corn prices, which are tightly correlated to the oil markets; third, the petroleum-derived supplies that we use such as resin-based packaging. Based on what we know today, we believe our outlook incorporates identified risks, but it will depend on the duration of the conflict. With these assumptions as a backdrop, our outlook for fiscal 2026 called for continued margin expansion driven by the strategies Shane just reviewed. This includes continued innovation, improved asset utilization, accelerated automation initiatives and cost savings that will help us achieve another record-setting year. First, we anticipate total company sales to be up low single digits compared to fiscal 2025. Our outlook for segment adjusted operating profit is as follows: for Packaged Meats, we anticipate adjusted operating profit in the range of $1.1 billion to $1.2 billion. For Fresh Pork, we anticipate adjusted operating profit of between $200 million to $260 million. And for Hog Production, our anticipated adjusted operating profit range is $150 million to $200 million. As a result, we anticipate total company adjusted operating profit in the range of $1.325 billion to $1.475 billion, reflecting broad-based performance. Please note that our outlook reflects 53 weeks of operations in 2026 and does not include the impact of the proposed Nathan's Famous acquisition and investment in the new processing facilities in Sioux Falls, South Dakota. Our targeted capital spend for 2026 will be in the range of $350 million to $450 million. In addition, subject to permitting and other approvals, we expect to invest up to $1.3 billion over the next 3 years to construct the new state-of-the-art Packaged Meats and Fresh Pork processing facility in Sioux Falls. We currently anticipate groundbreaking to commence in the first half of 2027 and for operations to commence by the end of 2028. We'll provide more updates as we progress. In summary, 2025 demonstrated that our key strategies are working. We expect 2026 to be another year of increased profitability, as we continue to execute our core strategies. Now, I'll ask the operator to open up the call for Q&A. Operator? Operator: [Operator Instructions] And today's first question comes from Megan Clapp with Morgan Stanley. Megan Christine Alexander: I guess, maybe to pick up, Mark, where you left off there, I wanted to start with the Packaged Meats outlook specifically. You talked about low single-digit top line growth for the total company. I guess... Shane Smith: Megan, did we lose you? Megan Christine Alexander: Sorry, can you still hear me? Shane Smith: Yes, you cut out for a second, though, Megan. Megan Christine Alexander: Okay. Okay. I'll start over. So Packaged Meats outlook, I wanted to ask about that. As we think about the top line guide, you talked about low single-digit growth for the total company. Should we be thinking about Packaged Meats kind of in that range? And then, from a margin perspective, if we just kind of take the midpoint of your profit guidance, I think it does imply some modest margin expansion, but, yes, still kind of well below where you've been historically. And, Mark, you kind of talked about this a little bit in your remarks, but maybe you can just help us understand a little bit more of the puts and takes on margins, as we think about the year ahead in terms of input cost inflation, continued mix benefits, and then, anything you're taking into account on consumer demand given some of the macro factors? Mark Hall: Thanks, Megan, for the question. So just on the top line, it's important to note that the low single-digit revenue growth year-over-year includes $230 million of one-time inventory sales to the joint ventures in 2025 that, that won't repeat. So that's about 150 basis points. And then, consistent with the comments, we're looking for lower markets year-over-year with the USDA call for pork production to be up about 2.5% year-over-year. So that's going to have a ripple effect throughout the segment. And I'll let Steve talk specifically to the top line on Packaged Meats. Steven France: Thank you for the question. So I'd start out by saying that nothing has really changed with respect to our long-term outlook for Packaged Meats margins. In the short term, as Mark had mentioned, consumers are definitely stretched, and I would say that the grocery and foodservice industry are seeing people spend less or trade down to less expensive items or items that deliver more value. And think about the fact that in 2025, our raw material costs were up over $525 million. So although we do expect to see lower raw material costs, as Mark had mentioned, they're still going to be elevated versus historical norms. Now, despite some of these headwinds, we do believe that we are better positioned than most companies due to the family of brands and also the extensive product portfolio that we have. And as you know, we have a very successful private label business, which does provide us the ability to capture those consumers, as they move up and down those different price points. And by doing that, so when you think about the family of brands that we have and also the private label that we have, it actually helps to minimize some of the financial exposure that we have with consumers, as they do move up and down that pricing spectrum. Now, we are focused on building long-term value, but it's also about protecting our near-term profits. So that means we are investing in our brands. We're funding our innovation that aligns with consumer trends. We also continue to shift, as Shane had mentioned during his opening comments, shift our mix from commodity items to higher-margin value-added products. And then, we're also, of course, spending capital to expand on capacity where it supports our long-term growth and profitable growth. So as Shane and Mark had mentioned, for our outlook for 2026, at this point, it really reflects the best view that we have today. And it's really guiding our Packaged Meats profit to that $1.1 billion to $1.2 billion, which we believe represents a healthy level of profitability in the face of really cautious consumer spending, higher-than-normal raw material markets. And, of course, there's a big unknown tied to the Iranian war that's currently going on. So at the end of the day, we are very -- we still -- we are confident in the outlook that we have, and we'll be able to address some of these challenges as they come at us throughout the year. Megan Christine Alexander: Great. That's super helpful. And just a follow-up on Hog Production. So the guide for the year, $150 million to $200 million would suggest similar profitability to '25 at the midpoint. And the futures curve at this point does seem to imply similar producer profit levels as well. At the same time, you've talked extensively, including in the remarks here, about the structural improvements you're seeing in your own business and even talked about perhaps monitoring the herd health as a potential tailwind. So maybe you can just help us understand a little bit more about what's embedded in the guide from an industry perspective? And what you're seeing in terms of supply today and -- versus your own internal cost improvements? Shane Smith: Yes, Megan, when you look at supply, we don't see right now any material level of expansion taking place outside of productivity and improvements in health. And I think that's what the USDA is modeling it as well with their 2.5% increase. And as you know, when you look at last year, the real true impacts of the health across the U.S. industry really didn't become apparent until we were in -- really into the second quarter. So we're monitoring what's going on as a part of overall health and how that will impact meat in the back half of the year. We do think that the guide that we issued this morning encompasses what we see today from the grain markets, from the changes in diesel fuel that we're seeing have an impact on things like freight and animal movements. So we feel comfortable where we are. We think it feels like we're back in somewhat of a normal cycle in that Q1-Q4 versus Q2-Q3 scenario. And of course, as you know, we have different hedging strategies that we take advantage of throughout the year. So we're really comfortable with the guidance that we've issued today in hog production. To your point, we have seen some real structural changes in our business. And the genetics that we've talked about for the last couple of years, that really helped us in 2025. We saw a lean pig cost that was down probably 8% year-over-year, better feed initiatives and livability initiatives. Our overall feed cost was down over 5%. And so we're seeing all of those things manifest in the earnings. And so again, I think we're really comfortable with the guidance with what we see today. Operator: And our next question today comes from Ben Theurer with Barclays. Benjamin Theurer: Shane, Mark and team, 2 quick ones. So first of all, as we look into like the value chain as a whole, and we've kind of like talked a little bit about the Hog Production just now and before that about the Packaged Meat segment. So picking up on what's in the middle in the Fresh Pork segment. Clearly, it was, call it, potentially a somewhat challenging 2025 with all the trade restrictions, et cetera. But as we move into 2026 and as you kind of like pointed to the puts and takes, can you maybe elaborate a little bit more on the Fresh Pork business itself, what to think about, a, seasonality? And b, what are like the more Fresh Pork-specific risks and opportunities for 2026 in contrast to 2025? That would be my first question. Shane Smith: Yes. So, Ben, maybe I'll start and then hand over to Donovan. 2025, I'm really proud of how the Fresh Pork team executed. We saw $135 million degradation in the gross market spread, but yet our profits were only down about $17 million. And so we saw growth in retail and sales volumes. I think that was 4% in sales and 5% in U.S. retail channel volume, really leaning into the case-ready part of the business. But also looking at some of those alternative channels that we've discussed before with our pet food business and our pharmaceutical business. And so I would say the Fresh Pork team in the face of what was a really dynamic and ever-changing 2025 did an excellent job in executing that next best sales strategy. Donovan, do you want to add to that? Donovan Owens: Yes. I think Doug (sic) [ Ben ], and Shane, you said it well in your opening remarks. But yes, 2026 for Fresh was a challenging year. I think it led off with what Doug (sic) [ Ben ] might be referring to as the tariffs. So the tariffs started to have some impact. It had some impact on the year. But as we look at how we rebounded in our net realizable value efforts in 2025, they paid dividends. I mean, we focused on our core strategy of looking at our Fresh Pork, Fresh Pork value-added business, as Shane has mentioned earlier. Growing our Fresh Pork in that arena is going to be pivotal in 2026, as it was in 2025. So we're going to focus on our case-ready value-added pork. We're going to focus on our marinate offerings. We're also going to focus on our branded effort, branded fresh pork to tie into our Packaged Meats portfolio. So we want to connect the dots, Doug (sic) [ Ben ], on all of our business. I think that's been an opportunity for Smithfield for a while and leverage our strength of our Packaged Meats business and start putting our name on our Fresh Pork portfolio of Smithfield, not just a brand that we have to fight with other -- with our competitors in the industry. So look forward to it, Ben, sorry for that. I got your name mixed up. But nonetheless, 2026, I feel very confident that we will continue our strategy on fresh pork and look forward to improved results. Benjamin Theurer: Awesome. And then, real quick on the capacity expansion project, Sioux Falls. I think you said groundbreaking first half 2027. So probably within the CapEx of that $1.3 billion, probably nothing yet to be contemplated for 2026. But how should we think about the CapEx needs for that project splitting that into what would be '27 and '28? And how do you think about just the general timeline? If you could refresh me on that one, that would be much appreciated. Mark Hall: Yes. So, Ben, as you indicated, there is no capital included in our estimate of $350 million to $450 million for the current year. So there may be some incremental spending towards the end of the year, but the most significant portion of the spend will come in '27, '28 and a little bit of spillover into '29. So anticipate groundbreaking, as you said, in early 2027, hopefully, to have the first products running down the line at the end of 2028. And I would say that the capital spending will be paced pretty evenly throughout the construction period. Operator: Our next question today comes from Leah Jordan at Goldman Sachs. Leah Jordan: I wanted to follow up on Megan's question within Packaged Meats. Just seeing if you could provide more color on how we should think about the margin cadence in that segment as we go through the year. And any timing impacts we should keep in mind? I mean, we're going to be lapping some different input costs as we go through the year as well as potential shift in Easter and as well as the 53rd week. Steven France: Sure. Thank you for the question. So first, when you think about margins and also how that would potentially tie to promotions, what we're focused on is really -- it's on the quality merchandising side. So it's really going after the quality of it versus quantity because typically, if you're going after the quantity, you're going to run into some potential challenges from being unprofitable. But what we continue to see is improvement with our promoted volume sold as feature and display. And when we do that, that by far is the most impactful promotional vehicle. So we'll continue with our current promotional strategy, although the reality is we're not just counting on promotions to drive our volume, we're actually very fortunate because our consumers are incredibly loyal and our brands perform because people trust us to deliver that same great quality, flavor, value every time. And that consistency that we built over decades shows up in every product. And our customers and consumers know that they can count on us. So -- the other part of your question was, I guess, consistency. And when -- reality is when you look at the first half and second half of the year, it's -- even though we have some seasonality between different items, between seasonal hams, we also have growing items during the summer, but the reality is when you look at first half and second half, they're basically fairly equal from a profitability standpoint. Shane Smith: Leah, the only thing I would add there, and I think this was part of your question, we will see Easter a little earlier this year. So there will be some Q1 impact of last year we would have saw in Q2. And the 53rd week actually will fall at the end of December, which would be post-Christmas for us. Mark Hall: Right. So to Shane's point, on a segment profit margin perspective, it's a little lighter in the first and fourth quarters because of that seasonal ham influence. Leah Jordan: That's very helpful. And then just for a follow-up, I wanted to ask on the feed side, given lower feed costs were such a tailwind for you in Hog Production last year, and now, we've got maybe some potential headwinds emerging, so how are you planning for feed over the coming year? What have you locked in so far? And just any color around assumptions within the guidance range and your flexibility there? Should we see some movement? Shane Smith: Yes. On the feed side, and Leah, we don't necessarily talk specifically about our hedge positions, but we do use corn and soybean meal contracts to help lock in when we think it's advantageous. So -- but I would tell you, our overall feed strategy is more than just a grain. It's being efficient in what we do. It's about the livability, the animals coming out that we've been putting grain into. What I would tell you, as it relates to feed for 2026, we are seeing some increases, and those spikes coincide with what we see taking place in the Middle East. I think we've been very in front of that, I would say, as far as our hedging strategies and how we think about locking in those grain costs as we go forward. So I think, again, as I mentioned earlier, I think we're in a pretty good position, as we look at 2026 from where we stand on corn. And keep in mind, as we go through the year, the later in the year we get, the feed cost, that fed cost of corn really would show up in the back part of the year and into 2027. So I think from a 2026 standpoint, we're pretty well positioned. And we think, again, that guidance that we issued encompasses that variability that we think we'll see in corn. Operator: And our next question today comes from Heather Jones at Vertical Group (sic) [ Heather Jones Research LLC ]. Heather Jones: I wanted just to ask a quick clarifying question on the extra week. So I think you talked about expecting a low single-digit volume increase in -- on the Packaged Meat side in retail and foodservice. I was wondering, is that adjusted for the extra week? Or is it largely due to the extra week, so we should expect most of that increase in Q4? Mark Hall: That includes the extra week. So the extra week is falling after the Christmas holiday this year. So it's -- seasonally, it's a softer week in the year as all the loading has gone on leading up to the holiday season. So from a volume and profitability standpoint, it punches below the average week's weight. Heather Jones: Okay. So you're expecting growth in the other quarters as well, not just the Q4? Mark Hall: Correct. Heather Jones: Okay. And then, I just wanted to ask about the Hog Production outlook, and just, how you all are thinking about the cadence of that 2.5% growth? Because my understanding is that there was some expectation that there would be like an easy comparison because of the PED and PRRS we had in '25. But PRRS has hit pretty hard again. I think it's in the upper Midwest. And so I was wondering, do you think the 2.5% takes that fully into effect? And how you're thinking about industry volumes year-on-year as the year progresses? Shane Smith: Yes. If I understood your question correctly, we are hearing that same thing that you just mentioned that PRRS is really beginning to show up in the Midwest. But again, I think our guidance, as we've issued this morning, takes that into account, both from what we expect to see on a seasonality basis between Q1 and Q4 and in the middle part of the year as in Q2 and Q3. So we think from a disease standpoint, from a corn standpoint, transportation that we've got those things embedded. And of course, as we move through the year, things will become much clearer, and we'll continue to update that guidance as we move through the year. But as it sits today, we feel really comfortable with that range that we printed this morning. Operator: And our next question today comes from Chris Downing of Bank of America. Christopher Downing: This is Chris on for Pete. You noted that acquiring Nathan's will eliminate licensing fees and allow you to capture the full retail margin with immediate earnings growth expected. Can you quantify for us how much of the anticipated accretion comes from recapturing licensing economics versus incremental operating synergies? And how quickly those benefits should scale post close? Shane Smith: Yes, Chris, I'll begin, and maybe, I'll throw it over to Steve or Mark. As we're -- really kind of limited on what we can say and what we can share. Once we close this transaction, once we successfully close it, we'll be able to share a lot more detail on both our plans and some of the inherent numbers. But as it sits today, we're really limited in what we can share until the deal actually closes. Steve, do you want to add some things on Nathan's? Steven France: Yes, I can just add a couple of things. And first and foremost, we're very excited on the Packaged Meat side of the business about Nathan's and what that represents for the future of Smithfield. So we know the Nathan's brand incredibly well. Obviously, we've been making products for years and selling it into the retail channel. So there's virtually no integration risk, and that's a really big deal from an M&A standpoint. Owning the brand, that would let us scale, scale with utilizing our marketing, innovation and also distribution across retail. And then ultimately, we'd have access to that foodservice channel, which again would be a big plus for the total Smithfield business. I would like to share more about what we have planned. But at this point, since the deal is not finalized, I'm going to have to wait until the transaction closes. But it's a great question. We're very excited about the opportunity to purchase Nathan's. Shane Smith: Yes. And, Chris, the only other thing I would add to that is we do believe that the transaction will be immediately accretive to our earnings. And I think you can look at Nathan's disclosures and really get to the crux of your question about what that licensing fee has been. Operator: And our next question today comes from Max Gumport with BNP. Max Andrew Gumport: I was hoping to turn back to Sioux Falls. Obviously, it's a very big investment for the company. I realize it's early, but any color or quantification you can provide on the benefits that you will receive? It's replacing a very old plant. I think it's over 100 years old, so maybe particularly on the cost side, what this means for efficiencies, automations and cost savings? Shane Smith: Yes, Max. I'm really excited about this investment in Sioux Falls. And to your point, it's a large investment, but it's necessary. Sioux Falls is a key part of not only our Fresh Pork business, but also our Packaged Meats strategy in general. And so that facility is over 100 years old. And as you can imagine, there's a lot of upkeep on that facility. But not only that, the footprint of that facility makes it very difficult to implement some of the automation and technology that we as a company are really rolling out across our footprint. When this facility is done, it will be the largest fresh combined, Fresh Pork and Packaged Meats facility in our system. We are anticipating a best-in-class facility that will just deliver significant efficiency gains to both Fresh Pork and Packaged Meats. So I'm really excited about the investment. We're anticipating it's going to have a really strong intern investment, and we expect to see those benefits in year 1, as we move to that optimal production level. But the interesting thing about Sioux Falls for us is it's a key part of the country. There's a tremendous culture of Hog Production in that part of the country. And from a vertical integration standpoint, that plant is less than 1% vertically integrated. So this investment is not only good for us, it's good for South Dakota agriculture, the surrounding regions and American agriculture in general. And like I said in my opening comments, this investment really represents one of the largest single investments in American agriculture that I'm aware of. And so we, as a company, are extremely excited about the opportunity to do this. I think it's going to be transformative for us as a company. And I think it's going to lead the way in the industry, as it relates to cost structures, to competitiveness. And so I'm really looking forward to getting this project done. Max Andrew Gumport: Great. And then, on the first quarter, I realize we're essentially through the first quarter at this point already. So I was hoping maybe for a bit more color on any initial thoughts on the sales and profit realized, maybe you don't typically guide by quarter, but just given that there's essentially only a week left or so, maybe a bit of color on how the first quarter is looking. Mark Hall: Yes. It's really about continuing execution of our strategies, continue to improve that mix within the Packaged Meat side of the business, appealing to the consumer across that price spectrum, whether it's in our branded portfolio or in private label. And again, continuing optimization of our net realizable value within Fresh Pork. So we're seeing continued execution of our strategies, and we look forward to a solid first quarter. We'll be back in front of you in, what, about 5 weeks, I think, to report on the first quarter, but things are shaping up. Operator: We have time for one more question today. And our final question comes from Saumya Jain with UBS. Saumya Jain: Congrats on the quarter. A quick one. With more CapEx spend, as you noted in '27 and onwards, would you see more upgrades or bolt-ons on current facilities or acquisitions of new ones? And what would drive one versus the other? Mark Hall: Yes. So in terms of CapEx, again, the uptick in '27 and '28 is related to the Sioux Falls build-out. Our guide for this year is really in that $350 million to $450 million range. And what you've seen is over the recent past, we've really worked significantly to optimize our network and improve our cost structure. So most recently, we announced the closure of 2 lease facilities in Elizabeth, New Jersey and in Springfield, Massachusetts, and we're folding those into existing operations. So that along with the transfer of the $3.8 million head that Shane mentioned in Hog Production to our joint venture partners, it really brings reduced requirements for maintenance CapEx across the network. So we're going to continue to invest about half of that CapEx figure on growth capital and about the other half on infrastructure, so maintenance types of projects. But we have plenty of opportunities to invest in growth capital, drive capacity expansions and cost savings projects through automation. So again, the $350 million to $450 million is all encompassing on the base business with incremental spend related to Sioux Falls in '27, '28 and '29. Saumya Jain: Great. And then real quick, I noticed that the market share in the hot dogs Packaged Meat subcategory changed from third to fourth. So I guess just wanted to understand what was driving that last quarter. And how do you view your acquisitions of Nathan's then changing the competitive dynamic in the space? Steven France: No, it's a good question. So, as far as the total hot dog category, so this is for the total industry, obviously, we're seeing some historic beef markets, which is resulting in consumers seeking value or gravitating down to private label or value tiers. Now, keep in mind, when I say that, that even when they gravitate down into private label, we have the ability to capture that consumer with some of the private label products that we do produce or some of the regional brands that fit that value tier. Now, if you look at the total category, so not just where we were, but for the total hot dog category for the U.S., in Q4, the sales were down 5.2%. And for total 2025, sales were down 4.8%. Now, with all that said, despite some of the category declines and some of the consumer shifting, we're still able to grow our Nathan's volume share, unit share and dollar share in Q4. So we also increased our points of distribution by over 19% in 2025, and that's on the Nathan's brand. So that really highlights the strength of the brand and also consumer loyalty. So despite some of the category declines that we saw within the hot dog space, we're very comfortable with where we are from a Nathan's performance and also what we expect to see in 2026. Operator: That concludes our question-and-answer session. I'd like to turn the conference back over to President and CEO, Shane Smith, for closing remarks. Shane Smith: Thank you, and thanks to everyone who joined our call today. I want to thank all of our Smithfield Foods employees for their exceptional execution in 2025. It truly was an outstanding year, and we're proud that our strategies drove record results, but we're not stopping here. Instead, we're constantly challenging ourselves to grow our business and continuously improve our operations. I'm looking forward to speaking to you again when we report our first quarter results. Thank you. Operator: Thank you. The conference has now concluded, and we thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.
Laurence Tam: Good morning, everyone, for those who are based in China and Hong Kong; and good evening for those based in the U.S. This is the 2025 WuXi AppTec results call. My name is Laurence Tam. I'm a China health care analyst at Morgan Stanley. We're honored today to have the full team from WuXi AppTec to present the 2025 results in English. The format of the call will be 2 parts. First, I'll let management go through their prepared remarks. You can refer to the slides on the webcast. And then the second part will be a Q&A session. [Operator Instructions]. With that, let me now pass it on to the Head of IR at WuXi AppTec, Ms. Tang Ruijia, to introduce management and to start the prepared remarks. I'll pass it on to you, Ruijia. Ruijia Tang: Okay. Thank you, Laurence. Welcome, everyone, to WuXi AppTec's 2025 Annual Results Conference Call. We released our financial results last night and have posted the latest on our company website. During today's call, we will make forward-looking statements. Although we believe that our predictions are reasonable, future events are uncertain, and our forward-looking statements may turn out to be incorrect. Accordingly, you are strongly cautioned that the reliance on any forward-looking statements involves known and unknown risks and uncertainties. In addition, to supplement the company's consolidated financial statements presented in accordance with IFRS, we provide adjusted IFRS financial data. We believe the adjusted financial measures are useful for understanding and assessing our core business performance, and we believe that investors may benefit from referring to these adjusted financial measures by eliminating the impact of certain unusual and nonrecurring items that are not indicative of the performance of our core business. However, these adjusted measures are not intended to be considered in isolation or as a substitute for the financial information under IFRS. All IP rights and other rights pertaining to the information and materials presented are owned by WuXi AppTec. Audio recording, video recording or disclosure of such materials by any means without the prior consent of WuXi AppTec is prohibited. This call does not intend to provide a complete statement of relevant matters. For relevant information, please refer to the company's disclosure documents and information on Shanghai Stock Exchange, Hong Kong Stock Exchange and the company's website. As usual, in today's call, there will be a Q&A session after our presentation. Please kindly share with us your name and institution before asking questions. With that, please allow me to introduce our Co-CEO, Dr. Minzhang Chen, to present our 2025 annual results. Minzhang, please? Minzhang Chen: Thanks, Ruijia. Good morning, and good evening. Thank you for joining our 2025 annual earnings call. We will begin on Slide #5. In 2025, WuXi AppTec beat full year guidance and achieved record performance in both revenue and profit. Total revenue achieved RMB 45.46 billion. Notably, revenue from continuing operations grew 21.4% year-over-year to reach RMB 43.42 billion. Our adjusted non-IFRS net profit grew 41.3% year-over-year to RMB 14.96 billion with non-IFRS net profit margin further improved 5.9 percentage points year-over-year to 32.9%. Next slide, please. The company remains focused on enhancing our core capabilities and capacity to better meet customer demand. With continuous capacity expansion by end of 2025, our backlog for continuing operations reached RMB 58 billion, growing 28.8% year-over-year. This does not include business operations we sold or discontinued such as clinical research services. Next slide, please. Slide 7 shows our diversified revenue streams of continuing operations. Based on customer headquarters, revenue generated from U.S. market grew 34.3% year-over-year. Japan, Korea and other regions grew 4.1%. Europe and China saw some decline, mainly due to fluctuations in project delivery timing. This diversified revenue structure reflects our global footprint and capabilities to enable health care innovations. We believe it will continue to underpin the stability and the resilience of our performance. Slide 8, please. So as an enabler of innovation and a trusted partner and contributor to the global pharmaceutical and life science industry, the company continues to drive sustainability, embrace initiatives with sustained recognition by leading global ratings. In 2025, we achieved our first MSCI AAA and CDP Climate Change A Rating, maintained CDP Water Security A, and EcoVadis Gold rating, and were included in the S&P Global Sustainability Yearbook for the fourth consecutive year. And meanwhile, our near-term greenhouse gas emissions reduction targets have been successfully validated by SBTi. As a committed UNGC participant and PSCI supplier partner, we actively embrace global initiatives and are dedicated to integrating sustainability into our business strategy and operations. Next slide, please. For over 2 decades, WuXi AppTec has remained steadfast in our commitment to safeguarding customers' IP and adhering to the highest standards for quality and compliance. In 2025, we completed 741 quality audits and inspections from global customers, regulatory authorities and independent third parties as well as 60 information security audits by global customers. This means, on average, we welcome 3 quality audits per day and over 1 information security audit per week, all with no critical findings. Currently, 20 of our main sites are ISO and IEC 27001 Certified, covering all main sites in China. IP is a lifeline for both our company and our customers. We uphold integrity as our foundation and enforce a zero tolerance policy against any infringement. This is our core value and our highest responsibility and commitment to our customers. Now let's move on to the segment performance. So please turn to Page 9. WuXi Chemistry's CRDMO business model drives continuous growth. In 2025, WuXi Chemistry revenue grew 25.5% year-over-year to RMB 36.47 billion, benefiting from continued process optimization and enhanced capacity efficiency driven by the growth of late-stage clinical and commercial projects. Our adjusted non-IFRS gross profit margin steadily improved 5.9 percentage points year-over-year, reaching 52.3%. Our Small Molecule Drug Discovery (R) business continues to generate downstream opportunities. In 2025, we have successfully synthesized and delivered over 420,000 new compounds to our customers. Meanwhile, 310 molecules were converted from R to D in 2022 (sic) [ 2025 ]. As we continue to strengthen the capabilities of our integrated CRDMO platform, we consistently enhance the internal conversion of molecules at different stages. Our Small Molecule D&M business remains strong, and the Small Molecule CDMO pipeline continued to expand. In 2025, Small Molecule D&M business revenue grew 11.4% year-over-year to RMB 19.92 billion. Meanwhile, the company continued to build small molecule capacity. In 2025, our Changzhou, Taixing and Jinshan API sites all successfully passed FDA on-site inspections with no single observation. By year-end, total reactor volume of small molecule APIs reached over 4,000 cubic meters. WuXi TIDES, our New Modalities business, sustained rapid growth. With the sequential ramp-up of new capacity released in 2024 and 2025, TIDES' revenue almost doubled to reach RMB 11.37 billion in 2025. As of year-end, TIDES' backlog grew 20.2% year-over-year. TIDES' D&M customers increased 25% year-over-year and its number of molecules increased 45% year-over-year. In September 2025, we completed Taixing peptide capacity construction ahead of schedule. The company's total reactor volume of Solid Phase Peptide Synthesizers has reached over 100,000 liters. Next page, please. So driven by Following the Molecule and Win the Molecule strategies, WuXi Chemistry's Small Molecule CRDMO pipeline efficiently converts and captures high-quality molecules and delivering sustained business growth. This reflects our customers' strong trust in our technical capabilities, our service efficiency and our quality system. In R stage, we delivered more than 420,000 new compounds in 2025, representing a significant scale. At the same time, the complexity of these molecules continue to increase, demonstrating the sustained demand from early-stage R&D customers for high-quality services. Building on this strong foundation, we continue to enhance the synergy between our R and D capabilities by strengthening the conversion of molecules from R to D. The new compounds synthesized in R stage serve as a continuous funnel, driving downstream demand for our D&M services. Moving to the D&M stage, we added 839 molecules to our pipeline in 2025 with 310 of them converted from R to D. As of year-end, our Small Molecule D&M pipeline reached 3,452 molecules, including 53 (sic) [ 83 ] commercial projects, 91 in Phase III, 377 in Phase II and 2,901 in Phase I and preclinical. Notably, commercial and Phase III projects increased by 22. As our late-stage pipeline grows, the complexity and the quality of molecules continue to grow. This deepens our collaboration with customers and lays a solid foundation for sustained long-term growth. Next page, please. Our TIDES business has maintained rapid growth over the past few years. So in 2025, TIDES' revenue grew a strong 96% year-over-year to reach RMB 11.37 billion, nearly double. We have been continuously enhancing our capabilities and capacity to better meet customer demand. Now I will hand over to our Co-CEO, Dr. Steve Yang, to talk about WuXi Testing and WuXi Biology. Steve, please. Qing Yang: Thanks, Minzhang. Please turn to Slide #14. In 2025, WuXi Testing revenue returned to positive growth, increasing 4.7% year-over-year to RMB 4.04 billion, of which revenue from drug safety evaluation service grew 4.6% year-over-year, maintained its leadership position in Asia Pacific. Adjusted non-IFRS gross profit margin declined year-over-year as the impact of market pricing were gradually reflected in revenue through backlog conversion. However, with our differentiated capabilities and enhanced operation management, margins continue to improve sequentially quarter-over-quarter. We actively enable customers in global licensing deals, supporting nearly 40% of the successful out-licensing projects from Chinese customers since 2022. Our new modality business continued to expand with revenue contributions exceeding 30% in 2025, maintaining a leading position in multiple areas. Meanwhile, we continue to advance automation. Our DMPK team launched a proprietary all-in-one compound identification software solution, improved efficiency by 80% (sic) [ 83% ] in spectral interpretation and metabolite identification for nucleic acids and peptide test articles. Finally, in 2025, our Suzhou and Shanghai facilities successfully passed multiple regulatory inspections by FDA, by OECD, NMPA and PMDA. This underscores the high quality of our GLP operations and our quality systems. Let's turn to Slide #15, please. WuXi Biology follows the science, strategically builds differentiated capabilities in emerging areas, and we actively expand our global customer outreach. This allows us to efficiently generate downstream opportunities for our CRDMO model, continuously contributing more than 20% of our new customers. We efficiently enable global customers through our integrated in vitro and in vivo drug discovery capabilities for biology, the cross-regional collaboration, end-to-end point in emerging areas. WuXi Biology revenue resumed positive growth in 2025, growing 5.2% year-over-year to RMB 2.68 billion. The adjusted non-IFRS gross profit margin was 36.9%, down 1.9 percentage point, reflecting market pricing dynamics. We closely follow market conditions with a flexible pricing strategy, maximize our value in generating downstream opportunities. Our revenue growth was driven by advancement in our comprehensive in vitro screening platform and enhanced in vivo pharmacology capabilities. Our non-oncology in vivo business maintained a competitive edge, serving as a key growth contributor to WuXi Biology. Our new modality business continued the momentum with the revenue contribution exceeding 30% in 2025, supported by rapid new customer expansion in multiple areas. Now I would like to turn the call to our CFO, Florence, to discuss our financial performance. Florence, please? Florence Shi: Thank you, Steve. Let's turn to Slide 17. We would like to recap on the company's financials. In 2025, we beat our full year guidance and achieved record high performance in revenue, profit and cash flow, all aspects. Thanks to the visibility provided by our CRDMO business model, we proactively planned our capacity and capabilities. As new capacity ramped up efficiently quarter-over-quarter, we timely supported the growing demand from late-stage clinical and commercial projects. Meanwhile, we continued to drive quality growth, strengthen our technological expertise and improve operational efficiency. In 2025, our adjusted non-IFRS gross profit reached RMB 21.89 billion. Adjusted non-IFRS gross profit margin expanded to 48.2%, up 6.6 percentage points year-over-year. Adjusted non-IFRS net profit grew 41.3% to RMB 14.96 billion. Correspondingly, adjusted non-IFRS net profit margin improved by 5.9 percentage points to reach 32.9%. Net profit after deducting nonrecurring items grew 32.6% to RMB 13.24 billion and net profit attributable to the owners of the company surged 102.6% (sic) [ 105.2% ] to RMB 19.15 billion (sic) [ RMB 19.19 billion ]. Building on our robust business growth, we sharpened our focus on the CRDMO core business and continue to enhance our investment management capabilities. This resulted in pretax investment gains exceeding RMB 8 billion in 2025. further boosting our net profit attributable to the owners of the company. Consequently, our diluted earnings per share reached RMB 6.61 (sic) [ RMB 6.63 ], more than doubling year-over-year. Please turn to Slide 18. With sustained business growth, particularly the rapid increase in late-stage clinical and commercial projects, combined with enhanced operational efficiency and financial management, our 2025 adjusted operating cash flow reached a record high of RMB 16.67 billion, growing 39.1% year-over-year. This fully demonstrates the sustainable momentum driven by our high-quality molecules and projects. We continue to actively advance our global capacity expansion as planned with CapEx payment of RMB 5.54 billion in 2025. Now I'd like to hand over to Minzhang to share the company outlook. Minzhang, please. Minzhang Chen: Okay. Please turn to Slide 20. Okay. We remain focused on our unique integrated CRDMO core business, accelerating the growth of our global capabilities and capacity. We provide highly efficient and exceptional services to our customers, benefiting patients worldwide and driving long-term growth. We will also drive the O in our CRDMO model operations. By driving optimized management and operations, we aim to continuously improve, improving efficiency and strengthen organizational resilience to navigate dynamic market conditions. With customers' ongoing demand for enabling services, our CRDMO business model and management execution, the company is confident to sustain rapid business growth. We expect total revenue to reach RMB 51.3 billion to RMB 53 billion in 2026, with continuing operations revenue growing 18% to 22% year-over-year. By continuously driving quality growth, realizing scale efficiency and enhancing operational excellence, while proactively managing new capacity ramp-up and exchange rate challenges, we are confident in maintaining a stable and resilient adjusted non-IFRS net profit margin in 2026. Finally, CapEx for 2026 is expected to reach RMB 6.5 billion to RMB 7.5 billion. Along with business growth and efficiency improvements, we expect adjusted free cash flow to reach RMB 10.5 billion to RMB 11.5 billion. Next page, please. While accelerating the growth of our global capacity and capabilities, we remain committed to rewarding shareholders and actively upholding the company's value. The Board proposes a cash dividend distribution plan totaling a record RMB 5.7 billion in 2026. Specifically, we plan to maintain the 30% annual cash dividend payout ratio, expecting to distribute 2025 dividend of RMB 4.71 billion, while continuing our interim dividend plan of RMB 1 billion in 2026. To continuously attract and retain top talent, we proposed the 2026 H-share incentive Trust plan. Under this plan, no more than HKD 1.5 billion worth of H-shares will be granted if 2026 revenue reaches RMB 51.3 billion. An additional HKD 1 billion worth of H-shares will be granted if revenue reaches RMB 53.0 billion or above. This aims to strengthen management resilience and align our team for long-term shared growth. Importantly, all underlying H-shares will be purchased in the open market at prevailing market prices with no dilution to existing shareholders. Thanks for your attention, and we are now open for questions. Laurence Tam: Thanks a lot, Minzhang Chen, Steve Yang, Florence and also Ruijia. We will now enter the Q&A session. [Operator Instructions] So let me start off with the first question. First of all, let me congratulate management on a fantastic 2025 and a very positive 2026 guidance. Obviously, this year, there's a lot of uncertainty in the markets and also, we have experienced a lot of volatility. Despite that, the company delivered a very positive 2025 and a continuing operations revenue growth range expected for 2026 of 18% to 22%, which means that the midpoint is 20% growth in 2026 for continuing operations, which gives investors a lot of visibility. One of the key concerns this year from investors for the CXO industry is the exchange rate. Year-to-date, the U.S. dollar has depreciated against the RMB. So the first question is, in the context of this renewed guidance, how does management think about the impact of currency exchange? And what is your outlook or guidance for each of the 3 business units? Ruijia Tang: Yes, thanks. We do consider the FX movement and the challenges. So I also would like to appreciate everyone who recognize, even with not only the FX, but with all the complexity and the volatility in the macro environment we are navigating, every company is navigating today, we still provide a very clear and narrow guidance range of our total revenue, which is only about like 3% of our top line, at the beginning of the year, which is pretty consistent with our historical practice. Basically, that reflects the strong visibility in our CRDMO business model and our confidence in our execution capabilities, same as the management capabilities on the FX movement as well. Laurence Tam: Thanks a lot, Ruijia. So the second question is a little bit on geopolitics. Obviously, the situation in the Middle East has escalated in recent weeks, and investors are worried about the rise in oil prices and the impact on raw material costs. Your margins improved significantly last year. And this year, the guidance is that margins would be stable. How would you think about the impact of geopolitics and oil prices on your margins going forward? Florence Shi: Yes, I will comment on the cost fluctuations that could be impacted. So first of all, our global operations are running smoothly as usual, okay? We acknowledge there are potential risk to certain upstream raw material costs, but it takes time to transmit through the broader supply chain. We haven't seen any direct or quantifiable impact on our operations or cost, but we will closely monitor the situation and the market dynamics as everyone did. We have mature and diversified procurement network in place in past 25 years. On top of that, we are constantly optimizing our manufacturing process, driving operational efficiency, which helps us focus on the certainty of meeting the customer demands in need and remain committed to deliver exceptional services. Laurence Tam: Thanks, Florence. So we get to sell-side and investor questions now. So I will first start with 2 questions from Goldman Sachs, Chen Ziyi. So his first question is the company continued to be highly committed to TIDES' CapEx. So he would like to understand a bit more on the pipeline behind the CapEx budget beyond injectable peptides, which has been a key driver in the past 3 years? And what would be the next key modalities that could potentially be the new focus, for example, siRNA, antisense oligos, oral peptides or any new modalities that biopharma is thinking about at the early stages? Minzhang Chen: Well, so right now, there are many modalities. It's a combination. So there is no single modality that can replace all. So we have small molecules, we have peptides, and we have oligos, and we have all kinds of conjugates. But currently, the demand for peptides itself is so high, so we continue to build the capacity and to meet the market demand for the peptides. At the same time, we're also seeing oligonucleotide is growing. And although the market is still small, but we see that there are many, many molecules in the pipeline, and also it's going from rare disease now to a very broad to general disease. So the growth will be fast. And also small molecule. Now the molecules became more and more complex. So to manufacture, in large scale, very complex molecules, needed very technical capabilities as well as manufacturing capacities to meet the market demand. So we are doing all this. Laurence Tam: Thanks, Dr. Chen. So Ziyi's next question is there's been some debate on what will be the impact of pharma's announced big CapEx on building internal capacity, particularly in the U.S.? What is WuXi AppTec's view on that? Have you sensed any change on client outsourcing strategy in the past 6 to 12 months? Minzhang Chen: Yes. So in the pharmaceutical industry, historically, all the API drug products are manufactured internally. And then some of the work is done by the CMO, CDMO. And so this has a long history. So it's nothing new that the large pharma is also manufactured internally, nothing new. But we just committed continuously to improve our capabilities and to invest in capacities and provide the best service and meet the customer needs. Laurence Tam: Thanks, Dr. Chen. So the next few questions are coming from Michael Luo of CLSA. His first question is, can WuXi AppTec give us some color on the current utilization rate of the company's 4,000 cubic meter small molecule API capacity? And also, do you still have any plan to expand capacity in this area this year? Minzhang Chen: Yes. Our current capacity is highly utilized. And we have the -- well, because we don't really talk about the capacity for the -- we are building the capacity for small molecules, but actually, we have the land and we continuously build the small molecule capacities to meet the demand. So we grow double digit, over 11% last year, to almost RMB 20 billion for the Small Molecule D&M. So that means a lot of capacity. And this year, we expect accelerated growing from the Small Molecule D&M. So there will be more capacity. So we continue to build new capacity for small molecules. And if you go to our Taixing site, we have the land and we continue to build the new plants all the time. Laurence Tam: And his next question is, beyond obesity and diabetes-related projects, can management highlight any pipeline products or areas that may become meaningful contributors to revenue growth in the next 3 to 5 years? Minzhang Chen: Yes. So our business model is a CRDMO business model. So we have a very broad pipeline. So for example, currently, our D&M pipeline for small molecules, we have more than 3,000 molecules. And so, as a funnel, we continuously have the project moving to the late phase and the commercial projects. And many of those projects are very high-quality molecules. Clearly, GLP-1 right now has the most demand in terms of volume. But also, we have quite a few very promising high-quality molecules into the late phase and the commercial stage. For example, the PCSK9 molecule, autoimmune molecule, pain, neuroscience. So we have a number of that. Just the number I gave in the Investor Day last year, 2024, the Drug Hunter named top 10 molecules, and we work on 8 of them. Again, just a few days ago, they published 2025 top 10 molecules, and we work on 7 of them; and the best-selling small molecules, the top 10, we work on 4 of them. So we work on many of the high quality as big large volume molecules. But of course, right now, GLP-1 is still the #1, no doubt about that. Laurence Tam: Thank you. His next question is, can management share how you're thinking about CapEx allocation this year, in particular, which business areas or capacity building are likely to be the key focus going forward? Florence Shi: Yes. I think the CapEx spending really reflects our business model and our global expansion strategy. So a majority of our CapEx spending will be put on the CDMO capacity expansion, because our business generates more and more downstream D&M projects. And also, we're accelerating our global expansion in U.S., Europe and also the Middle East in future. But at the same time, we are also expanding the capacity for both small molecule and new modalities in China as well. Laurence Tam: Okay. Thank you, Florence. His last question is, given the recent volatility in the Middle East, has the company's strategic approach to the region changed in any way? And also which types of business or operations, if any, do you see as potentially suitable for the Middle East over time? Qing Yang: Yes, our global capacity and capability building is our long-term strategy. Clearly, that will continue. And we have announced a memorandum of understanding with government agencies with Saudi Arabia late last year. And our strategic initiatives in Saudi Arabia continue to proceed. We are engaging with relevant stakeholders and develop tactical plans for the next step. So that continue. Our CRDMO business model and our globalization of our capacity and capability is really the key to our continued growth, and we will continue to build the global capacities. In terms of what suitable area in Saudi Arabia, we are going through a deep dive with the advisory of local strategic advisory firms to understand local regulatory requirement and what are the suitable capabilities we should localize. Based on our preliminary feedback, clearly, there are lots of opportunities. We will likely start in the discovery space and then gradually expand to other part of our global platform. Laurence Tam: Thanks, Dr. Yang. Next, we have 3 questions coming from CICC's Wanhua. First question is, what is the current capacity utilization rate of the company's solid phase peptide capacity, which now exceeds 100,000 liters? What level of utilization does the company expect to reach in 2026? Are there any plans for further capacity expansion? Minzhang Chen: Yes. The peptide capacity currently is highly used. So as a result, actually, we just started 2 new TIDES buildings, so for both peptide and oligo, we just started 2 TIDES building construction in our Taixing site. In the meantime, we also built a new plant in Singapore for TIDES. So in short, yes, our capacity is highly utilized right now, and we are building new capacities to meet the growing demand. Laurence Tam: Thank you, Dr. Chen. Her second question is, what is the progress of U.S. and Singapore sites? And is it currently in line with expectations? How will these new facilities coordinate with the company's domestic capacity? And has there been any change to the expected time line for commencing operations? Minzhang Chen: Both projects are on time, on schedule and on budget. So our U.S. plant, which is in Middletown, Delaware, is for drug products. So it will have both oral solid dosage and injectables once completely operational. So hope Q4 this year, we're going to start the operation of the oral solid dosage, and a year later, Q4 next year, we're going to start the injectable business. Yes, this is the U.S. plant side. For the Singapore side, it's also on schedule and on budget, and the first plant will be operational next year, '27, and that is for API. So this way, then we will have a dual supply chain for the customers, so they can either get made in China or made outside China, which is in Singapore, for API. On the drug product, U.S. side is mainly for the U.S., North American market customers. And we also have a drug product facility in Switzerland, which is mainly for the European market. Laurence Tam: Thanks, Dr. Chen. Her last question is, the company has seen a significant increase in inventory. Is this mainly related to stocking for large orders? When are the corresponding orders for these inventories expected to be recognized as revenue? Florence Shi: Yes. I think this truly reflects our business model of our CRDMO business. Our inventory is being built based on the orders in hand. At the same time, as we have the capabilities to capture the high-quality molecules, which is more complex and takes longer manufacturing process, so that's why the inventory growth is higher than the revenue growth. I think that's a further validation of the high-quality growth trajectory of our business. Laurence Tam: Thanks, Florence. So next, we'll go back to Ziyi Chen from Goldman Sachs. He has a question on AI. So in the past 2 months, U.S. CRO company share prices have been hit hard by concerns on AI and how it could pose competitive pressure on pricing or volume for lab services and clinical services. What is WuXi AppTec's view on the impact of AI, particularly on its Testing and Biology segments? Qing Yang: So first of all, our Biology and Testing business remain robust, both in terms of the return to positive growth, as we reported, and also our outlook for 2026. We actually believe AI in combination with human intelligence could be a huge enabler, not only for our industry, but specifically for our company, and help us to increase efficiency, at the same time, increase our ability to anticipate and forecast the future in terms of customer needs and in terms of capacity utilization. This is an area we have invested heavily in terms of our ability to using operational data to make our animal room scheduling, study scheduling, reactor cleaning as well as other aspects of work become more efficient. The example we cited during the presentation on spectral resolution and interpretation for our DMPK team is a good sign. That situation is obviously very different from as we have seen in other sectors such as in enterprise software. Secondly, we do believe our wet lab capabilities to generate massive data and with high quality and consistency is actually very important for companies who are interested to build a new model and algorithms to increase their prediction capabilities. And we had opportunity to work with many leading companies in this space. And so while they may have models that have the potential to generate new hypothesis, at this stage most of those models require high-quality data, and we are uniquely positioned to provide those data. So this is actually a driver to more business for our Biology and Testing business. And finally, we believe, for our CRDMO model, with more advancement in ability to unlock either target space or come with new hypothesis to design molecules, it will only accelerate the flow of new ideas into project start, and that will ultimately benefit the funnel, the CRDMO funnel, in a world where research and discovery become even more globalized and decentralized. Laurence Tam: Thanks, Dr. Yang. So now we have 2 questions coming from Chen Chen of UBS. First, U.S. FDA has announced that it plans to drop the standard requirement of 2 Phase III or pivotal trials. Instead, the FDA's default position will be for Phase III trial for drug approvals. Do you think that it would accelerate drug approvals and benefit your new orders growth? Qing Yang: I will start and then invite Minzhang for additional comments. So first of all, any regulatory streamlined process will benefit from patients. Secondly, any acceleration in clinical development potentially will drive more demand and more timely demand for drug substance and drug product to supply clinical trial. And if that shortens clinical development time frame, it will help actually accelerate the commercialization drive. So we think all of those initiatives that shorten the time to patients will be beneficial for our CRDMO model. Minzhang, any additional comments? Minzhang Chen: No, I think that's well said. Laurence Tam: Thank you, Dr. Yang, Dr. Chen. So her next question is, one of your biggest clients announced a 10-year plan to invest USD 3 billion in expanding its oral dosage supply chain in China, focusing on oral GLP-1 manufacturing. And one of your peers, a CDMO, has received part of this investment, actually USD 200 million initially. Do you think you can also benefit from this multinational investment in China and to what extent? Minzhang Chen: Well, so we all know that GLP-1 drugs, no matter it's peptide or small molecule, has a huge demand and so this announcement, this investment just further proved that, yes, the demand is very high for the molecule. So because the demand is very high, and we are the major player in this field, so we believe we will benefit from the opportunities. I don't want to comment on the specific partnership or collaborations, but -- so the USD 3 billion investment, right now it's only USD 200 million, so we have to spend the rest. Laurence Tam: Thanks, Dr. Chen. So the next question comes from Huang Yang of JPMorgan. What is WuXi AppTec's positioning in oral small molecule GLP-1 CDMO business? Minzhang Chen: Well, we had a double-digit growth last year, and we are accelerating the growth for the small molecule this year. And part of the contribution of this growth is from the GLP-1 small molecule. Laurence Tam: Okay. And his next question is, it seems that Small Molecule D&M business will have better growth in 2026 versus 2025. What would be the main drivers for that? Minzhang Chen: Well, it's just demand, high demand, because the drug will be approved this year, I believe. Laurence Tam: Okay. Next, we have 2 questions coming from an investor from Franklin Templeton. "Hi, this is Harry from Franklin Templeton. Congrats on the robust performance. So firstly, what is the revenue breakdown? What is the mix do you see? And how do you see the geographical mix changing? Growth, obviously, is very strong in the U.S., while Europe and China are showing some recovery." So let's first address this question. Minzhang Chen: Florence, do you want to comment on the mix? Florence Shi: Okay. Yes. I think because we follow the customer, follow the molecule, and follow the science. So the geographic revenue growth really demonstrates where the innovation comes from, where's the customer need, our capabilities and the capacities. We do see the strong growth from across all the regions, and we believe that we can better deliver and execute in 2026. Minzhang Chen: Thanks, Florence. Yes, we see the PO growth across all the regions for 2025. So we believe that's growth for all the regions in 2026, but particularly the growth was strong last year in U.S. So that's why the percentage of the other regions relatively becomes smaller, but we expect the growth for all regions this year. And the small decline in China and Europe last year was mainly due to the delivery schedule of some large projects, but the growth momentum is there. Florence Shi: Yes. I think that's basically proof we have very good position everywhere. And we continue to see the strong growth in U.S., in China, and Europe and all the other regions. Laurence Tam: Okay. And his next question is on the TIDES business. How do you see sustainability of its growth? Minzhang Chen: Yes. So the largest product that we are making, the demand will continue to grow in the next many years by market forecast. So the demand will continue to grow. We also are working on quite a few late phase, very promising projects, which potentially could be big products as well. One more step back, we are a CRDMO, so we have a very big pipeline, not only in small molecules, but also in peptides and also in oligonucleotides. We have a pipeline and that pipeline continues to funnel the projects into the late phase and commercial projects. And that's where our sustained long-term growth comes from. Laurence Tam: Okay. And on oligonucleotides, what is WuXi AppTec's differentiation from the other oligo CDMOs or manufacturers? Minzhang Chen: Yes. So like all other modalities like peptides small molecule, if you can find a place that has quality, speed, cost, technical capability and the capacity, you tell me. So I think it's the same. So we put all this together, and I think that's our unique advantage. Laurence Tam: And his last question is, can you give us some color on the general time line that it takes for a new facility to be built and to contribute in a meaningful way to earnings? Minzhang Chen: So in China, we can do that in less than 12 months from start to fully operational. Laurence Tam: So we have 2 questions next coming from Nomura's Zhang Jialin. So firstly, what is the range for the TIDES business gross margin? Do we calculate over 60%, is this about the right range? And how should we think about the margin trend for TIDES? Minzhang Chen: Well, I don't believe we disclose the margin for TIDES. Florence, can you answer that? Florence Shi: Yes. We don't disclose the specific margin. But I think the margin naturally reflects our capabilities, the capacities and the value creation to the customers. Laurence Tam: Okay. His next question is, how is the current Middle East situation or conflict impacting the company's investment view in Saudi Arabia in the midterm? Qing Yang: As I already mentioned earlier, we don't see any near-term disturbance changing our long-term strategy. Our long-term strategy is strengthen CRDMO model, build global capacity wherever there is a customer need. And we're continually engaging with stakeholders in Saudi Arabia and proceed with evaluation of different localization options. Those continue to proceed based on our plan. Laurence Tam: Thanks, Dr. Yang. So next, we'll go to Citi's John Yung. You initially guided continuing operations revenue to grow 10% to 15% for 2025, and you delivered 21% plus. Now the same guidance for 2026 is a range of 18% to 22%. Should we also expect this guidance to be prudent and that you are confident to beat it? Florence Shi: Rather than calling our guidance prudent, I would view it as responsible to the market, right? And I appreciate you track our records. We are navigating a lot of the complex and volatile macro environments today, but we do have the confidence to execute the guidance we provide to the market. Of course, we will closely monitor and give the updated time line to all the investors if we see any different situation. Laurence Tam: Thank you, Florence. So next, we'll go back to Ziyi Chen's question. So 2026 guidance has been very clear and exciting. He would like to understand the growth sustainability a bit more. What is the reasonable growth expectation beyond 2026, when the TIDES business will be slowing down given the large base and key product cycles. What could be the key growth driver beyond 2026? Florence Shi: I think we have the confidence to keep the sustainable growth. And basically, we follow the molecules, and the CRDMO model really gives us the confidence. We will continuously capture the high-quality molecules and follow the science. And we do have the capabilities and capacities to better serve our customers. Laurence Tam: Okay. And going back to Nomura's Zhang Jialin, he has a follow-up question. Can management help us understand the competitive landscape of siRNA CRO space and the growth outlook? How much will it contribute to the current TIDES segment? Minzhang Chen: Yes. So there are many players out there that have provided the CDMO service on the oligonucleotides, specifically, I think siRNA. And also siRNA has a very large percentage in our pipeline as well. Like I said, we continue to focus on the service we provide, and we continue to focus on both the quality service, the capacity, the speed and the competitive cost. So I think with our unique advantage, we just focus on providing the best service and win the competition in the end, just like we do in every modality in our business. Laurence Tam: So next, we have an investor question. WuXi AppTec has RMB 42-plus billion of backlog expected to be converted in 2026, but you're guiding for RMB 51.3 billion to RMB 53 billion of total revenue. So that means roughly an extra RMB 9 billion to RMB 11 billion will need to come from new orders signed and delivered within the year. In the current environment, with trade policy uncertainty, how confident are you in that year booking assumption? And has Q1 2026 order activity remained consistent with that trajectory? Florence Shi: Yes. I think you're right. You noticed. Actually, in our total backlog, it is expected to convert -- like 70% of our total backlog is expected to convert into the revenue in 2026, which is within the next 12 months. I think our ability to convert orders into revenue with speed and efficiency actually reflects our strong execution capabilities across our whole organization. And if you compare with the historical number, actually the percentage is significantly improved, which also demonstrates we have more and more late-stage clinical and commercial projects on hand. That really enhances the near-term visibilities and the certainty of our growth trajectory. As I mentioned, with all the efforts we are making, we do have the confidence to deliver our guidance. And of course, we always try to beat it, right? So I don't see there is any big concern about the new orders coming in the conversion. Laurence Tam: Okay. Great. Thanks, Florence. So last question, let me wrap up by touching a bit on geopolitics. We haven't really talked about the 1260H list from the U.S. Pentagon. Obviously, it was released shortly in February and then withdrawn within like an hour. And a lot of investors looked at that list and saw WuXi AppTec being on there together with a lot of big Chinese companies. Does the company have anything to say on that? Obviously, Sino-U.S. relations were moving in a positive direction in the months prior to that with obviously, the BIOSECURE bill not naming the WuXi companies. What is the company's view on relations between the 2? Qing Yang: Yes, I'll take that question. So as you mentioned that we have seen that in February the list was put on and withdrawn. So at this time, the final 1260H list for 2026 has not been officially published. And there's no definitive timetable at this time as to when this is going to publish, no one actually knows, and we won't make any prediction or speculations for the timing of the U.S. government's actions. At the same time, they are very confident that WuXi AppTec shall not be included in the 1260H list. We are a publicly traded company listed in Hong Kong and Shanghai with a transparent corporate governance. The company is not owned or controlled by any government or affiliated with any government or military organization. So at this moment, the company will continue to monitor the situation and take all necessary actions to correct any misinformation and clarify any misunderstandings. And in terms of BIOSECURE Act, you mentioned that -- we all know that the bill was passed as part of the NDAA at the end of last year. Since then, there's no recent development on the implementation. So we'll continue to monitor. Laurence Tam: Thank you very much. So we're coming up to the time limit. So let me pass it back to management to do concluding remarks. Minzhang Chen: All right. Thank you all for joining today's earnings call. So 2025 is the 25th anniversary of WuXi AppTec. So for the past 25 years, WuXi AppTec has been dedicated to lowering the barriers to R&D and advancing health care innovation worldwide. Entering 2026 with a sharpened focus on our core CRDMO strategy, we are accelerating the growth of our global capabilities and capacities, further improving production and operational efficiency and delivering greater value for customers and shareholders. Staying true to our founding aspiration, we will remain committed to doing the right thing and do it right, enabling our partners to deliver life-saving therapies to patients in need and advancing our vision that every drug can be made and every disease can be treated. Thank you all. Laurence Tam: Thank you very much to WuXi AppTec's management and the IR team. This will conclude the presentation. Thank you all for joining. Florence Shi: Thank you. Ruijia Tang: Thank you. Qing Yang: Thank you. Laurence Tam: Bye.
Operator: Thank you for standing by, and welcome to the Tuas Limited Half Year Financial Year 2026 Results Call. [Operator Instructions] I would now like to hand the conference over to Mr. Richard Tan, CEO. Please go ahead. Richard Tan: Good morning, and thank you for joining us. I'm Richard Tan, Chief Executive Officer of Simba Telecom, the principal operating entity of the Tuas Group. Also on the call today are Mr. David Teoh, Executive Chairman of Tuas Limited; and Mr. Harry Wong, Chief Financial Officer of Simba Telecom. It's a pleasure to present the financial results for Tuas Limited for the half year ending 31st January 2026, covering the period which started 1st August 2025. Let me briefly outline today's agenda as shown on Slide 2. We'll begin with Harry, who will walk through the financial performance and key metrics for the year. I'll then provide an update on our operational progress, status of M1 acquisition and outlook for FY '26. We'll conclude with a Q&A session to address any questions you may have. Please note that all financial figures discussed today are denominated in Singapore dollars. With that, I will now hand over to Harry to take us through the numbers. Harry Wong: Good morning, everyone. My name is Harry Wong. CFO of Simba Telecom. I'll be presenting the financials of the Tuas Group. On Slide 3, you'll see that we achieved a notable improvement in the financial results during the first half of FY '26 when compared to that of FY '25. Revenue for the half year is $91.9 million, up from $73.2 million for the same period last year. Pre-acquisition costs amounting to $10.5 million was incurred. Excluding this, the underlying EBITDA increased 27%, up from $33.1 million to $42.1 million. We achieved a half year positive statutory net profit after tax of $8.2 million, which is a significant improvement on the prior period's profit of $3 million. Next, we look at the revenue and EBITDA on Slide 4. Revenue for the half year ending 31 January 2026 increased 26% compared to that of FY '25. With increased scale of the business, EBITDA margin has improved to 46% of revenue. Gross mobile ARPU for the year was 9.61%. The key driver of the EBITDA uplift is the increased subscriber base for both the mobile and broadband products. Our mobile plans include generous roaming data at every price point and broadband plans provide exceptional value including premium Wi-Fi 7 routers and home phone lines as part of the package. Slide 5 shows our sustained mobile subscriber growth since FY '23. As of 31 January 2026, we had about 1.412 million subscribers, representing a 13% increase over the past half year. Slide 6 shows the broadband subscriber base. As of 31st January 2026, we had approximately 46,000 active services. We have gained traction in this segment, and we have added 20,000 subscribers over the past half year. We proceed on cash flow on Slide 7. We continue to show positive cash flow. Opening cash and term deposit balance was $80.7 million. Net cash generated from operating activities was $50.1 million. The main cash outflow comes from acquisition of plant and equipment and intangible assets of $18.9 million, largely mobile network and some fixed broadband infrastructure. We raised funds from capital markets of $260 million in support of the M1 acquisition. This brings the ending cash and term deposits to $478 million as of 31st January 2026. Again, positive cash flow after CapEx for the year is a welcome achievement. I should note that pre-acquisition costs that have been accounted for in this half year has not become liable for payment during the first half or since then. This explains a good portion of the positive cash flow outperformance compared to EBITDA. With this, I will let Richard proceed with the business updates. Richard Tan: Thank you, Harry. Singapore's mobile market remains highly competitive. And over the past financial year, Simba has continued to focus on delivering stronger value across all price points. This strategy has clearly resonated with consumers, as reflected in our robust subscriber growth. We have further enhanced our mobile offerings by adding 2 popular roaming destinations, Japan and Australia as inclusions in the APAC tier to our higher-value plans. This enhancement is an important part of supporting our continued growth in the mobile segment. To serve our expanding customer base, Simba continues to invest in network coverage and overall user experience. I am pleased to share that we have achieved another significant milestone. We have surpassed IMDA's regulatory benchmark of 95% 5G outdoor coverage, well ahead of the 31st January 2026 deadline. Slide 9 highlights the reasons behind the strong momentum in our fiber broadband business. The accelerated growth is driven by a clear, simple and compelling value proposition through 10 gigabit per second symmetrical speeds complemented by a premium Wi-Fi 7 router, modem and the home phone line included as standard. We are also proud to share that Ookla has awarded Simba, both the fastest download speeds and most reliable speed titles for the second half of CY '25. Most listeners would have used Ookla to do a speed test on your connectivity and they are widely regarded as an accurate global leader in Internet testing and network intelligence. This recognition is a testament to our engineering excellence and our unwavering commitment to delivering the best possible service experience for our customers. Moving to Slide 10. We appreciate shareholders' patience as we await IMDA's decision on our proposed acquisition of M1. This is a significant transaction involving critical national infrastructure and on a combined basis, it will create Singapore's second largest mobile customer base. Both Keppel and Simba continue to work diligently through the regulatory process and we remain fully committed to securing the necessary approvals. And finally, the business outlook. The first half of the year has established a solid platform for us with sustained growth across both our mobile and fiber broadband segments. In line with this expansion, Simba's stand-alone CapEx for the full year is expected to range between $50 million and $55 million. We will continue to prioritize margin optimization and maintain disciplined cash management as we scale. I'll now hand back to the moderator for the Q&A session. Operator: [Operator Instructions] Your first question comes from [ Raj Ahmed ] from Citigroup. Siraj Ahmed: It's Siraj Ahmed. Can you hear me okay? Richard Tan: Yes. Siraj Ahmed: Just I have maybe 3 questions. The first one just on the -- maybe a multipart question on subs momentum. Pretty strong pickup in momentum in the half. Just keen to understand what drove that from your perspective, especially given your advertising and marketing spend is actually down year-on-year? Richard Tan: Okay. So obviously, the momentum has been strong for the first half. And in part, I think, it was -- you could say that it was due to our announcement of the M1 acquisition because people are seeing us in different light. They know that we are a serious player and we are here to stay, and we have been delivering very good value for -- across all of our service plan. So this has resonated obviously across the -- our customer base as well as people who have not come aboard yet. So we saw a very strong momentum for the first half of the year. Siraj Ahmed: And Richard, just because I'm into the stock as well, just in terms of first quarter versus second quarter, is there some seasonality or some sort of events that supports 1Q? I know 1Q is quite strong. 2Q is strong as well, but it was down quarter-on-quarter. Is this something that impacts from like a seasonality perspective? Richard Tan: This is the typical seasonality effect because, as you all are well aware, the November and December traveling period is always very strong in terms of people leaving Singapore for their holidays. So a lot of people will sign up prior to that. And then they will return. Everyone goes back to work and school back in January. So you are obviously noticing the seasonality effect. Siraj Ahmed: Right. Actually, that's a good segue for my question on -- just in terms of the current environment with fuel and everything like that. And given that traveling is a big part of your value prop as well. Are you seeing any sort of -- anything that you can call out based on current trends that you're seeing on that impacting... Richard Tan: The trends will be very similar to previous years. And we expect second year to -- second half of the year to continue to exhibit good growth as well subject to the usual seasonality effects that we have seen over the past 3 to 4 years. Siraj Ahmed: All right. Helpful. Last one. In terms of just the gross margin, it seems like the network, the COGS has gone up quite a bit. Gross margin is down year-on-year. And is there some one-off in that, that we should be considering? Richard Tan: Well, the -- what we have been focusing on more is the EBITDA margin and the EBITDA margin has actually grown by 1 percentage point. So I think that's the main thing to focus on. Operator: Your next question comes from Darren Odell from Peloton Capital. Darren Odell: Congratulations on a strong result again. Just in relation to -- on the cost, the $10.5 million one-off cost in relation to M1 acquisition. I was just wondering -- it was quite large. I was just wondering if you're able to break that down in more detail, please? Richard Tan: We are not providing any breakdown as of now, but it is a mixture of legal due diligence, tax due diligence, financial due diligence and financial advisory. So I think in the -- considering the size of the transaction it is actually very, very reasonable. Darren Odell: And just in relation to just broadband connections, which have obviously been very strong in the last half. What's the sort of backlog look for that? Or do we expect the same sort of momentum to continue in number of subscribers or to be increasing? How should we be thinking about that in the future? Richard Tan: What I can say right now is that we are working very, very hard to build on the momentum that we have established and the fact that Ookla has given us the award, puts us in a very, very good position to build on that momentum. Operator: Your next question comes from James Bales from Morgan Stanley. James Bales: I guess I'd like to build on those questions about the acceleration in mobile and the strength in broadband subs. You talked about it being a question of brand awareness, durability, value that is in the consumers' mind. Should we extrapolate that the acceleration that you've seen in the first half is sustainable throughout the year and into FY '27. Richard Tan: So to be specific, are you referring to mobile or fiber broadband? James Bales: Well, I'm referring to both. So I guess I'm a bit surprised on broadband, where there's a 2-year term. It's a commoditized product, all selling the NetLink service. How you've managed to scale that so fast and whether we should expect that, that continues in the same sort of way. Richard Tan: So I think you will have seen that our value proposition is very strong. We have included a lot of value and the router that we are offering, it's a really good relative product, no compromises because, for example, it has a true 10 gigabit a second Ethernet port. And we have also added home phone line as well. So with the awards that I've mentioned from Ookla, that puts us in the very good position and people have been signing up through word of mouth. They have experienced very, very good service from both Simba, and the performance has been great. And obviously, we've been spending on marketing as well to ensure that the awareness is built up across the board. So with that with that foundation laid, that has put us in very good standing in terms of continued growth for broadband. Mobile, I think we are very well established across all segments. And we have seen good gains in these different segments, which I have alluded to, and these include, for example, the mass market and foreign [ router ] segment is something that we have always been very strong in. So without a doubt, our penetration is now deeper. Our growth is more broad-based, so that gives us also a good foundation for continued mobile growth. James Bales: That's really good context. And then I guess the other question I had was around M1 deal completion. This has taken a lot longer than you thought. Can you help us understand the -- in your mind, what's changed? And you would have expected that this deal completed last year or in January when you first announced it. Can you help us understand why it's taken longer and whether your confidence in closing it has changed at all? Richard Tan: Well, as I've indicated in my presentation it is an important transaction. What I did not say for example, is that this is the first time that the market is undergoing consolidation. So obviously, there are all aspects of the matter that IMDA will need to weigh upon. So I'm not surprised, and we are -- both parties, meaning Keppel and Simba are working diligently to gain regulatory approval as we go through the process. Operator: [Operator Instructions] Our next question is a follow-up from [ Raj Ahmed ] from Citigroup. Siraj Ahmed: It's Siraj again. Just, Richard, just on a follow-up to James' question on the time line. Is there any sort of indication that's been given to you on potential completion time lines? Or is it just open-ended from your perspective? Richard Tan: I don't think it's appropriate for us to set any expectations with regards to the time line. All I would say right now is that the engagements on a joint basis with the regulator, they are ongoing. So I think that's very important in terms of keeping the dialogue going. Siraj Ahmed: Okay. Got it. On that as well, there was a -- I think there's a 6-month sort of agreement with Keppel in terms of the deal completing. Is that -- I'm guessing that's -- I think that in sort of end of March, I think, I'm guessing that's been extended. Is that fair, given both of you are talking with IMDA? Richard Tan: We are aware of it, and both parties are working to extend it. Siraj Ahmed: Okay. Last one, just on CapEx. I know that sometimes there is seasonality. I think first half was only $19 million. You're reiterating the CapEx guidance. I'm just wondering whether -- is it sort of -- you're keeping the second half seasonality because of the deal -- impending deal? Or is it just timing related? Richard Tan: A lot of it is timing related because we initially spent more on CapEx, for example, building out our 5G coverage. But obviously, we are keeping in mind the need for us to continue to support our growth, and that is why we're keeping to the $50 million to $55 million CapEx expectation for the financial year. Operator: Thank you. There are no further questions at this time. I'll now hand back to Mr. Tan for closing remarks. Richard Tan: Thank you all for your time and for engaging in our business update. The Board and management of Tuas Limited deeply appreciates your continued support. We look forward to delivering further value and growth in the months ahead. Thank you. Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.