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Cody Fletcher: Good morning, everyone, and welcome to Bakkt Holdings, Inc.'s first Investor Day, both here in person and virtually at home or in your offices. We appreciate you joining. Before we begin, please review the forward-looking statements and disclaimers in today's materials. Our presentation will include statements regarding future events, business strategy, and market opportunity. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. We encourage you to review the risk factors in our most recent filings with the SEC. I am pleased to introduce Bakkt Holdings, Inc.'s Chief Executive Officer, Akshay Naheta. Akshay Naheta: Welcome, everyone. This is our first Investor Day, and I want to give you a view into what we have worked on over the last year, what we have systemically rebuilt, and where we are taking the company from here. We are entering the next phase of Bakkt Holdings, Inc.'s growth with massive momentum behind us, both from a regulatory perspective as well as the economic and financial tailwinds that lie within the sector of payments and financial services. It is a precise engineered strategy that we have put together that we look forward to disclosing as we go along throughout the year. We have rebuilt our governance, capital structure, and technology. We have a great line of sight. Our pipeline is primed. The regulatory path is clear. We are rewriting the definition of category-defining deals. Today is our opportunity to show you exactly what we have built, the immense velocity at which we are moving, and why Bakkt Holdings, Inc. is positioned to lead in this category. Quick overview of the agenda for today: We will cover five areas: a quick overview of our strategy and the key drivers behind it, the market opportunity and how Bakkt Holdings, Inc. is positioned to capitalize on it, and finally, a product deep dive across our three engines, and a quick review of the year 2025, which was operationally and financially a bit volatile. But we have gone through the restructuring that we had to do. Finally, Q&A followed by my closing remarks. Akshay Naheta: The mission is simple. Build secure infrastructure and products that make money work in real life globally. It is the precise description of the problem we are solving. Money is too slow, too expensive, and too opaque for most people and most transactions worldwide. Bakkt Holdings, Inc. is building the infrastructure layer that changes that for institutions, customers, and companies. Our vision is to build the next-gen financial ecosystem, one that sits at the intersection of programmable money, regulated infrastructure, and AI-driven agentic finance. The analogy I use is that what AWS did for software—it let companies build without owning servers—Bakkt Holdings, Inc. does for finance. We provide the licensed, regulated, scalable rails so that partners do not have to build them. We have done all the work for them. The world is moving towards programmable money. Stablecoins now settle more than $30 trillion annually, and Bitcoin is becoming a treasury asset for a lot of corporates and sovereigns around the world. In the middle of all of this, you have the tokenization opportunity of real-world assets, which is moving from pilot to production in real time. Bakkt Holdings, Inc. is positioned exactly where all this is breaking out, and we are well on our way to take advantage of these opportunities. We have organized Bakkt Holdings, Inc. around three engines. These are engines because each one generates its own revenues while powering the others. Bakkt Markets is our institutional-grade infrastructure for digital assets. It gets institutions to markets faster and more safely. Bakkt Agent is our programmable money and AI-powered agentic finance infrastructure. It is frictionless, intelligent, and fully auditable. Finally, Bakkt Global is our international expansion and strategic value creation engine. We are applying our intellectual capital, technology, and products to the world's highest-growth markets through a disciplined, capital-light investment model. Critically, these three engines are complementary. Markets provides the regulated rails. Agents use those rails to move money globally; that benefits both consumers and businesses. Finally, Global leverages all of our understanding in these different areas to take it into new jurisdictions to generate tremendous value for shareholders, and early results are already showing that for Bakkt Holdings, Inc.'s shareholders. The quick accelerants: We have laid the groundwork over 2025, and we have immense momentum on partnerships that are currently underway. I have showcased a few of these partnerships here, but we are deep in discussions with several partners across the ecosystem, and we have immense momentum on that front. For Agent, we have signed up tier-one telco partnerships across the U.S. and Europe, which will embed connectivity into our fintech product. The distribution partnerships involve category-defining deals, which will improve our immediate reach and will tap into a network of our partners, lowering customer acquisition costs. We look forward to announcing significant partnerships along this line over the very near term. With Better and Zoth, we embed our APIs into their product flows, generating volume from day one. For the Markets segment, with Nexo, Ascendex, and Ubit, we help expand their liquidity and our global client base. These are all commercial agreements with real volume and real economics, and I am extremely confident in each of these partnerships and what they are going to deliver for Bakkt Holdings, Inc.'s shareholders. There are three core KPIs for shareholders to follow going forward. For Bakkt Markets, it is going to be total transacting volume between what we have—the legacy brokerage-in-a-box business that Bakkt Holdings, Inc.'s shareholders are aware of. With DTR coming into the fold, we have significantly added to our stablecoin on-ramp/off-ramp capabilities. I expect the total transaction volume within Bakkt Markets to expand substantially, and Nick will talk about it during his presentation. For Bakkt Agent, the metric is monthly active users. It is a volume business—users transacting is what drives the revenue—and MAUs are the right measure for platform adoption and distribution reach. Finally, for Bakkt Global, we look at strategic asset value—the investment and equity value our global strategy generates. In Japan, we have already made 3x our money. In India, we have made 5x our money. The methodology is internally defined and incorporates mark-to-market valuations, cash proceeds, and any unrealized gains. These are independently governed businesses in different high-growth markets, and they will also generate revenues for Bakkt Holdings, Inc., which will then contribute directly to Bakkt Holdings, Inc.'s financial statements. These three KPIs will be reported as each product and platform becomes operational. The timing is tied to launch milestones and not a fixed calendar date at this time, and full disclosure on definitions, methodology, and reporting timelines is in the appendix. Let me briefly touch upon the Bakkt Holdings, Inc.–DTR transaction. This is foundational to everything you are going to hear today. It is, in our view, a category-defining transaction for digital finance infrastructure. DTR brings us two things: products and people. On the product side, we have a composable API platform. Bakkt Agent provides cross-border payments capability and expands Bakkt Markets into stablecoin payment settlements. These are not roadmap items; they are live and ready to be deployed. DTR also brings a complementary regulatory framework in Europe. They hold the VASP license, which then sits alongside Bakkt Holdings, Inc.'s existing pan-U.S. MTL coverage and the New York BitLicense. Together, we have the regulated footprint to grow the business across both sides of the Atlantic. On the people front, the DTR team is primarily 90% engineering, and it includes our CTO, Remy, who you will hear from later today. That brings in world-class engineering talent and a proven track record of building scalable, global fintech businesses. The acquisition is subject to customary closing conditions and shareholder approval. DTR really unlocks cross-border volume for Bakkt Holdings, Inc. on stablecoin payments. This is where stablecoin technology is transformative. The TAM here is enormous. Cross-border payment flows are $44 trillion today and growing quite rapidly to about $67 trillion by 2033, according to FXC Intelligence. DTR gives Bakkt Holdings, Inc. three specific revenue hooks into that volume: stablecoin on-ramp/off-ramp fees on every fiat-to-crypto conversion, embedded financial services revenue on every flow, and a scalable compliance stack that accelerates partner onboarding, and therefore, volume. Note: the TAM figures represent the full global market, and our serviceable and obtainable market will be disclosed as we formalize specific corridor strategies. Coming to the regulatory front, we have immense tailwinds from clarity within the U.S. regulatory environment. The Stablecoin Act was signed last summer, and the Clarity Act on digital asset markets is currently moving through Congress as we speak. As the rest of the industry plays catch-up with these newly passed laws, Bakkt Holdings, Inc.'s infrastructure is already built for it, with our licenses and regulatory stack. We built this infrastructure before it was required, and that gives us a durable competitive advantage. The four-part cycle on this slide is not aspirational. It describes our current positioning—regulatory alignment along with infrastructure readiness—then helps accelerated adoption, thereby enabling scalable growth. We are in that loop today. I will now turn the call over to Nick Bays to walk you through Bakkt Markets. Nick Bays: Thank you, Akshay. I am Nick Bays at Bakkt Holdings, Inc. I am going to walk you through Bakkt Markets. Our institutional digital asset trading business and how we are expanding it through our partner ecosystem and the DTR transaction. The DTR transaction does not just build out Bakkt Agent; it materially expands Bakkt Markets. Three specific capability additions: over-the-counter trading infrastructure that enables higher-margin execution and larger institutional transactions; stablecoin on- and off-ramps that add payment and settlement fees alongside cross-border transaction volume; and a scalable compliance stack that accelerates client onboarding and drives revenue growth. Pre-DTR, Bakkt Markets was a spot trading and custody business. Post-DTR, it is a full-spectrum institutional digital finance platform: spot, OTC, stablecoin settlement, and cross-border payments. The revenue model expands accordingly—execution spreads on OTC, settlement fees on stablecoin flows, and onboarding-driven volume from the compliance stack. Now let us talk through the institutional digital asset trading layer. The Bakkt Markets platform has three core components that work together as a single institutional execution layer. Best bid/offer engine: We aggregate real-time pricing across multiple venues to provide clients the tightest spreads on every trade. That is institutional-grade price discovery. Order management and risk: Every order is pre-validated for minimum size, holding sufficiency, and marketability before execution. Non-marketable orders are held rather than rejected. Exceptions surface in real time. Flexible funding rails: We offer three fiat funding models. You can use Bakkt Holdings, Inc.'s banking relationships and infrastructure, you can bring your own banking infrastructure, or you can integrate with our partner, Apex Fintech Solutions, to offer a consolidated funding model across TradFi and digital assets. This allows each client to use the funding and brokerage infrastructure that fits their platform. All of this is done on credentialed infrastructure, SOC 1 and SOC 2 certified. Now differentiation in the market. We offer four competitive advantages that are difficult to replicate. Flexibility: We do not force partners into a single structure. They choose the funding rails, the business model, and the integration depth that works for them. Tech stack: Institutional-grade execution engine with real-time risk controls, built on modular APIs. The same architectural principle as the Agent platform—composable, scalable, and auditable. Offerings: From spot trade to fiat on/off ramps to cross-border stablecoin payments via DTR. Breadth of product across one regulatory relationship is unique in the market. Compliance and governance: We offer MTL coverage across all 50 states plus a New York BitLicense. When a partner works with Bakkt Holdings, Inc., they go live without navigating their own licensing. Our regulatory infrastructure becomes theirs. For fintech companies, payment providers, exchanges, and brokers who want U.S. market access, that is an enormous time-to-market advantage. Partnerships and integration: Four strategic partners, each expanding a different dimension of the Bakkt Markets platform. Nexo: We enable U.S.-regulated trading infrastructure and expand our institutional partner network, driving transaction-based revenue growth. Nexo is a tier-one digital asset lender with global institutional relationships. Their network is our network. Ascendex: Expands our global customer base and demonstrates platform demand and scalability. Recurring revenue through activity—Ascendex proves the B2B2C model works at international scale. Ubit: A consumer app that lets users spend digital assets via a Ubit-issued debit card. We power the buy, sell, deposit, and withdraw flows. Our stablecoin and on-board APIs enable bank transfer on- and off-ramps across 30+ EU and Asia countries. Lastly, DTR: Adds cross-border payments and stablecoin settlements, expands the product suite well beyond trading, and supports ongoing platform upgrades. DTR is the infrastructure layer that allows Bakkt Markets to evolve from a trading platform into a complete digital finance infrastructure. Pull the three things together—regulatory infrastructure, onboarding new customers, and growing current offerings. Regulatory infrastructure: Partners do not need to run their own licensing processes. They use ours as a plug-and-play solution. This is how we gain access to the U.S. customer base quickly. Onboarding new customers: Third-party custodians and liquidity providers expand our offering set. Durable banking relationships provide the fiat rails. These are the relationships that let us say “yes” to institutional clients on day one. Growing our current offering: Stablecoin settlement and on-/off-ramps are the new revenue layer enabled by DTR. That turns Bakkt Markets from a trading business into a payments infrastructure business. Cross-selling trading, custody, and payments from a single institutional relationship. The bottom line for Bakkt Markets: This is a high-margin, recurring revenue business that gets better as volume grows. Each partner adds liquidity into the ecosystem. I will now hand it over to Remy and Ankit to review Bakkt Agent. Nick Bays: Together with Ankit, we will talk through Bakkt Agent, our AI programmable finance platform. Remy: Bakkt Agent is really built on four pillars. The technology pillar is a modular tech stack built for scale. Our efficiency layer lowers our cost to serve while volume grows without our headcount growing. Programmability: Bakkt Agent is built for the world of programmable finance—automated, logic-based money movements. Finally, distribution: we plug directly into existing networks of hundreds of millions of users. I will start with tech. This is the tech stack that makes it all work underneath our APIs and direct-to-consumer products. The tech stack is split into four main areas. We have our consumer apps at the top. We have our APIs underneath that we serve to our partners. We have our microservices layer, which is a logic engine, all tied together with a messaging bus allowing them to work asynchronously and independently from each other. Finally, at the bottom, we have a data lake that ties it all together. All the data that is generated internally and externally all falls into one place, laying the groundwork for our AI workforce to work with us. Our second pillar is efficiency. Legacy financial institutions scale headcount as they scale revenue. Our core operating model is built for automation. We have three agents that currently work at Bakkt Holdings, Inc.: Clara, which is our knowledge agent—you can ask anything to Clara about our customers, our business model, and our transactions that go through the platform. She speeds up time to answer by 98%, allowing the team to focus on growth rather than getting context. We have Lucy, who watches every transaction that goes through the platform and helps reduce our detection time by 83%. This helps us maintain our 99.9% platform availability. Finally, we have 74% of merged code contributed by AI, making sure that we speed up our delivery by over 50% without adding headcount to our engineering team. These are not aspirational metrics. These are operational numbers today, and they are a direct reflection of the groundwork that we have laid to make the right architecture decisions from the start. For our consumers, this means faster, simpler, more modular, and reliable money movements. Next, I will talk about programmability—what this means for us and why it matters now. Bakkt Holdings, Inc. is building products for a world where money is programmable. We have three composable APIs that can be used together or separately. The first one is the Zyra API, a chat-native cross-border payment interface that supports voice, text, and image inputs. It is a single API endpoint that our partners can integrate with and gives them access to our full regulated financial infrastructure. We have our Accounts API, allowing us to issue debit, credit, and savings accounts—virtual and named—in U.S. dollars, euros, and British pounds sterling. It has access to instant payment rails in all three native currencies and embeds eSIM issuance. Finally, our Stablecoin API allows payout into 57+ countries across 15 different currencies on 10 public blockchains with same-day settlement 24/7. As I said earlier, these three APIs can be used independently or composed together. Akshay mentioned Zoth—Zoth uses our Stablecoin API and our Accounts API together. Better’s integration is with our Accounts API. Talking about the two of them, Better embeds the Accounts API within their mortgage journey, allowing their mortgage applicants to deposit funds with Better from day one, helping them waive some of the mortgage application fees. Zoth uses our stablecoin financial infrastructure to enable users to more easily pay in and pay out of the Zoth app. I will dive a bit into Zyra. Zyra is the most technically sophisticated part of our stack. At the center, we have a primary agent, a large language model that is based on Google Gemini and then fine-tuned in-house. It helps orchestrate user intent between 15 different sub-agents. Those 15 sub-agents include KYC, settlement, FX, compliance, and treasury. Each specializes in its own domain and operates autonomously within its scope. At the bottom, we have a self-testing layer. This is what makes Zyra an intelligent swarm of agents. It helps analyze the input of user intent and the output that the swarm comes up with, and it learns over time, improving itself. Zyra is not just a chatbot. It is production-grade, self-evaluating, and designed for institutional-quality reliability in global payments. Now, to talk about our direct-to-consumer offering, I will hand it over to Ankit. Ankit Kemka: Hello, everyone. I am Ankit Kemka. I am the Chief Product Officer at Bakkt Holdings, Inc. Let us talk about our direct-to-consumer products. Firstly is the Zyra app, the chat-native remittance app with voice, text, and image input. It covers global money movement from the U.S. to 57 countries. It includes built-in KYC, AML, FX, and local settlements. No separate app or separate onboarding is needed. When you are using the Zyra app, it is all inbuilt. Second is our Everyday Money app. It is a full-service mobile banking app for daily use that is currently being built. It offers debit and savings accounts, debit cards, credit cards, peer-to-peer payments, simplified onboarding, and a retention-focused UX. It is a digital banking product that users come back to every day. Finally, our AI-powered loan underwriting product, which is AI-assisted underwriting and decisioning for consumer credit: faster approvals with consistent policy controls that dramatically lower cost to serve through automation versus traditional credit underwriting. Let me deep dive on the Everyday Money app. The product covers the full life cycle of a user's financial life: earn, spend, save, send, and control your finances. Customers will have access to products such as a checking account, debit cards, a credit card with a rewards program, a savings product, cross-border transfers, and, more importantly, data-driven insights across their financial life. Let me focus on the last pillar, which is distribution. The single biggest cost in consumer fintech is customer acquisition. Traditional partners spend hundreds of dollars to acquire a customer. We have solved that problem structurally by partnering with organizations that have already earned massive consumer trust. Instead of spending millions of dollars in paid marketing—which I have done before—we plug into existing networks where we can leverage owned reach. Organic reach and brand trust drive customer acquisition, and then on top of that, there are network effects that help with virality. We are extremely confident about our pipeline and are in advanced conversations with a few partners, especially for the consumer fintech platform. At Bakkt Holdings, Inc., we believe connectivity and everyday finance are intertwined. Someone with a bank account and an internet connection can go about their daily business fairly easily. Telecom markets are naturally concentrated—typically, two or three partners serve the majority of a country's population. We partner with the leading operator in each geography we want to operate in, and that gives us immediate reach through their existing distribution. With that partnership, we have embedded eSIM technology directly into our consumer fintech product. This creates a deeper relationship with our customers and higher retention due to higher switching costs. More importantly, for the consumer fintech app, owning the primary banking relationship across customers is the holy grail. Partnerships like this are the foundation of driving the primary banking relationship. Our launch focus is in the U.S. and Europe, and we have massive momentum from these telecom partners. In parallel, we are also extending our eSIM capabilities to partners via APIs. With our distribution strategy, Bakkt Holdings, Inc. is accelerating its time to scale and revenue growth. The engine is Bakkt Holdings, Inc.; we provide the regulated rails. Partners do not need to build compliance or licensing infrastructure—we provide all that. The catalyst is our owned reach that drives organic acquisition at scale through our distribution partnerships. This means we can do customer acquisition that is structurally below any other competitor relying on paid channels. More importantly, the integration provides a deeper relationship with our customers, which improves retention and lifetime value. This combination is a flywheel: low CAC, high retention, and an expanding user base. I will hand it over now to Akshay for Bakkt Markets. Thank you. Akshay Naheta: I want to now touch on our third growth engine, which is Bakkt Global. At its core, it is a capital-disciplined model of expanding our intellectual capital and technology into the world's highest-growth opportunities and markets. To be clear, this is not an experiment. This is well-thought-out, methodical capital allocation, and it is already delivering great results for Bakkt Holdings, Inc.'s shareholders. Furthermore, we are extremely confident in the trajectory ahead for this business. Effectively, we are building independently governed businesses in some of the world's highest-growth fintech opportunities. We deploy capital. We take an ownership stake and then help guide the strategic direction, products, and services into independently governed businesses. The independent governance is deliberate. It is a design choice because we do not want these to be characterized as subsidiaries. They have their own boards and management teams, and they devise their own business plans, which are guided by us. It creates accountability and credibility with all stakeholders: the shareholders, the local regulators, and the customers of these businesses. In return, Bakkt Holdings, Inc.'s shareholders derive compounding strategic shareholder value and the requisite growth as those businesses scale. We invest the money, not the infrastructure. Our products, if required, travel with us and can be leveraged by these businesses as and where applicable. It is a scalable and repeatable business model. The flywheel here is driven by the unique business strategy, which then feeds into the unique product strategy, and it is supported by independent governance and management teams. Bakkt Holdings, Inc. sits right at the center of it all, deploying the capital and receiving recurring value back. What makes this really scalable is that the product set is already built. The playbook for standing up these independently governed entities is proven, and we apply it market by market, geography by geography. These are publicly traded companies in some of the world's most attractive, liquid stock markets. We have done it twice so far: Japan, which we consummated over the summer last year, and our announcement in India in late November last year. This is the roadmap that has set both our internal expectations and how we expect these to play out going forward. I am happy to report that both of these opportunities are tracking well ahead of our internal benchmarks when we set out to make these investments. I am also looking forward to the public disclosures from these businesses in the near term, which will then shine further light on how limitless the potential scale of each underlying opportunity is. A quick update on the Japan business: it is called Bitcoin Japan Corporation. It is listed on the Tokyo Stock Exchange under the ticker 8105. We invested about $11.5 million in August, and as of mid-March, we have generated almost $37 million of returns. That is a pretty good outcome, but I think this is going to be dwarfed by what is to come going forward. Philip Lord, who is the CEO of the company, is in the crowd here today, and I am extremely confident in the leadership and the business plan that he and his team are putting together. I serve as the chairman of the board, and I have good insight into what Philip is doing to make sure shareholder money is being deployed in the right manner. Bitcoin Japan's broader strategy, as outlined on their website, is powering the AI and Bitcoin economy in Japan. At their upcoming AGM, I think Philip will be able to shed further light on exactly where he is going with this. Japan, mind you, is the second-largest market capitalization globally after the U.S., and I look forward to disclosing some of the great work that the team has undertaken in the business. Coming to India, we committed $10 million late last year. As of March, it is a 5x+ return on the deployed and yet-to-be-deployed capital. We are pending regulatory approval, which I expect in the very near term, hopefully before the end of the quarter. The strategy that has been discussed thus far in India includes a broker-dealer M&A rollout, which leverages Bakkt Holdings, Inc.'s tokenization capabilities to offer real-world assets in a tokenized format to the existing broker-dealer customers. We are extremely excited about the opportunity in India given the size of the market. It is the second-largest derivatives market in the world and one of the most exciting consumer fintech opportunities anywhere on the planet, given the size and scale of the population. We believe this investment will ultimately represent incredible value for Bakkt Holdings, Inc.'s shareholders, which, in my personal opinion, will be multiples of what you are seeing here in the very near term. Akshay Naheta: With that, what is in store for 2026? On the global side, while we continue to evaluate market opportunities where we can expand, our criteria are very high to go into any new jurisdiction. We want to have a clear high-growth strategic fintech opportunity. We need the right regulatory and legal environment that we can navigate. Finally, we need to bring in the right management team and have the right local capabilities to execute on that business plan. We are going to be very selective in how we grow this, but the current line of sight that we have with the existing investments that we have made is incredible, and we look forward to sharing more updates with you as companies make their plans public. It is good to take a few minutes to go back to what happened over 2025. I took over as CEO about four days from now to the day, a year ago. It really matters to understand where we are going forward. We have laid the groundwork to set Bakkt Holdings, Inc. up as a platform for exponential growth, especially with all of the advanced discussions and partnership opportunities that we have lined up, and I expect to announce these in the very near term. When I joined as CEO following the cooperation agreement with DTR in March, it was clear to me that we had to request patience from our existing shareholders because we needed to transform the business from the ground up, bring in the right people, upgrade the technology, and put in the right governance framework to set Bakkt Holdings, Inc. up for success in the future. On the leadership side, we brought in Ankit Kemka as the Chief Product Officer. He was the Head of Growth at Revolut and primarily focuses on Bakkt Agent. Philip Lord, who joined us as President of Bakkt International, is here in the crowd as well. When he saw the opportunity in Japan and realized how large and scalable it is, he requested that he become sole CEO of the Japan business and is now running that business for us. Thank you, Philip, for all that you did in the few months that you were at Bakkt Holdings, Inc. Finally, we are joined by the existing management team at Bakkt Holdings, Inc. that was there before I joined: Karen Alexander as the CFO, Mark DiNunzio as the General Counsel, and Nick Bays as the COO, who primarily oversees Bakkt Markets. We believe that we have now positioned the company—and the engineering team in particular—with the right domain expertise, execution track record, and alignment with where Bakkt Holdings, Inc. is really going forward. Finally, we revamped the board significantly. We added Lynn Alden, Mike Alfred, and Richard Galvin to the board. All three of them join us as independent directors, and we have Lynn and Mike in the crowd today with us. They all did their independent diligence, challenged our assumptions, and joined because they really believed in the strategy. We have now aligned the governance framework at Bakkt Holdings, Inc. in line with where we are going and the opportunity that lies ahead of us, which is one of the most important things we have done. At the end of the day, it is about people, and both at the board level and the management team level now, I feel like we are on the right path. With all of these governance and leadership changes, we have the right industry expertise and the oversight to ensure that we can deliver for our shareholders going forward. A quick reflection on the past 12 months: We did the leadership reset. We regained the focus as a digital asset infrastructure platform. We divested all non-core assets, completed the sale of Loyalty, and brought in the talent across teams to deploy the technology that we need to succeed going forward. We significantly simplified the capital structure, got rid of the Up-C structure, eliminated significant costs across the organization, recapitalized the balance sheet, and made it all debt-free. Finally, we brought in a whole new institutional shareholder base as a consequence of the turnaround and transformation story that was underway at Bakkt Holdings, Inc. We have done a full platform re-architect, positioning Bakkt Holdings, Inc. for scale through the DTR cooperation agreement, the launch of Global and Agent, and, hopefully, if shareholders approve, the DTR acquisition. I will now turn the call over to Karen Alexander to give us a quick overview of the financials. Karen Alexander: Hello, everybody. Good morning. I am Karen Alexander, the Chief Financial Officer at Bakkt Holdings, Inc. I am going to walk you through our fiscal 2025 financials and what they tell us about the business going forward. Just to set the context, as you have already heard from Akshay, fiscal year 2025 was a year of deliberate transformation. The financial statements that you are going to see reflect that. There was noise from divestitures, restructuring charges, and some of the one-time items that we have cited. I want to make sure we separate clearly from the underlying operating performance of the business going forward. Turning to this next slide, I wanted to focus on four data points in terms of our continuing operations in 2025. The first is total revenue, which was down 32% year-over-year from $3.4 billion to $2.3 billion. Now, thinking about what this number is: substantially all of this is gross transaction services revenue. It is the flow-through number that largely offsets the crypto costs that you see in operating expenses. The gross revenue decline had two drivers: as we disclosed earlier, we amended a commercial agreement with Webull in Q1 that reduced transaction volume, and we saw lower crypto trading volume overall and asset prices through most of 2025. If you compare that to the strong market that we had in Q4 2024 post-election, that is what is going on with this revenue component. The second metric is operating expenses, which again include the cost of crypto that is an offset to crypto revenues. You see that going down from $3.5 billion to $2.5 billion, so that tracks revenue. Drilling into this trend, if you look at OpEx excluding crypto costs, that came in at $156 million. That is up by $96 million, but it is important to note that the increase is almost entirely driven by approximately $65 million of stock-based compensation related to management equity grants during this reorganization. That is a non-cash expense that we expect to recalibrate moving forward. The loss from continuing operations is roughly flat year-over-year: a $98 million loss versus a $94 million loss. But when you strip out the nonrecurring stock-based compensation I previously mentioned, the underlying improvement is real. You are going to see that in the adjusted EBITDA. Adjusted EBITDA improved from a loss of $57 million to a loss of $33 million. That is a $24 million improvement year-over-year, and I think that is the most important trend on this slide. Adjusted EBITDA improvement is driven by approximately an $18 million increase in other income, primarily related to the derivative asset and equity method investment gains associated with Japan. There was also a $12 million reduction in SG&A. This validates that the cost structure is working and that the global strategy is already contributing to the income statement. Karen Alexander: Thinking about that as our continuing results, let us think through some of the legacy impact that we had in our 2025 financial statements that will go to zero or near zero in 2026. First off is the Loyalty divestiture. We recognized a $34.6 million net loss from discontinued operations, which is Loyalty. This is fully behind us. It does not repeat in 2026. We will have a clean continuing operations P&L going forward. The Up-C collapse: as Akshay mentioned, we felt it was important to collapse a structure that was creating ongoing drag. We incurred $26.9 million of TRA settlement costs. Most of that was paid in equity, but it was a combination of cash and equity. That will not recur in 2026. Restructuring expenses included $5.3 million of severance and platform transition costs. This is also nonrecurring. All in, what you see for the one-time legacy impact for 2025 was $66.8 million. Every dollar of this is either nonrecurring or already behind us. The headline is this: we start fiscal year 2026 with a dramatically cleaner P&L. The noise goes away, and what remains is the core operating business. So that was the cost—let us think about what that bought us. As I mentioned, the $66.8 million was deliberate. Every dollar was spent to clear a legacy drag that would have constrained the business going forward, and it does not repeat. On the three eliminated items: that $34.6 million drag in fiscal year 2025 from discontinued operations goes to zero. Loyalty and Custody are fully wound down with no recurring P&L impact. As Akshay mentioned, full-term long-term debt is fully extinguished. We have no debt service obligations or covenants constraining the strategy. Noncontrolling interest has been zeroed out with the Up-C collapse in November. Now we have one class of equity, one cap table, and full shareholder alignment. As a current snapshot into the business, we have about $88 million of cash and restricted cash as of February 2025. We ended 2025 with approximately $27 million of cash, and, as we noted, we raised $48.1 million from the February registered direct offering, plus restricted cash. In closing, we have sufficient liquidity to execute across all three growth engines we talked about today. The transformation cost was real, and it is fully behind us. We will now open for questions. Cody Fletcher: Testing. Testing. Thanks, everybody. Any questions from the audience? Mika is roaming around with a microphone. If you have any, please raise your hand, and then we will send her your way. Please introduce yourself and ask your question. Any questions? Alright. There we go. Dylan Husslin from Roth. I did not see any come through for the inbox. Thank you. Morning. Dylan Husslin: I guess, could you talk about distribution partners—what does the pipeline look like, how do you get embedded in there, and then how many end customers do they have? How do you go about going from where you are now to a much bigger base of people you are feeding your platform into? Akshay Naheta: We talked about the telco partnerships, and, obviously, our focus is the U.S. and Europe. As Ankit mentioned, there are two to three large-scale telco players in each market, and we are partnering with one of the top two or three telco players in each of those markets, which gives us a very good customer acquisition engine going forward. On the additional distribution partnerships, from a Bakkt Agent perspective, we are looking at very large networks where you have hundreds of millions of users either on the platform or already having touchpoints with these networks. The way our technology works is plug-and-play. We have done all the work. We built the infrastructure. For you to be able to launch something yourself is literally: you skin the app and launch it. Or, if you have an existing platform, you embed our chatbot within it, and you can run on our regulated rails with all of the infrastructure and piping at the back to launch a fully fledged fintech platform. We are in very advanced discussions on some category-defining deals, and, in the very near term, I look forward to updating you once we are ready to do so in accordance with SEC regulations. I hope that answers your question. Cody Fletcher: Thank you, Dylan. Any other questions from the audience? No? And Marni from Macquarie as well. Marni Lysart: Good morning. This is Marni Lysart from Macquarie. I guess it would be good, when we think about the pipeline, to get a bit more color on how you navigate the regulatory landscape. You have called out trying not to have the operating structure encompassing subsidiaries. How do you approach that as you evolve? Akshay Naheta: The regulatory landscape is a two-part vector. One is Bakkt Global: these are independent companies in their own jurisdictions, and they follow the regulations and laws in those local jurisdictions. Bakkt Holdings, Inc. does not have anything to do with what is happening in India or Japan, in the sense that those companies focus on the local regulatory environment. That is straightforward and clear. In terms of Bakkt Agent and Markets, we have the pan-U.S. licensing coverage. Similar to our brokerage-in-a-box business, which we have been doing for over five years—even before my time—we have leveraged that business model, which has been approved by regulators, and transferred it over to the Agent side, which is almost the same thing: you on-ramp and off-ramp. The only capabilities that you are adding on top are cross-border payments. Ankit talked about our capabilities to do near-instantaneous settlements in over 57 countries, which I expect will get to over 90 countries by the end of the year. There, we work with local regulated financial institutions—banks and payment service providers—who have their own local requirements. They conduct KYC/AML from their perspective. We ensure that we cover those on our side, and, so far, we have successfully done it for almost 57 countries. I do not see any problems with us getting to 90 by the end of the year. Does that answer your question? Marni Lysart: Yes, that is clear. Thanks for answering my question. Cody Fletcher: We have one more here. Thank you. Jared Watson: Good morning. Jared Watson from Retail. Thanks for taking my question. Akshay, you have talked previously about wanting Bakkt Holdings, Inc. to compete in the public markets. Has that and the capital you raised and the balance sheet been a competitive advantage in partnership discussions, especially when some of your competitors are private? Thank you very much. Akshay Naheta: It has made a big difference because, when I joined Bakkt Holdings, Inc., the big issue was that people were concerned about having their deposits or customer deposits sitting at Bakkt Holdings, Inc. Even though it is all segregated and is held within our trust, and we cannot commingle funds or use them, recapitalizing the balance sheet has helped materially with these customers and partners. From an ongoing business perspective, no one wants to do all of the integrations with a company and then face uncertainty around the financial stability of the business going forward. That has been a big driver of instilling confidence and helping us drive an active pipeline on the B2B side. As we go into stablecoin on-ramp/off-ramp payments, you will see it unfold pretty exponentially as we go through this year because the volumes on pure stablecoin on-ramp/off-ramp cross-border payments are in the billions. Even though you do not take any financial risk or hold customer funds because it is instantaneous, people want to make sure that you have a strong balance sheet to have the confidence of working with you as a counterparty. So, yes, it has helped tremendously. Thanks. Cody Fletcher: I have one more from Darren at home. Thank you, Darren. For Akshay: given you founded DTR, can you speak to why it was necessary to fold it into Bakkt Holdings, Inc.? Also, double-click on the benefits that DTR brings to Bakkt Agent, near term and long term. Akshay Naheta: I will have Ankit and Nick answer in a little more detail so you hear it from the people who are executing and touching the technology day to day. Just to rewind, it was always the intention for DTR to be folded into Bakkt Holdings, Inc., subject to shareholder approvals. The transaction was put together in March. I joined as CEO, and I was not sure, given all of the clouds around Bakkt Holdings, Inc. with the Loyalty business—I did not have any experience running a Loyalty business or a call center business. Until that business was hived off, I did not know if this would be the right focus, because my focus is fintech and the changing financial landscape going forward. It made sense for both companies to get into a cooperation agreement-type partnership. Now that the Loyalty business is behind us, and given all of the opportunities with the distribution pipeline that we have in very late and advanced stages, the independent committee and the board thought that it would make economic sense for these companies to come together to provide those services in a seamless manner to end customers. Nick, do you want to add color on the Markets side, and then Ankit on Agent? Nick Bays: My pleasure. Now that we are done with the prepared remarks, I can tell you how exciting it really is to have DTR in the fold. Working in the space of our Markets business, we were primarily focused on spot trading. That business is durable, resilient, and still valuable. But what we have seen in the space, and in talking to prospects over the last couple of years, are questions around stablecoins, payments, and cross-border. They saw our regulatory footprint and said we could power them. We were trying to figure out how our existing technology could power them, and there were a lot of rough edges. It was difficult to convince prospects to partner with us on that capability. Through the DTR commercial arrangement over the last nine months, we have already done integrations to help power these things. We are ready to go and are already ready in the U.S. to offer that capability. Now, when those prospects come to us, we do not have to turn them away, which is really exciting. We can also collapse a lot of overlapping technology, with synergies that let us consolidate onto a more modern technology stack. That has been really transformative, and we are looking forward to taking that out to market in the next couple of months. Ankit, do you want to talk about Agent? Ankit Kemka: The Bakkt Agent product is built on the tech stack from DTR. It is built from the ground up. Two examples: The Zyra app, which is a global money movement solution, is using everything that DTR has built and then adding agents on top. It is fully integrated. Second, the Everyday Money app: if you remember the modular tech stack that Remy showed, that is exactly how we have built the Everyday Money app. We have taken different product features—each built independently and modular—and they all connect for the fintech consumer platform we are building. It has been instrumental, and the way we have built this is very scalable. It can work across geographies and across platforms. It is pretty cool stuff. Cody Fletcher: We probably have time for one more here from Paul Golding, also at Macquarie. He is asking: how are you viewing the competitive landscape around stablecoin enablement and your relative positioning? Akshay Naheta: There are two segments: Bakkt Markets and Bakkt Agent. On the Bakkt Markets side, my view is that the architecture of payment systems is going to change dramatically over the next few years. You are already seeing some very large M&A transactions happen. We are aware of what our competitors are doing in the space, but the scale of the opportunity in payments is so large that doing tens of billions of dollars of volume is a drop in the ocean given the $44 trillion of cross-border payments today. Once we have all of the capability that Nick talked about within the Bakkt Markets platform, you will start seeing us sign larger clients. We are already seeing very good results with Nexo. I think Zoth will also go live over the next month or so, and the volume will scale rapidly now that we have fully integrated the DTR tech stack on the Bakkt Markets side. On the Agent side, competition boils down to distribution. Providing products in a cost-efficient manner—we have done that through our tech stack, with very little human intervention throughout the stack, from onboarding to accounting to compliance to money movements to treasury management, and so on. You go to any neobank or fintech out there—Chime, Revolut, and others—and with Ankit being at Revolut for so many years, we have a lot of insights into that space. It is about distribution partnerships. We have taken a thoughtful approach where we do not have to spend hundreds of millions of dollars like these companies did and be loss-making for years. We will be able to scale rapidly to a large number of monthly active users without spending that kind of money. That is why, when we launch with the right distribution partners in the very near term, MAUs will be one of the metrics to follow closely. Cody Fletcher: Thank you. I wanted to hand the mic over to a member of the board, Mike Alfred. Would you like to say anything? Okay. That is all the questions, then. I will pass it back to Akshay for closing remarks. Thank you. Akshay Naheta: In closing, 2025 has been a year where we have laid the groundwork. There was a lot of heavy lifting. It was not easy along the way, especially with divesting the Loyalty business. We have stripped away the noise, rebuilt the foundation, and I believe that Bakkt Holdings, Inc. is now well positioned to compound long-term shareholder value. Ninety percent of the structural work is behind us at this stage. We are also at a very interesting time in the world. Periods in which the architecture of money changes are very rare, and I believe we are in one of those periods today. I thought we were in that period three years ago when I left SoftBank to start DTR. There were structural forces shaping my thoughts around where financial infrastructure was moving. One was geopolitics: we had many years of peace, and with the Ukraine–Russia war starting in early 2022, that landscape changed dramatically. Over the last few weeks, it has changed again. The second is global debt levels: even back in 2022, fiscal debt levels were at all-time highs. You have not seen that level of global debt in peacetime. Given the global debt levels across major economies and the geopolitical backdrop, this will reshape the architecture of money. These new digital systems—primarily stablecoins—are going to redefine how value is stored, transferred, and programmed. The growth we are seeing in artificial intelligence will be a dramatic driver in how the software stack is structured in all financial institutions going forward. We have positioned Bakkt Holdings, Inc. at the center of it all, and we do not have any legacy technology debt to tackle this because we built everything from the ground up. Bakkt Holdings, Inc. sits at the intersection of these incredible changes, and I believe that we will be able to take significant advantage of the opportunities ahead. Looking ahead into 2026, we have built significant momentum. We have announced, or are very close to announcing, some very large partnerships. The discussions are progressing. We are in advanced conversations, and we expect aggressive growth at Bakkt Agent through the adoption of monthly active users on the platform. We have a clear line of sight. What lies ahead is a period of disciplined execution. We have the right team in place to do that, and this will translate into long-term value for shareholders, I believe. I thank our existing shareholders before I joined the company for their patience, and I believe that, if they stay on with us, they will be rewarded along with us for the journey ahead. Thank you so much for your time today. We appreciate you joining us in person today. Thank you.
Operator: Thank you for standing by. This is the conference operator. Welcome to the lululemon athletica inc. Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] And the conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Howard Tubin, Vice President, Investor Relations for lululemon athletica. Please go ahead. Howard Tubin: Thank you, and good afternoon. Welcome to lululemon's Fourth Quarter Earnings Conference Call. Joining me today are Meghan Frank, interim Co-CEO and CFO; and Andre Maestrini, interim Co-CEO, President and Chief Commercial Officer. Before we get started, I'd like to take this opportunity to remind you that our remarks today will include forward-looking statements reflecting management's current forecast of certain aspects of lululemon's future. These statements are based on current information, which we have assessed, but by which its nature is dynamic and subject to rapid and even abrupt changes. Actual results may differ materially from those contained in or implied by these forward-looking statements due to risks and uncertainties associated with our business, including those we have disclosed in our most recent filings with the SEC, including our annual report on Form 10-K and our quarterly reports on Form 10-Q. Any forward-looking statements that we make on this call are based on assumptions as of today, and we expressly disclaim any obligation or undertaking to update or revise any of these statements as a result of new information or future events. During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in our annual report on Form 10-K and in today's earnings press release. In addition, the comparable sales metrics given on today's call are on a constant dollar basis. The press release and accompanying annual report on Form 10-K are available under the Investors section of our website at www.lululemon.com. On today's call, Meghan will share an update on the action plan we laid out for you on our last earnings call. Andre will discuss our regional performance. Meghan will return to review our financials and guidance outlook, and then the team will be happy to take your questions. Before I turn the call over to Meghan, I'd like to remind investors to visit our investor site where you'll find a summary of our key financial and operating statistics for the fourth quarter as well as our quarterly infographic. Also, please note that the purpose of today's call is to discuss lululemon's 2025 financial results and 2026 outlook, and we ask that you keep your questions focused on our performance. Meghan Frank: Thanks, Howard. I'm glad to be here today to discuss our Q4 results, our outlook for 2026, and how we are executing our action plan to strengthen our brand, reaccelerate growth and create value for shareholders. Andre and I are working side-by-side with the senior leaders across our organization to drive our strategies forward to improve the U.S. business while also maintaining our international momentum and are making progress to deliver the performance we know is possible in all our regions. We have a healthy and loyal customer base that remains engaged and looking to us for great product and experiences. We have strong teams who are motivated and excited to bring our new innovations and product assortments to our guests. And we are working across the company to refine and advance our initiatives across product creation, product activation and enterprise enablement, which Andre and I will speak more about during our call today. We recognize there is more work to be done, and we have been course-correcting on a number of fronts, but we are encouraged by the guest response to our recent new product drops and activations. I'm grateful to our teams across the entire organization who remain committed to delivering products and experiences our guests love. Together, we are taking the right steps that will allow us to realize the full potential of lululemon. Before I speak to our action plan, I would like to call attention to today's announcement welcoming Chip Bergh to our Board of Directors. As you likely know, Chip Bergh is the former longtime President and CEO of the iconic brand, Levi Strauss. He's a seasoned public company executive who brings deep retail and brand expertise, and he has extensive experience guiding successful transformations and driving value creation at global category-defining companies. His appointment as a director comes after a comprehensive search by the Board and is part of the Board's thoughtful ongoing refreshment process that has brought 5 new directors to the Board over the last 5 years. I'd also like to acknowledge David Mussafer, one of our long-time directors, who has informed the Board that he won't be standing for reelection. We are grateful for David's many contributions to lululemon over the years. And with respect to the CEO search, I can share that our Board is running a robust search process and they've been meeting with highly qualified candidates. The process is moving forward, and we will provide an update on this topic at the appropriate time. I'll now dive into 3 components of our action plan: product creation, product activation, and enterprise enablement. During the fourth quarter, Andre and I dove deeper into each pillar of our plan and have been working with the teams across the organization to ensure we entered 2026 moving with focus and speed. We've been course-correcting where needed to restore and protect our brand health over time. A top priority for the management team as we enter the year is returning to full-price sales growth in North America. Through a series of steps that include the inflection of product newness and reducing the level of markdowns, SKU reduction and the rebalancing of inventory levels. This approach will reinforce our premium positioning that has long set lululemon apart from others while also protecting operating margin. So let's click down into product creation. Our priorities here are raising the bar on product design, delivering a consistent pulse of innovation, improving our speed to market and ensuring a relentless focus on product quality. Hopefully, you've been in our stores and visited our e-commerce sites and have seen some of our new innovations. I will take a moment to highlight a few of these for you including Unrestricted Power, our newest iteration of ShowZero and ThermoZen. Unrestricted Power is a new training collection for women and men. It is constructed from PowerLu, our newest technical fabric innovation, which uses our highest filament yarn count (sic) [ filament-count yarn ] and offers a remarkably soft feel while also providing incredible stretch and support. Guests have responded positively since the launch, and we look forward to an exciting future for this new franchise. Next, we recently announced an updated version of our ShowZero, no-show-sweat technology meant for high-sweat activities. This newest iteration of ShowZero was developed in collaboration with professional tennis player and lululemon ambassador, Frances Tiafoe and debuted at the BNP Paribas Open at Indian Wells earlier this month. The latest technology conceals sweat while also remaining incredibly lightweight and breathable. We plan to introduce new ShowZero products to guests later this year as we continue to scale the platform across activities and categories. And I also want to mention ThermoZen, our newest collection of insulated jackets and vests. These products offer warmth, water and wind resistance and superior softness, and are a great example of how we are leveraging our considerable expertise in developing technical apparel across our lifestyle and casual offerings. These are just some of the innovations that our team has been developing and we are encouraged by the response from guests to these offerings. When looking at our overall product assortment, you'll see it continue to evolve based on the strategic vision of our creative team. A few specific examples of what you can expect going forward include updates on some of our key lounge and lifestyle franchises, fewer logos, a more focused and coordinated color palette and a more edited assortment of our smaller accessories. This enables us to present a more refined, uniquely lululemon product assortment. As we introduce new and evolved product, we also recognize the importance of taking steps to further enhance and protect our product quality. I've been spending time with our supply chain team to ensure that as we shorten our go-to-market time line, we do not sacrifice on quality, maintaining the highest possible quality standards remains paramount for me and all of us at lululemon. Shifting to product activation. It is incredibly important that we ramp up our efforts to further engage existing guests, bring new guests into the brand and ensure all guests are made aware of our latest styles and innovation. Let me highlight 2 of our most recent activations for you, which occurred in the first quarter. The first is Studio Yet. This was a 3-week pop-up, high-performance training space in Los Angeles where we offered a variety of fitness classes taught by world-renowned trainers and coaches. The studio was a physical manifestation of our global Yet campaign, which focused on the relationship between going after big goals and the daily work needed to achieve them. Guest response to Studio Yet was fantastic with all classes selling out, significant media pickup across mainstream and social channels and it, along with the community events we hosted in conjunction with the L.A. Marathon, provided a halo effect and sales lift to our stores in the Los Angeles area. And I'll also highlight the success over the past few weeks of our sponsorship of the BNP Paribas Open Tennis Tournament in Southern California, one of the most popular tournaments for players and fans. This is the first year of our 3-year sponsorship and the long lines in response to our pop-up store, where approximately 2/3s of the visitors were new to lululemon, shows the significant potential for lululemon within the tennis community. These events demonstrate that when we engage with our guests through our unique activations, we see a tangible response, and this continues to reinforce the opportunity for lululemon going forward. When looking at our approach to integrated marketing, our plans continue to include more product-focused campaigns across social channels, which will leverage lululemon ambassadors and other influencers to help ensure our guests are aware of new styles, innovations and updates we're bringing into our assortments. Next, I'll turn to enterprise enablement, which includes our efforts to create efficiencies and manage costs across the company. While we have always been prudent with regard to expenses, we have been particularly vigilant over the last 2 years as sales trends in the U.S. have faced headwinds and tariff policy has added pressure. We are continuing with this vigilance into 2026, and we are targeting meaningful savings as we simplify our operations and focus on scaling more effectively while continuing to invest in key growth initiatives. Key work streams are increasing efficiencies across inventory management, supply chain and nonmerchandise procurement and reducing complexity while capitalizing on automation and AI opportunities. We know we must improve our performance in North America while continuing our momentum internationally. We have already taken decisive actions to position the business for sustainable growth. Looking forward, we have clear priorities and are moving with focus, speed and determination as we implement the strategies across our action plan. You can really feel the energy across the organization about the path forward and the team is excited about the opportunity ahead of us. I'll now turn the call over to Andre. Andre Maestrini: Thank you, Meghan. Like Meghan, I'm pleased to be here with you all. In my role overseeing our selling channels across all regions, I have the opportunity to spend considerable time in our stores, meeting with our leaders and educators and hearing from our guests. So I'm excited to share the highlights from our markets across the globe. Touching first on North America. We are actively making the changes needed to increase newness, enhance the guest experience in stores and online and improve our performance. We are building from a position of strength as we remain the #1 brand for women's activewear in the U.S. New guest acquisition, retention, engagement and key brand relevance metrics all remained solid in 2025. So let me speak to 3 of the strategies we are implementing to unlock growth in the region. First, as Meghan mentioned, we are focused on the growth of our full-price business. Looking at 2026, a primary goal in the North America is returning the business to healthier levels of full-price sales after seeing a higher markdown penetration in 2025. We are already seeing better full-price sell-through in Q1 relative to Q4, and we are targeting further improvement as we move through the year, driven by increased product newness, innovation and operating discipline. Second, we're enhancing the guest experience, both in-store and online. We recognize the importance of our store and e-commerce sites as guest touch points, and we are evolving the experience to better reflect the premium positioning of lululemon brand. In stores, our localization and curation enhancements continue. Our new design playbook features an elevated presentation with less density of product to better showcase our new styles and innovations, and to make the stores easier for guests to navigate and shop. We are also sharpening our focus on activity-based merchandising by offering clear destination for our core activities, including run, train and yoga, pilates within the store. These destinations allow for better storytelling and improve the shopping experience for guests. Our new store in SoHo reflects these enhancements, and we have been very happy with the guest response to these changes there and at other key locations. We will be rolling out these updates to additional doors in North America throughout 2026. And online, building on the new redesign of the site, we will continue to improve the guest journey with enhancements coming to our product display pages, checkout and overall storytelling. And third, we are increasing new style penetration across our assortment. Meghan already spoke to our product creation pillar. So I'll just add that in North America, with our new spring merchandise that is already hitting our stores and website, we have increased our new style penetration to approximately 35%. We know that our guests are looking for new styles and product from us. And when we deliver them effectively, we see strong response. In addition to what Meghan mentioned, other examples of successful new styles include EasyFive and the Groove Wide-Leg. Let me shift to our international business, where momentum remained strong. In China Mainland, our guests responding well to our product assortment in Q4 with outerwear and lounge being standout categories. The strength in outerwear was driven by Wunder Puff, which we feature in a localized brand campaign. More recently, we celebrated Chinese New Year with a campaign featuring world-renowned cellist Yo-Yo Ma, and offer guests the capsule collection comprised of some of our most iconic styles. This is an excellent example of how we continue to capitalize on locally relevant events to engage with guests in unique ways. In our Rest of the World segment now, let me highlight South Korea, one of our fastest-growing markets. Our localized approach to guest engagement, including targeted celebrity endorsement continues to resonate well, particularly among our younger guests. I would also highlight the strong response to our new store in Gangnam. This location showcases the newest expression of our brand similar to what we introduced in SoHo. It includes new design elements and detailing and acts as a hub for guests within the local community. In Milan, we saw the lululemon brand on the global stage at the Olympics as our partnership with the Canadian Olympic and Paralympic Committees continue. These games were our third as the official outfitter of Team Canada, a natural fit for our brand and help us acquire new guests by working with and outfitting elite athletes who perform at the highest level in their respective sports. To complete my around-the-world summary, I'll mention that with our franchise partner, the 100th lululemon store opened in EMEA in Warsaw, Poland earlier this month. This is an exciting milestone for the EMEA team and continues to demonstrate the long runway for growth within this region. The majority of stores in our international markets are company operated, but we strategically leverage our franchise model where it makes sense. Poland is a franchise market for us. And in 2026, our plans call for new franchise markets in Greece, Austria, Hungary, Romania as well as India. Before I turn the call back to Meghan, I want to express my confidence in the opportunity for lululemon in every market around the world, and I want to thank our team across our stores, distribution centers and corporate offices for your ongoing engagement with our guests and the tremendous enthusiasm you have for our brand. Meghan, back to you. Meghan Frank: Thanks, Andre. I'll now turn to our Q4 financial review and guidance outlook. For Q4, total net revenue rose 1% to $3.6 billion. Excluding the 53rd week in Q4 of 2024, net revenue rose 6% or 4% on a constant currency basis and comparable sales increased 2%. Within our regions and channels, excluding the 53rd week and in constant currency, results were as follows: North America revenue was flat with comparable sales down 2%. By country, revenue increased 3% in Canada and was down 1% in the U.S. In China Mainland, revenue increased 28% with comparable sales increasing 26%. Results were stronger than anticipated despite 2 discrete calendar shifts, which negatively impacted Q4, including earlier 11/11 events on our third-party e-commerce platform and the shift of Chinese New Year into Q1. Guests responded well to our product assortment with particular strength in outerwear and lounge. And in the Rest of World, revenue grew by 12% and comparable sales increased by 5%. In our store channel, sales were down 1%. We ended the quarter with a total of 811 stores globally. Square footage increased 11% versus last year driven by the addition of 44 net new lululemon stores since Q4 of 2024. During the quarter, we opened 15 net new stores and completed 7 optimizations. In our digital channel, revenues increased 9% and contributed $1.9 billion of top line. And by category, men's revenue increased 3% versus last year, women's increased 7%, and accessories and others grew 4%. Gross profit for the fourth quarter was $2 billion or 54.9% of net revenue compared to 60.4% in Q4 2024. Our gross margin decreased 550 basis points relative to last year and was driven primarily by the following: a 560 basis point decline in overall product margin, driven predominantly by tariff impact and higher markdowns. Tariffs had a gross negative impact of 520 basis points in the quarter, offset by 110 basis points related to our enterprise efficiency initiatives, while markdowns increased by 130 basis points. Deleverage on fixed cost was 30 basis points and foreign exchange had 40 basis points of favorable impact. Relative to our guidance for gross margin decline of approximately 580 basis points, the upside was driven primarily by a lower tariff impact and regional mix. Moving to SG&A. Our approach continues to be grounded in prudently managing our expenses while also continuing to strategically invest in our long-term growth opportunities. SG&A expenses were approximately $1.2 billion or 32.5% of net revenue compared to 31.5% of net revenue for the same period last year. The SG&A increase of 100 basis points was in line with our guidance and relates primarily to the negative impact of foreign exchange, fixed cost deleverage and ongoing investments to build brand awareness. These were partially offset by our ongoing initiatives to prudently manage costs across the enterprise. Operating income for the quarter was approximately $812 million, or 22.3% of net revenue compared to 28.9% of net revenue in Q4 2024. Tax expense for the quarter was $226 million or 27.8% of pretax earnings compared to an effective tax rate of 29.2% a year ago. The decrease in the effective tax rate relates primarily to a discrete tax benefit realized in the quarter and foreign exchange. The lower tax rate relative to our guidance contributed $0.15 to EPS. Net income for the quarter was $587 million or $5.01 per diluted share compared to earnings per diluted share of $6.14 for the fourth quarter of 2024. Capital expenditures were approximately $183 million for the quarter compared to approximately $235 million in the fourth quarter last year. Q4 spend relates primarily to investments to support business growth, including our investments in distribution centers, store capital for new locations, relocations and renovations, and technology investments. Turning to our balance sheet highlights. We ended the quarter with $1.8 billion in cash and cash equivalents and nearly $600 million of available capacity under our revolving credit facility. Inventory at the end of Q4 was $1.7 billion, an increase of 18% on a dollar basis. On a unit basis, inventory increased approximately 6%, below our guidance for an increase in the high single digits. The difference between dollar inventory growth and unit inventory growth relates predominantly to higher tariff rates relative to last year and foreign exchange. We are pleased with the composition of our inventory as we entered the spring season, as it is more reflective of our go-forward vision for the brand. During the quarter, we repurchased approximately 1.4 million shares at an average price of $188. For the full year, we repurchased $1.2 billion of stock. Let me now shift to our guidance outlook for 2026. As I mentioned, we are executing against our action plan, with particular emphasis on driving healthier full-price sales in North America. We're already seeing green shoots related to our new product launches and our recent brand activations. But I want to also acknowledge that an improvement in overall trends in North America will likely progress over the course of the year and into 2027 as we return to a healthier baseline of full-price sales. Let me also mention tariffs. For reference, in 2025, gross tariff costs were $275 million. We were able to offset approximately $62 million of this expense through our mitigation strategies, which was better than our initial expectations. Looking to 2026, we anticipate gross tariff impact of approximately $380 million with offsets from our enterprise efficiency initiatives of approximately $160 million within gross margin. Turning to our full year 2026 guidance outlook. We expect revenue to be in the range of $11.35 billion to $11.5 billion, representing growth of 2% to 4% relative to 2025. By region, we expect revenue in North America to be down 1% to 3%, with the U.S. down 1% to 3%. Baked into our total revenue guidance for North America is an improvement in full-price sales. We are already seeing better full-price selling relative to Q4, and we'd expect positive year-over-year growth in full price to begin in Q2 and continue into the second half, driven by the rollout of new styles, innovations and core updates over the course of the year. We expect revenue in China Mainland to be up approximately 20%, which takes into account our outperformance in 2025. Trends remained strong in Q1, and we're expecting a revenue increase of 25% to 30%, which includes a modest lift from the shift of Chinese New Year into the quarter. And in Rest of World, we expect revenue to increase in the mid-teens. Globally, we expect to open approximately 40 to 45 net new company-operated stores in 2026 and complete approximately 35 optimizations. This will contribute to overall square footage growth in the low double digits. Our new store openings in 2026 will include approximately 15 stores in North America including 8 in Mexico and 25 to 30 in our international markets, with the majority of these planned for China. While we are taking a disciplined approach to capital spending, we continue to see good returns from new store openings and store expansions as these strategies contribute to an improved shopping experience for existing guests, new guest acquisition, building brand awareness and community engagement. For the full year, we expect gross margin to decrease approximately 120 basis points relative to last year, driven predominantly by deleverage on fixed costs and ongoing investment in new store openings, optimizations and our distribution center network. We expect markdowns for the full year to improve modestly and tariffs to have a gross impact of 90 basis points, of which we expect to be able to offset almost all of it. Turning now to SG&A for the full year. While we intend to realize significant savings related to the enterprise enablement pillar of our action plan, we expect deleverage of approximately 130 basis points versus 2025 as we continue to strategically invest in our business to support future growth. These investments include market expansion, improving the guest experience by enhancing our omni capabilities and growing brand awareness. We are absorbing additional costs relative to last year as we layer back in certain expenses, including incentive comp, store labor hours, and we have onetime costs associated with the expected proxy contest this year. When looking at operating margins for the full year 2026, we expect it to decrease by approximately 250 basis points versus last year. For the full year 2026, we expect our effective tax rate to be approximately 30%, an increase from the 2025 effective tax rate of 29.5%. For the fiscal year 2026, we expect diluted earnings per share in the range of $12.10 to $12.30 versus EPS of $13.26 in 2025. Our EPS guidance excludes the impact of any future share repurchases. When looking at inventory, we expect dollar growth to be in the mid- to high single-digit range through 2026 with units flat to down slightly. With leaner inventories and improved chase capabilities, we are in a better position to read and react to guest demand and fuel momentum in stronger performing styles. We continue to have $1.2 billion remaining on our share repurchase program, which we will continue to utilize. Share repurchases remain our preferred method of returning cash to shareholders, and our repurchase levels in 2026 will likely be similar to those in 2025. Finally, for the full year, we expect capital expenditures to be approximately $725 million to $745 million. The spend reflects investments to support business growth, including capital for new locations, relocations and renovations, DC and technology investments. Our range of $725 million to $745 million is approximately 6% of revenue. Shifting now to Q1, we expect revenue in the range of $2.4 billion to $2.43 billion, representing 1-year growth of 1% to 3%. We expect to open approximately 6 net new company-operated stores and complete 6 optimizations. By region, we expect North America to decline in the mid-single digits with the U.S. also in that range and Canada is tracking slightly lower. We expect China Mainland to increase 25% to 30% and Rest of World to increase in the mid-teens. When looking at North America, as I mentioned, we are seeing good response to our new product launches and activations and are experiencing better full-price selling, but expect the inflection in total revenue to actualize over the course of the year. We expect gross margin in Q1 to decrease by approximately 380 basis points relative to Q1 of 2025. This decrease will be driven predominantly by higher tariff costs, ongoing investments in store openings and optimizations and our distribution network. We expect increased tariffs to have a gross negative impact of approximately 290 basis points with offsets of approximately 110 basis points. We expect markdowns to be up approximately 30 basis points versus last year. While full-price selling has improved meaningfully relative to Q4, we expect markdowns to begin to decrease versus prior year beginning in the second half. In Q1, we expect our SG&A rate to deleverage by 330 basis points relative to Q1 2025. This increase will be driven in part by timing related to brand activations, including the BNP Paribas Open, the Milan Olympics and Studio Yet as we have more events planned in the first half of the year versus the second half. In addition, there are discrete costs related to our proxy contest and expenses that we reduced last year that are layering back into this year related to store labor hours and incentive compensation. And we will continue to invest strategically in our growth initiatives and IT infrastructure. When looking at operating margin for Q1, we expect it to be 710 basis points lower than 2025 for the reasons I just mentioned. Turning to EPS. We expect earnings per share in the first quarter to be in the range of $1.63 to $1.68 versus EPS of $2.60 a year ago. We expect our effective tax rate in Q1 to be approximately 31.5%. I want to close today by saying that since Andre and I have stepped into our interim Co-CEO roles, we focused on engaging with our leaders and employees about the opportunities in front of us as we have worked to refine and implement initiatives that are part of our action plan. First and foremost, we are restoring the full-price health of our brand, and we are already seeing improvement in Q1. Other actions include testing a new design playbook in stores, rolling out enhancements to our e-commerce sites and working with the product teams to ensure that our design and merchandising choices emphasize athletic and technical apparel with lifestyle playing an important but supporting role. There is a renewed energy and enthusiasm across the business, in particular, where employees are seeing the product that is being introduced to guests that is in our pipeline. In fact, we've seen an increase in employee purchases as we introduce new innovations and product, which is an optimistic indicator that we're on the right path. Andre and I are encouraged by the progress we're seeing across the business, and we're inspired by the passion and commitment of our leaders and teams across the world. All of this reinforces our confidence in what's ahead for us. We recognize that it will take some time to see the benefits of these actions, but we are confident that these are the right moves to powerfully drive our brand forward in the near, mid and long term. We will now take your questions. Operator: [Operator Instructions] The first question comes from Brooke Roach with Goldman Sachs. Brooke Roach: When do you think the product assortment will be appropriate to deliver a return to inflection in North America growth? And how are you thinking about the headwind from the removal of markdowns throughout the year and the introduction of that new full-price selling product throughout the year? Meghan Frank: Thanks, Brooke. So as we mentioned, we are focused on reaccelerating the full-price health of our business. So in Q1, we will see a meaningful inflection relative to Q4. We expect in Q2 that we believe it would be approximately flat in full-price trend in North America and then flipping positive in the second half of the year. So that's how the year progresses. In terms of markdowns, we are lowering that penetration. So as we mentioned, we were up 130 basis points in Q4 and up 60 in the year in 2025. For 2026, we're expecting a modest improvement in markdowns for the full year, predominantly driven through the second half, and we are expecting just a modest increase in Q1. Brooke Roach: And just to clarify, are you seeing any improvement in your base business as you've put these new products into the assortment 1Q to date? Or is the improvement largely driven by the new product launches? Meghan Frank: We're definitely seeing improvement to date. So we've seen a meaningful inflection in terms of full price coming out of Q4 and into Q1. And it will take us some time to inflect and we think it will be sequential throughout the year, flipping positive as I mentioned in the second half, but seeing some really great green shoots. I mentioned some of these in terms of the new innovations. We launched Unrestricted Power, ThermoZen and ShowZero, which will be commercialized later this year. We also had an exciting run capsule that launched earlier this month. So we're building on that strength as we move throughout the quarter. It's still early, but definitely seeing some positive indicators. Also would point to, we did see employee sales pick up as well over the last few weeks as we introduced new product. Operator: The next question comes from Lorraine Hutchinson with Bank of America. Lorraine Maikis: As you work to inflect the North America sales trajectory to positive, are you doing any reassessing of your marketing, either dollars spent or types of marketing outreach to try to really bring in a new customer and reignite your existing? Or is it more status quo with the activation in grassroots styles? Meghan Frank: Thanks, Lorraine. I'd share -- I do think we're looking at our marketing strategy. So really focusing on engaging the guests, ensuring they're -- that newness is front and center and visible. I think you'll see us shift more into utilizing brand-appropriate influencers and ambassadors as we move throughout the year. We are really focused on our activations and engaging with our guests through those means. So I would say you saw some evidence of that in Q1 in terms of us being very active in, I would say, our activity activations. So with the BNP Paribas Open in Indian Wells with tennis, Milan Olympics. So really excited about the assortment that we showcased there and then also Studio Yet in L.A. We also had a Chinese New Year activation this year -- this quarter. Operator: The next question comes from Adrienne Yih with Barclays. Adrienne Yih-Tennant: Great. A couple of questions. Andre, on the 35% newness, can you talk about kind of whether that is obviously styles, which you mentioned or color choice and SKUs? And what products are you sunsetting to make room for the newness? And then along those same lines, how does the reporting structure of who makes final decisions for quantity, make, what to chase, et cetera, within the merchandising organization? I know Elizabeth Binder reports into you, but just trying to figure out how this -- the system is working in terms of that. And then my final question is, how much of the CapEx is AI tech-driven, like the tech stack to support AI? And how do you plan to use that and incorporate that into the business? Meghan Frank: Thanks, Adrienne. So we are moving our newness penetration from 23% in 2025 to 35% in '26. That is, I would say, new product never seen by the guest is how I'd frame that. So it's not just new colorways on existing products. It's truly a new product. So I would say in terms of sunsetting, we do have some SKU reduction as part of just being more pointed in our assortment and making that newness also more visible in our store and e-commerce expression. So that is a process we're going through as we assort the line. Jonathan Cheung, who's our Creative Director; as well as Liz Binder, our Chief Merchant, both report into me, and we've been leaning in together as we make these shifts. And then in terms of CapEx, we do have some investments in the AI space, shoring up our data and baseline so that we can move off of that. Really, I would say, our AI initiatives are focused on guest-facing, also enhancing our go-to-market calendar and supporting that speed aspect that we've discussed. So I would say it's an exciting and important part of how we're going after that enterprise enablement strategy. Operator: The next question comes from Laurent Vasilescu with BNP Paribas. Laurent Vasilescu: Meghan, it was very helpful in terms of understanding the newness of 35%. But for the audience, the North American full-price realization, can you maybe just unpack a little bit better in terms of -- like I think you mentioned 1Q is better than 4Q. But in terms of percentages, where is it now versus a couple of years ago? And where do you want that to go back for 2026? Meghan Frank: Yes. Thanks, Laurent. Yes. So if we look at 2025, we did have a higher markdown penetration than we would have liked. So it's illustrated by a 130 basis point increase in markdowns in Q4 and then 60 basis points for the year. We haven't broken out the penetrations in '26, but I would share, we expect to see a meaningful improvement in Q1. We're already starting to see that. But we are shifting from the lowest waterline in Q4. So we did have 130 basis points higher markdowns. So that points to having the most pressure on full price. So the sequential improvement is meaningful, but it will still underindex relative to our total top line. We do anticipate it will flip flat -- around flat in the second quarter and then the second half of the year would flip positive. We're really helping to enable this both through the newness curation as well as SKU reduction, and then the way we've positioned inventory for the year. So we have positioned units flat to slightly down. So really looking to read the trends on newness and chase where that's possible. As we've mentioned before, we have developed some capabilities -- enhanced capabilities in terms of our product team's ability to chase into what's working. So we believe this sets us up well for returning to healthy full-price sales penetration for the year and building off of that for the long term and in '26 as the opportunity presents itself. Laurent Vasilescu: Very helpful. And then I think you mentioned that square footage should grow low double digits. Just curious, whenever we find out about the new CEO. And if that individual wants to take a fresh look at that commitment. Can you maybe just unpack that a little bit more for the audience? How much of that is committed to for 2026? And then just a quick question here on marketing. I think in your 10-K, it's 5.7% of sales. Where should that go for 2026? Andre Maestrini: Yes. On your question, Laurent, about stores, we are taking a disciplined approach to capital spending and looking at our real estate project on a case-by-case basis. We continue to see good returns from new store openings and store expansions as these strategies contribute really to improve the shopping experience. So for 2025 to give you a number, NSOs are returning at above 100% ROI across both North America and the international markets. So representing a payback period of less than a year. So we feel confident with that. And also the strategy of optimization of existing doors in key influential cities to bigger format with proven quality traffic is solid. The productivity of our top larger stores is higher than the average of our fleet that is one of the best in the industry with sales per square foot over $1,400. So globally, to be precise, in '26, our plan calls for approximately 40 to 45 net new openings, which yields square footage growth to the low double digits. So with NAM, approximately 15 openings and international in between 25 to 30 openings with the majority in Mainland China. And for the marketing spending? Meghan Frank: Yes. And I'd just add, Laurent, from a store perspective, it's really a store-by-store look that the team is doing, being really mindful of where we're opening, making sure it's relevant for the guest and we've got the right positioning in each market. As Andre just mentioned, it's 15 stores in North America, the majority of which would be in Mexico. So we have just a small handful of new store openings and we are watching them closely. We would be largely committed through '26 to our square footage expansion plans, but the team feels really confident in them. I'd say from a marketing perspective, we are -- our guidance assumes we're relatively flat from a rate of sales perspective in terms of marketing spend. I think what you'll see is we're shifting the composition of that spend a bit more towards these impactful guest activations we discussed as well as utilizing brand-appropriate influencers and ambassadors as we move throughout this year. So I would say a little bit of a shift in strategy on the spend, same waterline, and we'll continue to monitor to the extent that it's working for us, and we'll continue to push into it. Thanks. Operator: The next question comes from Matthew Boss with JPMorgan. Matthew Boss: So Meghan, could you maybe speak to the bridge from 4% underlying revenue growth in the fourth quarter to the 1% to 3% in the first quarter and 2% to 4% for the year? Meaning maybe just if you could elaborate on the balance between the improvement in full-price selling that you're citing relative to what's offsetting or constraining revenue growth as we think about the course of the year. Meghan Frank: Yes, absolutely. So Q4, we're up 6%, excluding the 53rd week. And we did guide to 1% to 3% for Q1 and then 2% to 4% for the full year. I would say it's really the ramp of full price. So we had, I would say, the lowest waterline, as I mentioned in Q4, with markdown overpenetrating. We had 130 basis points of pressure in the markdown line in Q4. So we are improving that in Q1, but it will be still negative in Q1, flipping flat in Q2 and then accelerating in the second half of the year as we continue to build into it and then lap, I would say, the markdown performance that we had in the second half of '26. Matthew Boss: Great. And then, Meghan, just on the more than 200 basis points of operating margin contraction this year, how much of the decline do you see tied to more transitory items? And what do you see as the revenue growth necessary to see operating margins return to expansion multiyear? Meghan Frank: Yes. So we guided to 250 basis points decline. I would say the majority of that, when you step back from it, is add-backs of incentive comp and labor that we reduced in '25 and then also the proxy contest expenses. That's the majority of it as you step back. Obviously, we've got some headwinds and tariffs, but we're largely offsetting the year-over-year within the year. I do see this as the low waterline that we'll continue to build upon as we transition into '27. So really looking at getting back to that healthy full-price baseline. We're obviously having a little pressure on the fixed components of our P&L based on that revenue waterline of 2% to 4%. We haven't put a fine point on the leverage aspect. I think it will depend on the trajectory of the business, and then there are some decisions that we can make in terms of investment levels. So we'll definitely share more on that, but definitely expect it to improve from here. Operator: The next question comes from Paul Lejuez with Citi Research. Paul Lejuez: Lots of focus on the North America full-price improvement, but I'm just curious if we should read that as you guys being happy with full-price selling in the Rest of World and China. Maybe you can talk about how those regions compare from a full-price penetration perspective to the Americas. And then also maybe match that with what sort of level of newness do you see in those regions? Have the percentages also gone down? And are they also supposed to go back up in '26? Or has it been more constant there? Meghan Frank: Thanks, Paul. I would say we have not seen the headwind we've seen in North America in international regions in terms of full price. So still happy with the levels we're seeing there. That said, we do believe that the steps we're taking in our action plan in terms of product creation and activation will benefit all regions. But I would say we're still pleased with the trends there. I'll pass it to Andre just to add some more color on what we're seeing in the regions. Andre Maestrini: Yes, absolutely. I think that the model that has been developed to grow and expand in international is working because it generates full attention on the full price. And let me call out the different layers, which is, first, a brand-first approach, we are building the premium position of lululemon in activewear market in those key regions. Second, a diversified portfolio of product across the different activities where we want to lead in. Then this obsession of full price and minimal discounting and markdown. And also an elevated presentation in our stores and the guest experience across not only the key doors but also our online experience. And we are staying true to our community grassroot approach. We also keep standout events that generate organic traffic like the Summer Sweat Games, for example, in China. And that's why we are importing as a playbook to do Studio Yet that Meghan, you mentioned or our participation in the open of Indian Wells on new categories that we want to expand. So yes, as said, everything we are working on developing new styles and newness at the global level will also benefit all our markets to keep driving the focus and engaging the guest on full-price realization. Operator: The next question comes from Michael Binetti with Evercore. Michael Binetti: Could you speak a little bit to the Canada slower sales outlook in first quarter? Is that something you're seeing today, Meghan? Maybe just a few thoughts there. That market has been trending better than the U.S. for a little bit. I'm just curious what you're seeing in that market. And then maybe you could just help us -- you're shortening the time line on design from go-to-market. I think you diagnosed that as a pretty long time frame, 18 months plus. It's been a big focus for you. Could you just give us an update on what you're seeing there and some of the early progress or opportunities to shorten the lead times and what you think maybe that could go to as you look to kind of speed up the go-to-market process here? Meghan Frank: Yes. Thanks, Michael. So in terms of Canada, we're expecting -- we are inflecting full price across the North America region. The Canadian consumer has been a little bit more sensitive to markdowns. So we're seeing a little bit more of a pronounced impact there, I'd say. So that's what's driving that differential, but expect still the same opportunities in terms of assortment shift and focus on guests with our activations and think we'll reset to a better waterline. And then in terms of the go-to-market calendar, so we are going from about 18 to 24 months, we're expecting we could go to closer to 12 to 14 months over time. Really focused on tools, process and systems and leaning into automation, including in the AI space to lean into that calendar. We did mention that we have a new Head of Technology who's got an AI focus. We're excited about him joining the team and the things that we can unlock in that space. And there's -- I would say, a lot of energy in the business around this reduction and simplification of our process. Michael Binetti: Okay. And maybe if I can ask one follow-up. I think as I look back at last year, if I look at the first quarter, you mentioned that traffic was a little weaker than you'd liked in the quarter and the high-value guest was weak as well. You kind of gave us that breakout. Is that -- are you seeing better traction with the high-value guests as you start to flow the newness in and you start to get some confidence in the full-price selling as you at least start to improve sequentially from the fourth quarter here? Meghan Frank: Yes. I'd say it's early in the quarter. I'd like a little more time just to understand what's going on with the high-value guests. But I would say we're seeing, as I mentioned, great green shoots on some of the new product launches. And I would expect that extends to that guest as well. So we'll share more on what we're seeing as it progresses. Operator: The next question comes from Dana Telsey with Telsey Group. Dana Telsey: Nice to see the progress. As you think about the performance apparel market, and just the activewear market, did you grow share this quarter? Did it stay the same? What do you see in the growth of premium athletic and in performance apparel? And then with the early results, positive results to the new assortments coming in, is it bottoms? Is it tops? And what are you learning from that as you develop new products, but for the next time line for the balance of the year? Meghan Frank: Thanks, Dana. In terms of market share, so we maintained share in the total apparel market, and we lost about less than 1 point in activewear. So that's where we stand on that. As Andre mentioned, we maintained our position as the #1 women's activewear brand in the U.S. In terms of what's trending for category, tops and bottoms, we're seeing, I would say, some nice performance across both. The Unrestricted Power innovation, I mentioned we did in women's tights and men's shorts as well as a top, seeing some nice performance there. ThermoZen also was an outerwear innovation that we're excited about as well. We did also see some great performance out of a couple of bottoms that Andre mentioned, so EasyFive and then Groove Wide-Leg. And then we had a run capsule, which I would say encompass both tops and bottoms. So I would say it's both. And that had a lot of, I would say, energy around it in terms of fun and excitement in that run capsule. I think the team is really energized on building on the learnings in terms of what's working continuing to chase into as well as looking at how it informs our creative direction for upcoming seasons. Operator: The last question comes from Ike Boruchow with Wells Fargo. Irwin Boruchow: Meghan, can you just comment on the inventory ending in 4Q? How comfortable are you with that? I know the markdown is still expected to be up a little bit, but maybe just some more anecdotes there. And then what's your expectation for inventory as you move into 2Q and kind of the rest of the year? Meghan Frank: Great. Yes, I would say we're pleased with both the level and composition headed out of Q4. We guided to unit increase in the high single digits, and we came in up 6%, so cleaner than we expected. We did focus on cleaning out seasonal inventory and feel we're headed into '26 with an assortment that's more reflective of our go-forward strategy. In terms of how we're managing inventory in '26, I would say, throughout the year, we'd expect to see units approximately flat to slightly down. That would hold true for the end of Q1 as well. So that is part of how we're supporting driving that full-price inflection in our business and the return to a healthier baseline in terms of penetration. Operator: That's all the time we have for questions today. Thank you for joining the call, and have a nice day.
Operator: Good day, and thank you for standing by. Welcome to the Summit Midstream Corp. Fourth Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Randall Burton, Vice President of Finance and Treasurer. Please go ahead. Randall Burton: Thanks, Operator, and good morning, everyone. If you do not already have a copy of our earnings release and presentation, please visit our website at www.summitmidstream.com, where you will find it on the homepage, Events and Presentation section, or Quarterly Results section. With me today to discuss our fourth quarter and full year 2025 financial and operating results are J. Heath Deneke, our President, Chief Executive Officer, and Chairman; William J. Mault, our Chief Financial Officer; and Chris Tennant, our Chief Commercial Officer, along with other members of our senior management team. Before we start, I would like to remind you that our discussion today may contain forward-looking statements. These statements may include, but are not limited to, our estimates of future volumes, operating expenses, and capital expenditures. They may also include statements concerning anticipated cash flow, liquidity, business strategy, and other plans and objectives for future operations. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can provide no assurance that such expectations will prove to be correct. Please see Summit Midstream Corp.'s Annual Report on Form 10-K for the fiscal year ended 12/31/2025, which the company filed with the SEC on 03/16/2026, as well as our other SEC filings, for a listing of factors that could cause actual results to differ materially from expected results. Please also note that on this call, we use the terms EBITDA, segment adjusted EBITDA, adjusted EBITDA, distributable cash flow, and free cash flow. These are non-GAAP financial measures, and we have provided reconciliations to the most directly comparable GAAP measures in our most recent earnings release. And with that, I will turn the call over to Heath. J. Heath Deneke: Great. All right. Well, thanks, Randall, and good morning, everyone. I wanted to start this morning by introducing you to a new voice you will hear on the call today. Chris Tennant, who joined Summit Midstream Corp. in February as our Chief Commercial Officer, is joining us. Chris brings more than three decades of experience across the oil, natural gas, and NGL value chain, and he will be leading our commercial organization going forward. Chris has hit the ground running since joining the team and is already making a strong impact across the organization. I am excited to have him here and look forward to the contributions he will make as we continue executing on Summit Midstream Corp.'s growth strategy. Turning now to slide three. We are very pleased with the progress Summit Midstream Corp. made during the quarter and in the first couple of months of 2026. From a financial perspective, Summit Midstream Corp. generated approximately $58,600,000 of adjusted EBITDA in the fourth quarter along with $33,700,000 of distributable cash flow and $17,000,000 of free cash flow. Operationally, and despite the weakening of oil prices in 2025, we continue to see solid development activity across our systems with seven rigs currently running behind our footprint and approximately 90 drilled but uncompleted wells. At this point, we have visibility to between 116 and 126 well connections in 2026, which is relatively modest compared to prior years. However, we could see activity accelerate in the second half of the year as producers look to take advantage of the recent run-up in oil prices. On the commercial front, we have made a tremendous amount of progress since our last update. Starting with the Double E Pipeline, we recently signed two 11-plus year transportation agreements totaling 440,000,000 per day of firm capacity. In addition, we received an affirmative FID notice on the previously announced Producers Midstream 2 100,000,000 a day agreement that we announced last year. In the aggregate, this represents more than a half a Bcf a day of new long-term take-or-pay agreements that we have executed over the past six months. With these new agreements and the corresponding step-up in committed take-or-pay volumes over the next several years, our Permian segment adjusted EBITDA is expected to grow from $34,000,000 in 2025 to roughly $60,000,000 by 2029. With these new contracts, Double E’s existing mainline capacity is now generally fully subscribed. However, as Chris will get into further in the call, we have launched a binding open season to solicit additional customer commitments to support a mainline compression project that would expand the pipeline’s capacity by approximately 50% to roughly 800,000,000 a day. Additionally, we successfully refinanced the Double E capital structure with a new $440,000,000 term loan facility, which enables an $85,000,000 distribution back to Summit Midstream Corp. we intend to use to repay $45,000,000 of accrued and unpaid dividends and reduce borrowings under the ABL. We will walk through the details of the transaction later in the call, but this transaction is a major win for the company as it increases our financial flexibility while allowing us to continue to execute on these high-return growth projects at Double E, including the mainline compression project, without straining Summit Midstream Corp.’s corporate balance sheet. In addition, the repayment of the accrued dividends on the Series A preferred stock further simplifies Summit Midstream Corp.’s balance sheet and is also an important step towards enabling a sustainable return of capital program for our shareholders in the future. We are also very excited about the growth outlook in the Rockies segment as we continue to see development activity up in the Bakken shift towards our pipeline footprint in Williams and Divide Counties. As Chris will cover later in the call, our Polar and Divide system is uniquely positioned to benefit from that shift, as evidenced by a new long-term crude gathering agreement that we executed in the fourth quarter in Divide County. There is also a lot of positive momentum building up around our G&P system in the DJ Basin that we are excited about as well. I am sure we will be updating everyone on this as we move throughout the rest of 2026. And finally, at the end of the call, I wanted to walk investors through a snapshot of Summit Midstream Corp.’s strong and highly visible organic growth outlook that will be led by our Permian and Rockies segments. We are very excited about the commercial momentum we have around the business and the growing backlog of very attractive, high-returning organic growth projects that we believe will position the company to achieve over $100,000,000 of adjusted EBITDA growth by 2030. We believe we will generate a tremendous amount of shareholder value in the coming years as we execute on these growth plans, maintain our financial discipline, and continue our focus on improving the balance sheet. I will now turn the call over to Bill to walk through our financial results and guidance on slide four. William J. Mault: Thanks, Heath, and good morning, everyone. And before jumping to slide four, why do we not stay on page three. Summit Midstream Corp. reported fourth quarter adjusted EBITDA of $58,600,000, resulting in full year 2025 adjusted EBITDA of $243,000,000. Capital expenditures totaled $19,000,000 for the quarter and $89,000,000 for the full year. With respect to Summit Midstream Corp.’s balance sheet, we ended the year with net debt of approximately $930,000,000 and approximately $890,000,000 pro forma for the $40,000,000 repayment of the ABL associated with the $85,000,000 one-time distribution from the new Summit Permian Transmission term loan. This brings pro forma leverage to approximately 3.9 times. Our available borrowing capacity at the end of the fourth quarter totaled approximately $387,000,000, which included roughly $1,000,000 of undrawn letters of credit. Now on to the segments. The Rockies segment, which includes our DJ and Williston Basin systems, generated adjusted EBITDA of $27,800,000, a decrease of $1,200,000 relative to the third quarter, primarily driven by a decline in liquids volumes due to natural production declines, partially offset by modest growth in natural gas volumes. Liquids volumes averaged approximately 66,000 barrels per day during the quarter, a decrease of roughly 6,000 barrels per day relative to the third quarter, primarily due to natural production declines and no new well connections. Natural gas volumes averaged approximately 160,000,000 cubic feet per day, an increase of roughly 2,000,000 cubic feet per day relative to the third quarter as wells connected early in the year continued to ramp toward peak production. During the quarter, we connected 33 new wells in the DJ Basin, which we expect to reach peak production in 2026. We currently have six rigs running behind the system, including four in the Williston and two in the DJ, and approximately 65 DUCs, which provides good visibility into expected development activity in 2026. The Permian Basin segment, which includes our 70% interest in the Double E Pipeline, reported adjusted EBITDA of $8,700,000, an increase of $100,000 relative to the third quarter, primarily due to higher volume throughput on the pipeline. Volume throughput on Double E averaged 861,000,000 cubic feet per day during the quarter. The Piceance segment reported adjusted EBITDA of $10,000,000, a decrease of $2,500,000 relative to the third quarter, primarily due to a modest decline in volume throughput and certain revenues recognized in the prior quarter. Finally, the Midcon segment reported adjusted EBITDA of $21,500,000, a decrease of approximately $2,100,000, primarily due to lower volume throughput from natural production declines across the Arkoma and Barnett systems. During the quarter, we connected six wells in the Arkoma and no new wells in the Barnett. Subsequent to quarter end, we connected an additional six wells in the Arkoma, and there is currently one rig running behind the Arkoma and approximately 20 DUCs. Let me now turn to page four and discuss our outlook for 2026. We are establishing 2026 adjusted EBITDA guidance of $225,000,000 to $265,000,000 and total capital expenditures of approximately $85,000,000 to $105,000,000, which includes $35,000,000 to $50,000,000 in base business growth capital, approximately $15,000,000 to $20,000,000 of maintenance capital, and approximately $35,000,000 of contributions to the Double E joint venture. The $35,000,000 of contributions to the Double E JV are expected to be fully funded through the new term loan facility we closed yesterday. The majority of the base business growth capital will be directed toward pad connections in the Rockies and Midcon regions, where we continue to see steady development activity behind our systems. Similar to previous years, our guidance range incorporates real-time feedback we are receiving from our customers regarding their development plans, and we actively track rigs and completion crews across our systems to ensure well connects remain on schedule. Just as a reminder of our risking methodology, if our producers hit their current turn-in-line dates and production targets, we would expect to be near the high end of our adjusted EBITDA guidance range. The midpoint of the range reflects modest risking applied to current drilling schedules, while the low end assumes additional delays in well connects expected later in the year, which could push some of that activity into 2027. Across our footprint today, we currently have seven rigs running and approximately 90 DUCs behind our system, which provides line of sight to the 116 to 126 well connections expected in 2026. Approximately 80% of those expected well connections are crude oil-oriented wells. The remaining 20% are natural-gas-oriented. Commodity price assumptions for this range assume average crude oil prices in the mid-sixties and a natural gas price of approximately $3.40 per MMBtu. There has been a lot of upside movement in crude oil prices over the past few weeks, which, if sustained throughout the year, could lead to acceleration of activity from our customers and improvement in product margin associated with certain percentage-of-proceeds contracts in the DJ Basin. In the Rockies, we are currently expecting 90 to 100 well connects in 2026, a fairly even split between the DJ and the Williston. This level of activity, along with the 33 wells connected in the fourth quarter, will drive volume throughput growth in natural gas and liquids. Additionally, of the roughly 45 to 50 wells expected in the Williston, we will be gathering both crude and produced water for nine of those wells, for which we expect around a three-to-one produced water to crude oil ratio. Expected well connections in the DJ are a little bit lower in 2026 than the historical average. This is primarily due to the recently announced acquisition of Verdad Resources, a key customer behind the system, by Peoria Resources, a subsidiary of JPEX Core. Long term, we are excited about the acquisition and expect it to be a net positive to development, but as with all upstream consolidation, it has created some near-term delays in development. In the Midcon, we are expecting 26 wells to be connected to the system, including nine in the Arkoma and 17 in the Barnett. In the Arkoma, all but three of those wells are already connected and flowing, and in the Barnett, all 17 wells are currently in DUC inventory. Our key customer in the Arkoma is evaluating additional development in late 2026 and early 2027, but we have not included that potential activity in our financial guidance until we get confirmation that they intend to drill and complete those wells. With the level of activity included in our financial guidance, we would expect volumes in Midcon to be relatively flat year over year. In the Piceance, we are expecting no new well connects in 2026, which will result in continued decline in volume and EBITDA relative to 2025. Additionally, shortfall payments are expected to decline by approximately $4,000,000 from $17,000,000 in 2025 to approximately $13,000,000 in 2026. As a reminder, MVCs and shortfall payments completely roll off in 2026, so 2027 will not have MVC shortfall payments in the Piceance. Shifting to the Permian, year-over-year EBITDA growth is primarily driven by contractual step-ups in the long-term take-or-pay transportation agreements that fully ramped in November 2025. Additionally, we expect two of the recently signed firm transportation agreements on Double E to begin service in 2026, which will provide some incremental EBITDA. I will now turn the call over to Chris to discuss the commercial momentum we are seeing on Double E and expected growth in EBITDA associated with recently executed commercial contracts on slide five. Chris Tennant: Thanks, Bill, and good morning, everyone. Over the past several months, we have made significant progress commercializing the remaining free-flow capacity on the pipeline. With the recently executed transportation agreements, including the previously announced Producers Midstream contract, Double E has secured over 500,000,000 cubic feet per day of new long-term take-or-pay commitments over the past six months. Upon full ramp of those agreements, Double E will have approximately 1.6 Bcf per day of firm take-or-pay contracts with a group of prominent, primarily investment-grade shippers. These agreements also expand Double E’s downstream connectivity with new and highly valued delivery points into the Transwestern Central Pool, the Huber Benson pipeline, and a planned future connection with Desert Southwest Pipeline. These connections significantly increase the end-market optionality available to our shippers and improve access to several important demand centers. Given the strong commercial momentum we have seen, the remaining free-flow capacity on the pipeline is now effectively full, which has accelerated our efforts to pursue a mainline compression expansion. As Heath mentioned earlier, we recently launched a binding open season to solicit additional shipper commitments to support that project, which could expand Double E’s capacity by approximately 50% from 1.6 Bcf per day to roughly 2.4 Bcf per day. Based on our currently contracted volumes, we expect the Permian segment adjusted EBITDA to reach approximately $60,000,000 by 2029. Importantly, if we are successful in fully commercializing the planned expansion capacity, that EBITDA contribution could increase to approximately $90,000,000 or more by 2030. Stepping back for a moment, we continue to see strong underlying fundamentals across the Delaware Basin. Producers are continuing to improve drilling efficiencies and extend lateral lengths, while processing capacity across West Texas and New Mexico continues to expand. As a result, demand for reliable residue gas takeaway remains strong, and we believe Double E is very well positioned as a critical transportation corridor connecting the Delaware Basin to multiple downstream markets. With that commercial update, I will turn it back to Bill to walk through the recent Double E refinancing on slide six. William J. Mault: Thanks, Chris. Yesterday, Summit Permian Transmission entered into a new $440,000,000 senior secured term loan facility maturing in March 2031, including $340,000,000 funded at closing, a $50,000,000 committed delayed draw facility to support expansion projects, and a $50,000,000 accordion feature for future growth opportunities. Proceeds from the facility were used to repay the existing Permian Transmission credit facility and the subsidiary preferred equity at Summit Permian Transmission HoldCo, simplifying the capital structure and extending the maturity profile of the asset. The transaction also enabled an $85,000,000 distribution back to Summit Midstream Corp., and as Heath mentioned earlier, Summit Midstream Corp. intends to use those proceeds to repay approximately $45,000,000 of accrued preferred dividends and reduce borrowings on the ABL by approximately $40,000,000. Beyond improving our leverage profile and strengthening the balance sheet, the new facility also provides the capital needed to fund the expected growth projects on Double E, including the recently announced plant connections and the potential mainline compression expansion project Chris mentioned. Overall, this transaction simplifies the capital structure, funds high-growth projects, and positions Summit Midstream Corp. with greater financial flexibility moving forward. With the planned repayment of the Series A preferred stock accrued and unpaid dividends, Summit Midstream Corp. will have satisfied all conditions to allow for a return of capital program to its common shareholders. And with that, I will turn the call back to Chris to discuss our recent commercial success in the Williston Basin on slide seven. Chris Tennant: Thanks, Bill. In the fourth quarter, we executed a new 10-year crude oil gathering agreement with a producer in Divide County, North Dakota. The agreement includes a large area of dedications, spanning more than 200,000 acres along our existing Polar and Divide systems, and represents a meaningful expansion of dedicated acreage supporting our infrastructure in the region. This new customer is currently running one rig on their development program. The first pad associated with this agreement, consisting of four three-mile laterals, is expected to be turned in line in early 2026. More broadly, we continue to be encouraged by the innovation we are seeing from Williston Basin operators, particularly as they extend lateral lengths and improve drilling and completion efficiency. These improvements are helping drive development activity in areas such as northern Williams County and southern Divide County, where Summit Midstream Corp.’s systems are well positioned. This agreement expands both our dedicated acreage position and long-term development inventory, and we believe it positions us well to capture additional development across our footprint. Importantly, we are actively pursuing several additional commercial opportunities in the region and remain very encouraged by the level of engagement we are seeing from the operators. With that overview of the Williston activity, I will turn the call back to Heath for some closing remarks. J. Heath Deneke: Thanks, Chris. Let us turn to page eight. Here we have attempted to give investors a better sense of Summit Midstream Corp.’s long-term growth trajectory and some key assumptions that support it. Starting with activity across our G&P segments, we are currently projecting total system well connects in 2026 to come in below the historical averages we have experienced in recent years. We believe this is primarily due to timing impacts brought on by some significant upstream consolidation that involved key customers in our Rockies segment and a recap that is underway in the Midcon segment. We also believe that the oil price dip below the $60 mark towards the end of last year and into 2026 caused a temporary pause in second-half activity, which is still reflected in our current guidance for the year. However, as we look forward with input from our customers, we expect activity levels to climb back up to at least the historical average levels we have experienced over the past three years, if not greater, in a low-$60 oil and low-to-mid-$3 gas price environment. Given growing demand for natural gas and a tighter outlook on oil supply, we think this is a conservative but reasonable baseline assumption that has a lot of further upside potential, particularly in the 2028 to 2030 timeframe. We should also point out that the outlook includes roughly $18,000,000 of MVC-related shortfall payments in the Piceance segment that roll off from 2025 to the second half of 2026 and, conservatively, also assumes no new well connects through 2030. Moving over to the top right section of the slide, as we have discussed, we expect Permian segment adjusted EBITDA to reach approximately $60,000,000 by 2029 based on the new contracts we have already secured on Double E. If Chris and team are able to fully commercialize the capacity associated with the Double E mainline compression expansion, the Permian segment adjusted EBITDA contribution could grow to over $90,000,000 by 2030. Combining the Double E growth outlook along with the Rockies and Midcon expected segment growth, we believe Summit Midstream Corp.’s existing portfolio is very well positioned to add more than $100,000,000 of organic EBITDA growth by 2030. Touching on the capital slide on the lower left-hand section of page eight, we are forecasting total capital expenditures to trend above our normal $50,000,000 to $70,000,000 range as we execute on these high-returning capital investments in the Permian and Rockies segments in 2026 through 2028, but we expect capital spending to normalize and transition back to primarily maintenance and well connect capital in the out years. Taken together, these drivers provide visibility towards very meaningful earnings growth and significant value creation for our shareholders. As I have stated earlier, we are really excited about the growth outlook for the business, but I want to stress that we are also not taking our eyes off the ball. Further strengthening the balance sheet, maintaining our financial discipline, continuing our focus on achieving our long-term three-and-a-half-times leverage target at SNC, and enhancing shareholder returns with a return of capital program are all key components that we believe will maximize shareholder value as we execute the business plan. With that, Operator, we are ready to open the call for questions. Operator: Thank you. Please press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Our first question comes from the line of Mark Reichman with Noble Capital Markets. Your line is now open. Mark Reichman: Thank you. With new take-or-pay agreements announced, what level of additional commercial commitments is needed to move forward with the mainline compression expansion to 2.4 Bcf per day and when would a final investment decision occur? J. Heath Deneke: Thanks, Mark. I am going to let Chris Tennant, our new Chief Commercial Officer, take this one. Chris Tennant: Hey, Mark. Thank you for the question. This is a very attractive project for Double E Pipeline with an estimated sub-three-times build multiple. We are very hopeful to close half this open capacity early in the open season. Capex and rate depending, if we follow that cadence, we could see an FID decision as early as this summer. Mark Reichman: And then would you discuss the capital needs between, say, 2026 and 2029 to achieve the $100,000,000 of EBITDA growth by 2030? J. Heath Deneke: Yeah. Mark, it is Heath. So, look, if you kind of set Double E aside, right? If you look at our historical capital, we have come out in the range between $50,000,000 and $70,000,000 between growth and maintenance. We think that is likely to be what we would spend on the G&P segment businesses throughout the five-year forecast period. So really the step-up is going to be oriented around Double E and, as Bill pointed out in the call earlier, that capital is largely going to be financed through the new term loan that we put in place at Double E. So just think of it as $50,000,000 to $70,000,000 for our general G&P segments per year, and for the next few years, we will probably see a similar amount of capital for Double E, roughly in that $35,000,000 a year, Mark, for the next two to three years. William J. Mault: Yeah, Mark. And you can read into the fact we sized the delayed draw and the accordion at about $100,000,000 of incremental potential borrowings under that new term loan. So that should give you a general sense if we are $30,000,000 to $35,000,000 a year for the next, call it, two to three years, utilizing that $100,000,000. Mark Reichman: I see. That is very helpful. And then with respect to the 2026 guidance of 116 to 126 well connections, which basins and/or factors are most likely to drive upside or downside to that outlook? And how sensitive is it to changes in commodity prices? William J. Mault: Yeah. Great question, Mark. I will start with a couple stats, and then I will give you some color on upside/downside volatility. So today, we have got 90 DUCs. So that represents the lion’s share of that range of well connects already that are drilled but not completed. We also have seven rigs running, six in the Rockies, one in the Midcon. So those rigs right now, think about them as basically starting to drill for activity that I would characterize more as late second quarter, third quarter-type well connects. So between the DUCs and the rigs, we have got a lot of confidence in that range. In the Midcon, as an example, we are only expecting nine wells in the Arkoma as we sit here today. We only need three more to round out that nine. We have already had six that came online in the first quarter. And then the Barnett, as an example, all 17 wells are DUCs. Those are slated to come online in the June/July timeframe and really just require a completion crew to get out there to finish them up. We spend a lot of time looking at that data when we establish our guidance range so that we have confidence in what we are putting out there. Now as it relates to your upside/downside to the outlook, I would tell you that this plan is based on a $65 strip WTI and about $3.40 on Henry Hub. Strip today is $85 on crude and $3.70 on Henry Hub. In markets like this, historically, we have seen that this price indicator really incentivizes our customers to either accelerate development or try to bring on new well connects. So from an activity perspective, we are in a period where there is more upside than down from a commodity price perspective. And then lastly, as it relates to commodity price, as you know, in the DJ we have percentage-of-proceeds contracts. If you just run through current strip, so that $85 and $3.70, that is, call it, another anywhere from $5,000,000 to $10,000,000 of increased product margin that is not reflected in our guidance range today. Obviously, there is a lot of uncertainty around what is going on in the Middle East. We thought it was prudent to keep our conservative assumption around strip. I think that represents some pretty material upside for us this year based on what we are seeing right now. J. Heath Deneke: Yeah. Mark, just to add a little bit to that too. I think when you think of the range, if you accept the producer-driven forecast, which, in 2025, we saw some slippage to the right on that, which is why we came in lower. But when you think about 2026, I think just given the commodity price signals, most of the customers we talk to are trying to accelerate that activity, so more likely that they will hit their timing. If they hit their timing, that is generally going to push us to the higher end of the range. Then, the other component, it is not like you can snap your fingers overnight and get new rigs and new completion crews under contract. But we do know that several folks that were planning wells already for the 2027 timeframe are looking to see if they can bring those wells into the fourth quarter. That will not add as big of an impact for the year because you will be talking probably just a few, two to three months maybe, of contribution, but it will be a good sign as you get some momentum going into 2027 at a minimum. Mark Reichman: And then just lastly, following the Double E refinancing and preferred dividend repayment, how are you thinking about the path and timeline to reach the 3.5 times leverage target? When could the company realistically consider reinstating common shareholder dividends, and would asset sales or joint ventures be part of the deleveraging strategy? J. Heath Deneke: Well, look. Mark, what I would say is, if you just look at, for example, the high end of the range, right? If we hit the $265,000,000 mark, we think our leverage will be roughly 3.6 times. So I do not think it is out of the question for us to consider a dividend policy over the next twelve months. It is highly going to depend on this year and where we end up from an overall leverage perspective. But as you pointed out, the arrears are paid off. That is a major step to get out of the way, and I think as soon as we feel comfortable that we are getting to our target and are able to sustain that leverage target, that is when you are going to see us want to turn on a dividend. Your question around asset sales or JVs being part of the deleveraging strategy, I would say I do not think that those things are going to drive our deleveraging strategy. I think we are going to see that leverage come down as we execute our base plan. But we are very opportunistic. We have done quite a bit of M&A both on the sell side and the buy side and optimized the portfolio. So I think when we think about JVs and growth, I think those are more likely going to be the triggers to move forward from the M&A front. Mark Reichman: Well, this has been very helpful. Thank you very much. Chris Tennant: Thank you, Mark. Thank you. Operator: Our next question comes from the line of Greg Brody with Bank of America. Your line is now open. William J. Mault: Hey, guys. J. Heath Deneke: Hey. Greg Brody: Just thinking, congrats on the Permian contracts. I was looking—it is an opportunity that is exciting there. Just thinking about longer term, I know in the past you have talked about folding the Permian asset into the company. Obviously, this opportunity allows you to delay that. And I am just curious if you think about, in terms of allocating capital, do you think about contributing capital into the JV to potentially reduce leverage and maybe collapse the unrestricted sub and restricted group, or are you thinking about that? William J. Mault: Yeah. Greg, great question. And, look, we have talked a lot about that over the years. A couple things. One, our high-yield bonds mature in 2029. So I think it is reasonable to expect that sometime in 2028, a year or so in advance of that maturity, we would look to refinance that bond. One thing that we were successful in getting under this new term loan is really a supportive call protection structure. So it is non-call one, then it steps down to 102 in year two, 101 in year three, and par thereafter. So if we are executing a refi and you get some of this EBITDA growth on these commercial contracts, we can really clean up that term loan and refinance it alongside our bonds in 2028 without a bunch of leakage. So that was an important deal point for us when we were negotiating this transaction. And then, Greg, as you know, when you are in a high growth mode with a decent amount of capital spend, that really takes 12 to 24 months for that EBITDA to show up. This type of financing is actually a pretty attractive solution just to maintain a delevering profile at Summit Corporate while we are executing on this growth. Greg Brody: Yeah. That makes sense. Maybe just, since you touched it, the question on M&A. It was asked, but maybe just a little bit more color around the opportunity set today and the activity level we could see over the next year. J. Heath Deneke: Yeah. So, Greg, I would say this. We focused on today’s call about the $100,000,000 of organic growth really to set the baseline for what is in the plan today, where we think this company will go with the existing portfolio, and we are not dependent on M&A to achieve that. I think, but one of the key things that we think is important for Summit Midstream Corp. and our investors is that the business needs to continue to scale up. I think if we can scale up and keep the balance sheet in good shape, we think that is going to dramatically improve the investability of the company. There will be more institutional-type investors that would come into the stock. It just creates more room, if you will, for investors to come in and invest in Summit Midstream Corp. So I think we do think—and we are actively working on—opportunities around our portfolio that we can either bolt on synergistic assets and continue to do what we have done in the past, which is look for assets that are high free-cash-flow generating that we can buy at a really attractive valuation and fold into the portfolio. William J. Mault: Yeah. And, Greg, I would tell you that, as you know, we spent a lot of time getting this balance sheet to where it is today. As we evaluate M&A, we have been very disciplined, looking for things that are at a minimum leverage-neutral and value-accretive, and also have focused on high free-cash-flowing businesses, as Heath mentioned. I do not think you are going to see us really veer off that methodology as we evaluate potential acquisitions. Greg Brody: Thank you for the time, guys. William J. Mault: Thanks, Greg. Thank you. Operator: That concludes the question-and-answer session. Thank you all for your participation on today’s call. This does conclude the conference. You may now disconnect.
Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Neuronetics, Inc. Reports Fourth Quarter 2025 Financial and Operating Results. At this time, participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during this session, you will need to press 11 on your telephone. You will then hear an automated message confirming your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to Mark R. Klausner. Sir, please go ahead. Mark R. Klausner: Good morning, and thank you for joining us for the Neuronetics, Inc. Fourth Quarter 2025 Conference Call. Joining me on today's call are Neuronetics, Inc.'s President and Chief Executive Officer, Keith J. Sullivan, and Steven E. Pfanstiel, Neuronetics, Inc.'s Chief Financial Officer. Before we begin, I would like to caution listeners that certain information discussed by management during this conference call will include forward-looking statements covered under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements related to our business, strategy, financial and revenue guidance, the Greenbrook integration, and other operational issues and metrics. Actual results can differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with the company's business. For a discussion of risks and uncertainties associated with Neuronetics, Inc.'s business, I encourage you to review the company's filings with the Securities and Exchange Commission, including the company's Annual Report on Form 10-K, which was filed premarket today. The company disclaims any obligation to update any forward-looking statements made during the course of this call, except as required by law. During the call, we will also discuss certain information on a non-GAAP basis, including EBITDA. Management believes that non-GAAP financial information, taken in conjunction with U.S. GAAP financial measures, provides useful information for both management and investors by excluding certain non-cash and other expenses that are not indicative of trends in our operating results. Management uses non-GAAP financial measures to compare our performance relative to forecast and strategic plans, to benchmark our performance externally against competitors, and for certain compensation decisions. Reconciliations between U.S. GAAP and non-GAAP results are presented in the tables accompanying our press release, which can be viewed on our website. With that, it is my pleasure to turn the call over to Neuronetics, Inc.'s President and Chief Executive Officer, Keith J. Sullivan. Keith J. Sullivan: Thanks, Mark. Good morning, everyone, and thank you for joining us today. Before I get into our results, I am pleased to announce that the Board has appointed Dan Reavers as our next President and Chief Executive Officer of Neuronetics, Inc., effective March 23. Dan is a proven leader with more than 30 years in medical devices, and he knows how to build and scale commercial health care businesses. Having spent time with Dan through the search process, I am confident he is the right person to lead the company into the next chapter, and I am looking forward to working with him to ensure a smooth transition. Now turning to our performance. A little over a year ago, we closed the Greenbrook acquisition and set out to build a vertically integrated mental health company with the technology, the clinical infrastructure, and the scale to fundamentally change how patients access treatment for mental health conditions. I am proud to say that in our first full year as a combined company, we have done exactly that. We delivered strong fourth quarter results with adjusted pro forma revenue growth of 23%, driven by our strongest capital shipment quarter of the year and continued momentum across our Greenbrook clinic network. We also achieved the key milestone of positive operating cash flow in the fourth quarter, driven by revenue growth, operational discipline, and the cash collection improvements that we have been implementing throughout the year. Starting with the update on Greenbrook. Over the course of 2025, we executed against our growth initiatives, and the results speak for themselves. Full-year clinic revenue grew 28% on an adjusted pro forma basis. Our Regional Account Manager program is building awareness among referring providers and helping more patients find relief from their depression in our clinics. In the fourth quarter, our referring provider network added 430 new providers, a 25% increase year over year, contributing to over 1,300 new referrers added across 2025. This growth was supported by significantly higher field engagement, with our regional teams completing more than 47,000 physician outreach activities during the year. These efforts drove over 2,300 patient referrals in Q4, representing a 46% increase over the prior-year period. Our automated patient transfer process, educational tools, scheduling QR codes, and coordinated intake team engage patients while they are still at the primary care doctor's office. These capabilities are improving referral-to-treatment conversion while reducing friction for both the provider and the patient across the Greenbrook network. We are nearly complete with our SPRAVATO rollout, with 84 clinics now providing the treatment. Throughout 2025, we optimized our billing practices based on the economics of buy-and-bill versus administer-and-observe, and we have taken a disciplined approach to deploying the right billing model by state, by payer, and by clinic. Our efforts across both SPRAVATO and TMS continue to drive strong results, with total treatment volume up 18% year over year in the fourth quarter. On the operational side, we continue to drive standardization across the network, focused on getting patients into treatment faster and simplifying their experience at our clinics. We deployed tablet kiosks across all locations, streamlining check-in and making it simple for a patient to remit their patient-responsibility payments at the time of the visit. We are also piloting a patient portal that allows patients to complete intake forms and submit insurance information before their appointment, with the goal of offering an all-digital intake pathway in the future. We are starting to leverage AI in our benefits investigation, with initial applications helping us file claims faster and more accurately, increasing first-pass acceptance rates while reducing labor. Collectively, these efforts are enabling our team to care for more patients daily while improving our cash conversion. Turning to our NeuroStar business and the BMP program. On the system side, we had a strong finish to the year, shipping 49 systems in the quarter at an average selling price above our target for the fourth consecutive quarter. That tells us customers continue to see the value in NeuroStar and in the support that comes with it. As we have discussed throughout the year, we made a deliberate decision to realign our capital team towards higher-volume, higher-growth accounts that could add NeuroStar TMS into their practices quickly, meaning that they have the staff available to incorporate TMS into their practice, are credentialed with insurance payers, and therefore can get up and running treating patients faster. With that focus on TMS-ready accounts, we are seeing the benefits in system ASP, a reduction in resources needed to go from purchase to treatment of the first patient, and in the quality of accounts we are adding to the network. We believe this positions our NeuroStar business well heading into 2026, and I will discuss more about that shortly. On a pro forma basis, treatment session revenue increased 6% in Q4 on strong treatment utilization growth of 11%. Our Better Me Provider program had over 420 active sites at the end of 2025, with nearly 100 additional sites working towards qualification. Since inception, the program has connected more than 66,000 patients interested in NeuroStar TMS with one of our Better Me Providers. BMP sites continue to deliver significantly higher patient volumes and faster response times than nonparticipating sites, and we have observed that treatment session utilization is increasing at these sites, indicating strong patient flow and demand for existing equipment. We also continue to see growing recognition of NeuroStar TMS as a treatment option for adolescents. During the quarter, TRICARE West expanded coverage for TMS therapy to include adolescents age 15 and older diagnosed with depression, and the coverage is effective across 26 states. That is a meaningful development for military families and further validates the expanding insurance landscape for adolescent TMS treatment. Moving on to our Provider Connection program, which we launched last April. The program has gained real traction. Our field team has held over 400 educational meetings resulting in more than 210 new referral sites by year end. We have also seen strong engagement through the directed provider campaigns and the inside sales outreach efforts. This program takes what we have learned at Greenbrook about educating primary care physicians on the benefits of NeuroStar TMS and applies it across our entire NeuroStar customer base, and it is becoming a meaningful part of how we help patients find and access care with NeuroStar providers. We are also leveraging our Greenbrook infrastructure to offer new services to our NeuroStar customers. Through our intake center, we are now providing benefits investigations and patient management support to partners like Transformations Care Network and Elite DNA. Our benefits investigation model delivers financial clarity to patients within 24 hours, helping practices accelerate patient decision-making, and our patient management program guides patients from initial interest through to treatment, ensuring seamless engagement at every step. These programs are already driving new patient starts at our partner sites and represent a scalable model that we can extend across our national enterprise accounts. Stepping back, I want to put this year into context. When we announced the Greenbrook acquisition, we laid out a thesis that combining NeuroStar's technology platform and training programs with the Greenbrook National Care Delivery Network, we would expand patient access, accelerate growth, and create a path to profitability. One year in, that thesis is playing out. We grew revenue, we reached positive operating cash flow, we strengthened our balance sheet, and we built a platform that is now enabling opportunities that neither company could have pursued on its own. I will now turn it over to Steve to take you through the financial details, and then I will come back to talk about what those opportunities look like heading into 2026. Steven E. Pfanstiel: Thank you, Keith. Good morning, everyone. Unless otherwise noted, all performance comparisons are being made for 2025 versus 2024. Total revenue in the fourth quarter was $41.8 million, an increase of 86% compared to revenue of $22.5 million in 2024, primarily driven by the inclusion of Greenbrook operations following our acquisition in December 2024. On an adjusted pro forma basis, fourth quarter revenue increased 23% versus the prior year. Total revenue from our NeuroStar business, inclusive of our system revenue as well as treatment session revenue, was $18.3 million in 2025. On a pro forma basis, taking into account the impact of the intercompany revenue, this represents an increase of 9% versus the prior year. U.S. NeuroStar system revenue was $4.4 million, an increase of 15% on a year-over-year pro forma basis, and we shipped 49 systems in the quarter. This compares favorably to our fourth quarter 2024 shipments of 46 units, and we continue to see strong system ASP in the quarter. U.S. treatment session revenue was $12.4 million. On a pro forma basis, treatment session revenue increased 6% compared to the prior-year quarter. The reported decline of 4% is primarily attributable to the absence of prior-year Greenbrook intercompany purchases. Clinic revenue was $23.5 million for the three months ended 12/31/2025, a 37% increase on an adjusted pro forma basis, driven by growth in treatments across both NeuroStar TMS and SPRAVATO treatments. Gross margin was 52% in 2025 compared to 66% in the prior-year quarter. The decrease was due to the inclusion of Greenbrook's clinic business, which operates at a lower margin. It is worth noting that Q4 gross margin was our highest quarterly margin of the year, reflecting the impact of our efficiency efforts within the Greenbrook clinics as well as favorable product mix. Operating expenses during the quarter were $26.7 million, an increase of $0.4 million, or approximately 1.4%, compared to $26.4 million in 2024. The increase was primarily attributable to the inclusion of Greenbrook's general and administrative expenses of $8.5 million, partially offset by a reduction of R&D expenses. During the quarter, we incurred approximately $2.2 million of non-cash stock-based expense. Net loss for the quarter was $7.2 million, or $0.10 per share, as compared to a net loss of $12.7 million, or $0.34 per share, in the prior-year quarter. Fourth quarter 2025 EBITDA was negative $4.3 million, as compared to negative $11.0 million in the prior year. Moving to the balance sheet and cash flow. As of 12/31/2025, total cash was $34.1 million, consisting of cash and cash equivalents of $28.1 million and restricted cash of $6.0 million. This compares to total cash of $19.5 million as of 12/31/2024. Cash provided by operations in the fourth quarter was a positive $0.9 million, representing a continuation of the steady improvement we delivered throughout 2025. To put this in context, our operating cash burn improved sequentially every quarter this year from negative $17.0 million in Q1 to positive $0.9 million in Q4. This progress reflects the compounding effect of our continued revenue growth, expense discipline, revenue cycle management improvements, and operational efficiencies across the business. In March 2026, we amended our debt agreement with Perceptive, which reduces our outstanding debt obligation and interest expense. Under the amendment, we made a one-time principal payment of $5.0 million to Perceptive, along with adjustments to the existing covenants. Now turning to guidance. For the full year 2026, we expect total revenue of between $160 million and $166 million, with the midpoint of that range representing greater than 9% growth versus 2025. We expect to see strong revenue performance in our clinic business, with growth year over year in the double digits to mid-teens. For the NeuroStar business, we see increased momentum driving revenue growth year over year in the low to mid-single digits. For the first quarter 2026, we project revenue of between $33 million and $35 million. We expect full-year gross margin to be between 47% and 49%. This reflects the impact of efficiency efforts within our clinic network as well as product mix associated with higher clinic revenue growth. As we drive revenue growth, we remain highly focused on operating efficiency. We expect operating expenses of between $100 million and $105 million for the full year, inclusive of approximately $8.5 million of non-cash stock-based compensation. This total includes investments and costs associated with efficiency efforts primarily in 2026. We expect to see the full benefit of these efforts by the end of the third quarter, with operating expenses at an annualized run rate of less than $100 million by the fourth quarter 2026. For the full year 2026, we expect cash flow from operations to be between negative $13 million and negative $17 million. This includes the necessary investments in efficiency, particularly in 2026, to continue our efforts to drive towards sustainable operating cash flow. Similar to last year, we expect our operating cash burn will be highest in the first quarter due to seasonality of both businesses, where we typically see our lowest patient volumes and lowest capital revenues. Additionally, the first quarter is when we see higher annual cash outlays, such as licenses and incentive compensation. Operating cash flow is projected to improve significantly beginning in the second quarter and then sequentially through the remainder of the year, with operating cash flow being positive during the second half of the year. I will now turn it back to Keith for his closing remarks. Keith J. Sullivan: Thank you, Steve. I would now like to spend a few minutes on multiple meaningful opportunities ahead of us in 2026. We have spent the last year proving that our integrated model works. We now have a national platform with over 420 BMP accounts and Greenbrook locations across 49 states, a proven playbook for launching therapies in clinic-based settings, deep relationships with primary care physicians, and an infrastructure that gets stronger with every patient we treat. As we move into 2026, we are focused on leveraging that platform to drive the next phase of growth through two key initiatives. First, we are expanding how we bring NeuroStar TMS systems to market. As we continue to analyze the TMS market, we have determined that different customers want to acquire access to our technology in different ways. We are piloting new models to meet these customers' needs, allowing them to utilize NeuroStar TMS in a way that works best for them. We are testing these approaches during the first quarter and will provide updates throughout the year on their progress. We have expanded our capital sales team to help target and capture these opportunities. Second, we will continue to see strong growth in demand for depression treatment at our Greenbrook clinics. We now know that a significant unmet need remains. There are approximately 4 million patients with treatment-resistant depression, or TRD, in the United States, and individuals who have failed two or more antidepressants have limited effective options. NeuroStar TMS and SPRAVATO are both important therapies for many of these patients, but the vast majority of the TRD population remains undertreated, and we believe new therapy options can help us reach more of these patients. That is why we are excited to continue to advance our collaboration with COMPASS Pathways on COMP360 psilocybin, a potentially transformational new treatment for TRD. We believe that this could represent one of the most meaningful developments in mental health treatments in decades. COMPASS has recently completed two Phase 3 studies demonstrating highly statistically significant and clinically meaningful results, including durable improvement through at least 26 weeks after just one or two doses. COMPASS plans to submit an NDA, with the potential for an FDA decision by year end. Our Greenbrook clinics are uniquely positioned to be the leader in offering new therapies like this. We already serve a large TRD population across our network, and we believe a new FDA-approved option has the potential to drive increased awareness and engagement from both patients and referring providers. Through our experience integrating and scaling SPRAVATO across the Greenbrook network, we have built a proven playbook for launching REMS-compliant therapies, those requiring enhanced safety protocols and administration in clinic-based settings. We have a national footprint, experienced staff, and an operational infrastructure to support a launch, and because of the alignment with our existing SPRAVATO operations, we expect only limited incremental investment to support this new modality, if approved. Through our existing collaboration with COMPASS, we are preparing to commercially offer this treatment upon an FDA approval. We have identified the initial centers for the rollout, and we are working closely with COMPASS to align launch plans and to support the establishment of favorable coverage policies with payers. We see this as a natural extension of what we have built, further expanding Greenbrook's care platform to deliver innovative treatments to patients who need them most. Beyond treatment-resistant depression, we are also excited about the broader promise of psychedelic-class treatments, which have the potential to help patients suffering from PTSD, generalized anxiety disorder, and other serious conditions. We want Greenbrook to be the platform that can serve all these patients, and our track record of launching and scaling treatments across a national clinic network gives us confidence that we can deliver on that vision. We are excited to share more as we get closer to the potential launch in 2027. Before we open for questions, I want to take a moment to reflect on my time at Neuronetics, Inc. When I joined over five years ago, we were a single-product company with a bold vision. Today, we are a vertically integrated mental health platform with a national clinic network, a growing base of committed NeuroStar providers, and a pipeline of potential new treatment modalities on the horizon. None of that happens without this team. The people at Neuronetics, Inc. and across the Greenbrook clinics show up every day with a commitment to patients. I am proud of what we have built together, and I am proud of the difference we are making in the lives of patients and providers across the country. I leave this company in a position of strength and in very capable hands with Dan. I believe the best is truly ahead for Neuronetics, Inc. With that, I would like to turn the call over to the operator for questions. Operator: Thank you. To withdraw your question, please press 11 again. We will now open for questions. Our first question is from William John Plovanic with Canaccord. Your line is now open. William John Plovanic: Hey, great. Thanks. Good morning, and thanks for taking my question. So first of all, Keith, congratulations on your retirement, on significant transformation of a business. I think this was $50-ish million in revenues when you took over five years ago, and just adding Greenbrook and the scale and finally hitting that targeted cash flow positive, you know, it is definitely a hard-fought battle, but one, and congratulations. I have three questions. One of them is simple. So just, you know, one, I am going to start with the tough one. Just any granularity, color you can provide on the CID in Florida and this Michigan and what documents they are really asking for, and is this related to Greenbrook? Steven E. Pfanstiel: Bill, that is an investigation that is ongoing at the moment. What we can say about it is that we are providing all of the information to the U.S. Attorney's Office in the Middle District of Florida. They have requested documentation for billing practices prior to the acquisition of our acquisition of Greenbrook, and we are cooperating fully with them. William John Plovanic: Okay. Thank you. And then just secondly, on this SPRAVATO, thanks for the update. You know, on the COMP360, just if you could give us any feeling for difference in time the patients have to be in the facility post-treatment or delivery of medication, and then, you know, any difference in the profitability. Like, is it going to be shorter and more profitable, or the patient hangs out longer and it is less profitable per hour, per minute, whatever way you metric you look at. How do we think about that as that rolls out? Keith J. Sullivan: Bill, we have asked Corey Anderson, who is our Chief Technology Officer and running the Greenbrook side of the business, to join us today. So I am going to let him answer that question for you. Corey Anderson: Good morning, Bill, and thank you for the question. So COMP360 is administered in supervised doses within the clinic setting, so there is not a daily or recurring protocol. Unlike these daily medications, the treatment effect appears to be durable after just one or two administrations. So if it is approved, COMP360 would be administered under a REMS protocol requiring certified health care settings, trained staff, and patient monitoring, very similar to what we are currently doing with SPRAVATO. Steven E. Pfanstiel: Yeah, Bill, this is Steve. Just to add, you asked about the economics. We are working closely with COMPASS to look at reimbursement and understand that as we get closer to launch. So more to come on that piece, but I would view it similar to how we have looked at SPRAVATO A and O and SPRAVATO B and B. You know, if the reimbursement is there, it is a great business, but we are not going to take on business that is not going to be profitable at the end of the day. I think COMPASS is working hard, and we are working hand in hand with them to make sure we have got adequate reimbursement to make this a profitable business. William John Plovanic: Great. And then last question, Steve, is you ended the year with $34.1 million, $6.0 million was restricted. Now you paid down $5.0 million to Perceptive. Did that $5.0 million come out of the restricted or the non-restricted? And how do you feel about the cash position given the projected Q1 cash burn? Steven E. Pfanstiel: Yeah. So it does not come out of the restricted piece. So if you looked at 2025, we had $34 million. If you take that $5 million off, it would be a pro forma cash balance of $29 million. If you look at the midpoint of our operating cash flow guidance, we would still have, call it, $14 million to $15 million of cash at year end, obviously some of that being restricted, but that is a cash balance that we have been comfortable with, especially as we are focused on efficiency, reducing overall expenses, and profitability, especially in the second half of this year. I think the other benefit of paying that down is we get interest expense reduction from that. We are probably going to save close to $600,000 annually just for that $5 million paydown, and it just optimizes that overall debt balance that we have out there. So net-net, we are comfortable with where we sit, and I think it continues reducing that operating cash flow burden by taking out some interest. William John Plovanic: Great. Thanks for taking my questions. Operator: Thank you. Our next question is from Adam Maeder with Piper Sandler. Your line is open. Adam Maeder: Hi. Good morning, Keith and Steve. And, Keith, wishing you all the best in the next chapter. A couple of questions from me. I guess I wanted to start on the guidance front and just double click on the 7% to 11% top-line guidance for the overall business. If I heard correctly, double digits to mid-teens growth for the clinic, low to mid-single-digit growth for standalone. Can you just help us understand within the clinic how much is coming from SPRAVATO, and then on the NeuroStar or standalone side of things, volume versus capital? And then I had a couple of follow-ups. Steven E. Pfanstiel: Yeah, thanks, Adam. I will give a little bit of commentary on that. On the clinic side, we expect the majority of the growth to come from the volume side of it, although in Q1, in particular, we will have a lot of SPRAVATO growth due to BNB. So as you recall, we really did not have buy-and-bill volume in 2024, and it was actually pretty limited in Q1 of this past year. In fact, we kind of stabilized more in Q2 of last year at about one out of every seven SPRAVATO treatments being buy-and-bill, but prior to that, in Q1, it was still very limited. So I think what you will see on the growth is Q1 driven by that SPRAVATO BNB impact. Once we get into Q2, it is annualizing, and from that point forward, really, it is about just volume growth overall. SPRAVATO growth, I think, will be volume growth that will be higher than in TMS in general, but we have not broken out that growth rate. Maybe just to give you a flavor, SPRAVATO was probably 30% of our treatment at the start of 2025. It was about 35% by year end 2025. I would expect to see that pattern continue of SPRAVATO representing more of that treatment volume on a quarter-over-quarter basis throughout 2026. It is just a significant growth. I think the thing to remember about SPRAVATO in particular is once you start a patient and they respond, they stay on maintenance therapy long term, whereas with TMS, it is a course of 36 treatments, they are done, and they will come back only if they need to. So it is a little different cadence of how those patients build over time, but SPRAVATO certainly has that continuing maintenance therapy that patients stay on long term. On the NeuroStar side, to give a little bit of color there, Keith mentioned that we do have additional capital reps. We have been generally at around 40 capital shipments a quarter, a little less in Q1, a little higher in Q4. We would expect that to increase to as much as 45 or more as their impact is felt over time. So I think it will take a little bit of time for those reps to get up and running, and then the guidance we gave really, because our treatment session is just the biggest segment of the business, we would expect growth there to largely match the overall guidance of what we gave for the NeuroStar side of the business. Adam Maeder: That is great color. Appreciate that, Steve. And for the follow-up, I actually wanted to ask about Q1 guidance. The Street was a little bit higher than where you have guided to for the first quarter, maybe some mismodeling on our part. But can you just talk about the trends in the business quarter to date? And are you seeing anything that has maybe deviated from past trends? I would just love some incremental color for the first couple of months of the year. Steven E. Pfanstiel: Thanks. I will give a couple of comments there. Certainly, one is we are still just over a year into the Greenbrook acquisition. A big piece of what we have come to understand is that there is seasonality in the business itself, and we find in November and December we see new starts come down on the clinic side of the business. That is just holiday impact. So that kind of works its way through the first part of Q1 here. We tend to have a little bit of that negative seasonality impacting us in Q1. If you look at the overall level of revenue, clinic seasonality is meaningful. It is not uncommon for us to see a huge swing between Q1 and Q4. That is a big piece of that. I would say seasonality also impacts us on the NeuroStar side of the business, especially when you think about capital. Capital is always lighter in Q1 versus Q4. That has to do with how capital budgets are planned in clinics and at our customers. Generally, they are using it in Q4 and using less of it in Q1. Depending on how you look at that, those are two big seasonality impacts. I think the other thing that has really been an impact here, especially over the last couple of months, we have had some weather impacts, which affects patients being able to get in the clinic. We are going to have some of that every winter, but that is obviously something we have to manage as we think about January, February, March, and some of the storms we have had. So that bleeds into the seasonality that we generally see as we go from Q1, which, again, is always our lowest revenue quarter of the year, to Q4, which is generally the highest. Adam Maeder: That is helpful. Thanks. I will jump back in the queue. Operator: Thank you. Our final question is from Daniel Walker Stauder with Citizens. Your line is now open. Daniel Walker Stauder: Yeah, great. Thanks for the questions. Just first off, Keith, congratulations on a great run. It has been great working with you. So I am sending my congrats and just reiterating everyone else's comments. I guess, first, on the COMPASS collaboration, you know, that is really positive news, and I know we have talked a bit about this new wave of therapeutics and the potential role Neuronetics, Inc. could play here, but I was hoping you could give us any more color on this agreement specifically. It sounds like you will be the preferred provider, but is there any exclusivity involved at this point? And if not, could there be in the future? Thanks. Corey Anderson: Yeah, thanks for the question. So, you know, Greenbrook has been working with COMPASS over the past three years, and we have continued to advance that collaboration to help them with their preparations for commercial launch. We anticipate through the course of this year we will have continued discussions about our preparations as an organization to launch the therapy. As you are probably aware, our CMO, Dr. Jeff Grammer, participated in a COMPASS-hosted webinar in January, and we have laid out our operating plans to be prepared for the launch next year. As to the point of exclusivity, COMPASS has about seven of these strategic collaborations to help them prepare for commercial readiness, and Greenbrook is one of them. Daniel Walker Stauder: Great. Appreciate it. And just following up on that, staying with COMPASS, you know, it sounds like there should not be too much more of a lift, but, you know, beyond having to update some of your workflow maybe, are there any other updates you need to make, such as personnel or anything physical to your clinics? I am really just trying to get more of an appreciation of how seamlessly this could integrate into the current infrastructure you have. Thank you. Corey Anderson: Yeah. So, as you are aware, we operate about 84 SPRAVATO clinics under this REMS framework across the country, and I think our infrastructure and experience in running these SPRAVATO clinics provides three key advantages for Greenbrook. First, our clinical staff is experienced in both administering and monitoring these patients under treatment. Second, we have a significant infrastructure and investment in the back-office support of benefits investigations, prior authorizations, and ultimately helping patients access care. And third, we have a deep network of referring providers, psychiatrists, primary care doctors, and others that refer their patients to Greenbrook for these treatments. So I think the infrastructure is largely there, and we will be able to provide COMP360 treatments within the clinics and with the staff already in place at Greenbrook. Daniel Walker Stauder: Appreciate that. Just one final one from me on the SPRAVATO rollout. It sounds like you are nearly complete with all the 89 sites, but I just wanted to ask on the utilization of SPRAVATO for these newer converted clinics. How quickly has this ramped once it is available? Is it weeks, months, quarters? Just trying to get a sense of some of these utilization trends. Thank you. Steven E. Pfanstiel: We look at our utilization, our marketing, and our conversion rates on a daily basis. We are able to identify where we need to add SPRAVATO and where we do not. So in the five locations that are remaining, we are building up that marketing presence there to be able to hit the ground running. We are very comfortable with each one of our locations generating SPRAVATO at the proper level and with the proper billing process, either buy-and-bill or administer-and-observe. Daniel Walker Stauder: Great. Appreciate it, guys. Thank you. Operator: Thank you. I would now like to turn the call back over to Keith for closing remarks. Keith J. Sullivan: Thank you, operator. Thank you all for your interest in Neuronetics, Inc. I really appreciate your support over the last five and a half years while I have been here. It has been a pleasure working with our three analysts and all of the investors. I look forward to hearing the updates on the Q1 call and getting you updated at that point. Thank you all. Operator: This concludes today's conference call. Thank you for participating, and you may now disconnect.
Operator: Ladies and gentlemen, thank you for standing by. Welcome to the W&T Offshore, Inc.'s fourth quarter and full year 2025 conference call. During today's call, all parties will be in a listen-only mode. Following the company's prepared remarks, the call will be opened for questions and answers. During the question and answer session, we will ask that you limit yourself to one question and one follow-up. This conference is being recorded, and a replay will be made available on the company's website following the call. I would now like to turn the conference over to Al Petrie, Investor Relations Coordinator. Please go ahead. Al Petrie: Thank you, Dave. And on behalf of the management team, I would like to welcome all of you to today's conference call to review W&T Offshore, Inc.'s fourth quarter and full year 2025 financial and operational results. Before we begin, I would like to remind you that our comments may include forward-looking statements. It should be noted that a variety of factors could cause W&T Offshore, Inc.'s actual results to differ materially from the anticipated results or expectations expressed in these forward-looking statements. Today's call may also contain certain non-GAAP financial measures. Please refer to the earnings release that we issued yesterday for disclosures on forward-looking statements and reconciliations of non-GAAP measures. With that, I would like to turn the call over to Tracy W. Krohn, our Chairman and CEO. Tracy W. Krohn: Thanks, Al. Good morning, everyone, and welcome to our year-end 2025 conference call. With me today are William J. Williford, our Executive Vice President and Chief Operating Officer, Sameer Parasnis, our Executive Vice President and Chief Financial Officer, and Trey Hartman, our Vice President and Chief Accounting Officer. They are all available to answer questions later during the call. We delivered solid operations and financial results in 2025 by remaining focused on our strategic vision. Our proven strategy is simple and effective: we focus on cash flow generation, maintaining and optimizing our high-quality conventional assets, and opportunistically capitalizing on accretive opportunities to build shareholder value. We are successfully executing our strategy and remain committed to operational performance, returning value to our stakeholders, and ensuring the safety of our employees and contractors. Our ability to deliver consistent production and EBITDA results while integrating producing property acquisitions has helped W&T Offshore, Inc. grow during our 40+ year history. In 2025, we accomplished many things, so here are the bullet points. One, we increased production every quarter in 2025 from 30,500 barrels of oil equivalent per day in the first quarter to 36,200 barrels of oil equivalent per day in the fourth quarter by focusing on production enhancement projects. Two, while we did not drill any new wells, we invested $55,000,000 in 2025 CapEx and performed 34 workovers and four recompletions. Three, we generated adjusted EBITDA of $130,000,000 for full year 2025. Four, we continued to focus on enhancing our liquidity and reducing debt, and at year-end 2025 we grew cash by $31,000,000 year over year to almost $141,000,000 and reduced our net debt $74,000,000 to $210,000,000, further strengthening the balance sheet. And five, we reported year-end 2025 proved reserves of 121,000,000 barrels of oil equivalent with a PV-10 of $1,100,000,000. Obviously, those numbers have gotten better since March due to geopolitics. Six, we accomplished all of this while also returning value to our shareholders through our quarterly dividend. We have paid nine consecutive quarterly cash dividends since initiating the dividend policy in late 2023, and announced the first quarter 2026 payment that will occur later this month. Going into a little more detail about the positive production numbers we were able to deliver in 2025, normally, in the first quarter of every year we have some temporary downtime associated with the impact from cold weather and freezes. We experienced some in 2025 and again in 2026 as well. But through our focused production uplift projects and continued focus on ramping up recently acquired fields, we were able to achieve quarter-over-quarter growth and year-over-year growth. In the fourth quarter, production was up 2% over Q3 2025 and up 13% over the same quarter in 2024. Over the years, we have consistently created value by very methodically integrating producing property acquisitions, enhancing their capabilities, and thus extracting greater value. After we close any acquisition, we take time to assess and more fully evaluate the newly acquired assets. We have a large footprint across the Gulf Of America, so we look for ways to optimize operations, increase production, and utilize that large footprint where we can. That reduces costs and maximizes value. We work really hard on logistics. The assets we acquired in 2024 added meaningful reserves at attractive prices, and they required some additional capital and expense spending to maximize the production capability in all those fields. By 2025, we had also completed all the major projects on the acquired assets, and the production and cash flow benefits from the diligent work of this team to get all those properties online and up to our operating standards are reflected in our results. Moving into 2026, we remain focused on enhancing production and minimizing decline across our asset base through low-cost, low-risk workovers or rate inflation. We remain focused on cost control and capturing synergies associated with those asset acquisitions. We reduced our fourth quarter LOE to $22.4 per barrel of oil equivalent, which was 4% lower compared with 2025, and our absolute costs were below the midpoint of our guidance. Looking ahead, we are expecting our 2026 costs to be lower compared to 2025, which I will discuss later in the call. For the full year 2025, our capital expenditures were $55,000,000, coming in below the low end of our capital guidance. In the fourth quarter, we finished a $20,000,000 pipeline facility project at West Delta 73 that will help support production growth, improve operational performance, and increase our net realized pricing. We expect to see the benefit of that project in 2026. Overall, our capital expense will be back-half loaded in 2025, driven by recompletion and facility capital work to bring online and increase production in multiple fields related to the 2024 acquisition. In addition, our asset retirement settlement costs totaled $37,000,000 for 2025 as we continue to responsibly decommission assets. You can see our operational performance in 2025 allowed us to focus on improving our balance sheet. At the beginning of 2025, we had several transactions that strengthened and simplified our balance sheet, adding material cash to the bottom line and improving our credit ratings from S&P and Moody's. In January, we successfully closed the $350,000,000 offering of new second-lien notes that decreased our interest rates by 100 basis points and, together with other transactions, reduced our total debt by $39,000,000. We also entered into a new credit agreement for a $50,000,000 revolving credit facility which matures in July 2028 that replaced the previous $50,000,000 credit facility provided by Calculus Lending. We also sold a non-core interest at Garden Banks that included about 200 barrels of oil equivalent per day for $12,000,000. We received $58,000,000 in cash for an insurance settlement related to the Mobile Bay 78-1 well. All of these actions have allowed us to enhance liquidity and improve our financial flexibility. These financial actions, coupled with strong operational performance, allowed us to increase cash by $31,000,000 and reduce our net debt by $74,000,000 at year-end 2025. All of this was accomplished in what I consider to have been a much lower price environment for oil and gas. Our ability to execute our strategy delivered positive results in 2025, including an improved balance sheet, enhanced liquidity, growing production, and adjusted EBITDA, all of which have positioned us for success as we move into 2026. We are well positioned to take advantage of growth opportunities like we have done in the past, focusing on accretive, low-risk acquisitions of producing properties rather than high-risk drilling in the uncertain commodity price environment. These acquisitions must meet our stringent criteria of, one, generating free cash flow; two, providing a solid base of proved reserves with upside potential; and three, providing for the ability of our operations team to reduce costs. With our experience, strong balance sheet, and full-year track record of successfully integrated acquisitions, we believe we are well positioned to add to this impressive portfolio of assets. Turning to our year-end reserve results, we have a portfolio of conventional Gulf Of America assets that have established and recorded value over time. Over the past two years, our overall year-end reserves have remained virtually flat, including the volume and PV-10. We produced 24,600,000 barrels of oil equivalent of production, but we also made an accretive acquisition of several fields that helped to offset this production. Since closing the latest acquisition in January 2024, we have generated almost $285,000,000 in adjusted EBITDA, while only spending about $167,000,000 in capital expenditures, including acquisitions. We believe that our strategy of acquiring and enhancing producing properties continues to add value to our shareholders as reflected in our reserve amounts and value. For year-end 2025, our SEC proved reserves were 121,000,000 barrels of oil equivalent with a PV-10 of $1,120,000,000 in a reduced price environment. Notably, we recorded an increase to PDP PV-10 of $279,000,000—that is proved developed producing reserves—compared to year-end 2024, as we had reserves reclassified to proved developed producing. The reserves were classified as 71% proved developed producing, 24% proved developed non-producing, and only 5% proved undeveloped. At year-end 2024, only 52% were proved developed producing and 17% were proved undeveloped. W&T Offshore, Inc.'s reserve life ratio at year-end 2025, based on year-end 2025 proved reserves and 2025 production, was 9.8 years, about 10 years. Approximately 42% of year-end 2025 SEC proved reserves were liquids, with 32% crude oil and 10% NGLs, and we had 58% natural gas. Yesterday, we provided detailed guidance for first quarter and full year 2026 in our earnings release. In 2026, as I previously mentioned, we incurred unplanned downtime at several fields due to winter freezes that temporarily reduced our production volumes. We are predicting the midpoint of Q1 2026 production to be around 35,000 barrels of oil equivalent per day. We are continuing to focus on production enhancement projects throughout 2026, and we expect the full 2026 production midpoint to also be around 35,000 barrels of oil equivalent per day. This is assuming no additional acquisitions or drilling. Our ability to maintain low-decline production is a testament to our quality, our culture of operational excellence, and the strength of our reserves. With several capital projects completed in 2025, we are planning much lower capital expenditures for 2026 due to a substantial reduction in capital projects associated with pipelines, at about $22,000,000 at the midpoint, or less than half the amount invested in 2025. This does not include acquisitions. We are also forecasting about $38,000,000 in plugging and abandonment expenses for 2026, which is in line with the $37,000,000 we spent in 2025. We have a reliable asset base of low-decline wells. We have focused more on acquisitions over the past several years rather than on drilling many new wells, which has kept our capital spending much lower. Turning to costs, our guidance for 2026 LOE is projected to be lower than 2025, despite higher production in 2026. Similar to the capital projects, we spent operating expenses on recently acquired fields to bring them in line with our operational standards. Additionally, some of the capital projects that we undertook in 2025 should lead to lower expenses and higher price realizations. With that said, I believe that there are more opportunities to reduce our operating costs and find synergies to drive costs lower in the long term. Safety is paramount, and we are always working hard to reduce costs without impacting safety or deferring asset integrity work. Our first quarter 2026 LOE is expected to be between $63,000,000 and $70,000,000 and full year 2026 LOE of $265,000,000 to $295,000,000, which reflects the savings I mentioned earlier. Our first quarter gathering, transportation, and production taxes are expected to range between $8,000,000 and $9,000,000. First quarter cash G&A costs are expected to be between $15,000,000 and $17,000,000. As we mentioned in yesterday's earnings release, the DOI, Department of Interior, has proposed some positive regulatory changes that would roll back obligations from the 2024 rule that would have required companies to set aside about $6,900,000,000 in supplemental financial assurance. About $6,000,000,000 would apply to small businesses that make up most of the operators in The Gulf. The proposed changes will better align financial assurance requirements with actual decommissioning risk and could reduce industry-wide bonding by approximately $484,000,000 annually. These proposed revisions have been published in the Federal Register with a 60-day public comment period that is expected to end on 05/08/2026. We welcome these changes proposed by the Trump administration that can further encourage U.S. offshore production growth and further increase America's energy independence. Before we wrap up the call, I would like to say how proud I am of all the people who have helped make W&T Offshore, Inc. a success since we founded the company in 1983. Throughout that time, we have been an active, responsible, and profitable operator in the Gulf Of America. We are staunch advocates for this offshore industry. We believe that our outstanding long-life assets will continue to provide value for our shareholders and our country for many more years. As the largest shareholder, I believe we are well positioned to continue to grow and add value as we move into 2026. Our guidance forecasts that we can modestly grow production and reduce costs, which should lead to a continued build of our cash position. This allows us to remain active in evaluating growth opportunities both organically and inorganically. We have a long track record of successfully integrating those into our portfolio, and we continue to believe the Gulf Of America is a world-class basin that supports value creation. We remain focused on operational excellence and maximizing the cash flow potential of our asset base. With that, Operator, we will now open for questions. Operator: We will now open for questions. Please pick up your handset before pressing the keys. Our first question comes from Derrick Whitfield with Texas Capital. Please go ahead. Derrick Whitfield: Good morning, all, and great update. Starting with your guide, it is clear that you are prioritizing capital discipline and preservation in the current macro environment, not overly focusing on the front part of the curve. With that said, could you speak to where you see the greatest opportunity in the market for cash-on-cash returns, and if there is a sustained price scenario where you would be more inclined to engage the drill bit? Tracy W. Krohn: Thanks, Derrick. Sure. We still think that there will be acquisitions available, and we are confident that we will have our fair share over the next one to two years. We have maintained a record over 40 years of being able to replace and replenish those reserves. Short term and long term, we still see those as possibilities for growth. Organically, we do have prospect inventory, but we feel that our efforts are better placed in making acquisitions as opposed to trying to drill right now. All those prospects, with the exception of a couple of them, are actually held by production. Derrick Whitfield: Great. And for my follow-up, I wanted to focus on the regulatory policy updates you referenced in your prepared remarks. As you see it today, could you speak to what it means for W&T Offshore, Inc. from an insurance cost perspective? And if there could also be potential impacts to your cost of capital as you start to reduce the financial burdens? Tracy W. Krohn: Sure. To us, that means that the insurance premium costs will be going down in the future. We have made a lot of those payments already this year. What that means is that, because of the change in the regulations with regard to financial assurance—which was a term that was, or supplemental financial insurance rather, is a term that was coined in the Obama administration and further exasperated in the Biden administration—that provided so-called financial assurance for decommissioning costs. Most of these leases have, in the chain of title—and that is referenced in the actual lease that operators signed as lessees—you are required, as a lessee on any lease, to be jointly and severally liable for all the due decommissioning liabilities on the lease. So if Exxon owned a property or Shell or Chevron or anybody owned the property 20 years ago and had a lease interest, sold it, it lapsed, whatever, and the lease comes up having remaining decommissioning liabilities, those responsible in that queue are liable jointly and severally for all of those assets being removed from the ocean floor and decommissioning of all the wells. So the government never really needed these financial assurances. This was something that was done by this administration to be punitive. Unfortunately, it sucked a few companies out of The Gulf. A few of our competitors are gone and are not there anymore. A few producers that were contributing to the overall energy output of The United States are no longer there. Clearly, those premiums could have been used better as actual capital to get rid of some of those decommissioning issues that companies had. We feel like this is a proper and fitting action that the government has taken, and we applaud them greatly. Derrick Whitfield: Terrific. Great update, guys. Tracy W. Krohn: Thank you, sir. Operator: Our next question comes from Jeffrey Robertson with Water Tower Research. Please go ahead. Jeffrey Robertson: Thank you. Good morning. Tracy, can you talk about the depth of inventory W&T Offshore, Inc. has for recompletions and workovers that help you maintain or offset natural declines? Tracy W. Krohn: I will do better than that. I will defer that question to William J. Williford, who is our Chief Operating Officer. William J. Williford: Hey. Good morning, Jeff. Thanks for that. Thank you for the question. We have been spending a lot of time at our Mobile Bay asset, and that is a gas asset. We have been doing a lot of asset stimulations, and we have ongoing asset stimulations set up and approved to do in 2026. That is going to help maintain our production decline in Mobile Bay. Also, we have recompletes associated with some of our deepwater fields that are already set up and already on our reserve books, and we are just executing them based on where the production is in the current well. With that, we have several other opportunities, both on workovers and recompletes similar to that, that allow us to not only maintain the current production decline, flatten it out, but also increase it. That is why you see an increase year over year of our production based on 2026 guidance versus what you see in 2025. Jeffrey Robertson: With respect to the regulatory environment that Derrick asked about, Tracy, do any of the proposed changes have an effect on what is attractive to W&T Offshore, Inc. in the acquisition market and the valuations of assets? Tracy W. Krohn: I am sorry. I did not hear all of that question. Would you repeat it again, please? Jeffrey Robertson: With respect to the regulatory changes that you see on the horizon, how does that affect, if any, the type of acquisitions that make sense for W&T Offshore, Inc. to look at, and potentially the valuations of properties in The Gulf? Tracy W. Krohn: Yes. One of the things that I think you will see as a result of the change in regulatory requirements is fields will be allowed to produce longer, because you will not have to have these massive cash outlays or insurance outlays from a market that has shrunk and has shrunk a great deal. You will not have these massive cash and collateral requirements required by these companies to attempt to extort money from companies for their own purposes. We are involved in a lawsuit right now with some of the surety providers on an antitrust basis. That is one of the things that we have had to deal with as an industry. That takes away from the capital that is available to do actual work and drill wells and make improvements to leases. Jeffrey Robertson: Thank you. And if I could ask just one more, Tracy, when you think about the types of acquisitions that you want to look at, if you focus primarily on exploitation and development, are you able to find properties that you can acquire without paying for what the seller might think is drilling upside? Tracy W. Krohn: Drilling upside is nebulous. Of course, that is always the highest-risk asset class, or potential asset class. You never really know what you are going to find until you put a hole in the ground to investigate it. No, I do not think that that changes the outlook. Most people do not think about additional drilling assets as primary in the consideration, unless you have already made a discovery and you are drilling on the fringes of that discovery. I think that you know this well. I know this is the largest basin by area in The U.S., and it is the second-largest by producing assets. We have been able to make a pretty good living over the last 40 years and increase values for shareholders and for our contractors and everybody else. It is a lovely little food chain that exists in the Gulf Of Mexico. This will help continue that trend that the Obama and Biden administrations helped to, or tried to, get rid of. Operator: Thank you. The next question comes from Derrick Whitfield with Texas Capital. Please go ahead. Derrick Whitfield: Hey guys, thanks for allowing me to ask additional questions. Before the follow-up, I wanted to ask about the facility and production enhancements you pursued with Cox and the new marketing agreement for Mobile Bay. More specifically, could you help quantify or provide color on the uplift you expect in realizations and volumes by product? Tracy W. Krohn: That is a pretty comprehensive question, Derrick. I am not sure I have all the answers for your questions there right now as a sum total. What we do not do in The U.S. is we do not provide for a methodology of giving value to 2P reserves. We have to go to great lengths to explain that. In Europe, you are allowed to include 2P reserves in your reserve base. In The United States, via the SEC, we are not allowed to do that. That is the bigger difference that is hard to quantify. We do see that as value, and we have seen that year over year over year as an increase to our reserves by virtue of the type of reservoirs that we have—mainly water-drive reservoirs—that will actually provide a pressure mechanism by which Mother Nature actually helps us to drive that oil to the producing perforations. We are fortunate in this basin to have Mother Nature giving us a helping hand, so to speak. Derrick Whitfield: And, Tracy, maybe on that point, if I am looking at slide 16 of your new presentation, the way that I am reading that is that in your 2P bookings, you effectively do not need to drill any new wells, and you have the probable outcome of receiving additional recovery, thereby, again, increasing longevity of the asset base without new development capital being spent. Is that a fair prediction? Tracy W. Krohn: That is very fair. Derrick, I get a little bit nervous about quantifying some of these results because, in past administrations, that has been frowned on as an expression of 2P. But clearly, we book more cash and reserves over time as we realize that 2P part of our production stream. Traditionally, think about 1P reserves as proved producing and proved undeveloped and proved behind pipe, and then 2P is probable producing and probable behind pipe, probable undeveloped. We get a large portion—in fact, in that presentation that you referred to, it is about $750,000,000—of additional cash flow without any CapEx, hence no drilling, that comes to the wellbore in the form of cash and additional reserve bookings over time. It is a very effective tool that we find in the Gulf Of Mexico to add value without having to make capital expenditures. Derrick Whitfield: Great update. Thanks for your time. Tracy W. Krohn: Thanks. You too. Operator: This concludes our question and answer session. I would like to turn the conference back over to Tracy W. Krohn for any closing remarks. Tracy W. Krohn: Thank you, Operator. These are really unbelievable times right now. We are involved in a war in The Middle East that clearly demonstrates the point that things which affect us that we cannot control are always geopolitical. Other than that, we have pretty good control over our destiny. Even with existing or former administrations, the oil and gas business is not going to go away, fortunately. Thinking about political challenges, our business has always been challenging as a regulatory function, and I do not try to belie that truth in anything other than, yes, the regulatory bodies—generally, the people that work at these agencies—have good intentions. Some of their political masters do not, and we recognize that. I feel like with the current administration, some of those barriers are coming down, and rightfully so. We have been persecuted as an industry and even as individuals by certain administrations. I will leave it with that and tell you that I think we will have better news next quarter as well. Thank you very much, and we will talk to you again soon. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Good morning, and welcome to the Academy Sports and Outdoors, Inc. Fourth Quarter Fiscal 2025 Results Conference Call. The call is being recorded, and all participants are in a listen-only mode. Following the prepared remarks, there will be a brief question-and-answer session. Questions will be limited to analysts and investors, with one follow-up. Please press 0 on your telephone keypad. I would now like to turn the call over to Dan Aldridge, Vice President, Investor Relations for Academy Sports and Outdoors, Inc. Dan Aldridge: Good morning, everyone, and thank you for joining the Academy Sports and Outdoors, Inc. Fourth Quarter and Fiscal Year 2025 Financial Results Call. Participating on today's call are Steve Lawrence, Chief Executive Officer, and Carl Ford, Chief Financial Officer. As a reminder, today's earnings release and the comments made by management during this call include forward-looking statements. These statements are subject to risks and uncertainties that could cause our 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 earnings release and in our most recent 10-Ks and 10-Q filings. The company undertakes no obligation to revise any forward-looking statements. Today's remarks also refer to certain non-GAAP financial measures. Reconciliations to the most comparable GAAP measures are included in today's earnings release, which is available at investors.academy.com. This morning, we will review our financial results for the fourth quarter of 2025 and the full year, provide an update on strategic initiatives, discuss outlook for the year, and share guidance for the full year fiscal 2026. After we conclude prepared remarks, there will be time for questions. With that, I will turn the call over to CEO, Steve Lawrence. Steve Lawrence: Thanks, Dan, and good morning to everyone on the line today. On our call this morning, we plan to cover our fourth quarter and full year results for 2025, along with providing initial guidance for 2026. I will remind you that we also have an Analyst Day planned for April 7 in New York City that will also be webcast. We will go into more detail on our long-range plan and how the investments we have been making in 2025 and 2026 play into our multiyear strategy. I will start with the fourth quarter, which played out largely as we forecast, with sales coming in at $1,700,000,000, which is a 2.5% increase versus last year and translated into a negative 1.6% comp decrease. These results were within our implied guidance range for the quarter. As we shared on our last call, sales were strong over the Thanksgiving and Cyber Week time periods. Similar to prior years, we saw customer spending patterns soften in December and then surge during the week leading into Christmas, which continued into the last week of the month. January was softer than we anticipated, primarily driven by the large winter storms in the last ten days of the month, which caused roughly half of our stores to be partially or fully shut down for two to three days. We saw the business rebound once our stores reopened. As we discussed on prior calls, the big unknown for us this holiday was how the customer was going to react to the inflationary pressures on pricing for goods that were imported from overseas. Our forecast was for average unit retails to be up low double digits for the quarter. We delivered against that by raising our average unit retails up 10% through a combination of promotional optimization, growing sales in the better/best end of our assortment, and some strategic AUR increases. All these efforts helped improve our gross margin by 140 basis points versus last year. Pulling back to the full year, I am proud of how our team executed in a choppy environment. We navigated through all the challenges in 2025 while still growing top line sales to $6,050,000,000, or up 2%, which resulted in solid market share gains across our footprint. We also put in place many foundational building blocks which should help drive sales in 2026 and beyond, some of which include, first, I am proud of how the team rallied midyear to mitigate the impact of the incremental tariffs that were levied in late Q1 and Q2 of last year. The team had to react midyear after most of the merchandise was already purchased and managed to offset the increased expense through a combination of sourcing country diversification, inventory pull-forward at lower costs, and pricing and promotional optimization work. The result of these efforts yielded an annual AUR increase of 6% which translated into a gross margin rate of 34.8%, or plus 90 basis points versus the prior year. As we embarked on this journey to raise AURs, we also committed to not losing our reputation for having outstanding value by constantly monitoring pricing across the marketplace. What we found through the ongoing customer research work we do is that we have managed to improve average unit retails across the full year while also improving our value perception with customers relative to key competitors. I can assure you that this was no easy feat. Another key accomplishment was the 13.6% growth we drove in our .com business. We put a lot of new players in place late in 2024, and they jumped in and quickly worked to improve core search and site experience fundamentals. They also showed tremendous agility throughout the year as we incorporated emerging AI capabilities into our site for data enrichment on our items to help improve relevance in search, leveraging image generation capabilities on our private brand apparel, and finally, introducing agentic AI onto our site for the first time, the launch of Scout, prior to Christmas. While we are still in the early innings on these efforts, we are excited about the initial results we are seeing on this front. Third, new store expansion remains our number one growth opportunity. During the year, we successfully opened up 24 new stores, which in aggregate are tracking to exceed their year one performance. At the same time, stores that opened in 2022 through 2024, which are now in the comp base, drove mid-single-digit comp increases. We expect this tailwind to grow in 2026 as the 2025 vintage of new stores rolls into the comps as we progress throughout the year. Fourth, the team was laser focused on improving in-stocks through a combination of assortment rationalization efforts coupled with the rollout of RFID scanners to all of our stores in Q2. During the year, we shifted to weekly counts and inventory updates on brands that are RFID-enabled, which in aggregate represent roughly 25% of our annual volume. The end result was improvement in store in-stocks across the company by 500 basis points, which had a major impact on overall customer satisfaction along with improving conversion. We also believe that the merchants did a great job of leaning into emerging trends and brands, which helped reinforce our position as a key destination during gift-giving time periods such as Father’s Day and Christmas, along with stock-up time periods such as back to school. Adding in-demand brands such as Jordan and Converse to our assortment, coupled with expanding other hot-trending items such as Birkenstocks, Perliville 101, Turtlebox speakers, and the Ray-Ban Metas, helped us drive traffic into our stores during the key moments on our customers' calendars. This is another initiative that we will continue to push on in 2026. Next, our My Academy Rewards loyalty program has continued to grow since we kicked it off in mid-2024. We now have over 13,000,000 customers enrolled in this program. This is another initiative that we are still in the early innings on. We have some exciting plans to accelerate growth on this front in 2026 that we will share in a couple of minutes. Finally, all these efforts combined to help us drive new customers in our stores, which was evidenced by the 10% growth we saw in consumers whose household income is over $100,000 a year. The increased traffic from this cohort is, in effect, helping us diversify and somewhat de-risk our customer base, with these higher-income consumers now representing our largest and fastest-growing customer cohort. To be clear, we remain focused and committed to maintaining our position as the value provider in the sports and outdoor space. That being said, we believe layering on new trending brands and items targeted at the better/best end of the assortment is a good way for us to both expand our share of wallet with existing customers, while also attracting new customers to shop with us. Shifting gears to 2026, as you saw in our press release earlier this morning, we are providing sales guidance for 2026 of plus 2% to plus 5% total growth, which translates into a negative 1% to plus 2% comp sales. The low end of our guidance contemplates a continued muted backdrop for discretionary consumer spending. Our belief is that most of the macroeconomic pressures the consumer faced in the back half of 2025 will carry into 2026. In particular, inflationary pressures on goods sourced outside of the U.S. should continue through the first half of the year. Assuming no additional dramatic changes in trade policy, we believe that as we lap the increased tariff costs in the back half of the year, prices should settle in at their new levels. That being said, there are also several tailwinds that should help us overcome some of these macroeconomic pressures. The first three I will mention are external events that we should benefit from. First, we are still early in the tax return season, but we believe consumers should see higher income tax refunds this year. In the past, we have seen categories such as firearms, gun safes, and work boots benefit from earlier and/or higher refunds during the tax season. It is hard to discern how much of an impact we are currently seeing from refunds, but I will share with you that through the first seven weeks of the quarter we are running a positive comp. We believe some portion of these results could be attributed to higher tax refunds. Second, as most of you are aware, the World Cup is coming to the U.S. this summer, and approximately 30 matches will be played in venues across our footprint. We believe this should translate into increased tourism and foot traffic in the second quarter, which should provide a sales lift for our licensed team and tailgating businesses. Longer term, we have seen events such as this drive increased participation in youth soccer, which should help drive sales in our sporting goods business in the back half of the year and into 2027. Finally, 2026 is the 250th anniversary of the United States. We traditionally see strong selling over the summer in patriotic merchandise, and we believe this year will be even stronger when you couple the surge in national pride around our 250th birthday with all of the excitement for Team USA this summer. At the same time, we have multiple self-help initiatives we put in place, which should also enable us to drive comp growth. We expect the momentum we started to build in our .com results in 2025 will continue to propel the business forward. We are accelerating Academy’s digital transformation by building a modern omnichannel business that will deepen engagement with our customers through data-driven personalization. Key enhancements for 2026 include moving to an AI-based semantic search platform on our site in late Q2 to improve relevancy and conversion. We are also working with leading AI platforms such as OpenAI and Google to enable our catalog of products and offers to surface inside their ecosystems, which will greatly simplify the browsing experience for customers who are using AI as a search engine for shopping. We also continue to grow our online assortment through additional drop-ship partnerships. When you combine this push to expand our endless aisles with the new handheld devices we rolled out to stores, in conjunction with RFID last year, you can see we are empowering our store team members to take care of their customers’ needs in real time by dramatically expanding the assortment available to them well beyond what is physically available in that individual store. Lastly, we continue to expand our reach beyond our own channels through third-party storefronts on platforms where our customers frequent. Chad Fox, our Chief Customer Officer, will present at our Analyst Day on April 7 to give you a deeper dive into many of the topics I just covered, along with some of the other initiatives that we have in the works for later in the year and beyond. Another big landmark for us in 2026 will be the relaunch of the Academy credit card. We launched this program seven years ago, and for many years this served as our only loyalty vehicle. In 2024, we introduced My Academy Rewards as a way to extend loyalty offers to customers who either did not want and/or did not qualify for a private label credit card. These programs have worked in parallel to each other but were not connected. With this relaunch in Q2, we have streamlined the sign-up process and are also creating a unified customer loyalty program with expanded ways to provide increased value to our customers. The new program will have three tiers. My Academy Rewards, which is currently comprised of 13,000,000 members, is the base tier and does not require an Academy credit card to access. Key benefits customers get for joining My Academy include a sign-on first discount of $15 off their next purchase, a birthday reward, free shipping on .com orders over $25, and a $25 reward after spending $500 inside of Academy within the first 90 days. The second tier is a private label credit card that can only be used at Academy. The value proposition for this tier includes all the benefits of joining My Academy with some additional perks. The sign-up first discount accelerates from $15 off to $30 off. Customers get free shipping on all .com orders with no minimum, and similar to today, customers receive 5% off all purchases made in our stores and .com site on this card. The third tier is a new My Academy Rewards Mastercard which can be used as a normal credit card across all purchases. Benefits for this tier include all the ones I listed for the private label credit card along with a couple of additional incentives. First, they get a higher spending limit than customers traditionally get on a private label credit card. In addition to the 5% off for spending with us, these customers also get 2% back on all purchases made outside of Academy and rewards they can redeem to shop back at Academy. Finally, they get an initial $50 reward to shop after they spend their first $500 outside of Academy on their card. The beauty of this new card is a unique and best-in-class value that helps solve an unmet customer need. Most retailers’ cards only give rewards for spending within the brand’s four walls or on their website. Our My Academy Rewards Mastercard will allow all the game families that we serve to leverage all their spend on weekly necessities such as groceries and gas, taking the rewards from this spend and redeeming them at Academy to buy all the gear they need to fuel their families’ activities and passions. We will fully relaunch the program and convert existing cardholders over to the new card in Q2 in advance of Father’s Day. All reissued cards will have a reactivation reward included with their new credit card, which should help drive a good tailwind heading into the key store selling time period. Similar to last year, we will continue to add and expand our offering of better and best brands that resonate with our core consumers. For example, while we launched the Jordan brand in 145 doors last spring, some categories such as boys’ apparel, socks and slides, and backpacks have already expanded out to all doors. We will expand our Jordan Brand Shop concept this spring out to an additional 55 stores, which will take this integrated presentation to more than 200 doors overall. At the same time, we also will continue to expand our offering from Nike of higher-level fashion in both footwear and apparel into all stores and online. Another key trend we are rapidly growing is our offering of work and western wear. We are capitalizing on this growing lifestyle movement by expanding our breadth of assortment with key brands such as Carhartt, Wrangler, and Ariat, while also expanding our vendor matrix to test emerging brands such as Hooey and Brunt. On the fitness front, one of the hottest trends out there is 80 races across the globe. We are their exclusive brick-and-mortar partner in the U.S. and will bring their branded training equipment to over 70 Academy doors this spring so people can train at home for the races. The last big merchandise initiative I will cover today is our continued push into the baseball lifestyle culture. We continue to expand our assortment of the hottest hats and gloves and have supplemented that with an assortment of apparel and lifestyle accessories from hot new brands such as Baseball Lifestyle 101, Dirty Mid’s, and Bruce Bolt. This area was one of our best-selling categories for the holiday, and we expect that the momentum will carry through in the spring and summer selling seasons. We plan to share more on our other exciting brand launches at our Analyst Day in April. The last self-help initiative I will cover is leaning into and expanding on some of the strategic investments we made over the past couple of years. As I mentioned earlier, rolling out RFID scanners last year was a game changer for us as it helped us improve in-stocks and drive higher conversion rates. This spring, we are expanding tagging to include our private branded apparel and footwear products. This will allow us to facilitate weekly counts and update inventory on roughly one-third of our sales base by the end of spring. We also remain committed to our new store expansion plan, and as we shared in our Q3 call, our plan is to open up 20 to 25 new stores in 2026. The majority of these stores will be infill within our legacy and existing markets and should be strong performers for us right out of the gate. At the same time, as we move through the year, the 2025-vintage new stores will start to flow into our comp base. By the end of the year, we will have over 50 stores that opened between 2022 and 2025 impacting our comparable sales growth. We will give you a deeper dive into how we have refined our real estate strategy during our Analyst Day on April 7. To summarize, we are proud of all that the team accomplished in 2025. We expect the macroeconomic backdrop to be challenging for the lower- and middle-income consumer, but believe that there are a combination of external factors that, when coupled with our internal initiatives, should allow us to grow top line sales 2% to 5% while also driving margin expansion and earnings per share growth in 2026. I will now turn it over to Carl to give you a deeper dive into Q4 and full year financials for 2025, along with our initial guidance schedule for 2026. Carl? Carl Ford: Thank you, Steve. Fourth quarter net sales were $1,700,000,000, up 2.5%, and comparable sales were down 1.6%. Breaking down the comp, transactions were down 6.4% while ticket was up 5.1%. In the fourth quarter, Academy Sports and Outdoors, Inc. generated net income of $133,700,000 and diluted earnings per share of $1.98. Fourth quarter adjusted net income was $132,900,000, or $1.97 in adjusted diluted earnings per share. Gross margin of 33.6% in the fourth quarter was up 140 basis points versus last year and exceeded our implied guidance. The majority of the expansion was driven by efficiency gains in our supply chain and the lapping of costs incurred for port disruption from the prior year. Merch margin, inclusive of tariffs, was flat as we managed prices while maintaining alignment with our value pricing strategy. SG&A expenses came in at 23.7% of sales for the fourth quarter, an increase of approximately $21,000,000, or 70 basis points. The increase was driven by growth initiatives totaling approximately 135 basis points, comprised of 115 basis points of new store growth, as we have opened 24 new stores in the last twelve months, and 20 basis points of technology investments to fuel our omnichannel growth. The acceleration in new store growth from 2022 to 2025 has had an outsized impact on SG&A expense growth, but as we move through 2026, the number of new stores at 20 to 25 will be similar to FY25. Looking at the balance sheet, we ended the quarter with $330,000,000 in cash, which was a 14% increase from the prior year. Our inventory balance was $1,500,000,000, an increase of 15% compared to last year. On a per-store basis, inventory dollars were up 6.3% while inventory units were flat. For the full year, we generated $435,000,000 in cash from operations, of which we reinvested $172,000,000 back into the business to drive our growth initiatives. These actions led to approximately $263,000,000 of adjusted free cash flow, of which we returned $234,000,000 to investors through $35,000,000 in dividends and $199,000,000 in share repurchases at an average price of $50.62. In terms of capital allocation, our strategy remains focused on generating cash flow to reinvest into our growth initiatives for the business and to return the majority of our free cash flow back to investors through dividends and stock repurchases. During the fourth quarter, we paid $8,600,000 in dividends and repurchased approximately $100,000,000 of our shares at an average share price of $54.03. We are pleased to announce the Board recently approved a 15% increase in our dividend, resulting in $0.15 per share payable on April 10, 2026 to stockholders of record as of March 20, 2025. Our guidance for 2026 is as follows. Net sales are expected to range from $6,180,000,000 to $6,360,000,000, an increase of 2% to 5%, with comparable sales of negative 1% to positive 2%, with a midpoint of positive 0.5%. I would like to share the assumptions that influence our 2026 guidance. As we head into 2026, we expect the consumer to continue to face a challenging economic backdrop, but we are confident that our internal initiatives alone support the midpoint of our guidance. The low end of our sales guidance contemplates a continued muted backdrop in discretionary consumer spending, and the high end represents an improvement in consumer health, aided by the macro events already mentioned. We also expect traffic to improve as our internal initiatives continue to resonate and prices stabilize throughout the year. Our gross margin rate is expected to range from 34.5% to 35.0%. GAAP net income is between $380,000,000 and $415,000,000. Adjusted net income, which excludes stock-based compensation of approximately $37,000,000, is forecasted to range from $410,000,000 to $445,000,000. Our gross margin gains for the full year of 2025 were primarily driven from merch margin expansion, as we expanded Nike and launched the Jordan brand, and while we do not anticipate the same level of expansion, we do see growth as we expand the Jordan Brand Shop concept into 55 more doors and expand softline brands like Birnabow. This, of course, will be partially offset by the impact of continued tariffs, especially in the first half of the year. In addition, we expect shrink to be a tailwind as we continue to roll out RFID to more brands and private label apparel and footwear. We expect GAAP diluted earnings per share of $5.65 to $6.15 and adjusted diluted earnings per share of $6.10 to $6.60. The earnings per share estimates are based on an expected share count of 67,000,000 diluted weighted average shares outstanding for the full year. These amounts do not include potential future repurchase activity. Our current authorization had $437,000,000 remaining at the end of fiscal 2025. We are also confident in the strength of our cash flows and expect to generate between $250,000,000 and $300,000,000 of adjusted free cash flow after investing $200,000,000 to $240,000,000 back into the business in the form of capital expenditures, primarily for our strategic growth initiatives. Looking at the anticipated shape of the year, our Q1 performance through the first seven weeks is off to a positive comp sales start, and we expect it to be our strongest quarter as we lap a negative 3.7% comp from 2025. On the surface, the second quarter could appear the most challenging as we lap a positive comp, the launch of the Jordan brand, and the subsequent Nike assortment expansion. However, we are optimistic as we expect to see tailwinds from the launch of the new My Academy Rewards Mastercard, as well as the continued rollout of the Jordan Brand Shop concept into 55 doors this spring. Additionally, we expect to see a tailwind from the World Cup, increased tax refunds, and America’s 250th anniversary. We expect the positive momentum in the first half to carry over into the second half of the year, but we are mindful that tariffs and any prolonged impact to gas prices could have a negative impact on the U.S. consumer. It is also important to remember that the 20 to 25 new store openings in 2026 will be more back half-weighted when compared to fiscal 2025 due to the initial pausing of signing new leases for 2026 when tariffs caused uncertainty in construction prices. We will provide updates to our guidance each quarter as conditions warrant. To conclude, we are optimistic as we head into the new fiscal year and believe we have made the right investments and strategic decisions. I look forward to speaking with you again during our Analyst Day on April 7 about our long-range plan. Operator, please open the line for questions. Operator: Thank you. At this time, we will be conducting a question-and-answer session. You may press 2 if you would like to remove your question from the queue. As a reminder, we ask that you please limit to one question and one follow-up. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment, please, while we poll for questions. Our first question comes from Christopher Horvers with JPMorgan. Your line is now live. Christopher Horvers: Thanks. Good morning, guys. So my first question is on sales. You mentioned a large number of store closures in January. Can you quantify how much of a headwind that was to your overall performance in the fourth quarter? And then as we try to parse out what the right underlying trend in the business is, where are you any specificity on where you are running quarter to date? You did have weather headwinds that you lapped last year in February, and then March was not that much better. And then you have had the war recently, which I think historically when these events happen, it does drive some sort of run on the ammo business. So how do you think about the puts and takes of what the right underlying trend is? And have you seen any of that impact from what is going on around? Steve Lawrence: Yes, sure. I will start. So, Chris, we saw trends coming through Christmas pretty strong in the last week leading up to Christmas and even the week after Christmas. January was actually running positive for us. We had roughly half of our stores closed for about three days. It was over a weekend this year versus last year where we had some weather; it was during the week. If you took those three days out where we had roughly half of our stores shut down, we were running a positive comp in the mid-single-digit range. We estimate that was probably worth about 100 basis points in comp of a headwind for us within Q4. We were pleased to see, though, that once the stores reopened, as we said, the business resumed. February was strong. We were happy with the positive comps. We had positive comps across every division. That has continued into early March, so it feels pretty broad-based. I would tell you that ammo, the category you just mentioned, got better during the quarter in Q4. We talked on the previous call about how we were up against the run-up part of the election in Q3, and we saw that business start to stabilize in Q4. It started off running down high single digits; by the end of the quarter it was running down low single digits. It was running positive comp in February before the war kicked off a couple of weeks ago, and then since then, it has obviously accelerated a little bit. But it has also been a solid business for us. It probably was aided a little bit by current events. Christopher Horvers: Understood. And then my follow-up question, Carl, is on the SG&A side. You mentioned that you are going to annualize; you will have two back-to-back years of similar unit growth. As you look at what has happened, you know, ex the lapping, you will lap Jordan, the Jordan rollout, and some of the costs that you put in on the advertising and the updates there. But you have been running 6%, 7%. It looks like we were thinking that was the right trend here in 2026, but the guidance seems to imply about 2% to 3% SG&A growth this year. Is there anything, like how much of that is the annualization of a similar number of store opens? Is there some investments that are being dialed back, or anything unique to get down to that math? I know you mentioned the cadence of the year and how the stores are going to be weighted. So any additional detail on that would be helpful as well. Thanks so much. Carl Ford: Yes. So the main driver of our SG&A growth has been the store increases, and so as we move from 16 in 2024 to 24 in FY25, that had an outsized impact. We are guiding 20 to 25. We think that is the right number for us next year. We feel good about all of the openings. Simply not having the growth in the number of units—it will be about 8% unit growth for us—provides a good level of leverage. As it relates to next year’s guidance, at the midpoint, what is implied is modest leverage from an SG&A standpoint. I will remind you that in 2025, we had $7,500,000 in the Jordan launch cost that was associated with primarily the 145 shop doors. That is going to be less this year, and it will be in Q2, not Q1. And then overall, we are looking for ways to leverage in the business, doing things smarter and more efficiently. We found some automation opportunities—that is helpful—and we are going to have modest leverage next year at the midpoint. Christopher Horvers: Thanks very much. Have a great spring. Operator: Our next question comes from Simeon Gutman with Morgan Stanley. Your line is now live. Simeon Gutman: Good morning, guys. So if you look at 2025 in the rearview mirror, discretionary spend was fairly light across the board for most end markets, but you were lapping easier compares and you did add a few initiatives, which are working, still seem promising. So looking at the following year—and I appreciate the range, and it is early, and there is a lot of geopolitical things brewing—but, big picture, the return to positive comps, why do you think it is taking as long as it is given initiatives and the drivers and the confidence of landing maybe in the higher end of that range for this year? Steve Lawrence: Yes. I think when we talked about guidance, Simeon, we were looking at the puts and the takes. I would say from a headwind perspective, I think that the consumer was under pressure, as you noted, last year. I think that persisted throughout most of the year, and I think that was probably the one thing that stopped us from getting all the way across the line to get a positive comp. I will note that we actually grew the top line last year, which is the first time since 2021 that we have grown the top line, so that is a good starting point, but we know delivering consecutive positive comps is the key moving forward. That is why we really talked about some of the growth initiatives we have, both self-help as well as some external. You look at our .com business; that has been surging and was up almost 14% last year. I think we have a really good foundational base there. We are going to continue to lean into that. I think some of the moves the team is making and leaning into AI are really going to help out there. The new stores continue to get stronger. We mentioned that our new stores that opened from '22 to '24 ran a mid-single-digit positive comp, and we had roughly 25, 26 that we were feeling that last year. That number doubles this year as more stores fill in the comp base. That becomes an increasing tailwind. I cannot underestimate the impact of this loyalty credit card relaunch and integration. That is a big, big deal for us. It was two separate programs based off when we launched them. I think integrating it is really going to allow us to start delivering value to the consumer. Then you think about other things. We have got some outsized growth in some categories we are carrying, like work and westernwear—those are trending lifestyle initiatives out there that we are really doubling down on this year. We will continue to lean into newness with all the things we have mentioned on the call. Then you have the external tailwinds like the tax refunds, World Cup, and then obviously the 250th anniversary of the United States. So we feel like we have got a really good point of view around what we think the headwinds are. We think we have got a lot of self-help as well as external tailwinds that allow us to get back to positive comps. We think this is the year that happens. Simeon Gutman: Thanks. And a follow-up, the store economic model—if you step back, how is the profitability ramp of the newer stores? And then given the lighter comp backdrop, how do you think of the year-two, year-three stores, or the economic model with the returns producing the way you thought? Carl Ford: Yes, thanks for asking. Our stores in year one are a little bit better than what we anticipated. And with mid-single-digit comps for those that are in the comp set—and that is after the fourteenth month that they enter the comp set—they are performing well. So we are pretty pleased with it. We have seen some opportunities to infill in legacy and existing markets. Those typically perform a little bit better than those in our newer markets where we are establishing brand awareness. From an economic model standpoint, from a CapEx standpoint, it is $2.5 to $3.5 million of net CapEx, and then we invest some incremental inventory there too. We expect a 20% ROIC. From a multiyear standpoint, from a growth trajectory, what we are seeing is that they continue to grow. In the legacy markets, it is pretty steady growth, and then in the new markets, when you look at those that are in the comp set, they are growing well into years two and three as well. Again, we like what we are seeing. We have learned a ton over time since we started launching in 2022. We feel really good about the 2026 cohort. Simeon Gutman: Thanks. Good luck. See you in a couple weeks. Steve Lawrence: Thanks. Operator: Our next question comes from John Heinbockel with Guggenheim Securities. Your line is now live. John Heinbockel: Hey, guys. I wanted to start with this year, the waterfall effect of new stores. Looks like that could be, I do not know, 60 or 70 basis points or something like that at a mid-single digit. Is that fair? Does that sort of suggest mature stores you think will be flattish? And then the impact of loyalty and Mastercard launch, could that be as impactful as the waterfall? How would you sort of compare the two? Steve Lawrence: I think you are in the right range, John. I think that we saw mid-single-digit growth last year in the 2022 through 2024 vintage stores, and you multiply that times the percentage they contribute, it is probably about a 30 basis point tailwind last year that will probably come close to doubling this year. I think you can assume a very similar sort of lift for the loyalty relaunch. And I will remind you, that is for about a half a year because we are really kicking the full relaunch off heading into Father’s Day. So we will also get the benefit of that as we lap the first half of next year as well. So we are really excited about both those initiatives. John Heinbockel: And then maybe as a follow-up, I know there has been a lot of opportunity with regard to supply chain, which I guess has been pushed out a little bit. What is the current update on all of the initiatives? Some of it is technology. Some of it is throughput. Where are we on that? Where are we tracking? Carl Ford: Yes. From a supply chain standpoint, I will get to the future-facing in a second, but we did see the majority of our gross margin gains in the fourth quarter through the supply chain. Some was from lapping—I do not even know if people remember this, but in Q3 and Q4, there were proposed East Coast port strikes. We took some mitigating activities. We were up against those. The efficiencies that we saw in 2025 were more than just the lapping, and I think Rob Howell, our Chief Supply Chain Officer, is doing a great job as it relates to driving efficiencies out of transportation as well as DC efficiency. Moving forward, I would like to couch the majority of the ongoing benefit because we are going to contextualize that in the Analyst Day on April 7, but we have rolled out one of our distribution centers on the Manhattan Active warehouse management program. We are looking to slate the Katy distribution center and the Cookeville distribution center later. It will not be in 2026. We have got some pretty good efficiencies that are going on there right now based off the unitary management there, and that is implied within the guidance. As it relates to beyond that, I still feel really good about the supply chain efficiencies that we spoke about previously, but I would like to give you more color—if you do not mind, I would like to wait until April 7 to speak to beyond 2026. John Heinbockel: Sure. Thank you. Operator: Our next question comes from Brian Nagel with Oppenheimer. Your line is now live. Brian Nagel: Hi, good morning. Thank you for taking my question. I want to—look, a lot of questions and a lot of focus on just this path towards consistent positive comps at Academy. The way I want to frame the question is, today we are hearing, and over the last few quarters, it seems as though the tools to get there are taking shape. You have the new stores and the new product launches, e-commerce effort, etcetera. But we are still not there yet. The question is, is there something in the business, maybe aside from a more difficult macro backdrop, that is offsetting all those positives that are taking shape, that is becoming a bigger headwind for Academy and its push towards positive comps? Steve Lawrence: I would say if you go back and look at 2025 in a vacuum, probably one of the bigger headwinds we faced was ammo. That is a big business for us. It does move the needle, and there were a lot of events that drove that business in 2024 that were not there in 2025. But outside of that, I would say there is nothing I would point to outside of just getting these initiatives and strategies really mature and starting to contribute fully. I think that is the thing that is going to allow us to break through and post a positive comp, and that is why we are excited about all the different initiatives we put together. We are seeing really good green shoots beneath the surface on all the initiatives we talked about, and we think this is the year where all those things culminate and pull together and get us across the line. So we are seeing momentum in the business coming out of Christmas into the first part of this year. We want to be very muted about what we see from a consumer backdrop out there, but we are encouraged by what we are seeing, and we think that the culmination of all those initiatives is what it is going to take to get us there. Carl Ford: I agree with everything Steve said. The primary headwind is the economic health—the financial health—of the American consumer. That is what is moving against e-com being up 13.6%, new stores mid-single-digit comps, Nike and Jordan taken together—because we did not have Jordan the previous year—up high single digits. That headwind, except for the category of ammo that Steve spoke to, is the financial health of the American consumer. And that is embedded within our guidance. We feel great about the initiatives moving forward. But I am seeing credit card delinquencies at double what they were in 2024. I feel job growth in America is not going to be strong in 2026. I think that gas staying high—we are just really conscious of a headwind associated with financial health. Brian Nagel: That is very helpful. And, Carl, I guess my follow-up will be—just to—you made the comment just a second ago about gas prices. So obviously a very big focus right now for the market. A lot of questions of how high and the duration. But given the nature of your business and your consumer and given where your stores are generally located, historically have you seen higher or elevated oil or gas prices more of a friend or foe for your consumers? Steve Lawrence: Yes. I will jump in here, Brian. I would tell you that, obviously, gas prices being high is not good for discretionary spending in America. That is not a good thing for us or for any of our competitors because it just takes more share of wallet from the consumer. On the flip side, to the point I think you are alluding to, we have a big base of stores in Texas, and higher oil prices lead to higher rig count. Higher rig count leads to higher employment in the oil patch, and that sometimes can be a tailwind for us. We are not going to prognosticate on how long this is going to take or how long this is going to play out. But there are definitely puts and takes with what is going on in the world today. We got a question earlier about the impact on some of our categories. Ammo tends to be one of those categories that reacts positively when we have events like this happen. So we are watching it closely. We are not trying to prognosticate about what is going to happen in the war, but we think we have a really good balanced approach based off of the backdrop that Carl mentioned, as well as the self-help initiatives that we have internally to help us overcome those headwinds. Brian Nagel: Very helpful. I appreciate all the color. Thank you. Operator: Our next question comes from Michael Lasser with UBS. Your line is now live. Michael Lasser: Good morning. Thank you so much for taking my question. I wanted to mention some of the puts and takes on your sales outlook for this year. Carl, in your remarks, you talked about a 200 to 300 basis point swing from the low end to the high end of the guide based on macro factors, and yet you are also pointing to some good guys from the macro, whether it is tax refunds, the World Cup, or the 250th anniversary celebration. So are you factoring in around 200 to 300 basis points of a contribution from those factors? Because a year from now, when we are having this conversation, we are going to have to dimension how much of your performance in 2026 is based on what Academy is doing versus how much was based on macro, and it will be very helpful to understand what you assumed within your outlook. Thank you. Carl Ford: Yes. So we started with what our plan is, and it is not a range. It is what we think we are going to deliver. Our self-help initiatives—the things that we are talking to you about: new stores, e-commerce (aided by all the things that Steve said), the loyalty program—these things that we are launching and, in some cases, building upon, get us to the midpoint of that 2% to 5% guidance range. At the low end, we anticipate that macroeconomic factors stay the same and that the tailwinds associated with those three big events you just mentioned—World Cup, 250th, and elevated tax refunds—are completely negated by macro headwinds. At the top end, the 5%, those macro events, those three things, outweigh the headwind associated with financial pressure on the consumer and give us a little bit of a net tailwind, if you will. So our self-help initiatives get us to the midpoint. The three things that are macro drivers are either going to be overwhelmed by financial pressure of the consumer or will give us some benefit, and that was really what differentiated the 2% to 5% low-high guidance. I will tag on this question, Michael, thanks. The other thing I would say is that when you think about the value of the external tailwinds versus the self-help, the self-help are much greater than the external. We think the World Cup is probably worth about 30 basis points for the year. That being said, we think that just the loyalty credit card alone is equal to that this year with having a half year next year. So that should mute or overcome whatever we would be up against from a World Cup perspective. Tax refunds will be repeated; I do not think those are going to be lower next year. And so then you come back to the 250th anniversary of the United States. Helpful—it certainly can drive a surge in patriotism and help us with red, white, and blue. But it is not as big as the impact of the new store comp waterfall, the impact of .com in our business. So I would say that the majority of what gives us confidence this year about being able to bend the curve and get back to a positive comp is the self-help initiatives that are going to drive it. Michael Lasser: Got you. Very, very helpful. My follow-up question is the changing nature of the Academy model pivoting to maybe a slightly higher income and a slightly higher vendor base that might have a higher expectation for how you showcase their product. So as a result, is that driving an increase in your operating expenses? Because if we look at your results in the fourth quarter, your gross profit dollars actually exceeded the consensus forecast, but operating income was a bit short, and it really all came down to SG&A. And the question is, are you seeing less visibility in your SG&A dollars as you pivot to maybe a higher operating cost model as a result of these changes? Carl Ford: Yes. I do not think there is an elevated operating cost model. Again, there are some launch costs, which I walked through for Jordan associated with rolling out the shops, and then we do have a Jordan enthusiast that staffs on key time periods for that. But I really would not point to elevated operating costs as the issue. I think, in looking at the consensus for the fourth quarter on an SG&A rate standpoint, we do still pay people when we close our stores. So if that was a 100 basis point headwind to the fourth quarter comp, we still incur some of those costs without having the sales that they provide. But the majority—almost twice as much—of the deleverage, 135 basis points in the fourth quarter, was because of our growth initiatives that we are pretty committed to. Those will normalize as it relates to the number of stores year-over-year in 2026, which is why we are guiding to modest leverage in SG&A in 2026. Steve Lawrence: The thing I would add on to Carl’s points—I agree with everything he said—is that at our core, we are a value retailer. We are not getting away from that. I want to make sure we do not leave any doubt in anybody’s mind that we are losing focus on that. I think we are in an environment where the lower-end consumer under $50k is really under pressure, is opting out or trading down. We still actively market to them and want them to shop with us. I think we see them come back during times of deep value, like when we run clearance events or when we are in a key time period; we see them come back and shop with us. We see this layering on of better/best brands as the way to somewhat diversify and de-risk our assortment a little bit. From twofold: number one, it helps customers who maybe could not find those brands in our stores previously stay with us and shop when they had to leave. And on the other side of it, I think it is helping us bring in a new customer. So we are still a value-based retailer. We think these new brands help us diversify and de-risk our customer and bring in a slightly more elevated customer, but we do not want you to think in any way, shape, or form that we are losing focus on the value-based customer as well. Operator: Our next question comes from Kate McShane with Goldman Sachs. Your line is now live. Kate McShane: Hi, thanks for taking our question. We are just curious if we could get a little bit more detail about how each business segment performed during the quarter? And then just as a second unrelated follow-up question, when you are thinking about the loyalty program or this new iteration of the loyalty program, what is being incorporated into the margin implications of that in 2026? Steve Lawrence: Yes. So from how the different categories worked out in Q4, we saw strength across a lot of our core businesses. Bikes, fishing, outdoor cooking, apparel, electronics, and athletic footwear were all strong. Some of the softer businesses for us during the quarter were more seasonal in nature. So seasonal footwear—think boots—and outerwear. I already mentioned ammo was a little soft. I would say Drinkware was a little soft, primarily driven by lapping some really big numbers from the year before, and Ride Ons was a little tougher for us this holiday. When we went back and looked at it, we had to kind of cobble together an assortment there based off of the tariff environment, trying to find the right goods out there. What is exciting is as we have crossed over into spring and moved to a positive comp, all the businesses are performing pretty well right now. We are seeing pretty broad-based solid business across all the different businesses. Could you repeat the second part of your question, Kate? I was writing something down, and I missed the second part. Kate McShane: Oh, yes—just any kind of cost implications from the launch. Steve Lawrence: Yes. So on the loyalty, what we did is we went back—you know, we always have done different, sometimes targeted, discounts through various loyalty programs that we have. We basically pulled those all together and are bundling them in from a rewards perspective. So we do not expect it to really impact the overall gross margins. It is going to be more repurposing of discounts that we were using in the past for other purposes that we are going to repurpose via loyalty and be much more targeted. So rather than kind of broadly giving out coupons on certain events or certain time periods, it is going to be really targeted at loyalty members, which we think is going to really help us accelerate against them. Kate McShane: Thank you. Operator: Jonathan, are you muted? Jonathan Richard Matuszewski: Oh, good morning. Can you hear me okay? Operator: Yes, now we can. Jonathan Richard Matuszewski: Oh, great. Carl, you mentioned plans for traffic to improve in 2026 versus 2025. So maybe just at the midpoint of your comp range, what is embedded for traffic versus ticket? And how does that change at the lower end and upper bounds of the range? Carl Ford: We do not really guide based off of traffic, so I do not think I can directly answer your question. But I will say, as it relates to all of the context that we have given around sales growth, all of those are traffic drivers. So new stores, positive comping existing stores, launching and annualizing, gross traffic. E-commerce—we look at a couple of different ways to understand share. We look at Similarweb information associated with session growth, and we see that we are taking share there. We think that some of the agent search—and I do not know if you have looked at our website at Scout, the little assistant that helps you with large language searches—that is going to get better, quicker, faster, stronger. The additional Jordan shops—those are traffic drivers. So we have not overtly guided towards the basket or traffic, but I know that traffic will be improved from what we saw in 2025. Jonathan Richard Matuszewski: Okay. Thank you. And then just a quick follow-up. Just looking for more color in terms of the traffic decline this quarter. I do not know if you can share any details in terms of by income cohort, and understand how the lower-income quintiles are reacting to the AURs versus the other cohorts? Thanks so much. Steve Lawrence: Yes. So the traffic trends we saw by cohort mirror what we saw all year that we talked about on previous calls. At the high end, we continue to see a double-digit increase in traffic count—low double-digit increase—from customers in households making over $100,000 a year. At the lower end, we continue to see probably a high single-digit decline in those lower-income consumers, and the middle kind of is holding its own. That is the behavior we have seen all year, and it continued into Q4. Once again, I do not think that the AUR increases and the assortment mix are what is really driving the traffic declines in the lower income. I think they are just under pressure and are opting out or trading down. As I mentioned earlier, we do have some different time periods and strategies and tactics we have to try to engage with them. We were pretty pleased with some of the reaction we saw during February around our clearance event. I think that was a lower-income consumer coming back in and really taking advantage of the values there. And once again, as we run other promotional windows later in the year or clearance events, we are going to get that customer to come back, but they are definitely under pressure. Jonathan Richard Matuszewski: Understood. Best of luck. Thanks. Operator: Our final question is from Anthony Chukumba with Loop Capital Markets. Your line is now live. Anthony Chukumba: Thank you so much for squeezing me in. I guess I just have one question, two parts. It is on the Jordan brand. Just in terms of how has the brand—you know, it has been, I guess, six or seven months now—how has it performed relative to your initial expectations? And then also, do you think that is going to help with bringing some other high-profile brands that you currently do not have in your merchandise assortment? And, Steve, I think you know which brands I am referring to. Steve Lawrence: I do, Anthony. Thank you for the question. We are very pleased with the relationship that we have with Nike and the Jordan brand. We do not have a last year for Jordan, so what we can cite is that if you combine Nike and Jordan together, they grew high single digits, which we were very pleased with. And we are going to continue to expand and grow Nike and Jordan. We are getting more access to premium footwear that we are pushing deeper into the chain. You take a performance running shoe like Vomero, and last year we got it at launch. You are going to see that probably go out to roughly 150 doors as we head into back to school. I think how we brought the Jordan brand to life really showed the Nike team, as well as vendors across the spectrum, what we can do when we launch a new brand. And we certainly use that as a proof point as we are talking to new brands. We will share some information around some new brands in the April 7 update, and obviously, if we get to a place where we are ready to announce, we can announce some of the brands you have asked about in the past. Trust me, you will not have to ask us a question. We will probably tell you before you ask us. Anthony Chukumba: Fair enough. I will see you guys in New York. Steve Lawrence: Okay. Thanks, Anthony. Operator: We have reached the end of the question and answer. I would now like to turn the call back over to Steve Lawrence for closing comments. Steve Lawrence: Thanks. In closing, we made a lot of progress across numerous fronts in 2025, which allowed us to both grow top line sales for the first time in a couple of years as well as continue to gain market share. We believe that we have the strategies and tactics in place to continue this growth in 2026 and move back to comp store growth as well. As always, I would like to thank our 22,000-plus team members for their hard work and efforts, which are helping make Academy the best sports and outdoor retailer in the country. We look forward to meeting with most of you on April 7 and sharing how we plan to build on the initiatives we outlined today in 2026 and beyond. Thank you all for joining our call today, and have a great rest of your day, and happy Saint Patrick’s Day. Operator: This concludes today’s conference. You may disconnect your lines at this time, and we thank you for your participation.
Operator: Welcome to the Ampco-Pittsburgh Corporation fourth quarter 2025 earnings results conference call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Kimberly P. Knox, Corporate Secretary. Please go ahead, ma'am. Kimberly P. Knox: Thank you, Nick, and good morning to everyone joining us on today's fourth quarter 2025 conference call. Joining me today are J. Brett McBrayer, our Chief Executive Officer, and David G. Anderson, Vice President, Chief Financial Officer, and President of Air and Liquid Systems Corporation. Also joining us on the call today is Samuel C. Lyon, President of Union Electric Steel Corporation. Before we begin, I would like to remind everyone that participants on this call may make statements or comments that are forward-looking and may include financial projections or other statements of the corporation's plans, objectives, expectations, or intentions. These matters involve certain risks and uncertainties, many of which are outside the corporation's control. The corporation's actual results may differ significantly from those projected or suggested in any forward-looking statements due to various risk factors, including those discussed in the corporation's most recently filed Form 10-Ks and subsequent filings with the Securities and Exchange Commission. We do not undertake any obligation to update or otherwise release publicly any revision to our forward-looking statements. A replay of this call will be posted on our website later today. To access the earnings release or the webcast replay, please consult the Investors section of our website at amphcophgh.com. With that, I would like to turn the call over to J. Brett McBrayer, Ampco-Pittsburgh Corporation’s CEO. J. Brett McBrayer: Thank you, Kim. Good morning, and thank you for joining our call. The fourth quarter was a busy quarter for Ampco-Pittsburgh Corporation where we initiated and completed the removal of significant underperforming assets from our portfolio. As we emerge from the slowdown in the steel market, we expect these actions to improve adjusted EBITDA by $7 million to $8 million annually. As reported in our press release, consolidated adjusted EBITDA for the fourth quarter was $3.2 million, down from $6 million the prior year. This anticipated dip in performance was driven by the pause in customer orders in our Forged and Cast segment after the announcement of new global tariffs. Consolidated adjusted EBITDA for the full year was $29.2 million. This performance is an improvement from the prior year despite the revenue impact FCEP experienced during 2025. With strong demand continuing in our Air and Liquid Processing segment, A&L achieved record revenue and income for 2025. As we shared in a recent press release, bookings for both operating segments have accelerated in the first two months of this year. I am now going to turn the call over to David G. Anderson, Chief Financial Officer and President of our Air and Liquid segment, for further comments on this quarter's results for Air and Liquid. David G. Anderson: Thank you, Brett. Good morning. As Brett mentioned, 2025 was a record-breaking year for Air and Liquid, as we achieved new highs in both revenue and adjusted EBITDA. In Q4, revenue was 10% higher than prior year while full-year revenue was 7% above prior year. The Q4 revenue increase was driven by higher revenue in air handlers and heat exchangers, while full-year revenue was higher in all product lines. Adjusted EBITDA in Q4 was $3.3 million versus $3.7 million in the prior year. The decrease versus prior year was driven by unfavorable product mix. Full-year adjusted EBITDA of $15.4 million was the highest in Air and Liquid’s history and a 21% increase over prior year. Backlog declined year over year by $8 million, primarily driven by the U.S. Navy's decision to terminate production of the Constellation frigate program, which resulted in $7.1 million of orders being removed from the backlog in late 2025. Costs related to the terminated orders are expected to be paid by the Navy along with normal profit margins. While backlog ended $8 million lower, we did see significant order activity at the start of 2026. As referenced in our press release dated March 10, order activity was up 73% for the first two months of 2026 compared to prior year. Bookings in the first two months of 2026 for the U.S. Navy market were over $9 million, which more than replaced the $7.1 million from the Constellation frigate program termination. We continue to see positive activity in multiple markets across our product lines. 2025 orders and shipments for heat exchangers in the nuclear market were the highest in our history as this market continues to show long-term growth potential. There continues to be strong demand from the U.S. Navy, and we expect this demand to continue as the Navy moves forward with fleet expansion plans. The manufacturing equipment installed in 2024 has already increased manufacturing capacity for our pump product line, and there is more capacity expansion in process. Additional manufacturing equipment from the Navy funding program arrived at our facility in early 2026 and is expected to begin producing products in 2026. There is additional equipment expected later this year. This equipment will position us to meet the expected growth in the market. We are also seeing significant demand for our commercial pumps due to the AI data center market. Our commercial pumps are used in the gas turbine market, which is seeing extremely high demand due to the need for additional power for data centers. Bookings for commercial pumps were at a record high in 2025. Demand for custom air handlers remained strong as there continues to be significant demand in the pharmaceutical market for our air-handling products. In summary, 2025 was the best year in Air and Liquid’s history, and we are well positioned in markets that are showing significant long-term growth potential. J. Brett McBrayer: Thank you, David. Samuel C. Lyon, President of Forged and Cast Engineered Products (FCEP), will now share more details regarding his group's performance. Samuel C. Lyon: Thank you, Brett, and good morning, everyone. For 2025, the Forged and Cast Engineered Products Division, FCEP, reported net sales of $70.9 million compared to $66.5 million in the fourth quarter 2024. For the full year, we achieved total net sales of $292.6 million, representing a stable top-line performance compared to $280.6 million in the prior year. Our operating results reflect the strategic transformation of our footprint. On a GAAP basis, the FCEP segment reported an operating loss of $44.7 million for the full year. As Brett mentioned, this was primarily driven by one-time exit costs, including a $41.4 million deconsolidation charge associated with the closure of our U.K. facility. Given these large one-time charges, we believe adjusted EBITDA provides a clearer picture of our underlying performance. For the full year of 2025, FCEP generated $24.4 million in adjusted EBITDA. In the fourth quarter, adjusted results were $2.2 million compared to $5.5 million in the prior year. This Q4 decrease was primarily driven by fewer operating days in the U.S. than in 2024, higher FCEP production relative to rolls, FX headwinds, and ramp-up costs in Sweden. In the U.S., we proactively curtailed production days in response to temporary softness in roll demand driven by the digestion of steel tariffs. With the U.K. closure behind us, one of our primary focuses is optimizing our Sweden facility. We have a clear roadmap for improvements in Sweden throughout 2026 that will begin to materialize in our results this year and be fully realized in 2027. The recent weakening of the dollar to the SEK has created a short-term headwind, as supplies and labor are in SEK and euros, while approximately 40% of our product is sold to the U.S. in dollars. We are adjusting 2027 pricing to account for this and moving some European customers to purchase in SEK. We are executing a production ramp-up in Sweden and expect to reach a production level approximately 20% higher than 2025 by 2026. Sweden is also improving its mix by removing some lower margin rolls originally destined for the U.K. and is currently finishing lower margin backlog orders from 2025. We expect the order book to be fully normalized by the end of Q2, positioning us for full margin realization starting in Q3 2026. Our North American customers remain optimistic about 2027 and expect improved volumes, which will translate into higher demand for our rolled products. While European market softness persists, consolidating our cast operations in Sweden allows us to better manage utilization. Further consolidation is occurring globally. Recently, two competitors have begun winding down operations, creating opportunities for both cast and forged rolls. Additionally, stricter European quotas and increased tariffs set to take effect in 2026 should meaningfully increase utilization for our customers, driving higher roll demand in 2027. For our U.S. forged operations, our backlog and pricing have increased meaningfully for our non-roll FCEP as a result of the Section 232 tariffs, which have provided additional diversification in our backlog. In summary, 2025 was a pivotal year. With the U.K. facility closure, the operational roadmap for Sweden, and tariff protection for our U.S.-made products shipping to U.S. customers supporting pricing, we are well positioned for significant margin expansion in 2026 and full-year 2027. J. Brett McBrayer: Thanks, Sam. I will now turn the call over to David G. Anderson, our Chief Financial Officer, for more detail regarding our financial performance for the quarter. David G. Anderson: Thank you, Brett. As indicated in both our Form 10-Ks and in our press release 8-Ks filed yesterday, there was a great deal of one-time, primarily non-cash items recorded in the quarter related to the previously disclosed decisions to exit the unprofitable U.K. operations and the small steel distribution business in the U.S. In mid-October, we issued a press release and filed a Form 8-Ks, which detailed the accelerated exit from our U.K. cast roll facility through a structured insolvency process. The mostly non-cash deconsolidation and other costs related primarily to the U.K. exit totaled $42.4 million in Q4 and $52.2 million full year. We also recorded a non-cash $11.9 million after-tax expense in Q4 related to a revaluation charge of our asbestos accrual. All of this certainly causes a great deal of noise in our Q4 results, which, when we move to discuss adjusted EBITDA, it becomes much easier to see the core business, how it performed in 2025, and expectations of what it looks like going forward. I do want to provide some details on the non-cash asbestos expense, what it means, and perhaps more importantly, what it does not mean. At 12/31/2025, we had a third party evaluate our asbestos accrual and provide the adjustment needed based on their projection of payments in the years ahead. This does not mean that we expect our asbestos payments to increase in the years ahead. It is quite the opposite. The estimate projects we will begin to see our asbestos payments decrease starting in 2027. The reason for the increased asbestos accrual at 2025 is because their projection shows the decrease will be slower than what they projected as of 12/31/2024. Ampco-Pittsburgh Corporation's net sales for Q4 2025 were $108.8 million, an increase of $7.8 million compared to net sales for Q4 2024. Full-year 2025 net sales of $434.2 million were an increase of $3.8 million compared to prior year. The increase in both Q4 and full year was driven by higher sales in both operating segments. As shown in our press release yesterday, Q4 adjusted EBITDA of $3.2 million was lower than prior year primarily due to reducing the number of operating days in our FCEP facilities because of the temporary lower roll demand caused by the tariffs. Full-year adjusted EBITDA of $29.2 million was $1.1 million higher than prior year and has increased for the third consecutive year. The higher adjusted EBITDA was driven by increased revenue and lower SG&A expenses and was partially offset by lower overhead absorption caused by reducing the operating days. Total selling and administrative expenses declined $2.8 million, or 5%, for full-year 2025 versus prior year and were lower primarily due to lower employee-related costs, partially offset by higher sales commission expenses in both segments. Depreciation and amortization expense for the quarter and for full year are higher than prior year periods due to the accelerated depreciation portion of the exit charges associated with the U.K. operation and the steel distribution business. The change in other expense/income was primarily driven by lower foreign exchange transaction losses, but also lower pension income given the lower expected long-term asset returns due to the asset allocation changes made to protect the higher retained funded status of our U.S. defined benefit plan. At year-end 2025, our pension plan was nearing fully funded status and in early 2026 did achieve fully funded status. At 12/31/2025, the corporation's liquidity position included cash on hand of $10.7 million and undrawn availability on our revolving credit facility of $25.5 million. As I mentioned at the beginning, there was a great deal of noise in Q4 and full-year 2025, including the U.K. and steel distribution business shutdowns, and the impact to our overhead absorption caused by the pause in roll orders due to the tariff impact. However, as we enter 2026, the roll market is showing that it is recovering, and the shutdown costs are behind us now. Operator, at this time, we would like to open the line for questions. Operator: Thank you. We will now begin the question-and-answer session. To ask a question, you may press star. The first question will come from Justin Bergner with Gabelli Funds. Please go ahead. Justin Bergner: Good morning, Brett. Good morning, Sam. Good morning. David, I just want to delve a little bit more into the Air and Liquid Processing margins. Could you review the mix dynamic in the fourth quarter? And should I think of the mix for the full year and the margins for the full year as being more representative of Air and Liquid Processing as the company grows off of the 2025 base in that business? David G. Anderson: Yes. I would say the full year is definitely more representative of what we would typically see. Q4 just was a little bit of an unusual mix for us, and it is really timing of what orders are shipping when into which markets, but it is just a short-term Q4 issue. I think the full year is much more representative of what you would typically see. Justin Bergner: Okay. Any color you can give on what sort of incrementals this business should generate as it grows? If you do not want to go there, I totally understand, but figured I would put that out there. David G. Anderson: The margins are generally good. What I can tell you is in the growth markets that we are seeing—nuclear, the Navy markets—those are all good markets for us. There is very limited competition because there are a lot of barriers to entry. It is very difficult to supply into those markets, so that is favorable for us. Justin Bergner: Okay. Fantastic. And with respect to forged and cast rolls, help me understand the inflection from the headwinds in 2025 to the strong orders in 2026. I mean, the tariffs were in place in 2025, so what is changing in terms of behavior or market behavior? Samuel C. Lyon: Justin, there was a lot of noise because, first of all, the tariffs had to be calculated. On the cast side almost all the rolls we make are composite, so part of them is cast iron and part of them is steel, so you have to calculate what the tariff is. We and the whole industry had to figure out what the tariff was going to be, so you did not even know what your pricing was going to be. A lot of customers, particularly in the U.S., paused what they were doing, what they were taking, until that was figured out. And just on the large roll side, which is our most profitable product line, the demand for those kind of slowed down as well as people digested what was happening. So now that is all digested, and you can see that the U.S. continues to raise pricing on hot-rolled coil as an indicator. Nucor is above $1,000 a ton now, and demand has been slowly increasing in the U.S. One other thing I will mention is another thing happened when the U.S. increased tariffs. Canada and Mexico reduced their material coming into the U.S. They have since put tariff protections in place as well to support their markets, and so we are seeing everybody kind of follow the model of the U.S., which should all be positive for us, as our biggest markets are North America and Europe. Justin Bergner: Okay. And one more follow-on on Forged and Cast Engineered Products. With respect to the costs in euros and the revenue in dollars, I think you said that is 40%—a certain percentage—of Sweden only? Samuel C. Lyon: Yes. Justin Bergner: Okay. So 40% of Sweden incurs costs in euros and revenues in dollars. Will that get resolved this year or next year in terms of pricing? Samuel C. Lyon: Pricing will be 2027, but we have already seen a recovery from the low point. SEK to the dollar was as low as 8.8, 8.9. It is 9.3 this morning. So it is already—well, we do not know what it is going to do—but right now it is kind of reverting to the mean a little bit. We run almost all exclusively on yearly contracts. So there was some adjustment in 2026. There will be further adjustment for 2027. It has not been as significant in euro to dollar, but there has also been a decrease there. And so our competitors will be in the same boat as us from a pricing perspective. Justin Bergner: Thank you for taking all my questions. Samuel C. Lyon: Thanks, Justin. Operator: The next question will come from John Bair with Ascend Wealth Advisors LLC. Please go ahead. John Bair: Good morning, gentlemen. I have a question. I saw an article not too long ago about Westinghouse's AP1000 reactors. I was wondering if you are involved in supplying any components there or any involvement with that. David G. Anderson: John, it is Dave. I can answer that. The short answer is yes. We have supplied to Westinghouse in the past, and we have supplied to that particular product. So that would definitely fall under our heat exchangers. We do not know the timing yet of when they are expecting those, but we have certainly seen some of the same indicators that they are expecting to ramp up a lot of building those. So that is a positive for us for sure. John Bair: How much of a lead time is there in that? I mean, I am sure it is a long build cycle, but where would you fit into the order cycle of that? David G. Anderson: We usually fit in fairly early because they want to secure things like heat exchangers fairly early in the process. So once they have their timetable, then we will start to see activity from them. John Bair: Is there very much inquiry in that regard, or is that just kind of out in the distance at this point? David G. Anderson: Still a little bit in the distance for that particular—the Westinghouse, the AP1000s. We are certainly seeing continued nuclear market activity though across—from the plant restarts to all the other things that I have talked about on some of the other calls, the small modular units—the nuclear market continues to be quite active. John Bair: Very good. Thank you. David G. Anderson: Thank you. Thanks. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to J. Brett McBrayer for any closing remarks. J. Brett McBrayer: Thank you, Nick. In closing, I want to thank our employees who are making the positive improvements you heard about today. With the actions taken in the fourth quarter, our core business is improving. We anticipate improved profitability as we emerge from the slowdown in the steel market. We are excited to demonstrate the improved results from these strategic actions in 2026. I want to thank the Board of Directors and our shareholders for your continued support and for joining our call this morning. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Greetings. Welcome to Titan America's Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to Daniel Scott of Investor Relations. Thank you, and you may begin. Daniel Scott: Thank you, operator, and good afternoon to everyone on the line. Thank you for joining us for Titan America's Fourth Quarter and Full Year 2025 Conference Call. I am joined by Bill Zarkalis, President and Chief Executive Officer of Titan America; and Larry Will, Chief Financial Officer. Before we begin, I would like to remind you that earlier this afternoon, we released Titan America's fourth quarter and full year 2025 results, which are available on our website at ir.titanamerica.com, along with today's accompanying slide presentation. This call is being recorded, and a replay will be made available on our Investor Relations website. During the call, we will present both IFRS and non-IFRS financial measures. The most directly comparable IFRS measures and reconciliations for non-IFRS measures are available in today's press release and accompanying slides. Certain statements on today's call may be deemed to be forward-looking statements. Such statements can be identified by terms such as expect, believe, intend, anticipate and may, among others, or by the use of the future tense. You should not place undue reliance on forward-looking statements. Actual results may differ materially from these forward-looking statements, and we do not undertake any obligation to update any forward-looking statements we make today. For more information about factors that may cause actual results to differ materially from forward-looking statements, please refer to the press release we issued today as well as the risks and uncertainties described in our SEC filings. I will now turn the call over to Bill. Please go ahead. Vassilios Zarkalis: Thank you, Dan. Good afternoon, everyone, and thank you for joining us today for Titan America's Fourth Quarter and Full Year 2025 Financial Results Call. Before I get into the results, I want to take a moment to welcome Michael Bennett, who recently joined Titan America as Vice President, Investor Relations and Corporate Communications. We're very pleased to have him on the team. If you turn to Slide 4 in the presentation, I'd like to begin by highlighting what rendered 2025 a historic transformative year for Titan America marked by strategic milestones. In 2025, Titan America joined the roster of companies that trade on the New York Stock Exchange following a strong period of 11 years of achieving above-market performance and demonstrating we are passionate about providing innovative building materials and solutions that protect life and property, improve the quality of life, generate economic prosperity and connect communities. Equally remarkable was our performance in 2025. In the construction materials market that was affected by soft demand and economic uncertainty, Titan America delivered all-time high revenue, adjusted EBITDA, net income and operating cash flows. This success reflects the strength of our business model, disciplined decision-making, skillful execution across our operations and an unwavering focus on serving our customers. Titan America can grow and outperform organically even in challenging environments. At the end of the year, we concluded negotiations to acquire the Keystone Cement Company and signed an agreement in early January 2026. This strategic initiative marks a foundational investment in Titan American's new era of growth, represents an important step forward in advancing our long-term growth strategy and reflects our disciplined approach to expansion through M&A. Coming now to the specifics. The year presented a mixed demand environment. The residential sector remained challenging for yet another year throughout 2025 due to persistently elevated mortgage rates and low housing affordability. In contrast, robust demand from public sector projects driven by the Infrastructure Investment and Jobs Act and strong private nonresidential construction, particularly in data centers, manufacturing, logistics facilities and energy projects supported our performance. Our markets continue to benefit from population growth and business migration, particularly in Florida and the Carolinas, and the data center market remained exceptionally strong with Virginia continuing to represent the largest hyperscale data center market in the world. In the fourth quarter, we achieved 4% year-over-year revenue growth and 12% year-over-year adjusted EBITDA improvement. For the full year, we delivered record revenues, up approximately 2% and record adjusted EBITDA of $390 million. This represented a 75 basis points improvement in our adjusted EBITDA margin, demonstrating the inherent benefit of our vertically integrated business model and our cost efficiency despite a challenging market and macro environment. For the full year, our Florida business segment delivered strong results with solid infrastructure and private nonresidential construction demand offsetting a soft residential end market. Our investments in increased aggregates capabilities and our cost initiatives helped deliver record full year adjusted EBITDA in 2025, reflecting our disciplined execution during the year as well as the benefits of our strategic capacity investments. The Mid-Atlantic business segment was impacted by a combination of tariffs and soft demand in Metro New York and New Jersey, the only regions where we do not operate an integrated business model as well as adverse weather impacting the Mid-Atlantic. Resilient pricing, growth in infrastructure, data centers and private nonresidential investment as well as self-help from cost initiatives partially mitigated the impact from the headwinds in the region. Larry will provide further detail on the segment's performance and our capital investments for 2026 later on. Let's move now to Slide 5. As communicated, we have entered into an agreement to acquire the Keystone Cement Company in Bath, Pennsylvania, expanding our geographic reach in the Eastern Coast of our country while strengthening our vertically integrated footprint in the region. This transaction will add to our domestic cement production capacity. It is synergistic to our existing operations and this pending acquisition demonstrates our disciplined approach to value-creating M&A, and we believe positions us to capitalize on powerful secular growth trends in the region. Keystone is a modern cement facility with approximately 990,000 short tons of current clinker capacity and is well positioned to serve a greater than 6 million short ton addressable market across Pennsylvania, Ohio, Maryland and Delaware. These are markets where we have limited, if any, presence currently. Keystone's mineral assets are expected to support more than 50 years of cement production capacity, and the site presents meaningful future commercial aggregates opportunities that fits squarely within our growth playbook. The logistics and customer service network synergies with our existing operations are compelling. The Keystone plant is approximately 75 miles from our Essex Marine hub and approximately 200 miles from the Metro D.C. area, creating strong interconnectivity that we believe will enhance our strategic supply chain and customer service capabilities across the Mid-Atlantic. This acquisition adds to our domestic production capacity at what we believe is an attractive valuation relative to scarce high-cost greenfield or brownfield investment alternatives. The transaction is subject to regulatory approval and is currently under review. We believe it is strongly pro-competitive, and we look forward to providing updates in the near future. On Slide 6 now, it showcases a selection of key projects we participated in during the fourth quarter across both business segments. As we have shared in the past, these projects illustrate both the breadth of our market reach and our technical capabilities in providing specialized solutions across diverse construction sectors. I'd like to highlight today a few examples. At the top left of the slide, we have the Bentley Residences in Sunny Isles Beach in Miami. This more than 60-story ultra-luxury oceanfront condominium tower with more than 200 residences. The foundation work alone is requiring over 23,000 cubic yards of concrete, the largest in Florida history, supporting significant demand for structural concrete and building materials during construction. The next photo to the right shows the job site at the Kennedy Space Complex supporting next-generation starship missions, including a new launch tower and a dual pad lodge facility. The expansion will establish the Florida Space Coast as a major operational hub for starship missions, significantly increasing capacity for commercial and government space missions. The multiyear project is expected to require approximately 120,000 cubic yards of concrete, supporting substantial knock-on construction activity and materials demand across the Florida Space Coast region. On the bottom left of the side, we have PowerHouse 95. This project is a large-scale data center campus development near Fredericksburg in Virginia, located along the I-95 corridor. The project will be built on approximately 145 acres and is designed to support up to 800 megawatts of power capacity, making it one of the larger emerging data center developments in the region. PowerHouse 95 is intended to serve hyperscale technology and cloud computing companies, expanding the Northern Virginia data center ecosystem, Southward and supporting [indiscernible] construction projects. Larry will now provide a more detailed breakdown of our financial results and business segment performance. Larry? Lawrence Wilt: Thank you, Bill, and good afternoon, everyone. Moving to Slide 7. Let me share an overview of our fourth quarter and full year 2025 financial highlights. In 2025, weather played a meaningful role in our results, particularly in the first half of the year. We experienced harsh winter conditions in Q1 across our Mid-Atlantic region and saw continued adverse weather in Q2. Conditions improved by the middle of the year, enabling strong volume recovery in Q3 and our fourth quarter results also benefited from favorable comparison to the hurricane disrupted fourth quarter of 2024. For the fourth quarter, revenue was $406 million, an increase of 4% compared to $390 million in Q4 2024. Net income for the quarter was $44 million, an increase of 19% compared to $37 million in the prior year period. Adjusted EBITDA for the quarter was $94 million compared to $84 million in the prior year quarter, an increase of approximately 12%. Our Q4 adjusted EBITDA margin was 23.1%, up from 21.4% in Q4 2024, reflecting strong operational execution as we closed out the year. For the full year, we delivered revenue of $1.66 billion, up 1.8% compared to $1.63 billion in 2024. Revenue growth was driven primarily by product pricing improvements for aggregates and ready-mix concrete as well as increased aggregate sales volumes, partially offset by lower sales volumes for cement and concrete block, reflecting the ongoing softness in the residential market. Net income for the full year was $185 million, an increase of 12% compared to $166 million in the prior year. Adjusted EBITDA was $390 million, an increase of approximately 5% compared to $370 million in 2024. Our adjusted EBITDA margin expanded to 23.4%, up 75 basis points from 22.7% in 2024. This margin expansion reflects the benefits from our vertically integrated model, our strategic capacity investments, particularly in aggregates and effective cost management throughout the year. In Q4, operating cash flow was $81 million compared to $51 million in the prior year quarter. For the full year 2025, we delivered a record operating cash flow of $295 million compared to $248 million in 2024. After net capital expenditures of $43 million, free cash flow was $38 million in Q4 2025 compared to $27 million in Q4 2024 when net capital expenditures were $24 million. For the full year, free cash flow was $132 million after net capital expenditures of $163 million compared to $111 million after net capital expenditures of $137 million in 2024. As I will expand upon shortly, our net leverage ratio further improved to 0.64x at year-end 2025. Turning to Slide 8. Let me walk you through our sales volume performance by product line. The fourth quarter showed improved volume performance compared to the prior year quarter, which had been impacted by hurricane activity. Cement volumes increased 0.2% compared to the fourth quarter of 2024, reflecting improvements in Florida, driven by strong private nonresidential construction and infrastructure demand, partially offset by the decline in the Mid-Atlantic region. Aggregates volumes showed strong growth of 10.3% in the quarter, benefiting from the expanded production capacity in Florida. Fly Ash was up 23.2% on increased utility generation, while ready-mix volumes increased modestly with 0.6% growth. Concrete block volumes increased 9.8% in the quarter compared to the hurricane-impacted prior year quarter. For the full year 2025, our cement volumes decreased by 2.4% as continued weakness in the residential sector weighed on demand across our markets. This decline was partially mitigated by stronger demand from infrastructure and private nonresidential construction, including data centers and commercial development. We also saw stronger performance in our other product lines with aggregates volumes increasing by 15.7%, supported by our strategic investments and expanded production capacity. Fly Ash volumes grew by 20.9% from a low base, while ready-mix concrete volumes grew modestly by 0.2%. Concrete block volumes declined 2.1% year-over-year. Turning to Slide 9. Cement pricing in the fourth quarter was essentially flat, while aggregates increased 2.1% year-over-year. Ready-mix concrete pricing improved 0.9%, while concrete block pricing and Fly Ash pricing declined by approximately 2%. For the full year 2025, cement pricing remained resilient on a like-for-like basis, declining modestly by 0.4%, impacted primarily by unfavorable product and geographic mix. Aggregates pricing increased 2.8%, reflecting strong demand growth, while Fly Ash pricing increased 5.6%. Ready-mix concrete pricing improved 1.2%, while concrete block pricing declined 1.7%, impacted by softness in the single-family residential market and elevated regional capacity. Looking at Slide 10. Our Florida business segment delivered outstanding results in the fourth quarter and record performance for the year. Fourth quarter external revenue was $247 million, an increase of 5.1% compared to $235 million in the fourth quarter of 2024, driven by higher volumes in cement and aggregates. Concrete block volumes also improved from 2024's hurricane-affected quarter and the Florida segment adjusted EBITDA was $65 million in the fourth quarter, an increase of 22.5% compared to $53 million in the fourth quarter of 2024, primarily due to productivity improvements and the impact of higher sales volumes as compared to the hurricane-impacted prior year quarter. Florida's adjusted EBITDA margin expanded to 26.1%, up from 22.4% in the fourth quarter of 2024. For the full year, the Florida business segment revenue was $1.02 billion, an increase of 2.7% from $998 million in 2024. Full year segment adjusted EBITDA was $279 million, an increase of 11.6% from $250 million in 2024. Segment adjusted EBITDA margin expanded to 27.2% in 2025 from 25% in 2024, an improvement of 217 basis points. Looking ahead, we expect the Florida market to benefit from strong underlying long-term fundamentals. Population growth and business migration continue to support construction demand and infrastructure investments through projects funded by the moving Florida Forward program and IIJA. While single-family residential construction remained challenged, the structural housing deficit in Florida represents a significant long-term demand tailwind. On Slide 11, let me discuss our Mid-Atlantic business segment performance. For the fourth quarter, Mid-Atlantic external revenue was $159 million, an increase of 3% from $154 million in the fourth quarter of 2024, with volume growth supported by the release of project order book and favorable weather conditions relative to the prior year quarter. Mid-Atlantic segment adjusted EBITDA was $32 million in the fourth quarter compared to $34 million in the fourth quarter of 2024, a decline of 5.4% with segment adjusted EBITDA margin of 20.4% compared to 22.3% in the prior year quarter. For the full year, Mid-Atlantic revenue was $640 million, up 0.8% from $635 million in 2024. Full year segment adjusted EBITDA was $121 million compared to $135 million in 2024, a decline of 10.6% with segment adjusted EBITDA margin of 18.8% compared to 21.2% in 2024. As we mentioned throughout the year, our Mid-Atlantic segment's 2025 performance reflected 3 distinct headwinds: soft demand in the Metro New York and New Jersey markets, adverse weather in the first half of the year that suppressed volumes across Virginia and the Carolinas and higher raw material costs, including those from tariffs that were not fully offset by product price increases. Looking ahead to 2026, infrastructure demand remains high and data center construction remains robust in both scale and pace in the markets we serve. While tariffs remain in effect, they are expected to represent a smaller year-over-year headwind in 2026. Despite the challenges of 2025, our expectations for 2026 are constructive, and we see clear reason to be optimistic for improved performance in the Mid-Atlantic region. Now turning to the balance sheet and cash flows on Slides 12 and 13. As of December 31, 2025, we had $211.8 million of cash and cash equivalents and total debt of $462.4 million. Our net debt position was $250.7 million, representing a leverage ratio of 0.64x 2025 adjusted EBITDA, an improvement from the 0.71x at the end of the third quarter and 1.21x at the end of 2024. This strong leverage profile provides significant balance sheet capacity to pursue strategic growth opportunities while maintaining our disciplined approach to capital allocation as demonstrated by the previously announced agreement to acquire the Keystone Cement Company following regulatory approval. Operating cash flow for the year was $295 million and free cash flow was $132 million after $163 million in net CapEx investments. As indicated on Page 13, our next meaningful debt maturity is in July 2027. Slide 14 shows our CapEx profile for 2025 and 2024. Net capital expenditures in 2025 were $163 million and focused on several key areas. Among them, investments to expand capacity at our domestic cement plants in line with our previously communicated strategic plan, investments in vertical integration through ready-mix concrete and concrete block facilities that meet customer needs and represent a channel to market for our upstream construction materials, including cement and aggregates. Expanded access to limestone reserves near our Roanoke cement plant, and additional dragline investments in Florida aggregates, driving reliability and operational excellence. On Slide 15, I'll remind you of our capital allocation strategy. We remain focused on 3 key priorities: investing in the business, including organic growth opportunities, pursuing strategic M&A and providing returns to shareholders, all while maintaining a healthy net leverage profile. In 2026, our planned organic growth investments include innovative mining approaches at our aggregates production facility in Miami, development, permitting and construction of our previously announced precast lintel manufacturing facility in Florida, completion of our expanded processed engineered fuel investments at our Miami cement plant, investments in operations and efficiency of our marine import terminals in Virginia and New Jersey, expansion of our rail terminal network in Florida, enhancing our aggregates distribution capabilities, investments to increase our Pennsuco cement grinding capacity in line with our previously announced plans and our vertically integrated investments in ready-mix concrete and concrete block facilities to support upstream volumes and returns. I'd also like to announce that earlier today, our Board of Directors approved an issue premium distribution of $0.04 per share payable on May 8, 2026, to shareholders of record on April 20, 2026. With that, I'll turn it back to Bill for his closing remarks. Vassilios Zarkalis: Thank you, Larry. Let me say that in conclusion, 2025 was a record year for Titan America despite continued softness in the residential sector, tariffs and a number of challenges in the macro and geopolitical backdrop. We are proud of our strong financial performance in our first year as a public company, which reflects the effectiveness of our unique business model and the dedication of our team. Turning now to our 2026 outlook on Slide 16. In 2026, we expect the softness in the residential sector to continue. The recent surge in oil and energy prices introduces additional risks in an already complex and uncertain economic backdrop. Based on current market dynamics, with fears of inflation fueled by high energy costs, it seems that mortgage rates will remain broadly at current elevated levels and house affordability low. As a result, in 2026, we believe investment in the residential sector may be stabilizing at current lower levels with a much anticipated residential sector inflection point being potentially pushed into 2027. With continued residential softness in mind, our guidance for 2026 on a like-for-like basis anticipates low single-digit revenue growth compared to 2025 with modest expansion in our adjusted EBITDA margins. This outlook reflects our leading positions in our key markets, operational efficiencies and the ongoing benefits of our strategic investments. We remain focused on executing our growth blueprint in the years ahead. As we look to 2026 and beyond, we are excited about the strong growth opportunities ahead. The markets where we operate are the beneficiaries of significant tailwinds, including infrastructure investment, manufacturing reshoring and onshoring and emerging trends in resilient urbanization and overall construction technology. We continue to innovate and expand our product offerings, particularly focusing on meeting the evolving needs of our customers for sustainable, high-performance products, services and solutions. Our investments in new technologies and digital transformation are yielding tangible results in terms of operational efficiency, cost reduction and enhanced customer service. The proposed foundational acquisition of the Keystone Cement Company marks an important milestone in our journey, expanding our geographical footprint into Pennsylvania and Ohio, adding substantial cement production capacity and further strengthening our Mid-Atlantic positioning while reinforcing our commitment to unlocking significant value for all our stakeholders in the quarters and years ahead. Before we open the call for questions, I want to express my sincere gratitude to all our Titan America team members. Their dedication to safety, operational excellence and to serving our customers with care and quality every single day is what makes this company work. I'm proud of what they accomplished in 2025. With that, I'll turn the call over to the operator for the Q&A session. Operator? Operator: [Operator Instructions] Our first question comes from Anthony Pettinari with Citigroup. Asher Sohnen: This is Asher Sohnen on for Anthony. I was just wondering if you could walk through in a little more detail some of the puts and takes driving the guide for '26. I mean you talked already about the push out of kind of a resi recovery into 2027. But just on the infrastructure and private non-res side of the business, how would you compare your expectations now versus 3 months ago? And then also, are you maybe able to break out the guide for revenue between like price and volume? Lawrence Wilt: Yes. I'm afraid our phone went out here just for a minute. If you don't mind, could you just repeat the question? Sorry, very sorry about that. Asher Sohnen: Yes. So I was just asking about the puts and takes driving the guide. You talked about the resi recovery getting pushed to 2027. But I was wondering if you could talk about your expectations now versus 3 months ago for the private side and the infrastructure side. And then also within the revenue guidance for 2026, is there like a breakout between price and volume? Vassilios Zarkalis: We don't see any major change in relation to infrastructure and the private nonresidential side. It will continue strong. As we know from the statistics, about 50% of the IIJA funds have been spent. So we expect the rest to be spent in the next 3 years. And also, we expect the momentum to continue either with renewal of the IIJA this year in September or with a continuing resolution. And also, we see positive strength in certain parts of private nonresidential, as you know, data centers, logistics infrastructure, health and other elements like warehousing, the space center in Florida. So overall, we're very confident and optimistic about the non-resi elements. In relation to residential, there was anticipation that potentially in the second half of 2026, we're going to see the inflection point we all are awaiting. But of course, the recent geopolitical events with inflationary pressures potentially fueled by the high oil prices and, of course, the high energy prices. It seems unlikely that the Fed will proceed with reduction of the policy rates. And we see many analysts projecting mortgage rates to stay at or around 6%, so above the level that we were hoping will ease the affordability issues about housing and will trigger the inflection point. That's why we said that it seems likely that the inflection point is being pushed towards 2027. Asher Sohnen: That's helpful. And then switching gears, I wanted to ask about the Ohio and Pennsylvania markets that you're entering with Keystone. What makes those markets attractive? Can you just kind of compare and contrast those markets with your 2 existing markets? Lawrence Wilt: Okay. I think it's a territory that we're familiar with. We operate the Fly Ash part of our businesses there. You can see them on the map. I think we've scattered them on there -- in some slides that we've presented. So we deal with some of those customers today through that, not through the cement element. When you look at manufacturing, reshoring, Ohio, Pennsylvania are places of attraction and it's a place that we see good growth opportunities ahead. The plant is well set up to fix -- to serve both of those markets. And as we said in the opening comments, that facility also has the benefit of serving our Washington, D.C. area, and we can take then some of that logistics synergies into our business as well as we connect those 2 together. Operator: Our next question comes from Phil Ng with Jefferies. Jesse Barone: It's Jesse on for Phil. I just wanted to start with cement on pricing. There was a little bit of sequential decline. Just curious if that was kind of more of the mix pressures. And then if you could kind of remind us what you announced for 2026 and how those conversations are progressing? Vassilios Zarkalis: I think a safe assumption to say this is into the mix. As you recall, we report across the areas of Titan America. So there are elements of geography mix and also elements of packaging mix and delivery mix, whether it is pickup, customer pickup or delivery. So there is an element of mix. But still, of course, on a like-for-like element, you will see price increases in the low single digits. Now in relation to our announcements, we have announced $12 per ton across the areas where we operate for cement. We have announced $10 per cubic yard across the areas we operate for ready-mix concrete and $3 for aggregates finished goods. Jesse Barone: And were all those increases for January or were they spread out between January and April? Lawrence Wilt: Yes. I mean I think -- well, they were for January. And just based on the market, Jesse, we largely pushed those increases into April. That's -- I think the recent events and the war in Iran, for example, may give some additional impetus to increase those. But I think largely, what we'd expect, absent that, is to see price increases that would generally be in line with some of the increases that we have seen over the last year or so. So perhaps more in aggregates, more in ready-mix and a little less perhaps in cement. But we still are developing some of those internally, but that's what we would see today. Operator: Our next question comes from Chad Dillard with Bernstein. Charles Albert Dillard: So my question is on fuel cost. What share of that does that represent for your cost of sales? And then I guess, how much of the $100 price of oil is embedded in your guide? Or is this something that might potentially change as we need to mark to market? Lawrence Wilt: Yes. To answer the first question, fuel energy broadly represents about 8% of the cost of goods sold that we have slightly more than that as we closed out last year. You break that down between its components. Obviously, the kiln fuel has a piece, electricity has a piece and what you referred to at the end, their liquid fuel has a piece as well. Each of them have their own characteristics. We've invested, for example, in our capabilities for alternative fuels. We've invested in the capabilities to have multi-fuel sourcing, whether it's solid or natural gas at both cement plants in Roanoke and at Pennsuco. So we have some initiatives that we've taken to help mitigate some of those costs that you described. Having said that, when you look at liquid fuel, for example, we're at $5 per gallon today, this is public information. You can see it from EIA as registered every week. That's higher clearly than it was this time a year ago. For those things that are externally facing things like ready-mix concrete, there are built-in fuel surcharge mechanisms that would generally cover some of those cost increases that we would see. And then on the aggregate side, for example, that's a smaller piece of the overall total, call it, 1/3 then those things we address as we go along, perhaps through price increases that would be supported by those energy cost increases as we were saying before. Vassilios Zarkalis: So fundamentally, Chad, in relation to the energy bill altogether, I mean, in relation to the fuel, which is the biggest part for our plants. In cement, we have the capability to burn gas, coal, and alternative fuels. And we have recently invested in -- during the maintenance Roanoke, we installed our new state-of-the-art dual burner in order to increase our capability to burn multiple feeds and different types of fuel. And we are completing within April, our investment in new capabilities for alternative fuels in Pennsuco, which is going to grow the use of alternative fuels by 50%. So multiple levers here to face an increase in cost. And as Larry said, the other important element, which is the diesel cost for moving our products. We have automatic surcharges, which are included in our contracts for the products that we sell. Charles Albert Dillard: Okay. That's super helpful. And then just another question for you guys on the margin cadence. So you guys are guiding to a modest expansion in EBITDA margins. How should we think about that from a seasonality standpoint? On one hand, you have the tariff headwinds that probably anniversary towards the midpoint of the year. On the other hand, you have the, I guess, the fuel cost and the price increases to offset that. Just trying to level set how to think about that as we move through quarter-to-quarter. Vassilios Zarkalis: We participate -- we have deep penetration into infrastructure projects and major projects like data center. I mean you saw the example that we brought in terms of what we do in the Space Coast in Florida. These are projects that require large scale, proprietary technical capabilities, ultra-high-performance products that gives us an advantage in order to participate in high-value projects for the customers and also for ourselves, which allows us really to manage our margins successfully. And on top of that, like we've been discussing, we have in progress operational excellence and cost reduction initiatives. You are very well aware about our investment in digital transformation. Our real-time optimizers, I believe many analysts have visited in Pennsuco, which allows us to improve reliability to world-class levels to increase our throughput and our production rates and also optimize the use of raw materials and energy. All this leads to lower cost and margin expansion. On top of that, we have our proprietary maintenance -- the predictive maintenance tools, which are digital tools with machine learning that allows us to improve reliability, increase production, but also decrease our maintenance costs, which again add to the margins. And as we announced last year, we introduced a proprietary digital logistics technology, both in Florida and in Mid-Atlantic, which allows us to reduce our logistics costs and also improve our productivity in relation to cubic yards that we deliver per driver hour. All these had an impact in a very difficult backdrop in 2025, as you saw with our improvement in margins. And we expect the same to take place in 2026 as we continue our self-help initiatives in order to continue improving our margins. Operator: Our next question comes from Brian Brophy with Stifel. Brian Brophy: You mentioned increasing domestic cement capacity this year. Is that in relation to 1T or is something else driving that? And any color you can provide on how much you expect to grow capacity by? Lawrence Wilt: Yes. It's 2 things. One is... [Technical Difficulty] Operator: Ladies and gentlemen, please stand by. Ladies and gentlemen, thank you for your patience. We will be resuming shortly. Ladies and gentlemen, thank you once again for your patience. Larry, you may proceed. Lawrence Wilt: Yes. Thanks, operator. It's -- sorry, it's Larry here. We're going to go with the cell phone. Bill and I happen to be in Brussels. We had our Board meeting here today. So certainly something wrong with the fixed lines here. So we'll try it the old-fashioned way here with the cell phone. So hopefully, you can hear us. Brian, I'm not sure you heard the answer here. Brian Brophy: You just started answering. Lawrence Wilt: Yes. So your question was around the capacity expansion, where does it come from, right? So it's a combination of a couple of things. One, grinding capacity that we've talked about investing in the facilities like Pennsuco. We mentioned that in the prepared remarks and the reliability factors that come into place as well. These are the 2 main things that drive the increased production for this year. Brian Brophy: Okay. And then I guess similar question on the aggregate capacity side. Obviously, that was a pretty helpful driver last year. How are you thinking about opportunities to grow capacity there again this year? And you also mentioned some innovative mining approaches driving CapEx this year in the deck on the aggregate side. Just any more color on what you were referring to there. Vassilios Zarkalis: We're going to see, Brian, an increase in capacity and sales in this year, not at the same levels as last year, but we're going to see continued growth, whereas the investment that we have this year is going to give us a next step, the next wave of increased capacity most likely towards the second half of 2027. Operator: There are no further questions at this time. This now concludes our question-and-answer session. I'd like to turn the call back over to Larry for closing comments. Lawrence Wilt: Yes. Thanks, operator. And again, apologies for the difficulties we had with the telephones here. Thank you for your patience on that. And thank you for your time today. Obviously, we appreciate the interest in Titan America and look forward to obviously updating you on their progress as the first quarter call comes around in the early part of May. So thanks, and have a great rest of your day. Appreciate it. Operator: Ladies and gentlemen, thank you for your participation. This concludes today's conference. You may disconnect your lines, and have a wonderful day.
Operator: Good day, everyone, and welcome to comScore Fourth Quarter 2025 Financial Results. [Operator Instructions] Please note, this conference is being recorded. Now I would like to turn the call over to Mr. Kevin Burns, EVP of Business Operations. Please go ahead. Kevin Burns: Thank you, operator. Before we begin our prepared remarks, I'd like to remind all of you the following discussion contains forward-looking statements. These forward-looking statements include comments about our plans, expectations and prospects and are based on our view as of today, March 17, 2026. Our actual results in future periods may differ materially from those currently expected because of a number of risks and uncertainties. These risks and uncertainties include those outlined in our 10-K, 10-Q and other filings with the SEC, which you can find on our website or at www.sec.gov. We disclaim any duty or obligation to update our forward-looking statements to reflect new information after today's call. We will be discussing non-GAAP measures during this call, for which we've provided reconciliations in today's press release and on our website. Please note that we will be referring to slides on this call, which are also available on our website, www.comscore.com, under Investor Relations, Events and Presentations. I'll now turn the call over to comScore's Chief Executive Officer, Jon Carpenter. Jon? Jonathan Carpenter: Good evening, and thank you for joining us. 2025 was a solid year with meaningful progress as we further developed our leading cross-platform capabilities, all to achieve our objective of becoming the industry standard for modern measurement. Revenue for the full year was just over $357 million and adjusted EBITDA came in at $42 million, both ahead of 2024 performance. This was driven by 24% growth in our cross-platform solutions, along with double-digit growth in our local TV offering. Throughout the year, we had a number of important wins. One that I want to highlight is the launch of CCM, our cross-platform content measurement capability. CCM gives clients a more complete picture of the audience for any piece of content, whether it was viewed on linear TV, CTV or mobile device, all at the title level. Some of the largest broadcasters and technology companies in the world have already signed on, and we believe we're just scratching the surface. We've also deepened our relationships with the largest media companies, those that command the vast majority of ad dollars. Our cross-platform measurement solutions helped drive nearly 25% year-over-year growth across key technology clients. Additionally, our local business continued to execute at a high level, anchoring our cross-platform capability while delivering significant value to our broadcast network and agency partners, contributing to double-digit year-over-year growth. Beyond our commercial execution, we made meaningful progress simplifying our capital structure. At year-end, we closed a pivotal recapitalization with our preferred shareholders. The transaction eliminated $18 million in annual dividends, a $47 million special dividend obligation and our preferred holders also converted roughly $80 million in preferred shares into common shares at an attractive premium. And we were able to reduce the size of our Board, streamlining both costs and governance. This was an important first step, and we remain focused on continuing to simplify our business and strengthen our balance sheet as we move through 2026. I am proud of how our teams executed in 2025, and I'm excited about building on that momentum. But before I talk about where we're going, it's worth grounding everyone on where we've been. comScore has always led with innovation. We were the first company to make digital audiences measurable at scale. While others are only now figuring out how to combine big data and panels, comScore pioneered that work more than a decade ago. We also led the industry shift to big data TV audience measurement, giving us over 10 years of experience delivering stable measurement that reflects how people actually watch television. That history matters because it speaks to what comScore does when the industry is at an inflection point, and we're at one right now. The media landscape has fundamentally changed. Attention is fragmenting across AI-driven environments, platforms continue to wall off their data and creators across social platforms now command audience share that rivals traditional media. These shifts create a real challenge for advertisers, and they expose the limits of legacy measurement approaches. Our response is clear, become the defining standard for modern measurement. That means building a fully integrated flywheel connecting our offerings across planning, activation, buying and measurement with common metrics across the board. When our products work together, our clients can navigate this complexity with confidence rather than confusion. CCM is a clear example of this action. It allows advertisers to evaluate audiences for social creators alongside ad-supported connected television and linear TV and to plan true cross-platform campaigns from a single unified view. This is the flywheel capability that we're building. I look forward to sharing more -- looking ahead, we're also bringing forward innovation in AI measurement, an area that is only going to grow in importance for our clients. The early work here includes measuring which sources, LLMs and AI search tools are citing, how these tools are changing the way consumers discover brands and products and perhaps most importantly, how they're changing the way consumers make purchase decisions. What differentiates comScore is how we get this data. Our unique digital panel assets allow us to directly observe millions of AI search and AI chatbot interactions every single month. When we provide clients with single insights into how these tools are reshaping their businesses, it's based on real observed behavior, not just assumptions. CCM, AI measurement, a connected product flywheel. Our work in these areas is evidence that we're delivering all in service of one goal, establishing comScore as the standard for modern measurement. We look forward to sharing more about our progress and strategy with you throughout 2026. Now I'll turn it over to Mary Margaret to take you through our 2025 results. Mary Curry: Thank you, Jon. Total revenue for the year was $357.5 million, up 0.4% from $356 million in 2024 and in line with the guidance we gave on last quarter's earnings call. Content & Ad Measurement revenue of $304.3 million was up 1% from 2024, driven by growth in our cross-platform and local TV offerings. Cross-platform revenue of $50.3 million was up 24.4% compared to the prior year, driven by higher usage of our Proximic and CCR products, along with the successful rollout of CCM. Syndicated audience revenue of $253.9 million was down 2.6% from 2024, driven by declines in our national TV and syndicated digital offerings partially offset by growth from our other syndicated offerings, including double-digit growth in local TV from higher renewals and new business. Our movies business also posted solid growth, generating $38.4 million of revenue in 2025, up 3.4% from the prior year. Research & Insights Solutions revenue of $53.2 million was down 3.1% from 2024, primarily due to lower deliveries of certain custom digital products, partially offset by new business from our consumer brand health products. Adjusted EBITDA for the year was $42 million, up 2.6% from 2024, resulting in an adjusted EBITDA margin of 11.8%. These results are largely driven by our intentional decision-making around spend, which we calibrated throughout the year to align with our revenue expectations. Our core operating expenses for 2025 were up 1% year-over-year, primarily driven by an increase in employee incentive compensation, higher revenue share costs and higher panel costs, partially offset by lower data costs, most notably from the amendment we signed at the end of 2024 related to our data license agreement with Charter. We also made targeted investments in 2025, which contributed to the increase in operating expenses. As we've discussed on prior calls, we're focused on investing in areas that have the greatest potential to either accelerate top line growth or streamline our operations. In 2025, we invested in enhancing our cross-platform product suite and related sales teams, improving our panel footprint and integrating AI across the company, among other things. We believe these investments will continue to provide benefits to our business going forward. Our fourth quarter results tell a similar story with a couple of distinctions that I'll call out. Total revenue for the fourth quarter was $93.5 million, down 1.5% from $94.9 million the same quarter a year ago. Content & Ad Measurement revenue of $78.8 million was down 2.7% from 2024, primarily driven by lower revenue from our national TV and syndicated digital products, partially offset by growth from our cross-platform offerings. As Jon mentioned on our last earnings call, we expected cross-platform growth in the fourth quarter to be impacted by a strategy shift of one of our large retail media clients. This turned out to be the case, resulting in cross-platform revenue growth of just under 10% in Q4, lower than the growth we saw in previous quarters. We expect this to pick back up in 2026 with double-digit growth in cross-platform projected for the year. Our movies business generated revenue of $9.9 million in the quarter, resulting in 5.5% growth over Q4 of 2024. Research & Insights Solutions revenue of $14.6 million increased 5.3% from the prior year quarter, primarily due to new business from our consumer brand health products. Adjusted EBITDA for the quarter was $14.7 million, up 3.3% from the prior year quarter, resulting in an adjusted EBITDA margin of 15.7%. Our core operating expenses were down 4.4% compared to the fourth quarter of 2024, primarily due to lower employee compensation and data costs, partially offset by higher rev share costs. Looking ahead to 2026, we believe our revenue and adjusted EBITDA performance will continue to follow the trends we saw in 2025. We expect our cross-platform offerings, along with continued local TV adoption to play a significant role in shaping our business for 2026. As I mentioned earlier, we expect to see continued double-digit growth from our cross-platform offerings in 2026, which should offset the declines that we anticipate from our national TV and syndicated digital products. As such, we expect revenue in the first quarter of 2026 to be roughly flat compared to the first quarter of 2025. We also plan to continue making investments in key areas of the business with the goal of driving top line growth and streamlining our operations while remaining disciplined with overall spend as we work to improve our cash flow. We believe the recapitalization transaction was the first step in our strategy to transform comScore, putting us in a better position to evaluate additional strategic actions that have the potential to further streamline our capital structure, enhance our financial profile, unlock growth and simplify our business, all of which can contribute to generating cash flow and driving shareholder value. We plan to provide an update on our progress, along with our financial outlook for the rest of the year on our next earnings call. With that, I'll turn it back over to the operator for questions. Operator: [Operator Instructions] It comes from the line of Jason Kreyer with Craig-Hallum. Jason Kreyer: Just wanted to see if you can talk a little bit about the financial flexibility. With the structural changes that have been put in place in the business over the last few months, how does that open up kind of strategic flexibility or changes to how you want to run the business going forward? Jonathan Carpenter: Jason, thanks. Yes, as we move forward, I mean, I think one of the key elements here overall is just freeing up, again, $18 million in dividends that the preferred holders were entitled to, not having that obligation on a go-forward basis, better positions the company moving forward. I think some of the actions that the preferred holders took to reduce the size of the Board as part of that transaction that we announced helps us take down costs associated with running the Board. So I think both those things bode well in terms of freeing up the balance sheet to continue investing in the products that are going to drive the most meaningful growth going forward, namely our cross-platform execution. Jason Kreyer: Good to hear. Maybe staying on the cross-platform topic. Curious if you kind of can talk about the last several months, your ability to increase utilization of existing partners with your cross-platform solutions and then maybe a little bit of context on your ability to add new partners to cross-platform. Jonathan Carpenter: Yes. I think it's been a nice combination of both increased usage of our cross-platform audience product, Proximic across the client set. We are continuing to expand partnerships. We did so in the fourth quarter. We'll continue to do so and hope to be able to announce those in short order as we go through the early part of 2026 in terms of how the partnerships on the audience, the cross-platform audience capabilities is expanding. And then I'd just say on the cross-platform measurement products, CCM, really encouraged by the early adoption across the client set of that product really from launch through the end of the year, and we continue to see usage headed in the right direction on that front. And we still have a number of product features and enhancements that we're going to continue to roll out over the course of 2026. Jason Kreyer: All right. Good to hear more to come there. One last one for me. Just on the local side of the business, it seems that market is evolving, maybe creating more of a role for comScore. Just wondering what your thoughts are on the local market as we go forward. Jonathan Carpenter: Yes. I think certainly, in the traditional sense, the currency conversations continue to go very well for us in terms of those clients that are looking to transact more holistically against the comScore offering. We had some really good success on that over 2025 and the early readout in 2026 on -- as the renewals have come through, we fully anticipate that continuing. And then I just think as the world evolves to more audience-based buying across the ecosystem, we remain really the only place you can go to buy local audiences, local advanced audiences or specific local advanced targeting at the local market level at any meaningful scale. And as that side of the business continues to accelerate, that plays right into our wheelhouse. And of course, as you know, that product anchors our cross-platform capability, which really helps drive the overall robustness of what we're able to do in terms of attaching audiences, whether it be traditional linear to digital at a hyperlocal level, incredibly impactful. Steve, do you have anything else to add on local at all? Unknown Executive: No, I think that's totally in alignment. Operator: As I see no other questions in the queue, I will conclude this session and pass it back to Mr. Jon Carpenter for final remarks. Jonathan Carpenter: Great. Thank you. I'd like to just take a minute to thank our employees for their continued work to help us deliver for our clients. And further, I'd just like to thank our investors and clients for their continued trust and partnerships. Thanks, everyone, for joining us this evening, and I'm sure we'll be talking soon. Have a good night. Operator: Thank you. And this concludes our conference. Thank you for participating, and you may now disconnect.
Operator: Hello, and thank you for standing by. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the NextNav Fourth Quarter 2025 Earnings Call. [Operator Instructions]. I would now like to turn the call over to [ Jarrod Pollock ], [ Jarrod ], please go ahead. Unknown Executive: Good afternoon, everyone, and welcome to NextNav's Fourth Quarter 2025 Earnings Conference Call. Participating on today's call are Mariam Sorond, NextNav's Chief Executive Officer; and Tim Gray, NextNav's Chief Financial Officer. Before we begin, let me remind everyone that this call will include certain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by use of the words may, anticipate, believe, expect, intend, should, could and similar expressions. Such forward-looking statements which may relate to NextNav forecast of future results, future prospects, developments and business strategies are subject to known and unknown risks, uncertainties and assumptions, many of which are outside NextNav's control and could cause actual results to differ. In particular, such forward-looking statements include the achievement of certain FCC-related milestones and FCC approvals. NextNav's projections, plans, objectives and expectations and NextNav's future business strategies and competitive position. These statements are based on management's current expectations and beliefs as well as a number of assumptions concerning future events. You are cautioned not to place undue reliance upon the forward-looking statements, which speak only as of the date made, and NextNav undertakes no commitment to update or revise the forward-looking statements, except as required by law. For additional information regarding risks and uncertainties, please refer to the risk factors and other disclosures contained in the company's filings with the SEC. Following prepared remarks, the company will host an operator-led question-and-answer session. In addition, a replay of our discussion will be posted to the company's Investor Relations website. I'd now like to turn the call over to Ms. Sorond. Please go ahead, Mariam. Mariam Sorond: Thank you, Jared. Good afternoon, and thank you all for joining us today. I'll begin with an important update on our FCC process. Earlier this month, the FCC formerly sent a draft notice of proposed rulemaking or NPRM, focused on PNT technology and solutions to the White House OMB. This is a critical step in the process, and I am confident in the NPRM advancing to report an order. This development underscores the FCC's focus on addressing the national security urgency of identifying resilient backups and complements to GPS. It reflects an incredible milestone achieved in rapid time and extraordinary momentum under this administration. While I am thrilled it does not come as a surprise as this progress is consistent with the confidence I have expressed over the prior quarters regarding the FCC's direction. The NextNav team has worked tirelessly alongside a highly engaged FCC, and we are extremely proud of where we stand today. It marks significant validation of NextNav solution to a critical national security priority at a time of heightened global risk as adversaries continue to invest in their own terrestrial PNT capabilities. The U.S. must meet the moment. The under agency review of the NPRM is now progressing as expected. While we do not yet know specific content, we do know that NPRM can take many forms. And based on the strength and completeness of the existing record, we remain confident in a direct path to a report in order. NextNav plays an important role in a system of systems framework that combines multiple terrestrial and space-based capabilities to build redundancy and resiliency across America's critical infrastructure. a redundancy that exists today for our adversaries, including Russia and China, but not for the United States. NextNav proposed solution is a one-of-one within this system of systems framework requiring capabilities that only NextNav can provide a unique combination of wide-scale positioning, timing and 3D geolocation services which are commercially viable and we believe can be made available during the current administration. Moreover, our solution is future-proof and does not require taxpayer funding. The anticipated NPRM is supported by a well-developed and complete record. Though as we have stated on prior earnings calls, the exact timing of the process remains outside of our control. We applaud the administration and Chairman Carr for their actionable leadership on this issue and look forward to continuing to work constructively with the FCC and key stakeholders as the process moves forward. As the national conversation around resilience and critical infrastructure is expanding, NextNav is increasingly contributing to the highest levels of industry and policy leadership. To that end, I am pleased to have joined the CTIA Board of Directors and participated in my first Board meeting alongside a dynamic group of leaders. I look forward to advancing the association's mission and helping expand the capabilities of 5G networks in ways that strengthen America's national security infrastructure to ensure our industry remains a good standard for innovation, public safety and natural security globally. Furthermore, NextNav continued to advance dialogue across both regulatory and industry audiences through participation in recent events, including Mobile World Congress 2026 in Barcelona and the 2026 Milken South Florida dialogues. Discussions at these forums highlighted several key themes. First, there was clear recognition that multiple public and private sector organizations are working towards PNT capabilities with PNT increasingly viewed as the killer application for 5G and 6G, one that could be among the most valuable transformative uses of these networks. Second, it was clear that strengthening resiliency and vulnerable systems is essential both for deterrence and for regaining U.S. leadership in critical technologies. It was top of mind in discussions that GPS has clear vulnerabilities, including indoor coverage gaps, jamming and spoofing. And it takes as little as a $200 jammer purchased online to disrupt signals, let alone the capabilities of an adversary. Recent developments in the Middle East conflict, including widespread GPS and communications jamming highlight how quickly these disruptions can escalate and destabilize critical systems. That's why a ground component is essential. And NextNav has the largest footprint capable of delivering a unique combination of positioning, timing and 3D geolocation capabilities. Independent of our work with the FCC, NextNav continues to advance its technology and commercialization efforts. First, we are very proud to have begun operating the world's first 5G powered PNT network, marking an important step towards commercialization. While the FCC granted NextNav an experimental license to begin this testing in a defined geographic location, I will reiterate that the testing itself is for early commercialization purposes and is independent of the FCC's NPRM process. Next, we announced an expanded partnership with Japan's MetCom, we believe this partnership is a compelling validation of demand for resilient terrestrial 5G-based 3D PNT solutions and represents a potentially significant commercial opportunity beyond the U.S. market. Under the agreement, MetCom has licensed our technology to power new terrestrial timing services in major Japanese metropolitan areas, highlighting both the strength of the deal and the international scalability of our platform, particularly given our 3GPP standards-based approach, which makes technology partnerships outside the U.S. especially attractive. It is essential to support our allies in a complex geopolitical landscape. As a public company, strengthening our governance is important as we advance the terrestrial market-based backup and complement to GPS. With that, we are pleased to welcome Lisa Hook as our Board's new Lead Independent Director. She brings decades of public company board experience at the intersection of technology, telecommunications and National security. For experience as CEO of Neustart, a publicly traded global information services company, leading you through years of complex technology and policy make her an ideal thought partner as we execute on our mission. With that, I will turn things over to Tim for a review of our financials. Tim? Timothy Gray: Thank you, Mariam, and good afternoon, everyone. Based on the actions taken in 2025 to enhance the company's liquidity NextNav continues to hold a position of financial strength and strategic advantage with a strong cash position, valuable spectrum assets and the continued development of field testing of our resilient proven technology. On liquidity, we finished the fourth quarter with approximately $152 million in cash, cash equivalents and short-term investments. We will continue to manage our use of capital as we advance our ambitious goals, taking a deliberate approach to liquidity and commercialization. In addition, we have a significant number of warrants expiring in 2026 that have the potential to deliver over $200 million in additional capital depending on stock price performance. So let me be very clear that we believe we have significant runway in funding for multiple years. For our fourth quarter, a financial item of note. As a reminder, the gains or losses related to our outstanding private warrants and derivative liability fluctuate based on movements in our stock price. While last quarter, we had gains, this quarter, we're reporting losses. In the fourth quarter, we recognized losses of approximately $48 million associated with the change in the fair value of the derivative and warrant liability. The impact of these noncash losses resulted in our net loss for the quarter of roughly $68 million. These charges are a result of the funding the company took on earlier in 2025, which has put the company on very solid footing. With that, I'll turn the call over to the operator for questions. Operator? Operator: [Operator Instructions] Your first question comes from the line of Mike Crawford with B. Riley Securities. Michael Crawford: We were pleased to see that the FCC sent this promoting the development of PNT technologies to the OMB on March 2, but have you seen the content of what was actually sent. And do we know if that's any different from what has been contemplated previously? Mariam Sorond: Mike, thanks for the question. I -- the NPRM has been drafted. And it is in the inner agency review process. We have not seen the content, and that is part of the process, contents will be available the draft review will be available once it finalizes its interagency process with the NTIA [indiscernible] and OMB [indiscernible]. Michael Crawford: And then the data that you've been collecting shows that you get more precise PNT when you have a 10/5 channel. And so do you think that, that is something that's what we're likely going to see when we get an NPRM and eventually report in order? Mariam Sorond: Well, definitely, we've been testing and we're testing towards a 10 plus 5 capability, and that's part of our commercialization effort. And it's also just basically how 5G networks operate with respect to positioning, it becomes more accurate with the downlink being 10 megahertz. So we've made those studies over the FCC. And we remain confident that we're going to move forward with this FCC working with them to make sure that we meet the backup and complete requirements of GPS. Operator: Your next question comes from the line of David Joyce with Seaport Research Partners. David Joyce: Could you please provide any interesting learnings so far with your MetCom relationship? And perhaps connect that with how that might help with accelerated commercialization in the U.S.? Mariam Sorond: I think there's definitely an international opportunity. MetCom is part of that for us, and we're super excited about the partnership that we've had with them and this new development with respect to what they're doing in Japan. I think this is a solution that, as we have said, can be taken global and it does have a national opportunity. What we're facing today with a lot of the GPS or GNSS in general, jamming and spoofing issues is a global problem. So we will share the results of whatever MetCom does when they publicize it with the market. But right now, this is a great step advancing that partnership and relationship with us. Operator: That concludes our question-and-answer session. I will now turn the call back over to Mariam Sorond for closing remarks. Mariam Sorond: In closing, NextNav remains highly optimistic about the path ahead toward an FCC vote on an NPRM in the near term, with clear line of sight to a report in order, and we look forward to continued engagement with the FCC and key stakeholders. We are very proud of the progress we're making to deliver a resilient future-proof terrestial complement and backup to GPS, strengthening U.S. economic and national security at a critical moment in time. Thank you all. Operator: Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.
Operator: Good morning, ladies and gentlemen, and thank you for waiting. At this time, I would like to welcome everyone to Adecoagro S.A.'s 2025 Results Conference Call. Today with us, we have Mr. Mariano Bosch, Chief Executive Officer; Mr. Emilio Gnecco, Chief Financial Officer; Mr. Renato Junqueira Pereira, Sugar, Ethanol, and Energy Vice President; and Ms. Victoria Cabello, Investor Relations Officer. We would like to inform you that this event is being recorded, and all participants will be in listen-only mode during the company's presentation. After the company's remarks are completed, there will be a question-and-answer section. At that time, further instructions will be given. Before proceeding, let me mention that forward-looking statements are based on the beliefs and assumptions of Adecoagro S.A.'s management and on information currently available to the company. They involve risks, uncertainties, and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions, and other operating factors could also affect the future results of Adecoagro S.A. and could cause results to differ materially from those expressed in such forward-looking statements. I will now turn the conference over to Mr. Mariano Bosch, Chief Executive Officer. Mr. Bosch, you may begin your conference. Mariano Bosch: Good morning, and thank you for joining Adecoagro S.A.'s 2025 Results Conference. Today, we are presenting a larger, further diversified, and more resilient Adecoagro S.A., but with the same DNA: being the lowest-cost producer. Upon acquiring Profertil, we became the largest producer of urea in South America. This new operation marked a transformational moment for us as it broadened our production capabilities, more than doubled our cash generation, and reduced earnings volatility by incorporating a stable, consistent, and already cash-generating business. We are adding a unique asset in Argentina to our well-diversified agro-industrial portfolio, with the capacity to expand its earnings and cash potential by leveraging Argentina's largest natural gas reserves. As we rely on natural gas to produce urea, greater extraction will translate into further supply at more competitive prices. We also have a huge market opportunity of reaching a wider demand in South America that today must rely on imports from faraway origins such as the Middle East. Due to the ongoing international conflict, urea prices have peaked and we are very well positioned to capture this upside, as most of our production is still open to market prices and our gas supply remains secure and at a fixed price. The acquisition of Profertil would not have been possible without the continued support of our shareholders. We raised $300 million in new equity anchored by Tetra, our controlling shareholder, further reinforcing their commitment to the company's long-term strategy. Given this incorporation, we decided to simplify the way we view our businesses and move to three segments: the Sugar, Ethanol, and Energy business; the Fertilizers business; and the Food and Agriculture business, all of which Emilio will detail shortly. Now, looking back to 2025, it was a challenging year for the agribusiness sector as commodity prices reached the low end of the cycle. Today's prices remain under pressure, but with a focus on efficiency and being the local producer, we will be able to continue navigating the cycle. Higher crushing in Brazil will drive further cost dilution, which will partially mitigate the lower sugar prices. In Argentina and Uruguay, better productivity will turn into margin expansion and greater results. On top of this, we expect a normalized and full year of operations from the Fertilizers business, driving further cash generation. To conclude, I would like to acknowledge all the people in Adecoagro S.A. for their hard work in this tough context. I am convinced that if we remain focused on being the lowest-cost producer in each of our sustainable production models, we can further expand our earnings potential. I will now turn the call over to Emilio to walk you through the numbers for the year. Emilio Gnecco: Thank you, Mariano. Good morning, everyone. Before entering into the results of the year, I would like to make a preliminary observation with the intention to provide more clarity in the understanding of the numbers we are presenting today. Following the acquisition of Profertil on 12/18/2025, our consolidated interim financial statements incorporate Profertil's income statement only for a 13-day period under a new business unit named Fertilizers. Additionally, in an effort to update and simplify the way we view our business units, from January 2026 the company will change the business segment reporting structure as follows: Segment number one, Sugar, Ethanol, and Energy business as previously known; segment number two, the Fertilizers business, which includes the manufacturing and commercialization of fertilizers; and segment number three, Food and Agriculture business, which reflects an integrated business focused on agriculture and food production that in the past was presented through three separate verticals: Crops, Rice, and Dairy. Please turn to page four where you can see how the acquisition of Profertil supports our scale. On a pro forma annualized basis, consolidating the 2024 and 2025 results of our Fertilizers business, Adecoagro S.A. increased its size from a base of $1.5 billion in recurring revenues and a mid-cycle adjusted EBITDA of more than $400 million and cash generation of $150 million to above the $2.0 billion sales threshold with the potential to generate $700 million in EBITDA and to double its cash generation. In addition, the acquisition further diversifies our portfolio, as illustrated in the pie chart at the top right, thereby strengthening the company's ability to perform across cycles. Please turn to page five of the presentation. As we have been anticipating over the previous quarters, 2025 was a challenging year marked by lower commodity prices, mixed productivity, and higher costs in U.S. dollars, which resulted in a year-over-year decrease of 2% in sales and 38% in adjusted EBITDA. On top of that, Fertilizers' financial results were affected by two events which resulted in approximately 90 days of downtime: first, Profertil carried out the largest scheduled turnaround of its plant, resulting in a full shutdown of 54 days starting on October 16 and ending on December 8, shortly before our acquisition of the company; and second, a 31-day downtime due to the flooding of a third-party gas distributor that interrupted delivery of gas to the plant. As a result, again on a pro forma basis, assuming full-year results of our Fertilizers business for both 2025 and 2024, revenues were down 6% compared to the prior year, whereas adjusted EBITDA declined by 35% year over year. We expect a full recovery in the Fertilizers business’ adjusted EBITDA as operations return to normalized levels. At Adecoagro S.A., we have always leveraged low-cost production and product and geographic diversification to mitigate commodity price volatility and adverse weather events—two inherent risks within the agribusiness segment. With the incorporation of the Fertilizers segment, we have moved to three equal-size revenue streams and a more diversified and less volatile cash generation across our geographies and products, as shown in the pie charts at the bottom of the slide. Regarding the acquisition of Profertil, we would like to make now a brief summary. Please move to page six of the presentation. We closed the transaction during mid-December for a total consideration of $1.1 billion for the 90% equity interest. From this amount, $676 million had already been paid by December 31, with the remaining balance to be paid during 2026. As of today, the outstanding balance is approximately $50 million that will be settled before the end of this month. The transaction was financed through a combination of cash balances in the amount of $400 million, approximately two new long-term debt facilities of $200 million each with a seven-year tenure, two-year grace period at attractive rates, and an equity issuance of $300 million, marking Adecoagro S.A.'s return to the public markets since its IPO in 2011. At the same time, we continue to invest in organic growth projects throughout our operations as outlined in the box on the right-hand side of the slide. Please direct your attention to page seven where we present our debt profile. Our net debt and net leverage ratio increased compared to prior periods, explained mainly by the financing of the acquisition of Profertil and the lower results of the year. On a pro forma basis, net debt reached $1.5 billion, whereas our net leverage increased to 3.3x compared to 1.2x in 2024. Despite this, it is worth noting the company's full capacity to repay short-term debt with its cash balance. Most of our indebtedness is in the long term, and its currency breakdown matches that of our revenues, mitigating currency risk. Going forward, we intend to reduce our leverage ratio through higher expected adjusted EBITDA generation, mainly from our Fertilizers business, together with a revision of our capital allocation strategy. In this sense, we have reviewed our shareholder distribution program in light of our capital allocation priorities and the lower results generated. Accordingly, our Board of Directors approved the distribution of $35 million in cash dividends for 2026, subject to approval at our Annual General Shareholders' Meeting. Moving to the financial and operational performance of our business units, let us start with the Sugar, Ethanol, and Energy business on slide nine. The weather during 2025 was characterized by above-average rainfall, which reduced the amount of effective milling days and therefore limited our ability to reach a crushing volume in line with 2024. Nevertheless, the cane left unharvested at year end benefited from these favorable rains, showing excellent yields and is currently being harvested under our continuous harvest model while maximizing ethanol production. Cane productivity recovered significantly during 2025, as seen on the graph at the top left of the slide, positively impacting the mark-to-market of our biological assets on greater expected yields for the upcoming quarters. In terms of mix, we achieved a 72% ethanol mix during the quarter and a 58% mix for the full year, as ethanol prices substantially improved during 2025, becoming the product with a better margin. Although we maximized ethanol and largely increased the amount of volume sold at greater prices, annual sales remained below the prior year on lower global sugar prices and volumes sold. Despite the declining milling, our cash cost—which reflects how much it costs us to produce one pound of sugar and ethanol in sugar equivalent—remained unchanged at 12.8¢ per pound. This is explained by a more efficient upgrade of our machinery, which in turn reduced our annual maintenance CapEx, together with an increase in tax recovery given higher ethanol sales. Overall, adjusted EBITDA for the year ended at $292 million, below 2024’s performance. Looking at 2026, we foresee a low double-digit growth in our crushing volumes due to better productivity and a full year of ethanol maximization given the current price scenario. On the following page, 11, we present for the first time the Fertilizers business. As previously mentioned, the acquisition was concluded in mid-December, and therefore, our financial statements only include Profertil’s income statement for a 13-day period. For comparison purposes, we present Profertil’s full-year results and its main drivers. In 2025, as we described earlier today, the fertilizer plant experienced two major stoppages resulting in 90 days of downtime, which adversely affected results. Net sales and adjusted EBITDA declined year over year as fewer operating days throughout the year reduced production volumes, despite higher prices for both urea and ammonia. For 2026, we expect a full recovery in adjusted EBITDA generation driven by normalized operations compared to the prior year and a positive market price outlook. In the case of our farming business—now Food and Agriculture—2025 results were pressured by a combination of lower commodity prices, mainly in rice and peanut, uneven yields, and higher costs in U.S. dollar terms. The top line of this business remained in line versus the previous year due to higher volumes sold, which in turn partially offset declining prices, as seen on slide 13. Nevertheless, adjusted EBITDA was negatively impacted by the increase in costs and an uneven performance at the farm level. Looking ahead, we have implemented cost initiatives to improve margins, including a 22% reduction in total planted area through the renegotiation of our lease agreements. We have also increased the share of rice varieties due to more resilient prices, while also leveraging our production flexibility to produce dairy products for the domestic and export market based on marginal contribution. Before concluding this presentation, I would like to share a few brief closing remarks. Over the years, Adecoagro S.A. has demonstrated a strong track record of delivering consistent results and generating cash flow notwithstanding commodity price cycles and adverse weather events. With the incorporation of the Fertilizers business, we have effectively doubled the size of the company, further enhanced the security and visibility of our cash generation, and positioned Adecoagro S.A. in a new league in terms of scale and relevance. We acquired a state-of-the-art asset and a cash-generating business with immediate earnings contribution and limited execution risk. As a result, we are today a significantly stronger and more resilient company with enhanced diversification and a more robust earnings profile. We are very enthusiastic about the company we are building and the long-term value that this transformation is expected to deliver for all of our stakeholders. Thank you very much for your time. We will now open for questions. Operator: Thank you. The floor is now open for questions. If you have a question, please write it down in the Q&A section or click on “raise hand” for audio questions. Please remember that your company's name should be visible for your question to be taken. We do ask that when you pose your question, you pick up your headset to provide optimum sound quality. Please hold while we poll for questions. Our first question comes from Guillermo Gutia with BTG Pactual. Your microphone is open. Guillermo Gutia: Hi, Mariano. Good morning. So, two questions from our side here, please. The first one is on Fertilizers. You are now starting to operate Profertil at a time when urea prices are actually soaring. So we just want to hear a bit on the fertilizer market today. How are you seeing it? If you expect these higher prices to impact industry volumes in a meaningful way, or we may actually see this price increase maybe flow more directly to Profertil’s margins. So that is the first. And the second one is on the Sugar and Ethanol business. You are now estimating a double-digit growth in sugarcane crushing for this crop year, something that should be largely helped by agricultural yields. So we just want to know how you are seeing the unitary cost going forward, especially since you are going to have a higher dilution from the stronger volumes, but fertilizer prices are also increasing. So those are the two, please. Mariano Bosch: Thank you, Guillermo, for your question. Number one, I am going to take the question on the Fertilizers business, and then Renato will take the specifics of Sugar and Ethanol. On the Fertilizers business, of course, today the level of prices has increased because of the conflict, and that increase is between 30% to 40%. But before that, fertilizer prices were also good prices for us and for our business model. And today, how these higher prices on urea transform into higher margins for us—that difference goes directly to the final number, to the EBITDA number, or to our cash generation, because all our costs are fixed. Our gas contract, which is 60% of the cost of producing urea, is already fixed, and we have fueling contracts until 2027. So that is pretty easy to calculate and to understand what is the impact of that increase in prices. Having said this, we produce per year, or we should be producing on average, 1.3 million tons per year. From this 1.3 million tons, we have already produced and sold during January and February around 200,000, so 1.1 million are still open to this increase in prices. And we sell almost every month the amount that we are producing. There are some months that we sell more because of the cyclical acquisition from the farmers, so during July, August, and September we sell more than during February and March. So if the prices continue at this level, that 1.1 million tons that are still available for sale will impact directly our final results. So that is basically how we see this, and we see fertilizers for this year at relatively high prices. We have this view that even with the conflict finalizing, fertilizer prices will be impacted for the whole year with the most probability. And then going to your second question on the Sugar and Ethanol business, I will ask Renato to answer that question. Renato? Renato Junqueira Pereira: Hi, Guillermo. We think that our cost can be reduced in approximately 10% to 15%. I think one of the points you just mentioned is the dilution factor. As was mentioned, we had a lot of rains in the last quarter of last year, which improved a lot the outlook for the sugarcane for this year. That is why we are having a very intense first quarter in terms of crushing, producing only ethanol at high prices. So that is the dilution factor. Then, if you go to other points that impact our cost, we think that labor should increase close to inflation. Fertilizer: we have already fixed and bought 70% of our annual need, so we do not see impact until at least mid-year. And diesel, of course, depends on the increase of price of Petrobras, but we have the benefits of the increase of price of gasoline. Also, leasing cost should be lower because of the consequent prices. And more important, we have been working a lot in adjusting our efficiencies, especially in the agriculture part. We have been very disciplined in measuring the efficiency of each machine in the field, so we have reduced the number of equipment to harvest the sugarcane, to plant the sugarcane, so we are doing the same thing with less equipment, which represents less cost. So we are very optimistic we are going to have a good year in terms of cost. Guillermo Gutia: Very clear. Thank you very much, guys. Operator: Our next question comes from Gabriel Baja with SIT. Your microphone is open. Gabriel Baja: Hi, Adecoagro S.A. team. Thanks for taking my questions. I have two. Mostly, it is a kind of a follow-up from the last question. The first one is about the Fertilizers business. When you think about this new scenario for urea and ammonia price, given the fact that you have a really interesting position in the gas price, and I think China, how should we think about the commercialization strategy for the year, given this much better scenario, but the level of certainty that you have at this point makes this kind of decision more, let us say, challenging in this context. So I would like to understand this strategy for the year. The second point is about another commercialization strategy, but in ethanol. The same case here. You see a really tough situation right now for gas and the price for diesel in the country. You are seeing, even though Petrobras has not changed the gasoline price, gasoline prices increasing in the last two weeks, which means that it seems to be more supportive for ethanol price during this next crop season for the year. So to take advantage of this stronger scenario for ethanol price, how should we think about the mix and the commercialization strategy for ethanol going forward from your point of view? So those are the two questions. Thank you. Mariano Bosch: Hi, Gabriel. Thank you for asking your question. Renato, do you want to answer the second question on the gasoline prices, etc.? Renato Junqueira Pereira: Okay. So we are more optimistic about the ethanol situation now, that the gasoline price will have to increase. Actually, it is already increasing. In the short term, the prices are very good because the level of inventories is very low. Actually, it is 25% lower than a year ago. That is why, under our continuous harvest model, we are crushing a lot in the first quarter and only producing ethanol. So we are selling ethanol right now close to 20¢ per pound equivalent in Mato Grosso do Sul. When the season really starts, which is mid-April, we believe that the supply of ethanol will increase, something between 3 and 4 billion liters. But part of this is going to be consumed by the lower stocks that I just mentioned. The other part is going to be consumed by the fact that E30 is going to be effective since day one, different from last year. And the other part of the volume is going to be absorbed by a higher market share of hydrous ethanol. If you consider a parity at the pump at 60%, it is still an ethanol equivalent to 16.5¢ per pound in Mato Grosso do Sul, which is still better than sugar now. So that is why we think that we will be maximizing ethanol the whole year, and, of course, with a better price because of the situation of gasoline that you asked. Emilio Gnecco: Thank you, Renato. Mariano Bosch: Gabriel, and on the Fertilizers business and our strategy on commercialization, in this case you have to take into account that we always follow international prices. South America, this region, imports millions of tons of urea per year, and the region only produces 1.5–1.7 million tons per year. So the net imports are huge. So always the price is determined by international prices. Having said this, most of our strategy is selling domestically within Argentina, because Argentina, in particular, also imports half of the needs that it has per year. So our strategy is to maximize the sales within Argentina but always pricing at import parity. So that is the concept on how we price and all our strategy. And then, as we are producing every month more or less the same amount, and the needs of urea are different—there is a peak in May and another peak in August, September, October of the need that urea has at the fields or in the farms—part of the commercialization strategy includes delivering into the storage capacity in the interior of the different places in order to have this urea ready to be used, strategically. So that is basically how we sell the urea that we are producing all year round. Gabriel Baja: Thank you, team. Very clear. Operator: Once again, please type in the Q&A or click on “raise hand” for audio questions. Our next question comes from Isabella Simonato with Bank of America. Your microphone is open. Isabella Simonato: Thank you. Good morning. Thank you. My question is a little bit on the use of capital. As you said, you are much more leveraged than a year ago, and we have a very different cash flow stream profile, and I understand that this higher urea price should accelerate that. So I was wondering how first we should think about CapEx for 2026 and also cash being returned to shareholders. Thank you. Mariano Bosch: Thank you, Isabella. As you know, we have been always very disciplined on this allocation strategy. So with the acquisition of the Fertilizers business, we have higher leverage to what we have always expressed that is our ideal leverage in terms of times EBITDA. So around 2x is where we would like to be and where we are working to be. But having said this, when there is something very specific, very attractive, as it was the acquisition of the Fertilizers business, and we get into and we can move into this level as we are today, we are very confident that we are going to be able to go to the leverage where we feel comfortable pretty quick, and that is what we are working on. But as Emilio explained, we are continuing with our dividend policy, so we are continuing to distribute in cash dividends $35 million that will be distributed equally in May and November, as we have been doing in the past three or four years. And also, we are analyzing interesting growth projects. Each one of these three lines of business has very attractive and specific growth opportunities, most of them organic growth opportunities and some of them inorganic. But we are always analyzing that. But we will continue to be very disciplined with this general concept of the capital allocation, where some is for returning to shareholders, some to continue to grow, and also to go to the levels of debt of 2x, or around 2x, that is where we feel more comfortable. Isabella Simonato: Thank you very much. Operator: Our next question comes from Matheus Enfeldt with UBS. Your microphone is open. Matheus Enfeldt: Hi, everyone. Thank you for the time and for taking my question. My first question is sort of a follow-up from the previous question, which is: I understand that the near focus is on the deleveraging story, which might be relatively quick given what we are seeing in urea and ethanol prices. So thinking once you do deleverage in two, three years, what is the next growth avenue that you really view from here? Is it expanding more sugarcane crush? Is that a possibility? Or potentially expanding more the capacity in Profertil? And also if there could be M&A in the pipeline once leverage really drops? So that is my first question. And then the second question is: I understand that there is a change in the Food and Agriculture segment on how you perceive the business. It is going to be, I do not know, 30% of your revenues, but a relatively small contribution to the overall business, but with a lot of complexity. I think ten different commodities that you need to follow. So I am just wondering how you think that these assets fit into Adecoagro S.A.'s midterm portfolio—if there are ways to potentially monetize better the asset, or if you have the appropriate scale in the farming business to really run, or if you could think of JVs or some partnerships. Just on how you think that this fits into your portfolio midterm. Those are my questions. Thank you. Mariano Bosch: Thank you, Matheus, for your question. I am going to start with the second one and go into the first one. We feel very comfortable with the three business lines that we have today. We think that the Food and Agriculture business is something that has, as you mentioned, sales in that level, and we see a lot of opportunities to continue improving there. And when we think on the margins in terms of EBITDA, that is directly to the cash generation. So we feel very comfortable and enthusiastic on how that business is being transformed into a more cash-generating business. So we do not see anything strategic there on a partnership or anything specific there. We continue to see a lot of advantages in the domestic consumption business, etc., that are improving and working very well. There are some new products that are adding value, and that is very compelling in terms of what is going on there. But having said this, and going to the first part of your question on what is within the most attractive growth avenues that we are seeing today, the Sugar and Ethanol has always been very consistent, and we have this organic growth that we have been talking about and that we have been always analyzing, and we expect that to continue to be there as the returns or the marginal returns are continuing to be attractive. But when we explained to the market and when we were so enthusiastic on our Fertilizers business, it is because we are seeing strategically in South America a huge opportunity in terms of urea production. Argentina has one of the largest gas basins in the world and will become a very important exporter of gas. So one of the big opportunities that we see is to become a larger producer of urea. So, of course, we are analyzing that opportunity of building a new plant, duplicating the plant—what are the growth avenues that we are looking at there on the Fertilizers business. These are investments that are huge in terms of the amount of capital required, and are also very relevant in terms of the engineering of that plant. The time that it takes to build it—it is a three-year project to build a plant like we have today at the minimum, and when you include everything, it is always more of four, or sometimes it is a five-year project to build a plant like what we have today. So that is a huge project, very relevant. We have nothing to announce today rather than that we are very enthusiastic on analyzing deeper the project, the location, the amount of gas, and what is the exact amount of gas, etc. So we can also think about this regime that Argentina has, this special program with some benefits for large investments like this one. So these are the type of potential projects that could appear in the next year or so. Matheus Enfeldt: That is super clear. Thank you. Operator: Our next question comes from Lucas Ferreira with JPMorgan. Your microphone is open. Lucas Ferreira: Hi, guys. Two questions. On the Fertilizers business, how to think about the production cost per ton of urea and ammonia this year? Since last year, given the stoppage, I think not only you lost the volumes, but maybe fixed-cost dilution was impacted. So assuming the plant running full-year, and the gas prices you have fixed, what is the cost per ton, more or less, that you imagine for this business? And then, in the long term, how to think about this business? Right now you have fixed costs—obviously, this is a great thing because prices are going up, but it could have gone the other way. So my question is how to think about this business. Is this a business where we will see very high operating leverage, so you work with fixed prices? Is that going to be the business model going forward, or when the contract expires, would you be more spot? Just to understand how to model this long term. And if I may, on the farming business, maybe if you can quickly comment on the outlook for next season. I know it is maybe too early to say, but any improvements you are seeing for the business? And I think you are close to the administration—Argentina administration. Any views on any clue you have on if Argentina, with all the reforms passing, will be able to lower further the export taxes? How to think about that? Thank you. Mariano Bosch: Thank you, Lucas, for your question. On the second question, in terms of the farming business, in Argentina with this new administration, everything is improving. We are very optimistic on that, and that is why we feel comfortable that with this Food and Agriculture business in general, being able to compete domestically and in the export market will also be very positive. The taxes are being reduced. So that is a very relevant improvement that is going on within Argentina and that will certainly help this business to continue to improve. And that is why I mentioned before that we are still optimistic on this farming and agriculture business for Argentina and Uruguay in the coming future. Going to the first question and regarding the fertilizer and the urea and how we think about the prices, again, this is a very long-term view. This is within our DNA, as we were saying at the beginning. We believe we are the lowest-cost producers in the region of urea when we think on replacing all these imports of 10 million tons of urea that are happening every year in South America. We feel very comfortable that we are within the lower-cost producers, and we have analyzed all over the world the different plants that are producing urea, the different prices of gas, etc., and we are very confident on being the lowest-cost producer. What is this cash cost of producing urea today with this level of 1.3 million tons to be produced in the plant—that is what we think that we can produce stabilized—is within $180 to $190 per ton of urea. And, as you have seen, the prices are much higher, and we do not think that level of price is possible in order to compete with urea in this region. So we are very confident to be the local producer in terms of producing urea; that is why we got involved. We were not seeing that the prices were going to be at this level as we are today. We were always thinking on this long-term view that we have when we get involved into a business. Lucas Ferreira: Perfect. And just to follow up, the $180–$190 includes SG&A as well, so is it kind of EBITDA cost? Mariano Bosch: No, no. I am talking about cost of product. I am talking about the cash cost. Lucas Ferreira: Okay. Thank you very much. Operator: Our next question comes from Julia Rizzo with Morgan Stanley. Your microphone is open. Julia Rizzo: Hi. Good morning. Thank you for picking up my question. I would like to hear your thoughts on what you know about the global fertilizer, especially urea production—the dynamics within supply cuts around the key regions close to the Middle East. If you know about anything about supply cuts or supply reduction, and how that can affect or last in the market. And derivative to that is: as the planting season is starting in the Northern Hemisphere, especially Europe and India, and I think, less likely, the U.S., do we know if they have enough urea supplies for this season? Can you give us a sense of the supply-demand disruption that we could be seeing now in urea, given the war and Strait of Hormuz situation? Mariano Bosch: Hi, Julia. Thank you for your question. Of course, we are following this very closely. There is a lack of urea that is very relevant. Thirty percent of what comes into South America comes from the Middle East and through the Hormuz Strait. So there will be a lack of supply, and that can impact even further what has already been impacted. And also, there is a time needed in order for that to reach—60 days at least since you ask for the urea until it comes to be used. So, yes, it is going to be difficult to supply the whole needs for South America and for the Americas in general. The Americas are importers of urea globally. Julia Rizzo: So you are saying that it could be a supply shock? Given current inventory levels on the ground, I do not know how much the industry holds inventory for the next season. Mariano Bosch: Inventories are very low. The inventories are very low. Julia Rizzo: In South America, but in the Northern Hemisphere, are inventories enough? The Northern Hemisphere, let us say? Mariano Bosch: The Northern Hemisphere is also under pressure in terms of being importers of urea. I do not remember exactly how much they import, but they import like 5 million tons. Renato Junqueira Pereira: Yes. Julia Rizzo: And usually, they do not have enough inventories, like a three-month, four-month inventory. I do not know what is the level—inventories in the chain—what usually works. Mariano Bosch: In China, it is relatively low. Julia Rizzo: Okay. Interesting. So, yes, that could mean that prices will stay higher for longer until supply gets back on track, right? Mariano Bosch: Of course, we do not know, but that is a clear possibility. Julia Rizzo: Okay. I have another question on sugar. If you could help me: I would like to hear your thoughts. Recently, we saw a decline in—or a revision lower from—the Asian harvest. We have Brazil, of course, naturally going max ethanol. We have oil prices reaching over $100—actually, futures even higher. Why do you think it is driven—it is kind of putting up this pressure on sugar prices compared to other commodities, and even a strength in the fundamentals? And what do you see that turning? Mariano Bosch: That is a good question, Julia. We also do not clearly understand. Renato just explained, the sugar production in Brazil, which is one of the main producers worldwide, is going to be maximizing ethanol. So we expect that to be also transferring to sugar prices in the medium term, but we are not seeing that yet. Renato, can you add something else? Renato Junqueira Pereira: Well, I think it is exactly that. Once the market realizes that Brazil is maximizing ethanol, it is going to have less margin to switch the mix towards sugar, and then the market is going to be more balanced. Then we think there is a potential to increase the price of sugar in the second semester. And if you think in the midterm, we think that the supply is going to decrease because today the sugar price is below most countries' production costs, including most players in Brazil. So we think that it is going to have an impact on supply, so price should react next year, and then probably the low price is not going to last that long. Julia Rizzo: Okay. Thank you. Operator: This concludes the question-and-answer section. At this time, I would like to turn the floor back to Mr. Bosch for any closing remarks. Mariano Bosch: Thank you all for participating today, and we hope to see you in our next conferences. Operator: Thank you. This concludes today's presentation. You may disconnect at this time and have a nice day.
Operator: Gentlemen, thank you for standing by. My name is Christa, and I will be your conference operator today. At this time, I would like to welcome you to the Oklo Fourth Quarter and Full Year 2025 Financial Results and Business Update Conference Call. [Operator Instructions] I would now like to turn the conference over to Sam Doane, Senior Director of Investor Relations. Sam, please go ahead. Sam Doane: Good afternoon, and thank you for joining Oklo's Fourth Quarter and Full Year 2025 Company Update. I'm Sam Doane, Oklo's Senior Director of Investor Relations. Joining me today are Jake Dewitte, Oklo's Co-Founder and Chief Executive Officer; and Craig Bealmear, our Chief Financial Officer. After my opening remarks and the forward-looking statement disclosure, Jake will walk through the business update and strategic progress, and Craig will cover our financial results. Our remarks today include forward-looking statements, which are subject to risks and uncertainties that could cause actual results to differ materially from those discussed today. We encourage you to review the forward-looking statements disclosure included in our supplemental slides. Additional information on relevant risk factors is described in our filings with the SEC. We undertake no obligation to update forward-looking statements, except as required by law. With that, I'll turn the call over to Jake. Jake? Jacob Dewitte: Thanks, Sam. 2025 was a step change year for Oklo. We transitioned from product development into active project deployment across all of our business units. During the year, we broke ground on our first Aurora powerhouse at Idaho National Laboratory under the DOE Reactor Pilot Program, advanced key commercial partnerships across the value chain, including our early 2026 prepayment agreement with Meta to support plans for 1.2 gigawatt power campus and began initial construction activities on A3F at INL. We also completed the acquisition of Atomic Alchemy and made substantial construction progress at Groves in Texas, our first radioisotope test reactor. In fuel, we completed fast-spectrum plutonium criticality experiments supporting using plutonium as a bridge fuel. We announced the first phase of our advanced fuel center in Tennessee, and we progressed licensing activities across multiple assets. Taken together, 2025 was the year Oklo turned our platform strategy into deployed projects while also strengthening the balance sheet to fund that execution and our long-term growth. Before I go deeper into execution, it is also important to understand how much the external environment shifted over the last 2 years. In 2024 and 2025, U.S. nuclear policy moved toward a more execution-oriented posture across licensing, asset deployment, fuel supply and capital formation. You can see the 4 main pillars here. First, executive actions and regulatory direction focused on accelerating licensing and enabling first-of-a-kind projects. Second, federal support mechanisms, including tax credits, loan guarantees and direct financing tools are improving the pathway to fund projects. Third, fuel sovereignty measures are pushing domestic capability across the conversion, enrichment, HALEU and strategic fuel materials. And fourth, implementation of the ADVANCE Act is aimed at reducing friction and licensing and enabling more efficient deployment pathways. The policy backdrop has shifted from a light tailwind to a very strong tailwind for the nuclear sector, and Oklo is positioned to move in that environment. Going forward, we will talk about Oklo through 3 integrated business units: power, fuel and isotopes that together form a unique vertically integrated nuclear platform. Power is the clean baseload power and heat from our sodium fast reactors that can utilize a broad spectrum of fuels. Fuel provides Oklo with an integrated pathway to produce fuel required for our powerhouses as well as for our peers and competitors. This derisks deployment, strengthens long-term supply and unlocks nuclear energy abundance at scale through fuel recycling. And isotopes expand the platform into high-value products and services with strategic domestic importance that are natural co-products from our other business units. The key point is that integration across the value chain is designed to unlock multiple complementary value streams over time. And first is power. We are building the power business unit because demand for firm, reliable power is growing quickly across the country. From data centers to industrial customers to government applications, our customers need clean, dependable baseload power, not intermittent supply. Our Aurora powerhouses are expected to provide that kind of reliable baseload power, and our commercial model is built around long-term offtake agreements. Power is also foundational to the rest of our business platform. Power deployments create the demand that can scale our fuel production and fabrication capabilities over time and first deployments establish reference assets that improve repeatability for future campuses. Our experience building our power delivery capability has eliminated key opportunities in other parts of the ecosystem that we are leaning into building and scaling. So power is both a near-term customer solution and the foundation for broader platform scalability. Fuel is the second business unit, and it is one of the most important strategic parts of what we are building. Fuel availability remains one of the most significant rate limiters for new nuclear deployment. From inception, we have been building fuel capabilities to support our own deployment and broader advanced nuclear deployment. That starts with fabrication for us. Fuel fabrication converts raw fuel material into reactor-ready fuel forms. It is how we support Oklo reactors while also creating the potential to provide services to third-party reactors over time, either through directly fabricating fuel for them or hosting their fabrication lines in our factories. Oklo is also exploring opportunities to develop modern deconversion processes to streamline efficiencies, including what we recently announced with Centrus. This step has traditionally occurred at the fuel fabrication facilities themselves. But as we look at the future of nuclear fuel manufacturing, it makes a lot more sense to locate this with the enrichment facility. The second big part of our fuel strategy is recycling. Recycling can recover uranium for reuse, can recover and produce transuranic bearing material that can be used as fuel and advanced reactors, it can enable high-value isotope production and it can provide used fuel management solutions through recycling pathways. So fuel is both a deployment enabler in the near term and a scalable fuel cycle business over the long term. And the third business unit is isotopes. We are building this business because there are attractive high-value end markets across health care, industrial, space and defense applications because strategic domestic supply for many isotopes remains constrained. From life-saving therapies to the long-duration power supplies that have powered human space exploration to the future of remote monitoring and sensing for security purposes, isotopes are key material for humankind's future. We see those isotope opportunities as complementary to our power and fuel business units that can produce isotope co-products that the isotope business unit can then package and sell. At the same time, we are pursuing purpose-built production using reactors and facilities optimized for isotope production, and we see a services revenue opportunity through irradiation for advanced nuclear technology research and development, defense research and development, semiconductor doping and hardening and other applications. Taken together, isotopes expands the platform into high-value domestic supply for critical uses while strengthening the economics of the broader business. This slide shows how the 3 business units connect. In the conventional nuclear value chain, mining, enrichment, power generation and long-term waste storage are fragmented across different parties. Our strategy is to build a more integrated platform that links power production, fuel fabrication, fuel recycling and isotope production. When you can fabricate fuel into reactor-ready forms and recycle materials over time, you move from a one-way fuel cycle into a repeatable loop. That improves long-term fuel optionality, supports supply resilience and can unlock additional products across the value chain. It also creates new value streams. Recovered materials can support radioisotope production, which connects directly into our isotope business. So the objective is not just to deploy powerhouses. It is to build an integrated platform where power is an anchor product, fuel is an enabling system and isotopes extend the platform into high-value products and services. And the U.S. is uniquely positioned for a strategy like ours. The U.S. has generated roughly 20% of its electricity from nuclear power over the last 30-plus years, while producing a very small physical volume of used nuclear fuel. More than 90,000 metric tons of U.S. used nuclear fuel fits on a football field, about 10 meters high. That material is often described only as waste, but in reality, it contains enormous energy potential. The energy potential in U.S. used nuclear fuel is comparable in scale to the sum total of major global oil reserves. This is what makes recycling and reuse so strategically important. Used nuclear fuel is not just a liability to manage. It is also a major potential domestic energy resource if the infrastructure exists to put it back to work. That sets up the next slide, which is about one of the mechanisms now emerging to help build that broader life cycle infrastructure. The U.S. already has a major strategic energy reserve in used nuclear fuel, but realizing more of that value over time depends on building the infrastructure, capabilities and coordination needed to put it to work. That is why the DOE's Nuclear Lifecycle Innovation Campuses program is so important. DOE has framed this as a first step toward potential federal state partnerships to modernize the full nuclear fuel cycle using regional campus models that can co-locate key parts of the life cycle. As this model advances, it could reduce development friction, improve execution time lines and support more efficient investment across fuel, recycling, power and isotope-related infrastructure. As importantly, employing used nuclear fuel as a resource instead of treating it as a liability could change the power outlook for the U.S. over time, supporting advanced reactor fuel supply for generations, strengthening domestic radioisotope production and improving long-term used fuel management outcomes. From our standpoint, this matters because it reflects a more integrated model for building nuclear infrastructure in the United States, which is closely aligned with the strategy we are executing across our business units. We continue to be very supportive of state responses to the RFI and have started working with multiple states as they evaluate potential campus proposals. These efforts form the foundations for ensuring energy affordability and reindustrializing the nation. And this is where the strategy becomes tangible. Across power, fuel and isotopes, we are already building assets that support a more integrated nuclear development model to unlock nuclear energy abundance. On the power side, we have Aurora-INL, our first Aurora powerhouse at Idaho National Laboratory and Aurora Ohio, our planned clean energy campus in Pike County tied to our partnership with Meta. On the fuel side, we have A3F at INL, our first fuel fabrication facility and our advanced fuel center in Tennessee, which is our first phase of used nuclear fuel recycling infrastructure. And in isotopes, we are building Groves, our radioisotope test reactor in the Idaho p Radiochemistry Laboratory, which supports isotope processing and scale up. So when we say vertically integrated, this is what we mean, multiple real assets now moving forward across all 3 business units. Since our last company update, we have made meaningful progress across all aspects of the company. In power, Aurora-INL executed its DOE other transaction agreement under the Reactor Pilot Program, received DOE approval of the nuclear safety design agreement, continued construction activities, including blasting and signed with Siemens Energy for the power conversion system. We also signed the meta prepayment agreement in support of up to 1.2 gigawatts at Aurora, Ohio. In fuel, A3F received DOE approval of both the NSDA and the preliminary documented safety analysis, and it was selected under the DOE Advanced Nuclear Fuel Line Pilot Program. In recycling, we signed an agreement with TVA to explore fuel recycling, initiated site prework on our flagship recycling facility, completed NRC pre-application engagement, initiated a rolling NRC readiness review and were selected for DOE recycling R&D funding. We also completed a fast-spectrum plutonium criticality experiment and announced a joint venture initiative with Centrus around deconversion. And in isotopes, Groves executed its DOE OTA, received NSDA approval, submitted its PDSA and continued construction toward a July 4 criticality target. Separately, the Idaho Radiochemistry Laboratory obtained its NRC materials license. So this is execution across multiple assets, multiple licensing pathways and multiple business units, all moving forward in parallel. Aurora-INL is advancing on a DOE-first authorization pathway. We have already executed the OTA under DOE Reactor Pilot Program and received approval of the nuclear safety design agreement. Those are important because the OTA formally brings the project into the DOE authorization pathway and the NSDA locks in the safety and regulatory framework for the project. The next DOE milestones are the preliminary documented safety analysis, the documented safety analysis and then the readiness review and start-up approval. Each of those steps progressively aligns DOE and Oklo on a safety basis from final design and construction through start-up and operations. The significance here is that the DOE pathway allows us to keep advancing construction, procurement and system integration activities in parallel as the project moves forward. Alongside the authorization work, Aurora-INL is also advancing on execution and build readiness. On site development, we completed site characterization at INL. Site preparation is underway, including blasting and construction activities are progressing in line with the project plan. On procurement and supply chain, we have received responses for the majority of identified long lead component requests for proposal, supplier down selection is underway, and all major equipment now has vendors under contract. That includes the Siemens Energy contract for the power conversion system, active supply chain agreements for reactor module components and active vendor contracts for all major refueling equipment. So Aurora-INL is moving forward on both the physical site side and the supply chain side, which is what we want to see at this stage of a first deployment, and we are learning a lot on the way. Next is Aurora Ohio, where the key update is our agreement with Meta in support of a 1.2 gigawatt Aurora campus. The agreement advances plans for phase deployment with an initial phase of 150 megawatts targeted around 2030, and it is supported by prepayment for power structure designed to improve project certainty and support Phase 1 development. Importantly, Oklo expects to use funds from the prepayment agreement to support fuel procurement. We also own approximately 206 acres in Pike County, Ohio, which gives us a site to advance campus development in parallel with commercialization and permitting work. So this is an example of customer demand, commercial structure, site control and fuel planning, all starting to line up around a real deployment opportunity. Fuel availability is one of the key gating items for advanced nuclear deployment. So our fuel strategy is deliberately built around flexibility, supply optionality and execution readiness. As this slide shows, we are addressing that through strategic enablers, fuel supply pathways and strategic fuel partnerships. On the enabler side, our fast reactor technology is designed to be versatile across a wide range of fuel sources, and our fabrication capabilities are intended to convert different feed supplies into reactor-ready fuel. Over time, recycling can turn used fuel into a more repeatable strategic fuel supply. Oklo is pursuing a differentiated strategy here to help accelerate deployment even in the face of conventional supply chain bottlenecks. And on supply pathways, we are working with DOE managed materials, HALEU from conventional and advanced enrichment providers and recycled fuel supported through our own recycling and fabrication capabilities. And on partnerships, we are working with DOE, building relationships around enrichment and deconversion and developing opportunities around recycled fuel. The goal is to solve for near, mid- and long-term scale while maintaining flexibility as the market evolves. A3F has a very specific role in our deployment strategy. It is a purpose-built facility to fabricate fuel for Aurora-INL using an existing building at INL, where Oklo is installing and operating the fabrication equipment. On the authorization side, A3F was selected under DOE's Advanced Nuclear Fuel Line Pilot Program, which is intended to support accelerated licensing and construction of advanced fuel fabrication capabilities. Execution is already underway. Initial construction activities have begun, and A3F is advancing in parallel with Aurora-INL so that fuel fabrication does not become a deployment gating constraint. We have also received DOE approval of both the NSDA and the PDSA for A3F, which enables us to move forward with final design and construction. And notably, Oklo's PDSA was the first facility approved under DOE's Fuel Line Pilot Program, which is an important validation of the pathway we are using. Next is the Tennessee Advanced Fuel Center, which is our first major step toward building long-term recycling capability. On-site and development progress, we completed initial geotechnical surveys and soil borings at the Tennessee site and initiated site development activities. On regulatory and licensing progress, we completed our planned NRC pre-application engagement and initiated a rolling NRC readiness review in advance of a future license application. And on fuel supply and partnerships, we were selected for DOE recycling research and development funding. The broader point is that this project is advancing on the site, regulatory and funding fronts at the same time, which is how we intend to move recycling from concept into real long-term fuel supply infrastructure. Staying on fuel, this slide is about upstream fuel infrastructure and specifically uranium deconversion. We announced a potential joint venture with Centrus focused on deconversion, building on our prior relationship. What is strategically compelling is the intended location. Centrus' site in Pike County, Ohio, co-located with Centrus' enrichment operations and adjacent to our planned 1.2 gigawatt power campus. Deconversion is a critical upstream step in the domestic fuel supply chain and colocation has the potential to improve logistics, reduce friction and strengthen both cost and supply resilience over time. It is important to note that these deconversion capabilities can support Oklo's fuel needs and the fuel needs of other reactors and reactor types, including light-water reactors. So this is another example of how we are looking to expand fuel infrastructure alongside fabrication and recycling, while the current focus remains on initial venture structuring and project planning. Turning to isotopes. The Idaho Radiochemistry Laboratory is an important near-term asset and example of timely execution. We obtained the NRC materials license for the facility, which is a key operational milestone. The facility is expected to make first revenue this year, which also makes it one of the more near-term revenue-oriented pieces of our broader business. Strategically, the lab has the potential to provide the foundation for developing our isotope processing methods and then scaling them up to support future VIPR facilities. So this lab is well on its way to be both a practical operating asset and a foundational capability for scaling the isotopes business over time. Now to Groves, our first radioisotope test reactor deployment. Groves is moving through a DOE first authorization pathway, and we have already completed 2 important steps, executing the OTA under the Reactor Pilot Program and receiving approval of the NSDA. Those matter because the OTA formally brings the project under the DOE pathway, while the NSDA locks in the safety and regulatory framework for the project. The next milestones are approval of the PDSA, which has now been submitted, approval of the DSA and then the readiness review and start-up approval. Groves is progressing through a structured DOE first pathway that's designed to enable full project build-out and position the facility for start-up and operations. And rather than just talk about it, I want to show you what we've executed. We'll pause here for a short video from the Groves site, and then I'll come back and walk through the key build milestones. [Presentation] Jacob Dewitte: Now that you've seen the progress for the Groves project, here's where we are on the remaining path to criticality. Site development and the structure were completed in 5 months. The reactor tank is installed, fuel has been procured and interior mechanical, electrical and plumbing installation is in progress. Auxiliary equipment is also in various stages of procurement. From here, the focus is on finishing the remaining construction activities, final installation of reactor equipment, integrated system testing and fuel delivery. The current execution target is criticality by July 4. We and others are showing nuclear assets can be built and turned on in less than 10 months. These are real examples that shatter the widely held belief that nuclear is slow. Instead, we are demonstrating that new nuclear can deploy at pace. Groves is progressing rapidly. The structure is up, major components are in place, and the remaining work is the execution closeout and commissioning path to criticality. And one of the exciting things about this project is that it is fully executing a commercially viable sourcing strategy across all components and not relying on preexisting or nonscalable or nonviable components and capabilities. The lessons we are learning are teaching us a lot on the way to full commercial operations. Before moving on, it is worth taking a step back and explaining what Groves actually is. Groves is our first radioisotope test reactor. And strategically, it serves as a test platform for Atomic Alchemy's production scale VIPR reactor platform. It is named in honor of General Leslie Groves, who directed the Manhattan project. From a design standpoint, it is a pool-type, water cooled, non-pressurized reactor built for thermal neutron radiation using pressurized water reactor fuel bundles with low enriched uranium fuel. Why that matters is that Groves is not just a single asset. It is designed to give us practical experience across design, manufacturing, procurement, construction, installation and ultimately, operations. The value here is both near term and long term, near term in getting this first asset built and operating and long term in informing how future isotope production assets can be deployed and operated. And one important point across the company is that these assets are not all following the same licensing path. We are taking a tailored approach depending on the asset, the site and the development objective. For certain first-of-a-kind assets and DOE site projects, we are pursuing DOE authorization. That includes Aurora-INL, A3F and Groves. For broader commercial deployment and other non-DOE assets, we are pursuing the NRC pathway. That includes Aurora, Ohio, the Advanced Fuel Center in Tennessee and the Idaho Radiochemistry Laboratory, which received its NRC license earlier this year. The key takeaway is that we are not trying to force every asset through a single framework. We are using the pathway that best fits the specific asset and stage of development while also allowing lessons from early DOE authorized assets to inform future NRC licensed deployments. With that, I'll turn it over to Craig for the financial update. Craig? Richard Bealmear: Thanks, Jake. 2025 was a strong year for the company as we significantly strengthened our balance sheet such that capital can act as an enabler of the strategic agenda Jake has just presented. On a full year basis, Oklo has a loss from operations of $139.3 million, which was primarily driven by payroll, general business expenses and professional fees associated with the capital market and asset deployment activities. The operating loss also included noncash stock-based compensation expense of $41.8 million, which was impacted by the increase in the firm's share price during the year. Our loss before income taxes was $110.2 million, which included the benefit of interest and dividend income of $29.1 million from the investment in marketable securities. Additionally, on a full year basis, our cash used in operating activities was $82.2 million. This number is inclusive of approximately $13 million of prepaid capital project expense that will ultimately become property, plant and equipment and run through our cash flows for investing activities. When adjusting for this figure, we reached $69.2 million in adjusted cash used in operating activities, which was within our guidance we provided for 2025 cash used in operating activities of $65 million to $80 million, demonstrating disciplined management of the company's cash reserves while also capitalizing on the tailwinds to accelerate growth opportunities. The company intends to maintain a disciplined approach to cash management and capital allocation in 2026. We are raising our guidance for cash used in operating activities from $65 million to $80 million in 2025 to $80 million to $100 million in 2026. This measured increase will enable the company to expand headcount across its business units and execute on its business plans. As the company progresses asset deployments, we expect to increase our investment into projects across all 3 of our business units. We expect cash used in investing activities to range between $350 million and $450 million in 2026. This level of spend looks to drive progression of our strategy across all 3 business units, including powerhouse deployments at both Idaho National Labs and future power projects at locations such as Pike County, Ohio. Fuel development for both our first powerhouse in Idaho as well as progressing potential fuel projects that could utilize HALEU, plutonium or recycled transuranic fuel pathways. Isotope project for both Groves in Texas and potential projects in other locations and other uses to support the overall corporation. Oka ended 2025 with cash and marketable securities of $1.4 billion. During the first month of 2026, we also raised an additional $1.182 billion net of fees, completing our $1.5 billion ATM program. This financing provides Oklo with a strong balance sheet, leaving the company well positioned to benefit from ongoing policy and regulatory tailwinds and to execute on our business plans in 2026 and beyond. Operator, we are now ready for questions. Operator: [Operator Instructions] And your first question comes from Brian Lee with Goldman Sachs. Brian Lee: I appreciate all the updates here. Lots going on. Maybe just first one, you mentioned a lot of progress toward commercialization. I know there's a lot of focus around kind of the pipeline and customer status. Jake, can you maybe speak to where that sits today? Any new additions or conversion into binding agreements and any incremental visibility into more of that happening in 2026? Richard Bealmear: Brian, it's Craig. I'm not exactly sure why, but Jake just dropped off our line. I don't think it was because of the question. But I would say that clearly, Meta was an important anchor point towards that commercialization progress, as you mentioned. And kind of based on that, we continue to have conversations not only with Meta, but with other potential customers, both those we've announced and other ones that we're continuing to progress. But really, it is important that we think that Meta being an important anchor customer for us and the fact that we can do more not only in the Ohio location, but also with some of our kind of behind-the-meter on-campus customers. And not only in the data center space, but there's a lot of work going on with U.S. military, predominantly in Alaska, but not limited to there as well as other industrial customers. And it does look like Jake's jump back on. Jake, I went ahead and answer the question since I think you got disconnected. Jacob Dewitte: Yes, that's perfect. I was just -- I would say like I think at the end of the day, there's a pretty healthy pipeline that continues to kind of grow in different places. And I think one of the dynamics that's important is having Meta as a as one of the kind of basically a lead customer helps others want to come follow and kind of repeat that because sometimes finding the first customer is the biggest hurdle to get into. It creates a pretty powerful dynamic. And I think on top of that, like the location and how we've built the strategy around where we see a lot of opportunity in Ohio is going to continue to kind of grow and scale with us. Brian Lee: Okay. Yes. Fair enough. And then just a second question on the CapEx guidance here. The $350 million to $450 million in 2026, it's a pretty meaningful pickup. Again, lots going on, and it seems like some areas is accelerating. Can you maybe just provide a breakdown of where that CapEx is being allocated? You mentioned a couple of different locations. And then how should we think about the cadence into 2027 and future years off of this level? And then maybe just curious how much of the CapEx being allocated to the Meta Pike County site in Ohio? Richard Bealmear: Yes. So Brian, I'm not going to provide kind of a business unit by business unit or project-by-project breakdown at this point. And part of that is we're still doing a lot of work kind of refining cost estimates for certain projects as well as kind of progressing procurement activities across those projects. And it kind of feels like with where we are commercially, it would be good to kind of let those progress before throwing project bogeys out there as we're progressing procurement strategies. But that being said, it's progressing things across all 3 business units. But clearly, the Idaho project is an important piece of that spend, just given the criticality of getting that first power project up and off the ground. But we are also starting some preliminary work in places like Ohio for the meta powerhouses. And there's also quite a bit of work that's underway in recycling for projects -- for the potential project in Tennessee, things we're doing to get isotope projects off the ground. And there's also some scoping CapEx available for some of those fuel projects that Jake mentioned across HALEU, plutonium and transuranic fuels. In terms of '26 to '27, I think given the project pace of delivery, I do think that we'll continue to see CapEx that will be at those levels. But it's really just a reflection of multiple projects going on in multiple dimensions across all 3 business units. Jacob Dewitte: Yes. And I'll just echo, I think that's an important part about the positioning we have and also like the -- frankly, the ability to move more quickly and scale into the opportunity space as it is here and kind of set the direction and set ourselves up for a very long-term success by flexing into all of that is, I think, a very important thing to be doing, which is great that we're in a position to do it. Operator: Your next question comes from the line of Dimple Gosai with Bank of America. Dimple Gosai: Just a question on the regulatory strategy here, right? Can you give us a status update on the COLA timing and the PDC topical report review? Like how do you sequence the DOE authorization at INL with future NRC licensing for subsequent sites? And on the same topic, did the government shutdown at the end of last year and some of the staffing constraints that we heard of at the DOE and NRC move any internal licensing time lines or anything? And does this change the schedule at all in terms of deployment or filings or anything? That's the first question. Jacob Dewitte: Yes. I think -- I appreciate the questions. There's a couple of things in regulatory that are important. I think there's -- look, there's still, I think, sometimes some confusion about DOE authorization for NRC licensing and how these things all fit together. The key thing is DOE authorization allows us to do the most important thing, which is build, which is learn by building now in a faster path, which is what we just talked about and shared a lot of information on. The progress we've been able to make on the ore plan wouldn't have happened without that pathway going forward. And in many ways, arguably, this is the way the policies were set up a long time ago. And it dates back even a little more recently, but still some time ago, back in 2018, there was a bill passed into law and signed into law called the Nuclear Energy Innovation Capabilities Act, and that set the stage for using Department of Energy capabilities and resources, including the regulatory authorization side to support kind of the first of the kind of builds because DOE has just a wider range of regulatory experience and flexibility. And now with the executive orders, they directed a pretty clear approach and prioritization of DOE to leverage that and build the capabilities to do that, which, frankly, they largely already had. It just said put them to use to support these things, which is amazing because it's completely shattered the paradigms of the past. It's really illuminated a lot of the significant regulatory inefficiencies that have existed. On top of that, it sets a good pathway for us to then build that first plant. But then also what we expect to see coming from the NRC is part of the executive orders there that build on all the work from the ADVANCE Act before are driving a lot of new regulatory, frankly, pathways and development there that bridge from the DOE basically authorization itself. So we're expecting the NRC to fairly soon issue basically their approach, if you will, for converting a DOE authorized and built an operating facility to an NRC license facility, and we're in a great spot to be able to go through that and experience what that looks like. That inherently is not like a call out because you're not getting a license to build and operate the plant. The plant is rebuilt. So it's really a conversion process, which is cool. But they have to do the safety review and they have to reference and leverage everything before. Not only that, but we've also been working to include and loop in the NRC into our basically regulatory review with DOE. So they're seeing how it's done and they're getting experience watching and shattering those pieces, which is pretty powerful. And this is a key kind of opportunity to go, I think, faster. It's really -- it's hard to overstate the value of focusing on actually moving out of the way of sort of if you think about what a nuclear company historically would have to do, what our product was, if you really look at it objectively before these opportunities existed, our first product was really more built towards shipping permitting applications, right, paperwork. Now because of the DOE authorization approach, it's building while doing that, which allows us to learn and iterate way more quickly because naturally, things come up and evolve, and that helps you learn for really hard things that are actually really important to like deployment at scale. Now all of that also translates very effectively to what we're going to do with the NRC in Ohio. And I think what's pretty clear is DOE and their approaches and the milestones we fit with them show that they can do a safety review of certain fast tractors. And they've done a lot of those before because they oversaw the power plants that we build our legacy off of. On top of that, the NRC has also shown by recent developments that they've had, including, for example, the construction permit work with TerraPower that they can do that work as well and looping them into this and leveraging the experiences and expertise that DOE has because DOE has done this stuff before is quite constructive and quite efficient, frankly. So we're waiting to see the new framework from the NRC to start executing down the pathway of preparing to convert a license. But in parallel, we continue to work through effectively developing out the combined license. Now to submit for Ohio. That said, it's very important to also flag something else. Part of the executive order, there's significant regulatory work and rewriting going on that could significantly influence our approach in a constructive and productive way that we would expect to reduce costs and time lines as well as add additional regulatory kind of confidence and certainty. So that is all a very live situation as we speak, and we're watching eagerly as various things flow out from the NRC on that front. But it's fair to say that, that's probably going to be quite constructive, but also have some tweaks, if not more significant changes on our actual regulatory, I'll call it, semantic strategy. In other words, we still get an NRC license, but the vehicles by which we might do that may be a bit different because of what's happening at the NRC. That said, we've been preparing and continuing to go through the pathway of pre-application that addresses general and somewhat generic or cross-cutting issues that are important for licensing for us, and those will set the stage for us to actually have -- reference those in whatever application structure takes place going forward from the NRC. Again, at this point, we still expect a Part 52 combined license, but that's just because we haven't seen what the new menu of options are going to look like as well, which we expect to happen over the course of the next few months, and then we'll adapt kind of a strategy from there. But a couple of key things that we see are obviously just having the experience of going through the Aurora plant in Idaho under DOE authorization, going through the DOE regulatory process, having the NRC part of it, taking an iterative approach, learning by actually building and scaling that and then applying that outward. On top of that, we're also getting experience from NRC licensing already on the isotope side, having obtained an NRC license now. It's a great win. To your latter part of your question, Dimple, yes, we did face some delays on that with that license application back in the fall during the shutdown. But now we have the license in hand and off we go. I don't see any of the other effects that are, frankly, at this point materially affecting our progress on the other activities that we have going on with the NRC and with DOE. But that was definitely something that was noted. And then the last thing I'll just say is one important thing, too, that's very helpful is in the current frameworks, which again may evolve and change a little bit, but -- or frankly, a possibly, the approaches with what we're licensing and the work we've been doing on the isotope side, not just the material handling license, but the actual production reactor, like basically like the full commercial version of Groves that we've spent some NRC pre-application time with. That has a different pathway than what the commercial like Aurora power plant version has. And having the experience that we gained across both of those and what we're gaining on the recycling side and what we've done on fuel fabrication is very helpful because we see a whole spectrum of different parts of the NRC and can cross-connect best practices and help guide things from our development of an application as well as our engagement with them in the review process. And that helps in many, many ways in terms of some scaling efficiencies and bringing best practices from various business units across. And that's pretty unique for us because we're taking on that broad kind of set of -- broad set of projects. So yes, that's kind of the way I'm seeing that landscape evolve and how all this is moving forward. Operator: Your next question comes from the line of George Gianarikas with Canaccord Genuity. George Gianarikas: You mentioned in the past that about 70% of the Aurora powerhouse components are being sourced from nonnuclear supply chains, which is I think you brought Kiewit into the picture. Is there any update on what the 75-megawatt reactor CapEx should look like? And if not a complete update, maybe any early indication on the dollars per kilowatt there? Jacob Dewitte: Yes. I mean I think this is one of the things that's actively evolving from where we're at in terms of the build cycle and what we're seeing is doable and also what we're seeing can be done to either move some time lines to the left and build it faster and pay more to do that or not, right? But generally speaking, speed is a very important thing for us. So that's how we're trying to focus on this. It also gives us a lot of insights into then what we're going to do from a more, I would say, optimized strategy with the Ohio plants that would allow us to scale those according to what makes most sense from sort of like the experiences learned from the Idaho plant. So what that's all to say is we're going to have more information as we continue to get into the actual deeper works beyond some of the civil and prep works and have some relevant updates that come accordingly as they get deeper into it. But what we've learned on the procurement side is we've been able to find ways to pull schedule to the last in different ways constructively. We've been able to find ways to look at how some things can be accelerated, but one aspect of that is sometimes it helps the fact that we have the Aurora plants in Ohio coming afterwards because it can maybe accelerate some things here in Idaho to help us with other components and other parts and other sourcing for scaling those to the other Ohio plants and maybe having some benefits that happens that way. So the general view we have is it's evolving as we go through on this and as we develop and enhance the relationships we have and we look at different angles of attack on the different fronts of what drives costs and what doesn't and some things are candidly. Not worth necessarily driving the modernization for the first plant that we'd like to see in terms of the actual supply chain and the procurement of it. So we might pay a little bit more to move faster and other things that is working on that. It's a bit of a dynamic situation that we're continuing to evolve and look at. At the end of the day, though, like my view is like, generally speaking, all of these things can live like pretty much every part outside of the fuel can live outside of the nuclear like conventional supply chain. But I think what's really important is I think that paradigm has actually been sort of inverted as of late because there's -- we're seeing growth in the industry for the first time in a while. So you're actually seeing folks bring forward more disruptive approaches and kind of taking away some of the legacy models and approaches that were driving significant costs and inefficiencies by sort of locking into the status quo across different suppliers in different parts of the entire sort of value chain, if you will. And a pretty cool thing that we're seeing is that we can actually get to be, I don't know, a lot more thoughtful engagement from our partners about how to do that and more constructive engagement about knocking out some of the synthetic like nuclear cost multipliers that have existed before. I know I say this a lot, but it's hard to overstate the value of modern -- of basically taking out some of those nuclear cost multipliers, right? The "nuclear idiot index," if you will, is really, really high and is right to be changed by changing how we design, how we try to minimize and reduce parts that come in with some of the typical nuclear classifications to them by taking advantage of passive and enhanced safety features, but also by modernizing how our suppliers and ourselves actually deliver those plans. But we're finding that there are some places where, you know what, just easier to deal with what's legacy for the Idaho plant to get it up and running because that's more important. But that sets the stage for them how we can actually solve that problem in Ohio because we learned the best practices to do that. So it's pretty interesting to see that combo sort of evolving and taking shape. Generally speaking, though, we're seeing a very different way of engagement across most of the supply chain and not having some of the conventional legacy requirements. And what I really mean by that is not being a light-water reactor is actually really constructive. Counterintuitively, a value of that is not having to play in the legacy supply chains with the historical cost structures in place there. That's actually worth a ton because it gives us a lot more flexibility because we're not buying light-water reactor parts by and large. I mean yes, there's some similarities, but we're not a light-water reactor. So a lot of it is different. And that gives us a lot more flexibility. And it also helps us focus on where do we need to flex into building ourselves, what parts make the most sense to buy to go faster or build ourselves and maybe build ourselves to scale and build ourselves to deconstrained supply chains or build ourselves just to be cheaper. So it's an active growth aspect of the business, and it's also how we're looking at. Not just sort of the capital cost modeling and data sets, but also the long-term cost structures of the business and also like opportunities in the business. Operator: Your next question comes from the line of Ryan Pfingst with B. Riley Securities. Ryan Pfingst: Somewhat of a follow-up to some of the comments there, Jake. For the agreement with Meta, they ended up choosing 2 sodium-cooled reactor developers following their nuclear RFP process. Can you rehash some of the benefits of your design and why Meta might have chosen it? Jacob Dewitte: Yes. I think the answer right now is the fact that we've got -- I think they see the benefit of fast reactor technology between us and TerraPower, right? That's just repeating what you said. But basically, I think that translates across a couple of like vectors. One is the technical maturity, something that's vastly underappreciated even by a lot of nuclear experts. I think the fact is as a society, we built a lot of these plants, we've learned a lot about what doesn't work and what does work. And in the U.S., notably the experiences we got through EBR-II and FFTF, the ability that those plants had to achieve pretty exciting operational characteristics, both in terms of operating capacity factors, in terms of occupational dose rates, in terms of how to service and run those plants, right? Like their operating capacity factors were competitive and exceeded, in many cases, light-water plants at the time, which shows a lot of the inherent benefits of the technology itself. And it's the only technology that's really been able to do that. And on top of that, I think there's a clear project -- like clear trajectory on the cost benefits of sodium being a relatively materially benign fluid with commonly available steel. In other words, you can use it and it's quite compatible with stainless alloys. That's great in terms of opening up supply chains and reducing costs and avoiding major cost drivers of very exotic alloys you might need if you didn't have those benefits and then also not being pressurized and then having the benefits of being able to operate at relatively higher temperatures and then the features that come from that for passive heat rejection through the phenomenal heat transfer characteristics that sodium has as well as operating at higher temperatures and what you can do to reject heat to air because you're at slightly higher temperatures. So all in all, it translates to a lot of -- generally speaking, cost, I would say, cost benefits as well as the strong operational history and high technology readiness. I think those are big features there. Richard Bealmear: And Ryan, maybe just a couple of adds there. I think as we continue to emphasize in calls like this, the importance of having multiple seal pathways, I think, was another important point of distinction and being able to have proof points against those pathways. And I think another important part on Meta was already having a ROFR in place and access to land in Ohio, I think, was another important advantage. And then we've leveraged that land access even more with what we could potentially do with Centrus. Operator: Your next question comes from the line of Vikram Bagri with Citi. Vikram Bagri: I have 2 questions. I'll ask them together. First, maybe for you, Craig. Can you talk about the timing of Aurora-INL? It appears time line shifted slightly to the right with the change in language from late '27 to early '28. Now it says 2028. Am I reading that right? And what led to the shift in timing? Also, I see it's a 75-megawatt reactor. Can you talk about what the CapEx requirements for this reactor will be or when you will have a greater clarity into CapEx requirement? And then secondly, for you, Jake, I see you conducted fast-spectrum plutonium criticality experiment. Can you share what that entails and your expectation of timing of plutonium allocations that we've been looking forward to? Richard Bealmear: Yes, in terms of the last bit of your question, I'll take that first, that we're still doing a lot of work. And Jake kind of mentioned this dynamic of challenging the cost versus the time line because trying to bring time lines forward could have a cost element to it, and we're really trying to balance both of those pieces. And I think we'll have more information to share around what the cost of that first asset looks like later this year as well as how we look to bring costs down on future deployments. And in terms of the time line, I think I've been pretty consistent in the various investor meetings that I've been in that we're targeting a 2028 time line. We know it's an aggressive target, but we feel like the industry and our customers are pushing us towards being able to hit those time lines. And it's also, I think, important why we're doing things on project like growth where we can learn how to bring down capital costs and learn how to bring down project time lines as well. Jacob Dewitte: I think one thing we saw with the -- like what we're having happened with -- I think that basically, the time line elements are as we're putting all these things together, right, like we're -- we have a path of being able to start hitting important construction milestones this year, doing some plant commissioning work but getting the full plant into nuclear heat production just is going to really happen in 2028, right? It's just where it's going to be. So I think at this point, we're seeing that line up to make that kind of the case. We're always looking at different ways that might pull parts of the schedule to the left, and there might be some things that kind of help with that. But a lot of this gets to how we can execute on building this thing and doing it quickly and moving through learning and iterative processes relatively quickly. And I think it's important because we're trying to also make sure we capture lessons learned and not designing the fly to implement all those things, but that help us with Ohio. And that's important because that means that the follow-on plants are going to obviously show those improvements significantly. And that's a key thing about smaller reactors, right? The cost and time lines of iterations are just way lower. And that's how you really drive learning and scale as we see everywhere. On to the plutonium front, yes, it was pretty cool. We got to partner with Los Alamos National Laboratory and go out to the Nevada National Security Site. Basically, what we got to work with was a small plutonium like basically metal assembly that we used uranium as a reflector and plutonium was the primary fueling board and got to run it through some criticality basically benchmarks and tests as well as some reactivity measurements, which means you're actually taking the system, putting some power into it, heating it up a little bit and looking at the thermal expansion and the other effects that cause it to shut itself down naturally. It's important because while a lot of that data has been out there, doing it in this kind of way helped us get more fidelity in certain ranges of particular interest for us relevant to our use as well as just to enhance our overall models for validation purposes. It was pretty cool because it was really doing that, right? I think we're putting in a couple of kilowatts at most in terms of thermal power, but in a very small system that's literally very small, it matters and it was able to heat the system up and we got to see all those insanely like fast dynamics and responses. I've gotten to spend a little time around like a [ high-strainium ] fast reactor system in my past, but this thing was even faster in how it behaved. It's very, very like tightly responsive, which was awesome. And the way they ran it was just a pure testament to like how robust a small tightly coupled fast reactor is in terms of like inherent feedbacks and all those benefits. So that was helpful. We anticipate there's going to be more work there that just adds more fidelity to basically improve reactor performance and reduce some uncertainties throughout the system that ultimately translate to dollars saved or more dollars earned, right, for both. And then the other part of it is with the plutonium awards, we're expecting those things to kind of progress. I know the Department of Energy is going through the active kind of reviews of the request for applications they put out, and we're pretty excited about our positioning for that. But time lines, I think we'll watch it eagerly this quarter coming up, but I think it depends on a couple of factors that are still evolving. Operator: Your next question comes from the line of Jeffrey Campbell with Seaport Research Partners. Jeffrey Campbell: My first one is, will the deconversion discussions you've noted result in Centrus increasing its enrichment capabilities from its current small volumes? Or do you envision the deconversion capability is independent of any particular uranium enrichment supplier? Jacob Dewitte: I mean from the deconversion technology side that we've worked through and we've been developing out, it's pretty flexible. I mean it's based on a UF6 input. And try to supply some things we think can help scale and drive costs more effectively at the facility level. So it's pretty flexible. Part of why we explored it with Centrus to start is just given the positioning we have in Ohio, the fact we're going to be building a lot of plants right there by where they have it. There's some significant economies of scale of putting deconversion there as well as potentially fuel fabrication there and the reactors there. So you have a pretty cool campus that goes from enrichment to deconversion to fabrication to actual reactors, all in that general area and in a very attractive market to be in overall. So that's how we see kind of the opportunity on that. I think the space we see is -- I think we've got some cool technology pieces. We're eager to explore what that looks like to integrate with theirs, like their facility and their approach. The idea would be, of course, to support their significant growth and expansion. But yes, we see this as being broadly suited for any kind of uranium hexafluoride approach. So any of the, I'll call it, more conventional centrifuge enrichment approaches. When we talk with other enrichers that use uranium hexafluoride for different processes, similar benefit. And then there's some of the other technology developers that are working on true metal-to-metal kind of enrichment. And obviously, you don't need deconversion for that. And for us, that's also great because you can just take the metal right into fabrication. But it's kind of how we're looking at the landscape. Jeffrey Campbell: My second one is, I thought your point about pursuing different licensing pathways is interesting. Specific to fuel and fuel recycling, why did you choose the NRC licensing pathway for Tennessee? And how does this differ from the fuel facility licensing under DOE at INL? Jacob Dewitte: Yes. As we see it, like the DOE INL one set up very well under the -- well, first of all, we were going to need to make fuel for the Aurora plant. So a long time ago, we said, where can we do this and what's the fastest way to do this? And at the time and as it maintains to be true now is to use one of their existing buildings and set up the fabrication equipment there. But we want to scale that outward as soon as reasonably possible. And already sitting on a DOE facility, it just makes sense to have that under their kind of purview. So we look at how that can scale given the Reactor Pilot Program and the Fuel Line Production Pilot Program. In terms of the commercial kind of use case around the recycling, given where that is and it's designed to be a fully commercial facility, like that is something we see as taking an NRC licensing approach. Inevitably, by the way, we've also engaged with the NRC in pre-application on fuel fabrication because at some point, we're going to need full commercial fuel fabrication. So that also will end up becoming more -- become NRC licensed. But being able to get the repetitions of permitting and regulatory oversight and execution by actually building and operating these things under DOE authorization just moves faster and the programs were there for the fuel side. The NRC side, then we see those converting over to the NRC or at least helping inform where we do go fully with the full NRC license commercial fuel fab facility. And then it's similar that we're just kind of at that stage on the recycling piece already and needed to do a lot more pre-application work there because there's more, I would say, fundamental licensing-type topics to cover on recycling, and that's why we've been at that for several years now and why we're pretty excited to move into this kind of rolling readiness review after completing the major items we wanted to in the pre-application side. So that's actually part of the story that probably gets maybe a little bit underappreciated, but the progress made on NRC licensing for the recycling facility in Tennessee is quite exciting. It's quite staggering actually to see how much work has gone into that and how much progress has been made through pre-application getting ready for a full application submission. That said, with the DOE life cycle program out, I also -- I would not be surprised if there is a pathway that makes sense to pursue recycling through a DOE authorization approach for kind of a pilot facility. That's something we'll evaluate should that make sense to do. If it does make sense, then we'll kind of take our lessons learned to go there while we continue working with the NRC for full commercial scale. But we just see that all these DOE pathways allow us to move to first of a kind more quickly and then better position us for NRC licensing at scale. Operator: Your next question comes from the line of Sameer Joshi with H.C. Wainwright. Sameer Joshi: I just have one on the Atomic Alchemy Groves test reactor. There's roughly 3.5 months left for your target criticality on July 4. There is some amount of construction left and some procurement of auxiliary equipment left. How confident are you that you would meet that deadline? Jacob Dewitte: Yes. I mean this has been a great rallying drive for the company to both design and build quickly and also learn lessons quickly and iterate quickly. So like when you look at how far this has come, we feel pretty confident that we're going to be able to hit or meet that -- hit or beat that date of being able to pull rods and take the system critical. Fuel has been ordered. All the major items generally have been ordered. There's still some work about trying to see what we can do to make sure we build ourselves enough buffer time to be able to receive and manage all this. But it's a logistical effort to time all the permitting steps with the ability to receive the fuel, to load the fuel, have the equipment on hand, find some ways to maybe accelerate how we can come up with some solutions that allow us to have the right kind of things that are available now versus maybe what we want to have more commercial scale and have some replaceability for them for certain things on instrumentation and detection. But that's part of what this feature in this facility is for. It gives us the ability to run it, work with what's available and then have some flexibility to pivot those things in. But you look how far this has come by doing -- going from a bare field to excavation to putting a concrete in the foundation, putting in the vessel, loading that, building out the structure, having other major items in order, getting stuff ready to be received and installed, like it's pretty exciting how that's all coming together. So we feel very good about that. It's a challenge. It's not going to be easy, but we feel very good about the position we have. And I constantly am trying to say, how can we make sure we can move faster and do better. And what's interesting, too, is like there are going to be some other companies that are going to achieve criticality before that date probably, which is very exciting because, again, what I said is it shows there's a spectrum of solutions that are going to deliver on that. What's great about this one is it includes real civil works. And some of these other ones kind of are just a different scale. So they don't quite have that same effort or they're maybe using preexisting prefabricated fuel from DOE facilities or inventories and other things that kind of allow you to hit that kind of criticality milestone, which is awesome, like it's really important. But like part of what we've learned in this process is and with Groves that's so exciting to me is it's a full design build that wasn't using pre-existing stuff, right? Like I mean yes, there's some things that are on inventory and shelves from our suppliers, but it's not like we're trying to -- we're not using fuel that was already made by somebody else and sitting on some DOE warehouse or something like that. Like the whole thing has gone through from -- pretty much from scratch. And it's a pretty powerful story and us and our ability to actually build and deliver that and execute in building something that fast that's actually going to make real news -- it's going to be pretty cool. Operator: Your next question comes from the line of Sherif Elmaghrabi with BTIG. Sherif Elmaghrabi: Just one for me today. Craig mentioned the fact that you had land in Ohio help yield -- help win the deal with Meta. And I believe you got that land from an economic -- or with help from an economic development council in the state. So can you speak to why they saw Aurora powerhouses as an attractive use for the land? And do you see similar opportunities in other states? Jacob Dewitte: Yes. This is like -- this is -- I love this question. This goes back to like strategic vision that I think, Caroline, the co-founder saw here and some of the rest of our team saw with respect to these opportunities of taking federal land resources that were being sort of cleaned up and made available and repurposed for economic development and federal is a great position for that, right? If you're not familiar with the site, it is home to one of the largest enrichment plants in the whole world. It's incredible feet of industrial like might and strength. But as that plant was retired and they're looking at repurposing a lot of that land, it became an opportunity for saying, hey, there's a lot of infrastructure here that would make sense to build into, we should do this. And so back before ChatGPT, before kind of this recognition of an inflection point coming on power needs, we saw that, hey, there could be some opportunities to fight some power plants there. We're going to need fuel from Centrus. So we announced several years ago a relationship with them to potentially sell them power and be able to build some infrastructure there, including the power plants. And so we started working with them to do that and had that vision. And then all of a sudden, all these dynamics start to come together very attractively, all in a relatively short order, but we have found that position as a really useful thing to have. Along the way of doing that, we also learned the exact thing you're asking, which is, there's actually some good opportunities if we do that in the right way strategically at the right time, in other sites. And so yes, that is the thing we're doing. Like I think I alluded to earlier on the call is what we're -- everything we need to do to deliver power to customers is illuminating things and opportunities for us to do, in some ways, more, in many ways more and do it more efficiently and cost effectively by doing it ourselves and sort of leveraging our side. So instead of working with others who have the land, developing the land ourselves or partnering with folks to develop the land together and bringing power to is a pretty important differentiation for us. So we're pretty excited about like the opportunities we see around that. And by being -- because of our business model, we have to solve those things. So it's important because then we're forced to solve the really tricky things that actually make deployment hard, which isn't always just the building of the reactor, it's all the stuff around it. So our insights on that are actually allowing us to create a lot of value by doing those things. So yes, we see that, and we see other opportunities that are pretty exciting. And what they saw with us was they wanted nuclear in the area because they had a strong history of nuclear. They wanted economic growth because they had a lot of jobs that were in the area before that, but were then being phased out as decommissioning was kind of progressing. And we were well positioned to support some of that. Now we're going even bigger there. So there's a lot of opportunity that's going to come because of that. And I think they also saw that like from -- and obviously, I'm interpreting my opinion to them. I mean they're the best ones to ask directly, but like they also saw that we were -- like building power and infrastructure is great because it creates halo effects. And again, this was pre the whole data center boom, but it creates halo effects for other industries. And obviously, data centers get a lot of that attention now. But I think that's what they saw was if you build -- if you have some power plants coming here, you're going to probably have some other opportunities that come with that. So that's, I think, what they saw and how we saw it. Operator: Your next question comes from the line of Eric Stine with Craig-Hallum. Eric Stine: So obviously, the Meta agreement quite important, and it does create that mechanism for prepayment. But also, I would assume, predicated on a firm PPA. So just curious progress there. And you mentioned that other potential customers may want to follow this model. So maybe just talk about or characterize the PPA discussions with other potential customers. Jacob Dewitte: Yes. I guess like the way I kind of think of it is we -- this is one of the cool things about how we look at the landscape with what we've tried to position ourselves into is power is a massive need for a lot of folks and our ability to work with Meta was -- we positioned and structured so that like hey, they want us to be successful. We want to be successful. We also need to make sure just like they do kind of that we have the opportunity to work with different potential partners in different areas and in different ways. And the way we try to structure that agreement allows us to have the ability to obviously prioritize where we are in Ohio with them, but also provides opportunities for them to either work with us or others to work with us on either growing there or around there or in other sites. And so overall, like I think what we see is -- I mean we're seeing the inbound and the focus on actual structure now that we have an example of it really kind of change in a constructive way. So we're really talking about like meaningful binding offtakes that emulate similar dynamics to it to have a structure and look like prepayment that allow us to drive project certainty, but also allow us to make sure we're working with partners that are committed to sort of success here for us and have the right understanding and the right sort of, I'll call it, grace built into how they're going to work with us as well as commitment, and that's pretty important. And we're finding -- we found that like I think the tone and the tenor and the approach and the conversations we've had has focused into the major players are going to be the right ones to kind of look at there and has kind of accelerated the conversation set since announcing that deal. So we feel pretty -- I think I feel personally quite excited about how this sets the stage for how we're going to work with both Meta and potentially others as they come to the table. But we don't see a shortage of need or appetite. I mean there's way more opportunities. It's just -- it's a huge number of opportunities. But this does allow us to have a framework that helps us really know who and how to prioritize and who's going to come to the table with the right things that kind of show that commitment as a partner to help us actually execute successfully. I don't hope that kind of answers the question. I don't know, Craig, if you want to add anything to that, but... Richard Bealmear: No, I like that. Eric Stine: Okay. And just so on that, I mean so next step then would be to see a firm PPA with Meta. I mean is that the right way to think about this here with that mechanism now in place? And as an example, whether it's with Meta or someone else, it would be a firm PPA just to kind of move this area, this development potentially in Southern Ohio forward? Jacob Dewitte: Yes. I'd be kind of clear, like I think this is a binding commitment to provide power and -- from us, for them to buy power from us. So like what we see is this sets the stage to then get into the actual execution on the preprocurement on the longest lead items a fuel and some other items as well as ensuring the project into those stages. So then, yes, convert over to a PPA. I know we've been saying this for a long time, but the approach we've been taking with customers is not to rush to PPA, but find better binding offtake structures. And this is very much what we had in mind because overdefining the PPA now isn't the right answer versus having a binding commitment that allows us to scale into the right kind of PPA structure after this goes forward. And that's a very important like point of kind of distinguishment, I guess, or differentiation because of what this allows us to do to define that as we work through this with them. So yes, looking out over the next year or so, I imagine that's where we'll kind of see the PPA come together. But I mean part of that is the time lines are going to evolve a little bit based on exactly specific need sets and how to best structure this. But like at the end of the day, that's what's important here is that this is a binding offtake and a binding agreement to support that. Richard Bealmear: And Jake, I would just add, it's trying to progress both the asset deployment plans in lockstep with the commercial discussions on the PPA so we can make sure that we get the right asset-level returns. But clearly, the lock-in elements that Jake mentioned that we have with Meta really becomes an important enabler for the projects we intend to do in Ohio. Operator: Your next question comes from the line of Derek Soderberg with Cantor Fitzgerald. Derek Soderberg: Just one for me. Jake, government policy and the regulatory environment broadly has been pretty supportive. I'm wondering, based on your ongoing conversations with the DOE, the NRC, do you expect any new government programs or regulatory changes this year that potentially could help you guys accelerate your plans even faster? Jacob Dewitte: Yes. I think what we see is the government like -- I mean kind of gave a very long-ranging answer to Dimple earlier on this similarly. But like we do expect there to be additional like federal action that's continuing to be supportive and trying to find different ways to help accelerate around this. I think the Nuclear Lifecycles initiative is an important one. I think that's pretty also significantly underappreciated, but it's basically setting the stage for very significant federal commitments to states that are focused on addressing the back end of the nuclear fuel cycle and the natural economic development kind of approach to doing so is going to be anchored around recycling. So we're pretty excited about how that looks and what the benefits are going to be that trickle out from that. Additionally, from the executive orders, there's continuing to be significant activity around the NRC and kind of, let's say, reform and modernization work at the NRC that includes a significant amount of work going into modernizing and updating the -- like basically the suite of regulations there. And we're seeing some of that start to trickle outward, but we know there's a lot more coming. And I think that's going to play out across. I mean from what we can tell, like everything, which is generally, I think, a pretty darn good thing. So we expect there to be added clarity, enhanced schedule certainty, reduced time lines, reduce costs across the board around a whole bunch of different relevant things for us. And given we have so many projects and given we're doing so many things across the space because of the opportunity of integrating these things, we see that those line up really favorably for us to benefit from those. And in some ways, being agile and nimble like we are, gives us a better pathway to take advantage of those than if we had a license application in already. I know it sounds kind of funny, but that's kind of how we see the space. Operator: We have time for one more question, and that question comes from the line of Craig Shere with Tuohy Brothers. Craig Shere: So on Brian's CapEx question in 2027, Craig, you seem to suggest the investment spend could continue at 2026 levels. Depending on approvals and partner capital, is it possible to see a further stair stepping into next year? And given what seems like $2.5 billion of pro forma cash and investments, including the January ATM you hit, is it reasonable to say that, that's sufficient to carry you through at least to next year? And finally, do you have enough fuel for that 75 megawatts at INL? Richard Bealmear: So I'll let Jake answer the last question, but we're very well capitalized for 2026 and beyond. But -- and I think as we've talked about in earlier conversations, the one thing we've not yet been able to execute on, but it's definitely part of our overall long-term capitalization strategy is what we might be able to do at what I would call the asset-level financing approach. So things like project financing. And in terms of the level of spend, I think one thing that Jake talked 2.5 years at Oklo is expect the unexpected because I think we see more opportunities ahead of us than we did this time last year. But I do think what's going to happen in the years ahead is I think kind of the nature of the spend will change in terms of seeing more -- as our projects progress, especially in the fuel space, we talked a lot about recycling. I could see that kind of the split of the capital changing over time, which is also why I think it's important that we've been able to demonstrate an ability to raise capital in the capital markets. And we've got other levers at our disposal in the future, which would be project financing. We're having discussions with the energy -- with EDF, which used to be the loan program office. And we definitely make sure that the treasury team under Graeme Johnston's leadership is always kind of on top of the next thing. And I'm really proud of what the team achieved in 2025. Operator: That concludes our question-and-answer session. I would now like to turn the conference back over to Jake Dewitte, Co-Founder and Chief Executive Officer, for closing comments. Jacob Dewitte: Thank you, and thank you all for joining us today as we get into kind of the opportunities with -- or basically updates on all these opportunities that we're leaning into and executing against. 2025 was a pretty exciting year. It wrapped in a pretty high note and hit off to a really good start this quarter that we're currently in based on some of the milestones we talked about hitting with the Meta announcement, for example. I think as we continue to scale into building and execution, we are postured as a very, I think, strong position to learn through doing and something that has not been in the nuclear ecosystem in meaningful ways largely since kind of the 1960s, I would contend. And so very exciting time for the space, very exciting time to see all sorts of new things be learned in a modern context, including how to best design and build and deploy and scale across the ecosystem. Given our positioning and our posture and our business model, we're also uniquely suited to learn a lot about where the opportunities are for us to lean into, both in terms of where we can create value, whether we build things ourselves, whether we acquire, merge or buy companies or just partner with folks to buy sourcing or supplies from them or material from them. It gives us a lot of good insights about how to actually execute here. That's the key thing now. What we're solving for is broad, scaled nuclear execution, which really translates to how we can build, how we can license, we can operate, how we can source and supply in-house and do all the things we need to do to actually do what we're trying to achieve. We're also really excited by the progress we've made on the isotope side. We've shown we can obtain an NRC license. We've shown we can execute against DOE authorization across multiple lines, and we've shown that we can also build a real physical asset, a real reactor in incredible time lines and also internalize all those lessons learned, the things we've learned that are hard, the things we've learned that are easier, the things that didn't work and the things that do work and help apply those to where we go forward and aim for turning that reactor on by July 4, which will be a really exciting milestone for us. So with that, I'll go ahead and say thank you again for everyone who joined and look forward to the next quarterly update. Thank you all. Operator: Ladies and gentlemen, this does conclude today's conference call. Thank you all for joining, and you may now disconnect.
Operator: Good afternoon, ladies and gentlemen, and thank you for joining DocuSign's Fourth Quarter Fiscal 2026 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded and will be available for replay on the Relations section of the website following the call. [Operator Instructions] I will now pass the call over to Matthew Sonefeldt, Head of Investor Relations. Thank you. You may begin. Matt Sonefeldt: Thank you, operator. Good afternoon, and welcome to DocuSign's Q4 Fiscal 2026 Earnings Call. Joining me on today's call are DocuSign's CEO, Allan Thygesen; and CFO, Blake Grayson. The press release announcing our fourth quarter fiscal 2026 results was issued earlier today and is posted on our Investor Relations website along with a published version of our prepared remarks. Before we begin, let me remind everyone that some of our statements on today's call are forward looking, including any statements regarding future performance. We believe our assumptions and expectations related to these forward-looking statements are reasonable, but they are subject to known and unknown risks and uncertainties that may cause our actual results or performance to be materially different. In particular, our expectations regarding factors affecting customer demand and adoption are based on our best estimates at this time and are therefore subject to change. Please read and consider the risk factors in our filings with the SEC together with the content of this call. Any forward-looking statements are based on our assumptions and expectations to date. And except as required by law, we assume no obligation to update these statements in light of future events or new information. During this call, we will present GAAP and non-GAAP financial measures. In addition, we provide non-GAAP weighted average share count and information regarding free cash flows, billings and ARR. These non-GAAP measures are not intended to be considered in isolation from, a substitute for or superior to our GAAP results. We encourage you to consider all measures when analyzing our performance. For information regarding our non-GAAP financial information, the most directly comparable GAAP measures and a quantitative reconciliation of those figures, please refer to today's earnings press release, which can be found on our website at investor.docusign.com. I'd now would like to turn the call over to Allan. Allan Thygesen: Thank you, Matt, and good afternoon, everyone. In fiscal 2026, DocuSign's AI-native Intelligent Agreement Management, or IAM platform, establish clear market leadership as the agreement system of action for companies of all sizes. After just 18 months, IAM customers are generating over $350 million in ARR and delivering strong retention and expansion. We're proud of the improvements in product, go-to-market and operational execution over the past 3 years that have led us to this inflection point. We are positioned to begin accelerating the business. Fiscal 2026 was defined by consistent execution, positioning us for durable long-term growth. In Q4, revenue was $837 million, up 8% year-over-year, while billings exceeded $1 billion for the first time, growing 10% year-over-year. ARR ended at $3.3 billion, up 8% year-over-year. IAM represented 11% of ARR. Fiscal 2026 was our first year with non-GAAP operating margins of over 30% and free cash flow over $1 billion. In fiscal 2027, we expect to maintain operating margins at a similar level as we reinvest go-to-market efficiencies into increased R&D investment to accelerate our road map. We will also leverage strong cash flow generation to support our repurchase program, which we have expanded to $2.6 billion. In fiscal 2027, we're focused on 2 priorities to grow IAM. First, helping customers automate workflows and drive business results; and second, expanding our AI data and innovation advantage. IAM is an AI-native end-to-end platform that transforms how customers manage agreements across every part of an organization. In the front office, sales workflows connect to legal, finance and operations teams while also integrating with CRM platforms, enabling customers to close deals faster, deliver a better customer experience and gain meaningful top line benefits. In the back office, IAM's extraction and analysis capabilities enable a CFO in procurement use cases or general counsel and legal use cases to better manage vendor relationships and gain previously unattainable insights into the business across hundreds of thousands of documents using IAM as a system of action. Aon, a leading global professional services firm is implementing DocuSign's Intelligent Agreement Management to surface intelligence buried in its legacy agreements and delivered through Aon's Meridian capability, equipping colleagues with the clarity they need to serve clients more effectively. Bank of Queensland signed a 3-year strategic agreement and upgraded to IAM through the Microsoft Azure Marketplace. By leveraging our global partnership, Bank of Queensland will accelerate its digital transformation, streamline agreement workflows to reduce their cost to serve, improve speed to market and strengthen regulatory controls through deeper Microsoft integration. IAM is now the center of gravity across our direct sales, partner and product-led growth motions. Building on significant commercial momentum in fiscal 2027, we will scale IAM with enterprises by adding a top-down C-suite focused sales motion. We're launching IAM consumption-based subscription pricing in Q1. Our partner channel is increasingly emphasizing IAM and made an improved contribution to our direct business in Q4 with total partner contributed bookings growing by over 30% year-over-year. Our product strategy is also focused on delivering more use case value across organizations and enterprises. In fiscal 2027, IAM will cover more surface area for our customers by introducing new IAM SKUs for specific functions within companies, including IAM for HR and procurement. We're also building richer agentic tools for legal teams. This complements existing SKUs for sales and customer experience. We will continue to strengthen trust and compliance functionality through deeper permissioning, access management and auditing as well expanded IAM extensibility to more enterprise-focused third-party public and private applications. Recently launched AI-powered tools bolster IAM's workflow capabilities, Agreement Desk, Agreement Preparation and AI-Assisted Review streamline agreement creation. Workspaces and identity verification speed up secure agreement commitment and Custom Extractions and SCIM for DocuSign deliver sophisticated, scalable capabilities that enterprise customers require. You can see these in action in our demo videos found in the prepared remarks. eSignature remains a thriving part of our platform vision. In Q4, we added AI capabilities to eSignature that make every step of the signing process smarter and more trustworthy. We continue to see consistent year-over-year growth in the eSignature base, especially among customers spending $300,000 or more a year. Q4 envelope consumption once again increased year-over-year at near multiyear highs, while growth in envelope sent remains healthy and consistent. Our focus on improving sales engagement and reducing customer friction delivered year-over-year improvements in gross and dollar net retention. Three years ago, we recognized that AI would transform how agreements are managed, and we began building the AI-native platform that became IAM. We believe that Agreement Management was a natural extension of DocuSign's business and that we had unique competitive advantages. These include a deep understanding of customer agreement workflows and context, a large ecosystem with more than 1,100 integrations, market-leading security and compliance and customer trust and distribution relationships built over decades with companies around the world. Our AI data advantage continues to grow as customers invest in IAM. Today, the number of private consented agreements ingested has expanded to more than 200 million agreements in DocuSign Navigator, our intelligent repository, up from 150 million in December. AI search leader, Elastic, is deploying Navigator to automate contract workflows across the business, while fintech leader, Clasp, is leveraging Navigator and our suite of app extensions to automate agreement workflows and centralize as contract data. DocuSign AI models draw upon an enormous unmatched body of agreement data gathered over 2 decades. By leveraging our customer consented library of private contracts. We believe we can achieve up to a 15 percentage point improvement in precision and recall compared to our models trained on public contract data, while operating at incredible cost efficiency. We've optimized AI processing costs by upwards of 50x compared to running direct prompts on LLMs. We further extend our AI advantage by directly integrating with the leading AI providers. Last month, we partnered directly with Anthropic to make IAM available as part of Claude Cowork. The DocuSign MCP connector is available in beta today through Anthropic's Connectors Directory. It enables DocuSign customers to use Cowork's natural language prompts to automate agreement workflows and securely create, review, send and manage agreements in IAM, all with DocuSign's trusted security and access controls. In addition to Cowork, IAM also connects via MCP server to OpenAI's ChatGPT, Google Gemini, GitHub Copilot Studio and Salesforce's Agentforce. IAM's ability to integrate with customer workflows and third-party applications delivers significant value to our customers. leading venture-backed fintech company, Vestwell, connected IAM to its CRM and reduced the time required to create a new customer agreement package from 75 minutes to 5 minutes. Move Forward Financial, a real estate lender, is saving money and delivering a better customer experience by using IAM for sales. Payworks, a Canadian developer of workforce management software increased 24-hour contract completion rates from 55% to 87% and recovered more than $400,000 in annual sales representative productivity by integrating IAM workflows with a complex Salesforce implementation. Inside DocuSign, we're adopting AI across the organization, deploying new tools and enablement programs to boost productivity and gain efficiencies. The vast majority of our engineering organization is developing with AI and 60% of new code is AI assisted. In closing, we're proud of the immense value IAM delivers to customers by enabling them to build sophisticated and efficient agreement workflows and unlock the power of the data in their agreements. DocuSign IAM has emerged as the category-leading agreement management platform and puts DocuSign at the leading edge of AI innovation. I want to thank the entire DocuSign team for their dedication to helping our customers move faster, grow their businesses and operate more efficiently, all while transforming DocuSign into a durable long-term growth business. With that, let me turn it over to Blake. Blake Grayson: Thanks, Allan, and good afternoon, everyone. Fiscal 2026 represented a critical year for DocuSign as we continued our transformation, leveraging our recognized leading position amongst the world's most trusted software companies to help customers realize value from their full repository of agreements through IAM. With 1.8 million customers, representing most large enterprises, mid-market companies and over 1.5 million small businesses, we are in a unique position to provide the insights, productivity and velocity companies need to improve their performance, particularly via leveraging AI. Fiscal 2026 was both our first full year integrating IAM into our business as our primary growth driver and our first year generating over $1 billion in free cash flow. We are proud of the progress we've made over the past 3 years and aspire to even greater gains in the future. Q4 total revenue was $837 million and subscription revenue was $819 million, both up 8% year-over-year. For the full year fiscal 2026, total revenue was $3.2 billion, up 8% year-over-year and subscription revenue was also $3.2 billion, up 9% year-over-year. Revenue in Q4 and for the full year benefited from approximately 80 basis points and 20 basis points year-over-year, respectively, from foreign exchange rates. Additionally, as discussed in prior quarters, fiscal 2026 revenue also had a slight tailwind from digital add-ons that launched in late fiscal 2025. Our annual recurring revenue, or ARR, grew 8% year-over-year in fiscal 2026 to nearly $3.3 billion. This is consistent with our fiscal 2025 ARR growth rate of 8% year-over-year. ARR growth this year was driven by accelerating gross new bookings, primarily from IAM customers as well as gross retention improvements. Our ARR growth in fiscal 2025 was driven predominantly by gross retention as we made sizable gains that year. We're excited about the opportunity to accelerate our ARR growth in fiscal 2027 as we continue to become an even more valuable partner to our customers. As a reminder, and as detailed in our filings, ARR is calculated using fixed exchange rates set at the start of the fiscal year. Billings for Q4 were up 10% year-over-year and exceeded $1 billion for the first time in DocuSign's history. Approximately half of the Q4 billings outperformance relative to our guidance was driven by timing with the remainder from FX and bookings. For the full year fiscal 2026, billings were $3.4 billion, also up 10% year-over-year. Billings in Q4 and for the full year benefited by approximately 2.3% and 1.1% year-over-year, respectively, from foreign exchange rates. As a reminder, this quarter will be the last time we report on billings as a top metric as we shift to discussing ARR going forward. Please see Slide 29 in our Q4 earnings deck for a full summary of our top line metrics changes. The underlying foundation of our business remains durable and healthy. Our dollar net retention rate, or DNR, was 102% in Q4, up from 101% in the prior year showing moderate sequential improvement over the last 6 quarters. Both consumption, a measure of envelope utilization and the volume of envelope sent in Q4 continued to improve year-over-year with consumption remaining near multiyear highs across customer segments and verticals. We are seeing continued strong adoption of our IAM platform. In Q4 and after just over 18 months from launch, IAM represented over $350 million in ARR or 10.8% of total company ARR, up from 2.3% at the end of fiscal 2025. Although still early, our first IAM renewal cohorts are performing better than the company average, and we continue to see adoption rates for IAM features climb as users engage with the platform's expanding functionality. In Q4, total customers grew 9% year-over-year to over $1.8 million. We ended the quarter with 1,205 customers spending over $300,000 annually, a 7% increase year-over-year. International revenue surpassed 30% of total revenue in Q4 and grew 15% year-over-year. Our commitment to operating efficiency delivered strong profitability for the quarter and fiscal 2026. Non-GAAP gross margin for Q4 was 81.8%, down 50 basis points from the prior year due to ongoing costs associated with our cloud infrastructure migration, as discussed throughout the year. For fiscal 2026, non-GAAP gross margin was 82.0%, down 20 basis points on a year-over-year basis a better result than the anticipated full percentage point of headwind in our initial fiscal 2026 guidance as higher revenue partially offset the cloud migration impact. Non-GAAP operating income for Q4 was $247 million, up 10% year-over-year. Operating margin was 29.5%, up 70 basis points versus last year. For the full year, non-GAAP operating income was $968 million, up 9% year-over-year, with full year operating margin reaching 30% in the fiscal year for the first time in our company's history, representing a 30 basis point increase year-over-year. We ended fiscal 2026 with 7,044 employees, up modestly from 6,838 a year ago, as we continue to invest deliberately in roles focused on growing the IAM platform. While we are hiring across all of our global offices, the vast majority of our net new head count growth has come from, and we expect will continue to be in lower-cost locations. Also in fiscal 2026, we delivered our first year with over $1 billion of free cash flow, a 33% margin compared to 31% a year prior. In Q4, we generated $350 million of free cash flow, representing 25% year-over-year growth and a 42% margin. Strength in Q4 was driven primarily by improved collections efficiency as well as higher billing seasonality and the timing of billings. Our balance sheet remains strong. We ended the quarter with approximately $1.1 billion of cash, cash equivalents and investments. We have no debt on the balance sheet. In Q4, we also increased our buyback activity repurchasing $269 million in shares. This was our largest quarterly dollar buyback to date. For the full year fiscal 2026, we repurchased $869 million in stock representing 82% of our annual free cash flow. When including the additional funds used to offset taxes due on RSU vesting, this rate is slightly over 100% for the year. In Q4, we established a 10b5-1 program to repurchase shares before the open window rather than our typical buybacks that coincide with open trading windows after earnings. This mechanism extends the potential time frame for share buybacks, and we have already repurchased $158 million to date in Q1. In addition, today, we announced a $2 billion increase to our repurchase program, bringing our total remaining authorization to $2.6 billion. Our focus continues to be on improving free cash flow generation and redeploying excess capital opportunistically to shareholders. Non-GAAP diluted EPS for Q4 was $1.01, a $0.15 per share improvement from $0.86 last year. GAAP diluted EPS for Q4 was $0.44 versus $0.39 last year. For fiscal 2026, non-GAAP diluted EPS was $3.84 versus $3.55 in fiscal 2025, and GAAP diluted EPS was $1.48 versus $5.08 last year. As a reminder, GAAP earnings in fiscal 2025 were positively impacted by the tax valuation allowance released that year. In Q4 and fiscal 2026, the buyback program contributed to reducing our share count. Diluted weighted average shares outstanding for Q4 were 204.7 million, a decrease from 214.5 million last year. Basic weighted average shares outstanding for Q4 decreased by 2.8 million year-over-year to 200.5 million from 203.3 million total shares. With that, let me turn to guidance. For ARR, we anticipate accelerating growth in fiscal 2027 compared to the prior year. We expect a year-over-year growth rate range of 8.25% to 8.75% or an 8.5% year-over-year increase to $3.551 billion at the midpoint at the end of Q4 of fiscal 2027. We expect growth to be driven by gross new bookings, primarily from both new and expanding IAM customers as well as by gross retention improvements versus fiscal 2026. Related to this, we expect another year of modest improvement in DNR. We expect IAM to represent approximately 18% of our total ARR at the end of Q4 fiscal 2027, driving IAM to well over $600 million in ARR by the end of this year. This is our first year guiding to ARR and I want to provide some context on our philosophy and approach around it. Our guidance represents our current best estimates for both total ARR and IAM's trajectory based on the business data and bookings forecast available today. Therefore, we intend to only revise our ARR forecast as our underlying bookings expectations evolve for the entire year and not necessarily on a quarterly basis. As you are aware, our bookings are seasonally weighted more heavily to the second half of the year, in particular, Q4, which is typically our strongest quarter. As a result, updating our full year ARR forecast will depend on our visibility later into the year, which will take time to achieve. For total revenue in the first quarter and fiscal year 2027, we expect $822 million to $826 million in Q1 or an 8% year-over-year increase at the midpoint and $3.484 billion to $3.496 billion for fiscal 2027 or an 8% year-over-year increase at the midpoint. After adjusting for impacts from FX and the moderate tailwinds from digital add-ons in fiscal 2026, revenue growth is in line with the prior year. Beginning fiscal year 2027, we will only guide to total revenue, given that subscription revenue has now become the vast majority of our recognized revenue base, specifically 98% of our revenue in fiscal 2026. We will continue to report the breakdown between subscription and professional services and other revenue in the footnotes of our SEC filings based on materiality thresholds. For profitability, we expect non-GAAP gross margin to be between 80.8% to 81.2% for Q1 and between 81.5% and 82.0% for fiscal 2027. We expect non-GAAP operating margin to reach 29.0% to 29.5% for Q1 and 30.0% to 30.5% for fiscal 2027. Our fiscal 2027 operating margins guidance reflects a similar level of margin expansion as we saw in fiscal 2026. We expect non-GAAP fully diluted weighted average shares outstanding of 196 million to 201 million for Q1 and 190 million to 195 million for fiscal 2027, a meaningful reduction from the prior year as we expect that our buyback activity will more than offset dilution. For detailed commentary on top and bottom line factors to guidance, please see the Modeling Considerations appendix in our prepared remarks. In closing, fiscal 2026 was defined by the successful global rollout of IAM and our continued commitment to business fundamentals and improving efficiencies while redeploying excess capital to shareholders. As we look toward fiscal 2027, we remain focused on leveraging efficiency gains to drive product innovation and ultimately accelerating ARR growth delivering the long-term improvements that our customers, shareholders and employees will be proud of. That concludes our prepared remarks. With that, operator, let's open the call for questions. Operator: [Operator Instructions] Our first question is from Rob Owens with Piper Sandler. Rob, please check and see if your line is muted. Robbie Owens: Allan, in your prepared remarks, you talked about being positioned to accelerate the business, and clearly, that's reflected here in the ARR guide. And after 2 years of consistent growth now calling for modest acceleration. So maybe help us unpack what's underpinning that confidence. You talked about gross retention, net retention. But can you stack rank kind of the delta between the 2 with IAM playing a role, maybe speak to some of the top of funnel activity that you're seeing as well? And lastly, on that line -- along those lines, the level of conservatism that you have in this guidance relative to prior years? Allan Thygesen: Sure. Thanks for the question. Overall, I think we're really pleased with the momentum in the business. That's what's reflected in our guide. We continue to see, I think, very strong adoption of product market fit in the commercial segment and accelerating momentum in enterprise, which represents an even larger addressable opportunity. In terms of the drivers of the growth this year, it's a combination of new expansion bookings and retention. And both are very significant focus areas inside the company. On the expansion side, as I said, it cuts across segments, primarily driven by IAM. And on the retention side, of course, the bulk of the business is in design. And I think we're doing a better and better job on retention there reflected in the increasing DNR rates. We're starting to see a modest contribution from IAM as well, which has even higher retention, but it's still a very small part of the book. So that's not a huge driver this year, of course, will become more important as we go further out. Blake, I don't know if there's anything you want to add that? Blake Grayson: Yes. Just kind of ending question on the level of conservatism, I think, Rob, that was in your question. We forecast -- we continue to forecast and communicate what we see in the business. No change in our philosophy there. And as things develop over time, we'll continue to update, but no change in structure or anything like that. Operator: Our next question is from Tyler Radke with Citi. Tyler Radke: I appreciate all the disclosure and prepared remarks, you put out ahead of time and good to see the slight excel on the guide. I guess, Blake, you walked through sort of the guidance philosophy on ARR, which we understand is fundamentally a different metric than billings. But I guess as we just sort of look at the IAM piece implied within your guidance, I mean, very strong growth this year. I think you added about $280 million, $285 million of net new IAM in FY '24, which was up orders of magnitude -- or sorry, in FY '26 up orders of magnitude from the prior year. But if we look at your guide for next year for FY '27, it sort of implies like a similar amount of net new in IAM. So can you just help us understand, I mean, it seems like this is a business that's growing exponentially. You got a lot of new initiatives ahead. You talked about consumption pricing, the C-suite selling. So like why wouldn't that number continue to ramp? And maybe just sort of help frame that in the context of returning to double-digit growth, kind of what else do you kind of need to see to kick in to get back there? Blake Grayson: Sure. Thanks for the question. What we saw this year and what we're expecting to see next year, again, it's a pretty linear progression in the IAM share of ARR. You saw us go from 2.3% to 10.8% this year. We're forecasting approximately 18% by the end of next year. A lot of that has to do with renewal cycles, right? So how are we having those discussions with our customers, getting deeper into their business and a consultative approach around what's right for them. I would just say IAM is tracking as we hoped it would. I'm excited for it to become an even larger percentage of our business over time. It absolutely is a key growth lever for us to get to that aspirational double-digit growth rate. That, combined with improvements in gross retention, which not only are we making those in eSign, but also we are seeing in IAM contribute to that in small shares today just because we're getting our very first renewal cohorts through. But the combination of those 2 things, I think, helps us reach that longer-term aspirational goal of reaching double-digit growth. So hopefully, that helps. Operator: Our next question is from Mark Murphy with JPMorgan. Mark Murphy: Congrats, Allan. It's intriguing to see the 200 million documents have been adjusted into Navigator because I think theoretically, it would give you an accuracy advantage or performance advantage, if you compare it to LLMs that might be out there running queries on their own. You're also saying that the Anthropic partnership is central to your strategy. Could you comment on how much of a priority you want your own sovereign system Iris to be versus kind of working with Anthropic? And basically, how much of an accuracy advantage are you seeing when people are using Iris? Allan Thygesen: Yes. I start just at the highest level, AI has been fantastic for DocuSign over the last 3 years. I think we saw the potential impact on the agreement space early, articulated the IAM vision, you can see how that's powered some incremental growth for us. I want to distinguish between the agreement library and the processing that we do on that and then what's the UI that people interact with. On the data side, we have a huge advantage in using private consented agreements, not just public data. When we started with IAM, we were processing off public data. And now, as you mentioned, we've reached 200 million agreements that have been consented to be processed. And that's powering increased accuracy in our models. At the same time, because we're processing large amounts of data, we've taken significant steps to drive additional efficiency in how we process that data, and that's what's driving the very significant cost advantage that we have in processing these large data sets. So I think it's a -- we are certainly benefiting from the overall model innovation that the Anthropics and OpenAIs and Googles of the world are doing, building on top of that, leveraging the incredible CapEx innovation they're doing. But then we have our own proprietary access to data, workflows and trust from customers that adds to that. In terms of the user experience, we always have the philosophy that we want to reach users and enable them wherever they want to do their work. So they can certainly do that through the DocuSign UI. But we've always been available in Salesforce, in the SAPs of the world, Workday and many other applications. And so it's sort of a logical extension of that to now be available in the leading chatbots like Anthropics or OpenAI, which we announced last fall. And so I don't -- I view that as a continuation of our strategy. And you should expect to see us if new surfaces arise that are important to our customers, we want to make DocuSign data and actions available in those surfaces. Hopefully that helps. Operator: Our next question is from Patrick Walravens with Citizens JMP. Patrick Walravens: Great. And let me add my congratulations. If I could ask one for each of you. Allan, I was intrigued by the comment about the bank. I think it was maybe the Bank of Queensland that bought DocuSign through the Microsoft Azure Marketplace. So if you could just comment on the Microsoft relationship and how that's trending, that would be great. And then, Blake, for you, I've gotten e-mails about this. So if you wouldn't mind touching on where you are on your philosophy on stock-based comp, I think that would be appreciated by investors. Allan Thygesen: Yes. So on the Bank of Queensland deal, yes, we -- that was transaction through the Microsoft Azure Marketplace, and we've done a number of enterprise transactions there. As you all know, Microsoft has a number of Azure commitment agreements with large companies and often they appreciate being able to buy through that platform. But it's beyond just the convenience factor. I would say I've been thrilled with Microsoft as a partner. They really linked in here and we're a big part of the sale. In fact, a Microsoft leader presented that case at our conference last week to the entire partner community. So they've been fantastic, and we look forward to doing even more with them. Blake, I think there's a second question for you. Blake Grayson: Yes. Thanks, Patrick. So related to stock-based comp. We made a concerted effort around that line item. I think you'll see in the financials that stock-based comp grew -- I mean, it's been pretty flat actually for the past couple of years. Stock-based comp grew 2% year-over-year in fiscal '26. I think that was coming off a slight decrease, negative 1% in fiscal '25. And you can see that in our results if you just take SBC as a percentage of revenue. It's been declining in the past couple of years. And so we're happy with that. I expect it to decline again into fiscal '27. As you all know, there's been a number of actions that we've taken over the past years to manage stock-based comp around whether that's head count resource management, whether it's around fewer executive grants and also shift to more PSUs whether that's making adjustments to equity structures around leaning a bit more into cash comp. We recognize we still have work to do, but I'm proud of the continued progress that we're making and we're focused on continuing that. Allan Thygesen: Yes. So just to add to your question, you asked about Microsoft, but I don't want to -- since you mentioned Bank of Queensland, I think it's an important use case to talk about. So I think you all know that financial services has always been an important vertical for DocuSign. And of course, we powered many use cases from bank account onboarding to mortgages, to loan agreements, et cetera. But historically, we sat just at the end of the process, the execution moment, very important moment, very high value moment, but that has powered -- let's say we basically work with practically every bank, certainly all the large ones. But now we can essentially power the entire onboarding process from the initial presentation of the sign-up process to real-time data validation of the data that a customer enters to real-time identity verification of their documents and that they are present and then, of course, the execution moment and then writing the data back to whatever system powers the next step in the process, which is dramatic simplification and both improvement in the customer experience and improvement in internal efficiency. And Bank of Queensland is an example of one of the early customers for that end-to-end process. And I think we're going to do a lot more of that over the next couple of years. So I just thought that was an exciting use case, not just for what it illustrates about the Microsoft partnership, but what it illustrates for a use case that might not be well understood. Operator: Our next question is from Kirk Materne with Evercore ISI. S. Kirk Materne: I was wondering -- you could you just mentioned banks, and I was wondering, Allan, if you could just talk a little bit about what you guys are thinking about from a vertical perspective. I realize, you're a horizontal platform at its core. But I was just kind of curious what you're seeing in terms of either faster adoption in some verticals for IAM and maybe what you're doing to lean into some verticals where there's a really good product fit for that product? Allan Thygesen: Yes. Thanks for the question. At a high level, I would say we're still an incredibly broad application. And that's true for sign and it's as true for IAM. We see it adopted across the industries, across companies with different sizes and now across geographies. I would say that we are moving increasingly towards functional use cases. So the account sign-up example I just gave for banks, of course, is a customer experience front of the house type application. We also do that in B2B or B2B sales organization. That's, of course, been a long-standing partnership with Salesforce and we do that for other CRMs as well. And now increasingly, more use cases in procurement, where there's a lot of B2B contracting that happens and in HR, where the attraction and recruiting and onboarding of new employees, it mirrors in many ways, the bank account example that I gave you at the beginning. So we are focused on those functional use cases, if you will, more than specific industries to the extent that we focus on industries. Financial services, health care and government are 3 areas that we invest a little extra in because while they're complicated, they're high value, and we do well in them. But it's very broad from an industry perspective. S. Kirk Materne: Okay. That's super helpful. If I could just ask a follow-up for Blake. Just Blake, on gross retention, do you have any sense on how that changes with IAM customers for you all? I realize the cohorts are pretty new here, but I was just kind of curious if that's playing out the way you would have expected in terms of potentially higher gross retention for those customers? Blake Grayson: Yes. We are seeing -- and I'm going to preface this by a very early days of our first renewal cohort. So the sample size is pretty small. But even with that said, gross retention and dollar net retention rates for these IAM early renewal cohorts are better than the company average. So I would say cautiously optimistic, excited. It's frankly what we expected from this because just of all the feature functionality that comes with IAM and we'll see how that develops over time, but I'm cautiously optimistic about that so far. Operator: Our next question is from Allan Verkhovski with BTIG. Allan M. Verkhovski: Allan, it's interesting to see how you've optimized AI processing costs by upwards of 50x compared to running the direct prompts on LLMs. Why is IAM consumption-based pricing the right way of monetizing? And what were your top learnings from the quarter in conversations with your larger customers about how much of an uplift you can drive with IAM? And then I've got a quick follow-up with Blake after. Allan Thygesen: Yes. Just to be clear, the consumption pricing we're referring to is consumption, if you will, of service credits. It's not a straight up token type billing model. So you buy a certain amount of capacity. This of course is not new to DocuSign, as you all know, better than almost anyone. Our eSignature business has historically revolved around an envelope model. We pre-buy envelope capacity. You can take a business as sort of a generalization of that. Now with all the different ways we can deliver value with IAM, we've basically looked at how each of those products and use cases drive value and create a credit system. We've now used that with 40, 50 customers. They've been very enthusiastic. So both our customers and our sales teams appreciate that model, and so we're now rolling it out next month. And I think that will just power most of our enterprise business going forward. We still think that the -- for commercial customers, simpler pricing model, makes sense, but for enterprises where there's so many different ways to deliver value and grow value over time that a consumption-based credit model is the right approach, and that's been validated in the last 6 months of trialing. Allan M. Verkhovski: Got it. And then, Blake, is your internal time line for when you can get to 10% top line growth sooner, unchanged or later after this quarter and why? Blake Grayson: Yes. Just to be frank, on this, that is our long-term aspiration for us. It is for me in the long term achievable. If we can both grow expansion and accelerate gross new bookings and improve our retention rates, that's something we could do. The when on that is not as important to me at the moment. We're going to go as fast as we can at this company and provide value to our customers. I think it's something we can achieve. It's going to take some time for us, as you can see. But I'm really excited about the opportunity ahead. But as far as like time line or anything like that, nothing really to share. Operator: Our next question is from Josh Baer with Morgan Stanley. Josh Baer: A couple on the enterprise opportunity. One, Blake, you were mentioning that around like the linear progression of IAM as a percentage of ARR. I guess I'm wondering -- I know that wasn't like a comment about all years in the future. But I would expect with your positioning and kind of readiness in the enterprise for that to accelerate just because of the size of the enterprise opportunity and now unlocking that. Is there -- I mean, would that be the case? So like how are you thinking about the unlock of enterprise and the impact on that linearity? Allan Thygesen: Why don't you go first and then I'll add. Blake Grayson: Yes. I think, obviously, for us, we've got big aspirations for enterprise. It's still early days for us there. And you heard a couple of examples. You heard Aon's one that we're really excited about internally. And obviously, externally, the other ones that we've talked about. I think for us, we're just going to have to see how this ramps over time, right, is that as our customers use IAM and they experiment it and they use more of it, you can see that ramp over time, but it's a little bit like eSignature, right? You go into maybe through a division and then you're able to expand that to more users and whatnot. But I think that it's still early days for us. We're really excited about the opportunity. Our long-term success depends on growing the enterprise business. We're really excited about that, and we are very head-down focused in order to drive that. And Allan, I don't know if there's more to go on that. Allan Thygesen: Yes. Just on the enterprise topic, it's really shifting into gear for us. It's contributing more of the top line mix. And over time, I expect it ultimately to become a bigger part of our business than it has been historically in eSign. Just because of the addressable opportunity and the pain is so much larger. Just for purposes of illustration, I just want to double-click on the Aon example just for a second. So as you can imagine, Aon being an insurance business, their product is essentially agreements. They literally process hundreds of millions of documents. And they have a strategic project called Meridian. That's basically a customer portal where the customer can access all of their agreements with Aon and derive insights from those agreements and, of course, also create opportunities for additional value for Aon. And they chose DocuSign to power that, which we're honored by. That is a massively complex enterprise project and a project that is transformational in terms of the customer value proposition for Aon. And so it's sponsored by the highest level of the company. We're thrilled to be deeply engaged with them, and they are certainly pushing us in several areas. But that's what you want and expect from your largest customers and partners. And so there's a number of examples like that, but Aon was, I think, the most iconic of this quarter. Josh Baer: Really helpful. And just to stay on this topic, any way to frame the pipeline or demand for IAM specifically in the enterprise? And related, is there -- could there be any initiatives or are there any current initiatives of bringing customers on to AIM before the renewals that we are kind of just talking about with regard to the linear progression? Allan Thygesen: Yes. I mean, look, it's always the case in subscription business, the renewal creates a natural focus point, so to say, for discussions. But we are absolutely working to accelerate discussions with customers who are further out from their renewal and finding ways to do deals out of cycle. We have various contract structures to help facilitate that and as well as opportunity identification for our sales teams and our partners. And as you know, enterprise sales cycles are long anyway. And so you've got to start way ahead if you want to do a big deal like an Aon type deal. So yes, that is a focus. I don't think we'll ever be able to completely avoid the natural timing that's associated around renewals. It's just a fact of life, and customers also anticipate that and work towards that. But we are absolutely pulling a lot of levers to enable our sales teams, our partners and customers to have discussions as soon as customers frankly are ready to entertain them. Operator: Our next question is from Alex Zukin with Wolfe Research. Aleksandr Zukin: I guess maybe 2 quick ones for me. I'll ask the inverse of Tyler's question. If I think about the guidance around ARR, looking at the IAM flat and that implies non IAM ARR is going to actually get -- is guided to get a lot meaningfully better. So just curious what's driving kind of the confidence? Is that a gross retention dynamic continuing to improve? And then I've got a quick follow-up for Blake. Blake Grayson: Yes. Let me see if I can answer the question I think in the spirit and the way you're asking it. Is the -- if you look at the IAM net new ARR and you try to compare it to the company net new ARR, that can be a tricky comparison because the way to think about IAM is really not necessarily as an incremental brand new product, but it's a platform shift, right? Like we have got a lot of people in our in our -- a lot of customers in our installed base that are moving to IAM. And remember, IAM comes with the new signature offer as well. And customers are paying for that. That's part of their IAM deals that they're doing with us. So while IAM has many incremental features on top, it's also driving that platform shift. So I encourage you to think about it because of that as a platform. Use total company ARR when thinking about our absolute kind of dollar growth. For us, retention gains are critical. IAM is one of those big levers for us to be able to do that, that we think that will play out over time, right? Because you got to get somebody in -- a customer to move into IAM, keep them getting excited about it and then renew them as well. And so this is going to play out like over years for us. And I think that I'm really excited about it. But along with that, too, we're making gains in our company -- total company retention as well, which, as Allan said earlier, and I think all of you know, it's still predominantly an eSign business. And so for us, those 2 things matter a lot. I'm really excited to be able to improve upon the gains that we made this year and get even bigger ones next year. Aleksandr Zukin: Understood. And then maybe just with respect to the consumption-based pricing that you guys are introducing, I guess probably how much of the IAM ARR in the year that you're guiding to? Do you expect to be coming from consumption? Or are you not including any of that in the guide? And kind of how do we think about that progression as it applies to NRR improvements gradually throughout the year? Blake Grayson: So this is a -- we're launching subscription consumption-based pricing. So I would say the consumption element is all part of our ARR forecast, whether it's consumption or seats or not. And so I would encourage you to think about it that way. Like Allan said, this is a lot akin to what we do at envelopes today, right. That a person, a customer signs up for a subscription and then they get a capacity that they can utilize against it. So I don't think there's any big swing necessarily just because of the pricing plan. I think it's going to give us an opportunity to appeal to a lot more of these enterprise customers, and I think that's the best way for us to be able to increase usage over time. Allan Thygesen: Yes. I agree with all that. And I'd just say, look, it's primarily relevant in the enterprise space, which is a smaller, but accelerating part of our business. And of course, it does lend itself to, as you implied in your question, potentially realize more growth over time in accounts because you already have the pricing mechanism installed and it should be sort of easier to say, well, you just need more credits. And so let's see where it goes for this year. It's important for the enterprise go-to-market. And probably somewhat meaningful for the overall business, but not the primary driver. Operator: Our next question is from Rishi Jaluria with RBC Capital Markets. Rishi Jaluria: Wonderful. Maybe to start, not to keep harping on the ARR kind of question. But I guess just kind of taking a big value, right, you're guiding to effectively non-IAM ARR being flat, IAM ARR growing hyper growth, call it, 70%, 80%, depending on the assumptions you make, I get that there is a conversion element from it right? And so maybe I'll ask a question that we've been trying to figure out for a while. And hopefully, you have a decent amount of telemetry that make kind of some sort of preliminary indication, but just wanted to get a sense what sort of pattern of behavior do you see in terms of overall ACV, TCV, LTM, whatever sorry, LTV like whatever metric you want to use, but just in terms of so far as you've taken existing customers, move them from just the core eSignature to the IAM platform, how much higher does that spending look like? And then I've got a quick follow-up. Allan Thygesen: Sure. Yes. I mean our focus continues to be on driving our dollar net retention rate up. And that's -- we're going to do that in large part by making IAM the foundation, not only of our expansion strategy but also our retention strategy going forward. So talking about expansion rates, the stuff gets pretty tricky when you start to balance those components. And we are seeing in general, in the vast majority of cases, an expansion opportunity for our customers that are coming. We're not breaking that out. But we also need to see the early renewal cohort customers, and we're encouraged, like I said earlier about that. But it's something that for us, for IAM in total. It provides an expand and retention opportunity, but we're not breaking out the expansion rates right now. Rishi Jaluria: Understood. That's helpful. And then maybe just thinking going back to some of the partnerships that you have with Anthropic, you've got one with OpenAI. We've seen you highlighted on stage with them over the past several months. And it's coming at a time where clearly investors are worried about potential competition either from DIY using those platforms or the platforms themselves. Can you maybe talk a little bit about how is your conversation with both of those and any other model providers as well because I know you have the ability to work with most models out there. But just how those conversations have kind of changed over time and how you've been able to double down on a lot of the things that have made you successful in shaping the nature of the partnership? Allan Thygesen: Yes. Thanks. The reality is, I think every provider of chatbots, the leading ones like OpenAI and Anthropic and Google, but there are many others who are aiming to provide a chat interface to their customers. And as they think about how do I provide value in that chatbot, one of the most important data elements that you want to expose and process that you want to kick off is agreements. And so we've had a lot of inbound interest. Every major provider of models is interested in partnering with us on this, which is reflected in those announcements, and there'll be more like that. And so I just think we are well positioned as the system of record for agreements as well as a system of action, and we can power those actions through our own interface, through third-party agentic interfaces or third-party applications like Salesforce, SAP and Workday. And I'm very bullish on our position as the authority and logical top partner for companies with ambitions to retrieve agreement data, kickoff agreement processes, complete them. We're a good partner for that. And I think that's reflected in what you've seen in the public news. Operator: Our next question is from Scott Berg with Needham & Company. Unknown Analyst: This is [ John DeVries ] on for Scott. One question for us. We noticed the company is conducting some AB testing on self-serve eSignature plans. Have any pricing changes that have been incorporated into the fiscal '27 guidance? Blake Grayson: Well, I'll take that and Allan, you want to add on, go ahead. Our guidance reflects all of our plans for this fiscal year, including tests like that, like we're testing that at the moment. And we'll see how it goes. We're excited about it. But the guidance is a reflection of the plans that we have for this next fiscal year. Allan Thygesen: Yes. We're constantly -- in a digital business, you're constantly testing all kinds of new pricing and packaging. And this is just one of those that we're doing in a couple of geographies. And we'll see which ones work, and which don't. Operator: Our next question is from Brent Thill with Jefferies. Unknown Analyst: This is [ John Bain ] for Brent Thill. Question on AI. I mean, wondering which features or where you're seeing the most traction and momentum? And also whether you're seeing any meaningful usage or volume or lease through the chatbots? Allan Thygesen: Yes. On the first point, look, the foundational major AI platform feature was Navigator, which gives you access to your repository agreements. I think that still powers a tremendous amount of value for customers of all sizes. It's really remarkable. How many different ways people find value from that. But we're now increasingly delivering AI-enabled features across the agreement journey. So for example, we have automated Agreement Review, that's, I think, becoming a very expected thing. We are -- you'll see automated data validation, automated use of AI for identity verification and for risk assessment. We've launched a number of features in that area over the last 6 months. So really across the board, AI is wherever we can use that to power more value for customers, we're going to do that. And you can see that now across the various stages of the journey and in different functional workflows. And there's so much more to come here. So I'm very optimistic that this is going to power value delivery and innovation for us for a while. Operator: Our next question is from Patrick McIlwee with William Blair. Patrick McIlwee: Allan and Blake, one more on IAM, it's great to hear you're expecting absolute ARR from that product to nearly double this year. And I understand a lot of that growth is coming from existing customers transitioning, but can you just provide a quick update on what type of traction you're seeing in going out and winning net new customers with those incremental capabilities? And as we think about that, how you feel this solution is competing against other CLM vendors and broader workflow platforms? Allan Thygesen: Yes. I think that's going extremely well. It's an even larger part of our NewCo dollars then of normal renewals. And I think when you come in fresh, you get to position all the exciting things that IAM has to offer, whereas with some [ ESAB ] customers, they may have an existing perception of what's possible with agreements or what we can deliver for them and you need to change those perceptions. But NewCo will continue to be a core element of DocuSign's growth. Of course, all of our customers start as new customers and many of them started as small customers and grew into very large customers. And so that is an essential acquisition pipeline that we continue to invest in. With all that said, the primary focus of our go-to-market with IAM is with existing customers, and that's the vast majority of IAM revenue. And it's a huge advantage for DocuSign that we walk in. We already have your agreements. We're already a trusted group supplier. We're already generally very well perceived because of the quality of the side product and the experience customers had. And that's an amazing starting point for delivering value and for processing their agreements with AI that's unmatched by any other company. So I think we have a lot of data and product advantages. We also have huge distribution advantages. And that might not be as fully understood. But you can start to see that really come into play with the number of customers that we've already brought on to our new AI platform, a number of agreements that we've ingested and processed. Patrick McIlwee: Okay. Great. And just quickly, you touched on it in the prepared remarks, but the flat guidance for operating margins, understand you're reinvesting some efficiencies from the go-to-market side in R&D. Is there any context you can provide on what those investments are geared towards or what capabilities you're looking at as you invest there? Allan Thygesen: Yes. Maybe just first for context, I know you all know this, but I'm just going to repeat it anyway. We've gone from 20% operating margins to 30% operating margins over the last 3 years, growing revenue 30%, while we've dropped headcount 13%. So I think, DocuSign has been already on some of the improvements that you're all seeking. I think the decision we made in planning for this year is that we're rightsized for the opportunity ahead of the growth acceleration opportunity that we have. That doesn't mean that we're not reprioritizing aggressively inside the company. So we continue to seek incremental efficiency in our go-to-market motion. We've done a lot there, and there's going to be more opportunities and then we're investing some of that in our product and technology organization. The areas that we're investing in enterprise and AI, continued acceleration of our legal tech road map, federal, U.S. federal is a big opportunity for us. So those are examples of things. Security continues to be a key investment area. Those are 5 areas that got sort of incremental funding on top of baseline, freed up by some of the efficiencies and other functions. Operator: There are no further questions at this time. I would like to turn the conference back over to Allan for closing remarks. Allan Thygesen: Thank you, operator, and thank you to all for joining today's call. In closing, we are very excited about the value IAM is delivering to customers in their workflows and through our AI innovation. We will be positioned to begin accelerating the business in 2026 or fiscal '27 while generating strong efficiency and profitability. Thanks for your support. Look forward to talking next quarter. Operator: Thank you. This will conclude today's conference. You may disconnect at this time, and thank you for your participation.
Operator: Greetings, and welcome to Longeveron 2025 Full Year Financial Results and Business Update. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host, Jenny Kobin. Thank you. You may begin. Unknown Executive: Good afternoon, everyone, and thank you for joining us today to review Longeveron's 2025 Full Year Financial Results and Business update. After the U.S. markets closed today, we issued a press release with the financial results for 2025, which can be found under the Investors section of the Longeveron website. On the call today are Stephen Willard, Chief Executive Officer; Joshua Hare here, Co-Founder, Chief Science Officer and Executive Chairman of the Board; Nataliya Agafonova, Chief Medical Officer; and Lisa Locklear, Chief Financial Officer. As a reminder, during this call, we will be making forward-looking statements. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from these statements. Any such statements should be considered in conjunction with cautionary statements in our press releases and risk factors discussed in the company's filings with the Securities and Exchange Commission, which we encourage you to review. Following the company's prepared remarks, we will open the call to questions from covering analysts. With that, let me hand the call over to Stephen Willard, CEO. Steve? Stephen Willard: Thank you, Jenny, and thank you all for joining us today. I am excited and honored to join Longeveron at this pivotal moment for the company. The strength of the company's stem cell science and success in multiple clinical trials across several indications positions Longeveron to be a leader in the stem cell field. Upon assuming the role of CEO, I have had an immediate focus on 3 critical areas: first, securing necessary financial resources and planning efficient capital allocation. I'm delighted to report, as you have hopefully seen from our prior press releases, that we have secured $15 million in new capital from, among others, what I believe are 2 of the premier fundamental institutional investors in biopharma, Coastland Capital, that's Matthew Perry; and Janus Henderson Investments. We also have the potential to close a second tranche of an additional $15 million upon meeting certain milestones. We are grateful for their investment, support and shared vision of advancing stem cell therapies for the benefit of patients and their families. The initial capital from the financing provides runway comfortably into the fourth quarter of 2026. Second, this capital enables us to complete and deliver the results of the ELPIS II, our anticipated pivotal Phase IIb study in HLHS and potentially, if supported by the data, begin preparation of the company's first BLA with the U.S. FDA. Enrollment of the clinical trial was completed in June of last year, and we remain on track for reporting results in the third quarter of this year. Third, strategic partnering. We plan to pursue a robust partnering strategy across all of our development programs to accelerate potential time to market, increase capital use efficiency and leverage the greater resources of larger organizations. For HLHS, we believe that the optimal timing to secure a potential BLA and commercialization partner will be following the readout of the ELPIS II clinical trial results in the third quarter of this year. For Alzheimer's disease, we plan to leverage the strength of our Phase II data and clarity on the clinical pathway to a potential BLA for Alzheimer's disease to engage with potential funding commercialization partners. For pediatric dilated cardiomyopathy or PDCM, we intend to execute a single pivotal Phase II registrational study under our active FDA IND, leveraging an efficient development strategy appropriate for a rare pediatric disease. If successful, this study could form the basis of a potential BLA submission pending FDA alignment. Upon successful completion, we intend to pursue strategic partnership opportunities to support regulatory approval and commercialization. Finally, and potentially very significantly, are our opportunities for Priority Review Vouchers or PRVs. Our HLHS program has been granted rare pediatric disease designation by the FDA, which makes it eligible to receive a PRV upon approval of a BLA. And the same opportunity may exist for our PDCM program to also be eligible for PRV. Companies can either use the PRV to secure a speedier FDA review of a future therapy or sell it to another company. Since August of 2024, vouchers have been sold for between $150 million and $205 million each. Securing one or more PRVs would obviously be a tremendous financial outcome for the company and shareholders. In our recent private placement, we agreed to pursue a sale of a PRV received for HLHS if granted and that the investors would be entitled to 50% of the proceeds received from the potential future sale of the HLHS PRV. It is an exciting time for laromestrocel, the patients we serve, Longeveron and our shareholders. With that, I will turn the call over to Dr. Agafonova, our Chief Medical Officer, to touch on the clinical development programs. Nataliya? Nataliya Agafonova: Thank you, Steve, and good afternoon, everyone. As Steve mentioned, our HLHS program is the primary focus for us with a near-term pathway to potential approval in an area of clear unmet medical need. The Phase IIb clinical trial, ELPIS II, evaluating the potential of laromestrocel to improve right ventricular function and long-term clinical outcomes in infants with HLHS is nearing completion. Enrollment of 40 patients was completed in June of last year. Top line results from the ELPIS II trial are anticipated in the third quarter of 2026. Based on FDA feedback received in August 2024, ELPIS II may be considered a pivotal study subject to the trial results, which could potentially accelerate the regulatory pathway for laromestrocel. If supported by the data, we plan to initiate preparation for a potential biologic license application, BLA. This would represent our first BLA submission and targets a serious pediatric condition with significant unmet medical need. Our laromestrocel program in HLHS is designed to improve cardiac function in these children with the goal of potentially improving long-term clinical outcomes. The earlier Phase I ELPIS I study established the safety and feasibility of laromestrocel administration and provided supportive clinical observations that informed the design of the ongoing pivotal ELPIS II trial. Due to its small size and single-arm design, ELPIS I was not intended to evaluate efficacy outcomes. We look forward to sharing the results of the ELPIS II clinical trial in the third quarter. Pediatric dilated cardiomyopathy is a rare pediatric cardiovascular disease in which the muscles in one of the more of the heart chambers become enlarged or stretched dilated with nearly 40% of children with PDCM required the heart transplant or dying within 2 years of diagnosis. Our investigational new drug IND application for laromestrocel as a potential treatment for PDCM became effective in July 2025. This IND allows unbased advancement directly into a single pivotal Phase II registrational clinical trial, reflecting the serious nature of this rare pediatric disease and the significant unmet medical need. We currently anticipate planning and preparation for the study in 2026 with potential initiation of the study in 2027. I will hand the call over to Lisa Locklear, our Chief Financial Officer. Lisa? Lisa Locklear: Thank you, Nataliya, and good afternoon, everyone. This afternoon, we issued a press release and filed our annual report on Form 10-K, both of which present our financial results in detail, so I will touch on some highlights. Revenues for the year ended December 31, 2025, were $1.2 million and consisted of $1 million of clinical trial revenue and $0.2 million of contract manufacturing revenue. Revenues for the year ended December 31, 2024, were $2.4 million and consisted of $1.4 million of clinical trial revenue, $0.5 million of contract manufacturing lease revenue and $0.5 million of contract manufacturing revenue. 2025 revenues decreased $1.2 million or 50% when compared to 2024 as a result of lower participant demand for our Bahamas registry trial and reduced demand for contract manufacturing services from our third-party clients. General and administrative expenses for the year ended December 31, 2025, increased to approximately $12 million compared to $10.3 million for the same period in 2024. The increase of approximately $1.8 million or 17% was primarily related to an increase in personnel and related costs in 2025 as we increased headcount year-over-year and a onetime accrued severance cost for our former CEO. Research and development expenses for the year ended December 31, 2025, increased to approximately $12 million from $8.1 million for the same period in 2024. This increase of $3.9 million or 48% was primarily driven by a $2.2 million increase in personnel and related costs, including equity-based compensation, 1.4 million increase in CMC costs associated with technology transfer, including nonclinical manufacturing batches that advance our readiness for future commercial production as part of our BLA-enabling efforts and $0.2 million increase in amortization expense related to patent costs. Our net loss increased to approximately $22.7 million for the year ended December 31, 2025, from a net loss of $16 million for the same period in 2024. The increase in the net loss of $6.7 million or 41% was for the reasons outlined previously. Our cash and cash equivalents as of December 31, 2025, were $4.7 million with approximately $1.4 million in working capital. On March 11, we completed a private placement that raised gross proceeds of approximately $15.9 million. We're delighted to welcome Coastland Capital and Janus Henderson investors as key shareholders. As a result of the financing, we currently anticipate our existing cash and cash equivalents will enable us to fund operating expenses and capital expenditure requirements into the fourth quarter of 2026 based on our current operating budget and cash flow forecast. I will now hand the call over to Josh Hare, our Founder and Chief Science Officer. Josh? Joshua Hare: Thank you, Lisa. Good afternoon, everyone. As you've heard from the previous speakers, we believe we are on the cusp of pivotal data in HLHS which, if positive, would be an important step in our mission to help patients and families through the application of stem cell research. This important milestone for Longeveron reflects not only the continued advancement of laromestrocel, but also the significant progress occurring across the broader field of stem cell research, clinical application and commercialization. In recent years, we've seen increasing validation of cell therapy's role in regenerative medicine and its potential to address a wide range of serious conditions, reinforcing the promise of this rapidly evolving area of medicine. We believe these advances are helping to establish cell therapy as a potentially transformative approach for treating serious diseases with significant unmet medical need. Longeveron has been an active participation -- an active participant in this evolution. with multiple clinical stage programs, publications of clinical trial results in premier journals such as Nature Medicine and Cell stem cell and multiple stem cell therapy patents issued globally. The potential for stem cell therapies to address large and underserved patients -- underserved patient populations represent a significant opportunity, and we remain focused on executing our clinical, regulatory and strategic priorities to unlock the value of our platform. I will now turn the call back to Stephen. Stephen Willard: Thank you, Josh. The anticipated near-term pivotal clinical data for HLHS, the strengthening of our balance sheet, the support of high-quality fundamental investors and possibly our first BLA submission as well as potential partnerships across our development programs make this an extraordinarily exciting time for Longeveron. We deeply appreciate the support of all of our stakeholders and look forward to continuing collaboration and progress in the future. Operator, we would now like to open the call for questions from our covering analysts. Operator: [Operator Instructions] Our first question comes from Ram Selvaraju with H.C. Wainwright. Raghuram Selvaraju: Congratulations on all the recent progress, very exciting. I wanted to ask about the commercial perspectives as these pertain to scaled up manufacturing and CMC for laromestrocel were it to be approved in the HLHS indication? And also wanted to see if you could just enumerate for us again which potential areas of inquiry for laromestrocel could conceivably be eligible for PRVs in the future beyond HLHS? Stephen Willard: Sure. This is Steve. I'll take the second question. We could have a separate PRB for PDCM. In fact, we'll be seeking that very shortly. So there are 2 different PRVs that one of which has -- we sold half of to our investors and the other half is for us. And then the PDCM is entirely for us. With regard to the manufacturing in CMC, that is a priority for us going forward. It's a priority for us this year. We've made incredible strides with regard to it so far. We are engaged in a CDMO who will be able to do the manufacturing for us going forward, and it will free up our own laboratory space for other projects. Do you have a follow-on question, Ram? Raghuram Selvaraju: Yes. With respect to indications like, for example, Alzheimer's disease and age-related frailty, what potential nondilutive sources of capital to fund those initiatives? Could you access beyond the PRVs that you just enumerated? Stephen Willard: Great question. And the answer is it's going to be a real priority for us to seek licensing partners for both Alzheimer's disease and for age-related frailty. We've already got some preliminary conversations set up. I have a background in licensing. I ran a company called Flamel Technologies, ticker symbol FLML based in Lyon, France, and we had partnerships with 24 of the world's largest pharmaceutical companies. I have a pretty active Rolodex and Alzheimer's disease is a very attractive possibility for us now. and age-relating frailty, we have a wonderful paper in cell stem cell that just came out. I recommend it to you highly. And we already had incoming interest with regard to licensing that technology. So those 2 things will be on the priority list for 2026. Operator: Our next question comes from Boobalan Patheon with ROTH Capital Partners. Boobalan Pachaiyappan: Of course, congratulations on your new role. So firstly, with respect to the HLHS program, assuming the data is positive in 3 quarter -- third quarter '26, how sooner you can file for BLA for the HLHS program? And also, if you can provide some granularity in terms of whether you'll be filing your BLA on a rolling basis and also if you're expecting a priority review? Stephen Willard: Thank you very much for those questions. Josh, would you care to answer with regard to the various attractive things that have granted to us by the FDA with regard to HLHS? Joshua Hare: Yes. Thank you, Steve. Boobalan, thank you for the question. Yes, we are potentially eligible for rolling submission, which we would take advantage of if allowed by the FDA. At this stage, our next big milestone is, of course, the data readout, which will then trigger an end-of-phase meeting with the FDA to help determine the speed and timing of the application process because we have the rare pediatric disease designation, we are eligible for the rolling submission. And I believe we're also eligible for priority review based on the designations that we have. So of course, data permitting, our objective would be to initiate that regulatory process as quickly as possible and as allowed by the FDA. Perhaps I might also ask Nataliya to comment on that since she's so involved in that process. Nataliya Agafonova: Thank you so much, Josh, and thank you, Boobalan, for your question. So assuming the data are positive in third quarter of 2026, definitely, we would like to take advantage of following submission. And as you know, it's not only the readiness of clinical data and all the modules related to clinical data is also CMC, but we are going to take all the advantage and targeting BLA submission sometime in 2027. Boobalan Pachaiyappan: Okay. That's really helpful. And then in terms of PRV because that has been mentioned many times in today's call. So obviously, the most recent PRV was sold for a very high price of $205 million. This is from Fortress Biotech, right? But at the same time, we have a new sunset date for the PRV, which is September 2029, which is a little more than 3 years from today. So because the sunset date is a little far, do you expect any challenges in terms of monetizing PRV for a heavy premium given this new sunset date? Just curious. Stephen Willard: That's a great question. It's hard to predict out that part, but I don't I think prices immediately prior to that $205 million was a $2 million, $200 million from Jazz Pharmaceuticals. So the last 2 have been in the $200 million range. I would expect prices I would expect prices to remain strong for these as we approach 2029. Boobalan Pachaiyappan: All right. And then with respect to PDCM, pediatric dilated cardiomyopathy program, can you provide some context in terms of what would be the next step in this program? How sooner you can start your clinical study? I know your IND has been sort of cleared. So maybe provide some context in terms of the time line design and potential endpoints you could possibly explore? And also, I'm trying to understand what is the unmet need you're trying to address here with laromestrocel? Is it something that patients who would be treated with laromestrocel not seek the heart transplantation? Or is this an ambitious goal? Stephen Willard: Nataliya, would you care to respond to that? Nataliya Agafonova: Sure, absolutely. So Boobalan, on your first question about the timing of the PDCM, our goal was to initiate the trial this year. And due to finding, we were not able to achieve this. However, it's also a priority. And we are able to do feasibility assessment sometime this year and hopefully initiate the trial and open the -- start opening sites sometime in 2027. So -- as far as the -- go ahead. Boobalan Pachaiyappan: No, no, go ahead, sorry. Nataliya Agafonova: Yes. And the -- you asked also about -- can you remind me, you asked about timing and then... Boobalan Pachaiyappan: Design, sample size and also is the goal here to have patients not to seek transplantation? Nataliya Agafonova: Absolutely. So we are planning to use Hierarchical Composite Endpoint similar to the HLHS. And we include listings for transplant because the left ventricle is silent. So we would like to see less heart transplant and hospitalization. Those are very standard approach for heart failure patients, and we are utilizing that. FDA did accept that as a primary endpoint with a few comments, which we are going to do and address as a protocol amendment once they are ready to initiate the trial. And we are planning a 1-year study every 3 month administration with laromestrocel. And hopefully -- so the number of patients is 70 patients. And our goal was to do the trial globally, not just to U.S., but in all geographic area. But as I mentioned, we are planning to do feasibility this year, which is going to show us the high enrolling sites and the best geographic areas, et cetera. So hopefully, sometimes in our next call, we can give you an update on that. Stephen Willard: Josh, do you have any comments on that? Joshua Hare: Yes. Thank you, Steve. Yes, vis-a-vis the potential clinical outcome, laromestrocel in this population, we're very enthusiastic about the possibility for actually a meaningful disease modification effect here. This condition of dilated cardiomyopathy is something that affects both adults and children. In children, the clinical burden is much more severe than adults. It affects younger kids and the younger they are affected, more likely they are to have a poor outcome. So the death or transplant rate is extremely high in children in the first few years of life. And this is because it's a progressive illness. We don't have any disease -- we don't have any treatment modality to actually cure it, and it's treated with medications that are palliative medications. Laromestrocel has the potential to actually cure or reverse the disease. And evidence for that does come from studies done in the academic setting in adults that you can actually see a complete reversal and remission from the disease. So of course, we will only know that once the trial is done, but there is a reason -- there is some reasonable expectation here that the effect could be very substantial and could potentially be curative in these kids and prevent the need for heart transplant, not by prolonging the need for transplant potentially, but by actually completely reversing the need for it. So that at this point is a hypothesis. We can't say that, that is definitely going to happen, but the trial as designed will detect the ability to have the complete reversal of the disease and therefore, be one of the first true disease-modifying treatments for this condition. Stephen Willard: That's wonderful. Boobalan Pachaiyappan: Yes, maybe one last question, sorry. So obviously, you recently received a patent about Laro's used in sexual dysfunction in females. So this is a pretty interesting program. I'm trying to understand what's your strategy here? Is it -- do you envision this more of a partnered program rather than developing on your own? And also, do you expect this drug in this indication to be a short-term therapy or a long-term therapy? Stephen Willard: Josh, you take that one as well, please. Joshua Hare: Yes. Thank you. That's another great question. Yes. The finding of the improvement of female sexual dysfunction arose from our aging frailty work. And so this is an issue and the patent is related to older female individuals. This is a very important unmet need in this population as well. And there's a tremendous amount of interest in women's health in general that's emerging. It's particularly highlighted by the recent FDA decision to remove the black box warning on postmenopausal estrogen. And so I think we see a new era of focus on women's health in women in postmenopausal women. There's also the recognition in the field that sexual performance and sexual function at that stage of life is incredibly important for health and quality of life. And so we do see a big clinical need here and a physician community that's now very focused on this particular matter. In terms of development, I think this would be an indication that would be ripe for partnership as opposed to us going it alone. There would clearly be another study that would need to be done and a formal regulatory pathway with the FDA established. So in short, I do see this as addressing a very high unmet need and something that would be ripe for a partnership opportunity. Operator: We have reached the end of the question-and-answer session. I'd now like to turn the call back to Stephen Willard for closing comments. Stephen Willard: Thank you, operator, and thank you all for attending today's call. We greatly appreciate your interest and support and look forward to updating you on our continued progress. Thank you once again. Operator, you may end the call. Operator: Thank you. This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.
Operator: Good morning. Thank you for joining us today to discuss Consolidated Water Company's 2025 Full Year Operating and Financial Results. Hosting this call today is the Chief Executive Officer of Consolidated Water, Rick McTaggart; and the company's Chief Financial Officer, David Sasnett. Following their remarks, we'll open the call to your questions. [Operator Instructions] Before we conclude today's call, I'll provide some important cautions regarding the forward-looking statements made by management during the call. I'd like to remind everyone that today's call is being recorded, and it will be made available for telecom replay. Please see the instructions in yesterday's press release that has been posted to the Investor Relations section of the company's website. Now I'd like to turn the call over to Consolidated Water's CEO, Rick McTaggart. Sir, please go ahead. Frederick McTaggart: Thank you, Chloe, and good morning, everyone. Our retail, bulk and manufacturing revenues and operating incomes in 2025 were consistent with our expectations for the year. However, our services revenue did not perform as expected due completely to a permitting delay relating to our 1.7 million gallon per day seawater desalination project in Kalaeloa, Hawaii. We believe this type of delay is common for the complex multi-agency permitting process required for a project of this scale and has not been due to any failures on the part of consolidated water. In fact, over the past year, we have achieved all other major project milestones under this phase of the Hawaii project, which include successful pilot testing, receipt of confirmation from the Honolulu Board of Water Supply that we are able to produce water that is a reasonable match to the quality of their current water supply and that we are able to produce water that causes no detrimental impact to the Board of Water Supply system or their customers' assets. And then finally, we completed 100% of the design for this project. Achieving these other significant project milestones enables us to begin construction once all permits have been issued. We continue to work closely with the Honolulu Board of Water Supply and the regulatory authorities to advance the permitting process and mitigate schedule impacts. While our total revenue on a consolidated basis was slightly down compared to the previous year, our consolidated gross margin in terms of percentage and dollars improved and our consolidated net income from continuing operations noticeably increased compared to 2024. Gross profit generated by all 4 of our business segments increased in terms of percentage, which speaks very well for our attention to efficiency and cost control. Our retail water operations continued to grow in 2025, driven by the strength of the Cayman Islands economy and historically low rainfall in our exclusive utility service area on Grand Cayman. We saw ongoing growth in population and business activity on the island, coupled with very low precipitation, which resulted in a record volume of water sold to a record number of customers in 2025. Although our Caribbean-based bulk segment revenue declined slightly this past year, primarily due to lower fuel-related charges that we pass through to our customers, we achieved higher profitability in dollars and gross profit percentage in this segment. This improvement was driven by lower cost of revenue, reflecting our focus again on operational excellence in our Bahamas and Cayman Islands bulk businesses. Our Services segment revenue decreased in 2025, primarily due to the completion of 2 major design build projects in 2024 and the lull in Hawaii project activity while awaiting the issuance of a key project permit, and this was subsequent to completion of the pilot plant testing phase of the Hawaii project in early 2025. The Services segment revenue decrease is also due to a lesser extent to a decrease in nonrecurring consulting revenue, which actually has picked back up in the last quarter. The decrease in Services segment construction and consulting revenue was partially offset by a 9% increase in recurring revenue from O&M contracts. This increase in O&M revenue was attributable to incremental revenue generated by both our PERC Water subsidiary and REC in Colorado, and it includes revenue from a new municipal client in Southern California and from additional services provided to a large federal client for the second half of last year under a contract which expires at the end of this month. Our Manufacturing segment during the year continued to improve its revenue and gross margin, which reflects the production this past year of primarily higher-margin products for nuclear power and municipal water clients as well as our continued focus on maximizing efficiency and throughput of our facility. Completion of our new 17,500 square foot manufacturing facility in the third quarter of 2025 has further enhanced efficiency and throughput and is key to growing that business segment through continued customer and product diversification. And that diversification is occurring primarily in the municipal water client or municipal section of our business. Now before getting into recent developments and our outlook for the rest of the year and beyond, I'd like to turn the call over to our CFO, David Sasnett, who will take us through the financial details for 2025. David Sasnett: Thanks, Rick. Good morning, everyone. Our 2025 revenue totaled $132.1 million, which is a slight decrease of 1% from 2024. This decrease was primarily due to decreased revenue for our Services segment as well as a modest decrease in the bulk segment revenue. And these decreases were partially -- the decrease was partially offset by revenue increases in the Retail segment and in our Manufacturing segment. Retail revenue increased 6.6% to $33.6 million due to an 8.3% increase in the volume of water sold to a record 1.09 billion gallons, and this increase resulted from significantly lower rainfalls, in fact, historically low rainfall on Grand Cayman and an approximate 7% increase in the number of customer accounts in our license area. Our bulk segment revenue decreased less than 1%, and this decrease was due to a decline in energy prices, which decreased the energy pass-through component of our rates in the Bahamas operations. The decrease in Services segment revenue was primarily due to plant construction revenue decreasing from $18.6 million in 2024 to $13.5 million in 2025, and this decrease was a result of $8.2 million of additional revenue from PERC's contract with Liberty Utilities and $1.3 million in revenue from the Red Gate contract in Grand Cayman in 2024. These contracts were both substantially completed in mid-2024. Construction revenue recognized on the Hawaii project also declined by $2.9 million in 2025 due to completion of the pilot plant testing phase of the project. These decreases in construction revenue were partially offset by construction revenue generated under new contracts. Services segment revenue generated under our O&M contracts totaled $32.1 million in 2025, which represents an increase of 9% from 2024. The increase was due to incremental revenue generated by both PERC and by REC. Our Manufacturing segment revenue increased by $1.1 million or 6% to $18.7 million as compared to $17.6 million in 2024. Our gross profit for 2025 was $48.4 million, which represents 30% of total revenue as compared to $45.6 million or 34% of total revenue in '24. And this improvement is due to increases in both the Retail and Manufacturing segment revenue. Our net income from continuing operations in 2025 was $18.6 million or $1.16 per diluted share. This compares to net income of $17.9 million or $1.12 per diluted share in 2024. Including discontinued operations, our net income attributable to Consolidated Water shareholders in 2025 was $18.3 million or $1.14 per diluted share. This compares to net income of $28.2 million or $1.77 per diluted share in 2024. Turning to our balance sheet. During the year, CW-Bahamas accounts receivable balances decreased to $20.7 million as of December 31, 2025, as compared to $28.4 million as compared to -- as of December 31, 2024. This decrease was the result of receiving significant payments in addition to current billings on CW-Bahamas delinquent accounts receivable from the WSC. As of February 28, this receivable from the WSC amounted to $22.6 million. We continue to be in frequent contact with officials of the Bahamas government, who continue to express their intention to significantly reduce CW-Bahamas delinquent accounts receivable balances. However, we are presently unable to determine if or when such reduction will occur. Our cash and cash equivalents totaled $123.8 million as of December 31, 2025, and our working capital as of that date was $141.9 million, and our stockholders' equity was $221.7 million. The working capital and cash amounts as of December 31, 2025, represent a $24.4 million increase in cash and a $9.1 million increase in working capital from the prior year-end. And as we have consistently reported on our calls, our balance sheet currently has no significant outstanding debt. Our projected liquidity requirements for the balance of 2025 include capital expenditures for existing operations of approximately $11.1 million, and this includes approximately $1 million in the first half of 2026 for a project in Bahamas. We increased our quarterly cash dividend by 27.3% to $0.14 per share beginning in the third quarter of 2025, and we paid approximately $2.3 million in dividends in January of 2026. Our liquidity requirements may also include future quarterly dividends as such dividends are declared by our Board. And we continue to evaluate how to best utilize our ample cash balance and outstanding liquidity to increase shareholder value. So this completes our financial summary for the year, and I'll turn the call back over to Rick. Frederick McTaggart: Thanks, David. Looking at our retail water business in Grand Cayman, we were pleased with the continued growth there, as David mentioned, in sales and sales volumes. And our Caribbean-based bulk water business continued to generate long-term stable recurring revenue. Demand for our water in the Cayman Islands is affected by variations in the level of tourism and rainfall primarily. And according to the figures published by the Department of Tourism Statistics and Cayman, tourist air arrivals in the Cayman Islands increased by 2.9% to approximately 450,000 in 2025 compared to the previous year, and this likely contributed to our retail sales growth. And it's interesting to note, so preliminary statistics show that January this year has also been a banner month for tourism arrivals in the Cayman Islands. So we look forward to seeing how that ultimately impacts our sales. However, also in the first couple of months of this year, the weather was much wetter with about a 280% increase in rainfall for the first 2 months of 2026. So we also expect that is impacting our sales in 2026 in the first quarter. Regarding our Cayman Water utility license, in February of last year, we received a new concession from the government that authorizes and maintains the terms of our 1990 license until a new license from OfReg is enacted. Negotiations between Cayman Water and OfReg for a new license have been more active than in previous quarters, but remain ongoing. So looking again at the Hawaii project, this past quarter, we completed -- or this past quarter, we completed 100% of the design of the seawater desalination plant for BWS, and we're focused on obtaining the remaining permits needed to allow our client to issue a notice to proceed with construction of the project. This includes actively responding -- our activities include actively responding to regulatory inquiries and coordinating with the BWS to mitigate schedule impacts. The deferral of construction activities essentially has shifted anticipated revenue recognition and associated cash flows related to the Hawaii project into future periods. We anticipate that construction of the project will recommence or will commence later this year and see the construction phase of this major project substantially adding to our revenue and earnings growth in later reporting periods. Our Construction Service segment revenue is anticipated to remain below the record we achieved in 2023 until the initiation of construction of the Hawaii project. Looking more at our Services segment. As announced this past quarter, we were awarded 2 water treatment plant construction projects, new projects including a $3.9 million drinking water plant expansion in Colorado and an $11.7 million wastewater recycling plant in Northern California. The revenue attributable to these projects is expected to be realized primarily this year, and the combined value of these projects totals obviously $15.6 million. The first project was secured by REC, our Colorado subsidiary, and this drinking water plant expansion will help us to build a resume to pursue additional design build opportunities in Colorado. As announced during the fourth quarter, our PERC Water subsidiary secured the other contract to construct a wastewater recycling plant for San Francisco Bay Area Golf Club. This innovative project, which will convert untreated wastewater into irrigation water is expected to save 36 million to 38 million gallons of potable water annually for the golf club. Because this facility will be constructed below ground, we decided to start construction of the project when the rainy season ends in Northern California to minimize construction delays. Therefore, we expect revenue from this project to be recognized primarily this year. In the meantime, we have been lining up subcontracts and ordering long lead equipment for the project. So it continues. PERC Water's customized design report or CDR program delivers comprehensive project-specific plans for water infrastructure, incorporating life cycle costs, schedule and performance metrics. These reports minimize risk and optimize plant performance for our clients by providing cost, schedule and water quality certainty and have been particularly attractive to large homebuilders and private utilities. In Arizona, PERC continues to use its CDR program to pursue several design build opportunities for developers in the Phoenix metropolitan area. As was the case with the Liberty Utilities project in Arizona a few years ago, we believe that some or all of these CDRs will ultimately lead to a design build contract for these important wastewater treatment facilities. But as I mentioned, these opportunities typically have a longer sales cycle. Regarding our manufacturing operations, in August 2025, we finished expanding our facility in Fort Pierce, Florida by adding 17,500 square feet of plant space, bringing the total manufacturing space to 47,500 square feet. This expansion allows us to handle more production volume and manage several projects at once. It's particularly well timed as there has been a significant increase in bidding activity for municipal water projects in Florida. Given the extended lead times associated with these municipal initiatives, we anticipate that they will contribute to growth in 2027. We believe that our extensive experience manufacturing large-scale nanofiltration and RO systems as well as our location in Fort Pierce, Florida, positions us well to continue growing that part of the business in the Florida market. And as reported previously, we hold an NQA-1 certification from 2 major nuclear industry companies, and we see renewed interest in U.S. nuclear power solutions. These specialized manufacturing qualifications also position us for continued growth. As we move through the year ahead, we believe our diversified business segments will continue to deliver improved results to shareholders. This includes continued growth in our retail business in Grand Cayman, our long-term stable recurring revenue from our Caribbean-based bulk water business and the growth potential of our U.S.-based manufacturing, design, build and O&M businesses. As the global demand for clean water continues to grow, our strong balance sheet enables us to move quickly on desalination and water infrastructure opportunities in the Caribbean and North America as well as any potential strategic acquisitions or partnerships. So with that, I'd like to open the call up for questions. Chloe? Operator: [Operator Instructions] The first question today comes from Gerry Sweeney with ROTH Capital. Gerard Sweeney: I wanted to ask a couple more questions on the Hawaii desal project. Just curious as to what that permit is and who's responsible for obtaining the permit. Frederick McTaggart: Well, I guess that would be all right to say it's the state historical preservation department. I think we mentioned it in the call in November. I mean that permit is required before we can put in applications for all the building permits and ground clearance permits and that sort of thing. We're making progress on it. It's just a very slow process for everybody. It's not just us. Gerard Sweeney: Got it. So is Consolidated responsible for that permit? Or is the city responsible for it? Frederick McTaggart: The client is responsible for that. And they've been dealing with all the inquiries and that sort of thing from the department. Gerard Sweeney: Got it. And once that is received, then you do have to put in some other building permits, et cetera. Is that -- did I understand that correctly? Frederick McTaggart: That's correct. Yes. Some of this permit is a prerequisite for applying for a number of other permits. That's my understanding. Gerard Sweeney: Got you. Best guess, I mean, once the historical permit is achieved, I mean, do you have any idea of how long the other permits take? Or is that sort of a little open-ended just because of the nature of permitting? Frederick McTaggart: I mean, again, my understanding is that they're a bit more straightforward. We have finished the design and so it would be a matter of getting the regulators to sign off on the various parts of that design so that we could get moving on building permits. I mean I'm just -- I'm a little reluctant. I mean, you can see what's happening because you got delayed from last year in the fourth quarter. I mean, with the stock price and that sort of thing, it's very difficult to predict these sorts of things. So that's why we said in our notes that later this year, I mean, we would expect certainly for the construction to start sometime this year. But to say exactly what quarter it is, is somewhat difficult at this point. Gerard Sweeney: No, that's understandable. I was just curious as to what are some of the other sort of milestones or steps post the historical permits. So that helps frame out when and how it all develops. So that's helpful. And then the other thing I want to talk about was just the O&M revenue that's ticked back up in the quarter. I think you mentioned a couple of project wins, but I think also another project was expiring. But that's around, I think, PERC and REC, I'm talking about, not the Caribbean. But how does that business look in pipeline and opportunity on a go-forward basis? Frederick McTaggart: There's a lot going on there, Gerry. I mean there's a couple of really big opportunities that we're chasing right now. One of them, the -- it's very competitive. I mean these are bigger O&M opportunities. We think we have certain advantages. Obviously, they're both in Southern California, and we think our presence there and our record helps us. But it's a competitive market, and we're just working through trying to get some of these. It could be big winners for us if we get these projects. Gerard Sweeney: Got it. All right. And then one last question. Obviously, the West Bay facility was completed that I think 1 million gallons a day of water. How do we -- I think it was finished in the fourth quarter last year, but how do we think about that? I mean, that adds incremental volume. I don't think it's going to be used up right out of the gate or that may be the case, but I'm just curious as to how much of that water or the 1 million gallons a day sort of spoken for are going to be used if you have a visibility on that. Frederick McTaggart: Well, I mean, last year, we used it because we had pretty big quarters. I think we look at maybe like a 5-year horizon, 5- to 10-year horizon on our asset planning. So it kind of depends on what this higher rainfall is going to do this year because we base our production capacity on peak demand, which typically occurs in December, January, February, those sort of months and then it starts getting wetter in the summer. So demand tapers off. But I mean we use that capacity, and we had to -- we put in the original 1 million gallons, I guess, about 2.5 years ago, and then we immediately started expanding it because we needed the additional capacity. If you look at our volume growth over the last 5 years, it's quite -- since post-COVID, it's quite remarkable. Operator: [Operator Instructions] The next question comes from John Bair with Ascend Wealth Advisors. John Bair: I probably ought to know this by now, but how quickly are the energy cost recovery increases reflected in your bulk services? Is that on a monthly, quarterly? How does that work? Frederick McTaggart: It's monthly. We look at the average cost for fuel and electricity every month, and then we charge the client back for that. John Bair: Okay. All right. And then the next one, you mentioned a federal contract for services that's finishing up at the end of the month, I believe it was. Is that a renewable contract? And if it is, is it something that's open for bid? Or is it over and done with? Frederick McTaggart: Yes. We bid for that back during COVID, and it's been renewed every year since. Our understanding is there were some other -- it has nothing to do with our performance or their willingness to renew with us in particular. The -- I guess the military had other things that they had to deal with on that base, and they gave it -- our understanding is that, that contract is being given to a municipal entity that's right next door to the base. So they didn't bid it out. They just -- they gave it to this public utility, municipal utility. John Bair: Okay. And then you did talk in general in your prepared remarks about project opportunities and so forth. And I was just kind of curious, so there's a lot of municipal projects that are out there. Just wondering how much is -- if you can speak to the balance between public-private opportunities versus purely the public projects. In other words, is there, for example, opportunities in data center water aspects that maybe is a bigger opportunity for you? Frederick McTaggart: Yes. I mean we're not chasing the data center stuff, honestly, John. I mean the stuff I'm talking about is kind of rock solid municipal business. So particularly in Florida, I mean, there's been changes to regulations for shallow aquifer withdrawals and that sort of thing. So any new capacity, drinking water capacity that's being built, if the cities have already exceeded their shallow water withdrawal permits and they're having to go into the deeper aquifers, which are more saline. So it gives us a big opportunity on the low-pressure RO market. I mean there's -- I mean there's a number of projects. They're all municipal. So just name a city up the East Coast of Florida, and they're all looking at expanding their production capacity for drinking water. So Pompano Beach, Delray Beach, West Palm Beach, Stuart, Port St. Lucie, all up there. There's a number of projects that are going on that give us opportunities to build the equipment. So we've made a lot of progress over the last few years working with the consulting engineers in Florida, and they really love our products and our quality, and we're getting spec-ed in on a number of these projects. John Bair: That's good to hear. That kind of leads in a little bit to my last question here. And wondering if there's any new opportunities, any new market opportunities that are addressable by your Manufacturing segment, given that you've expanded it and so forth, you're looking at any new potential market opportunities to provide equipment? Frederick McTaggart: Yes. I mean you kind of can view the municipal RO system market as sort of a renewed opportunity. I mean we hadn't gotten that much business out of that market for a number of years, and we're focused more on producing smaller equipment and assemblies and piping and that sort of thing. This larger space in Fort Pierce gives us the opportunity to participate in a much bigger way in the municipal water market and to make these large assemblies at production skids that are required for those types of plants. So that's really where we're focusing at the moment. And then there's other -- the nuclear market. I mean, there's -- we continue to make products for that market. It's a little bit more cyclical, I guess, than what we're seeing in the municipal market right now. There's just a very strong demand for that type of equipment. So that's where we're focusing our effort. John Bair: And that nuclear market, is that more domestic? Or is it global, I guess, broadly speaking? Is it pretty much... Frederick McTaggart: Yes. The 2 clients that we have, I mean, they sell domestically and globally. I don't really have that sort of number off the top of my head, but I know there's projects in the U.S., in Canada and Japan, things like that, Korea that these products are used on. Operator: All right. At this time, this concludes our question-and-answer session. I'd like to now turn the call back over to Mr. McTaggart. Sir, please go ahead. Frederick McTaggart: Yes. I'd just like to thank everybody for joining us today, and happy St. Patrick's Day, by the way. And I look forward to speaking with everybody when we release our Q1 report in May. Take care. Thank you. Operator: Thank you. Before we conclude today's call, I would like to provide the company's safe harbor statement that includes cautions regarding forward-looking statements made during today's call. The information that we have provided in this conference call includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding the company's future revenue, future plans, objectives, expectations and events, assumptions and estimates. Forward-looking statements can be identified by the use of words or phrases usually containing the words believe, estimate, project, intend, expect, should, will or similar expressions. Statements that are not historical facts are based on the company's current expectations, beliefs, assumptions, estimates, forecasts and projections for its business and the industry and markets related to its business. Any forward-looking statements made during this conference call are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict. Actual outcomes and results may differ materially from what is expressed in such forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, tourism and weather conditions in the areas we serve, the economic, political and social conditions of each country in which we conduct or plan to conduct business, our relationships with the government entities and other customers we serve, regulatory matters, including resolution of the negotiations for the renewal of our retail license on Grand Cayman, our ability to successfully enter new markets and various other risks as detailed in the company's periodic report filings with the Securities and Exchange Commission. For more information about risks and uncertainties associated with the company's business, please refer to the Management's Discussion and Analysis of Financial Conditions and Results of Operations and Risk Factors sections of the company's SEC filings, including, but not limited to, its annual report on the Form 10-K and quarterly reports for Form 10-Q. Any forward-looking statements made during the conference call speaks as of today's date. The company expressly disclaims any obligations or undertaking to update or revise any forward-looking statements made during the conference call to reflect any changes in its expectations with regard thereto or any changes in its events, conditions or circumstances of which any forward-looking statement is based, except as required by law. I would like to remind everyone that this call will be available for replay starting later this evening. Please refer to yesterday's earnings release for dial-in replay instructions available via the company's website at cwco.com. Thank you for attending today's presentation. This concludes the conference call. You may now disconnect.
Desiree: Ladies and gentlemen, thank you for standing by. My name is Desiree, and I will be your conference operator today. At this time, I would like to welcome everyone to the Telesat Corporation Fourth Quarter 2025 Financial Results. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during this time, please press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. I would now like to turn the conference over to James Ratcliffe, Vice President of Investor Relations. You may begin. James Ratcliffe: Thank you, Desiree, and good morning, everyone. This morning, we filed our annual report for the period ending December 31, 2025, on Form 20-F with the SEC and on SEDAR+. Our remarks today may contain forward-looking statements. There are risks that Telesat Corporation’s actual results may differ materially from the results contemplated by the forward-looking statements as a result of known and unknown risks and uncertainties. For a discussion of known risks, please see Telesat Corporation’s annual report and updates filed with the SEC. Telesat Corporation assumes no responsibility to update or revise these forward-looking statements. I will now turn the call over to Dan Goldberg, Telesat Corporation’s President and Chief Executive Officer. Dan Goldberg: Okay. Thanks, James, and thank you all for joining us this morning. I'll say a few words about the business and our focus for this year, then I'll hand over to Donald to speak to the numbers in more detail, and we'll then open the call up to questions. I'm pleased with the results we achieved last year and the steps we've taken to position Telesat Corporation for significant growth and to capture the compelling opportunities we're seeing in the market today. Our GEO business faces structural challenges. We've discussed that before. But we came in ahead of our adjusted EBITDA guidance for last year, and within the constraints of what's essentially a fixed-cost business, we've optimized our cost structure where we can to maximize the cash flow of that business. Turning to LEO, I'm very pleased with the significant progress we've been making on Lightspeed, including the very tangible progress on the development of the network, the satellites, the multiple software platforms that power the constellation and support our customers, and the development of the advanced user terminals and landing stations that comprise the terrestrial portion of the Lightspeed network. It's very positive and very exciting. As we've said previously, our first satellites are scheduled to launch at the end of this year. Then we have a very heavy launch cadence planned throughout next year, 2027. Although our expectation has been for Lightspeed to enter full global commercial service around the end of next year, it now looks like we'll enter service about three months later than that, so around Q1 2028. The cause of the slight slip is the readiness of the chips, the ASICs, which power the onboard processor and phased-array antennas of the Lightspeed satellites. These chips are being developed by SatixFy, which some of you may know was acquired by MDA last year. The delivery of these chips is one of the key schedule risks our program faced, and for that reason, we were pleased that MDA acquired SatixFy, given that MDA has much greater financial and technical resources and is also our prime contractor for the Lightspeed satellites. We're tracking the development of these chips pretty forensically and, based on that and the assurances we're getting from MDA, we feel good that the chips will be available in time to support the program schedule. Turning to the commercial landscape for Lightspeed, it's absolutely the case that global market dynamics are evolving in ways that I believe are very accretive to the Lightspeed business case. The fact of the matter is there's a transition taking place across the verticals we serve toward LEO. The impressive progress Starlink has achieved is a clear testament to that, and so too are the very significant opportunities we're seeing for Telesat Lightspeed. Last year, as you know, we signed a substantial agreement with Viasat to use Lightspeed for a range of services, prominently among them broadband to commercial airlines. Airlines and business jet users around the world are showing a strong appetite for high-throughput, low-latency satellite connectivity, and Lightspeed has been optimized to serve their fast-growing requirements. But without a doubt, some of the most compelling near-term opportunities we're pursuing are in the government defense market. I've said on previous calls that we've become increasingly bullish on the government and defense opportunity for Telesat Lightspeed, and the trends there only continue to get better. The geopolitical environment is driving once-in-a-generation increases in defense investments by allied countries globally, with defense organizations increasingly focused on the need for mission-critical, resilient, reliable, high-throughput, and low-latency satellite communication services from dependable providers. Indeed, the Government of Canada, in its recently released defense industrial strategy, identified satellite communications as a critical sovereign capability, pledging in the first instance to procure these important services from Canadian companies like Telesat Corporation in order to meet its and Canada’s allies' sovereignty and security requirements, with the Arctic a particularly important area of focus. And Canada certainly isn't alone in identifying the need for advanced LEO services for defense and sovereignty purposes. The U.S., the EU, Germany, Italy, South Korea are just a few of the governments that have plans to procure such capabilities. Given the fact that Lightspeed was designed from the very outset to meet the demanding requirements of defense users, Telesat Corporation is well positioned to meet those needs. To give you a few examples of those opportunities, Telesat Government Solutions, our U.S. subsidiary, has received an IDIQ contract under the U.S. SHIELD program, making us an approved supplier for the over $150 billion “Golden Dome” project, in which robust and resilient connectivity plays a key role. In Korea, we recently signed an MOU with Hanwha Systems, a leading provider of defense equipment and services to the Korean and other governments, to work together on leveraging the Telesat Lightspeed solution and Hanwha's defense offerings, as well as to develop user terminals compatible with Telesat Lightspeed. And of course, as we announced in December, Telesat Corporation and MDA have been selected by the Government of Canada to develop and deploy the Enhanced Satellite Communications Project Polar, known as ESCaPE, a next-generation satellite communications platform to provide connectivity for the Canadian Armed Forces in the Far North. This is a significant opportunity for us, and we're working with our partners to get under contract for that as soon as possible. In light of the order of magnitude of the opportunity to serve allied defense users, and as you may have seen in our separate release this morning, we're further optimizing Telesat Lightspeed for defense requirements by adding military Ka spectrum, or Mil Ka as it's called, to our initial 156 Lightspeed satellites, and we fully expect additional satellites we'll add to the constellation in the future will also have Mil Ka capability. Specifically, we're dedicating 500 megahertz of our Lightspeed capacity to Mil Ka, which is 25% of the total spectrum that Lightspeed will operate on. Because Mil Ka spectrum is adjacent to the commercial Ka-band spectrum used by Lightspeed, the change in frequency plan is a straightforward one, resulting in no adverse schedule impact and only a modest cost impact. And when I say modest cost impact, the cost is around $25 million, which is less than half a percent of the total program cost for the first 156 satellites. The 500 megahertz of Mil Ka will replace the same amount of commercial Ka-band spectrum on the network's user link — that's the link between the satellites and the user terminals that our customers will have. The gateway link — the link between the satellites and our gateways located at various locations throughout the world — is unaffected by the spectrum change. Allied defense users want Mil Ka capability, and with this change to Lightspeed, we'll be able to offer a very substantial increase to the total current global supply of Mil Ka with performance capabilities that are vastly superior to the Mil Ka platforms that allied governments have historically relied upon. Specifically, because we're offering it from LEO on a highly flexible, highly advanced constellation, it will be more resilient, more secure, higher throughput, and lower latency, and it'll cover the entire planet including the poles, which means, of course, the Arctic. As you can probably tell, we're very excited about this change to Lightspeed and about the opportunities we're seeing out there. We're very bullish on Lightspeed's prospects, and I'd say now more than ever. Donald will take you through our financial expectations for 2026, but I wanted to say a few words about our key priorities for the year. In LEO, naturally, we're laser-focused on successfully and timely deploying Telesat Lightspeed while expanding our revenue backlog in advance of global commercial availability. Given the various opportunities we're pursuing, we're very optimistic we'll be successful in meaningfully growing our Lightspeed backlog this year. In our GEO business, our focus remains on maximizing the revenue we can generate from our existing satellite fleet while at the same time being highly disciplined on costs in order to mitigate as much as possible the EBITDA and cash flow impact of the ongoing revenue decline in that business. And of course, we remain very focused on refinancing the Telesat Canada debt — the debt that's tied to our legacy GEO business. We continue to work closely with our advisers, who are engaged with the advisers representing some of the larger lenders, with the aim of reaching a successful result prior to the initial debt maturities in December. So I'll end my remarks there and hand over to Donald to go over the numbers. And while this is the first time you'll be hearing from Donald, he's already been on board since last October and has come up to speed, as we knew he would, very quickly. So, Donald, that official welcome over to you. Donald: Thank you, Dan, and good morning, everyone. I'm very pleased to be joining you this morning and to do my first call as Telesat Corporation CFO. My prepared remarks today will focus on highlights from this morning's press release and filings, including our guidance for 2026. Telesat Corporation ended the year 2025 with reported revenue of $418 million, adjusted EBITDA of $213 million, and with $510 million of cash on the balance sheet. In the fourth quarter of 2025, Telesat Corporation reported revenue of $94 million and adjusted EBITDA was $40 million. Revenue in 2025 was in line with our expectations and our guidance. Adjusted EBITDA of $213 million, including $33 million in expenses relating to our equity distribution in Q3 and our debt refinancing process, was well above our guidance of $170 million to $190 million due to higher-than-anticipated capitalized labor to our Lightspeed project, lower-than-expected increase in our headcount, and, except for the equity distribution and debt refinancing expense, lower-than-expected OpEx in our legacy GEO business segment. Interest expense for 2025 totaled $200 million, down from $240 million in 2024 and $270 million in 2023, reflecting our buyback of $857 million of Telesat Canada debt. Non-cash interest expense of $29 million incurred on Telesat Lightspeed financing was capitalized in 2025. Net loss for the year was $530 million compared to $302 million in 2024. The negative variance of $220 million was principally due to reduced revenue and EBITDA, impairment of goodwill relating to our GEO business, and we also recorded an increase in the derivative liability relating to the Telesat Lightspeed financing warrants caused by the meaningful increase in the valuation of the project as we are making strong progress on the development of the constellation. This was partially offset by a foreign exchange gain associated with the impact of a stronger Canadian dollar on our U.S.-dollar-denominated debt at the end of the year. EBITDA from our legacy GEO business segment totaled $284 million, or $317 million excluding $33 million of expense related to the equity distribution and debt refinancing-related costs, representing a margin of 77%, down from 80% in 2024. LEO loss before interest, tax, depreciation, and amortization for the year was $67 million, driven by operating expenses of $72 million, which were slightly below our guidance updated in October 2025 of $75 million to $85 million, reflecting higher capitalized labor and a slower pace of hiring in 2025. Capital expenditures in 2025 on an accrued basis were $708 million, of which nearly all were related to Telesat Lightspeed. This was below our expectations and our guidance of $900 million to $1.1 billion for the year. This was mostly attributable to milestone payments we expected to make to MDA last year that will be made in 2026. In September, we distributed 62% of the equity of Telesat Lightspeed to a wholly owned subsidiary of Telesat Corporation to provide us with more flexibility to raise capital in the future. Through our adviser, we are engaged with the advisers of the ad hoc group of lenders with the objective of successfully refinancing Telesat Canada debt before it matures in 2026 and 2027. You will note in MD&A disclosure in our financial statements and MD&A regarding liquidity given the need to refinance $1.7 billion of debt in Telesat Canada coming due in December 2026. Telesat Canada financial statements were prepared on a going-concern basis as usual. I would now like to turn to our financial guidance for 2026, which was disclosed in our press release earlier this morning. We've modified our disclosure in an effort to provide guidance that tracks the metrics we focus on as we run the business. We are, therefore, providing guidance for revenue and adjusted EBITDA of our legacy GEO business segment. For the LEO business segment, we're providing guidance for the total amount we will invest in Lightspeed in 2026, including operating costs incurred and capitalized labor and interest. We believe this approach will provide investors with the information they need to track our investment and progress in the Lightspeed project. On the GEO side, we expect 2026 revenue of between $300 million and $320 million, representing a year-on-year decline of $90 million to $110 million compared to 2025, roughly evenly split between our broadcast and enterprise segments. In broadcast, we expect revenue from DISH to decline due to the reduced usage of Nimiq 5 and the end of the Anik F3 contract in April 2025. Revenue from Bell is also to decline due to the expiration of its contract on the Nimiq 4 satellite in October 2025. On the enterprise side, the largest impact comes from declining revenue under our restructured contract with Explorer, the vast majority of which being non-cash, as well as our Telstar 14R satellite reaching end of life. With lower expected revenue, we expect GEO segment adjusted EBITDA to be $210 million to $220 million in 2026, excluding any expense related to our debt refinancing process. As a reminder, these costs, plus the costs related to the transfer of 62% of Telesat LEO, amounted to $33 million in 2025. In the LEO segment, we expect to spend between $1.0 billion and $1.2 billion on Telesat Lightspeed in 2026, including operating costs, capitalized labor and interest, and capital expenditures incurred with third-party vendors and suppliers. I'll note that our guidance assumes an average exchange rate of 1.38 Canadian dollars per U.S. dollar. Turning to our cash and liquidity position, we had approximately $206 million of cash on hand at the end of 2025 in our GEO business segment, and the business continues to generate healthy cash. We believe the combination of this cash on hand and the cash flow generated by our legacy GEO assets in 2026 to be sufficient to meet all the company’s obligations prior to Telesat Canada debt maturing in December. In the LEO segment, we ended the year with $337 million in cash on hand. This, combined with $1.82 billion available under our Telesat Lightspeed financing and $325 million available from our vendor financing, is expected to be sufficient to fully fund the Telesat Lightspeed project until it achieves global commercial service. Before I conclude my prepared remarks, I would like to confirm that we are in compliance with all covenants in our credit agreement and indenture. I also want to remind everyone that Section 5 of our 20-F includes the unaudited condensed consolidated financial information. I'll now turn the call back to the operator for the Q&A. Thank you. Desiree: Thank you. We will now begin the question-and-answer session. If you have dialed in and would like to ask a question, please press star then 1 on your telephone keypad to raise your hand and join the queue. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset to ensure that your phone is not on mute when asking your question. We do request for today's session that you please limit yourself to one question and one follow-up question only. Thank you. Our first question comes from the line of David McFadgen with ATB Capital Markets. Your line is open. David McFadgen: Alright. Hi, guys. So a couple of questions. Maybe I'll start off with the decision to put some of the Lightspeed capacity on the military Ka band. I thought that when you would do that, you would also announce a deal with the Canadian Armed Forces. It's kind of a surprise that you didn't announce that at the same time. Do you still expect a deal with the Canadian Armed Forces? Where would licensing of that military Ka spectrum sit? Dan Goldberg: Good morning, David. It's Dan. So it was back in December that we announced — well, by we I mean we were joined by the Government of Canada and MDA — and it was announced that MDA and Telesat Corporation had been selected to form a strategic partnership with the Government of Canada to deliver ESCaPE. And what is known about ESCaPE is, well, a few things. One, it's a multi-frequency-band constellation for support in the Arctic of Canada's defense and sovereignty requirements. It's Mil Ka, it is X-band, and UHF — so all spectrum that defense users frequently use. And so, while it was announced back in December, we're still not under contract, which is not a surprise. It takes some time to do that. And so we — and by we, I mean Telesat Corporation and MDA — are currently engaged with the Government of Canada, working on that. We're focused on getting that done sooner than later. And so because we're still negotiating everything and it's not done yet, we can't say exactly what it is the constellation will look like. It is the case that by putting Mil Ka on Lightspeed, Lightspeed is better situated to meet some of those requirements. But we're not in a position to say anything more about that right now. We are focused on getting that contract done certainly before the end of this year. David McFadgen: Okay. So I would imagine that you could also sell that military Ka-band capacity to other defense departments around the world, right? Like, the Canadian Armed Forces isn't going to take the entire 500 megahertz, or is it? Dan Goldberg: Yeah. Listen. As I said in my remarks, the quantum of Mil Ka capacity that we're bringing to market by proliferating it across all of our satellites is a massive increase. It's a little hard to track this stuff because it's Mil Ka, so you don't know everything. But for instance, the U.S. and its allies use the WGS network. The UK has Skynet. There are other pockets of Mil Ka elsewhere. Historically, it's all been in GEO. But as you can imagine, the amount of capacity across those systems relative to what we're bringing on Lightspeed — whether it's an order-of-magnitude increase — is dramatically higher. And it's not just the sheer quantum of capacity we're bringing. The capacity that we're bringing, the performance characteristics are so much more compelling. It's high throughput, low latency, distributed, which makes it more resilient. It covers the poles, which — there's a heavy focus on the Arctic right now for all sorts of reasons. And so, yes, we will be able to make that capability available not just to the Government of Canada, but to all of the allied nations — NATO and other allied governments. And not to go on for too long here, but there is a significant focus with military planners on having access to these kinds of capabilities given the nature of modern warfare, given the nature of the fact that so many more of the platforms that they use are high-bandwidth consumption platforms, many of which operate autonomously and need these high-throughput, low-latency, very resilient, very secure links. So we think about this as a very significant opportunity for Telesat Corporation, and we caught this at a great time. We caught it early enough in the build-out of Lightspeed so that it's not schedule impactful. As I mentioned in my remarks, the cost is pretty trivial. Because we were already using the commercial Ka and because the military Ka band is immediately adjacent, the changes that needed to be made to accommodate the Mil Ka on Lightspeed were very straightforward. And look, this isn't something that we figured out last week. This is something that we had been thinking about for some time now. So we were able to do some advanced planning work with MDA to make sure that this would be as easy — from a schedule perspective and from a cost perspective — as possible. So we're really pleased about this. David McFadgen: Okay. And maybe I can just follow up on a comment you made. You're talking about ESCaPE, right? ESCaPE — the military wants to be able to have a constellation running at X and UHF. You just want to sign Ka. So do you envision another potential constellation here that you would be able to offer up that would run on X and UHF? Is that a possibility? Dan Goldberg: It's still a little premature to say. I really want us to get through the good work that's taking place right now with the Government of Canada. Again, we want to move quickly on that. The good news is the Government of Canada, as you probably heard, is very much wanting to streamline and accelerate their procurement processes, so we've got a pretty motivated counterparty to move these discussions along. So all I would say is to stay tuned on that. David McFadgen: And maybe if I can just ask one more — I won't take up too much time — but just for 2026 guidance, it would be really helpful if you can give us an idea on the EBITDA loss as you would expect out of LEO. Because, obviously, I think you can figure it out. Dan Goldberg: If you look at the guidance, I think what you have there is the total expenditures associated with Lightspeed, both CapEx and OpEx. But we can break it down. I think it's $1.0 billion to $1.2 billion in total, Donald, and can you give a range for what we think the OpEx piece of that— Donald: Included in the $1.0 billion to $1.2 billion, there's somewhere between $90 million to $110 million of OpEx in Lightspeed that we will incur this year, depending on how much labor we're capitalizing. One of the reasons we decided to not show the EBITDA specifically for Lightspeed is that how much labor we are capitalizing versus expensing is always difficult to predict when we're looking forward. But each quarter, we'll report on what it is so that everyone can tell what it is. David McFadgen: Okay. Alright. That's really helpful. Thank you. Dan Goldberg: Okay. Thank you. Desiree: Our next question comes from the line of Caleb Henry with Quilty Space. Your line is open. Caleb Henry: Hi. Thanks, guys. Just a question on the launch schedule with the three-month delay. Do you have a sense of how many satellites will be launched by the end of 2027 now? Dan Goldberg: Yeah. I think we can probably give a sense of that. So, two things. We are still holding our launch schedule for our initial launch, so that is still being focused towards the end of this year. That hasn't changed. Then our expectation is our significant launch cadence will — because we're going to launch those first satellites, and as we said before, we're going to test them extensively before we start launching the rest of the satellites. By the time we launch the first two satellites, do the orbit raising, and then do the amount of testing that we and a bunch of our customers want to do, it'll be sort of mid next year where we kick off with the heavy launch schedule. So by the end of the year, we will have enough satellites in orbit so that we can launch full global commercial coverage, but we've slipped the date back a quarter — you still have to do the orbit raising and whatnot. For us to do full global coverage, that's about 96 satellites. So we should have 96 satellites at least in orbit by the end of next year, and then we're just going to keep going. And so that's the plan. Caleb Henry: Okay. And then on the Mil Ka — you talked about the spacecraft side. Can you share any updates on whether that requires any new gateway infrastructure? And then on the user terminal side, will those Mil Ka user terminals be available at the same time as the commercial ones, or where is that in the development cycle? Dan Goldberg: Yeah. Good question. The gateway — because I mentioned in the opening remarks that the spectrum that we use for the gateway frequencies isn't changing — the gateways are totally unimpacted. And then on the user terminal side, yes, there will be Mil Ka–compatible user terminals for a variety of different platforms — ships, planes, drones, manpacks — that will be available. One of the great things about operating in commercial Ka is that the Mil Ka is adjacent, and so the user terminal partners that we've already been working with — their flat-panel antennas, the modems, and whatnot — can accommodate the addition of the Mil Ka. We'll be engaging with all of our customers, defense and commercial alike, with a good family of advanced flat-panel antennas. And by the way, we talk a lot about flat-panel antennas. The parabolic antennas are still out there, and they are quite efficient, so those will be available too because they are good for certain applications. But yes, those will all be available when we go into service. Caleb Henry: Alright. Thank you. Desiree: Our next question comes from the line of Edison Yu with Deutsche Bank. Your line is open. Laura: Hey. This is Laura on for Edison, and thanks for taking my question. I want to follow up on that Canadian Arctic military communication constellation topic. Could you provide more sense on the backlog potential from both the Canadian military and the others? And any additional spend you anticipate not just from the spectrum perspective, but for overall efforts required compared to the baseline Lightspeed? Dan Goldberg: So on ESCaPE, first off, there's a lot of information about ESCaPE that's publicly available. It's been a program of record for the Department of National Defence here for many, many years. But I won't speculate just now on potential backlog impact, nor on impacts to our broader plan — whether that's spending or revenue profile and whatnot. We need to get through this contract negotiation with the Government of Canada. But I will say on backlog creation — less about ESCaPE, but just a broader observation — as I mentioned in our opening remarks, the pipeline of activities for Lightspeed is robust. And a lot of that right now in this environment relates to defense applications — defense and sovereignty applications. And because of that, we are very bullish about our ability to significantly grow our backlog for Lightspeed this year. Our expectation is this time next year, our backlog tied to LEO is fairly dramatically higher than it is today, with the caveat that we've got to sign these deals and with the caveat also that because many of those opportunities are government-related, government opportunities often have a life of their own in terms of closing them. But notwithstanding that, that's our expectation — that we will be closing significant opportunities for Lightspeed this year and that will have a very significant favorable impact on backlog for Lightspeed. Laura: Okay. Gotcha. Appreciate it. Thank you. Desiree: And again, if you would like to ask a question, press star then the number one on your telephone keypad. We do have our next question from the line of Walter Piecyk with LightShed Ventures. Your line is open. Walter Piecyk: Hey, Dan. On the spectrum change, this is probably a tactical, wonky question. I'm not fully understanding because if I went back to, I think it was in 2024 — as you may recall, I was asking about adding additional spectrums, and you referred to that as payloads. And I think at the time, you were like, for the first 198 satellites, the ship has sailed, and it didn't seem like — and I think I've asked this question a couple times on earnings calls — that you couldn't add spectrum because there was obviously some available that was out there to the constellation to broaden out the services. So I'm guessing there's something different because there's a swap out, or whatever it is. Can you explain why that's the case, or maybe if there's some update that, this late in the game, you can actually change the spectrum that's in the constellation? Dan Goldberg: Yeah. My recollection is when you and others have asked that question in the past, it's mostly been in the context of, like, a D2D — so, can you add spectrum for direct-to-device applications, whether that's L-band or S-band or C-band or whatnot. There, because that spectrum is so far away from the 28 gigahertz band that the commercial Ka band is in, you would need a different payload to transmit on those frequencies, and that would be a very significant change to the satellite. If we wanted to support our existing mission — broadband connectivity in Ka band — and add a direct-to-device payload, for instance, we would need a bigger satellite. It would be a very different thing. What's different here is the military Ka band — as I said, it's also in the 28 gigahertz band. It is contiguous with the commercial Ka band. So we've really just shifted the frequency plan up by 500 megahertz for the user link, and that's a pretty easy modification. So that's the difference. Dan Goldberg: You're talking to somebody who was a history major. If I had asked our CTO to explain it, you might not have followed us. No, I'm kidding. If we had the CTO get on, those guys drone on forever. Let's just hear on Amazon. It feels like there's a slower rollout. They're getting hazed a little bit by the FCC chairman about their rollout. For you guys, obviously with the progress, you're heading towards this first launch at the end of this year. My question is, because of what's going on at Amazon and your progress, have you found it easier to get the attention of some of these enterprise/government customers? Are you seeing more fluidity there in getting towards contracts than maybe six months ago — both from your progress and also perhaps from Amazon's lack thereof? Dan Goldberg: I won't comment on Amazon. We're certainly getting more engagement with the customer base, and I'd say particularly the defense, the government customer base. Part of that is we're just getting, as you point out, closer to being in service. A big part of it is demand for this kind of capability has grown dramatically over the last, call it, 12-plus months because of the changes in the geopolitical environment. Some of that's been a function of everybody seeing how the Ukraine hostilities have unfolded and how consequential access to Starlink is in a modern conflict. And when I say Starlink, I really mean an advanced LEO constellation that can support all sorts of things in a battlefield domain — whether that's flying drones, communications with forward operating units, fighter jets — all of that. Part of it is we're getting closer. Part of it is there's a much greater focus on the need to have these kinds of capabilities from a range of suppliers. I think all these governments want to be able to work with a range of different constellation providers, in part just to have more resilience, more diversity, less vendor lock — that kind of rationale. With respect to Amazon, as far as I can tell, they're coming. It's taken them, I think, longer than they had anticipated. They point to the lack of launch opportunities, and we understand that. But I think the forward progress and the traction that we're getting in the market has a lot less to do with their schedule and a whole lot more to do with the capabilities that we're bringing and this moment in time in terms of the geopolitical environment and what customers want. And then I've spoken a lot about defense, but these other verticals that we're focused on also are embracing LEO — whether that's aero, maritime, fixed enterprise, backhaul for MNOs. You're seeing significant traction with LEO. As we get closer to being in service, all of these things have been very favorable tailwinds. Walter Piecyk: That's very comprehensive. Thank you. And I'm hoping you're planning on some type of launch party because Florida's a lovely place to be in December, especially for us in the Northeast. Dan Goldberg: Florida is lovely, but our launches will be coming out of Vandenberg. Walter Piecyk: That's okay — California, that's fine. Even better. Dan Goldberg: We will be having a lot of launches in the next 18 months, so we'll have a lot of opportunity to celebrate that. Walter Piecyk: Awesome. Thank you. Dan Goldberg: Thanks. Desiree: That concludes the question-and-answer session. I would like to turn the call back over to our CEO, Dan Goldberg, for closing remarks. Dan Goldberg: Okay. Well, operator, thank you very much, and thank you all for joining us this morning. We look forward to speaking with you shortly when we release our first quarter results. Donald: Thank you very much. Desiree: Ladies and gentlemen, that concludes today's call. Thank you all for joining in. You may now disconnect.
Operator: Greetings, and welcome to the IZEA Worldwide Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, John Francis, Vice President, Sales and Marketing Operations. Thank you. You may begin. John Francis: Good afternoon, everyone, and welcome to IZEA's Earnings Call covering the Fourth Quarter of 2025. I'm John Francis, VP, Sales and marketing operations at IZEA -- and joining me on the call are IZEA's Chief Executive Officer, Patrick Venetucci; and IZEA's Chief Financial Officer, Peter Biere. Thank you for being with us today. . Earlier this afternoon, the company issued a press release detailing IZEA's performance during Q4 2025. If you would like to review those details, please visit our Investor Relations website at izea.com/investors. Before we begin, please take note of the safe harbor paragraph Included in today's press release covering IZEA's financial results and be advised that some of the statements we make today regarding our business, operations and financial performance may be considered forward-looking and such statements involve a number of risks and uncertainties that could cause actual results to differ materially. We encourage you to consider the disclosures contained in our SEC filings for a detailed discussion of these factors. Our commentary today will also include the non-GAAP financial measures of adjusted EBITDA and revenues excluding divested operations. Reconciliations between GAAP and non-GAAP metrics for our reported results can also be found in our earnings release issued earlier today and in our publicly available filings. And with that, I would now like to introduce and turn the call over to IZEA's Chief Executive Officer Patrick Venetucci. Patrick? Patrick Venetucci: Thank you, John, and good afternoon, everyone. At the end of 2024, the leadership team and I have made a commitment to accelerate our path to profitability. I'm pleased to announce that at the end of 2025, we delivered on that commitment. Year-on-year, we broke even increased cash, held managed services revenue relatively flat, excluding Hoozu, and grew our enterprise accounts faster than the market. We achieved a net profit swing of $18.9 million, which is not only a first for this company, but is a notable event in the context of microcap public company turnarounds. Annual revenue was $31.2 million, a 13% decrease that reflects a deliberate strategic pivot toward long-term profitability compounded by broader macroeconomic headwinds. During the year, we successfully exited international markets and off-boarded lower-margin SMB accounts to prioritize a high potential enterprise portfolio. These internal shifts coincided with government-induced disruptions as [ DOGE ] and trade policies negatively impacted our government and retail accounts. Looking at the fourth quarter, revenue was $6.1 million, down 45% year-over-year. More than half of this variance was a direct result of our strategic client rationalization, while the balance can be attributed to delayed bookings in the second half of the year on a few key enterprise accounts and a conservative holiday marketing environment. Despite these strategic shifts and external headwinds, Managed services revenue, excluding Hoozu, remained resilient, finishing the year down a modest 2%. This relative stability masks significant underlying growth considering our enterprise accounts expanded well above industry growth rates. As we've strengthened and expanded our relationships with enterprise clients, we've been rewarded with more business. We have successfully scaled five enterprise accounts beyond the $1 million threshold each delivering double or triple-digit growth. Having largely worked through the attrition of our legacy SMB accounts, we believe the client portfolio is close to being stabilized, allowing the higher growth potential of our enterprise business to take center stage. Our sales and marketing efforts are attracting new clients and our pipeline reached a new high for the year with invitations to larger pitches growing. Lastly, we produced new work for Stellantis, Warner Bros., Georgia Pacific, Denon and many other leading brands consistently delighting our clients. Our restructured cost base was instrumental in our return to profitability this year. We achieved a 40% reduction in total operating expenses, driving a significant turnaround in cash operating profit to $0.7 million a substantial recovery from last year's $11.1 million cash operating loss. This disciplined approach further strengthened our balance sheet, putting an end to the cash burn. By implementing advanced human capital management systems, we have institutionalized this cost discipline to ensure our profitability is both sustainable and scalable. Looking ahead, our strategy is centered on a few core pillars. We are building deeper vertical expertise and executing key account plans on our enterprise accounts to maximized value for these high-potential clients. We are refocusing our SMB efforts on boutique accounts, clients with franchise business models so that our solution frameworks are highly repeatable. We are investing in high-tier talents who can level up our capabilities in creator strategy, media and commerce, which our enterprise clients are demanding. At the same time, we are extremely active in M&A discussions searching for companies that can build these capabilities faster and accelerate the growth of our enterprise client portfolio. It's important to note that given our low operating margin, an acquisition could be instantly accretive. Operationally, we are preparing to launch a proprietary technology platform which will enable our account managers to manage integrated creator campaigns at enterprise scale efficiently and effectively. This platform is infused with AI and tightly integrated with our unified operating model. In summary, we've reset the company's economic model in 2025 by creating operating leverage beyond cost reduction establishing durable breakeven economics where future revenue growth is expected to translate directly into profitability. This work has positioned the company for long-term success with a more focused client portfolio, a stronger leadership team, an engaging culture, significant client opportunity and incredible possibilities with IZEA's technology platform. With all of this momentum and opportunity ahead of us I am optimistic about the future of this company and our ability to deliver additional value to all of our stakeholders, shareholders, clients and employees alike. With that, I'll turn the call over to Peter Biere, our Chief Financial Officer, for a closer look at the financial results. Peter Biere: Thank you, Patrick, and good afternoon, everyone. This afternoon, we reported our fourth quarter and full year 2025 results and filed our Form 10-K with the SEC. I'll focus today on the key drivers behind our operating performance add more color regarding our strategic repositioning and the resulting profitability improvement and provide an update on our cash position. All of today's comments exclude Hoozu, which we divested in December 2024. As Patrick described, we repositioned our business in early 2025 to prioritize larger recurring core enterprise accounts and reduce our exposure to lower margin project-based or high turnover client relationships. We refer to these collectively as noncore customers. Additionally, we reduced our annual cash operating costs in 2025 by over 40% and or $10 million, while increasing our investment in enterprise account management personnel where we're seeing growth. Overall, results show that we're on track posting positive cash from operations and breakeven net income for the year, both of which show significant improvement over 2024 results. Our strategic reset had a significant impact on 2025 contract bookings which declined by $10.3 million or 27% year-over-year. This decline reflects our intentional reduction in noncore customer activity, which accounted for the majority of the decline rather than weakness in our enterprise business. We ended 2025 with a $10.1 million contract backlog. Based on current pipeline opportunities and first quarter progress to date, we believe our bookings reset is largely behind us and expect to return to year-over-year bookings growth in early 2026. Given that revenue recognition for our managed services typically trails contract bookings by roughly seven months. 2025 revenue still reflected the runoff from noncore contracts booked prior to our repositioning, the majority of which concluded by the end of the second quarter of 2025. So we expect year-over-year revenue comparisons in the first half of 2026 to be lower, reflecting the absence of this noncore activity. We anticipate a return to year-over-year revenue growth in the second half of 2026 as revenue increasingly reflects our current mix of core enterprise engagements. Turning to results for the fourth quarter. Managed services revenue was $6 million, down from $9.8 million in the prior year quarter, reflecting our deliberate shift away from noncore accounts toward enterprise relationships. About half of the year-over-year decline relates to the expected runoff from noncore customers as a part of the strategic client rationalization, while the remainder primarily reflects the timing of bookings from several enterprise accounts and a more cautious holiday marketing environment. Operating expenses declined meaningfully to $4.4 million, down 40% year-over-year, driven primarily by lower sales and marketing spend and reduced employee and contractor costs, which reflect our structural cost reset. For the quarter, we reported a net loss of $1.2 million or $0.07 per share on 17.1 million shares outstanding compared to a net loss of $4.6 million in the prior year period or $0.27 per share on 17 million shares. This significant year-over-year improvement reflects the impact of our operating reset, improved cost structure and a higher quality customer mix. Adjusted EBITDA for the fourth quarter was negative $0.9 million compared to negative $2 million in the prior year quarter. As a reminder, in late 2024, we refined our non-GAAP definition of adjusted EBITDA to exclude nonoperating items, primarily interest income from our investment portfolio. And we restated the prior year amounts for comparability. A reconciliation of adjusted EBITDA to net income is included in the earnings release. We earned $0.4 million of interest income during the quarter primarily from cash balances held in a money market account following the maturity of all investment securities. And finally, we continue to operate with no debt on our balance sheet. In September 2024, we announced a commitment to repurchase up to $10 million of our common stock in the open market, subject to customary restrictions, which include regulatory limits on daily trading volume and company-imposed share price thresholds. Through December 31, 2025, cumulative repurchases totaled 561,950 shares for an aggregate investment of $1.4 million under the program. No shares were repurchased during the fourth quarter. We remain committed to a disciplined capital allocation approach, and we'll continue to evaluate repurchase activity in light of market conditions liquidity needs and alternative uses of capital. As of December 31, 2025, we had $50.9 million in cash and cash equivalents, a decrease of just $0.2 million from the beginning of the year. This compares favorably to the $13.1 million reduction in cash during 2024 and reflects improved operating performance and disciplined cost management. With $50.9 million in cash and investments at year-end, we believe we're well positioned to support organic business growth initiatives and pursue our strategic acquisition plans. Thank you for your time today. At this time, we invite our investors and analysts to share their questions so that we may provide clarity and insights. Operator: [Operator Instructions] And our first question today comes from Jon Hickman with Ladenburg Thalmann. Jon Hickman: So could you give us a little clarity on gross margins going forward? Kind of high [ accordingly ]. Patrick Venetucci: Yes, we don't give specific guidance, but I think we're on the right track. There's been an increase relative to the last couple of years. But more importantly, we really have our eye on net revenue. The real goal is to focus on growing the net revenue and keeping our cost structure aligned with that? Jon Hickman: Okay. And then kind of in line with Peter's comments about the first half of the year being lower than last year, but the second half being higher. In total, do you expect year-over-year growth in revenues? Patrick Venetucci: Yes, we're aiming for growth. I mean, this is a growth market. And so we're absolutely aiming for growth. Jon Hickman: Okay. And then one last question. You mentioned several times in acquisition strategy. So do you see like lots of targets out there? Is it lots of sellers? Or are things tight. Can you maybe elaborate on that? Patrick Venetucci: Sure. It's a very high priority. I'm spending a lot of time speaking with M&A targets. We're very active in the marketplace. As some of you know, I mean, this is my background. I've come from a space where I successfully was able to close quite a few deals in a short period of time. We're both tapping into my personal network of potential acquisition targets as well as working with quite a few investment bankers that specialize in this space. We're seeing good deal flow, and we're actively engaged at different stages of M&A. Jon Hickman: So to follow up. In the past, there's been kind of a big difference between private market values and public market values. Is that -- valuations an issue for you or [indiscernible]. Patrick Venetucci: I agree. There definitely is a difference in valuation. It's not an issue for us. I think it points out an opportunity for investors in terms of investing in IZEA, because the equity value is not exactly what we're seeing in the private markets for IZEA. However, from our perspective, I mean, we have enough cash to be able to buy at a fair market value. We're going to be disciplined. We're doing our homework and using various valuation methodologies and so forth and making sure that any investment that we make, we have certain, we're modeling out what our return on capital would be, and we have certain hurdle rates that we're striving to achieve. Jon Hickman: So are you interested in customers or technology, or both? Patrick Venetucci: Well, more customers, I mean, we've got ample technology. As you know, we shifted our strategy to be services first supported by technology. And so our acquisition strategy really reinforces some of the things we've been outlining throughout the year. Number one, the verticalization and enterprise accounts. So if there's an ability to add to our depth of certain verticals to add enterprise grade clients with recurring revenue and strong relationships. That's one area. The second area is capabilities. As I've also stated throughout the year, we're trying to increase our service offerings that we're able to sell to our enterprise client base. Having an integrated service offering is certainly part of our future. Operator: And your next question comes from Kris Tuttle with Blue Caterpillar. Unknown Analyst: I think one of the things that would be really helpful right now is you guys are obviously having a lot of terrific discussions with your clients and potential clients the last couple of months. I love an update on how are they thinking about IZEA in terms of their overall context? And not strictly speaking, competition, but going to creators directly or different strategies they might employ. I just love an update on how they're seeing you positioned relative to all the other things they have to consider and just some of your observations around that for this year. Patrick Venetucci: We -- there's a massive shift happening in marketing right now that we're catching the tailwind on. And that is as television audiences have been declining. In social media audiences, have been increasing. We're at what I've coined the social singularity, meaning that the audiences have flipped -- so social audiences are now larger than television audiences. And a lot of marketers are still structured to service the old system, the old way, which was it was television first. And they're struggling to be social first -- and the way to reach social audiences is through creators. Creators are essentially modern-day channels. And that's where IZEA comes in. I mean we're -- we provide those kinds of solutions to marketers. We help connect the brands with the creators. But we look at it more as a marketing partnership where we help them select and curate the right combination of creators. We cut the deals with them and that helps them reach the right audiences and connect with their consumers. Unknown Analyst: Okay. All right. I got it a little bit. And then one last point on just the -- when I looked at the enterprise value today, relative to the cash, it was quite low. And I'm wondering, like is that where you look in terms of deciding when to deploy some of that buyback, given the fact that you have M&A opportunities, but it wouldn't take a lot for the enterprise value to get close to 0 again. Patrick Venetucci: Yes. As in the past, we've been proponents of buybacks. Again, we believe that there's a lot of upside to this, and that's why we've done it in the past and continue to have a philosophy of doing buybacks at the right price. We're not coming out and staying in the specific price. But as I said before, I mean, we're looking at the market holistically and where we -- as John pointed out, there is a gap between what the private markets are valuing companies like ours and what the public markets are -- and so I think this is a great opportunity for investors. And with our capital, that's certainly one of our choices is to be an investor. And in the past, we've bought back. And if it continues to be that way, we'll continue to buyback. Operator: [Operator Instructions] Ladies and gentlemen, there are no further questions at this time. So I'll hand the floor back to John Francis for closing remarks. Thank you. John Francis: Thank you, Diego, and thank you, everyone, for joining us this afternoon. As a reminder, a replay of today's call will be available shortly on our website, izea.com/investors. We appreciate your continued interest and support, and hope you'll join us for our next conference call to discuss our first quarter 2026 results. Thank you so much. Operator: Thank you, and this concludes today's call. All participants may disconnect.
Operator: Good morning, everyone, and welcome to the Abeona Therapeutics Inc. full-year 2025 results conference call. At this time, all participants are in a listen-only mode, and the floor will be open for questions following the presentation. If anyone should require operator assistance during this conference, please press 0 on your phone keypad. Please note this conference is being recorded. During this call, we will refer to the press release issued this morning announcing the financial results, which is available on our corporate website at www.abeonatherapeutics.com. We anticipate making projections and forward-looking statements during today's call, which are made pursuant to the safe harbor provisions of the federal securities law. These forward-looking statements are based on current expectations and are subject to change. Actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors including, but not limited to, those outlined in our Form 10-K and periodic reports filed with the Securities and Exchange Commission. These documents are available on our website at www.abeonatherapeutics.com. Joining us on today's call with prepared remarks are Dr. Vishwas Seshadri, Chief Executive Officer; Dr. Madhav Vasanthavada, Chief Commercial Officer; Joseph Walter Vazzano, Chief Financial Officer; and Brian Kevany, Chief Technical Officer. After the prepared remarks, we will conduct a question-and-answer session. I will now turn the call over to Vishwas Seshadri to lead us off. Vishwas, over to you. Vishwas Seshadri: Thank you, Jenny, and good morning, everyone. We continue to see growing patient demand for ZivaSkin, the first and only autologous cell-based gene therapy for the treatment of adult and pediatric patients with recessive dystrophic epidermolysis bullosa, or RDEB. As a reminder, ZivaSkin was approved in April 2025, but our launch was delayed to Q4 2025 as we optimized a sterility test that was required for product release. Treating our first commercial patient this past December was a significant milestone for Abeona Therapeutics Inc., but 2026 is where the launch execution ramps up. We are not just looking at one-off successes anymore. We are focused on building a consistent cadence of biopsies, product delivery, and treatments. Since resuming manufacturing in late January, after our annual shutdown, we have treated one patient this quarter, biopsied three additional patients with treatment scheduled over the coming weeks, and expect to perform additional biopsies this month. All patient treatments and biopsies performed to date have come from the first two of our four qualified treatment centers, Lurie Children's Hospital in Chicago and Lucile Packard Children's Hospital at Stanford. As our third and fourth QTCs, which are Children's Hospital of Colorado and UTMB at Galveston, Texas, also begin to schedule their patients into upcoming biopsy slots, we anticipate a healthy cadence of patient biopsies in the coming months. This momentum provides Abeona Therapeutics Inc. an opportunity to demonstrate that the operational machine behind ZivaSkin works at scale from initial biopsy through final delivery. At the same time, we are hyper-focused on ensuring a seamless experience for every patient in the ZivaSkin treatment journey, and we are building a foundation of operational excellence that resonates with this close-knit RDEB community. We recognize that in this patient-driven market, providing a smooth journey is the most effective way to catalyze the organic demand needed to scale ZivaSkin in 2026 and beyond. To further elaborate on how our launch is gathering momentum, I will now hand the call to our Chief Commercial Officer, Dr. Madhav Vasanthavada, to review the commercial update. Madhav? Madhav Vasanthavada: Thank you, Vishwas. Hello, everyone. Demand for ZivaSkin continues to grow. We previously had reported that nearly 50 potentially eligible patients were identified across our initial qualified treatment centers and community-based physicians. Starting this year, we have deployed a field team that has been engaging with community physicians, and the number of identified eligible ZivaSkin patients has now grown to more than 100. While demand continues to grow, the speed at which identified patients receive ZivaSkin treatment has significantly varied during these initial months of launch, but the momentum is picking up. Since our launch in Q4 2025, two patients have been treated with ZivaSkin, three additional patients have been biopsied for treatment over the coming weeks, and we expect to biopsy additional patients this month. Currently, we also know of at least 10 more patients who are advancing through the administrative process and targeting the second quarter 2026 biopsy. As Vishwas mentioned, the patient treatments and biopsies until now have all come from the first two QTCs that were activated in the middle of last year. While it has taken a long time to move the very first patients through the funnel to treatment, we have not seen patient attrition during this process, and no payers so far have denied insurance coverage for ZivaSkin, reflecting the strong value ZivaSkin offers to this patient community. As QTCs and payers treat more patients and gain experience with the overall process, we expect the speed of patient treatment to go faster. Additionally, as the remaining two QTCs treat patients, we anticipate that the number of ZivaSkin treatments will grow in the coming quarters. Now, regarding activating additional QTCs for ZivaSkin, becoming a QTC is a multistep process. It starts with a dermatologist who is an EB specialist championing ZivaSkin at their institution and requires buy-in and sign-off from various functions and committees all the way to the level of CEO or CFO of that institution. Once the decision is made to become a QTC, several moving parts, including a master service agreement, trade policy, clinical training for biopsy and treatment, and registry protocols with IRB approvals must be put into place. That makes QTC onboarding a several-month process. Once the site is activated, it may then begin patient consultations for ZivaSkin, work with insurers to secure clinical authorizations and financial commitment for that individual patient, and then schedule patients for biopsy. As mentioned earlier, we have four QTCs activated, two have started treating patients, and the other two have patients that are moving through the administrative process to schedule a biopsy. In addition to the four current QTCs, we are actively working toward onboarding five additional centers and are in various stages of the site onboarding process. To ensure a geographically expansive footprint, our goal is to have at least seven QTCs active by 2026. Lastly, on the market access front, I would like to reiterate that all major commercial payers, including UnitedHealthcare, Cigna, Aetna, Anthem, and most Blue Cross Blue Shield plans, have published coverage policies for ZivaSkin, representing roughly 80% of commercially covered lives. ZivaSkin also has baseline coverage across all Medicaid programs for all 50 states. In addition, CMS has established a permanent HCPCS J-code for ZivaSkin effective 01/01/2026. We expect a J-code to be an important enabler for streamlined billing and reimbursement for QTCs. Ultimately, every step forward—every biopsy, every treatment, every positive patient story—strengthens our confidence in the impact ZivaSkin can have. We are energized by the early momentum and remain committed to delivering a seamless ZivaSkin experience. I will now pass the call to our Chief Financial Officer, Joseph Walter Vazzano, to discuss our financial results. Joe? Joseph Walter Vazzano: Thanks, Madhav. I would like to remind everyone that you can find additional details on our financial results for the year ended 12/31/2025 in our most recent Form 10-Ks. Starting with the statements of operations, total revenue for the year ending 12/31/2025 was $5,800,000. Total revenue includes $3,400,000 in license and other revenues and $2,400,000 in net product revenue. License and other revenues were primarily driven by a clinical milestone of $3,000,000 achieved in 2025 under our sublicense agreement for Rett syndrome with Taysha Gene Therapy. Net product revenue reflects the patient treatment in December. The patient treated was a Medicaid patient. We expect our average net revenues to normalize over time as the payer mix expands to include commercially insured patients. We received payment for this treatment in 2026. Cost of sales for 2025 was $1,500,000, primarily driven by the first commercial ZivaSkin treatment in December. Cost of sales also includes the costs from the August production batch that was not released due to technical challenges related to an FDA-mandated rapid sterility lot release assay. As more patients are treated, we expect our gross margins to increase significantly with better economies of scale related to production costs. Total research and development (R&D) spending for 2025 decreased $7,600,000 to $26,800,000 compared to $34,400,000 in 2024. This reduction was primarily driven by the April 2025 FDA approval of ZivaSkin, which resulted in certain production costs being capitalized into inventory, and engineering runs that are no longer classified as R&D expense. Selling, general, and administrative (SG&A) expenses for 2025 were $65,000,000, an increase of $35,100,000 over 2024. This increase primarily reflects Abeona Therapeutics Inc.’s commercial transition following the April 2025 FDA approval of ZivaSkin, including $18,600,000 in personnel and stock-based compensation and $2,300,000 in direct commercialization costs. Additionally, certain engineering and training expenses previously classified as R&D were transitioned to SG&A post approval. In May 2025, we sold our rare pediatric disease priority review voucher awarded following the FDA approval of ZivaSkin. The company recorded a $1,524,000,000 gain on sale from this transaction after receiving payment in June 2025. Net income was $71,200,000 for the year ended 12/31/2025, or $1.034 per basic and $1.10 per diluted common share. Net loss in 2024 was $63,700,000, or $1.55 loss per basic and diluted common share. As of 12/31/2025, cash, cash equivalents, and short-term investments totaled $191,400,000. With that, I will pass the call back to Vishwas for additional remarks before opening the call for Q&A. Vishwas Seshadri: Thank you, Joe. In closing, I want to reiterate that while 2025 gave us our first commercial proof of concept, 2026 is about solidifying our commercial blueprint. I am incredibly proud of the entire Abeona Therapeutics Inc. team, from our manufacturing and quality groups ensuring every lot meets our highest standards, to our commercial and clinical teams supporting our treatment centers. Every person in this company is focused on ensuring that the RDEB community's experience with ZivaSkin is nothing short of excellent. We are doing the heavy lifting now to get these foundations right, and I am confident that this collective focus on execution today is what will allow us to scale aggressively and deliver meaningful value in the quarters and years to come. We look forward to providing updates on our continued progress on our first-quarter 2026 conference call. With that, I will turn the call over to Jenny to open it up for Q&A. Thanks, Jenny. Operator: Thank you very much, Vishwas. At this time, we will be conducting our question-and-answer session. If you would like to ask a question, please press star 1 on your phone keypad now. A confirmation tone will indicate that your line is in the queue. You may press star 2 if you would like to remove your question from the queue. It might be necessary to pick up your handset before you press the keys. Please wait a moment while we poll for questions. Our first question is coming from Ram Selvaraju of H.C. Wainwright. Ram, your line is live. Ram Selvaraju: Thanks so much for taking our questions, and congratulations on all the recent progress. I was wondering if you could comment on the cadence with which qualified treatment centers are likely to be stood up in the coming months and any specific factors that might influence the speed with which that occurs, if you expect that pace to increase. And if so, what might be the specific contributing factors to that? Secondly, I was wondering if you could comment on the specific drivers of R&D spending over the course of 2026 and beyond and if we should expect R&D spend to modulate somewhat over the course of the coming quarters, or if in fact you expect any noteworthy increases over the remainder of 2026. Thank you. Vishwas Seshadri: Good morning, Ram, and thank you for the questions. Regarding the cadence with the QTCs and the speed of ramp-up, I think there are a lot of factors that go in. We have some preliminary viewpoint just beginning this quarter. I will turn it over to Madhav to articulate, knowing that our projections are based on the first two sites just about ramping up. Madhav, why do you not take that one? Madhav Vasanthavada: Thanks, Ram, for the question. So with regard to QTCs, as I mentioned, we are working with five centers, one of whom is imminent, and we expect to hopefully announce it in this coming quarter. And then centers are in varying stages of their onboarding process. Our goal is to have seven in total active by the end of the year. In terms of the aspects that drive the speed with which the centers come on board, there are various ones. Some centers wanted to obviously wait for ZivaSkin approval to take place before they invested additional resources. Some started looking at their payer mix, like the individual patients that are in their treatment pool to see what kind of payer mix exists, how many are commercially insured patients, and if Medicaid, what are the out-of-state Medicaid nuances there. And they essentially were also waiting to see coverage established. But now we have covered significant ground with regard to market access, having established coverage and these payer policies also in place. So that has given great confidence for these sites to initiate their process and speed that up. And then there are other factors with regard to institutional bureaucracies that exist with every institution, people getting to understand the cell and gene therapy units, because in the dermatology space, this is the first engineered cell therapy that we are moving to the treatment space. And so that requires greater cross-functional interaction. But we have learned a lot in onboarding the previous four centers, and our teams are doing a tremendous job in helping the upcoming centers to navigate that pathway and bring them to speed. So we think we are confident about having seven total. And if additional centers move faster, then yes, of course, we will be able to help them stand up sooner. I hope that gives some flavor. Vishwas Seshadri: And just to add to that, Ram, you said at steady state, what we anticipate is sites have communicated to us that one patient a month is kind of a cadence that we can definitely do. Some sites are saying perhaps two patients a month. So I think it is just a matter of we are projecting based on what we are hearing from the sites in terms of their plans and their patient visibility. We need to see that come through. I think we will be able to give more evidence-based cadence and the speed of getting there once we start seeing that steady state. We need to see three consecutive months of delivering that consistently. I think that is really what we are looking to get to by midyear. But as we also articulated, two of our four sites are yet to reach the point where they start layering their patients because the upfront setup time is what they are taking right now. Hopefully, that comes through in the second quarter, and we are able to show with data that, okay, sites are reaching their kind of cruise-control level of speed and, therefore, this is more predictable. So I hope that helps there. Regarding your second question about R&D spending, let me open it up to Joe first to just give a little bit, because we are so focused on ZivaSkin launch right now that our R&D spend is almost insignificant. But, Joe, why do you not go ahead? Joseph Walter Vazzano: Sure. Thanks, Vishwas. Yes, Ram, I believe the question was just drivers of R&D spend for 2026 and going forward. As you may recall, we have to do the registry study that was part of the FDA approval so that they, you know, track the registry. Study costs go into R&D, and then also the pipeline development costs will go into R&D. And, again, as I mentioned in the prepared remarks, there is a shift from R&D to SG&A just with the evolution of transition to a commercial company. But those two items that I mentioned are going to be the main drivers of R&D spend for 2026 and outer years. Vishwas Seshadri: Right. And also, to add—sorry. Go ahead, Ram. Go ahead. Go ahead. No. No. Go ahead, please. I was just going to say, as you know, we do have some preclinical programs. We are not spending a lot of energy and resources on those. It is kind of running in the background. We do not see preclinical programs to stack up R&D expenses in a significant way, at least in 2026. 2027 is a different story, and I think a lot of it is going to depend on the ramp-up speed of ZivaSkin and what we can bite into. So I think that is going to be a story that will evolve through the rest of the year. Ram Selvaraju: Just with respect to the qualified centers, I was wondering if you could comment on the relative coalescing or concentration of patients around those centers, and if you expect on a go-forward basis the bulk of new patients coming in to go through the first two treatment centers to be stood up, or if you expect some of the other treatment centers to be just as significant contributors to the overall number of patients coming on to ZivaSkin. Vishwas Seshadri: Yes, that is a great question. Go ahead, Madhav. Madhav Vasanthavada: We expect them to have a good, decent pool of patients similar to the currently stood-up centers, Ram. And our strategy right now, just to expand on your question, is very clear. It is a three-pronged approach that we are taking. One is to have patients that are in these qualified treatment centers. We want to place them on ZivaSkin therapy as soon as possible. The second is to focus on the community physicians who already have indicated they have patients that are motivated and would be eligible for ZivaSkin treatment. We want those referrals to be the second tranche. And in parallel, as we look to stand up these additional centers, that is going to pancake on top of the first two-pronged approach to have their own pool of patients. Our approach is to make sure that the centers are as geographically spread as possible, because that also obviously will help with the travel, etc., for the patients and their families, let alone payer barriers that will be easier to overcome once you have more centers that are geographically spread. So we anticipate some of these centers who have the infrastructure, who have the EB centers of excellence, etc., to bring their own set of patients as they get activated. Ram Selvaraju: Thank you. Operator: Thank you very much. Our next question is coming from Maury Raycroft of Jefferies. Maury, your line is live. Maury Raycroft: Hi, thank you. Congrats on the progress, and thanks for taking my questions. I had a question on the QTCs as well. So it sounds like currently, the QTCs are able to manage about one or two patients per month. Just wanted to clarify that. And what do you expect the cruise-control state to look like? I guess, how many patients per QTC do you think you are going to be able to get at sort of a maximum capacity at these initial sites? I will start with that one. Okay. And can you also just comment on the current timeline from receipt of START form to treatment initiation? What does that timeline look like? And then could that become more efficient over time as well? Yep. That makes sense, and that is helpful. Maybe last quick question, and I will hop back in the queue. Just if you can comment on, based on the demand ramp that you are seeing, how confident are you in achieving profitability for the company this year? Madhav Vasanthavada: That is correct, Maury. One or two patients a month. We think that their ability to ramp up is really dependent on the sites. Certain institutions have demonstrated performance to be able to have a greater number—even go up to three patients a month—which will really depend on what their experience has been like with regard to their resource allocation and the nursing staff that have to care for the patient post operating procedures. But for the most part, we expect one or two patients a month in the foreseeable future. We will have to see how that ramps up as their overall process experience looks like. Vishwas Seshadri: The current timelines are very variable. It depends on various factors. But if I were to average ballpark, it is more like a four- to five-month process, of which 25 days is manufacturing time. That is very much a hard fix there. So four to five months, and that includes roughly one month of manufacturing. And we expect that to improve over time. I am glad you asked this question, Maury, because another factor here is you mentioned the START form. I would say from the point of identifying a patient to when they receive treatment, because the START form is something that we are seeing has a lot of variation in when a site puts that form to us. Some sites do it soon after an identified patient is either referred or they have had a consult, and some sites wait until the entire payer process takes place and then put the START form. So it is a very variable input as to what point in the patient's journey we receive that. What Madhav is describing here as approximately five months is when there is a consult that happens and the patient intends to get ZivaSkin and that conversation has happened. The first few patients took about five months all the way to get to the treatment, whereas we are seeing that process is going to shorten over time because the administrative part of this is getting more efficient as a given site has been through two or three patients. We believe that we have a pretty good chance of achieving profitability. If you define it as an entire company-level profitability, there are numerous factors that you already know. We have mentioned that anything north of three patients a month takes us to the profitable zone, which is, you know, $100,000,000, give or take, about the company burn in a given year. So if you use your gross-to-net calculations, 3.5 or more per month is taking us to the profitable zone. I think this is a very achievable target. There are some uncertain factors as to how the third and the fourth sites are going to achieve their speed and reach cruise control, and also how quickly we are bringing additional sites on board and then up and running. So I think these are a couple of variables, but we feel this is a pretty reasonable goal. Maury Raycroft: Got it. Okay. Thanks for taking my questions. Operator: Thank you very much. Our next question is coming from Steven Willey of Stifel. Steven, your line is live. Steven Willey: Good morning. Thanks for taking the questions, and congrats on the progress. Has the target number of QTCs that you want to bring online over the longer term increased at all? I know you have some early experience on the referral front. I am just curious if you are finding that it might be logistically easier to activate more of these centers as opposed to trying to increase the band of referrals. Okay. So when you say—oh, go ahead. Sorry. Just one clarification: when you say you are actively onboarding five additional centers, that does not include the two that have recently signed up, Colorado Children's and UTMB. Understood. Then is there just anything you can talk about on the reimbursement side specifically as it pertains to preauthorization? And just curious if payers are pegging themselves to inclusion/exclusion criteria from the Phase 3. Is it pegged to the label? Just any color there would be helpful. Okay. And then just lastly, I think you mentioned that there is, I believe, another 10 patients or so that are targeting biopsies for next quarter. Can you just speak to how those patients are distributed against the two QTCs that are already treating patients versus Colorado and UTMB that you will be activating here shortly? Vishwas Seshadri: Our target QTC number, Steven, has been five to seven, and we do think that seven this year is a realistic goal. That does help with certainly the bandwidth within the qualified treatment centers as well as just increasing the footprint overall. We think we will have more outlets for patients to get treated. We are going to be working towards bringing these centers on board. But in the meantime, of course, as the various community physicians have patients, we want that healthy awareness and healthy enthusiasm from all of the other physicians also, so that in the longer term, that is really where we will rely on these community physicians to funnel their patients into the qualified centers. So that is really our approach. Our target centers right now are seven. And as I said, we have more centers that are working with us and would like to be activated. So if we have more treatment centers, then certainly that only adds more to the process and even the logistics. As Madhav explained, the QTC onboarding process itself can take several months. So while we talked about five additional centers beyond the four that we are working with, which are already activated, giving you a bigger number, we anticipate that some of those may spill over to even next year because it is a lengthy process. But we are definitely looking to have seven activated sites this year. Correct. Madhav Vasanthavada: We are seeing a mix—definitely to inclusion/exclusion criteria—given the high-cost nature of the product. They want to make sure that their initial set of patients are guided to the inclusion/exclusion. But then we also have major plans like UnitedHealthcare and many of the Medicaid states also looking to have coverage that are favorable to the label criteria. So it really depends on the plans. But regardless of the criteria, what we are seeing is with letters of medical necessity, physicians have been able to overturn the requirements. For instance, if there is an age—age is one major that you are seeing in the sense that six years and above was our inclusion criteria—but for patients that are less than six, physicians have been able to overturn that. Also, with regard to squamous cell carcinoma and their presence in the body location, that is also one of the factors that physicians have been able to overturn and get the patients onto the product. So as more patients go through the process, in terms of the overall timing, that is also improving because letters of medical necessity and the templates that are required—those templates are getting populated. For future and subsequent patients, for processes that are unique to ZivaSkin, we are seeing that time also improve at the QTCs that are already treating patients. So that is really the reimbursement process. These inclusion/exclusion criteria do not prevent a patient from getting reimbursed eventually with all these additional steps that we are taking. So even if the plan has that kind of restriction, we are able to work through that and get patients reimbursed. It is across all of the four QTCs. Steven Willey: All right. Thanks for taking the questions. Operator: Thank you very much. Our next question is coming from Kristen Kluska of Cantor Fitzgerald. Kristen, your line is live. Kristen Brianne Kluska: Hi. Good morning, everybody, and thanks for all of this specific color this morning. I wanted to ask about the dialogue or the relationship between the QTCs themselves. It sounds like Stanford and Chicago, being the first two, are kind of paving the way here, having a little bit of additional time to get things on board. Are they working with the additional two QTCs just to be a sounding board and help as everybody familiarizes themselves with this process? Okay. And then, as we think about the fact that some additional biopsies are already scheduled, and we have two weeks left in Q1, should we be conservatively modeling that these are more likely to come in Q2 versus the current quarter? And then it sounds like we will get one more QTC pretty quickly and another two maybe before the end of the year. How are you thinking about dispersing throughout geography in the country, and how has that played an impact so far about getting patients on board and the ability to travel to these sites, etc.? Madhav Vasanthavada: They are not that we are directly aware of. We certainly know it is a tight-knit physician community, so they do talk to each other in terms of sharing best practices as well as administrative steps. Plus, our teams are also actively working with them and helping them cross-pollinate the best practices. Vishwas Seshadri: We expect one for this month, Kristen. But, of course, until the biopsy is done, we do not know. We do not see a reason why there should be any attrition or a drop-off, but it is for this month that we expect additional biopsies. Our goal is to have a geographically dispersed footprint. Clearly, you can see that the Eastern Seaboard is an important area for us. So if we have a center in that region, I think that will certainly help with patient access. These patients, for other reasons with their other comorbidities, do travel significant distances to get therapies. We do not really think that even five or seven is going to impede their ability to travel for ZivaSkin. But, of course, as more centers come on board, that is definitely going to be a positive thing. Also, the flexibility that it offers—right now, certain patients, and I am not saying this is true for every patient, crossing state borders have extra paperwork to go through Medicaid. There are more bureaucratic steps. Those things will also be streamlined a little bit by offering more choice and flexibility on where they can get treated. So that is really what we are also excited about. Operator: Thank you very much. Our next question is coming from Jeff Jones of Oppenheimer. Jeff, your line is live. Jeffrey Michael Jones: Good morning, guys, and thanks for taking the question. Maybe the first one on manufacturing. How comfortable are you at this point that the sterility testing is well behind you now? And just a reminder, if you would, on current production capacity and then the expansion plan of that capacity through the year. And then the second one, maybe on patient and physician feedback now that you have treated patients in the commercial setting. What is the feedback you have been getting from physicians and patients on the overall experience? Vishwas Seshadri: Thank you, Jeff. So your first question is about manufacturing, the sterility test—whether that is behind us and how we are ramping up capacity. We do have our CTO, Dr. Brian Kevany, on the call. Brian, can you take that one, please? Brian Kevany: Thanks, Vishwas. As a reminder, we had a very healthy dialogue with the agency around the sterility assay issue. That was a very productive conversation with the agency, and we do feel that the resolution that came out of that is the solution going forward. We will continue to always look to ways to improve our manufacturing and testing process, but we do feel very confident that the resolution that came out of those discussions is going to support us going forward. As it relates to production capacity, currently, we are running at a cadence of six patients per month within the facility and continue to develop the space to be capable of reaching that 10-patient-per-month capacity that we have previously discussed throughout the rest of this year. All of those activities are on track to meet that goal, and it is actually lining up very well with onboarding the additional QTCs to maintain a steady level of supply for those sites as they come on board. Vishwas Seshadri: And I just wanted to also add on the sterility topic, Jeff, which is we have done a lot of work trying to minimize the probability that that problem occurs again. Whether we can go, say, 40 runs or 50 runs and never see this problem happen again—that is only going to be empirically proven. But all our feasibility studies point out that the probability is significantly reduced by at least a log order or more. That is what gives us the strength. But we are not stopping at that. Whatever we have implemented as an improvement to reduce those false positives, we are not stopping at that. We are also doing the next-generation rapid cellular redevelopment alongside this so that we can get to an even better level. When you say R&D, we are always thinking about pipeline. There is a lot of lifecycle management R&D that goes into optimizing ZivaSkin. That is really where some of our teams in the quality function are focused on. And as Brian said, we are already operating at six manufacturing runs a month cadence. With the current demand, it is keeping up, and that is going to be ramped up to about 10 a month by the second half of the year. The second question that you asked was about the patient and HCP feedback on the current treatment. I will just preface this by saying that there are only two patients that have been treated, and there is not enough time that has passed along, because you remember even our endpoints and assessments happen at six months. This is a therapy with a durability play. I do not know if we have enough feedback, but I will open it up to Madhav to see what he has on that. Madhav Vasanthavada: Nothing more to add, Vishwas, to what you have said at this point. Vishwas Seshadri: Overall, when we talk to doctors and they say, “Oh, that patient is doing well,” what does that really mean? Are you talking about wound healing, or are you talking about general health of the patient? These are things that we do not really know. So it is too premature to comment on that. Jeffrey Michael Jones: Alright. Appreciate it, guys. Thank you. Operator: Thank you very much. Our next question is coming from David Bautz of Zacks Small-Cap Research. David, your line is live. David Bautz: Hey. Good morning, everyone. Thanks for the update this morning. So I have a couple of questions about the patients that you have already treated. First off, are you aware if they were also simultaneously being treated with VYJUVEK, say, maybe for their smaller wounds, if they had any? Do you anticipate the need to retreat either of those patients later in 2026? And then are you aware if there are any exclusions for retreatment, say, if any of the payers have restrictions on the ability to get retreated? Vishwas Seshadri: Go ahead, Madhav. Madhav Vasanthavada: We do not know the wound-by-wound related question. What we do know is that these patients were not simultaneously on VYJUVEK. That is the information we have. With regard to their prior history of VYJUVEK, we think that most of these patients have received VYJUVEK at some point in their journey. Your second question with regard to retreatment: based on the physician feedback, these patients have significantly large wound areas, and physicians have said that, yes, these patients would require a second round of the ZivaSkin treatment. We do not know if that is going to be this year or if this is going to be next year or at some other point, because these initial set of patients and the foreseeable future—these patients have large areas of their body that require several areas to be treated. The third one with regard to exclusion: no, we do not see exclusion criteria with regard to a retreatment of a patient, which is really something we are very pleased to see—that payers are not blocking ZivaSkin for once in their lifetime. That is encouraging. If we do have a patient that requires a retreatment of a previously treated ZivaSkin area, then it really depends on what the payer policies there would look like. But we are not seeing any kind of a blockade based on the policies that have been published. David Bautz: Okay. Great. Appreciate you taking the questions. Operator: Thank you very much. We have now reached the end of our question-and-answer session. I will now turn the call back over to Vishwas for his closing remarks. Vishwas Seshadri: Thank you, Jenny, and thank you, everyone, for joining us today for the earnings call. We will talk to you again soon. 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.
Operator: Good morning, ladies and gentlemen, and welcome to the Natural Gas Services Group, Inc. fourth quarter earnings call. At this time, all participants are in listen-only mode. Operator assistance is available at any time during this conference by pressing 0#. I would now like to turn the call over to Anna Delgado. Please begin. Anna Delgado: Thank you, Luke, and good morning, everyone. Before we begin, I would like to remind you that during the course of this conference call, the company will be making forward-looking statements within the meaning of federal securities laws. Investors are cautioned that forward-looking statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements. Finally, the company can give no assurance that such forward-looking statements will prove to be correct. Natural Gas Services Group, Inc. disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Accordingly, you should not place undue reliance on forward-looking statements. These and other risks are described in yesterday's earnings press release and our filings with the SEC, including our Forms 10-K for the period ended 12/31/2025 and our Forms 8-K. These documents can be found in the investors section of our website located at www.ngsgi.com. Should one or more of these risks materialize or should underlying assumptions prove incorrect, actual results may vary materially. In addition, our discussion today will reference certain non-GAAP financial measures, including EBITDA, adjusted EBITDA, and adjusted gross margin, among others. For a reconciliation of these non-GAAP financial measures to the most directly comparable measures under GAAP, please see yesterday's earnings release. I will now turn the call over to Justin C. Jacobs, Chief Executive Officer. Justin? Justin C. Jacobs: Thank you, Anna. Good morning, everyone. Joining me today is Ian M. Eckert, our Chief Financial Officer. To start, I want to once again thank the entire Natural Gas Services Group, Inc. team for their continued dedication and hard work. Our results this year reflect the efforts of the entire organization. I especially want to recognize our field team. Their commitment to delivering exceptional uptime and reliability for our customers continues to be a defining strength of this company. As a result of our team's strong execution, Natural Gas Services Group, Inc. delivered another great quarter and record full-year results in 2025. This performance also marks the third consecutive year in which we have taken market share in the rental compression industry. Our continued growth reinforces Natural Gas Services Group, Inc.'s position as one of the fastest-growing rental compression companies and as we enter 2026, we feel confident in our ability to drive further improvements and to continue to increase shareholder value. Moving to our operating and financial performance in the fourth quarter and full year, we reached record levels of rented horsepower and utilization in 2025. Rented horsepower increased to approximately 563,000 by year-end 2025, a 14% increase over the prior year. Fleet utilization reached 84.9%, another high watermark for the company. The fourth quarter rental revenue totaled $44.3 million, up roughly 16% year over year, reflecting continued fleet expansion and strong demand for large-horsepower compression units. Adjusted EBITDA was $21.2 million for the quarter and $81 million for the full year, both records for Natural Gas Services Group, Inc., and the full-year number was at the high end of our guidance range, and I would note that we increased guidance three times during the course of the year. We also started our return of capital program in 2025. During the second half of the year, we initiated our inaugural dividend and subsequently increased it by 10% with the fourth quarter issuance. In total, approximately $2.6 million was returned to shareholders in the second half of the year. This reflects our confidence in the durability of our cash generation and our disciplined capital allocation strategy. Overall, our strong performance continues to be driven by fleet expansion, operational execution, pricing improvements, and the continued mix shift towards large-horsepower compression units. Our strong year-over-year performance demonstrates the continued growth underway at Natural Gas Services Group, Inc. During 2025, we added approximately 70,000 horsepower, with more than half deployed in the fourth quarter. Large-horsepower electric units represented approximately 30% of those additions. Looking ahead to 2026, we expect this continued momentum. We are currently contracted to deploy 50,000 horsepower of new large-horsepower compression units distributed relatively evenly throughout the year. Electric motor drive units are again expected to represent a similar percentage of the total horsepower additions as 2025. As we have consistently communicated, our growth investments remain focused on large-horsepower and electric units, which generate higher returns and typically carry longer contract durations. At the same time, we remain committed to a capital allocation framework that combines organic growth, shareholder return of capital through dividends and share repurchases, and disciplined evaluation of strategic M&A opportunities. Importantly, Natural Gas Services Group, Inc. continues to maintain leverage on the low end of our public compression peers, which provides us the flexibility to be offensive regardless of market conditions while also returning capital to shareholders. Turning to the broader market environment, demand for natural gas compression remains very strong, primarily driven by domestic oil production, particularly in liquids-rich basins such as the Permian. Looking forward, we see the benefit of several tailwinds, including increasing LNG export capacity and growing electricity consumption from data centers and AI-related infrastructure. We expect these structural changes to drive growth for at least the next several years. We are also monitoring geopolitical developments, including evolving policy and supply dynamics in Venezuela and Iran. While the ultimate impact on global oil markets and U.S. production activity remains uncertain, we continue to evaluate these developments closely. Additionally, lead times for new large-horsepower compression equipment remain long. The lead time for certain components on certain models is stretching well beyond one year. These conditions support continued pricing strength, high utilization levels, and attractive long-term growth opportunities for compression providers. Within this environment, Natural Gas Services Group, Inc. continues to win market share due to our high-reliability equipment, industry-leading service quality, strong customer relationships, and balance sheet flexibility. I will move next to the specific growth and value drivers that continue to support the strong performance of Natural Gas Services Group, Inc. First, fleet optimization. We continue to see strong performance in rental revenue per horsepower, which increased approximately 3% in the fourth quarter compared to the prior year. This improvement reflects new unit deployments, contract renewals with increased rates, and the ongoing mix shift towards large-horsepower units. A record horsepower utilization of 84.9% demonstrates the strong demand environment for our fleet. In addition, we are investing significant time to improve the collection and use of data in all aspects of our business. For our units in particular, these investments will further improve uptime, optimize gas flow, and will support predictive maintenance across our installed base. Second, asset utilization. In the fourth quarter, we received confirmation of $12.3 million of the income tax refund and associated interest, which was received in 2026. This represents the successful monetization of another material non-operating asset. We were very pleased to finally receive the bulk of this receivable, which represents approximately $1 per share. We also continue to pursue the monetization of real estate assets, including the listing of our Midland office property. Third point is fleet expansion. 2025 represented a significant year of fleet growth, and we entered 2026 with substantial contracted deployments already in place. All new units being deployed are large-horsepower compression equipment, including electric motor drive units. Finally, we continue to evaluate strategic and accretive acquisitions. Natural Gas Services Group, Inc. remains well positioned to pursue disciplined M&A where it complements our existing operations and enhances shareholder value. With that, I will turn the call over to Ian to review our financial results and balance sheet in more detail. Ian M. Eckert: Thank you, Justin, and good morning to everyone joining us today. As Justin emphasized, the Natural Gas Services Group, Inc. team delivered a very strong year for our shareholders, reflective of significant fleet expansion and strong operational performance. To recap the full year 2025, rental revenue totaled $164.3 million, representing an increase of $20.1 million, or 14% year over year. Total revenue reached $172.3 million, increasing $15.6 million, or approximately 10%, compared to 2024. Total revenue growth was lower than rental revenue growth due to our exit from the Midland fabrication operations and our broader strategy to migrate away from non-core, low-margin fabrication activities. Adjusted rental gross margin totaled $99.6 million, an increase of $12.3 million, or 14%, year over year, reflecting continued growth of our rental fleet and improved pricing. Fourth quarter adjusted rental gross margin improved 1.6% sequentially to $25.9 million. During the fourth quarter, our adjusted rental gross margin percentage was 58.5%, which declined roughly 300 basis points compared to the third quarter and was well below our expectations. All of this decline relates to a physical inventory adjustment recorded during the fourth quarter. Importantly, it does not reflect the ongoing economics of our business. In fact, as we move into 2026, we expect continued adjusted rental gross margin percentage expansion beyond the 2025 figure of 60.6%. This is driven by new large-horsepower unit deployments, operating leverage from our growing horsepower base, and ongoing cost discipline. For the year, adjusted total gross margin was $100.5 million, representing a 14% increase year over year. Net income totaled $19.9 million, or $1.57 per diluted share, representing record performance for the company. I would like to point out a few discrete items included within our 2025 results. First, we recorded a $2.6 million non-cash impairment charge related to our Midland headquarters property as we prepared the building for sale and began transitioning to an alternative leased office space. Second, we recognized $2.4 million in interest income during the fourth quarter, a result of the IRS confirming refund and interest amounts associated with our income tax receivable. And finally, our effective tax rate for 2025 was 24.9% compared to 20.5% in 2024. This increase is primarily attributable to higher state taxes resulting from changes in state apportionment. Looking ahead to 2026, assuming our operational footprint remains generally consistent, we expect our effective tax rate to be approximately 25%. Turning to the balance sheet, our income tax receivable increased to $14.1 million during the fourth quarter reflecting the IRS confirmation of the refund and interest amounts owed to the company. Of this amount, $12.3 million was received during 2026, leaving approximately $1.8 million outstanding, which relates to the 2019 tax year. As mentioned earlier, we recorded an impairment associated with our Midland office facility. While the building remained in use at year-end, we expect it to be reclassified as assets held for sale during 2026 once the applicable accounting criteria are met. From a capital spending perspective, full-year capital expenditures totaled $121.5 million, of which approximately $109.8 million is associated with growth capital expenditures for new large-horsepower compression units. This placed our growth capital spending at the high end of our guidance range and reflects the continued expansion of our fleet to support strong customer demand. As Justin mentioned earlier, 2025 also marked the initiation of our dividend program, with $2.6 million returned to shareholders during the second half of the year. We ended the year with strong liquidity and ample borrowing capacity, and our leverage remains at the low end of our public peer group, positioning the company well to support continued fleet expansion, shareholder returns, and acquisitions. In summary, our operating performance continues to translate into growth in adjusted EBITDA, strong operating cash flows, and increasing scale across the business. At the same time, we remain disciplined in our capital allocation approach, investing in high-return fleet expansion while maintaining a strong balance sheet and returning capital to shareholders. With that, I will turn the call back to Justin for 2026 guidance and closing remarks. Justin C. Jacobs: Thank you, Ian. We enter 2026 with record fleet utilization, significant contracted horsepower deployments, and a very active quoting pipeline. Based on this visibility, we are providing adjusted EBITDA guidance for 2026 of $90.5 million to $95.5 million. We expect continued organic growth in 2026 driven by large-horsepower deployments, expanding customer relationships, and sustained industry demand for compression services. In 2026, we expect growth capital expenditures in the range of $55 million to $70 million, which represents an increase of approximately $5 million at the low end of our prior expectations. This comes on top of hitting the high end of our range for growth CapEx in 2025. The 2026 increase, combined with the 2025 actual performance, shows that we continue to win new contracts to drive organic growth. Based on the forward growth capital guidance now provided by our public peers, 2026 will mark the fourth consecutive year that Natural Gas Services Group, Inc. has captured market share organically. The streak is a testament to the strong competitive position we have in the market. Maintenance capital expenditures are expected to be in the range of $15 million to $18 million in 2026. Our 2025 maintenance capital came in at the low end of the guidance range, so we expect a little spillover in 2026, coupled with the capital requirements of a growing fleet. In closing, Natural Gas Services Group, Inc. delivered record results in 2025. We achieved record rented horsepower, record fleet utilization, and record adjusted EBITDA. Looking forward, we believe the company is well positioned for continued growth and market share expansion. Structural tailwinds for the compression industry remain strong, including LNG export growth, increasing natural gas power demand, and rising electricity consumption driven by data centers and AI infrastructure. Combined with our strong balance sheet and operational execution, these factors position Natural Gas Services Group, Inc. to continue investing in growth, increasing EBITDA and earnings, returning capital to shareholders, and pursuing strategic opportunities. Luke, we are now ready to open the call for questions. Operator: Ladies and gentlemen, at this time, we will conduct a question-and-answer session. If you would like to state a question, please go ahead and press 7 on your phone now, and you will be placed in the queue in the order received. You can press 7 again at any time to remove yourself from the queue. We are now ready to begin. Our first question comes from Jim Rollyson with Raymond James. Go ahead, please. Jim Rollyson: Hey. Good morning, guys, and nice job and great finish to a pretty strong year here. Justin, in the press release, and I think Ian mentioned this, you mentioned large horsepower and electric motor drive assets are expected to expand rental gross margins. Maybe a little context, relative to the 60.6% number you printed in 2025, what is the kind of guidance range embedded as far as margins go? Ian M. Eckert: We have not given, historically—nor are we going to at this point—specific guidance on adjusted rental gross margin percentage or gross margins overall. As we look at that 60.6% for 2025, we do expect uplift from that. Generally, in past quarters, we have described margins in the low sixties, and that is our expectation going forward. So I would expect to see some modest uplift from that, and beyond the current mix shift, looking further out, we would like to see that number keep ticking up. Jim Rollyson: Thanks for the color. Appreciate that. And then as a follow-up, a bunch of your peers have talked about extended lead times, especially for Cat, talking 110 to 120 weeks, which is more like two years instead of one. I know you guys have—historically, at least recently on the large-horsepower side—been a big fan and customer of Waukesha. But maybe you could talk about what you are seeing in lead times with them and, generally, what is the current bottleneck across engines, compressors, fabrication, etcetera. Just kind of how that sets up for you specifically. Justin C. Jacobs: Yes. What we are seeing in the lead times is particularly at the high end of the large horsepower from our perspective of what we offer in the fleet. That is where you are seeing those 100-plus weeks. As we look in horsepower below that, but still well in large horsepower, we have not seen significant changes over the past three to six months and certainly nothing like what we have seen specifically from Caterpillar at that high end of the range of our fleet. As we look at the other major components and the fabrication space, generally, I would say there is not a lot of change since three to six months ago. It is probably creeping out a little bit. But the 100-plus week, that is tied to engines at the high end of the range. Jim Rollyson: Got it. Appreciate that. I will turn it back. Thank you. Operator: Thank you, Jim. Our next question comes from Nate Pendleton with Texas Capital. Nate Pendleton: Good morning. Congrats on the strong quarter. Can you share your thoughts on how the competitive environment evolves with the new large-horsepower units being so delayed, as you just talked about? And maybe how that can manifest for you guys as far as pricing and the potential M&A market due to that tightness? Justin C. Jacobs: Thanks for joining, Nate. It is a rapidly evolving landscape, particularly at the high end of the horsepower. If you look back to not just our call, but our competitors'—our public competitors'—calls in the third quarter, the lead times for that high end were up around half the number that it is at today. There are a number of different ways that we are able to address that. One is, as a percentage of our fleet overall, that longest lead-time item, we certainly have a good quantity of those units, but it is far from a majority of our large horsepower. And so in some of those still significant size equipment, but less than the high end, the lead times are significantly less than 100 weeks, and that provides us an ability to continue our growth and meet customer needs. In terms of the impact in M&A and other, I think it is too early to really look at that. This is a relatively recent and pretty material change in the competitive landscape. Nate Pendleton: Understood. And then, perhaps for Ian, I know you have been really involved in some of the blocking and tackling that goes on behind the scenes to deliver the improving results we have seen quarter after quarter. Can you talk about maybe some of the areas of opportunity that your team has been working on from your perspective and maybe how that might manifest in the financials going forward? Ian M. Eckert: Yes. Sure, Nate. Thanks for joining the call today. So I am going to start with that physical inventory adjustment in the fourth quarter. As part of that process, we identified a number of capability and process gaps within our warehouse operations. Importantly, we have already taken decisive actions to address those areas, and that includes targeted personnel changes and implementations of best practices across our inventory management processes. And while that is a one-time impact in the fourth quarter, I think those actions that were taken ultimately help us as we move into 2026. As those warehouse operations continue to mature, we expect to realize improved efficiencies and some degree of cost savings, which should ultimately help to support margin expansion going forward. Nate Pendleton: Got it. Thanks for taking my questions. Justin C. Jacobs: Thanks, Nate. Operator: Thank you very much. Our next question comes from Selman Akyol with Stifel. Selman Akyol: Thank you. Good morning. A couple quick ones for me. As you think about the environment and the competition, and you noted the longer lead times for the extremely high horsepower, is that giving you an opening at all to move beyond gas lift more into midstream? Are you seeing any opportunities for that? Justin C. Jacobs: Good morning, Selman. Thanks for joining. I have spoken on a number of the recent calls that when you look at our larger horsepower that is in centralized gas lift, and you look at our large horsepower overall, we do not have any material applications in the midstream at this point. That has been a targeted area for us to focus on to add to our existing business. I can say that it is still early for us, but that we are seeing at least quoting activity in that area, and that it is up to us from an execution perspective to be able to go out and win that business. So it has been a focus area not just because of recent lead times, but because we think—and have thought for a number of quarters—that is an opportunity for us because of the similarity of the equipment. Selman Akyol: Is that just a matter of pricing, or is it you need to get your first customer and then sort of prove you can do it in the reliability, and then you think more comes pretty rapidly. Does that make sense? Justin C. Jacobs: It does make sense. I think if you look at the evolution of our business, not over the last couple of quarters, but going back several years, we are reasonably new entrants into the 1,000-plus horsepower package market. Our first 35/16s are north of 30—north of 1,000 units—are kind of 2018, 2019 time frame. We first got into that business with Occidental Petroleum. Obviously, they are now our largest customer. We now have a material number of customers—Devon Energy—where we are servicing with north of 1,000-horsepower units. I think it is a similar evolution there. Midstream is a logical next place for us to have looked and to penetrate. We have not done that yet, but I think getting that first customer is going to demonstrate that our equipment from a technology perspective and the service we provide—we should have competitive advantage there as well. That is how we approach it. Selman Akyol: Got it. Okay. Thank you for that. And then next, thinking about EBITDA growth—very robust in 2026—clearly you have got some monetization going on, and your CapEx is coming down, so your free cash flow is accelerating. I know you highlighted your inaugural dividend and then you increased it once already, and you have got this strong free cash flow coming. How should we be thinking about return of capital and dividend in particular as we go through 2026 and beyond? Justin C. Jacobs: There I would repeat comments that we have made on prior calls. I think on the call after we initiated the dividend, we made clear we have a good understanding of shareholders' desire for a consistent and increasing dividend, and we were not going to provide specific guidance other than to make it clear we understood that. That is how I would think about how we—and the Board—will approach return of capital overall, but the dividend specifically in 2026. Selman Akyol: Okay. Thank you very much. Justin C. Jacobs: Thanks, Selman. Operator: Our next question comes from Tim O'Tell with Petra Company Management. Tim O'Tell: Good morning. I had a couple comments because in the wake of Steve's retirement, I wanted to just make on the way in, and wanted to just acknowledge him for a couple things. One being building a balance sheet through some very tough years, and then also seeing the growth opportunity, sort of 2019–2020, which also became interesting, obviously, signing up with Oxy and actually pivoting towards growth in large horsepower, which has obviously been a very good move. And then also, kind of later on—but not that much later than 2020—obviously working with Justin to replace himself, and that has proven so far to be a very good choice. And so I wanted to kind of congratulate him on the way out. And then one other comment that I wanted to make before I get into a couple of questions is I would still love to see some more detail around discretionary cash flow and discretionary cash flow per share and growth in that metric. A few of your competitors focus on that. I think it is appropriate. It is more indicative of economic earnings for the company, and would love to encourage more focus on that and a little bit more information around that. Justin C. Jacobs: Tim, appreciate you joining, and appreciate your comments. Just to echo on the first point for Steve, and particularly the last part you put there, I think of Steve as really a quasi founder of this business. Having worked with him through the transition, he did an outstanding job. It was absolutely amazing for me, and I think for the company, and a lot of credit is due to him there. So just wanted to echo your comments on that. Tim O'Tell: Yes. Well, thanks for that, Justin. I think Steve—hopefully he is listening from home or can go listen to it at some point—and anyway, we appreciate you. It was a very good run for a very good result. To a question that was just asked and just kind of feeling you out in terms of how you are looking at things going forward in terms of the growth space, midstream—obviously, you would be well suited to fill some of that bill. There are some competitors out there you would be aware of, and a few also that are not necessarily directly in the compression space but in related spaces that have been looking at actually power generation. So you have the reciprocating engine on the front end driven by natural gas to actually create pad power or maybe beyond pad power. I am wondering how you look at those two trade-offs, if you are even considering the electric generation space given kind of the wall of demand that is coming at us. Also, related to that, I do wonder—it is maybe more of a question for your customers, but you are in that discussion—how the space looks at the fact that electric power will be tight, will be in demand, maybe short supply at times, and pricing on the power to drive the compression may also become an interesting topic. Could you talk to that for a minute? Justin C. Jacobs: Sure. Happy to. On the power gen space, that is an area that we have looked at from an acquisition perspective and looked at a couple of specific opportunities. Some of the similarities are relatively straightforward in terms of the service model, the equipment, the rental nature of equipment, at least in certain applications. We understand that is a similar market. I think what we have seen from one of our public competitors shows that. As we look at it, some of our questions really relate to: are we going to see the same long-term applications as compression? We have not seen business—at least that we have looked at yet—in the power gen space that has a similar application length that we do, particularly with our large horsepower. We are going to continue to look at it very closely, and I am sure look at additional opportunities. As with all M&A, you never know exactly what will happen—it is kind of the sun, the moon, the stars—so it is certainly on our radar, but those are kind of how we look at it. Tim O'Tell: Okay. Great. I kind of expected something along those lines, wanted to feel you out a little bit on that because we have not discussed that. Another question I have, and this might be a little bit more for Ian than you, Justin. You mentioned Oxy and Steve kind of engaged with them and started to support a lot of capital for that particular customer in the 2019–2021 space in terms of some of the going online. One of the things I am noticing on the maintenance CapEx level is that that is creeping up. I am wondering if maybe you could talk to this a little bit. I am wondering if some of that maintenance CapEx is kind of associated with the initial bolus of that significant allocation of capital to the Oxy footprint, and whether we should expect that to level out for a few years until the next big bolus reaches, let us say, five years, or if that is on a trajectory that is likely to build as we go forward more or less ratably or steadily, trailing the growth that you have put up the last couple of years? Ian M. Eckert: Hi, Tim. Thanks for joining. You hit on a key point here. We have seen significant fleet horsepower growth over the last half a decade, and your assumption is correct. The initial tranche of those large-horsepower units are coming up on some key maintenance events that require maintenance capital, hence the increase that we see year on year from 2025 to 2026. I believe you can expect that to continue gradually, ticking upward given the significant horsepower we put in place over the last five years. Justin C. Jacobs: Tim, I know you know this well, but as we talk to our broader public shareholder base, just to make sure they understand the maintenance cycle here: specifically for the engine, you are looking at major maintenance roughly every three and a half years. At three and a half years you have a good-sized event, and at seven years you have a larger event in terms of cost, with other components on roughly similar cycles. Our expectation with the growing fleet size is that maintenance capital will gradually drift up in proportion with our fleet growth. Tim O'Tell: Right. And that makes perfect sense. But obviously it is taking a bit of a step up and it probably helps to actually set the table for that as we go forward. Also, that kind of circles back to my comment on discretionary cash flow and discretionary cash flow per share growth as we go forward. And then I am also—this is another question kind of for Ian—is the physical inventory adjustment that you took in the fourth quarter, is there more of that to come as we go into the front end of 2026 to kind of set the table for growth in adjusted gross margin again? Or is that really basically behind us, and going forward it is just actually tuning up operations more than anything else. Ian M. Eckert: Yes. That is very much behind us at this point in time. That was a one-time impact in the fourth quarter. Moving forward, I do not expect continued physical inventory adjustments of that scale. Tim O'Tell: Great. Okay. Thanks. I think that is all I have right now. Thank you, gentlemen, and another good quarter setting up for another interesting and fruitful year. Thanks. Justin C. Jacobs: Thanks, Tim. Appreciate you joining. Operator: Thank you very much. And again, if you have any questions, please go ahead and press 7#. Our next question comes from Rob Brown with Lake Street Capital Markets. Go ahead, please. Rob Brown: Hi. Good morning. I wanted to follow up on your comments about increased quoting activity. Just a sense of what areas are the most active and maybe the ability to expand, I think, your 50,000 horsepower this year. How early do you have to get the quotes in to expand that 50,000, and what could it be? Justin C. Jacobs: When I look at the quoting activity overall, at least from a geographic perspective, it is certainly dominated by the Permian Basin, as our existing business is, and so really no difference there from where we operate today. In terms of applications, as was said earlier in the call in one of the questions, we are seeing opportunities in the midstream, but we have not won one of those yet. On the 50,000—just to confirm—that is contracted growth that we expect to set in 2026. We are seeing a mix of larger existing customers in terms of quoting, some customers that are very large companies but relatively small customers for us where the quoting activity is far in excess of the amount of business that we have with them today, and then some new customers in there, a number of whom we have already won some units with. So I would generally describe it as broad-based. Rob Brown: Great. Okay. Thank you. And then, just on the comments around the natural gas demand, some of the demand drivers there. Do you foresee a better utilization in smaller-horsepower fleet from that, or how does that impact your business? Justin C. Jacobs: I would say that we have not modeled that into our forward guidance. I think it is a reasonable expectation that we will see it. We just have not included that in. As our business is increasingly becoming dominated by large-horsepower units, the impact to the business will be—it could be a reasonable amount—but I would not describe it as particularly significant relative to the overall size of the business. Rob Brown: Okay. Great. Thank you. I will turn it over. Justin C. Jacobs: Appreciate it, Rob. Thank you. Operator: Thank you very much. And again, if you have any questions, please press 7#. I do not see any other questions, sir. Justin C. Jacobs: Thank you, Luke. And thank you all for your questions and for your continued interest in Natural Gas Services Group, Inc. We sincerely appreciate your support, and we look forward to updating you on our progress next quarter. Ian M. Eckert: Thank you. Operator: Thank you, everyone. This concludes today's conference call. Thank you for attending.
Operator: Greetings, and welcome to the ClearPoint Neuro, Inc. Fourth Quarter and Full Year 2025 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the call, please press 0 on your telephone keypad. As a reminder, this conference is being recorded. Comments made on this call may include statements that are forward-looking within the meaning of securities laws. These forward-looking statements may include, without limitation, statements related to anticipated industry trends, the company's plans, prospects, and strategies, both preliminary and projected; the total addressable markets or the market opportunity for the company's products and services; the company's expectations regarding the integration, performance, and anticipated benefits of the recent acquisition of Eris Holdings Inc., including operational efficiencies, and the impact on the company's financial condition and results of operations; the company's expectation for future development, regulatory approval timing, commercialization, and the market for cell and gene therapies, and the anticipated adoption of the company's products and services for use in the delivery of gene and cell therapies; and management's expectations, beliefs, estimates, or projections regarding future revenue and results of operations. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they were made. Actual results or trends could differ materially. The company undertakes no obligation to revise forward-looking statements or for new information or future events. For more information about the company's risks and uncertainties, please refer to the company's filings with the SEC, including the company's recent filings on Form 8-K, Form 10-K, and Form 10-Q. All the company's filings may be obtained from the SEC or the company's website at www.clearpointneuro.com. I will now turn the call over to Joseph Burnett, Chief Executive Officer. Please go ahead, sir. Joseph Burnett: Thank you. As always, thank you to all of the investors, analysts, and biopharma partners listening to today's call. We remain both committed to and focused on developing a complete neuro ecosystem capable of delivering various minimally invasive treatments, including cell and gene therapies to the brain. We believe that this approach will finally unlock hope for the patients and their families who are battling these frightening neurologic disorders and who today have very few options to choose from. This is one of the largest unmet needs in all of medicine, and we at ClearPoint Neuro, Inc. believe we can play a crucial role in this exciting future. Our company ended 2025 on a high note with the strongest financial quarter of the year, a newly acquired and commercialized neurocritical care product line, and genuine excitement for what is to come in 2026. Over the past five years, we have invested more than $100,000,000 and built a strong foundation to support our team and our goals moving forward. This foundation is made up of four growing product categories, a vetted pipeline of new development programs, an expanded manufacturing footprint, a thoroughly audited quality system, a collection of global regulatory approvals, an expansive IP portfolio, an installed base of more than 150 global centers, and the cash position and investor base to execute on our strategy. Most importantly, through our unique biologics and drug delivery ecosystem, we have attracted more than 60 active biopharma partners. We are participating in more than 25 active clinical trials. We are exploring therapies for more than 15 different indications, and currently more than 10 of our biopharma partner programs have now been accepted to some form of FDA expedited review. Our foundation is set, and our company has never been in a stronger position than we are right now. As we look ahead, we have now entered the next two phases of our growth strategy. The first phase, which we call Fast Forward, is to penetrate an existing $1,000,000,000 market opportunity made up of four distinct product segments: number one, pre-commercial drug delivery products and services; number two, neurosurgery navigation and robotics; number three, laser therapy and access; and number four, neurocritical management. We expect all four of these product lines to grow double digits in 2026 through the expansion of our commercial organization, approval of products in new geographies, additional site activations, generation and publication of new clinical evidence, and the execution and launch of new products in our development pipeline. The second phase which we are entering in parallel is called Essential Everywhere. This phase is different, as it requires us not to grow share in an existing market, but to build a completely new market that does not yet exist for commercial cell and gene therapy delivery. This is a market in which we believe that the unique ClearPoint Neuro, Inc. ecosystem will play an essential role. This ecosystem will include brain segmentation tools, predictive drug delivery modeling, pre-planning and navigation software, frame and robotics delivery options, drug loading and mechanized infusion technologies, an array of cell and gene therapy routes of administration, and post-procedure quality confirmation software to meticulously track proper delivery. All of these workflow steps will be supported by our talented team of clinical specialists and scientists who will be there in the room assisting our partners when these new-to-world therapies are finally commercialized. While the only gene therapy approved today for direct delivery to the brain is for a very rare disease, it is important to remember that this drug is in fact co-labeled with ClearPoint Neuro, Inc. technology, a trend we expect to continue in the future. As we look ahead to the full year 2026, we now expect revenues to be in the range of $52,000,000 to $56,000,000, which now takes into account a couple of factors, including the latest FDA communications regarding the potential approval and treatment of rare diseases, as well as the integration efforts and priorities surrounding our recent acquisition of Eris just a few months ago. I invite anyone listening to visit clearpointneuro.com. You can download a new version of our investor deck that should better communicate the vision and scale of our strategy. I will now turn the call over to our CFO, Danilo D’Alessandro, to walk through the prior year financial data, after which I will provide a bit more commentary on the road ahead. Danilo? Danilo D’Alessandro: Thank you, Joe, and thank you all for joining us today. Let me start by looking at the full year 2025 results. ClearPoint Neuro, Inc. total revenues were $37,000,000 for the year ended 12/31/2025, compared to $31,400,000 in the year 2024. Our total 2025 revenue of $37,000,000 includes $1,200,000 of revenue from the acquisition of Eris Holdings Inc., which we completed on 11/20/2025. Revenue is made up of three components: biologics and drug delivery; neurosurgery navigation and therapy; and capital equipment and software. We include the EarFlo product line in our navigation and therapy segment. Biologics and drug delivery revenue includes sales of disposable products and services related to customer-sponsored preclinical and clinical trials. Biologics and drug delivery revenue increased 10% to $19,000,000 in 2025, up from $17,300,000 in 2024. This increase was primarily due to an increase in our product sales as our pharmaceutical partners advanced their development programs. Neurosurgery navigation revenue consists of commercial sales of disposable products and services related to the cases utilizing the ClearPoint Neuro, Inc. system to deliver medical therapy to the intended target. This revenue segment grew to $14,800,000 for the year 2025, including $1,200,000 in EarFlo revenue. The growth in this segment was mainly due to our increased installation base and the full market release of our PRISM Laser System and iCT solution. Capital equipment and software revenue consists of sales of ClearPoint Neuro, Inc. reusable hardware and software and related services, and was $3,100,000 for the year 2025. Gross margin for the full year 2025 was 61%, in line with the year 2024. Research and development costs were $13,900,000 for the year 2025, compared to $12,400,000 in 2024, an increase of $1,500,000, or 12%. The increase was due to higher product and software development costs of $1,200,000, an increase in personnel costs, including share-based compensation expense of $200,000, and additional costs due to the consolidation of Eris. Sales and marketing expenses were $16,500,000 for the year 2025, compared to $14,500,000 for the same period in 2024, an increase of $2,000,000, or 14%. This increase was due to higher personnel costs, including share-based compensation expense, of $1,400,000 resulting from increases in headcount in our clinical team, as well as increased cost of $900,000 due to the integration of Eris, partially offset by decreased marketing cost of $200,000 and decreased travel cost of $200,000. General and administrative expenses were $16,500,000 for the year 2025, compared to $12,000,000 for the same period in 2024, an increase of $4,500,000, or 38%. This increase was due primarily to severance expense of $1,400,000 in connection with the Eris acquisition, increased professional service fees of $1,000,000, higher personnel costs including share-based compensation of $900,000, higher information technology and software costs of $500,000, increased bad debt expense of $200,000, and additional cost of $200,000 related to the Eris acquisition. Net interest expense for the year 2025 was $1,200,000. Interest expense for the year 2025 was $2,400,000, compared with $450,000 for the year 2024. The increase was due to the issuance of notes payable in May and November 2025. I will now turn to the fourth quarter 2025 results. Total revenue was $10,400,000 for the three months ended 12/31/2025, in comparison to $7,800,000 for the three months ended 12/31/2024. Biologics and drug delivery revenue increased 23% to $5,200,000 in 2025. This increase is attributable to $1,100,000 of higher product revenue resulting from greater demand for disposables as multiple partners progressed in their trials, partially offset by lower service revenue of $100,000. Neurosurgery navigation and therapy revenue was $4,700,000 for 2025, from $2,900,000 for the same period in 2024. The increase is driven by an increased customer base and additional revenues due to the EarFlo product line acquisition completed in November 2025. Capital equipment, product, and related service revenue was $500,000 for 2025, a slight decrease compared to $600,000 in the same period in 2024. Gross margin was 62% for 2025, compared to a gross margin of 61% for the same period in 2024. Operating expenses for 2025 were $13,400,000, compared to $10,400,000 for 2024. The increase was mainly driven by the acquisition and consolidation of Eris’ financials and increased professional services fees. At 12/31/2025, the company had cash and cash equivalents totaling $45,900,000, as compared to $20,100,000 at 12/31/2024, with the increase resulting from the net proceeds of the notes payable and stock offering of $51,400,000 and cash acquired as part of the Eris acquisition of $1,100,000, partially offset by the use of $23,900,000 in cash for operating activities and $1,900,000 in cash paid for taxes related to the net share settlement of equity awards. Net cash flows used in operating activities for the year ended 12/31/2025 was $23,900,000, an increase of $15,000,000 from the year ended 12/31/2024. This increase was primarily due to a higher net loss of $6,600,000 and the paydown of accounts payable and accrued expenses of $10,600,000; $8,000,000 is related to liabilities assumed from the Eris acquisition as part of the purchase price and Eris acquisition-related transaction expenses. In addition, we had $1,100,000 of operational post-acquisition Eris expenses in Q4. We do not expect to incur cash outflows for the payment of assumed liabilities of a similar magnitude in future periods, as the paydown of the liabilities assumed in connection with the Eris acquisition represents a non-recurring event. I would now like to turn the call back to Joe. Joseph Burnett: Thank you, Danilo. As you can tell from our fourth quarter results, we ended 2025 on a strong note, with terrific momentum going into 2026. Now I will just spend a few minutes digging a bit deeper into our four-pillar growth strategy. As a reminder, our four pillars consist of the following segments: number one, pre-commercial biologics and drug delivery products and services; number two, neurosurgery navigation and robotics; number three, laser therapy and access; and number four, neurocritical management. These are the four markets that we participate actively in today, and pretty much 100% of our current revenue is coming from these four markets. In 2026, we expect all four of these segments to each grow in the double digits. In the future, expect to add our fifth pillar of growth, which would be commercial cell and gene therapy delivery as our biopharma partners continue to progress through the various global regulatory processes. To be clear, our existing revenue forecast for 2026 of between $52,000,000 and $56,000,000 does not include any meaningful expected revenue from commercial drug delivery, so any change to the FDA treatment of rare diseases or approvals of these drugs outside of the United States would be upside to this forecast. First, let us start with pillar number one, pre-commercial biologics and drug delivery. The team has made substantial progress building out the ClearPoint Neuro, Inc. Advanced Laboratories facility in Torrey Pines, California, affectionately known as the CAL. In 2025, we performed our very first preclinical study for a sponsor and continue to execute additional studies already here in 2026. While construction will not be complete until our scheduled grand opening in the second half of the year, we do have the capability now to do smaller studies, and we expect to add full GLP capability soon as well. We continue to support our talented biopharma partners as their cell and gene therapy treatments progress through the development, clinical, and regulatory process. We now have more than 60 active biopharma partners, we support more than 25 active clinical trials, and we have more than 10 partner programs that have been accepted to some form of FDA expedited review. For some perspective, if we look at only the programs under expedited review, which span across eight different indications, there would be more than two million patients in the United States alone that have indications that are being considered for expedited designation pathways. Treating just 1% of those patients, or about 20,000 patients a year, could deliver approximately $300,000,000 in annual revenue to ClearPoint Neuro, Inc. Keep in mind that modest assumption of procedure volume is not even high enough to treat the newly diagnosed patients each year, let alone provide care to the millions of patients already living with the disease. I can tell you from direct conversations with our partners that their ambition and expectations far exceed that number. I can also share with you that in 2025, we had the highest volume of clinical trial cases supported by our biologics and drug delivery team in our history. In the meantime, while we are waiting for these first-in-world treatments to successfully win approval, our existing and collaborative biopharma relationships combined with our unique neuro capabilities should position us to achieve 20% of the estimated $300,000,000 market for pre-commercial biologics and drug delivery products and services. To say it another way, we are participating in pre-commercial drug delivery today and plan to enter commercial drug delivery in the future, but we do not need these future drugs to be approved to generate meaningful revenue. Moving on to pillar number two, which is neuro navigation and robotics, we have made some tremendous progress recently. The launch of our 3.X software platform has been very successful, as we have added multiple new installations, especially in sites that are intent on using ClearPoint Neuro, Inc. not only in the MRI, but also in the operating room using CT imaging. The results from our limited market release were very positive, highlighting the advantages of our platform in accuracy, procedure time, radiation dose, and room turnover rate, which will enable multiple ClearPoint Neuro, Inc. navigation procedures to be performed in the same room each day. We expect the data from this early experience to be submitted for publication later this year. Our switch to a new European Notified Body has been successful, and the CE marking for the 3.X software represents a further step in establishing a successful certification track record under this new Notified Body. We expect that the 3.X software certification will go a long way toward consolidating our entire installed base under one software version to simplify training and to ensure our worldwide customers all have access to our latest software features. At the request of a number of pharma partners, we have now initiated the PMDA regulatory process in Japan and expect to perform our first cell therapy clinical trial cases sometime in the second half of this year. Our recently announced robotic platform is also making development progress, and we expect multiple product usability showcases with customers this year. Importantly, we plan to perform our very first preclinical studies using the ClearPoint Neuro, Inc. robotic platform at the new CAL facility before the end of this year. Again, given our unique MRI capabilities, our fast, simple, and predictable operating room performance, our clear focus on cranial robotic development, and our deep relationships with biopharma, which will fuel future volume, we believe that achieving 20% of the cranial navigation market is a reasonable goal to achieve in the years ahead. For pillar number three, laser therapy and access, we have made progress as well. In 2025, the PRISM system received FDA clearance expanding compatibility of the system with 1.5 Tesla power MRI scanners. This clearance gave us access to the other half of the U.S. laser therapy market, as previously we only had clearance for 3.0 Tesla strength magnets. As we look to 2026, we have now installed our first 1.5 Tesla sites and have proposals in front of numerous interested centers. In 2026, we expect additional pipeline progress as we seek European approval for PRISM, submit our Harmony 1.0 software including numerous PRISM visualization features, and publish our first tumor clinical trial enabled by PRISM to help us bridge beyond functional neurosurgery and into neuro-oncology. On the access side of the business, our drill partner Adior just this week received FDA clearance for the Velocity Alpha MR Conditional Power Drill, which is designed to reduce procedure time compared to our currently available hand twist drill. We are just now starting our limited market release and prioritizing early drug delivery sites and cases. These cell and gene therapy procedures often require multiple trajectories where we believe the Velocity MR drill will provide meaningful advantages and simplify the overall procedure. We believe that our laser therapy and access portfolio will continue to grow in popularity not only because of the many unique and differentiated features, but for the simple fact that the laser ablation workflow with ClearPoint Neuro, Inc. is arguably the most similar workflow to these future cell and gene therapy cases. In both laser and drug delivery, there are multiple different trajectories, there is the delivery of a volumetric therapeutic dose, there is the need for periprocedural catheter adjustments, and there is the need to include small, minimally invasive access points. Every laser procedure a hospital does with ClearPoint Neuro, Inc. today is getting their team more familiar with the drug delivery workflow of tomorrow. Practice makes perfect and permanent, and we continue to believe that achieving 20% of this total market is a reasonable near-term goal. And last but not least, pillar number four, which is neurocritical management and is made up of the various EarFlo assets included in the acquisition at the end of 2025. This is a new market for ClearPoint Neuro, Inc., but it is an important one as it fits our two-phase strategy perfectly. Number one, it allows us to participate today in an existing $500,000,000 market opportunity with a unique and differentiated product supported by growing clinical evidence. And number two, it gives us another drug delivery option for the brain that fills a historic gap in our portfolio for a flexible indwelling option. The EarFlo catheter is now being offered as yet another tool in our ecosystem that our biopharma partners can consider and trial for themselves at the CAL facility. The existing market for these intracranial procedures is arguably the largest that ClearPoint Neuro, Inc. can participate in today, and our clinical expertise, global reach, commercial footprint, and investment pipeline can only improve our chances to earn 20% of this approximately $500,000,000 market opportunity. All in all, we believe we have an excellent vision and strategy for the future of our company: Phase One to earn 20% of a combined $1,000,000,000 market opportunity, generate $200,000,000 in annual revenue, and get us comfortably to cash breakeven and profitability; and Phase Two to provide unwavering support to our unique ecosystem of drug delivery tools to help our biopharma partners treat the very first 1% of patients living with severe neurological diseases that has therapy candidates under FDA expedited review. If we accomplish these two goals, we will have built a $500,000,000 annual revenue business and helped a lot of patients along the way. These are the two phases of our company, and we are just getting started. We will now open for questions. Operator: The first question comes from the line of Frank Takkinen with Lake Street Capital Markets. Please proceed. Frank Takkinen: Great. Thanks for taking the questions and appreciate the comprehensive update. I was hoping to start with a follow-up related to the 2026 guidance. I think you called out some of the most recent FDA communications around rare diseases, then integration efforts and priorities as a reason for tightening that guidance a little bit. Maybe talk a little bit more about each of those elements, what you may have previously incorporated into guidance and now what current assumptions incorporate into guidance. And then as it relates to that, big picture, how should we think about organic growth versus growth? Obviously, I can see growth with Eris in there, so maybe the right way is just how should we think about organic growth? Joseph Burnett: Yes. Thanks for the question, Frank. So starting with the first question, which has to do with what is kind of included in the guidance and where we could kind of go from there. There are two things that I cited in my prepared remarks. One was sort of the FDA current condition around rare diseases. And the second one is really digging deeper into the Eris acquisition and figuring out if the prior priorities are the same as the current ClearPoint Neuro, Inc. ones. So on the rare disease side of things, I think as many of our investors are aware, the current positioning that the FDA has communicated to at least two of our partners this year has been that sort of a more rigorous clinical trial strategy, which historically has been incredibly difficult to do for rare diseases to execute these traditional Phase III studies. So based on that information and how it would impact our two companies, or two biopharma partners, we have effectively taken out any and all revenue associated with the commercial launch of those particular products, and also just the understanding that it might take a while to really get to the bottom, you know, if and when the FDA were to change course there. So in the event that some good news is created, in the case of uniQure or the case of REGENXBIO, it is possible we would revisit that guidance. But for now, we think the most appropriate thing to do is base our guidance on the information that we have in hand, which is the latest information that those two biopharma partners have presented publicly. So that is really where we are on the rare disease side of things. I think it is important to note, however, that the vast majority of the biopharma partners we are working with are on more established and larger markets, sort of less rare diseases and more large volume patient populations. The majority of those partners were already planning to do that same Phase III sham study. So this newest FDA guidance, we do not believe it carries over to timelines relative to these larger populations because the expedited review process always included doing a Phase III study. What they were often allowed to do is skip Phase II and go directly to Phase III, but that large multicenter, geographically expansive sham study was always in the mix. So that is one half of the equation. The other one has to do with Eris itself, and, you know, the biggest thing I can point to there—again, it is a very exciting product. We are learning a lot every single day, meeting customers. As I mentioned, they had an existing revenue base last year in that $8,000,000 to $9,000,000 range, give or take. What I would say the biggest change that we have made is really in our Europe strategy, where we have kind of hit the reset button as we think about European expansion and, very specifically, which distributors we want to continue working with versus which ones we would like a fresh start with at this point. So, if anything, we maybe took a little bit out of our European revenue piece, just based on this latest information. But again, if something happens on the positive side, we always reserve the right to revisit that guidance in the second half of the year. But that is kind of what is embedded in the guidance itself. Then, Frank, what was the second question that you had there? Frank Takkinen: Underlying core growth. Organic growth. Joseph Burnett: Yes, I would say we expect it to be pretty balanced between the two. I think I did make that comment that we expect all four of our segments—and if you want to add capital equipment as a fifth segment, I think all five of those—we plan to grow double digits in the year. Now, quarter to quarter, there might be a little bit of noise here and there, but I think the development pipeline, the fact that our commercial organization today is significantly larger than it was a year ago, I think that new clinical evidence coming out in each one of those four categories, and we are getting familiar with the ClearPoint Neuro, Inc. and Eris team starting to work together. We think both organic and inorganic growth coming from Eris could be relatively balanced, but all in that double-digit range. Frank Takkinen: Got it. That is helpful. And then I was hoping to ask a little bit more about the core billion-dollar market and path to $200,000,000. If you envision yourself on the other side of the integration of Eris and you are back to a point where the business is all integrated, how should we think about the durable growth rate? And what I am trying to get at is that pathway from today around that $50,000,000 to $60,000,000 revenue range to $200,000,000. How long could that take and what kind of growth rates should we expect to see over time? Joseph Burnett: Yes. I mean, I think if we generally can grow in that 15% to 20%, maybe even north of 20% range for the foreseeable future, that assumes that we are taking 1.5% to 2% share pretty much each year across all four of those. And again, there could be differences that take place in each one of those markets. You know, for example, when we get our GLP capability for the CAL facility, and we earn our very first large GLP study on behalf of one of our biopharma partners, a single study could be in that $15,000,000 to $20,000,000 range. So we could see a large bump in any given year based on our capability being ready and then a biopharma company hiring us to do that work for them. So we could have a leap one year to the next in the biologics and drug delivery side. You know, similarly, on the EarFlo technology, there is a lot of clinical evidence being supported. There is a randomized clinical trial actually supported by Eris called the ARCH trial where we expect the data readout at some point later this year. So that is a very, very large market where EarFlo is a relatively new technology, where if we had clinical evidence that showed not only patient improvement but also some economic benefits for a hospital where a patient leaves the hospital sooner or has less complications during the procedure itself, those are things that could really swing market share pretty quickly because this is not a high intensive training product. This is one where we can ship a pump into that hospital the next day and we can be training residents 24 hours a day to get them familiar with the technology. So, where we cannot get to the point where we can outline exactly which one of those will be the primary driver any given year—other than this year, them all growing double digits—we do feel comfortable on that 15%, certainly 15%, maybe even 20% from an organic standpoint, until we get to that $200,000,000 number. Frank Takkinen: Helpful. And then last one, Joe, we get a lot of questions on just the attachment to uniQure and obviously the volatility around FDA's communication there. The question I wanted to ask was really focusing on the diversified offering. You have got BlueRock and Neurona's assets coming as the next most likely near-term, big market opportunities that should really exemplify the value of a diversified offering. Maybe just talk a little bit more about those assets, when they could be on the market, and then coming back to just the value of having so many partners in expedited review and kind of deemphasizing the attachment on just one singular asset and what the model looks like over time. Joseph Burnett: Yes. So, Frank, I do not want to comment on the timing of our partner programs. They give their updates when they prefer to. So I am just going to stick to what they have said. If you go to the websites of BlueRock, Neurona, some of these other companies as well, I think they shy away from giving actual timing updates and rather simply provide the status of the current program and what phase of clinical trial they are in. As I mentioned a second ago, we have a new investor deck that is just going live today, which I think puts some of that diversity and some of that staging into language that I think our biotech investors will better understand to show the scale of how many programs that we are in and then how many are in preclinical versus Phase I/II versus Phase III and even in the case of PTC when that is commercialized. So I would encourage you to take a look through that, and I think it will provide some feedback there as to where we are. The other thing I would bring up, however, is that even these Phase III trials can provide meaningful revenue to ClearPoint Neuro, Inc. So a typical Phase III study that we are seeing or we are participating in could be anywhere from 60 to 120 patients that are studied, sometimes randomized two-to-one in the test arm versus the control arm. A 120 patients times five, 10, 15 studies that could be going on at the same time could again be a very meaningful volume, maybe even a thousand patients a year, that would just be still in this clinical trial phase. So again, we do not count that in that Phase Two opportunity of commercial drug delivery, but it is supporting the growth, in addition to the CAL, of that pre-commercial biologics line. And I think as I mentioned in the remarks, Q4 was the largest volume we ever saw of drug delivery. So patients are raising their hand and enrolling in these trials, and we expect many more to start here in 2026. Frank Takkinen: Very helpful. Thank you. Operator: The next question comes from the line of Anderson Schock with B. Riley Securities. Please proceed. Anderson Schock: So first, you called out more than 10 partners in expedited review pathways now, so implying at least one new partner in these pathways since the last call. Could you provide any more color on the indication and population size for this new partner or partners? Joseph Burnett: Yes. In some cases, it has been a new indication. In some cases, it is redundant in an existing indication. So the two largest ones that are under expedited review today would be Parkinson's disease and drug-resistant epilepsy, the MTLE. So those are the two that are, I think, the largest existing populations. The ones in addition to that are anything from glioma to Friedreich's ataxia to Huntington's disease with uniQure, as mentioned before, to a couple other rare genetic disorders as well. So I think there are eight total indications and maybe 13 partners that are under FDA expedited review. So, again, we have a little bit of overlap—I think it is four or five in Parkinson's alone, for example. So it is nice because it gives us much higher confidence when you look at a disease state like Parkinson's with over a million patients in the United States that are really waiting for a superior treatment. We have five, maybe six partners that are already under expedited review. And maybe that treatment is not that far away, but just as importantly, we have got four, five, maybe six of these shots on goal that are under expedited review. Again, maybe every one of them does not make it all the way through the regulatory gauntlet, but if one, two, three of them get approved, we could be very successful there. Anderson Schock: Okay. Got it. Thank you. And then you mentioned the first tumor clinical data for PRISM publishing this year, potentially expanding beyond functional neurosurgery and into neuro-oncology. How should we think of the timeline for this expansion in the TAM in neuro-oncology versus PRISM's current addressable market? Joseph Burnett: Yes. I would say it is really just a strength of our commercial team and how we are growing and evolving as well. If you think about the laser therapy market, it has historically been split between epilepsy and tumor, with functional neurosurgeons maybe doing the epilepsy procedures and neuro-oncologists doing the tumor procedures. Now, we are participating in tumor procedures today, but because of our navigation history, because of our biopharma partnerships, we have always been a little bit heavily weighted towards functional neurosurgery and movement disorders. So having a publication that is looking directly at our laser performance in a group of very sick tumor patients, I think, puts us in a situation where we can look customers in the eye and say yes, we are taking this very, very seriously, and we are going to be participating in multiple clinical trials moving forward, even if it is a customer base that we have not had quite the same experience as we have with functional. Anderson Schock: Okay, got it. Thank you for taking our questions. Joseph Burnett: Yes. Thanks, Anderson. Operator: Thank you. This concludes the question-and-answer session. I would like to turn the call back over to Joseph Burnett for closing remarks. Joseph Burnett: Well, thanks again for joining our call today. Our team feels like we have built an incredible foundation which will now serve as the launch pads for our two parallel strategies. We are on the path to helping treat tens of thousands of patients a year who suffer from many of the most frightening neurological diseases imaginable. Supporting this vision and supporting us on the road ahead. Operator: Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.