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Operator: Good day, and thank you for standing by. Welcome to the Omada Health Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Allan Kells, Vice President, Investor Relations. Please go ahead. Allan Kells: Thank you. Good afternoon. Welcome to Omada Health's Fourth Quarter and Full Year 2025 Earnings Call. Joining me today are Sean Duffy, our Co-Founder and CEO; Wei-Li Shao, President; and Steve Cook, our CFO. Before we begin, I'd like to note that we'll be discussing non-GAAP financial measures that we consider helpful in evaluating Omada's performance. You can find details on how these relate to our GAAP measures along with the reconciliations in the press release available on our website. We'll also be making forward-looking statements based on our current expectations and assumptions, which are subject to risks and uncertainties including factors listed in our press release and in the risk factors found in our filings with the SEC. Actual results could differ materially, and we assume no obligation to update these forward-looking statements. With that, I'll turn the call over to Sean. Sean Duffy: Good afternoon, everyone, and thank you, Allan. 2025 was a milestone year for Omada. We became a public company, delivered 53% revenue growth for the year and achieved GAAP profitability for the first time in Q4. We also significantly outperformed initial expectations from the time of our IPO and we believe we are entering 2026 with momentum, with ambition and with a clear plan for what's next. Here are the highlights from Q4 and the full year. Total members reached 886,000 at year-end, up 55%, compared to 2024. Revenue grew 58% in Q4 and 53% for the full year to $260 million. Gross margins expanded to record levels. We achieved our first quarter of positive GAAP net income in Q4 at $5 million, and we delivered positive full year adjusted EBITDA of $6 million. We believe these results reflect the impact of strong market tailwinds, combined with a decade of investments. Omada's technology and operational platform, our clinical programs, our peer-reviewed research, productive distribution channels and more than a decade of rich and unique data are strongly suited for this exact moment, for when customer demand for chronic care solutions, a rapidly evolving GLP-1 marketplace and AI-driven innovation converge. We believe that 2025 demonstrated how we can capture that momentum. But the real story is at the level of the person we're supporting as a GLP-1 Care Track member recently told us. "The Omada program in collaboration with my doctor and the use of GLP-1 meds has been life-changing. I learned real skills needed to lose weight and be healthy for a lifetime. The beauty of the Omada plan was that I did not just jump in with all of these changes on day 1. The plan guided me to focus on different lessons each week and then select a goal for the coming week. When I was stuck, my coaches were there to make suggestions and help guide me along the way, knowing that someone cared and they took the time to check my meal log and comment about a recipe or a new meal idea I put together that looks good, helped me feel that I was not doing it alone." Stories like that get to the heart of what we do. Omada is on a mission to bend the curve of obesity-related disease. 40% of adults have obesity and nearly 2/3 have at least one cardiometabolic risk factor such as obesity, diabetes, hypertension or cardiovascular disease. We believe the health care system is structurally unable to address this at scale without a fundamentally different care model. A person's disease trajectory is determined largely outside the doctor's office through nutrition, movement, sleep medications and care plan adherence. Yet the broader health care system still organizes around infrequent 15-minute visits. Omada puts the space between those visits at the center of care through an integrated multi-condition care model refined over more than a decade. We've built a member experience that brings together care teams, AI, connected devices and a custom care platform designed for quality at scale. We've expanded into a multi-condition platform spanning weight health, diabetes, hypertension, musculoskeletal care, GLP-1 companion care, GLP-1 prescribing and our newly launched cholesterol program, giving employers the convenience of a single partner for multiple highly prevalent conditions. We've accumulated a large and growing body of peer-reviewed evidence and accreditations, which we believe is a key reason, employers and health plans choose Omada. We help the market understand that Omada delivers true clinical quality health care, which enables us to contract and bill as a health care provider, allowing our fees to be treated as medical spend. We've established thousands of customer relationships across a broad web of distribution channels, spanning an estimated more than 25 million covered lives and in operating for over a decade, we've amassed a robust and unique data set, tens of millions of care team messages and billions of data points that underpin our product, strengthen our AI capabilities and allow us to innovate more quickly on the back of significant scale. These investments form the foundation of everything ahead. They allow us to look through the windshield with optimism, ambition and excitement. 2025 served as a significant launch pad for our next chapter. And I want to touch on 3 areas where we're particularly proud. First, we believe 2025 was the year we solidified our position as a leader in enterprise GLP-1 companion care, while reinforcing that our opportunity expands well beyond GLP-1s. Employer demand to maximize the value of their GLP-1 investment and reduced waste drove significant adoption of our GLP-1 Care Track. As we've scaled to over 150,000 members on GLP-1, we've seen what we believe these members need most, support to stay on therapy, manage side effects, build sustainable habits and maintain results if and when they discontinue. Our results have shown that GLP-1 Care Track members on average achieved greater weight loss, compared with published real-world evidence and critically largely maintained their weight on average, 1 year after discontinuing GLP-1 therapy. These outcomes challenge the narrative of inevitable weight rebound and underscore the power of behavior change layered on top of medication. In November, we announced our GLP-1 prescribing capability. As the landscape grows more complex with oral and injectable options, variant doses and emerging maintenance therapies, employers are asking us to help them navigate it all. Adding prescribing strengthens our position by helping ensure that the right member is on the right medication at the right time while also delivering lifestyle support designed to improve outcomes and minimize waste. At the same time, the broader spotlight on GLP-1 has increased attention on cardiometabolic disease overall. Because Omada supports weight health with or without GLP-1s and helps members manage diabetes, hypertension and now cholesterol, we've also seen strong growth among members not on GLP-1s. For customers that choose not to cover GLP-1s, our weight health programs support their employees, and new options like our GLP-1 Flex Care, creates flexible path for employers to offer meaningful support even when they are not in a position to afford the medicines. Second, we made meaningful progress with AI in 2025, and I am particularly excited about our potential for AI innovation going forward. We've embedded AI throughout Omada. For members, we launched OmadaSpark, our AI-powered assistant that works alongside human coaches for real-time nutritional support, motivational challenges and habit building. We launched that in Q2 of last year and followed with enhancements in Q4 with Meal Map, an AI-driven experience focused on food quality, not just calories. For our care teams, AI-enabled tools like summarization let coaches spend less time on administration and more time on personalization. And 100% of our engineers are equipped with AI-assisted coding tools to improve development speed and output. What makes AI at Omada different from a typical software business is what sits underneath. In caring for members, we've received tens of millions of care team messages, billions of data points and more than a decade of specific clinical outcomes, comprising what we believe is one of the most exciting cardiometabolic data sets in digital health. That data can improve our AI tools and overall member experience such that interactions with today's members make the experience better for tomorrow's. The last area I'm proud of in 2025 is our commercial success. As Wei-Li will share, in 2025, we closed significant additional covered lives, which we believe positions us well going forward. Our between-visit care model and multi-condition platform continue to resonate as we closed contracts in the second half of 2025. Employers and health plans increasingly see the advantage of working with a single scaled evidence-based partner and our year-end results reflect buyers leaning into that vision. In 2026, we plan to maintain our focus on the pillars that power Omada's growth, expanding covered lives through new customers and channel partnerships increasing enrollment effectiveness, so that more eligible people become active members and driving deeper engagement and retention through AI in a continually improving member experience. Across these pillars, we're expanding capabilities. GLP-1 prescribing, cholesterol and GLP-1 Flex Care, greater personalization in content through AI and the use of AI to drive efficiency across engineering, operations and care delivery. These investments are intentionally designed to balance growth and profitability as we continue to move toward our long-term ambition of 20% plus percent adjusted EBITDA margins. We accomplished a great deal in 2025 for Omada's mission, and we are entering 2026 with bold ambitions to bend the curve of disease. That's what we're here for, and that's why we do what we do. With that, I'll hand things over to Wei-Li. Wei-Li Shao: Thanks, Sean, and hello, everyone. I'm proud of our teams and what they accomplished in 2025. It's an exciting time to be at Omada, and I'm pleased to walk through our results and progress. As Sean shared, we ended the year with 886,000 members, up 55% year-over-year. This includes 55,000 net new member additions in Q4, nearly double the net adds in Q4 of 2024. For the year, we added 314,000 net new members, compared to 182,000 in 2024. Growth continues to be driven by both multi-condition adoption and demand for our GLP-1 support capabilities, which together position Omada as a broad integrated partner for cardiometabolic care. We also benefited from improvements in marketing effectiveness, which drove higher enrollment rates across both new and existing customers. Key performance drivers in 2025 included estimated covered lives grew by more than 5 million, and we ended the year with over 25 million estimated eligible lives with strong performance across multiple channels, including the successful launch of a large new channel partner. Our e-mail enrollment rate improved significantly with the average percentage of a customer's population that receives our outreach and then enrolls increasing by 24% year-over-year. Member engagement remains strong as well. As of December 2025, more than 55% of our members in their 12-month of cardiometabolic programs still engaged with the platform at least once during the month and more than 50% of members in their 24th month engaged at least once during the month. Our focus on outcomes also remains consistent across our programs. Taken together, we strengthened funnel conversion at multiple layers, which gives us confidence heading into 2026. We ended the year having supported over 150,000 members on GLP-1s, adding more than 100,000 in 2025 alone. And as Sean mentioned, we continue to see growth beyond GLP-1s across our cardiometabolic suite. Substantial white space remains and our penetration across combined self-insured and fully insured lives is below 10% with a total addressable market that we estimate at over $138 billion. We have also been pleased to see developments in government-funded health care such as the passage of the Prevent Diabetes Act, which cemented Medicare coverage for virtual diabetes prevention programs. And while it's early and details are still developing, we are closely watching emerging programs like balance and access models for CMS. This government activity reinforces that virtual first prevention is increasingly recognized as essential to expanding access to quality care. Our strategy is organized around 3 pillars: Innovation, programs that work and our multi-condition platform. The results we delivered in 2025 are a direct reflection of progress across each. Beyond the AI capabilities Sean described, our innovation agenda in 2025 extended across several additional fronts. With respect to GLP-1 prescribing, since sharing our plans, we've had many discussions with interested customers and channel partners who are looking for help managing GLP-1 complexity. As GLP-1s evolve across oral and injectable forms, different doses and new mechanisms, employers need to manage switching, titration and benefit design in ways that improve ROI, not just increased spend, prescribing is a natural extension of our model, allowing Omada to act as a GLP-1 value maximizer across the entire journey from informing prescription decisions to supporting members on therapy to safely discontinuing medication when appropriate. We look forward to providing updates as we build out this capability. In addition to prescribing, we also have plans to support more flexible GLP-1 access models, including the GLP-1 Flex Care option we announced today. The need for alternative GLP-1 benefit in design solutions is underappreciated and we believe this could represent a significant opportunity. The GLP-1 market for large commercially insured employers is currently split, roughly 45% covering GLP-1s for obesity and roughly 55% that don't. Within this segment that covers, 2 of the country's largest PBMs have built GLP-1 solutions that include or offer Omada programs. One offers employers financial reassurance through a spend guarantee. And Omada has been a successful partner in that solution. The other expanded its GLP-1 offerings last year and Omada programs are an option there as well. But the 55% that aren't covering GLP-1s needs something different before moving from waiting and watching to confidently covering. That's where GLP-1 Flex Care comes in. It gives employers a structured way to connect eligible employees with clinical evaluation, prescribing and ongoing medical oversight for GLP-1 alongside Omada's lifestyle and behavioral support. Employers pay for the doctors' visits, labs and behavioral support, employees purchase branded GLP-1s out-of-pocket through credible cash pay channels. We believe the future for GLP-1 coverage will include multiple benefit design solutions addressing diverse employer needs, including robust clinical services, broad GLP-1 access, lifestyle support and financial reassurance. Our strategy is to be part of that spectrum, so employers can access the clinical benefits of our programs regardless of the benefit design they choose. We've also recently expanded our cardiometabolic offerings by adding a cholesterol program. This is a risk area that is often underserved in traditional cardiometabolic offerings despite the fact that up to 70% of adults with obesity have high cholesterol. Evidence from our existing programs has shown that virtual behavior first interventions can drive an average 39-point reduction in total cholesterol in 4 months among participants with diabetes and high cholesterol. Omada for cholesterol will build on that foundation, connecting behavior change, lab awareness and ongoing guidance from clinical specialists to cholesterol risk becomes visible and actionable within everyday life. We recently completed an initial commercial launch with a large enterprise customer that has more than 300,000 employees and then we expect a broader rollout in 2027. In summary, our innovation allows us to broaden how we support the management of cardiometabolic risk, leverage AI as a differentiator and deepen our relevance across a wide range of benefit strategies, making Omada a more flexible long-term partner for employers and health plans. Our second pillar is programs that work. Solutions grounded in evidence and behavior change science that deliver measurable durable outcomes. In 2025, we expanded our body of research on GLP-1 support. One analysis showed that members in our GLP-1 Care Track, who discontinued medication, largely maintained their weight 1 year later with an average weight change of only 0.8%, compared to 11% to 12% average weight regain reported in key clinical trials without ongoing lifestyle support. A separate analysis found that members in our enhanced GLP-1 Care Track who remained in the program and persisted on the medication for 12 months, achieved average weight loss of 18%, compared to 12% in real-world evidence without structured support. We also published our 30th peer-reviewed manuscript, focused on our joint and muscle health program, which showed that patients using a modest virtual physical therapy have lower total health care utilization and reduced MSK related costs and encounters on average at 6 and 12 months, compared to in-person PT even after accounting for program costs. These results demonstrate that our human-led digitally enabled model can drive outcomes that matter to members and customers. Our third pillar is the power of our multi-condition platform relative to Point Solutions. Customers increasingly recognize the advantage of working with a single scale partner across multiple conditions. Our ability to support obesity and weight health, diabetes, hypertension, cholesterol and MSK conditions, and GLP-1 care as 1 provider continues to be a key differentiator and the growth across our cardiometabolic suite reflects this. Revenue from our weight health program, which increasingly includes members on GLP-1s for weight loss, grew more than 50%, and revenue from both our diabetes and hypertension programs grew at rates 45% or more year-over-year. That broad-based growth across conditions reflects employers and health plans leaning into Omada as their integrated cardiometabolic partner, not just a single condition solution. In summary, our progress across innovation, programs that work, and our multi-condition platform helped to drive our strong 2025 results and provide tangible proof that customers are buying into this vision. We believe we're well positioned for 2026 and beyond. And with that, I'll turn it over to Steve. Steven Cook: Thank you, Wei-Li. Hello, everyone. I'll walk through our Q4 and full year 2025 results, discuss the key drivers and provide our outlook for 2026. Let me start with top line results. Members grew 55% year-over-year to 886,000. Revenue in Q4 was $76 million, up 58% year-over-year. For the full year, revenue was $260 million, up 53% compared to 2024. The primary factors driving growth include a broad industry focus on cardiometabolic conditions, deeper penetration of multi-condition customers strong adoption of our GLP-1 programs and more effective enrollment campaigns. As these strong results in macro trends feed into our business model, they are creating a durable, visible revenue stream with meaningful operating leverage, which I'll discuss in a moment. I'd also like to note that in Q4, we had a onetime transaction that resulted in approximately $2 million of additional revenue, gross profit and adjusted EBITDA. While relatively small and immaterial to full year results, I wanted to note it for any impact on sequential modeling from Q4 to Q1. Turning to gross profit. We saw significant margin expansion in both Q4 and the full year. Q4 GAAP gross profit was $54 million, up 67% year-over-year with GAAP gross margin of 71% versus 67% in the prior year. For the full year, GAAP gross profit was $171 million, up 66% and GAAP gross margin was 66% versus 61% in 2024. Q4 adjusted gross profit was $55 million, up 65%, compared to Q4 '24, and adjusted gross margin reached 73% in Q4, an all-time high and a 320 basis point improvement year-over-year, demonstrating our ability to operate above our long-term 70% plus adjusted gross margin target for the first time. For the full year, adjusted gross profit increased 64% to $176 million outpacing our 53% revenue growth by 11 points and driving adjusted gross margin up 450 basis points over 2024 to 68% in 2025. Over the past 4 years, we've nearly quadrupled revenue and expanded adjusted gross margins by more than 1,600 basis points, a trajectory that underscores the leverage in our business. This has been driven by our growing member base and multi-condition expansion with spreads fixed costs across a larger revenue base as well as care team efficiencies enabled by our platform, AI-powered tools and optimized staffing models. We believe these drivers can continue contributing margin expansion as we pursue our long-term target of 70% plus full year adjusted gross margins. Moving to operating expenses. We continue to demonstrate strong leverage below the gross profit line. Q4 GAAP operating expenses increased 28% year-over-year to $50 million, for the full year, GAAP operating expenses were up 25% to $183 million. Adjusted operating expenses grew 27% to $47 million in Q4 and 24% for the full year to $170 million. That 24% annual growth supported 53% revenue growth with strong operating leverage across all 3 operating expense lines. Key drivers included scale from our channel partnerships and B2C go-to-market approach, sales force leverage from selling multiple conditions with 1 sales force, R&D efficiency from a flexible program architecture and spending discipline as we work towards sustained profitability. Our steadfast commitment and multiyear focus on achieving profitability paid off in 2025 as we reached positive adjusted EBITDA a full year ahead of expectations, a milestone driven by financial discipline, strong growth and the operating leverage I've just described. We're proud of this accomplishment. Notably, Q4 also marked our first quarter of GAAP net income profitability. Specifically, we delivered GAAP net income of $5 million in Q4, which was a $13 million improvement, compared to a net loss of $8 million in Q4 of 2024. For the full year, GAAP net loss was $13 million, an improvement of $34 million, compared to a loss of $47 million in 2024. Adjusted EBITDA in Q4 was $8 million with an 11% margin, an improvement of $12 million and 18 margin points compared to a loss of $4 million and a negative 7% margin in Q4 '24. We Full year adjusted EBITDA was $6 million with a 2% margin, an improvement of $35 million and 19% margin points compared to a loss of $29 million and a negative 17% margin in 2024. Notably, we converted 40% of incremental revenue to the adjusted EBITDA line in 2025, which continues to highlight the scalability of our business. To wrap the discussion of our P&L, I'd like to provide some additional perspective. After we went public in June, initial consensus estimates were approximately $222 million of revenue and a $19 million adjusted EBITDA loss for 2025. We delivered $260 million of revenue and $6 million of adjusted EBITDA, with the positive adjusted EBITDA occurring a year ahead of projections. We're pleased with that performance, and we believe it reflects our strong market position, solid execution and the strength of our business model. Specific to our balance sheet, we ended 2025 with $222 million of cash and cash equivalents, up from $199 million at the end of Q3. We generated positive operating cash flow for the full year, a significant milestone. We have no debt outstanding having repaid our $30 million credit facility earlier in 2025. This gives us a strong financial position to invest in initiatives aimed at driving incremental growth and ROI while also maintaining flexibility. As for our guidance, we expect 2026 revenue in the range of $312 million to $322 million, with the midpoint reflecting 22% growth over 2025. We expect 2026 adjusted EBITDA in the range of $7 million to $15 million with the midpoint reflecting a $5 million increase compared to last year. Similar to our 2025 performance, our 2026 guidance is significantly above initial post-IPO consensus expectations. With our revenue midpoint approximately $50 million higher and adjusted EBITDA approximately $15 million higher, reflecting continued strong execution. Let me provide context on how we've approached guidance and on our growth trajectory. Our guided revenue of 22% at the midpoint comes on top of a 53% growth year that included a strong first wave of GLP-1 adoption and significant commercial momentum. This is an exceptional baseline to build from. We built our guidance, starting with our year-end base of 886,000 members and over 25 million estimated covered lives. Then we layer in historical enrollment conversion rates and observed engagement and retention trends with no significant improvement assumed. This allows us to anchor to what we consider our more highly visible level of revenue. Just as important is what's not in the guide. We have not embedded meaningful contributions from GLP-1 prescribing, GLP-1 Flex Care or our cholesterol program, and we have not assumed further improvement in enrollment conversion rates or significant revenue from contracts not yet signed. Our adjusted EBITDA guidance reflects the revenue outlook combined with the investments we've discussed. If we achieve revenue upside, we would expect a portion to contribute to a stronger adjusted EBITDA. We believe this approach reflects appropriate prudence for initial guidance and positions us to build on our track record of execution. Stepping back from the specifics of our guidance, we believe the most important story is the quality of our growth in 2025. As I shared, we converted 40% of incremental revenue to EBITDA. We achieved our first quarter of GAAP profitability, and we generated positive cash flow for the year. We continue to believe in the long-term scalability and profitability of our business. In closing, we are very pleased with our 2025 results, which reflected outperformance across all key metrics. Looking ahead, we believe our market position, strategic investments and scalable business model position us well for durable profitable growth. With that, we'll open the call for questions. Operator: [Operator Instructions] Our first question comes from David Roman with Goldman Sachs. David Roman: Steve, I really appreciate the detail on the guidance basis as you think about 2026. So maybe I could just push you a little bit on the assumptions there. And very specifically, I just want to make sure that we're hearing the outlook correctly that effectively the guidance contemplates only contribution from the existing business and not necessarily some of the new opportunities -- and if that is the case, I just want to make sure that we're not misreading this, and it looks like the guidance suggests some of the base business starting to hit a wall or markedly decelerates. So just to make sure that we're interpreting that correctly, and that's how you're intending to frame the guidance. Steven Cook: Yes, David, thank you for the question. Firstly, we're obviously extremely proud of the results in 2025 per some of the prepared remarks, growing 53% in 2025 was well ahead of expectations. And when we look back at your commitments from just 6 months plus ago during the IPO, we're trending meaningfully above that path at $50 million ahead on revenue and $15 million ahead on EBITDA. So we're carrying a tremendous amount of momentum, and we're a full year ahead of expectations that we set at that time. It's also worth noting that from the get-go, we have been communicating externally that we intend to grow this business for the foreseeable future at least a minimum commitment of 20-plus percent. And we think that the guidance reflects commitment against those projections. As we think about some of the inputs there, you're exactly -- you're correct in that we're basing it off of 886,000 exit members we're looking back. We're coming through all of our historical trends on enrollment rate conversion, on engagement rate and assuming that there's no material improvement across those metrics throughout the course of the year. We have a lot of internal investments and initiatives focused on improving those metrics to the extent we're able to capitalize on those throughout the course of the year, that would be incremental revenue compared to our guide. And then per some of your commentary, we spent some time in talking about our prescribing capabilities, GLP-1 Flex Care cholesterol. These are also not materially in our guidance numbers. Are we going to be launching a lot of those in market this year and as those gain market traction, and we have more of our customers purchasing those, those will be reflected in potential upside to the guide. David Roman: Super helpful. And maybe just a follow-up. As you kind of think about the -- what you've observed and February from conversions off of the 2025 -- sorry, excuse me, 2026 selling season. Can you just give us some flavor of maybe a little more detail how that tracked? And then how we should think about just the cadence of revenue and profitability throughout the year to make sure we have the phasing of the year, correct. Wei-Li Shao: This is Wei-Li. Let me talk a little bit about how we close the end of the year and to the extent that I can cast a little bit of high-level color on what we've seen this year in just the first couple of months. We're pretty pleased with how we closed the end of the selling season. I mean, we're up over 5 million additional eligible covered lives across our business. We've also seen continued momentum in terms of multi-condition product sales. And as mentioned earlier, last year, we improved our enrollment rate yield, our enrollment rate performance, more than 20%, 24% to be precise. And so we're pleased with the overall funnel developments, if you want to put it that way, or funnel conversion improvements, and as mentioned by Steve, that's going to be carried on into how we think about this year's performance. I won't go into too much quantitative characterization of January and February. But suffice it to say that things are tracking, and we like what we see there. As you might expect, as it is every year, the additional covered lives that we closed in the prior year, oftentimes are going live at the beginning of the year, it's the heavy enrollment season. and that certain pattern or that seasonality certainly exists too as well. Steven Cook: And David, I'll just add a little bit of color on some of the revenue and the EBITDA progression per your question. We do expect -- we had an extremely strong Q4. We saw 11% sequential growth quarter-over-quarter. That's stronger compared to what we've observed historically. If you looked at 2024, we only saw a 5% increase there. So we don't expect as big of a jump on Q4 revenue -- on Q1 revenue basing off of where we exited the year, and we also did have that onetime $2 million adjustment, which we don't intend to repeat going through the year. So Q1 should roughly be -- expect to be flat relative to Q4 win accounting for that $2 million, and then we'll sequentially grow revenue throughout the course of the year. And then as you're aware, Q1 is our largest net new enrollment volume quarter. It carries additional costs associated with increased device shipments as well as increased cost for our care teams as there's more labor in the first quarter. And then we'll steadily climb out of that as we go throughout the year, improving gross margin and improving EBITDA margin throughout the remainder of the year. Operator: Our next question comes from Sean Dodge with BMO Capital Markets. Sean Dodge: I just want to start maybe understanding a little bit better the mechanics of the new GLP-1 Flex Care program. It sounds like the existing GLP-1 Care Track, but now just building connections for the member to get a script and actually buy the drug. Does building that in, does that change the economics of the program for you at all? Do you get compensated for facilitating those connections? Or is this just more about kind of broadening the appeal and kind of the utility, the program to more employers. Sean Duffy: Thank you Sean. This is Sean here. Happy to talk about Flex Care. Let me just start with the characterization on the segments, in the employer market specific to GLP-1s for obesity because there are 2 primary groups. The first is those who cover. So that's roughly 45% of the market. They cover GLP-1s for obesity. Historically, when we talked about our Care Track, that's who that was targeted toward. Those are folks who want to maximize the value of that investment. It's actually a bigger segment. And that's -- roughly 55% of the large employers and those that just do not cover GLP-1s for obesity yet. But equally, they do want a way to support their employees. And that is what the GLP Flex Care solution is targeted toward because it gives these employers a structured model, where, yes, for your comments, they do pay Omada and would pay Omada more for the GLP-1 Flex Care offering because that includes clinical evaluation, prescribing lab ordering and Omada lifestyle and behavioral support while eligible employees can purchase the branded GLPs out of pocket through vetted cash pay channels, of course, with a focus on accessing the lowest available price. So this, in turn, allows that segment of the market to still offer their employees a chance for high-quality GLP-1 care with strong oversight without immediately taking on that full drug spend risk. Sean Dodge: That's super helpful. And then, Wei-Li, you mentioned having improved enrollment yield. I think you said 24% last year, so driving significant efficiencies on the marketing front. Is there anything you can -- anything more you can share on just like how you've been able to do that? I think you mentioned AI is playing a role there. And then just maybe how much runway you see being left when it comes to driving kind of incremental margin or marketing efficiencies? Wei-Li Shao: Yes, sure, Sean. Let me address that. In terms of how we were able to achieve that -- as you and others may recall, we do a lot of digital marketing. And as a result of that, we actually have the ability to do dozens if not hundreds of A/B tests. Those A/B tests can switch out concepts, creative, language, call to action, you name it, across the spectrum of what one would think about optimizing in our campaign outreach. And so that certainly is a component of that, and we did that last year. We did that in 2024. We did that in 2023. We're going to do it again in 2026. And we still think that there's runway to optimize those campaigns in that outreach. The other component, of course, is a multichannel component. And when we say multichannel or omnichannel, we mean about digital signage on-site at an employer, especially if they have a large distribution center with a large warehouse, for instance, employees that are on site. And then other forms, including direct mail, other types of flyers, so on and so forth. And even in those particular channels, we can then optimize, again, the frequency, how often we send, what is the depth of the content, the copy, the creative. And then we can actually look across entire campaigns and how we define a campaign is really a combination of all those things in a multichannel approach to understand how we stack them on each other. And so there's multiple dimensions upon which we can actually optimize and improve yield rates or employee enrollment rate. And we think, again, that there's still a runway to improve that in 2026, and that certainly is on the docket for us to do so. Operator: Our next question comes from Craig Hettenbach with Morgan Stanley. Craig Hettenbach: Sean, just going back to AI, plenty of debate on the impact, including potential disruption to business models. So against the backdrop of some of the concerns in the marketplace, where do you see Omada is most insulated? And what are some of the things you're doing to benefit from AI as opposed to be disrupted? Sean Duffy: Craig, thank you for the question. It is one that I and we think about a lot. Pulling that beyond Omada, I believe we are on the frontier of just a remarkably innovative moment in the history of health care. And this is the moment where, in our view, it's being propelled by AI. And so against that, there are a number of things that, I think, frankly, any innovative company can do, that these include leveraging AI coding assistance, using AI to improve member support using exciting frontier models within their app. So Omada is doing these. We're already seeing signs of how this impacts the business on a day-to-day basis, our members on a day-to-day basis, and that is, of course, an important part of ongoing improvements to margin. That being said, those are perhaps table stakes. I mean yes, there is one thing that we believe that is true today and will be true tomorrow. And that is the value of unique data sets that, in many cases, take years to build. We have tens of millions of care team conversations, hundreds of millions of biometric data points and billions of real-world data points. And so what that allows us to do and what we're excited is allows us to customize and personalize care in a way that's unique and in a way that's valuable. So it will take time to prove this out, and it will take time because we are in health care. We're regulated. We have devices, hardware, a supply chain, a complex web of distribution relationships and we're dealing with people's lives, which we take very seriously. So when I'm asked that question, I don't tend to view it as if AI will disrupt health care or disrupt Omada, rather, I view it as a question of who is going to build it in the right way in health care. And I believe we have the unique foundations to do just that here at Omada. Craig Hettenbach: Helpful. And as a follow-up, I wanted to focus in on just the hypertension/diabetes programs. I feel like they tend to get overshadowed just by all the excitement and interest in GLP-1. So -- can you talk about the traction you're seeing in those programs and just how you see the runway for growth in the coming years? Wei-Li Shao: Yes. Craig, this is Wei-Li, and you get extra points for asking a non-GLP-1 question. So I appreciate that. Yes, we've always said that the GLP-1 moment is actually a cardiometabolic moment, insofar as meaning that the discussion is a gateway into the broader cardiometabolic kind of condition question and challenge that our customers face. And in fact, when you look at the cardiometabolic landscape, the overwhelming majority of people who suffer from those conditions are not taking a GLP-1. So it actually represents a TAM that is as, if not larger than the current GLP-1 accessible market. So what does that mean in terms of our performance. We've always said from the get-go that a pillar of our strategy is to understand and realize that people who suffer from, let's say, obesity, also have diabetes, also have hypertension. As we all know, and that's why we provide a multi-condition platform. In multi-condition sales continues to be something that is strategically important and a huge strategic focus for us. And we talked about our progress on that. It continues -- we continue to make progress on that, and we're happy with that. But maybe a way to talk about the results in our portfolio products is that we saw strong growth, not only across our cardiometabolic suite, but across the individual programs. And so prevention or weight health, obesity grew more than 50% in both diabetes and hypertension grew 45% or more year-over-year. And we think that breadth of growth really reflects the customers increasingly using Omada as their integrated cardiometabolic partner excuse me, and not just for a single condition. So we're seeing growth in summary, in both diabetes and hypertension, almost directionally similar to the overall growth rate that we saw last year overall in revenue. Operator: Our next question comes from Ryan MacDonald with Needham & Company. Ryan MacDonald: Congrats on a quarter. Steve, maybe first for you, just so as we're thinking through the 2026 guidance. So obviously, you mentioned sort of no material changes or improvements in sort of enrollment yields and rates from there. So should we sort of take the guidance as sort of you grew covered lives 25% on a year-over-year basis. And so if you assume that sort of same conversion rate that sort of member count grows about that 25% rate. And then you see then some declines in average revenue per member. And if that's the case, can you help us understand what you're seeing from a program mix perspective that may be driving sort of this continued sort of ARPU declines. Steven Cook: Yes, absolutely right. Happy to provide some color there. Again, per some of the prior comments, just to recalibrate on what's in our baseline assumptions. It's just starting with that 886,000 members and then layering on some historical assumptions around enrollment conversion as well as engagement rate. I think the easiest way to think through the modeling next year is that ARPU stays relatively flat. Historically, it's been roughly just shy of $300 per ending member. And so -- and then building up your total member base off of that growing roughly in line with revenue guidance at 22%. What's important is what's not in the guide. And we talked a little bit about this, all which have the ability to drive incremental ARPU throughout the year. The first being some of the new product categories we're entering to the extent we're able to layer on GLP-1 Flex Care prescribing cholesterol. These are all accretive to ARPU throughout the year. we are creating internally some investments around driving more engagement through increased product and feature enhancement. The longer we can keep folks in program that also has the ability to drive additional ARPU with a little incremental cost as we go throughout the year. So the really way to just take the basis is to grow the member count by 22% and keep revenue roughly flat. Ryan MacDonald: Super helpful. I appreciate the finer point on that. And then maybe a secondary question for Wei-Li or Sean. Earlier this week, we had a benefits conference and what the conversation really standard around sort of for this year was -- so this idea that your average employee benefits portfolio is about 28 different point solutions today and that the conversation is really around in the current budgetary environment with health care costs continuing to rise at accelerating rates, as more of a consolidation, looking to see where there are duplicate solutions and then optimizing for outcomes, would love to know if this is something you're seeing sort of in the early stages of the 2026 selling season and how maybe this could potentially favor your multi-condition platform relative to sort of individual point solutions providers. Sean Duffy: Yes, Ryan, thank you for the question. I mean if you serve as a Head of Benefits and were on LinkedIn, you'd have about 50 messages a week coming in from point solution providers, and that does grow tiring, and that's a message we hear frequently about. And it's one that we respond to. It's been a recurring theme that customers love the fact that they can get quality care across multiple care areas from Omada. We see that across our portfolio suite. And even we see that within GLP-1s, where one buyer is one buyer. And equally, they recognize that tomorrow's strategy specific to their GLP-1s may not be the same as today's. And so we are thrilled with that. In fact, I think we have a proof of concept of this approach right in front of us in cholesterol. We announced Omada for cholesterol. That's a natural extension of our cardiometabolic suite. We like that. High cholesterol often, as shared in the remarks, coexists with obesity, diabetes hypertension. And one of the reasons that we got excited to do it is we heard about it from our largest customers who said, this is a clinical area where I care about. Omada, we trust you, we'd love if we could work together on it. And then we're starting out of the gate with a customer lined up there for Omada for cholesterol. Wei-Li Shao: And if I were just to tag on a little bit to that and add and what really drove that particular situation, and we're seeing is repeated across a number of opportunities is exactly what you mentioned around a fatigue around single-point solutions, imagining somebody who suffers from obesity, diabetes, hypertension and now, of course, some dyslipidemia or high cholesterol, they could be on as many 4 different applications in the consolidation into one multiproduct company, Omada, that has proven evidence-based results and outcomes and ROI, certainly is attracted to buyers, and we're seeing that play through, which is why we continue to see momentum in multiproduct sales and growth across the portfolio of programs. The last bit I would also mention is that we happen to be in the actual therapeutic areas or disease areas that HR benefits company CEOs, CFOs understand are actually the biggest drivers of their health care spend cardiovascular events, cholesterol, heart attacks, diabetes, obesity, MSK, they always register small company, big company always to the top of the top 5, top 6 areas that are driving spend. And so as employers and benefit solution providers decide to consolidate away from "you said 28 different point solution providers". They're obviously going to think about Omada, they're going to think about multi-condition platforms, but they're also going to think about those providers that are in the sweet spots that are driving most of their year-over-year health care spend and it happens to be the ones we're in. Operator: Our next question comes from Elizabeth Anderson with Evercore ISI. Elizabeth Anderson: Kind of think about improving gross margins. Steve, obviously heard what you said about the contribution to gross margins from the $2 million, but still improved quite nicely even without that. So can you talk about that and how you see those flowing through into 2026. I understand that, obviously, you guys have seasonality that will impact particularly the 1Q numbers, but just sort of how to think about that incrementally? And then if there's any more color you can provide on sort of what that adjustment was in the fourth quarter, that would also be super helpful. Steven Cook: Yes. Maybe I'll start there with the adjustment in the fourth quarter. We did have a $2 million onetime true-up. This was a negotiation that was cascading throughout the year with one of our larger partners. We also resolved that in the fourth quarter and as such, released that revenue. If we had negotiated it and resolved it earlier in the year, you would have seen that revenue recognized ratably throughout the course of the year. We don't expect that to recur on a go-forward basis. With regard to gross margin, again, tremendously proud of our performance in Q4, hitting 73% gross margin. As we've communicated consistently, our terminal annualized target continues to be 70% plus. So we believe Q4 really demonstrates our ability to hit to March towards that target in the long term. Two main drivers here: the first being ongoing traction with multi-condition customers. So the more diabetes and hypertension revenue that we drive through, those are coming through at our -- those are our highest priced products. And they drive incremental gross margin dollars and gross profit dollars for us. That was a large contributor. And then the second piece is just more cost efficiencies, and that came in 2 forms. The first is us just continuing to optimize our labor costs across our care teams. We've experimented with dozens of staffing models, and we really feel like we fine-tune that over the course of the past several years, which led to additional margin expansion as well as some of the prepared remarks, us continuing just to use AI and using a contact summarization, making our care teams more effective and more efficient. And we're going to be planning to roll some of those -- that momentum throughout the course of the next year. and we envision 2026 being another key stepping stone on our path to getting to a 70-plus percent gross margin. Operator: Our next question comes from Stan Berenshteyn with Wells Fargo. Stanislav Berenshteyn: First on retention dynamics, I know you commented that they're pretty steady over 12 and 24 months. I'm curious whether the new products of OmadaSpark and Meal Map, whether they've demonstrated any measurable improvement in engagement that you can point to? Wei-Li Shao: Yes. Thanks a lot, Stan. Wei-Li here. Let me take this one around OmadaSpark. So we launched this in the first half of last year and then fast forward with some enhancements to OmadaSpark. And so we're proud of that, and it allows our members to essentially have a nutritional AI assistant. Food is such an important part of the behavior change process. And then, of course, the Meal Map allows individuals to either dictate their food, snapshot their food with their camera, log their food in a number of different ways and then the nutritional density of the food is actually registered very accurately and then that information then translates into what meaningful changes can they make. And so I kind of recourse all of that because you can imagine the value that numbers have in seeing this knowing that nutrition in food and food quality and nutritional density is such an important part of generating a positive outcome, not just in obesity and weight health, but across diabetes, hypertension and now cholesterol and believe it or not, even in MSK as well. We're encouraged by the early results, members who interact with a lot of Spark, our health AI assistant, along with Meal Map demonstrating higher levels of ongoing engagement. And in fact, because they are returning to the app more frequently compared to those who haven't yet used the tools. And so we're seeing that lift. Now specifically, the Meal Map, which is the part and parcel of understanding what you eat, and then matching the behavior change. We're also seeing meaningful lifts in actual food tracking behavior, which is one of our strongest predictors of sustained weight management. And so all of these, of course, drive more activity with the app. And because we bill based upon activity for the majority of our business, we do believe over the long haul, and over time that this should potentially create some meaningful improvement in terms of financial performance. Stanislav Berenshteyn: And then I just want to follow up on the cover lives. I think you mentioned 25 million. That's about 5 million incremental from your prior disclosures. Can you share with us what is the mix of self-insured versus fully insured within those 5 million that you onboarded. Sean Duffy: Yes, sure. Right. So of the 5 million that we closed, the way to think about it and characterize that is that it was driven by strength across multiple commercial channels and across the product portfolio. So it wasn't densely concentrated in 1 significantly over the other. But if you were to look at the mix, our PBM channel is the largest contributor followed by strong performance in our self-insured, fully insured and ASO business. Operator: [Operator Instructions] Our next question comes from Richard Close with Canaccord Genuity. Richard Close: Great and all the success this year. Sean, maybe on GLPs, welcome your perspective on how you think about GLP prices coming down and how that impacts the growth opportunity for Omada, I do think there's some fears out there as those prices come down, maybe demand for programs like Omada gets impacted? Sean Duffy: Yes, Richard, thank you for the question. It's certainly an important one. And within that, it's also important to share that the way our accounts and customers view Omada is not a cost on top of their medication spend, but rather a value maximizer of their decision to cover GLP-1s for obesity. And so again, right now, the accounts that cover GLP-1s for obesity, it's roughly 45% of the market. They know the cost of that decision and what they're after is reduced waste. And so Omada Care Tracking capabilities allow us to support them across the entire journey from helping inform prescription decisions with our new prescribing capabilities to supporting realized outcomes well on therapy and, of course, to safely discontinue when appropriate. And so net, relative to the price of the meds, we believe these lower price points actually have the potential to increase GLP-1 utilization, which increases access to the medicines and thus, increases the need for Care Track services like Omada. And equally, for the market where employers say, look, I just can't afford these meds, I mean that's where a new GLP-1 Flex Care offering comes in, and that's the 55% of the employer market segment specific to GLP-1s. Richard Close: And then, Steve, maybe as a follow-up. I think you mentioned all the new programs are accretive. Can you put that into perspective in terms of ARPU? Steven Cook: Yes. That's a great question. We have priced across prescribing cholesterol and our GLP-1 Flex Care above our current rates. So for cholesterol, specifically, that's roughly priced in line with hypertension. But as we view -- as we observe more customers in taking these products, these all have the potential to uplift ARPU above where our current run rates are at $300 per year per average member. So as we get more traction in market, again, these are very nascent products. We're just starting out with them. We'll be able to provide more specific guidance on the exact measure of uplift that we're observing as we get traction with some clients. Operator: And our final question comes from Carly Buecker with Barclays. Carly Buecker: You have Carly on for Saket here. If we look back to 2018, when Omada launched its diabetes and hypertension programs, can you walk us through what the adoption curve looks like for those programs over time as we think about kind of a parallel to help frame the launch of the cholesterol program. How long did it take to roll out the diabetes and hypertension modules more broadly? And when did you start to see adoption really pick up steam and drive incremental revenue? Sean Duffy: Yes, I can start because again, those are good examples of how we love to innovate, which is on the back of really listening deeply to customer needs and ask and ideally finding kind of a one or multiple marquee customers to start the innovation journey with you. And so that was a couple of long-standing customers that had said, you know what, Omada, we love what you do in prevention in obesity and weight health. Would you consider diabetes? And so that started the journey. And then we did highlight the growth rates which are comparable to prevention, which I think is a statement on how that journey has gone. And so we're hoping to rinse and repeat with, of course, cholesterol, hoping to rinse and repeat with that same process of listening intently on things like GLP-1 prescribing GLP-1 Flex Care because we know based on how those grow, how they can be accretive over time. But I don't know, Wei-Li, if you have any comments on top of what I've shared. Wei-Li Shao: Yes. The only thing I would share on top of would be kind of qualitative and just imagining kind of the intent of the question. That was 6, 7 years ago in the Omada that was then in 2018. We're a very, very different Omada today. Our capabilities are far more evolved across the entire conversion funnel, starting with closing lives with channels and then employers and, of course, enrollment rate and engagement and so on and so forth, activation through the members. All that to say to me that I think what would have taken us 3, 4 years to eventually sell through a payer or PBM and then build a book of business to employers and then begin to enroll, I think we've gotten better at that. I know we've gotten better at that. And so we certainly think that we can beat those time curves in terms of full-scale adoption. The last thing I'd also remind everyone to as well is that our approach over the last few years in innovating and expanding new programs has not really just been looking at TAM, but as Sean mentioned, really listening to our customers and oftentimes, the trigger for us which accelerates adoption is actually when a customer says, "Boy, if you do this, we'll buy it." and we're seeing that reflected with our cholesterol program where a large customer came to us and said, hey, we're seeing this being a cost driver in our health care spend. We'd love to partner with you all, and we built that and immediately win in contracting and launched that customer earlier this year. And so the approach there is as such. Sean Duffy: And then last thing here. So just stepping back, what's fun is if you look at all these launches, we believe they really add up. I mean, between GLP-1 prescribing, GLP-1 Flex Care, Omada for Cholesterol, as I reflect on the journey we've been on, we are on pace to roll out more new offerings in 2026 than in any year in the history of our company. And so what this translates into, of course, is the opportunity set, translates into new ways to support specific customer needs and we believe a solid foundation for durable growth. Operator: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.
Fabiana Oliver: Good morning, everyone. Let's begin the Lojas Renner S.A. video conference call. With me today are Fabio Faccio, our CEO; and Daniel Santos, CFO. Before giving them the floor, I'd like to make some announcements. This video conference call is being recorded. And translated simultaneously into English. We will show here the presentation in Portuguese. So for those following the call in English, the English version can be downloaded from the chat. And from our IR website. Questions from journalists can be directed to our press office through the (113) 165-9586. Before proceeding, let me mention that forward-looking statements relative to the company's business perspectives, projections and operating and financial goals are based on beliefs and assumptions and on information currently available. They are not a guarantee of performance as they depend on circumstances that may or may not occur. During the Q&A PAUSE Questions may be asked live. I now turn the floor to Fabio. Fabio Faccio: Very well. Thank you all. Thank you for coming. Thank you for your time. Our Q4 confirms that our model generates profitability. Gross margin gains are the result of our operational evolution and the investments we made. We are now close to prepandemic levels, and the margin is sustainable, also with opportunity for growth. Expense growth was half that of sales growth. Even having a start of quarter that was slightly more challenging with milder temperatures, the performance of Black Friday and Christmas were very good and also with a lower promotional activity than the previous year. The efficiency of our model signaled another opportunity that of improving sales performance during times of transition. We also made progress in structuring our expense reduction plan. And this is an essential opportunity to prepare our company for the 2026-2030 period. So what characterized the year of 2025? Our sales performance in 2025 in the full year was in line with our expectations. We grew twice as fast as the market according to the trade monthly survey. We have the highest growth among our peers, our comparable peers. And we confirmed the expectations we had at the beginning of the year regarding how the year would unfold. We wouldn't have equal quarters, but the first half would be stronger. We grew 15.6% in the first half and the second half with lower growth. 2025 also confirmed the efficiency of our model in growing margins. This growing margins are the result of our inventory management, not only with smaller inventories, but mainly newer inventories. At the same time, we posted productivity gains with dilution of expenses. At Realize, we also had a year of good results, still acting prudently regarding credit granting. Well, given the risky environment that we see. Youcom also posted another year of strong growth. And Camicado had excellent margin growth. We increased our ROIC and delivered robust cash generation. We posted record net income, both in the quarter and in the full year with a return of BRL 1.8 billion to our shareholders in terms of interest on capital or share buyback. And we had a 27% increase in earnings per share. We ended 2025 motivated by the progress achieved by the company. I would also like to give you some examples of actions we took over 2025. When we look at our Renner brand and talking about fashion execution. We wanted to leave a universe of just fashion retail to become more of a fashion brand with leadership and authority in fashion. Within the Dare to Be You positioning, we strengthened our collabs and licensing strategies aiming to expand our perception as fashion experts and to reinforce sustainability and a Brazilian identity. We built a network of relationships with ambassadors, creators and influencers, who reinforce brand awareness, principality and leadership, and we evolved our artificial intelligence tools for further personalization and greater assertiveness. As a result, the Renner brand grew by 25 percentage points in brand recognition as a brand that knows, understands and creates fashion. Brand relevance remains unchanged. Very high, top of change in its category fashion and Brazil's most beloved fashion brand. Renner is also the brand with the highest engagement on social media. Now talking about expansion. We began accelerating store openings in 2025. In 2024, we already had more stores. We opened 23 stores. In 2025, we opened 34 stores. And in 2024 we closed more stores. So net opening in 2024 was 13. In 2025, net opening 31 stores. We accelerated expansion and remodeling of stores, also because those renovated stores provide improved customer experience and boost sales. And we had omni growth. It happened in brick-and-mortar stores and in the digital channel. In digital, we continue to gain scale and efficiency. We adopted new initiatives which personalize the offer and contribute to an increase in conversion rate. Let me give you some examples of digital advances. Just this quarter, Q4, we launched the virtual fitting room, where customers can try on different pieces of clothing in a virtual dynamic and very realistic way. Well, this is not yet available for all items. We see a 2.6% increase in conversion, and this should continue to evolve when we start operating this to more elaborate items into more pieces of clothing. Another important example. We are expanding the use of AI in the creation of content, mainly for the kids category. This has led to a 60% increase in views for this category. Another example is the omni shopping bag, where shoppers can purchase online and off-line at the same time. So they are at a store, they can buy, they can order something else to be delivered to their home. And this improves the culture and conversion rate. In brick-and-mortar stores, we have a much more assertive mix. We have more personalized fulfillment for every group of stores, for every group of customers. We have an increasingly fluid online and offline integration. And as a consequence of that, in addition to omni and off growth, we have continuous increase in NPS and expansion of the customer base. We will continue to advance in omni channel productivity and consistently scale value. Now when we do all that, we increased our productivity gains. We further expanded our leadership in performance per square meter. Sales per square meter reached BRL 17,000 per square meter in the year. We continue to have the highest productivity in the sector, increasing the difference in the gap to our peers. On average, we are 45% above our direct competitors. We had the highest sales growth among comparable peers but we have an opportunity to grow and sell even more. The operating model allowed us to see 2 opportunities to boost our results: executing cost reduction strategies and optimizing sales opportunities, mainly during seasonal transitions replacing marked-down items with new products on a larger scale than we have historically done. This path like all model evolution is gradual and continuous but it is important also to understand what 2025 meant for our 2026-2030 strategy, which we announced in our last Investor Day at the end of the year. Although 2025 is not part of the guidance horizon, 2026 to 2030, well, the year evolved in the same direction as the guidance in terms of sales growth, dilution of expenses, increased profitability and ROIC and even with store expansion, which was 34 stores in 2025. For 2026, we are aiming to 50 to 60 stores in total. So 2025 has already shown that the plan that we announced is feasible and tangible. I'll now hand over to Daniel, he's going to give us more data on the quarter and full year 2025. Daniel dos Santos: Thank you, Fabio. Good morning. To speak about growth. In Q4, we achieved 4.3% retail growth and 5.1% in apparel. This represents competitive sales growth even with lower than usual temperatures in the first half of the quarter, which resulted in lower store foot traffic and economic factors that pressured consumers' purchasing power. This performance reflected the positive reception of the high summer collection, particularly in the athleisure and beachwear categories and the improvement in the in-season reaction cycles and assortment allocation processes. In the full year 2025, we grew 9.2% in retail revenue and 10.4% in apparel. The breakdown of our 9.2% revenue growth already reflects the key growth pillars that support our long-term growth ambition. They are prices in line with market inflation, positive impact of mix due to better inventory mix, superior growth of the digital channel and Youcom and store expansion plan for Renner as well as for Youcom. In 2025, we opened 34 stores, including 14 Renner stores, 17 Youcom stores and 3 Camicado stores, resulting in a 1.8% expansion in full space. Not all of this expansion in area converted into sales in 2025, given that most of the openings occurred near the end of the year. We saw an increase in our customer base and in-store traffic and app and website traffic, which increased sales volume. We found that while our shoppers purchased fewer items per transaction, on the other hand, they made more purchases and spend more on average. On our digital channel, GMV grew by 10%, reaching a 14% share of total sales. This performance was driven by important innovations that enhance the customer experience and channel efficiency. As a result, retail revenue per square meter, one of the company's main drivers of growth and omnichannel productivity increased by more than 7% during the year, reaching BRL 17,000 per square meter, the highest among comparable peers. As for the gross margin. We ended Q4 with a retail gross margin of 56.5%, up 0.7 percentage points over fourth quarter 2024. Gross margin for apparel was 57.9%, increasing 0.8 percentage points. For the full year, gross margin grew 0.7 percentage points to 56.1% close to our historical record for gross margin. This performance was made possible by the greater share of new items in sales and the evolution of the supply model, which resulted in a healthy level of markdowns. The evolution and the mix added to price adjustments in line with inflation also contributed to an improvement in margins in 2025. Youcom reported a 0.9 percentage point reduction in gross margin in the quarter as a result of mix adjustments to renew inventories. These adjustments have already been made and Youcom will continue on its growth trajectory. For the full year, gross margin remained stable at around 6%. Camicado reported a 1.2 percentage point increase in gross margin compared to the previous year, reflecting adequate commercial management and a greater share of private label items, home and style. For the year, Camicado's gross margin was 56.5%, up 1.7 percentage points over the previous year. The company ended 2025 with a renewed inventory position and with fewer markdowns, which allowed us to start the year with renewed products in our stores, in our app and in our brick-and-mortar stores. As for expenses in the quarter, operating expenses grew by 2%, the lowest growth of the year. Even excluding PPR expenses, PPR being profit sharing program, our operating expenses grew 3.3%. As a result, we saw a dilution of expenses in relation to retail net revenue of 0.7 percentage points year-on-year. Sales expenses grew by around 3% in the quarter compared to the previous year, resulting in a 0.4 percentage point reduction in their share of retail revenue. General and administrative expenses grew 4% in Q4, in line with inflation for the period. The increase in spending on third-party services was offset by substantial reductions in shipping costs. In the full year, operating expenses grew 8%, resulting in dilution of expenses in relation to retail net revenue of 0.4 percentage points, reflecting our commitment to deliver consistent operational leverage in 2025. In 2025, expenses linked to the profit sharing program or PPR, which covers approximately 23,000 employees, excluding statutory offices grew 16% and accounted for 12% of net income, down 0.6 percentage points versus 2024. The total amount provisioned for 2025 was calculated based on the average achievement of 103% of corporate, individual and strategic targets. Each business unit has specific triggers and targets. Moving on now to Realize. The quarterly result of Realize reflects the consistency of risk management throughout the year, cautious origination and good portfolio risk management. It is important to note that we had a nonrecurring impact in 2025 of BRL 115 million that needs to be considered in the projections for 2026. And this nonrecurring impact happened entirely in the first half of the year. Our over 90 ex the effect of regulation of 4,966 closed at 13.8% in line with the previous year. And our short-term delinquency remains at low levels. This performance was mainly due to a careful credit granting model that allowed us to maintain a low-risk portfolio. In the medium term, we do not expect any change in our lending policy given the high default scenario that continues to happen in the country. As for net income in the company's profitability indicators, net income increased 13.4% in the quarter and 21.8% in the full year reaching a record mark of BRL 1.5 billion, reflecting improved operating performance in the Retail and Financial Services segments despite lower financial result and a higher effective corporate income tax rate. Earnings per share grew 26.7% in the full year, also a record mark. The 12-month cumulative ROIC increased by 2.3 percentage points to 14.7%. The continued growth of ROIC is supported by margin gains, higher asset turnover driven by inventory productivity, working capital discipline and store expansion with incremental returns in new markets. Cash generation in 2025 remained stable at BRL 1.4 billion, a slight decrease justified by an increase in CapEx in 2025. We distributed BRL 1.8 billion to shareholders in the period, including interest on capital and share buyback plan, which represented in total approximately 112% of the year's profit. As a reminder, distribution at this level of net income was only possible because we used reserves from previous years. Now as for the outlook for 2026. Our growth expectation for 2026 is 9% to 13%, in line with the guidance disclosed in the end of 2025 in our Investor Day. It is important to note and stress that growth dynamics for 2026 will be the opposite of what we saw in 2025. Stronger growth in the second half of the year due to a more challenging comparison base with the first half of 2025. When as Fabio mentioned, we grew 15.6%. The composition of revenue growth in 2026 will feature an increased contribution from revenue coming from accelerated expansion. In 2025, we accelerated expansion with 23 store openings concentrated mainly in Q4 '25. These new stores will contribute to sales for the whole 2026. In addition, we will expand by 50 to 60 stores, which will contribute significantly to year-end sales. And as mentioned on our Investor Day, we expect digital growth to outpace physical stores growth. In January and February of this year, we completed the transfer of old inventory from the digital channel to Cabreúva distribution center and ended sales operations via the Rio de Janeiro DC. This transfer caused the temporary unavailability of old inventory for the digital channel, impacting digital channel sales in Q1 but in a planned fashion. This situation was already -- has already been resolved. We chose to execute this based on our strategy in Q1 because it is the quarter with the lowest sales share and lowest operational impact for the year. This was an important step in the process of centralizing sales operations at the Sao Paulo Cabreúva distribution center. We will continue in 2026 on our journey to expand the gross margin. We will have operational leverage in 2026 as a result of expected growth and efficiency gains. We have made progress in identifying opportunities and now have the support of a consulting firm specialized in mapping out new initiatives and implementing short- and medium-term actions. As for capital allocation, we disclosed yesterday in a material fact that our proposed capital budget for 2026 is around BRL 1 billion with a focus on opening and renovation of stores. We expect to open between 50 and 60 stores. Our expansion process remains careful and diligent ensuring capital allocation in cities, in neighborhoods that are appropriate for our return objectives. As for capital distribution, profit distribution will be prioritized based on IoC, the buyback plan announced last year and/or dividends, all subject to the availability of reserves and our minimum cash limit. As a reminder, the distribution guidance we disclosed last year is an estimate. It does not represent a cap of distribution. In this way, we will continue our journey of ROIC evolution and value creation for our shareholders. With this, I turn the floor back to Fabi. Fabiana Oliver: Let us now begin the Q&A session. [Operator Instructions] First question from Joseph Giordano with JPMorgan. Joseph Giordano: I'd like to know more about 2 main points. The first leverage of sales per square meter. Perhaps we have 2 factors here. One is digital, as Fabi showed. He showed a lot of operational improvements and customer experience. And the second point, the renovations. We have a lot to be done during the year. Could you give us an update on how the stores have been performing -- renovated stores have been performing compared to the comparable cluster. How are you seeing this? And the second point has to do with the investments. We have the DC maturing. Of course, this contributes to gross margin. Daniel mentioned that he expects some expansion. So perhaps, 1 or 2 more years or expansion of gross margin. And then the CapEx for technology, there are many of initiatives, the CapEx is much higher. So I'd like you to explore these 2 points. Fabio Faccio: Thank you, Joseph. Well, on leverage of sales per square meter. As you mentioned, this comes from digital. Yes, we have been investing. And I think that I will also talk about technology CapEx. CapEx is mainly geared as a priority to new stores. In recent years, it was geared to infrastructure. And CapEx is also being directed to technology, data, artificial intelligence, improving customer's journey. So growth comes a lot from the digital channel and also the physical channel. I think it is an interrelationship, intertwining of both that is important. Improvements in digital have brought more improvements. It adds to total growth. But brick-and-mortar stores, both mature stores and renovated ones have been performing well. Both mature and renovated stores are above the average of the clusters. It's kind of hard to break down how much better our renovated store performs compared to others because there are many variables involved, but that performance is paying our bills because performance is improving. And as we mentioned in the Investor Day, we can have an investment cost per square meter, either new stores or renovated stores that is lower. We're being more efficient in using our investments. So this has brought -- this has been driven -- driving up our sales per square meter. As for the DC maturation and expansion of gross margin. It's all connected. It's not just the DC. As we always say, it's an end-to-end process. It's the whole model, capturing trends, improving collections, assertiveness of collections, assertiveness in distribution. It is our ability with the DC to distribute things in a granular fashion. This has helped us a lot. We have been reaping the fruits the stabilization of the DC in 2024, and we continue to reaping fruits now and in the future. And this is very important for the gross margin because the ticket has been increasing because we are selling new products, and we are reducing the sale of markdown items. That increases the ticket and the margin. So it's win-win. And this has been incremental month after month. It's easy to see in our balance sheet. We grew our sales 9% and reduced inventories by 3%. But a qualitative piece data, which is not there. So we have followed the percentage of our inventory, which is the oldest, more prone to markdowns, and that inventory was reduced by 16%. So we have a very competitive entry price for our shoppers with a healthy margin, and we can gain more margin by reducing markdowns. This is the result of the model that this is also a very important part of that. So it's the whole model and the DC contributing to that. Daniel dos Santos: Joe, your comment on the technology CapEx because we saw some reports talking about that. In Q4 there was a comment that there was a leap in CapEx, but 2 points to mention here. In our investment plan, disclosed in the beginning of the year about [ 320 ] technology was spent [ 350 ] flat. There was a theme of phasing out in Q4, there was slightly more spending. And basically, licenses. In technology, there are some licenses that are renewed between 3 and 4 years. So we had more licensing renewed in the end of the year. The license renew, there's a CapEx involved, but it's paid out over its use along the year. That's the only thing that I can comment on the technology CapEx. Fabiana Oliver: The next question from Pedro Pinto with Bradesco. Pedro Pinto: I'd like to mention 2 points. First, I'd like you to elaborate on expenses. You mentioned that in selling expenses, publicity and advertising sales were the highlight. In G&A, there was a reduction in utilities, in shipping. So could you elaborate on the line items that should support the 3.5% efficiency or percentage points in efficiency. There is a part related to operational efficiency. If the company has a 9% to 13% increase in revenue, but you suggested some line items where you could improve efficiency. Are these the ones? Are there any others? And is that the order of magnitude? That's my first point about expenses. The other point I'd like to explore is an update in the cohort of stores opened in 2024, '25. A lot of things happening in Q4 '25. We're not going to have a lot of data about that. But perhaps, those that have been opened for longer, I'd like to know about the ramp-up of sales? And things that the newer stores can inform us the timing, cost of occupancy, personnel versus the current lot of stores. If you could quantify that, it would be nice because with the acceleration of store openings that is coming, it would be nice to follow these metrics. Daniel dos Santos: Thank you, Pedro. Speaking about expenses. Well, first, as you said it yourself, we delivered operational leverage for 2025. And it is our target to deliver this over the 2026-2030 cycle. There are 2 drivers that we mentioned. First, the company's ability to deliver growth that we estimate between 9% to 13%. And doing that, delivering of that without the need to have greater investment. In other words, delivering growth by using an installed expense base that will allow us to have gains of scale. The other point is efficiency. It's what I mentioned in my outlook for 2026. We have identified some opportunities already. We have an external consulting firm that is working with us. To revisit these opportunities, come up with new opportunities so that we can adopt an implementation plan, an action plan to implement these opportunities. Where are the opportunities coming from? There are opportunities in selling and G&A expenses. There is not just one single sweet spot where we can find opportunities. We believe we can find opportunities across the board, in terms of gaining efficiency, in possible activities that can be performed with more efficiency, some activities that can stop being done. And that's the work that we're doing with this consulting firm. And as for open stores, I would say that, they are behaving as planned. These stores have a profile where on one hand, they are smaller stores. And of course, they have sale per square meter, which is lower than our base because we have an average bigger size of stores, but there's an occupancy cost and the personnel cost, when we look at total SG&A that is -- it is lower than the installed base we have. And that's why these stores collaborate more in terms of company's profitability. Fabiana Oliver: Next question from Bob Ford with Bank of America Merrill Lynch. Robert Ford: Fabio, as you improve the supply chain and efficiency, how should we think about working capital and additional improvements to gross margin? And what are you thinking in 2026? And what is the percentage of collections, especially the winter collection. Fabio Faccio: Thank you, Bob. It is what we mentioned before, I think that the key point about our model is to be able to produce closer to in-season periods when we have demand. That varies a lot in terms of collection assertiveness. We have the ability to produce 15 million to 25 million or almost 30% of our production happening in season. We are working to get that up to 40%, which is what we think is necessary. Well, there's a point of basic items, more constant items. So we have been working on that. And I think that this is bringing us margin gains and cash flow margins. We start having turnover inventories, store improvement in ticket margin and cash flow. And the trend is that we are going to have a gradual and continuous evolution. We continue to -- we expect to continue to have gains in inventory turnover margins, et cetera. As for the winter season and more specifically, that's a more challenging season in the end of the cycle for us. Both due to greater penetration of imported items and also the risks that we have a smaller collection time. We spoke about this last year. We have already implemented some initiatives in terms of having a faster flow of imported items or to replace some transition products by national items. That's what I mentioned. It's an opportunity during seasonal transitions, and that applies to several moments. What we have seen in our model and with the evolution of our model is that historically, at some moments, end of cycle of summer or winter when we are starting spring or fall, these ends of cycle historically dependent more on marked down items. So what's happening is that we are having fewer and fewer markdowns, and we are able to turn over our inventory faster and faster, which is very good. So we are testing. A part of the opportunistic sale will be reduced, but we can replace part of that sale by new items with a higher ticket and a higher margin for the company. That is an important opportunity for us. So we're testing this. Of course, we have to test what kind of product is accepted because it's not too clear to relationship. But we've been testing this. And we've had a good response with some of these items in recent cycles. So we see good performance of new items replacing those sales and generating margin. I think it's a gradual evolution that we're going to see, as I said in my opening remarks. This applies to both end of cycle, seasonal transition and weather variations. I think that this is an opportunity that we're starting to see good results, and we believe that gradually, this will also continue to evolve. Robert Ford: Okay. What are you thinking about 2026 and consumer demand? Fabio Faccio: That's an important question. And I think that Daniel kind of spoke about this in his remarks. We don't want to comment of quarters that are underway. So your question is good first to speak about the full year outlook. Last year, 2025, when the year began, we spoke a little about this, that we had an expectation of a greater first half and the second half of the year with low growth for a number of reasons. There are many variables, comparable base, planning, macroeconomic situation, which over 2025 for a long time, we saw consumers more under pressure, and we felt that in the end of the year. Now, things happened in line with our expectations, not exactly the same. The first half was stronger. We grew 15.6%, second half we posted about 4% increase. We got to 9.2%, which is very much in line with what we're expecting for 2026, was thinking about 9% to 13% for the coming years. But as Daniel said, for 2026, our year expectation is the reverse. For a number of reasons, we expect a first half growing less and the second half growing more. And one of the main reasons is inversion of the comparative base. We're going to have a stronger base in the first half and a weaker comparison base in the second half. So that already changes the expectation. And there are other reasons as well. Last year, we saw customers being under pressure, more and more under pressure because the interest rates were very high, were very long. And the expectation this year is okay, interest rates are already high. But the expectation is that interest rates will ease over the year. So the comparative base, the easing in our operational planning, put it all together, our expectation in that range of 9% to 13%. We don't expect equal quarters, of course. A first quarter, weaker second quarter, stronger, but growth along the year, along the quarters, as the quarters unfold. Fabiana Oliver: Next question coming from Vinicius Strano with UBS. Vinicius Strano: Two questions. if you could comment on how you're seeing price positioning of the company compared to the main competitors? And how is the customer perception regarding pricing in the Renner brand? How do you see this evolving? With inventory is improving, the company is generating a lot of cash. I'm just trying to understand whether you have any room for reinvesting part of the gains to increase commercial competitiveness to drive volume. My second question is regarding credit. If you could comment on how you see the expectations for Realize, speaking about the new cohorts of customers, your private label sales are slightly lower than historical levels. With declining interest rates, do you see -- do you expect a different demand? Fabio Faccio: Well, I'll start with the first part of your question, positioning your prices, Daniel will speak about credit and Realize. So here's what I can say. In our view, our price position is very adequate. We are very competitive. We have heard some complaints about promotional activity in the industry. I think that there are many players trying to adjust their prices and positioning. We saw some competitors at some points with very high prices, and we were very consistent in our pricing strategy. I think we have very competitive entry prices. Our model with the reduction of old inventories has allowed us to boost our gross margin, and this is very important to maintain competitiveness. Competitiveness in our positioning, of course, things are very fluid. Things are a living organism. The market is adjusting itself all the time. So we are always looking at pricing vis-a-vis our competitors, what matters for our shoppers. But I would say that on average, our prices are very much in line with inflation. And I think that customers do value that. We have seen consistent improvement in our NPS, focused not only on customer experience, but products. Our products are improving in quality, assertiveness, with greater price competitiveness. And the other part of the equation, we are growing in price. It doesn't mean higher price. It means lower markdowns. And that's very sustainable for us because it's a result that comes from greater efficiency rather than an attempt to gain margin by increasing prices. Our prices are very well positioned. Daniel dos Santos: Vini, speaking about Realize. Over 2025, we were very cautious in our originations. On one hand, this is reflected in the quality of the portfolio levels of delinquency of our portfolio. We do not believe in the short term in any change, we'll continue to be very cautious and prudent. When we look at delinquency levels in the market, there was a certain deterioration. If we consider the middle of the year and now which means that we will continue to be prudent and cautious. On one hand, this, of course, reduces the potential to expand the customer base and the portfolio. When we look at the loss of share of our Card, it's a reflection of that. We believe that as the macroeconomic scenario improves, we'll be able to increase our originations. On the other hand, it is what we mentioned in our Investor Day, which is the value proposition of Realize. We have plans to continue to strengthen that value proposition. One of the milestones is the new office room will be available in the second half of the year, and this will allow us to bring in other elements in the value proposition, which will allow us to combine a possible increase in origination with a better value proposition. This will allow us to recover the share of the Realize Card in Renner sales. Fabiana Oliver: Next question from Eric Huang with Santander. Eric Huang: I would like to address the digital channel. You mentioned it is an important driver of growth in the coming years. I'd like to talk about profitability. You mentioned that profitability is improving. So looking at the sales mix, how much more has the share of sales evolved on the channel? And what is the gap? Thinking about EBITDA margin of the channel versus brick-and-mortar channels. How is this evolving? That's number one. And my second question, a very quick one regarding performance of Renner stores in shopping malls, where international players are also going. There was a comment about that, that it kind of drove sales. I'd like to understand that. Fabio Faccio: Thank you, Eric. I'll start with the last one, and then I'll turn the floor to Daniel for your first question. As regards opening of international stores of international competitors, I agree with the observation of another player. Since these are few stores, in a large universe of shopping malls, when a new store opens, which is a novelty, of course, that brings foot traffic to the mall. But we're very competitive. Our performance in the shopping malls where these stores are opening, well, it's a good performance, a better performance. They haven't impacted us as for the profitability of the digital channel. Daniel dos Santos: Thank you for the question. First, our strategy is an omnichannel execution. So we aim to be very transparent in how we execute things. When we look at the digital channel, the digital channel, is one of the big advances we had in the period. When you talk about the cost of operating the channel. The investments we made and the centralization of all sales of the digital channel. In the Cabreúva DC that allows us to have a similar cost of operation today. The growth we have in brick-and-mortar stores or over the digital channel, this does not increase operational expenses because we have the cost to operate both channels operating in a similar way. This is the result of investments we made, and it's something that in the future will allow us to work with both channels without a concern of having expenses increasing related to one channel or another. Fabiana Oliver: Next question from Danni Eiger with XP. Danniela Eiger: My question is almost a follow-up question of what I asked in the last video conference call. I remember I asked you, what you were doing to go back to being the outperformer of the industry, as you always were. It seems that this quarter is pointing in that direction. You're talking about in-season reaction, it is a point that in Q3, you mentioned that you were not doing that. Could have done it. But I think it would be cool to understand the changes such as this one that can sustain in addition to the whole model, as you mentioned, in your positioning, you talked about colabs, and I remember Fabi talking about revisiting sub-brands of Renner -- and how the store is distributed and assembled. So my question is, trying to understand what you're doing in the operation itself, other than the model because we talk a lot about the model. But at the store level to sustain this overperformance because if we look at the 9%, you delivered in 2025, it was much driven by the first half. Of course, there was a customer base, get execution. But I'm thinking about what is it that you are building to overcome the difficulties in 2026? Fabio Faccio: There are many variables, you mentioned many of them that are very important. It is what we have been saying just the beginning of our investments in the evolution of our model. The expectation is that we'll have gradual gains, gradual improvement. We will continue to accelerate our gains over a longer period of time. And that's why we have a 2026-2030 cycle because we expect to have continuity of growth, margin improvement, efficiency gain in that time horizon for a long time. And there are many variables. We have the DC that we all see. The DC will bring about operational productivity, but also distribution assertiveness. We will be able to do something that was not done in the past. And as we do it, we increase efficiency. That is a gain. And our decisions are having speed to produce in season. We strive doing that in a more robust and efficient way. We gain assertiveness. And that's why we say it's a gradual process. We learn as we go and we implement and we learn. We don't go from 8 to 80. Because if we do that, we can have problems rather than productivity. We prefer to do it gradually. We see opportunities of new products, replacing markdowns by new products. This is not trivial. Some people are just trying to have new products, and some people are just trying to have markdowns. So how can we do this? But what kind of product we test, we see what works with this regard what doesn't work. The Renner brand more focused on fashion. It's not just the place to sell fashion. It's more of a brand fashion, a fashion brand, actually. And it's been more and more recognized by our consumers. So there's a whole array of actions that are very much coordinated. We have a lot of actions in product, distribution, fulfillment, operation, productivity, brand and customer journey. Putting it all together, that's how we expect to have a gain in productivity, efficiency, value creation with profitable growth in 2026 to 2030. That's why we announced our plan in that time frame. So it's the sum of all of these parts. Fabiana Oliver: Next question from Rodrigo Gastim with Itaú BBA. Rodrigo Gastim: Fabio would like to explore this dynamic, which I thought was interesting internal expectation in different first and second half. I'm not speaking about the quarter. I know you don't want to speak about Q1. It makes sense. I just want to understand because when we monitor Renner, when we look at the growth of the apparel segment, with a weighted average of the 440 stores that Renner has in different states, we see the debt of Renner, the market where Renner operate are growing almost 4 percentage points versus last year a relevant a significant acceleration at the beginning of the year. So I'd like to understand the logic of first versus second half of the year. But seeing this substantial acceleration of a debt and considering that you should not be losing market share. It's hypothesis, I'd like you to comment. My question is, can you really have a qualitative perception that is similar to what we see in debt? Fabio Faccio: Thank you, Gastim. As you said it yourself, since we gave you a guidance between 9% to 13% on annual basis, we are not going to be commenting on the quarter that is ongoing. We will make comments on the reported quarters. But in terms of the year, our intent here is to reinforce that never other quarter is the same. If we look at 2025, the full year that we are reporting on is a dramatic difference of growth quarter after quarter. And when we put together our plan and expectations for 2026. In the annual year, it's between 9% and 13%. It is what we expect for the year. But considering difference in the quarters, just like last year, when we look at our expectation and when we look at our plan, just this would explain the difference between half years and quarters. In addition, there are other factors. Last year, interest rates increased a lot and continued high. But this year, there's an expectation. I don't know whether it will materialize of declining interest rates, which should benefit the end of the year. And Daniel mentioned that we put pressure in the beginning of the year with a positive and necessary transition. And we are benefiting the end of the year with a more substantial number of store openings when we sum up all of the variables, we expect greater growth in the second half of the year, growing over the year and getting into that range, but with a lower growth in the first half. Rodrigo Gastim: Perfect. So to understand the rationale. It's very clear, actually. Since the first half, you have a comparative base, which is harder and using the low range of 9%. And that's my own analysis, okay, a mathematical perception. It is probable to have 9% in the first half. So double digit would be expected for the second half of the year, a difference between the half years with the most substantial acceleration in the second half. Is that what we should expect? Fabio Faccio: Yes. Yes, we're expecting weaker first half and a stronger second half. Rodrigo Gastim: Perfect. And Daniel if I may ask a quick question about buybacks. You created reserves with Q4 profits. Very much in line with what you have been saying. What do you use, Daniel, as a criterion to press the button of buyback? Is it share price or the moment of the company. I just want to understand the criteria. How do you define and you trigger the process of returning capital to shareholders, specifically with share buybacks? Daniel dos Santos: On on one hand, it's the composition of the balance of results, as you mentioned. The moment we disclosed Q4, we recompose it. We monitor share prices, and we have some good governance criteria regarding the percentage that we can purchase. We always try to have a cap of 5% and 10% of the daily volume. That's kind of the logic, the rationale we use. And that's the rationale we used last year, it will be very similar to the dynamic we will be using this year as we recompose our reserves we look at the share prices, and we will be executing the buybacks over the year. Fabiana Oliver: Next question from Irma Sgarz with Goldman Sachs. Irma Sgarz: About advertising -- advertising spending that dropped 17% year-over-year from what I understood, perhaps part of that comes from digital, where you generate more and more organic traffic. And perhaps you have more intelligence and discipline in spending. First, I'd like to understand what are the levers in addition to that one do you have or have you had in recent months? And any more improvements expected in that line item for 2026 and beyond? And related to that, because I don't want to disregard the 10% growth that you posted in digital, which obviously was great. But I'd like to understand how do you see the market? So digital market segments are growing at higher rates. Perhaps we cannot break it down to the apparel segment, but I'd like to understand, in digital, looking at the digital segment. You gained market share vis-a-vis the market as a whole. Perhaps you could tell us what you're thinking about balance of expenses? And growth in the digital environment. Perhaps you chose to grow 10%, you could have grown 15%. But then your profitability will be reduced. I don't know whether the question is clear, but that's the direction. Fabio Faccio: I think it is clear, Irma, I'll start with the end, and Daniel I will speak about expenses. When you talk about digital, I think that there are many ways of measuring it. We have been gaining share in our segment. We have seen -- we have been seeing a lot of more compressed margins, too much promotional activity on digital by some peers. And I think that your question involves the balance between market share growth and margin. Our strategy is to grow with profitability. We don't give up on margin. We're not doing a lot of promotions to grow in digital. We have been gaining efficiency and profitability in digital. Of course, if we had more promotions, we would have grown more. That's a direct relationship, but we believe that we can continue to grow. We can continue to gain market share with differentiated value proposition. We have to remember that our products are unique. There are ours, no one else sells our products. So it's not a price competition for the same product. We're betting all that. On our positioning, our power as a brand, our fashion power. And this has given us good results. We have been balancing growth and margin. We want to grow with profitable margins. This is what we are pursuing. It's our continuous pursuit. And perhaps to reinforce. When I answered the question by Eric from Santander, when he spoke about the omnichannel logic. Today, shoppers play in both channels. They can start online and up off-line and vice versa. And the integration of the channels is key to have a good balance of expenses. And to work well, not just the profitability of one single channel, but the whole picture. And this is a big challenge in our day today. And this is our strategy to gain productivity because at the end of the day, what matters to us is to grow the whole. And that's why we have that indicator of productivity per square meter. Daniel dos Santos: On digital Fabio mentioned, knowing how to work well on social media with the influencers, it involves a whole dynamic in the way in which we operate the on and off-line, which is key for our success. Of course, we look and see that the digital channel is growing more, and we're able to perform there. It leads to market share gains as a whole, and we continue to gain market share on digital. And it's kind of what you mentioned in the beginning of your comments. You kind of asked and gave us the answer. Because at the end of the day, the reduction in advertising expenses in the period is the result of this optimization. We continue to optimize investments in the digital channel. When we have more of our own traffic, traffic that comes from this social media strategy and influencers, we can reduce investments on digital, without giving up or hurting our competitiveness and presence on digital. It's part of our strategy. We will continue to evolve over the coming years because this is key for our competitive growth within this omnichannel logic. Fabiana Oliver: Next question from [ Ian Seskin ] with BTG. Unknown Analyst: I have just one question. You spoke a lot about margin levers or drivers that were very visible in Q4. My question is more on the logic of the pyramid of product assortment. What is the company's plan, mainly for entry-level products, given the scenario of more challenging consumption in Brazil? So what is your strategy regarding that? And do you expect you will sustain the strategy that we saw in Q4? Fabio Faccio: Very well, Ian. Thank you for the question. Here's what I can tell you. As we said, in entry-level products, I think that our prices are very competitive. We have an assertive positioning. Our product has good acceptance. A good value proposition for our customers. We have also seen in our middle of the pyramid core products that we are also very competitive. Anything that what is driving more margin gain and where we have more opportunity to continue to gain is with those fashion products. Shoppers come to us due to our fashion expertise, fashion knowledge with a very adequate value proposition. So these products tuned to fashion. And this also kind of becomes the middle of the pyramid. And this is the strategy that is bringing a lot of value and margin for the company. And when we speak about assortment, and that's where the opportunity lies. Well, of course, this is no dramatic change, but we have been seeing opportunities to add a few more products mainly in the end of cycles during seasonal transitions and weather changes, we bring something in terms of middle of the pyramid in fashion, trying to anticipate this. And this is bringing us good results. So in the pyramid as a whole this brings about an opportunity of a slight increase in average price, not a specific price or specific product and the entry-level products are at a very competitive level. Fabiana Oliver: Next question from Joao Soares with Citi. Joao Pedro Soares: I have some quick questions. I think it's very clear in terms of sales dynamic over the year, but Fabio. I'd like to do some mental exercise with you on the 3 main moving parts. When we think about volume, ticket and price. Just so we know what will move the needle? Because last year, we had a strong volume base. The whole industry suffered. We saw that in data of the segment. So what are you thinking about this? And this is also a relevant point here. If we have declining interest rates and you go back to the original origination level, this will help our analysis. Is this going to happen in your expectation? If we have a more hawkish interest rate cycle, could this impact your outlook? Fabio Faccio: Sure, thank you for the question. I think that, yes, it's a sum of everything. When we speak about the outlook for the year, there is the base effect, which is relevant. If we look at last year growth, it's very different. So the base effect is important. And there's also the element of interest rates when we start having an easing of interest rates, we put less pressure on consumers and to have a greater ability to pay and with a lower risk environment. It's a virtuous cycle. When for a long time, you have a lot of pressure that worsens ability to pay. But when you are easing, you improve everything. In a lower risk environment, you can go back to granting more credit, and this will lead to more sales. Our expectations while interest rates will start declining over the years. So in addition to the base, we have higher expectations for the second half of the year. And Internally, we opened a lot of stores in the end of 2025. These stores will gain productivity. We'll know more about their customers over the year, and they will trend up. And so we expect an improvement in the second half. And then we'll be adding more stores this year. If we think about average growth in 2024, it was basically net 0. In 2025, average area growth was about 1% with 1.8% in the end of the year, which kind of drags this to 2025 in the average area growth, when we speak about 50 to 60 stores expected, it's about 3% on average this year, getting to 4% in the end of the year. All of that, the last year's stores and the stores we're going to open this year will all help the second half of the year. So these are the three main moving parts. The base, the easing of the interest rates, and operationally speaking, we'll have more power coming during the year, mainly more towards year-end. Joao Pedro Soares: Excellent. And if I may, touch on another point. It has to do with what you disclosed in the Investor Day of 50% of payout. In your opening remarks, you mentioned that it could be higher than that. We see that you have a new buyback program, you have a cash position that is very strong. And thinking of what you distributed in 2025, it was above the guidance that we expected. So it seems we have this impression that in 2026 you should go over the cap because you're well positioned for that. Just want to be a little provocative regarding that, Daniel. Daniel dos Santos: So I think what matters is, let's analyze 2025. As I mentioned, we used the reserves of prior years. We started the year with 0 reserves. And we will recompose reserves with the Q4 results. As we explained in the Investor Day, the rationale. The rationale is I'll seek to distribute our reserves as they are recomposed. In looking at our cash generation, limited to what we consider minimum cash internally. If we create more reserves and if this is coupled with a good cash flow generation, we have the potential to be able to exceed the cap of the guidance, which is what I mentioned, the guidance is a guidance. It's a range, but it's not a limiting factor. If we have better cash flow generation, we might distribute interest on capital. It will always have a priority given the tax advantage. We can supplement that with a share buyback or perhaps an extraordinary dividend payout. That's kind of the dynamic, but we'll have to see how this will evolve during the year. If we have more cash flow generation, we might exceed the cap, the upper range. Fabiana Oliver: Next question from Andrew Ruben with Morgan Stanley. Andrew Ruben: Thanks very much for the question. Two topics from my side, please. First, you mentioned the consumer pressure from reduced purchasing power, but I'm curious if you're seeing any type of divergence in your stores that cater more towards higher income consumers versus lower income. And then second, curious also for Street versus non-Street stores. Any differences you're seeing in performance? And also as you look to the opening plans for this year, how you're looking at mall versus street stores for the plans. Fabio Faccio: Thank you, Andrew. As for the first part of the question, I would say that we haven't seen any dramatic change in consumption in recent months. Second half posted lower growth, there's a base effect, consumption effect, but -- the habit of shopping seems to be very similar. Unlike other types of retail, we have identified opportunities for fashion products, products with an added value that are selling well with good margins. Now obviously, purchasing power is under pressure, whereas the growth would have been a lot higher. And I think the easing of the interest rates -- easing cycle of the interest rate might help with that. But I would say that we expect or we saw some stability in the past few months. And as for performance of cities in -- in smaller cities. I'm not going to talk about street or non-street shops. But street is in midsized cities, as Daniel mentioned. They're performing really well. We are performing as expected or slightly above our plans. And as we mentioned in the Investor Day, above similar cohorts of the past, where we have stores in shopping malls and bigger stores. And this is due to lower costs and lower cost, as Daniel mentioned, and the lower cannibalization because we're opening stores in virgin cities. So there's a faster acceleration. And there's improvement online. So it's bringing 10% more sales online in those cities or else the brick-and-mortar stores would be selling even more. So we're happy with their performance. They are performing better than past average. According to plan or slightly above on average and with opportunities for improvement. Because all the improvement we have seen in fulfillment will helps us understand the type of consumer, type of shopper in that city, and that improves fulfillment illustrativeness. In smaller stores, it's going to be even more important. So we're happy with the evolution of our model. And this is the best timing to accelerate after opening expansion. We're accelerating to open 50 to 60 stores in total of the brands. Renner, 22 to 30. Youcom 23 to 25 and about 5 Camicado stores and our expectation. And we'll speak about this in a year's time, okay? But our expectation is that perhaps in 2027, we'll open even more stores. And just to speak about shopping mall and street stores. In the different cities, we have to analyze the potential of the city qualified demand, and then we'll look for the best location. It might be in a shopping mall, it might be a street store. So there is no rule written in stone. It will depend. It will vary city by city. In larger and bigger cities, we are normally present in shopping malls, okay? Fabiana Oliver: With this, so we are ending our Q&A session. Additional questions that were not answered can be sent to our IR team. I'll give the floor back to Fabio for his final statements. Fabio Faccio: Well, our conclusion regarding 2025 full year is that we are ready for the 2026-2030 cycle. We know what works. We also know where we have room for improvement. We are confident in our strategy and the quality of our team. We have focused on delighting our customers and creating consistent and sustainable value to our shareholders and other stakeholders. Thank you very much for joining us today. Fabiana Oliver: Thank you. Have a great day.
Operator: Hello, and welcome to the Algonquin Power & Utilities Corp. Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] I will now turn the conference over to Mr. Brian Chin, Vice President of Investor Relations. Please go ahead. Brian Chin: Thank you, operator, and good morning, everyone. Thank you for joining us for our fourth quarter and full year 2025 earnings conference call. Joining me on the call today will be Rod West, Chief Executive Officer; and Rob Stefani, Chief Financial Officer, who will share prepared remarks. Other members of the management team are also available to answer your questions during the Q&A portion of the call today. To accompany today's earnings call, we have a supplemental webcast presentation available on our website, algonquinpower.com. Our financial statements and management discussion and analysis are also available on the website as well as on SEDAR+ and EDGAR. We would like to remind you that our discussion during the call will include certain forward-looking information and non-GAAP measures. Actual results could differ materially from any forecast or projection contained in such forward-looking information. Additionally, all net earnings information to be discussed today is for continuing operations and is attributable to the common shareholders of Algonquin. Certain material factors and assumptions were applied in making the forecasts and projections reflected in forward-looking information. Please note and review the related disclaimers located on Slide 2 of our earnings call presentation at the Investor Relations section of our website at algonquinpower.com. Please also refer to our most recent MD&A on SEDAR+ and EDGAR and available on our website for important additional information on these items. On the call this morning, Rod will provide a business update, and Rob will follow through with details of our financial results. We'll then open the line for questions. [Operator Instructions]. And with that, I'll turn things over to Rod. Roderick West: Thanks, Brian, and good morning, everyone. Thanks for joining us. 2025 was a turning point for Algonquin. We delivered strong results, improved earned returns, made substantial operational and regulatory progress and meaningfully strengthened our balance sheet. And those results reflect something broader. Algonquin is a different company today than it was a year ago. We are more focused, more disciplined and to each other and to our stakeholders more accountable. We have sharpened our strategy, assembled an experienced leadership team and laid the foundation for a sustained performance culture. In short, we're advancing toward our goal of becoming a premium pure-play regulated utility. Turning to Slide 5. I'll begin my remarks today by walking through our accomplishments in 2025. We delivered full year net earnings per share of $0.27 and adjusted net EPS of $0.34, which exceeded the top end of our guidance range by $0.02. These results demonstrate that our Back-to-Basics strategy is driving measurable improvements in our underlying fundamentals. And as we've discussed before, becoming a premium utility starts with getting the fundamentals right. Since I joined Algonquin, we focused on, first, improving operational discipline to improve customer outcomes and driving efficiencies by bending our cost curve; and second, strengthening regulatory strategy execution through more proactive stakeholder engagement, all to drive more constructive and timely outcomes. Our 2025 results provide recent evidence of that focus. We reduced operating expense as a percentage of gross revenue by -- from approximately 38% in 2024 to roughly 36% in 2025. We achieved constructive regulatory outcomes across a range of proceedings, and we improved our earned ROE from 5.5% in 2024 to approximately 6.8% in 2025. We also made progress this year in strengthening our balance sheet. We used net proceeds from the sale of our renewable business, excluding our hydro assets to retire approximately $1.6 billion of debt, materially improving our cap structure and financial flexibility. And finally, we continue to simplify the company and the story, both through portfolio actions and by reducing complexity inside the regulated platform. While we clearly have much more work to do, this was a good start, and we carry that momentum into 2026. Looking ahead to 2026 on Slide 6, our priorities build directly on what we have achieved over the last 12 months. Operationally, cost discipline remains a core priority. As we transition to a more commodity aligned structure and centralizing shared services around cost and value, we expect to capture additional efficiencies and drive consistency across our gas, water and electric portfolio. As we undertake these efforts, we're also implementing a centralized capital projects team to improve our execution performance and reducing risk. At the same time, we're focused on improving the safety and reliability of our system, supporting positive customer outcomes and maintaining affordability across all of our jurisdictions. To drive better customer experiences, we've been making improvements across our end-to-end process design, focusing on the moments that matter most to our customers. This includes more accurate billing and better delivery of information during any kind of disruption. From a regulatory standpoint, we're pleased to receive approval of our settlement in Empire Electric Missouri's rate case in January this year. We're working there to see the rates implemented, which remains subject to evaluation of specific customer metrics. We were also glad to reach settlement agreements at New England Gas, CalPeco Electric and Arizona Litchfield Park Water & Sewer and look forward to advancing them towards approval and implementation. I'll speak to each rate case in a bit more detail shortly. Finally, at the corporate level, we've recently onboarded key leaders, including Rob as our new CFO; Pete Norgeot as our new Chief Operating Officer; and Kristin von Fischer as our new Chief Human Resources Officer. Our execution against these priorities underpins our financial outlook. For 2026, we're pleased to reaffirm our earnings guidance. The drivers supporting this year's guidance range are well defined, and we're confident in our ability to execute. Relative to where we were last June, we now expect our effective tax rate in 2027 to be in the mid- to high 20s percent range as compared to the previously anticipated low to mid-20s percentage range. We're continuing to evaluate tax strategies to optimize the tax rate, but expect the majority of the benefits from those strategies to be realized after 2027. This largely results in an updated expected adjusted net EPS range for 2027 of $0.38 to $0.42. With an executive team that brings deep utility experience now in place, in addition to the aforementioned tax optimization work, we're focused on disciplined execution and constructive regulatory engagement to position the business to deliver sustainable earnings growth over the long term while also looking for additional opportunities to bridge the gap caused by the tax rate relative to last June. Turning to Slide 7. While there is more to be done to bring resolution to a number of key rate cases, we're seeing the benefits of our regulatory and stakeholder engagement approach. By prioritizing earlier dialogue to identify areas of common ground as well as advancing more pragmatic filings, we've been able to achieve settlement agreements. We expect these agreements will deliver reasonable regulatory outcomes that benefit our customers and allow us to recover investment in our systems efficiently. Let me walk through our key recent proceedings. In January this year, the Missouri Public Service Commission approved our settlement agreement for Empire Electric, which is our largest operating utility. This authorizes a $97 million revenue increase after we meet customer metric performance requirements for 3 consecutive months, with an additional potential $13 million of annual revenue increase based on meeting further performance requirements starting in the second half of 2026. In California, we received a proposed decision at CalPeco Electric, adopting the proposed settlement agreement, which provides for a $48.6 million revenue increase retroactive to January 2025, an ROE -- allowed ROE of 9.75% and an equity ratio of 52.5%. We are awaiting a final decision. In Massachusetts, we reached a settlement for New England Natural Gas, which calls for a $45.3 million revenue adjustment, of which approximately $17.9 million is non-gas system enhancement plan revenue, with 2 additional step-ups in rate base in subsequent years. The settlement includes an allowed ROE of 9.3% and an equity ratio of approximately 52.9% and a rate stay out -- the rate case stay out through October 31, 2029. We've requested a commission order by the end of this month. In Arizona, just this week, we filed a proposed settlement for Litchfield Park Water & Sewer. The settlement, which was reached with the Arizona Corporation Commission staff calls for a $15.3 million revenue adjustment and an ROE -- allowed ROE of 9.75% with a 54% equity ratio. Hearings are scheduled for late March of this year. And finally, in Kansas, we filed a rate case at Empire Electric in December, requesting a $15.8 million base rate adjustment, which represents a net requested increase of $12.5 million with a 3-year phase-in for a gradual adjustment. Slide 8 helps put all of this in context. Over the past year, we have steadily resolved rate cases across multiple jurisdictions, advancing from filing to constructive resolution to implementation of rates. As we look ahead, we now have line of sight to resolving a significant portion of the remaining requested revenue adjustments this year, which will inform our forward earnings trajectory. Turning to Slide 9. We are fortunate to operate in high-quality jurisdictions that have attractive regulatory mechanisms. This includes tracker mechanisms, multiyear rate plans, forecasted test years and formula rate structure. These regulatory mechanisms underpin the majority of the expected rate base growth between now and 2028. Building on this foundation, recent legislative and regulatory developments across our states are supporting enhanced investment recovery. Recent advances in Missouri, Arizona, New Hampshire and Oklahoma are further strengthening our regulatory frameworks with the adoption of future test years, CWIP for new gas generation, plant and service accounting and consideration of formula rates. Overall, these developments reinforce the constructive regulatory environments in which we operate. With that, I'll turn it over to Rob to walk through our financial update for the quarter and year-end. Rob joined the company just this past January on January 5. Many of our analysts and investors may already know Rob from his time as CFO of Southwest Gas Holdings. He also previously served as CFO and Treasurer of PECO Energy, a Philadelphia-based electric and gas utility subsidiary of Exelon. Rob joins a strong team of experienced utility executives in the C-suite. And as we continue to build our utility platform, Rob's utility leadership experience, strategic skill set and financial expertise will be leveraged to build a strong foundation for the company as we solidify our strategy and execute on our path to becoming a premium utility. So again, Rob, and for my last time formally welcoming you, I'll hand the call over to you. Robert Stefani: Thanks, Rod, and good morning, everyone. I've been immersed in my first 2 months at Algonquin, and I'm excited to partner with Rod and the leadership team here to build a premium utility through disciplined execution across the organization. With that, I'll turn to our results on Slide 11. We reported full year GAAP net earnings of $208 million compared to $54.8 million in 2024. Full year adjusted net earnings were $258.8 million, up approximately 17% from $221.6 million in 2024. For the fourth quarter, GAAP net earnings were $29.4 million compared to a net loss of $110.2 million in the fourth quarter of 2024. These strong results reflect the progress we are making to deliver steady, predictable earnings. I'll now discuss the drivers behind this improvement as I walk through our adjusted net EPS results. On Slide 12, we provide our fourth quarter 2025 adjusted net EPS walk to common shareholders. Fourth quarter adjusted net EPS to common was $0.06 per share, which was flat year-over-year. On the top line, the increase in adjusted net earnings was primarily driven by $10.3 million from the implementation of new utility rates at BELCO Electric, Midstates Gas, Peach State Gas, Missouri Water, New York Water and several of our Arizona water and sewer systems. Moving to interest expense. We realized a $17.9 million reduction, reflecting the paydown of debt using proceeds from both the sale of the renewable energy business and the sale of our ownership stake in Atlantica. This has been a consistent positive driver throughout the year and a direct result of our balance sheet strengthening efforts. Operating expenses and depreciation were modestly higher by $6.1 million, driven by fourth quarter costs associated with the targeted relief initiative for customers agreed to as part of our Empire Electric Missouri settlement. Full year basis, operating expenses were essentially flat. These benefits were offset by the removal of $10.9 million in Atlantica dividend income, which impacts the corporate group as well as a $7.3 million write-off related to the CalPeco solar project that was discontinued. Taxes were flat year-over-year. Moving on to Slide 13. Full year adjusted net EPS attributed to common was $0.34 per share, up from $0.30 per share in 2024, representing approximately 13% growth. This exceeded the top end of our previously stated guidance range by $0.02 per share, driven by accelerated realization of our operating expense savings, lower depreciation expense resulting from authorized deferrals and tax adjustments. Let me walk through the key drivers in more detail. New utility rates contributed $41.6 million of benefit from approved rate implementations across several gas, water and electric systems throughout the year. We saw $13.9 million of favorable weather, predominantly at our Empire Electric system. In addition, we benefited from $11.9 million in depreciation deferrals. These factors were partly offset by the costs associated with the targeted relief initiative at Empire and CalPeco write-off mentioned previously. We also recognized a $15.9 million Hydro Group tax adjustment that was largely recognized in the first half of the year from the Hydro reorganization completed in connection with the sale of the renewable energy business. Interest expense declined by $81.1 million, reflecting the paydown of debt using proceeds from the sale of the renewable energy business completed in January 2025 and the prior sale of our Atlantica ownership stake. The removal of $76.3 million in dividend income from the sale of an ownership stake in Atlantica was the single largest headwind for the year. As a reminder, the repayment of debt using the Atlantica sale proceeds contributes to the interest expense savings across both the Regulated Services Group and the corporate group, which partially offsets the lost dividend income. We also absorbed a higher effective tax rate and common share dilution from the mandatory underlying shares as approximately 77 million common shares were issued upon the settlement of the purchase contracts in 2024. The Regulated Services Group growth was driven by the combination of new rate implementations, favorable weather, lower interest expense and the depreciation deferral benefits, partially offset by higher operating expenses and the solar project discontinuations. Turning to Slide 14. We are updating our 3-year regulated utility capital expenditure outlook now totaling approximately $3.2 billion from 2026 through 2028. This includes approximately $800 million in 2026, ramping to $1.1 billion in 2027 and approximately $1.3 billion in 2028. Cash flow from the business and existing cash balances are expected to internally fund approximately 65% to 70% of the capital investment requirements. This capital plan is focused on reliably serving our customers with investments in safety, reliability and service across our electric gas and water systems. As you can see on the slide, the capital spend is expected to be diversified across our commodity types. Our large capital expenditure plan supports our strong organic regulated utility growth proposition. As Rod highlighted, across our jurisdictions, mechanisms exist to pursue recovery via capital trackers, formula rates and other interest rate case mechanisms. I'd note that the 2025 capital expenditures totaled approximately $604 million, down from approximately $757 million in 2024, with the decrease primarily due to investment in our integrated customer solution platform, which was largely completed in 2024. In terms of rate base, year-end 2025 rate base was approximately $8.2 billion, up from $7.9 billion at year-end 2024. We expect our rate base to grow to approximately $8.5 billion by the year-end 2026, $9 billion by the year-end 2027 and approximately $9.7 billion by year-end 2028, representing a compound annual growth rate of nearly 6% from 2025 year-end through 2028. On Slide 15, our balance sheet was meaningfully strengthened following the completion of the sale of the renewables business in January of 2025. We used approximately $1.6 billion of net proceeds to pay down debt. Combined with proceeds from the sale of our Atlantica ownership stake, we have significantly improved our credit profile. Total debt stands at approximately $6.5 billion. After adjusting for equity credit on our hybrid debt, Empire securitization bonds and preferred equity, our adjusted net debt profile supports our current credit ratings. We have a solid investment-grade credit rating with stable outlooks from S&P and Fitch. Moody's rates our operating subsidiary, Liberty Utilities at Baa2 with a stable outlook. We continue to expect no equity issuance through 2027. On the near-term financing front, we plan to refinance the Algonquin unsecured notes that are due in June 2026, and we continue to manage our maturity profile in a disciplined manner. Lastly, we expect to pay an annualized dividend of $0.26 per share, subject to Board approval. On Slide 16, you'll see a sources and uses table depicting the cash flows between the holding company of our U.S. operating businesses, Liberty Utilities Company, or LUCO, and the publicly traded holding company, Algonquin Power & Utilities Corporation or APUC. Our 2026 financing plan at APUC of approximately $1.6 billion includes nearly $1.45 billion upstream from LUCO. We expect this upstream to fund repayment of the June 2026 APUC of $1.15 billion debt maturity and the approximately $100 million Suralis term loan as well as the Algonquin common equity dividend. We expect to raise approximately $1.15 billion at LUCO through bond issuances to retire the June maturity at APUC. Cash flow from ops of approximately $500 million and a draw of about $500 million on the credit facility together are expected to fund domestic regulated CapEx and the upstreaming of cash to APUC. Through these actions, we aim to proactively refinance upcoming maturities, fund the business, maintain liquidity and manage leverage without incurring additional incremental debt. Let me walk through our financial outlook on Slide 17. First, we are reaffirming our 2026 adjusted net EPS estimate in the range of $0.35 to $0.37, consistent with the outlook we originally provided in June of 2025. The drivers supporting 2026 performance are underway, and we are confident in their achievability. As Rod discussed earlier, we are revising our 2027 adjusted net EPS estimate to a range of $0.38 to $0.42. We updated our assumptions regarding the company's effective tax rate in 2027, which is now expected to be in the mid- to high 20s percent range as compared to the previously anticipated low to mid-20s percent range. We are continuing to evaluate tax strategies to optimize the tax rate, but expect the majority of the benefits from such strategies to be realized after 2027. The guidance revision also reflects expected timing of gas operational excellence activities to extend into 2027 before normalizing. With that, I'll turn the call back over to Rod for his closing remarks. Roderick West: Before we open the line for questions, I want to step back and leave you with a few thoughts on where we are and where we're headed now that literally, this is my 1 year in the job. It was March 7 last year when I began my tenure. When I joined Algonquin just over a year ago, I said that this company had the very real potential to become a premium pure-play utility. In 2025, we began turning that potential into results. Our leadership team is now in place, and we're delivering results through our Back-to-Basics strategy. We're focused on driving operational execution and constructive regulatory engagement to drive an attractive near-term financial profile as we close the gap to our authorized return. We have a strengthened balance sheet with a credit rating profile that provides low-cost access to capital and no expected equity needs through 2027. We're executing a customer-focused capital plan of approximately $3.2 billion, focused on organic investment to enhance safety, reliability and improve customer service. As we continue to reearn our right to grow, we're keeping our eye on additional opportunities in our service territories. We believe this adds up to a clear and compelling investment thesis as we position Algonquin as a singularly focused pure-play regulated utility operating across high-quality, increasingly constructive jurisdictions. As you've heard me say, every component of our vision, mission and strategy is being developed with achieving sustainable premium attributes at the forefront. We're staying focused on capturing the opportunity ahead and executing the mission we've laid out. I couldn't be more excited about what's in store for 2026 and beyond. Thanks for your time this morning. And with that, I'll turn it back to the operator for questions. Operator: [Operator Instructions] Our first question comes from the line of Baltej Sidhu with National Bank of Canada. Baltej Sidhu: Just on the revised 2027 guidance, can you share details or the largest drivers that underpin the new assumptions towards the mid- to high 20s effective tax rate versus the prior assumptions? Robert Stefani: Yes. Thanks, Baltej. It's Rob Stefani. Look, throughout my onboarding, we reviewed the financial projections. And during that assessment, the forward view of the effective tax rate moved from the low to mid-20s to the mid- to high 20s that we currently expect. That resulted in just over about $0.03 per share of EPS deduction. We're actively looking at tax optimization strategies, but those appear to really move past 2027, if pursued. As a result and in the interest of transparency, we revised that 2027 range down. Anything else I can add there for you? Baltej Sidhu: No, I think I got it there. And then just a follow-up there for you, Rob, just more from a strategic overview. You've been in the seat now for 60 days. Could you share your thoughts on the largest levers that the business can pull in the near term and also potential procedures or processes that Algonquin doesn't have yet that you've seen elsewhere in your prior experience? Robert Stefani: Yes. I mean, look, I think the strategy that Rod and the team have put together is strong, and that's really hinges around the rate case cadence and rate case strategy and engaging across our jurisdictions, bringing leaders in from very well-recognized utilities to enhance the operating platform like Amy and Pete and Kristin. And so as I think about kind of levers we can pull as a management team with a lot of experience at premium utilities, I think that's really at the forefront. And then the balance sheet, we've got over $1.4 billion of liquidity. We've got a strong investment-grade balance sheet, and that provides us the flexibility to pursue organic growth as well as assess other opportunities. So as you think about levers, the leadership team, that refocus on regulatory engagement and then the sound financial balance sheet provides us a lot of flexibility. Operator: Our next question comes from the line of Elias Jossen with JPMorgan. Elias Jossen: I wanted to start on the additional opportunities you mentioned at the end of your remarks. Can you just frame what types of opportunities you see in the market and maybe touch on whether those would include some portfolio optimization opportunities as well? Roderick West: I'll start and certainly let Rob weigh in with his early observations. The opportunities from my vantage point aren't new. Our growth story starts with organic growth within our existing jurisdictions where we have both the opportunity, and I would dare say the mandate to create different customer outcomes in the areas we serve. And the underpinning of our rate base growth is predominantly organic. What we've said in prior -- the last prior couple of quarters, particularly since last May, is that the portfolio, we've done the work on our existing portfolio with all the potential scenarios around puts and takes. And what you've heard from us is that we remain opportunistic. There was nothing so compelling given the screening criteria for M&A that keeps us disciplined on our core business. There was nothing immediately so compelling that it required us to move now. But to the extent that there are opportunities for us to take a look at potential moves within the portfolio, we're poised to do that. There was a capital recycling opportunity. Again, we have a point of view around things that might be in the dashboard. But our focus still -- and remember, it's only -- from my vantage point, at least, it's only 12 months in. We're under the hood right now improving the existing portfolio with an eye towards creating sustainable returns from that base. And we'll continue to be eyes wide open on additional moves, but they got to be accretive. They got to be transactional to be able to be executed, and they can't so unduly distract us from the commitments we've made. So opportunistic is the word. Elias Jossen: Great. And then we've seen some initial rate case and broader operational execution across the business. But maybe thinking a bit further out, how should we think about this transitioning from an ROE improvement vision to one that is more growth driven by solid rate base trends and growth across the business? Roderick West: Yes. That's the right question and the one that's occupying us. It starts first on our end by improving the outcomes for customers and our own operational discipline, earning the right to make requests for the -- and I use the term gently, the tweaks and the regulatory mechanisms in our respective states. I'll give you a prime example. I'll use the state of Missouri because I remember off the top of my head, I think it's Senate Bill 4 that created forward test year formula rate plans for water and gas, I believe, and it did not include electric. But given what we know to be our capital focus to create customer outcomes and support economic development in that Empire region, it would be a helpful component if we didn't have -- if we had the access to forward test years and formula rates in the electric business, right? But those require legislative adjustments. And I could see where we would align -- we can align with our stakeholders there to help support more timely and constructive recovery mechanisms consistent with our customer-centric capital plan. That's just one example of the types of tweaks where we have an opportunity to close the gap and allow returns by coming to the regulator with an all-out effort to lower cost to be focused on affordability, while at the same time, meeting our aligned objectives around improving customer outcomes, supporting economic development and certainly for us, meeting our financial obligations to our owners. Operator: Next question comes from the line of Nelson Ng with RBC Capital Markets. Nelson Ng: Rod, congrats on your first anniversary on the job. My first question just relates to CalPeco, the solar project that was canceled or written down. Can you just give a bit of background on that project and like how big it was? Because I think there are several solar assets at CalPeco already, but I just want to kind of understand -- provide a bit of color. And then also, I guess it was also included in adjusted earnings and why it wasn't adjusted out? Robert Stefani: Yes. So just regarding the question on the CalPeco solar write-off, that project was in Nevada, was meant to bring power in CalPeco. Just given where the economics of the project were and our assessment of the ability to earn a fair return on it, we decided not to move forward. As far as why it wasn't included in adjustments, I think as a utility with the rate base, the size of ours, obviously, you'll have projects that could potentially be abandoned along the way. And so view that more as something that wouldn't necessarily be classified as one-off. Obviously, you strive to limit those. But in that case, we wanted to reflect it within operating expenses year. Nelson Ng: Okay. Great. And then my next question is, I know, Rod, you previously talked about potentially redomiciling. Do you have any updates or early indications on that process? And I was just wondering whether that could potentially impact your effective tax rate. Roderick West: The short answer is it could. And the other answer is it's ongoing. I won't be in a position to announce anything on the redomicile question other than to say we are advancing our analytics around answering those types of questions to the extent that a redomicile conversation could influence our point of view on our respective tax strategy and the options available to us. And we're taking those types of -- that type of analysis to our Board to answer those very questions. So -- but we don't have announcements to make. I think those are premature, but the work is without question underway. Operator: Next question comes from the line of Robert Hope with Scotiabank. Robert Hope: So I appreciate the incremental color on 2028 CapEx and rate base on the presentation. Can you provide some incremental color on what you think the natural growth rate of your utilities are in a more steady-state environment? The presentation shows 5% to 6% rate base -- 5% to 6% rate base CAGR to '28. But if we actually take a look at '28 with $1.3 billion of CapEx, you're closer to 8% growth on the rate base. Is this what you view to be a more indicative number for the natural growth of the business? Robert Stefani: Yes. Thanks, Robert. I think towards the end of that forecast, I think you have to remember, we've got the ARIS generation project as well as our investment in the transmission and SPP, which we're very excited about. So it's back-end weighted due to that SPP transmission project and really more of the spend on ARIS. So that's what really drives the outsized growth towards the end of that forecast period. Robert Hope: All right. That's helpful. And then as a follow-up there, maybe just in terms of the SPP transmission, can you provide us an update on where you are with the number of those projects? And would it be fair to assume that, that does hit '28, but that will be a multiyear project towards the end of the decade? Roderick West: One, it's a multiyear project for sure, where the lion's share of the capital really shows up in the back end of the decade. We're going through various regulatory processes associated with SPP and our counterparties in both the transmission and the generation projects internally. We're tracking along with our regulator expectations around how that capital deployment is actually going to flow through rates, and we're shaping our regulatory strategy around aligning recovery with our capital deployment expectations. And so it's -- as you know already from your history, you know how this works. Given the size of the capital programs, particularly as it relates to the history of Algonquin and the Empire District, it's one of the largest projects we've ever had in the company's history. It's critical for us that we align our CapEx programs with constructive regulatory recovery. And to their credit, the respective states are aware of the significance of us getting that piece right, and we're bringing them along with us on the journey. Operator: Next question comes from the line of Ben Pham with BMO. Benjamin Pham: You mentioned the progress on operational efficiencies for '25. You mentioned the uptick in ROE. Can you comment then maybe specific for Rod, as you think about the last 12 months, you kind of tracking to what you're expecting coming in? Was there anything you learned along the way in the last 12 months, surprises, areas you can tweak a bit more. So a progress update on 2025 versus when you first started? Roderick West: Yes. It's a great question, and I've been in constant both assessment and reflection mode. I think the extent to which I had a point of view around bidding the cost curve and the need for us to rightsize the service company in support of our utility objectives, that's really been reinforced the deeper I've gotten into the organization. The need for consistent operational both cadence and standards for customer outcomes for safety and operational performance, the need is great. To the extent that you have operating entities from, let's say, Bermuda out from an eastward perspective to CalPeco to the West, you have different operating cultures and experiences. The 13 U.S. states in 4 different countries each have different regulatory cultures. But from our vantage point, the need to have a singular focus on safety, customer outcomes and operational excellence required more engagement from leadership, which is why I knew that I needed to be surrounded by folks who understood what excellence looks like so that we could role model the very behavior we're seeking to now reinforce 2, 3, 4 levels down in the company. And the other piece of the puzzle is the stakeholder engagement where I'm bringing and we are intentionally bringing our stakeholders along with us on the journey. It's really important for us as leaders to show up with our regulators who we're asking to support us on the journey to create different customer outcomes. And that means putting capital to work. More importantly, all of this stuff is happening in an environment where affordability is an absolute headwind regardless of what the actual price to value might actually be. The narrative around affordability is influencing our regulators' receptivity to additional rate recovery. But they recognize being intellectually honest, that customers can't receive the benefits of economic development and lower cost without efficient investment and timely recovery. And so I'm not surprised by what I've seen because I've been in the industry long enough to where I'm recognizing pattern recognition, but in every different jurisdiction, context matters and it influences how our employees, our regulators, the communities and the customers that we serve, how they receive our value proposition. My objective then is to provide you as much transparency as our investors in the path ahead and create a predictable pathway of meeting your expectations so that you take the journey with us. But I've been pleasantly surprised by the receptivity of our employees to this pure-play strategy and the standard. And I'm really pleased that I've been able to convince my colleagues around the table to join me on this journey of realizing what I still very much believe is a fantastic future for Algon. Benjamin Pham: Okay. That's great. And then maybe to turn to some of the other questions highlighted, the 2028 CapEx, the rate base you have there. You now have CFO, Rob in the seat, he's looked at the numbers in more detail. Are you in a position near term or next couple of months to think about your guidance beyond '27 with these additional details? Or is even through 2030 guidance, that may be unrealistic just given that you're still walking and running? Roderick West: Yes. I think you better believe we're looking at that. But to the extent that I would give guidance beyond, say, a growth CAGR for earnings, I'm grappling with what level of certainty do I have given the multitude of states, regulatory constructs, investment opportunities, portfolio scenarios on top of the earlier questions that were being asked and continue to be asked around domicile. I don't know that in the next couple of months, I'm going to give you -- be in a position where I'm comfortable giving you a longer view. But from the moment we came on board and now that we've settled and Rob has settled in -- settling in as CFO, we're putting the meat on the bones around the longer view and zeroing in on reducing that cone of uncertainty as we and the Board begin making some decisions around the answer to some of those broader questions, whether it's portfolio, domicile, all of those things influence the tax assumptions for '27. But it's a work in progress, and I don't -- I won't create an expectation of some big reveal, but I need you to know that we're under the hood constantly assessing how far out can we have clarity so that we can project transparently that clarity to you. But we are definitely working on that. Operator: Next question comes from the line of Mark Jarvi with CIBC Capital Markets. Mark Jarvi: Just in terms of the CapEx ramping through '27 and again through '28, Rob, you've articulated that you don't want the company really spending capital unless you can earn a fair return on it. So just as you stand here today, the confidence that the regulatory improvement there, confidence in recovering that invested capital to get across '27, '28. And just is that sort of the signal then the higher CapEx through '28, just that increasing confidence that the earned ROE continues to track higher beyond 2027? Roderick West: The short answer is yes. And again, for me, looking at -- and certainly, Rob, as we're shaping out the capital plan and matching the earnings, we're also doing the dance around timing. And what I am trying to get my comfort around, and this kind of goes to my relative visibility into a 5-year plus kind of look is how does the timing play out? I know that I got some big chunky investments in transmission and generation in the next couple or 3 years. Missouri, I got a 2-year stay-out period, right, where I'll be working to feather in the implementation of the rates that we settled on, while at the same time, knowing I got to put capital to work to advance the larger chunkier projects in transmission and generation, all of which are accretive to the value of the firm. But the work is ongoing for me, how do I bend the cost curve in the near term to create and maintain the margins while still feathering in investment and getting support of our regulators to, in some instances, perhaps accelerate existing mechanisms to keep us whole. All of those things are part of managing the business. And as we've alluded to, there are some areas where we just have to put more resources to work to provide the outcomes to customers to earn the right for those more efficient recovery mechanisms. But Rob and I are -- along with the executive team, know that our responsibility to you is to map out how we close the gap between our allowed returns and earned. And we are dead set on remaining focused on achieving those outcomes as quickly and as efficiently as we can. I need you to know that that's not -- that's never lost on us. Mark Jarvi: That makes sense. And then just if I hear you right, would we maybe sort of higher sort of variance potentially on CapEx in '27, '28 just because you're still working through this process? And then I guess, Rob, in terms of the comments around 2027, no equity, just the view in terms of how you fund through 2028? Robert Stefani: Yes. So we haven't put out guidance on 2028. And I think to Rod's earlier point, I think as you look across the business and anything we could do there, I think it's just premature. But as we look out, as you look at our balance sheet, as you look at bringing in decisions on the regulatory front, we feel confident in that ability to get through 2027 without an equity issuance. I think the capital plan is exciting. It is back-end weighted, but not an insignificant part of that is FERC transmission that would earn a return along the way that's compelling. So as we think about those kind of opportunities and closing the gap on ROE, I mean, that's exactly that and getting in on the state side to close the gap on the distribution end. That's what we got to be doing. So I think it's exciting. Those projects, unfortunately, they're towards the back end. But as Rod highlighted, they do continue past 2028. So something to kind of look forward to in the forecast, but also beyond that. Operator: Next question comes from the line of John Mould with TD Cowen. John Mould: I'd just like to start with the Missouri rate case and the customer metrics that you need to have in place there for 3 consecutive months. Could you maybe just -- and I appreciate those are metrics that were included in the settlement that you're comfortable with. I'm just wondering if you could give us some color on your progress on those customer metrics and how you're thinking about kind of time to hitting that 3 consecutive month window? Roderick West: Yes. And I have Amy, our Chief Customer Officer, here. I'll start the question, and I'll look for some body language from Amy to tell me if I'm off on it. And I've shared before that these -- the customer metrics were all around items like accuracy, timeliness of billing, which sounds simple, but for us, represented the outcomes of a series of end-to-end processes that presented opportunities for improvement. We did not believe those metrics, all of which would be the types of things that any utility would view as reasonable. We believe we have satisfied those metrics, but we are in the process of validating with the commission the sustainability of -- the achievement and sustainability of those metrics so that we could then satisfy for the commission that we met the conditions precedent for rate implementation. And Amy and her team have literally been working 24/7 to ensure not only the achievement, but the durability of the fixes that created the friction in Missouri. And our expectation is that we're going to answer the bell for the regulator, but also for our customers to meet that -- to meet those time lines and outcomes. So we're on track, but we're in the process of validating that with the commission, and that is a condition precedent of rate implementation per for this element. But think about timeliness, think about accuracy of bills and the durability of the system upgrades that we -- and tweaks that we have made along the way. John Mould: Okay. And then just maybe a quick one on the hydro. How should we think about where that sits in the pecking order of potential recycling opportunities? It doesn't impede your pure-play positioning and wouldn't displace an equity need over the next couple of years because you don't need to come to market, but it does represent your only non-reg assets. So how should we think of that relative to the rest of the portfolio and in terms of what you -- the kind of interest or conversations you've had in the market since you identified that? Roderick West: Yes. And I'm -- it's not going to be exciting to hear because there isn't one thing different than what you've heard before. And I don't -- well, actually, I do want to sound like a broken record because I want us to be consistent, is no longer what we consider to be material, right, just given where the asset sits within the existing portfolio. We are focused on the pure play. And certainly, our openness and willingness to transact with the hydro asset hasn't changed. We've made the point that it's not a fire sale circumstance where we're looking to jettison it at any cost. And to the extent that we have been -- have received or are in any stage of conversation with counterparties, we wouldn't be commenting on it unless we thought we were at a point where we'd have something to transact on. That being said, it is still very much an asset that we believe is -- would better serve us outside the portfolio, assuming we had reasonable terms. And that's all we're doing is pursuing reasonable terms, and we're sure not going to be distracted by any process that isn't from our vantage point, isn't creating some level of value on our end. So if Rob has anything to add there by all means, but it's on the dashboard, and we go through the normal processes around considering inbound from interested parties. But again, this will not be a fire sale. Operator: [Operator Instructions] We'll take our last question from Elias Jossen with JPMorgan. Elias Jossen: One more quick one. Can you just discuss your overall view on the California regulatory backdrop, maybe thinking about wildfire risk at CalPeco and whether the team would consider contributing to a wildfire fund there? Roderick West: How much time you got? Elias Jossen: I got all morning. Roderick West: No, it's -- listen, it's an ongoing effort for us as we're not at the same scale as some of my larger colleagues that operate in the state. And that dynamic influences how I think about the backdrop around wildfire. We're going through a process right now to get our wildfire mitigation plans approved. And it is a complex landscape that we are navigating. We expect to navigate it as is our charge and reduce the risk, both financially, operationally and otherwise to wildfires while managing certainly the cost, but from my vantage point, the recovery mechanisms that -- and access to insurance that reduces risk on our end. And I am spending a fair amount of time as is my team, both contributing to and tracking that process. But -- and it is a full-time endeavor. I will tell you. We are spending a fair amount of time and resources keeping up, but I am duty bound to reduce the risk of operating in California, and we're engaged with our stakeholders in Washington, D.C., and the state of California from the governor's office to our regulators and other counterparties. We're fully engaged just given the complexity of managing risk there. Operator: There are no further questions at this time. I will turn the call to Mr. Rod West. Roderick West: All right. Just a general thanks for your continued interest and our commitment to be transparent with you has been the undergirding of our disclosures today. And again, thanks for supporting our path to premium. Have a great day. Operator: This concludes today's conference call. You may now disconnect.
Eduardo De Nardi Ros: [Audio Gap] Webcast for our results, the fourth Q for this year. It's a pleasure to be with you. This event will be presented in Portuguese with simultaneous translation into English. And the links to both languages can be found on our website, the Investor Relations website. I'd also like to say that all participants will be able to watch the broadcast online as listeners. And after the introduction, there will be a Q&A session as usual and you can send your questions to our e-mail. With us today, we have Magda Chambriard the President of Petrobras, Álvaro Tupiassu, the President of Gas and Energy on behalf of Angelica Laureano, our Executive Director of Energy Transition and Sustainability; Clarice Coppetti, Executive Director of Corporate Subjects, Claudio Schlosser, Director of Logistics. Fernando Melgarejo, the Financial Executive Director of Investor Relationships, Renata Baruzzi, Director of Engineering, Technology and Innovation and Ricardo Wagner, Director of Governance and Compliance; Sylvia Anjos, Executive Director of Exploration and Production; and William França, Director of Industrial Processes and Products. So now I will give the floor to our President, Magda Chambriard for her initial considerations. Magda de Regina Chambriard: Ladies and gentlemen, good morning. It's a pleasure to be with you to present our results for 2025. And for the fourth Q of the same year. We are extremely proud of our results, and that's why I say, and I repeat that if you place your bets against Petrobras, you're going to lose and we keep saying that. Having said that, let's now start up by saying that at 2025, as you saw, was an unprecedented year in terms of the production growth in Petrobras. As you could see, over the course of the quarters, there was a constant increase in production, which is the result of a technical, secure, well-executed job done by our teams which work in an absolutely integrated manner, guaranteeing efficiency and the best possible use of our ore in our facilities of, our beds in our facilities. First, I'd like to remind you that the brand did not help us. The oil prices had -- they plummeted, but it was the growth of our production. That allowed us to mitigate this drop in production. That was a big drop in the oil prices, but we delivered an additional 11% in terms of production in 2025 when compared to 2024, achieving and surpassing our goals has been a constant thing in the company. In terms of refining capacity, platform production and oil exploration goals or goals around the allocation of new products to new markets. So I want to highlight a few of our records. The Buzios field platforms surpassed the operated production milestone of 1 million barrels per day in October 2025. And therefore, it's a goal that was surpassed before the deadline, the Atapu, and Sépia fields also reached 1 million barrels per day, and we are proud to say that this happened on December 31, 2025, showing that the Petrobras team is heads on 24/7. We're repeating into in Atapu, and Sépia, the historical milestone we reached in 2019. When it comes to nonrenewable energy, we should pay attention to this field, it was a declining field, a huge field that have been declining since 2019 that was able to go back to production levels making Petrobras proud to have 2 oil fields that produce more than 1 million barrels per day in the pre-salt sector and more oil means more cash flow, more investment capacity, more taxes and more dividends. We are proud of having surpassed these goals. We've been working hard to achieve them and to surpass other goals, and we'll move forward, accelerating deliveries whenever we have the opportunity with a full focus on safety, operational excellence and capital discipline. A recent example of this efficient approach was the conclusion, the completion of the anchoring of P-79. P-79 was the latest platform to arrive in Brazil in the last few days of this year. And after arriving, it was anchored and a record-breaking period of 12 days with 26 anchoring systems connected once again proving that we operate with excellence, planning, integration across the teams in everything we do. P-79 is already moored. And soon, it will start to operate. If we look at 2025, I need to highlight that we delivered our facilities before the deadlines. We delivered the contracts for refineries below the intended price and with that, we've been -- every day, we've been producing more. We've been producing better with fewer resources. And this is Petrobras' constant search for excellence. We used to say that tomorrow needs to be better than today. And today, undoubtedly has been better than yesterday. We also had great news about our oil and gas reserves. In 2025, we incorporated 1.7 billion oil barrels, which allowed us to achieve the highest number of proven reserves at the company for the last 10 years. We're proud of this milestone especially because last year, we achieved a record-breaking production levels, record-breaking exporting levels. And nonetheless, we guarantee a record-breaking level of reserve replacement. Our reserve replacement level and our generation of proven reserves and production have been much higher than those of our peers across the industry. In 2025, as I said, in terms of oil exportation -- exporting, it was 675,000 barrels exported per day in a year. In the last quarter of the year, the average was of almost 1 million barrels per day, which is the result of our logistic efficiency in relieving our platforms and a continuous work towards developing new markets. When I referred to almost 1 million barrels exported in the fourth quarter of 2025. I'm proud to say that it was almost because it was 999,000 barrels per day. We almost hit the 1 million mark, developing new markets, logistic efficiency to allow for these exporting levels, new high-quality products sent to the market refineries achieving a utilization factor of 92% with almost 70% of the production being comprised by diesel gasoline and QAV, which are our highest added value by products, which contributed hugely to value generation and to our sales. You can see that in spite of the drop in the oil prices, we delivered robust results with the production -- with the drop in production mitigated by the increased production and by the excellent performance of our refineries and by the expansion of the markets that our most valuable products. As I said, we sold 1,747,000 barrels per day worth of byproducts in the internal market, 1.43% higher than the same year -- the same period of the previous year, and that was fostered by gasoline and QAV that accounted for 74% of our sales. The sales of QAV aviation fuel saw an increase of 6% in the year, reaching the best performance level of the last 6 years. We keep on expanding the S10 diesel production, a high value-added diesel, and we've been advancing in the production of renewable content fuels. Our diesel containing 5% to 10% of renewable content is a reality that's being increasingly accepted by our market. We started by producing a sustainable aviation fuel SAF at the Duque de Caixas and Henrique Lage Refinery. At President Bernandes, we started the contracts for the construction of this first plant dedicated to the production of SAF and green diesel. In addition to that, we, for the first time, delivered in 2025, a bunker with renewable content to the Asian market. I've had the possibility to tell you that in the previous quarter, but we're making good money by offering bunker or navigation fuel with a 24% content of renewable fuel in the Asian market. It's a good amount of money with all of the batches having been sold quickly at high levels. In the gas market, we also had great news. The second module of the Boaventura Complex unit for processing natural gas started to operate last year, increasing the total processing capacity of the unit to 21 million cubic meters per day. We reached the milestone of 6.6 million cubic meters per day in terms of gas volume contracted in the inflexible modality. This is what a free market looks like, doubling the client database of Petrobras while still keeping our excellent service levels. This means that Brazilian companies keep on believing and betting that Petrobras is their main natural gas provider in Brazil. We will still have big growth opportunities with value generation moving forward. We've been able to combine a high-quality portfolio with high returns with an administration strategy based on discipline and capital increased operational efficiency. Petrobras is imbued with a strong purpose, which is to make this company increasingly bigger, growing along with Brazil, delivering to a Brazilian society and its investors, be they state-owned or private, the best the company has to offer. We are building a company that is profitable, increasingly diversified and prepared to lead a just energy transition as well as prepared to fight the volatility of such an unstable oil market as the one that we are now facing, generating return for our shareholders and wealth and development for Brazil. I want to thank you all for your trust, and I reiterate that Petrobras' commitment is towards an even better future for the company and for Brazil. Before wrapping up, I want to say it again, if you place your bets against Petrobras, you're certainly going to lose. I'm proud to say that. Thank you for your presence. And now I'll give the floor to our CFO, Fernando Melgarejo, who will have the honor to disclose on our behalf the financial results, which we're all very proud of. Thank you. Fernando Melgarejo: Thank you, Magda, for your introduction. I want to greet all of the directors and everybody that's watching us on this webcast, which discloses the results of the fourth Q of 2025 and the yearend closing for 2025. As President Magda said, we had an unprecedented growth in the oil and gas production in the company, which reinforces the quality of our assets as well as our capacity to have a strong cash flow generation even in face of challenging scenarios. Let's see how this reflected in our financial results in the next slide. First, let's talk about the external environment. The average Brent in 2025 was $69 per barrel, a 14% drop compared to 2024 and well below our expectations. These are factors that, by their nature, are outside of our control. What we can and should manage is our resilience in the most diverse scenarios. For that, we demonstrated the company's management capacity to extract the maximum potential from our assets. Later, we'll talk about the management levers and projects that boosted production. Our adjusted EBITDA reached $42.5 billion without considering exclusive events. The amount is $43.8 billion, which is in line with the previous year. Net income reached $19.6 billion without exclusive events, it's at $18.1 billion. Here, we left out gains from exchange rate variations and other factors that do not have a cash effect. In other quarters, exchange rate variation negatively impacted the balance sheet. This time, the impact was positive on the corporate result, reflecting the appreciation of the real against the dollar. Finally, in terms of operating cash flow, even though we are facing a scenario of a plummet in the Brent, we generated $36 billion in operating cash during the year, maintaining the results at the same level as last year, challenged by a 14% drop in Brent, which demonstrates that our result is robust, sustained by quality assets with high returns and rapid cash generation. This slide shows how we delivered these results even though there was this drop in Brent. In 2025, we recorded a growth in the sales of derivatives in the domestic market of totaling 1.7 million barrels per day. I wish to highlight the 5.2% increase in diesel sales, a result that reinforces our competitiveness and capacity to meet the demand of the Brazilian market with profitability. We achieved a refinery utilization factor of 91% with 68% of the production being comprised of higher value-added derivatives such as diesel, gasoline and QAV. Another important aspect is that 70% of the oil processed in our refineries came from the pre-salt, which contributed to the generation of higher value derivatives, reduction of emissions and to our logistical optimization. This result is aligned with our commitment to sustainability and environmental responsibility. A key factor for the offsetting Brent falls is what we achieved in 2025. We exceeded our target. So we have an x-ray of this 11% increase of our production in 2025 and the new production of the pre-salt had a vital role in these results. Buzios still delivers more than expected with productivity levels that are very high. In October 2025, [indiscernible] platforms reached a record of 1 million barrels of oil a day. In the Tamandaré, as you know, is now the platform with the highest production in Brazil with over [ 240,000 ] barrels a day. The platform reached a record of instant flow rate of 270,000 barrels a day. We have no records of a similar level -- production level worldwide. In Mero, we hit another record, [ 650,000 ] barrels, and we increased our operating efficiency everywhere between 2024 and 2025, we reached an increase in efficiency of about 4 percentage points, and this represents additional production of 100,000 barrels of oil a day. This efficiency gains is equivalent to a startup of a new production like the Maria Quiteria and the Jubarte oil field. In other words, we're delivering a new platform -- production platform with just this efficiency increase. So that means more oil with the same assets. And with that result, we want more. We are committed to doing more with less. So -- and that is for everyone here, all the officers here, our employees. That's why we have programs for operating efficiency and also to reduce losses that can be avoided. This shows our teams have reached a new efficient operating efficiency level at Petrobras. Next, please. From the beginning of our management, we have put efforts into changing the behavior of what was found in our investment in the previous years. Until 2023, we invested about 70% of our CapEx. And now recently changed in 2024 and 2025, our focus was on a profitable production increase. Our investment impacts much more than the deliveries of 2025. And that means our long-term commitment. For example, the tie-in of 77 oil wells. That was a historical milestone before the top number was 57. So we over -- more than doubled what we had before. We also reduced the risk of delays and increased the likelihood of anticipation, and this is something we've already discussed before about anticipations and forecast of anticipations. This is crucial for us to reach our production growth on our business plan. Next, please. This is why 84% of our investment was allocated in exploration and production, as we can see. So 11% in RTM and 2% in low carbon energy. In other words, [ $17 billion ] in E&P with the best portfolio in the world. We'd also like to stress that the cost of our execution projects are in -- we're in control of that. We should know that all these anticipation of projects that is something we always work for. We've always avoided as we can see on the table, a full life CapEx of our current business plan projects are slightly lower than the same period in 2025,'29. Next, on this slide, we have great news that we announced at the beginning of the year about our reserves. We added [ 1.7 billion ] additional reserve barrels, and that led us to have the highest reserves volume in the last 10 years. So -- and that's between December 21, 2025. And the replacement rate was 175%, even considering a record production in 2025. And the ratio between probable reserve and the production is below -- above what we expect, above what our peers are. So we have low cost, and this will be our -- remain our priority. Between December -- on December 31, 2025, we had $69.8 billion that our gross debt. We should highlight that over 60% of our debt, in fact, 62% comes from leasing, the platforms also ships and probes that's part of our debt. In 2025, the Almirante Tamandare recorded $2.6 billion in debt and the Alexandre de Gusmao, another $0.4 billion -- sorry, $1.1 billion. So on our webcast, we should remind you that these new leasing installments lead to production-generating assets. In other words, it generates income. The 2 additional platforms added 270,000 barrels a day in capacity only for Petrobras. When you look at our financial debt, we're still working on our debt management. Along 2025, we want the lowest debt profile. And I'd also like to highlight very successful market -- capital market operations that took place in December with our bonds that became more attractive and also liability management operations in quarter 4 with some pre-banking prepayments in banking. So we had reductions in our debt from 2025 to 2026 and our -- next, please. This quarter, the Board of Directors approved a detailed report for the payout of BRL 8.1 billion, BRL 0.62 per share that were paid in 2 similar installments in May and June. This strategy is to generate value and to conciliate investment in high-yield projects. And then we can remunerate shareholders in a competitive fashion. With regard to what Petrobras is giving back to society, it cannot be held in a single slide. Everything that is produced in this company, every platform, refinery, power plant, laboratory for every social project generates consequences for many layers of society. We want a short summary that can cascade down our Brazilian economy. So we start with investment. In 2025, as we mentioned, we invested over [ $20 billion ], increasing -- an increase of 22% with regard to 2024. We're committed to speeding up everything that we can to generate return to our investors and to society. This investment led to over 300 jobs -- 300,000 jobs. That's about 5% of Brazilian investment. Another example is BRL 277 billion. That's what we paid, including tax royalties and special interest to government, state and local governments. We also distributed BRL 45 billion in dividends, BRL 17.6 billion for the controlling group, and we also allocated BRL 2 billion approximately in social environmental investments, sponsorships and donations. These are some examples of our multiplying effect in Brazil. Finally, I'd now like to stress that we have high-quality projects that will deliver growth -- both growth and profitability. The entire Brazilian society as well as our shareholders will enjoy long term with all these benefits. I'd also like to stress that we focus on executing our business plan from 2026 to '30. We have 3 fronts. First, capital discipline; number two, greater production; and number three, higher efficiency levels. This is what we will keep seeking throughout 2026. We want results and also economic development for this country. So this is the end of my presentation. Thank you. So all the top management is here, all the directors, officers are here to answer your questions. Eduardo? Eduardo De Nardi Ros: Thank you, Magda and Fernando. We will now start our Q&A session. The first question comes from Rodolfo De Angele of JPMorgan. Rodolfo De Angele: So I think every analyst is entitled to a single question. I'd like to discuss some of your, earnings in further detail of quarter four. But as I cannot, I cannot ask a long question, I'll just ask about your current scenario. In other words, what's going on in the oil and gas industry, considering the conflict in the Middle East. We've had questions by our clients on how the situation is, especially with regard to fuel. So how is Petrobras preparing to work in this moment of uncertainty and also highly volatile prices? So now I'd like to hear from you, from Petrobras' top management, how you see your supply situation. Do you have any prospects, any strategy about prices? Can you give us your views? Is there anything going on in exports? Is it possible to increase the use of refineries in the short run? So these are some of my concerns that I can ask of you, especially short-term concerns. Magda de Regina Chambriard: Thank you. I'll start by answering the question, and then I'll ask the other officers to also give their answers in refining and finance. Yes, undoubtedly, this is a high geopolitical instability. So at this moment, we want to make sure that the company is ready for any situation, anything that may happen. So if it's USD 85 per barrel, we need to be prepared. If it's USD 55, we need to be equally prepared. I'd just like to remind you that we started last year with an oil price that was higher than $80, and we finished the year with less than $60, so that was $59. And the company delivered its results and showed that it has remained resilient and faced this price variation accordingly. At the beginning of the year, this volatility was again very high as a result of the war. But we still keep or stick to our internal policy, which remains solid. We looked at the oil and derivative pricing without transferring this volatility to the Brazilian domestic market. And this is something we've been doing several times. Last year, we delivered a great result in terms of prices. So when Petrobras looks at international qualities and the appreciation of its products and also considering its own space, in other words, how it is in the Brazilian market. This is not a concern anymore. This is an equivocal I've had many similar questions this week. So this was okay when the price of oil decreased. Will this also work when prices increase exponentially as we see it now? Yes, it will. We have no price -- internal policy of price fluctuations. There's no discussions on this matter. As for routes, we will have an explanation in further details in a minute, but we really need to keep exporting what we need to export our refinery or import what we need importing our refineries still have a growing processing capacity. Our manager, William -- Officer William will talk about that. And our cash is still on our focus. We're really concerned about ensuring that this company remains resilient, that we respect our capital discipline and that we reduce costs. We're talking about $85. A few years ago, it was $59. And now those that mentioned $55 next year. So we are indeed working hard and checking all these variables, and we want to ensure that the company remains absolutely prepared to face any scenarios that might come up along 2026 and 2027. I'll now give the floor to another director. And the second one will be [ Fernando ] who will talk about the performance of our refineries. I'd also like to remind you that when it comes to exploration production and connection between oil wells, we are ensuring increasingly greater production and our target is to have increasingly more oil wells and also to optimize our -- the production and extraction of our deposits. Everyone is working hard and together to deliver these results. So can you explain a little more about this global market, Schlosser? Claudio Schlosser: Yes. Thank you, President Mrs. President. Yes, the company has this strategic plan. So we are indeed prepared for a Brent range that is quite wide when you consider the short -- and that in the long term. Now in the short run, our situation is highly unexpected. I think we've never had such a scenario. So the regions that export 16 million in oil and an additional 5 million in petroleum products, this region will be closed. Of course, this has a huge impact. We take snapshots at different times, 10 days ago, for instance, what people said, they were talking about $50 a barrel or a surplus of 4 million or 5 million barrels available. So -- and then it all changed. So we have different focuses at different points. There are also consequences to this. When we have, for example, Brent. So the first is when you no longer have this production of oil and petroleum products. It's as though the market froze. Oil was not being paid, and we have 2 or 3 days without oil trading. That was the initial impact. So we know that we know how that works and the market is now expected to change prices or adapt to the new pricing. We have many ships that were trapped. There's also a set of ships that are unloading, so shipping -- or freight values are now adjusting. So in the short run, let's look at our snapshot again. Our current snapshot is when -- as for our oils is that this means a favorable netback to Petrobras. So we have greater margins. So when it comes to oil, I would also add the fact that the markets that we supply, they're outside of the conflict region. We're not in the Gulf region or any other region where there's a conflict. All of our flows go towards India, Europe and other areas. So we're outside of this area, which is a good position for the company. If you look at the oil, we're looking at a more interesting netback for the company in terms of shipping. If you compare Petrobras with other companies in the world when it comes to freight, Petrobras is also in a privileged position. If you look at the international market, the companies are more or less working with 5% of their own fleets and 95% with other contracts. And Petrobras is with a -- in a much better position in oil exploration, we have more than 30% of rate allocated to long-term contracts, which is also an advantage and the market average doesn't even reach 10%. So we're very well positioned in that regard. So for -- that's what I would have to say about the -- about oil. When it comes to refined products, Petrobras is having no difficulty meeting its goals. We work with an optimized business plan. We optimize all of our assets, and we have very robust assets for that, be they terminals, refineries, pipelines. So we optimize that, and we optimize the more attractive export -- importing products. And we've been able to meet our goals and the imports are in line with our plans. In gas, we -- in gasoline, we are exporting it. In LNG, we are also exporting it. We talk to the market, and there's a relevant level of importing being carried out by distributors. And the vessels that were coming towards Brazil are still coming to Brazil. And we'll get here. If you look at the entire scenario, the business plan of Petrobras and the other players is in line with our previous plans. I'd also like to say that when it comes to supply, in terms of supply, Petrobras is committed to its clients. In Brazil, Petrobras is not the only player in the supply side. We have other relevant players in Brazil. So this is our perspective when it comes to products and refined products. The long-term perspective, as I said, is well covered by the strategic planning and the short-term view has to be done on a snapshot-by-snapshot basis. Every day is a different day. We do a constant assessment and obviously, we make use of the best netback opportunities, be they related to oil exporting or more profitable imports. So this is -- these are the details of the short-term planning. We covered basically everything along with our President. In terms of refining, we're already using the logistic planning for the first Q. And the idea is that we ended the year with 91% of foot in FUT and we'll close the first Q with 95% with a very good use of refined products. We have a few scheduled downtimes, especially in 4 refineries this year and replan will be revamped and expanded, but with the monitoring of the units, we are able, if necessary, to extend the campaign period of refineries, increasing the production of the refined products. And if necessary, we're also going to do that. So we're working in a synergy with the logistics and commercialization area. And as we said, we've had an increase in the utilization factor, which is very good. It's a benchmark from a global perspective. I would say the biggest reference is strategic planning. There are no changes in that regard. We are seeking efficiency, also reducing our balance Brent to $59, as we said. And all of these optimizations are being looked into by the directors, and they can be reverted into good operational results for the company. Well, I'm talking about pricing. The business strategy of Petrobras was created for times like these where there is a huge volatility as we are seeing in the market, a huge volatility coming from unexpected facts, and this is what it was created for. The business strategy of Petrobras provides this robustness to the company when it comes to conducting its business. Eduardo De Nardi Ros: Thank you, Magda, Fernando, Schlosser, Emilia. Before we take the next question. I forgot to say -- let's limit the number of questions to 1 question per analyst, please. Lilyanna Yang from HSBC. Lilyanna Yang: First, I want to congratulate you on the greater transparency of information. And my first -- my question is the oil price is much higher than the Brent that you have in your budget, the one that outlines the investment plans. If the oil prices are still high, like that. Can you tell us what is the priority allocation of the cash flow that would be generated in excess of the budget for the first half. Just to give you a hint of what I'm looking at is -- what are the investment projects out of the $10 billion that have not been approved or the ones that you said that you want to approve but the final investment decision could be postponed. What -- or which of these projects are in a more advanced approval stage and does that include Braskem, for instance? Magda de Regina Chambriard: Thank you for your question. Great to hear you again. Our priority is capital discipline as usual. We'll always be very careful in all of our decisions. It's something very recent. The entire world is still assessing its full effects. No one is fully clear as to what is going to happen, the new Brent price levels and/or even if that applies to the short or long term. What we've discussed before, including with you and your team, is that we always focus on the scheduled investments, both in terms of our base CapEx, our target CapEx and our CapEx under assessment. This is our focus. And obviously, if there is additional revenue, we'll take care of investments, then we'll take care of the debt. We want to converge to [ $65 billion ] in 5 years. And if there is a cash surplus, we will try to anticipate it according to our capital discipline that we've been discussing. So our rationale is still the same when it comes to elevated unnecessary cash levels. If we understand that our cash flow levels are too high, we would love to distribute extraordinary dividends as long as we're sure that there will be no impact on the financial ability of our declared projects based on our '26 to 2030 strategic plan. Eduardo De Nardi Ros: Now the next question comes from Bruno Montanari from Morgan Stanley. Bruno Montanari: Going back to the first subject about the prices, just to confirm, if I understand you correctly, it's very clear that the policy does not transfer volatility to the domestic market, but the President also said that it works in scenarios of high oil and low oil price scenarios. Since the Brent has reached levels above 90 today, for how long can the company maintain its unaltered prices before that starts harming its refining margin? In other words, should we always expect the refining margin to be positive in scenarios where this margin is challenged. Is this the moment where you make the decision to adjust the prices, assuming that the prices will remain like that for weeks or months? I'd just like to understand if that's the correct way to look at the policy. Magda de Regina Chambriard: Thank you for your question. I will start the answer and then Schlosser will help me with the rest of the answer. Your sentence says something interesting. If this assumption remains like this. So I think that right now, what we're asking ourselves is what's the trend -- what's the tendency? What will that look like a few days from now? Is that a momentary spike? Have we changed our rules unnecessarily? Or is that a more persistent change that has to be faced? I would say that as of now, this question remains unanswered. But if this volatility is really this high and if the price ascent is really that high, it will certainly require quicker responses than it would require if this scent were slower. But as you said yourself, as of now, we are not sure about anything. let alone this about this assumption. Claudio Schlosser: Thank you. I think I agree with you. As you said very well, it's part of Petrobras' strategy to be the customers' best alternative. And we're constantly analyzing the international market prices, and we have to look at our position. Our exploration and production has been producing oil significantly. There has been an increase in refineries. As William said, our performance is world-class. And the main principle is not to transfer volatility. In the past, for instance, readjustments were happening on a daily basis. If anything happened in the market, that would get immediately transferred to the market, but that does not work. It doesn't work for the company. It doesn't work for society in general. So basically, what we support in terms of commercial strategy is to guarantee that. And as the President put it very well, the thing is we're talking about snapshots. In 10 days, we're talking about a completely different scenario. We're talking about [ $1 billion ] in oil floating around the world. So as I said, the strategy was created to take these aspects into account. But evidently, as you said, another variable that's part of the business strategy is financeability, which is comprised in the strategy. It's analyzed on a daily basis from a technical standpoint, and that's how we position ourselves. If you ask me, we have not adjusted the diesel prices in 300 days, even though there is an environment that's full of conflicts around the world. So given that volatility, the most important factor here is time. Eduardo De Nardi Ros: Thank you, Magda and Schlosser. Bruno, thank you for your question. The next question comes from Bruno Amorim from Goldman Sachs. Bruno Amorim: Congratulations on the solid deliveries throughout the year, especially on the production side. My question is along the lines of production. I'd like to hear take on the optionalities for anticipations and the operations of platforms. Is there a possibility of advancing them to 2026. I mean, what are the conversations with suppliers like -- so that's a more encompassing question. If there is an anticipation being considered in terms of anticipating the operations of platforms. Renata Baruzzi: As we always say, we're always trying to anticipate. For 2026, we don't consider that any other anticipation is possible for the sail away of these platforms. The P-80 will sail away in August, P-82 in September and P-83 in February of next year. What we are looking at is the anticipation of ramp-up of P-78 and P-79. For P-78, I talked about -- we talked about the mooring record of P-79. But this week, we hit a record of the first injection of gas at P-78. The shortest time we reached with our own platforms had been with P-66 at 79 days. We were able to anticipate the injection by quite a bit, and that's fundamental in order for us to proceed with the other wells. We have one interconnected well to P-78 and by stabilizing the gas injection, we'll ask for approval for a second well and so on and so forth. So for 2026, our campaign is to accelerate the ramp-up of the current platforms. Eduardo De Nardi Ros: Thank you, Renata, and thank you, Bruno, for your question. Magda de Regina Chambriard: Give me one second, Eduardo. Just a reminder, Bruno, we are talking about 2 large platforms that will go into production in a scenario where we're able -- we've been able to significantly reduce the decline in the production of the large fields. So our reserves have allowed us to reduce the decline in production. And you've seen that if you look at the production numbers from last year, we're able to reduce the decline of our fields from 2024 until today from 12% to 4% per year. If we were at 12%, we would be adding platforms with no effects on production increase. So if we are better able to manage our fields and optimize our gas injection projects, as Renata said, our water injection projects, our complementary development projects and so on and so forth. If we do that, we're able to keep the fields with a minimum amount of decline so that the new platforms really lead to an increased production. So at 4% of decline per year, more or less in the pre-salt, 2 platforms of 180,000 each represent a significant production increase for 2026. In addition to the sale away of P80 in August. It should take it 2 to 3 months to arrive in Brazil. So in -- by November, it will be moored and that also ensures that by the beginning of 2027, we'll have additional support to our production. So we have 2 large platforms that will go into production this year, changing the production levels of Brazil and another 2 for the beginning of 2027, that will also go into production, also changing the production levels of Brazil in the beginning of 2027. Eduardo De Nardi Ros: Thank you, Magda. We will now go on to our next question. That's Monique Greco, Itaú BBA. Monique Greco: I'll resume your -- the topic of our trade strategy. So when you discussed how you're dealing with volatility in the short run, so it's really interesting to see how you can ensure greater allocation of your production. So my question is now a similar question to your commercial strategy. So how are you running your commercial strategy? Are you meeting every day? Are you evaluating it weekly, every 15 days? Can you tell me more about how you've been building this answer to a question that remains unanswered. So can you give me more details about this process in order to build, to design the structure that you need to have before you decide your next move? Claudio Schlosser: Monique, thank you for your question. I'll start by discussing our process, telling you about our process, what -- how the whole company is involved in the process. So as we said, our commercial strategy, it has this goal of being the best option for our clients. That's what we want to be. We have to have a strong position. That's what our commercial strategy aims at. So what do we do? We have our technical team working on this, our domestic market commercialization, our foreign market commercialization teams. These people, they talk daily. Every day, we write reports. So again, we have follow-up -- daily follow-up reports on Brent or even the exchange rate to the dollar of our petroleum products or derivatives. It's all part of what we call our alternative cost to our clients. This is a daily analysis and reports are written and forwarded to everyone to a group, a special group with a President and the commercialization of logistics and finance officers. So we get that information every day. And this is also something we do with our officers. Our top management analyzes the scenarios, moments of crisis. So we do this much more frequently. Last week, for instance, we had a discussion with the executive directors, about the scenario or the pricing scenario. So when we have more disruption in the horizon, that means more frequent meetings. And also everything is presented to the Board of Directors. Our Board of Directors is also aware of all the conditions and what is being done in our commercial strategy. So we have daily meetings. And even when the need arises, it can -- we have more participation from the executive suite and also even the Board of Directors. I don't know if I answered your question. Eduardo De Nardi Ros: Thank you for your question. Monique, thank you, Schlosser. Now Regis Cardoso, XP, you may proceed Regis. Regis Cardoso: I have a single question. So let me now discuss your current crisis situation. In the foreign market, we see limits shut-in oil production in the Middle East and crack spread of some products abroad. So my question is, in your physical operation per se in Petrobras in Brazil, what are the consequences? What are the effects that you feel in terms of LGP or the importing of liquefied gas? LNG or what you get from the oil that you are not getting from the Middle East, how will you adapt your refineries? In other words, physically speaking, how has your operation or how have the operations been affected or maybe gasoline is less critical, but tell me about your day-to-day operations and how you're adapting and how you believe this will change or evolve over time because I know that you also have some ways of absorbing that fluctuation, but how will happen with your stocks over time? Claudio Schlosser: Okay. I'll try to be less repetitive, and I'll focus on some other details. There are some operations like we import a very specific oil used for lubricants. The oil, we have that from the Red Sea. So we have a ship in the Red Sea and they get out from the other side. Saudi Arabia, for instance, they have 2 logistic systems. The prevailing system, they get out of the Hormuz, the Strait of Hormuz, but also from the Red Sea. That's an alternative route. In terms of inventory, in oil, we have a guaranteed provision. We have a significant supply of oil with a significant inventory. And [indiscernible], we have a very long-term contract with Saudi Arabia. So this type of oil is something that is -- that we can rely on. And our planning also includes an optimized scenario with the greatest profitability. When you look at our -- and yield, when you look at our progression linear models, we have the following more interesting imports, and we may change this every day if the situation changes dramatically. So we have many opportunities, many alternatives. And this is something we're checking every day. If a new opportunity arises in oil production or petroleum products, we will make the best of that and tap into that opportunity. So if you have ships, for instance, that are sent to the U.S., but then we have a new opportunity in Africa with a much greater cash netback. So that depends on what happens on different days. As for the supply and the planning of supply, we're talking in a short term -- from a short-term perspective. And we're looking at April, let's say, we're good. We have a good position -- market position. We have the imports coming from our distributors. So this is our current scenario. And the President -- our President has discussed widely about seeking operating excellence. So in 2025, we have an indicator that was planned and what was achieved. And this has been the best results we've ever had in Petrobras' history, considering what we plan to do, this is the best results we've ever had. So the difference between what we plan and what we achieved. This -- we've achieved the best results. And that's a very relevant indicator. It means that we are highly efficient, and that means a great result Eduardo De Nardi Ros: Next question, Tasso Vasconcellos, Tasso your question you may proceed. Tasso Vasconcellos: I'd like to explore a new topic, based on some news that we saw earlier. It's about your questions about IG4 and Braskem. So what are you expecting? What is the outcome of the discussion? Is there any time line? And in addition, how about the Braskem shareholders? Do you see the equalization of the debt at that company with some capital injection? Good Petrobras participate in that process of injecting capital in any way. So -- and if that is not possible, what are the other options you've been discussing? How could Petrobras contribute at some sort of a loan or any other possibility. And now one follow-up to this point, this discussion about extraordinary is this decision to be taken just by the end of the year? Or can that be evaluated throughout the year considering our current scenario. Magda de Regina Chambriard: Okay. I'll start the answer, and I'll turn it over for Fernando to continue. I think this is for -- is up to Fernando really to answer this question. Anyway, at Braskem, we have a corporate issue at state. What's going on? There's a related party, and we have a shareholders' agreement with them. So we in other words, our partner will have the preponderance of administration. In other words, if there's an agreement between the shareholder of Braskem with IG4 who represents the banks. So this is pending approval by the CADE committee. And this hasn't happened yet. And the latest news is that this would be postponed to a month. This space is absolutely necessary for us to have a new shareholders' agreement with IG4. In other words, we can better address the synergies with the Petrobras -- between Braskem and Petrobras. In other words, today, we know the synergies are not being used the way they should. Ultimately, Braskem is leaving money on the table as these synergies are not used with a company as large as Petrobras. We believe this will be sold in the next -- in the near future. And we will finally be able to enter into that new agreement with a new partner. And the point is to maximize the synergy between the Petrobras system and Braskem to benefit both Petrobras and Braskem in addition to our shareholders, whether government or private shareholders and Brazilian society at large. Can you continue on that Melgarejo? Fernando Melgarejo: Right. Well, still about Braskem, we should remember that with the -- in our government instances, we approved prevailing right. We're just giving up the right of first choice for everything we approved. So things -- if there's nothing new, things will be as it is. This has already been decided. And as the President said, petrochemistry is one of Petrobras' interest. We see synergies in that. So we are placing our chips on this project. But we cannot speak on behalf of the company if money will be invested or not from that company to Petrobras. So we will do everything that generates value to Petrobras' shareholders. This is the logic behind it all. But everything will be communicated in a timely manner as soon as CADE approves this -- these proposals are approved. And what we are having now is the shareholders' agreement. So we need to wait now for dividends. As for your question on dividends, when we were planning our strategy, it was and it still is, of course, so we need to be really careful about the foreign political situation, and they still have a perspective on our prices. So we considered this, and we have a basis CapEx, a target CapEx. In other words, we need to be flexible enough to add new projects, start working on new projects. In other words, our focus is on the execution of the projects we already have to begin with. And with a new Brent, nothing will change in the conduction of our projects, the Brent that we are testing. They're still at $50. This does not change. We need long-term resilience. That will not change in all our governance instances or levels. We also have greater return for any new investment. So we're trying to optimize or to achieve the greatest return on investment. And if it gets to $110, so we need to have the levels that we expect. And then we are also evaluating how feasible those projects are. That's a new governance level here. And then if they also see if there's a surplus in cash every quarter, this is calculated. And we not necessarily have payouts next month or in the next quarter or next year. It's too early to be able to state anything. If we have surplus cash, of course, we'd love to pay that out as long as it does not impact our long-term sustainability. But it's too early to say anything about that. And the practice of evaluating surplus as our strategic agenda is. This is the best thing Petrobras can do to discuss our extraordinary dividends. Eduardo De Nardi Ros: Thank you, Magda, Fernando and Tasso. Now the last question of our webcast by Gabriel Barra of Citi. Gabriel Coelho Barra: Well, my question is about this situation of higher oil prices and the equatorial margin. This is a very important topic in my opinion. There was the issue of the leaks that's already been solved. Now can you tell me about your time line in your exploration schedule. So when we have the first figures for the projects in the region? And can you -- also in a higher oil price scenario, can you -- and as Fernando mentioned, that won't change your long-term perspective much, I believe. Now do you -- are you considering any short-term hedging as we have a more stressed oil scenario. We don't talk much about hedging for Petrobras. Other companies do this more often. So maybe can you talk about all these points? Magda de Regina Chambriard: So I'll talk about the hedge. We have no hedge strategy being assessed. So far, we haven't had any strategies for hedging. And our opinion is that we shouldn't apply any hedging to the oil prices. That's a long-standing rationale that we still consider to be valid. The hedging cost nowadays would probably be a huge and to apply hedging to the amount of oil that we produce would be unfeasible. Talking about the equatorial margin, Sylvia? Sylvia Couto dos Anjos: Gabriel, about the equatorial margin, we can say that we made a great achievement, haven't obtained our license. We are now drilling. We've advanced. We are now introducing the -- implementing the BOP. And in very few days, we'll go back to production and we expect to reach the reservoir interval in the second quarter of 2026. When we acquired these blocks, we entered into a minimum exploration commitment. We have to drill this well plus another 7 to ensure that we're adequately exploring the region. Just to reiterate, the equatorial margin has a big potential. It's different from our other pre-salt fields. It's reservoirs are very similar to what we find in the -- such as basin in the post-salt. And we -- any assessment of what we're going to do is highly result dependent. So for this well, the results of a single well do not allow us to assess the exploration. President Magda, just to say that in the Campos Basin, we came to the first discovery after 9 wells. And here, we're going to assess the oil system, the results of well whether it produces oil or not, that does not indicate that we are performing an exploratory assessment. There is a huge potential the equatorial margin is not there by itself. It's aligned with major discoveries that were -- that occurred in Africa back in 2010 and 2012 and their equivalent to the discoveries of Guyana, our oil system will assess if this generator is equivalent to the La Luna generator of Venezuela and the efficiency of the oil system and if the migration generation were adequate so that we can achieve the accumulation that we expect to achieve. But the results only make sense after the discovery. And once the discovery occurs, the exploratory assessment and then only can we think about the production system that will be adequate. But let's root for this well, which is the world's most famous well. Everybody asked me about it. My -- even the janitor asked me what about ROL? So yes, that's a route for yet another discovery. Eduardo De Nardi Ros: Thank you, Sylvia and Fernando. Thank you, Barra, for your question. This is the end of our Q&A session. If you have any additional questions, please send them to our R&I team. We'll be happy to answer your questions. I will now give the floor to the Petrobras President, Magda Chambriard for her final comments about the 2025 results. Magda de Regina Chambriard: We are very proud of the results we're delivering. Petrobras is extremely proud of its integrated work and the delivery capacity of the Petrobras team. Over the course of 2025, we became Latin America's biggest company, which required a lot of work, a lot of efforts dedication and a lot of purpose to turn this company into Latin America's biggest company, we've been able to do that. So let's maintain our mission and purpose. The company is a strong cash generator. Our processes are solid. Our procedures have proven correct and effective, and this is what we're going to keep chasing. We are committed to providing the best possible production by our pre-salt giants. We've just made an important discovery in the Aram reservoir. It hasn't been tested yet, but we've seen a beautiful flame indicating that that's yet another pre-salt reservoir that's emerging with a beautiful flame produced by gas and condensate. Along 2025, we made 5 discoveries, not as big as the pre-salt. I would say that there are midsized discoveries that will require development efforts on our part. And we are considering all of them along with a complementary development project for 2P Buzios. And for the fields in general, both from the pre-salt and the Campos Basin with capital discipline and with the certainty that producing is not enough. We need to produce a value to our refineries and find the best possible markets for our products in the world. This is what we're doing, and that we'll keep on doing and this is how we should look at Petrobras and understand that this team is really committed to delivering what they promised. So let's keep doing this. Thank you very much. Eduardo De Nardi Ros: Thank you, Fernando. Any final words? Fernando Melgarejo: Well to wrap up. Thank you, Magda. Thanks, everybody. It's great to be with you, and to the investors, we are constantly available to ask to answer your questions over the phone or in person. As a take-home message, I want to say that a wrong strategy in a commodity company at a time of high volatility may bring about huge difficulties for the future of the company. That is why our Administration principles are based on 3 important pillars, regardless of the price of Brent, whether it's going up or down, which is capital discipline operational efficiency in all of our processes and the search for production increase. Eduardo De Nardi Ros: Thank you, Fernando. Once again, I thank you for your attention. This presentation will be available on our Investor Relations website soon, and the audio track will also be available to you. Thank you. Have a great day, and see you in the next webcast.
Guilherme Paiva: Good morning, ladies and gentlemen, and thanks for standing by. As a reminder, this conference is being recorded. Its broadcast is intended exclusively for the participants of the events and may not be reproduced or retransmitted without the express authorization of Embraer. This conference call will be conducted in English, but please let me say a short announcement for Portuguese speakers. [Foreign Language] My name is Gui Paiva, and I'm the Head of Investor Relations, M&A and Venture Capital for Embraer. I want to welcome you to our fourth quarter of 2025 earnings conference call. The numbers in this presentation contain non-GAAP financial information to help investors reconcile Eve's financial information in GAAP standards to Embraer's IFRS. We remind you Eve's results will be discussed at the company's conference call. It is important to mention that all numbers are presented in U.S. dollars as it is our functional currency. This conference call may include statements about future events based on Embraer expectations and financial market trends. Such statements are subject to uncertainties that may cause actual results to differ from those expressed or implied in this conference call. Except in accordance with the applicable rules, the company assumes no obligation to publicly update any forward-looking statements. For detailed financial information, the company encourages reviewing publications filed by the company with the Brazilian Comissao de Valores Mobiliarios or CVM [Operator Instructions] Participants on today's conference call are Francisco Gomes Neto, President and CEO of Embraer; Antonio Carlos Garcia, Chief Financial Officer; [ Baltasar de Sousa], Corporate Communications Manager; and myself. This conference call will have 3 parts. In the first part, top management will present the company's Q4 results. In the second part, we will host a Q&A session only for investors. And last but definitely not least, in the third part, we will host a dedicated Q&A session only for the press. It is my pleasure to now turn the conference call to our President and CEO, Francisco Gomes Neto. Please go ahead, Francisco. Francisco Neto: Thank you, Gui, and good morning and good afternoon to everyone. It is a pleasure to be here with you to share Embraer's fourth quarter and full year 2025 results. 2025 was a remarkable period for our company. We met our deliveries guidance on the operational side, while we outperformed the expectations on the financial side. This performance reflects a longer trend. Embraer has been able to deliver 2 digits of revenue growth over the past 3 years despite the supply chain challenges. 2025 was also a marquee period for the E2 program with strong sales across all continents, which has consolidated further the E2 platform as a benchmark in the small narrow-body segment. At the company level, our record revenue and backlog provides strong visibility to investors about our ability to deliver sustainable growth for many years to come as we have robust processes and governance in place. We have made significant progress across the production chain through closer collaboration with suppliers, process digitalization and investments in artificial intelligence tools. The production level initiatives have now been extended across all our platforms, and they should help support production stability in 2026 and onwards. We are well positioned in strategic markets, supported by partnerships under discussion with global players in India, Mahindra and Adani Group and in the U.S., Northrop Group. These partnerships reinforce our strategic position and support long-term growth potential across both our Commercial Aviation and Defense segments. To conclude, all our business units are performing very well with solid execution and bigger backlogs. During the quarter, we saw a strong sales momentum across all business units. In Commercial Aviation highlights included new orders from TrueNoord for 20 E195-E2s, Helvetic Airways for 3 E195-E2s as well as 4 E175 orders from Cote d'Ivoire. In Executive Aviation, revenues reached an all-time high of circa $750 million as we delivered 53 business jets, the highest number ever in a single quarter. In Defense & Security, we reinforced our global footprint with Sweden's order for 4 KC-390 plus 90 options. And Portugal signed a 6 aircraft order along with 10 options for NATO countries. Finally, in Service and Support, we signed an E195-E2 pool program with Airlink and the maintenance service extension with the Republic for its E1 fleet. Let me now walk you through our sales performance for the full year. During the 12 months, Commercial Aviation recorded 157 E2 new orders across all continents, plus 140 options. In addition, the E1 program reinforced its market position with 64 new orders plus 68 options. These achievements increased the division's backlog to $14.5 billion with an impressive 2.8:1 book-to-bill ratio. In Executive Aviation, total sales reached approximately $2.3 billion, supported by strong demand across the portfolio, including the continued success of the Phenom 300, now the world's best-selling light jet for 14 straight years. The backlog in the division now stands at $7.6 billion, supported by a consistent 1.1:1 book-to-bill ratio. Defense & Security achieved another strong year with 5 KC-390 aircraft sold to 2 NATO countries, plus 19 additional options and 10 A-29 Super Tucanos sold to Uruguay, Panama and Sierra Nevada. The business unit closed the quarter with a $4.6 billion backlog and a 1.4:1 book-to-bill ratio. Finally, in Service and Support, the sales momentum remained strong. During the year, the program added approximately 75 aircraft and the Executive Care program signed another 37 new contracts. As a result, the business unit finished the quarter with a $4.9 billion backlog and a 1.2:1 book-to-bill ratio. Together, these results drove a consolidated 1.7:1 book-to-bill ratio for Embraer in 2025. I will now move on to our operational results for the year, and my comments will reflect year-over-year comparisons. In Commercial Aviation, revenues increased by 7%, driven by higher volumes. The adjusted EBITDA margin improved from 2.5% to 2.7%, supported by lower expenses. Executive Aviation, revenues increased a significant 25%. The adjusted EBITDA margin increased from 11.7% to 12%. The gains recorded from higher volumes, pricing and operating leverage more than offset the negative impact of U.S. tariffs. Moving to Defense & Security. Revenues grew 36%, mainly because of higher KC-390 and A-29 Super Tucano volumes. The adjusted EBITDA margin improved from 6.2% to 7.9% as a consequence of operating leverage and client mix. In Service and Support, revenues rose 18%, driven by higher volumes and the ramp-up of the OGMA GTF engine shop. Adjusted EBITDA margin decreased from 16.5% to 15.5%, mainly because of the ramp-up of new operations. Before I conclude, I would like to share a brief update on EV's steady progress. The first flight of EV's eVTOL prototype in December 2025 marked an important milestone. Since then, our full-scale prototype has run 28 missions for a total of more than 1 hour in over flights. The program continues to advance through flight tests towards certification in 2027. Antonio Garcia: Thank you, Francisco. Good morning and good afternoon to everyone. I'd like to start by highlighting that despite a year marked by challenges and volatility, the company remains focused on disciplined execution, delivering results in line with its commitments. Let's now take a closer look at our financial results for the fourth quarter and full year 2025. All my comments will be based on year-over-year comparison unless otherwise noted. Turning to next slide, I will start with deliveries. In the last quarter, Embraer delivered 91 aircraft, 32 commercial jets, 53 executive jets and 6 defense related. This represents a 21% increase with Commercial Aviation deliveries up 3% and Executive Aviation up significant 20%. More importantly, for the full year, we delivered 78 jets in Commercial Aviation for a 7% increase and in line with our 77 to 85 aircraft guidance for the period. Meanwhile, in Executive Aviation, we delivered 155 jets, up a relevant 20% during the period and at the high end of our 145 to 155 aircraft guidance for the year. In Slide 12, backlog and revenue. Our company-wide backlog reached $31.6 billion during the quarter, up a significant 20% and higher than our previous record. The backlog for Commercial Aviation and Defense & Security increased plus 42% and plus 10%, respectively, for support plus 7% and for Executive Aviation plus 3%. In addition to our firm backlog, we currently have approximately $20 billion in options held by our customers. These are not included in our backlog, but they represent a meaningful upside potential over the coming years. As these options are exercised, they could support a significant expansion of our backlog, potentially profit towards $50 billion over time. Beyond the size of the backlog, it is also important to focus on its quality and overall composition. The current backlog reflects a more attractive customer mix, which positions the company for a more favorable firm margin profile perspective over time. Any financial impacts from this mix will continue to depend on execution, delivery phasing and external factors. Moving on to revenues. Our top line increased 15% and almost reached $3 billion in Q4 '25. From a business perspective, our revenue remained well diversified across segments. Commercial Aviation accounted for 37%, Executive Aviation, approximately 30%, Service and Support around 20%; and Defense & Security 13%. Our top line of $7.6 billion for the full year was above the high end of our guidance, an increase of plus 18% when compared to 2024. Moving to the next slide, please. We generated $298 million in adjusted EBITDA in Q4 '25 with an 11.3% mark and $889 million in the year with an 11.7% mark. compared to 12.1% margin a year ago if we exclude the onetime impact of the Boeing agreement. Slide 14, adjusted EBIT. Now adjusted EBIT was $231 million for the quarter with an 8.7% margin compared to 11.5% in the same period a year ago. As we highlighted in our last earnings call, we expected a relevant impact from U.S. imported tariffs in Q4. In addition, we faced additional infrastructure-related costs, which weighed on margins. Tariffs totaled $27 million during the period and nonrecurring infrastructure costs reached $20 million. For the year, we generated $657 million with the same 8.7% margin, in line with last year if we exclude the onetime Boeing gift and surpassing the upper end of our 8.3% guidance for 2025. This performance was achieved despite the impact of U.S. import tariffs and reflects our discipline in our ongoing cost reduction initiatives and efficiency gains. Let's move now to the next slide. Embraer generated $738 million in adjusted free cash flow in the quarter, mainly supported by operations, higher number of aircraft delivered and sales campaign. For 2025, we generated $491 million in adjusted free cash flow and helped the company to cover on average close to 60% of its EBITDA in free cash flow over the past 3 years. The 2025 figure compares to $676 million in 2024, which includes a one-off $150 million inflow related to the Boeing agreement. We exceeded our guidance of $200 million or higher, supported by our continued efforts to reduce working capital requirements. Looking now at our investments, excluding Eve, we allocated almost $100 million during the quarter. The figure includes $27 million in CapEx, $34 million in addition to intangibles, $12 million in the Pool program to support new contracts and $27 million in research. On a yearly basis, Embraer stand-alone invested a total of $383 million in 2025, 10% lower compared to $428 million in 2024. Our capital allocation continues to be geared towards segments with higher returns, such as Executive Aviation Service and Support, mainly in U.S. We continue to see our CapEx run rate at close to $400 million per year in the near future. In Slide 16, adjusted net income. Our adjusted net income was positive $153 million for the quarter, supported by a 5.8% adjusted margin compared to 7.5% in the same period last year. Meanwhile, we ended the year with $253 million in the adjusted net income compared to $461 million in the prior year. We finished the year with a 3.3% adjusted margin. It was lower than 7.2% recorded in 2024. I would like to emphasize the decline was mainly driven by the onetime $150 million impact from the Boeing agreement, less favorable net results and U.S. import tariffs. Turning to next slide, let me walk you through the financial bridge from our reported EBIT in 2025 to both reported and adjusted net income. We finished the year with $608 million in EBIT after accounting for $340 million in net financial mainly inflated by the mark-to-market gains of our share price in our stock-based compensation plan, $91 million in tax credit and $7 million in minority interest. We arrived at $352 million in reported net income. To arrive at adjusted net income, we exclude extraordinary items. These adjustments included a negative $137 million related to deferred taxes, which was partially offset by a positive $38 million from [indiscernible] results. With that, we get $253 million in adjusted net income for the year. Looking at the evolution of our earnings per share, we have seen solid sequential improvement over the past few years. EPS was negative $0.2 per ADS in 2021, improved to $1.4 per ADS in 2024 if we exclude the one-off related effect and reached $1.9 per ADS in 2025. This trajectory highlights the structural improvements in profitability and the progress we have made in strengthening the company's earnings profile over the past few years. In Slide 18, financial position. We continue to strengthen our balance sheet throughout the year. And as a consequence, our liquidity position has increased significantly our stand-alone net debt decreased by $220 million, reaching a net cash position of $109 million at the end of 2025. The solid position of our balance sheet ensures the company remains well prepared to navigate potential volatility ahead. Consequently, our leverage position, excluding if improved further from 0.1x net debt to EBITDA to 0.1x net cash to EBITDA by the year-end. As a reminder, in the third quarter, we announced a new liability management initiative, which was fully executed. The average maturity of Embraer debt without Eves increased to 9.1% from 3.7 years, significantly improving our debt maturity profile. Today, 96% of our debt is long term, which provides us with financial flexibility. Importantly, these actions also led to a reduction in our average cost of debt, which declined to 5.5% from 6.2%, further strengthening our financial profile. Slide 19, shareholder remuneration. We declared a total of BRL 568 million in 2025 in shareholder remuneration, combining interest in equity and dividend. This amount corresponded to BRL 0.78 per share and represents a dividend yield of approximately 0.9%. As a reminder, this distribution should be complemented by an additional dividend to ensure compliance with the minimum 25% net income distribution required under the Brazilian corporate law. The full amount will be paid in a single installment following our 2026 Annual Shareholders Meeting. Slide 20, guidance. Before I present our 2026 guidance, I would like to remind you, Embraer has delivered its financial estimates year in and year out since 2021, reflecting a disciplined approach to planning and execution. Now to conclude my presentation, let me go over the details of our 2026 guidance. In terms of operations, we forecast Commercial Aviation should deliver between 80 and 85 aircraft. Meanwhile, for Executive Aviation, we forecast 160 to 170 jets, representing a year-over-year increase of approximately 6% in both segments based on the midpoint of the range. Turning to financials. We forecast a consistent double-digit growth. We estimate top line to settle between $8.2 billion and $8.5 billion, with the midpoint of the range, 10% higher than what we generated last year. We forecast EBIT margin between 8.7% and 9.3% for the year, which would imply around $750 million at the midpoint of the range and approximately 15% higher than the adjusted $657 million EBIT generated in 2025. Finally, if we move to free cash flow generation. We estimate an adjusted free cash flow without Eve of $200 million or higher for the year. Remember, our midterm goal is to convert 50% of our EBITDA in free cash flow. If we look from 2024 to 2026, we should generate circa $1.4 billion or more in free cash flow, which is 50% of circa $2.8 billion implied EBITDA by our 2024 and 2025 and our 2026 guidance. It is important to highlight this guidance reflects our assessment of the operating environment prior to February '20 before the latest round of changes to U.S. import tariffs. We are taking a conservative approach at this point in time because of decreased policy uncertainty and prefer to wait for additional visibility before making any changes to our outlook. We will update or reiterate our 2026 guidance on a quarterly basis as the year goes by. Let me stop here, and now I hand it back to Francisco for his final remarks. Thank you very much. Francisco Neto: Thank you, Antonio. To conclude, 2025 clearly marked the consolidation of our strategy across all businesses. In Commercial Aviation, record orders supported the consolidation of the E2 platform as they reinforced its global relevance and provided long-term visibility for the business. In Executive Aviation, strong retail and fleet demand supported by higher delivery volumes reflected the strength of our portfolio, which was further reinforced by the recent announcement of the next generation of the Praetor 500E and 600E. In Defense & Security, we continue to advance KC-390 campaigns globally, including key strategic opportunities. In Service and Support, the growing footprint of our operations is strengthening our ability to generate recurring revenues. Our continued focus on driving efficiency and financial discipline across all areas of the company is paying off as our best-in-class operations and services that support our customers. Looking ahead, we expect substantial growth over the midterm, while we prepare the company for a more ambitious long-term expansion, supported by a new generation of products and technologies, always grounded in our culture of safety first and quality always. With that, I would like to move on to the Q&A session. Operator: [Operator Instructions] We remind you again, this conference is being recorded. This broadcast is intended exclusively for the participants of this event and may not be reproduced or retransmitted without the express authorization of Embraer. We also highlight this conference call is being conducted in English with translation to Portuguese. Please let me say a short announcement for Portuguese speakers. [Foreign Language] [Operator Instructions] The first part of the Q&A session will be exclusively for equities research analysts and investors. The second part of the Q&A will be only for the press. The first question comes from Marcelo Motta with JPMorgan. Marcelo Motta: The question is regarding the strategic partnerships that the company have been announcing. So just wondering if you can provide us an update on the stage of it once in India for the commercial and for the defense and also in the U.S. for defense. Francisco Neto: Thank you, Marcelo. Francisco speaking. Good question to start the Q&A today. So yes, we are focused on strategic partnerships to support long-term growth for Embraer. And the 2 main ones are India, where we have been working 2 fronts, the MTA, mid transportation aircraft with India Air Force that we've been working for a few years already and a more recent partnership, this one with Mahindra. So we expect an RFP from the customers still this year. And the second one is with the Adani Group is to focus on the executive civil aviation to improve connectivity between smaller cities in India. Both opportunities can bring a relevant business and potential growth for Embraer. So again, defense, we expect RFP for this year. And civil aviation, we are still building the case, but we have said that if we get orders still in 2026, can do the rollout of jets by 2028 in India. In the U.S. -- sorry, thank you, Antonio. In the U.S., we are -- we announced recently the partnership with the Northrop Grumman to develop the boom capability for the C-390 as an option for -- to complement the tanker fleet of U.S. Air Force with our KC-390. This we don't have a time line defined it, but we are working very hard. We recently took the KC for demonstrations in the U.S. Operator: The next question comes from Kristine Liwag with Morgan Stanley. Gabrielle Knafelman: This is Gaby on for Kristine. Just a follow-up on the Northrop Grumman partnership. On the partnership around adding BOM capability to the KC-390, could you provide any more detail or color on the structure of the partnership and how responsibilities are being split strategically, how significant is adding a boom for the KC-390s competitiveness, particularly in the context of [indiscernible]? And how should we think about the potential size of the opportunity over time? Francisco Neto: Thank you for the questions, Kristine. So at this point, we have signed an MOU with Northrop Grumman and the main focus is the collaboration to enhance the capabilities of the KC-390 Millennium focusing on the integration of an autonomous boom refueling system and agile combat employment solutions. This is designed to meet the future needs of U.S. Air Force and allied nations, not only U.S. We don't have a time frame defined yet, but the main purpose is really to engage this discussion with the U.S. Air Force and have the KC-39 to complement the fleet they have. We don't see this collaboration, our strategy is based on the premise that it does not compete with the KC-46 or any other strategic tanker, but rather, it's a complementary capability. And our intention, if we get a sizable order, this aircraft will be assembled and produced in the U.S. We don't know the size yet, and we don't have a clear view about time frame, Kristine. Gabrielle Knafelman: Great. And just a quick follow-up, if I can. Can you just provide a quick update on the supply chain environment across both commercial and Executive Aviation? What are the major constraints you're still seeing? And what areas have you seen improvement in? Francisco Neto: Last year, we face some issues in supply chain, but even then we -- as a company, we were able to overcome the issues and deliver the aircraft in the year. This year, we see the supply chain improving, but it's still with a few bottlenecks that we want to be even more proactive this year than we were last year to anticipate all the issues and act with greater effectiveness. And we have started doing that already in January. And yes, we are -- I'd say, we are monitoring the situation, but we are positive that this year is going to be better than last year. Operator: [Operator Instructions] The next question comes from Myles Walton with Wolfe Research. Myles Walton: Great. I was hoping you could touch on the margin outlook by segment, maybe just a little bit more color below the surface. Pretty good to have margin expansion. I think service and support probably going against you. And I think I heard that the tariffs are in the guidance, and I would imagine those would be incremental year-on-year given a full year of effect. So maybe just talk to what the margins would be without tariffs? And then also any color of where the uplift is happening within the segments? Guilherme Paiva: Myles, thanks for the question. This is Gui. I think one way to kind of think about the outlook for margins is to account that last year, we paid $54 million in tariffs. And we are carrying over around 2025 from inventory into '26. So if you adjust for that, we are probably looking for something close to 75 to 100 basis over time as both of them unwind. And... Antonio Garcia: Myles, it's Antonio speaking. Just to complement, I would say, overall picture, we -- if you see what we have reported and the trajectory that we are right now and the huge impact on tariffs was in Executive Aviation, and we delivered the same number we delivered last year and percentage-wise, which means it doesn't matter if you have tariffs or if we have a crisis, we always find a way to compensate. And I would say, if we take service and Executive Aviation is already on double-digit space on the margin profile, and we are moving towards defense, I would say, it's up to speed also to go also to double digit, I would say, then we keep on our challenge here with Commercial Aviation to move to mid-single digit. I would say, on a consolidated level, we are coming closer to double-digit EBIT margin for this company here. Myles Walton: Okay. Great. And then maybe just one other one on cash flow performance in the fourth quarter. Is this similar to last year where some of the defense orders came through with higher advances? Or were there other attributes driving the performance? Antonio Garcia: I would say, some effects. We -- for sure, we have -- we delivered more than 90 aircraft in Q4. That's -- and especially in commercial aviation, where the -- when we deliver, get more cash than compared with the others because of the size of the advanced payment and by delivery, we get more money. I would say 2, 3 effects, a lot of deliveries concentrated in Q4. And luckily, we got some final anticipation and advanced payment from defense customer, if you -- and to be honest, also nice sales campaign in December on Executive Aviation, I would say, some up altogether, we brought this nice development in Q4. You know that it's hard for us to predict. That's why you see the guidance 200 plus again, but it was more or less the same as happened in 2024. Operator: The next question comes from Noah Poponak with Goldman Sachs. Noah Poponak: Just wanted to follow up on the delivery projections and profile here. I know at commercial, you've talked about getting back above 100. I hear you -- it sounds like supply chain is still a bit of a hurdle. I guess it's a little surprising to see the low end of the guidance pretty much flat. Maybe you could just talk about the hurdles left to get back to 100, when you think you can get there? And then on the executive side, similar question. I know you've talked about potentially expanding capacity to get to 200 there. What's the latest thinking and time frame to get to those types of numbers on the executive side? Francisco Neto: Thank you, Noah. Francisco speaking. Yes, I understand your point, but we are very focused this year to be from the mid to the high end of the guidance in terms of commercial aviation deliveries. And I said before, we believe we are better prepared this year with the supply chain to get there, while we are preparing the ground to reach 100 aircraft probably in 2027. We are working in that direction and not confirmed yet for sure, but we are working in that direction to create capacity to be there by '27, maximum 2028. We believe 2027 will be feasible. Same on the Executive Aviation. We are working in 2 fronts. We are expanding capacity in some bottlenecks of the production. We have been doing that already for a couple of years, while we work on improving efficiency in our production lines. So now we produce one Praetor or one Phenom in half of the time that we used to do back in 2021. So we are moving -- I'd say we're moving fast to reach those targets, production targets in the next years. Antonio Garcia: And we have orders for that. Francisco Neto: And we have order for that with the best news, right? Yes. Noah Poponak: Okay. Great. And how does the rate of growth in services that you've embedded in this initial 2026 guidance, how does that compare to what you saw in 2025? Antonio Garcia: We -- Noah, this is Antonio speaking here. It's nice to talk to you again. We are seeing Service and Support -- Service and Support also in the double-digit space in regards to growth, I would say. And to be honest, it's growing faster than the aircraft division because we have other contracts as well. And that's why we see even a fast speed growth for Service and Support comparing to -- with the aircraft delivery on the other 3 segments. I would say, more than double digit for Service and Support to move forward for the next 2, 3 years. Operator: The next question comes from Lucas Marquiori with BTG Pactual. Lucas Marquiori: I just wanted to follow up on the tariff discussion and actually try to understand what's the situation there. I know there's different sections of investigations and that, I mean, our latest understanding was that this is 0 now. I just wanted to confirm that. And for how long should it remain that way? Or what's the bureaucratic there that we need to see happening for that to change? And also, if there is any difference in tariffs for Embraer versus its main rivals or its main peers, if there's any kind of a dislocation of competitiveness or actually an improvement in competitiveness because of the 0 tariffs right now. Just wanted to hear your thoughts on that one. Francisco Neto: Lucas, thanks for your question. Well, first, yes, we confirm that all Embraer aircraft engines and parts are exempt from the 10% tariffs as of February '24. Yes, we still have some inventory that we paid the tariff in U.S. inventory, but we'll deal with that during the year, and this is already included in our projections. Of course, we welcome the level playing field in our industry since Embraer was the only manufacturer to pay tariffs on aircraft exports before. And this outcome will benefit our U.S. customers. So airlines, they can renew -- they can keep their plan to renew their fleet of jets, and we'll keep buying a lot of U.S. parts because more than 40% of our aircraft has a U.S. content. So I think the decision was very positive and it will benefit not only Embraer, but U.S. customers and suppliers as well. What was the -- how long this will take, this question? Antonio Garcia: 232, 301. Francisco Neto: We expect this to be a long-term decision. And about the sections, 232, 301, we are now monitoring the topics very closely and while we keep focus on our regular business. But so far, we don't expect any big changes, but this geopolitical situation is a little volatile. But let's see, we are now very optimistic that this will remain, and we will continue to reinforce our position and the aerospace industry position in the U.S. as well. Antonio Garcia: And Lucas, Antonio speaking here. We did -- we ran an assessment and we came to a conclusion. It's too early to bet to stay or is going to revert in another section here. That's why when you see our guidance profile, as of today, we see more upside than downside because we are not paying tariffs. But we have to wait because we don't want to -- it could be very complicated and volatile as we are seeing the word every single day. Operator: The next question comes from Alberto Valerio with UBS. Alberto Valerio: I would like to talk about the orders for the year. What should we expect? We should expect 1x book? Or do you think that it could be even more, but the guidance of commercial and executive is still having some supply issues on it included? Antonio Garcia: Alberto, Antonio speaking. You asked about our expectation for new sales company or just... Francisco Neto: I didn't get your question. Alberto Valerio: Exactly, exactly. So what should we expect in terms of book-to-bill for the year, if it will be one time or if we can expect a little bit more than the guidance, for instance, [indiscernible] on the commercial jets because you have still some supply issues for the year? Francisco Neto: Well, first of all, Alberto, I mean, we had stellar year last year in terms of sales of E2, right, 157 new sales plus 140 options. This brings a lot of confidence in the platform for the future, and we keep selling the E1s as well. For this year, as I said before, we are preparing to increase our production output for E-Jets for the next years. So we expect this year -- we are working in various sales campaign, and we expect the book-to-bill again above 1:1 for this year in terms of sales. And I mean, supply chain, as I said before, we are working now this year, again, very, very close to the supply, especially the pacers in order to mitigate the issues, delivery this year, the guidance, we expect from mid to high end of the guidance and prepare the company to increase the production in the following years for E-Jets. Operator: The next question comes from Andre Mazini with Citi. André Mazini: So 2 questions. The first one around defense and geopolitics, of course, that's a hot topic. So will it make sense to accelerate defense applications for Eve? Would that increase LOIs, predelivery payments and even get maybe to breakeven faster? I know Eve have their own earnings call, but I think it's pretty important for Embraer as well. So I wanted to hear your thoughts on that. This is the first one. The second one about the buyback program just announced. If you can read it, the buyback program as meaning that over the next 12 months, right, the duration of the program, you prefer to allocate capital in Embraer stock rather than going for a large new programs such as a new airframe and et cetera? And more generally, how do you think about the trade-offs of buyback, plowing money back into the company and new development -- plowing money back into buybacks, right, or new developments on aircraft, airframes and whatnot? Francisco Neto: Thanks, Andre. I answer number one, and then Antonio and Gui will answer number two. So Eve now, we are very focused on the certification process of the Eve, the product we have, the EV 100. And I know they are discussing all the opportunities. But at this point of time, they are really focused on the certification of the program until the end of 2027. I think for more questions, I recommend you to go to the Eve presentation, they will give you more details. Antonio Garcia: And Antonio speaking. In regards to the buyback, it's quite simple. We -- if you see the material fact issue, we are considering to replace the equity swap we have in the market. Basically, what we are doing are just changing, reducing the active swap into share from the treasury in order to hedge our long-term incentive program. It's going to be much more faster than 12 months, probably going to take 1 or 2 days to be concluded. That's more or less -- we are not increasing the shares, just changing from active swap to a share buyback. And we do not -- today, the company does not do this buyback in regards to total shareholder remuneration just to hedge the long-term incentive plan. Guilherme Paiva: And also just to complement, the company continues to invest heavily on the businesses that we have the higher ROIC, and that includes Executive Aviation and services. Operator: The next question comes from Luiza Mussi with Safra. Luiza Mussi Tanus e Bastos: Just a follow-up question because we saw some media reports yesterday indicating that India actually has opened a bid for like 60 units from military aircraft and the total contract value will be $11 billion. I mean, could you share like your perspectives on this deal in terms of how you expect the competitive dynamics to evolve? And how could you differentiate yourself like from the other competitors? Francisco Neto: Luiza, thanks for the question, Francisco speaking. We are very excited about this opportunity because we believe we have the best value proposition for India with our product, the [ KC-390 ]. It is very competitive, very modern, exactly for that segment. And we have also been working with Mahindra with a lot of activities to be compliant with Made In India expectations from them. So again, we are very excited and working very hard to win that business. That will be a very important step for the KC program. So yes, this is -- the original plan was from India is to buy from 40 to 80 aircraft. So 60 is the midpoint. And yes, this will generate billions of dollars in terms of revenue opportunity. Operator: The next question comes from Lucas Laghi with XP Investments. Lucas Laghi: Two quick follow-ups. First one on the Services division. I mean, margin performance is very strong. Just trying to understand what has been the main drivers this quarter. I mean you mentioned materials, for example. Just trying to understand if this -- I mean, should you continue to work with 20-ish percent EBIT margin going forward? I mean is this assumption that we should guide for -- in the upcoming years? And a follow-up on the guidance for 2026 regarding -- still regarding the margin. But I mean, we estimate around $90 million of EBIT impact considering a 10% tariff, which you mentioned that you included as an assumption for your guidance. So just to understand if that is the level of impact that we could consider as an upside given that you are -- I mean, merged in a current 0% tariff environment. So just to understand the size of the upside potential regarding EBIT for this year in this tariff topic. Antonio Garcia: Lucas, this is Antonio speaking. Thanks for the nice question. To be honest, I would love to take the 20% margin for Q4 for Service division and move forward, but not now. What's happened in Q4, we have a lot of bad guys throughout the year and then has been compensated in Q4 also with compensation for suppliers, this and this. That's why we see this nice 20% margin in Q4. For sure, we are not happy with 15%. We are moving towards a bigger number, but I would say, for your assumption here, 15%, 16% is okay to move forward. But we do see improvement, but not in the pace that we should assume already for 2026. And for the tariffs, I would ask Gui. Guilherme Paiva: So I think for 2025, we paid $54 million. And as I mentioned, we have about $25 million in inventory. So you can use that $80 million as a good proxy. But we're going to unwind that in '26 and in '27, right, because the inventory impact will hit us in '26 and will be only unwound in '27. So I would expect 2/3 of the benefits to come in this year if the status quo is maintained for the tariff, and we hope it does, with the balance 1/3 being upside for '27. Operator: Our next question comes from the chat and is from Andre Ferreira with Bradesco BBI. Congratulations on the results. The guidance assumes tariffs. So to confirm, if it is exempt, is there upside to the margin numbers? Would that translate in any way to the delivery guidance as well? Guilherme Paiva: Andre, thanks for the question. I think we just answered that with Lucas in the previous question. So let's move on to the next, please. Operator: The next question is also from the chat with -- it's from Kristine Liwag. Following up on the supply chain question, there's a public dispute between Airbus and Pratt about engine deliveries. For your commercial delivery outlook in 2026, how much conservatism is built into your assumption? And is Pratt able to support? Francisco Neto: Thanks for the question. Yes, I think as I said before, we have some bases that we are working on very closely in 2026. But I mean, we have been working in a very collaborative way with our suppliers, I mean, trying to help each other. And again, we are very confident that we will deliver the aircraft we are planning for the year, and we don't have any big issues with Pratt this year. They are doing that. Operator: Thank you very much. This concludes the question-and-answer session for equity research analysts and investors. Now we will start the Q&A session dedicated to the press. First, we will answer questions in English and then we will answer questions in Portuguese. We will also answer questions sent via the platform chat. [Operator Instructions] The first question comes from Pablo Diaz. Unknown Analyst: Can you hear me? Francisco Neto: Yes, we can. Unknown Analyst: Just wondering about the joint venture with Adani in India and the new line -- production line for the E175. Wondering if that production line is going to be focused on the E1 and if there is any possibility for that line to later migrate to E2 providing the certification process is retaken. Francisco Neto: Pablo, thanks for the question. At this point of time, we have -- we don't have a joint venture yet. We have signed an MOU with Adani to explore the opportunities in this civil aviation. And at this point of time, focus on the E175 E1. Operator: The next question comes from Curt Epstein with Aviation International News. Curt Epstein: I was wondering if you could detail the impact on your Executive Aviation division by the tariffs over the past year. Guilherme Paiva: I think the easy way to think is that out of the $54 million that we paid in '25, about 80%, 85% of that was in our Executive Aviation division. Antonio Garcia: For 9 months. Guilherme Paiva: Yes. Antonio Garcia: Starting April onwards. And for the whole year, should be something like $60 million to $70 million, but today, you are back to 0, Curt. Operator: This concludes the question-and-answer session in English for the press [Operator Instructions] [Interpreted] Our first question is from the chat by Nelson [ Doring ]. We'll see the first Gripen being delivered in the 25th of March in Gaviao Peixoto. Congratulations, Bosco and the defense staff. Is Embraer going to be a part of the Gripen agreement in Colombia and other potential contracts? Unknown Executive: [Interpreted] Thank you for your question. No, we haven't established any contracts. However, we do have a good collaboration with Saab. We are working with them to cooperate with them and if possible, to bring the assembly of these aircraft to Gaviao Peixoto because we have installed capacity, it would be good for us and for them, but we don't have any subcontracts that we have entered into yet. Operator: [Interpreted] We have no audio from Mr. [ Nascimento ]. So our next question, again from Nelson [ Doring ] also came through the chat. How does Embraer see the landscape for raw material supply as aluminum and titanium as critical elements for engines and avionics, both for military and civil aviation. Unknown Executive: [Interpreted] Nelson, thank you again for your question. 2026, in our calculation should be better in terms of supply when compared to 2025. There will still be some difficulties in terms of parts, but raw material is not one of the difficulties. I think as for raw materials, we are quite comfortable with the current inventory we have. And there is another item that we are monitoring quite closely to ensure not only the year's total production, but a better production of aircraft production throughout the year. So again, we are working very closely with suppliers since the beginning of the year, and we are quite positive and comfortable when it comes to aircraft delivery for 2026. So we'll try again. Operator: [Interpreted] Next question from Mr. Nascimento for Vale Trezentos e Sessenta News. Jesse Nascimento: [Interpreted] I do apologize for my mistake. It was something related to my own equipment. I have 3 basic questions, Francisco. The first question is whether Embraer in the period where tariffs were implemented, I know that you -- you had a meeting with the representatives of the Brazilian Foreign Relations Office in New York in an attempt to align the issue of tariffs. So this is question number one. If you want, I can ask the 2 other questions later on. Unknown Executive: [Interpreted] When in fact, Embraer did not take direct part in that event. I mean, we just did a follow-up, but we were not there at the time. What we did was try to facilitate the event, but we didn't have any direct participation. Jesse Nascimento: [Interpreted] And my second question is about the recent decision by the U.S. when the President was questioned by the courts that said that he couldn't charge the tariffs, that the tariffs were unconstitutional. Do you think that Embraer could try to collect the tariffs that were charged unduly? And how much more of the tariffs were charged? Unknown Executive: [Interpreted] In terms of recovering the money paid in tariffs, we are monitoring the situation, trying to understand what our peers will do and what kind of outcome they will get from there. So then we will decide what to do. I mean, in terms of what has been paid, we already paid $80 million. Jesse Nascimento: [Interpreted] Okay. So finally, Francisco, we see the war escalating in the world and countries trying to strengthen their defense. I mean -- and Embraer with KC and Super Tucano should fit into that scope. My question is whether Embraer is developing or thinking about developing new equipment for the defense side to probably serve some worldwide need. Unknown Executive: [Interpreted] [indiscernible], right now, our focus is in selling our equipment. KC is a new product that was launched in 2019. And also taking this opportunity with -- I mean, sales of Super Tucano and also some of our equipment from Atech, one of our subsidiaries. But right now, there is nothing being developed at the moment. Operator: [Interpreted] Our next question comes from the chat from Chandu Alves from Ovale. Do we know the deadlines of the RFP for 60 jets for India? How long is this process going to take? When are we going to get an answer? And who is competing for this? Unknown Executive: [Interpreted] Right. First question. We're keeping an eye on this, but we can't control their deadlines. Of course, the clients from India are going to set their deadlines. We expect to see an RFP this year a request for proposals. This is an important step for aircraft selling because competitors will be showing their RFPs and then they will have some time to go over them. Of course, right now, we have no visibility over that. And our competitors are Lockheed Martin from the U.S. with the 630 hectare and Airbus in Europe with A400. Operator: Our next question is from Leda Alvim, Bloomberg News. Leda Alvim: [Interpreted] Could you please confirm the values that we have in paid tariffs for now? If you could break it down by segment, that would be useful. Antonio Garcia: [Interpreted] Leda, this is Antonio. In total, we already paid $80 million. 85% of that is for Executive Aviation and the rest of it is for service and support. So $80 million so far is everything we've paid since April 2025. And since February '24, we went back to 0, but we still don't know what's going to happen from now on. Operator: Next question also from the chat from Paulo Ricardo Martins with Folha de Sao Paulo. Paulo Ricardo Martins: [Interpreted] How can the war in Iran impact Embraer? Could it jeopardize the delivery of aircraft for the Middle East? Unknown Executive: [Interpreted] Ricardo, thank you for your question. Ricardo, thank you for your question. At the moment, we are just monitoring the situation very closely. Our main focus and #1 focus is with the people we have in the region because they are experiencing the situation day-to-day. We are they're trying to cater to their needs and the expectations of the families. We are also taking care of our suppliers, both direct and indirect in the region. And so far, we haven't seen any critical issue that could compromise our deliveries. And we are not seeing any impacts in deliveries or even short-term sales. So the focus now at the moment is just to monitor the situation so as to help us take mitigating actions in due time so that we can deliver whatever we are launching for this year. Operator: Ladies and gentlemen, thank you very much. That concludes the Q&A session of today's conference call. And this concludes Embraer's conference call. Thank you for joining us, and have a very good day. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]
Jens Breu: So good morning, everyone, and thank you for joining us today for presenting the annual report of 2025. The following presentation of the 2025 annual results can be found on our website at www.sfs.com, under the Downloads section. Now it's not moving to the next slide. Somehow it's not moving to the next slide. Can you -- someone is on the braking pedal, most probably you. Sorry for that. Volker Dostmann and I are pleased to present the SFS Group results for the financial year 2025. It was yet another year characterized by a demanding market environment, geopolitical uncertainty and continued currency headwinds. Despite this, SFS delivered solid results. Our diversified positioning across end markets and regions once again proved to be a strength. At the same time, we initiated important structural measures that will strengthen our competitiveness for the years ahead. So next slide, I have to say. Let me briefly guide you through today's agenda. In the next roughly 45 minutes, Volker and myself will actively walk you through the highlights of the year. I will start with a short reminder of how SFS is positioned and how we create value for our customers. After that, I will summarize the key takeaways of 2025. Volker will then walk you through the key financial figures in more detail, and then I will return with a short overview of the segment developments before we conclude with our outlook for 2026, and open the floor for questions for the remainder until noon. Now we got kicked out. Okay. I'll start with the positioning of the SFS Group. SFS as a company is people throughout everyday life, often unnoticed 24 hours a day, 7 days a week. Our mission-critical precision components, fastening systems and quality tools are embedded in the products and processes of our customers. While our products are often small components within larger systems, they play an essential role in ensuring reliability, safety and performance by focusing on mission-critical applications. We help customers achieve efficiency and cost effectiveness across a wide range of applications. This positioning is built on a long-term customer relationship, engineering expertise and a deep understanding of our customers' applications. Our guiding principle is simple, inventing success together. In many cases, the direct cost of our products represents only a very small share of the overall cost of our customer products. The real value lies in optimizing the overall process. Through value engineering, we improved product performance, simplify installation processes and reduce supply chain complexity for our customers. This is where we, as value creators, create measurable gains. Our activities are structured in 3 segments. Engineered Components focuses on highly precise customer-specific components and assemblies. Fastening Systems develops and markets application-specific fastening solutions for the construction industry. And Distribution & Logistics provide tools, fasteners and C-part management solutions for industrial manufacturing customers. Optimizing the product. Let's now take a look at the specific end market with an aerospace application. This example illustrates how value engineering works in practice. Instead of simply supplying a standard component, SFS engineers analyze the entire application and redesign a new solution. By replacing the conventional bracket solution on the left side with a hybrid insulated pin fixation with bolts on the right side, we can reduce weight and operating cost. At the same time, customers benefit from easier installation and lower procurement complexity. The next success story as well in aerospace shows the engineering capabilities of our Engineered Components segment in the aerospace industry. From the initial customer idea to first flight, the development took only 16 months, which is very short for aerospace projects. The solution combines advanced plastics and metal processing technologies to create an ultra high-strength composite overhead compartment hinge for the refurbishment of existing aircraft cabins. It provides more space for passenger luggage, improves boarding and deboarding and contributes to both sustainability and cost efficiency for airlines. To give another example from the aerospace market. Many of the solutions developed by SFS are not visible to the passenger, yet they are essential for the performance and safety of the aircraft. Typical examples include cabin assemblies, assembled solutions, injection molding components and new also aerospace fasteners. These solutions require a very high precision and close cooperation with the customers already during the design phase. SFS supports customers from engineering and prototyping all the way to serial production, creating strong and long-term partnership. In the Fastening Systems segment, SFS combines products, tools and digital engineering solutions into integrated fastening systems. Our approach is not only to supply fasteners itself, but to optimize the entire fastening process. This includes specialized insulation tools and calculation software that ensures the correct application of the fastening solution. By combining these elements, we improve reliability, productivity and efficiency for our construction customers. In Distribution & Logistics, SFS focuses on optimizing the supply and the management of tools and C-parts for industrial customers. Through smart tool storage and digital issuing system, employees have immediate access to tools and consumables at any time. This improves availability while reducing inventory levels and administrative effort. At the same time, the generated data enables further optimization of procurement and production processes. Payback for the customer is usually less than 5 years. The concept can also be compared to a razorblade model. The system itself is the infrastructure, while the tools and consumables represent the continuously used blades. Through this system, we not only supply the tools but also generate transparency on consumption and usage patterns. This allows us to provide additional services such as cost optimization, inventory reduction and process improvements for our customers. To act as a true value engineering partner, it is essential for SFS to have a clear focus on specific end markets and customer applications. For this reason, the SFS Group implemented several organizational changes to sharpen its end market exposure and strengthen collaboration across the segments. As of January 1, 2026, the Engineered Components divisions were reorganized around applications, and the new region, Asia was created to further develop the important Asian growth markets. Urs Langenauer was appointed as Head of EC segment; Martin Reichenecker to go with the leadership of Region Asia; and Iso Raunjak became Head of D&L segment; while Christina Burri joined the Group Executive Board as Head of Corporate HR, Communications and ESG. These changes also reflect the generational transition in leadership and ensure continuity in the execution of our strategy. I'll start with the key takeaways of 2025 at a glance, resilience in turbulent times. The year 2025 proved to be another intense year against the backdrop of an adverse market environment. SFS realized solid results, thanks to its broad positioning across different end markets and regions. A program to streamline the global production and distribution network was proactively introduced with the goal of realigning production capacities with partially reduced customer demand and strengthening focus on core activities. Third party sales of CHF 3 billion was generated, plus 0.6% versus prior year. Organic sales growth of 2.9% demonstrates strong market positioning, currency effects again had a significant impact with minus 2.9%. And adjusted operating profit EBIT of CHF 371 million, in the prior year CHF 350.2 million was achieved, which resulted in an adjusted EBIT margin of 12.2%, in the prior year 11.6%. Reduced earnings per share of CHF 5.63, in the prior year CHF 6.21 were caused by the economic environment and the nonrecurring effects from our program to streamline global production and distribution network. Expenditure on plant equipment, hardware and software declined considerably to CHF 103.7 million, in the prior year CHF 148.9 due to the completion of several major projects. Organizational adjustments, as mentioned, were completed to support the generational transition and to strengthen customer focus. The key takeaways are clear. Consistent progress was achieved. In 2025, SFS achieved total sales growth of 0.6%, while organic growth reached 2.9%, demonstrating the solid underlying performance of the business. Currency effects had a negative impact on the reported figures. The main growth driver during the year was the electronics end market, which showed particularly strong demand. As a result, sales in electronics increased from around CHF 400 million to CHF 422 million, confirming the strong positioning of SFS in the targeted electronics applications. On the environmental side, interim targets were exceeded. Sustainability remains an important pillar of SFS' long-term strategy. In 2025, we made further progress in reducing our environmental footprint. Compared to the 2020 baseline, Scope 1 and Scope 2 emissions were reduced by 77.1% measured as CO2 emissions in metric tons relative to net sales. At the same time, we continue to increase the use of renewable energy, 81.5% of our total electricity demand is now covered by renewable sources, reflecting our continued efforts to decarbonize operations and move towards our long-term climate targets. On the social side, dual education goals were secured, progress in accident rate finally achieved. Alongside environmental progress, SFS has also made further advancements in the social dimension of sustainability. Our training and development targets were successfully confirmed, reflecting our strong commitment to education and continuous employee development. A significant number of employees are engaged in education and training programs, reinforcing the importance we place on developing skills and future talents. At the same time, we achieved a significant improvement in workplace safety. The accident rate measured as the number of accidents per million hours worked, declined noticeably, reflecting the continued focus on safety initiatives across the group. With that, I'm now handing over to Volker for the presentation of the key financials. Volker Dostmann: Thank you very much, Jens, and a warm welcome also from my side. The financial year 2025, as said, was to be seen in the front of a backdrop mixed with geopolitical and economic challenges, distinct FX development and instability of international trade. We may report good results and satisfactory development in such difficult environment. The team showed great dedication to their end markets to their customers and found opportunities despite all of that. We thank all of the 30,646 employees for their dedication. And I summarize the performance as a consistent progress. We grow, we optimize ourselves, namely the production and distribution network. We drive profitability and we generate with that significant levels of cash. But let me go into the details, starting with sales. We show sales of CHF 3.056 billion, which is 0.6% growth adversely affected, as you see, by the FX environment, CHF 88 million up to the tune of 2.9% that is lost against the appreciation of the Swiss francs. Sales dynamics during 2025 have been challenging, as said, but after a muted first half year by geopolitics and hesitations in order patterns globally, we report a pickup in Q4 especially versus prior year, and our organic growth is despite the adverse conditions at 2.9%, just shy of our midterm guidance. This is largely based on the positive developments in Engineered Components where we see, especially in the electronics end market, replacement cycles in mobile phones. Additionally, the increase of stamped parts that we deliver to the respective customers successfully support our top line. In parallel, we continue to ramp up the known brake systems in the automotive end market. That's happening in Switzerland, in China, in India and in the U.S. We are on track to see good progress there. Distribution & Logistics shows very solid development in an end market where especially machine builders and manufacturers restricted their demand painfully and kept their priorities on operational necessities. Still, the team has managed to achieve organic growth of 2.4%. With construction activities in Central Europe being very sluggish versus a more dynamic North American market, the segment Fastening Systems saw headwinds from the weakening of the U.S. dollar. Gradual improvements during the year were dampened towards year-end again. Overall, we see a slight negative performance throughout the year for the Fastening Systems segment. As said, FX development, again, mainly against Swiss franc, dollar, euro, Swiss franc, melted off a significant portion of the locally made progress 29% up to the tune of CHF 88 million. Looking into breakdown by geography and industries. I would like to highlight that we stay very solid in Europe at 56.8% and the share. But also we'd like to point out the shift in North America and Asia, where we gradually gain footprint to Asia 14.3%, and the Americas 17.8%. Sales breakdown by industry shows a stable situation as well. Industrial manufacturing at 27%, just losing a wee bit in an extremely competitive market environment. We managed to keep the footprint almost stable. Construction and automotive, both at the 20% reach. Our local for local approach remains a strategic pillar. And with that setup, we see ourselves well positioned against tariffs and customs discussed. And also the unilateral measures taken by the respective countries. The uncertainty and the volatility from the end market demand is more of a concern to us at these days as the tariffs itself. Operating profitability is at the CHF 371 million or 12.2% or EBITDA, CHF 505.8 million, 16.6%, which is a normalized figure. Reported, we are at CHF 324.3 million, 10.6% or EBITDA of CHF 466.6 million, 15.3% of sales. We adjusted to CHF 46.7 million one-time nonrecurring cost in the program of streamlining our production and distribution footprint, and this shows the results. We have managed to lower our personnel expense quota by 0.5 percentage points, and OpEx by 0.4 percentage points in a sustainable way. Based on a stronger second half year top line versus prior year and the improved performance, we record an emphasized pickup in profitability towards year-end. As mentioned before, we tie that to significant part to the favorable economic environment in electronics, where we see this replacement -- the replacement cycle and also to the dynamics as such. We expect that to flatten out slightly during the coming months. And 2026 should not be such a distinct difference between first half year, second half year. Being on an adjusted basis back in the target of 12% to 15% EBIT range was possible due to the progress in the streamlining of the footprint of production and distribution networks. And I would like to give a bit more detail on what we are doing at the moment and where we are on the next slide. We said that we are going to reduce top line by CHF 110 million, phasing out technologies and legacy products. We are, at this point of time, at the range of 20% that we actually phased out. Individual discussions with customers are ongoing, and we are confident to reach the target. As a nature of the topic, this is going to take longer. 650 FTEs were announced that we want to reduce overall. We implemented actions affecting more than 330 FTEs by year-end. 50% of the workforce is therefore roughly targeted. And again, this is a topic where we take our time in order to find the best possible solution for the businesses, but also for the individuals. And we are working towards finishing all these measures by end of 2027. Reducing these 650 FTEs does and will involve closing as well as selling of individual sites. Divestiture is clearly there in the realm, and we would, in any case, prefer that as we can grant these people in the future in a different environment. Should you be looking at the overall FTEs on the group level, you will not find the 650. We have 2 counter effects that we would like to mention here, which have absolutely nothing to do with the streamlining of the profit -- of the production footprint. But you see the distinct workforce up in electronics, which usually is a temporary workforce, that is temporarily higher, as well as the ramp-up in India where we are expanding our product portfolio. The total cost for the adaptation program was targeted at CHF 75 million, which still is our total target. At the moment, we are more than 60% through the measures from a cost perspective, one-time cost perspective, as I said, the CHF 46.7 million. We are striving to improve 0.8 percentage points on EBIT. We've seen first minor effect in 2025. We'll see roughly shy half of that in 2026. So we are here on good track. If we look at what we did in a chronological order, then you see these different sites that are and will be affected. And I'll summarize as follows. We have places where we are through, sites where we are through like Brunn am Gebirge in Austria, like Olpe in Germany or Mocksville in the U.S. These sites are closed. The measures are fully implemented. On the other hand, we have sold Allchemet to the management in Emmenbrücke. That is one of these divestitures I mentioned. And we are lastly in implementation in Torbali in Turkey, in Turnov in Czech and also in Flawil, in Switzerland, where we are on track. And all measures as said shall be implemented by year-end of 2027, which brings me to earnings per share. And as already mentioned, we have earnings per share of CHF 5.63, which is CHF 0.58 down versus prior year. We have impact from the streamlining program and the one-time cost, which obviously are reflected in our earnings per share. On the other hand, we have a pickup in profitability and mix, which works counter this. We have no or minor impacts from the financial result this year. And we have a bit of a pickup as we pay nominally less taxes in the year 2025. Based on that result, the Board of Directors will propose to the general assembly of 22nd of April, a dividend of CHF 2.5. As in prior year, we will distribute part of that CHF 0.50 out of privileged capital reserves, which is an advantage to the individual shareholders in Switzerland. The rest, the CHF 2.0 will be distributed as a genuine dividend. With that, we stay in a payout ratio of below 50%, which is a clear signal that we will continue to deleverage our balance sheet. Dividend yield is at 2.3% measured with the share price end of the year. Net working capital development remained flat, which was quite of a challenge in a situation where we had tariffs and uncertainty from a logistics point of view. We managed to keep that flat, especially focusing on inventories. Overall, we stay at 28%. Clearly, it remains a topic to come down on these levels again. Brings me to capital expenditure, where we say with 3.4% of sales, we are reaching a historical low which is clearly down and below D&A ratio of 4.7%. This is clearly the outcome of the streamlining of the production floor print and the increase of utilization of existed installed capacity. Additionally, of course, we have the trends from the ending of the investments in Heerbrugg, which were large. And in China, in Nantong, where we had larger investment cycles during the last 2 years. We keep the rigid view on CapEx, and we will reconfirm here the bracket of 4% to 6% of sales going forward in investment into CapEx as we take the positive cash flow from that element. We go to the operation free cash flow, which is a very strong signal at CHF 274 million. And therefore, at 57% of EBITDA or 124% of net income, which we deem as a strong signal and a clear document of the good ability to generate cash. As I said, whilst we optimize ourselves whilst we grow and therefore, also deleverage our balance sheet, and we will strive for that further. Net working capital management, diligent CapEx decisions and profitable growth are cornerstones in our decision-making. We see ourselves positioned to keep the cash generation up and reconfirm the target bandwidth of [ 40 to 50 ] of EBITDA going forward. As said, balance sheet ratios come back steadily and the equity ratio that we lowered deliberately in 2022, acquiring Hoffmann Group and expanding distribution and logistics has come back to 64.4%. Meanwhile, good, in the range and above the targeted 60% threshold. Our first outstanding bond has been reimbursed against the revolving credit facility and we strive, as said, to go that path further as we go along. Return on capital is fluctuating or moving exactly in parallel with our profitability and comparable levels to prior year along those performance indicators. Effective tax rate, to our dismay, did raise again. We were aiming to reverse the trend and fighting against it, but we have some elements to line out here. One is the closure of sites made us write-off deferred tax assets as we lose them, which drives the tax rate. Secondly, we have a distinct hunger of the economies to generate tax income and the creativity in Germany, France, Italy and Hungary, with new taxes drives our tax rate and our ability to counter react was somewhat limited. And lastly, the continued moving out of our tax shield in the U.S. is counter affecting our other measure. If we look at tax rate on strict statutory rate, we would end up at 23% as we are positioned today. So there is a potential, and we will implement measures to drive that down and/or keep it flat. That brings me to the KPI summary. I conclude my detailing on the performance. Thank you very much for your attention, and hand back to Jens. Jens Breu: Thank you very much, Volker, and I'm happy to continue with the presentation of the segment development. I'll start as usual with the headlines of the Engineered Components segment. The Engineered Components segment delivered good growth in both sales and profitability supported by several end markets and application areas. Within this segment, the electronics division was a key growth driver, particularly through stamped components used in mobile devices and components for nearline HDD applications. The aerospace business showed a very encouraging performance throughout the entire year, reflecting strong demand and successful project execution has proven through the introduction. In contrast, demand in the medical device industry developed somewhat below expectation during the year. Despite excess capacity in the European market, the automotive division achieved solid results, demonstrating the competitiveness of its product portfolio. In addition, several ramp-up projects in Switzerland, China, India and the United States are progressing. Finally, George Poh and Walter Kobler retired from the Group Executive Board, and Urs Langenauer assumed the role of Head of Engineered Components segment. The Fastening Systems segment was impacted by the economic environment, particularly in Europe. In the context or in this context, the segment recorded a slightly negative sales development and weakening currencies further reduced operating profit in this sluggish market environment. At the same time, the North American construction industry proved more dynamic than its European counterpart. In addition, regionally cold and unusually long winter conditions at the beginning and the end of 2025 had a temporary negative effect on construction activities. Nevertheless, demand recovered slightly over the course of the financial year. And finally, market access in North America was further expanded through the acquisition of DB Building Fasteners in the United States on August 1, 2025. The Distribution & Logistics segment showed subdued market momentum during the year. Nevertheless, the segment delivered solid results in this challenging environment, supported by prudent cost management, the onboarding of partners and a comprehensive range of products and services. The planned acquisitions of the partner companies, Gödde, Oltrogge and Perschmann will further strengthen the platform. These acquisitions will enable the further internationalization of the trading business. They will also allow us to pull resources and realize advantages in terms of expertise and costs. Furthermore, the purchase of a 51% stake of the 3D-printing platform, Jellypipe AG now renamed Hoffmann Additive Manufacturing expands our technology offering. Since January 1, 2026, Iso Raunjak has been leading the Distribution & Logistics segment. Looking ahead to the financial year 2026. The outlook is still characterized by considerable uncertainty. Against this backdrop, the group will continue to focus on its rigorous customer orientation, pushing ahead with innovation projects and ensuring efficient and profitable business processes. We will steadfastly continue to pursue and implement the global production and distribution network, streamlining programs introduced in the year 2025. For the 2026 financial year, the SFS Group is focusing on the midterm guidance and expect organic growth of 3% to 6% in local currencies as well as in our adjusted EBIT margin of 12% to 15%. Looking ahead, we continue to focus on our main strengths and opportunities with a clear emphasis on disciplined strategy execution, our key priority is building a fit-for-purpose global manufacturing and disposition network that reflects the current economic environment and includes targeted site-specific optimization measures. At the same time, we remain committed to maintaining a strong financial foundation supported by operational cost discipline in response to the challenging market conditions. In addition, we'll continue to pursue selective bolt-on M&A opportunities that strengthen our technology portfolio, market access and distribution capabilities. Alongside these initiatives, we aim to further increase the equity ratio, ensuring that SFS remains financially robust and well positioned for sustainable long-term growth. At this point, I would like to thank all employees of the SFS Group for their commitment, expertise and innovative energy, which were essential for the good results and development achieved during the year. I also extend my sincere thanks to our customers, business partners and shareholders for their trust, loyalty and constructive collaborations, which supports the long-term success of SFS. Thank you for your attention. And now Volker and myself are happy to answer your questions you may have. We'll start first here in the room. [Operator Instructions] Alessandro Foletti: Alessandro Foletti from Octavian. I have a couple. Maybe starting with the top line guidance for 2026. You had 2.9% organic in '25, and now you're guiding for a little bit less than that for '26. So I wonder what was special in '25 that is not repeating and what are the risks and chances for '26? Jens Breu: Last year, we also guided 3% to 6% in local currency, same as we do. This year, Volker will give us a little bit of the breakdown then in detail on where we expect this growth happening. Overall, I think when we go back a year from now, at that time, we also clearly said we have innovation projects and in general, initiatives in the organization to grow 3% to 4%. And this is roughly where we also ended up. And so also this year, we have a range of initiatives, which we are implementing as we discussed, so ramp-ups, which we expect to have in the year '26, also probably in that range of around 3% to 4% overall. I don't know whether you want to? Volker Dostmann: Maybe it's important, in that mix, we will see roughly CHF 50 million that go out as we streamline our production and distribution network, right? So from this CHF 110 million that we overall target, we expect roughly CHF 50 million in 2026 to materialize. So that is a headwind that you need to factor into your calculation. Alessandro Foletti: Right. But then you have -- I don't know if this works, but then you have about CHF 100 million plus/minus, if I calculate correctly from M&A, right? And this is 3%. So you have CHF 50 million going out, that's 1.5%. So you have a 1.5% tailwind only from M&A or scope of consolidation, right? So looking at organic, it doesn't seem to be very dynamic, what you are indicating, at least the bottom of the range. So I wonder what are the moving parts? And where are the challenges? Volker Dostmann: I mean moving is -- the volatility, I think we mentioned earlier, we do not see yet a clear trend of recovery, right? We do see first sparks. We do see good months in some end markets. We see lower months in the same end markets. It's not a consistent trend that we have at the moment that signals recovery. That's the volatility that we alluded to, right? And yes, we are, from that point of view, we take our reservations. I think that's clear. Jens Breu: And I think if we go back to the numbers, as you mentioned, the Gödde, Perschmann, Oltrogge is around 3%. Then we had other acquisitions last year, smaller ones, which will give us an additional 0.3% to 0.5% effect on that one. And then we expect roughly around 1% to 2% from projects. And when we go through the segments and take a look at the opportunities and start with the Engineered Components segment, we have a ramp-up ahead of us in aerospace fasteners that's one specific direction we take. Secondly, we have new programs also in the electronics area, where we add and increase value-added on the smartphone side. Then in automotive, we still have ramp-ups ahead of us with braking systems. These are more or less the main growth drivers broadly in Engineered Components, especially in China and India, we see that automotive demand is good and solid. We have roughly around 70% market share in China with ABS Valve components and see new customers coming. And we're also working on ball screw drive technology customers in China. Besides that, we also have ball screw drive technology customer in India, which we acquired, low volume, low momentum, not a large market, only 6 million cars being produced in India. So maybe that's to be taken a little bit more on the cautious side. Then we have also to realize that most of the ramp-up projects, which we have seen over the last 2 years have not yielded yet the full top line impact as we expected. This is naturally given because the market environment has been a little bit more challenging. And we have also seen that some of the customers overestimated the change in technology. But sooner or later, we also expect that this will be happening and maybe this will take a little bit more time, and that's growth opportunity which we have in the back end. Then in the segment Fastening Systems, we have seen that we had good organic growth in North America, a little bit challenging environment in Europe. And here, we have to say that in North America, we are gaining new customers. Our competitors have supply chain issues. So we expect here to also make further inroads on the construction market side. And then in Europe, it's more or less, it's a matter of recovery of confidence because the mega trend is clear. There are not enough apartments. There are not enough buildings out there. We have seen a substantial better performance against our competitors in Europe with our numbers as we have shown. So also we believe, we gained market share in general in Fastening Systems. And then in Distribution & Logistics, which is mainly the industry environment in which we are. We have seen, I would say, a sharp correction over the last 2 years in Europe. We believe this correction is almost through. And we should see slightly improvement in the European environment. We see new applications like defense, for instance, is giving momentum to the industry in Europe and the general industry, the automotive is maybe more challenged on that side. But we also see that, I would say, the adjustment cycle, we believe, is gone, is through. And now the demand cycle will slowly start to build up, not quickly but slowly. Volker Dostmann: Just one small addition to that. Acquisition of the partners in D&L will yield only 3 quarters of the year. That might affect your... Alessandro Foletti: Okay. 130 times 3 divided by 4. Volker Dostmann: Yes, it's still, given on the CHF 3 billion, it's still an impact. Alessandro Foletti: One question then I'll pass on the mic. Maybe can you give a little bit more precise guidance on the CapEx? Because we really hit historic lows. Volker Dostmann: We're not going to be consistently below depreciation, right? I mean we are not going to stay consistently for a longer period below depreciation. We said 4% to 6%, we'll stay for this year rather to the lower end. But we will see, we will see eventually other expansion projects coming. We are, at the moment, building out India. We will have -- during this year, we will have machinery being added there. That's not going to change it significantly, but we will see that figure coming up. That's why we say 4% to 6%. For 2026, you can expect us to the lower of that range. But we will not stay consistently below this 4%. That's not going to fly. Alessandro Foletti: Well, what I wonder is, we look at the past, you had very often like sort of normal CapEx and then a couple of bursts where it really went above the 6%, et cetera. Is it just not possible to keep it less volatile and more sort of kind of preparing today, future ramps? Or you really have to do it this way? And you will always have this sort of big chunks? Jens Breu: The big chunks, as you write out properly has a lot to do with technology and changes, shifts usually require that. Then as we know, I mean, positions are usually occupied on the supply side within applications. I mean a door is opening, you need to go in full force. And this is where we usually then see a peak. We have seen quite a few peaks in automotive due to the braking systems, for instance, then also in electronics due to stamped products and such things. So that's very much a characteristic of the Engineered Components segment. In FS and D&L, it's more as we go. We need initial CapEx on a smaller basis. So we cannot promise it depends more or less on bigger opportunities. And the profile of SFS is clear. We need to go in early when the technology is new and fresh and form and shape, then the design so that we are specified in then for the rest of lifetime. And that usually requires that we do a leap forward. Otherwise, we leave the room and the space to others, and following usually is not as attractive on the margin side. Operator: Christian Bader from Zürcher Kantonalbank. I have a question regarding your capital allocation. Now that your equity ratio is so high and net gearing is lower than everybody was expecting. So can we expect an acceleration of M&A activity in the short term? Or will it take a breath now having done a few deals in Europe? Jens Breu: Overall, we are not afraid of heavy cash around us, and it gives us an opportunity then to maybe also be a little bit more flexible and a little bit more constructive in -- on the M&A side, what we do with it. So I believe first priority for us is that we take a look at the quality of the M&A opportunities, which are out there in the market. That's key besides adhering to our strategy on the M&A side. Secondly, having more firing power is usually not a disadvantage. So we will be patient. And I think when we go back in history in time, SFS, we had quite a few years where we got asked a lot. When do you do a step forward, and we were patient to wait and then do the right move forward, for instance, with the Hoffmann Group or with Tegra Medical later on. Same as we speak now. We certainly see more opportunities in the market. You see every year, we do usually 2 to 3 acquisitions. But once again, we are patient. We are in there for the mid and the long term and quality is key. We do not want to distract ourselves, management and the operations from customers and innovation by having to solve problems, which we cause by rushing into maybe M&As, which are not beneficial maybe there on that side. Christian Bader: And maybe a question on your supply chain. I mean given what's ongoing with the war in Iran. Are you affected at all by any supply chain constraint or maybe increase in the freight cost? Jens Breu: The questions are mounting as soon as it started, the telephones are running hot, everyone is calling and asking this question. And as we have experienced also from the past, when you know early on, the ships get rerouted and maybe it takes 2 weeks longer. And in terms of inventory management, that's not much of a challenge. So we expect that we deliver to our customers on time and as promised. We do not expect that this will leave a mark on the top and on the bottom line. Besides that, we have, I would say, in terms of total sales, on the marginal volumes, which we ship from Asia to Europe, it's specific products. Usually, we source locally very strongly. And from that point of view, we do not expect an impact. We expect an impact that this is a further dampening of the sentiment overall that maybe consumers but also industrial customers will probably remain more on the cautious side and maybe on the opportunistic and aggressive side, that's probably the effect we will be seeing. On the capital allocation side, the M&A side, certainly high focus on Fastening Systems, construction market. That's the key. But we have also seen that when there are opportunities around in the D&L segment, that will also act there. If we could wish probably, we would ask for more opportunities maybe in the Americas and Asia. But that's on the wish list. Then we had a question here. Tobias Fahrenholz: Tobias Fahrenholz from ODDO BHF. Can we speak a little bit about Germany? I mean it's an important region for you. Do you see some signs of improvement there? When would you see at the earliest some benefits from the bigger programs there? So thinking about D&L then maybe a little bit later cyclical, the Fastening Systems business. And how is your expansion of the product portfolio with the new fastening high runners going on? Volker Dostmann: I mean, alluding a bit to that, that we are all waiting for these big investment programs to happen, right? I said it before, until it drizzles through the supply chain and really creates orders at our sites, we mentioned we expect 24 months. What we would have hoped for was increase in sentiment, improvement in sentiment in the respective end markets, and that would kick in much faster than we would see the genuine money distributed to come our way. We don't see that sentiment changing significantly. The pessimistic view in the market is persisting and that keeps that sluggish situation in construction, in Distribution & Logistics. And I think in the general industries, automotive area, it's widely discussed. So from that point of view, we see there a pocket of improvement. But as I said before, not a consistent trend where we say the market as such is showing maybe signs of one or the other direction. Jens Breu: And I think the pocket is the key. As you mentioned, the opportunities are out there as we talk defense and aerospace, for instance, is on the positive side and general machine building, mainly companies which had a major export to India, China, those are challenged overall. But I think fast key besides understanding the market key is then what is the need in the market. And there, we deliver good solutions. Everyone needs improvements on the cost side, needs to become competitive, needs to have a partner at the site, which we believe we are, who tells him there is room for improvement for potential to become more efficient. And I believe that's the opportunity now. We lay the groundwork for the next leap in growth. Now you specify yourself into situations with new tools, new solutions, which then scale later on when the environment will improve again. Tobias Fahrenholz: Maybe one more on the outlook, especially the profit margin. I mean we managed to get to the 12% at the lower end. As you said, well, you expect some savings from the program, let's say, maybe 30, 40 basis points. So you mentioned the wide range was 12% to 15%. Is this year's range somewhere between 12.5% and 13% or? Volker Dostmann: If that's your calculation. I'm not going to counter that one. I mean we said we want to see roughly half of the improvements until end of 2026, and that would go into that direction, yes. The range is rather wide. But we stick to it with our with our capital tied in and with our end markets and the respective risk. We belong into a bracket of 12% to 15%. And we just wanted to signal also that is where we are committed to be. Jens Breu: So next question. Yes. Right here. Unknown Analyst: I would have a question on the big topic of AI. There will be potentially a big improvement in labor productivity, especially the white collar labor productivity. Have you tried to quantify that? Or can you give us a kind of tangible forecast, what that means for you? What you do in order to implement these new technologies in the company? Jens Breu: Yes, yes. That's a very good topic. And I think we are full force on the AI side, committed to use it as a tool to improve productivity, but also to develop new solutions for our customers, increase efficiency. Last year, we had our international management conference exactly under the theme of AI, the next step opportunity. We have around 100 use cases in the organization on AI, where we work on to be implemented besides that we have many opportunities already implemented. So if we start in the operations, we have a tool in place, which we call [indiscernible], that's our own developed manufacturing visualization and improvement system where year-by-year, we expect to improve productivity just by the system, 2% to 3%. The system captures data from all the working centers and brings them up, visualized in a good way so that the operator understands what are the main levers he or she has to improve productivity. In the background, we collect all the data, analyze it and also further improve. So from that point of view, if we go back 5 years when we had an issue on an operating center, maybe it took you 3 to 5 days to fix the problem and solve it. Today, it's a matter of half a day because you have the data, and you can, from there, derive the root cause of the problem. So that's maybe on the operational side. And certainly, we have also on the white collar side, as you say, expectation is when you go out there and take a look at white papers that you can improve productivity by around 15%. Our ambition is that we said we want to improve productivity annually between 3% to 5% on the white collar side. So that's a clear ambition we have given to the organization and we budget year-by-year, the main initiatives and improvements going forward. And thirdly, also on the market side, use AI tools and the e-shop, for instance, to lead customers easier, better and faster to their specific needs and products, which we have available to them. So overall, holistically, we clearly see this as a big opportunity. It's innovative. It's increasing productivity. And especially us, we see ourselves between the customer and usually a hardware product. But in between, it's all about digitization. That's the main enabler. And maybe on the IT side. Volker Dostmann: I mean we have formed a dedicated team that is administrating and realizing implementing selected initiatives out of this funnel of 100-plus initiatives, which gives also the organization tools at hand and environments where they can safely test their options. We deem it as very important that employees start working with the tools, right? And we felt like it was also -- there was a hesitation around in respect of security, of what am I allowed to do, how can I, right? We gave there, meanwhile, a very good platform that is heavily used. And we see adoption is being really fast. And it sparks new ideas. And I think that is not to be underestimating the element in the AI environment is that you have dynamic from areas you never would have targeted before, right, because we have spread it out now. And that is working very well. And we'll look forward to realize some major steps where we also have then actually a reduction in workforce at certain process steps. Tobias Fahrenholz: Okay. Maybe a second one. If I look at volume-wise, I mean you don't report the numbers, but given the organic growth that you report volume-wise, the group hasn't really grown that much in the last years. This year again with FX against you reported growth going to be flat, most probably you're closing or divesting 8 sites in these 3 years. So basically in front of this backdrop of sideways or shrinking kind of overall development. There are two other big topics out there. One is defense. Second one is robotics. I understand that your exposure to these 2 sectors is not significant or not that great at this point in time. What do you do in order to jump on this bandwagon, so to speak, in order to capture part of the growth that is probably coming from the 2 sectors? Jens Breu: We are certainly exposed to those areas. Defense has been quiet for many decades, we can say, in Europe mainly. But we are certainly active in North America where we have specific applications for instance. But it never has been truly a focus area where we say we want to set the future strategy and group on per se because when you take a look at the SFS Group, we have a sharp focus for consumables. And in defense, it's the cycles that can be quite intensive. And in consumables, like ammunition, we do not want to go. That's not our expertise. That's not our focus. So we are mainly with the indirect enablement in defense. That means if new production is opening up, if someone is producing specific defense products and solutions, then we help this organization in equipping a manufacturing site with the needed tools and the needed infrastructure to do so, but we are not spacing ourselves into specific defense applications. So from that side, we have seen good growth. I think, top of my head, around 20% growth in the defense applications we are focusing on. Last year, this has been some of the pockets and niches where we have seen growth also in Germany, in the DACH region, for instance, that's essential to us. And secondly, I believe also part of the DNA of the SFS Group is that its consumables so that we have a steady continuous ongoing growth and not too much variation because, especially us with our DNA of automation and CapEx and investment, it always provides then the risk that you are maybe underutilized for quite a few years and maybe invested in specific applications you then cannot take to other end markets. That's the challenge. So the nature also of our Engineered Components business and D&L business is very much that we go into applications where we are flexible and reallocate and reuse the investments into maybe new applications, and that's somewhat limited in defense, in aerospace also somewhat limited. So we need to make sure we stay close to our DNA, and that's the path going forward. Torsten Sauter: Torsten Sauter from Kepler Cheuvreux. I'm not quite sure I understood your comments on the tax development, which is kind of higher than the statutory tax rate 26% versus 23% or something. Can I take the 23% as an indication of some sort of a guidance for the medium term? And what sort of tax can we expect for the year ahead? Volker Dostmann: Okay. So I was a bit fast on that, rather imprecise. 23% would be if we are in each and every jurisdiction optimally structured, right, which you never are, as you have adverse effects. And we need to work on that delta, number one, right, between 23% and 26.5%. But that's number one. Number two, we need to squeeze out the 1x effect from giving up legal entities, namely that's going to be the case in Turkey, and in Czech, right? And we need to dampen that out. And lastly, the question is how we work on our legal structure and how we, within the given jurisdictions, kind of optimize the overall flow of values. Now your question is towards where do we go? We would like to bring that towards '23, of course, not being in a position to give you precise date by when. But I would say we should see a first step this and next year, right? We must work on that. Yes. Torsten Sauter: Can I have a follow-up? Totally different topic. I understand that the European Commission has recently proposed this Made in EU framework. With your current setup and the products and verticals that you're shipping to, to what extent do you see SFS affected? Volker Dostmann: As we said and with local for local, we -- let's -- your shift of topic, let's come back with a completely different view on that. When we looked at tariffs and trade, we looked at streams that we really have crossing countries and delivering of one country to another, we ended up at roughly CHF 50 million for the group, right? So it is very limited where we really produce out of another country for a respective end market. From that point of view, I'm not very alarmed. I was alarmed when Switzerland was considered non-EU, which seems not to be the case anymore. That would have affected our trade between Switzerland and Europe in the long term, right? And that would have been a headache, but that's gone by now. Jens Breu: I believe it's even a huge opportunity since we -- on the D&L side source around 90% of the products within Europe, which we distribute in Europe. We are certainly one of the partners to be with, especially when we then talk about, for instance, on the defense side, 70% of the value added needs to come from within Europe in such applications we can support, we can be a partner, we can help to achieve that. So since there are no more questions in the room, we -- there's a question. Yes, last one, and then we go to the questions on -- that side, yes. Unknown Analyst: The question is actually quite simple. I've seen 2 multiyear trends. One of them is the ForEx, which everybody in the room knows. And the second one is your share of Swiss sales is also a multiyear decline. My question is you talked about Americas and Asia as a source of M&A. Have you ever looked at Switzerland with generational changes in small to medium companies that you would do acquisitions in Switzerland because you would no longer have the currency problem? Jens Breu: Absolutely. We do not exclude Switzerland as an M&A market. As a matter of fact, especially on the construction side, we have the clear intention to become stronger in Switzerland. We believe we are not well represented with our Fastening Systems segment in Switzerland. And so if there are opportunities, we would certainly go after that and take a close look at it. So now we have the questions from online, yes. Unknown Executive: So we start now with questions from the chat. We will unmute Jörn Iffert for questions. Joern Iffert: A couple of questions, if I may. The first one is, please, on the EBIT margin, on the core EBIT margin development in the second half 2025, which was, I think, a very strong improvement in D&L. Can you please tell us what exactly were the key moving parts here? Why it was so strong in the second half versus the first half? Because I think in absolute terms, revenues are not too different. And then the same for Engineered Components, if this was mainly product mix with HCV and smartphones? This would be the first question. If it's okay, I would take them one by one. Volker Dostmann: Yes. Thanks for the question. So the distinct shift in D&L and Engineered Components, Engineered Components, pickup in electronics. So really mix and dynamics in the end market underpinned there the EBIT margin. Second effect within the Engineered Components is also the phase of the ramp-up. The ramp-up as they continue reaped more on better profitability as in the first year. So both of that plays into Engineered Components. When you look at D&L, it is truly not a shift in dynamic from a top line point of view. But there, we see clearly effects from the distribution network adaptations that we did and which kicked in, in the second half year. So there, we see really, I would say, a productivity improvement sales per employee. That would be the factors. If that helps you with your question, Jörn. Joern Iffert: Yes. And then maybe to follow up on the second question then on the margin outlook for 2026. First of all, to clarify, did you say organic sales growth, 3% plus? Or is this including these complementary M&A to double check on the operating leverage? But then additionally, I mean, like my colleague was stripping out, you have the efficiency gains on the margins from the [indiscernible] you are doing overall having contributions on total EBITDA, which I think is quite profitable from recent M&A. If I set this into context to the revenues, you have some operating leverage. So isn't this 13% run rate you have achieved in the second half the starting point to think about 2026? And if not, what are really in absence of macro risk, et cetera, the cost blocks we need to consider or reinvestments we need to consider on the margin bridge? Volker Dostmann: Okay. I think first, the question on the guidance. The guidance is clearly in local currencies, including scope effect, right? That's what we -- that's how we used to state it and how we keep it up, right? So no change from that point of view. And your question about the margin dynamics going into 2026. Now electronics replacement cycle that we saw -- we've seen in Q4 2025 as well as the ramp-up in automotive and engineered components. As I said, we expect to flatten out slightly, right? So we do not -- I mean you said, is that now at the beginning of the new level. It will come down slightly as we see electronics in its seasonality coming down, and it will also volume-wise kind of be a more muted situation quarter 1, quarter 2, 2026 as today, right? I would see no considerable cost blocks that we are adding. At the moment, we're working more or less to the other side. Of course, we are building up capacity here and there, but this is capacity that is mainly utilized and engaged already. So from a profitability point of view, not a game changer. And on the other hand, our streamlining of the production footprint will continue. As I said, adding a bit to the EBIT first half, we would expect to see by end of 2026 in the margin, right? Joern Iffert: Okay. And the last question, just a technical one. Sorry when I missed this. You talked about your defense exposure was growing 20%, if I understood this correctly. Can you tell us what is the absolute amount you think you have as exposure to the defense sector when you were able to quantify the growth to it? Jens Breu: Yes, yes. Internally, we have a number which we usually say it's around CHF 30 million to CHF 36 million in defense. But question is always what do you count into defense and whatnot. It's somewhat not a black and white and a little bit of grayish area. That's roughly the basis. Unknown Executive: Good. Then we continue with another question from the chat from Vitushan Vijayakumar from Baader Helvea. Vitushan Vijayakumar: So I would just have a question on -- so the growth drivers that are coming for '26 and even ahead. So I heard that there was a good momentum for the electronic markets with replacement cycles in mobile phones, as you mentioned. I wanted to know if this was rather a one-off effect? Or is it something that would be sustained in the future? And also, if you can just touch a word on -- about the footprint gaining in Americas and Asia as well, it would be good, yes. Jens Breu: First off, in electronics, that's unusual development replacement cycle we have seen in '25 for '26. We do not bet on it in the same amount and the same development, '26 is more about new value-added, meaning new components, new designs where we are able to participate and specify or being specified into new devices and solutions, which come to the market in '26. So we expect that the current base will continue in '26 with a number of smartphones and solutions being sold. And secondly, we expect them to have more value added in there. Then to the question on the footprint expansion we have seen in the United States that we, in the Fastening Systems segment, acquired DB Fasteners. So our ambition is clear to continue that also in the year '26 that we maybe have smaller bolt-on acquisitions on the construction-related or end market related smaller companies with that growing geographically in the United States and gaining access to new customers, which we do not have. Same in distribution on logistics and engineered components probably in the Americas and Asia, we would wish for -- so that means on the M&A side, strategically, we look sharper, more focused on Americas and Asia since we believe the opportunities are there. That's part of the strategy going into 2026. Also with Martin Reichenecker having now the Region Asia more in the focus, we also expect to hopefully create there more momentum. I hope this did I answer your question. Vitushan Vijayakumar: Just another one on the competition and the pricing one. So I just wanted to know if you see any changes compared to 2025 or 2026 in terms of competition, but also in terms of pricing? Jens Breu: Yes. The competitive environment is fairly stable, we have to say in the end markets, some of the applications in which we are. I would need to think very, very hard to give you even a name of a new entrant, usually in our core applications, very steady, very stable overall. Clearly, in an environment like we have seen in '25, prices become more flexible, maybe a little bit more aggressive to defend market. So we usually then have the strategy to defend our pricing levels and secondly, go in with new solutions, innovations, maybe new product lines to offset and not needing -- need to give too much away and rather focus on new solutions, which then yield a good margin profile. That's usually our strategy as we are not the one to go to focus on commodities, for instance, and a low price strategy. We are more on the innovation side, on the solution side, on educating the customer what to do and giving strong advice. That's our position. So life maybe became a little bit more challenging in '25, a little bit more on the defensive side. '26, we expect not too much change to that. We expect that the environment remains, I would say, with a high focus on cost and efficiency improvement on the customer side, and this is what we need to deliver. Good. Since there are no more questions online and are there any more questions. Yes here. Yes. Sure. Always. Alessandro Foletti: Just yesterday, there were [indiscernible] reporting numbers, sort of similar, maybe a tick lower than you, but in general, comparable. What I kind of liked -- one of the things that I like about what they said was their strategy to follow their global clients, right, where they supply them like you do with [indiscernible] in Switzerland, but these clients are global, and they're really -- can you do the same? Are you doing the same? Should be a big opportunity for D&L? Jens Breu: Yes, yes, absolutely. That's the big opportunity. And historically, as the Hoffmann and D&L segment, is focused very much, I would say, on customers in Germany, Austria, but also rest of Europe. We see that they have very strong key account management, which we are also expanding to our Swiss customer base, and this key account management exactly does that strategically. We focus following customers as customers shift value added to different countries and regions maybe for various reasons. We are clearly there to their site to help them and support them. That's initiative number one, which is a given. Initiative number two is that we also are progressing in defining more local assortments, meaning that besides the global need and the global support, having them in China, Chinese assortment, which is more tailored to the Chinese needs and demands and characteristics, same we do in India and the same we do in the U.S. So we go into the future with a twofolded strategy following customers, but also local enablement with local solutions, which is key. Alessandro Foletti: And is this kind of sort of already baked in, in what you're doing in the current growth rate of the company? Or is that, at some point, a change in the trend towards the upside? Volker Dostmann: That is baked in. Alessandro Foletti: For '26, I imagine it is. Volker Dostmann: But also going forward because we see -- we must not underestimate, we see also the other way around. We also see global manufacturers building their automotive manufacturing sites or other manufacturing sites in Eastern Europe, in Mexico, in the U.S. And what they're doing, they bring their customer and they bring their supply chain with them wherever they come from, right? So we see also there quite a fierce environment. And as we showed last year once in a presentation, this switching costs for the relevant customer to switch between their current D&L provider and us as incumbent, that needs quite a bit of power and sales force until we can enter a new ground. Jens Breu: I think that's a very good point you make. In Engineered Components, we are already a little bit further there. We have customers we pick up in China, and they now come here to Hungary, for instance, or Serbia, and have a demand which we cover here even though we picked them up in China. In D&L, that would be the wish to be also at that point in the future. Not yet there. I believe that this local assortment initiative is starting and developing. We need to build it out more solidly. Good. And we are right on time, 12:00. That's great. So Swiss precision also on your end with your questions you had right on time. So thank you all, and we wish you a good lunch and happy to invite you for lunch. Thank you. All the best to you.
Operator: [Audio Gap] Sylvie, and I will be your conference operator today. [Operator Instructions] As a reminder, note that this conference call is being broadcast live on the Internet and recorded. I would now like to turn the conference call over to Aaron Swanson, Vice President, Investor Relations. Please go ahead, Mr. Swanson. Aaron Swanson: Good morning, and thank you for joining AltaGas' Fourth Quarter 2025 Results Conference Call. This call is being webcast, and we encourage following along with the supporting slides that can be found on our website. Speakers this morning will be Vernon Yu, President and Chief Executive Officer; and Sean Brown, Executive Vice President and Chief Financial Officer. We're also joined by Randy Toone, President of Midstream; Blue Jenkins, President of Utilities; and Jon Morrison, Senior Vice President of Corporate Development and Investor Relations. We will refer to forward-looking information on today's call. This information is subject to certain risks and uncertainties as outlined in the forward-looking information disclosure on Slide 2 in the presentation. As usual, prepared remarks will be followed by a question-and-answer session. I'll now turn the call over to Vernon. Dai-Chung Yu: Thanks, Aaron. Good morning, everyone, and thanks for joining our Q4 conference call. I'll start by introducing Sean Brown, who joined us in January as our new CFO. Sean has been in the energy business for more than 25 years as an executive and an investment banker. Sean's strong financial background adds to our existing bench strength at AltaGas, and he will help drive the continued execution of our strategic priorities. Today, we will review our Q4 and full year financial results. We'll reaffirm our 2026 guidance and update you on our progress of our strategic priorities. Our performance in 2025 reflects the strength of our people, assets and relationships, which positions us well for continued success in 2026. I'm going to kick off my remarks by reviewing some of the highlights from 2025, including our financial performance and the execution of our strategic priorities. I'll then review our growth projects and our project backlog, talk about the importance of natural gas for long-term customer affordability and close by reviewing the current LPG export market. John will then cover our financial results and outlook in more detail. Let's start on Slide 4. Our 2025 results were driven by strong performance in both Midstream and Utilities. We delivered normalized EBITDA close to the top of our guidance range, exceeding $1.86 billion for the year. Earnings per share came in at $2.23, which was in the upper half of our guidance range. We executed our strategic priorities by optimizing our asset base, delivering record global export volumes, record throughput at North Pine and Pipestone, along with active regulatory filings at our Utilities. We continue to de-risk the business through long-term contracts and export market diversification in Midstream and extending regulatory approvals for the Utilities asset modernization program. We strengthened our balance sheet, exiting the year at 4.7x adjusted net debt to EBITDA and saw our credit rating outlook move from negative to positive. We advanced key growth projects. Pipestone II came into service in December, and we saw great construction progress at REEF, reached positive FIDs on REEF Optimization 1, the RIPET methanol removal project Phases 1 and 2, expanding the Dimsdale gas storage facility and the Keweenaw Connector Pipeline in Michigan. These results translated into a 29% total shareholder return in 2025 and a 5-year TSR CAGR of 22%, where we have meaningfully outperformed our peers. Turning to Slide 5. Pipestone II is complete and is operating close to full capacity. The project was delivered on time and on budget, further strengthening our Midstream value chain. On Slides 6 through 8, we highlight our construction progress at REEF. Phase 1 is now 70% complete, which was in line with our plan. We now have all the LPG accumulators and bullets on site. All 3 LPG accumulators should be placed on their foundations this week. You can see a picture of the arrival of the 2 accumulators on Slide 8. Study construction has accelerated and remains on plan. We have successfully installed 8 of the 13 spans. The remaining sections will be put in place later this spring, and we've kicked off work on the loading platform. Phase 1 of the rail corridor and utility corridor have been finished. This includes the full rail yard and the rail offloading modules. Opti-1 is also advancing on plan and is expected to be in service for mid-2027. Overburden removal has been completed and blasting activities will start this month. Opti-1 will add another 30,000 barrels a day of propane export capacity, which is higher than our original expectations. Slide 9 shows that the RIPET methanol removal project and the Dimsdale gas storage expansions both remain on time and on budget. These new facilities will contribute to our 2027 growth outlook. Slide 10 highlights our Midstream project offer, where we continue to advance multiple growth projects, including a Townsend De-Propanizer, a Northeast BC liquids expansion focused on improving long-term rail logistics, progressing additional phases of REEF, including the potential of adding ethane exports given the strong demand from China as well as a North Pine frac expansion and more gas processing with Pipestone III. Let's turn to Slide 11. We're set to start construction of the Keweenaw Connector pipeline this spring. All the long lead items have been ordered and the entire right-of-way has been secured. We remain very active with $1.7 billion of modernization programs across our 4 jurisdictions, which will improve the safety and reliability of our network. We are also advancing our data center opportunity set with multiple FEED studies completed. And we have now started construction of the natural gas connections to feed Phase 1 of a 24-megawatt facility in Maryland, which is expected to be completed by year-end. Slide 12 highlights the importance of natural gas during today's energy affordability crisis for Utility customers across North America. Natural gas is the most affordable and reliable heating source in the U.S. The cost of electricity for home heating is more than 3x more expensive than natural gas across our jurisdictions. This cost advantage is only getting bigger. Recent electric bill increases are coming in at over 10% per year, which is 4x current inflation. This trend will continue as more and more investment is needed to replace America's outdated electrical grid. Natural gas is the only energy solution that is scalable, affordable and reliable to meet growing North American energy demand. Public policy should prioritize cost-effective outcomes by avoiding unnecessary electrification that increases customer bills and reduces energy reliability. We believe that policymakers should be incentivizing natural gas infrastructure for space heating across the country. Asian demand continues to grow and is expected to be up by nearly 25% by 2030. This is being fueled by new household demand in markets like India and the continued growth at PDH facilities in China. In 2026 alone, we are expecting to see 300,000 barrels per day of increased propane demand due to Chinese PDH start-ups. Since the beginning of 2025, we've seen very strong demand for non-U.S. LPG supply with global trade sanctions. This has caused Chinese imports of U.S. propane to decline by more than 50% in 2025. And the market continues to pay a premium for non-U.S. propane. On the supply side, the local Canadian butane market is currently oversupplied due to certain facility outages. Both of these supply and demand factors are tailwinds for our 2026 outlook. The FEI forward curve has strengthened materially in 2026 as highlighted in the bottom right chart. We saw FEI move up with winter weather in Asia, then further up with the recent Saudi supply disruption and even further up with the Iranian conflict. As a result, March FEI propane spreads are almost 50% higher than the start of the year, underscoring the severity of the Middle Eastern supply shock. Let's turn to Slide 14. 2025 marked a step change in our export destinations with 45% of our volume landing in China, where our market share has now increased to about 6% of China's imported propane. AltaGas now represents 5% of Canada's total national trade into Japan, South Korea and China, amounting to about $2.5 billion in 2025, which we expect to double by 2030 with the start-up of REEF and Optimization 1 and the continued debottlenecking at our existing export facilities. We're also proud to be investing in Asian economic activity with $600 million invested in Japan, South Korea and China over the last number of years to support the expansion of our global export business. This is in concert with very large investments that we've made with domestic manufacturers and engineering companies in Canada and the U.S. Finally, on Slide 16, we're committed to our strategy of disciplined capital allocation. With approximately $5 billion of investment capacity over the next 3 years, we can fund $3.5 billion of growth while staying within our financial guardrails. Investment in our high-quality organic growth backlog supports long-term enterprise growth of 5% to 7% per year, which will generate meaningful and sustainable shareholder value creation. And with that, I'll now turn it over to Sean. Sean Brown: Thanks, Vernon, and good morning, everyone. I'm excited to be here for my first quarterly conference call with AltaGas. I'll begin with an overview of our consolidated quarterly financial results, followed by segment performance, a discussion of our balance sheet strength and conclude with our 2026 outlook. Turning to Slide 17. We closed the year with a strong fourth quarter, delivering normalized EBITDA of $564 million, an 8% increase year-over-year and normalized EPS of $0.77, consistent with the same period last year. In the quarter, we exported more than 124,000 barrels per day of LPGs, including over 85,000 barrels per day from RIPET, a new quarterly record despite the impact of a 28-day labor disruption. At RIPET, we are pleased to sign a new 5-year agreement with the union in late December. This agreement supports increased vessel loading and higher throughput moving forward and reflects AltaGas' commitment to working collaboratively with our unions to deliver positive outcomes for all stakeholders. Utilization across the balance of the Midstream platform was strong with throughput volumes up an average of 4% year-over-year across our gas processing, fractionation and extraction assets. With respect to our Utilities business, colder weather and a growing customer base drove increased usage, as I will discuss on the next slide. The fourth quarter also saw several important regulatory outcomes, including approval of new rates in D.C. at 61% of our ask, a USD 25 million extension of the PROJECTpipes 2 ARP program in D.C. through June 2026, approval of a USD 700 million ARP amendment in Virginia extending through 2028 and the filing of a new rate case in Maryland late in the year. In addition, subsequent to year-end, we recently filed a USD 61 million rate case in Michigan. And this week, we received approval for our DC SAFE ARP program to spend USD 150 million from mid-2026 to mid-2029. In terms of segmented results, I'll start with Utilities on Slide 18. Utilities normalized EBITDA was $383 million, up 14% year-over-year. Performance was driven by rate base growth from ARP modernization investments, asset optimization initiatives and an 18% increase in usage, supported by colder weather in D.C. and Michigan and continued customer growth. Results also benefited from the partial settlement of Washington Gas' pension plan. These positives were partially offset by lower realized contributions from the retail energy business and higher operating and maintenance costs, driven by increased labor requirements during cold weather and higher employee incentive expenses driven by AltaGas' rising stock price. During the quarter, we deployed $255 million of capital in Utilities, including $117 million towards modernization programs and $113 million towards system betterment initiatives. As noted, we remain active on the regulatory front with 3 active rate cases. Shifting focus to our Midstream business on Slide 19. Normalized EBITDA was $202 million, an 11% increase over Q4 of last year. As noted, we exported more than 124,000 barrels of LPG per day during the quarter through 21 VLGCs and for the full year, averaged in excess of 126,000 barrels a day across 83 ships at our Ferndale and RIPET terminals. Throughout the year, demand for our open access export terminals continued to strengthen, supported by long-term tolling agreements with investment-grade counterparties. These agreements enabled us to achieve our 60% tolling target, further enhancing cash flow durability. The remainder of the Midstream portfolio also performed well year-over-year, particularly our Montney focused assets where gas processing volumes increased 6% and fractionation volumes increased 14%. Pipestone throughput increased 11%, while North Pine operated near its 25,000 barrel per day capacity. Constructive fundamentals for natural gas storage continue to reinforce our decision to advance both phases of the Dimsdale expansion, which will play a key role in managing Montney production growth and large LNG demand pulls in the years ahead. During the quarter, we remain disciplined in managing commodity exposure. Our export business was largely insulated from price volatility through commercial tolling agreements and a structured hedging program. Looking ahead, approximately 80% of expected 2026 global export volumes are either tolled or financially hedged with an average FEI to North America spread of approximately USD 19 per barrel on non-toll volumes. In addition, substantially all of our 2026 Baltic freight exposure is hedged through a combination of time charters, financial instruments and tolling arrangements. We continue to manage frac spread exposure through our disciplined risk management program. We have seen a meaningful uplift in frac spreads since the beginning of the year, which we have used to increase our hedge position, which now sits at roughly 70% through 2026. Let's turn to our balance sheet on Slide 20. Following the decision to retain our stake in the Mountain Valley Pipeline, we issued $460 million in equity, achieving an equivalent deleveraging impact as if we had divested our working interest while retaining asset upside. These actions resulted in a year-end adjusted net debt to normalized EBITDA ratio of 4.7x, slightly below the midpoint of our 4.5 to 5x target range and led to positive credit revisions from both S&P and Fitch. As we have commented recently, operating performance and progress on expansions at MVP continue to reinforce our decision to retain the asset. Since announcing our decision, the Southgate extension received unanimous FERC approval and key North Carolina water permits. The MVP Boost, which will add 0.6 Bcf a day of capacity through low-risk compression continues to progress well and is expected to enter service by mid-2028. The project is supported by investment-grade Utilities and is expected to generate a build multiple of approximately 3x EBITDA. We are reaffirming our 2026 guidance, as shown on Slide 21, with normalized EBITDA of $1.925 billion to $2.025 billion and normalized EPS of $2.20 to $2.45. Headwinds and tailwinds remain relatively balanced at this stage. Year-over-year tailwinds in 2026 will include new utility rates in Virginia, Maryland and D.C., incremental contributions from Pipestone II and the Dimsdale Phase 1 expansion and continued growth in global exports supported by increased dock capacity at RIPET. These are expected to be partially offset by lower merchant volumes and more moderate retail energy performance. The 2026 capital budget, as shown on Slide 22, remains unchanged at $1.6 billion with 69% of consolidated capital dedicated to Utilities and 27% to Midstream. Compared to last year, Utilities will see a meaningful increase in both spending and share of total capital reflecting significant opportunities around asset modernization as well as reduced requirements in Midstream following the completion of Pipestone II and lower capital needs at REEF. Of the $1.1 billion Utilities capital program, 71% is allocated to modernization and system betterment initiatives, supporting safety, reliability and efficiency. This is expected to drive approximately 10% rate base growth in 2026. Turning to Slide 23. I'll close by reiterating AltaGas' proven track record of delivering per share growth, which has translated into material share price outperformance. The company continues to offer an attractive value proposition, as shown on Slide 24. Our low-risk infrastructure platform supports stable, growing earnings and cash flows, underpinned by disciplined capital allocation and a robust organic growth pipeline. With that, I'll turn it back to the operator for the Q&A session. Operator: [Operator Instructions] And your first question will be from Robert Catellier at CIBC Capital Markets. Robert Catellier: I know this is a bit of a sensitive question, but I feel -- compelled to ask it. I was wondering, just understanding you've had a long history of constructive respectful dealings with First Nations. I'm wondering if there's anything you can share on the Metlakatla situation and their interest in the Trigon terminal. Any update you can provide there would be much appreciated. And specifically curious if you can confirm whether you're still engaged in active discussions with the Metlakatla. Dai-Chung Yu: It's Vernon here. I think you're absolutely bang on that we're disappointed that we're having a disagreement with the Metlakatla First Nation kind of in the public. At AltaGas, we take a lot of pride in the fact that we're a good neighbor and that we've been have had very strong relationships with all of our communities and particularly with our First Nation partners. We've had indigenous equity participation deals and mutual benefit agreements for many, many years. And in fact, we've been working with the Metlakatla and Prince Rupert since 2017 with the development and start-up of RIPET and REEF. So across our footprint, I think we have 15 mutual benefit agreements in Alberta and British Columbia. In fact, we have 6 mutual benefit agreements on the coast for both REEF and RIPET. With the construction of REEF, we've been actively working with various indigenous businesses where, in fact, about $350 million of REEF's total capital cost is being done by indigenous businesses, and we're really proud of that. So our hope is to continue to work with all of our First Nations partners. Obviously, we want to continue to have dialogue with them at Metlakatla. We do speak with them fairly regularly. We're at a point right now where we're having a disagreement on a couple of items, particularly related to Trigon. And I guess we felt like we've been drawn into the situation because Trigon would like to build a competing LPG export facility on Ridley Island. The regulator and the landlord of Prince Rupert, the Prince Rupert Port Authority doesn't agree that they have the ability to do that. And we need to obviously defend our commercial rights and protect our export franchise. So we feel that having exclusivity is an important feature. It's a common feature that you see in port development globally and in Canada. As an example, for REEF, we spent along with our JV partner, Vopak, about $100 million of that risk capital before we were able to get our permits to go ahead and that regulatory process, in fact, took around 7 years. So without these types of commercial arrangements, it's very difficult for project proponents to put risk capital at work because you need to ensure that you're going to get a healthy and reasonable return on your overall capital once your facility is up and running. So long and the short is we've continued to have active dialogue with all First Nations along the coast, and we hope that we can find a mutually benefit solution as we go forward. Robert Catellier: Okay. I had a couple of questions on the operations. A little surprised, Sean, to hear your comment about the puts and takes of the tailwinds and headwinds being relatively balanced. I would have thought maybe the change in commodity prices would have put the balance in favor of the tailwinds. But with that in mind, given the change in commodity prices we've seen some producers such as Tourmaline are claiming to reduce deep Basin activity. With that in mind, are there any direct impacts from that disclosure from Tourmaline on AltaGas? And just in general, what's your sort of expectation of how the G&P business might develop for '26 compared to when you released guidance? Dai-Chung Yu: Maybe I'll start, Rob. So we've seen upstream customers want to take more control of gas processing, both in BC and Alberta for some time. And I think that the interesting part of that is by them taking control of that part of the business, they get more control over their liquids, which is positive to us because Tourmaline and other producers realize that the best outlet for their liquids is for global exports. And Tourmaline is obviously one of our largest customers. So I think anything that they're contemplating, we generally stand to benefit because they have a deep understanding of market dynamics and how to maximize the netbacks of their LPGs. I think Sean and Randy can talk about just the outlook for this year. Sean Brown: Yes, I can start, certainly. I mean, I hear your comment, Rob, around the puts and takes. I mean, as we sit here today, certainly, there is constructive tailwinds given some of the geopolitical activity. But the thing I would say is it is early in the year as well. So we're trying to remain balanced as we think about the discussion around the full year. And if you look at the shape of the curve in general, I mean, it's fairly backwardated. So it's all of that, that we put together when we thought about our prepared remarks. But your point is a good one where as you sit here today in isolation, probably the tailwinds are quite positive, and we feel good about where we are to start the year. Robert Catellier: Okay. And just one quick one on the Utilities. Just wondering if you could provide a sensitivity to rate base growth, sort of big picture outlook should the various building energy performance standards in your jurisdictions pass as intended and survive any of the legal challenges? Donald Jenkins: Yes, thanks, Rob. It's a good question. We continue to work our way through that. As you would expect, the uncertainty seems to be more impactful than the actual change in the standards. So as we look across our business, the growth rate, we don't think is materially impacted as we look across how things are being built and what's being built. What we're seeing is uncertainty of investment being more driven by the -- some of the other policies in the area. So as we look across that growth rate, we still connect -- we still have positive customer growth, very strong customer growth in Maryland. As you saw in the prepared remarks, we still see -- our first data center contract happens to be in Maryland right in the middle of all of those battles. So at the moment, I don't know that I'd call it significant by any stretch, and I think that process is going to take a while, but we continue to educate the regulators and the decision-makers and of course, the investors in these projects about the overall affordability impacts and how to think about that more holistically. So we're optimistic that we'll get to a good place without significant impact. Dai-Chung Yu: Rob, just as a data point, the municipal government in D.C. excluded all of their buildings from those net zero standards. So it just tells you how [indiscernible] some of these initiatives are. Operator: Next question will be from Rob Hope at Scotiabank. Robert Hope: I want to go back to the forward curve for global exports. You are correct. It is very backwardated, but we continue to see kind of, we'll call it, higher pricing push further out into the curve. Just given these dynamics, how do you think about your remaining merchant exposure through the year? Will you be looking to lock in pricing? Are you willing to ride out some spot exposure there? And in addition, are you able to push incremental spot barrels through if you're able to accumulate them? Dai-Chung Yu: Well, Rob, let me start and Randy can jump in if I miss something. So you're right. The curve is highly backwardated, but the curve has gone up a little bit. We're quite comfortable with our hedge positions right now where we're about 80% hedged for the year. We are benefiting a little bit from supply differentials. And then on our open merchant volumes, we are seeing strong demand for those barrels with obviously the supply outages coming out of the Middle East. We will -- and it is a unique market where you're seeing everything on the screen that you see may not be fully representative of the final sales price that we get. So we think we're perhaps being a bit cautious in talking about this. But if this continues to play out where the straits are shut down for an extended period of time, I think we're in a good position with our current financial hedges that we don't really need to do any more. Robert Hope: All right. Appreciate that. And then maybe just turning over to REEF Opti-1. So can you walk us through how it went from 25,000 barrels a day to 30,000? And is that 300 now firm? Or could there be some further upside there as well? Randy Toone: Rob, it's Randy. Just with the further detailed engineering of Opti-1, the teams identified some adjustments that added the extra 5,000 barrels. So there's nothing unique there. It's just as you go through detailed engineering, the team plans optimizations. Operator: Next question will be from Sam Burwell at Jefferies. George Burwell: Dovetailing on with the prior question, I'm curious if you could give some sort of breakdown as to like what really drove the wider hedge spreads in the second half versus the first half. Is that a function of like layering on hedges recently with Far East propane spreads being a lot wider? Is it contribution that's pretty meaningful on the butane side? Just curious if we could get a breakdown of that to inform the much wider locked in spreads in the back half of the year. Randy Toone: It's Randy. I think it's a combination of both. It's -- we actually have seen some -- the spreads widen, and so we've took advantage of that to put in some hedges. But it's also -- it's higher -- we have higher hedges on butane, which is a larger spread. George Burwell: Okay. Understood. And then just on the potential projects that you guys called out in the slide deck, I mean a lot of those addressed liquids growth out in the future. So just like curious how you guys would, I don't know, maybe clarify some of the hurdles that are remaining on each of them where you might rank order them in terms of build multiple or timing perhaps? Dai-Chung Yu: I think the Townsend depropanizer is probably the most we should see an FID sometime in the next 12 months or so. That really is customer-driven at this point, whereas customers bring on more volumes, we have an obligation to process those volumes for them. Then we, obviously, with the depropanizer are able to get the liquids out and move them to the West Coast at our North Pine rail facility. I think REEF Optimization II is also a 2026 potential FID project. There, obviously, the strong commercial support. It's really just locking down the capital cost. So we have a firm Class III cost estimate and then finalizing one permit amendment that we need to go ahead with that. The other ones are probably in that 12 to 15 months out, maybe 24 months out. And all of these projects are relatively low capital, low build multiples, so highly attractive and should be very competitive as we do our capital allocation going forward. George Burwell: Okay. Great. One real quick one just on REEF Opti-2 since you brought it up. I mean is that sanctioning contingent upon any progress made with the discussions with the Metlakatla? Dai-Chung Yu: We're obligated to do consultation with all of our First Nations, and the consultation process will go into the regulator, and the regulator will make a determination if we've done sufficient consultation. Operator: Next question will be from Jeremy Tonet at JPMorgan. Elias Jossen: This is Eli on for Jeremy. Just wanted to start on the balance of Midstream versus Utility capital within the backlog. We see nearly twice as much Utility growth capital versus Midstream. And so if we see some of these projects in the backlog move ahead on the Midstream side, could we see that mix shift move a little? Or -- and then maybe just thinking about sort of the strong returns you generate from those Midstream projects, could we see sort of higher within the range of that 5% to 7% long-term annual growth if you were to sanction more Midstream projects? Dai-Chung Yu: Eli, I think you've asked a great question. You would have seen us in the last couple of years slow down our Utility spend a little bit when we had some very attractive Midstream projects to execute. And the good news that we found is that those Utility growth opportunities didn't go away. They just got deferred a year or 2. So I think if we are in a situation where we have more projects than investment capacity, we're going to have to go through and do our process of capital allocation and the best risk-adjusted returning projects will get priority. So the nice thing about Utility capital is its ratable growth. So -- because the bulk of our capital that we're spending is modernization capital with rate riders, so we get that almost immediate growth from it. Midstream projects do have a longer gestation period and build cycle. So while they may be more attractive, they are lumpier in nature. So I think if we're successful in filling up the full growth hopper, we'll be very comfortable to be in the upper end of our medium-term growth guidance. Elias Jossen: Great. I had a smaller accounting question as a follow-up. We've seen some consistent transaction or restructuring expenses, and I know it's been a while since the last larger transaction. Any color on what those kinds of add-backs pertain to? Sean Brown: Are you -- sorry, are you referring to sort of normalization in general? Elias Jossen: Yes. I mean I think we see restructuring costs and transaction costs, just looking at some of the reconciliations within the MD&A. Sean Brown: Yes. I mean if you look -- just think about last year alone, I mean, with respect to the MVP transaction, there certainly would have been some there. There was some changes otherwise. But I mean, in general, the biggest one would have been really around MVP that I'd highlight. Operator: Next question will be from Ben Pham at Bank of Montreal. Benjamin Pham: Maybe more detailed question on WGL. Can you quantify or attempt to quantify what the realized ROE was for 2025 versus 2024. Sean Brown: I'm going to -- just give me a second here, Ben. Donald Jenkins: Yes. So on the portfolio for WGL, realized we were within about 100 bps of the authorized on the total portfolio. That varies a bit by jurisdiction, as you would expect, but the total portfolio, about 100 bps of authorized -- within authorized. Benjamin Pham: Okay. So it sounds like it's generally unchanged versus 2024 then in terms of the relative difference? Dai-Chung Yu: I think it's a little bit better than 2024, maybe 10 or 20 basis points. We expect that to improve further in this year because of the DC rate case going in, getting approval for the DC rate case and having those rates go ahead. So we think we'll be in the range of about 70 basis points in 2026, Ben. Donald Jenkins: Yes. I think that's right. I would add, Vernon, to that and just Ben, so that we have a full year of the DC rate case. We have rates in effect from Virginia at the start of the year, subject to refund on that final case. And then we filed for Maryland, and we expect to have rates -- new rates in effect in Q4. So I think you see a consistent progression in '24 to '25 to '26. Sean Brown: And as we've said in the past, Ben, that doesn't include asset optimization, which is always an opportunity for us to improve returns as well, and that will be consistent this year. Benjamin Pham: Got it. And there was an earlier question on the propane export hedging. You provide some details there on the level and the shape of it. You also provided the sensitivity as well; $1 a barrel is $10 million. Is that sensitivity, is that incremental to the price levels you disclosed? Is that some lower number that's baked into your 2026 guidance? Sean Brown: So that would be what's baked into our 2026 guidance, Ben. Benjamin Pham: And presumably, that's probably lower just given when you put your budget out versus how the spot has moved since then? Aaron Swanson: Yes, that's fair. Operator: Next question will be from Robert Kwan at RBC Capital Markets. Robert Kwan: First question here is just on Prime Minister Carney's meetings in India and the government's release citing the ongoing engagement for more LPG exports into India. So I'm just wondering, generally, just what your thoughts on that given of all the different things you talked about energy-wise, LPGs are probably most actionable in the near term. And then there was also a statement about addressing higher shipping costs. And I'm just wondering if you've got some color or thoughts on that as well. Dai-Chung Yu: Well, I think, Robert, the dynamic with India is there is very strong demand in India for more LPGs. Remember, I think 300 million people in India still cook with charcoal. And I had recently met with Minister Hodgson, who indicated when he was in India that India is very keen to get people off that cooking charcoal and propane is obviously the best alternative for that market. As you know, India is a little bit far away from Canada. So Middle Eastern barrels will always be advantaged going into India just because of shipping costs. Once you go past about South China, we become disadvantaged on a shipping cost basis. So you've seen us kind of move initially with RIPET into Japan and Korea, where we had a material shipping advantage. We've seen the Chinese market open up to us primarily because of U.S. trade tensions. And then as demand continues to go up and if Canada disproportionately grows in supply, we do have an opportunity to expand to other markets. And that's why we're so keen to have REEF Opti-1 and hopefully Opti-2 follow up and provide access to Canadian producers to all of these markets. Robert Kwan: And just in terms of the government statements that both are going to work on helping address the shipping cost differential, do you see that then as just a redirection of flow? Is that maybe higher contracting for you or possibly new capacity? Dai-Chung Yu: We haven't seen any direct linkage yet. So we look forward to engaging with the government and seeing what they're thinking about. Robert Kwan: Okay. Just the last is on fractionation capacity, and you kind of outlined some potential projects in North Pine and Townsend. I guess just as you think about your existing integrated network and possibly further increasing capacity at REEF, do you feel the need to even further increase your control of NGL fractionation beyond what you've outlined for Townsend and North Pine? Dai-Chung Yu: We're actively working with a number of our customers, primarily NGL aggregators that have significant amounts of frac capacity and growing frac capacity. So we're looking to offer full-service solutions from the wellhead to the dock, basically in a JV-like partnership with a number of these companies. Obviously, you've seen in the last 12 months, we press released transactions with Keyera, Pembina and Wolf, all of which are building incremental fractionation. So our view is if we're able to bundle these solutions through partners, so it's not critical that we own more frac capacity. But I think we're uniquely situated in Northeast BC, where with North Pine and Townsend, we can provide just that much of a better logistical option because of where our rail facilities are, Robert. Operator: And our last question will be from Patrick Kenny at National Bank Capital Markets. Patrick Kenny: I guess just on the appointment of Mr. Evans as Chair, we've seen a decent uptick in bitumen production over the past few years and a fairly constructive outlook here for egress expansions going forward. I know the exports platform and execution of REEF is top priority. But just wondering if we should be reading into any longer-term shift in strategy related to looking at participating in any opportunities to extend your service offering to oil sands producers, whether it be on the propane solvent front for SAGD projects or perhaps investing more heavily into condensate infrastructure, either in BC or Fort Saskatchewan? Dai-Chung Yu: Well, Pat, I don't think you can read a ton into Derek's appointment of a change in strategy. We're going to be disciplined in how we put our capital to work. We feel like we obviously have strategic advantages in NGLs and global exports, as you pointed out. If there are opportunities to work with oil sands producers about moving NGLs from Fort McMurray to other markets, well, for sure, we'd be happy to investigate that. But I wouldn't read too much. And we just want to have Board members with deep industry knowledge and great management experience that provides advice as we continue to try to grow and optimize our business. Patrick Kenny: Okay. Got it. And then maybe just back on the unsecured growth backlog. So you touched on the cost advantage of gas over electricity on the Utilities front. It seems to suggest some upside there to the CapEx plan. Yet obviously, still a lot of attractive projects in the queue on the Midstream side. So I'm just wondering how you might be thinking about bringing in some strategic JVs or other financial partnerships, just whether it be on the U.S. side of the border or up in Canada, just to make sure you don't have to pass up on any opportunities from a funding standpoint. Dai-Chung Yu: Well, the good news is our investment capacity grows each and every year as we add cash flow. So we have a natural uplift in the amount of capital we can put to work. Some of these things that we're looking at, obviously, in the unsecured hopper are further out in time where we'll have more investment capacity. But at the end of the day, if we've got great projects that pass all of our investment hurdles, our finance team will figure out a way to get them financed. Operator: Thank you. This concludes the Q&A portion of today's call. I will now turn the call back to Mr. Swanson. Aaron Swanson: Great. Thanks again to everyone for joining the call this morning. The Investor Relations team is around if you have any further questions. Have a great day. Operator: Thank you, sir. Ladies and gentlemen, this concludes today's conference call. Once again, we would like to thank you for attending and at this time, ask that you please disconnect your lines.
Operator: Good afternoon, ladies and gentlemen, and welcome to the Ensign Energy Services Inc. Fourth Quarter 2025 Results Conference Call. [Operator Instructions] This call is being recorded today, Friday, March 6, 2026. I would now like to turn the conference over to Mike Gray, Chief Financial Officer. Please go ahead, sir. Michael Gray: Thank you. Good morning, and welcome to Ensign Energy Services Fourth Quarter Conference Call and Webcast. On our call today, Bob Geddes, President and COO; and myself, Mike Gray, Chief Financial Officer, will review Ensign's fourth quarter highlights and financial results, followed by operational update and outlook. We'll open the call for questions after that. Our discussions today may include forward-looking statements based upon current expectations that involve several business risks and uncertainties. The factors that could cause results to differ materially include, but are not limited to, political, economic and market conditions, crude oil and natural gas prices, foreign currency fluctuations, weather conditions, the company's defensive lawsuits, the ability of oil and gas companies to pay accounts receivable balances or other unforeseen conditions, which could impact the demand for services supplied by the company. Additionally, our discussion today may refer to non-GAAP financial measures such as adjusted EBITDA. Please see our fourth quarter earnings release and SEDAR+ filings for more information on forward-looking statements and the company's use of non-GAAP financial measures. On that, I will pass the call back to Bob. Robert Geddes: Thanks, Mike. Good morning or afternoon, everyone, wherever you're at. Some introductory comments. The fourth quarter 2025 provides a great deal to discuss, both in terms of reflecting on the full year's performance and looking ahead to the opportunities and challenges that lie in front of us. The Ensign team completed the 2025 year with results that exceeded analyst estimates, both for the quarter and the full year. And most importantly, we're able to clip off an additional $80 million of debt in 2025. The Canadian business unit led the way with year-over-year EBITDA gains, while the U.S. battled great headwinds. In 2025, the team was successful in getting operators to fund roughly half of the $48 million in upgrades executed in 2025. These rigs are all tied up now on long-term contracts. The team ended the year expanding our forward long-time contract book to $1.2 billion of forward contract coverage with 60% of the fleet contracted forward. Our international business unit, which operates in Venezuela, Argentina, Australia, Oman, Bahrain and Kuwait had a share of ups and downs, which I will expand on later. For a deeper dive into the fourth quarter and full year '25, I'll turn it over back to Mike. Mike? Michael Gray: Thanks, Bob. Ensign's results for the fourth quarter and 2025 year-end reflects the benefits of our diversified operational geographic footprint. With the recent volatility in commodity prices, and -- the outlook is constructive and the operating environment for the oil and natural gas industry continues to support relatively steady demand for oilfield services. Total operating days were up in the fourth quarter of 2025 by 1%. The United States operations saw an increase of 14%, while the Canadian and international operations reported a decrease of 8%, each when compared to the fourth quarter of 2024. For the year ended December 31, 2025, total operating days were down by 3%. The United States operations saw an increase of 2%, while the Canadian and international operations saw a decrease of 3% and 15%, respectively, compared with the year ended December 31, 2024. The company generated revenue of $418.8 million in the fourth quarter of 2025, a 2% decrease compared with revenue of $426.5 million generated in the fourth quarter of the prior year. For the year ended December 31, 2025, the company generated revenue of $1.64 billion, a 3% decrease compared with revenue of $1.68 billion generated in the prior year. Adjusted EBITDA for the fourth quarter of 2025 was $107.5 million, lower by 5% than adjusted EBITDA of $113.4 million in the fourth quarter of 2024. Adjusted EBITDA for the year ended December 31, 2025, was $389.8 million, a 13% decrease compared to adjusted EBITDA of $450.1 million generated in the year ended December 31, 2024. The 2025 decrease in adjusted EBITDA is due to the decreased year-over-year activity caused by customer consolidation, economic uncertainty and volatile commodity prices. Depreciation expense for the year decreased by 3% to $345.4 million compared to $355.8 million for the year ended 2024. Interest expense decreased by 23% for the year ended December 31, 2025, compared with the same period in 2024. The decrease in expense compared to the prior period is the result of lower debt levels and reduced effective interest rates. Offsetting the decrease is the negative exchange translation on U.S.-denominated debt. G&A expense for the fourth quarter of 2025 was $14.5 million compared with $13.1 million in the fourth quarter of 2024. G&A expense totaled $55.5 million for the year ending December 31, 2025, compared with $57.4 million for the same period in 2024. The G&A expense decreased for the year due to nonrecurring expenses incurred in the prior year. Offsetting the decrease is the annual wage increases and the negative 2% translation effect on converting U.S.-denominated expenses. Net capital expenditures for the fourth quarter of 2025 totaled $35.3 million compared to net capital expenditures of $22.3 million in the corresponding period of 2024. Net capital expenditures for the calendar year 2025 totaled $183.7 million, consisting of $48.1 million in upgrade capital, $146.3 million in maintenance capital, offset by proceeds of $10.6 million for equipment disposals. The company has budgeted maintenance capital expenditures for 2026 of approximately $161.4 million and $32.8 million of selective upgrade capital, of which $24 million is customer funded. Debt repayments against debt totaled $80.3 million for the year, but we saw a total net decrease by $105 million due to foreign exchange as well as debt repayments. With the reductions in adjusted EBITDA, the stated debt reduction target of $600 million will now likely be achieved in the first half of 2026. The revision is the result of the current industry conditions and the reinvestment of capital expenditures. If the industry conditions change, this target could be increased or decreased. On that note, I will pass the call back to Bob. Robert Geddes: Thanks, Mike. Let's start with a quick reflection by region for 2025. The fourth quarter was quite active for us right across all our world as we methodically grew rig count in the high-spec triples and high-spec single rig type categories in North America. Each area had different market dynamics -- excuse me, each area had differing market dynamics at play. In Canada, we were up 3% on activity year-over-year whilst being up year-over-year on EBITDA. This is a result of our Canadian business unit continuing to focus on delivering high-spec rigs with high-performance crews. In fact, one of our new ADR HSS set a record drilling 2,500 meters in a 24-hour period. In the U.S., the market forces were much tougher and keeping rigs active meant spot pricing was falling. Rigs that have consistent work remained active and with little rate degradation. Once again, the U.S. operations team outperformed their peer group and placed 10 Ensign rigs in the top 20 across the entire U.S. for outstanding performance metrics. Our international business unit was relatively calm through 2025, and then that changed quickly at the beginning of the year, more on that in a moment. Current operational update starting with Canada. Whilst industry was down 10% year-over-year in the first quarter '26, we peaked at peaked at 51 and enjoy 43 drilling rigs active today in Canada. As we head into breakup, we expect to run 20 or so rigs over breakup similar to the prior year. We are currently upgrading one of the high-spec singles we recently brought up from California and expect to have it contracted long term for rates in the mid-20s all in. That rig should be spudding its first well by the summer. The value proposition is still valid for the client as we continue to perform by improving drilling efficiency offsetting any rate increases. Also because the rig equipment is being run closer to its technical limits more and more, rate increases are quite justified to offset the higher operating costs. We see strong support for the high-spec triples in Canada, and they operate in the low 30s all in. We continue to see the Canadian market adapt our EDGE drilling rig automation more and more every quarter. This provides a high-margin bolt-on incremental revenue stream of anywhere from $1,000 to $2,600 a day across the high-spec triples generally, and now we are deploying on to our high-spec singles. We continue to address any upgrades that operators request by assisting the capital upgrade be paid for by the operator with a notional rate increase or we adjust the day rate incrementally in order to achieve a 1-year payout or less on the incremental capital with the incremental rate increase. In the U.S., we mentioned in our last quarterly call, our rigs continue to drill more footage per day, albeit we are finding that the double-digit rig efficiency gains in years past has slowed into the single digits as we get closer to the technical limits of the rig equipment. This is good news and an indication that we are at or near a trough. Operators now focus on continued duplication of their best wells. Again, we mentioned on our last call, our position hasn't changed. Most operators are starting to look at Tier 2 acreage as we move along into the future. We also saw the U.S. hit record oil production close to 14 million barrels per day. So with the technical limits of rigs establishing somewhat of a ceiling and with Tier 1 acreage diminishing, we will need to see rig count move up if we were to hang on 14 million barrels of oil production. Current oil prices certainly helped us construct. So in the U.S. today, we have 38 high-spec Ensign rigs, mostly high-spec triples out of our fleet of 70 high-spec ADRs operating across the U.S. from California to the Rockies and down into the Permian. Our busiest operating area is, of course, in the Permian, where we run roughly 26 rigs daily and which we own 9% of that market share. We continue to increase our market share in the U.S., the result of our high-performance rigs and crews in concert with our EDGE drilling solutions technology. We saw our California business unit almost double its rig count in 2025 from 5 to 8, and we expect that we will stay at that level through 2026. Our directional drilling business unit, which is essentially a mud motor rental business that utilizes proprietary technology continues to provide some of the best motors with high-quality rebuilds and the longest runs in the Rockies. We're expecting that '26 to be very similar to '25 there. On the international front, we have a fleet of 25 high-spec rigs that operate in 6 different countries around -- sorry, outside of North America, of which 13 of those 25 are active today. At this point in time, our 7 Middle East rigs are still operating under either standby with freeze or on full operational rate. This is, of course, a day-to-day situation, which may change at any point in time. The area is what we call on yellow alert with safety of the personnel and security of the assets most important. In Kuwait, we have been successful in contract extensions on both 3,000-horsepower ADRs, taking us out into mid-2026. We started back in Venezuela and now have both rigs operating. The only 2 drilling rigs operating in Venezuela, I will point out. As you know, there is no lack of excitement in Venezuela these days, and we'll see how this area develops. In any case, Ensign has a product to fill operators' demands, and we have the on-the-ground experience that very few have in the area, thanks to our strong Venezuelan team. In Argentina, we have both our ADR 2,000 horsepower super-spec triples under contract with demand possible for additional rigs in the area. In Oman, the 2 rigs we have undergoing extensive upgrades are on budget on time with the first rig now operational and the second rig planned for April commissioning. This will add to the 3 ADRs currently under contract in Oman and bring us to 5 rigs active in the country once the last rig is commissioned. The current Middle East situation will, of course, create possible delays in the commissioning of the fifth rig in Oman, notwithstanding the general concerns in the Middle East region today. In Australia, we have 4 rigs active going to 5 by the summer and with strong bid activity, which we feel will take us to 6 rigs by year-end. Moving to well servicing. Back in North America, we have a fleet of 85 well service rigs in North America, 38 in Canada, of which we operate 15 to 20 on any given day, plus we have 47 well service rigs, primarily in the Rockies and California where we operate with high utilization rates consistently. Our U.S. well servicing business unit, which is, again, focused primarily in the Rockies in California, has come out of the gate stronger than last year and is expecting a stronger year than 2025. Our Canadian business unit focuses primarily on the heavy oil market and has been very steady with rates increasing basically in line with cost inflation protecting margins. Moving to the technology side, our EDGE AutoPilot drilling rig control system. In 2025, we increased our EDGE autopilot installs by 15% and now have our EDGE AutoPilot systems on 60% of our rigs globally. Our EDGE drilling rig controls product line continues to expand with increasing adoption of products like our ADS, automated drill system, which we doubled the number of rigs we have deployed this technology in the 2025 year. In the last call, we reported that we successfully beta tested our Ensign EDGE ATC auto toolface control in conjunction with the DGS. This paves the way for seamless control of automated directional drilling for those operators who utilize remote operating centers and utilize in-house DGS systems, direction and guidance systems. I'm happy to report that we are now fully commercial with our EDGE ATC and are charging that out on 5 rigs today. We have also initiated the development of an Ensign EDGE state-of-the-art DGS, directional guidance system. With the help of AI, our development team was able to develop a DGS ready for beta testing in less than a year and for a fraction of the cost of other DGS developments. Happy to report that we're now beta testing this on our super-spec -- one of our super-spec ADR 1500s in the U.S. With this, we'll be able to provide a complete and comprehensive drilling control system offering all the bells and whistles. With that, I'll point the call back to the operator for questions. Operator: [Operator Instructions] Your first question comes from the line of Keith MacKey from RBC Capital Markets. Keith MacKey: Maybe just to start off, Bob, if you ask me where will oil be in 1 year from now? If you asked me that about a year ago, I would have said not -- I wouldn't have said $90. But at the same time, we're hearing from most E&P operators in the U.S. and Canada that it's not necessarily going to affect the activity levels with prices even being where they are. So question for you is, what's your view on that? How long do you think it takes of high prices before we start to see an activity improvement in the U.S. based on the oil price spike that we've been seeing of late? Robert Geddes: Yes. Well, I agree with your summary there, basically that oil companies will be takers of this blip in oil pricing. I don't think it will affect activity too much if it -- but I would suggest though that if it continues for 6 months, I think it will start to attract capital, and people will go after more drilling. That's been the plan. But the question is, as you point out, I mean, last week, would I have thought oil would be $90 today? No. But -- so that's our sense on it. Short term, I see very little impact. But if it stays for 6 months, I think there's enough capital going after it that will make a good return that people will start to drill more for sure. Keith MacKey: Yes. Got it. And what about pricing? Like maybe activity doesn't change in the next couple of months, but does it give you and your competitors a bit more of a leg to stand on when you go to renew contracts now that customers have healthier cash flows? Like do you think this is at least positive for pricing? Or is it neutral for pricing, would you say? Robert Geddes: Well, I'd say it's -- our pricing is always dictated by the supply of drilling rigs. And -- but there's no question, as we're getting more calls and getting more bids, we tend to bid up. So we'll see. We'll see, yes. Keith MacKey: Got it. Okay. And just one more for me on Venezuela. Certainly, you're the only ones kind of working there now with the 2 rigs running. Can you just give us a bit of a summary on the state of the environment there with respect to the rigs that you have there, how many rigs you have, how many could work, what types of bidding or at least inquiries that you're getting now? And what's your sense of how many rigs competitors might have on the ground as well? Robert Geddes: Yes. Well, that's a big question. Just to unpack that a little bit. We've got 2 drilling rigs that have been active. I mean they're great rigs. I've been down there recently. There are, of course, over the last 5 years, a lot of the U.S. competitors have disappeared and chased away or whatever, and there hasn't been much activity. So the rigs that are on the ground are not in very good shape in any shape at all outside of the rigs that we have running. We've got kind of 3 rigs, 2 drilling rigs and kind of a deeper workover rig in the country. But we've got -- or not properly, we've got assets that we can deploy from the U.S. that can meet the needs, and we're under current conversation with some clients on that. Keith MacKey: Got it. Do you have an estimate of how many rigs you think could be deployable from the U.S. to Argentina in your fleet? Or is it too early... Robert Geddes: Venezuela? Venezuela or Argentina. Venezuela? Keith MacKey: Yes. Robert Geddes: Yes. It's -- we -- well, let's put it this way. We've got capacity. We could send 10 if we needed to. But it's -- I think Venezuela develops slowly. There's a lot going on, but it's very active. A lot of OFAC licenses have been granted to various operators, and they've been in touch. But I think it develops slowly. It's a tough place to do business as one can imagine. But right now, it seems to be a little bit of a party compared to what's going on in the Middle East. Operator: Your next question comes from the line of Aaron MacNeil from TD Cowen. Aaron MacNeil: Just more of a clarification one on the Kuwait rigs that are rolling off contract mid this year. Is this something that you reasonably expect to get renewed again once the contracts expire? Or at this point, are you trying to find sort of new homes for them? Robert Geddes: Yes. The operator has provided some indication that they might have another well behind each one of these rigs. And it's typically how they move along. They'll get close to 60 days from when the rig is going to be complete and they find another well. That's how we've been operating in the last year or 2. So they provided some indication, but we don't know with everything happening in the Middle East, everything is happening here. Aaron MacNeil: Got you. And then we saw Tourmaline cut capital earlier this week, not materially, but ARC also recently removed Attachie Phase 2 from their long-term plans. How are you thinking about sort of that deep basin and liquids-rich Montney outlook in Canada, maybe starting to see some cracks in the armor given gas prices? Like any updated views there? Robert Geddes: Yes, good question. Yes, gas prices are not helping. I got to think that liquids pricing has got to be helping. But yes, I'm not too surprised. This is the -- the dilemma Canada has, of course, is takeaway capacity, and that's another conversation. But yes, we are victims of gas prices for sure. Aaron MacNeil: Fair enough. And then maybe I'll sneak one more in to build on Keith's question. In the event that you would mobilize rigs to Venezuela, what's the rig spec that makes sense for the market? And how would you think about sort of staffing and sort of other sort of soft issues in... Robert Geddes: Yes. Well, yes, we've been in Venezuela over 25 years. Almost all of our people in Venezuela are Venezuelans. There are some people coming back. We've got a strong franchise there. The type of rigs depends on the area where we operate. They're typically 1,000, 1,500 horsepower type rigs, mostly 1,500. That's kind of the rig for the Orinoco Belt. Operator: Your next question comes from the line of Josef Schachter from Schachter Energy Research. Josef Schachter: First one on the debt side. You knocked down $100 million to that $918.6 million. How should we be looking at debt going forward? You mentioned that in the commentary that the $600 million target should be reached during 2026 first half. If you go back -- if we go back to periods when you had $80, $90 oil, let's say, post war, [ 28 ], [ 29 ], and we get there, in 2012, you had EBITDA of $561 million. In 2014, you had $537 million. If you look at and say something like you do have EBITDA [ 28 ], [ 29 ] of $500 million, would your target be to get to 1:1 debt to EBITDA? Robert Geddes: Mike? Michael Gray: Yes. I mean, ideally, that [ 1 ], [ 1.5 ] is really the target. So yes, I think once we kind of get to that, then conversations would start to change. But yes, that would be the target that we'd be looking at. Josef Schachter: So about $100 million a year then for debt reduction is still something to keep in mind for models? Michael Gray: Yes, for sure. We're still laser-focused on the debt reduction. Josef Schachter: Super. At what point would you be starting to look at increasing the amount of NCIB versus debt reduction? Is there a number that you need to reach $700 million? Is there some number out there that you need before you could start looking at the mix of allocation of capital funds flow? Michael Gray: There's a minimum liquidity on the credit facility that we have that we'd have to meet first, then we probably -- like I said the conversations at the Board level would need to take place on what would happen. But like I said the next year or 2 years are really focused on continued debt reduction. Josef Schachter: Okay. Last one for me. Given we're seeing insurance companies pulling insurance coverage for shipping, is there any concern about your rigs in the Middle East, given they're in the zone of drone attacks that insurance is -- could be an issue or the cost could get up to the point where putting the rigs in the field doesn't make sense? Robert Geddes: Yes. We've got -- we're not going to -- we don't talk in detail about our insurance programs, but we do have insurance. We're -- we've been operating in the Middle East for long periods of time, and have good protocol on keeping most importantly, personnel safe and then equipment. Where we're at in Oman and Kuwait, there's been a little bit of action, but not much. We're basically both green in that area. Bahrain or what we call yellow alert. But the rigs are -- in Oman and Kuwait are still drilling and in Bahrain, we're on basically standby with crews. So -- and it's changing every day. So tomorrow may be a different story. Operator: Your next question comes from the line of Tim Monachello from ATB. Tim Monachello: I just wanted to start, I guess, with margins. They came in a little bit above my model. And I was thinking perhaps this might be an impact of either rig mix and business mix, but maybe also just the impact of adding some of these EDGE automation systems to the fleet over time. Do you have an expectation for what the margin lift could be in sort of an otherwise flat environment for pricing just based on those EDGE automation systems and other technology additions? Robert Geddes: Yes. We've got -- I mean, we're building our EDGE rollout at about 15% per year. We have about 60% of our fleet today that is active. We have [ 100 to 160 ] rigs. So we're adding about 10 per year with anywhere between $1,000 to $1,500 a day on average. And it's all margin. It's all margin. So you can build that into the model pretty quickly there. Tim Monachello: Okay. That's helpful. And then -- most of my questions have been answered. But I guess I want to dive in a little bit into what's going on in California. It sounds like there's at least some rumblings of more oil and gas friendly policies being pushed in California. Are you seeing any changes to, I guess, your customers' expectations or activity levels or expectations for what their activity levels will be going forward in California? Robert Geddes: A little bit, yes. I mean we -- we basically are running 8 rigs now. We're down to about 4 or 5 there at the beginning of '25. So it is changing. It's opening up a little bit, and I'll say that tongue in cheek for California, but they're starting to realize that they do need a little bit more oil and gas. So operators that are in the area are able to get some permits that are allowing them to get after some drilling along with some P&A activities, which we benefit from in our service rigs. We also run a bunch of service rigs in California. We're the biggest -- one of the biggest in California as well on the service rig side, the biggest on the drilling side. So yes, it's California, but it is a little more happy face than sad face, I'd say. Tim Monachello: Okay. Do you think you'll see stronger activity levels in California on average in '26 than '25 or at least... Robert Geddes: I think we stay steady -- yes, I think we stay steady at 8 through '26 is my thinking. Tim Monachello: Okay. And then Ensign has historically been a little bit underrepresented in gas basins in the U.S. Are you making any progress in moving into gas basins or getting more activity levels in the Haynesville or talking to customers in that basin? Robert Geddes: Yes. Yes. We're seeing some bids coming out into the Haynesville, the Eagle Ford. We've got a few idle rigs that can take those bids. But yes, it's slowly moving for sure. I mean gas prices down there a little different up here, right? Tim Monachello: Okay. And then just in terms of Venezuela and the prospect of perhaps moving some idle equipment into the region for the next few years. I guess, what type of contract structures would you require for that? And what type of assurances would you be looking for to be able to deploy incremental capital or equipment into that region? Robert Geddes: Yes. Well, it's -- Venezuela is still a risky market. Let's -- it's been derisked to some extent, but it's still a risky market. We would look for long-term contracts of at least 3 years to 5 years and with some coverage on getting us in and getting us out. We work in U.S. dollars in Venezuela, obviously. And that's about all I want to disclose, but we've been working there for 25 years. So we know how to run the business there and the commercial side of it well. Operator: [Operator Instructions] Our next question comes from the line of Parvin Mamedov from Equinox. Parvin Mamedov: Congrats on the release. I had 2 [ assigned ] questions. So if I look at the international rigs that you have, I think it's around like low teens and then half of it is in the Middle East. Should I think about in terms of revenue also roughly similar breakdown, 50% of international revenues are in the Middle East and the rest is split between other markets? Robert Geddes: Mike, do you want to handle that one? Michael Gray: Yes, that would be appropriate. I said that would be appropriate. Parvin Mamedov: Okay. So sorry, I didn't hear that. And in terms of the CapEx, I expected lower growth CapEx considering that it is -- a big chunk of it was customer paid, but I don't really understand where that number shows up. How should I think about the customer paid portion of the CapEx? Do you -- is it already netted out of the growth CapEx number? Or are you going to get it this year? Like where does it show up in financials? Michael Gray: It show up through the revenue line over the course of the contract. So that CapEx is the growth CapEx number. And then the customer funded one, depending on structure of the contract will flow through revenue. Operator: Your next question comes from the line of John Daniel from Daniel Energy Partners. John Daniel: I just have 2 quick ones on Venezuela. Can you speak to just the AR collections over the last couple of years? And then has anything changed post Maduro leaving? That's the first question. And then the second would be, would you be more likely in terms of faster incremental deployments of equipment down there? Would it be workover rigs or drilling rigs? Just your thoughts. Robert Geddes: Yes. Well, let's answer the last one first, drilling rigs. In our perspective, there's some local workover rigs that I suspect the local companies will jump on to because lower capital required, less complex equipment. As far as the commercial side, since Maduro left, nothing has changed as far as our relationship with our client and how we're getting paid. And we'll see how it evolves. We've got a pretty good contract structure that we've been using for a period of time that is within the OFAC restrictions. So yes, Maduro leaving hasn't changed anything other than it appears to have more blue sky ahead of Venezuela. But on a day-to-day basis, there's not much change. Operator: There are no further questions at this time. I will now turn the call back to Mr. Bob Geddes, President and COO. Please continue. Robert Geddes: Thank you. Well, the outlook for the drilling industry remains constructive, supported by obvious stronger commodity prices and the ongoing need for reliable global energy. At the same time, the sector continues to operate within a volatile macroeconomic and geopolitical backdrop. That's obviously an understatement today. In this environment, operators will remain focused on efficiency, capital discipline, high-performance drilling contractors like Ensign, whom also have a global footprint and are capable of delivering fast, safer and more cost-effective wells on a consistent basis. We will stay active well into the future. And with that, I'll close off, and we'll look forward to our next call in 3 months. Thank you. Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.
Operator: Good morning, ladies and gentlemen. Welcome to Central Puerto's Fourth Quarter of 2025 Earnings Conference Call. A slide presentation is accompanying today's webcast and will be also available on the Investors section of the company's website, centralpuerto.com/en/investors. [Operator Instructions] Please note, this event is being recorded. If you do not have a copy of the press release, please refer to the Investor Relations Support section on the company's corporate website at www.centralpuerto.com. In addition, a replay of today's call will be available in upcoming days by accessing the webcast link at the same section of the Central Puerto's website. Our host today will be Mr. Fernando Bonnet, Central Puerto's CEO; Mr. Enrique Terraneo, the company's CFO; Mrs. Maria Laura Feller, Head of Investor Relations; and Mr. Alejandro Diaz Lopez, Head of Corporate Finance. Maria Laura, please go ahead. Maria Feller: Good morning, everyone, and thank you for joining us. We will walk you through Central Puerto's fourth quarter and full year 2025 results, discuss key operational and market developments and then open the line for questions. Before we begin, please note that my remarks may include forward-looking statements and references to non-IFRS measures, such as adjusted EBITDA. These statements are subject to risks and uncertainties, and actual results may differ materially. Definitions and reconciliations are available in our 4Q '25 earnings presentation and financial statements. Revenues for 2025 reached $782.8 million, up 17% year-over-year. 4Q '25 revenues were $172.8 million, decreasing 26% quarter-on-quarter and increasing 3% year-on-year. 2025 adjusted EBITDA was $337.2 million, an increase of 17% year-over-year. And 4Q '25 adjusted EBITDA was $84.7 million, down 16% quarter-on-quarter and up 30% year-on-year. Total generation for the year was 18.6 terawatt hour, down 14% year-over-year, largely reflecting historically low hydrology at Piedra del Aguila. And also in 2025, we undertook nonrecurring maintenance works in Central Costanera combined cycles and Lujan de Cuyo generation asset. Regarding business performance, 2025 marked a pivotal year of consistent growth and market normalization. The company strengthened its strategic positioning and reinforced its power generation asset portfolio for long-term value creation. Throughout 2025, Argentina's wholesale market -- power market advanced toward normalization. Since November 1, Resolution 400 has supported U.S. dollars-denominated spot prices and recognized a margin over variable costs. In December 2025, 97% of our revenues were denominated in U.S. dollars and we also progressed in the new thermal term market, signing around 11% of total volumes in the contracted market with approximately 900 megawatt hour delivered to industrial customers during November and December. Our CapEx plan in 2025 included fully executed projects over the year and additional projects that allow us to look forward and continue delivering growth. In 2025, our total CapEx was $202.4 million, consisting of concluding with 2024 projects such as the closing of the Brigadier Lopez combined cycle that achieved commercial operation during 1Q '26, and we concluded also the San Carlos solar farm project, our first solar greenfield project. The asset reached commercial operation in November 2025, adding 15 megawatts of renewable capacity to our portfolio. Together with Cafayate, our two 2025 solar projects doubled our installed solar capacity and increased our total renewable portfolio by 20%. Also, in 2025, we extended Piedra del Aguila concession. The company was awarded the concession under the Comahue Hydroelectric Complex privatization process, extending the operation -- the operating term of the Piedra del Aguila hydroelectric facility through 2055. Winning bid offer was $245 million paid in January 2026. The company is also focused on the battery energy storage system projects, looking forward to add 205 megawatts of new technology in 2027. Our growth plan is [ backed ] by our financial strength, flexibility and low leverage ratio. In December 2025, net leverage ratio was 0.3x annual adjusted EBITDA, which positions us well to add new financial debt to finance Piedra del Aguila concession extension and the fee payment and the battery energy storage system projects. 2025 revenues stood at $782.6 million, 17% above 2024 revenues despite the 14% decrease in generation volumes. Spot revenues growth in 2025 reflects additional revenues from the realignment of the spot price over the year and the Resolution 400 since November 2025. Also, we see the effect of the self-procured fuel oil with the associated cost pass-through in revenues. Offsets came from lower water inflows from Piedra del Aguila and the maintenance works in Central Costanera combined cycles. PPA sales growth include new MAT contracts in November and December 2025, including also cost of fuels incorporated in the energy component. Renewable revenues increased by 3% as wind farm volumes increased 5% due to higher wind resources and the full contribution from Cafayate solar plant since the end of August 2025. Full year 2025 EBITDA reached $337.2 million, a 17% increase year-on-year, primarily driven by revenue growth and the market normalization and higher margins from self-procured fuels, which added approximately $8 million. In 2025, total generation reached 18.6 terawatt hours, representing 14% decrease compared to 2024. Central Costanera's generation volumes decreased by 15% year-over-year, primarily due to maintenance work in both Mitsubishi and Siemens combined cycle during 2025. Second, Piedra del Aguila generated 38% less than in 2024, mainly due to historically low water inflows affecting hydro production. Finally, Lujan de Cuyo was 24% lower year-on-year, largely explained by maintenance works in the co-generation asset in the fourth quarter. Moving to installed capacity, our portfolio reached 6,938 megawatt hours in 2025, representing an increase of 234 megawatt hours compared to 2024. The increase was driven by several developments. Brigadier Lopez combined cycle was completed and the San Carlos solar project added 15 megawatts of solar capacity. Together with Cafayate solar farm acquired in August 2025, these two solar projects contributed by 20% of the renewal capacity additions during the year. Regarding market position, Central Puerto maintained its market leadership, reaching 14% market share of total SADI generation. Finally, looking at operational performance, our thermal fleet continued to show solid availability levels. In 2025, total thermal availability reached 77%, while combined cycle availability stood at 89%, reflecting strong operational reliability. During 2025, three thermal and renewable projects were completed, combining greenfield developments and M&A transactions, further expanding our generation portfolio. First, the Cafayate solar farm, which was acquired through an M&A transaction is already in operations. Second, we finalized Brigadier Lopez combined cycle project, which is also already in operation since January 2026. Third, the San Carlos solar farm also entering in operations in November 2025. In addition, we were awarded two battery energy storage system projects, which were granted in August 2025. These projects are currently under development and are expected to begin operations during the first half of 2027. Finally, an important milestone regarding the Piedra del Aguila hydroelectric plant was that Central Puerto successfully secured a 30-year concession extension for the plant through the privatization tender process. The concession fee payment was successfully completed in January 2026, marking another key step in strengthening our long-term asset base. In 2025, the Argentine power system reached a new record for the demand with a peak of 30,257 megawatts on February 10, 2025. Renewable generation rose 16.5% year-over-year and supplied about 19% of total demand, including hydro renewables representing roughly 39% of the total annual energy mix. Thermal fuel consumption declined 2.6% year-over-year with gas oil down 53% and fuel oil 60%, partially offset by 1.2% increase in natural gas and 5.2% increase in coal. As of December 31, outstanding financial debt was $337.8 million and net leverage ratio stood at 0.3x adjusted EBITDA. On December 19, we signed a $300 million syndicate A/B loan with IFC with an average life of 5 years to fund Piedra del Aguila concession fee and Central Puerto's BESS project. Also, our outstanding FONINVEMEM receivable credit was $118 million as of year-end. Overall, 2025 was a year of solid growth and continued progress as the market normalized. During the year, the company kept expanding and strengthening its generation portfolio to support long-term development. Looking ahead, we will focus on three priorities: discipline contracting commercialization, operational excellence and advancing our growth agenda. Fernando Bonnet: 2025 was a pivotal year for Central Puerto, marked by Piedra del Aguila concession extension by 30 years more, portfolio expansion, market normalization and strategic progress across our assets. We enter 2026 from a position of strength with robust liquidity and resilient business model. Thank you for your continued confidence in Central Puerto. Please let's stay connect. And now we will open the line for questions. Operator: [Operator Instructions] Our first question comes from Martin Arancet with Balanz. Martin Arancet: I have three. I would like to run them one by one, if that's okay. First, I was wondering if you could give us some color on why the decrease in the quarter-over-quarter EBITDA given that the market liberalization should have been at least positive for thermal exposed to the spot market. Fernando Bonnet: Martin, thank you for your question and your interest in Central Puerto. The main topic affected the 4Q 2025 is that we have a strong maintenance in our combined -- Central Puerto combined cycle and Mendoza combined cycles, the two of our biggest combined cycles. And because of that, we don't catch in those units, the benefits of the new regulation scheme. But it's only regarding to that. The rest of the equipment was okay and the new regulation is in place. So we expect that will be recovered in the first quarter 2025 -- '26, sorry. Martin Arancet: Okay. And sorry for this follow-up because probably you already disclosed this, but are those plants already working again? Fernando Bonnet: Yes, yes, yes, they start working at the end of December and the other one early January. So we don't expect additional maintenance for those units until 2027, '28. Martin Arancet: Okay. Then regarding one of your main focus for 2026, I was wondering how much of the thermal capacity that was under the legacy scheme do you think can compete for energy PPAs? How much of that do you already have contracted? And how do you see the market for signing the rest of the energy that you have? I don't know if you are seeing much interest. I don't know if you have discussed this with distribution companies. And if you expect probably a stronger interest for industrial consumers as we approach the winter where you have higher seasonal prices? Fernando Bonnet: Well, in terms of our capacity, we are -- we can contract, as you know, 20% of our combined cycles that are the spot legacy scheme. That is around 2 gigawatts, the whole combined cycle. So it's the 20% of that with the private customers, with big industries. And then this -- and we are doing around that 20% yet. During January, February and March, we're going to cover that capacity contracted. For -- to exceed that, we need to go to -- as you mentioned, we need to go to the distribution companies. And that is coming slower. The distribution companies need to discuss with the regulators -- each regulator because it's not only federal, it has local regulators in each provinces. And this is coming slowly because they need to discuss and receive a pass-through possibility in order to make the pass-through to the demand. So by now, we are entering with not a lot -- we are not doing a lot of transaction with distribution companies. Right now, we are, of course, in discussions. We are having advances, but we are not closing big deals yet. We expect that it could happen -- start happening during this year. Martin Arancet: Okay. Right. So do you think that to sign contract with distribution companies, you probably will require I don't know, some backup from CAMMESA or something like that, like it happened with the battery project? Fernando Bonnet: No, no, no, no. We -- of course, we're going to make our credit analysis, and we're going to pick the distribution companies that we think that they are suitable to giving credit, but we don't request additional CAMMESA backup. Talking about, as I mentioned, legacy energy selling because this is month on month, and we can cut the provision if they doesn't pay. So -- but talking about other projects like new generation or perhaps, [indiscernible] this is different. This will be different. Martin Arancet: Okay. And my last question then regarding the other main focus that you will have for 2026. I was wondering where do you see growth opportunities coming this year and probably also the next year? Because it seems that there is not enough incentives yet to add thermal capacity. Now with the thermal capacity competing also for PPAs with renewables, we have seen lower [ tenures ] in new PPAs and at slightly lower prices. So I don't know if adding more battery is now the best idea. And there has been a lot of comments regarding probably new renewable capacity for mining and oil and gas, but it doesn't appear to have materialized yet. So I was wondering where do you see the growth opportunities coming in the near term? Fernando Bonnet: Okay. Well, first of all, we have right now an auction in place for new battery storage system for the other provinces than Buenos Aires that was -- that we get awarded last year. So we are looking spots over the interior in different province Santa Fe, Mendoza, [ Corrientes ], Cordoba, there are opportunities there. This new auction is in place and will be -- have the due date in May this year. So this is an opportunity of expansion that we're going to look at. As you mentioned, in terms of renewables, right now, it's getting difficult to get new PPAs with existing demand. So we are looking for new demand. Now the existing one, as you mentioned, mining companies are one of them. Oil and gas companies are other possibilities, companies that needs -- perhaps gain efficiency in the product in their processes, like introducing steam, perhaps we can work on co-generations there. And looking forward for perhaps in the middle of this year or perhaps in the third quarter of an auction for new capacity that need to be set for cover some areas, specific areas like specifically Buenos Aires area. And I see there are opportunities, not -- as you mentioned, not trying to catch the existing demand with renewable because, as you mentioned, it's been challenging right now because the thermal are entering in the market and are stressing prices. Also, the hydros are entering the market and put some pressure there also. But I see opportunities, as I mentioned, in storage system capacity, in new demand coming from new players in the market like mining companies and a possibility in capacity -- new thermal capacity coming in some auction during this year. Martin Arancet: Okay. Great. So this thermal auction that you mentioned, something similar to the Terconf that got canceled? Fernando Bonnet: Well, it's not completely established by the government yet, but we have talking with them that could be something similar, but with different perhaps approach to the to the demand. So something like receiving a payment for capacity from CAMMESA. But well, it's something that are under discussion right now. Operator: We are going to go now for the question with Lucas Lombardo with BACS. Lucas Lombardo: I want to know the percentage of new term contract that -- the income from -- for the company. Fernando Bonnet: Okay. I think you are referring to how much of the 20% that we can sell to private consumers we reach. That is the question. Lucas Lombardo: Yes. Fernando Bonnet: Yes. We expect during March to cover all those 20%. Operator: Our next question comes from Matias Cattaruzzi with Adcap. Matias Cattaruzzi: I wanted to ask first about the outlook for 2026 and the -- how do you see volumes coming for next year, especially hydro volumes? And then how do you expect the PPA versus spot mix to be in next year regarding the new regulation? Do you expect PPAs to grow more in generation? Fernando Bonnet: Okay. Thank you. Talking about volumes for Piedra del Aguila specifically, the hydrological year starts on May. So it's difficult today to say that we're going to see better inflows than the previous year. Of course, the previous year was a low year, so in our expectations are to be better than that. But to have a clear view, we need perhaps 2 more months in order to see how the year comes. In terms of the thermal generation, we expect an increase because, as I mentioned before, two of our combined cycles were in maintenance during the whole month of December and the other one was in maintenance the whole month of September. So we don't see those maintenance in 2026. So we expect an increase of our thermal generation also. In terms of new PPAs coming, we -- as I mentioned, we are trying to catch additional demand from the distribution companies. This will unlock the possibility to sell the legacy energy above the 20% that we have already granted -- so we expect to have news on that this year. It's difficult to predict, as I mentioned before, it's difficult to predict the volume that we can reach there because the distribution companies are discussing with the regulators, the feasibility of make that pass-through directly to the demand and the terms of that pass-through. So right now, it's difficult to forecast the potential there, but we see potential. So I think we can catch more than the 20% that we are already selling, and we can go over that going to distribution companies. Matias Cattaruzzi: Great. And then do you intend to participate in the upcoming tender for national batteries? Fernando Bonnet: Yes, we are looking at, yes. Yes. We are looking at -- of course, it's different from the participation that we have in the last year because we are looking in places different for our facilities in -- the ones that we awarded last year, we established inside our facilities and it's convenient or very convenient for us. And right now, this new auction is all over the country. So we are looking at places. And the new reality in the battery storage system prices because the lithium goes up, the copper, all the materials the batteries used. So -- and the price according to the last auction. So we are looking at returns on that places that are outside from the -- our facilities -- are far from our facilities is not the same. So we are looking at, but we need to do more work in order to understand if something suitable for us or not. Matias Cattaruzzi: Great. Do you expect to participate in the upcoming privatizations by ENARSA assets? Fernando Bonnet: Yes. Yes, we are looking at. We don't have the mandate yet to move forward, but we are looking at. Matias Cattaruzzi: Great. And do you have any updates on the OpenAI-Sur Energy project? Fernando Bonnet: No, we have discussion with them. After that we award Piedra del Aguila that was very important for them that we have a huge hydro backup in us to give power to them. That was a great news for them. We discussed with them that, but we don't have a clear timing on any additional news coming from that place. Matias Cattaruzzi: Great. And last, can you give us like an EBITDA bridge for upcoming years until 2028? Fernando Bonnet: Well, I can give you some perhaps information regarding 2026. 2028 is, of course, need to -- we will expect to maintain that, but talking about increasing will be challenging regarding the expansion, as I mentioned, of new PPAs and how we're going to do in terms of the new coming auctions. But talking about 2026, we have some certainties that can share with you and the rest of the listeners. One important thing or the biggest improvement that we are seeing for 2026 and onwards is that the PPA, the Brigadier Lopez closing combined cycle PPA going to bring additional $60 million for our EBITDA. The other improvement, as we talked in the previous calls, the new regulation for spot market bring another between $70 million and $80 for our EBITDA. Piedra del Aguila also have an improvement compared to the old regime that compared to this new concession will bring additional $15 million. And if you perform the full year of the renewables that we acquired and build last year, this will add additionally $8 million and -- between $8 million and $10 million more. So [indiscernible] terms will be an improvement of $150 million, $160 million. Matias Cattaruzzi: Great. And I have two more questions. One is if you expect distributing dividends in 2026? Yes. And the second one would be more operational. With the upcoming IP for the Perito Moreno pipeline expansion, do you expect that your plants in the central area would get some more upside with lower costs due to lower gas prices because of the expansion of the [indiscernible] Perito Moreno? Fernando Bonnet: Okay. In terms of dividend, that is something that we'll be discussing by the Board of Directors. Right now, we have no guidance regarding to that, specifically because, as I mentioned, we have different projects under our pipeline, and we are performing some projects right now. So this is something that Board will be -- discuss in the next coming month. Talking about the TGS pipeline, we are -- we don't see a reduction on prices because the gas prices are set right now by the plant gas contracts that CAMMESA and the government signed during the former administration. So we received these prices -- or these prices are fixed until the end of 2028 when those contracts get to the end. So we don't see big reduction on prices until this plant gas goes to the end. In terms of the capacity or the transportation capacity of the TGS, we are analyzing the convenience or not to acquire that capacity. The problem is that going further in a big 10 or -- contract is like 15 -- of course, you can do less, but normally it will be 15 years of contract, is not fully discussed the regulation scheme in which we can recover this additional cost because this additional transportation will have an incremental cost related to what -- one that we are paying now. So it's not clear for us yet the new regulation scheme that will be available or the regulation scheme that will be available to recover that incremental cost. So right now, we are looking at, but we don't have a decision yet. Matias Cattaruzzi: Great. But wouldn't it be better for gas prices in the winter? Wouldn't you need less liquids or gasoline or fuel oil? Fernando Bonnet: Yes. The problem is to get here to our terminals, you do not only need the TGS expansion, you will need distribution here and the distribution in Buenos Aires area are very constrained. So we don't see a full elimination of diesel and LNG during winters for a while. Of course, will be a reduction because the TGS will inject here and also have some volumes that could go to the north. But we'll see a reduction, but not a full elimination of diesel and LNG. Operator: This concludes our Q&A session. I would like to turn the conference back over to Mr. Fernando Bonnet for any closing remarks. Fernando Bonnet: Well, thank you for your interest in Central Puerto. I will encourage you to ask any questions to our team that you may have. Thank you very much, and have a good day. Operator: This concludes today's presentation. You may now disconnect, and have a good day.
Eduardo De Nardi Ros: [Audio Gap] Webcast for our results, the fourth Q for this year. It's a pleasure to be with you. This event will be presented in Portuguese with simultaneous translation into English. And the links to both languages can be found on our website, the Investor Relations website. I'd also like to say that all participants will be able to watch the broadcast online as listeners. And after the introduction, there will be a Q&A session as usual and you can send your questions to our e-mail. With us today, we have Magda Chambriard the President of Petrobras, Álvaro Tupiassu, the President of Gas and Energy on behalf of Angelica Laureano, our Executive Director of Energy Transition and Sustainability; Clarice Coppetti, Executive Director of Corporate Subjects, Claudio Schlosser, Director of Logistics. Fernando Melgarejo, the Financial Executive Director of Investor Relationships, Renata Baruzzi, Director of Engineering, Technology and Innovation and Ricardo Wagner, Director of Governance and Compliance; Sylvia Anjos, Executive Director of Exploration and Production; and William França, Director of Industrial Processes and Products. So now I will give the floor to our President, Magda Chambriard for her initial considerations. Magda de Regina Chambriard: Ladies and gentlemen, good morning. It's a pleasure to be with you to present our results for 2025. And for the fourth Q of the same year. We are extremely proud of our results, and that's why I say, and I repeat that if you place your bets against Petrobras, you're going to lose and we keep saying that. Having said that, let's now start up by saying that at 2025, as you saw, was an unprecedented year in terms of the production growth in Petrobras. As you could see, over the course of the quarters, there was a constant increase in production, which is the result of a technical, secure, well-executed job done by our teams which work in an absolutely integrated manner, guaranteeing efficiency and the best possible use of our ore in our facilities of, our beds in our facilities. First, I'd like to remind you that the brand did not help us. The oil prices had -- they plummeted, but it was the growth of our production. That allowed us to mitigate this drop in production. That was a big drop in the oil prices, but we delivered an additional 11% in terms of production in 2025 when compared to 2024, achieving and surpassing our goals has been a constant thing in the company. In terms of refining capacity, platform production and oil exploration goals or goals around the allocation of new products to new markets. So I want to highlight a few of our records. The Buzios field platforms surpassed the operated production milestone of 1 million barrels per day in October 2025. And therefore, it's a goal that was surpassed before the deadline, the Atapu, and Sépia fields also reached 1 million barrels per day, and we are proud to say that this happened on December 31, 2025, showing that the Petrobras team is heads on 24/7. We're repeating into in Atapu, and Sépia, the historical milestone we reached in 2019. When it comes to nonrenewable energy, we should pay attention to this field, it was a declining field, a huge field that have been declining since 2019 that was able to go back to production levels making Petrobras proud to have 2 oil fields that produce more than 1 million barrels per day in the pre-salt sector and more oil means more cash flow, more investment capacity, more taxes and more dividends. We are proud of having surpassed these goals. We've been working hard to achieve them and to surpass other goals, and we'll move forward, accelerating deliveries whenever we have the opportunity with a full focus on safety, operational excellence and capital discipline. A recent example of this efficient approach was the conclusion, the completion of the anchoring of P-79. P-79 was the latest platform to arrive in Brazil in the last few days of this year. And after arriving, it was anchored and a record-breaking period of 12 days with 26 anchoring systems connected once again proving that we operate with excellence, planning, integration across the teams in everything we do. P-79 is already moored. And soon, it will start to operate. If we look at 2025, I need to highlight that we delivered our facilities before the deadlines. We delivered the contracts for refineries below the intended price and with that, we've been -- every day, we've been producing more. We've been producing better with fewer resources. And this is Petrobras' constant search for excellence. We used to say that tomorrow needs to be better than today. And today, undoubtedly has been better than yesterday. We also had great news about our oil and gas reserves. In 2025, we incorporated 1.7 billion oil barrels, which allowed us to achieve the highest number of proven reserves at the company for the last 10 years. We're proud of this milestone especially because last year, we achieved a record-breaking production levels, record-breaking exporting levels. And nonetheless, we guarantee a record-breaking level of reserve replacement. Our reserve replacement level and our generation of proven reserves and production have been much higher than those of our peers across the industry. In 2025, as I said, in terms of oil exportation -- exporting, it was 675,000 barrels exported per day in a year. In the last quarter of the year, the average was of almost 1 million barrels per day, which is the result of our logistic efficiency in relieving our platforms and a continuous work towards developing new markets. When I referred to almost 1 million barrels exported in the fourth quarter of 2025. I'm proud to say that it was almost because it was 999,000 barrels per day. We almost hit the 1 million mark, developing new markets, logistic efficiency to allow for these exporting levels, new high-quality products sent to the market refineries achieving a utilization factor of 92% with almost 70% of the production being comprised by diesel gasoline and QAV, which are our highest added value by products, which contributed hugely to value generation and to our sales. You can see that in spite of the drop in the oil prices, we delivered robust results with the production -- with the drop in production mitigated by the increased production and by the excellent performance of our refineries and by the expansion of the markets that our most valuable products. As I said, we sold 1,747,000 barrels per day worth of byproducts in the internal market, 1.43% higher than the same year -- the same period of the previous year, and that was fostered by gasoline and QAV that accounted for 74% of our sales. The sales of QAV aviation fuel saw an increase of 6% in the year, reaching the best performance level of the last 6 years. We keep on expanding the S10 diesel production, a high value-added diesel, and we've been advancing in the production of renewable content fuels. Our diesel containing 5% to 10% of renewable content is a reality that's being increasingly accepted by our market. We started by producing a sustainable aviation fuel SAF at the Duque de Caixas and Henrique Lage Refinery. At President Bernandes, we started the contracts for the construction of this first plant dedicated to the production of SAF and green diesel. In addition to that, we, for the first time, delivered in 2025, a bunker with renewable content to the Asian market. I've had the possibility to tell you that in the previous quarter, but we're making good money by offering bunker or navigation fuel with a 24% content of renewable fuel in the Asian market. It's a good amount of money with all of the batches having been sold quickly at high levels. In the gas market, we also had great news. The second module of the Boaventura Complex unit for processing natural gas started to operate last year, increasing the total processing capacity of the unit to 21 million cubic meters per day. We reached the milestone of 6.6 million cubic meters per day in terms of gas volume contracted in the inflexible modality. This is what a free market looks like, doubling the client database of Petrobras while still keeping our excellent service levels. This means that Brazilian companies keep on believing and betting that Petrobras is their main natural gas provider in Brazil. We will still have big growth opportunities with value generation moving forward. We've been able to combine a high-quality portfolio with high returns with an administration strategy based on discipline and capital increased operational efficiency. Petrobras is imbued with a strong purpose, which is to make this company increasingly bigger, growing along with Brazil, delivering to a Brazilian society and its investors, be they state-owned or private, the best the company has to offer. We are building a company that is profitable, increasingly diversified and prepared to lead a just energy transition as well as prepared to fight the volatility of such an unstable oil market as the one that we are now facing, generating return for our shareholders and wealth and development for Brazil. I want to thank you all for your trust, and I reiterate that Petrobras' commitment is towards an even better future for the company and for Brazil. Before wrapping up, I want to say it again, if you place your bets against Petrobras, you're certainly going to lose. I'm proud to say that. Thank you for your presence. And now I'll give the floor to our CFO, Fernando Melgarejo, who will have the honor to disclose on our behalf the financial results, which we're all very proud of. Thank you. Fernando Melgarejo: Thank you, Magda, for your introduction. I want to greet all of the directors and everybody that's watching us on this webcast, which discloses the results of the fourth Q of 2025 and the yearend closing for 2025. As President Magda said, we had an unprecedented growth in the oil and gas production in the company, which reinforces the quality of our assets as well as our capacity to have a strong cash flow generation even in face of challenging scenarios. Let's see how this reflected in our financial results in the next slide. First, let's talk about the external environment. The average Brent in 2025 was $69 per barrel, a 14% drop compared to 2024 and well below our expectations. These are factors that, by their nature, are outside of our control. What we can and should manage is our resilience in the most diverse scenarios. For that, we demonstrated the company's management capacity to extract the maximum potential from our assets. Later, we'll talk about the management levers and projects that boosted production. Our adjusted EBITDA reached $42.5 billion without considering exclusive events. The amount is $43.8 billion, which is in line with the previous year. Net income reached $19.6 billion without exclusive events, it's at $18.1 billion. Here, we left out gains from exchange rate variations and other factors that do not have a cash effect. In other quarters, exchange rate variation negatively impacted the balance sheet. This time, the impact was positive on the corporate result, reflecting the appreciation of the real against the dollar. Finally, in terms of operating cash flow, even though we are facing a scenario of a plummet in the Brent, we generated $36 billion in operating cash during the year, maintaining the results at the same level as last year, challenged by a 14% drop in Brent, which demonstrates that our result is robust, sustained by quality assets with high returns and rapid cash generation. This slide shows how we delivered these results even though there was this drop in Brent. In 2025, we recorded a growth in the sales of derivatives in the domestic market of totaling 1.7 million barrels per day. I wish to highlight the 5.2% increase in diesel sales, a result that reinforces our competitiveness and capacity to meet the demand of the Brazilian market with profitability. We achieved a refinery utilization factor of 91% with 68% of the production being comprised of higher value-added derivatives such as diesel, gasoline and QAV. Another important aspect is that 70% of the oil processed in our refineries came from the pre-salt, which contributed to the generation of higher value derivatives, reduction of emissions and to our logistical optimization. This result is aligned with our commitment to sustainability and environmental responsibility. A key factor for the offsetting Brent falls is what we achieved in 2025. We exceeded our target. So we have an x-ray of this 11% increase of our production in 2025 and the new production of the pre-salt had a vital role in these results. Buzios still delivers more than expected with productivity levels that are very high. In October 2025, [indiscernible] platforms reached a record of 1 million barrels of oil a day. In the Tamandaré, as you know, is now the platform with the highest production in Brazil with over [ 240,000 ] barrels a day. The platform reached a record of instant flow rate of 270,000 barrels a day. We have no records of a similar level -- production level worldwide. In Mero, we hit another record, [ 650,000 ] barrels, and we increased our operating efficiency everywhere between 2024 and 2025, we reached an increase in efficiency of about 4 percentage points, and this represents additional production of 100,000 barrels of oil a day. This efficiency gains is equivalent to a startup of a new production like the Maria Quiteria and the Jubarte oil field. In other words, we're delivering a new platform -- production platform with just this efficiency increase. So that means more oil with the same assets. And with that result, we want more. We are committed to doing more with less. So -- and that is for everyone here, all the officers here, our employees. That's why we have programs for operating efficiency and also to reduce losses that can be avoided. This shows our teams have reached a new efficient operating efficiency level at Petrobras. Next, please. From the beginning of our management, we have put efforts into changing the behavior of what was found in our investment in the previous years. Until 2023, we invested about 70% of our CapEx. And now recently changed in 2024 and 2025, our focus was on a profitable production increase. Our investment impacts much more than the deliveries of 2025. And that means our long-term commitment. For example, the tie-in of 77 oil wells. That was a historical milestone before the top number was 57. So we over -- more than doubled what we had before. We also reduced the risk of delays and increased the likelihood of anticipation, and this is something we've already discussed before about anticipations and forecast of anticipations. This is crucial for us to reach our production growth on our business plan. Next, please. This is why 84% of our investment was allocated in exploration and production, as we can see. So 11% in RTM and 2% in low carbon energy. In other words, [ $17 billion ] in E&P with the best portfolio in the world. We'd also like to stress that the cost of our execution projects are in -- we're in control of that. We should know that all these anticipation of projects that is something we always work for. We've always avoided as we can see on the table, a full life CapEx of our current business plan projects are slightly lower than the same period in 2025,'29. Next, on this slide, we have great news that we announced at the beginning of the year about our reserves. We added [ 1.7 billion ] additional reserve barrels, and that led us to have the highest reserves volume in the last 10 years. So -- and that's between December 21, 2025. And the replacement rate was 175%, even considering a record production in 2025. And the ratio between probable reserve and the production is below -- above what we expect, above what our peers are. So we have low cost, and this will be our -- remain our priority. Between December -- on December 31, 2025, we had $69.8 billion that our gross debt. We should highlight that over 60% of our debt, in fact, 62% comes from leasing, the platforms also ships and probes that's part of our debt. In 2025, the Almirante Tamandare recorded $2.6 billion in debt and the Alexandre de Gusmao, another $0.4 billion -- sorry, $1.1 billion. So on our webcast, we should remind you that these new leasing installments lead to production-generating assets. In other words, it generates income. The 2 additional platforms added 270,000 barrels a day in capacity only for Petrobras. When you look at our financial debt, we're still working on our debt management. Along 2025, we want the lowest debt profile. And I'd also like to highlight very successful market -- capital market operations that took place in December with our bonds that became more attractive and also liability management operations in quarter 4 with some pre-banking prepayments in banking. So we had reductions in our debt from 2025 to 2026 and our -- next, please. This quarter, the Board of Directors approved a detailed report for the payout of BRL 8.1 billion, BRL 0.62 per share that were paid in 2 similar installments in May and June. This strategy is to generate value and to conciliate investment in high-yield projects. And then we can remunerate shareholders in a competitive fashion. With regard to what Petrobras is giving back to society, it cannot be held in a single slide. Everything that is produced in this company, every platform, refinery, power plant, laboratory for every social project generates consequences for many layers of society. We want a short summary that can cascade down our Brazilian economy. So we start with investment. In 2025, as we mentioned, we invested over [ $20 billion ], increasing -- an increase of 22% with regard to 2024. We're committed to speeding up everything that we can to generate return to our investors and to society. This investment led to over 300 jobs -- 300,000 jobs. That's about 5% of Brazilian investment. Another example is BRL 277 billion. That's what we paid, including tax royalties and special interest to government, state and local governments. We also distributed BRL 45 billion in dividends, BRL 17.6 billion for the controlling group, and we also allocated BRL 2 billion approximately in social environmental investments, sponsorships and donations. These are some examples of our multiplying effect in Brazil. Finally, I'd now like to stress that we have high-quality projects that will deliver growth -- both growth and profitability. The entire Brazilian society as well as our shareholders will enjoy long term with all these benefits. I'd also like to stress that we focus on executing our business plan from 2026 to '30. We have 3 fronts. First, capital discipline; number two, greater production; and number three, higher efficiency levels. This is what we will keep seeking throughout 2026. We want results and also economic development for this country. So this is the end of my presentation. Thank you. So all the top management is here, all the directors, officers are here to answer your questions. Eduardo? Eduardo De Nardi Ros: Thank you, Magda and Fernando. We will now start our Q&A session. The first question comes from Rodolfo De Angele of JPMorgan. Rodolfo De Angele: So I think every analyst is entitled to a single question. I'd like to discuss some of your, earnings in further detail of quarter four. But as I cannot, I cannot ask a long question, I'll just ask about your current scenario. In other words, what's going on in the oil and gas industry, considering the conflict in the Middle East. We've had questions by our clients on how the situation is, especially with regard to fuel. So how is Petrobras preparing to work in this moment of uncertainty and also highly volatile prices? So now I'd like to hear from you, from Petrobras' top management, how you see your supply situation. Do you have any prospects, any strategy about prices? Can you give us your views? Is there anything going on in exports? Is it possible to increase the use of refineries in the short run? So these are some of my concerns that I can ask of you, especially short-term concerns. Magda de Regina Chambriard: Thank you. I'll start by answering the question, and then I'll ask the other officers to also give their answers in refining and finance. Yes, undoubtedly, this is a high geopolitical instability. So at this moment, we want to make sure that the company is ready for any situation, anything that may happen. So if it's USD 85 per barrel, we need to be prepared. If it's USD 55, we need to be equally prepared. I'd just like to remind you that we started last year with an oil price that was higher than $80, and we finished the year with less than $60, so that was $59. And the company delivered its results and showed that it has remained resilient and faced this price variation accordingly. At the beginning of the year, this volatility was again very high as a result of the war. But we still keep or stick to our internal policy, which remains solid. We looked at the oil and derivative pricing without transferring this volatility to the Brazilian domestic market. And this is something we've been doing several times. Last year, we delivered a great result in terms of prices. So when Petrobras looks at international qualities and the appreciation of its products and also considering its own space, in other words, how it is in the Brazilian market. This is not a concern anymore. This is an equivocal I've had many similar questions this week. So this was okay when the price of oil decreased. Will this also work when prices increase exponentially as we see it now? Yes, it will. We have no price -- internal policy of price fluctuations. There's no discussions on this matter. As for routes, we will have an explanation in further details in a minute, but we really need to keep exporting what we need to export our refinery or import what we need importing our refineries still have a growing processing capacity. Our manager, William -- Officer William will talk about that. And our cash is still on our focus. We're really concerned about ensuring that this company remains resilient, that we respect our capital discipline and that we reduce costs. We're talking about $85. A few years ago, it was $59. And now those that mentioned $55 next year. So we are indeed working hard and checking all these variables, and we want to ensure that the company remains absolutely prepared to face any scenarios that might come up along 2026 and 2027. I'll now give the floor to another director. And the second one will be [ Fernando ] who will talk about the performance of our refineries. I'd also like to remind you that when it comes to exploration production and connection between oil wells, we are ensuring increasingly greater production and our target is to have increasingly more oil wells and also to optimize our -- the production and extraction of our deposits. Everyone is working hard and together to deliver these results. So can you explain a little more about this global market, Schlosser? Claudio Schlosser: Yes. Thank you, President Mrs. President. Yes, the company has this strategic plan. So we are indeed prepared for a Brent range that is quite wide when you consider the short -- and that in the long term. Now in the short run, our situation is highly unexpected. I think we've never had such a scenario. So the regions that export 16 million in oil and an additional 5 million in petroleum products, this region will be closed. Of course, this has a huge impact. We take snapshots at different times, 10 days ago, for instance, what people said, they were talking about $50 a barrel or a surplus of 4 million or 5 million barrels available. So -- and then it all changed. So we have different focuses at different points. There are also consequences to this. When we have, for example, Brent. So the first is when you no longer have this production of oil and petroleum products. It's as though the market froze. Oil was not being paid, and we have 2 or 3 days without oil trading. That was the initial impact. So we know that we know how that works and the market is now expected to change prices or adapt to the new pricing. We have many ships that were trapped. There's also a set of ships that are unloading, so shipping -- or freight values are now adjusting. So in the short run, let's look at our snapshot again. Our current snapshot is when -- as for our oils is that this means a favorable netback to Petrobras. So we have greater margins. So when it comes to oil, I would also add the fact that the markets that we supply, they're outside of the conflict region. We're not in the Gulf region or any other region where there's a conflict. All of our flows go towards India, Europe and other areas. So we're outside of this area, which is a good position for the company. If you look at the oil, we're looking at a more interesting netback for the company in terms of shipping. If you compare Petrobras with other companies in the world when it comes to freight, Petrobras is also in a privileged position. If you look at the international market, the companies are more or less working with 5% of their own fleets and 95% with other contracts. And Petrobras is with a -- in a much better position in oil exploration, we have more than 30% of rate allocated to long-term contracts, which is also an advantage and the market average doesn't even reach 10%. So we're very well positioned in that regard. So for -- that's what I would have to say about the -- about oil. When it comes to refined products, Petrobras is having no difficulty meeting its goals. We work with an optimized business plan. We optimize all of our assets, and we have very robust assets for that, be they terminals, refineries, pipelines. So we optimize that, and we optimize the more attractive export -- importing products. And we've been able to meet our goals and the imports are in line with our plans. In gas, we -- in gasoline, we are exporting it. In LNG, we are also exporting it. We talk to the market, and there's a relevant level of importing being carried out by distributors. And the vessels that were coming towards Brazil are still coming to Brazil. And we'll get here. If you look at the entire scenario, the business plan of Petrobras and the other players is in line with our previous plans. I'd also like to say that when it comes to supply, in terms of supply, Petrobras is committed to its clients. In Brazil, Petrobras is not the only player in the supply side. We have other relevant players in Brazil. So this is our perspective when it comes to products and refined products. The long-term perspective, as I said, is well covered by the strategic planning and the short-term view has to be done on a snapshot-by-snapshot basis. Every day is a different day. We do a constant assessment and obviously, we make use of the best netback opportunities, be they related to oil exporting or more profitable imports. So this is -- these are the details of the short-term planning. We covered basically everything along with our President. In terms of refining, we're already using the logistic planning for the first Q. And the idea is that we ended the year with 91% of foot in FUT and we'll close the first Q with 95% with a very good use of refined products. We have a few scheduled downtimes, especially in 4 refineries this year and replan will be revamped and expanded, but with the monitoring of the units, we are able, if necessary, to extend the campaign period of refineries, increasing the production of the refined products. And if necessary, we're also going to do that. So we're working in a synergy with the logistics and commercialization area. And as we said, we've had an increase in the utilization factor, which is very good. It's a benchmark from a global perspective. I would say the biggest reference is strategic planning. There are no changes in that regard. We are seeking efficiency, also reducing our balance Brent to $59, as we said. And all of these optimizations are being looked into by the directors, and they can be reverted into good operational results for the company. Well, I'm talking about pricing. The business strategy of Petrobras was created for times like these where there is a huge volatility as we are seeing in the market, a huge volatility coming from unexpected facts, and this is what it was created for. The business strategy of Petrobras provides this robustness to the company when it comes to conducting its business. Eduardo De Nardi Ros: Thank you, Magda, Fernando, Schlosser, Emilia. Before we take the next question. I forgot to say -- let's limit the number of questions to 1 question per analyst, please. Lilyanna Yang from HSBC. Lilyanna Yang: First, I want to congratulate you on the greater transparency of information. And my first -- my question is the oil price is much higher than the Brent that you have in your budget, the one that outlines the investment plans. If the oil prices are still high, like that. Can you tell us what is the priority allocation of the cash flow that would be generated in excess of the budget for the first half. Just to give you a hint of what I'm looking at is -- what are the investment projects out of the $10 billion that have not been approved or the ones that you said that you want to approve but the final investment decision could be postponed. What -- or which of these projects are in a more advanced approval stage and does that include Braskem, for instance? Magda de Regina Chambriard: Thank you for your question. Great to hear you again. Our priority is capital discipline as usual. We'll always be very careful in all of our decisions. It's something very recent. The entire world is still assessing its full effects. No one is fully clear as to what is going to happen, the new Brent price levels and/or even if that applies to the short or long term. What we've discussed before, including with you and your team, is that we always focus on the scheduled investments, both in terms of our base CapEx, our target CapEx and our CapEx under assessment. This is our focus. And obviously, if there is additional revenue, we'll take care of investments, then we'll take care of the debt. We want to converge to [ $65 billion ] in 5 years. And if there is a cash surplus, we will try to anticipate it according to our capital discipline that we've been discussing. So our rationale is still the same when it comes to elevated unnecessary cash levels. If we understand that our cash flow levels are too high, we would love to distribute extraordinary dividends as long as we're sure that there will be no impact on the financial ability of our declared projects based on our '26 to 2030 strategic plan. Eduardo De Nardi Ros: Now the next question comes from Bruno Montanari from Morgan Stanley. Bruno Montanari: Going back to the first subject about the prices, just to confirm, if I understand you correctly, it's very clear that the policy does not transfer volatility to the domestic market, but the President also said that it works in scenarios of high oil and low oil price scenarios. Since the Brent has reached levels above 90 today, for how long can the company maintain its unaltered prices before that starts harming its refining margin? In other words, should we always expect the refining margin to be positive in scenarios where this margin is challenged. Is this the moment where you make the decision to adjust the prices, assuming that the prices will remain like that for weeks or months? I'd just like to understand if that's the correct way to look at the policy. Magda de Regina Chambriard: Thank you for your question. I will start the answer and then Schlosser will help me with the rest of the answer. Your sentence says something interesting. If this assumption remains like this. So I think that right now, what we're asking ourselves is what's the trend -- what's the tendency? What will that look like a few days from now? Is that a momentary spike? Have we changed our rules unnecessarily? Or is that a more persistent change that has to be faced? I would say that as of now, this question remains unanswered. But if this volatility is really this high and if the price ascent is really that high, it will certainly require quicker responses than it would require if this scent were slower. But as you said yourself, as of now, we are not sure about anything. let alone this about this assumption. Claudio Schlosser: Thank you. I think I agree with you. As you said very well, it's part of Petrobras' strategy to be the customers' best alternative. And we're constantly analyzing the international market prices, and we have to look at our position. Our exploration and production has been producing oil significantly. There has been an increase in refineries. As William said, our performance is world-class. And the main principle is not to transfer volatility. In the past, for instance, readjustments were happening on a daily basis. If anything happened in the market, that would get immediately transferred to the market, but that does not work. It doesn't work for the company. It doesn't work for society in general. So basically, what we support in terms of commercial strategy is to guarantee that. And as the President put it very well, the thing is we're talking about snapshots. In 10 days, we're talking about a completely different scenario. We're talking about [ $1 billion ] in oil floating around the world. So as I said, the strategy was created to take these aspects into account. But evidently, as you said, another variable that's part of the business strategy is financeability, which is comprised in the strategy. It's analyzed on a daily basis from a technical standpoint, and that's how we position ourselves. If you ask me, we have not adjusted the diesel prices in 300 days, even though there is an environment that's full of conflicts around the world. So given that volatility, the most important factor here is time. Eduardo De Nardi Ros: Thank you, Magda and Schlosser. Bruno, thank you for your question. The next question comes from Bruno Amorim from Goldman Sachs. Bruno Amorim: Congratulations on the solid deliveries throughout the year, especially on the production side. My question is along the lines of production. I'd like to hear take on the optionalities for anticipations and the operations of platforms. Is there a possibility of advancing them to 2026. I mean, what are the conversations with suppliers like -- so that's a more encompassing question. If there is an anticipation being considered in terms of anticipating the operations of platforms. Renata Baruzzi: As we always say, we're always trying to anticipate. For 2026, we don't consider that any other anticipation is possible for the sail away of these platforms. The P-80 will sail away in August, P-82 in September and P-83 in February of next year. What we are looking at is the anticipation of ramp-up of P-78 and P-79. For P-78, I talked about -- we talked about the mooring record of P-79. But this week, we hit a record of the first injection of gas at P-78. The shortest time we reached with our own platforms had been with P-66 at 79 days. We were able to anticipate the injection by quite a bit, and that's fundamental in order for us to proceed with the other wells. We have one interconnected well to P-78 and by stabilizing the gas injection, we'll ask for approval for a second well and so on and so forth. So for 2026, our campaign is to accelerate the ramp-up of the current platforms. Eduardo De Nardi Ros: Thank you, Renata, and thank you, Bruno, for your question. Magda de Regina Chambriard: Give me one second, Eduardo. Just a reminder, Bruno, we are talking about 2 large platforms that will go into production in a scenario where we're able -- we've been able to significantly reduce the decline in the production of the large fields. So our reserves have allowed us to reduce the decline in production. And you've seen that if you look at the production numbers from last year, we're able to reduce the decline of our fields from 2024 until today from 12% to 4% per year. If we were at 12%, we would be adding platforms with no effects on production increase. So if we are better able to manage our fields and optimize our gas injection projects, as Renata said, our water injection projects, our complementary development projects and so on and so forth. If we do that, we're able to keep the fields with a minimum amount of decline so that the new platforms really lead to an increased production. So at 4% of decline per year, more or less in the pre-salt, 2 platforms of 180,000 each represent a significant production increase for 2026. In addition to the sale away of P80 in August. It should take it 2 to 3 months to arrive in Brazil. So in -- by November, it will be moored and that also ensures that by the beginning of 2027, we'll have additional support to our production. So we have 2 large platforms that will go into production this year, changing the production levels of Brazil and another 2 for the beginning of 2027, that will also go into production, also changing the production levels of Brazil in the beginning of 2027. Eduardo De Nardi Ros: Thank you, Magda. We will now go on to our next question. That's Monique Greco, Itaú BBA. Monique Greco: I'll resume your -- the topic of our trade strategy. So when you discussed how you're dealing with volatility in the short run, so it's really interesting to see how you can ensure greater allocation of your production. So my question is now a similar question to your commercial strategy. So how are you running your commercial strategy? Are you meeting every day? Are you evaluating it weekly, every 15 days? Can you tell me more about how you've been building this answer to a question that remains unanswered. So can you give me more details about this process in order to build, to design the structure that you need to have before you decide your next move? Claudio Schlosser: Monique, thank you for your question. I'll start by discussing our process, telling you about our process, what -- how the whole company is involved in the process. So as we said, our commercial strategy, it has this goal of being the best option for our clients. That's what we want to be. We have to have a strong position. That's what our commercial strategy aims at. So what do we do? We have our technical team working on this, our domestic market commercialization, our foreign market commercialization teams. These people, they talk daily. Every day, we write reports. So again, we have follow-up -- daily follow-up reports on Brent or even the exchange rate to the dollar of our petroleum products or derivatives. It's all part of what we call our alternative cost to our clients. This is a daily analysis and reports are written and forwarded to everyone to a group, a special group with a President and the commercialization of logistics and finance officers. So we get that information every day. And this is also something we do with our officers. Our top management analyzes the scenarios, moments of crisis. So we do this much more frequently. Last week, for instance, we had a discussion with the executive directors, about the scenario or the pricing scenario. So when we have more disruption in the horizon, that means more frequent meetings. And also everything is presented to the Board of Directors. Our Board of Directors is also aware of all the conditions and what is being done in our commercial strategy. So we have daily meetings. And even when the need arises, it can -- we have more participation from the executive suite and also even the Board of Directors. I don't know if I answered your question. Eduardo De Nardi Ros: Thank you for your question. Monique, thank you, Schlosser. Now Regis Cardoso, XP, you may proceed Regis. Regis Cardoso: I have a single question. So let me now discuss your current crisis situation. In the foreign market, we see limits shut-in oil production in the Middle East and crack spread of some products abroad. So my question is, in your physical operation per se in Petrobras in Brazil, what are the consequences? What are the effects that you feel in terms of LGP or the importing of liquefied gas? LNG or what you get from the oil that you are not getting from the Middle East, how will you adapt your refineries? In other words, physically speaking, how has your operation or how have the operations been affected or maybe gasoline is less critical, but tell me about your day-to-day operations and how you're adapting and how you believe this will change or evolve over time because I know that you also have some ways of absorbing that fluctuation, but how will happen with your stocks over time? Claudio Schlosser: Okay. I'll try to be less repetitive, and I'll focus on some other details. There are some operations like we import a very specific oil used for lubricants. The oil, we have that from the Red Sea. So we have a ship in the Red Sea and they get out from the other side. Saudi Arabia, for instance, they have 2 logistic systems. The prevailing system, they get out of the Hormuz, the Strait of Hormuz, but also from the Red Sea. That's an alternative route. In terms of inventory, in oil, we have a guaranteed provision. We have a significant supply of oil with a significant inventory. And [indiscernible], we have a very long-term contract with Saudi Arabia. So this type of oil is something that is -- that we can rely on. And our planning also includes an optimized scenario with the greatest profitability. When you look at our -- and yield, when you look at our progression linear models, we have the following more interesting imports, and we may change this every day if the situation changes dramatically. So we have many opportunities, many alternatives. And this is something we're checking every day. If a new opportunity arises in oil production or petroleum products, we will make the best of that and tap into that opportunity. So if you have ships, for instance, that are sent to the U.S., but then we have a new opportunity in Africa with a much greater cash netback. So that depends on what happens on different days. As for the supply and the planning of supply, we're talking in a short term -- from a short-term perspective. And we're looking at April, let's say, we're good. We have a good position -- market position. We have the imports coming from our distributors. So this is our current scenario. And the President -- our President has discussed widely about seeking operating excellence. So in 2025, we have an indicator that was planned and what was achieved. And this has been the best results we've ever had in Petrobras' history, considering what we plan to do, this is the best results we've ever had. So the difference between what we plan and what we achieved. This -- we've achieved the best results. And that's a very relevant indicator. It means that we are highly efficient, and that means a great result Eduardo De Nardi Ros: Next question, Tasso Vasconcellos, Tasso your question you may proceed. Tasso Vasconcellos: I'd like to explore a new topic, based on some news that we saw earlier. It's about your questions about IG4 and Braskem. So what are you expecting? What is the outcome of the discussion? Is there any time line? And in addition, how about the Braskem shareholders? Do you see the equalization of the debt at that company with some capital injection? Good Petrobras participate in that process of injecting capital in any way. So -- and if that is not possible, what are the other options you've been discussing? How could Petrobras contribute at some sort of a loan or any other possibility. And now one follow-up to this point, this discussion about extraordinary is this decision to be taken just by the end of the year? Or can that be evaluated throughout the year considering our current scenario. Magda de Regina Chambriard: Okay. I'll start the answer, and I'll turn it over for Fernando to continue. I think this is for -- is up to Fernando really to answer this question. Anyway, at Braskem, we have a corporate issue at state. What's going on? There's a related party, and we have a shareholders' agreement with them. So we in other words, our partner will have the preponderance of administration. In other words, if there's an agreement between the shareholder of Braskem with IG4 who represents the banks. So this is pending approval by the CADE committee. And this hasn't happened yet. And the latest news is that this would be postponed to a month. This space is absolutely necessary for us to have a new shareholders' agreement with IG4. In other words, we can better address the synergies with the Petrobras -- between Braskem and Petrobras. In other words, today, we know the synergies are not being used the way they should. Ultimately, Braskem is leaving money on the table as these synergies are not used with a company as large as Petrobras. We believe this will be sold in the next -- in the near future. And we will finally be able to enter into that new agreement with a new partner. And the point is to maximize the synergy between the Petrobras system and Braskem to benefit both Petrobras and Braskem in addition to our shareholders, whether government or private shareholders and Brazilian society at large. Can you continue on that Melgarejo? Fernando Melgarejo: Right. Well, still about Braskem, we should remember that with the -- in our government instances, we approved prevailing right. We're just giving up the right of first choice for everything we approved. So things -- if there's nothing new, things will be as it is. This has already been decided. And as the President said, petrochemistry is one of Petrobras' interest. We see synergies in that. So we are placing our chips on this project. But we cannot speak on behalf of the company if money will be invested or not from that company to Petrobras. So we will do everything that generates value to Petrobras' shareholders. This is the logic behind it all. But everything will be communicated in a timely manner as soon as CADE approves this -- these proposals are approved. And what we are having now is the shareholders' agreement. So we need to wait now for dividends. As for your question on dividends, when we were planning our strategy, it was and it still is, of course, so we need to be really careful about the foreign political situation, and they still have a perspective on our prices. So we considered this, and we have a basis CapEx, a target CapEx. In other words, we need to be flexible enough to add new projects, start working on new projects. In other words, our focus is on the execution of the projects we already have to begin with. And with a new Brent, nothing will change in the conduction of our projects, the Brent that we are testing. They're still at $50. This does not change. We need long-term resilience. That will not change in all our governance instances or levels. We also have greater return for any new investment. So we're trying to optimize or to achieve the greatest return on investment. And if it gets to $110, so we need to have the levels that we expect. And then we are also evaluating how feasible those projects are. That's a new governance level here. And then if they also see if there's a surplus in cash every quarter, this is calculated. And we not necessarily have payouts next month or in the next quarter or next year. It's too early to be able to state anything. If we have surplus cash, of course, we'd love to pay that out as long as it does not impact our long-term sustainability. But it's too early to say anything about that. And the practice of evaluating surplus as our strategic agenda is. This is the best thing Petrobras can do to discuss our extraordinary dividends. Eduardo De Nardi Ros: Thank you, Magda, Fernando and Tasso. Now the last question of our webcast by Gabriel Barra of Citi. Gabriel Coelho Barra: Well, my question is about this situation of higher oil prices and the equatorial margin. This is a very important topic in my opinion. There was the issue of the leaks that's already been solved. Now can you tell me about your time line in your exploration schedule. So when we have the first figures for the projects in the region? And can you -- also in a higher oil price scenario, can you -- and as Fernando mentioned, that won't change your long-term perspective much, I believe. Now do you -- are you considering any short-term hedging as we have a more stressed oil scenario. We don't talk much about hedging for Petrobras. Other companies do this more often. So maybe can you talk about all these points? Magda de Regina Chambriard: So I'll talk about the hedge. We have no hedge strategy being assessed. So far, we haven't had any strategies for hedging. And our opinion is that we shouldn't apply any hedging to the oil prices. That's a long-standing rationale that we still consider to be valid. The hedging cost nowadays would probably be a huge and to apply hedging to the amount of oil that we produce would be unfeasible. Talking about the equatorial margin, Sylvia? Sylvia Couto dos Anjos: Gabriel, about the equatorial margin, we can say that we made a great achievement, haven't obtained our license. We are now drilling. We've advanced. We are now introducing the -- implementing the BOP. And in very few days, we'll go back to production and we expect to reach the reservoir interval in the second quarter of 2026. When we acquired these blocks, we entered into a minimum exploration commitment. We have to drill this well plus another 7 to ensure that we're adequately exploring the region. Just to reiterate, the equatorial margin has a big potential. It's different from our other pre-salt fields. It's reservoirs are very similar to what we find in the -- such as basin in the post-salt. And we -- any assessment of what we're going to do is highly result dependent. So for this well, the results of a single well do not allow us to assess the exploration. President Magda, just to say that in the Campos Basin, we came to the first discovery after 9 wells. And here, we're going to assess the oil system, the results of well whether it produces oil or not, that does not indicate that we are performing an exploratory assessment. There is a huge potential the equatorial margin is not there by itself. It's aligned with major discoveries that were -- that occurred in Africa back in 2010 and 2012 and their equivalent to the discoveries of Guyana, our oil system will assess if this generator is equivalent to the La Luna generator of Venezuela and the efficiency of the oil system and if the migration generation were adequate so that we can achieve the accumulation that we expect to achieve. But the results only make sense after the discovery. And once the discovery occurs, the exploratory assessment and then only can we think about the production system that will be adequate. But let's root for this well, which is the world's most famous well. Everybody asked me about it. My -- even the janitor asked me what about ROL? So yes, that's a route for yet another discovery. Eduardo De Nardi Ros: Thank you, Sylvia and Fernando. Thank you, Barra, for your question. This is the end of our Q&A session. If you have any additional questions, please send them to our R&I team. We'll be happy to answer your questions. I will now give the floor to the Petrobras President, Magda Chambriard for her final comments about the 2025 results. Magda de Regina Chambriard: We are very proud of the results we're delivering. Petrobras is extremely proud of its integrated work and the delivery capacity of the Petrobras team. Over the course of 2025, we became Latin America's biggest company, which required a lot of work, a lot of efforts dedication and a lot of purpose to turn this company into Latin America's biggest company, we've been able to do that. So let's maintain our mission and purpose. The company is a strong cash generator. Our processes are solid. Our procedures have proven correct and effective, and this is what we're going to keep chasing. We are committed to providing the best possible production by our pre-salt giants. We've just made an important discovery in the Aram reservoir. It hasn't been tested yet, but we've seen a beautiful flame indicating that that's yet another pre-salt reservoir that's emerging with a beautiful flame produced by gas and condensate. Along 2025, we made 5 discoveries, not as big as the pre-salt. I would say that there are midsized discoveries that will require development efforts on our part. And we are considering all of them along with a complementary development project for 2P Buzios. And for the fields in general, both from the pre-salt and the Campos Basin with capital discipline and with the certainty that producing is not enough. We need to produce a value to our refineries and find the best possible markets for our products in the world. This is what we're doing, and that we'll keep on doing and this is how we should look at Petrobras and understand that this team is really committed to delivering what they promised. So let's keep doing this. Thank you very much. Eduardo De Nardi Ros: Thank you, Fernando. Any final words? Fernando Melgarejo: Well to wrap up. Thank you, Magda. Thanks, everybody. It's great to be with you, and to the investors, we are constantly available to ask to answer your questions over the phone or in person. As a take-home message, I want to say that a wrong strategy in a commodity company at a time of high volatility may bring about huge difficulties for the future of the company. That is why our Administration principles are based on 3 important pillars, regardless of the price of Brent, whether it's going up or down, which is capital discipline operational efficiency in all of our processes and the search for production increase. Eduardo De Nardi Ros: Thank you, Fernando. Once again, I thank you for your attention. This presentation will be available on our Investor Relations website soon, and the audio track will also be available to you. Thank you. Have a great day, and see you in the next webcast.
Operator: Good morning. My name is Carmen, and I will be your host today. Welcome to Canfor and Canfor Pulp's Fourth Quarter Analyst Call. [Operator Instructions] During this call, Canfor and Canfor Pulp's Chief Financial Officer will be referring to a slide presentation that is available in the Investor Relations section of the company's website. Also, the companies would like to point out that this call will include forward-looking statements. So please refer to the press releases for the associated risk for such statements. I would now like to turn the meeting over to Susan Yurkovich, Canfor Corporation's President and Chief Executive Officer. Please go ahead, Susan. Susan Yurkovich: Thank you, Carmen, and good morning, everyone. Thanks for joining the Canfor and Canfor Pulp Q4 2025 Results Conference Call. I'll kick off with a few comments this morning before I turn things over to Stephen MacKie, Canfor's Chief Operating Officer and the CEO of Canfor Pulp; and Pat Elliott, Chief Financial Officer of Canfor Corporation and Canfor Pulp. I'm also joined by Kevin Pankratz, our Senior Vice President of Sales and Marketing for Canfor; and Brian Yuen, Vice President of Sales and Marketing for Canfor Pulp, who will be available to take questions as well. Before discussing our fourth quarter results, I just want to highlight the significant transformation that Canfor has undertaken over the past several years. Our strategy is focused on strengthening our operating platform to reduce the impact of elevated duties, further diversify our asset base and product offering and improve our cost competitiveness. In that vein, since 2023, we've made the difficult but necessary decisions to close 9 high-cost sawmills, including 2 in 2025, with a total capacity of 2.3 billion board feet. At the same time, we've invested heavily in new facilities in the U.S. South, expanded our operations in Sweden and proactively managed our Canadian business in response to the challenges we are seeing accessing economic fiber in BC and elevated countervailing and antidumping duties as well as the more recent Section 232 tariffs. While 2025 was another challenging year, we have started to see the benefit of these strategic actions. And although the near-term uncertainty is likely to persist, Canfor is well positioned to navigate the challenging markets, supported by our high-quality globally diversified operating platform. Looking ahead, we continue to believe the medium- to long-term lumber demand fundamentals remain strong and the improvements to our asset base will enable us to capitalize on stronger market dynamics going forward. Finally, notwithstanding the current market uncertainty, we have maintained a strong balance sheet and have the flexibility to pursue strategic growth should the right opportunities present themselves, although we will continue to remain patient and disciplined in our approach. I'd now like to turn it over to Stephen to provide an overview of Canfor Pulp. Stephen MacKie: Thanks, Susan, and good morning, everyone. Canfor Pulp continues to be impacted by weak global pulp and paper markets with ongoing trade disputes and broader economic uncertainty contributing to elevated inventory levels and weak pricing through much of 2025 and continuing into 2026. Against a challenging market backdrop, we continue to focus on achieving targeted cost reductions and improving our operating performance. While we have made some progress on identified initiatives in recent months, weak market conditions continue to weigh on our financial results and available liquidity with results in the fourth quarter further impacted by scheduled maintenance downtime at Northwood. Notwithstanding the pending transaction with Canfor, Canfor Pulp's management team remains committed to mitigating the impact of global trade dynamics and economic uncertainty by closely managing factors within our control. This includes managing our balance sheet, preserving available liquidity and continually assessing our operating footprint based on our cost structure, the availability of economically viable fiber and market demand. I will now turn it over to Pat to provide an overview of our financial results. Patrick A. Elliott: Thanks, Steve, and good morning, everyone. In my comments this morning, I'll speak to our fourth quarter financial highlights, a summary of which is included in our overview slide presentation, as always, in the Investor Relations section of Canfor's website. Our lumber business generated an adjusted EBITDA loss of $8 million in the fourth quarter, $6 million lower than the prior quarter. These results continue to reflect weak lumber market conditions, particularly for Southern Yellow Pine as well as lower sales realizations in Canada following the introduction of Section 232 tariffs in the fourth quarter. Our European lumber business generated adjusted EBITDA of $42 million in 2025. However, weak demand and elevated log costs have contributed to losses in recent quarters. Given ongoing cost pressures in the region, we recorded a $214 million (sic) [ $250.6 million ] asset write-down and impairment charge in the fourth quarter, which has been excluded from our adjusted EBITDA. Looking ahead, we have started to see improvements in our underlying cost structure in Sweden and remain well positioned to navigate the current market challenges. While we expect European demand to remain relatively flat in the first quarter, constrained lumber supply across the region is anticipated to support higher pricing heading into the second quarter. In North America, industry-wide downtime in December has contributed to stronger lumber pricing to start the year, particularly for Southern Yellow Pine. Although near-term volatility is expected to persist, our lumber business is well positioned to navigate the current market dynamics, the transformation of our operating platform Susan previously mentioned. Turning to our pulp business. Canfor Pulp reported an adjusted EBITDA loss of $17 million in the fourth quarter, $14 million lower than the prior quarter, reflecting the ongoing impact of weak global markets as well as scheduled maintenance at Northwood. Canfor Pulp ended the quarter with net debt of $104 million and $40 million of available liquidity, while Canfor, excluding Canfor Pulp and the duty loan completed in 2024, ended the fourth quarter with net debt of approximately $226 million and available liquidity of $1.2 billion. Looking ahead to 2026, we anticipate capital spend of approximately $175 million in our lumber business with $35 million for Canfor Pulp, inclusive of capitalized maintenance. In addition, Canfor has also entered an agreement to acquire all of Canfor Pulp's issued and outstanding shares not already owned by the company and will receive the results of the shareholder vote later today. Following a write-down and impairment charge in the fourth quarter, it's highly probable that Canfor Pulp will reach its financial covenants in the first quarter, absent a successful transaction with Canfor. As Stephen mentioned, regardless of ownership structure, Canfor Pulp continues to review its underlying business as it looks to optimize and mitigate financial losses. Despite challenging market conditions and elevated capital spending in recent years, Canfor's balance sheet remains solid. With lower capital spending over the next several years, we believe our financial position provides flexibility to manage current market uncertainty and support potential strategic investments should the right opportunity arise. And with that, we are now ready to take questions from analysts. Operator: [Operator Instructions] For our first question that comes from the line of Ben Isaacson with Scotiabank. Ben Isaacson: Just a couple of questions. First one, Susan, for you. Just in the lumber market in North America overall, since the last conference call 3 months ago, have you seen an uptick in distressed assets and potential assets available for sale in the marketplace? And sorry, if not, are you surprised by that? Susan Yurkovich: Well, I think there's no question, Ben, that the elevated duties that we're all paying is -- it's a big challenge for every company. It's putting a lot of pressure on companies across the country as we -- because those are cash deposits. So we know that, that's a challenge. Have I done an inventory or have asked all of our competitors exactly what their position is? No, but I know it's a challenge for us, and it's a challenge for everybody across the business. Ben Isaacson: And then, Pat, for you, the $210 million in '26 CapEx guidance, I saw the split between lumber and pulp. But can you give a little bit more detail in terms of maintenance versus growth? Or maybe asking it in a different way, how much of that is discretionary? Patrick A. Elliott: Yes, Ben, thanks. I think we've already identified one project, the sawmill we bought in El Dorado, Arkansas, there's a rebuild going on there. There's a number of other sort of smaller discrete projects with -- I'd say about 40% of the budget is on the discretionary side. The remainder is maintenance. Ben Isaacson: Okay. And -- but on that discretionary, I mean, that seems quite committed. There's really not an opportunity for a pullback if markets deteriorate. Is that fair to say? Patrick A. Elliott: Well, look, there's always opportunity to do that. I think we're committed to doing it. The balance sheet supports it. It's strategic, particularly in Arkansas as it relates to our facility there at Urbana as well and the synergies that come with doing it and kind of having 2 mills in that region. So I think we are going to proceed with it, but that's more of a choice. Ben Isaacson: Understood. And then just final question is on the pulp inventory days of about 47, I think, you mentioned. Can you just give some historical context in terms of how much that has swung around in good times and bad? Patrick A. Elliott: Yes. So Ben, thanks for the question. I would say for sure, inventories on the softwood side are well above the balance range. And if you use historically, that range has been in the high 30s to mid-40s at most. So again, assuming that balance is in terms of a balanced supply-demand fundamental, 40 days, we've got about a week's worth of inventory overhang sitting in the producers' hands. And when you're talking about a 25 million tonne market, that's about 0.5 million tonnes in there. Operator: [Operator Instructions] Our next question comes from Hamir Patel with CIBC Capital Markets. I do not hear any audio from Mr. Patel. Susan Yurkovich: No, we can't hear him either. Operator: Well, at this time, there are no further questions. I will turn the call back to Susan Yurkovich for any closing comments. Please go ahead, Susan. Susan Yurkovich: Sure. Thanks, operator. And Hamir, if you're having trouble with your phone, maybe just give us a call, and we'll try and help you out there. Thanks very much for joining us on today's call, and we'll see you next quarter. Operator: Ladies and gentlemen, this concludes today's conference call. Thank you very much for your participation. You may now disconnect.
Operator: Good morning, ladies and gentlemen. Welcome to Central Puerto's Fourth Quarter of 2025 Earnings Conference Call. A slide presentation is accompanying today's webcast and will be also available on the Investors section of the company's website, centralpuerto.com/en/investors. [Operator Instructions] Please note, this event is being recorded. If you do not have a copy of the press release, please refer to the Investor Relations Support section on the company's corporate website at www.centralpuerto.com. In addition, a replay of today's call will be available in upcoming days by accessing the webcast link at the same section of the Central Puerto's website. Our host today will be Mr. Fernando Bonnet, Central Puerto's CEO; Mr. Enrique Terraneo, the company's CFO; Mrs. Maria Laura Feller, Head of Investor Relations; and Mr. Alejandro Diaz Lopez, Head of Corporate Finance. Maria Laura, please go ahead. Maria Feller: Good morning, everyone, and thank you for joining us. We will walk you through Central Puerto's fourth quarter and full year 2025 results, discuss key operational and market developments and then open the line for questions. Before we begin, please note that my remarks may include forward-looking statements and references to non-IFRS measures, such as adjusted EBITDA. These statements are subject to risks and uncertainties, and actual results may differ materially. Definitions and reconciliations are available in our 4Q '25 earnings presentation and financial statements. Revenues for 2025 reached $782.8 million, up 17% year-over-year. 4Q '25 revenues were $172.8 million, decreasing 26% quarter-on-quarter and increasing 3% year-on-year. 2025 adjusted EBITDA was $337.2 million, an increase of 17% year-over-year. And 4Q '25 adjusted EBITDA was $84.7 million, down 16% quarter-on-quarter and up 30% year-on-year. Total generation for the year was 18.6 terawatt hour, down 14% year-over-year, largely reflecting historically low hydrology at Piedra del Aguila. And also in 2025, we undertook nonrecurring maintenance works in Central Costanera combined cycles and Lujan de Cuyo generation asset. Regarding business performance, 2025 marked a pivotal year of consistent growth and market normalization. The company strengthened its strategic positioning and reinforced its power generation asset portfolio for long-term value creation. Throughout 2025, Argentina's wholesale market -- power market advanced toward normalization. Since November 1, Resolution 400 has supported U.S. dollars-denominated spot prices and recognized a margin over variable costs. In December 2025, 97% of our revenues were denominated in U.S. dollars and we also progressed in the new thermal term market, signing around 11% of total volumes in the contracted market with approximately 900 megawatt hour delivered to industrial customers during November and December. Our CapEx plan in 2025 included fully executed projects over the year and additional projects that allow us to look forward and continue delivering growth. In 2025, our total CapEx was $202.4 million, consisting of concluding with 2024 projects such as the closing of the Brigadier Lopez combined cycle that achieved commercial operation during 1Q '26, and we concluded also the San Carlos solar farm project, our first solar greenfield project. The asset reached commercial operation in November 2025, adding 15 megawatts of renewable capacity to our portfolio. Together with Cafayate, our two 2025 solar projects doubled our installed solar capacity and increased our total renewable portfolio by 20%. Also, in 2025, we extended Piedra del Aguila concession. The company was awarded the concession under the Comahue Hydroelectric Complex privatization process, extending the operation -- the operating term of the Piedra del Aguila hydroelectric facility through 2055. Winning bid offer was $245 million paid in January 2026. The company is also focused on the battery energy storage system projects, looking forward to add 205 megawatts of new technology in 2027. Our growth plan is [ backed ] by our financial strength, flexibility and low leverage ratio. In December 2025, net leverage ratio was 0.3x annual adjusted EBITDA, which positions us well to add new financial debt to finance Piedra del Aguila concession extension and the fee payment and the battery energy storage system projects. 2025 revenues stood at $782.6 million, 17% above 2024 revenues despite the 14% decrease in generation volumes. Spot revenues growth in 2025 reflects additional revenues from the realignment of the spot price over the year and the Resolution 400 since November 2025. Also, we see the effect of the self-procured fuel oil with the associated cost pass-through in revenues. Offsets came from lower water inflows from Piedra del Aguila and the maintenance works in Central Costanera combined cycles. PPA sales growth include new MAT contracts in November and December 2025, including also cost of fuels incorporated in the energy component. Renewable revenues increased by 3% as wind farm volumes increased 5% due to higher wind resources and the full contribution from Cafayate solar plant since the end of August 2025. Full year 2025 EBITDA reached $337.2 million, a 17% increase year-on-year, primarily driven by revenue growth and the market normalization and higher margins from self-procured fuels, which added approximately $8 million. In 2025, total generation reached 18.6 terawatt hours, representing 14% decrease compared to 2024. Central Costanera's generation volumes decreased by 15% year-over-year, primarily due to maintenance work in both Mitsubishi and Siemens combined cycle during 2025. Second, Piedra del Aguila generated 38% less than in 2024, mainly due to historically low water inflows affecting hydro production. Finally, Lujan de Cuyo was 24% lower year-on-year, largely explained by maintenance works in the co-generation asset in the fourth quarter. Moving to installed capacity, our portfolio reached 6,938 megawatt hours in 2025, representing an increase of 234 megawatt hours compared to 2024. The increase was driven by several developments. Brigadier Lopez combined cycle was completed and the San Carlos solar project added 15 megawatts of solar capacity. Together with Cafayate solar farm acquired in August 2025, these two solar projects contributed by 20% of the renewal capacity additions during the year. Regarding market position, Central Puerto maintained its market leadership, reaching 14% market share of total SADI generation. Finally, looking at operational performance, our thermal fleet continued to show solid availability levels. In 2025, total thermal availability reached 77%, while combined cycle availability stood at 89%, reflecting strong operational reliability. During 2025, three thermal and renewable projects were completed, combining greenfield developments and M&A transactions, further expanding our generation portfolio. First, the Cafayate solar farm, which was acquired through an M&A transaction is already in operations. Second, we finalized Brigadier Lopez combined cycle project, which is also already in operation since January 2026. Third, the San Carlos solar farm also entering in operations in November 2025. In addition, we were awarded two battery energy storage system projects, which were granted in August 2025. These projects are currently under development and are expected to begin operations during the first half of 2027. Finally, an important milestone regarding the Piedra del Aguila hydroelectric plant was that Central Puerto successfully secured a 30-year concession extension for the plant through the privatization tender process. The concession fee payment was successfully completed in January 2026, marking another key step in strengthening our long-term asset base. In 2025, the Argentine power system reached a new record for the demand with a peak of 30,257 megawatts on February 10, 2025. Renewable generation rose 16.5% year-over-year and supplied about 19% of total demand, including hydro renewables representing roughly 39% of the total annual energy mix. Thermal fuel consumption declined 2.6% year-over-year with gas oil down 53% and fuel oil 60%, partially offset by 1.2% increase in natural gas and 5.2% increase in coal. As of December 31, outstanding financial debt was $337.8 million and net leverage ratio stood at 0.3x adjusted EBITDA. On December 19, we signed a $300 million syndicate A/B loan with IFC with an average life of 5 years to fund Piedra del Aguila concession fee and Central Puerto's BESS project. Also, our outstanding FONINVEMEM receivable credit was $118 million as of year-end. Overall, 2025 was a year of solid growth and continued progress as the market normalized. During the year, the company kept expanding and strengthening its generation portfolio to support long-term development. Looking ahead, we will focus on three priorities: discipline contracting commercialization, operational excellence and advancing our growth agenda. Fernando Bonnet: 2025 was a pivotal year for Central Puerto, marked by Piedra del Aguila concession extension by 30 years more, portfolio expansion, market normalization and strategic progress across our assets. We enter 2026 from a position of strength with robust liquidity and resilient business model. Thank you for your continued confidence in Central Puerto. Please let's stay connect. And now we will open the line for questions. Operator: [Operator Instructions] Our first question comes from Martin Arancet with Balanz. Martin Arancet: I have three. I would like to run them one by one, if that's okay. First, I was wondering if you could give us some color on why the decrease in the quarter-over-quarter EBITDA given that the market liberalization should have been at least positive for thermal exposed to the spot market. Fernando Bonnet: Martin, thank you for your question and your interest in Central Puerto. The main topic affected the 4Q 2025 is that we have a strong maintenance in our combined -- Central Puerto combined cycle and Mendoza combined cycles, the two of our biggest combined cycles. And because of that, we don't catch in those units, the benefits of the new regulation scheme. But it's only regarding to that. The rest of the equipment was okay and the new regulation is in place. So we expect that will be recovered in the first quarter 2025 -- '26, sorry. Martin Arancet: Okay. And sorry for this follow-up because probably you already disclosed this, but are those plants already working again? Fernando Bonnet: Yes, yes, yes, they start working at the end of December and the other one early January. So we don't expect additional maintenance for those units until 2027, '28. Martin Arancet: Okay. Then regarding one of your main focus for 2026, I was wondering how much of the thermal capacity that was under the legacy scheme do you think can compete for energy PPAs? How much of that do you already have contracted? And how do you see the market for signing the rest of the energy that you have? I don't know if you are seeing much interest. I don't know if you have discussed this with distribution companies. And if you expect probably a stronger interest for industrial consumers as we approach the winter where you have higher seasonal prices? Fernando Bonnet: Well, in terms of our capacity, we are -- we can contract, as you know, 20% of our combined cycles that are the spot legacy scheme. That is around 2 gigawatts, the whole combined cycle. So it's the 20% of that with the private customers, with big industries. And then this -- and we are doing around that 20% yet. During January, February and March, we're going to cover that capacity contracted. For -- to exceed that, we need to go to -- as you mentioned, we need to go to the distribution companies. And that is coming slower. The distribution companies need to discuss with the regulators -- each regulator because it's not only federal, it has local regulators in each provinces. And this is coming slowly because they need to discuss and receive a pass-through possibility in order to make the pass-through to the demand. So by now, we are entering with not a lot -- we are not doing a lot of transaction with distribution companies. Right now, we are, of course, in discussions. We are having advances, but we are not closing big deals yet. We expect that it could happen -- start happening during this year. Martin Arancet: Okay. Right. So do you think that to sign contract with distribution companies, you probably will require I don't know, some backup from CAMMESA or something like that, like it happened with the battery project? Fernando Bonnet: No, no, no, no. We -- of course, we're going to make our credit analysis, and we're going to pick the distribution companies that we think that they are suitable to giving credit, but we don't request additional CAMMESA backup. Talking about, as I mentioned, legacy energy selling because this is month on month, and we can cut the provision if they doesn't pay. So -- but talking about other projects like new generation or perhaps, [indiscernible] this is different. This will be different. Martin Arancet: Okay. And my last question then regarding the other main focus that you will have for 2026. I was wondering where do you see growth opportunities coming this year and probably also the next year? Because it seems that there is not enough incentives yet to add thermal capacity. Now with the thermal capacity competing also for PPAs with renewables, we have seen lower [ tenures ] in new PPAs and at slightly lower prices. So I don't know if adding more battery is now the best idea. And there has been a lot of comments regarding probably new renewable capacity for mining and oil and gas, but it doesn't appear to have materialized yet. So I was wondering where do you see the growth opportunities coming in the near term? Fernando Bonnet: Okay. Well, first of all, we have right now an auction in place for new battery storage system for the other provinces than Buenos Aires that was -- that we get awarded last year. So we are looking spots over the interior in different province Santa Fe, Mendoza, [ Corrientes ], Cordoba, there are opportunities there. This new auction is in place and will be -- have the due date in May this year. So this is an opportunity of expansion that we're going to look at. As you mentioned, in terms of renewables, right now, it's getting difficult to get new PPAs with existing demand. So we are looking for new demand. Now the existing one, as you mentioned, mining companies are one of them. Oil and gas companies are other possibilities, companies that needs -- perhaps gain efficiency in the product in their processes, like introducing steam, perhaps we can work on co-generations there. And looking forward for perhaps in the middle of this year or perhaps in the third quarter of an auction for new capacity that need to be set for cover some areas, specific areas like specifically Buenos Aires area. And I see there are opportunities, not -- as you mentioned, not trying to catch the existing demand with renewable because, as you mentioned, it's been challenging right now because the thermal are entering in the market and are stressing prices. Also, the hydros are entering the market and put some pressure there also. But I see opportunities, as I mentioned, in storage system capacity, in new demand coming from new players in the market like mining companies and a possibility in capacity -- new thermal capacity coming in some auction during this year. Martin Arancet: Okay. Great. So this thermal auction that you mentioned, something similar to the Terconf that got canceled? Fernando Bonnet: Well, it's not completely established by the government yet, but we have talking with them that could be something similar, but with different perhaps approach to the to the demand. So something like receiving a payment for capacity from CAMMESA. But well, it's something that are under discussion right now. Operator: We are going to go now for the question with Lucas Lombardo with BACS. Lucas Lombardo: I want to know the percentage of new term contract that -- the income from -- for the company. Fernando Bonnet: Okay. I think you are referring to how much of the 20% that we can sell to private consumers we reach. That is the question. Lucas Lombardo: Yes. Fernando Bonnet: Yes. We expect during March to cover all those 20%. Operator: Our next question comes from Matias Cattaruzzi with Adcap. Matias Cattaruzzi: I wanted to ask first about the outlook for 2026 and the -- how do you see volumes coming for next year, especially hydro volumes? And then how do you expect the PPA versus spot mix to be in next year regarding the new regulation? Do you expect PPAs to grow more in generation? Fernando Bonnet: Okay. Thank you. Talking about volumes for Piedra del Aguila specifically, the hydrological year starts on May. So it's difficult today to say that we're going to see better inflows than the previous year. Of course, the previous year was a low year, so in our expectations are to be better than that. But to have a clear view, we need perhaps 2 more months in order to see how the year comes. In terms of the thermal generation, we expect an increase because, as I mentioned before, two of our combined cycles were in maintenance during the whole month of December and the other one was in maintenance the whole month of September. So we don't see those maintenance in 2026. So we expect an increase of our thermal generation also. In terms of new PPAs coming, we -- as I mentioned, we are trying to catch additional demand from the distribution companies. This will unlock the possibility to sell the legacy energy above the 20% that we have already granted -- so we expect to have news on that this year. It's difficult to predict, as I mentioned before, it's difficult to predict the volume that we can reach there because the distribution companies are discussing with the regulators, the feasibility of make that pass-through directly to the demand and the terms of that pass-through. So right now, it's difficult to forecast the potential there, but we see potential. So I think we can catch more than the 20% that we are already selling, and we can go over that going to distribution companies. Matias Cattaruzzi: Great. And then do you intend to participate in the upcoming tender for national batteries? Fernando Bonnet: Yes, we are looking at, yes. Yes. We are looking at -- of course, it's different from the participation that we have in the last year because we are looking in places different for our facilities in -- the ones that we awarded last year, we established inside our facilities and it's convenient or very convenient for us. And right now, this new auction is all over the country. So we are looking at places. And the new reality in the battery storage system prices because the lithium goes up, the copper, all the materials the batteries used. So -- and the price according to the last auction. So we are looking at returns on that places that are outside from the -- our facilities -- are far from our facilities is not the same. So we are looking at, but we need to do more work in order to understand if something suitable for us or not. Matias Cattaruzzi: Great. Do you expect to participate in the upcoming privatizations by ENARSA assets? Fernando Bonnet: Yes. Yes, we are looking at. We don't have the mandate yet to move forward, but we are looking at. Matias Cattaruzzi: Great. And do you have any updates on the OpenAI-Sur Energy project? Fernando Bonnet: No, we have discussion with them. After that we award Piedra del Aguila that was very important for them that we have a huge hydro backup in us to give power to them. That was a great news for them. We discussed with them that, but we don't have a clear timing on any additional news coming from that place. Matias Cattaruzzi: Great. And last, can you give us like an EBITDA bridge for upcoming years until 2028? Fernando Bonnet: Well, I can give you some perhaps information regarding 2026. 2028 is, of course, need to -- we will expect to maintain that, but talking about increasing will be challenging regarding the expansion, as I mentioned, of new PPAs and how we're going to do in terms of the new coming auctions. But talking about 2026, we have some certainties that can share with you and the rest of the listeners. One important thing or the biggest improvement that we are seeing for 2026 and onwards is that the PPA, the Brigadier Lopez closing combined cycle PPA going to bring additional $60 million for our EBITDA. The other improvement, as we talked in the previous calls, the new regulation for spot market bring another between $70 million and $80 for our EBITDA. Piedra del Aguila also have an improvement compared to the old regime that compared to this new concession will bring additional $15 million. And if you perform the full year of the renewables that we acquired and build last year, this will add additionally $8 million and -- between $8 million and $10 million more. So [indiscernible] terms will be an improvement of $150 million, $160 million. Matias Cattaruzzi: Great. And I have two more questions. One is if you expect distributing dividends in 2026? Yes. And the second one would be more operational. With the upcoming IP for the Perito Moreno pipeline expansion, do you expect that your plants in the central area would get some more upside with lower costs due to lower gas prices because of the expansion of the [indiscernible] Perito Moreno? Fernando Bonnet: Okay. In terms of dividend, that is something that we'll be discussing by the Board of Directors. Right now, we have no guidance regarding to that, specifically because, as I mentioned, we have different projects under our pipeline, and we are performing some projects right now. So this is something that Board will be -- discuss in the next coming month. Talking about the TGS pipeline, we are -- we don't see a reduction on prices because the gas prices are set right now by the plant gas contracts that CAMMESA and the government signed during the former administration. So we received these prices -- or these prices are fixed until the end of 2028 when those contracts get to the end. So we don't see big reduction on prices until this plant gas goes to the end. In terms of the capacity or the transportation capacity of the TGS, we are analyzing the convenience or not to acquire that capacity. The problem is that going further in a big 10 or -- contract is like 15 -- of course, you can do less, but normally it will be 15 years of contract, is not fully discussed the regulation scheme in which we can recover this additional cost because this additional transportation will have an incremental cost related to what -- one that we are paying now. So it's not clear for us yet the new regulation scheme that will be available or the regulation scheme that will be available to recover that incremental cost. So right now, we are looking at, but we don't have a decision yet. Matias Cattaruzzi: Great. But wouldn't it be better for gas prices in the winter? Wouldn't you need less liquids or gasoline or fuel oil? Fernando Bonnet: Yes. The problem is to get here to our terminals, you do not only need the TGS expansion, you will need distribution here and the distribution in Buenos Aires area are very constrained. So we don't see a full elimination of diesel and LNG during winters for a while. Of course, will be a reduction because the TGS will inject here and also have some volumes that could go to the north. But we'll see a reduction, but not a full elimination of diesel and LNG. Operator: This concludes our Q&A session. I would like to turn the conference back over to Mr. Fernando Bonnet for any closing remarks. Fernando Bonnet: Well, thank you for your interest in Central Puerto. I will encourage you to ask any questions to our team that you may have. Thank you very much, and have a good day. Operator: This concludes today's presentation. You may now disconnect, and have a good day.
Operator: Ladies and gentlemen, welcome to the Lufthansa Group Q4 2025 Results Conference Call and Live Webcast. I'm Moritz, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Marc-Dominic Nettesheim, Head of Investor Relations. Please go ahead, sir. Marc-Dominic Nettesheim: Yes. Thank you very much. And also from my end, a very warm welcome, ladies and gentlemen, to the presentation of our full year results 2025. With me on the call today are our CEO, Carsten Spohr; and our CFO, Till Streichert. Both of them will present the results for the past year and discuss our commercial outlook for 2026, and afterwards, as always, you will have the opportunity to ask questions. [Operator Instructions] Thank you very much. And with that, Carsten, over to you. Carsten Spohr: Yes. Thank you, Marc, and a warm welcome from me as well to this full year '25 conference, which I think will start in a little bit of a different tone, not because it's our famous 100-year celebration this year, which makes it a special year for us anyway. But while we were focusing on this to a certain degree, obviously last weekend when everything was changed again. So maybe I'll share with you a few thoughts on where we are when it comes to the situation at the Gulf first, which is, as you know, very dynamic. And of course, with a few thoughts on the whole year before I hand over to Till for more details and expected by you feedback on our numbers. And of course, also, we'd like to give you a view ahead as much as possible in such a dynamic environment. On the Gulf situation, like many of us, I would assume, we're a little bit surprised by the various dynamic turns this takes. In the end, our crisis management always asks us for safety first, which, in our case, meant we stopped flying a day early to the region, which also allowed us to have hardly any aircraft on location because we brought them home before. We then brought our crews home and then went into the next phase of our management of the situation by deciding to close 10 destinations initially, which included Larnaca. We are opening this next -- this Saturday, again, we'll keep the others closed for probably a few more days at least to remain. I think there's more and more now doubts. This is a question of days of reopening or was it weeks, we prepare for both, and we'll take you through this in the Q&A session, if required. Second, of course, big impact spike on fuel prices. Till will come back to that. We actually believe, due to the fact that we are hedged higher towards our main competitors, actually only other airline hedged the way we are is Ryanair with which who, as you know, hardly overlap, should give us a relative advantage where now prices in the markets need to go up to cover for higher fuel prices, especially, of course, for our American competitors and partners to more or less are not hedged at all. Third, extension or extra sections to be flown to markets beyond the Gulf. We have seen huge demand since day 1 for bookings coming in from Asia, to Asia, also South Africa, also very much in China towards Beijing and Shanghai. So we now decided to put extra sections into the air with spare aircraft we have due to the cancellations, spare crews we have and also by the fact that we're still in the winter schedule which doesn't put our fleet to the max. So we already announced quite a few extra flights to Bangkok. There will be more coming to Singapore, to Shanghai, to Cape Town, and to India, which will probably confirm the course of the last day from our revenue management teams that we have record inbound bookings, especially to those regions I mentioned. And that will allow us probably give also later on to a more positive outlook on the commercial output, at least of this initial phase of this crisis than we otherwise would have been able to do. Last but not least, the mother of all questions probably for European airlines. How much is the situation changing the view and the behavior of travelers, customers on this obvious Achilles' heel of geopolitical topics beyond aviation but surely in aviation. So we all -- I think we, the Gulf carriers will reopen eventually but how our traffic flows, how are cargo flows being directed in the future based on this terrible experience locally, I think is the mother of our questions for our industries, and we're sure we'll be discussing that later on. With that, let me, nevertheless, take you, of course, now back to '25, which, as you might recall, we have called a transition year from the very beginning. Various topics in the pipeline, we have addressed to you before, and of course, happy to also discuss today. Overall, the turnaround of the Lufthansa Airline remains our utmost priority. As also mentioned in the former quarterly result sessions, starting from operations. We have seen significant improvements, which also allowed us to reduce our flight irregularity costs by 43%, equivalent of EUR 362 million, significant input into our improved numbers of '25. And overall, also, we were quite cautious with our capacity increase, which only resulted a 4% or a little less, even 3.8% growth by lifting our revenues to a new record of EUR 39.6 billion. Nevertheless, of course, we're able to improve our profits, as you know, to at least by 19% compared to '24. This is a delta of EUR 350 million, far away from where Till and I want to take the company, talk about the 8% to 10% margins, but at least a step in the right direction and especially when it comes to the core airline operational stabilization was the basis for everything to come. We once again saw strong earnings contribution from MRO and Logistics. But for us, important that also in the core of the core, we are moving forward. We also have seen the first but only the first positive impacts of our fleet modernization and the associated product improvements. As you know, we finally were able to certify our Allegris seats also the 787, which is a big part of the 23 new aircraft deliveries we received. As a matter of fact, 7 of these 23 were 787 with now more or less all certified seats across all classes. That fleet alone, Boeing 787 will grow to 32 aircraft by the end of the year, '27 will have a significant impact on our modernization. Allegris, our new product in Lufthansa and SWISS Senses are now underway out of 3 hubs: Munich, Zurich and Frankfurt. Not only we are receiving very positive feedback but maybe more important for you in numbers, we have been able to achieve 12% higher yields for Allegris than for the former business class. To give you an example on business class, that's a big element of bringing up our ancillary revenues, which already went up 15% last year. And I'm pretty sure we'll show you some good numbers for '26 a year from today. Overall, that, of course, forced us to discuss how much we want to make sure that shareholders already participate from this improvement. We decided to increase the dividend by 10% to EUR 0.33 per share, which is a 10% increase, resulting in a dividend yield of 4% and a payout ratio of 30%. With that, let me turn to the traffic regions. I think we all remember Liberation Day last spring, when there were doubts about the development of the North Atlantic, it turned out as expected that the North Atlantic remained strong. And by the way, continues to do so. We'll come back to that later. And we managed to expand and sell capacity on this most profitable market segment of ours by 5%. In the fourth quarter, with an overall capacity growth of roughly 4%, we even managed to slightly increase unit revenues on a currency adjusted basis, which was clearly a trend reversal to the demand situation we saw in Q3. Going forward, I think the backbone of North Atlantic will remain but I think it's already fair to say we will see an increased shift of point of sales to the U.S. This stage where American customers tend to book earlier than European customers in Q3, in Q2, we are almost at a 60% above share of point-of-sale U.S. and obviously below 40% in Europe. Again, due to the later booking patterns of Europeans this will shift a little bit. But again, I'm convinced the trend of last year where we grew our American passengers by 10%, and our European passengers only by 1%, will probably result in even stronger dynamics this summer. Second largest intercontinental area for Lufthansa is not anymore China but by now India, which is also obviously one of the fastest-growing aviation markets in the world. We signed a partnership agreement with our long-term partner, Air India, following just a few weeks after the EU and India had concluded a new trade agreement. We, in this case, includes not only Lufthansa but the German economy, the German business environment, are quite positive and bullish on India. And of course, Lufthansa Group wants to be part of it. But also in South Korea and Japan, where we slightly increased capacity, along with demand, we were able to bring up profitability. And that is also true for South America, which, as you know, becomes more important for us also due to the fact that with IATA, we were able to double our capacities to Argentina and Brazil. The idea for '26 is to grow 6% on intercont and more or less stay flat on cont. And as I said, this, of course, does not include our recent extra sections, we are now in the process of offering. So these numbers, of course, are based on the regular flight pattern, which probably will change due to the short-term demand we are trying to take advantage of. Nevertheless, focused growth will remain our fundamental principle. We've seen the upside of this '25 and we'll probably see more of this in '26. Coming to the next slide. Let me talk a little bit about our obviously unique business model based on the fact of not having the same home market as our main competitors in Paris and London. We will be even more focused on the 4 business segments, and we'll also show them now also in our financial reporting with the 4 strategic pillars we know. Network Airlines will continue to be our core of the core by 70% turnover share. Of course, with Lufthansa Airlines being the biggest part of it. But we will also now be more transparent on our success in the point-to-point business where Eurowings is continuous, not only going strong to defend our non-hub home markets. You all know this is the utmost priority for Eurowings historically, we also see due to the fact that other airlines have been leaving Germany due to the high cost structure, additional market opportunities on the leisure side, we are continuously exploring. Third pillar, Logistics. Not surprisingly, the more unplannable the global economy is, the better for cargo. We've seen a good year in '25. Till will give you more numbers on in a minute. And already, the way things are starting now after the Chinese lunar year with a complete mix up of traffic lanes and supply chains due to the situation at the Gulf, we're probably looking at a good year here as well. And on top of that, new consumer behavior when it comes to e-commerce, I think combined, will make this big. This is a strong part of our company to come. That's even more true for Technik. We all have discussed with you before that '25 due to tariffs, there has been a little bit of a slowdown of our increase of margin and profits, which we don't expect to see again in '26. And obviously, the more or less new part of the Technik business being defense will probably also get more headwinds -- sorry, tailwinds, tailwinds from the unfortunate military developments in Iran over the last days and more to come. So I'm sure we'll be talking this -- we will be talking about this rather more than less in the future. Till with that little call it, 360 and almost hourly dynamic situation where we are, I hand over to you and talk to you in a few more minutes with some outlooks on my side on the strategic path before we are ready for your questions. Till Streichert: Yes. Thank you, Carsten, and also a warm welcome from my side. Exactly as Carsten said, I'll deal with the 2025 looking backwards. And then, of course, looking into 2026 and commenting on our outlook and then Carsten and I will try to answer your questions, in particular, to 2026 as much as we can in the best possible way. But let's first get 2025 out of the way. So 2025, as you've seen, revenue increased by 5.4% to EUR 39.6 billion, enabled by disciplined capacity growth of 3.8% of our Passenger Airlines, strong third-party revenue growth at Lufthansa Technik and as well continued strong demand for air cargo. And while costs developed in line with expectations last year, the cost increases continued to weigh on our P&L, such as a 10% increase in fees and charges or also a 40% increase for emission certificates last year. On the positive side, we did benefit from a lower fuel bill in 2025 and that was EUR 514 million lower than the year before. Overall, adjusted EBIT increased by EUR 350 million to EUR 1.96 billion and our adjusted EBIT margin improved to 4.9%. Please note, due to a one-off tax valuation effect, our positive EBIT development did not translate into a higher net income. Adjusted free cash flow amounts to EUR 1.2 billion, and this is a significant improvement, and this significant improvement was driven by the stronger adjusted EBIT, tax reimbursements and a slightly lower net CapEx. Turning now to our Passenger Airlines. The segment surpassed last year's results despite a challenging environment. Adjusted EBIT increased by EUR 41 million, supported by favorable fuel prices, a significantly lower irregularity impact and a positive earnings contribution from IATA. We are especially happy about Lufthansa Airlines adjusted EBIT improvement of around EUR 250 million. And this reflects the positive impact of the turnaround program. And across all our airlines, capacity grew, as mentioned before, 3.8%, with growth being primarily deployed to the North Atlantic and Continental routes, reflecting the strategic importance of both markets. In the second half of the year, we shifted capacity growth towards intercont markets while streamlining cont traffic. Seat load factor was at 83.2%, slightly higher than 2024 and with a clear momentum towards year-end. As anticipated, yields came under pressure, particularly on short haul and parts of long haul. However, I want to highlight that in our important North Atlantic traffic, unit revenue increased in the fourth quarter by 2.1% on a currency-adjusted basis, confirming the resilience of the demand. Moreover, yield weakness was, to a large extent, compensated by strong growth in ancillary revenues, up 15% for the full year as well as significantly lower irregularity related compensation cost. On the cost side, we have improved our performance throughout the year, while ex fuel CASK still increased by 3.6% in the first half of the year. The increase in Q3 was only 0.5% and the Q4 CASK was almost flat to prior year. This impact of our turnaround measures is important given the ongoing substantial cost inflation in fees, charges and personnel costs. As mentioned before, Lufthansa Airlines is of fundamental importance to us. So I'm happy to report progress. In its turnaround program, we achieved measures with a gross earnings impact of more than EUR 500 million, a clear confirmation that the turnaround is gaining traction. Looking ahead, we expect to measure volume to increase to EUR 1.5 billion by the end of 2026 and to EUR 2.5 billion by 2028. As communicated in our -- on our Capital Markets Day, we are targeting a high single-digit adjusted EBIT margin by 2028 to 2030 for Lufthansa Airlines. The key building blocks of this trajectory are clear: The continued renewal of our fleet, productivity improvements and the combined power of many other initiatives of the turnaround program. On fleet, we expect the Allegris share of the Lufthansa Airlines wide-body fleet to reach as much as 50% by the end of the year. This goes hand-in-hand with an improved yield level, we currently see a 12% RASK uplift from Allegris. On productivity, we will shift further 14 aircraft into our more cost-efficient AOCs, Discover Airlines and City Airlines, City Airlines has recently taken up operations out of Frankfurt and will operate 18 aircraft by the end of the year in total. Discover will operate 32 aircraft, including four A350s. Combined with further measures to improve cockpit and cabin staffing, this is expected to increase crew productivity by about 7% in 2026 compared to prior year. On our 700 turnaround initiatives, let me just comment on some of them. One example is ancillary revenues where we expect a further push driven by the prominent placement of additional services as well as the consistent monetization of the Allegris seating options. Our new cont fare structure will lead to a more personalized offer with the aim to increase customers' willingness to pay. And on the cost side, we will increase operational efficiency and hence, achieve a further reduction as well in fuel consumption. All of this improves financial performance. And in 2026, we expect that we can limit the increase of the Lufthansa Airlines ex fuel CASK to a maximum of half the annual rate of inflation. Moreover, it is noteworthy that this unit cost increase is fully driven by premiumization, hence an investment into value creation for both our customers and ultimately, our shareholders. Ladies and gentlemen, structural improvements do not only apply to our mainline, we also focus on digital transformation on a group level. Let me briefly touch on the progress of our One IT program. One IT is a group-wide transformation program and its aim -- its aim is to move toward a completely unified IT backbone, a common data and AI foundation and an integrated operating model under the recently founded legal entity Lufthansa Group .IO. The objective is clear, structurally lower IT costs while unlocking digital business value. And I'm pleased that already in 2025, the launch year of the program, One IT delivered its first tangible financial contribution. We realized more than EUR 50 million of IT cost savings through quick wins such as contract renegotiations, sourcing optimization and application rationalization. In 2026, One IT will focus on the implementation of structural changes followed by scaling on in 2027. The program targets in total about EUR 200 million of sustainable annual cost savings by 2030. This IT transformation will also enable significant additional business, value for example, ancillary revenues, personalized advertising or cost improvements and customer servicing. And this is why One IT is not only a cost program, but a core enabler of value creation across the entire group. Let me now turn to our Logistics segment. Lufthansa Cargo once again delivered a strong performance in 2025, demonstrating that the business is well positioned in the post-pandemic air freight environment. The revenue growth of 4% was driven by a 5% capacity increase as a result of one additional freighter and increased belly capacity. Strong demand was driven by Asian e-commerce, semiconductors, aviation components and pharmaceuticals, all of them high-margin verticals and therewith putting them into the focus of Lufthansa Cargo. Lufthansa Cargo delivered an adjusted EBIT of EUR 324 million, representing a 29% improvement driven by higher volumes and improved load factors more than compensating a decline in yields. On the cost side, Lufthansa Cargo showed a strong performance, ex-fuel unit cost decreased by around 6% and main drivers were here, lower charter expenses, IT cost reductions and improved crew productivity through optimizing network planning. Looking ahead, we expect for Lufthansa Cargo a clear earnings increase in 2026, building on a disciplined execution of its strategy and the strong market position in special cargo and premium products. Turning to our MRO segment. Lufthansa Technik achieved a 12% revenue growth, with total revenue exceeding EUR 8 billion for the first time, driven by a 23% increase in third-party business. While this was an exceptional top line development, adjusted EBIT amounted to EUR 603 million, broadly in line with the previous year. And this result was achieved despite sizable external headwinds. One of those headwinds came from foreign exchange developments, while the weak U.S. dollar had a net positive effect for our airlines, Lufthansa Technik was impacted negatively with a mid-double-digit million euro earnings effect. Lufthansa Technik was also affected by the U.S. tariffs on aluminum and steel impacting the results by roughly EUR 30 million. But please note that this was already significantly lower than originally assumed due to the swift and successful implementation of mitigation measures. These measures included adjustment to the production flows, renegotiations with customers and optimizing customs processes. These steps contributed to an earnings recovery in the fourth quarter and we expect that the negative effects will diminish further in 2026. In parallel, Lufthansa Technik continued to expand its global footprint. New or growing facilities in Portugal, Tulsa, Calgary and Malta will contribute to substantial capacity additions, particularly in the engine segment. And in 2026, we expect earnings at Lufthansa Technik to increase significantly, supported by normalization of tariff impact, continued growth in the engine segment and the benefits of the commercial initiatives already underway. Turning now to cash flow. 2025 was a year of significant improvement for the group, both in terms of cash flow profile and resilience of our balance sheet. Operating cash flow increased to EUR 4 billion, driven by higher earnings as well as a tax repayment from a German tax audit. CapEx includes the final payments for 23 new aircraft, of which 9 were wide-body aircraft. This was partially offset by 19 sale and leaseback transactions and net CapEx stands at EUR 2.5 billion and is therefore slightly below previous year's level and also below our expectation at the end of Q3 due to a delivery shift of 4 wide-body aircraft into the first half of 2026. And adjusted free cash flow reached close to EUR 1.2 billion, which represents a meaningful increase of EUR 350 million. Looking at our balance sheet. The combination of strong operating cash flow and disciplined investment led to a significant strengthening of our liquidity position, and we ended the year with liquidity of around EUR 10.7 billion, above our target corridor of EUR 8 billion to EUR 10 billion. And we expect this liquidity position to return to the target corridor -- into the target corridor by year-end 2026 as we use these available funds for aircraft, invest and payments. Financial net debt increased to EUR 6.4 billion, mainly driven by the capitalization of leases. And when including our net pension position, total net debt remained stable year-over-year. And as our profitability increased, our leverage ratio improved to 1.8x. We continue to be solidly positioned with an investment grade credit rating and ample financial flexibility to support our fleet renewal and growth plans. Now let's talk about fuel prices, which is, of course, on top of everyone's mind right now. So fuel costs developed favorably throughout 2025 and amounted to EUR 7.3 billion in line with guidance. For 2026, our fossil fuel bill estimate is around EUR 7.2 billion, thereof EUR 7 billion for fossil fuel and EUR 0.2 billion for mandatory SAF. All figures as of last week Friday. These numbers represent a tailwind of approximately EUR 100 million versus 2025, predominantly driven by the weaker U.S. dollar. And as you know, our hedging strategy continues to provide protection against volatility while also allowing us to benefit from price declines. And for the Passenger Airlines, we have already hedged around 82% of our fuel needs for the remainder of 2026. Since last Friday, we have, of course, seen a substantial increase in the jet fuel price, resulting from both higher crude oil price as well as higher jet crack. I will comment on this in more detail in a minute when we talk about our full year earnings outlook. So let's go there. And speaking now about our outlook for the current financial year. This is obviously not easy given the events in the Middle East. On the one hand side, I see the strength of our group and the progress we make in executing our strategy in all the dimensions and also in all the dimensions that we can control. On the other hand, I see what's happening around us and this does have an impact as well on our financials. The bottom line impact will depend on which effects are outweighing the others and also on whether those effects will change subject to the duration of the current situation. Being in this situation for only 6 days by now, obviously, does not provide us with sufficient hard data points to draw final conclusions for the rest of the year. But of course, we have data points from the first couple of days, which we were going to talk -- which we are going to talk about in a minute. Let's go through the building blocks of our outlook. We plan to increase capacity by around 4% and here also in a disciplined way. Clear focus will be on intercont routes where we expect to grow in mid- to high single-digit range while cont capacity will be broadly unchanged. I do expect cost inflation to persist but it will be partly offset by our transformation programs and the ongoing fleet modernization. And on this basis, we expect adjusted EBIT for 2026 to be significantly above the 2025 level, consistent with our commitment to delivering sustainable profitability improvements. Now let me put this into perspective of the Middle East crisis, and let me describe to you what we are currently seeing. One slide before, we've shown you a fuel price forecast based on last week's Friday, and that is the way we always presented to you each quarter, including also the fuel sensitivity, the fuel matrix where you can go along the axis and get an idea how things can move. Now since then, fuel prices have increased and taking a short-term perspective, just for the next 2 months, current fuel price levels mean about a 20% to 25% higher fuel cost for March and April compared to the underlying figures reflected in our EUR 7 billion forecast for the full year. However, for March, the impact -- and again, that's normal, for March, the impact will be further limited as about 60% of our physical settlements for fuel are priced at the prior month level. This does give us additional time to also adjust our revenue management approach. Having said that, broadly, in terms of fuel dynamics, we don't believe that fuel price levels remain in the long run where they are right now. Then we also have impacts from flight cancellations. Since 28th of February, we, of course, have stopped flying into the region. These are 10 destinations. And overall, to give you an idea, Middle East traffic would have represented about 3% of our capacity in the first quarter. For comparison in 2025, it was just about 2%. So you can see that the overall impact is somewhat limited. We estimate about a EUR 5 million earnings impact per week from those cancellations based on lost business and cost of care. On the other hand, we are also observing positive earnings effect. And firstly, since last weekend, more people have been flying with the Lufthansa Group Airlines instead of connecting via the Gulf hubs. Since the weekend, additional bookings on our Asia and Africa routes have by far overcompensated the cancellations we've seen on our Middle East routes. Over the past days, revenue intake for departures in March was about 60% higher than last year. Global net revenue intake for the full year during those days, was more than 20% higher than last year, indicating a positive impact in booking intakes also beyond March. We expect this situation to persist as long as the hubs in the Middle East cannot be fully serviced. Secondly, many people are currently changing their travel plans in the short term. And on this topic, we see the possibility that travel patterns might also change for longer. Potentially persisting -- potentially persisting security concerns around the Gulf region might also lead to more traffic within Europe or through European hubs or U.S. destinations. Thirdly, with more than 80% hedge ratio, we are hedged to a higher degree than many others. This provides us with a relative advantage, especially compared to those who are not hedged at all. And fourthly, a large part of the airfreight capacity in the Middle East is currently affected, about around 18% of global capacity is not available at the moment. This means that also cargo streams are shifting. And Lufthansa Cargo has observed an increase in demand over the past few days. Moreover, we've seen rise in cargo yields of 5% worldwide and plus 35% in the Middle East and Asia over the past few days, even a further yield uplift from these markets is conceivable. More longer term, we might also see more shift from seafreight to airfreight when things are time critical. Therefore, for me, the conclusion or the message is kind of clear. We do control what we can control, and we are obviously closely monitoring what's going on in the world right now. And even in the light of the current situation, we are convinced that we can significantly increase our adjusted EBIT in 2026. However, let me also be clear, the range of uncertainty has increased and there was also the range of possible outcomes. Let's now go back to what we control, that's our CapEx. Our CapEx outlook. Net CapEx is expected to amount to around EUR 2.9 billion, reflecting the planned delivery of up to 45 new aircraft. That's the largest single year fleet expansion in our company's history. And adjusted free cash flow is expected to be around EUR 0.9 billion slightly below last year due to the higher investment volume. We expect 2026 overall, to be a year of continued progress for the group on our path towards our midterm targets and our businesses are well positioned and on a clear trajectory towards long-term value creation. And on that note, knowing that, of course, 2026 will be at the center of our discussion, I believe. I'd like to hand back to Carsten for further remarks on the strategic outlook. Carsten Spohr: Yes. Thanks, Till. And just a few words on, indeed, how do we look into the future, of course, based on what Till and I communicated at the Capital Markets Day back in September, where we announced our medium-term financial targets, you are well aware of by now, centering around 8% to 10% adjusted EBIT margins. First, lever of -- the 4 key levers I'd like to address is obviously airline growth in a profitable way, which means for us more long haul than short haul. We actually want to grow the intercont fleet to 200 aircraft while we keep the short-haul fleet more or less flat. The additional required feed will be provided by coordinating our hub traffic in the future, centrally over all 6 hubs, which will give us a higher share of feed passengers to intercont destinations rather than short-haul to short-haul. At the same time, we're, of course, leveraging the One Group approach beyond this example. We do see a 3% margin uplift from fleet and new premium alone but there's also elements of the loyalty ecosystem and the ancillary push, which will pay into our midterm targets. Last but not least, the so-called One IT, where we're harmonizing the IT network, at least across the 6 hubs in many regards, even beyond our hub and Network Airlines is another example of this second lever. Third, airline cost transformation. Operational excellence focus in '25 has provided the stability I quoted was -- mentioned to you before. Now starting in '26, efficiency will be higher on the priority list. And we do believe, including more modern aircraft, including, of course, lessons learned, and finally, enough staffing at the European and especially German hub airports, we will be able to show that we keep our unit cost despite cost inflation flat in '26 as we already did in the fourth and last quarter of last year. Another element of this will be the fact that we grow fastest in those airlines with the best cost competitiveness, thinking about Discover, for example, and Lufthansa City Airlines. Yes, and last but not least, the so-called fourth lever is the additional focus on MRO and cargo. You know our Ambition 2030 program in Cargo, by which we want to achieve EUR 10 billion of revenue with the 10% EBIT margin by the end of the decade. And also in Lufthansa Cargo probably supported by the recent developments in the Gulf, we are looking to claim the top 3 position globally, again, coming out of top 5. Last but not least, defense was already mentioned, and we strongly believe, again, with current affairs probably creating a tailwind here that defense will be a very stable and highly profitable part of Lufthansa Technik to a higher degree. Last but not least, let's talk about a little bit more about maybe the single most important lever and most impactful lever we have, our fleet renewal. You're aware we're taking -- we're in the middle or at the beginning, if you might say, of the largest ever step towards a more modern and productive fleet. We expect 45 new aircraft this year alone, more or less 1 per week, and there is an unheard number of 27 widebodies among them. That will bring us to a new tech quota across the whole group of 1/3 with obviously resulting cost advantages and productivity gains. Also, we see some light at the end of the tunnel of the Pratt & Whitney engine issue. As far as it looks now, we'll be able to bring down the number of grounded aircraft to less than 10, which is 30% less than last year. Coming to an end, getting ready for your questions, you might share my view that the Lufthansa brand is an iconic brand in our industry for many, many years now, celebrating our 100 anniversary today. No doubt, we intend to maintain this in the future. And part of that must be the further improvement of the customer experience and be an example of Starlink, which we are looking to offer to our customers as of Q2, be it new lounges in almost all of our hubs and flagship lounge to be opened soon in JFK, where all of our group airlines or more or less all of our long-range group airlines are serving the airport at least once a day, where overall, the further integration of IATA creating more synergies is a step towards that product improvement for our customers. So overall, again, with all the uncertainties existing, we're looking optimistically into '26, and now -- look forward to your questions and comments. Thank you very much. Operator: [Operator Instructions] And the first question comes from Jaime Rowbotham from Deutsche Bank. Jaime Rowbotham: Two questions from me. Firstly, Carsten, I wanted to ask about these puts and takes, pros and cons of the current unfortunate situation. Till did a great job of running through some of them. Interesting to hear bookings to Asia Africa over compensated for cancellations to the Middle East. I just wanted to focus it maybe on the transatlantic, given it's so important for you, your U.S. competitors aren't hedged, so they are likely raising fares and hopefully, you can follow that a bit. At the same time, though, I wonder if fares are going up at just the wrong time in the sense that some people might be nervous to travel at all, which could have a downward impact on demand. Maybe you could just flesh out either what you've seen so far or what you think happens next insofar as that's possible. Second one for Till. Thanks a lot, for clarifying what might happen to fuel for March and April. I just wanted to ask, if possible, about the full year. So on the fuel slide, you tell us you as of last Friday, $71 for Brent, $26 for the crack spread to get to EUR 7.2 billion. Obviously, Brent now $88 and the crack spread about $100 a barrel. So it's costing more to refine than to buy the oil. Hopefully, that won't last. But the forward curves are pointing to a scenario that's not even covered by your sensitivity table where the jet crack part on the x-axis could double or triple versus what you show. You also mentioned in the footnote, the hedging you've got is part on gas oil and part on Brent, so you don't actually have the crack spread hedged. With that in mind, have you had a chance to do any scenario analysis on what a mark-to-market type fuel bill might look like for all of 2026? Till Streichert: I'll go second first and then maybe on the puts and takes, Carsten, if you want to add a little bit. So Jaime, absolutely. I mean, this is top of mind question how this is going to evolve. And you are quite right in terms of hedging. We've got a split and you know that we usually hedge blend with about 35% and gas oil as a proxy for jet crack with about 50%. And it's true that, obviously, jet crack has moved up. You can almost say off the chart of our fuel matrix on the right-hand side. So here, I would just highlight, and again, mathematically, you can calculate all of that, and we have done that. And the impact, obviously, if you would imagine that it stays for the full year is of size. On the other hand side, I also don't believe that this situation will going to stay there for a long time. And you can see also, and I'm sure you've looked at the volumes that have been traded driving ultimately the crack price, the crack spread. It's on very low liquidity. And therefore, there was -- I would also say a bit on the back of what President Trump yesterday evening said to possibly also escort tankers through the Strait of Hormuz. Ultimately, I do believe that this is not going to stay for long at these levels. And of course, leading now into the other side of the equation, it's true that the hedge levels do we have give us a solid upward protection. And of course, this differentiates us versus others that follow a non-hedging policy. And therewith, I do expect that also yields also or in particular, on the North Atlantic have got the potential to go up and increase. Carsten Spohr: Yes, Jaime, Carsten here. I think you already kind of put it in your question. There are pros and cons, and I think it's very difficult right now to quantify them exactly after just a few days. Again, cost of cancellations exist, probably like EUR 5 million per week is our best estimate. But at the same time, as you pointed out, we have a relative advantage on the fuel cost on the one hand. I think there's also historically a certain move of bookings towards highly trusted brands in times of crisis, we are definitely SWISS as the [indiscernible] Switzerland and Lufthansa to a certain degree, we probably benefit from. Then, of course, the question is, is the overall potential softness in travel for us, European carriers overcompensated by the shift of travel from carriers in parts of the world where people don't want to go now towards us. Hard to quantify at this point but not completely probably unexpected that will happen to a certain degree. And as I said before, there will be flexibility in our network as we are now within days putting capacity into China, into South Africa into Southeast Asia, of course, we're happy to also reallocate capacity throughout the whole summer if needed. If, for example, the demand tool from Asia become so strong that the next best route tool from Asia is more profitable then the weakest route on the North Atlantic, we would move the airplane. But I think it's way too early to discuss that now. Till Streichert: Let me add maybe just 1 additional point, if I may, just to give you a bit of a holding line as well on the RASK side. If we would have spoken 10 days ago and talked about RASK expectation for the first quarter, I would have said currency adjusted, so ex-X positive but including FX, slightly negative. Now as we speak today, with the net booking intake that we've seen over the past few days, this has shifted clearly to the positive side. And I expect that the RASK for the first quarter should reach a positive territory, even including the unfavorable FX headwind in comparison to prior year because remember, obviously, the U.S. dollar started to depreciate just in the second quarter last year. Operator: And the next question comes from Stephen Furlong from Davy. Stephen Furlong: Carsten, Till and Marc, congratulations on the results. Carsten, in the prepared remarks, I mean, you talked about the industry being more resilient to crisis than it used to be. Could you just amplify that? And then maybe just talk about the Allegris products and talk again about the kind of rollout of that product. I know there's been a lot of kind of news, comments and reports about some delays and then not delays and what the revenue kicker you're getting from that excellent product? Carsten Spohr: Yes, Stephen, thanks. I think has said this numerous times about the industry being more resilient before the unfortunate events that the Gulf started a few days ago. Because, unfortunately, already before that, we have more military conflict in the world than ever before since 1945. And whereas usually, when there's a conflict somewhere, bookings usually collapse because people are afraid to fly and want to stay home, this hasn't happened, not only not the last days, let's even go beyond that. We have seen, as you well know, record demand in the industry basically since COVID. And what is the background of this. I share the view of some of my American counterparts that for consumers, traveling has been higher prioritized since COVID as before. That's 1 element. We definitely don't have a period of overcapacity due to the shortage of engine and plane productions at the OEM level. And I think last but not least, you see more wealth around the world, not only in the saturated markets but also in other parts of the world, which airlines serve. I think all that combined -- by the way, the last one is why especially the premium classes, as you know, are booming now for many years. So I think all that combined shows that even though the world has not become more stable, our industry has. And now to also the last days might add to this because imagine this would have happened 20 years ago, I think you would see a very different booking environment than what we are seeing since last weekend. Allegris, yes, we had significant delays in certifying the Boeing aircraft with our Allegris seats who have a different manufacturer than the seats in our Airbus wide-bodies are manufactured by. We wanted to split the risk many years ago and also the capacity of none of the seat manufacturers was big enough to provide all of our wide bodies. But now these airplanes are coming in quick time, as I mentioned, 9 are here already. By the end of the year, we have 36, I think, as I said in my opening remarks, we have 28 seats in the 787, of which 25 are now certified as the end of March. And there is now only 3 seats, which will not be able to be sold by the end of March. And we even now decided to pull that 1 week forward giving us additional revenue opportunities by already having the seats open for a flight a few days before the end of the winter schedule. But that's only the 787 topic. And as mentioned also by the end of the year, in the Lufthansa Airline, 50% of our seats will either be Allegris or in case of the 380 aisle access seats. So we're another manufacturer. So this is now in full swing. We mentioned before, we have 12% to 13%, 14% higher yields on these seats than on our regular business class seats. So that's big and also the ancillary revenue increase, which we're expecting for '26 to a high degree, will come from Allegris versus the first time we actually charge for different seat types in business class, so that will also be, I think, tailwind for '26 and beyond. I hope that answers your question. Operator: And the next question comes from Alex Irving from Bernstein. Alexander Irving: I'll ask 2, please, both around technology. First of all, on IT, you signed in the last quarter for a new IT platform to implement across 9 of your group airlines. There's an IATA paper that's been around for a while that talks about a 2% to 3% improvement to RASK platforming like this. Is that the right way to think about the upside for Lufthansa Group? Or is the incremental gain less given your work to date in areas like continuous pricing, for example? Second question is on the distribution side of things, specifically, how are you approaching decision about whether and how to sell in large language models? Are you planning to engage directly through an API or to rely on existing infrastructure GDSs, travel agents and continue to pay commissions? Do you have a view on when you're likely to sell your first trip through an LLM? Till Streichert: Okay. I'll make a start on the first one, and then I'll see how far I get on the large language model based selling. Look, I mean, as you know, quite right, we want to embark on the journey of implementing on the one order path, it will be a long-term journey for the industry and also us but it is important to be amongst those ones that joined the pack at the beginning. And we do believe that there are clear benefits on the IT infrastructure on the one hand side because, I mean, as you know, the P&R standard, e-ticket standard and the miscellaneous data standard gets basically consolidated into a single order that is more efficient and drives back office efficiency on the other hand side, quite right. Once you've got this type of let me say, Amazon order type model, marketing and retailing obviously benefits as well. I am aware that IATA quotes these figures of 2% to 3% RASK benefit. To be honest, I find it quite early to take a view on this. But I do believe that principally, there are benefits also on the revenue side from better retailing. I think particularly for us, what I believe is good. We obviously come with scale when you think of passengers that we've got. And whenever you touch these large-scale transformations, when you get it for done at scale, it does give you normally a greater benefit. Look on the distribution, to be honest here, and large language models, I have to admit I'm not that deep into the status where we are. What I can tell you is that, clearly, we are advancing on many fronts in the digital arena to improve customer servicing, through large language model-based trainings, bots. And I don't know what the digital adoption right now is, but we are making progress on that front. But happy to come back and have a dedicated conversation on this. Operator: And the next question comes from James Hollins from BNB Paribas. James Hollins: So Till, on the turnaround update, maybe I always see a slightly in charge of this, so maybe I'm wrong. But as you see it, where have you outperformed, underperformed so far on the turnaround program? And you may not choose to answer this but if I take the Lufthansa Airline EBIT growth of EUR 250 million, which was a gross benefit of EUR 500 million. Is that 50% net versus gross benefit, a good indicator for the full year '26 EUR 1.5 billion? And then probably for Carsten and I know there's lots going on but I thought I'd better mention the strike you had in Q1. Maybe you could update on the cost of that where we are on some of the open CLAs and whether this current situation tends to lead to a bit of a backtrack from some of the union aggression? Till Streichert: Yes. So I mean turnaround, first, to give you my kind of assessment, I am happy with what we have achieved last year. Again, it's not easy to get such a large-scale program off the ground. And the EUR 500 million gross figure, as you know, has come from several initiatives. We've got EUR 700 million in the entire funnel. Several of them obviously have gained traction and delivered in 2025. Let me say, where were we strong and where maybe things will be moving in the future towards. Point where we were clearly strong and successfully executed was operational stability. You remember that was one of our big topics at the beginning of 2025. Get stability back into the production, into the system. That is good for our customers, was good for our customers. You can see that in NPS, customer satisfaction everywhere. And also in the significant benefits on the so-called IRREG cost charges and foregone revenue that is sizable. And that's a clear proof point but also on many other smaller initiatives. And again, I wouldn't speak about EUR 700 million initiatives if it wouldn't be quite granular. We've made good progress. What's ahead of us is clearly the focus on productivity. And this is why I made it also a point on my chart on my slide. And there, we will continue to move capacity into our lower-cost AOCs, Discover Airlines, City Airlines. You can see the aircraft that we are moving and also starting operations for City Airlines from Frankfurt and there with big focus for 2026 and beyond is productivity. Now to your question, gross versus net. Look, it's hard to say. To isolate it on a program level because we do have, obviously, underlying cost inflation drivers from a salary point of view, from a fees and charges point of view, and therefore, it's a bit of a harder ask to say how this -- how the gross is directly translated into a net. But I do see us on track to get the EUR 1.5 billion in 2026 delivered. Carsten Spohr: Yes. On the strikes, the number you're asking for day of strike like the 1 we just had, we probably estimated to be around [ EUR 50 million. ] You might see that's a lot less than what we had before. Why is that? Well, there's less support this time for the units going on strike, which results in more volunteers to continue operation. So therefore, we don't ground the whole fleet as we were forced to in the past but keep our most profitable routes in the area that's reducing the cost. Looking ahead, we are in constructive talks both with our cabin union, as a matter of fact happening today, and Verdi, our ground staff union and also for the cockpit union, actually, we have now 2 corporate units in Germany but for the 1 which is affected here for Unabhangige cockpit, we have offered even in a moderated fashion to talk about the bigger scheme of things, which right now has not been agreed to yet but the individual pilots very much want to stop the shrinking of the main airline, which becomes more and more obvious, as Till just pointed out with our shift of airplanes. So I'm quite optimistic that eventually, that shrinking on behalf of the pilots should come to an end, which will require us to talk on the bigger scheme of things. So I don't see any strike action like the one we saw in 2012 to 2016 or anything because there, we just now too much what the members want and believe that the answers, of course, can only be a reduction of the cost disadvantage of the main airline to the other AOCs in Lufthansa, whereas a strike itself and even the things they're asking for in the strike, and we are not willing to give in the airline with the lowest profit would increase the distance and the disadvantage on the cost side. So this will not be a long-lasting, I think, exercise. Operator: The next question comes from Harry Gowers from JPMorgan. Harry Gowers: First question, maybe just related to Jamie's question on the fuel hedging. Can you just confirm, do you fully hedge the crack component and that's all included within your comments on the March to April monthly impact? I think you said that gas oil hedging is a proxy for jet crack, and so does that type of hedging basically fully cover the price increases we're seeing in the crack spread market at the moment? That's the first one. And then second one, just on the ex-fuel unit costs. You have this comment around 2026 ex-fuel CASK is expected to be half of inflation for Lufthansa Airlines? Can we extrapolate that for the entirety, I guess, of the kind of new network airline segment? Is there any reason why those other airline businesses won't be reporting a similar cost results? And maybe just related to that, if I can squeeze 1 in, what are you assuming for the union agreements? And staff cost inflation in your overall kind of cost and EBIT guidance for the year? Till Streichert: Okay. Maybe a comment on just union agreements. I'll leave to you, Carsten, and I'll go on the first question -- on the second question first, ex-fuel unit cost. So let me be clear what I said is indeed for Lufthansa Airlines, half of inflation is our target. Now overall, as you will remember, we stayed away from giving a group guidance on CASK overall. So we limited it to a specification just for Lufthansa Airlines. Of course, all of the other airlines, our business units have got CASK saving programs in place but I don't want to give an overall cost guidance for the entire group. Going back to the first question, which is a fuel hedging, once again, we hedged gas oil 50%. So 50% is the element of our hedge. Our hedging composition included 35%. And gas oil as a proxy that is strongly correlated to jet crack but it's true currently, Jet crack is very high. We believe that the spread between jet and gas oil will come back to normal levels. And I think the spread currently is inflated mainly because of the illiquidity in the market. Carsten Spohr: Yes. Harry, if I got your question right, you wonder how union agreements would impact our guidance. So I think it's fair to say they will not impact our guidance. Where we have talks, we kind of know what we are willing to offer and how that would result in financial outputs. Of course, it's in our planning. And in the last strike we had for the pilots on the mainline, we told them that as long as the main line is not reaching its targets in terms of profitability. And that actually is the lowest profitability airline in the group. There is no any financial room for maneuver to pay even higher pension benefits, which are already higher than the ones in the other airlines. So there's also no room for additional costs here. That remains is, of course, the cost of strikes. But at the same time, the more strikes there are, the less airplane will be in that airline. So I think there's almost like a natural hedge if you want to use the term from our fuel environment. So the answer again, to your question is that there is no impact on the guidance to be expected from the current labor conflicts. Operator: And the next question comes from Axel Stasse from Morgan Stanley. Axel Stasse: I have two from me. On the first one, coming back on fuel, apologies. How much of that fuel inflation can be passed on? Obviously, you mentioned your exposure to jet and gas oil crack. But obviously, the U.S. guys are not hard at all. So if fuel goes up by 10% approximately, how much of that can be passed on? Can we assume half of it? The reason why I'm asking is because I'm slightly surprised to see you we're comfortable of providing an EBIT guidance without a lot of visibility in the near term on fuel. And I therefore assume you guys feel comfortable passing that on. So just trying to understand the extent of it. And then the second question is can you provide maybe an update on TAP, what are the latest news here? And how comfortable are you on TAP? Till Streichert: I'll take the first one, just on fuel once again. Two comments I would add in addition to what I already explained. I mean, first of all, ticket prices are made at the market level but we do see already increased yields also on the North Atlantic and the fuel price surcharges are being implemented. Now how much of that exactly I can't tell you but the situation is dynamic, and therefore, I think it is just not prudent to give you a statement on that. I think if in the future, fuel prices remain elevated, clearly, everyone and in particular, those ones that follow a no-hedge strategy or have got less hedge protection will need to pass on fuel prices. And that, in my view, provides an opportunity and allows for equally pass-through from our end of additional fuel cost. We have done first price increases already through the fuel price surcharge and have implemented them. And sorry, and just 1 more thing, Cargo. I wanted to speak about both segments. Cargo obviously works on a pass-through model as well. And there -- there is literally -- it's not on a daily basis but within a week, prices get adjusted for the input cost of fuel. Carsten Spohr: Yes. Actually, there's nothing really new on TAP. As you know, we are in the process because we believe there would be a perfect addition to our multi-hub network, also due to the fact that we are currently the weakest on the Latin American market. The overlaps are less than they would be for others, which probably has an impact on the antitrust approvals to be obtained. At the same time, there are so many open questions about the process and the outcome that it's impossible at this point to answer is creating value for our shareholders or not. If it doesn't create shareholder value, we will not do it. We don't need it. If it ends up to be a win-win of Portugal TAP and us, we will maybe see more progress here. Nothing else to add. Operator: And the next question comes from Muneeba Kayani from Bank of America. Muneeba Kayani: Firstly, Till, if I can just clarify your comments around the impact from the Middle East on kind of near-term March, April. Did you say that the higher bookings demand that you're seeing for Asia, Africa and all is compensating just the cancellation costs? Or is it compensating cancellation costs and the jet fuel higher costs on the unhedged portion? So that's my first question. And then secondly, just going back to the transatlantic and Carsten, in your experience, how long does it take for kind of U.S. airlines to adjust the capacity in such shocks on the oil price, given their lack of hedging? Till Streichert: Mona, let me take the first question, albeit I might not give you a totally conclusive answer on that. But yes, first of all, and let me go on the net booking intake and just to run you through that. And I've really taken the view on kind of what numbers do we see right now. And since last Saturday, our net booking intake has developed strongly, exactly as I said. And when we compare these net bookings which we have received between Saturday and Wednesday, end of day, for the month of March, this figure is about 60% higher than 1 year ago. And my second statement on the inflow side was, if I compare same period, those few days, net bookings for the rest of 2026, this figure is 20% higher than 1 year ago. So clearly, what I said on the negative side, the cost of the cancellations of the Middle East, we have comfortably covered. To your question now, does that cover as well the fuel cost. Look, it really depends on how long the fuel prices remain elevated because I've equally given you a view on March and March as such, while I said, nominally 20%, 25% higher fuel bill as we obviously settle the physical fuel bill with a month's delay, you can actually knock half of it off for a month, okay? So it's not that straightforward to say how all-in looks like but there are puts and takes. And I think we should clearly see both of them, albeit I'm not giving you a net figure right now because I can't. Carsten Spohr: Yes. Muneeba, Carsten, you asked for my experience, and I think the things I experience is twofold. First of all, the speed of reaction is a function of the impact of -- on the traffic. Think about 9/11, it took us all only days to come up with a different schedule when the skies reopened than the schedule we had before because it was so obvious impact was huge. I think this is a different situation here. But none of us knows how long the war will last, how long the impact will last, at which degree but I think it's worth to say that all of us have become much better in reallocating capacity to demand, also due to the lack of aircraft in general. What does that mean? When you have a route which is not performing well anymore, you can more easily find another route to provide profitability and value for your shareholders than in the past where maybe you already had loss-making routes and couldn't find something else because otherwise, we would have done it before. So I think with the profitability where it is also for the international business of the U.S. carriers, we're going to see a very market-focused reaction on both sides of the Atlantic, which fuses our optimism -- fuels our optimism, sorry, for my language. Operator: And the next question comes from Andrew Lobbenberg from Barclays. Andrew Lobbenberg: Can I ask about IATA, we haven't spoken about that beautiful pretty picture on the slide of the planes? How are you thinking about the decision to take majority in general? And then how are you thinking about it in the context of the unsettling events in the Gulf? And then can I just come back to the scale of current bookings? You've given us really precise figures on how bookings have come in for those destinations in the range of the Gulf that have gained. What has happened to booking inflows for short-haul Europe? What has happened to booking inflows on the North Atlantic in that short time period? Till Streichert: So look, first of all IATA, on it, maybe I'll just divert the sac, and just IATA has done a good 2025. Organically, they've reached breakeven on adjusted EBIT, which is positive, which is great. And you can actually back-calculate what also their overall net income was. Our 41% contributed with EUR 90 million. On our side, I do see many benefits of calling and integrate -- calling early and integrating IATA faster. We've made very good progress throughout last year. But as you can imagine, with the call option being open to be decided in June, we will keep our options open, and we continue to assess and then take a decision nearer by the time and will communicate. Secondly, on the different travel on the -- sorry, your second question was on Europe and North Atlantic in terms of sentiment, travel sentiment. We actually have so far not observed worsening of travel sentiment or also bookings in intra-Europe or North Atlantic but of course, it's to be seen. Operator: And the next question comes from Ruairi Cullinane from RBC Capital. Ruairi Cullinane: What have you done to Middle East capacity this summer? And linked to that, should we expect the EUR 5 million per week cost of cancellations to tail off even if the conflict doesn't come to an end soon? And then secondly, are you any less comfortable hedging fuel through Brent and the gas oil and leaving spread to jet fuel unhedged? Could you consider that in the future? Till Streichert: First of all, Middle East, I've given you an idea of the sizing. Last year, it was about 2% of our capacity. In Q1 normally that would have been 3%. Remember, last year, there was also a bit of on and off of flying into the Middle East, and this is why it was 2%, and we had it increased it a little bit. So I think what I've given you now is a EUR 5 million negative impact while we are not flying will rather go down because it does include, of course, a view on the cost of care. We took a view now of also those additional costs that is just on the ones where we actually need to care -- where we need to support, while also passengers guests are staying still need to be repatriated or flown back. If it stays long, we will clearly reallocate capacity. And then even this element of what I called negative impact or lost business from Middle East will obviously go away. And therewith, I would say this is not so much of an impact medium term. In terms of strategy of hedging, look, I think I've described it probably to the fullest extent I can do on this call. And we -- our hedging strategy is clearly designed through options and that's different to swaps where we want to participate, also in the downwards movement and therefore, I'm comfortable with the strategy that we have so far in place. Operator: And the next question then comes from Antonio Duarte from Goodbody. Antonio Duarte: The first one is on ancillaries. So 15% growth year-on-year, clearly doing very well, namely with Allegris rollout. Could you give us some color here where you see these terms of ranges going forward? And my second question is turning to the MRO. As you said, a bit of a margin compression seen in '25, a bit of recovery expected from your defense, et cetera. Would you be comfortable with the full recovery from the margin seen in '24? And any color on that would be great. Till Streichert: Okay. Let me make a start just on ancillaries. We have explained what we've seen on Allegris. And the additional seat options and also ancillary sales overall. If I split that, I do believe that the ancillary sales as such has got substance to continue. But of course, it's hard to be at a double-digit rate going forward, just a law of big numbers at one point in time. Therewith, I would like to go back to the Allegris element within the ancillaries. And here, we clearly see the benefit of selling the different seat options. And the main driver of that is obviously the number of aircraft coming with the Allegris cabin into it, and that has got runway and gives us longevity to continue to grow the ancillary sales category. Carsten Spohr: We always call it the big 3, Antonio, baggage, seating upgrades. And that, I think, will continue to drive ancillaries up as Till explained, with Allegris, of course, a special push. MRO, you know that in '25, MRO was suffering almost -- as the only part of the Lufthansa Group under tariffs, which, as you well know, for airplanes and engines don't apply. These tariffs, as we all know, have been ruled illegal by the Supreme Court. So at least they don't go forward. Probably there will also be reimbursements as we all know. So that will be definitely 1 of the reasons why we believe we can not only get back to '25 -- sorry, '24 margins in MRO, but we will continue to go towards the 10% we have planned for the end of the decade. And I'll leave that defense element out, which as I mentioned before, we'll see, I think, another support for the strategic development of Lufthansa Technik, even though it doesn't necessarily monetize short term. But again, we are committed to our 10% margin in '23. And some of the ramp-up costs we had in for Canada, for Portugal also won't repeat themselves. So overall, my optimism continues. Operator: Ladies and gentlemen, this was the last question. I would now like to turn the conference back over to Marc-Dominic Nettesheim for any closing remarks. Marc-Dominic Nettesheim: Thank you very much for your questions, for your interest and for the lovely discussion. We are happy to continue this from the Investor Relations side. We wish you a lovely afternoon and talk to you soon. Bye-bye. Operator: Ladies and gentlemen, the conference has now concluded, and you may disconnect. Thank you for joining, and have a pleasant day. Goodbye.
Operator: Good afternoon. Thank you for joining Tetragon's 2025 Annual Report Investor Call. [Operator Instructions]. The call will be accompanied by a live presentation, which can be viewed online by registering at the link provided in the company's conference call press release. This press release can be found on the shareholder page of the company's website, www.tetragoninv.com/shareholders. [Operator Instructions]. As a reminder, this call is being recorded. I will now turn you over to Paddy Dear to commence the presentation. Patrick Giles Dear: As one of the principals and founders of the Investment Manager of Tetragon Financial Group Limited, I'd like to welcome you to our investor call, which we will focus on the company's 2025 annual results. Paul Gannon, our CFO and COO, will review the company's financial performance for the period. Steve Prince and I will talk through some of the detail of the portfolio and performance. And as usual, we will conclude with questions, those taken electronically via our web-based system at the end of the presentation as well as those received since the last update. The PDF of the slides are now available to download on our website. And if you are on the webcast, directly from the webcast portal. Before I go into the presentation, some reminders. First, Tetragon's shares are subject to restrictions on ownership by U.S. persons and are not intended for European retail investors. These are described in detail on our website. Tetragon anticipates that its typical investors will be institutional and professional investors who wish to invest for the long term and who have experience in investing in financial markets and collective investment undertakings who are capable themselves of evaluating the merits and risks of Tetragon shares and who have sufficient resources both to invest in potentially illiquid securities and to be able to bear any losses that may result from the investment, which may equal the whole amount invested. I would like to remind everyone that the following may contain forward-looking comments, including statements regarding the intentions, beliefs or current expectations concerning performance and financial condition on the products and markets in which Tetragon invests. Our performance may change materially as a result of various possible events or factors. So with that introduction, let me hand over to Paul. Thank you, Paddy. Paul Gannon: Tetragon continues to focus on 3 key metrics when assessing how value is being created for and delivered to Tetragon shareholders. Firstly, how value is being created by an NAV per share total return. Secondly, how investment returns are contributing to value creation measured as a return on equity or ROE. And finally, how value is being returned to shareholders through distributions, mainly in the form of dividends. The fully diluted NAV per share was $41.88 at the 31st of December '25. NAV per share total return was 19.6% for the year. And since the IPO in 2007, Tetragon has now achieved an annualized NAV per share total return of 11.2%. For monitoring investment returns, we use an ROE calculation. This was 23.4% for 2025 full year, net of all fees and expenses. The average annual ROE achieved since IPO is now standing at 12.1%, which is within the target range of 10% to 15%. On to the final key metric, Tetragon declared a dividend of $0.12 for the fourth quarter 2025. That's an increase from $0.11 in Q3 and represents a dividend of $0.45 for the full year. Based on the year-end share price of $17.35, the last 4 quarters dividend represents a yield of approximately 2.6%. This next slide shows a NAV bridge breaking down into its component parts, the change in Tetragon's fully diluted NAV per share, starting at $35.43 at the end of 2024 to $41.88 per share at the end of 2025. Investment income increased NAV per share by $11.24 per share. Operating expenses, management and incentive fees reduced NAV per share by $2.78 with a further $0.29 per share reduction due to interest expense incurred on the revolving credit facility. On the capital side, gross dividends reduced NAV per share by $0.44. There was a net dilution of $1.28 per share, which is labeled as other share dilution in the bridge. This bucket primarily reflects the impact of dilution from stock dividends plus the additional recognition of equity-based compensation shares. I will now hand it back over to Paddy. Patrick Giles Dear: Thanks, Paul. As on previous calls, before we delve into the details of our performance for the year, I'd like to put the company's performance in the context of the long term. Tetragon began trading in 2005 and became a public company in April 2007. So the fund has almost 21 years of trading history. What this chart does is show the NAV per share total return, which is that thick green line and the share price total return, which is the dash green line and shows them since IPO. The chart also includes equity indices, the MSCI, ACWI and the [ FTSE ] all share and also includes the Tetragon hurdle rate, which is SOFR plus 2.75% approximately. As you can see in the graph, over the time that Tetragon has been trading as a publicly listed company, our NAV per share total return is 631%. We believe that our somewhat idiosyncratic structure of a listed fund owning alternative assets and a diversified alternative asset management platform has enabled us to create an alpha-driven ecosystem of ideas, expertise, insights and connections that helps us to generate investment returns. Continuing the theme of looking at the long term, here are some more performance metrics. Our ROE or investment return for the year, as Paul said, is plus 23.4%. Our target is 10% to 15% per year over the cycles, and our average since IPO is 12.1% per annum. So to date, we are achieving that target. Thus, this year's performance is an outlier, but on the positive side. The table also shows that over 39% of the public shares are owned by principals of the investment manager and employees of Tetragon Partners. We believe this is very important as it demonstrates a strong belief in what we do as well as a strong alignment of interest between the manager, our employees and Tetragon's shareholders. This next slide shows the breakdown of the $3.9 billion of net asset value by asset class. Now over the year, we've reorganized the asset classes from prior reporting periods, and it reflects the current mix of our portfolio based on the underlying assets and fund structures. So to give you some color on that, Westbourne River Event fund and other funds have been reclassified to equity funds from event-driven equities. Acasta funds have been reclassified to credit funds previously under the event-driven equities, convertible bonds and other hedge funds. U.S. CLOs and Tetragon Credit Partners funds have been reclassified to credit funds, and that's from previously bank loans. Contingency capital funds have been reclassified to credit funds from legal assets. Hawke's Point funds have been reclassified to equity funds from private equity and venture capital. And lastly, the new Tetragon Life Sciences Fund has been classified to equity funds from other equities. So these colored disks show the percentage breakdown of the asset classes and strategies as at year-end 2025, and that is on the left and compares them with where they were the previous year at the end of 2024 on the right. So a couple of points to highlight. Tetragon's investment in private equity stakes in asset management companies, so this is collectively known as Tetragon Partners, is now 45% -- sorry, 42%, down from 45%, and that is mainly driven by the partial sale of Equitix during the year. Private equity and venture capital grew to 21% from 17%, and that is mainly driven by the gains in Ripple. Equity funds, which comprise investments managed by Hawke's Point, Westbourne River, Tetragon Life Sciences, et cetera, are at 22% from 20%, and that's driven by gains primarily in Hawke's Point. And the credit funds, which now comprise investments managed by contingency and Acasta as well as CLOs are 5% of NAV versus 9% in the previous year, and that is driven predominantly by declines in CLOs, but also a redemption in Acasta. It's worth a slight pause to reiterate that last point. Many people have thought of Tetragon as a CLO business, but to reiterate, bank loans in total as an asset class are now down to less than 5% of the portfolio. And so I think those of you who have long memories will remember the IPO nearly 20 years ago, and we were probably about 96% in CLOs. So a dramatic change over the years in terms of our portfolio allocation. Now let's move on to discuss the performance in more detail. The NAV bridge that Paul showed was a high-level overview of NAV per share. And this table shows a breakdown of the composition of Tetragon's NAV at the end of 2024 versus the end of 2025 by asset classes and the factors contributing to the changes in NAV. Thus this table shows the investment performance plus capital flows and so tying back to that change in NAV. As you can see from the bottom row of the table, the aggregate investment performance during 2025 was mainly driven by the same 3 investments, which were the strongest performance in 2024. First, Tetragon Partners ownership or GP stake in Equitix. Equitix is a leading international investor, developer and fund manager in infrastructure, and it was the strongest positive contributor in 2025 with a gain of $432 million. During the year, Hunter Point Capital, HPC, acquired a 16.1% stake in Equitix at an enterprise value of GBP 1.3 billion, excluding net debt. Post transaction, Equitix remains Tetragon's largest position. Equitix is a leader in a sector where we continue to see significant runway for innovation and growth. Second, Tetragon's investment in Ripple Labs contributed $333 million of gains in 2025. Ripple Labs is a top U.S. enterprise blockchain company, underpinned by the XRP token and XRPL cryptocurrency ledger. In 2025, the company benefited from various tailwinds, including the final resolution of the SEC's lawsuit, significant platform expansion, U.S. cryptocurrency policy developments. And the shares also benefited from multiple share tender offers. In the fourth quarter, Ripple followed a tender offer, valuing the company at $40 billion with a strategic investment round at the same valuation backed by Citadel, Fortress, Brevan Howard and Galaxy. And the third big mover, investments in funds managed by Hawke's Point which is Tetragon Partners resource finance business. These generated gains of $260 million, led by their largest strategic investment, Ora Banda Mining Limited, an Australian gold mining exploration and development company. On the negative side, investments with exposure to bank loans via collateralized loan obligations or CLOs, led losses in 2025. This includes $117 million decline in LCM, our CLO manager, owned within Tetragon Partners, where AUM continued to fall through the year. Indeed, separate equity investments in older vintage CLOs contributed an additional $32 million to losses, including vehicles managed by Tetragon Credit Partners. As I've said before, but I'm very happy to reiterate, it's hard to imagine 3 less intrinsically correlated investments. These 3 investments exemplify our diversified approach, our focus on identifying attractive alternative investment strategies that may be hopefully more likely to have low correlation to markets and indeed to each other. Now to take you through the asset classes in more detail. Firstly, our private equity holdings and asset management companies had gains of $355 million. And these asset management businesses continue to grow and perform well, and this was the best performing segment and obviously includes Equitix that I've mentioned. Secondly, equity funds gained $296 million on the year. And again, as I've mentioned, that includes the Hawke's Point funds. Thirdly, the credit funds had losses of $19 million, the losses mainly generated through CLOs -- and through CLOs. Real estate had a loss of $10 million. And lastly -- sorry, and private equity and venture capital had a gain of $342 million, and this includes Ripple as a direct private equity investment. Lastly, other equities and credit had a gain of $63 million. So now what we're going to do is go through more detail on each category. And to do that, we'll start at the top with Tetragon Partners, our private equity investments business in asset management companies, and I'll pass over to Steve. Stephen Prince: Thanks, Paddy. Before I review the performance of the constituent businesses of Tetragon Partners, I wanted to discuss the renaming of the business from TFG Asset Management that occurred at year-end. Over the last several months, we have been taking steps to simplify the way we present Tetragon Financial Group, both on our website and in our annual report, refining the description of the company's investment strategy and the ways that we invest. Initially, as Paddy mentioned earlier, Tetragon focused on CLO equity and invested exclusively with external managers. However, even during its initial public offering in 2007, Tetragon was built with the capability to invest in alternative assets and strategies, both partnering with asset managers who offer differentiated expertise and by making direct idiosyncratic investments. Beginning in 2010, when we acquired Loan Manager LTM, Tetragon began that journey of building asset management businesses. This first transaction was followed by our real estate joint venture, GreenOak, which eventually became BentallGreenOak or BGO. That was followed by the acquisitions of hedge fund specialist Polygon and our infrastructure manager, Equitix. More recently, we launched Hawke's Point and Banyan Square and Contingency Capital. Our asset management businesses give Tetragon the capability to invest as an LP in the underlying strategies and to benefit from the growth in the value of our GP stakes. In renaming our asset management platform, Tetragon Partners, we have sought to emphasize that an important part of Tetragon's growth has been our success in Tetragon Financial Group and TFG Asset Management, now Tetragon Partners, partnering with asset managers who offer us this differentiated expertise. Through the combination of these partnerships and Tetragon's direct idiosyncratic investing, the diversification of our exposure now ranges from event-driven arbitrage to legal assets from life sciences to AI and machine learning from GP stakes in asset management businesses to digital assets and from mining and resource finance to infrastructure, venture capital co-investments and beyond. I would now like to move on to the performance of the Tetragon Partners segment during 2025. Our private equity investments in asset management companies through this group, Tetragon Partners, recorded an investment gain of $355 million during 2025 driven by our investment in Equitix. Equitix is a leading international investor, developer and fund manager in infrastructure. Tetragon's investment in Equitix was the strongest positive contributor in the portfolio for the year. Tetragon's investment made a gain of $432.2 million in 2025, driven by a combination of: a, a higher valuation as the valuation approaches were calibrated towards the transaction that I will talk about in a moment, where we sold a minority stake, foreign exchange gains as the pound gained 8% against the U.S. dollar, approximately 50% of the value of Equitix is hedged; and lastly, dividend income of $9.4 million received from Equitix during the year. So let me spend a moment on the minority stake transaction we consummated with Hunter Point. In October 2025, Tetragon completed a sale of a minority stake in Equitix to Hunter Point or HPC, an independent investment firm providing capital solutions and strategic support to alternative asset managers. HPC acquired a 16.1% stake in the business at an implied enterprise value of GBP 1.3 billion before accounting for net debt. HPC's stake was acquired from existing investors, approximately 14.6% from us, Tetragon Partners and 1.5% from Equitix Management. Today, Tetragon holds 66.4% of Equitix. Our investment in BGO, a real estate-focused principal investing lending and advisory firm generated an investment gain in 2025 of GBP 54.8 million. Distributions to Tetragon from BGO totaled $19.9 million during the year, reflecting a combination of fixed quarterly contractual payments and variable payments. The valuation of BGO, I should point out, is on a discounted cash flow basis with an assumed exit upon the exercise of the call option in 2026, which I'll talk about in a moment. The exercise price is determined based on the average EBITDA of BGO during the 2 years prior to the exercise of that option. So the main driver of the gain in BGO during the year was an increase in the value of the put/call option due to a higher EBITDA achieved than was previously forecast and an unwinding of the discount at which we hold that -- the value of that option as we got closer to the exercise date. As discussed previously, as I have been discussing, the put call is exercisable in 2026, 2027. And that was put in place in 2018 when Sun Life Financial acquired GreenOak and formed BGL. So I now want to talk about a subsequent events after the year-end. In February '27, Sun Life Financial exercised its option to call our position in BGO, and that transaction is settling in this month in March. Tetragon Partners also agreed as part of that transaction to relinquish certain ongoing rights it has held in the business. We will be retaining -- Tetragon Partners will be retaining its ownership of carried interest in all existing GreenOak and BGO real estate funds as well as its LP interest in a number of those funds. However, going forward, given that Tetragon Partners has monetized its 13% stake in BGO, we will no longer be including BGO as one of our partners on the platform. Moving on to LCM. LCM is a bank loan asset management company that manages loans through collateralized loan obligations, or CLOs. That business generated a loss of $116.5 million during the year as the valuation of LCM decreased for the following reasons: First of all, LCM's AUM fell to $6.6 billion at the end of 2025, which was 25% lower than the prior year's AUM of $8.8 billion. That was due both to the amortization of LCM's existing deals and the fact that LCM did not issue any new deals during 2025. Due to the current issuance volumes that we're seeing from LCM, the future capital raising assumptions in the model were reduced by the valuation agent, which lowered the value of the business. These factors also led to lower EBITDA and the market multiple approach, lower cash flows used in the DCF valuation and a lower discount rate by about 150 points and a lower EBITDA multiple in valuing the business. The EBITDA multiple was reduced from 12.5x to 10.9x. Tetragon Partners' other asset managers consist of 8 diversified alternative asset managers, Westbourne River Partners, Acasta Partners, Tetragon Global Equities, Tetragon Credit Partners, Hawke's Point, Banyan Square, Contingency Capital and Tetragon Life Sciences. Details of each of those businesses can be found in Tetragon's annual report and most of them on Tetragon's website. The collective loss on Tetragon's investments in these managers and the platform was $15.3 million during the year. That's primarily owed to the working capital support that we're providing to these relatively nascent businesses. Paddy is now going to go over our fund investments. Patrick Giles Dear: Thanks, Steve. Tetragon invests in equities, primarily through funds managed by Hawke's Point, Westbourne River Partners, Tetragon Life Sciences and Tetragon Global Equities, so all part of Tetragon Partners. These investments generated a gain of approximately $300 million for the year of 2025, and that was driven by gains in Hawke's Point funds and co-investments that we've discussed. But a little bit more color. Tetragon's resource finance investments managed by Hawke's Point generated a gain of $260 million during '25, primarily driven by the investment in Ora Banda Mining Limited, an Australian gold mining project. This company had a strong 2025 with positive developments in a number of its mines, leading to its stock performing well. In addition, its shares were added to the ASX 300, the ASX 200 and the MVIS Global Junior Miners Index. Tetragon invested an additional $15.1 million into Hawke's Point as it added an investment in an Australian copper producer and increased its investments in another Australian gold mining project. A partial liquidation of investments in Ora Banda produced distributions of $108.4 million during the year. And additionally, Tetragon committed $9.9 million to Hawke's Point Critical Metals Fund. Our investments in Westbourne River European event-driven strategies were flat in 2025. For context, the net performance for the fund was plus 10.3% for its [indiscernible] share class and down 1.6% in its low net share class. Gains in M&A and corporate restructuring trades were offset by weakness in dislocation names and in the no net class, the portfolio hedge. The new Tetragon Life Sciences Fund invests in both public and private equities, targeting opportunities throughout the drug development cycle. The investment strategy is focused on high-impact therapeutic areas such as immune-mediated diseases, cardiometabolic and renal conditions, neurological disorders, rare diseases and precision oncology. In 2025, Tetragon invested just over $100 million of capital and received $62.6 million from sales and had a gain to the NAV of $30.5 million. Other equity funds, investments in other equity funds had a gain of $6.1 million during 2025. Now moving on to credit funds. Tetragon invests in credit primarily through contingency capital funds, Acasta Partner funds, Tetragon Credit Partners funds and LCM managed CLOs. This segment in aggregate had a loss of $18.5 million. First, contingency capital. These funds combine credit structuring and legal underwriting to create pools of legal assets and lend against them in a manner consistent with how a traditional asset-based lender would lend against receivables or inventory. Tetragon has committed capital of $74.5 million to contingency capital vehicles, [ 55.2 ] million of which has been called to date, and a gain of $5.5 million was generated from this investment during the year. Second, Acasta Partner Funds. The Acasta Global Fund invests opportunistically across the credit universe with a particular emphasis on convertible securities, distressed instruments, metals and mining and volatility-driven strategies. Acasta Partners also manages the Acasta Energy Evolution Fund for portfolio targeted opportunities driven by the transition of energy to renewable resources. Tetragon's investment in Acasta funds generated a gain of $8.3 million during the year, and Tetragon reduced its holding in Acasta Global Fund by $50 million during the year. Thirdly, Tetragon Credit Partners Funds. Tetragon invests in bank loans indirectly through Tetragon Credit Partners Funds, TCI II, TCI II, TCI IV and TCI V, a CLO investment vehicles established by Tetragon Credit Partners. During 2025, Tetragon's investment in funds generated $26.3 million in cash distributions and had a P&L loss of $8.7 million. Performance was negatively impacted by both realized and unrealized losses on older vintage loan exposures. And finally, U.S. CLOs. Tetragon invests in bank loans through CLOs managed by LCM, primarily by taking the majority positions in the equity tranches. Directly owned U.S. CLOs generated a loss of $23.6 million in 2025, and this performance was driven by realized and unrealized losses. During the year, investments in this segment generated $24.7 million in cash proceeds. Next is real estate. Tetragon's real estate investments are primarily through principal investment vehicles managed by BGO. And these investments are geographically focused and include investments in the U.S., Canada, Europe and Asia and generally take an opportunistic private equity style investment. BGO funds and co-investments had a net loss of $13.6 million in 2025 and due to losses mainly in the U.S. investments. And as Steve mentioned earlier, we will continue to hold these investments to fruition. Other real estate, Tetragon holds investments in commercial farmland in Paraguay, managed by a specialist third-party manager in South American farmland. And this investment generated an unrealized gain of $3.4 million after third-party revaluation in 2025. And with that, let me hand back to Steve. Stephen Prince: Thanks, Paddy. Tetragon's private equity and venture capital investments were a significant driver of performance during the year, generating gains of over $340 million. Investments in this category are split into the following subcategories: the largest contributor to investment gains was in the direct private equity bucket, which produced a gain of $326 million during the year. This related to Tetragon's investment in the Series A and Series B preferred stock of Ripple Labs. Paddy touched on this investment earlier, but as a reminder, Ripple is a U.S. enterprise blockchain company underpinned by the XRP token and the XRPL cryptocurrency ledger. The gain in this investment was driven by an increase in the price of Ripple shares observed in the private market from $64.50 at the end of 2024 to $150 per share by the end of 2025. During the year, Ripple conducted 3 tender offers, one at a price of $125 a share, one at $175 a share; and lastly, one at $250 per share. Tetragon participated in these tender offers and received $65.7 million in cash receipts during the year. Secondly, I'll cover PE investments in externally managed private equity funds and co-investment vehicles. Those investments are in Europe and North America. They're spread across 41 different positions, and they generated gains of $11 million during the year. Lastly, investments in Banyan Square's portfolio companies generated a gain of $5 million. Banyan Square has 17 positions across its 2 funds, and those investments are across application software, infrastructure software and cybersecurity. Now I'm going to cover our other equity and credit segments. We make direct investments from our balance sheet, and they target idiosyncratic opportunities. And they're typically single strategy ideas, they're opportunistic and they're catalyst-driven. These investments range from listed instruments to private investments, and they cover a broad range of assets. The breadth and diversity of our LP investments in managed funds, including through Tetragon Partners managers and our relationships with the managers on and off the Tetragon Partners platform create co-investment opportunities and ideas, which we may develop in as direct investments. This segment generated a gain of $63 million during the year and at the end of the year, comprised 15 positions. Over half the value of these positions is in shares of UiPath, which is an equity position and is our seventh largest holding at the end of the year. UiPath is a global leader in Agentic automation, which -- and they focus on helping enterprises harness the full potential of AI agents to autonomously execute and optimize complex business processes. I want to lastly cover Tetragon's cash. At the end of the year, cash at the bank was $27.1 million. The net cash balance, let me go through, however, $27 million cash at the bank, $350 million drawn on our credit facility, $0.6 million net due to brokers, $7.1 million positive in receivables and payables gives us a net cash position of $316.4 million negative -- negative $316.4 million. During the year, Tetragon increased the size of its credit facility from $500 million -- or to $500 million, I'm sorry, from $400 million, and we extended the maturity date out to 2034. At the end of the year, as I just mentioned, going through the net cash position, $350 million of our facility was drawn. And of course, this liability is incorporated into the net cash balance calculation. We actively manage our cash to cover future commitments and enable us to capitalize on opportunistic investments and new business opportunities. During the year, Tetragon used $380.8 million of cash to make investments $23.7 million to pay dividends. We received $711.6 million of cash from distributions and proceeds from the sale of investments. And finally, our future cash commitments are just under $100 million, $99.9 million. Those include investment commitments to private equity funds of $35 million, a commitment to contingency capital of $19.3 million, BGO funds of $20.7 million, a commitment to Tetragon Partners, their latest fund of $15 million and a commitment to Hawke's Point of $9.9 million. I now want to hand the call back to Paddy. Patrick Giles Dear: Most of the questions actually fit into 3 very specific areas. So rather than read each question, which might get a little dull, I've decided to amalgamate them. Apologies if I don't read out your questions word for word, therefore. But the 3 areas are, first, lots of questions about the discount to NAV and what management are doing about it. Second theme is several questions about buybacks and what we're doing and what we might be likely to do. And the third on a thematic basis is questions surrounding the sale of BGO and just asking for more clarity in various different ways. So what I'd like to do is start by answering the third question first because it does have impact on the others. And that is BentallGreenOak. So the relevance of this is it's an update post year-end. So the annual report stands for the year-end, but the very detailed minded amongst you will have seen on Page 87 of the annual report, and there is a line item for subsequent events. It's a small item, so easily missed, but an important one to refer to. And so although Steve and Paul have given you some detail, I'd like to give you a little bit more detail on that. So on the 27th of February this year, the call to buy Tetragon's stake in BGO was exercised by Sun Life of Canada. And that call will settle in March, so this month. And what it means, just to reiterate what Steve was saying, is that Tetragon has sold its total ownership in the BGO management entities and any associated ongoing rights that Tetragon had. Tetragon remains an investor in several BGO funds as an LP, and Tetragon still retains its existing participation and carried interest in the [indiscernible], GreenOak and BGO funds. So that is no change. But Tetragon no longer has any financial interest in the equity of the management companies. And thus, BGO will no longer be referred or referenced as a line item within Tetragon Partners. So I think the important point or mediacy is what does that mean for the effect on the NAV for Tetragon and Tetragon's cash. So let's start with the first of those. In addition to the call exercise, Tetragon agreed to relinquish all its ongoing rights for a payment of $155 million. This $155 million is accretive to the year-end NAV, and we expect that to be reflected in the February NAV when that is released. Separately, the call proceeds net of tax are expected to be in line to a little bit above what was in the December NAV. So just to reiterate, the $155 million, we believe will be accretive to the year-end NAV and the call proceeds will be in line with our December NAV or possibly a little bit above. Second theme here is cash. So when these transactions settle in March, we will receive approximately $475 million gross in proceeds in cash, but we will need to pay tax on some of this. So really, that brings me to the second question, which is about the cash position and how that leads into dividends and buybacks. So to update on cash, which is a little bit of an update from year-end, I'm going to start with the January fact sheet that everyone has hopefully seen. The cash position for the company at the end of January was minus $413 million. As Steve says, we have a capacity on a revolver of $500 million. And we also have capacity from lending from our prime brokers on liquid securities. So that is how the $413 million is funded is a combination of those 2. So when we receive $475 million from the sale, we will put that cash first to pay taxes. We're unsure the exact amount right at the moment. The second thing, as we've announced this morning, is we plan to spend $50 million on buying back Tetragon shares in the market. And then the immediate use for the others will be to pay down the existing debt. So that's the immediate use. It's worth just reiterating that longer-term cash usage remains a continued balance between investments, buybacks and dividends. And I would say that if we're looking at the balance between just buybacks and dividends, we currently have a preference for buybacks rather than dividends. The reason for that is partly the noncash flowing nature of the portfolio. And therefore, it's easier to spend lump sums of cash rather than dividends, which are an ongoing source of cash. And secondly, we have a preference for buybacks when there's a large discount to NAV because obviously, a large discount to NAV means that buybacks are accretive to NAV per share. And indeed, at the current share price, we believe this buyback that we are talking about today will be accretive to the NAV per share. So the third theme here is a very important one. It's a common theme, and that is what our management doing about the discount to NAV. And I'm afraid there is no simple answer to the solution. And everyone within the industry is aware of that fact. There's certainly no silver bullet. And I think followers of the U.K. closed-end market will know that this, in particular, is a market-wide issue currently. That's not a reason not to address it, but it's an important one to take into account. And forgive me if some of you or many of you have heard me on this topic before, but I don't think the answers are different. In fact, they remain the same and probably will broadly remain the same for anyone in the closed-end fund industry. And that is if one starts at the most sort of simplistic approach to address the issue, you need to find more buyers and sellers of the shares. And we believe the single most important objective to achieve that is performance. And over the years, it's compounding that performance. So driving value through increase in the NAV per share. But also, I think we have to come to a point where shareholders believe in the future performance because obviously, that is what drives the NAV going forward. So to that end, and we alluded to this in the presentation, it's not only the performance that we try and focus on, but what we think of as, call it, the engine that drives that performance. And what do I mean by that, but really is the -- our ability to generate future performance. So it's improving idea sourcing, idea generation, how we underwrite those ideas, how we risk manage those ideas, et cetera. Now if we're good at that, we then need to get people to understand what we do. We need to explain why. We need to give people confidence in the process. And sometimes that's difficult given the complex nature of some of our investments, whether it be crypto or technology or legal assets, structured credit. A lot of these are not mainstream investment assets or strategies. So we look to educate the market, and we look to our joint brokers or JPMorgan and Jefferies to help in that process, but -- and others. We're always looking to improve the quality and transparency of our reporting. I think you'll see a lot of changes in the annual report, hopefully, for the better. And indeed, that goes to monthly and websites, et cetera. We've talked a bit about dividends and buybacks, but I think they are the most tangible results of performance. If we are generating good returns and cash, that gives us the ability not only to pay ongoing dividends, but also to do one-off buybacks that can help returning capital to shareholders. But I would stress on this last point, our belief is that whilst buybacks can be very accretive to NAV per share, they don't solve the issue of a persistent discount. Indeed, there's evidence not only from the 20 years of observing the performance of our shares, there are plenty of other closed-end funds that have wide discounts that have not been affected by buybacks either. So it's not just our own information on that point. And to put some numbers to that, Tetragon's buybacks to date, not including today's announcement, we've spent $860 million on buybacks, and that's in addition to just under $1 billion in dividends. And as we're all painfully aware, that has had minimal impact on the discount. So to sum up there, we believe those buybacks are accretive. We like doing them, but we don't think they solve the problem of the discount. So those are the sort of 3 large thematic questions we received. There is one rather more specific question, and that is on Ripple. And the question is, can you tell us a bit more about how you value your investment in Ripple Labs. And for that, I'm just going to hand over to Paul, as CFO. Paul Gannon: Thanks, Paddy. So as a reminder, Tetragon holds approximately 3.4 million of the Series A and B preferred stock. This is unlisted, but does trade on private platforms, and we have access to more than one of these. In addition, we also have direct relationships with some brokers who trade the stock. And so in arriving at a valuation, we're looking to both of these sources. At the 31st of December, the position was valued at $150 per share. And we also utilized the services of an independent valuation agent who determined a fair value range for the stock and $150 per share was within that range. Back over to you, Paddy. Patrick Giles Dear: Great. Thanks, Paul. That completes the Q&A session. So just leaves me to thank you once again for participating and wishing you all a very good weekend. Thank you. Operator: This now concludes your presentation. Thank you all for attending. You may now disconnect.