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Operator: Ladies and gentlemen, thank you for standing by. I'm Paulina, your Chorus Call operator. Welcome, and thank you for joining the Turkcell's conference call and live webcast to present and discuss the Turkcell Fourth Quarter and Full Year 2025 financial results. [Operator Instructions] The conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Mrs. Ozlem Yardim, Investor Relations and Corporate Finance Director. Mrs. Yardim, you may now proceed. Ozlem Yardim: Thank you, Paulina. Hello, everyone, and welcome to Turkcell's 2025 year-end earnings call. On the call today, we have our CEO, Ali Taha Koc; and CFO, Kamil Kalyon. They will provide an overview of our operational and financial results for the quarter and the year, followed by a Q&A session. Before we begin, I would like to kindly remind you to review our safe harbor statement, which is available at the end of our presentation. With that, I will now turn the call over to Mr. Ali Taha Koc. Ali Koç: Thank you, Ozlem. Good afternoon, everyone, and thank you for joining us today. We closed 2025 with a strong finish, exceeding all of our expectations. Revenues increased by 11%, and we achieved an EBITDA margin of 43.1%. Net income from continuing operation reached TRY 17.8 billion, up 23% year-on-year. These outcomes reflect disciplined execution and strong momentum across the business. 2025 was pivotal for our long-term strategic positioning. We were awarded the largest spectrum in the 5G auction and secured our fiber footprint through the agreement with BOTAS. This will strengthen our network leadership and expand our capacity to capture 5G demand. We maintain a robust balance sheet through prudent financial management. This preserves flexibility and liquidity. We delivered shareholder returns through a solid dividend payment and launched a 3-year share buyback program. Turkcell is a technology company. We are reinforcing that identity through focused investments. In 2025, we allocated 15% of CapEx to strategic areas, primarily in data center, cloud infrastructure and renewables. These investments deepen our digital infrastructure, enhance energy resilience and support long-term value creation. A major milestone for Turkiye is our strategic partnership with Google Cloud. We are building a hyperscale cloud region in Turkiye. This cloud region will help enterprises accelerate cloud adoption to secure their data sovereignty as well as excess advanced capabilities in AI, cybersecurity and digital platforms. Turkcell is at the center of Turkey's digital transformation. With this partnership, Turkcell will have sustainable technology-led growth. Next page, please. Over the past 3 years, we have executed with discipline to show that Turkcell's leadership in connectivity and digital infrastructure. This transformation shapes how we operate today and how we allocate capital to deliver long-term value creation. Our capital allocation framework is built on 3 pillars. First one, investing in our business to sustain leadership and capture future growth. We continue to advance mobile rollout and expand our fiber footprint with 5G. Our fixed wireless access solution Superbox will extend our coverage beyond fiber. In parallel, we are investing in data centers and cloud, which will bring future growth. As we scale this business, we may also evaluate selective inorganic opportunities. Our expected CapEx intensity of around 25% reflects this investment cycle. The second one, delivering attractive shareholder returns. Last year, we distributed 72% of net income from continuing operations. This is our ninth consecutive year of dividend distribution, 9 consecutive years. We also launched a new share buyback program and repurchased $58 million of shares to date, reflecting our confidence in long-term value of our business. Thirdly, maintaining a strong balance sheet. We continue to diversify our funding sources from sustainable bond issuance to Islamic financing structures. We remain committed to maintaining net leverage below 1x, preserving flexibility to invest in growth while continuing to support shareholder returns. Overall, we have a crystal clear capital allocation plan to invest in strategic infrastructure, capture structural global opportunities and deliver sustainable shareholder value. Next page, please. We can now move to the quarterly performance. The fourth quarter marked another period of solid execution for Turkcell's leadership. Performance was driven by operational excellence and supported by our key growth engines. With outstanding performance across all core segments. In this quarter, revenues grew by 7% year-on-year to TRY 63 billion. Results were underpinned by ARPA expansion, continued subscriber momentum and scaling of our data center business. All of these reinforce the strength and resilience of our growth model. Group EBITDA increased 12% to TRY 26 billion, reaching a solid 41.2% margin. Margin expansion reflects continued cost discipline and as well as the operational efficiency. Focused financial management also supported our bottom line with net income from continuing operations increasing 11% to TRY 3.6 billion. We achieved 905,000 net postpaid additions in the fourth quarter. This is the strongest quarterly result in the last 6 years. This was driven by targeted value propositions as well as customer-focused strategy. Another good news, this growth also came with real ARPU expansion, reflecting balanced growth. On the other hand, our data center and cloud business continued to scale with revenues growing by 32%, renewable energy installed solar capacity reached 62.2 megawatts. Next, please. Let us turn to the key operational highlights that shape our great quarter. Competition remained elevated for much of the year, but it is moderately in the middle of the fourth quarter. 2025 was marked by record high mobile number portability. In this environment, our customer-centric approach and pricing strategy helped us strengthen our market leadership and expand our customer base. We had 2.4 million postpaid net additions for the year 2025, the highest level in the past 26 years. Rising share of the postpaid subscribers was a key driver of revenue growth. It increased by 4.7 percentage points year-on-year to reach 81%, strengthening the resilience and the visibility of our revenue base. Revenue quality also improved. Through our micro segmented pricing actions and AI-supported offers we migrated a significant portion of our subscribers to higher-tier packages. As a result, mobile ARPU real growth is 5.4%. Innovative offerings, including family plans and a new loyalty platform like Tumbara, increased engagement and supported retention. As a result, our churn improved year-on-year to 2.7%. Next, please. Turning now to our fixed broadband operations. Another strong year for Superonline, our fixed business as well. We expanded our base with net addition of 119,000 Turkcell fiber subscribers. Total fiber subscriber base reached 2.6 million. High-speed campaigns were instrumental in driving this growth. We expanded our offer to speeds of up to 1,000 megabits per second. Today, out of all of our customers, 1 in 5 customers subscribes to speeds above 500 megabit per second. This signals a clear shift toward premium connectivity with Turkcell Superonline only. Residential fiber ARPU increased by 10.3% year-on-year. We expanded our fiber home pass to 6.3 million home passes. While increasing the number of home passes, we achieved a phenomenal performance on take-up ratio of 42%. Next please. Our digital infrastructure strategy is central to Turkcell's long-term growth. We believe that cloud and AI infrastructure is structural, a must for every business in Turkiye. The Turkish cloud market is growing at 19% annually in dollar terms, supported by increasing digitization and rapid adoption of AI-driven workloads. Our partnership with Google Cloud marks a defining milestone. Establishing a Google Cloud region in Turkiye strengthens our country's digital ecosystem and enhances our position in the infrastructure value chain. This partnership diversifies Turkcell's revenue streams and reinforces our long-term growth profile. Today, we operate 50 megawatts of active data center capacity, and it will be doubled by 2032. Over the same period, we expect our data center and cloud revenues to grow at least sixfold in U.S. dollar terms. Beginning in 2026. We expect this segment to generate approximately $100 million in EBITDA. We are uniquely positioned to capture this technological breakthrough with our scale, network assets, market leadership and strategic partnership, we are ready to benefit from this structural growth. Next please. Digital Business Services delivered solid growth, with revenues increasing by 30% to TRY 7 billion, supported by stronger hardware sales. Our system integration backlog reached TRY 6 billion. Our data center and cloud revenues increased by 32% year-on-year. This outstanding growth was driven by capacity expansion. As this new capacity established a higher base, we expect growth rates to gradually normalize. Even so underlying demand remains robust and continues to support for further expansion. We expect to complete the final module of Ankara data center in this year, reaching the full capacity -- full technical capacity of our existing facilities. In the first half 2026 construction of our new data centers under Google Cloud partnership will start. This will be our next phase of capacity expansion strategy. Techfin is one of our core strategic growth engine. Our techfin business delivered solid performance in 2025 with revenues growing by 21% and once again outpacing group growth. Paycell was the main driver of this growth. In the fourth quarter, its revenues increased by 40% year-on-year, supported by POS solutions and Pay Later services. Paycell increased its non-group revenue share by 18 percentage points to 77%, reflecting its ability to scale beyond the Turkcell ecosystem. On the financial side, revenues declined by 6%, mainly reflecting the lower interest rate environment. The loan portfolio continued to expand despite tight regulatory conditions. Net interest margin improved to 6.3%, primarily driven by lower funding costs as well as disciplined risk management and better collection practices. Overall, techfin continues to enhance the diversification and quality of our revenue growth. Next page, please. Now a few words on our renewable energy footprint. We are so proud of it. In the fourth quarter, we commissioned our largest active facility to date. Active solar capacity increased from 8 megawatts at the end of the last year to 62 megawatts in 2025. In total, we reached 164 megawatts of installed capacity across 8 different cities. These investments are already delivering financial benefits. During the year, our solar energy portfolio generated TRY 156 million in OpEx savings. Stronger contribution is expected in 2026. We will continue to expand our portfolio to enhance cost efficiency, strengthening operational resilience and support our 2050 net 0 commitment. Next page, please. We exceeded our expectations in 2025. This underscores the resilience of our operating model and the consistency of our execution. Looking ahead to 2026, our focus remains on real profitable growth. We expect real revenue growth in the range of 5% to 7% with the strength of our core business and increasing contributions from strategic areas. We aim to deliver an EBITDA margin between 40% to 42%, reflecting ongoing operational efficiency while continuing to invest in growth. Our operational CapEx intensity is expected to be around 25%, consistent with our investment cycle in 5G rollout, digital infrastructure expansion and renewable energy projects. In our data center and cloud business, we anticipate revenue growth in the range of 18% to 20%. This reflects a normalization following the significant capacity expansions completed in 2025, while underlying demand remains healthy. Overall, we believe our guidance balances growth, continued investments and sustainable value creation. With that, I will now hand over to our CFO, Mr. Kamil Kalyon, to walk you through our financial highlights. Kamil Kalyon: Thank you very much, Ali Taha bey. Let me briefly walk you through our financial results. We delivered a strong performance for both the year and the quarter. Top line grew by 11% year-on-year, surpassing TRY 241 billion, quarterly growth was 7%. This performance reflects resilient execution in our core telecom business and continued scaling of our techfin platform. Turkcell Turkiye revenue increased by TRY 21 billion year-on-year. Growth was driven primarily by real ARPU expansion and sustained postpaid subscriber additions. Continued upselling and premium positioning further enhanced the quality of our revenue base. Techfin accounted for 6% of consolidated revenues contributed TRY 2.4 billion for the year. Performance was underpinned despite strong momentum in Paycell, particularly in POS solutions and Pay Later. Both verticals continue to expand transaction volumes and monetization. Next slide, please. Now EBITDA performance. Exceeding the top line growth, EBITDA increased by 14% year-on-year to TRY 104 billion, reflecting efficient cost management, EBITDA margin surpassed 43%. The main positive contributors were employee and energy expenses. While payment expenses scaled alongside strong POS expansion, Paycell's primary growth driver this year. Radio-related expenses reflect the acceleration of our 5G readiness and ongoing network modernization efforts. As a result, EBITDA margin expanded by 1.2 percentage points demonstrating disciplined execution while continuing to invest for future growth. We remain focused on balancing strategic growth investments with long-term profitability. Next slide, please. Profit from continuing operations increased by 23% year-on-year to TRY 17.8 billion, primarily driven by strong EBITDA growth. We maintained market leadership through solid execution and a diversified revenue mix supporting sustainable EBITDA generation. We had a larger debt position during the year. However, our proactive balance sheet management further supported bottom line performance by TRY 3.5 billion. Net finance income benefited from lower interest expenses, loan redemptions and reduced hedging costs amid stable FX conditions. In addition, maintaining a solid TL position allowed us to benefit from attractive local currency yields. Monetary adjustments continue to reflect moderating inflation dynamics and the residual impact of the Ukraine divestment in 2024. Looking ahead, the capitalization of 5G license is expected to support normalization in this line. TOGG contributed positively this year, supported by improved pricing dynamics and the launch of the new model. We see additional long-term value creation potential as 5G-driven technological transformation accelerates. Income tax expense increased mainly reflecting the deferral of inflation accounting application in statutory financials. Next slide, please. Let's take a closer look at our CapEx management. With a prudent CapEx approach, we closed the year at 22.6%, in line with guidance. We continue to advance both mobile and fixed infrastructure. Fixed investments accelerated adding 405,000 new while base station fiberization reached 47%. Excluding strategic areas, CapEx intensity remains stable at around 18% to 19% over the past 3 years reflecting consistency in our investment framework. Our investment profile reflects a focus on our strategic growth areas beyond traditional telecom. Operational CapEx intensity of 25% is aligned with our strategic priorities across 5G, data centers and renewable energy. We allocate capital with a clear focus on long-term value creation, favoring projects with strong return visibility and scalable cash generation. Next slide, please. Moving now to our balance sheet. Our balance sheet provides flexibility to execute our strategic objectives while preserving financial resilience. We closed 2025 with a cash position of TRY 92 billion after dividend payments, loan repayments and the Eurobond redemption in the fourth quarter. Our solid liquidity position fully covers upcoming 5G payments and debt service obligations over the next 2.5 years. Net debt was TRY 15 billion. Net leverage improved to 0.1x supported by strong EBITDA generation. We remain committed to maintaining leverage below 1x while comfortably funding 5G payments and broader strategic investments. The increase in lease obligations reflects the onetime accounting impact of a 15-year BOTAS infrastructure renewable agreement in the fixed side. We continue proactive debt management and actively evaluate diversified financing opportunities to support our long-term growth strategy. Next slide, please. Lastly on foreign currency risk management. We proactively monitored market conditions and swapped a portion of our U.S. dollar holdings into Turkish lira. As a result, 56% of our cash was held in TL at year-end. This allows us to benefit from higher local currency yields and supported net financial income. At the year-end, we had USD 3.4 billion in FX debt, USD 1.9 billion in FX-denominated financial assets and a derivative portfolio of USD 600 million. Derivative portfolio reflects our short-term FX swap transactions with volumes increasing towards year-end and fewer NDF transactions. The increase in our short-term FX position mainly reflects higher FX-denominated CapEx in the fourth quarter and a deliberate reduction of hedging instruments to avoid higher costs. We target managing our FX position around USD 1.5 billion to support investments and 5G license obligations. We may adjust this level proactively in line with market volatility. This concludes our presentation. We are now ready to take your questions. Thank you very much. Operator: [Operator Instructions] The first question is from the line of Bystrova Evgeniya with Barclays. Bystrova Evgeniya: Congrats on your results. I have just one question. I was kind of curious to know more about the data centers business. If you could please provide more color maybe on what are the EBITDA margins of this business? That would be very helpful. Ali Koç: So thank you very much for the question. It's our growth area, and we are expanding our data centers. AI and our cloud are expected to drive 14% CAGR in data centers from 2025 to 2030, lifting global capacity from 108 gigawatts to 200 gigawatts. So overall, what we can see is our results are getting better and better. AI is reshaping workloads all around the world. So there's a huge demand on the data center business. So currently, our expectation is that more than 2x increase in active data center capacity and 6x increase in the data center cloud revenues in dollar terms as of 2032. Share of the DC cloud revenue and total revenue is expected to increase around 8% to 10%. It is -- currently, it is around 2% and we are expecting that no dilutive impact is expected on our EBITDA margin. Operator: The next question is from the line of Demirtas Cemal with Ata Invest. Cemal Demirtas: Thank you for the presentation and congratulations for good results. My question is about your FX position. Maybe if could you further elaborate that. If I didn't understand wrong, you mentioned that you have short position now around $900 million. I couldn't understand the justification behind that any -- short position in U.S. dollar, maybe that will be more helpful because there's jump and you justify with some other things, I guess, investments that further evaluation could be helpful. And the other question is, again, the data center sites. We visited one of your -- the data center, and it was really helpful for us. Thank you once again, and you spent time with us, and it was very helpful to know where Turkcell is going ahead. But Ali Taha bey, I'm receiving questions about the size of the investments. Currently, is a simple calculation, maybe you can just give us a better color with the size, you have already have 50 megawatts. And you will add additional 50 megawatts. And -- but during that period, $1 billion will be invested you and $2 billion will be invested by Google. For some -- just we see that question from also investors, isn't the small number, small megawatts as a hyperscale scalers shouldn't be expected a bigger megawatt numbers also in the investment side, please just help us to understand better? Or should we assume that this is the starting point. Going forward, this megawatt number could be much higher. That would be very helpful again. Kamil Kalyon: Yes. Cemal, I will start from your first question. Our FX position is around USD 957 million sizes. As you know, fourth quarter is seasonality from the CapEx investments are very high in our site. Therefore, the one reason is coming from the high CapEx investments. The other side, as we mentioned in the presentation slide, we are monitoring the market conditions very closely and we swapped some portion of U.S. dollar holdings into Turkish lira. Therefore, we would -- currently our cash is -- 56% of the cash is Turkish lira position. This transaction in order to benefit from the higher local currency yields coming from the money funds, for example, in Turkiye, the money market funds. Therefore, we would like to benefit from this advantage, therefore, we swapped some portion of our U.S. dollar into Turkish lira. For the first question, I can say this at for the second and third question, I will hand over to Mr. Ali Taha. Cemal Demirtas: Kamil bey, related to this question. Doesn't it mean you are taking a position, if I understand correctly, it looks like if there is the pressure on Turkish Lira, do you have any hedge for that already as a structure -- is it hedged? I just try to understand that. Maybe it's a good strategy part of this, but doesn't need just for the benefit because Turkish lira -- things might change. There's a risk and it's not the main business of the company. So maybe further justification could be helpful. Kamil Kalyon: You're absolutely right. But as you know, in 2025, the FX policy of the Central Bank worked very well. Therefore, the hedging costs were very, very expensive in 2025. Therefore, we prefer to move a short position in the U.S. FX side in 2025. Yes, this policy worked very well in 2025. For example, if you do not have any war in the Iran or something like that, we believe that in 2026 this policy also will work. But currently, we are monitoring the conditions. Current conditions are a little bit different when you compare it with 2025. We are closely monitoring the markets and the environment right now. Therefore, we will decide how will we use this FX position. But as we mentioned in our presentation, our aim is, our policy is we would like to keep the short position in USD 1.5 billion levels. We still trust the policy of the Turkish Central Bank for 2026. Ali Koç: Okay. Let's come to the data center business. Yes, that's my favorite topic and favorite question. Let me tell you that. Let me give you a brief information about the Turkiye. Turkiye's total cloud consumption is around 150 to 200 megawatts. So if you look at the corporates, it's there out of 70 to 80 megawatts. So overall, what we need to do is most of the corporate domain in Turkey is still building their own data centers and they do internal consumption. So that's the reason that 50-megawatt number is not a huge number. The good thing about the 50-megawatt is. So previously, what we were doing is we were preparing the infrastructure for the colocation services. So our first 50 megawatts, most of the banks, most of the airline companies are bringing their own servers and they have their own hardware, and we colocate them in our data centers. But for the Google Cloud, it's going to be full-blown system. So we are going to build a data center. We are going to prepare for Google Cloud that infrastructure with electricity with cooling. But on top of it, Google will bring thousands, 10 thousands servers to Turkiye. So that's the reason that the investment is high. So they're going to have a full-blown system such a way that -- and so another thing is the space, 50 megawatts is good enough because these servers are going to be used by not only one company, hundreds of companies that are going to -- together, they are going to use it. That's the meaning of cloud actually. So they can utilize their service more and more. So that's the reason that 50 megawatts is a huge investment, and I'm pretty sure that our biggest target is to bring all of these companies or the industry players to move their old systems to this cloud -- state-of-the-art cloud regions. Operator: [Operator Instructions] The next question is from the line of Karagoz Yusuf with Ak Yatirim. Yusuf Karagoz: You ended the year with a 43% EBITDA margin for the next year, your guidance is around 40% to 42%. Do you expect any contraction in margins? Kamil Kalyon: Yusuf, normally, as you said, that the 2025 performance was very, very good regarding the EBITDA side, especially for the energy cost and the salary expense, salary wage expenses are -- does not increase over the inflation rate. It was very useful for 2025. In 2026, there are some -- we make a salary increase, average in 30 percentage levels is a little bit above the inflation side. And as you know, this is the 5G year. We will be starting from the April 1, the 5G issue. Therefore, we will be spending some money through the marketing expense, marketing activities and the sales activities for the 5G side. And we will closely monitor the energy prices because the war, current war might affect -- might have some effects, inflationary effects in the energy side and the other cost. Therefore, we would like to be a little bit conservative starting for the year for the EBITDA margin. We will look forward within the year. But this year is a little bit less when you compare it with the 2025. Operator: Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Turkcell management for any closing comments. Thank you. Ali Koç: Thank you very much for listening. Hope to see you next time. Thank you. Kamil Kalyon: Thank you very much. Ozlem Yardim: Thank you, bye. Operator: Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling, and have a pleasant evening.
Operator: Good day and a warm welcome to today's conference call of the PATRIZIA SE following the publication of the preliminary financial results of 2025. [Operator Instructions] Having said this, I hand over to PATRIZIA's Director, Investor Relations, Janina Rochell. Janina Rochell: Thank you, Sarah. Welcome, everyone, to our analyst and investor call for the full year 2025. This is Janina speaking and I'm pleased to have our CEO, Asoka Wohrmann; and our CFO, Martin Praum with us today. Asoka will start by presenting the highlights of the year 2025. Afterwards, Martin will guide you through our preliminary financial results for 2025 and provide an outlook for 2026. As mentioned by Sarah, the call will be followed by a Q&A session. During today's call, we will refer to our results presentation, which you can find on our website. If you have any questions, the IR team is more than happy to assist. As usual, this call will be recorded and made available on our website afterwards. We will also provide a call transcript for further reference. With that, I'd like to hand over to Asoka to start the presentation. Asoka, the floor is yours. Asoka Woehrmann: Thank you, Janina. Dear ladies and gentlemen, a warm welcome from my side as well. Let's start on Page 3 of the presentation. Our world is changing rapidly and uncertainty, volatility is the new geopolitical normal. The old world order based on the rule of law, open societies and free trade are facing existential threat. The new emerging world order is dominated by 3 major powers. The use of political and economic power to pursue national interest on a global scale is part of the new norm. And military conflict is back also on the agenda. In the light of the current global turbulences, investors are looking for safe havens of stability to protect their investments for the long term. We believe this is the right moment in the new cycle to invest in real assets in the right geographies. Why is that? Real asset investments offer strong long-term returns. And they are also an inflation hedge, provides stable cash flows while other asset classes are impacted by increased uncertainty. In this environment, the attractiveness of Europe as an investment destination becomes even more apparent. In addition, the stability of the euro supports investment performance for international capital. We believe this is the moment for Europe's awakening. Europe is a beacon of stability, offers unique investment opportunities. We, PATRIZIA, are well positioned to capture this shift, with deep expertise, strong local presence and proven track record and proven execution across resilient European real asset markets. That said, let's move to the next slide and take a look back at 2025. The first, let's talk about the market in 2025. After a weaker-than-expected 2025, we see that a new cycle has started. We believe this cycle is different to previous cycles. It will be a longer, slower and bumpier. Despite the current geopolitical turbulences, we are more optimistic than in previous years about the real asset industry. Market sentiment is already improving. Investors are becoming more optimistic. We see signs of stabilization with slightly improving valuations. Thus, we expect this recovery to gain stronger momentum in 2026. PATRIZIA remains well positioned for long-term growth, driven by the DUEL megatrends. These megatrends, digitalization, urbanization, energy transition and living transition continue to shape our economies and societies and we will continue to invest along the DUEL megatrends in 2026 and in the future. The creation of PATRIZIA's integrated investment platform, combined with strict cost discipline has made our business more resilient and less dependent on market-driven revenue streams. And you can see this very well in our earnings performance. Our profitability has significantly improved compared to last year. Importantly, this reflects a structural setup or step-up in our earnings profile. In 2025, our management fees fully covered by operating expenses for the first time. This means we can turn the market momentum into even stronger profitability in the new cycle. And this is an important step to strengthen our long-term profitability beyond 2026. We are seeing a clear upward trend in fundraising with higher equity raised in 2025 than in the prior 2 years. This demonstrates the growing investor appetite, renewed confidence in PATRIZIA's product offering and market position. Market -- the investment volumes gained momentum, reflecting a clear acceleration in transaction activity. This was fueled by our international business activities, underlying PATRIZIA's global footprint across real estate and infrastructure. With that, let's move on to the next slide. Let me briefly comment on our results for the financial year 2025, which we already published yesterday evening after markets closed. We significantly improved our EBITDA by 35%, up to EUR 63 million. We are improved or we also improved our EBITDA margin to close to 23%, well above last year's margin. Our earnings performance is a result of efficient operations, strict cost discipline and a stable portfolio. Our AUM remained almost stable at EUR 56 billion despite a slower and weaker market recovery and currency headwinds. On the positive side, we saw valuations improving gradually during the year. Let me now turn to our investment activity on the next slide. We already saw a small but encouraging increase in transaction activity in the second half of 2025. We signed more transactions and we also closed more transactions compared to last year. And PATRIZIA continued to be a clear net buyer in the market. We expect this positive momentum to continue in 2026. Valuations continue to improve. Transaction volumes are increasing. More clients are taking advantage of market opportunities in the new cycle, especially in real estate. And we believe this is the right moment to start investing in real estate again. That said, let me turn to our fundraising activity on the next slide. The increase of 22% in our equity raised compared to fiscal year 2024 shows the strong demand for real estate, especially in modern living but also in infrastructure. And our multi-manager platform, AIP, contributed to this positive development. The progress we are seeing in fundraising clearly support our long-term growth ambition. We continue to see strong demand for our DUEL-aligned investment strategies, particularly across our flagship products. Building on the progress we have seen in 2025, let me now turn to the market outlook for the coming year. Looking at the market sentiment for 2026, we see clear signs of improvement. Interest rates are expected to remain stable or trend lower. Inflation is also expected to stabilize. As we can see again, geopolitical uncertainty remains a factor and it will impact investment sentiment in different regions in a different way. Overall, this environment is expected to create structural tailwinds for us as PATRIZIA. The positive market development should lead to a higher equity raised and increased investment volumes. We continue to focus on targeted investment solutions across our key strategies, living, value-add and infrastructure. Living has been a strategic growth pillar for PATRIZIA for more than 40 years. We have a exceptional track record in living, both in our home market, Germany but also across Europe and recently also in Japan. Living will be a key investment focus for PATRIZIA in the new cycle as valuations improve and offer attractive long-term returns for our clients. And as we all know, housing, especially affordable housing is one of the most pressing challenges in our societies today. More than 23 households in Europe spent over 40% of their disposable income on housing and energy. But this challenge is also an opportunity and PATRIZIA wants to become a leading impact investor in Europe. We are currently building affordable homes for 7,500 people in Ireland, in the U.K., Spain and Belgium. Our ambition is to provide affordable housing for 40,000 people in the next couple of years across Europe. Likewise, infrastructure, remains a key investment focus for PATRIZIA in Europe and in Asia Pacific. Overall, we are well positioned to capture the opportunities in the new cycle. Thank you for your attention. I would now like to hand over to our CFO, Martin Praum. He will guide you through the fiscal year 2025 results and our outlook for 2026. Martin, please. Martin Praum: Thank you, Asoka, and welcome also from my side. Let's continue on Page 10 of the presentation. Let's have a look at the AUM development in 2025. As Asoka mentioned, virtually stable development. We've seen some good inflows in 2025, both in real estate and in infrastructure. But as Asoka mentioned, we've seen an increased transaction volume in the market and at PATRIZIA with inflows but also portfolio rotations and realizations. And this is a typical pattern for a market that recovers. It's time for asset allocation updates of our clients in the new cycle as the markets open up. We've seen valuation effects now turning slightly positive. This is also a sign for a market stabilization and improvement. And the real drag for our AUM this year were currency effect with minus EUR 0.7 billion, leading to the AUM of round about EUR 56 billion. Looking forward, at the same time, we still have open equity commitments that are available for investments of around EUR 1.3 billion waiting to be deployed in the market. Let's continue on Page 11 with the EBITDA composition. Key message here is, we've seen a strong increase in EBITDA to EUR 63 million, up 35%. And we've seen growth in management fees but market-driven revenues like transaction fees and performance fees were still down year-on-year, having bottomed out in this market cycle. So overall, total service fee income down 2% year-on-year. At the same time, our balance sheet investments had a higher return and had a higher contribution to our results. If you look at other income, then this has materially decreased to last year and is a reflection of a better earnings quality that we are delivering. Now if we look at total service fee income, around 90% of total service fee income and from fees are coming from recurring management fees. Let's move on to Page 12 with a little more details. I already talked about the management fee development. Transaction fees are still down because if you look at the transaction volume that we delivered, only a slight percentage of these transactions had a transaction fee arrangement attached. So this is why the higher transaction volume did not had an impact on the transaction fees. Performance fees are also slightly down year-on-year but this was in line with management's expectations. Let's have a look at the cost side on Page 13. You know that we actively adapted to the changed market environment over the last 3 years and we intensified our cost efficiency measures, which led to a significant improvement of the cost side. We see total costs down 10% year-on-year to around EUR 225 million, both driven by staff costs and other operating expenses. Now what have we achieved? We've made the platform more resilient to market cycles and we've increased the operating leverage once revenues come back in a more pronounced way. As an example of what this leads to, let's go to the next page on Page 14. Here, you'll see the split of management fees versus operating expenses. Key message here is that management fees alone for the first time, more than cover operating expenses. We've shown growth in EBITDA despite being at the bottom of the market in transaction and performance fees. Coming back, management fees as a most recurring item more than fully covering expenses. And this is a very good starting point for the next cycle and we think we're well positioned for growth in the new cycle, given we have a better resilience and we have a better scalability of the platform, increasing the operational leverage once revenues come back. Let's have a look at our segment reporting on the next page, on Page 15. You might remember, we described PATRIZIA as a 2-engine model. On the one hand, the asset-light investment management business and our balance sheet investments that we have deployed in strategic co-investments and seed investments. The asset-light part is up 29% in terms of EBITDA, again, driven by better efficiency of the platform. Balance sheet investments are slightly down year-on-year. But last year, we had an extraordinary positive effect. So underlyingly, also balance sheet investments have improved their contribution to our results. Consolidation and other effects are down materially year-on-year. So the negative effect has become smaller and this drives the overall 35% increase in EBITDA for PATRIZIA Group. Let's have a closer look at the balance sheet investments on Page 16. I think you are familiar with that graph showing our invested capital at cost and at fair value and the value that we have created over time with our balance sheet investments. We have used the market opportunity to also invest more in the real estate living sector and also in infrastructure in 2025. The positive long-term returns that are primarily driving the invested capital are certainly driven by living exposure that we have. And at the same time, we've seen foreign exchange positive valuation effects also on our balance sheet investments in 2025, again, a confirmation that the market is stabilizing and changing. If we now focus on the right pillar and the fair value capital of our real estate of around EUR 783 million, around 40% of that pillar are profit entitlements or you could call them exit carry entitlements, which we will harvest step by step in the next years. This will support our cash inflow by around EUR 50 million per annum and it's a sign that we actually crystallize the value that was created over the last 2 years to the benefit also of shareholders of the company. Let's have a look at the operating cash flow on Page 17. Also here, we've seen a significant improvement to last year. The operating cash flow is more than 4x the level we've seen in 2024. This was driven; a, by a better general profitability; secondly, more active working capital management; and thirdly, the quality of our income, which had a lower level of noncash items attached. The EUR 57.6 million more than cover our dividend payout for last year, which is around EUR 31 million. Also, if we look at the dividend payout in terms of net income, we have a net income after minorities of EUR 18 million this year. So on that basis, the dividend is not yet fully covered but we're on a clear path to have full coverage also on net income going forward. Let's move on to Page 18 of the presentation. Our own liquidity, our balance sheet liquidity has improved year-on-year to now EUR 175 million in total and EUR 115 million as available liquidity. The equity ratio was further strengthened to close to 74%. So we continue to run a solid and strong balance sheet and this will also be the backbone for our future activities. Let's go to Page 19 to look at the guidance for 2026. Asoka mentioned that the new cycle has started and it will be slower and bumpier but we see lots of signs for improvement and also lots of opportunities in the market. So while our people will work on growing equity raising, investments and AUM, we will continue to work on the further improvement of processes, of efficiencies and also the quality of EBITDA. And so basically, we expect a moderate improvement in the operating environment in terms of revenues and continued cost efficiency, driving our EBITDA up to a range of EUR 60 million to EUR 75 million. This would also have a positive impact subsequently on the EBITDA margin. In terms of AUM, we expect an increase to a range of EUR 55 billion to EUR 60 billion. Again, it is a relatively broad range depending on valuations of assets, organic growth but also as we've experienced on foreign exchange impact. Let's have a look at the dividend side of things on Page 20. We are proposing the eighth consecutive increase in dividends since we initiated payments in 2018. As I mentioned before, the dividend last year was covered 40% by net income. That has increased now to 53% coverage and we have a clear plan for full coverage going forward with as a next step based on our plans and guidance for this year, we would talk about depending on tax rate, coverage of over 70%. Don't forget, our operating cash flow is very, very strong. We have a very solid balance sheet to cover the dividend. And as a last statement, don't forget that this equals a dividend yield of around 4.6% at the moment and we will continue to deliver on the dividend policy that we've set in the past. With that, thank you for your attention. And now both Asoka and I are happy to take your questions. Operator: [Operator Instructions] And having said this, we will first start with Philipp Kaiser. So please go ahead with your questions. Philipp Kaiser: I have a couple of questions and I would like to go through them one by one, if I may, starting with the AUM. As far as I understood, you updated your AUM policy and now include also fee-generating commitments. Firstly, could you elaborate a bit more on this idea? And secondly, do you also adjust the 2024 numbers accordingly? Martin Praum: Thank you, Philipp. Yes, what we did is, we had a look at our AUM policy overall. And you might remember that our AUM policy should always be aligned to market standards and the industry standard. And as part of that, we updated the policy and included as many other players, the commitments where we already generate a fee. And this had a positive EUR 0.3 billion impact and we have highlighted that here and we'll make that very transparent also in the annual report. And we have not adjusted the previous year number. But again, given we mentioned the EUR 0.3 billion impact, you could adjust yourself in your model, if you like. Philipp Kaiser: Perfect. With regards to the AUM guidance, you mentioned earlier during the presentation that the investment market is slightly increasing and the market dynamics are improving. That said, your AUM guidance includes a downside scenario. What's the scenario for this case? Is it the macroeconomic upheaval we currently see or any other implications? Martin Praum: Yes. Thank you for the question, Philipp. It's actually just to cover for potential timing effects. I mentioned before, we are in a market phase where you also see portfolio rotation, where also investors might realize some performance. At the same time, we also want to cover for foreign exchange impacts. As you have seen, this had a relatively high impact on our AUM in 2025. And depending on AUM fluctuations, we just want to have a certain downside protection here in terms of the guidance range we're giving. But we would say you should focus on the midpoint. We expect further increase in equity raised in '26. We expect a modest increase in transaction activity. So organically, we are planning for growth in AUM. Philipp Kaiser: Okay. Perfect. Does the 2026 outlook exclude or include potential currency impacts? Martin Praum: The current outlook excludes -- I mean, it excludes currency impact. So we didn't make any specific currency assumptions in the planning. Philipp Kaiser: Okay. Perfect. Very, very helpful. And then let's move on to the operating cash flow. Cash flow improved significantly. So congrats to this development. And just for my understanding, the crystallization of the roughly EUR 50 million per annum Dawonia entitlement will further stabilize your operating cash flow in the coming years. Is that correct? Martin Praum: It is partially correct, Philipp, because it will come into the cash flow in the investing part of the cash flow, not the operating cash flow. Philipp Kaiser: Okay. Perfect. And then my last one with regards to net sales revenue and they were driven by rental income from warehoused assets. Will those assets stay on your balance sheet throughout the current fiscal year? Or do you have already concrete plans to transfer the entire assets or part of the assets into funds during the year? Martin Praum: No. If we look at the exposure we have here, we have assumed for the time being that they'll stay on the balance sheet for the year. If we see a market opening up in certain areas, there might be an exit earlier but assume in your model that they'll stay until the end of '26. And again, we'll see how the market develops. Philipp Kaiser: Perfect. Very helpful. Just one follow-up on the operating cash flow then. You already mentioned the 3 pillars, improved net profit, working capital management and other positive effects. Of the 2 -- last 2, how much could also accrue in 2026 of those positive effects? Martin Praum: Good question, Philipp. I think we've advanced already in our working capital management but there are still some fruits to be harvested. So I would expect at least a positive effect in the single-digit million euro area also in 2023 -- sorry, 2026, from more active working capital management. Operator: And then we will move on with the questions from Lars Vom-Cleff. Lars Vom Cleff: I would be interested in your growth aspirations. I mean, thank you for sharing the split of your '25 fundraising with us. Which asset classes do you expect to be strongest contributors to your growth this year? Will it be real estate or infrastructure again, or maybe AIP? Asoka Woehrmann: Look, thank you, Lars, for the question. Definitely, I can tell you without any doubt, real estate will be the -- the majority of assets will be generated this year along our expectations because as I outlined, affordable housing topic as well as value-add, living is the right macro moment for the long-term investors to harvest great returns. So therefore, I do think definitely, we are expecting this year living strategies to kick off where we have the best, in my opinion, track records, not because we have track records but I do think that's the right moment for the investors and that's the way we are advising also and have the conversations. But also, I think I can see, by the way, in logistic, in real estate area, the last mile logistic, this strategy will be -- will change. There is -- logistic become a very like RE-Infra, what we are calling convergence of real estate infrastructure because energy, how you building on logistics, the rooftop solar, battery techniques, charging stations, all that is, in my opinion, very much upcoming now in the demand of clients. And I do think this is a area what I'm really expecting to grow. But also, in my opinion, early signs that some value-add investors are on the street, are looking for, let me say that value-add opportunities in offices is not excludable. This year is the first time after 3.5 years, I would say, we can first time think is their interest. And then your question regarding infrastructure. I think, look, all the investment bills of these government bills, what they are now all announced that will come down mostly for infrastructure first, except of affordable housing or let me say, the bottleneck in housing in our societies. But I do think what we are seeing is all where we are today in the modern infrastructure, let me say, energy storage techniques or investments, roof sustainable energy, waste to -- energy to waste, all these strategies will be -- will come up now beside the very heating topic of data center. As you know, we entered last year into this consortium deal in the U.S. line data centers. By the way, we already capitalized and has been sold to a big asset manager and developer in the Middle East, very well get profited from that. I do think, we are expecting also, especially [ last ] in Asia, infrastructure to kick off. And I do think, especially last year, we can see we invested more than EUR 300 million in Philippines with partners, co-investment partners. I do think I am very, very positive on infrastructure in Asia. Also our new fund strategy, emerging market sustainable infrastructure strategy, what we are looking to place in Asia, what we are raising in a -- capital raising in a first round. We have a promising not only deal pipeline but also promising clients are coming in and have interest. So therefore, let me say, if you ask me, Asoka, what is exactly the portions, 50% to 70% in real estate, 30% in infrastructure, might be 10% in between and a little bit out of the infrastructure, I would say we can phrase that as a Re-Infra area. So this is a little bit the storyline what we are seeing in Europe as well as in Asia. Lars Vom Cleff: Crystal clear. And then I can't withstand to ask the question. And I think on the Q3 call, you said that illiquid assets would also look very attractive and that would -- you would be happy to elaborate on that in one of the following calls. Is today one of the following calls? Asoka Woehrmann: Yes. You asked the illiquid or liquid? Lars Vom Cleff: Illiquid. Asoka Woehrmann: Illiquid. Lars Vom Cleff: Illiquid. Yes. Asoka Woehrmann: Illiquid. Yes. We are in the illiquid. I have to say that illiquid assets, I do think to be honest, do not feel all -- we are all investors -- the gold is performing unbelievably well as fears of market participants are coming to a level decrease and also the world -- explosions in the market that people are going to protect theirself with these strategies. I think to be honest, nothing is, let me say, cash generating, no return generating. It is the time and also the correction from Bitcoins, all these nondigital currencies, this is a sign these areas are exhausted. I think gold will still get as a illiquid asset, by the way, illiquid asset for me because you have not the illiquidity, you can trade it every day. But again, it's not interest rate bearing. It's not interest rate generating. I think to be honest, if you have a stable grade in valuations, if you buy it today into real estate or infrastructure as a long-term investment, you had a fantastic returns front of you. I would take this part as a diversifier. So my conviction for illiquids, even now, not last time only I discussed, it is already I would say, if you not already look into that, you should. And that's the way we are advising. And we can see, by the way, more and more clients are looking into that. And I do think the geographies are not unimportant. Europe, people feel undervalued. And again, beside all the press releases talking down Europe, the unimportance of Europe compared to the 3 big players in the world with China, U.S. and in some way, Russia and some other ones. But I have to say I feel Europe is the right place to invest. Asia is the right place to play growth. And this is -- valuation-wise is a place to be, especially in the right sectors and the right place of growth and over returns is Asia. So in my opinion, we are in the right geographies and I do think -- I am very confident. And you know that I've been a long-time investor and a CIO in my former career. I have a very strong conviction Lars. Hopefully, it is now if you -- it's the right time. It's a macro moment, what I'm saying. This is a macro moment where you should -- it's -- most of our clients are shy sometimes to take risk. But I do think this is the right time to take risk in illiquids. Lars Vom Cleff: Perfect. And then you indicated increasing transaction activity. I guess, also listening to my real estate colleagues, it's something where momentum will build up over this year, right? It's starting but we should rather expect transactions to be a bit more back-end loaded this year. Asoka Woehrmann: You're right. I think the whole story of our industry is always back ended, back ended, back ended. I can't hear that anymore and I'm not also giving to any excuse to also to us. Yes, last year was a disappointment as Martin also -- already shown. We are transparent. I think, as you know, PATRIZIA has a fantastic transaction team around Europe and also in Asia in both asset classes. We can be, one point if you want, was a disappointment, not because our people are bad, there was a -- really the market has not played with us. You need to play -- you need a tango partner also in the market. Market were not the right tango partner for us. And I do think this year, I can see sizes are increasing. And the great thing is I feel that clients are asking, do you see now interesting transactions? Can you show us? Is there any good risk rewards you can show us? This is a good moment in my opinion. So is it still slow? As we are saying, this cycle is slower, bumpier. Is it very different from the last time? There is no, let me say, macroprudent policy supports in the sense of central banks are helping us, is more other way. But I do think this is what I'm seeing. I can see now the right time for all that to act and the transactions will -- we will see more transactions this year. And also more in -- by the way, in real estate because people, family offices, they're smaller tickets what I'm seeing and then the big packets -- packages. But you need deep pockets and a strong conviction and there's only very less players in the world can do these things. But I can see that it's coming. I'm confident. Lars Vom Cleff: Perfect. And then one last question, if I may. With business momentum picking up slightly and I love your picture of tango partners. What about new tango partners for you? We haven't seen some bolt-on M&A from you recently. So is there anything in the pipeline in order to speed up your assets under management growth? Asoka Woehrmann: Let me say that I'm always said bold acquisitions for lazy managers, we are not lazy. Lars Vom Cleff: I know you say that all the time. Asoka Woehrmann: That -- no, I'm saying that always, Lars. But I do think, joke aside, I think PATRIZIA has grown fantastically before I came in, unbelievable, they flew over the cycle, even with the great cycle, what we have seen, we go -- grew so exceptionally well. But this consolidation was needed and consolidate our platforms, creating global platforms, creating efficiency, as Martin said, there was a hard working of reorganization, platform building, all that. And we feel we are ready. Our core is stable. If you think about our balance sheet position, if you think about our operating business, how that improving, I am not shy to say that's a time to look around to partnerships, not only acquisition bolt-ons and all that. It is also partnerships. The world is going to build by partnerships. There's a big task there and big profit pools can be shared. I do think from that, I'm super confident with our resilience, what we have shown in the last 3 years. We've done our homework. We are showing what we -- again, you guys can all -- if you go back since what we are talking here, not promise too much that we're doing our efficiency work, that we are doing the cost cutting, we are doing the reshaping, we are putting our product shelf in the right to win in this cycle. All that is coming. We have a stable core now, resilient platform, great balance sheet. We are ready for all things, not only to build partnerships, bolt-ons, all that. It is -- is that fitting to us? It's great. But what I'm not going to agree to and with no one, not inside, outside, we are not buying because something is cheap and we are solving this problem, that they should solve theirself. If that fitting to our strategy is something what we are missing, we feel there's growth in, we are there. And we are looking. It is -- and your question is absolutely right and relevant. Many, many transaction has been offered to us. But good managers have to also say no, inside and outside and that's what we do. Operator: [Operator Instructions] Manuel Martin: Perfect. Manuel Martin from ODDO BHF. I have 2 questions from my side, if I may, please. Maybe one by one. First question is, as far as I understand, real estate might be the preferred -- one of the preferred asset classes this year, especially living strategies. When it comes to offices, maybe they're in value-add strategies that could be something. When it comes to offices, have you heard anything from your clients when it comes to the topic artificial intelligence and demand for office space, which might influence this asset class. I don't know if you have some insights to share here. Asoka Woehrmann: Yes. I think, look, PATRIZIA has a really a great portfolio in -- especially in Europe, not mostly, I can tell that in Europe, offices. We ourselves, I don't know if you have the chance ever to visit us physically. We are creating over 5 years since before COVID but also during the COVID and up to now, the real showcases how to invest in offices. We spent quite much money. I want to invite you, for example, to visit also our London office in London, in our international hub in London that just won by the way, PROP awards. And let me say that your AI question is a very valid one. I would not say AI but I think today, there's 3 things in offices are relevant. Beside now risk classes. It is important that you make your offices attractive for your employers. This is relevant because the home office tendencies has killed the offices, mostly if you think about U.S. and New York and the big cities. Europe is also very much impacted. The second -- what has led -- that has led to reduce offices because people only reduce the place, let's say, space to reduce costs. What we've done, we upgrade our offices. We are showing that our employees have a incentive to come over. There is a more, let me say, not only a brutal desk, there's areas to sit together, communicate, to build kind of community within the offices. I really invite you our Frankfurt office soonly in Augsburg and also in London, especially but also other places like Hamburg, what we have and especially in Europe. And again, that is one effect that has negatively impacted. But at the same time and you have to give a answer to employer and give a incentive to come back to offices that they like to work with -- and that's relevant in my opinion. You can command like in the U.S., the CEOs, we have also 3-2 rule, 3 days in the office, 2 days home with agreement within your -- with your teams. But again, at the same time, you can't command. You must give the incentive. So that's the first thing. And that means officers have to change in their conceptional setting. That's the one thing. The second thing is, in my view, is especially the digital sphere and what you are saying. Today, the tech part is absolutely relevant. We've shown our -- and that's -- that -- the London office won the PROP Award in 2025 in the U.K. as the best office building, let me say, turning into a office story that has really worked well. Tech played a key role there, key role. And I think this is relevant. AI is something different for me. AI is also now it's -- is coming to our big decision-making spaces but also back and middle offices. We are in the full of the process to use AI to become efficient, become modern, become time to market, become -- make us better also in reporting and reporting standards for our clients. And this is helping us and to enrich our people. And I think the efficiency win is something is front of us now, all that. So I would say that's not necessarily combined with the offices that you can -- this is -- but I think offices will play absolutely a new story, how they get structured. How important -- and I think, by the way, the real factor is also ESG that means the offices have to -- in the refurbishment have to follow special standards, all that. It's why the office market, you have to enter into a value-add area, not -- you can't -- I think, to be honest, as a core asset is at the moment difficult. And by the way, in the last remark, you have to be in core centers of cities. And that's what we have. Mostly if you are in the C areas, I think then the mixed-use is might be option to come out of that, but. That takes time, that takes resources that reduce your returns at the beginning and might be you are avoiding a stranded asset. Martin Praum: And if I can add to that, Asoka. Manuel, I want to second what Asoka just said, I would say that AI will have the first real impact, especially on process-driven work and on back-office work. And these are typically in secondary locations due to cost optimization and outsourcing and these locations will be impacted first. The human intelligence and the decision-makers, the analytical part of our work will want to continue to work in A locations in urban areas. And in our view, AI will actually intensify the flight to quality to A locations in the office sector. Manuel Martin: Yes, sounds logical. Sounds really logical. My second question and last question would be on -- again, on the clients and the macro environment. In your opinion, what is holding back the clients? They are still a bit shy as some people say? Is it that the prices are not yet at the correct level? Or is it the interest rates, which is shaky? What would be the start button in the sports car to let you drive again at high speed? Asoka Woehrmann: Yes, yes, it's also a great question. I think there's 2 -- I think let me say also 3 factors. First, don't forget -- we are forgetting and we are great market people. That's why we are always fascinated about markets. And -- but one thing we should not forget before COVID or during the COVID, the first 1.5 years, we have seen extremely low or negative interest rates. And people have been exposed, overexposed into illiquid to hunt a return, to withstand the negative rates and have long-term returns. And we've done, by the way, in this context some late cycle investments. That is not playing out well for them. And they have to take a long breath on that to solve out of -- they need solutions get out of their portfolio. But at the same time now, the sudden -- let me say that '22, '23 is a sudden death of illiquids. As Lars discussed earlier, I'm mentioning, I think there was a sudden death of illiquids. People don't want to invest and people want to go now all, more or less all their liquidity, the pension funds, the lifers, the -- also even sovereign wealth funds, they want to be in fixed income. They are the most favorite asset class, other fixed income and private credit. And now also with the inflation moderated and I think to be honest, also I would not -- I would really -- if I look the sovereign debt explosion in the world, all the AAA status, A and AAs, I'm questioning this ballooning of debt, if that's sustainable. And that means, by the way, that's -- the only good thing is that will lead us to a longer expectation -- long-term expectation that the rates have to be very low, not to overburden the fiscals -- fiscal budgets of states. So saying that fixed income was the most favorite asset class, still the favorite asset class, corporates, private debt, government bonds and there is other institutional factors in Europe. I think to be honest, the central banks and regulators with the solvencies and all that, also our -- we are mostly institutional clients. We have been in long-term bonds and that is underwater. So their risk limits to go into illiquids also low. So saying that all, at the moment, what is holding back, you're asking me. But what they can't hold any more back is because I think they want to be at one day now real assets. They are seeing the attractive risk returns in the value-add and core plus because at the moment, that is the easiest to say and that is nothing marketing you get for core plus risk, or let me say, core plus risk, value-add returns. This is exactly what a asset manager like us have to deliver asymmetric risk return profiles. That is, by the way, has not existed earlier. This is now. And also, I think if the office area also revalued stronger, I think U.S. happened and it's still not settled 100%. Europe are all devaluations are happening slower. If that is certainty there, people will go with both hands into these areas. And that's what I'm seeing. That is upcoming, starting with living, starting with also, in my opinion, kind of logistic. There is some retail portfolios underway in the market, all that giving you opportunities. So in my view, let us -- we have -- I'm patient in general but I do think I have the conviction the matrix for illiquids are going to change over the next 2 years. And that's where my hope is coming. Martin Praum: If I may add to that, Manuel, exactly what Asoka said, the market first had to digest the relative overallocation of real estate at the peak of the cycle. Then now the market has repriced. The expectations, I think, have changed and the market becomes more transparent with more transaction volume. The world seemed brighter in many other areas than Europe for quite a while. And now we have a reallocation and rotation back to Europe. And the refocus on generating cash flows, generating recurring income is also one thing that we think will drive investors and will kind of break up this situation where investors were hesitant to invest in real assets. Asoka Woehrmann: 100%. Manuel Martin: Okay. And where are we more or less, so the digestion might still hold on a little bit and then maybe people can move more freely? Or where do you think where we are right now? Martin Praum: I mean it's been a process really for 3, 4 years. And you know that we haven't seen a V-shaped recovery in the market. It was all slower and as Asoka said, bumpier. And when we talk to our clients and simply, we derive that from the feedback we get from our clients. They are more open to talk about real estate investments again. They are more open to talk about infrastructure. For some of them, the regulatory environment has also eased and changed. They have more flexibility to invest in infrastructure. And all these, if you put all that together, are signs and are confirmed in the way we discuss with our clients that there's a regained interest in the sector. Asoka Woehrmann: If you need also in a picture, again, we are not 5:00 in the investment clock, we are at 7:00. We passed the 6:00, trough is behind us. So that's important. And that's what long-term investors are seeing and that's why we are -- they are earning money. And with these views, are now coming more and more. And I do think Martin said a very important thing. The transaction makes the valuations visible for investors. That gives the confidence also. If you are doing in the [indiscernible] transaction, you don't know if that's still 5:00 or 7:00. It's important. Manuel Martin: Okay. Okay, I will try to put the clock in my office. Okay. That's a good example. Operator: Thank you so much for your questions. So in the meantime, we did receive not any further questions or virtual hands. So everything seems to be answered by now. Should further questions arise later, please get invited to get in touch with Janina and her team at any time. So thank you very much. And with this, I hand back to Martin for some final remarks, which concludes our call for today. Martin Praum: Yes. Thanks so much for your attention. Thanks so much for your very good questions. And we are very happy to continue the discussion both on IR team level and also during the next conferences that we have planned, for example, one in London and then there will be other venues where we have the ability to discuss our financials and the strategy. Stay healthy and speak soon. Thank you, everyone.
Operator: Good morning, ladies and gentlemen, and welcome to the Tourmaline Q4 2025 Results Conference Call. [Operator Instructions] This call is being recorded on March 5, 2026. I would now like to turn the conference over to Scott Kirker. Please go ahead. W. Kirker: Thank you, operator, and welcome, everyone, to our discussion of Tourmaline's financial and operating results for the quarters and years ended December 31, 2025, and December 31, 2024. My name is Scott Kirker, and I'm the Chief Legal Officer here at Tourmaline. Before we get started, I refer you to the advisories on forward-looking statements contained in the news release as well as the advisories contained in the Tourmaline annual information form and our MD&A available on SEDAR and on our website. I also draw your attention to the material factors and assumptions in those advisories. I'm here with Mike Rose, Tourmaline's President and Chief Executive Officer; Brian Robinson, our Chief Financial Officer; and Jamie Heard, Tourmaline's Vice President of Capital Markets. We will start with Mike speaking to some of the highlights of the last quarter and the full 2025 year. After his remarks, we'll be open for questions. Go ahead, Mike. Michael Rose: Thanks, Scott, and thanks, everybody, who dialed in. So we're pleased to announce our Q4 2025 disclosed year-end reporting and update on '26 activities so far. So a few highlights. We had record production in Q4 of '25, and that carried on and set a new record in January of this year. We added 829 million BOEs of 2P reserves in '25, including a corporate record single year organic 2P addition of 457 million BOEs. We realized continued corporate operating cost reductions in Q4 of '25, down over 9% from the first half of '25 to current $4.66 per BOE. Peace River High asset sale was completed in February 2026 for proceeds of $765 million. And net debt at year-end '25 of $1.5 billion, inclusive of the impact of the Peace River High asset sale was down from Q3 '25 net debt of $2.3 billion and represents 0.5x forecasted '26 cash flow. On production, in addition to record Q4 production, our Q4 '25 average liquids production was a record 152,673 barrels per day. January '26 production averaged over 685,000 BOEs per day. That's prior to the sale of the Peace River High asset. We've elected to terminate our discretionary deep cut gas plant deliveries in the Alberta Deep Basin those contracts expire. This will reduce corporate average ethane production volumes by approximately 20,000 barrels per day on a full year basis, but is expected to increase '26 operating netback by approximately $65 million and forecasted '27 operating netback by approximately $110 million, and that's through the elimination of deep cut processing fees as well as C2+ transportation and fractionation fees. And really, this is all part of the overall cost reduction and margin improvement initiative that's ongoing. Looking a little deeper at financial results. Q4 '25 cash flow was $890 million or $2.29 per fully diluted share, and full year '25 cash flow was $3.4 billion. As mentioned, we've sold the Peace River High complex to a Canadian senior producer for cash proceeds of $765 million. the company has sold its most mature highest cost production and we'll replace that with new low-cost production streams flowing through newly constructed Tourmaline facilities. And although we pioneered the Charlie Lake horizontal play in the first place in '09 and 2010, this disposition allows us to enhance the focus on our 2 massive natural gas complexes. We intend to utilize the proceeds in the following way: $500 million for permanent long-term debt reduction and the remaining $265 million to fund in part the BC infrastructure build-out split between the next 2 years, and that's the Phase 1 build-out. As mentioned, net debt year-end '25 was $1.5 billion, and that's down from $2.3 billion in Q3 '25. We've set a long-term net debt target of $1.75 billion. A few comments on the capital budget. We have updated the multiyear EP plan in the COV, and it's been updated for results in '25, asset sales, very strong well performance, new commodity hedges and the new cost reduction initiatives that we've realized to date. We believe that during these unusually volatile times, the best business approach is to just steadily reduce debt and continually improve the overall cost structure, and that's exactly what we're doing. Q4 '25 EP CapEx was $813 million, and that was within the original guidance range. The combination of the Peace River High asset sale and the redirection of discretionary Deep Basin deep cut volumes will reduce total corporate production by a total of approximately 50,000 BOEs per day on a full year basis. Importantly, the '26 full year EP CapEx program will be reduced by $350 million to $2.55 billion, along with a $50 million cut in our non-EP capital for a total CapEx reduction of $400 million. This reduction includes the $175 million of originally planned CapEx on the Peace River High complex and a further $175 million of expenditures in the gas complexes. We believe it's prudent to defer certain gas-focused expenditures until we see a sustained stronger local price as both AECO and Station 2 prices in the Western Canadian Sedimentary Basin and the prices in the Pacific Northwest and California are unusually low. The gas complex expenditure reductions will have a negligible impact on our '26 production guidance given much stronger-than-anticipated '26 well performance to date. We have identified an additional $200 million of D&C capital that could be deferred from the '26 EP capital program if commodity prices remain weak. At strip pricing, Tourmaline's revised EP plan anticipates '26 cash flow of $3.4 billion and free cash flow of a little over $0.7 billion. All else equal, for every USD 0.10 per Mcf that AECO pricing improves, our '26 cash flow and free cash flow increased by approximately $45 million. Similarly, because we are exposed to these markets for every dollar per Mcf that both JKM and TTF improved, '26 cash flow improves by $50 million and '27 cash flow by $70 million. Some comments on reserves. Year-end '25 PDP reserves were 1.47 billion BOEs, and that's up 20% -- 27%, sorry. Total proved reserves of 3.26 billion BOEs were up 20% over 2024, and our 2P reserves eclipsed the 6 billion BOE mark, and they were up 15% year-over-year. So after 17 years of full operations, the company has 27.7 Tcf of economic 2P natural gas reserves and just under 1.5 billion barrels of 2P oil condensate and NGL reserves. These are all pipeline connected to markets across North America. And at year-end '25, we'd only booked a little over 15% of our current internally estimated drilling inventory of 26,500 gross locations. And that's kind of been our historical booking average of the total inventory for the last few years. It's always around 15%. Reserve replacement was 356%, which is big for a large company of 25 annual production of 233 million BOEs with the 2P additions of 829 million BOEs. The company has elected to increase D&C costs across our entire booked inventory, including the previously booked inventory, and that's to reflect our steady migration to longer horizontals. They're 75% longer wells since 2018 and an increasing percentage of plug-in per style completions, mostly in the Northeast BC Montney. We also increased future facility capital in the year-end '25 report. So these onetime increases actually bumped up the 2P F&D for '25 alone by $3.21 per BOE. Looking at some marketing highlights. The company has an average of about 880 million cubic feet per day of nat gas hedged in '26, and that's at a weighted average fixed price of CAD 4.54 per Mcf. In the first quarter, we had over 370 million cubic feet per day of our physical gas exposed to the premium price Eastern markets, which was good when they ran. So that's Dawn, Ventura, Chicago, Iroquois, Emerson and ANR Southeast. And that provided a strong uplift to our Q1 cash flow. We have entered into a long-term natural gas storage agreement with AltaGas at their Dimsdale storage facility in Alberta. We did that in the second half of 2025. Subsequently, AltaGas has announced a positive final investment decision for the Phase 2 expansion of that facility. So in '26, we'll have access to 6 Bcf of storage capacity, and that starts in April of this year. And then next year in mid-'27, it increases to 10 Bcf and that's for a 10-year term. And we view the acquisition of an additional large storage position as a strategic opportunity to improve financial performance and enhance our operational flexibility in periods of natural gas volatility. And it's really just another aspect of our ongoing efforts to fully integrate our natural gas business. Updating the cost reduction and margin improvement activities. We did embark upon that initiative in mid-'25, and the focus is on reducing all aspects of the cost equation. And we're excited by the rapid progress that we've made already. So Q4 OpEx was $4.66 a BOE. That was down 3% from the third quarter in 2025. and 9% from the first half of 2025 when costs were $5.14 a BOE. The Peace River High complex sale will reduce go-forward corporate OpEx by a further 7%. So our '26 OpEx guidance is $4.50 per BOE. With the success of the cost reduction initiatives to date, we are revising our aggregating aggregate operating and transport cost reduction target that was $1 per BOE by 2031 to $1.50 per BOE and approximately $0.70 per BOE have already been achieved since the first half of '25. We've also entered into agreements to control our frac sand capacity in BC via a transload facility. It's expected to commence operations in Q2 of '26. in this vertical integration of our sand business, it's estimated to save a minimum of $40 million per year in capital costs. The ongoing Northeast BC infrastructure build-out will systematically reduce costs as well as various components are completed. First major component completed is the liquids hub and associated pipelines with it, that's located in proximity to the Aitken gas processing complex. By 2031, Tourmaline expects up to $500 million per year of aggregate commodity price independent structural cost reductions, and that's compared to the first half '25 cost structure. And that will flow through to lower corporate breakevens and our free cash flow margin improvement. On the EP front, in 2025, we drilled 320 gross wells, and we led the Canadian industry with a total of 1.7 million meters drilled during the year. In '25, we delivered our best overall well performance in the past 6 years in the BC Montney gas condensate complex. We're 22% higher in '25 than the previous 5-year average, and that's based on the IP90 of 102 wells. And this outperformance has been across the full suite of the BC Montney assets from Aitken, Birch, Gundy in the north, to Groundbirch, Doe, Montney in the south., and it speaks to the size and scale of this fully derisked asset base. We continue to increase lateral length, 25 Deep Basin and Northeast BC program, averaging 8,400 completed lateral feet, and that's up 1,100 feet over 2024. D&C cost per foot in the Deep Basin and BC are actually now in decline and the stats are quoted there. The 26 EP capital budget reduction that we've announced, the $175 million will not impact the original startup of timing of the Aitken and the Groundbirch Manias gas plant projects in BC. Aitken is on schedule for a Q4 '26 completion and Manias completion is expected in Q4 of '27. Our ongoing new zone new pool exploration program has now resulted after approximately 5 years in 2.55 Tcf equivalent of 2P reserve additions and approximately 1,350 Tier 1 and Tier 2 drilling locations. And we've got several high-impact exploration and delineation wells planned in the '26 program. We figure this is by far the largest and most consistent exploration program in the basin. On EPI, our environmental performance improvement, importantly, Tourmaline has achieved Grade A certification for methane performance across our entire Northeast BC asset base. That's under MIQ's global methane certification standard. We are the first Canadian company to be certified under MIQ and the first company in MIQ's history to have certified integrated gas production and processing facilities. And the timing of this is significant given the ongoing negotiations on methane between the province of Alberta and the federal government. There are several other EP highlights as there always are detailed in the release, and you can read those at your leisure. On the dividend, our Board of Directors has declared a quarterly base dividend of $0.50 per share payable on March 31, 26 to shareholders of record at the close of business on March 16, '26. And the weak Western Canadian Sedimentary Basin local gas pricing and unusually low pricing at the PG&E and Malin sales hubs this winter will limit free cash flow and constrain our ability to fund a special dividend in Q1. Sustained stronger pricing and our ongoing margin improvement activities are expected to lead to further base dividend increases and special dividends are anticipated to be used in those periods of particularly strong pricing to return the majority of incremental free cash flow to shareholders. So that's it for the formal remarks, and we're here to answer questions. Operator: [Operator Instructions] Your first question comes from Kalei Akamine from Bank of America. Kaleinoheaokealaula Akamine: My first question is on the capital flexibility. You called out potentially taking $200 million of additional capital out of the '26 budget. With the breakup season kind of around the corner, I imagine that decision would be imminent. What factors would influence your decision? How do you allocate the reduction across the asset base? And in the case where there's additional flexibility needed in coming years, should we think about what you've done here as the template for future actions? Michael Rose: Yes. Well, cutting the capital budget in '26, sorry, is exactly what we did in '25 and '24, but particularly weak local pricing and PG&E pricing, they're both below $2 was the reason for that. Yes, we do have flexibility to cut an additional $200 million. Again, it would be focused on D&C because we want to keep the 2 plant projects in BC on schedule and total facility spending in BC is sort of between $250 million and $300 million for those particular projects. So we do have quite a bit of flexibility. You mentioned breakup. It gives us a bit of time, so probably 2 to 3 months to watch where prices go. And we are starting to see AECO move upwards from its sort of $1.60 level. And PG&E was constrained. That was -- usually, that's a huge premium market for us, usually trades USD 2 above Henry Hub. Now it's $1 below Henry Hub, which we haven't seen in the 9 years we've been selling there. It's actually always a big winner in our portfolio. They had no winter. They had an enormous amount of rain. So lots of excess hydro. And then there's a particular maintenance project at the Grand Cooli dam where they have to do dry dam maintenance that starts on March 15. So they've been emptying that reservoir all winter, and that's been hammering 6 gigawatts a day into that local market, which is a bit oversupplied anyway. 6 gigs is about equivalent of a Bcf a day of gas. So it certainly hasn't helped gas. Now we expect that price to start improving when the maintenance starts. And then that 6 gigs has gone for an extended period of time. First of all, they do the maintenance and then they have to refill. So we're positive on our outlook for where PG&E prices are going to go. And AECO and PG&E are directly connected, and you can watch them. They've been tracking each other really for the past month. And they're both going to head up. I didn't mention that it's $45 million for each dime on AECO. So if we got to the marvelous price of $2.25, all of a sudden, our free cash flow is over $1 billion. So it kind of puts it in context. So we have some time. We certainly have some flexibility. The first EP capital cut because of well outperformance doesn't affect the production. If we cut more capital out of the budget, it would affect production. Kaleinoheaokealaula Akamine: I also think Costa Azul LNG is starting up sometime in the second half, so that should be supportive to that macro that you're talking about in California. The next question is just on plug and perf. We've seen more of the Montney program shifting from Ball drop to plug and perf because of the results, I would assume. If that is more capital efficient, more resource for less dollars, could we see you fully shift your program to plug and perf? I know it's really hard to fix something that isn't broken, but wondering if there are any incremental benefits that could be realized. Michael Rose: Yes. I mean we're up to 75% of the wells in BC on plug and perf. And we continue to evaluate. It's particularly advantageous when you're in the more liquid-rich tighter Montney horizons. And so we're certainly using it there. And we did take the entire booked inventory well cost up primarily because of this evolution to plug and perf style completions. So our 2P F&D because we're carrying the booked inventory would have been $588 a BOE rather than the 908 because we basically recalibrated the entire inventory and the capital all in year 1. So it sets us up nicely for even lower F&D in future years. So we're always working on it and figuring out the best recovery, the best deliverability and the best economic return on the wells. Operator: Your next question comes from Sam Burwell of Jefferies. George Burwell: I wanted to piggyback on Kale's question on the CapEx deferrals. I mean, first, were these in the Deep Basin primarily or in Northeast BC or spread all over the place? And then how does this impact 2027 and beyond? I mean, is there CapEx that could be incremental to the numbers in the EP plan? And if so, is there upside to production? Or is this sort of timing deferral already baked into those numbers that we're looking at in the EP plan? Michael Rose: The deferrals and cuts were more in the Deep Basin than anywhere else. And one flexibility option we have, of course, is to continue to drill the pads and not frac them because the stimulation piece is 60% of the cost. And so that's essentially what we did in the second half of 2025. We shaped the production growth curve to the improving price curve. And December prices actually were good in '25, and we're able to do that very quickly. Deep Basin breakeven is about $2 an Mcf. And so that's why the majority of the capital deferrals have been there. The BC Montney is $1.40 for reference. We can add production into 2027 if we have a much more favorable pricing environment. I mean, right now, we're weak locally at AECO and Station 2 and on the West Coast in the U.S. We're strong in the East and obviously, a recent tailwind with our exposure to JKM and TTF. So we remain very flexible. I think we can pivot faster than anybody with our EP program, and we will. George Burwell: Okay. Great. And then next one, just on the ethane rejection decision. Is that idiosyncratic to just those particular contracts at certain plants, coupled with the desire to cut costs? Or is this any wider indication of ethane recovery economics across the basin? Michael Rose: Yes. The only place we recover ethane is in Alberta. So none of the BC build-out is impacted by that because there isn't an ethane business out there. But yes, it's a tough business, and it's hard to make money. We've been in those deep cuts in the Deep Basin outside operated for an extended period of time. And generally, we make very, very little to nothing of ethane. And even though it's such an important feedstock in the petrochemical business, the gas in Alberta has so much ethane in it that as soon as the price starts to improve, someone downstream goes and recovers that ethane and kind of keeps the market very, very weak. And so those contracts were coming due, and it was an opportunity for us to save costs. And it fits perfectly with this broad initiative we have across the company, which is really working. So you're going to get a double win when our local prices finally improve because we're doing a whole bunch of things to make this business a whole lot better, and it's all masked by our very low sub-$2 AECO prices in the connected basin. So when those improve and they will, you'll get kind of a double win. You'll get the top line improvement off the improving gas prices and then all the underlying improvements to the business will just add to that. Operator: Your next question comes from Greta Drefke of Goldman Sachs. Margaret Drefke: My first one is just on the return of capital outlook. Beyond the base dividend, can you speak to the AECO pricing environment that would position Tourmaline to return to paying out a special dividend? Do you see a path towards returning to special dividend payouts by the end of this year? Or would you expect it to return in 2027 or so? James Heard: So we are always available and willing to sweep additional free cash flow to shareholders and our preferred method has been a special dividend. Prices are changing quickly and our cash flows can change quickly, too. Just with the TTF and JKM move that we've seen over the last couple of days alone, that's added several hundred million dollars to our forward outlook of free cash flow. And we see that as not yet settled. It's still transpiring. And if LNG out of that region, the Middle East is constrained for more than a month, we see a pretty dramatic change in global S&D that would could propel JKM and TTF prices to a point where free cash flow is well over $1 billion for Tourmaline. So we're monitoring that. It's also affecting our FEI pricing at propane. That's up quite a bit relative to where it was last week for our forward outlook. This is also adding to our free cash flow outlook. And as we march through the year, we'll continue to monitor our forward free cash flow profile. And if there's ample free cash flow over and above the base dividend, we will return it. Margaret Drefke: Great. That's very helpful. And then for my second question, I just wanted to ask a little bit more on the power demand outlook for the basin. Can you speak a little bit about your latest conversations with regulatory entities, hyperscalers or other parties on the potential for power demand build-out relating to data center demand in Western Canada? Have you seen time lines or just broader conversations progressing as expected? And have these discussions been of the scale or magnitude that would encourage you to participate in a potential project? Michael Rose: We've been -- we're a year into a process exploring the possibility of Cold Lake locating near one of our natural gas plants. We think Alberta has all kinds of advantages. We have advantages because we've got land and water and power redundancy and fiber connection and CCUS capability of a hyperscaler wanted a full green solution, if you like. We will know what we're going to do specifically this year in 2026. But we're excited about what's happening in Alberta altogether. There's a couple of on-grid projects. We expect to see an announcement on one of those, and we think that will be very good for the basin and the market's understanding that this can be a big growth opportunity for Alberta. By 2030, just adding up some of the behind the fence opportunities and the 2 on-grid projects we kind of see it as a minimum 1.5 a day of gas consumption inside the basin. And that would be ahead of LNG Canada Phase 2. So that would be very good timing for the S&D dynamics in our basin. Anything you want to add, Jamie? James Heard: I would think that these dynamics extend just beyond the Alberta border as well into areas Tourmaline can easily reach with gas. As we've seen data centers be built out, we would kind of characterize the first phase as on-grid power consumption where it was available. Alberta is still in that phase. The second phase was reigniting brownfield assets or mothballed assets. And the third phase has been brand-new greenfield development with behind the fence power generation matched with the data center. And those assets have moved north and west. We've seen far more announcements of behind-the-meter data centers, west of the Great Lakes into the Dakotas and the Montana. And those are assets that Tourmaline can access with gas, and it will also tighten the markets that Tourmaline already accesses, whether it be on Northern Border or into the Great Lakes region or even into the Malin market. And so as we see these build-outs, we're excited for the opportunity to participate in the province of Alberta, whether it be our colocation project that we're directly involved in or a firm supply agreement with a project that is near one of our asset bases. But we also think that Tourmaline's gas in the western part of the Northwest of the United States is going to have preferential access to the vast build-out that's already occurring into basins that frankly have a declining local supply environment. So it's both a local and a broad strategy at Tourmaline, and we see probably the next year being a pretty critical year to see all these things frame up FID and put real dollars to work in consumption that we're going to enjoy '27, '28 and beyond. Operator: Your next question comes from Aaron Bilkoski of TD Cowen. Aaron Bilkoski: You've been pretty nimble with the shorter cycle E&P capital cuts. But I'd be curious to know if there's a scenario where you would lower the longer-term growth trajectory through 2031. Michael Rose: Well, I think we want to keep the first 2 plants in the Montney build-out on schedule. So as I mentioned, so that would be Aitken and Groundbirch Manias. If gas prices don't recover and they're lower than what any of us are actually expecting getting towards the end of the decade, we have flexibility around the timing of the Phase 2 of the BC Montney build-out. I mean we can take a year off if we need to and build significant free cash flow in that particular annum. So we're just going to see how it plays out. But as you mentioned, we are nimble and can pivot quickly. Operator: The next question comes from Josh Silverstein of UBS. Joshua Silverstein: I wanted to touch on the LNG exposure that you have given the capacity and contracts signed and to understand some potential upside exposure. It looks like you're assuming kind of $12 to $13 JKM versus $3.75, $4 Henry Hub. I'm guessing there's probably kind of an all-in cost of maybe $5 to $6 to get that JKM price. So can you just talk around some of the sensitivity around that if we remain at kind of this $10, $12 spread, just maybe how much upside there is? James Heard: Josh, it's Jamie speaking. So your numbers are roughly correct. We ran the strip that you're seeing for '26 and '27 in the 5-year plan on March 2. So that would have just the first day of this international price move incorporated within it. We have today over 200 million cubic feet a day of LNG capacity. That extends towards 330 million cubic feet a day over the next several years. The details are in the deck. We've only hedged roughly 1/4 of that. That's also in the hedge disclosure available in our financials website. We have taken steps to lock in some of the spike that we've seen, but we're totally aware that a long-term outage, specifically out of the Qatar LNG plant would rapidly reshape the S&D dynamics on the water, and we are available for that upside, especially in the months ahead and into '27 as our portfolio also expands into these markets. So the sensitivity is a $1 change in JKM or TTF together is roughly $50 million of free cash flow this year and $70 million next year. And we've seen these. Obviously, these markets go into the 20s, 30s, 40s on supply disruptions before. So we're aware that it's a very high convex market, and it could end up being a windfall, and we're widely open to it. Joshua Silverstein: And just to understand, that's a dollar move higher relative to what it was trading at or that's a spread change? James Heard: It's just a sensitivity. So I'm talking about, yes, holding Hub flat. If JKM and TTF move $1, that's your sensitivity. So it's a sensitive of just the floating market. We're not going to get into the swaps and the deductions, et cetera. Those are all confidential contracts, but your characterization of roughly $4 to sometimes $5 less is a fair estimate, inclusive of our transport cost to the Gulf. Joshua Silverstein: Got it. That's helpful. And then just on cash allocation, you're $1.5 billion at the end of the year. You're taking $500 million down from that. You're at $1 billion. You're well below the $1.7 billion target. Is the idea that sometime this year, maybe use that some way if it's not going to special dividends, could you use it for acquisitions, some additional storage opportunities? Or do you actually want to stay around kind of the $1 billion number, maybe kind of use the balance sheet if natural gas prices move lower? James Heard: Josh, I just want to add a quick clarification. In our financials, because the Arch is available for sale, our net debt includes the proceeds. So the $1.5 billion is after receiving the effective consideration of the Arch. And then maybe I'll let Mike talk about our M&A outlook. Michael Rose: Yes. I mean, right now, the M&A is focused on small asset tuck-ins in and around existing infrastructure or infrastructure to be built. So we're not looking at anything large at the current time. And persistence and patience are the key to pre assets out of large companies. And so we'll continue with that approach. But M&A is not a big piece of the equation right now. Operator: Your next call comes from Jamie Kubik of CIBC. James Kubik: Just with respect to Ford pricing, AECO and Station 2 aren't really sustainably above $3 a DJ until 2028. Should we think about potential for shut-ins through the summer from Tourmaline? And I guess, when do you expect that forward pricing turns for the better here? Michael Rose: Yes. If the price gets low enough, and we've shut in before, we're actually -- of course, we're always thinking the price is going to go up, but we are quite constructive, and Jamie and I can talk to that. Our storage position starts to factor into that summer equation. We can inject, I think, 67 million a day this summer, but that number in 2027 summer triples, and that becomes a meaningful volume. And we can be very nimble about when we inject and when we withdraw. It's a very high deliverability reservoir. And again, we know quite a bit about it from previous employment. It's actually something I worked on at Shell many decades ago when it actually had producible gas in it. So it's kind of fine that way. Just some comments on LNG Canada and it's on and gosh, the price is $2 or less, what's going on. Part of it is that California equation that we talked about already, and it is putting a cap on AECO because it is so weak. And we need to get that 3 Bs a day out of the West Gate and the other B that comes down through the West Coast system into the Pacific Northwest to clear. And we see the PG&E prices will start to help with that. And there's an order of fill with the LNG Canada facility. So the first train, most of the fill came from the direct connects that a couple of the large operators have. And then it was -- as you brought Train 2 on, the first volumes for that were off the Enbridge system. So that meter station is Sunset West. And so the last station to get gas, which is the one that affects AECO and the NGTL system is Willow, and it's had really strong volumes over the last 3 or 4 weeks. And so AECO, NGTL get the positive impact last. And storage, if you look at it, will -- in about 7 days based on the weather, will eclipse the storage withdrawal that we had in all of last year's winter. So we're going to end up well into the 200s of withdrawal. That's positive. And when we think you'll start seeing it set up is when there'll be really tepid injections in April and May when you actually have reasonably warm weather. And we think that's what starts to move the AECO and Station 2 prices up. Anything else you guys want to add or... James Heard: I would say the other thing is we closely study the supply side of the equation locally, and we are not seeing meaningful supply growth in the basin. The numbers we see would be well shy of 1 billion cubic feet a day. Exit or exit was actually down. February was much milder, so we didn't have freeze-offs this year, but we still average, call it, 0.6, 0.7, and then that's spinning to, call it, 0.4, 0.5 today as we see supply. So the local FD is good. It's -- you can't have AECO too strong because you need to be able to clear transport economics into our main export hub of Pac Northwest and PG&E. And so as that market strengthens, AECO can strengthen. There's no long-term glut issue locally. It is this idiosyncratic demand issue we've had with just a very bizarre winter, which was very East focused and not very West focused. James Kubik: Okay. Could you maybe talk a little bit about the potential for turnarounds in Q2 or Q3 with respect to terminaling or even perhaps more broadly and how that could possibly help the situation? Michael Rose: Well, we kind of schedule our turnarounds or try to, when the scheduled TC and Enbridge turnarounds are happening. So it's about the same as last year. I think the scheduled pipeline turnarounds from the big midstreamers is a little bit less for '26 versus 2025, particularly on the GTN system, which impacts us. Operator: Your next question comes from Fai Lee of Odlum Brown. Fai Lee: I'm just trying to get my head wrapped around your 5-year plan and the AECO pricing assumptions. Given the future strip for AECO seems to be closer to $2.50, which is what we're seeing in 2027. Just trying to understand how I can reconcile that with the $4 that you have for 2028. And is that something related to the PG&E like demand, if that improves that you see moving up closer to that? Or what's your confidence interval around the $4 outlook for 2028 and beyond? James Heard: Fai, this is Jamie speaking. So the first 2 years, as you mentioned, are on strip, and we just honor the strip that's offered on the date. We are totally aware that markets will disconnect to the upside and the downside in any given year. And so the flat price deck is what we think would be a balanced outlook at a fixed price. So in our perspective, $65 WTI feels mid-cycle. $4 Henry Hub, given the dynamics we see at play in the United States where basins are starting to have performance degradation feels like a new normal for a mid-cycle price. We are aware there will be volatility on either side of that. And then in a $4 hub environment, we believe AECO should price at transport economics and transport economics would imply a basis of roughly USD 1. In the current foreign exchange environment, USD 1 basis is effectively offset by the FX. So CAD 4 would be your implied AECO price. So this is, from our perspective, a mid-cycle look at Tourmaline's cash flows. The reason why we felt flat deck was a good illustration here is the margin improvement of the business is better borne out. You can see the margin improve on an annum to anum basis as we grow this business in BC, which is our most profitable rock. If you were to run strip every day, the contango turning to backwardation was always masking that, which was hiding this margin improvement that's inherent in the asset base, even though year-to-year, you'll definitely see it come through in the financials. So we thought the flat deck was a better way to illustrate how the profitability of the business was getting better in the out years. Fai Lee: Yes. I understand the rationale, and I don't have an issue with what you've just said. I'm just trying to understand if the reality turns out to be closer to the future strip, which is closer to, call it, $250, $255, does that change your marketing strategy or your -- a lot of been talked about capital plans, I guess, as well. But how does -- how are you set up your 5-year plan if the outlook isn't really $4? And I guess, would you consider like in 2027 and beyond, you're increasing your AECO exposure. Would that change if it's closer to the $2.50 in reality? Michael Rose: Yes, everything would change. So I did reference that when Aaron asked his question, I mean, we can slow down on the North Montney Phase 2 build-out in BC. So that's addressing the capital side of the equation. We are the most diversified producer in North America. So right now, it's about 1.3 Bs a day of our 3 Bcf a day is exported. And usually, we win on those markets. So this winter, we did not win on California. So we'll continue to look for diversification opportunities, which help the overall financial picture of the company. But we are very flexible and nimble as has been referenced on the call, and we know the price breakpoints and when we should slow down and when we should speed up. And so we are paying attention to that every single week. Fai Lee: Okay. And just really quick, is that -- I know you've given the sensitivity for 2026 for AECO, but you haven't for 2027. Is that just because of that nimbleness and things can change? Is that why? James Heard: It would be slightly larger, call it, 25% larger in '27, and that's mostly a flexibility of hedge book. Operator: There are no further questions at this time. I will now turn the call back over to Scott Kirker. Please continue. W. Kirker: Thank you, operator. Thanks, everyone, for participating. We look forward to our discussion next quarter. See you then. Operator: Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.
B. Bazin: Good morning. It is my pleasure today to present our 2025 results together with Maud Thuaudet, our CFO. Once again, we delivered a very strong performance in 2025. 2025 was the last year of our Grow & Impact plan, which has been a very clear success. We have demonstrated our capacity to execute year after year and deliver on strategic initiatives, value creation, margin and cash. Saint-Gobain is now an attractive business profile, thanks to our decisive portfolio optimization, which will, of course, will continue. We are positioned Saint-Gobain as the leader in sustainable construction, and we have achieved all the financial targets that we had set at our 2021 Capital Markets Day. Here are a few examples of Saint-Gobain solutions being used around the world in iconic residential or nonresidential buildings, such as this inspiring resort in Saudi Arabia. On infrastructure also, we have provided, for instance, 17 solutions at the new Noida airport in Delhi in India, bringing clear benefits in terms of climate resilience, regulatory compliance and fire safety. In 2025, our teams have once again delivered very well against very different market backdrops. Europe improved in the second half, returning to growth. In North America, as expected, we outperformed, and we delivered a broadly stable margin in the second half. In Asia and emerging markets, we delivered strong growth, up 12.6% in local currencies. And finally, we have taken new strategic steps in construction chemicals with Cemix and FOSROC acquisitions, in particular, achieving almost 16% sales growth in local currencies. Let me congratulate and thank very warmly all our talented and very engaged teams all around the world. Now moving to our financials. In 2025, we have delivered a strong set of results despite contrasted markets. Growth in sales up 2.1% in local currencies with over proportional growth in profit, both EBITDA and operating income, a robust EUR 3.3 billion recurring net income and a 4.5% increase for our proposed dividend at EUR 2.3 per share. We also continued to deliver strongly on free cash flow with a 58% conversion ratio. So a very strong set of results and very, very strong execution. Now, Maud the floor is yours to go through all the financial metrics. Maud Thuaudet: Thank you very much, Benoit. Good morning to all of you, and I'm very happy to share with you our strong 2025 results this morning. I'll start with the top line. We achieved sales growth of 2.1% in local currencies. On a like-for-like basis, sales were virtually stable. They were supported in H2 by good growth in Asia Pacific and Latin America, a return to growth in Europe despite the decline in North America. Volumes were down 1.3% over the year, reflecting these mixed market trends by geography. Prices were up 0.8% and with a positive 0.7% effect in H2 in a softer inflationary environment, inflation was broadly stable in H2. This actually reflects the added value of our solutions and disciplined execution from our local team. Currency effect was minus 2.3% for the year. It became more negative at minus 3% in H2 with the depreciation of most currencies against the euro. And we expect similar impact in Q1 2026 of around minus 3% on sales. We had a positive scope impact of 2.6% and reflecting our continued portfolio rotation and in particular, Cemix, FOSROC, Bailey and CSR. Regarding operating income and margins, we delivered overproportional operating income growth, up 3.8% in local currencies and slightly up like-for-like. We were able to deliver a stable operating margin despite the environment and the negative currency impact. This was driven by our ability to proactively adapt our operations throughout 2025 as market conditions shifted from our initial scenario. We had a greater impact from FX on the operating income at minus close to 4%, close to double the impact on sales. This is because the depreciation versus the euro was particularly seen in regions where the group -- where the margins are above the group's average. This strong margin performance reflects a very good operating performance, including a slight positive price/cost spread. Moving now to EBITDA and EPS. EBITDA rose 3.4% in local currencies with the EBITDA margin stable at 15.5%. Nonoperating costs remain below our group guidance of around EUR 250 million on average per year. And as explained in July, there were more in H2 than in H1. Net financial expense was up, reflecting the rise in gross debt and less interest earned on cash placements. The tax rate on recurring net income was stable at 24%. Last, EPS increased 2.5% and 6.4% in local currencies. Now looking at cash and balance sheet. We generated free cash flows of EUR 3.8 billion with a cash conversion ratio of 58%, above our target of 50%. We continue to dynamically optimize the operating working capital, reducing by 1 day to 11 days sales at the end of 2025 despite the dilutive effect of our portfolio rotation. And in terms of CapEx, we remain stable at around 4.5% of sales and planned for the same this year. We also maintained in 2025, a strong financial discipline and a strong balance sheet. Our net debt-to-EBITDA ratio was stable at 1.4x and we made clear capital allocation decisions toward value creation for our shareholders with notably 95% of our gross investment either through gross CapEx and M&A put in our high-growth markets and EUR 1.5 billion returned to our shareholders through dividends and share buybacks. Now let us look at the results by region, and I'll start with Europe overall, where we saw a return to sales and operating margin growth in the second half sales were up 1.1% in local currencies and up 0.6% like-for-like. The margin held up well despite the lower sales in H1 driven by firm price and cost management. In terms of local dynamics in Northern Europe, a contrasted situation from one country to the other with the U.K. reporting further growth with a strong outperformance, thanks to our specified sales and our full solutions offering in the country. Eastern Europe was slightly up even if Poland was impacted by weaker Industrial Solutions, Germany remained down ahead of the stimulus plan in a wait-and-see attitude and the Nordics remained mixed overall, but we won several large infrastructure projects there. Lastly, it's worth noting that we are well placed to capitalize on major infrastructure and defense spending in Central and Eastern Europe, thanks to a network of 100 plants and representing over 10% of our sales of the group sales. Now moving to Southern Europe, Middle East and Africa. We improved noticeably because in the second half, sales were up 1.7% in a market that remains uncertain, France stabilized in the second half and reported growth in the fourth quarter, driven by the rise in permits and housing starts, which should continue to support new construction. We outperformed the market in both new construction and renovation. Spain and Italy continued to show growth with particular market share gains in Interior Solutions and the Middle East and Africa achieved double-digit growth, supported by the successful integration of FOSROC, in construction chemicals and major infrastructure project in Saudi Arabia and Abu Dhabi. Moving now to the Americas. Sales in North America were down 4.2% over the year and by 7.3% in H2 with Q4 down 8.2%. U.S. roofing volumes remained low as expected in Q4, down 17% given the lack of major weather events. The new construction market was down, impacting Interior Solutions, but construction chemicals accelerated throughout the year with market share gains. Despite this challenging environment, our North American teams outperformed the market and delivered a very good operating performance, maintaining a positive price effect and optimizing production cost and industrial plant maintenance. As a result, margins held firm for the full year and in the second half. Latin America delivered a strong performance, up 13.5% in local currencies and 6.9% like-for-like. Growth was slower in H2 on a tougher comparison basis and with prices slowing at the end of the year due to lower energy costs. The integration of Cemix in Construction Chemicals has been a great success with 15% growth in local currencies and clear spillover effect in Central America for the full Saint-Gobain solutions offer. The Americas region delivered a slight increase in its operating margin over the year to 17.2% and held firm at 16% in H2, as we said last October. Turning lastly to Asia Pacific, we delivered 17% growth in local currencies and 2.4% like-for-like. The operating margin reached a record supported by volume growth and good pricing management. India saw double-digit growth and further market share gains with our comprehensive range of solutions, we were awarded new projects in nonresidential and infrastructure with increased share of wallet, thanks to our leadership in construction chemicals and the successful integration of FOSROC. Southeast Asia saw growth with a widened range of specified solutions and the delivery of 20 data centers in Indonesia and Malaysia during the year. The integration of CSR is going well, both in operational performance and in the enhancement of the solutions offering for the local market. The Australian construction market remains lackluster but leading indicators are improving. And last, China was down slightly over the year, but progressed in H2 with market share gains despite continued market weakness. So in a nutshell for Saint-Gobain, 2025 was a strong year focused on discipline and execution despite a contrasted environment. And for 2026, I can tell you that all the teams are fully committed. Priorities are crystal clear, outperformance, margin, cash portfolio rotation and we are all set to deliver. Benoit, I'll leave it to you for the conclusion. B. Bazin: Thank you, Maud. Let me now update you on our strategy. Saint-Gobain is opening a very exciting new chapter with our strategic plan, Lead & Grow that we announced at our Capital Markets Day last October. We benefit from strong supportive megatrends in sustainable construction, population growth and urbanization, notably in Asia and emerging countries, job site productivity and energy efficiency renovation, notably in Europe and the adaptation of buildings and infrastructure to extreme weather, especially in North America. We have an unmatched breadth of addressable markets across residential, nonresidential and infrastructure totaling EUR 500 billion. And to capture this, we are rolling out a value-enhancing solutions approach and leveraging the well-established growth compounding country platforms. Let's start with our solutions. We are the only provider of a comprehensive solutions set delivering performance and sustainability. We have everything for buildings and infrastructure from roofing to facades, flooring, partitions, ceilings and so on. And our solutions bring thermal, acoustic, air quality, visual performance and even productivity benefits project sites. This is altogether a very crucial competitive advantage for Saint-Gobain. A key part of Lead & Grow relies on our expansion of these solutions into nonresidential and infrastructure markets where we have many growth opportunities and where we can tailor and specify our Technical Solutions segment by segment. If I take the hospital segment, for instance, where hygiene, safety, air quality, comfort are crucial, we have a full range offer, including easy to clean floors and ceilings, X-ray protection plasterboard, antibacterial wall finishings and so on. We provide technical support in high performance and code-compliant materials and we have dedicated local teams for the health care market. Similarly, data centers have their own specific requirements centered around construction speed, thermal performance, fire safety, sustainable construction. And here also, we have a full catalog of technical, specific what we call hero products that address these needs. With our global key account management, we are currently working on an active pipeline of more than 600 data center projects in 26 countries around the world. In infrastructure, airports have their own specific requirements in terms of customer experience, regulatory compliance and climate resilience. We have also tailored comprehensive solutions to address both the billings, which, on average, is 60% of the CapEx for an airport and the infrastructure part of airports. As you know, we are growing fast on infrastructure, thanks to our attractive leadership in construction chemicals, which has been a very dynamic buildup in the last years. Our EUR 6.5 billion leading platform across 76 countries can address all critical parts of infrastructure and buildings. As we highlighted at our Capital Markets Day, we plan to continue our acquisitions and also our CapEx to reach more than EUR 9 billion of sales by 2030 on construction chemicals. This is a bit of a highlight by segment. Now let's look at how we deploy our solutions by region. In Europe, we see improving leading indicators with strong commitments from government, even the EU level to address the housing crisis, also some rising affordability and better housing starts. On the renovation side and energy efficiency, we see policies supportive of energy-efficient renovation and green value is increasingly reflected in real estate prices. We are well placed to benefit from the improving leading indicators, thanks to our solutions approach across the board that brings share of wallet, cross selling and margin benefits for Saint-Gobain. We also have very attractive digital solutions. One example is for architects on facade specification, we are the clear leader. The second one as a go-to partner for thousands of craftsmen in France, we have a full suite of digital tools enhanced by AI that bring to them speed and value on quotes, regulations, invoices, deliveries and, therefore, attractive, stickiness and volatility of those contractors to Saint-Gobain. In North America now, we work also on strong contractor engagement and loyalty to drive and enhance our brand reputation across our multiple products and solutions offer. We are the #1 position in North America on interior and exterior solutions. This allows us to further roll out cross-selling actions and more importantly, to build up and strengthen win-win partnerships with the top national distributors across the country. In North America, we are the best player to address the increasingly extreme weather conditions with the most comprehensive climate resilient offer on the market. But the core of that offer is our leadership in roofing across U.S. and Canada. And I'm convinced that it will continue to benefit from strong fundamentals. Although, as we know, the 2025 storm season was unusually calm with no hurricanes for the first time in 10 years, there is an increasing number of extreme climate events in the U.S. Second, more than 12 million homes built in the early years of 2000, need renovation -- aging of the roof. And third, we have this structural housing shortage that persists in the U.S. and in Canada. To build up on that momentum and the strong fundamental drivers of roofing, we are replacing a nearly 50-year old line with a modern, highly competitive roofing capacity in the undersupplied region in the Southeast. Altogether, I'm confident that this positions us altogether on climate resilient offer, including, of course, roofing, to outperform and continue to outperform in North America, like we have demonstrated again last year as one of the only 3 meaningful national players in roofing in North America. In North America, we're also expanding in nonresidential and infrastructure. We are well positioned to serve fast-growing segments such as data centers, airports, I mentioned hospitals a bit earlier on. We have dedicated sales teams and we differentiate with highly technical products like our Sage electrochromic glass. We are the only in the world to provide that, that has been specified in 29 U.S. airports over the last 2 years. Altogether, I'm confident about the structural growth drivers and outperformance of Saint-Gobain in North America and what will continue to grow in North America across the board in the coming years. Let's now look at how we are deploying our solutions in Asia and emerging countries, a very important profit tool and growth tool for Saint-Gobain. In India, we are the undisputed #1 on buildings, and we are expanding on infrastructure, already 2,200 major infrastructure projects in '25. In Southeast Asia, we systematically complete our offer country by country. And we differentiate like in China, differentiate ourselves with high value-added solutions that represent 45% of our sales, which brings good resilience and margin also in China. In this region, we are significantly increasing our penetration on nonresidential markets also through specification. Take the fast-growing hospitality market in the Middle East we are very well placed to service this market with our leadership positions in the Middle East and Turkey. In Mexico, nearly 30% of our sales stem for specification, and we are leveraging our widened offer, including our construction chemicals offers, thanks to the very strong profitable Cemix acquisition. So this is the view by region, after the view by segment. And as you know, to roll out our strategy, of course, quality of execution, which we have demonstrated day in, day out in the last 5 to 6 years, quality of execution is crucial. And this is what we have delivered consistently and will continue to do so. We benefit from our country-led operating model, which is well suited to our markets, of course, but well suited as well to our current geopolitical environment. This Saint-Gobain operating model has been tested and proven with proactive and empowered CEOs very close to their teams and customers. They work -- we work on all levers, commercial excellence, I highlighted quite a lot of examples by systematically tracking the rollout of our solutions, margin by proactively driving cost and productivity gains as well as positive price/cost price based on the value that our solutions bring to our customers and cash, of course. This operating model by country is a great growth and value creation compounder for Saint-Gobain. A few examples of what we have done in the last year, take, for example, North America, where our teams have increased our sales by 60% since 2019. Mexico, India, the Middle East, which are meaningful size for Saint-Gobain, not only in sales, but of course, in profit where we have more than doubled our turnover over the same period. And in all these countries, Saint-Gobain has significantly outperformed the market. As you know, one of the strong, very strong pillars of Lead & Grow is that we have done in the past, our ongoing portfolio optimization that has brought a lot of successes. So we continue to actively steer our portfolio optimization. I'm happy to say that the integration of FOSROC and Cemix in construction chemicals are going very well with 11% organic sales growth in local currencies and 20% combined EBITDA margin. We have created a lot of value in the past acquisitions, such as Chryso, GCP and Continental, and we are on track to deliver value for our most recent acquisitions. In 2025, we rotated EUR 1.2 billion of sales, and our country platforms are nurturing an active pipeline as we speak. As you know, we intend to rotate through acquisitions and disposals more than 20% of our sales by 2030, keeping a strong value and continue to work, of course, under value creation for our shareholders. Indeed, our strategy is delivering attractive shareholder returns. In '25 total return to our shareholders from dividends and share buybacks amounted to EUR 1.5 billion. If I take the last 5 years, we have returned over EUR 7 billion to our shareholders. In 2026, the Board we had yesterday proposed -- will propose to the AGM, a dividend of EUR 2.30 per share. Shareholder returns will continue to be a very important part of our capital allocation framework. From '26 to 2030 we plan buybacks of around EUR 2 billion and dividends of around EUR 6 billion. So EUR 8 billion altogether for our shareholders. Now let me finish and turn to our outlook. You can see our expectations for each geography here on the slide, in a contrasted macroeconomic environment and still uncertain geopolitical landscape, Saint-Gobain expects an EBITDA margin of more than 15% in 2026 with the first half affected by the extreme weather conditions in Europe and North America that we have seen since the start of the year. As a conclusion, we have established a very strong track record over the last 5 years. Lead & Grow gives us a very exciting and very powerful road map, very clear for the teams, for the customers, for the shareholders over the next 5 years, deepening our value-enhancing solutions, expanding them across nonresidential and infrastructure; and second, sharpening the group's business profile through portfolio rotation. All this being delivered with ongoing excellence in execution supported by our proven operating platform country by country. So I'm very confident that all this will continue to deliver strong momentum, strong value creation for all our stakeholders. Thank you very much. And we now turn to your questions for Maud and myself. B. Bazin: As always, we start with the questions in the room, and then we will go on the call or Internet. So Elodie wants to... Elodie Rall: Elodie Rall from JPMorgan. Maybe I'll ask them one at a time. First of all, could you give us some color about your expectations about volume and pricing for '26? And I assume you confirm price/cost positive. I'll continue then. Second, you're guiding for a weaker H1. Does that mean that we should prepare for -- prepare for margin in H1 to be down before recovering in H2? And overall, do you think you can defend 2025 margin, noting that consensus is already a bit above? Third question is actually on the difference between EBITDA margin and EBIT margin. So I know you confirm at the CMD that more than 15% EBITDA margin equals more than 11% EBIT margin. But what we've seen in H2, is that actually EBITDA margin was down 40 bps when EBIT margin were flat. So maybe you can give us a bit of color what's going on in D&A and other nonoperating costs and how we should forecast that in '26? And just 2 quick ones more. Northern Europe, I think the disappointment was that volume was sequentially lower there versus Q3, and we were expecting some improvements. So when should we expect volume to turn positive in the region? And lastly, well done on North America margins, indeed flat in H2. But I think you indicated tougher comps in H1 '26. So what is the magnitude of decline that we should prepare for H1? B. Bazin: So we took notes because it's a long list. Do you want to take the technical one, the third one. Maud Thuaudet: Yes. So difference in EBITDA and EBIT. So what we said at the CMD, 15% equivalent to 11%. That doesn't change. Then you have indeed some H1, H2. End of July, we had said that we had lower nonoperating costs. They were at that time around EUR 50 million. And then you have overall for the full year, EUR 230 million. So you have had that mix in terms of semester on nonoperating costs. And especially, of course, that has weighed on the EBITDA margin in Northern Europe, where we have done a bit more in H2 of restructuring and nonoperating costs, therefore, being a bit up in Northern Europe in H2, especially. So the message remains the same, which is EBIT plus 4% and then EBITDA. And then in terms of depreciation, we anticipate more or less the same figures in terms of depreciation. B. Bazin: Maybe we'll go back to the first one. So yes, we continue to target positive price/cost spread like we have done last year on H1, full year and H2. Now let me clarify a bit the -- your question on volume and price and notably on Q1 weather because I'm sure it's a question I hate, and it's the first time I mentioned weather, but it's a fact that we have a very significant weather impact. If you take France, we have -- we have seen snow, but more importantly, we have seen a lot of floods in the last weeks. First time ever in the last 50 years, we have so much rain, and we have half of our regions, which are down double digit. So it's significant. You have seen also all the huge snowstorms in the U.S. with, I think it's 24 states on emergency status in North America. So all this has an impact. So we are assuming, of course, the normalization in Q2 because we think the weather will normalize. So Q2 and second half normalization improvement, as I highlighted in the outlook. So it's a transition, weaker volume. We think we'll have bottom actually on Q1 in North America, assuming the weather will normalize in the second quarter. So all in all, when you take the impact on North America and U.S. we should expect a low to mid-single-digit volume down in Q1 because of this weather. It's unfortunate. But that's the fact that we see in France and North America. And from there, normalization, improvement. We expect a lot of the green shoots we have seen in Europe to continue. France turned positive in Q4. And outside of this weather impact, it should continue. We have seen some positive momentum in the U.K. You have seen some very strong performance in Asia and Latin America. All that will continue. But yes, there is this volume impact on the first quarter, which has again, low to mid-single digit impact on Q1 volumes, minus 3 to minus 5, it's too early to tell because. We are not completely out of the woods. But that's the magnitude of the impact. And to sum up, on Q1, we were expecting Q1 to continue like Q4 outside of the weather impact, but the weather impact has been significant notably for France and the U.S. Overall H1 margin, we don't guide again margin by half. As you know, we are ambitious on the margin. We will stay ambitious. So there is, I think, a different seasonality to expect this year on the margin like on the operating profit because it's about the same. Don't forget these exceptional items last year that we are different in H1 and H2. So that's the slight difference between operating profit and EBITDA. But we might see a seasonality different this year between H1 and H2 on the margin because of this weather impact and because of the fact that we will see improving trends in our end markets starting in Q2. But more importantly, in H2. So it will be a bit of 2 halves of the year with a different momentum. I think your other question was on North Europe volume, take that one? Maud Thuaudet: Yes, sure. So Northern Europe, it's really a story of mixed and contrasted evolution country by country. Again, U.K. outperforming clearly. Then Germany still down. And we are quite happy to see that finally, the stimulus plan, you see some money starting flowing into the economy, but not yet into clear spending in construction at least. That's not what we're observing. So ahead of that, for sure, we have done some restructuring. We have optimized our setup in Germany, and we are ready to capture. The teams are already -- have key accounts in place discussing with all the major customers and with all the major people in charge of this public spending to prepare for the project and to get the impact. But it is slow, and it is taking a little bit of time. Then looking at Nordics, again, within the Nordics, mixed and contrasted dynamics. Norway is still difficult. Finland and Denmark are in a better shape. So we will see how that evolves, but that's the overall... B. Bazin: And if I take the last question on North America. As you have seen, Q4 was a bit softer than Q3. So we outperformed the market when you look at our self-delivery and margin in the second half. We don't have the carryover. Therefore, effect that we had starting Q1 of '25, [ because Q4 ] was a bit softer. So all in all, H1 '26 margin in North America will be below H1 '25, no surprise. And I think in terms of magnitude, the better indication is more the H2 '25 margin, than H1 '25 margin because of the volume momentum we have seen in H2 that we will continue to see at the start of the year, notably in Q1. And then it will progressively normalize. So as a reference, it's H2 margin, H1 margin that we expect for H1 margin in North America. Elodie Rall: So that's 200 basis points decline then? B. Bazin: You know the figures. But that's -- of course, it's too early to tell, but the order of magnitude is more the reference of '25 second half than first half, second half, where we had this carryover from late '24 expecting again in Q2 a normal weather pattern, which is what we expect, and we'll see the replenishment of the inventories from the distributor. And keeping in mind that roofing is 35% of our total exposure in the U.S. We grew in siding in Q4. We are growing as we speak in siding. So we gained market share on construction chemicals. So I think we should not overemphasize the roofing picture, which as we have seen on the slide I shared with you, a very abnormal hurricane season. And on top of that, even on the storm from hail storms, we were 13% below the last decade. So I think it was a transitory weaker volumes in North America due to weather impacting roofing, weather impacting across job sites in Q1. I think we can say too early, but we have bottomed in Q1 in North America. And from there, it will improve. You have seen that you take collective housing, the starts and the figures are moving in the right direction. I think the affordability even if it's a bit slow, is improving versus where we were some months ago, and we have delivered very well on our commitment in North America and all the teams are hands-on how to continue to [Technical Difficulty]... Ebrahim Homani: Ebrahim Homani, CIC CIB. I have 3, if I may, a follow-up on the roofing business in North America. -- if the weather conditions are more normal than last year, what could be the organic growth and the margin in 2026, especially in H2. My second point on your CapEx and the investment strategy for 2026. And do you expect an increase in free cash flow to EBITDA? And my last question is on Europe, price and volume dynamics that you expect, especially in Southern Europe? B. Bazin: I take the first. You may conclude. I repeat again, Roofing is a very strong business in North America. We are the only, the 3 only national players. So when you talk to the large distributors that are consolidating the market, they need national payers. So you win because you are national player across U.S. and Canada. I had a chance to meet the top 3 national distributors we have in December. I can tell you they are happy to continue to win with Saint-Gobain. I know that some competitors thought about entering the market. They may have realized, it's not easy to be a meaningful player on residential roofing in North America across the board. So it's a very good business, driven by strong fundamentals. Again, you have seen the multiplied by 4 of the weather patterns. If I take the last 30, 40 years, it's not going to diminish. It's accelerating with an exceptional low year in 2025. We have also all the aging of the roof. And on top of that, the housing shortage that everyone is working on it across all the states of the U.S. and also in Canada. So yes, we expect the weather to normalize. You may have seen -- we are not the only one to say it, Home Depot, which is a good proxy of the U.S. market, said it beginning of this week. So all this is there. We could expect -- again, it's too early to say that all the ice and snow storms we have seen across the board in the last 2 months would trigger some additional above and beyond renovation. By how much? It's a bit early to tell, but yes, the momentum in roofing will continue to be good, assuming, of course, a normal weather pattern starting in Q2 and H2. So yes, we will find it back in the second half. And that's the equation that we have computed because all the fundamentals drivers of roofing are still there, and we are happy that we have this Georgia competitive plant ready to go. Again, it's a 2% addition on the market, which had been sold out in the last 5 years. And even the region of Florida and Southeast today are pretty busy. So we are happy to be the first to have a competitive plant ready to go when the market will improve, and it's very meaningful for the national distributors when you continue to invest on your roofing business, like when you invest on your plasterboard, siding business and when you have the complete offer. So I'm not worried at all about 8% new capacity additions that we have seen over the next 3 years on the market and again, 2% coming from Saint-Gobain. We shut down a plant, which was 50 years old. We didn't ask you to visit, and we'll be happy to ask you to visit the new one, but happy to have a new one recent one in Georgia, which is a very busy [ Southeast ] region. Maud Thuaudet: Yes. So in terms of CapEx, 2025, we were around 4.5% of sales. We will be the same for next year. 80% of our growth CapEx were in those high-growth markets, as you might have seen. It's very important that we allocate those CapEx to growth. And there are clear allocation on this topic. And we are, for example, in India, building clearly very fast our footprint to grow in the country, and it's working extremely well. We are enlarging the offer, and we are gaining shares as well in the categories where we are already. In terms of free cash flow generation, our target is to be above 50%. You have seen the results this year. We will obviously remain there and continue to optimize all the elements of the free cash flow. B. Bazin: You had a question on price and volume in Europe. Yes, we expect what we started to see in the second half of last year to continue. Now keep in mind that it has been 4 years in Europe with a negative trend. So I was happy that for the first time in H1 '22, if I'm correct, we had growth in Europe in local currencies in H2 of '25. We should continue to see that bearing in mind, notably in France, the negative impact of the flood in the last 2 months. So yes, it should continue. We have announced some price increase at the beginning of the year in Europe across multiple geographies, be it in France, in the U.K., in Germany. So that should continue and progressive evolution as well in Europe. We have seen all the green shoots of new build. If you take France, the starts are up 5% to 7%. The permits up double digits. So all this will trigger some additional activity going forward. Another question in the room. So, we may turn questions to the call, who wants to start? Is it Goldman Sachs? So go ahead, please. Unknown Analyst: I just had 2, please. I guess, thanks for the comments on the U.S. margin impacts in the first half. If we're thinking about the European margin impacts, is it right to think they're less significant than the 200 basis points you expect for margin pressure in Americas? And I guess the second question would just be on portfolio rotation, in light of the 20% target by 2030. I'd be interested, do you see 2026 as a year where you can make more progress than average on -- against that target? And I guess do you see the upside more from divestments or acquisitions this year? B. Bazin: You take the first, and I take the... Maud Thuaudet: So EU margins, they will continue. You've seen what we have delivered this year, and we will continue maintaining the positive price cost spreads at group level, obviously, and focusing on strong pricing. And we will continue delivering on the margins. Of course, we will have some benefit from volumes when volumes are back, and that's what we have said in the past about operating leverage of around 25% when you have some kind of significant volume uptake. B. Bazin: And on the portfolio, so yes, we are active. You have seen that we announced on Tuesday or Wednesday, 2 small acquisitions on Construction Chemicals, that's part of the add-ons and bolt-ons we are happy to say and to deliver. We will continue to do that. We are working, as we speak, on acquisitions and divestitures. Depending on your average, I don't know what it is. If you take the last 5 years, we rotated 40%. So roughly 10% per year. We want to rotate 20% in the next 5 years. So is it going to be 10% just this year? It's a bit on the high side. But yes, we will be active on portfolio rotation in '26, both in terms of acquisitions and divestitures. On acquisitions, we have a very solid balance sheet. So we are ready to capture the good opportunities, but we are always extremely conscious about the value creation that we have delivered in the past, integrating well when you have double-digit growth on Cemix and FOSROC, that means it's a very good solid acquisition and delivery. So yes, we will be active in '26, and we will show more progress, as you asked on the portfolio rotation to continue to strengthen the business profile. And you know the criteria, financial criteria and also the strategic criteria, growth and acquisitions and CapEx in high-growth geographies, construction chemicals and divestitures in the businesses which are a bit far from the strategy or a bit far from the financial performance of the group. Unknown Analyst: Excellent. And Maud, maybe just coming back on the margin question. Just thinking about the French weather impacts that we could expect on margins in the first half. Is there any way to quantify what kind of headwind that might pose against, obviously, the improving volume outlook and positive price contribution? Maud Thuaudet: So you've seen that in the past we've been able to manage quite well the margins in Europe. And we will be, again, always very demanding with our teams who deliver really well on the margins. B. Bazin: Next question is from Cedar, Morgan Stanley. Cedar Ekblom: Just 2 questions from me. Can you talk about your relative performance in the U.S. market in the fourth quarter? It does look like your volumes outperformed Owens Corning and outperformed the broader ARMA data from a roofing perspective. Do you think that, that's just a comp effect? Or do you think that there is something to say there in terms of how you're engaging with the customer? And then can you help us put some numbers around how to think about energy cost inflation into 2026? Obviously, energy markets have been quite volatile, but is there a potential for a tailwind on energy costs as we move into 2026? Or should we still be thinking about an inflationary backdrop? B. Bazin: I'll take the first and you take the second one. There are multiple reasons for this outperformance in the second half. Clearly, I think the fact that we have a full breadth of offering, when you talk to the big distributors, they are happy to have -- because a lot of them, they have now exterior and interior solutions, take the Home Depot, SRS, GMS, you take Lowe's and FBM. So they are happy to have the full set of solutions, exterior and interior. And we are the only one to provide all this when you compare to the roofing or to the other players. So that's part of the equation. Like I would say, when you look at our construction chemicals overperformance, we delivered almost 3% in the second half. Of course, the other set of product lines have a pull effect on our construction chemicals performance and [indiscernible] a pure-play silo business, yes, the fact that we have the full breadth is meaningful. We have also enhanced our contractor customer engagement on the ground that helps on the delivery. After that, yes, there is a bit of outperformance versus ARMA statistics, and we hope we are working hard to continue to do that going forward. There was also -- if you take the gypsum performance in the U.S., we did much better than some of the public figures, we have seen because we were in a mid-single-digit decline in the kind of minus 5%, minus 6% decline in North America in the second half when I have seen some other figures being down double digit. That means you can have this win-win effect on exterior/interior solutions. Maud Thuaudet: Energy. So energy, as always, we have our hedging policies, which are in place. Indeed, it's a volatile market. We don't see much inflation. We anticipate around stable energy inflation for this year with, of course, volatile situation, but no particular point on energy. And overall, for inflation, we anticipate stable to slightly positive inflation. And of course, we will keep this positive -- slight positive price cost spread for the full year. B. Bazin: I think the next question is from Bank of America, Arnaud. Arnaud Lehmann: Three questions, if I may. Firstly, you -- Maud you just commented on energy. Can you -- could you please comment on raw materials? We've seen industrial metals moving higher. I guess cement could be moving higher. So do you see meaningful inflation on the raw material side? That's my first question. My second question is coming back on U.S. residential roofing. Sorry about that, but we've seen some price increase announcement from the industry for April. Are you confident that this could happen? Or are you trying to be a little bit defensive, trying to prevent price decline and you expect prices to be stable? And lastly, in France, we've seen quite a few headlines around housing targets, boost to social housing. We've seen MaPrimeRenov coming back after the budget. Could you try to frame things a little bit for us in terms of what's going on in France in terms of housing activity? Unknown Executive: You start with the first one. Maud Thuaudet: So raw material, again, stable to slight inflation. We have some categories which are seeing inflation, sand, paper, raw material -- sorry, packaging and transportation are seeing some slight inflation. Coming to your specific point, you mentioned cement. So cement, we are substituting quite a lot of our cement input. For example, we inaugurated a plant in Finland that enabled us to actually substitute cement with other raw materials. So we are quite stable on this one. But overall, stable to slight inflation for the group on raw material as well. B. Bazin: And on your second question, yes, we have in mind, it's a bit too early to say, but we have in mind and our teams are preparing for that, a kind of price increase around April for roofing. You may have noticed, but we can tell you that we were still positive on Q4 pricing in North America in Q4. So we have been very disciplined. That helps also the margin on top of all the cost actions we took in the second half. We have been very disciplined on the pricing momentum for our different product lines, which were all exterior or interior positive in the second half. On France, well, Arnaud, we have seen in the last year that France is not an easy read on multiple fronts. So I will be a bit cautious because it could change. But for me, if I step back, over the last 3, 4 years, clearly, and we have been advocating for it, not only for Saint-Gobain but just for our overall society, the housing topic, the energy efficiency in homes is becoming more and more as a top political priority, even to the point, even to our surprise that the EU Commission, which is not in their perimeter, decided to take on the housing crisis across Europe. So yes, in France, there are some increased momentum, 400,000 homes and start we should build in the coming years, more emphasis on social housing. So we see a clear momentum on new build in France as we speak, again, single digit in starts, double digit in permits. The political willingness is there. We will see a positive momentum there in '25. It's a bit too early to see a bullish scenario for housing in France. But yes, the momentum is there. All the players are pushing for that. MaPrimeRenov, as you said, is back. So energy efficiency is a factor. I highlighted the green value of what it means for the real estate value, not only the comfort and the purchasing power on the energy bill, but also the real estate value. So all those parameters are moving in the right direction. Let's not fool ourselves on the total momentum. But as you have seen, we are turning the corner in France, and I'm confident that we are outperforming in France across new build and renovation, thanks to our full presence, and it should continue throughout the year '26 and beyond. We are at the beginning of the large housing recovery in Europe because there are big needs. We are at the beginning of that, which will be a multiyear process. Next question is from Yassine, On Field. Yassine Touahri: First question on -- there is a debate currently in Europe around competitiveness versus potentially a revision of the EU ETS. I guess decarbonization is a big theme for you. What do you think of this debate? And what does it mean for the strategy of Saint-Gobain and your investment plan? That would be my first question. And my second question, coming back to the U.S. pricing. Have you announced any price increase in gypsum or insulation? Or is it too early in the context where the volume are a bit subdued? B. Bazin: No, it's too early to say on gypsum and insulation. So we will see how the year develops, but it's too early. We start the year slightly above where we were last year because we ended the year on a positive note, but it's a bit too early to say on all this topic about competitiveness and decarbonation, keep in mind that within building materials, the light side is the solution. And all the strategy of Saint-Gobain on light sustainable construction has been to accelerate the rollout of solutions towards low-carbon construction and low-carbon buildings. We are not the problem. We are the solutions in terms of lowering the carbon content of construction. So we are not part of the CBAM scope, and we don't need that. We don't rely on that. We have some quotas of CO2. We are actively decarbonating our plant. We dropped by 35% of our CO2 content within Saint-Gobain in terms of footprint, Scope 1 and 2. So we are, I think, pioneering on that with only 2 plasterboard electrified in the world, Norway and Canada. So it's not only Europe, it's across the board. So we are making nice progress, and it's a competitive advantage for Saint-Gobain. So we don't have the volatility of what it means for us because we are not relying on CBAM, and we are on the solution to bring forward low carbon content in materials on buildings, be it new or be it renovation. So for us, it's a good momentum, and we will continue to accelerate and differentiate on that. We have the full scope almost of Saint-Gobain covered with EPDs, Environmental Product Declaration. We have the full suite of products [ Infinae ] for low-carbon gypsum, [ Enae ] for low carbon mortar substituting cement, [ Rinnai ] for low-carbon insulation. So all this is already a commercially available offer for Saint-Gobain and doesn't rely on CBAM type of measure. Next question is from Julian, UBS. Julian Radlinger: So 2 from me, please. So first of all, can you talk about Europe and specifically Northern Europe? So I remember in summer 2025, you were still assuming positive growth but then sort of turn to flattish and now it ultimately ended up being negative more than 2%. I mean what was the main driver versus your own expectations here aside from the market just staying tough? And I guess what gives you the confidence now that, that will turn after the difficult weather in Q1? Next question, it's 3 actually. You said the Americas margin in H1 could be around 16%. So can I just ask, so for that kind of scenario, what kind of volume and price would you need to see to achieve that? And what could be the upside or downside? And then last one, and most importantly, maybe if I take everything together that you said on this call, weaker first half than second half, the margin comment on Americas, et cetera. For the full year, do you think EBIT or EBITDA should reasonably be up year-on-year in absolute terms for the group? Is that kind of a fair base case? B. Bazin: So on Northern Europe, I answer that. As Maud highlighted, we have been a bit disappointed by the momentum in Germany and in Nordic countries. Sweden was slightly better, like Denmark, but Norway a bit down. So that has been the reason behind last year. It's improving. We have also, keep in mind, divested a business, which was a tough one for us in Germany, which was commodity mortars. That was part of the negative like-for-like last year, which we are not going to see going forward. We outperformed clearly in Switzerland. We have a nice growth in Switzerland. Because we are from Switzerland, so I'm happy to say that. We have growth in the U.K. We have growth in Eastern Europe. So it was the size of the Nordic countries and Germany below the momentum and the expected momentum we had last year. It's again improving, and we will see that in '26 on -- anything you would like to... Maud Thuaudet: No. B. Bazin: On Americas, again, I've been clear on how you should compare the margin overall for Americas. We expect, and there is no reason not to say that, a normal weather in Q2 and starting the season, like always, for all the job sites, be it renovation, be it new build, be it roofing or gypsum. So that's what we expect, and there is no reason to think differently. We will have this negative impact in Q1, which I highlighted. We have seen that across all the competitors. Outside of that, we will continue to deliver on a normal year and do well on our margin overall for Americas, H1 being lower than what we expect in H2. And the full year, well, we have given a very clear guidance for the full year, like we do every year at the beginning of the year. We are ambitious on the margin. We have a very powerful plan for the next years. You have seen that we delivered every single year, every single year, and it was not walking the park in the last 5 years, be it inflation, energy crisis, Ukraine war, COVID, whatever, we delivered. So this is what Saint-Gobain showed you in the last 5 years. We deliver on portfolio optimization. We deliver on execution and operational excellence. We have a fantastic growth avenues on nonresidential and infrastructure, where we gained share. We have seen that on construction chemicals clearly in North America and across the board last year. So happy to continue, and we will have a nice momentum in '26. Keeping in mind that, yes, there is a transition on weather at the beginning of the year. But I think we have bottomed in Q1 in North America because of this weather pattern and no carryover of roofing from last year. So from there, in Europe, in North America, I think we will show some attractive momentum. From Bernstein now. Unknown Analyst: So I had one question on working capital. And again, you've got another year where the working capital days has reduced by 1 day. So could you help us in trying to get a sense of how we should think about it going forward? I mean, obviously, there has to be one range where you're comfortable, but how much lower can you go from here on? And my second question, sorry for going back to North American roofing and the North American margins in general. So I think it was -- it's quite commendable that you were able to maintain the margins despite the huge decline in volumes in roofing, and you also highlighted some weakness in the Solutions business. So could you help us unpack the offsetting drivers which allowed you to offset the impact of the weaker volume in some parts of the business so that you were able to maintain the margins? B. Bazin: I'll take your second one, and Maud will take the first, quickly again on North American roofing, there is -- we have a lot of lovely businesses within Saint-Gobain. It's not only North American roofing. Stay with us and stay tuned. We are growing a lot in double digits in Asia and emerging markets. And with -- now based on the exchange rate, we have more profit from Asia and emerging markets than Western Europe and than North America. So stay tuned on how fast we grow double digit in Latin America. No one talked about the 7% almost organic growth we delivered in Latin America, but I can tell you it's stellar and way, way above the market without mentioning the double-digit volume growth that [indiscernible] has delivered, [indiscernible] very well on volume in India last year. But coming back to our interesting piece of roofing, we took a lot of actions in the second half. Of course, pricing. We have shown a very strong pricing discipline. As I said, it has been up altogether in H2 and also in Q4. We took some short-term actions that you can take. You cannot take that forever. You're dropping some shifts, working on your maintenance cost. So there are some short-term actions that we took deliberately in the fourth quarter, in the second half to deliver on our commitment. You cannot take that forever because at some point, you have to rebuild the inventory to service your customers. So yes, there were a lot of the full range of short-term actions that we took across the board in North America last year and not only in roofing, our Siding business accelerated in the fourth quarter. We had a nice delivery on gypsum. We took some one furnace down in insulation in the U.S. Altogether, sometimes, I should maybe emphasize that more, but we have taken a lot of cost actions within Saint-Gobain last year. If I were to tell you that we had over the last 2 years, 4,000 headcount reduction in Europe, that's the fact. That's how proactive we have been on cost management within Saint-Gobain. Last year, we did shut down 20 plants across Saint-Gobain in the world, we did open 24, but we did shut down 20 old plants, including 6 in the U.S. So a lot of those actions are behind the margin protection, the margin focus. And all this is being delivered by country CEOs, being proactive, hands-on and incentivized on their margin. So all those parameters helped us to deliver nicely on our commitment in the margin. Maud Thuaudet: Yes. On the working capital, yes, indeed, we improved by 1 day this year in 2025. I think we are at the range where we can stabilize the working capital -- the operating working capital. It's where we are at ease to service the customers in a good way. So clearly -- and we have guided during the CMD for a working capital below 15 days. So that's the order of magnitude where we will navigate going forward, again, from where we are today and navigating within the range of our CMD objective. So that is what you should expect. But again, as for the margin, remaining ambitious in terms of cash generation and ambitious in terms of how we are able to optimize all our operations, as Benoit explained, for the margins. We do the same for the cash. We optimize everything. B. Bazin: Thank you, Maud. Next question from Ephrem, Citigroup. Ephrem Ravi: Sorry, going back to the working capital again. The -- given the weather events in the first half, should we expect a change in trajectory at least in the short term on the working capital in terms of holding higher inventory at your sites or at your distributors given the potential kind of bounce back in demand in the second half? So i.e., should we see a big or a sizable pickup in the first half in terms of working capital versus the second half? Secondly, in terms of free cash flow and net debt. So basically, your net debt remained relatively stable despite your acquisitions and increased dividends. So again, do you see scope for the balance sheet to be stretched a little bit more in terms of acquisitions beyond sort of the EUR 2.5 billion range that would get you to about sort of 1.7, 1.8x net debt to EBITDA? Maud Thuaudet: So in terms of working capital, of course, it will depend how the season goes and when actually the weather normalizes, et cetera. So we will see how it evolves. It's a bit early to say. We will manage that very tightly, being a bit strategic as well in building the right inventory so that we can service the spikes in demand that we typically see whenever there are some hailstorms, for example, in the U.S. coming back to the Roofing business. So we are strategic in maintaining the right level of inventory to capture the demand and the spike in demand. So we will manage that very tightly, and you should expect something to be normal. You've seen what we've done last year, and we continue managing that. In terms of net debt, yes, we have room for acquisitions. Does it mean that because we have room, we are going to go on major moves that -- so again, we have some clear criteria. We have a good balance sheet. We have optionality to do nice deals. We have a good pipeline. But then again, being very picky on the quality of the company and the quality of the business and what value it brings to Saint-Gobain to the shareholders. B. Bazin: Next question from Bill Jones, Rothschild. William Jones: Three, if I could, please. First, just generally around synergies. Clearly, you're still integrating some large deals from the recent years. So just whether you could talk a bit more about the revenue and cost synergy benefits that might lie ahead this year and where they could be most impactful. Second was on the Distribution businesses, France and Nordic particularly. Perhaps you could just talk on the performance in '25 there, particularly around gross margins and any comments for '26, maybe that is aside from just the macro? And then maybe just Asia Pacific lastly, slightly stronger volume growth in H2 than H1 at kind of 3% to 4%. Do you think that run rate can continue? And any country-related comments there would be great. B. Bazin: So maybe I'll take the one and three, you take the second. On Asia and emerging markets, yes, we have seen a better momentum, stronger momentum in H2. We have stellar growth in India, and it will continue. We have a good start -- a very good start of the year in this part of the world. Southeast Asia, be it Indonesia, Philippines, Thailand, Vietnam, all those countries are strong. So that will continue. In China, we have seen some positive momentum lately. So then we are with a high-added value positioning in China, keeping in mind that we have a sizable part of Industrial Solutions in China, competing on innovation. So that should bode well. So yes, I'm confident that the momentum in Asia will be positive and even increase in '26 versus what we have seen in '25 in the second half. On the -- I take the first question, yes, synergies and how we integrate. You have seen the value we created, if I take our gypsum position in North America, the first with Continental Building Products. We have seen very good momentum. Let's take the second half of last year, we were down single digit on gypsum versus the public figures, I've seen some -- from peers down double digits, 14 or 15 when we were down in volume, minus 6 or minus 7. So I put that on the background of how we can deliver on synergies, not only on plasterboard, but across the full spectrum because every single of the top distributors in the U.S. You take A, B, C, they have exterior, they have interior with L&W. So all of them, they ask for interior and exterior solutions. You take our strong momentum in Latin America. Cemix, of course, has a nice pull effect across Mexico and Central America. I went to Saudi Arabia and Middle East in December together with Thierry Bernard. We have a 30% growth in the Emirates. And it's thanks to FOSROC, Gyproc, all the momentum. So all this is part of the -- not only cost synergies on purchasing and all the logistics and the raw materials we can deliver, but more importantly, on the top line. So yes, we are happy about the synergies we have been delivering on all those acquisitions and more to come because we have now the country platform to integrate well and to accelerate the momentum. You want to take the... Maud Thuaudet: Yes, sure. For distribution performance, well, you see the margins in Southern Europe, in particular, and in Northern Europe, which shows that those businesses are performing well in terms of margin despite, again, a tough environment in terms of volumes when you compare to 2019, for example, in France, it is down 15%. In Nordics, more around the 20%. So those businesses are doing well. We had given -- they are a bit below what we had said at the previous CMD of this range, 6% to 8%, but they are doing well. They are clearly leading on all the digital side, and they are providing great insight for the rest of -- great pool for the rest of Saint-Gobain. If you think about AI applications, if you think about digital suite, digital tools, those businesses are really spearheading those topics and we're creating some nice spillover on the rest of the group. So good performance, and we will continue on this one with very mobilized, of course. B. Bazin: Next question from Harry Goad, Berenberg. Harry Goad: I've got 2, please. First, if I could just come back to Europe, I guess, with a more specific question with your thoughts on 2026. Do you expect to see positive volume growth in France, Germany and the U.K. in the year? And then the second one is just with regards to the evolution of the portfolio when you talk about this 20% turnover of the revenue base, should we think of that as sort of half acquisitions, half divestments? Or is it right to think of it as much more skewed to acquisitions driving that 20% evolution in the next few years? B. Bazin: The 20%, if I understand correctly your question, it's both acquisitions and divestitures, and we measure it like we have done in the last 5 years on turnover. So that gives you the magnitude. Also you take EUR 50 billion turnover of Saint-Gobain, depending on the exchange rate, that's around EUR 10 billion of sales we will have rotated in the next years. And to your first question on '26, yes, we have seen some green shoots moving in the right direction on those countries. So putting aside the weather impact at the start of the year, and again, if we -- don't be surprised on Q1 organic growth because of this negative effect coming from the weather. I say it again, you may have seen some pictures at least for the French ones with half of France being totally flooded. So it's not only that you cannot work because you have to dry the building, but you cannot even access to the job sites. France, we have 6,000 truck drivers on the road every single day. So that's a double-digit impact at the beginning of the year. But bearing that aside, putting that aside, yes, we expect the countries you mentioned to turn on positive volumes in '26. Now we move to the questions on the Internet on the website, and I will start with a question from [ Paul Roger from Exane. ] I guess I will read your question, Paul. I will not have your perfect accent. It will be my French accent, but keep with us, stay with us. Did the group lose any market share in Northern Europe, Germany and Nordics? And why did H2 EBITDA margins decline in this region? I'll take the first half. I don't think we lost market share, but it's not regions where we have a clear outperformance. If I take France, Spain, Italy, U.K., U.S., Canada, Brazil, India, all those countries, we beat the markets. In Germany and in the Nordics, we have been working on the quality of the assets. If I take Germany specifically, as I said, we divested last year -- it was kind of EUR 100 million of sales. Our great commodity mortars, which, frankly, was not high-end part of our solutions. We did also shut down a large flat glass facility in Herzogenrath in September, October because of the overcapacity. So we thought it was the right action to take. So it was not fishing for volumes. It was working on the quality of the assets. And therefore, no outperformance in terms of market share, notably in Germany. But I think we have now a better portfolio. We have a new manager in place, Christian Bako, who used to be the Head of Saint-Gobain marketing worldwide. So it will, for sure, bring a nice dynamic in Germany going forward, plus all the expected momentum we see on the infrastructure and... Maud Thuaudet: There was a second part of the question, and I'll take it, which was about H2 margin decline in this region. So we talked about it. It's mostly due to nonoperating costs, which were higher in H2 in that region because of the actions that Benoit just mentioned. B. Bazin: Next question from Laurent Runacher. No, sorry, there was another question. Will depreciation step up this year as the group increases capacity? You answered that question... Maud Thuaudet: Yes. B. Bazin: Already, Maud, right. Does the group's high market share limit further M&A opportunities in U.S. construction products? The overall answer is no, of course with some exceptions. If you take roofing, as I said, residential roofing, we have only 3 national players. So it's hard to buy one of them, but that would be one exception. And as you remember from what Mark Rayfield presented at the Capital Markets Day, the direction of travel in North America is more towards nonresidential and infrastructure markets because we have a very meaningful #1 position on residential roofer, both interior and exterior. So if any, target and effort, it's more organically and inorganically towards nonresidential and infra where we have plenty of space. This is why we have done some acquisitions on construction chemicals in the U.S. and in Canada last year. We will continue to look at that. We have some targets as we speak. So that's the direction of travel to expand our Saint-Gobain presence in construction products across North America, U.S. and Canada. Next question is from Laurent Runacher. With the last rotations of the portfolio, what can we now expect in terms of organic growth for the group over the cycle? Well, we answered that on October 6 on the Capital Markets Day. So I think you have the answer, and we highlighted it region by region and also saying that on non-resi and infra, we expect that to be above the group average. So please... Maud Thuaudet: Yes. And we also highlighted the fact that our acquisitions on average have 4 points of organic growth additional versus the group average. So clearly, portfolio rotation changes the growth profile of the group. B. Bazin: A question from Glynis at Jefferies. You talked about win-win relationship with top U.S. distributors. Can you provide some additional color on this? Well, there is a bit of commercial insight, of course, behind that. But maybe one easy answer is to say, when you are a national player with hundreds, if not thousands of outlets across U.S. and Canada, you want to make deals and bring eye-to-eye top CEOs, CEO to CEO across the country. You don't want to have a deal because there is a new plant in Alabama or a new plant in Minnesota. You need to partner altogether. And this is the kind of -- I talk to the natural players. And if they can deliver to me not only 1 product category in 50 stores, but 6 different categories across 800 stores, I'll partner with them. So that's the kind of high-level strategic discussion and long-term partnership we have been building with the top distributors. They have been consolidating. And when you consolidate, yes, you need an even bigger player on the partnership side. So that's what we have been seeing. And one example, I'm not sure we gave it on my slide, we have increased by 10% the number of stores on those distributors where we are cross-selling. And for us, cross-selling in the U.S., we measure it when we cross-sell more than 6 product lines. So that's true that last year, we increased by 10 points the cross-selling point of sales with the national distributor. So that's the kind of initiative. Another initiative, they are all working on digital solutions on AI. They partner with the big players that can offer that. So it's important. And they are happy when you can tell them, we invested $7 billion in the U.S. in the last 5 years. That means we are committed to the country, and we are a meaningful player to you. So that's the kind of -- and with those top players, I can tell you, Mark Rayfield, myself, we have top-to-top meetings every single year and deepening the relationship. As you have seen, Continental Building Products years ago helped us to accelerate in retail. The fact that some retail players bought some Merchanting businesses, will continue to help us accelerate in retail, and we have seen some good initiatives as we speak. So that's the kind of win-win partnership we will continue to move forward. This is also what we experienced in France. In France, when you are 6x bigger on your Merchanting business than any other player, you partner with the best players on the manufacturing side, which are the Saint-Gobain manufacturing brands. So that's the kind of win-win snowball effect we will continue to push forward. There is a question now from RBC, if I'm correct. Some energy efficiency tax credit programs are expiring in the U.S. this year. Therefore, how are you thinking about U.S. renovation demand and volumes within your Interior Solutions segment going into '26? But frankly, I don't look at it like that. I look at it as acceleration of the climate, extreme weather patterns, take a multiyear view. We have seen that across the board. It could be fire risk. It could be flood. You have multiple states today where there is no more insurance. If you have a fortified home because of your roof, because of waterproofing, because of siding, so the need for climate-resilient building is accelerating in the U.S. So that's clearly an important momentum that should continue because, as I said multiple times, sustainable construction just means better buildings, better real estate value. You take the average statistics in the U.S. on offices, we have 25% higher real estate value when you have the right performance on energy efficiency, regardless of any tax credit. So be it the real estate value, be it climate-resilient offer. This is driving the U.S. market, and it will continue. We are not going to rebuild Los Angeles the same way it was built. We are not to rebuild homes that have been destroyed with heavy storms the same way they were built 20 years ago. You need more wind-resistant shingles and it goes on and on like that, and we'll continue to see that. I think some last questions from Davy. Can you provide an estimated percentage of revenues that currently relate to data centers? And how big is the growth strategy. Maud, do you want to take this? Maud Thuaudet: Yes. It's -- we had highlighted this topic at our CMD where there had been this study of who is the most present in terms of building material towards contractors and the answer from contractors at 34% was Saint-Gobain. So we have a strong offer in data centers, and Benoit just showed it. We are working currently on 600 projects, and we are talking about projects which take place everywhere in the world. And the way it happens is we partner with some consultants. Sisk, for example, in Ireland is one of them. We develop the offer. We co-develop the offer with those players. And then, of course, we have the ability to provide that offer everywhere in the world because the construction sites are then local in every country. When we deliver 20 data centers in Indonesia and Malaysia, it's because we produce in Malaysia and Indonesia part -- large parts of the offer. And then, of course, we can ship some additions, which make the complete data center offer. So we are quite uniquely positioned. And I think we had said, Benoit, last call that data centers is -- we can expect to triple sales in that area, and it's some hundreds of millions. B. Bazin: I think we are exhausted, the last question. No regrets, Elodie Rall from JPMorgan. I -- Not, I can hear you, Elodie, and I will repeat the question for everyone. So questions from Elodie Rall, JPMorgan is the scope and FX estimate for the full year and the tango of margins of roofing in North America where the -- if I understand well, where the H2 margin will be more -- H2 '26 will be more comparable with H1 '25 when we said that H1 '26 will be more comparable with H2 '25. So you take the first one Maud and I will take the... Maud Thuaudet: Yes. So FX, we anticipate at current spot rate because it's a little bit of a complex exercise, but at current spot rate, about minus 3% on sales for first quarter. H1 would be around minus 2%. But again, keep in mind that this is very volatile, and we've seen that last year. And then in terms of scope, if -- things will move, but as of now, around stable scope effect, maybe a bit negative, but around stable. B. Bazin: And to your second question, the overall answer is yes, because we expect the weather to normalize in -- starting in Q2 and therefore, in H2. Let's see how strongly the momentum will develop, notably the proportion of the additional business we could get from the snow ice storms we have seen at the beginning of the year because we will not have the carryover that we had in H1 '25 from '24. So -- but I'm confident that H2 will be a normal year for roofing, and we should see that starting in Q2. So in general, high-level answer is yes to your question. Thank you. I think we are short on time. Last question from [ Christophe, mic, ] and then we will finish, [ Christophe Lefevre-Moulen. ] Unknown Analyst: To come back to U.S. insulation and plasterboard, we -- so main issue for your competitor, Owens Corning was not roofing, but this business line, gypsum and insulation, what was the case for Saint-Gobain over the second half? Was the margin strongly down as it was the case for your competitor? Or are you able to maintain it? B. Bazin: Well, we have delivered a flattish margin in the second half in North America. So we could not have done it if one of the big businesses, be it exterior or interior would have been down. So the overall answer because I'm not going to give you the details on all this that we delivered well on the margin, both exterior and interior across North America in the second half with some cost actions. So insulation was tougher, and we decided to shut down one furnace in Kansas City. So there has been some ups and downs, but we delivered quite well on the margin overall being broadly stable in the second half in North America. So I think we covered all your questions. Thank you again. As a conclusion, again, a big thank and a big congratulations to all the Saint-Gobain teams for another year of very strong delivery, consistent delivery like we have shown in the last 5 years of Grow & Impact. And happy to say that we have nicely concluded Grow & Impact, and we are opening a very exciting Lead & Grow. I can tell you the teams are running and didn't wait for January 1. We have been running since we launched it in October. Lead & Grow is simple -- powerful and simple. It's deepening our solutions, which are proven to be very relevant, expanding those solutions on infrastructure and nonresidential markets where we have a lot to play and to win. Rotating the portfolio. We are active, and we have been -- that we can deliver well on that in terms of value creation, and we have clear plans and clear projects as we speak to do some meaningful moves in '26. And of course, continue to rely on super engaged, powerful operating model at Saint-Gobain driven by country CEOs. So many thanks to all of them. Many thanks to all of you, and we will deliver a strong performance in '26. Thank you very much.
Operator: Greetings, ladies and gentlemen. Thank you for standing by. Welcome to the Global Water Resources, Inc. 2025 Year-end Conference Call. [Operator Instructions] I would like to remind everyone that this call is being recorded on March 5, 2026, at 1:00 p.m. Eastern Time. I would now like to turn the conference over to Kyle Upchurch, Controller. Please go ahead. Kyle Upchurch: Thank you, operator, and welcome, everyone. Thank you for joining us on today's call. Yesterday, we issued our 2025 year-end financial results by press release, a copy of which is available on our website at gwresources.com. Speaking today, we have Ron Fleming, President and Chief Executive Officer; Mike Liebman, Chief Financial Officer; and Chris Krygier, Chief Operating Officer. Ron will summarize the key operational events of the year. Mike will review the financial results for year-end, and Chris will review Arizona Corporation Commission activity. Ron, Mike and Chris will be available for questions at the end of today's call. Before we begin, I would like to remind you that certain information presented today may include forward-looking statements. Such statements reflect the company's current expectations, estimates, projections and assumptions regarding future events. These forward-looking statements involve a number of assumptions, risks, uncertainties, estimates and other factors that could cause actual results to differ materially from those contained in the forward-looking statements. Accordingly, investors are cautioned not to place undue reliance on any forward-looking statements, which reflect management's views as of the date hereof and are not guarantees of future performance. For additional information regarding factors that may affect future results, please read the Risk Factors and MD&A sections of our periodic SEC filings. Additionally, certain non-GAAP measures may be included within today's call. For a reconciliation of those measures to the comparable GAAP measures, please see the tables included in yesterday's earnings release, which is available on our website. I will now turn the call over to Ron. Ron Fleming: Thank you, Kyle. Good morning, everyone, and thank you for joining us today. We are pleased to report the results for year-end 2025. First, before jumping to normal operating highlights, I would like to get straight to the main points on 2025. This year included many large and successful initiatives that will materially grow rate base. In fact, including 2024 and 2025, the test year and post test year for our Santa Cruz Water Company and Palo Verde Utilities Company rate case, we have increased the collective rate baseable assets of our company by $70 million or 59%. With respect to these initiatives, we've had a near record year for capital investments that were critical to complete within 2025. These investments span everything from recommissioning the previously mothballed water reclamation facility in Pinal County, south of the City of Maricopa, which is part of the system we refer to as our Southwest plant to our capital improvements to stay in front of our fast-growing communities and the acquisition of the City of Tucson water systems. All of these investments inure to long-term value creation and also benefit customers and communities we have the privilege to serve. However, these investments increased expenses across the board, including much larger depreciation and a onetime asset write-off related to the Southwest plant, which all impact income and earnings per share. This regulatory lag is an unfortunate part of the historical test year environment here in Arizona, but it is necessary to make investments upfront and seek recovery thereafter. Additionally, certain company expenses such as medical costs continue to grow at an unprecedented pace. As I've been saying for many quarters now, we need new rates to keep up with all the investment and inflation that has occurred in our utilities. Chris will discuss these rate cases and our regulatory activity later in the call. In the meantime, I want to make it clear. 2026 is about working hard to control expenses, and we have reduced the pace of capital investments. Now as a reminder of many other positive announcements from 2025 that underpin our goal of long-term value creation and our ability to deliver total returns to our shareholders in the years and decades to come. First, we announced that the Arizona Governor signed meaningful water legislation known as Ag-to-Urban, which became law in 2025. We believe this will result in many benefits that will be applicable for Global Water in our service areas, improving offer for sustainability while creating a new groundwater supply to support additional growth. Based on Global Water's established service areas created through buying and building utilities in the path of growth, our regional areas coincide with land that has considerable historical farming operations just outside densely populated Metro Phoenix. Thus, we believe the new law will drive even more growth to our service areas. Second, full funding of the highway 347 expansion connecting Interstate 10 and metro Phoenix to the City of Maricopa and the entire western part of Pinal County was approved in 2025. As the stakeholders had already begun engineering on certain long-term elements of the 13-mile road widening project, it is estimated that the construction will begin in summer 2026. This project should go a long way to ensure that the City of Maricopa continue to be one of the fastest-growing communities in the country, and it meets -- helps meet our population projections of growing nearly 90% by 2040. As evidence to the potential of this population projection, on July 1, 2025, the U.S. Census Bureau released its population projections from 2024 data. And the City of Maricopa was once again in the top 10 of the fastest-growing large municipalities in the country, coming in at #6. Even more telling was that population growth in 2024 was even stronger than 2023 as the city realized 7.4% growth compared to 7.1%. Below, I will discuss connection growth rates and permit growth rates that have begun to slow, but it is important to keep this population growth that I just discussed in mind, as it is now more closely correlates with consumption and revenue growth based on the amount of multifamily housing and commercial growth that is occurring. Finally, if you think about everything just mentioned from rate base accumulation to water and transportation that are the 2 fundamental elements of economic development, you can see that even more than ever, we have the foundation of sustainable growth for the years and decades to come. Now I'll provide a few operational highlights. Total active service connections increased 6.3% to 68,577 at December 31, 2025, from the 12 months prior. In 2025, we achieved a 3.2% total active service connection growth rate, excluding the recent acquisition of the 7 Tucson water systems. And specifically, we invested $67.3 million into infrastructure improvements in existing utilities to provide safe and reliable service. The majority of our investments in 2025 were post-test year projects in Santa Cruz Water Company and Palo Verde Utilities Company, our 2 largest utilities located in Pinal County and are included in our already filed 2024 test year rate application. Now I want to discuss organic customer growth and what is going on in our core utilities even further. The single-family dwelling unit market ended 2024 with approximately 27,156 building permits issued in the Phoenix greater metro area. In 2025, this market realized 21,815 building permits, and this did represent a nearly 20% decrease in 2024. In 2025, the Maricopa market realized 600 building permits, representing a 39% decrease from the same period in 2024. The 2025 permit data showing a bit of a pullback from the prior year is not surprising considering the uncertainty in the market today. While new permit activity has slowed in '25, growth in the Phoenix MSA, particularly in the City of Maricopa, is reflected in the company's 3.2% year-over-year organic increase in active connections. We believe the decline in permits is temporary, especially considering that mortgage rates continue to drop, and we remain well positioned to benefit from the anticipated long-term growth of the Phoenix MSA. I will now turn the call over to Mike for financial highlights. Michael Liebman: Thanks, Ron. Hello, everyone. Total revenue for 2025 was $55.8 million, which was up $3.1 million or 5.8% compared to 2024. The increase in revenue was primarily attributable to the City of Tucson acquisition in July 2025, organic growth in active water and wastewater connections and, higher rates in our Farmers and Sororal utilities compared to 2024. Operating expenses for 2025 increased approximately $5.3 million or 12.2% to $48.6 million compared to $43.3 million in 2024. Notable changes in operating expenses included depreciation, amortization and accretion expense increased $2.3 million for the year, the increase was substantially attributable to the additional depreciable fixed assets placed in service this year as a result of our increased capital investments and the commissioning of related projects, which are part of our current rate case. Operating and maintenance costs increased approximately $2 million for the year. The increase was primarily driven by 3 things: first, personnel costs as a result of the Tucson acquisition, medical expenses and filling a previously vacant position; second, utilities, chemicals and repairs due to higher purchased power, chemical costs and water treatment expense associated with increased consumption and newly operational plant; and third, higher contract services. G&A costs increased by approximately $1 million in 2025, primarily driven by higher medical costs, increased professional fees, largely from legal expenses associated with the Nikola bankruptcy, higher IT spending, increased insurance premiums and elevated municipal licensing fees tied to revenue growth. Now to discuss other expense. Other expense for 2025 was $3.2 million compared to $1.5 million in 2024. The increase in expense is primarily attributable to a loss on asset disposals of $1.3 million related to the recommissioning of our Southwest plant and lower income associated with our Buckeye growth premiums. Net income for 2025 was $3 million or $0.11 per diluted share as compared to $5.8 million or $0.24 per diluted share in '24. Adjusted net income, a non-GAAP measure, was $3.9 million or $0.14 per diluted share in '25 as compared to $6.3 million or $0.26 per diluted share in '24. Lastly, I'll discuss adjusted EBITDA, which adjusts for certain nonrecurring items such as onetime storm-related expenses and noncash items such as restricted stock expense and the loss on asset disposals for our Southwest plant. For 2025, adjusted EBITDA decreased 0.7% to $26.5 million from $26.7 million in the prior year. This concludes our update on the year-end 2025 financial results. I'll now pass the call to Chris to review our regulatory activity for the year. Christopher Krygier: Thank you, Mike, and hello, everyone. We accomplished a number of constructive developments on the regulatory agenda this year. First, in January 2025, we secured ACC approval to acquire the 7 public water utility systems from the City of Tucson, which we closed in July 2025. Second, in April 2025, the Arizona Corporation Commission approved approximately $1.1 million of new revenues for our Global Water Farmers utility. Finally, we continue progressing on our Global Water Santa Cruz and Global Water Palo Verde rate reviews. As Ron mentioned, we are squarely focused on securing rate relief for our significant capital investments and rising expenses. Since we last spoke in November, we filed testimony supporting a proposed revenue increase of approximately $4.3 million. Since that filing, the parties and the administrative law judge revised the case schedule to include additional ACC staff testimony being filed on April 15, 2026, and the hearing is now scheduled to begin in August of 2026. We are continuing to dialogue with our regulatory stakeholders on the case, and we will keep you apprised of additional updates on future calls. This concludes the update on regulatory activity for the year. I'll now pass the call back to Ron. Ron Fleming: Thank you, Chris. To close today, I just wanted to express how proud I am of our team. We took on a lot in 2025 and successfully executed on many fronts. But while these efforts have prepared us for 2026 and beyond, we still have more work to do. And despite many headwinds, we will continue to execute our growth plan and remain at the forefront of the water management industry, advancing our mission of achieving efficiency and consolidation. We truly believe that expanding our total water management platform and applying our expertise throughout our regional service areas and to new utilities will be beneficial to all stakeholders involved. We appreciate your investment in and support of us as we grow Global Water to address important utility, water resource and economic development matters along the Arizona Sun Corridor, allowing our communities to thrive. These highlights conclude our prepared remarks. Thank you. We are now available to answer any questions. Operator: [Operator Instructions] The first question comes from Zach Liggett from Desmond Liggett Wealth. Zach Liggett: I just had two. First of all, on the rate case, just given how kind of frustrating this has been, I'm curious if you guys have done an analysis and have looked at things that are within your control that you can do differently on future rate cases. So that's my first question. And then the second question is just related to AI, if there's any use cases you guys have identified that you can apply to the business and try to squeeze out some more operating efficiencies. Ron Fleming: Yes. Zach, it's Ron Fleming here. I'll go ahead and start on the rate case question, and then Chris and Mike, feel free to jump in. I just want to make it clear that to use your word, it's been a frustrating process. The primary element of this rate case is very unique, and it is the recommissioning of that Southwest plant assets. And for those of you that are new investors to the company, we invested in a new utility territory just South of the City of Maricopa prior to the Great Recession. So really in the years 2005, 2006, 2007. Ultimately, when 2008 hit, no customers showed up. And so we weren't able to actually fully commission and bring those utilities online and move them in the rates, which is clearly your normal process. Lots of things happened during the Great Recession, as I'm sure you can imagine that took a long time to work through. But most recently, growth did return there, kind of back in 2001. We started working with the developers there again. Growth has jumped from the City of Maricopa to this area, and it's growing actually pretty nicely now. But we had to recommission those assets and move them into rates. And so to be fair to the commission, this is a unique situation that's not often dealt with. And we certainly don't plan on replicating the situation again in future kind of normal business operations or rate cases. Christopher Krygier: Yes, Zach, this is Chris Krygier. What I would add to that is I absolutely agree on the uniqueness. I've been in the regulatory space for a long time in my career, and this is definitely one of the most unique situations that we've had to work through. But I'd tell you, big picture, you're always looking and taking lessons learned from every rate case, and we have continued to do that. But I'd also say we follow the pretty traditional playbook with a unique issue like this, meaning we've been talking to our regulatory stakeholders for a long time about it. We've been talking to our communities about it. And so really -- and talking to customers about it. So we'll continue all of those, but it is a unique issue, but we will get it there. Ron Fleming: Yes. And then happy to speak a little bit on the AI question as well. Ultimately, funny enough, we just got a presentation from our Vice President of IT and Security yesterday on it. And ultimately, there's going to be lots of use cases in our industry. The most obvious one that people benefit from right off the jump is in your call center, and your ability to provide better service to your customers and also, obviously, on our end, make it more efficient. So that's something we've started to implement at a level. But to take it outside of the call center and across our utility operations, because we're obviously very highly regulated and very highly automated, there's lots of security issues that we want to have in place before pushing it too far out into the organization. So those conversations are being had. We're not going faster, primarily because of the security considerations that we need to have in place. Zach Liggett: Makes sense. I appreciate the color there. And just a quick follow-up on the -- back on the rate case. If we get to the end of the year and it just doesn't go as you guys hope, do you have the ability to accelerate like a refiling and take another crack at it? Or like how does that process work? Christopher Krygier: Yes. Zach, we're -- this is Chris again. We are looking at all of those options and giving thought as to what that would look like. We don't have anything to announce at the moment, but I'd say we're evaluating all of those options and what would be the best court if we needed to pursue that. Ron Fleming: Yes. Thank you. And I'll make one more point on the top of that. It kind of builds off my comment earlier in my planned remarks about having moved $70 million of rate baseable assets into service. That means it is into service, so providing customers. So it is a matter in our view of when, not if, and we'll have that determined through this rate case on the win. So thank you. Operator: Seeing no further questions, I would like to turn the conference back over to Ron Fleming for any closing remarks. Ron Fleming: All right. Thank you, operator. Again, I just want to thank everybody for participating on the call and for your interest in Global Water Resources. We appreciate it and look forward to speaking with you again. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Good morning. My name is Daniel, and I will be your conference operator today. At this time, I would like to welcome everyone to Savaria Corporation's Q4 2025 Investor and Analyst Call. [Operator Instructions] Please be advised that today's conference is being recorded. This call may contain forward-looking statements, which are subject to the disclosure statement contained in Savaria's most recent press release issued on March 4, 2026, with respect to its QX 2025 results. Thank you. Mr. Bourassa, you may begin your conference. Sébastien Bourassa: Thank you, Daniel, and good morning, everyone. Today, I will start with a small recap of our Q4 results. Then Steve will update us on financial, and JP will update us on Savaria One and Europe, followed by a Q&A session. Once again, I'm very proud of our Q4 results. As for the first time ever, we reached $51.3 million of EBITDA at 21.2%, which is a very important milestone and our best quarter ever. We finished the year with sales of $913 million and an EBITDA of $186.2 million at 20.4%, which again is our best result ever. All KPIs are improving, and Steve will go more in detail later. Today, there's 3 things that I would like to highlight. First, thank you. Yesterday marked the 5-year anniversary of Handicare acquisition, and I need to say that I'm quite proud of all the work that has been achieved since the beginning, especially through Savaria One. It's not the same company anymore, and you can see it in the people, in the operation, in the product portfolio and recently, the change under Savaria brand in Europe. So I'm very optimistic about the future and the growth and the profitability. Also, I would like to highlight the performance of Garaventa North America in 2025. It was a record year for the team in Vancouver and North America. So congrats to all the team. Second, growth. I'm quite happy with the way we ended the year as we had growth in each area. And it is the pillar that was a bit behind in the Savaria One as naturally commercial efforts takes more time usually to pay off. And here are some example of the recent effort to have to generate some future growth. We continue the effort to develop the market on home elevator in North America, increase our sales effort in North America, continue to expand the Matot dumbwaiter material lift line of products. Business development activities are always ongoing so that we continue our growth and be a market leader. Expand the one-stop shop in Europe, talk about it for a long time, but it's coming, the Luma, the VPL, the inclined lift, so that will give us a good future. Continue to be the partner of choice on stairlift in Europe. And in the patient care, on the room and continue to develop the long-term care segment as well as the acute care. It's just some small details, and we'll try to unveil more detail during our Investor Day on April 14 as well as our 5 years financial target. Third item, acquisition. We have demonstrated in the past that we can do 3, 4 acquisitions per year to bring additional sales and EBITDA. And now with liquidity of $312 million and a debt ratio of 1.03, we can easily invest $200 million over the next few years and maintain an EBITDA debt below 2, which has been always a comfort zone. With the best team ever, we feel quite good that we can apply the learning over the last 2 years towards integration to make it successful faster. The recent acquisition of Baxter Residential Elevator is a good example. Small tuck-in, but very strategic in a high potential area. It's one of the most area with the best housing start in North America. We will invest more to develop this area with our sales force, our marketing to become a dominating player in Texas. So welcome R&D and all the team in the Savaria family. To conclude, what allows us to beat each quarter after quarter in the last 2 years is the new Savaria One culture. It's part of our DNA, and it make it normal to always have continuous improvement and what we implement is sustainable. Once again, thanks to all the employees for their efforts over the last 2 years and looking forward to this new chapter of growth. Steve, financial, please. Stephen Reitknecht: Thank you, Sebastien, and good morning to everyone on the call. I'm now going to provide some further detail and commentary regarding our Q4 2025 financial results. Key highlights for the quarter include: firstly, our adjusted EBITDA for Q4 reached $51.3 million, which is our highest quarter ever and represents growth of almost 20% over prior year. The corresponding margin of 21.2% represents an increase of 200 basis points and brings our 2025 year-to-date margin to 20.4%. This EBITDA performance was driven by revenue growth of 8.3%, made up of almost 8% growth in Accessibility and 10% growth in Patient Care. And lastly, our Q4 ending leverage ratio was 1.03, which reflects a decrease of $71 million in our net debt versus the same time last year. So now going into more details. Consolidated revenues for the quarter were $241.8 million, an increase of $18.4 million versus last year. This was driven by organic growth of 5.2% as well as a positive foreign exchange impact of 2.5%. Our Q2 acquisition of Western Elevator also provided revenue growth of 0.6%. Our Accessibility segment saw growth of 7.7%, including growth of 7.2% coming from North America, combined with a strong growth of 9% in Europe. Europe recorded positive organic growth this quarter, and we feel that we have turned the corner there. Patient Care achieved a revenue growth of 10% in Q4 to bring the full year revenue growth number for that segment to almost 5%. Our consolidated gross margin for the quarter was 38.9% compared to 37.7% in 2024, and our operating income increased by 36.6%. This performance is mainly driven by the Accessibility segment due to continued improvements under Savaria One as well as operating leverage. As mentioned, adjusted EBITDA was $51.3 million for the quarter, marking our first quarter above the $50 million threshold. Adjusted EBITDA margin finished at 21.2% for the quarter versus 19.2% in Q4 2024. And the Accessibility segment finished at 23.4%, while Patient Care finished at 19.4%. Our full year adjusted EBITDA margin was 20.4%, which is above our goal of 20% that we set over 3 years ago. We also incurred $4.7 million in strategic initiative expenses for the quarter. This quarter marks the last quarter of consulting fees related to Savaria One. We also incurred $1.8 million of other expenses in this quarter, and that's related to optimization and one-off costs. Finance costs for the quarter were $4.8 million compared to $2.4 million last year. Interest on long-term debt decreased by $1.3 million due to an overall lower debt balance and a reduction in variable interest rates. We also incurred an unrealized foreign currency loss of $1.7 million compared to a gain at the same time last year. Net earnings was $20.5 million for the quarter compared to $14.3 million last year, which is an increase of 43%. And earnings per share was $0.28 for the quarter compared to $0.20 in Q4 2024. Now looking at cash flow and our balance sheet. Cash flow from operating activities in Q4 was $35 million, driven by the strong net earnings and also a reduction of working capital of $2.8 million for the quarter. CapEx was $6.8 million for the quarter and finished at $22 million for the year, which represents 2.4% of sales and is in line with our guidance. CapEx mainly includes for us a mixture of maintenance, new equipment and R&D costs. Our cash flow contributed to a repayment of debt of $45.2 million in Q4 and $75.2 million for all of 2025, improving our leverage ratio to 1.03 at year-end, as previously mentioned. We finished 2025 with our guidance largely achieved. As noted already, we surpassed our adjusted EBITDA goal of 20%, which we owe in large part to Savaria One and the transformation that has taken place across the company. This new profitability level is 100% structural and it was achieved without any favorable one-offs in our underlying numbers. Savaria One is a continuous improvement way of working that is now ingrained in our culture, and the next phase of our strategic plan will focus on accelerating growth by expanding our market opportunities, deepening customer relationships and further strengthening our competitive position. We look forward to sharing more details at our upcoming Investor Day in April. And with that, that completes my prepared remarks, and I'll turn the call over to JP to provide further details on Savaria One. JP? Jean-Philippe Montigny: Yes. Thank you, Steve, and good morning, everyone. So let me first talk about Savaria One to explain what happened in 2025, highlight some of the successes in Q4 and also give a heads up for what we expect in '26, and then I'll say a few words about Europe. 2025 was a year of transition for us on Savaria One because we really internalized the effort. What happened is we kept the rigorous cadence of implementation that we had for the past years. We started to generate more initiatives by ourselves. So a lot of the initiatives we implemented in last year have been developed in-house without any support. When I look back at the numbers, we implemented more than a dozen initiatives each month for -- with over 160 initiatives through the year. So it's really a lot of small efforts across the company that are paying off. We also continue to generate more gains each quarter than the quarter before, which means that we have an accelerating momentum. So nothing is slowing down on our side. Also important to note is that we refreshed our strategic plan last summer and early fall, and that's something we'll present in the next Investor Day in April. And therefore, we have a growth road map for the next 3 years, but also cost reduction initiatives that we continue to implement. So I think we had a very successful year in 2025 on Savaria One, and now we enter 2026 with at least 100 new initiatives generated for this year. So still a lot of work ahead of us. If I look at Q4 in particular, there were about 35 new initiatives implemented in the quarter, generating multiple millions of recurring savings. Some examples of what happened include the renegotiation of our main IT support and license contracts. We also improved our -- what we call the RMA process, which is the returns and warranty parts process to reuse more parts. We completed a number of procurement RFPs, which delivered savings across different categories. We also partnered with a distributor for small hardware across many of our facilities to reduce small hardware costs. Also, we had some additional successes with automation of our business processes and something that we've been working on for some time is getting our field engineers to be more efficiently dispatched and that continues to improve. And finally, we reduced our warehousing costs and also innovative in our factories. So still many improvements happening even in Q4 last year. So we're also already actioning some elements of our growth plan. So we did a lot of work last summer to look at how we can grow the business. But as you saw in the results in Q4, we're already accelerating our growth, including in Europe. So that's very positive. And one thing I want to highlight is our direct businesses are doing particularly well, and that's because we had a lot of innovation and improvements in those through Savaria One. So what to expect for 2026 for Savaria One. Like I mentioned, we entered the year with 2 things. First is about 100 new initiatives that we're going to implement this year, but we also have some tailwinds or momentum, if you call it this way, from all the initiatives we implemented in 2025. So if you remember, we had initiatives implemented through the year and some of them did not pay off fully in the year and continue to accrue benefits in the next year. So we -- I think we have good momentum starting this year. And of course, we'll have more details to unveil during the Investor Day. But rest assured, everything -- all the good habits we developed in Savaria One continue. In fact, we decided to keep the name Savaria One internally because we really believe this is the right way to talk about how we improve the business and work together to be one great efficient company. Maybe some news about Europe now. So I started a new role earlier this year officially, but I've been spending a lot of time in Europe in Q4 of last year. And the way I would think about it is that the last 2 years in Europe before I started, we were a lot about reorganizing the business and improving profitability. But somehow my arrival coincides with a changing in momentum and priorities for Europe, where we now have a good business that is very healthy and profitable, and our focus is about growing the top line. And as you saw in the Q4 results, we already have some good momentum there. So one thing that we did to make that happen and enable that going forward is we already reorganized the team in Europe to have a better allocation of responsibility between different dealers so we can have a better support for each of our growth vectors. We also spent a lot of time with our different dealers, which actually have great feedback about our company, about our support to those dealers and about our products. So that is already starting to show in the numbers, and we're quite optimistic about the potential there. We already had some good wins since I started of dealers switching their product portfolio to us. And again, it shows in the numbers that we had in Q4. Looking forward, 2026 is going to be a year of new product introductions and of innovations, especially in Europe, where we have new stairlifts that are coming, but also a new incline platform lift. We have a number of field trials going on right now. And hopefully, if everything goes well, this year, we'll have a number of those product introductions to come to mass market. Finally, we did something important for us, which is that we rebranded our operations in Europe to be under the name Savaria, which is a bit of a symbolic thing, but to say we are now Savaria in Europe. We're not just the different brands that we used to convey, but we're actually Savaria, which means we have the full product portfolio. We are the one-stop shop, and we're positioning ourselves to be the best partner for accessibility with our dealers. So this summarizes my update. Maybe I'll turn it back to you, Seb, for closing remarks. Sébastien Bourassa: Thank you very much, JP. Good detail. So before we turn to Q&A, I just want to say thank you very much to all the analysts. You do a very good job on your coverage. You know well the story of Savaria. So hopefully, today, you learn a few new things that you can continue your good work. So Daniel, I think we are ready for questions. Operator: [Operator Instructions] Our first question comes from Michael Glen with Raymond James. Michael Glen: Maybe just to start, JP, you were talking about Europe. Can you just remind us -- I think it's been for the past 2 years that Europe on the top line has seen some pressure. Can you just remind us like the -- what were the main items that were overhanging top line in Europe and just the duration of those in total? Jean-Philippe Montigny: When you say overhanging, you mean that limited the growth of the top line, just to be sure? Michael Glen: Yes, exactly. I think there were some programs, some government programs that came off and then there was some -- you guys had exited some business, just those elements, the timing of those and the duration. Jean-Philippe Montigny: If you want exact timing and duration, maybe, Steve, you can complement. I can talk about the main ones, just to give you a flavor. One -- so if you think about top line, what happened is, first of all, we did some divestments in the car business, but that was a while back. So maybe Steve can add to this. We had some restructuring, if I can call it this way, for our business in Europe. So in some of our direct businesses, we decided to have maybe a more rigorous approach on pricing. We did the same in some of our dealer businesses. So in some markets, we had some contracts with, let's say, business partners and dealers that were unfavorable to us. We just held a stronger line on the partnership terms and sometimes on pricing, and that made some of them go to competition. We also had very aggressive competition in some markets, to be honest, so at the same time. So that's why we had limited or sometimes a flat growth in Europe. So I think that happened in -- through 2024 and maybe the first half of 2025, largely speaking. There were also some challenges with government programs. So in many of our markets in Europe, there is some form of government support for purchasing of our accessibility products. And sometimes, for example, in France and Italy, last year, there were some moment of stop and go. So the government would announce a program, for example, in France, but would not be ready to process the order. So that slows down the business or in Italy, they announced that the program would stop and then it started again. So there's a bit of stop and go like this happening. But I think that's just creating fluctuations quarter-to-quarter. But I think the fundamental thing we did in the last 2 years is more to be more rigorous about which business we want to have, be more disciplined about which partnerships and the pricing we want to have, and that resulted in limited growth since 2024. Steve, do you want to add anything on this? Stephen Reitknecht: I mean I think you covered it well, JP -- just adding that the biggest impact was really our focus on higher-margin sales. And we -- these efforts really kicked off with Savaria One. So I'd say, Michael, it's really been 2 years that sort of the end of 2023 and now lapping that at the end of 2025. So it's really been the last 2 years that we've seen sort of that decline now come to an end. Michael Glen: Okay. No, that's -- thanks for framing it that way. That's good information. And then can you also just provide an update on the capacity expansion in the U.S. and the expected timing for the go-to-market on the Made in the U.S.A. elevator product? Sébastien Bourassa: Okay. Well, very good question. Thanks for the interest. So yes, definitely, Greenville, if we go back in time in Q2 2025, we started to do some elevator -- home elevator in Greenville. I think right now, again, we are doing approximately 35%, 40% of our home elevator of Savaria brand. In Greenville, depending on where the end user is located, for sure, right now, we're still complying with UMSC. So that means we do not pay tariffs. So that's why we pick and choose. And I will say a Greenville expansion that we are actually have other permits that they are in place, they are digging and the new extension should be ready in October this year. So I think that will be a positive news to be able to continue to add some capacity for the future. Michael Glen: And with FedEx, when would you expect to -- will the elevator -- how much of the elevator at that point in time will be made in Greenville once that capacity expansion done? Sébastien Bourassa: We'll need to come back later with more details right now. Again, we are compliant. We do not pay tariffs. So I think this is why we started with one line. And as the expansion gets ready, we'll be able to expand with more for the future. Michael Glen: And Steve, can you just remind us of how CapEx trends next year and what we should expect quarter-to-quarter? Stephen Reitknecht: Yes. So the Greenville obviously is a one-off project for us. It's an own building. That started already. It's -- we have shovels in the ground already in 2026. So the work has actually started. We're going to see this probably come live in Q4. So we're going to see the spend or the CapEx investment over the next few quarters. We do have an increase in our CapEx budget this year, but we have tightened up some other areas. So we're going to be slightly over our 2.5% of sales, but this is sort of a one-off project investment that we're treating that way. Michael Glen: So would it be $25 million in CapEx? I'm just trying to get a number? Stephen Reitknecht: For 2026, our number is probably going to be more in the 2.5% to 3% of sales. Operator: Our next question comes from Derek Lessard with TD Cowen. Derek Lessard: Congratulations on a great year, Sebastien, to you and your team. Maybe just talking about the business as a whole. Curious how you're thinking about it and without stealing any of your thunder coming this April, but is it more -- and you did allude to accelerated top line growth, but can we expect some margin expansion in 2026 as well? Sébastien Bourassa: Very good question, Derek. So for sure, we need to wait a bit more to get further detail. But definitely, as JP said, things are sustainable. We continue to generate new ideas. And when this new idea, it's not always about money, but often there's some EBITDA impact. So definitely, I would be disappointed if we don't continue to improve the margin this year. Let's call it this way. For sure, we always have to be careful if we do, example, midsized acquisition that could bring down the margins for a certain time. But on the legacy business, on the full Savaria, I'm very positive as the environment change that we should be able to improve the margins. Derek Lessard: Okay. And then maybe that's a good segue. My next question was on M&A. Curious about the pipeline and maybe some of the opportunities that you're seeing in the market, whether it's new categories that you guys want to get into? Or is it may be related to incremental manufacturing capacity that you might need? Sébastien Bourassa: Good question. So for sure, again, we have always done M&A in the past, and we like to do M&A because for us, to acquire one of our existing dealer is very natural. And again, we proved it last year with Western, this year with Baxter. So this is good because we are vertically integrated. That gives us a chance to invest a bit more in the local market to accelerate the sales. Also, when we bring in new products, example, Matot when we bought that last year, that's always good because that brings new products to our dealers so that we can continue to be the #1 choice in the industry. So definitely, there's the 2 type of acquisitions we like to do, products or dealer that can help us be better on the local market. Now we are lucky. We have the right liquidity -- but for sure, we always remain disciplined, okay? We don't want to just do acquisition to do acquisition. We have to do the one that will be the most beneficial for the group, we have a good future. Derek Lessard: Absolutely. Okay. And maybe I'll throw one last one in here for JP. Just maybe talk about your full circle transition from consultant to a leadership role in Europe and how that came about? Jean-Philippe Montigny: What's your question specifically? Do you want to -- I'm happy to answer, but what are you thinking? Derek Lessard: No, I was just curious on why -- one, the transition and is it because you saw -- or what opportunities you saw in the role in Europe in particular? Jean-Philippe Montigny: Well, just I'll try to answer your question. Thanks for asking. For me, the role in Europe is a natural professional progression for me because like joining Savaria as Chief Transformation Officer, I got to know the whole business, and I learned skills that I did not have as a consultant. So I was building on my skill set, but expanding it. And leading the business in Europe is a personal professional challenge for me. So I'm learning a new role. But I feel like I'm also very well equipped for it as a true Savaria One. I did spend a lot of time in Europe. I know the business quite well. I speak multiple languages. I studied and worked in Europe a lot in my previous life. So I think I'm very happy here. I'm having a great time, and I think it's benefiting the business also that I bring some of the Savaria North American culture to Europe, so I can really bridge the gap there. So I think, yes, that's how I think about it. So it's great for me. It's great for the business, I believe. And hopefully, we have a lot of success with me playing this role. Operator: Our next question comes from Frederic Tremblay with Desjardins Capital Markets. Frederic Tremblay: Just maybe coming back on the CapEx and beyond 2026, not looking for specific numbers, but just wondering if the growth plans that you're about to introduce, will that require incremental CapEx? Or do you feel like the growth opportunity can be supported with -- largely with the existing infrastructure? Stephen Reitknecht: Yes. No, I mean, we're definitely going to talk more about this at the Investor Day. But generally speaking, we have enough capacity, especially with what we're building at Greenville to facilitate the growth that we have planned for the next few years. You never know what could come through M&A too as far as footprint is concerned, but we have enough -- especially with the Greenville expansion, we're going to have enough footprint and capacity to achieve our growth plan. So we are going to have a little bit of additional expenditure this year, but we're going to be back down this year being 2026, but we're going to be back down in line with our 2% to 2.5% of sales for 2027. That's our plan. A big part of our CapEx spend, as a reminder, is our R&D. That continues to be an area of focus for us where we do invest. It's roughly half of that CapEx spend on a normal annual year. So it won't be not exactly the same in 2026, but for 2025 and 2027, typically, R&D and intangibles sort of half of where we spend the money. And that's important to us to make sure we have a robust R&D pipeline of new products hitting the market. So while it can be a sizable investment, it's a critical area of expertise for us and a critical competitive advantage, I'm trying to say. Sébastien Bourassa: Okay. And if I may, Steve. So I think, again, for us, Fred, we have pushed a lot of our factories in the last 2 years to improve, to have the best machine to be the most productive. And right now, we have unlocked so much capacity in the last few years, but to continue to be the best is very, very important for us. And R&D, we have 62 people. I think we have done a lot of reorganization, new process in the company. And you will see that in the future, we'll be able to improve existing products, launch some new one and R&D has to be part of the growth plan. And I think we are pretty in good shape across all our different segments. Frederic Tremblay: That's great. I was hoping to get maybe a bit of an update on market conditions in North America. We're obviously seeing home construction activity is still pretty slow, but you guys keep growing at a nice pace in North America in Accessibility segment. So wondering if you could comment just generally on the market and sort of what Savaria has been doing to win market share and keep growing nicely in that region. Sébastien Bourassa: Definitely we have some interesting slide to show at our Investor Day about the size of the market, the opportunity. But again, with the aging of the population, after the densities in the city that town house are going up, okay, that's really helping elevators. And right now, not enough people put a home elevator into their housing, okay? So if we continue the good work with architect, contractor, designer to develop this market, I think that that's enough opportunity to offset some of the slowdown you might have right and left. Example, Texas, we talked about that's an opportunity for us. So I think on our side, we continue to be busy. And when we look at other products like stairlift, it is a necessity. When your bedroom is on the second floor, you cannot go up and down. No, you put a stairlift, it is very affordable. And in some places in Europe, yes, you can have some subsidies. So that's -- again, we have the right demographic to help us. Frederic Tremblay: Great. And then maybe last one for me. Just on dealer acquisitions. Can you remind us of like the drivers of accelerating the growth of those businesses after you acquired them? I think typically, you'd expect the organic growth of those businesses to accelerate after you've acquired them. So maybe briefly run through some of the key aspects that you guys focus on after acquisitions? Sébastien Bourassa: For sure, it's a good question. Right now, we own 30 direct store. And I think we -- there's a lot of good place that we do very good business. And at the end, we're able to learn from each other and to bring it to the dealer after the acquisition to enable to invest in the business, to generate more leads to again push with the sales team to meet more architect, contractor. We believe in showroom. So very often, we'll make sure we have a good representation, a nice room that we can bring a professional and customer into our showroom to see what is the best we can do. So I think that's really all the knowledge that we had in the past that when a dealer wants to sell or wants to retire, we are a very natural buyer. Right now, approximately 33% of our sales of accessibility are direct. The rest is dealer, but we are good at it. Operator: Our next question comes from Zachary Evershed with National Bank Capital Markets. Zachary Evershed: Congrats on the quarter. So most of my questions have been answered. Maybe just one. You mentioned a 5-year target to be revealed on April 14. Will we be getting shorter-term guidance as well for 2026? Sébastien Bourassa: I think it's the job of the analyst to do short-term guidance, Zach. But no, we try to -- I think we have demonstrated in the last 2 years, what we are capable to do and what we do is sustainable. I think we'll be able to give enough color at the Investor Day on the 5-year target that people will be able to put a number by themselves for the yearly guidance. No, we want to go on a broader period because we're in the business for the mid, long-term, not for the short-term. Zachary Evershed: Makes sense. And then actually, just one other one. You previously mentioned that some parts of Europe are already exceeding the 20% margin target while some are dragging. Can you tell us broadly what those units are doing differently versus the ones still under the target? Or is it primarily a function of the subsidies that are available in those geographies? Sébastien Bourassa: I think just one -- I'm not sure where you got this comment. But I think if we look at our detailed MD&A, I think we see that the accessibility is at 23%. So again, it's a mix of North America and Europe. So I think we're probably closer to the 20% than we were in the past, okay? But I don't think we detail exactly per location or per country what's happening. But maybe some of the good things that we are doing, JP, you want to highlight a few items, what we're doing good for Europe to improve our profitability? Jean-Philippe Montigny: Yes. So the main things in the last few years has been the efficiency of our factories and our field operations. So in our factories, there are a number of initiatives to reduce, let's say, the number of people we have for the same output by automating some industrial processes we have. So that's been very effective. We also deployed a lot of lean, let's say, lean improvements to our factories. So I think that's where we have a lot of people in the factories and there we became much more efficient. The other place where we have a lot of people is in the field operations for installation and servicing. And for that, we did not only improve the quality, let's say, of our work because we had a lot of training and we elevated the performance of our team by capability building, but also we deployed better systems where the dispatching, for example, is more efficient. So that's something we keep working on, but it's already much better than it was. So through this, we improved the profitability quite a bit. And last thing, as I mentioned before, as we became a bit more let's say, rigorous and strategic in how we price and manage the pricing. So as a result of all these things, we improved our profitability overall. Operator: Our next question comes from Justin Keywood with Stifel. Justin Keywood: Just on the Baxter Residential Elevator acquisition announced early in February. I realize it's a tuck-in deal, but are you able to provide any metrics around the profitability of that asset and the opportunity to expand margins and some of the integration activities that have been successful with some of Savaria's other acquisitions? Sébastien Bourassa: Thank you, Justin. So yes, I would say probably in the low teen, the profitability. But I think the success of Savaria is always the vertical integration from the dealer to the factory, to the subcomponents, example, in Mexico. I think all this make it successful. Again, we see with Baxter a good opportunity. Again, it's a small business unit. So I think we will add some volume and develop some area that will be -- that will continue to help for the success. But I think that's an area that we believe we can be much better and that's why we did the acquisition. Justin Keywood: Great. That's helpful. And how did the acquisition come about? Was this a cultivated opportunity? Just if you have any background on that. Sébastien Bourassa: I think at this stage, most of the dealers know that we are a natural buyer. So I think it goes to different conversation with their President right and left, that Nicolas, corporate development. So definitely, we know which dealer might be selling in the next few years and typically, on the list and when they are ready, they call us. So that's a bit of how it works. Justin Keywood: Great. Good to hear. And I had a question on foreign exchange. It was quite impactful in the quarter. I don't recall it being impactful historically. Just wondering if there's a strategy around managing FX risk with hedges or if there were any unique factors for this quarter impacting the results? Stephen Reitknecht: We do have some hedges in place, Justin. So we do hedge some of our debt. What happened this quarter was unrealized loss on the U.S. dollar. So some of our mainly related to U.S. cash and to U.S. receivables that when they were converted back to Canadian, just the change in the FX rate quarter-over-quarter created that loss versus the same time last year. You remember the U.S. dollar was going the other way, so quite a bit. So I mean, we do have some hedging in place, but we're going to see these types of impacts on a quarterly basis. I think this one is just more pronounced based on the change in the U.S. dollar over the last short-term. Operator: Our next question comes from Razi Hasan with Paradigm Capital. Razi Hasan: You spoke about operating leverage in the quarter. Could you maybe talk about future ability to capture operating leverage and where that comes from? Stephen Reitknecht: Yes. I mean we're -- we've talked a lot about continued improvements that have come under Savaria One, and it's a new way of working and a new culture here. But something that is just going to happen naturally without any effort is going to be some of that operating leverage. We -- I mentioned the capacity that we have at our sites. A significant amount of our cost base is fixed. So being able to put through more revenue with the same cost base, we're going to see that leverage come through in all of our regions and segments. So we're going to see that in Patient Care and Accessibility. We are making this one-off investment in Greenville, but we feel -- we know that we have enough capacity to service our long-term growth plans. So Razi, we're going to see this come through. We saw some this quarter. We're going to see this continue over the next few years. Razi Hasan: Okay. Great. And then maybe one for JP. Just if we take a step back a bit, could you maybe provide some details on growth rates for the elevator market in Europe? Just overall, how do you see that market growing? Or how has it been growing? And how do you see it growing going forward? Jean-Philippe Montigny: Just to clarify, we're currently not playing in the elevator market in Europe, except for Vuelift, right, you know this. So that's the context. Now the growth rate, we will present that in the Investor Day what we think are the growth rates per market, but I think it's in the range of 4% to 5%, if I remember, I'm going from memory, but it's in that range. Most of our markets are in that or slightly higher range of growth rates. So that's what -- yes. But maybe hold that question until the Investor Day, and you'll get a more granular view of all the markets we operate in. Razi Hasan: Fair enough. That's helpful. And then maybe just lastly, I'm not sure if it was answered earlier or asked, but just thoughts on priorities for capital deployment for 2026. Stephen Reitknecht: Yes, I can take this one, Razi. I mean we're -- we have been delevering over the last couple of years. We're going to continue to do that. We are building the balance sheet for -- mainly for acquisition growth and for acquisition opportunities to make sure we have the funds available to execute transactions as they arise. So we are at 1x leverage. Our sweet spot is around that 2 mark or below that 2 mark. So Sebastien mentioned in his comments that there's $200 million available for acquisitions over the next few years. I mean this is going to continue to expand, and we're going to -- the idea is that we're going to be self-funding acquisitions. So our dividend policy is relatively stable. We're not looking at buybacks in the short-term, and we talked a little bit about CapEx already, but the main goal right now is to continue to repay debt and use our revolver to execute on acquisitions when they arise. Operator: Our next question comes from Jonathan Goldman with Scotiabank. Jonathan Goldman: So really nice organic growth. Maybe we can just focus on accessibility, both North America and Europe. Can you provide some color on how booking trends and backlog have trended so far in Q1? I guess if you want to talk about directionally, has the momentum from Q4 spilled over into 2026? Sébastien Bourassa: Okay. So I don't think we have retailer backlog in Q4. I think we had a good start of the year. And typically, Q1, there's a bit of deadline in North America for some price increase. So that usually give us a healthy backlog. And I think in terms of stairlift, we are busy. So no, I'm quite comfortable with the way we have exited the year that we have some backlog remaining to hopefully have a good Q1. Jonathan Goldman: Okay. And maybe switching to Europe, the idea of kind of being a one-stop shop. Can you remind us of what the current product mix is in Europe right now? And I guess related to that, could you give us an update on the dealer uptake and reception of the Luma? Sébastien Bourassa: Yes. So maybe I will start and JP will complete. So for sure in Europe, we are firstly the stairlift organization. That has been the bread and butter of Handicare for many, many years. And then don't forget, we have the Garaventa brand in Europe, where we have the incline platform. We have been a strong player in incline platform as well. We brought the Luma last year. So for sure, Luma, again, it takes time, but it's one of those we put the seeds for the mid, long-term because people before they buy example, 10, they do and they put in the showroom, then they do one of the customer. So it takes some time. But definitely, there's a lot of traction. People like the products. So I think we'll get a good future. Again, we have the Vuelift in Europe. We have some short VPL called them out. So definitely, we are starting to have a better picture of the one-stop shop and the dealer appreciate that. So I think that would be good. Maybe JP, you want to complete something on that? Jean-Philippe Montigny: Well, I think you said it well, Sebastien, but I think it's recent that we bring almost all the products. So the one big piece that's missing is home elevators because we have the Vuelift, but we don't have the other category killers like the Eclipse, for example, but for everything else, we are there. But for us, to be transparent, for example, selling incline platform lifts, vertical platform lifts has always been something that we existed through Garaventa, but we still have room to grow there because we're, for example, educating even still today some of our historical Handicare dealers to sell those products, okay? So at least we made progress in that regard in the last few years, but there is still work for us to do and room for us to cross-sell our different products to our different historical dealers in Europe. Jonathan Goldman: Okay. That's good color. And maybe just one more. On the Patient Care, the organic growth was really strong in the quarter, and you were lapping also like a really strong comp as well. Was there any onetime projects in there or anything that would make that growth look unusual? Sébastien Bourassa: About patient Care, we have to be careful. It's always a bit lumpy from one quarter to the other, because of big project, as you said, and sometimes there's some deadline with some funding with the government. But on our side, we try to get more at a year versus a quarter for the Patient Care. I think last year, we finished in the low 5% of growth. I think it is below what we want, but I think this is how we should look at it. Operator: Our next question is a follow-up from Michael Glen with Raymond James. Michael Glen: I'm just -- I apologize if I missed this, but did you indicate what the organic -- like the excluding ForEx organic growth rate was in Europe for the quarter? Jean-Philippe Montigny: Steve? Stephen Reitknecht: Yes. So we don't typically disclose that number, but we had low single digit -- in the quarter, we had low single-digit organic growth in Europe. They had a very large positive FX impact. So it's roughly around the 9% split roughly around 2% organic and 7% FX, but the pound and euro strengthened versus the CAD. Michael Glen: Okay. And that -- is it safe to assume that, that would have been negative through the first 9 months of the year? Stephen Reitknecht: No, it wasn't negative. It's been positive for most of the year. Michael Glen: Okay. And then just the tax rate next year or this year '2026? Stephen Reitknecht: Yes. And so maybe your question is coming from our lower tax rate that we experienced in Q4. For next year, we're expecting to be back in the range of 26%, 26.5%. There were some positive impacts in Q4 that you'll see. I think our rate for the quarter was about 17.5% and we had some positive adjustments on earnings in some countries that previously were experiencing losses. So we have carryforward losses in some of those countries that where we're now making income that we apply those losses against the current income so that the effective tax rate is lower. So there was a bit of a one-off adjustment. But going forward, I think if you're modeling, keep 26.5%. Operator: I'm showing no further questions at this time. I would now like to turn it back to Sebastien Bourassa for closing remarks. Sébastien Bourassa: Thank you very much, Daniel. So thanks for all the good questions. It seems a lot of good interest this morning. So again, I'm very happy of the results, very proud of that. And I think it shows that we are in a good industry. We continue to do the right thing, Savaria One learning we did in the last 2 years. So quite comfortable and excited to present to you the next chapter of growth in April. And I remember, if you have interest to be at the Investor Day in April in Brampton, Toronto, please register so that we have enough chair and enough sandwich for lunch. So thank you very much, Daniel. See you next quarter. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to Endeavour Mining's Fourth Quarter and Full Year 2025 Results Webcast. [Operator Instructions] Today's conference call is being recorded, and a transcript of the call will be available on Endeavour's website tomorrow. I would now like to hand the call over to Endeavour's Vice President of Investor Relations, Jack Garman. Please go ahead. Jack Garman: Hello, everyone, and welcome to Endeavour's Q4 and Full Year 2025 Results Webcast. Before we start, please note our usual disclaimer. On the call today, I'm delighted to be joined by Ian Cockerill, Chief Executive Officer; Guy Young, Chief Financial Officer; and Djaria Traore, Executive Vice President of Operations and ESG. Today's call will follow our usual format. Ian will first go through the highlights of the quarter and the year, Guy will present the financials, and Djaria will walk through our operating results by mine before handing back to Ian for his closing remarks. We'll then open the line up for questions. With that, I'll now hand over to Ian. Ian Cockerill: Thank you, Jack, and hello to everyone who's joining us on the call today. Now 2025 was an outstanding year for Endeavour, in which we delivered a strong operational performance and record financial results. Over the course of the year, we produced 1.2 million ounces at an all-in sustaining cost of $1,433 per ounce. We achieved the top half of our production guidance with costs in line with the guided range on a royalty adjusted basis, and our safety record remained sector-leading. Our strong operational performance, coupled with higher gold prices, translated directly into free cash flow. We generated a record $1.2 billion of free cash flow, and that's equivalent to over $955 for every ounce of gold that we produced. This cash generation enabled us to quickly deleverage our balance sheet to just 0.07x net debt to EBITDA by year-end, which is well below our through-the-cycle target of 0.5x, positioning us to significantly increase shareholder returns and invest in our exciting organic growth pipeline. For 2025, we returned a record $435 million to shareholders, and that's equivalent to $360 for every ounce of gold that we produced and 93% above our minimum commitment for the year. That's truly a sector-leading return. And looking forward, we are already increasing returns with a commitment to over $1 billion minimum dividend over the next 3 years that we expect to supplement assuming current gold prices with at least another $1 billion of additional dividends and share buybacks. Importantly, shareholders are not the only stakeholders benefiting from our strong performance. We also contributed $2.8 billion to our host countries, and that includes $919 million of direct contributions to our host governments, and we significantly increased our in-country procurement spend, reiterating our commitment to our in-country partners and strengthening the resilience of our business. As we transition into a phase of increased focus on organic growth, we continue to advance the Assafou feasibility study towards completion, which is expected in a few weeks, and the key environmental and exploitation permits have already been approved, and that significantly derisks our time line to first gold, which is targeted to H2 2028. Our exploration program discovered 1.5 million ounces this year at Assafou, Sabodala and Ity. And while we didn't fully replenish reserves, we are strengthening our exploration pipeline to ensure that we sustainably replace reserves, resources and production depletion as part of our 5-year exploration program as well as adding new high-return growth projects into our pipeline. We started 2026 with a strong operating momentum, and we will remain disciplined as we accelerate organic growth and shareholder returns, delivering on our strategic objectives. On Slide 7, in 2025, we show how we increased production by 10% year-over-year, driven by the full year contribution from our Sabodala-Massawa BIOX plant and the Lafigué projects. More importantly, at a realized gold price of $3,244 an ounce, our all-in sustaining margin expanded dramatically to $1,811 per ounce. That's up 60%, 6-0 percent from 2024. Our track record of achieving guidance speaks for itself, and we were pleased to extend that track record in 2025. That means we've now achieved or beaten guidance 12x over the last 13 years. That demonstrates our operational excellence and the high quality of our diversified portfolio. Looking at the year ahead on Slide 9. Group production is forecast to remain relatively stable as increased production at our Sabodala-Massawa mine will be partially offset by a planned lower production at our Houndé and Lafigué mines, which are entering a short phase of lower grades associated with higher stripping activity. All-in sustaining costs are expected to increase primarily due to the cost impact of this phase at Houndé and Lafigué. We'll also see the impact of the increase in Côte d'Ivoire sliding scale royalty rates from 6% to 8% and a weaker dollar-euro ForEx assumption for the year. Nevertheless, we'll continue to generate exceptional margins, and we expect to see cost improvements from 2027 as Houndé and then Lafigué complete their current phases of stripping and transition back into higher-grade material. As shown on Slide 10, we're firmly on track to achieve our 2030 production target of 1.5 million ounces, representing a 27% organic growth from this year. This growth will be driven by the targeted addition of production from Assafou [indiscernible] growth that will be coming from Sabodala-Massawa. At Sabodala-Massawa, we continue to drive improvements in BIOX's throughput and recovery rates. And in the second half of the year, we are starting some underground development to support high-grade underground ore through the CIL plant. Importantly, we expect to achieve this growth while improving all-in sustaining costs, positioning us again in the lower quartile by 2030. Our production growth last year, combined with strong gold prices supported record operating cash flow and record free cash flow of $1.2 billion in 2025. So that's equivalent to $955 of free cash flow for every ounce of gold produced, and we'll continue to maximize cash flow for every ounce of gold we produce. We're chasing margins and not just chasing ounces. This strong cash flow helped rapidly deleverage our balance sheet that Guy will walk us through shortly. The free cash flow outlook for '26 is strong with us well positioned relative to our gold peers due to stable production and CapEx year-on-year. The completion of our hedging program and improved gold prices. Importantly, the gold mining sector is still good value for money relative to other sectors. On Slide 13, for the year, we returned a record $435 million to shareholders, as I said, $360 for every ounce that we produced. Now since we started paying shareholder returns 5 years ago, we have returned $1.6 billion or 83% above our minimum commitment, and we have increased dividends per share and total returns per ounce produced every year, a trend we expect to continue in this higher gold price environment. As shown on Slide 16, our '25 returns compared very favorably with our peers, both on a per ounce basis as well as in terms of yield. While the gold sector has not historically delivered an attractive yield compared to other sectors, we see that changing, and we want to maintain -- to remain a sector leader so that we're not just attractive for gold investors, but appeal to a wider investment base that seeks reliable yield in a macro landscape of rate declines. In January, we announced our updated shareholder return program for '26 through '28. We will return a minimum of $1 billion dividend over '26-'28, and that's based on the assumption of a gold price of $3,000 per ounce and similar to our previous program, at higher gold prices, we'll supplement that minimum. As I mentioned, we've paid 83% above the minimum over the past 5 years, and we'll do that -- and with gold prices where they currently are, we expect total returns to more than double our minimum commitment over the next 3 years. Moving on to growth and our flagship Assafou project on Slide 18. We're progressing very well, and the project remains on track with key environmental and exploration permits now approved, and that significantly derisks the project pipeline. The feasibility study mine plan is expected to be well aligned with the pre-feasibility study plan and the feasibility study will incorporate higher CapEx due to optimizations following additional grade control drilling results, a more scalable processing plant design that can be expanded in future and an extended road and power line diversion, which is aligned with both community and government requirements, which will bring slightly higher initial capital costs. More detail on the feasibility study will be released at the end of this quarter as we formally announce the results of our feasibility study in a separate stand-alone presentation. On Slide 19, I wanted to highlight some resource expansion and permit consolidation that we have been busy with at Assafou and across the wider belt. We increased measured and indicated resources by 13%, largely thanks to the maiden resource at Pala Trend 3, which is the first satellite target that we've defined at Endeavour. Now while the resource is initially quite small, it is less than 2 kilometers away from Assafou. It's over 1.5 grams per tonne of oxide material that starts from surface. So it supports significantly increased operating flexibility at Assafou, and we expect it to be the first of many satellite resources that will ultimately support the upside at Assafou. Our strategic partner, Koulou Gold, has also successfully acquired the permit to the south of Assafou in addition to their permit to the East, helping to consolidate this highly prospective underexplored belt. Exploration has been our most significant value creator over the last 10 years. We have now discovered more than 22 million ounces of measured and indicated resource for a discovery cost of less than $25 per ounce, including discoveries of the cornerstone Lafigué and Assafou deposits. This year, we discovered 1.5 million ounces at Assafou, Sabodala-Massawa and Ity, which only partially offset the production depletion and model optimizations that took place across the balance of our portfolio. Over the next 5 years, we are targeting the discovery of between 12 million to 15 million ounces of measured, indicated and inferred resource. That target comprises 6 million to 9 million ounces at our existing operations to replace production depletion and up to 6 million ounces from greenfield resources, including the potential discovery of up to 2 or 3 new projects focused on strengthening and diversifying our long-term greenfield pipeline. As outlined on Slide 22, despite Endeavour's strong performance and strong outlook that is underpinned by substantial organic growth, we still have a compelling value proposition, not only amongst gold peers, but across most other sectors as well. As we continue to deliver consistently, invest in sector-leading organic growth and deliver sector-leading returns while retaining our disciplined approach to capital allocation, we expect to unlock even more value. As a long-term partner in West Africa, our resilience is underpinned by our ability to continue to deliver value to all our stakeholders. In 2025 alone, we contributed $2.8 billion to host economies, including $919 million in payments to host governments in the form of taxes, royalties and dividends and $270 million in wages and $1.6 billion on procurement at in-country. We also maintained our strong ESG track record, which is a reflection of our consistent commitment to excellence in ESG, and this is best shown in our impact over the last 5 years. Since 2021, we've delivered more than $11 billion in total economic contribution, including $3.3 billion to host governments and $6.6 billion in local procurement. Beyond this economic contribution, we have made tangible impacts to local livelihoods through our social investments, including providing 55,000 people with access to quality health care, 38,000 children with educational support and nearly 10,000 people with economic development opportunities. Generating shared value that benefits all our stakeholders is key to sustaining our success, and I encourage you to view our sustainability report that we've published today. And with that introduction, please let me hand you over to Guy, who will take you through the financials in more details. Over to you, Guy. Guy Young: Thank you, Ian, and hello, everyone. As Ian mentioned, 2025 was an exceptional year financially for Endeavour with record results across all key metrics. We produced 1.2 million ounces at an all-in sustaining cost of $1,433 per ounce, or $1,305 per ounce when adjusted for gold price-driven royalties. With a realized gold price of $3,244 per ounce, we generated record adjusted EBITDA of $2.3 billion, up 75% year-over-year and adjusted net earnings of $782 million, up 244% year-over-year. Free cash flow reached another record $1.2 billion, up 269% from 2024. Turning to Slide 25. For the fourth quarter specifically, production increased by 34,000 ounces to 298,000 ounces due to higher grades across the portfolio, in line with the mine sequence. Our all-in sustaining margin also increased to $2,225 per ounce, a $547 increase compared to the prior quarter due to improved gold prices. On Slide 26, we can see that the improved gold price translated into a 46% increase in adjusted EBITDA for Q4 as we generated $681 million with our adjusted EBITDA margin also increasing quarter-on-quarter. The higher EBITDA naturally drove an improvement in operating cash flow, as shown on Slide 27. Our operating cash flow in Q4 was up 97% from Q3 to $609 million, benefiting from the higher Q4 production, higher realized gold prices and seasonally lower tax -- sorry, cash taxes. The operating cash flow bridge on Slide 28 shows the key drivers of the $300 million increase from Q3 to Q4. The realized gold price increased by $626 per ounce, which added $208 million of operating cash flow. Gold sales increased by 44,000 ounces, contributing a further $156 million. Cash operating expenses were up $177 million due to increased production, increased royalties due to gold prices and increased royalty rates in Côte d'Ivoire. Income taxes paid decreased by $44 million due to the seasonality of cash tax payments and the typically lower payments in Q4. And working capital improved by $69 million as the buildup of inventories and VAT receivables slowed and was offset by a slight increase in payables at the end of the year. I highlighted that we were expecting to see improvements in our working capital last quarter. And pleasingly, Q4 was a significant improvement over Q3. This year, we're expecting this to improve further. We expect to further reduce inventory as we start drawing down on stockpiles at Lafigué and Houndé as we will be relying on stockpiles to support the mill feed during H1 as we concentrate on stripping at both sites, in line with mining sequence. And we expect our VAT receivables to also improve as the timing of the VAT recovery cycle normalizes in Côte d'Ivoire and Senegal. And in Burkina Faso, we will continue to convert our VAT receivables into marketable debt instruments and sell them on the open market. Free cash flow in Q4 reached a record $476 million, up 187% from Q3, driven by the stronger production, higher gold prices and lower seasonal taxes. For the full year, free cash flow was $1.156 billion, up 269% from 2024, marking a significant inflection in our cash generation capability following the completion of our last growth phase. It is pleasing to be converting strong operational performance into free cash flow, and we are effectively and efficiently upstreaming that cash to support our increasing shareholder returns. Last year, with great support from our host nations within the West African Economic Union and the Central Bank of West African State, we successfully upstreamed $1.2 billion, leveraging our annual cash upstreaming model, which serves us and our in-country stakeholders very well as it provides early visibility on cash movements, foreign exchange requirements and minority interest dividend and withholding tax quantum. Moving on to Slide 30. The change in net debt bridge on the slide shows how we are able to rapidly deleverage the balance sheet. We started Q3 with net debt of $453 million and generated operating cash flow of $609 million. After investing activities of $133 million and financing activities, including dividends and buybacks of $181 million, we ended the quarter with net debt of just $158 million. This represents a comfortable leverage level of only 0.07x, down from 0.21x at the end of Q3 and well below our through-the-cycle target of 0.5x. We reduced our net debt by $574 million and also reduced our gross debt by $511 million last year, leaving us with over $1.1 billion of liquidity available through our cash on hand and our undrawn RCF. Finally, turning to earnings on Slide 31. I won't go through every line item, but just a few of the highlights. We generated $665 million of earnings from mine operations for Q4. We recorded $193 million of impairments, largely across exploration properties, including, in particular, Bantou, Nabanga and Kalana, as we don't expect to do any exploration work in the near term and don't see potential for Endeavour type assets at any of these properties. Other expenses increased to $44 million. This does include $37 million of incremental royalties for 2025 at our Ity and Lafigué mines in Côte d'Ivoire, where the royalty rates for 2025 were retroactively increased from 6% to 8%. The net losses on financial instruments of $62 million were mainly due to realized losses on gold collars, partially offset by unrealized gains on marketable securities. Last year, the tail end of our hedging program created a significant headwind to our earnings and our free cash flow. Given the strong gold price environment in particular, pleasingly, this year, we are fully unhedged and expect to realize the full benefits of this favorable gold price environment. During the quarter, we recognized a $52 million deferred tax recovery in the quarter as deferred tax liabilities decreased following the impairment of our exploration properties, which I referenced earlier. And adjusted net earnings reached $293 million or $0.93 per share for the quarter. Thank you, and I'd like to hand you over to Djaria. Djaria Traore: Thank you, Guy, and hello, everyone. Before discussing our operating results, I want to start with safety, which remains our top priority. I'm pleased to report that we've maintained our industry-leading safety performance in 2025 with a long-term injury frequency rate of just 0.07, which position us as one of the safest operators in the gold mining sector. Before turning to the mine-by-mine review, I wanted to touch on our reserve and resource evolution. During 2025, our P&P reserve decreased by 10% or 1.8 million ounces to 16.6 million ounces, driven by 1.4 million ounces of production depletion and the optimizations of several of our reserve models to incorporate updated cost assumptions. The decrease was partially offset by an increase in reserves gold price from $1,500 per ounce to $1,900 per ounce. However, we have not realized the full benefit of this increase as we have not yet updated the pit shells at Sabodala-Massawa and Ity mines. And the full benefit of the higher gold prices is expected to be realized next year when these pit shells are updated. M&I resources also decreased slightly by 4% or 1.1 million ounces to 25 million ounces, which is due to 1.6 million ounces of depletion and resource model optimizations, which was partially offset by 1.5 million ounces of discoveries at Assafou, Sabodala-Massawa and Ity. As part of our new exploration strategy, we are focused on replacing production depletion at our existing assets, while adding up to 6 million ounces of resources at new greenfield projects to support our long-term growth -- organic growth. On Slide 35, you can see an overview of our portfolio performance and the 2026 outlook. In 2025, we've achieved a production growth across Sabodala-Massawa, Mana and Lafigué, while production was lower at Houndé and Ity mines. Looking ahead to 2026, we expect further production growth at Sabodala-Massawa due to continued improvement through the BIOX plant. This increase will be offset by lower production at Houndé and Lafigué, where, as Ian mentioned earlier, we will be mining and processing lower grades and prioritizing waste stripping. All-in sustaining costs are expected to increase this year, largely due to an increased focus on waste stripping at Houndé and Lafigué, which will lead to the processing of lower grade ore and a reliance on stockpiles to supplement the feed. In addition to that, the higher royalty rates in Côte d'Ivoire and the lower USD euro ForEx has driven our all-in sustaining cost guidance higher. We expect costs to start to improve next year as this phase of stripping is completed at Houndé and Lafigué. On a longer term, we are tracking well towards our 1.5 million ounces target by 2030. And as we incorporate higher grade at Sabodala-Massawa, Houndé and Assafou in the coming years, we expect to be in the first cost quartile when we got to that 1.5 million ounces target. On Slide 36, with Sabodala-Massawa, we've delivered a strong performance in 2025, achieving the top half of our production guidance range with costs within the guidance range on a royalty adjusted basis. Production increased 20% year-on-year as the BIOX plant had a full year of production. We expect to see further increases this year as the BIOX throughput continues to increase, targeting 15% above design nameplate, while recoveries continue to improve towards the 85% target. At the same time, we are starting to develop the Golouma underground deposit to incorporate the high-grade non-refractory underground ore into the mine plan from 2027, and that's supporting a continued production growth and cost improvement. Moving to Houndé on Slide 37, where we've achieved near the top end of our production guidance range last year with cost beating guidance on a royalty adjusted basis. The strong performance was largely due to higher grade from the Kari Pump pit. As Ian mentioned earlier, Houndé will focus on waste stripping at the Vindaloo deposit this year. And as a result, we will be mining lower grade and drawing down on stockpile to supplement the mine ore feed, which result in a slightly lower production and higher costs. As stripping advances, we expect to see grade and costs improve through the year and notably into next year 2027. Longer term, we are excited by the underground potential at Houndé, and we expect to declare a maiden resource for the large high-grade Vindaloo Deep deposit during H1 this year. At Ity on Slide 38, we've achieved the top half of our production guidance with costs in line with the range, supported by strong mill throughput that has benefited from the use of supplemented mobile crushers. Production is expected to be stable year-on-year, while costs will be higher due to a slight increase in sustaining capital related to waste stripping at Ity, Zia and the Le Plaque pit. but as well as the increase in sliding scale royalty rates in Côte d'Ivoire from 6% to 8%. At Mana on Slide 39, as expected at Mana, the accelerated development rates improved access to higher grade underground stopes, supporting a stronger production in the later part of last year. As a result, we've achieved the top half of our production guidance, while costs were above the top end of the range, reflecting an increased development and costs, which were associated with the contractor changeover. This year, production at Mana is expected to be stable as underpinned by improved development rates from our consolidated single contractor underground mining model, coupled with a small volume of open pit feed in the mine plan. These 2 elements are expected to support an improved throughput year-on-year, which will largely offset the impact of slightly lower grade in the mine sequence. We are continuing to work on improving cost at Mana, prioritizing improvement in grid connection, power stability as well as underground mining productivity. Finally, turning to Lafigué on Slide 40. We've achieved our production guidance with -- above the top end of the range due to higher mining volumes required to support the improved processing throughput rate as the plant continued to deliver well above design nameplate. For 2026, similar to Houndé, Lafigué will be prioritizing stripping activities to improve access to higher-grade ore. The mill feed will be supplemented with lower grade stockpile material, which combined with the increase in sliding scale rates of royalty in Côte d'Ivoire is expected to result in slightly production and higher costs year-on-year. Thank you, everyone. I'm now handing back to Ian for the closing remarks. Ian Cockerill: Thank you, Djaria. Now as we look ahead, we're extremely well positioned to continue creating value for all of our stakeholders. Given our strong operational outlook and high gold prices, we expect to generate very strong free cash flow, which given our low leverage will be used to deliver sector-leading organic growth and sector-leading shareholder returns. So thank you for listening. And now let me hand you back to the operator, and let's open up for Q&A. Thank you. Operator: [Operator Instructions] And we take our first question, and it comes from the line of Alain Gabriel from Morgan Stanley. Alain Gabriel: Ian, I have a couple of questions. First, can you confirm on your capital allocation that you are thinking about $1 billion of supplemental buybacks and special dividends above and beyond the minimum $1 billion that you have set? And if so, what are the next milestones, time lines and signposts to unlocking these additional returns? Is it the AGM? Is it the Q1 results? How should we be thinking about it? That's my first question. Ian Cockerill: Okay. Thanks, Alain. Yes, look, just for clarity, we said that the $1 billion over 3 years is the minimum that we'll be sort of targeting to hand out to shareholders. That assumes the maintaining a minimum gold price of $3,000 an ounce. What I was saying is that if you take current spot prices, the very real prospect of an additional $1 billion, and that will be made up of supplementary cash dividends as well as buybacks. And the buybacks will continue on an opportunistic basis, and they will form part of that additional $1 billion. Alain Gabriel: On that question, on the second part of your question -- of your answer, is it -- should we wait for the AGM for an authorization for the next leg of the buyback? Or what are the next milestones that we should be waiting for? Ian Cockerill: No, sorry. Yes, I should have been a little bit clearer there. No, look, I mean, we've already decided there's not a fixed number in terms of buybacks. It is going to be opportunistic. It will follow what we have done previously. Buybacks form part of the broader capital allocation framework, prioritizing where we get best return on our investment. And as and when we see the opportunity to affect a buyback and get the sort of returns that we're looking for, they will happen automatically. So there's no further sort of approvals needed because in principle, it's already been agreed that we should be doing it. Guy Young: Sorry, Alain. I was just going to add, I don't think you should expect that at the AGM, we'll come out and revise the shareholder returns program per se. Your first clear indication is going to be probably at the time that we're declaring the next dividend. So we're effectively saying we see our way clear at these gold prices. But what we will be waiting for is effectively a period in which, for example, the first half, we've earned that cash, and therefore, we will look to distribute to shareholders, and that would be the dividend declaration. But we're not looking to revise the shareholder returns program through the period. Alain Gabriel: Very clear. And my second question is on Assafou. I think, Ian, in your presentation as well, you touched on the cost being slightly higher than initially anticipated, but also the size of the project resources is also expanding, continues to expand. Can you give us some preliminary hints or indications as to the scale of the increase in CapEx? And given what you've learned in the last few months on production and profile -- the production profile and the economics, anything that you can give us in advance of the full feasibility study that you expect to release before the end of the quarter? Ian Cockerill: Yes. No, look, I'm not going to be sort of specific. The increases are not out of the ordinary. They are linked as much to changes in scope for the project, some subtle design changes. We've picked up on, say, for instance, Lafigué because obviously, Assafou is very much the fundamental design is predicated on what we have at Lafigué. But also on what we've learned at Lafigué, what went well, what didn't go so well and having looked globally at other projects using sort of HPGRs and making sure that for instance, our comminution circuits are fit for purpose, robust and are going to work well. So there is modest increases. I mean, escalation is there. I think everyone is seeing cost creep on these things. So we will be in a position by the end of this month to have finalized the numbers, but it would be premature to give you the sort of even an indication at this stage. But the number will be going up, but not dramatically. Operator: And the next question comes from the line of Ovais Habib from Scotiabank. Ovais Habib: Congrats on a solid year. Just a couple of quick questions from me. You already answered the question on Assafou CapEx, so that's all good. But just moving on to -- and keeping on Assafou, maybe talking about Pala Trend 3. It looks like good oxide resource there, good grades there. Will this be included in the DFS? And if not, would it be safe to assume that these ounces will come into the mine plan in the front end of the mine life? Ian Cockerill: Yes, Ovais, look, again, just for clarity, no, they will -- Pala Trend 3 ounces are not included in the feasibility study. But because it's -- as we said, it's very, very close to the actual mine and to the plant, it's oxide material. It's there almost as should we call it, an emergency backup. So it just gives you greater sort of mining optionality and flexibility. But we're seeing even more sort of resource in and around and in close proximity to the plant. So it's the upside over and above the basic mine plan, it's more than just Pala Trend 3. There are other satellite deposits in close proximity to the plant that will ultimately be included and will form part of the natural, should we call it, evolution and expansion of this plant as we get it up and running, as we debottleneck, as we start to probably operate beyond the 5 million tonnes, we don't need to include them in the feasibility study, but they will form, I think, a natural sort of upside to the project and probably will be in the early part of the project because it's so convenient to get it close by. Ovais Habib: And just again, as you were talking about those other satellite targets that you guys are probably targeting, I mean, is this Sonia targeting those areas right now in the 2026 drilling program? Or is this more going to be more once production starts, then you'll continue doing more exploration around the area? Ian Cockerill: We haven't really stopped from the time that we started doing all the exploration drilling around there, Ovais. So it's not as if we've got to start doing it. These are projects that have already been identified. Some of them we've done some initial scout drilling, some more advanced than others. I think what I'm really basically trying to say is that this is -- it's a permissive area. There's lots of opportunity, and it forms a natural sort of extension to the existing broader regional program in and around Assafou. Ovais Habib: Perfect. And I don't know if Sonia is online, but just wanted to see if -- where she is most excited about this 2026 exploration program. Ian Cockerill: Look, she's not here at the moment. But what I can tell you is that we've been doing a lot of very interesting work at Sabodala. We've been applying a lot of -- doing some lot of AI work on that permit. We've identified a significant number of targets, applying this technique over our existing deposits. It identified 99% of the deposits that we already know about. So the fact that we've got a very interesting number of new projects gives me a lot of hope that we'll be finding some more stuff. Effectively, what we've done, Ovais, is we started to join the dots because we -- as you know, we've got lots of deposits in and around. But our knowledge and understanding of how they all interconnect has been somewhat disjointed. We're starting to fill in the gaps in our knowledge. So we're very excited for '26 about what's there. And then we're going to take this technique and this technology. We're applying it to Ity South as well as Ity Maine. And we'll also apply it on our East Star joint venture in Kazakhstan, where we've got a massive area. So using this technology to help us zero in on target areas as opposed to just trying to cover the whole area makes a huge amount of sense. So lots of prospect. The other area more immediately is Vindaloo Deeps at Houndé. Now we are very, very close to sort of publishing the results of that study. It wasn't quite ready in time for this year's declaration. But there's going to be not far short of 1 million ounces going into resource at Vindaloo Deeps, that's high grade, good quality. I know that, Djaria, I can't wait to get our hands on that. Ovais Habib: Sounds good. And my last question, just moving on to Sabodala. Djaria mentioned that you're developing Golouma to come into production in 2027. Are there any other satellites that could come into production in the near term to improve the oxide production oxide production? Djaria Traore: Thank you, Ovais. I think, yes, as you mentioned, we will be starting -- I think we're currently busy finalizing the commercial decisions, which contractors select for Sabodala. So that should be done sometime by the end of quarter 1, so that we can start mobilizing equipment into H2 of this year. We expect that next year we'll be in and around development to start seeing the first ounces sometimes in 2028, really, which is really the high-grade ore that we needed for the CIL plant. We are working very closely with Sonia, obviously, to see, as Ian just mentioned, what are the other targets that we can see in and around Sabodala-Massawa. So I'm sure that the next call, we'll be able to start giving you some hints in that as well. Operator: And now we're going to take our next question. And the question comes from the line of Fahad Tariq from Jefferies. Fahad Tariq: Apologies if I missed this. Can you walk through the thought process of using $3,000 an ounce gold to set 2026 guidance? Ian Cockerill: It was simply a question of choose a number. The classical approach that we have taken historically is that we give forward guidance on our dividend program. We select a number and then based against our anticipated production and cost profile, we know what our cash generation should be. We're comfortable in guaranteeing that sort of number. And then over and above that, that's when we say there will be supplemental returns as well. So 3,000 was just chosen as a number. We could have taken another number, but we felt comfortable with 3,000 over the next 3 years. And it's an indication to investors if you've got that sort of gold price environment, that's what you should anticipate should be coming your way in the form of dividends as a guaranteed. Fahad Tariq: Okay. And then maybe just -- my question is more on just setting the cost guidance in particular. Maybe let me ask a different way. If I think about the year-over-year increase in the AISC guidance from 2025-2026, how much of that would be the higher royalty structure versus the increased waste stripping at Houndé and Lafigué? I'm just trying to get a sense of how AISC could potentially come down in 2027 once the stripping is complete? Guy Young: Let me try and answer. The 3,000, is obviously relatively conservative in terms of current spot prices. But we do like to use fairly conservative gold pricing for budget purposes and cost control in the first instance. When it comes to, I think, the second part of your question, which was '25-'26, if you take a look at the overall cost per ounce increase, roughly 15% of that is made up of royalty rate increases and foreign exchange. The remainder is effectively down to the mine sequencing, which includes a proportion of stripping activities at Houndé and Lafigué, which we mentioned, as well as the cost of stockpile drawdown. And those 2 factors combined constitute about 85% of that cost increase. Operator: And the next question comes from the line of Marina Calero Ródenas from RBC Capital Markets. Marina Calero Ródenas: I have a couple of questions. The first one is on your reserves. You mentioned that Ity and Sabodala are -- don't have the reserves calculated using the $1,900 per ounce price. I was wondering if you could give us a bit more details about that? And how will your group reserves look like if those prices were used across the entire portfolio? Ian Cockerill: Sorry, Marina, I didn't get -- it's a bit garbled. Could you repeat the question again, please? Marina Calero Ródenas: Is now better? Can you hear me now? Ian Cockerill: Yes. Yes, that sounds much better. Marina Calero Ródenas: Okay. Sorry about that. I was just asking you about your 2025 reserve statement. I noticed that you're not using the $1,900 price for Sabodala and Ity. So I was just wondering if you could give us a bit more color about that and how your group reserves will look like if the same prices were used across the entire portfolio. Ian Cockerill: Yes. Sorry. Now I understand the question. Look, I think what we have to recognize is that last year, there was a massive dislocation on gold prices. For us to get to produce truly accurate answers about reserves, you actually have to change pit shells, the pit shells also have to align. It's not just a question of changing the prices. And to be honest, we just -- for the 2 mines that you mentioned, at Sabodala and Ity, we just didn't have a chance to do the changes in the pit shells. They will take place later on this year. What I -- and from that, we'll see what changes have taken place. What we are seeing, though, and this is a very sort of generic statement rather than anything specific about these 2 operations. is that the intrinsic quality of our reserve base and the relatively flat grade tonnage curves that we've got from our operations means that major changes in the gold price doesn't necessarily have a significant impact on our reserves either going up or going down. But we still need to do the proper engineering with the correct price pit shells, and we simply just didn't get around -- didn't have the time to get around to doing it for those 2 specific mines, but it will be done later this year. And then as we update in the middle of the year, we'll see those changes coming through as we'll see also the updates coming through from Houndé, which we'll be able to produce fully [ queue feed ] resource and reserve statements there from Houndé as well. Marina Calero Ródenas: Just another question on costs. Can you comment on the main inflationary pressures that you're seeing? And maybe as an extension of that, why is the sensitivity of your all-in sustaining cost, if any, to the oil price? Guy Young: Sure. So on the first one, in terms of inflationary pressures, we've got somewhere in the region of 2/3 to 3/4 of our costs are effectively local denominated costs in [ CFA or XOF ]. That local currency is pegged to the euro. And as a result, we see relatively benign inflation for the vast majority of our cost base. If you break down the cost base into its key elements, you'll have labor, which in West Africa, we are very lucky to have a great supply of people, well-experienced people. And as a result, we haven't seen the level of labor inflation that is necessarily being seen in other territories around the world. Local inflation, I think, as a result of the pegging also means that the -- there isn't runaway local inflation that, again, you may see in other territories. So the fiscal discipline and policy of the Regional Central Bank fundamentally helps us from an inflationary perspective across the majority of our costs. In addition to that, we've obviously got medium, long-term contracts that help us manage over time associated with agreed to contractual rise and fall. So there, again, that's on our side rather than helping it from an inflationary perspective. More importantly, to the second part of your question, oil or energy represents a fairly significant proportion of our cost base as well. But it's important to note that the 3 host nations in which we're operating all have relatively strict sets of pricing mechanisms, whereby the vast majority of host nations are maintaining a very low level of volatility of fuel prices on the ground to international oil prices. So we have not seen either the highs or lows in terms of volatility that other countries have seen over the last number of years. On top of that, the vast majority of fuel that is supplied into West Africa is not coming from the Middle East. So our actual reliance in terms of security of supply is much more focused to Northwestern Europe and Africa itself. And consequently, when we look at oil shocks, we tend to see it more as a question of pricing rather than security of supply. But even with that pricing, because of the government's pricing mechanisms, volatility is not significant for us from an all-in sustaining cost perspective. Operator: Excuse me, Marina, any further questions? Marina Calero Ródenas: Not that I have. Operator: And the next question comes from the line of [ Alex Badawani ] from Stifel. Unknown Analyst: Just one simple question for me. So Guy, I want to pick up on something you alluded to earlier when you said Endeavour type assets when referring to the exploration impairments. At this point in time now, what constitutes an Endeavour type asset? And has that changed in the last couple of years? Guy Young: Thanks very much. No, it hasn't changed. So you're right, it was shorthand, but what we're talking about is the same key elements that we would have always described as an Endeavour type asset. So it's life of mine cost profile and size, i.e., annual production. They're the same. Unknown Analyst: And what sort of thresholds are we looking at? Is it minimum 250,000 ounces... Guy Young: Exactly. It's 250,000 ounces annual production. It's 10 years plus, and it's first quartile cost producer. Operator: Now we are going to take our next question. And the question comes from the line of Frederic Bolton from BMO Capital Markets. Frederic Bolton: So just 2 questions from me as has already answered them for me. So first on Koulou, given your 19% position in the company, should we think of that as a stake -- think of that stake primarily as an investment today? Or is that one that carries a longer-term strategic value in the portfolio? And then second question, given that there's been a bit of industry discussion around royalty rates in Côte d'Ivoire. When you think about the costs over the long term, what are the sort of key operational or financial levers you can mitigate or offset against the royalty pressures when you look at project economics? Ian Cockerill: Yes. Look, I mean, we've been involved in Koulou Gold for several years now. We think it's a very interesting project. I think everything that we saw right from the get-go, the more that the guys look, the more that we appreciate what's there. That whole southeastern corner of Côte d'Ivoire is turning into a very interesting from a geological perspective because it's not Birimian, it's not Tarkwaian. It's really the transition between the 2. So what you have is you have Birimian type grades, but you have Tarkwaian type, call it, size and scale. So it makes it a very, very interesting part of the world. At a 19% stake, we're comfortable with where we are. We have someone who sits on the Board, and we're watching very closely what is going on there. And we have good cooperation with Koulou. On the royalty, I'm going to pass you over to Guy. Guy has been very much involved with the discussions with the government on royalty. Guy, over to you. Guy Young: Thanks, Ian. I think your question around the royalties is more where are the opportunities to offset an increasing royalty environment. So is that the question? Frederic Bolton: Yes, that's the question. Yes. Guy Young: So I'll start off, and I'm sure Djaria may want to add here as well. But if we look at fundamental offsets, I would suggest it's probably in a couple of areas. The first and most obvious one is just day-to-day, month-to-month, year-to-year productivity gains. So we do whatever we can to be mining and processing on a more efficient basis. And we have a productivity program in place across sites that is going to play a partial role of offsetting the royalty cost. The other piece and the one that we're trying to talk about in today's slide deck is also just to maintain a perspective that we will continue to add higher grade options to our portfolio. And that's through obviously exploration in the first instance. But then through, as you mentioned earlier, investments in the likes of Koulou. The ability for us to do that from a diversification perspective and ensure that we are improving grade being fed into the mills is naturally going to be assisting us in terms of cost. And then one thing which I think is longer term, which I don't want us to lose sight of is new growth based on that exploration in West Africa comes at a lower capital intensity. So those 3 elements for me would be key offsets in West Africa in total, but specifically to your question in Côte d'Ivoire as well. Djaria Traore: If I can, just to add in there, just to reiterate what Guy had mentioned, is really for us in terms of operations to look at way of reducing mining costs. And that really goes through several opportunities initiatives that we're currently putting in place with the team on site. Obviously, we do know about the Ity doughnut. We also know about the Ity grand pit. What it allows us to do is to be able to look at different type of equipment, either bring in bigger equipment or just some mix of equipment so that we ensure that we optimize those costs. So that's one of the levers. The other ones in terms of our fixed plant is to ensure that we keep our throughput optimal, maximize it. And if we add capacity, just -- again, it's really to look at different initiatives to ensure that we are processing those ore high-grade ore that we have. And I think it's really, again, with the team to think outside of the box, what are different levers and different initiatives that we can put in place on a daily basis. Operator: Now we take our next question. And the question comes from the line of Mohamed Sidibe from National Bank. Mohamed Sidibe: And maybe if I could just follow up on the royalty rates and not necessarily in Côte d'Ivoire, but just if you could comment on anything that you may be seeing either in Burkina or Ivory Coast or Senegal as it relate to that pressure for potential higher royalty rates. We know that Côte d'Ivoire just went through, but any comments would be appreciated on the remainder of your portfolio. Ian Cockerill: Look, I mean, as far as Burkina is concerned, I mean, the royalty rates in Burkina are well established. We know there's a sliding scale -- they're getting towards the top end, but they are well known. As far as Senegal is concerned, Senegal has not changed its mining code for quite some time. And there's been a sort of some indication that they want to sort of change the mining code. We do, though, have a sort of a grandfathered project at Sabodala and that Sabodala-Massawa, that basically were grandfathered until 2040. So a mining convention. But if they want to change sort of royalty rates and what have you, that is usually outside of any sort of mining convention that we've got. At the moment, Senegal is lower in terms of the overall rates, much more favorable sort of overall taxation and royalty schemes than the other countries. There's been some suggestion ventilated about them wanting to change that. I would argue that it's likely that the trajectory overall would likely increase because that seems to be the move everywhere. It's not just here in West Africa, but even in other places around the world. So whilst we're not seeing or hearing anything definitive as yet, if it happened, it probably would not be a huge surprise. But as to quantum size, change or when, at this stage, totally unknown. Mohamed Sidibe: And then just my final question on your target for 2030 for 1.5 million ounces of production. I know that Assafou will be a big contributor to that. But could you maybe help us reconcile the potential contribution from Sabodala and Lafigué? Any color on those 2 would be appreciated. Ian Cockerill: Yes. Look, I mean, if you take the existing sort of 5 assets, you could probably sort of look at a relatively steady performance coming from Mana. Houndé would be sort of the mid-200s, maybe slightly higher than the mid-200s. Ity would be its steady level, plus/minus 300. We'll likely look at a higher output coming from Sabodala as part of the overall program, we were certainly targeting by sort of '28, '29 to be somewhere into the low to mid-300s. I think as an indicative number, that is the sort of target that we will be looking for. Lafigué, anywhere sort of guiding between sort of 180 and 200. And then you're coming in with Assafou, which in '28 and then '29. '29 will be the first targeted first full year of production, but not at full rate, but it will be in 2030 that we'll be getting the full rate at Assafou, which will be sort of in the low 300. Operator: We're going to take our last question for today, and it comes from the line of Daniel Major from UBS. Daniel Major: Can you hear me okay? Ian Cockerill: Yes. Daniel Major: Yes. First question is a follow-up on the first question actually around capital returns. Yes, encouraging to see the commitment to lifting cash returns. But if we looked at free cash flow from the business anywhere near to spot prices, you would significantly exceed $2 billion of free cash over the next 3 years. I guess the question is, is there a net debt target or net debt level at which you would make a commitment to shareholders to return 100% of free cash to -- in the form of dividends and buybacks? Ian Cockerill: Yes. I think we've said all along that through the cycle, we wanted a net debt target of 0.5. Clearly, when we're not in a build program, that net debt would virtually go down to 0, maybe even occasionally just flick over a little bit. During the build program, we'll be bumping up against our upper limit closer to 1x debt to EBITDA. When the time comes and assuming that we're in the fortunate position that we're generating huge amounts of cash, the way we structured our program gives us absolutely the flexibility to return as much as we can. If there is no other sensible use of our for our sort of free cash flow. And of course, it's going to go back to shareholders because it's shareholders' money after all. But what we've tried to do with our programs is give a base outline at the -- what we -- as Guy called them, sort of conservative yet rational levels. And then beyond that, as and when we generate the money, it will get dished out to shareholders. So I don't think there's any need for us to say, well, it's going to be 100% or even less than that. As the time comes, we'll see what we need to do the business because one of the last things we want -- we don't want to do is we don't want to come through a period of really good gold prices, just handing back all the money to shareholders and then making sure that our -- the business is not robust and resilient. As we come out the other side of this strong gold price, we want to make sure that we have a business, we have an asset base, which is in sound shape, and that may well require some additional capital injections in there. But again, everything will be done, assuming our normal sort of capital allocation program and making sure that we get the sort of returns that we're looking for as well. Daniel Major: Okay. And second one, just on the portfolio. Mana is the lowest quality of your assets. Would you consider disposing it if a good offer came in is the first question. And the second question, some assets in the region from one of the larger peers in Tanzania DRC may come to the market. Would you be interested in looking at any acquisitions in the region if they were to become available? Ian Cockerill: On Mana, first of all, we're always asked the question about it's our poorest asset. I would advise people just look at the cash generation of Mana. It's generating a lot of cash. It's more than adequately washing its space. If somebody wanted to come along and compensate us for that, yes, we are. As I said all along, all assets ultimately are up for sale. It is simply a question of is someone prepared to pay for it. But bluntly, Daniel, we haven't had people banging the door down saying we'd like to make an offer for Mana offer any other asset. And that's fine. I'm very happy to continue running those assets as long as they are contributing to the bottom line. As far as -- and if I understand the thrust of your second question in terms of potential inorganic opportunities. Over the last 2 to 3 years, we have looked at a variety of assets. all of which we have walked away from because they don't satisfy our return criteria. Does it mean that we are not going to do inorganic growth opportunities? Of course, not. We are in the fortunate position that we have got a very strong organic growth pipeline, and that is where our focus would be. But it is also appropriate for us to look outside of that. As and when opportunities arise, we can look at stuff. And if it makes sense, obviously, we would do it. But again, it has to be -- has to measure up and to be able to satisfy the sort of returns that we would be looking at as a group as a whole. Operator: Daniel, any further questions? Daniel Major: No, that's it. Operator: Dear speakers, there are no further questions for today. I would now like to hand the conference over to the management team for any closing remarks. Ian Cockerill: Thank you, operator, and thanks, everyone, for listening, and we look forward to reporting back when we do our Q1 results for 2026. Look forward to it then. Thanks very much indeed. Cheery-up. Bye-bye. Operator: This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.
Operator: Good day and a warm welcome to today's conference call of the PATRIZIA SE following the publication of the preliminary financial results of 2025. [Operator Instructions] Having said this, I hand over to PATRIZIA's Director, Investor Relations, Janina Rochell. Janina Rochell: Thank you, Sarah. Welcome, everyone, to our analyst and investor call for the full year 2025. This is Janina speaking and I'm pleased to have our CEO, Asoka Wohrmann; and our CFO, Martin Praum with us today. Asoka will start by presenting the highlights of the year 2025. Afterwards, Martin will guide you through our preliminary financial results for 2025 and provide an outlook for 2026. As mentioned by Sarah, the call will be followed by a Q&A session. During today's call, we will refer to our results presentation, which you can find on our website. If you have any questions, the IR team is more than happy to assist. As usual, this call will be recorded and made available on our website afterwards. We will also provide a call transcript for further reference. With that, I'd like to hand over to Asoka to start the presentation. Asoka, the floor is yours. Asoka Woehrmann: Thank you, Janina. Dear ladies and gentlemen, a warm welcome from my side as well. Let's start on Page 3 of the presentation. Our world is changing rapidly and uncertainty, volatility is the new geopolitical normal. The old world order based on the rule of law, open societies and free trade are facing existential threat. The new emerging world order is dominated by 3 major powers. The use of political and economic power to pursue national interest on a global scale is part of the new norm. And military conflict is back also on the agenda. In the light of the current global turbulences, investors are looking for safe havens of stability to protect their investments for the long term. We believe this is the right moment in the new cycle to invest in real assets in the right geographies. Why is that? Real asset investments offer strong long-term returns. And they are also an inflation hedge, provides stable cash flows while other asset classes are impacted by increased uncertainty. In this environment, the attractiveness of Europe as an investment destination becomes even more apparent. In addition, the stability of the euro supports investment performance for international capital. We believe this is the moment for Europe's awakening. Europe is a beacon of stability, offers unique investment opportunities. We, PATRIZIA, are well positioned to capture this shift, with deep expertise, strong local presence and proven track record and proven execution across resilient European real asset markets. That said, let's move to the next slide and take a look back at 2025. The first, let's talk about the market in 2025. After a weaker-than-expected 2025, we see that a new cycle has started. We believe this cycle is different to previous cycles. It will be a longer, slower and bumpier. Despite the current geopolitical turbulences, we are more optimistic than in previous years about the real asset industry. Market sentiment is already improving. Investors are becoming more optimistic. We see signs of stabilization with slightly improving valuations. Thus, we expect this recovery to gain stronger momentum in 2026. PATRIZIA remains well positioned for long-term growth, driven by the DUEL megatrends. These megatrends, digitalization, urbanization, energy transition and living transition continue to shape our economies and societies and we will continue to invest along the DUEL megatrends in 2026 and in the future. The creation of PATRIZIA's integrated investment platform, combined with strict cost discipline has made our business more resilient and less dependent on market-driven revenue streams. And you can see this very well in our earnings performance. Our profitability has significantly improved compared to last year. Importantly, this reflects a structural setup or step-up in our earnings profile. In 2025, our management fees fully covered by operating expenses for the first time. This means we can turn the market momentum into even stronger profitability in the new cycle. And this is an important step to strengthen our long-term profitability beyond 2026. We are seeing a clear upward trend in fundraising with higher equity raised in 2025 than in the prior 2 years. This demonstrates the growing investor appetite, renewed confidence in PATRIZIA's product offering and market position. Market -- the investment volumes gained momentum, reflecting a clear acceleration in transaction activity. This was fueled by our international business activities, underlying PATRIZIA's global footprint across real estate and infrastructure. With that, let's move on to the next slide. Let me briefly comment on our results for the financial year 2025, which we already published yesterday evening after markets closed. We significantly improved our EBITDA by 35%, up to EUR 63 million. We are improved or we also improved our EBITDA margin to close to 23%, well above last year's margin. Our earnings performance is a result of efficient operations, strict cost discipline and a stable portfolio. Our AUM remained almost stable at EUR 56 billion despite a slower and weaker market recovery and currency headwinds. On the positive side, we saw valuations improving gradually during the year. Let me now turn to our investment activity on the next slide. We already saw a small but encouraging increase in transaction activity in the second half of 2025. We signed more transactions and we also closed more transactions compared to last year. And PATRIZIA continued to be a clear net buyer in the market. We expect this positive momentum to continue in 2026. Valuations continue to improve. Transaction volumes are increasing. More clients are taking advantage of market opportunities in the new cycle, especially in real estate. And we believe this is the right moment to start investing in real estate again. That said, let me turn to our fundraising activity on the next slide. The increase of 22% in our equity raised compared to fiscal year 2024 shows the strong demand for real estate, especially in modern living but also in infrastructure. And our multi-manager platform, AIP, contributed to this positive development. The progress we are seeing in fundraising clearly support our long-term growth ambition. We continue to see strong demand for our DUEL-aligned investment strategies, particularly across our flagship products. Building on the progress we have seen in 2025, let me now turn to the market outlook for the coming year. Looking at the market sentiment for 2026, we see clear signs of improvement. Interest rates are expected to remain stable or trend lower. Inflation is also expected to stabilize. As we can see again, geopolitical uncertainty remains a factor and it will impact investment sentiment in different regions in a different way. Overall, this environment is expected to create structural tailwinds for us as PATRIZIA. The positive market development should lead to a higher equity raised and increased investment volumes. We continue to focus on targeted investment solutions across our key strategies, living, value-add and infrastructure. Living has been a strategic growth pillar for PATRIZIA for more than 40 years. We have a exceptional track record in living, both in our home market, Germany but also across Europe and recently also in Japan. Living will be a key investment focus for PATRIZIA in the new cycle as valuations improve and offer attractive long-term returns for our clients. And as we all know, housing, especially affordable housing is one of the most pressing challenges in our societies today. More than 23 households in Europe spent over 40% of their disposable income on housing and energy. But this challenge is also an opportunity and PATRIZIA wants to become a leading impact investor in Europe. We are currently building affordable homes for 7,500 people in Ireland, in the U.K., Spain and Belgium. Our ambition is to provide affordable housing for 40,000 people in the next couple of years across Europe. Likewise, infrastructure, remains a key investment focus for PATRIZIA in Europe and in Asia Pacific. Overall, we are well positioned to capture the opportunities in the new cycle. Thank you for your attention. I would now like to hand over to our CFO, Martin Praum. He will guide you through the fiscal year 2025 results and our outlook for 2026. Martin, please. Martin Praum: Thank you, Asoka, and welcome also from my side. Let's continue on Page 10 of the presentation. Let's have a look at the AUM development in 2025. As Asoka mentioned, virtually stable development. We've seen some good inflows in 2025, both in real estate and in infrastructure. But as Asoka mentioned, we've seen an increased transaction volume in the market and at PATRIZIA with inflows but also portfolio rotations and realizations. And this is a typical pattern for a market that recovers. It's time for asset allocation updates of our clients in the new cycle as the markets open up. We've seen valuation effects now turning slightly positive. This is also a sign for a market stabilization and improvement. And the real drag for our AUM this year were currency effect with minus EUR 0.7 billion, leading to the AUM of round about EUR 56 billion. Looking forward, at the same time, we still have open equity commitments that are available for investments of around EUR 1.3 billion waiting to be deployed in the market. Let's continue on Page 11 with the EBITDA composition. Key message here is, we've seen a strong increase in EBITDA to EUR 63 million, up 35%. And we've seen growth in management fees but market-driven revenues like transaction fees and performance fees were still down year-on-year, having bottomed out in this market cycle. So overall, total service fee income down 2% year-on-year. At the same time, our balance sheet investments had a higher return and had a higher contribution to our results. If you look at other income, then this has materially decreased to last year and is a reflection of a better earnings quality that we are delivering. Now if we look at total service fee income, around 90% of total service fee income and from fees are coming from recurring management fees. Let's move on to Page 12 with a little more details. I already talked about the management fee development. Transaction fees are still down because if you look at the transaction volume that we delivered, only a slight percentage of these transactions had a transaction fee arrangement attached. So this is why the higher transaction volume did not had an impact on the transaction fees. Performance fees are also slightly down year-on-year but this was in line with management's expectations. Let's have a look at the cost side on Page 13. You know that we actively adapted to the changed market environment over the last 3 years and we intensified our cost efficiency measures, which led to a significant improvement of the cost side. We see total costs down 10% year-on-year to around EUR 225 million, both driven by staff costs and other operating expenses. Now what have we achieved? We've made the platform more resilient to market cycles and we've increased the operating leverage once revenues come back in a more pronounced way. As an example of what this leads to, let's go to the next page on Page 14. Here, you'll see the split of management fees versus operating expenses. Key message here is that management fees alone for the first time, more than cover operating expenses. We've shown growth in EBITDA despite being at the bottom of the market in transaction and performance fees. Coming back, management fees as a most recurring item more than fully covering expenses. And this is a very good starting point for the next cycle and we think we're well positioned for growth in the new cycle, given we have a better resilience and we have a better scalability of the platform, increasing the operational leverage once revenues come back. Let's have a look at our segment reporting on the next page, on Page 15. You might remember, we described PATRIZIA as a 2-engine model. On the one hand, the asset-light investment management business and our balance sheet investments that we have deployed in strategic co-investments and seed investments. The asset-light part is up 29% in terms of EBITDA, again, driven by better efficiency of the platform. Balance sheet investments are slightly down year-on-year. But last year, we had an extraordinary positive effect. So underlyingly, also balance sheet investments have improved their contribution to our results. Consolidation and other effects are down materially year-on-year. So the negative effect has become smaller and this drives the overall 35% increase in EBITDA for PATRIZIA Group. Let's have a closer look at the balance sheet investments on Page 16. I think you are familiar with that graph showing our invested capital at cost and at fair value and the value that we have created over time with our balance sheet investments. We have used the market opportunity to also invest more in the real estate living sector and also in infrastructure in 2025. The positive long-term returns that are primarily driving the invested capital are certainly driven by living exposure that we have. And at the same time, we've seen foreign exchange positive valuation effects also on our balance sheet investments in 2025, again, a confirmation that the market is stabilizing and changing. If we now focus on the right pillar and the fair value capital of our real estate of around EUR 783 million, around 40% of that pillar are profit entitlements or you could call them exit carry entitlements, which we will harvest step by step in the next years. This will support our cash inflow by around EUR 50 million per annum and it's a sign that we actually crystallize the value that was created over the last 2 years to the benefit also of shareholders of the company. Let's have a look at the operating cash flow on Page 17. Also here, we've seen a significant improvement to last year. The operating cash flow is more than 4x the level we've seen in 2024. This was driven; a, by a better general profitability; secondly, more active working capital management; and thirdly, the quality of our income, which had a lower level of noncash items attached. The EUR 57.6 million more than cover our dividend payout for last year, which is around EUR 31 million. Also, if we look at the dividend payout in terms of net income, we have a net income after minorities of EUR 18 million this year. So on that basis, the dividend is not yet fully covered but we're on a clear path to have full coverage also on net income going forward. Let's move on to Page 18 of the presentation. Our own liquidity, our balance sheet liquidity has improved year-on-year to now EUR 175 million in total and EUR 115 million as available liquidity. The equity ratio was further strengthened to close to 74%. So we continue to run a solid and strong balance sheet and this will also be the backbone for our future activities. Let's go to Page 19 to look at the guidance for 2026. Asoka mentioned that the new cycle has started and it will be slower and bumpier but we see lots of signs for improvement and also lots of opportunities in the market. So while our people will work on growing equity raising, investments and AUM, we will continue to work on the further improvement of processes, of efficiencies and also the quality of EBITDA. And so basically, we expect a moderate improvement in the operating environment in terms of revenues and continued cost efficiency, driving our EBITDA up to a range of EUR 60 million to EUR 75 million. This would also have a positive impact subsequently on the EBITDA margin. In terms of AUM, we expect an increase to a range of EUR 55 billion to EUR 60 billion. Again, it is a relatively broad range depending on valuations of assets, organic growth but also as we've experienced on foreign exchange impact. Let's have a look at the dividend side of things on Page 20. We are proposing the eighth consecutive increase in dividends since we initiated payments in 2018. As I mentioned before, the dividend last year was covered 40% by net income. That has increased now to 53% coverage and we have a clear plan for full coverage going forward with as a next step based on our plans and guidance for this year, we would talk about depending on tax rate, coverage of over 70%. Don't forget, our operating cash flow is very, very strong. We have a very solid balance sheet to cover the dividend. And as a last statement, don't forget that this equals a dividend yield of around 4.6% at the moment and we will continue to deliver on the dividend policy that we've set in the past. With that, thank you for your attention. And now both Asoka and I are happy to take your questions. Operator: [Operator Instructions] And having said this, we will first start with Philipp Kaiser. So please go ahead with your questions. Philipp Kaiser: I have a couple of questions and I would like to go through them one by one, if I may, starting with the AUM. As far as I understood, you updated your AUM policy and now include also fee-generating commitments. Firstly, could you elaborate a bit more on this idea? And secondly, do you also adjust the 2024 numbers accordingly? Martin Praum: Thank you, Philipp. Yes, what we did is, we had a look at our AUM policy overall. And you might remember that our AUM policy should always be aligned to market standards and the industry standard. And as part of that, we updated the policy and included as many other players, the commitments where we already generate a fee. And this had a positive EUR 0.3 billion impact and we have highlighted that here and we'll make that very transparent also in the annual report. And we have not adjusted the previous year number. But again, given we mentioned the EUR 0.3 billion impact, you could adjust yourself in your model, if you like. Philipp Kaiser: Perfect. With regards to the AUM guidance, you mentioned earlier during the presentation that the investment market is slightly increasing and the market dynamics are improving. That said, your AUM guidance includes a downside scenario. What's the scenario for this case? Is it the macroeconomic upheaval we currently see or any other implications? Martin Praum: Yes. Thank you for the question, Philipp. It's actually just to cover for potential timing effects. I mentioned before, we are in a market phase where you also see portfolio rotation, where also investors might realize some performance. At the same time, we also want to cover for foreign exchange impacts. As you have seen, this had a relatively high impact on our AUM in 2025. And depending on AUM fluctuations, we just want to have a certain downside protection here in terms of the guidance range we're giving. But we would say you should focus on the midpoint. We expect further increase in equity raised in '26. We expect a modest increase in transaction activity. So organically, we are planning for growth in AUM. Philipp Kaiser: Okay. Perfect. Does the 2026 outlook exclude or include potential currency impacts? Martin Praum: The current outlook excludes -- I mean, it excludes currency impact. So we didn't make any specific currency assumptions in the planning. Philipp Kaiser: Okay. Perfect. Very, very helpful. And then let's move on to the operating cash flow. Cash flow improved significantly. So congrats to this development. And just for my understanding, the crystallization of the roughly EUR 50 million per annum Dawonia entitlement will further stabilize your operating cash flow in the coming years. Is that correct? Martin Praum: It is partially correct, Philipp, because it will come into the cash flow in the investing part of the cash flow, not the operating cash flow. Philipp Kaiser: Okay. Perfect. And then my last one with regards to net sales revenue and they were driven by rental income from warehoused assets. Will those assets stay on your balance sheet throughout the current fiscal year? Or do you have already concrete plans to transfer the entire assets or part of the assets into funds during the year? Martin Praum: No. If we look at the exposure we have here, we have assumed for the time being that they'll stay on the balance sheet for the year. If we see a market opening up in certain areas, there might be an exit earlier but assume in your model that they'll stay until the end of '26. And again, we'll see how the market develops. Philipp Kaiser: Perfect. Very helpful. Just one follow-up on the operating cash flow then. You already mentioned the 3 pillars, improved net profit, working capital management and other positive effects. Of the 2 -- last 2, how much could also accrue in 2026 of those positive effects? Martin Praum: Good question, Philipp. I think we've advanced already in our working capital management but there are still some fruits to be harvested. So I would expect at least a positive effect in the single-digit million euro area also in 2023 -- sorry, 2026, from more active working capital management. Operator: And then we will move on with the questions from Lars Vom-Cleff. Lars Vom Cleff: I would be interested in your growth aspirations. I mean, thank you for sharing the split of your '25 fundraising with us. Which asset classes do you expect to be strongest contributors to your growth this year? Will it be real estate or infrastructure again, or maybe AIP? Asoka Woehrmann: Look, thank you, Lars, for the question. Definitely, I can tell you without any doubt, real estate will be the -- the majority of assets will be generated this year along our expectations because as I outlined, affordable housing topic as well as value-add, living is the right macro moment for the long-term investors to harvest great returns. So therefore, I do think definitely, we are expecting this year living strategies to kick off where we have the best, in my opinion, track records, not because we have track records but I do think that's the right moment for the investors and that's the way we are advising also and have the conversations. But also, I think I can see, by the way, in logistic, in real estate area, the last mile logistic, this strategy will be -- will change. There is -- logistic become a very like RE-Infra, what we are calling convergence of real estate infrastructure because energy, how you building on logistics, the rooftop solar, battery techniques, charging stations, all that is, in my opinion, very much upcoming now in the demand of clients. And I do think this is a area what I'm really expecting to grow. But also, in my opinion, early signs that some value-add investors are on the street, are looking for, let me say that value-add opportunities in offices is not excludable. This year is the first time after 3.5 years, I would say, we can first time think is their interest. And then your question regarding infrastructure. I think, look, all the investment bills of these government bills, what they are now all announced that will come down mostly for infrastructure first, except of affordable housing or let me say, the bottleneck in housing in our societies. But I do think what we are seeing is all where we are today in the modern infrastructure, let me say, energy storage techniques or investments, roof sustainable energy, waste to -- energy to waste, all these strategies will be -- will come up now beside the very heating topic of data center. As you know, we entered last year into this consortium deal in the U.S. line data centers. By the way, we already capitalized and has been sold to a big asset manager and developer in the Middle East, very well get profited from that. I do think, we are expecting also, especially [ last ] in Asia, infrastructure to kick off. And I do think, especially last year, we can see we invested more than EUR 300 million in Philippines with partners, co-investment partners. I do think I am very, very positive on infrastructure in Asia. Also our new fund strategy, emerging market sustainable infrastructure strategy, what we are looking to place in Asia, what we are raising in a -- capital raising in a first round. We have a promising not only deal pipeline but also promising clients are coming in and have interest. So therefore, let me say, if you ask me, Asoka, what is exactly the portions, 50% to 70% in real estate, 30% in infrastructure, might be 10% in between and a little bit out of the infrastructure, I would say we can phrase that as a Re-Infra area. So this is a little bit the storyline what we are seeing in Europe as well as in Asia. Lars Vom Cleff: Crystal clear. And then I can't withstand to ask the question. And I think on the Q3 call, you said that illiquid assets would also look very attractive and that would -- you would be happy to elaborate on that in one of the following calls. Is today one of the following calls? Asoka Woehrmann: Yes. You asked the illiquid or liquid? Lars Vom Cleff: Illiquid. Asoka Woehrmann: Illiquid. Lars Vom Cleff: Illiquid. Yes. Asoka Woehrmann: Illiquid. Yes. We are in the illiquid. I have to say that illiquid assets, I do think to be honest, do not feel all -- we are all investors -- the gold is performing unbelievably well as fears of market participants are coming to a level decrease and also the world -- explosions in the market that people are going to protect theirself with these strategies. I think to be honest, nothing is, let me say, cash generating, no return generating. It is the time and also the correction from Bitcoins, all these nondigital currencies, this is a sign these areas are exhausted. I think gold will still get as a illiquid asset, by the way, illiquid asset for me because you have not the illiquidity, you can trade it every day. But again, it's not interest rate bearing. It's not interest rate generating. I think to be honest, if you have a stable grade in valuations, if you buy it today into real estate or infrastructure as a long-term investment, you had a fantastic returns front of you. I would take this part as a diversifier. So my conviction for illiquids, even now, not last time only I discussed, it is already I would say, if you not already look into that, you should. And that's the way we are advising. And we can see, by the way, more and more clients are looking into that. And I do think the geographies are not unimportant. Europe, people feel undervalued. And again, beside all the press releases talking down Europe, the unimportance of Europe compared to the 3 big players in the world with China, U.S. and in some way, Russia and some other ones. But I have to say I feel Europe is the right place to invest. Asia is the right place to play growth. And this is -- valuation-wise is a place to be, especially in the right sectors and the right place of growth and over returns is Asia. So in my opinion, we are in the right geographies and I do think -- I am very confident. And you know that I've been a long-time investor and a CIO in my former career. I have a very strong conviction Lars. Hopefully, it is now if you -- it's the right time. It's a macro moment, what I'm saying. This is a macro moment where you should -- it's -- most of our clients are shy sometimes to take risk. But I do think this is the right time to take risk in illiquids. Lars Vom Cleff: Perfect. And then you indicated increasing transaction activity. I guess, also listening to my real estate colleagues, it's something where momentum will build up over this year, right? It's starting but we should rather expect transactions to be a bit more back-end loaded this year. Asoka Woehrmann: You're right. I think the whole story of our industry is always back ended, back ended, back ended. I can't hear that anymore and I'm not also giving to any excuse to also to us. Yes, last year was a disappointment as Martin also -- already shown. We are transparent. I think, as you know, PATRIZIA has a fantastic transaction team around Europe and also in Asia in both asset classes. We can be, one point if you want, was a disappointment, not because our people are bad, there was a -- really the market has not played with us. You need to play -- you need a tango partner also in the market. Market were not the right tango partner for us. And I do think this year, I can see sizes are increasing. And the great thing is I feel that clients are asking, do you see now interesting transactions? Can you show us? Is there any good risk rewards you can show us? This is a good moment in my opinion. So is it still slow? As we are saying, this cycle is slower, bumpier. Is it very different from the last time? There is no, let me say, macroprudent policy supports in the sense of central banks are helping us, is more other way. But I do think this is what I'm seeing. I can see now the right time for all that to act and the transactions will -- we will see more transactions this year. And also more in -- by the way, in real estate because people, family offices, they're smaller tickets what I'm seeing and then the big packets -- packages. But you need deep pockets and a strong conviction and there's only very less players in the world can do these things. But I can see that it's coming. I'm confident. Lars Vom Cleff: Perfect. And then one last question, if I may. With business momentum picking up slightly and I love your picture of tango partners. What about new tango partners for you? We haven't seen some bolt-on M&A from you recently. So is there anything in the pipeline in order to speed up your assets under management growth? Asoka Woehrmann: Let me say that I'm always said bold acquisitions for lazy managers, we are not lazy. Lars Vom Cleff: I know you say that all the time. Asoka Woehrmann: That -- no, I'm saying that always, Lars. But I do think, joke aside, I think PATRIZIA has grown fantastically before I came in, unbelievable, they flew over the cycle, even with the great cycle, what we have seen, we go -- grew so exceptionally well. But this consolidation was needed and consolidate our platforms, creating global platforms, creating efficiency, as Martin said, there was a hard working of reorganization, platform building, all that. And we feel we are ready. Our core is stable. If you think about our balance sheet position, if you think about our operating business, how that improving, I am not shy to say that's a time to look around to partnerships, not only acquisition bolt-ons and all that. It is also partnerships. The world is going to build by partnerships. There's a big task there and big profit pools can be shared. I do think from that, I'm super confident with our resilience, what we have shown in the last 3 years. We've done our homework. We are showing what we -- again, you guys can all -- if you go back since what we are talking here, not promise too much that we're doing our efficiency work, that we are doing the cost cutting, we are doing the reshaping, we are putting our product shelf in the right to win in this cycle. All that is coming. We have a stable core now, resilient platform, great balance sheet. We are ready for all things, not only to build partnerships, bolt-ons, all that. It is -- is that fitting to us? It's great. But what I'm not going to agree to and with no one, not inside, outside, we are not buying because something is cheap and we are solving this problem, that they should solve theirself. If that fitting to our strategy is something what we are missing, we feel there's growth in, we are there. And we are looking. It is -- and your question is absolutely right and relevant. Many, many transaction has been offered to us. But good managers have to also say no, inside and outside and that's what we do. Operator: [Operator Instructions] Manuel Martin: Perfect. Manuel Martin from ODDO BHF. I have 2 questions from my side, if I may, please. Maybe one by one. First question is, as far as I understand, real estate might be the preferred -- one of the preferred asset classes this year, especially living strategies. When it comes to offices, maybe they're in value-add strategies that could be something. When it comes to offices, have you heard anything from your clients when it comes to the topic artificial intelligence and demand for office space, which might influence this asset class. I don't know if you have some insights to share here. Asoka Woehrmann: Yes. I think, look, PATRIZIA has a really a great portfolio in -- especially in Europe, not mostly, I can tell that in Europe, offices. We ourselves, I don't know if you have the chance ever to visit us physically. We are creating over 5 years since before COVID but also during the COVID and up to now, the real showcases how to invest in offices. We spent quite much money. I want to invite you, for example, to visit also our London office in London, in our international hub in London that just won by the way, PROP awards. And let me say that your AI question is a very valid one. I would not say AI but I think today, there's 3 things in offices are relevant. Beside now risk classes. It is important that you make your offices attractive for your employers. This is relevant because the home office tendencies has killed the offices, mostly if you think about U.S. and New York and the big cities. Europe is also very much impacted. The second -- what has led -- that has led to reduce offices because people only reduce the place, let's say, space to reduce costs. What we've done, we upgrade our offices. We are showing that our employees have a incentive to come over. There is a more, let me say, not only a brutal desk, there's areas to sit together, communicate, to build kind of community within the offices. I really invite you our Frankfurt office soonly in Augsburg and also in London, especially but also other places like Hamburg, what we have and especially in Europe. And again, that is one effect that has negatively impacted. But at the same time and you have to give a answer to employer and give a incentive to come back to offices that they like to work with -- and that's relevant in my opinion. You can command like in the U.S., the CEOs, we have also 3-2 rule, 3 days in the office, 2 days home with agreement within your -- with your teams. But again, at the same time, you can't command. You must give the incentive. So that's the first thing. And that means officers have to change in their conceptional setting. That's the one thing. The second thing is, in my view, is especially the digital sphere and what you are saying. Today, the tech part is absolutely relevant. We've shown our -- and that's -- that -- the London office won the PROP Award in 2025 in the U.K. as the best office building, let me say, turning into a office story that has really worked well. Tech played a key role there, key role. And I think this is relevant. AI is something different for me. AI is also now it's -- is coming to our big decision-making spaces but also back and middle offices. We are in the full of the process to use AI to become efficient, become modern, become time to market, become -- make us better also in reporting and reporting standards for our clients. And this is helping us and to enrich our people. And I think the efficiency win is something is front of us now, all that. So I would say that's not necessarily combined with the offices that you can -- this is -- but I think offices will play absolutely a new story, how they get structured. How important -- and I think, by the way, the real factor is also ESG that means the offices have to -- in the refurbishment have to follow special standards, all that. It's why the office market, you have to enter into a value-add area, not -- you can't -- I think, to be honest, as a core asset is at the moment difficult. And by the way, in the last remark, you have to be in core centers of cities. And that's what we have. Mostly if you are in the C areas, I think then the mixed-use is might be option to come out of that, but. That takes time, that takes resources that reduce your returns at the beginning and might be you are avoiding a stranded asset. Martin Praum: And if I can add to that, Asoka. Manuel, I want to second what Asoka just said, I would say that AI will have the first real impact, especially on process-driven work and on back-office work. And these are typically in secondary locations due to cost optimization and outsourcing and these locations will be impacted first. The human intelligence and the decision-makers, the analytical part of our work will want to continue to work in A locations in urban areas. And in our view, AI will actually intensify the flight to quality to A locations in the office sector. Manuel Martin: Yes, sounds logical. Sounds really logical. My second question and last question would be on -- again, on the clients and the macro environment. In your opinion, what is holding back the clients? They are still a bit shy as some people say? Is it that the prices are not yet at the correct level? Or is it the interest rates, which is shaky? What would be the start button in the sports car to let you drive again at high speed? Asoka Woehrmann: Yes, yes, it's also a great question. I think there's 2 -- I think let me say also 3 factors. First, don't forget -- we are forgetting and we are great market people. That's why we are always fascinated about markets. And -- but one thing we should not forget before COVID or during the COVID, the first 1.5 years, we have seen extremely low or negative interest rates. And people have been exposed, overexposed into illiquid to hunt a return, to withstand the negative rates and have long-term returns. And we've done, by the way, in this context some late cycle investments. That is not playing out well for them. And they have to take a long breath on that to solve out of -- they need solutions get out of their portfolio. But at the same time now, the sudden -- let me say that '22, '23 is a sudden death of illiquids. As Lars discussed earlier, I'm mentioning, I think there was a sudden death of illiquids. People don't want to invest and people want to go now all, more or less all their liquidity, the pension funds, the lifers, the -- also even sovereign wealth funds, they want to be in fixed income. They are the most favorite asset class, other fixed income and private credit. And now also with the inflation moderated and I think to be honest, also I would not -- I would really -- if I look the sovereign debt explosion in the world, all the AAA status, A and AAs, I'm questioning this ballooning of debt, if that's sustainable. And that means, by the way, that's -- the only good thing is that will lead us to a longer expectation -- long-term expectation that the rates have to be very low, not to overburden the fiscals -- fiscal budgets of states. So saying that fixed income was the most favorite asset class, still the favorite asset class, corporates, private debt, government bonds and there is other institutional factors in Europe. I think to be honest, the central banks and regulators with the solvencies and all that, also our -- we are mostly institutional clients. We have been in long-term bonds and that is underwater. So their risk limits to go into illiquids also low. So saying that all, at the moment, what is holding back, you're asking me. But what they can't hold any more back is because I think they want to be at one day now real assets. They are seeing the attractive risk returns in the value-add and core plus because at the moment, that is the easiest to say and that is nothing marketing you get for core plus risk, or let me say, core plus risk, value-add returns. This is exactly what a asset manager like us have to deliver asymmetric risk return profiles. That is, by the way, has not existed earlier. This is now. And also, I think if the office area also revalued stronger, I think U.S. happened and it's still not settled 100%. Europe are all devaluations are happening slower. If that is certainty there, people will go with both hands into these areas. And that's what I'm seeing. That is upcoming, starting with living, starting with also, in my opinion, kind of logistic. There is some retail portfolios underway in the market, all that giving you opportunities. So in my view, let us -- we have -- I'm patient in general but I do think I have the conviction the matrix for illiquids are going to change over the next 2 years. And that's where my hope is coming. Martin Praum: If I may add to that, Manuel, exactly what Asoka said, the market first had to digest the relative overallocation of real estate at the peak of the cycle. Then now the market has repriced. The expectations, I think, have changed and the market becomes more transparent with more transaction volume. The world seemed brighter in many other areas than Europe for quite a while. And now we have a reallocation and rotation back to Europe. And the refocus on generating cash flows, generating recurring income is also one thing that we think will drive investors and will kind of break up this situation where investors were hesitant to invest in real assets. Asoka Woehrmann: 100%. Manuel Martin: Okay. And where are we more or less, so the digestion might still hold on a little bit and then maybe people can move more freely? Or where do you think where we are right now? Martin Praum: I mean it's been a process really for 3, 4 years. And you know that we haven't seen a V-shaped recovery in the market. It was all slower and as Asoka said, bumpier. And when we talk to our clients and simply, we derive that from the feedback we get from our clients. They are more open to talk about real estate investments again. They are more open to talk about infrastructure. For some of them, the regulatory environment has also eased and changed. They have more flexibility to invest in infrastructure. And all these, if you put all that together, are signs and are confirmed in the way we discuss with our clients that there's a regained interest in the sector. Asoka Woehrmann: If you need also in a picture, again, we are not 5:00 in the investment clock, we are at 7:00. We passed the 6:00, trough is behind us. So that's important. And that's what long-term investors are seeing and that's why we are -- they are earning money. And with these views, are now coming more and more. And I do think Martin said a very important thing. The transaction makes the valuations visible for investors. That gives the confidence also. If you are doing in the [indiscernible] transaction, you don't know if that's still 5:00 or 7:00. It's important. Manuel Martin: Okay. Okay, I will try to put the clock in my office. Okay. That's a good example. Operator: Thank you so much for your questions. So in the meantime, we did receive not any further questions or virtual hands. So everything seems to be answered by now. Should further questions arise later, please get invited to get in touch with Janina and her team at any time. So thank you very much. And with this, I hand back to Martin for some final remarks, which concludes our call for today. Martin Praum: Yes. Thanks so much for your attention. Thanks so much for your very good questions. And we are very happy to continue the discussion both on IR team level and also during the next conferences that we have planned, for example, one in London and then there will be other venues where we have the ability to discuss our financials and the strategy. Stay healthy and speak soon. Thank you, everyone.
Nicolaas Muller: Good morning to everyone. Welcome here to all those present, the investment community, our own Implats people and for everyone who's dialed in as well, welcome. Always an honor to represent a very talented Implats team. Extraordinary times that we are living in. We had a presentation from one of the consulting firms the other day, and it was very clear that we are going through a shift in global order. It's a new era that is being introduced. We're seeing changes in international relationships, institutions, NATO, trade paths are changing, supply chains are changing. The move from globalization to multipolarity is accelerating. We just recently this weekend seen a new event unfold in the Middle East. And so all of this creates a number of consequences, one of which is uncertainty in future supply, particularly in natural resources and in our case, critical minerals and metals. And critical can be defined in many ways. But one is, if it's used in critical industries like in Europe, the auto industry is a very important employer. It affects politics. And so without our metals, there is a risk for the industry. But then also our concentrated supply globally with 80% of the world's PGMs being produced from Southern Africa and the uniqueness of our metals, as has been said many times over the past. And so given these pressures and the uncertainty in supply chains, where will this metal come from in the past, there's a major topic of critical minerals and the hoarding of that, we've seen, as an example, the $12 billion evolve program announced by the U.S. We certainly are having similar discussions with other jurisdictions or representatives of industry in other jurisdictions where similar concerns are being echoed where there's an engagement to determine the extent to which relationships can be formed to provide security for long-term supply. In addition to that, we've seen the flow out of the U.S. dollar towards hard assets such as gold. We've seen record gold prices and other precious metals like platinum has now followed suit. So that has in part been the driving force behind the extraordinary rise of the PGM dollar prices. On top of that, if you look at the market fundamentals, we do see continual downward revisions in the EV penetration rates. We have witnessed in recent times a shift in priority in decarbonization in general, particularly in the U.S. But we have seen relaxation in terms of expectations of where the world wants to be in terms of, for instance, the percentage of fleet contribution of electric vehicles by certain dates 2030 and 2035. And so that has resulted in an increase in demand for our metals. We have seen an increase in demand from Chinese jewelry and certain industrial customers as well. On the other side, we do have certain supply risks being acknowledged by the market. We have not seen the historical levels of investment in future supply. I had occasion to sit with the four CEOs -- the other four CEOs of PGMs. And even in February, we were unanimous that it's not the right time to consider large-scale greenfield capital projects at this stage. And so if you look at the global order shift in world uncertainty combined with shifts in the fundamental markets that has given cause to the increase in -- sorry, on the wrong slide, metal prices. As a consequence of where -- of the nature of the major forces, it is our contention that the price support that we're currently seeing is not a short-term one. This is not as a consequence of Donald Trump. It's the Trump effect. It will outlast the current administration. It's not reliant on who wins the next election. It's uncertainty -- once you've asked these questions, those questions remain relevant and you have to organize your country, your region very differently for a generation to follow. So it is our belief that this current upswing in prices will remain longer than has been the case in the past where we saw relatively short summers following very long winters. And so if you look at our results, it's dominated by two major points. One, the production performance, both at mine operational level as well as in the processing division and what we sold, it's more or less in line broadly. I mean, as I said in the video, if you look at all of those numbers, it's like 0% or plus 1% is around about there. So that's the one thing. The business has been in good hands. We have navigated through this period in a very stable fashion. The one red flag that we need to be cautious of is the increase in operating costs. Our unit cost increased by 11%. There are reasons for that, that will be addressed by Meroonisha and our COO, but it is something that we have to be aware of. So I think cost management is something that we have to take into consideration and the operating cost specifically. And then, of course, the other dominant factor has been this 40% increase in the rand basket price. And if you look through all of the financials, the entire industry is looking a lot more attractive than what it did in the previous period. Given the fact that we are where we are in terms of metal prices and then increase in EBITDA and revenue and cash flow, it does provide us with a really important opportunity, and that is to change our strategic focus in the company. During the lean years, we are very defensive. We focus on cost control, capital management. We even go as far as organizing or reorganizing labor and even do things like portfolio reviews to understand or to have a strategy if there is a further decline in prices. So at the bottom, that talks about an inflection point. So if I look at where the company is positioned now, the focus is different. We now have the opportunity to focus on how to strengthen the company. And our opportunities, there's like a funnel of a pipeline of opportunities, starting off at the most basic level, Patrick and his team with the support of Meroonisha and the rest of the executive have already implemented through Board support a number of early action programs to initiate life extension projects. They've occurred at -- two Rivers, at Marula, at some of the shafts at Rustenburg. One of them has already been converted to a fully fledged capital application that was approved, and that's at 14 Shaft for roughly ZAR 1 billion. And that will provide us with life extension project. I am very confident that some of these other early works programs that were initiated will result in approval of additional capital. And based on Patrick's information, roughly, we will look at a 3-year extension to our current steady-state 3.5 million ounces per year production profile. Thereafter, we will require additional initiatives. So that's the one part. The second part is that we do believe that there is room for optimizing of the industry through various actions. One, there is the sharing of infrastructure. We are constrained at the moment with our processing capacity, and we have excess ounces. But in future, I mean we do see a declining production profile. So that will open up some processing capacity to share in the industry. And we do believe it's critically important for Southern Africa to protect local beneficiation of the metals. And so I think that the opportunity to do so will increase as we go forward. Then there are the normal cross-boundary opportunities that always exist. And I can think about a few, but let me just raise one. And I'm not -- please don't interpret this as me announcing any action. I'm just saying one of the areas that we have battled with in the industry is the Eastern Limb as an example. So if you reimagine what the Eastern Limb could look like if it's operating as a greater unit, I think you can share concentrator capacity with mining capacity, but it will provide you with better muscle to create a more attractive area to get skill better -- a better range of skills in the area and to do better at your socioeconomic contribution to increase the license to operate. So I think there is an opportunity. If I look at Zim, there are a number of emergent producers, GDI, Karo's and so on. So I think that there is an opportunity not only for Implats, but for the industry to reimagine how it operates and to optimize to increase further efficiencies as an industry. And I do think Implats is very well positioned. I mean, we are represented in all the major producing -- PGM producing areas other than Russia. So I mean, we are in South Africa, Western Limb, Northern Limb, Eastern Limb, as well as in the Great Dyke as well as North America. So I do think that we're very well positioned. We do have a good track record in constructive partnerships, toll arrangements, joint ventures. We have been operating in Africa where we focus on long-term strategic relationships. So that's something that we think is quite valuable in considering future options. And then I mean, we can ask more questions about it, but then there would be the questions about greenfields, the Waterberg and the big other thing. As I said earlier, we remain cautious about introducing major new ounces to the market at this point. So we do not expect to make any announcements about that soon. On that note, I would like to hand over to our esteemed COO, Mr. Patrick Morutlwa. Patrick Morutlwa: Thank you, Nico. Yes. Good morning, everyone. It's really a privilege for me to present our group results. And I'll start with safety, health and environment, which underpins everything we do in our group. So for the past 18 months, we have been implementing our 8-point safety plan. And I'm glad to say it is starting to deliver a step change in safety that we've actually envisaged. And this is seen in some of the milestones we've achieved for the period. Our mining and processing division for the first time for the period actually went fatal-free. Similarly, so Rustenburg, one of our biggest operations achieved 5 million without the free shift in the period. And also, if you look at our key risks: fall of ground, winches and machinery, we saw a 12% reduction in injuries, which is all symbolizing and strengthening of career controls in those areas. So while we are building on this momentum, we are equally humbled and also grounded because of the two losses of life we incurred, one in the period and one post the period. So we are reflecting, we are learning, and we will be taking these lessons to make sure that we implement no repeat solutions. So we don't repeat this type of incidents. On the environmental side, our ESG programs continue to receive global recognition. As you've seen in the video, for the fifth year running, we have been included in S&P's Sustainability Yearbook. And during all the same period, you have seen that we have not recorded any Level 3 to Level 5 environmental incident. So we operate sustainably because this is the way we express our values of care, respect and deliver. And lastly, on the health side, also our health programs continue to deliver positive results. Our HIV and TB prevalence are well below the national averages. So the next thing for us for health really is to focus on mental health and psychological health of our employees because healthy employees are engaged, they are safe, but they are also productive. Then moving over to production. We have actually delivered a steady and consistent production, which was really buoyed by second quarter, which was much stronger than the first half. So what you also see that this has happened despite three of our operations having some serious strategic shift. At Marula, we focus on development. At Canada, we continue with the high-grade strategy as previously communicated. And lastly, Rustenburg 3 of our shafts are nearing end of the economic life. So we had to deal with labor movement in those shafts. So going forward, in terms of processing, we also have seen strong performance. And this is also on the back of the work we have done. We have upgraded our BMR at Springs, and we have also done some design and maintenance work in Rustenburg furnaces. So you will see that for our BMR, we have actually a record milling and also for this period, Rustenburg smelter performed very well above budget. And as a result, we were able to release 20,000 ounces of excess inventory. Usually, our release is gravitated towards H2. But because of this good work, we are able to release 20,000 ounces. Our furnace 4 have gone down for maintenance way ahead of schedule. We should be able to restart now in April. And as a result, very confident to release 100,000 of excess inventory as promised at the start of the year. As Nico spoke about the cost, we were about 5.5% above the mine inflation. This was a decision to strategically invest in our infrastructure, particularly some conveyor belt in Zimplats and also improving our maintenance fleet across the group. This will set us well for the future to make sure that we can maintain the current production, but we also deliver into the future expectations. So as I stand here, I can safely say we will meet our guidance on production, on cost and capital for the year. Thank you very much, and I'll hand over to Meroonisha. Meroonisha Kerber: Thank you, Patrick. And I'm checking the time still good morning, everyone. So clearly, the steady operational performance that you've seen enabled us to fully benefit from the 40% improvement in pricing. Let me just get there. Okay. So you'll see EBITDA up at ZAR 18.1 billion, headline earnings, ZAR 9.3 billion. But I think what is noteworthy is that we did not have any unusual non-recurring items in our earnings for the period. As Patrick and Nico spoke about, given the improved pricing and profitability, we were allowed to reinvest in the business. So you'll see some of that in our unit costs, where we took the opportunity with the improved cash flow to spend more on infrastructure and maintenance. And of course, some of that contributed to the 11% increase that you've seen. If you -- and that is particularly at two of our biggest operations, our Rustenburg operations and Zimplats. If you look at free cash flow for the period, we generated significant -- there was a significant improvement from ZAR 600 million in the previous year, up to ZAR 7 billion. And this was driven largely by the improved profitability, but some of this was offset by the buildup in working capital. I think what's important to note is that at the end of the period, there was an additional tax payment that was due of ZAR 1.4 billion, and we made this payment in January, and it basically was a top-up to our provisional tax. If you recall, there was quite a steep increase in prices in the month of December. And clearly, we worked our forecast that were done in November that didn't fully take into consideration the rapid improvement in pricing. If you look at the balance sheet, we used the opportunity of the improved free cash flow to repay some debt. So we repaid about ZAR 800 million worth of debt, mostly at Zimplats, and our gross debt declined from ZAR 1.8 billion down to ZAR 1 billion. Another very important thing we did in the period was our group revolving credit facility was almost -- I think it would have expired now in February. So we took the opportunity to refinance it in quarter 2. And basically, we upsized it from the -- just under ZAR 8 billion to ZAR 14 billion, and we managed to do this on very competitive terms. The new revolving credit facility is valid for -- well, extends for 3 years, and we've got two -- the reason that I mentioned the RCF is we've made some changes to our disclosure on net cash. So in line with the new RCF, we amended the disclosure and definition of net cash to align to the RCF. What this meant is that, we now exclude the deferred revenue from the gold stream from the net cash balance, but also we are not now including the cash held at Zimplats in local currency in our cash balance. And that really is because of the fact that, that currency is not -- you cannot use it outside of Zimbabwe. So on this basis, our net cash got adjusted -- our net cash increased from ZAR 8.1 billion to ZAR 12.1 billion. And with the undrawn revolving credit facility of ZAR 14 billion, we closed the year with headroom of just -- liquidity headroom of just under ZAR 29 billion. I think before I go on to the next slide, I just want to point out a few things. If I look forward, I think the company is really well poised to take advantage of the favorable metal price environment. And there's a few factors that I would like to highlight. Firstly, you've seen sustained operational delivery, and I have no doubt that the team will continue to deliver into H2. We have got a track record of good cost discipline, and it is something that will receive focus. But that -- but I think our teams will deliver on keeping the cost tight. Our capital intensity has normalized, but we've got the ability and the capacity to further strengthen the business and invest in progressing our life of mine projects. And I think the other point, which is very important, is that we have expanded processing capacity and the excess inventory. And I don't think we must underestimate the flexibility this gives us to manage any operational challenges that we might have along the way, and it does support free cash flow generation. If I can then move on to capital allocation. So after repaying about ZAR 800 million worth of debt and making provision for the ZAR 1.4 billion tax payment, the Board declared a dividend of ZAR 4.10 per share or ZAR 3.7 billion. This represents a free cash -- sorry, a payout ratio of 60%, about 60% of adjusted free cash flow, which is double our minimum policy. And if you take into consideration the tax payment that was due, it's about 80% of the available free cash flow. As a result of, obviously, prior capital allocation decisions as well as completing a number of our strategic projects, there was limited capital that was allocated to growth and investment. I think what the capital allocation should demonstrate is that overall, we have maintained our disciplined and consistent approach to capital allocation, and we have prioritized returns to shareholders. Lastly, as Patrick has alluded to, we will obviously end with the market guidance. We're very pleased that we keep our guidance intact. And I believe given where the business is, we are well on track to deliver within this guidance. So with that, I'd like to hand over to Johan. Johan Theron: All right. Thanks to the team. Happy to take some questions as normal. I think let's start in the room. There will be some roving mics. We will pass that along. Just for the benefit of people that might not see on the screen or the camera, just start just to raise your name, just so that everybody knows who's asking the question. We've got a couple of hands up here. Chris, let's start there with you. Christopher Nicholson: It's Chris Nicholson from RMB Morgan Stanley. A couple of questions, if I may. So you've provided a fairly optimistic outlook on the pricing environment. Maybe a bit of a surprise that you didn't accelerate, maybe some of the capital projects to the same extent. So here you're doing some early work. Could you maybe give us further details specifically on Marula? Is this akin to what was previously known as Phase 2? And what type of mine life extension you're looking to get there? Similarly at Impala Rustenburg, 14 Shaft and some of the other extensions, how long are you looking to extend mine life by there? And then kind of linked to that, should we expect ZAR 9 billion of CapEx going forward? Is that a good level into these prices? And then just second question, again, optimistic price outlook. I think some might be slightly disappointed with the dividend. You've seen another 2 months of very strong prices since year-end. Just thought process as to why you need to hold too much cash on balance sheet again. Nicolaas Muller: Okay. I think, Pat, if you don't mind. The first question is about the life mine extension projects, the specifics and that's what they are going to cost and the expected life extension. Patrick Morutlwa: Yes. Let me start first with Rustenberg. As Nico said, we have already approved 14 Shaft extension. It is taking the existing decline into the 18 shaft area. It will give us 4 additional years, which will maintain the current production for another 4 years. It is about ZAR 877 million. The early capital was approved the last quarter, so work is continuing there. Then again, there, we have Rustenberg 20 shaft, where we're now taking 20 shaft into the Styldrift ground. So that work, we're still validating the feasibility study. It should be coming to the board somewhere in August. So I cannot share the numbers now, but it will also extend life approximately 5 to 6 years there. Then the last one is BRPM North shaft, is just taking the existing decline further. So that one, it will give us a much more long life, anything between 10 and 15 years. And again, there early capital approved, so we're executing the final capital numbers not yet finalized. Then moving over to Marula. Marula Phase 2 was closed given that at the time we executing that project, the price did climate. So as part of cost preservation, we did stop that. But now with the new prices, we have restarted the work, approved ZAR 40 million of early capital. So it's not going to be the same as Phase 2. So we're actually doing small chunks. So this project is now divided in four phases. Phase 1 is taking the 11 shaft 2 level down, and there will be a big chunk of capital to secure infrastructure then further chunks of capital to take both Driekop and Clapham down. So we have designed in such a way that we've got proper off ramps through the price plan, we should be able to stop. So the first phase, I spoke about should give us additional 5 to 6 years on top of the existing 6-year life left at Marula. So that's more or less high level on this project that we have undertaken. Nicolaas Muller: And Patrick, the ZAR 9 billion capital, is that a fair expectation or... Patrick Morutlwa: All right. Thank you for that. So you remember, we gave you between ZAR 8 billion and ZAR 9 billion. With this bolt-on project, you can add a maximum ZAR 2 billion. So I think it makes ZAR 10.5 billion, because we will start very slow and just ramp up a bit. But I don't see it going beyond ZAR 11 billion, really. Nicolaas Muller: Chris, I want to -- sorry, I just want to add -- actually, maybe repeat Patrick's words, but in a different form because you asked is it Phase 2? And he said, no. I think it is. But the application of how we get there is different. In fact, the first time we did, we had a ZAR 5.5 billion single project and we had agreed off-ramp points whereas this time, we are saying there's no single ZAR 5.5 billion project. There are going to be a sequence of smaller projects. And so we will have like a consolidated assessment for the entire thing, which will be based on the valuation, but the implementation will have to meet certain performance hurdles as we go along for the next phase to be implemented. So essentially, it's Phase 2 wrapping different color. Patrick Morutlwa: And if I may just add one thing. Nico earlier said that with this project, they will push the 3.5 million ounces back out another 3 years. In addition to that, the old profile within 10 years' time, if we did nothing, we're going to lose 50% of our production. Now this project have also helped to slow down the decline. So within the same 10 years, if we do all this project, we will only be dropping by 15%. So they do actually extend life and the angle of decline. Nicolaas Muller: And sorry, I'm again butting in. But I think Tim will kill us if we don't talk about Canada because I really think that there's an opportunity there. I mean, we have already extended the life to April '27. But the technical team at Impala Canada is working on a novel technology for us in the group, which is called dry tailings, which makes use of the filtered tailing plant, which enables you to essentially to dry out the tailings and place that on existing tailings dams as opposed to creating a new greenfield tailing dam, which requires new licensing and permits and so forth. I mean the capital expenditure is quite intense, but that will provide Canada with not an incremental 1 year time life, but that will enable us to take a longer position subject to the palladium price remaining at above $1,600 or something like that. And then we haven't quite spoken about Mimosa. I mean, there's a few things to resolve in Zim specifically, but there is still the opportunity to consider some form of North Hill extension to life at Mimosa, which currently we're not speaking to because it's not currently in the works. It's being evaluated and we've got a partner that we need to consult them on that and so forth. Meroonisha Kerber: Sorry, the question on the cash. So I think there were two parts to it. So the one was around why the ZAR 10 billion and the other one was about the cash that we've made since year-end. So let me address the second part of it first. I mean our policy, and we've consistently applied it is when we look at the dividend, it's on the cash that was made in the 6-month period. So you can -- if you look at the trajectory of the price, you'll see December, we had the rapid increase and then January, February, we've enjoyed these very, very high prices. Also, you've got to take into consideration we have contracts that -- a lot of contractual sales, and we've obviously got the lag in the contractual sales. So that increase in December only really will flow through mostly in the second half of the year. So to the extent that, that flows through in the second half, that will be part of the free cash flow for the second half and it becomes available for distribution per our capital allocation framework in the next 6 months. And maybe just to add to that point is that if you just look forward at our capital allocation, there's a little bit of work to be done on the balance sheet, not a lot of debt. So even if we want to do it, it's not going to take a lot of capital. There's -- Patrick and Nico have talked about our life of mine extensions, but there's no greenfield projects that we're looking at. So there should be a fair -- all of that profitability should be available for distribution in the at the year-end. The second question was really around the ZAR 10 billion and why the ZAR 10 billion. So I mean, it's like running your bank account. Nobody wants to run on an overdraft. So here, what we do is we look at -- so what is the liquidity that we need for the group. And remember, we've got entities in different jurisdictions at different currencies. And so the view that we have is that all of our operations should be able to pay -- settle its working capital and be able to operate for 1 month without resorting to borrowing of money. And so, that's how we get to the ZAR 10 billion. And you can imagine that there's timing differences between sales, et cetera. And with IRS, there are big payments that need to be made. So we need to be able to hold enough money in the required currencies in the required jurisdictions to be able to manage all of the timing. So that really is how we -- there's no other signs to how we get to the ZAR 10 billion. Gerhard Engelbrecht: Gerhard Engelbrecht, Absa. Chris has asked the questions. So I'm not going to flog that horse any longer. Can you maybe give us an idea of any near future furnace maintenance projects, shutdowns that you have on the cards? Johan Theron: Adele is here, if she wants to speak to that. Nicolaas Muller: That's a good idea. Where's Adele? If she's at the back, you can perhaps just pass her the mic. Johan Theron: Adele, come stand quickly here in front of me. Adelle Coetzee: Good afternoon. Thank you for that question. Yes, we have furnace maintenance, furnace scheduling going on as per our normal maintenance philosophies and structures. And obviously, to make sure that our infrastructure is sustainable going forward. As Patrick already mentioned, we have #4 furnace that is currently in rebuild that we hope to get power on that furnace very soon. Also on schedule as what was planned. We also will be having at our Zimplats operation in the coming year, not in the next 6 months, in our new year, we will be doing our end walls also as per our internal maintenance strategic plan. And then going forward, as everyone should be knowing by, should know by now, we are planning the rebuild of our future furnace. And we will commence with our rebuild, our new design in Rustenburg come July 2027. And that will be on the furnace #5. Hopefully, that is answering the questions. Thank you. Johan Theron: Adele, just to put a final point on it. It's fair to say that we're back to normal furnace maintenance. The interventions are all behind us now. Nicolaas Muller: Sorry, Johan, if I can just add, as I do, just one more point to that. Historically, if we went into furnace rebuilds, we would have accumulated additional stock. So, the historical work that has been done on expanding the smelter capacity as well as the 10% expansion of our base metal refinery results in current capacity that prevents the buildup of stock. That's why, I mean, we've only released 20,000 ounces of the committed, I think it was. Johan Theron: 110,000 ounces. Nicolaas Muller: Yes. 110,000 ounces. 110,000 ounces is what we committed to the market. I see that's changed to 100,000 ounces only. I think we are on track, notwithstanding the maintenance on the smelter to release 110,000 ounces for the year. I think that is quite newsworthy. And also, I mean, as Adele, you didn't mention on the -- sorry, I'm expanding. But in base metal refinery, we have achieved record milling rates again, which prevents us from having to build up stock in front of the BMR. So the investments that we've made over the past three or four years has really paid off. Sorry, Johan. Johan Theron: No, all good. One more question, Arnold. After Arnold, I will given opportunity on Chorus Call. So if you're on Chorus Call, you can queue yourselves along, and then we'll move to Chorus Call after Arnold's question. Arnold Van Graan: It's Arnold Van Graan from Nedbank. Just want to go back to your capital projects which you're doing in phases. Look, I welcome that because the last thing we want is everyone jumping in and just bringing on excess capacity. But my question is, how efficient is it doing these projects piecemeal as opposed to the big projects? And what I'm thinking about is further down the line where you then ultimately will have to in any way do the whole thing. My concern is that interim, it creates inefficiencies in the system. And we're already looking at your cost number. You alluded to that it's -- it's under pressure. So, yes, how do you manage that? What is different? Why did you previously want to do all of it in one go, and now you're doing it in phases other than the balance sheet impact? Nicolaas Muller: So firstly, you can also contribute. So, you are 100% correct. I mean, I was just saying if you have got a 5-year mining contract, you can do that once, if you do it, break it up into different parts, you've got slightly establishment costs and all of that. I mean, I think that there are ways to mitigate that to ensure that the different phases are dovetailed. But there are performance conditions to the continuation. And that's where -- I mean, we need to see an improved Marula. I mean, Marula even at current prices, if I look at the cash contribution of Marula, it is -- if I have to be honest, it's below expectation. And so we want to incentivize ourselves and the operation and the project by making sure that the financial valuation on which these things are premised is, in fact, met. And so I am 100% convinced with all of the additional face length that is being created and the improvements in the infrastructure, we are going to get to a stronger position of confidence with Marula. But at the moment, we think in spite of the potential cost inefficiencies, it is better for us to have a cautious approach to investing large sums of capital in the projects that really requires some improved operating performance and project execution performance. Patrick Morutlwa: Yes. I think the only thing I can add, Nico, is that, I mean, as you said, that we do the evaluation of this project, the whole project. But then we divide into critical milestone to open all reserves, but also that milestone #1 should be able to pay for milestone #2. But also, again, like I said earlier, these are off ramps. So should the price plummet, you have not committed cash and have a lot of unfinished bits and pieces, because that's exactly what caught us the last time. So we want to make sure that when the price plummets, we've actually delivered phase then that can take the mine further. So it's literally just make sure that we don't commit cash all over and when the price plan is, we have got a lot of unfinished bits and pieces. Johan Theron: As high as you can. Nicolaas Muller: Yes. And one small last consideration, Marula has the option if we can navigate through farm boundaries of extending laterally. So we have just not been successful in achieving those agreements to the extent that we can. That will be a far more efficient capital investment per ounce generated, so we are hoping that between now and final execution at some point that we have an opportunity to settle on some of that potential and that will then typically replace some of the deepening as an interim and shift Phase 2 later components further down the path. Johan Theron: Okay. I'm going to queue to Chorus Call. I can see there's one question on Chorus Call. So I'm going to hand over to the coordinator. Operator: Thank you. The question comes from Nkateko Mathonsi of Investec Bank. Nkateko Mathonsi: Good afternoon, and thank you for the opportunity to ask questions. You've spoken about life of mine extension, and I'm referring to Impala Rustenburg. But I also just want to get a bit of a confirmation as to how we should think about life of mine for some of the shafts that have a shorter life, and that's Shaft #1, Shaft #6, and E/F. I think the last time I asked this question, you said 1.5 years, but prices have increased. You probably are able to keep these shafts going for a bit longer. So, if you can give us a little bit of guidance around that, that would be helpful. My second question is very much on costs. We've seen you spend close to ZAR 1 billion on technology around winders. Are there other areas that you're looking to do something similar in order to improve your asset reliability? And what does it actually -- what are the implications for cost beyond FY '26? Then I also have a question for Nico, and this is regarding Zimplats. And if Alex is there, he can also answer. I just wanna your experience of operating in Zimbabwe during your tenure. From headline news, it would what I'm seeing is the risk is not necessarily declining there. And the latest news was the ban on unprocessed raw material does not seem to affect you guys, but somehow it looks like the risk continues to actually escalate. And then there's also the financial issues. So, if you can just comment in terms of how you are experiencing Zimplats at this point in time, how we should think about it going forward? So those are my three questions. Johan Theron: Thank you, Nkateko. Moses, can we pass a microphone to you specifically on 1 E&F, #6 Shaft, and your view of prices now? Can we just get a microphone to Moses, please? Moses Motlhageng: Thank you very much, Nkateko. This time I've got your surname correctly. Regarding 1 Shaft, when we remember in this current business plan, we've got one year for 1 Shaft, we've got one year for 6 Shaft, we've got two years for E&F. We are currently evaluating that. As it stands, it appear that 1 Shaft will have additional year, and then 6 Shaft will remain on one year, and E&F will also remain on 2 years. There's not much of a change with the current blocks or reserves that we've got. It looks like 6 Shaft will be out, E&F maybe 2 years, and 1 Shaft, 2 years. That's for the shorter life shafts. Perhaps Johan, I can also just jump on the capital that we are spending on our infrastructure. Nico spoke about spending a little bit more capital on the infrastructure. Yes, it's correct. When we look at the longer shafts or the growth shafts, we are looking at spending, I mean, upgrading all those winders to make sure that in the long term, they do sustain us even if the prices goes down. So there's about a capital of just over ZAR 800 million, that we want to spend it on our winder infrastructure. We see that as an opportunity, especially during this price commodity that we find ourselves at. Thanks. Nicolaas Muller: Let's just talk about Zim and the perceived risk with the jurisdiction. In my opening, I did talk about our presence in Africa in difficult jurisdictions. We believe that long-term partnerships are absolutely critical. And that has proven very successful for Implats throughout its 25-year presence in Zim right now. Funny enough, we've actually had worse times. I can remember there were times, Johan, prior to any of us joining, I mean, we had to pay employees in not in money, in groceries and so forth. And so, difficulty in Zimbabwe is not new to us. And what I will say is that we've got an extremely cooperative relationship between Implats, Zimplats, as well as government and the communities. I mean, just as an example, now for the second time that I'm aware of, during the difficult times, employees agreed to a salary reduction to accommodate the fall in price. That, I mean, that's the kind of relationship that we have. So having said that, the big issue at Zim is the uncertainty of policy and the shifts that happen from time to time, and that scares foreign direct investors quite a lot. So, if it's difficult, that's one thing. If you're never certain what the rules are gonna be in the next year, that is a different kettle of fish. And I do find that at the moment, for us, there is elevated risk. And so we have -- we are navigating through a process with the government to address that because our perception of risk has materially shifted upwards over the last year or 2 years. And in part, it's the change in policies, but it's also got to do with the retention of local currency that is owed to Zimplats in exchange for the foreign currency retention in terms of the foreign -- the policy of Zim. And so, in fact, Leanne and I just had this morning an extensive meeting with Alex. We are scheduled to meet with SA government as well as with the Zim government. I have to believe that a successful outcome will be achieved. It has always been achieved in the past. And I'm very confident that we will get to a similar position right now. So our posture will not necessarily change with immediate effect. Johan Theron: I don't see further questions on the Chorus Call, so I'm gonna go to the webcast. I'm also conscious of time. I'll try and group the ones that can be grouped all together. There's a question here from Adrian. I think we've dealt with the two first parts of his question. The second one hasn't come up, which is, can you give us some color on some of your customer order trends in the auto space and some of the other minor metals? So, I guess with all the volatility in prices, how does your customers engage and buy your metals? Sifiso, you're probably best positioned to talk to that. Any news hot off the press from our customer base? Sifiso Sibiya: Thank you. Thank you, and good afternoon, everyone. From our customer side, we've seen increased requirements in terms of all the metals. The higher list rates are actually making our customers require metal earlier than they would normally do. So, we've seen this during our H1 FY 2026, and the trend is still continuing. Nicolaas Muller: And sorry, Kirt, I'm not sure if you would like. Sifiso spoke to you about the existing customers. But the conversations that you have been engaged in during Indaba and recently, and perhaps how the focus of potential consumers of the metal, I spoke earlier about some of the relationship requirements or expectations or hopes. Kirthanya Pillay: Yes. I think what we are seeing more broadly than I think the normal customer ongoing relationships is an increased focus from the OEMs and the end users to secure supply as well as price certainty for the future. So it's very much the story that was playing out in the BEV space a few years ago, where there is a requirement to create longer term relationships than just the normal short-term fixed price contracts and potentially for the OEMs to move upstream and create these longer term partnerships with the actual suppliers and the miners of the metal on more attractive pricing. But largely to secure supply, particularly linked into this ongoing issue, as Nico mentioned, of a more multipolarized world and creating security for each of the regions in which these OEMs are operating in. Johan Theron: Thanks, Kirt. Interestingly enough, there's two people asking exactly the same question. Rene Hochreiter, and David Fraser, specifically to Nico, and now that you're reimagining what an Eastern Limb could look like, any thoughts on the Waterberg project and, you know, whether it's a different way of imagining it fitting into the world, specifically given its palladium dominance? Nicolaas Muller: No. Johan Theron: All right. We've dealt with that one. Nicolaas Muller: Yes. So I mean, the Waterberg project is in the Northern Limb. We are acutely aware that it has got a strong palladium bias, and that's probably the metal that we have got the least confidence in long term. I mean -- well, our palladium and rhodium. I mean, I do believe that there will be a place for the Waterberg project. We do not see that as imminent right now. Johan Theron: Perfect. And then I can probably conclude there and to all of the questions, and to the extent that we don't get to them, we will make sure we come back. I think there's two or three that again specifically asks about the dividend and given the metal prices, the good operating performance, was there any consideration of higher payouts or other ways of returning value to shareholders? That question is repeated by a couple of people online. So maybe, we have answered it, I think, but maybe in conclusion. Meroonisha Kerber: Just -- so, I think -- I mean, clearly if you look, if you look forward, are we gonna generate substantial cash? And I have spoken about allocations to balance sheet and growth, and investment are not gonna be significant. So with that, there are gonna be increasing returns to shareholders. At the time when we look at the returns, we do have options. The one is to do what we've done in the past, which is to provide a sort of a special dividend by increasing the payout ratio. But there is also the option to look at a combination of these special dividends and potentially share buybacks. I mean, we haven't undertaken one in the past, but I think at any point when we look at these surplus funds to return back to shareholders, we will have to look at what the most effective way to return value to shareholders at that point in time. Johan Theron: So with those great prospects, probably a good time to end. We're really, really looking forward to spending some time with you on the road. For the people in the room, please join us afterwards. There is some snacks available. The whole management team is here, so a good opportunity to ask those other questions that perhaps we didn't get to. And then for people on the webcast and Chorus Call, thank you for joining us. We should see most of you on the road over the next week or 2 weeks. And to the extent that you have any questions, please reach out to the team and we'll endeavor to answer it as quickly as possible. Thank you very much.
Operator: Good morning, and welcome to the ImmuCell Corporation Conference Call to discuss Unaudited Fourth Quarter and Full Year 2025 Financial Results. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference call over to Joe Diaz of Lytham Partners. Please go ahead. Joe Diaz: Thank you, Bailey, and good morning to all. As the conference call operator indicated, my name is Joe Diaz with Lytham Partners. We are the Investor Relations consulting firm for ImmuCell. I thank all of you for joining us today to discuss the unaudited financial results for the fourth quarter and the year ended December 31, 2025. Listeners are reminded and cautioned that statements made by management during the course of this call include forward-looking statements, which include any statement that refers to the future events or expected future results or predictions about the steps the company plan to take in the future. These statements are not guarantees of performance and are subject to risks and uncertainties that could cause actual results, outcomes or events to differ materially from those discussed today. Additional information regarding forward-looking statements and the risks and uncertainties that could impact future results, outcomes or events is available under the cautionary note regarding forward-looking statements or the safe harbor statement provided with the press release that the company filed last night, along with the company's other periodic filings with the SEC. Information discussed on today's call speaks only as of today, Thursday, March 5, 2026. The company undertakes no obligation to update any information discussed on today's call. Please note that references to certain non-GAAP financial measures may be made during today's call. With that said, let me turn the call over to Oliver Te Boekhorst, President and CEO of ImmuCell Corporation, for opening remarks. Oliver? P. F. Te Boekhorst: Thanks, Joe, and good morning, everyone. It's my pleasure to welcome you to today's discussion of ImmuCell's Full Year 2025 Results. 2025 was a very successful year for the company. In 2025, we hired a new management team. We increased manufacturing capacity to meet end customer demand and resolved a multiyear backorder situation. We pivoted to a strategy that is dedicated towards maximizing shareholder value from our highly successful First Defense franchise. We achieved total product sales of $27.6 million, and we earned $1.6 million of net operating profit, which was an improvement of $3.3 million compared to 2024, largely driven by significantly expanded gross margins. In our previous calls, including our special investor call on January 9, 2026, to discuss our full year revenue and our shift in strategy to focus on First Defense, we explained some of the drivers of our revenue performance and the rationale for our new strategy. In summary, we compete in a large growing market with a highly differentiated product portfolio that has a lot of runway for further growth domestically and internationally. And so we decided to double down on this successful First Defense franchise. Our results in 2025 give us confidence in this decision. I will review some of the drivers in more detail and share some of our market observations after Timothy Fiori, our Chief Financial Officer, completes a deeper review of the financials for the fourth quarter and full year 2025. I now turn the call over to him. Tim? Timothy Fiori: Thank you, Oliver. I'll start with a short recap of product sales results, which are unchanged from our January conference call. All the numbers I'll speak to are approximate and rounded. Product sales for the fourth quarter of 2025 came in at $7.6 million, a decrease of 1.6% as compared to the fourth quarter of 2024. The Q4 decline was so modest is noteworthy. As you will recall, our very strong sales in the fourth quarter of 2024 benefited from increased demand and catching up from a prior backorder situation. We had earlier warned that quarter-to-quarter comparisons for the last half of 2025 would be affected by this catch-up factor. That same dynamic will continue to impact growth rates in the first half of 2026, but I want to be clear that this does not impact 2026 operationally, we're shipping orders every day. Digging further into the details, domestic sales for Q4 grew 8.7% as compared to the fourth quarter of 2024 to $7 million, while international sales for Q4 declined a bit more than half to about $600,000 in the same period, mainly driven by order timing in Canada. It's important to note that international sales are only approximately 8% of total sales for Q4 2025. For the year as a whole, in 2025, we grew 4.3% as compared to 2024 to total product sales of $27.6 million. Similar to the quarterly results, we saw growth in domestic sales and a decrease in international sales, again, influenced by order timing from our Canadian distributor. In terms of product mix, we're pleased to see continued shift towards Tri-Shield, reflecting new customer acquisition and migration from our lower-priced Dual-Force products by some customers seeking the broadest protection available. We realized gross margin improvement in 2025 as compared to prior year. Gross margin as a percentage of product sales increased to 38% during Q4 of 2025 compared to 37% during Q4 of 2024. Notably, we achieved this improvement despite Q4 2025 gross margin being suppressed by noncash inventory write-downs. The full year results show the story more clearly. Gross margin increased to 41% during the full year 2025 compared to 30% during full year 2024. Gross margin improvement in 2025 was driven by increased manufacturing volumes and efficiencies as well as product price increases, partially offset by noncash inventory write-downs. As previously disclosed in our January conference call, we conducted a thorough review of fixed assets and inventories. As part of that review, we took a noncash write-down across Q3 and Q4 of 2025 of approximately $650,000, mainly consisting of work-in-process colostrum inventory. This noncash write-down is approximately 5.9% of Q4 2025 revenue and approximately 2.4% of full year 2025 revenue. We will continue to carefully monitor assets, including inventory as part of a rigorous and disciplined capital allocation process. Operating expenses increased to $3 million during Q4 of 2025 compared to $2.2 million during Q4 of 2024. Operating expenses increased to $9.8 million during the full year 2025 compared to $9.6 million during full year 2024. The increase in both period comparisons was primarily driven by increases in G&A, partially offset by reductions in product development expenses related to Re-Tain. Other expense increased to $2.8 million during Q4 of 2025 compared to $100,000 during Q4 of 2024. Other expense increased to $2.7 million during full year 2025 compared to $500,000 during full year 2024. The primary driver of both Q4 and full year 2025 increases came about as a result of our shift in strategy around Re-Tain. In December, we announced a shift away from Re-Tain manufacturing to allow us to focus more on our highly successful First Defense product line. In December, we took a noncash write-down impairment charge of $2.7 million for certain Re-Tain-related property, plant and equipment. This is $200,000 or so less than I discussed in the January conference call, which is attributable to a slight increase in our estimation of future salvage value. We continue to sharpen our overall assessment of the value of former Re-Tain assets that we plan to repurpose for use in First Defense manufacturing and our estimates of their net value are subject to change. We did have a onetime income from insurance proceeds of $427,000 in the first quarter of 2025, which provided a partial offset to the Re-Tain write-down in the full year view. I'll wrap up the income statement financials with some discussion of the improvements we've seen regarding 2025 net income and earnings per share as compared to prior year. Net loss of $1 million during 2025 represents a $1.1 million year-over-year improvement compared to 2024, even considering the significant impact of the previously mentioned $2.7 million Re-Tain write-down. The year-over-year improvement was driven by higher sales and increased gross margins. Basic net loss per share during 2025 was approximately $0.12 per share in contrast to a net loss of $0.26 per share during the prior year. Please note that we provided EBITDA figures in yesterday's earnings release. However, the EBITDA calculations do not adjust for the impact of write-downs for Re-Tain or inventory, which are obviously material to 2025 results. Lastly, operating income for 2025 was $1.6 million compared to an operating loss of $1.6 million in 2024, a year-over-year improvement of $3.3 million. To wrap up with financials, let me highlight a few key balance sheet items. We ended 2025 with $3.8 million of cash on hand. Working capital increased from $10.6 million at the end of 2024 to $13 million at the end of 2025, driven by higher finished goods inventory. As you may recall, we ended 2024 with near 0 finished goods. We will continue to closely monitor and manage cash and our other assets as we balance long-term investment with near-term operational needs. With that, I'll turn the call back to Oliver for some closing remarks. Oliver? P. F. Te Boekhorst: Thanks, Tim. Congratulations to the team for the excellent financial results in 2025. It was a challenging year for sure with a lot of change, but ImmuCell navigated it well, and we are ready to make 2026 a success. As promised, I will take a little time to review our strategic focus and share some market observations with you. ImmuCell competes in a very attractive, large and growing market for calf health solutions with our First Defense range of products. Calf's health is a dynamic market that has seen rapid and dramatic increases in the value of cats driven by dairy beef cross breeding and a contraction in the U.S. calverd, which has tightened calf supply relative to market demand. First Defense is a best-in-class preventative for calf scours, which is a condition that affects 14% to 15% of pre-weaning calves. That's approximately 5 million calves every year in the U.S. alone and is the leading cause of death in these pre-weaning calves. Scours represents up to $1 billion of economic burden in the U.S. due to treatment costs, performance losses and mortality. And U.S. farmers spend $90 million to $100 million per year on scours prevention products. Our customers, whether they are dairies raising their own calves, calf ranches that raise calfs for dairies or cow calf operations are all interested in preventing scours outbreaks and protecting these calves that are the highest risk animals on the farm. Calves are born immune incompetent. And in the first few weeks of their lives, they are particularly vulnerable to bacteria and viruses. Our product line protects against 3 common pathogens that cause scours, namely Bovine Coronavirus, E. coli and Rotavirus. First defense products are colostrum-derived and the only USDA-approved solutions for scours that aren't a vaccine and delivers 3 to 6x as many neutralizing antibodies against these pathogens than our primary vaccine competitor does. And being colostrum-derived, we provide these calves a lot of other bioactives to help them stay healthy, too. It should not come as a surprise that we are priced at approximately 2.5x competitive alternatives. These product characteristics have helped us win market share, increasing from 10% to 15% of treated calves in the U.S. in the past 8 years, and we capture approximately 29% of the spend in this growing category. Specifically in the U.S. in 2025, producers spent approximately $93 million on calves scours category. That's vaccines and our antibody products, which was 14% higher than in 2024. 10% came from the increase in the number of calves using scours preventatives and the rest from price and product mix. And yet, about 55% of calves are still not getting any treatment for scours at all. So when you do the math, the total addressable market in the U.S. is more than $200 million. And internationally, the total addressable market is at least 5x as large. ImmuCell maintained approximately 15% share of treated animals in the U.S. in 2025, and we are pleased to report that we added more customers with new account volume more than offsetting normal account attrition in 2025 and that recurring customers increased their purchasing in 2025, driven by higher coverage rates and inventory normalization. We believe momentum accelerated in the fourth quarter. So we gained revenue share against the 3 largest animal health companies in the world during a time when we were supply constrained due to the manufacturing challenges. Now that we're addressing manufacturing capacity, we have a lot of confidence in future growth. In late December, we announced our strategy to focus on First Defense and pause investment in a subclinical mastitis product that the company had pursued for some time to allow us to focus on the scours market opportunity I just described and critically important, also on improving our manufacturing capabilities and capacity. To give you some background, we grew our manufacturing capacity from approximately 3 million units in 2023 when we were in a backorder situation to 4.1 million units in 2024 and 4.6 million units in 2025. This helps you understand the gross margin improvement that drove our bottom line results in 2025, although not all that margin improvement was driven by volume, a portion of that was efficiencies and product price increases also. In the past 3 months, we have completed an exhaustive analysis of our processes led by outside experts and key leadership inside the company, and we have identified over a dozen opportunities to further increase our capacity to between 5 million and 6 million units per year. Units don't match up exactly with revenue because of the different and changing price points of the products in our portfolio, so we will no longer communicate our capacity in terms of revenue. Having said that, we recently implemented medium- and long-term demand and supply planning, and the team is confident we can meet demand in 2026 and 2027 by implementing yield improvements, while we work on our next major capacity expansion. When we focused on First Defense at the end of December, this enabled us to really dive into these yield improvement opportunities, and we are also excited to repurpose assets previously deployed for our subclinical mastitis product to First Defense, and we are now devoting all our time and investments to expanding a successful existing product line. Finally, we previously announced that we are increasing our sales capacity, and I'm pleased to announce that we hired a senior international market development leader, added a new sales manager in the U.S. and are actively recruiting for a third commercial position. We will make additional territory hires based on continuous assessments of calf population density, adoption of calf level scours prevention solutions and demonstrated price acceptance within each region. In the meantime, I just returned from a very successful sales meeting last week, where we implemented a new standardized sales approach that will enable us to scale our commercial activities more efficiently. Our top priority at ImmuCell remains solid execution across the organization from sales to manufacturing and including all the support functions that make future profitable growth possible. With that said, we'd be happy to take your questions. Let's have the operator open up the lines. Operator: [Operator Instructions] Joe Diaz: Bailey, if I might interject here while the queue builds up, let me begin with a couple of questions for management. Oliver, 2025 certainly was a transformational year for ImmuCell. Looking ahead into '26 and '27, what are the biggest challenges ahead that you see for the company to achieve your goals? P. F. Te Boekhorst: Thank you, Joe, for that question. I see 2 types of challenges that we're addressing as a company. The first one is a planned increase in yield and followed by an increase in capacity through more major investments. So as I discussed, we believe that with the opportunities we identified in the last 3 months, we can increase our volume to between 5 million and 6 million units. And this is without making any major investments. This is through improved floor planning, some maintenance, some small additions to existing equipment and a whole series of activities that are planned for the year that will get us there. So capacity and making sure that we have the capacity to meet market demand is our first order of business. And at the same time, we are now stepping up our commercial activities. So whereas our commercial team has spent a lot of time in the past year to 2 years, managing allocations of products due to our back order situation, it is now proving to a proactive outreach to gain new customers. And so it's all about growth on the top line for the company. So those would be our 2 primary initiatives that we're focused on in the coming year. Joe Diaz: Will you be expecting any additional Re-Tain write-downs in 2026? Timothy Fiori: Joe, I'll take that one. We don't anticipate any large write-downs for the assets formerly associated with Re-Tain. We're evaluating the best way to roll out this larger capacity expansion project, medium term, using the former Re-Tain plan and the majority of the former Re-Tain assets. We have booked a modest salvage value, a couple of hundred thousand dollars associated with the assets that have been written down. And there's always a chance that we'll reevaluate a specific piece of equipment over time. But currently, we're really not seeing anything like that. Joe Diaz: As it relates to 2025 revenue, how much do you consider to be recurring? And is that something that will be the case in '26 and '27? P. F. Te Boekhorst: Thanks, Joe. I'll take that question. So the -- once customers are on our product, they see a fairly dramatic change or reduction in scours related to the antigens that our products protect against. And despite price increases and some supply constraints over the last few years, they've largely remained loyal to the company and to the product because of its impact on their operations. So we aren't at this time would have calculate things like churn to give you an exact answer around recurring revenue due to all the things that happened in back order situation. For example, if a customer couldn't get our product from one distributor, they would sign and ask another distributor for the product and that impacts the way that we can calculate churn. So that's just an example. So what I can say with my sales team's input, but also from my own personal visits to customers over the last 3, 4 months is a high degree of loyalty and a high degree of satisfaction with our products. Joe Diaz: Fantastic. Well, with that said, I think this will conclude the Q&A session. I want to thank all of you for participating in today's call. We look forward to talking with you again to review the results for the quarter ended March 31, 2026, during the week of May 11, 2026. Thanks again, and have a great day. Operator: Thank you for attending today's presentation. The conference has now concluded. You may now disconnect.
Operator: Ladies and gentlemen, thank you for standing by. I'm Paulina, your Chorus Call operator. Welcome, and thank you for joining the Turkcell's conference call and live webcast to present and discuss the Turkcell Fourth Quarter and Full Year 2025 financial results. [Operator Instructions] The conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Mrs. Ozlem Yardim, Investor Relations and Corporate Finance Director. Mrs. Yardim, you may now proceed. Ozlem Yardim: Thank you, Paulina. Hello, everyone, and welcome to Turkcell's 2025 year-end earnings call. On the call today, we have our CEO, Ali Taha Koc; and CFO, Kamil Kalyon. They will provide an overview of our operational and financial results for the quarter and the year, followed by a Q&A session. Before we begin, I would like to kindly remind you to review our safe harbor statement, which is available at the end of our presentation. With that, I will now turn the call over to Mr. Ali Taha Koc. Ali Koç: Thank you, Ozlem. Good afternoon, everyone, and thank you for joining us today. We closed 2025 with a strong finish, exceeding all of our expectations. Revenues increased by 11%, and we achieved an EBITDA margin of 43.1%. Net income from continuing operation reached TRY 17.8 billion, up 23% year-on-year. These outcomes reflect disciplined execution and strong momentum across the business. 2025 was pivotal for our long-term strategic positioning. We were awarded the largest spectrum in the 5G auction and secured our fiber footprint through the agreement with BOTAS. This will strengthen our network leadership and expand our capacity to capture 5G demand. We maintain a robust balance sheet through prudent financial management. This preserves flexibility and liquidity. We delivered shareholder returns through a solid dividend payment and launched a 3-year share buyback program. Turkcell is a technology company. We are reinforcing that identity through focused investments. In 2025, we allocated 15% of CapEx to strategic areas, primarily in data center, cloud infrastructure and renewables. These investments deepen our digital infrastructure, enhance energy resilience and support long-term value creation. A major milestone for Turkiye is our strategic partnership with Google Cloud. We are building a hyperscale cloud region in Turkiye. This cloud region will help enterprises accelerate cloud adoption to secure their data sovereignty as well as excess advanced capabilities in AI, cybersecurity and digital platforms. Turkcell is at the center of Turkey's digital transformation. With this partnership, Turkcell will have sustainable technology-led growth. Next page, please. Over the past 3 years, we have executed with discipline to show that Turkcell's leadership in connectivity and digital infrastructure. This transformation shapes how we operate today and how we allocate capital to deliver long-term value creation. Our capital allocation framework is built on 3 pillars. First one, investing in our business to sustain leadership and capture future growth. We continue to advance mobile rollout and expand our fiber footprint with 5G. Our fixed wireless access solution Superbox will extend our coverage beyond fiber. In parallel, we are investing in data centers and cloud, which will bring future growth. As we scale this business, we may also evaluate selective inorganic opportunities. Our expected CapEx intensity of around 25% reflects this investment cycle. The second one, delivering attractive shareholder returns. Last year, we distributed 72% of net income from continuing operations. This is our ninth consecutive year of dividend distribution, 9 consecutive years. We also launched a new share buyback program and repurchased $58 million of shares to date, reflecting our confidence in long-term value of our business. Thirdly, maintaining a strong balance sheet. We continue to diversify our funding sources from sustainable bond issuance to Islamic financing structures. We remain committed to maintaining net leverage below 1x, preserving flexibility to invest in growth while continuing to support shareholder returns. Overall, we have a crystal clear capital allocation plan to invest in strategic infrastructure, capture structural global opportunities and deliver sustainable shareholder value. Next page, please. We can now move to the quarterly performance. The fourth quarter marked another period of solid execution for Turkcell's leadership. Performance was driven by operational excellence and supported by our key growth engines. With outstanding performance across all core segments. In this quarter, revenues grew by 7% year-on-year to TRY 63 billion. Results were underpinned by ARPA expansion, continued subscriber momentum and scaling of our data center business. All of these reinforce the strength and resilience of our growth model. Group EBITDA increased 12% to TRY 26 billion, reaching a solid 41.2% margin. Margin expansion reflects continued cost discipline and as well as the operational efficiency. Focused financial management also supported our bottom line with net income from continuing operations increasing 11% to TRY 3.6 billion. We achieved 905,000 net postpaid additions in the fourth quarter. This is the strongest quarterly result in the last 6 years. This was driven by targeted value propositions as well as customer-focused strategy. Another good news, this growth also came with real ARPU expansion, reflecting balanced growth. On the other hand, our data center and cloud business continued to scale with revenues growing by 32%, renewable energy installed solar capacity reached 62.2 megawatts. Next, please. Let us turn to the key operational highlights that shape our great quarter. Competition remained elevated for much of the year, but it is moderately in the middle of the fourth quarter. 2025 was marked by record high mobile number portability. In this environment, our customer-centric approach and pricing strategy helped us strengthen our market leadership and expand our customer base. We had 2.4 million postpaid net additions for the year 2025, the highest level in the past 26 years. Rising share of the postpaid subscribers was a key driver of revenue growth. It increased by 4.7 percentage points year-on-year to reach 81%, strengthening the resilience and the visibility of our revenue base. Revenue quality also improved. Through our micro segmented pricing actions and AI-supported offers we migrated a significant portion of our subscribers to higher-tier packages. As a result, mobile ARPU real growth is 5.4%. Innovative offerings, including family plans and a new loyalty platform like Tumbara, increased engagement and supported retention. As a result, our churn improved year-on-year to 2.7%. Next, please. Turning now to our fixed broadband operations. Another strong year for Superonline, our fixed business as well. We expanded our base with net addition of 119,000 Turkcell fiber subscribers. Total fiber subscriber base reached 2.6 million. High-speed campaigns were instrumental in driving this growth. We expanded our offer to speeds of up to 1,000 megabits per second. Today, out of all of our customers, 1 in 5 customers subscribes to speeds above 500 megabit per second. This signals a clear shift toward premium connectivity with Turkcell Superonline only. Residential fiber ARPU increased by 10.3% year-on-year. We expanded our fiber home pass to 6.3 million home passes. While increasing the number of home passes, we achieved a phenomenal performance on take-up ratio of 42%. Next please. Our digital infrastructure strategy is central to Turkcell's long-term growth. We believe that cloud and AI infrastructure is structural, a must for every business in Turkiye. The Turkish cloud market is growing at 19% annually in dollar terms, supported by increasing digitization and rapid adoption of AI-driven workloads. Our partnership with Google Cloud marks a defining milestone. Establishing a Google Cloud region in Turkiye strengthens our country's digital ecosystem and enhances our position in the infrastructure value chain. This partnership diversifies Turkcell's revenue streams and reinforces our long-term growth profile. Today, we operate 50 megawatts of active data center capacity, and it will be doubled by 2032. Over the same period, we expect our data center and cloud revenues to grow at least sixfold in U.S. dollar terms. Beginning in 2026. We expect this segment to generate approximately $100 million in EBITDA. We are uniquely positioned to capture this technological breakthrough with our scale, network assets, market leadership and strategic partnership, we are ready to benefit from this structural growth. Next please. Digital Business Services delivered solid growth, with revenues increasing by 30% to TRY 7 billion, supported by stronger hardware sales. Our system integration backlog reached TRY 6 billion. Our data center and cloud revenues increased by 32% year-on-year. This outstanding growth was driven by capacity expansion. As this new capacity established a higher base, we expect growth rates to gradually normalize. Even so underlying demand remains robust and continues to support for further expansion. We expect to complete the final module of Ankara data center in this year, reaching the full capacity -- full technical capacity of our existing facilities. In the first half 2026 construction of our new data centers under Google Cloud partnership will start. This will be our next phase of capacity expansion strategy. Techfin is one of our core strategic growth engine. Our techfin business delivered solid performance in 2025 with revenues growing by 21% and once again outpacing group growth. Paycell was the main driver of this growth. In the fourth quarter, its revenues increased by 40% year-on-year, supported by POS solutions and Pay Later services. Paycell increased its non-group revenue share by 18 percentage points to 77%, reflecting its ability to scale beyond the Turkcell ecosystem. On the financial side, revenues declined by 6%, mainly reflecting the lower interest rate environment. The loan portfolio continued to expand despite tight regulatory conditions. Net interest margin improved to 6.3%, primarily driven by lower funding costs as well as disciplined risk management and better collection practices. Overall, techfin continues to enhance the diversification and quality of our revenue growth. Next page, please. Now a few words on our renewable energy footprint. We are so proud of it. In the fourth quarter, we commissioned our largest active facility to date. Active solar capacity increased from 8 megawatts at the end of the last year to 62 megawatts in 2025. In total, we reached 164 megawatts of installed capacity across 8 different cities. These investments are already delivering financial benefits. During the year, our solar energy portfolio generated TRY 156 million in OpEx savings. Stronger contribution is expected in 2026. We will continue to expand our portfolio to enhance cost efficiency, strengthening operational resilience and support our 2050 net 0 commitment. Next page, please. We exceeded our expectations in 2025. This underscores the resilience of our operating model and the consistency of our execution. Looking ahead to 2026, our focus remains on real profitable growth. We expect real revenue growth in the range of 5% to 7% with the strength of our core business and increasing contributions from strategic areas. We aim to deliver an EBITDA margin between 40% to 42%, reflecting ongoing operational efficiency while continuing to invest in growth. Our operational CapEx intensity is expected to be around 25%, consistent with our investment cycle in 5G rollout, digital infrastructure expansion and renewable energy projects. In our data center and cloud business, we anticipate revenue growth in the range of 18% to 20%. This reflects a normalization following the significant capacity expansions completed in 2025, while underlying demand remains healthy. Overall, we believe our guidance balances growth, continued investments and sustainable value creation. With that, I will now hand over to our CFO, Mr. Kamil Kalyon, to walk you through our financial highlights. Kamil Kalyon: Thank you very much, Ali Taha bey. Let me briefly walk you through our financial results. We delivered a strong performance for both the year and the quarter. Top line grew by 11% year-on-year, surpassing TRY 241 billion, quarterly growth was 7%. This performance reflects resilient execution in our core telecom business and continued scaling of our techfin platform. Turkcell Turkiye revenue increased by TRY 21 billion year-on-year. Growth was driven primarily by real ARPU expansion and sustained postpaid subscriber additions. Continued upselling and premium positioning further enhanced the quality of our revenue base. Techfin accounted for 6% of consolidated revenues contributed TRY 2.4 billion for the year. Performance was underpinned despite strong momentum in Paycell, particularly in POS solutions and Pay Later. Both verticals continue to expand transaction volumes and monetization. Next slide, please. Now EBITDA performance. Exceeding the top line growth, EBITDA increased by 14% year-on-year to TRY 104 billion, reflecting efficient cost management, EBITDA margin surpassed 43%. The main positive contributors were employee and energy expenses. While payment expenses scaled alongside strong POS expansion, Paycell's primary growth driver this year. Radio-related expenses reflect the acceleration of our 5G readiness and ongoing network modernization efforts. As a result, EBITDA margin expanded by 1.2 percentage points demonstrating disciplined execution while continuing to invest for future growth. We remain focused on balancing strategic growth investments with long-term profitability. Next slide, please. Profit from continuing operations increased by 23% year-on-year to TRY 17.8 billion, primarily driven by strong EBITDA growth. We maintained market leadership through solid execution and a diversified revenue mix supporting sustainable EBITDA generation. We had a larger debt position during the year. However, our proactive balance sheet management further supported bottom line performance by TRY 3.5 billion. Net finance income benefited from lower interest expenses, loan redemptions and reduced hedging costs amid stable FX conditions. In addition, maintaining a solid TL position allowed us to benefit from attractive local currency yields. Monetary adjustments continue to reflect moderating inflation dynamics and the residual impact of the Ukraine divestment in 2024. Looking ahead, the capitalization of 5G license is expected to support normalization in this line. TOGG contributed positively this year, supported by improved pricing dynamics and the launch of the new model. We see additional long-term value creation potential as 5G-driven technological transformation accelerates. Income tax expense increased mainly reflecting the deferral of inflation accounting application in statutory financials. Next slide, please. Let's take a closer look at our CapEx management. With a prudent CapEx approach, we closed the year at 22.6%, in line with guidance. We continue to advance both mobile and fixed infrastructure. Fixed investments accelerated adding 405,000 new while base station fiberization reached 47%. Excluding strategic areas, CapEx intensity remains stable at around 18% to 19% over the past 3 years reflecting consistency in our investment framework. Our investment profile reflects a focus on our strategic growth areas beyond traditional telecom. Operational CapEx intensity of 25% is aligned with our strategic priorities across 5G, data centers and renewable energy. We allocate capital with a clear focus on long-term value creation, favoring projects with strong return visibility and scalable cash generation. Next slide, please. Moving now to our balance sheet. Our balance sheet provides flexibility to execute our strategic objectives while preserving financial resilience. We closed 2025 with a cash position of TRY 92 billion after dividend payments, loan repayments and the Eurobond redemption in the fourth quarter. Our solid liquidity position fully covers upcoming 5G payments and debt service obligations over the next 2.5 years. Net debt was TRY 15 billion. Net leverage improved to 0.1x supported by strong EBITDA generation. We remain committed to maintaining leverage below 1x while comfortably funding 5G payments and broader strategic investments. The increase in lease obligations reflects the onetime accounting impact of a 15-year BOTAS infrastructure renewable agreement in the fixed side. We continue proactive debt management and actively evaluate diversified financing opportunities to support our long-term growth strategy. Next slide, please. Lastly on foreign currency risk management. We proactively monitored market conditions and swapped a portion of our U.S. dollar holdings into Turkish lira. As a result, 56% of our cash was held in TL at year-end. This allows us to benefit from higher local currency yields and supported net financial income. At the year-end, we had USD 3.4 billion in FX debt, USD 1.9 billion in FX-denominated financial assets and a derivative portfolio of USD 600 million. Derivative portfolio reflects our short-term FX swap transactions with volumes increasing towards year-end and fewer NDF transactions. The increase in our short-term FX position mainly reflects higher FX-denominated CapEx in the fourth quarter and a deliberate reduction of hedging instruments to avoid higher costs. We target managing our FX position around USD 1.5 billion to support investments and 5G license obligations. We may adjust this level proactively in line with market volatility. This concludes our presentation. We are now ready to take your questions. Thank you very much. Operator: [Operator Instructions] The first question is from the line of Bystrova Evgeniya with Barclays. Bystrova Evgeniya: Congrats on your results. I have just one question. I was kind of curious to know more about the data centers business. If you could please provide more color maybe on what are the EBITDA margins of this business? That would be very helpful. Ali Koç: So thank you very much for the question. It's our growth area, and we are expanding our data centers. AI and our cloud are expected to drive 14% CAGR in data centers from 2025 to 2030, lifting global capacity from 108 gigawatts to 200 gigawatts. So overall, what we can see is our results are getting better and better. AI is reshaping workloads all around the world. So there's a huge demand on the data center business. So currently, our expectation is that more than 2x increase in active data center capacity and 6x increase in the data center cloud revenues in dollar terms as of 2032. Share of the DC cloud revenue and total revenue is expected to increase around 8% to 10%. It is -- currently, it is around 2% and we are expecting that no dilutive impact is expected on our EBITDA margin. Operator: The next question is from the line of Demirtas Cemal with Ata Invest. Cemal Demirtas: Thank you for the presentation and congratulations for good results. My question is about your FX position. Maybe if could you further elaborate that. If I didn't understand wrong, you mentioned that you have short position now around $900 million. I couldn't understand the justification behind that any -- short position in U.S. dollar, maybe that will be more helpful because there's jump and you justify with some other things, I guess, investments that further evaluation could be helpful. And the other question is, again, the data center sites. We visited one of your -- the data center, and it was really helpful for us. Thank you once again, and you spent time with us, and it was very helpful to know where Turkcell is going ahead. But Ali Taha bey, I'm receiving questions about the size of the investments. Currently, is a simple calculation, maybe you can just give us a better color with the size, you have already have 50 megawatts. And you will add additional 50 megawatts. And -- but during that period, $1 billion will be invested you and $2 billion will be invested by Google. For some -- just we see that question from also investors, isn't the small number, small megawatts as a hyperscale scalers shouldn't be expected a bigger megawatt numbers also in the investment side, please just help us to understand better? Or should we assume that this is the starting point. Going forward, this megawatt number could be much higher. That would be very helpful again. Kamil Kalyon: Yes. Cemal, I will start from your first question. Our FX position is around USD 957 million sizes. As you know, fourth quarter is seasonality from the CapEx investments are very high in our site. Therefore, the one reason is coming from the high CapEx investments. The other side, as we mentioned in the presentation slide, we are monitoring the market conditions very closely and we swapped some portion of U.S. dollar holdings into Turkish lira. Therefore, we would -- currently our cash is -- 56% of the cash is Turkish lira position. This transaction in order to benefit from the higher local currency yields coming from the money funds, for example, in Turkiye, the money market funds. Therefore, we would like to benefit from this advantage, therefore, we swapped some portion of our U.S. dollar into Turkish lira. For the first question, I can say this at for the second and third question, I will hand over to Mr. Ali Taha. Cemal Demirtas: Kamil bey, related to this question. Doesn't it mean you are taking a position, if I understand correctly, it looks like if there is the pressure on Turkish Lira, do you have any hedge for that already as a structure -- is it hedged? I just try to understand that. Maybe it's a good strategy part of this, but doesn't need just for the benefit because Turkish lira -- things might change. There's a risk and it's not the main business of the company. So maybe further justification could be helpful. Kamil Kalyon: You're absolutely right. But as you know, in 2025, the FX policy of the Central Bank worked very well. Therefore, the hedging costs were very, very expensive in 2025. Therefore, we prefer to move a short position in the U.S. FX side in 2025. Yes, this policy worked very well in 2025. For example, if you do not have any war in the Iran or something like that, we believe that in 2026 this policy also will work. But currently, we are monitoring the conditions. Current conditions are a little bit different when you compare it with 2025. We are closely monitoring the markets and the environment right now. Therefore, we will decide how will we use this FX position. But as we mentioned in our presentation, our aim is, our policy is we would like to keep the short position in USD 1.5 billion levels. We still trust the policy of the Turkish Central Bank for 2026. Ali Koç: Okay. Let's come to the data center business. Yes, that's my favorite topic and favorite question. Let me tell you that. Let me give you a brief information about the Turkiye. Turkiye's total cloud consumption is around 150 to 200 megawatts. So if you look at the corporates, it's there out of 70 to 80 megawatts. So overall, what we need to do is most of the corporate domain in Turkey is still building their own data centers and they do internal consumption. So that's the reason that 50-megawatt number is not a huge number. The good thing about the 50-megawatt is. So previously, what we were doing is we were preparing the infrastructure for the colocation services. So our first 50 megawatts, most of the banks, most of the airline companies are bringing their own servers and they have their own hardware, and we colocate them in our data centers. But for the Google Cloud, it's going to be full-blown system. So we are going to build a data center. We are going to prepare for Google Cloud that infrastructure with electricity with cooling. But on top of it, Google will bring thousands, 10 thousands servers to Turkiye. So that's the reason that the investment is high. So they're going to have a full-blown system such a way that -- and so another thing is the space, 50 megawatts is good enough because these servers are going to be used by not only one company, hundreds of companies that are going to -- together, they are going to use it. That's the meaning of cloud actually. So they can utilize their service more and more. So that's the reason that 50 megawatts is a huge investment, and I'm pretty sure that our biggest target is to bring all of these companies or the industry players to move their old systems to this cloud -- state-of-the-art cloud regions. Operator: [Operator Instructions] The next question is from the line of Karagoz Yusuf with Ak Yatirim. Yusuf Karagoz: You ended the year with a 43% EBITDA margin for the next year, your guidance is around 40% to 42%. Do you expect any contraction in margins? Kamil Kalyon: Yusuf, normally, as you said, that the 2025 performance was very, very good regarding the EBITDA side, especially for the energy cost and the salary expense, salary wage expenses are -- does not increase over the inflation rate. It was very useful for 2025. In 2026, there are some -- we make a salary increase, average in 30 percentage levels is a little bit above the inflation side. And as you know, this is the 5G year. We will be starting from the April 1, the 5G issue. Therefore, we will be spending some money through the marketing expense, marketing activities and the sales activities for the 5G side. And we will closely monitor the energy prices because the war, current war might affect -- might have some effects, inflationary effects in the energy side and the other cost. Therefore, we would like to be a little bit conservative starting for the year for the EBITDA margin. We will look forward within the year. But this year is a little bit less when you compare it with the 2025. Operator: Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Turkcell management for any closing comments. Thank you. Ali Koç: Thank you very much for listening. Hope to see you next time. Thank you. Kamil Kalyon: Thank you very much. Ozlem Yardim: Thank you, bye. Operator: Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling, and have a pleasant evening.
Operator: Good morning. My name is Becky, and I will be the conference operator today. At this time, I would like to welcome everyone to the Bowman Consulting Group Ltd. Fourth Quarter and Fiscal Year 2025 Conference Call. All lines will be placed on mute for the presentation portion of the call, with the opportunity for questions and answers at the end. Please note that many of the comments made today are considered forward-looking statements under federal securities laws as described in the company's filings with the SEC. These statements are subject to numerous risks and uncertainties that could cause future results to differ from those expressed, and the company is not obligated to publicly update or revise these forward-looking statements. In addition, on today's call, the company will discuss certain non-GAAP financial information such as adjusted EBITDA, adjusted net income, and net service billing. You can find this information together with the reconciliations to the most directly comparable GAAP information in the company's earnings press release, filed with the SEC and on the company's Investor Relations website at investors.bowman.com. Management will deliver prepared remarks, after which they will take questions from research analysts. A replay of this call will be available on the company's Investor Relations website. Mr. Bowman, you may now begin your prepared remarks. Gary P. Bowman: Okay. Thanks, Becky. Good morning, everyone, and thanks for joining our year-end earnings call. Bruce Labovich, our CFO, is with me this morning, along with Dan Swayze, our Chief Operating Officer. First, I would like to welcome all new Bowman Consulting Group Ltd. employees who joined us this quarter, including those from RPT Alliance who joined in December. After my introductory remarks, I will turn the call over to Bruce, who will cover our financial performance and technology initiatives, and then Dan will discuss operational successes, including where we are winning and why. I will end the call with some closing statements before opening it to Q&A. Going forward, we plan to periodically introduce members of our leadership team to provide deeper insight into specific aspects of our business. Let us start with fourth quarter and full-year results. You know, it is hard to believe that 2025 was our fourth full year as a public company and the final year of our emerging growth company status. I am pleased to report that we delivered another record year as we advanced our efforts to become an ENR Top 50 firm. We achieved our goals of generating double digit in gross revenue, double digit growth in gross revenue, organic net revenue, and adjusted EBITDA. In addition, we increased our capture rate for public contracts with growth of approximately 28%. We entered 2026 with a record backlog of over $479,000,000, a 20% improvement over the prior year. We strengthened our position in our existing markets through acquisitions, acqui-hires, and organic workforce expansion. Our increasing breadth of services, growing scale, and redoubled commitment to relationship building produced new order growth for the year that was particularly strong in power utilities, transportation, and natural resources, all of which are markets where we are seeing increased, durable, long-term demand. Our book-to-burn ratio continues to be over 1x, a level which I am proud to say we have achieved consistently since our public debut in 2021. The 2026 is so far no exception, sales this quarter outpacing the fourth quarter. With the successful acquisition and integration of several consequential acquisitions during the year, and these results as a springboard, I am confident we are positioned for another breakout year in 2026. With that, I will turn the call over to Bruce to review our financial performance in greater detail. Bruce? Great. Thanks, Gary. Bruce J. Labovitz: I am going to start with a little off-script nod to Gary in light of recent announcements. When I came to Bowman Consulting Group Ltd. in 2013, we were a $50,000,000 company with around 450 employees. Gary's vision of achievement at the time was a diversified $100,000,000 revenue company where people could thrive and grow. For the past thirteen years, he has been deliberate in his leadership with a conviction about growth and a steadfast commitment to our culture. So, with $490,000,000 in revenue to end the company's thirtieth anniversary year, and 2,500 committed professionals living our values every day, I think it is fair to say Gary is qualified for membership in the Overachievers Club. On behalf of everyone at Bowman Consulting Group Ltd., I want to publicly thank you for all you have done. Okay. Turning to the fourth quarter and full year 2025, I am pleased to be here today discussing another breakout year for Bowman Consulting Group Ltd. With quarterly gross revenue of $129,000,000, we have now had two consecutive quarters at a revenue run rate of greater than $500,000,000. Net service billing, which we use interchangeably with net revenue, was $14,600,000 in the quarter, up 16.2% compared to last year. At an 89% net-to-gross ratio, up 200 basis points over last year, gross was disproportionately achieved through net revenue. For the full year, gross and net revenue were up 14.914.5% to $490,000,000 and $434,800,000 while maintaining a net-to-gross ratio of 89%. We again generated double digit growth of organic net revenue at 12.4%. Gross margin for the quarter was 55%, up 190 basis points from last year, and 53.4% for the full year, up 120 basis points over last year. SG&A for the full year was down 250 basis points compared to the prior year. Combined overhead for the year, in other words, the combination of all labor, both direct and indirect with SG&A, was down 400 basis points compared to the prior year. We believe this reflects an evolving mix of business in the scaling strategy we have been working towards for several years. Pretax net income for the year was $11,200,000 as compared to a loss of $8,900,000 in the prior year. Net income was $12,800,000 for the full year as compared to $3,000,000 for the prior year. With issues related to research and experimentation capitalization resolved, tax benefits had a lesser impact on our fourth quarter and the full-year results. Moving forward, tax is projected to have a more normalized impact on our statements, including simplifying the calculation of changes in working capital on our operating cash flows, no longer splitting the effect above and within the working capital. With Section 174 capitalization no longer an issue, it is key to note that we do still benefit from other permanent research and development credits that reduce our effective tax rate and never expire. We believe the turnaround in pretax GAAP profitability this year is the result of the improved labor utilization, scale, and full integration strategy we have been executing to achieve efficiency in operations. We are pleased to see meaningful increase in EPS, both GAAP-based and adjusted. On a GAAP basis, our basic and diluted EPS of $0.74 and $0.73 were up 300% year-over-year. On an adjusted basis, our basic and diluted EPS of $1.72 and $1.68 were up nearly 40% from the prior year. Holding our share count through buybacks also helped. With absolute growth in all market verticals this year, we continue to advance our objective of increased revenue diversification. Revenue distribution continued to shift positively in 2025, with transportation at 21.2%, power and utility at 22.4%, natural resources at 11.5%, and building infrastructure down to 44.9%. We expect this trend and trajectory to continue in 2026. Our geospatial operations continue to be increasingly consequential and represented approximately 26% of 2025's gross revenue as a service that was spread across all markets. In the aggregate, around 30% of total gross revenue was derived from government or public funded work assignments, an area where we expect to continue to grow over the short and long term. Organic net revenue growth was 11% in the fourth quarter and 12.4% for the full year, excluding UP E3I, SOLAs, and RPT. Broken down by vertical for the quarter and for the full year, Natural Resources led the way with 2927% growth, and utilities delivered 1113% growth. Transportation grew 622%. And building infrastructure was up 96%. Organic growth rate in transportation in the fourth quarter was a function of delayed contracting and notices to proceed in 2024. While we caught up in 2024, the delay created a skewed growth curve for the year. All is well within our transportation business, and we continue to win consequential new awards. I think it is also worth pointing out the steady increase in organic net revenue growth in building infrastructure throughout the year. I am optimistic that this represents a developing trend for that market. Backlog increased 20% to $479,000,000 on 12/31/2025, up from $399,000,000 at the 2024. While every vertical is up, the biggest gainer was power and utilities, where we were particularly active with business development and acquisitions. Excluding purchase backlog in place at year end, the increase was 18.5% at $473,000,000. Sales of new work after closing an acquisition would not be considered acquired backlog. In the case of RPT, while we have very strong visibility into projects and schedules, work is released in more frequent phases that keep their forecasts high but their backlog low relative to the overall companies. Cash from operating activities for the full year increased by nearly 50% to $35,800,000 from $24,300,000 in the prior year. Net working capital increases adjusted for the UTP changes represented the equivalent of a roughly four-month investment in gross revenue. Reducing that investment by 25% through process automation and operational efficiencies could add seven to eight percentage points to cash flow conversion. This is high on our to-do list in 2026. Net debt at the end of the year was $179,000,000, including the all-cash acquisition of RPT on December 5. Leverage was 2.45x trailing twelve months, and 2.06x the midpoint of our 2026 guidance. We expect increased cash flow from operations during the year to continue to reduce this debt throughout 2026. On March 3, we executed a third amendment to our credit facility with BofA, TD Bank, and PNC to increase the maximum borrowing to $250,000,000. We increased the facility to ensure we have sufficient access to affordable capital to continue funding investments in organic growth, innovation and efficiency, accretive acquisitions, and stock repurchases. As of today, we have available liquidity of approximately $150,000,000. During 2025, we periodically repurchased $18,800,000 worth of our common stock at an average price of $27.51 per share. We continue to view stock repurchases as a means of addressing liquidity and valuation dislocations, as opposed to a commitment to the return of capital. Assuming market stability and a rational valuation of our equity, our top priorities remain investment in organic and inorganic growth. We remain steadfast in our commitment to investment and innovation. The BIG Fund, our internal technology incubator, is funding ideas presented by our employees to make impactful investments that advance our capabilities, improve the efficiency of our workforce, and decouple revenue growth from headcount growth, increase the value of our services, and extend customer engagement. It is admittedly a tricky time in our industry with respect to innovation in AI. We need to be sure we are prioritizing investment in processes and services relating to deliverables sold at stable values, as opposed to efficiencies that merely cannibalize the work of work sold by the unit. We are making significant investments this year in our fleet of geospatial imaging assets, including high-resolution, high-altitude scanners, along with improved capture vehicles, including planes, UAVs, drones, boats, all of which increase collection rates and data processing efficiencies by as much as 30% to 40%. We continue to integrate the technologies we have developed in-house with tools we purchased in the recent Orcus acquisition, and we are launching PAC, our Port Asset Conditions Kit, which provides GIS-enabled, digital twin-based life-cycle asset management to port and marine operators. As opposed to the traditional software-as-a-service subscription model, we have put forward a services-powered-by-software model that engages our integrated digital platforms with customers through a professional services arrangement that combines process automation and professional intervention. As we develop our suite of AI- and GIS-enabled tool sets, we believe we are well positioned to monetize the library of assets in our growing digital services and advisory practice into a unique value proposition for our customers and shareholders. In connection with yesterday's release, we increased our full-year 2026 guidance to a range of $495,000,000 to $510,000,000 and an adjusted EBITDA margin of 17% to 17.5%. At an 88% net-to-gross ratio, this would represent $563,000,000 to $580,000,000 of gross revenue. Increased net revenue guide includes the recent RPT acquisition without contemplating any future acquisitions. At the midpoint of our net revenue guidance, this represents approximately 16% absolute growth over last year. Pro forma, to exclude RPT's 2025 revenue from the basis and from next year, from this year, we are projecting just over 12% organic net revenue growth. We expect revenue during the year to again be nonlinear, with the first and fourth quarters representing around 47% of net revenue and the second and third to be around 53% of net revenue. This should not be construed as quarterly revenue guidance, but rather as a guideline for relative weighting of the quarters throughout the year. I am now going to turn the call over to Dan Swayze, our Chief Operating Officer, who is joining us today to provide insight into the question of where we are winning and why. Dan has been with Bowman Consulting Group Ltd. for over three and a half years, and spent two decades in senior leadership roles in civil and engine and energy-related engineering. At Bowman Consulting Group Ltd., Dan's focus as the Chief Operating Officer is on the management and execution of our portfolio of services across markets. Dan, welcome. Gary P. Bowman: That is nice, Bruce. Thank you. Dan Swayze: Thank you, Bruce, and good morning, everyone. I know a lot of our team is listening to the call today, and I sincerely thank them for all they do and their commitment to Bowman Consulting Group Ltd. I am very proud of our team. Today, I am going to focus on where we are winning in the market and why those wins are becoming increasingly repeatable. In other words, our right to win. Over the past several years, we have been deliberate about building differentiated capabilities in markets where technical depth, geographical reach, capacity, execution consistency, and integrated end-to-end ability creates a competitive advantage. Our acquisition strategy across the country created integrated service delivery teams in our various markets. In our data center and mission critical practice, we are increasing our win rate by meeting our clients where they are. Data center programs are rarely single-service projects. They are multiphase, multiservice opportunities. For example, combining the electrical and mechanical engineering forces from our E3 acquisition, the fire and life safety design services from our Fisher acquisition, with our established capabilities in civil planning and engineering, we have a strong service offering our clients can rely on. Our ability to deliver consistent technical standards across jurisdictions while maintaining strong relationships positions us as a long-term partner rather than a one-time design provider. As major operators continue to deploy capacity into new regions, we are following them into those markets, pairing local engineering knowledge with the strength of our national platform. As a result, we are expanding wallet share and deepening our engagements in a durable growth market. This approach increases client stickiness. The power utility sector remains a robust market for our organization, spanning electric, oil and gas, as well as renewables. Bowman Consulting Group Ltd. is actively involved in supporting the development and expansion of new power supplies for utilities, addressing the evolving and urgent need for bridging power for data centers, and the rapid deployment of compressor stations for the midstream movement of natural gas. The services we provide for our natural gas clients are provided through a combination of several acquisitions, including MPX, Survein, RPT Alliance, Excellence Engineering, and Burke Engineering. Our approach leverages a comprehensive suite of services, seamlessly integrating a unique collection of geospatial expertise and equipment with proven engineering solutions to address the evolving needs of our clients. This multiservice, end-to-end strategy ensures we can consistently deliver innovative, reliable, one-stop-shop outcomes across a diverse landscape of our clients' needs. Being an early establishes incumbency, and incumbency is an important element to our right to win. Our geospatial engagements often create pull-through opportunities for related engineering and advisory services. Recent investments in new aircraft and advanced LiDAR sensors directly strengthen our competitive position. These advanced capabilities allow us to support complex infrastructure initiatives, including utility expansion both in electricity and natural gas, damage assessments, land acquisition, land development, and other large-scale public works projects. As an example, we were recently renewed for a five-year agreement with the U.S. Army Corps of Engineers to provide photogrammetric mapping and related survey services. Being awarded this renewed agreement reflects both past performance and technical differentiation. We are also continuing to build strength in transportation across the U.S., where our extensive history of time of delivery and our expansive portfolio of creative bridge and highway design create a meaningful competitive opportunity. Our comprehensive transportation services offerings are an amalgamation of our acquisitions of McMahon, Speece Lewis, and Exeltek, and our legacy teams in the Chicago area, providing end-to-end solutions. Transportation agencies prioritize demonstrated experience and capacity to deliver on comparable assets. The depth of our expertise and project experience in these regions drives repeated wins. Across these markets and others we participate in, the pattern is consistent. We win where specialized technical expertise matters. Past performance and incumbency create barriers to entries to our competitors. Our national presence enhances client value, and our integrated geospatial and engineering delivery improves client outcomes. Our operational investments, including workflow modernization, data integration, and selective automation using AI and machine learning, support these markets by improving throughput and timely delivery of superior outcomes. These investments are in service of a larger objective to strengthen our competitive standing in the market where we see durable demand and long-term growth potential. We are not pursuing growth indiscriminately. We are concentrating on efficient use of capital, leveraging our talent, and embracing technology in markets where we have established credibility and where our integrated platform creates measurable differentiation and competitive advantage. The result, we continue to successfully deepen client relationships, enhance our right to win multiservice assignments, and strengthen our foundation for sustained revenue growth. Our competitive position in the industry has never been stronger, and our right to win continues to broaden throughout our markets. With that, I will turn it over to Gary. Gary P. Bowman: Great. Thanks, Dan. As Bruce mentioned, our focus on execution, organic growth, and strategic acquisition was evident in our results. We exited 2025 with strong momentum, some of the best margins in the E&C group, and a backlog which foreshadows another year of double-digit revenue growth. We enter 2026 with a renewed focus on disciplined growth and continued operational improvement along our service platform. While change in the occupant of the CEO chair is ahead of us, the core of this company, its senior leadership and professional workforce, is as intact, cohesive, and aligned in its mission. With the exceptional talent we have at every level of this organization, I am really excited for the future of the company I founded some thirty years ago. With that, I will now turn the call back to Becky for questions. Operator: Thank you. Please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. Our first question comes from Aaron Spychalla from Craig-Hallum. Your line is now open. Please go ahead. Aaron Michael Spychalla: Yes, good morning. Thanks for taking the questions. First, maybe on the RPT acquisition. Good morning. Thanks. On RPT, you know, can you just maybe talk a little bit about, you know, what that brings to your offering, you know, and early on on just how integration is going there and kind of potential synergies within the platform? And then maybe second on EBITDA margins. You know, good performance in the quarter, 17.3%. Just thinking about the guidance for 2026, were there anything, you know, noteworthy from a driver perspective in the fourth quarter? And what are some of the factors you are incorporating for 2026, and how are you thinking about potential for upside there? Gary P. Bowman: Morning, Aaron. Yes. I will start off with the second part of the question. Actually, integration there is well ahead of any other acquisition that we have done. It is pretty much, you know, integrated from an operating and financial perspective. It is on its way from a platform perspective. And so we jumped right on that one because the, you know, the opportunity is right ahead of us to grow that business in connection with the rest of the components of Bowman Consulting Group Ltd. And so it is integrated. It really extends our product offering in LNG. I will let Dan talk for a second about the extension of the LNG and data center product offering. Dan Swayze: Yes. If you go back to what we talked about a minute ago and you think about our right to win, RPT's skill set and client reach puts us right into the whole midstream movement of natural gas. Feeding liquefied natural gas centers also gives us that opportunity to provide more consulting engineering services for those building pipelines. I will also say we have already been successful in several cross-selling efforts where, you know, the combination of services has gotten us into projects that we otherwise probably would not have been necessarily a lead contender for. Bruce J. Labovitz: Yes. Again, I think, Aaron, we have demonstrated that, you know, that margin is not necessarily always consistent, you know, throughout the quarters, but then we look at the year as being able to deliver from what was the sixteen, you know, high sixteens this year to what we think will be mid sixteens, you know, next year. So it is continuous improvement in margin. It always has to do with the timing of the acquisition of labor relative to the starts of projects. That is our biggest driver of margin in any particular period, is the, you know, how well we time the collection of labor with the realization of revenue. So I think that we continue to, as we scale, grow margin over overhead, and as we implement, you know, better and better workflow process automated processes, we optimize labor. So I think we can increase by another, you know, we are projecting another, you know, 50 to 50 plus basis points of margin expansion this year, 50–80 points, and I think those are the key drivers. Aaron Michael Spychalla: Alright. Thanks for taking the questions, Gary. You know, congrats on the retirement, and best of luck to everyone moving forward. Gary P. Bowman: Thank you, Aaron. Thanks. Operator: Thank you. Our next question comes from Mincho from Texas Capital Bank. Your line is now open. Please go ahead. Mincho: Good morning. Great. Thank you very much, and congrats on a really strong year. You mentioned that the building segment saw some organic growth this quarter and that there were some developing trends. Can you talk a little bit about the opportunities that you are seeing there? Also, on Slide eight, you provided some gross margin by vertical, and I was just wondering if you can talk about how that has trended over the last few years. I am assuming that it is kind of expanded just with the scale that you have. But can you talk a little bit about expectations for 2026, just directionally? And then just finally, your natural resources segment obviously had strong organic growth this quarter and just in the year. And I do not think Dan spoke too much about that segment, but can you just provide a little more detail about where that demand is coming from? Seeing any green shoots there? Gary P. Bowman: So is that put at work optimistic that this is a developing trend. I am not sure we are ready to call it yet. I think one thing that we are expecting to see at some point is a focus on affordability of housing. And we are already seeing it at the state level. You are seeing the requirements for permitting being loosened and stimulus for more affordable housing. That is where we really thrive, is in creating supply for builders and for the home building and multifamily market. So we saw some good positive movement there. It is geographical in nature. Some pockets of the country, you know, are better at times than others. But we are optimistic that that is an early indicator of, you know, some opportunity for bigger growth in that market again. Bruce J. Labovitz: Across the—you mean, you broke up a little bit there, so I think the question was about the gross margins by vertical and expectations on those for the year, I am going to assume that was the question. Yes. And so it is consistent with where we were in the third quarter when we started reporting on gross margin by vertical, with transportation being more of a cost-plus kind of market, but with longer-term commitments and longer engagements that reduce turnover costs there and create stability in workforce. And we think that the other three markets continue to have favorable gross margins, and I do not see anything that is going to erode those throughout the course of this year. If anything, processes, you know, process automations can help to improve those slightly. Gary P. Bowman: Yes. So in some respect, that is a little bit of the catchall for what does not fit into categories, but it includes environmental, it includes mining, it includes water resources, it includes agricultural imaging and orthoimaging, and it includes land services associated with assisting landowners in acquisition of easements and other rights of way when it is not land acquisition for a power utility or for a road, bridge, or highway. So it is a large category for us in terms of the number of things that fit in there. A lot of exciting projects that, you know, are developing in that area, particularly with water resources, particularly with high-altitude aerial imaging, and in the land services business. Operator: Thank you. Our next question comes from Andrew John Wittmann from Baird. Your line is now open. Please go ahead. Andrew John Wittmann: Hey, great. Good morning, and thanks for taking my questions. I have a few here. So where do I want to start? I guess I do not know. Maybe I am reading into it too closely, but in your press release, it talked about 2026 being—I forgot the exact terminology—more of an organic year. That sounds like a little bit of change. You said in your script here that your priorities are still organic growth and inorganic growth. And so just feels like maybe there is a change there. Is there more kind of organic focus in '26 than in the past? And if that is correct, why the change? And then, Bruce, in your comments, you talked about some things that are going to be kind of a priority on collecting working capital this year. Could you just elaborate on that a little bit more? It does feel like there is some working capital opportunity, maybe at lots of places, including your receivables. What is a realistic goal here for DSOs and progress through '26? And then a couple of model-focused ones: you talked about a more normalized tax rate—what is the effective tax rate that you think is applicable here in '26? And on seasonality, last year the second quarter adjusted EBITDA margin was higher than the third quarter, which is atypical. Should we expect the higher margin in the third quarter than the second quarter in '26, or is there a reason that last year’s pattern would repeat? Gary P. Bowman: Andy, this is Gary. There is really—there is not a fundamental change. We are still committed to inorganic growth. We are a little narrower in our focus with strategic and moving toward bigger opportunities. So you are seeing maybe a less frequent—certainly less frequent—announcements. But we are just as committed as ever to a strong growth of a strong combination of inorganic, inorganic growth. Bruce J. Labovitz: I think there is an evolving nature of the market that there is opportunity to invest in the expansion of our services, right, through investment in technologies and innovation, and that is all organic. So, you know, we continue to be investing in expansion of our capabilities, expansion of the capability of our workforce to generate revenue. But as Gary said, I think we will do less frequent small—yeah, but still be focused on acquisition. And in the meantime, be focused on internal investment in organic growth. But thanks for bringing it up, because I think it is an important—absolutely—point of distinction there. We want to clarify that. Bruce J. Labovitz: Yes. One thing I will point out that, you know, we are already so far past in the year, it is hard to remember that at the end of the year, there was a government shutdown, and that did slow collection on a portion of our receivables. Not because they were not collectible, but just because, you know, getting them processed was slower in a portion of our business. So it gives a little bit of extension of receivables from that artificial impact. Getting work through working capital is an important focus for us. Certainly, getting work to be billable—not necessarily that we are not earning it—but getting it to the point of billing and collecting it, you know, is something that, you know, we are working towards narrowing down. And so I think reducing, let us say, work in process, which is a component of working capital, will be a focus this year. And, you know, we are always working on collections, Andy. It is one of the great challenges that, you know, never seems to completely get solved. But between that, between—you know, we implemented a new—not a new—we upgraded our ERP system throughout in 2025. We think that will help facilitate the process of processing work to—follow on Bruce's point, always work on the collections. The thirty, thirty-one some years, we—it is in our DNA. We have to keep the cash flowing. Bruce J. Labovitz: Yes. I would say that it is, you know, on our statutory, less our R&D credits, it is somewhere in that high teen 20 kind of range. Bruce J. Labovitz: No. I do not think it is necessarily a repeatable pattern from last year. I think we had a—we talked about it in the second quarter of last year—there were a few exceptional items that, you know, sort of hit on all cylinders. I am indicative of—I think that, you know—yeah. I would not necessarily say that that is a pattern permanently. Gary P. Bowman: Thanks, Andy. Operator: Thank you. Our next question comes from Tomo Tomasano from JPMorgan. Your line is now open. Please go ahead. Tomasano: Good morning. Thank you. And, Gary, although we have only recently met, I would like to express our respect and appreciation for your leadership and culture as you prepare for your retirement. I would like to kick off: you raised your 2026 net revenue guidance to $495 to $510,000,000. Which segments or projects are driving this upward revision and/or your current $479,000,000 backlog? What proportion do you expect to convert to revenue in 2026? And as a follow-up on the upcoming CEO transition, could you talk about how you are ensuring management stability and continuity? Are there any qualitative KPIs or targets related to succession and strategic continuity? Gary P. Bowman: Thank you, Tomo. Bruce J. Labovitz: Generally speaking, Tomo, we turn somewhere between 70–80% of backlog in a year. In a twelve-month period. So I think it is a little longer. Sometimes it gets a little shorter. But generally speaking, we think of 70% to 80% of backlog in any moment as having a twelve-month tail to it. In terms of where we think we are going to continue to see growth, obviously, power is an area that we expect to, you know, to contribute to the growth year-over-year. A big chunk of that guidance increase was from the acquisition of RPT that happened after last quarter's conference call. So that is all power-related in that bit of the increase. The rest of it is between natural resources and transportation. Transportation. Gary P. Bowman: We are—we—effective communication. We are doing retention, economic retention packages for some key people. And, really, the communication, the assurance of the continuation of our culture. So, you know, a qualitative view of success in the succession is certainly retention of our key staff, retention of our leadership, and continued forward execution of our strategic plan. Bruce J. Labovitz: Yes. We have got 2,500 people who depend on the continued success of this company every day, and we take that responsibility very seriously. And, you know, the Board takes that responsibility very seriously. And so we are all wholly committed to the long-term successes. We are all invested in the long-term success of this company and in seeing this through without any disruption in service to our customers, in service to our employees, and, you know, in value generation to our shareholders. You know, I will also follow-up there, Tomo, as a member of the Board, I am not on the search and selection committee, but certainly I have input. But I would not have made this move if I did not have great confidence in the Board getting this right both for the legacy—my legacy, candidly, personal legacy, and my personal economics. I am still the largest single shareholder in the company, and I intend to continue to own a tremendous amount of the stock in the long run. So I have a real vested interest in the success. Tomasano: Thank you very much. That is all from me. Operator: Thank you. Our next question comes from Liam Burke from B. Riley Securities. Your line is now open. Please go ahead. Liam Burke: Good morning, Gary, Bruce, Dan. Gary, congratulations on your retirement. When you reach critical mass here on the front end of the infrastructure project, has there been any competitive pushback from some of the larger specialty contractors that are looking to move into your space, since it is probably the most profitable piece of the project? And across the board, you had good growth across all your business segments. Do you see any pockets of weakness, or is your diversification allowing you to move right past it? Bruce J. Labovitz: Are you talking about in the power space or—sorry, infrastructure writ large, Liam? Liam Burke: Power space? Let us go infrastructure at large. Bruce J. Labovitz: Yes. There is a real line of distinction in the industry between, I would say, the construction companies—I think that is what you are asking about—and the engineering firms. And while there is a collegial relationship between, we have not felt threatened. Dan, you can tell if you have, you know, felt it from the ground up, from, let us say, specialty construction contractors trying to make their way into the engineering world. Dan Swayze: No. In some cases, we are working for those contractors. So it is not really a threat that we see. Bruce J. Labovitz: Yes. If anything, I would say it is drawn the other way, in that there is such a resource constraint in this space that, you know, it is an all-hands-on-deck kind of mindset. And there are functions of the construction process that the specialty contractors need help with. The equipment providers, the GCs, you know, need help. There is no effort to share risk on that part of the process, but there is an effort to bring in help. Liam Burke: Mhmm. Right? Bruce J. Labovitz: Yes. Right now, I would say that there are no pockets of weakness. There is no negative, you know, connotation to any of the markets or segments. Obviously, we are keeping an eye on the growth rate of the building infrastructure space. Still our biggest and continuing to grow, and we have hopes for it to accelerate. So I would not characterize it as weakness. It is getting attention from us to make sure that, you know, we keep our staffing right and our—and all of our overhead right for that group. But on the others, as I use the same phrase, it is an all-hands-on-deck effort to try to keep up with power and transportation and natural resources. The good news, Liam, as we have talked about, is that in our workforce, it is very fungible across the four markets. So we do not have silos of workforce that are only able to do one thing. You know, the base of our labor pyramid really is very cross-disciplined and cross-market capable. And so, you know, we focus on that kind of business model deliberately. Gary P. Bowman: Thank you, Liam. Operator: Thank you. Our next question comes from Jeffrey Michael Martin from ROTH Capital Partners. Your line is now open. Please go ahead. Jeffrey Michael Martin: Good morning, Gary, Bruce and Dan. Bruce and Gary, I wonder if you could touch on RPT. I know that they were constrained for growth, and you have owned it roughly three months now. Just curious how much you have been able to staff up for RPT during the initial three months, and maybe give us a glimpse at what your hiring plans are for that business in particular, as well as touch on just general availability of labor and ability to staff up in front of larger contracts in general. And then I wanted to touch on geospatial. You mentioned that is roughly—I think 26%, 24% of your net revenue. Sounds like you are making further investments in geospatial. Can you elaborate on general demand trends you are seeing there, and also touch on the competitive dynamic? And could you tie that into your CapEx and equipment acquired and capital lease projections for this year? Gary P. Bowman: Yes. It is Gary. I will jump in. As we were doing our due diligence on RPT, and certainly part of the attraction is all the opportunities in the space that they are in and their being down as a single office operation in Houston. But being in Houston, there are pockets of the oil and gas industry that are—especially the oil industry—maybe up until this past week, that have been soft, and there has been a good availability of labor down there. So we have found the ability for the RPT group to staff up as flexible as any of our pieces of business. It has been also, you know, with them becoming part of a much larger organization has given them access to staffing that has availability of utilization as well. So we have tamped down the shortage by adding capacity from our system. The other thing that we have been doing a lot of now is insourcing things that they used to outsource. Yes. And so we are finding, you know, they are using survey. They are using our fire protection. They are using our mechanical, and we are grabbing—essentially, we are grabbing more work from their clients, which is, again, putting a little more stress on the need for people. But it is what we do for a living, is making sure that we can meet demand with supply. Bruce J. Labovitz: Yes, Jeff. Geospatial is pretty much at the core of everything that we do. A lot of the work we do originates with imaging, processes through imaging, and utilizes survey and scanning and three-dimensional iteration throughout the life cycle of the asset. So we do not think of it as a vertical because it is a service that really supports every bit of business that we do. It is kind of at the epicenter of our services portfolio. So, you know, we are making investments in that space because it is evolving so quickly. And those that are ahead have distinct advantages, and geospatial is one of those service lines that creates, as Dan mentioned, incumbency. Incumbency is such a valuable asset in the life cycle of asset work. So we are buying high-resolution scanners. We are buying imaging technology that does underwater LiDAR. You know, we are buying vehicles that collect data, whether that is from the air, from the water—you know, we are improving the operational efficiency of our altitude fleet, which spends a lot of time, let us say, chasing weather. And if we can shorten the chase, we get more productivity out of it. And there is plenty of work to be done there. So geospatial is—we think it is really a critical part of the overall product we deliver. And so we want to be a leader in our fleet. Bruce J. Labovitz: It is generally included—I mean, it is included in that bucket. We may—and, again, we sort of talk about an average of 3–4% spending on CapEx. Episodically, it may be, you know, a little bit higher and a little bit lower in years. This may be one of the little bit higher years as we continue to improve that fleet. But as revenue is growing, you know, you absorb that CapEx from a percentage perspective as well. So I do not think it is going to, you know, in any way put it off the charts, but it, you know, it could pop at a point or so this year. But then these are long-lived assets. So, you know, you buy them in one year, they last for several years. Jeffrey Michael Martin: Thank you. And, Gary, congratulations on your retirement. Gary P. Bowman: Thank you, Jeff. Bruce J. Labovitz: Look forward to seeing you guys in a couple of weeks. Operator: Our next question comes from Sharif Al Sabahi from Bank of America. Your line is now open. Please go ahead. Nabi (for Sharif Al Sabahi, Bank of America): Good morning, everyone. This is Nabi. I am on with Nadeetha for Sharif. Just on the full-year guide, you raised the net revenues for the full year, but the EBITDA guide was maintained. Could you talk about the margin profile of recent acquisitions like RPT? Does it come at lower margin with other cost optimization measures in the business holding margin steady at 17–17.5? Or on the flip side, is it slightly accretive, and are there other temporary investments in the business that we should be aware of that are holding margins back a little bit? And also, net leverage—think you mentioned around 1.9x, just higher than historical levels. Could you remind us of your target range again? Could we see leverage structurally closer to the high end of your range for a period of time as Bowman Consulting Group Ltd. gets more acquisitive, or is there a plan to delever to historical levels over the near to medium term? Lastly, on the $25,000,000 BIG Fund, can you give us a sense of how much has been committed versus funded, and the runway there? Gary P. Bowman: Good morning. Bruce J. Labovitz: Yes. So I am not sure I would characterize it as holding margins back in a sense that if we continue to grow margin, we are growing it—we are committing to grow it, you know, another half to 50 to 50 plus basis points during the year. So we are very much focused on expanding margin over time. RPT is a high-margin business. But again, as a percentage of our overall business, you know, even being a significantly higher-margin business does not necessarily drag the whole business along from a margin perspective. We think that, you know, being able to get 17.5% margins is a pretty high bar for the industry. And I think that, you know, as—if you asked about, you know, contributors to that, certainly, sort of this concept that we introduced about decoupling revenue growth from headcount growth does not mean shrinking your workforce, but it means growing revenue faster than you grow workforce, and that increases margin. And that is from the tools that we are employing and investing in, as sort of as one of the earlier questions about organic investment and investing in these processes and service line expansions, I think, will add margin over time. We have talked about that, you know, we believe that this is a high-teens margin business without innovation and an even higher one with, and, you know, it is a journey that we continue to be on. Bruce J. Labovitz: Yes. So we have typically been in the, you know, the one-and-a-half kind of range. We want to—you know, the mid-ones. We made this acquisition of RPT on December 5, so did not get any of the benefit at year-end for any of the, you know, the EBITDA from that acquisition, but had all the leverage on our balance sheet. When we look ahead, it is about, on a pro forma basis, about 2x. That is before we start paying that down with cash flow, you know, that we will generate from this year. So we hit 50% cash flow generation this year. We think that is going to continue to improve. So, you know, at an EBITDA of, you know, of—in the seventeens margin on, you know, on $500,000,000 of revenue, there is going to be a good deal of cash flow to be used to pay that down. Now we will continue to be growth-oriented. And to the extent that we identify another acquisition, yeah, we would certainly—you know, there could be additional leverage from it, but there would also be significant amount of EBITDA from it. So you will see us structurally, you know, try to achieve a below 2x, keep it in that, you know, 1.5x to 2x range, which has been our sort of our target. But we have been consistent that episodically, we will be higher as we invest, you know, in growth. Bruce J. Labovitz: Yes. So I would say that we are roughly about halfway into it in terms of committed. It does not mean it has all been expended. There is a lot of proof of concept, a lot of proof of returns, you know, and a lot of other factors that, you know, over the next twelve to eighteen months, we would, you know, fund the projects that have come forward. Some of it is the investment in assets in geospatial that will facilitate some of these additional services. But I would say we are about halfway into ideas that would be funded. Gary P. Bowman: Thanks so much. Operator: As we have no further questions on the line, I will now hand back to Gary Bowman for final comments. Gary P. Bowman: Thanks again, Becky. Well, thanks to everybody for joining us on the call today. We are very pleased with where we are at, pleased with the prospects for the year. And thanks certainly to all the employees and to our investors for all the faith that you put into us. Have a great day, everyone. Operator: This concludes today's call. You may now disconnect your lines.
Operator: Good day, and thank you for standing by. Welcome to the OTC Markets Group Inc. Fourth Quarter and Full Year 2025 Earnings Conference Call and Webcast. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press *11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press *11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Daniel Zinn, General Counsel and Chief of Staff. Please go ahead. Daniel Zinn: Thank you, operator. Good morning, and welcome to the OTC Markets Group Inc. Fourth Quarter and Year-End 2025 Earnings Conference Call. With me today are Cromwell Coulson, our President and Chief Executive Officer, and Antonia Georgieva, our Chief Financial Officer. Today’s call will be accompanied by a slide presentation. Our earnings press release and the presentation are each available on our website. Certain statements during this call and in our presentation may relate to future events or expectations and as such may constitute forward-looking statements. Actual results may differ materially from these forward-looking statements. Information concerning risks and uncertainties that may impact our actual results is contained in the Risk Factors section of our 2025 annual report and is also available on our website. For more information, please refer to the safe harbor statement on slide three of the earnings presentation. With that, I would like to turn the call over to Cromwell Coulson. Cromwell Coulson: Thank you, Dan. Good morning, everyone, and thank you for joining us. I will begin by reviewing our year-end 2025 results at a high level and will then turn to our priorities for 2026. For the full year 2025, gross revenues grew 13%, bringing us to over $125,000,000 for the first time in our history, while our net revenues grew by 12%. The company achieved double-digit gains across all four quarters last year, with each business line contributing to our strong results. For the year, OTC Link was up 17%, Market Data increased 15%, and Corporate Services was up 8%. OTC Link's performance primarily resulted from increased trading volume across our markets. In times of increased market activity, we focus on providing reliable service trusted by our broker-dealer subscribers. Meeting that standard across all of our ATSs is a direct result of the hard work and dedication of our business, infrastructure, and technology teams. Market Data benefited primarily from price increases that took effect at the start of 2025, supported by new sales in certain product areas. While pricing power is a critical part of long-term competitiveness, especially in inflationary environments, we prioritize consistently adding value to our subscribers, expanding our distribution networks, signing new clients, and growing unit counts. While not materially impactful to our revenue during 2025, our OTC Link and Market Data teams established the foundation of our overnight trading business. Moon ATS, which facilitates overnight trading in exchange-listed securities, gained traction in the fourth quarter as a result of our team's onboarding subscribers and educating the global trading community. The momentum in NMS securities on Moon and the lessons learned will serve us well as securities markets move to 24/5 and longer. Our Corporate Services business not only delivered solid revenue growth for the year, but also ended the year with 17% revenue growth in the fourth quarter. These increases resulted from the success of our OTCID Basic Market, launched in July, as well as price increases and strong new sales in our OTCQX and OTCQB markets. Over the long term, our Corporate Services business remains strategically focused on client success and retention, helping connected companies close the investor and broker information experience gap with exchange-listed securities. Our operating expenses also increased last year, up 7%. Compensation and benefits remain the largest components of our expense base, as we continue to invest in our people. I am grateful for the hard work and dedication of our colleagues, and thrilled that our trajectory last year reflects each person's contributions. With revenue running faster than expenses last year, our operating margin also rose back above 31% for the year. We remain committed to achieving sustainable growth over the long term. Overnight trading and the OTCID Basic Market were our primary strategic initiatives during 2025. Although our work on each is far from over, I am pleased with our progress thus far. On overnight trading, Moon ATS saw a substantial increase in volume traded during the fourth quarter as our broker-dealer subscribers used the system to trade thousands of exchange-listed securities between 8:00 p.m. and 4:00 a.m. We face significant competition in this space, with one established player already controlling a majority of the market share, and the listing exchanges planning to enter the space as early as this year. In this increasingly competitive landscape, we believe that Moon ATS offers an elegant, reliable, and cost-effective solution for our current subscribers and an opportunity to expand and scale our network. Our overnight trading initiative is also focused on educating and onboarding subscribers to our OTC Overnight Market. Although we have not yet had trading take place in this market, the OTC space is where we can offer a unique value proposition. Over 12,000 OTC securities trade on our daytime markets, and more than 9,000 of those are non-U.S. Providing global investors access to these securities during hours more convenient for non-U.S. time zones remains a key part of our vision for overnight trading. Our second priority initiative last year was the OTCID Basic Market. Following its launch, OTCID experienced a rapid uptake as qualifying companies chose our services to publish a baseline of ongoing information. It is well aligned with our strategy of connecting more companies to their U.S. trading market to improve market quality one security at a time. OTCID enhances our offerings for corporate clients, filling a gap below the premium OTCQX and OTCQB markets. With a disclosure- and management certification-driven service, OTCID allows more companies to connect without the price, float, or financial requirements of our higher-level markets. It is a simple entry point for companies to start to stream information, gain a foothold of liquidity, or test the waters. We have designed our premium markets to provide the functionality for connected companies to supply data that will improve the quality of the market for their securities. In comparison with Pink Limited securities, our objective is to clearly flag risks. Investor-focused companies need to be actively connected to the market, consistently updating investors, with management teams willing to certify compliance with regulations. Otherwise, gaps in communication can lead to information asymmetries, disruptive corporate actions, and discounted valuations that diminish their market quality. The connected companies on our OTCQX, OTCQB, and OTCID markets represented approximately 25% of all securities traded on our platforms at the end of 2025 and contributed roughly 31% of the dollar volume traded on our markets during the fourth quarter. Our primary focus is to increase the percentage of connected companies and related dollar volume on our markets. When we empower public companies to connect to our Corporate Services, actively publish ongoing information, and demonstrate global governance standards, our markets become better informed and more efficient. These are the core activities that improve the quality of each company's individual trading market, open up more investor accounts, and expand overall investor interest. As we move these metrics higher, we will improve overall market quality and further separate companies on our premium markets from the imperfections and inefficiencies of securities orphaned on our Pink Limited Market. Preparing for the introduction of tokenized and digital asset securities into our markets is another strategic priority for 2026. As the SEC and Congress continue their work to provide regulatory clarity in these areas, it is vital that we prepare to support our FINRA member broker-dealer, market data customers, and other market participants as they innovate around these new technologies. We also continue to advocate for modernizing digital asset regulation without undermining market integrity. We believe a technology-neutral approach rooted in existing regulatory principles will foster responsible growth, prevent regulatory arbitrage, and reinforce confidence in U.S. market structure. Our regulatory priorities extend further, with a particular focus on capital formation, state Blue Sky laws, and disclosure-based initiatives that will improve the often-overlooked market functionality that provides the backbone of our capital markets. Being public should not be painful, and we need to both lower the burdens on public companies and increase the benefits. We have achieved 50-state Blue Sky compliance for our own shares, so we will use that knowledge to efficiently map the path to national compliance for our corporate clients. International companies on our markets, and the dollar volume traded in these companies, has trended higher in recent years. This is due to a number of factors, including our premium markets for issuers, improved broker-dealer trading functionality across our ATSs, increased access to our market data, and targeted outreach by our Corporate Services team. Continuing to grow our international presence remains a key objective for 2026. We are focused on educating non-U.S. companies about how best to use our market structure, data, and disclosure tools to connect with more investors and build their brands in the U.S. I look forward to updating you on our progress with each of our 2026 core initiatives throughout the year. We have a long history of paying regular quarterly dividends and a special dividend at the end of the year. It is a conservative strategy that gives us operational flexibility and financial resilience. In reviewing companies with similar strategies, we have decided to increase our quarterly dividend to better balance the ratio between quarterly and special dividends. We will also look to opportunistically resume buying back shares in the public market. As such, I am pleased to announce that on March 2, our Board of Directors declared a quarterly dividend of $0.30 per share payable later this month. This dividend reflects our ongoing commitment to providing superior shareholder returns. With that, I will turn the call over to Antonia. Thank you, Cromwell, and thank you everyone for joining us today. Antonia Georgieva: I would like to start by thanking our entire OTC Markets team for driving our business to record revenue, and for the successful execution of our key projects for 2025. I will now review our results for the fourth quarter and year ended 12/31/2025. Any references made to prior period comparatives refer to the fourth quarter or the year ended 12/31/2024. A review of our fourth quarter results is included on page seven. We generated $32,700,000 in gross revenues, up 15% as compared to the prior-year period. Revenues less transaction-based expenses were also up 15%. OTC Link's gross revenues increased 7%, driven by a 12% increase in transaction-based revenues from OTC Link ECM and OTC Link NQB with Moon ATS contributing as we benefited from a higher number of shares traded on those platforms. As an offset, transaction-based expenses also increased 12%. Additionally, OTC Link saw a 6% increase in usage-based revenues, including OTC Link ATS messages due to a higher number of messages and the Quote Access Payment service due to the increased volume of trading activity. Trading volumes remain highly unpredictable and could decline in the future. OTC Link finished the fourth quarter with 117 subscribers on OTC Link ECM, and 77 subscribers on OTC Link ATS, compared to 114 and 82, respectively, at the end of the prior year. OTC Link had 145 unique subscribers to our ATSs at the end of 2025, up four from 2024. Revenues from Market Data licensing increased 17% quarter over quarter, reflecting a 25% increase in the registrar-based revenues, a 14% increase in revenues from direct-sold licenses, and a 3% increase in revenues from data and compliance solutions. Within the 32%, primarily due to price increases from 2025 combined with a 3% increase in professional user count. Nonprofessional user revenues declined 4% as a result of an 18% reduction in reported nonprofessional users, which more than offset the impact of the price increases. Historically, in the normal course of business, we have seen significant changes in the number of nonprofessional users as market volumes and retail participation on our markets fluctuate, and we may experience further decline in the future. Broker-dealer enterprise licenses and internal licenses drove the growth in direct-sold licenses. Broker-dealer enterprise license revenues increased due to the combined effect of price increases and subscriber growth, while internal system license revenues increased due to subscriber growth. Increased revenues from data services and the Blue Sky data product contributed to overall growth in data and compliance solutions revenue, partially offset by lower revenue from EDGAR Online. Corporate Services revenues increased 17% in the fourth quarter. The impact of annual incremental pricing adjustments effective 01/01/2025 and improved sales, combined with a steady average number of OTCQX companies, resulted in an 8% increase in OTCQX revenues. OTCQB revenues increased 11% due to the same factors combined with a higher number of companies on the OTCQB market. In the fourth quarter, we added 41 OTCQX companies compared to 22 in the prior-year quarter, and finished the period with 574 OTCQX companies, up 1%. On OTCQB, we added 71 new companies in the fourth quarter compared to 61 in the prior-year period and finished the quarter with 1,106 OTCQB companies, up 5%. The launch of OTCID on 07/01/2025 resulted in a substantial number of Pink companies upgrading to OTCID and receiving access to DNS as a result. In addition, select Pink Limited companies also chose to subscribe to DNS. The resulting increase in DNS subscribers combined with price increases from the beginning of the year drove a 55% increase in related revenues compared to the prior-year period. As of 12/31/2025, 1,052 companies traded on the OTCID Basic Market, up from 1,035 companies at launch on 07/01/2025. Overall, we had a combined 1,508 OTCID companies and Pink Limited subscribers to DNS and other products at the end of the fourth quarter, representing a 13% increase from 1,338 companies at the end of the prior-year period. Month-to-month variability in our Corporate Services subscribers is driven by new sales, offset by non-renewals, corporate events, and compliance downgrades. Turning to page eight for our full-year results. In 2025, we generated gross revenues of $125,300,000, up 13%. OTC Link revenues increased 17%, driven by the same factors as previously mentioned. Transaction-based expenses increased 39%. Market Data licensing revenues increased 15%, also driven by the same factors as previously discussed, with nonprofessional user revenue increasing 1% for the full year due to price increases offsetting the decline in nonprofessional user count. Corporate Services revenues increased 8%, with a 46% increase in revenues from our OTCQX and OTCQB markets as well as a 29% increase in revenue from the OTCID market and the DNS product, driving the overall increase. During 2025, we added 137 new companies to OTCQX compared to 83 in the prior year, and 293 new companies to OTCQB compared to 190 in the prior year. The retention rate for the annual OTCQX subscription period that began on 01/01/2025 was 96% compared to 93% for the prior year. The net increase of seven in OTCQX companies reflects the 137 new sales, partially offset by 130 OTCQX removals. For the annual OTCQX subscription period beginning 01/01/2026, we achieved a 95% retention rate. Turning now to expenses on page nine. On a quarter-over-quarter basis, operating expenses increased by 6%. The primary drivers were a 6% increase in compensation and benefits, and a 9% increase in each of IT infrastructure and information services costs, and professional and consulting fees. Compensation and benefits comprised 61% of our total operating expenses during the fourth quarter, unchanged from the prior-year period. In the fourth quarter, income from operations increased 32%, while net income and diluted earnings per share each increased 28%. Operating profit margin expanded to 36.3% compared to 31.6% in the prior-year quarter. On a year-over-year basis, on page 10, operating expenses were up 7%, driven by similar factors. Compensation and benefits comprised 63% of our total expense base in 2025 compared to 64% in the prior year. Turning to page 11. For the full year, income from operations increased 19%, and net income increased 14%. Operating margin expanded to 31.5% compared to 29.9% in the prior year. Our diluted earnings per share increased commensurately to $2.58 per share compared to $2.26 per share. In addition to certain GAAP and other measures, management utilizes adjusted EBITDA, a non-GAAP measure which excludes non-cash stock-based compensation expenses. Our adjusted EBITDA was $47,600,000 for the full year 2025, and our adjusted diluted earnings were $3.94 per share, each up 15% compared to the prior year. Cash flow from operating activities for 2025 amounted to $48,600,000 and free cash flows were $48,400,000 compared to $32,900,000 and $31,600,000 in the prior year, respectively. Turning to page 12. During 2025, we returned a total of $32,600,000 to investors in the form of dividends and through our stock buyback program, a 10% increase from the prior year primarily related to an increase in the special dividend. We remain focused on growing our business and delivering long-term value to our stockholders. With that, I would like to thank everyone for your time and pass it back to the operator to open the line for questions. Operator: We will now open for questions. Please press *11 on your telephone and wait for your name to be announced. To withdraw your question, please press *11 again. Our first question comes from Steven Silver with Argus Research Corp. Steven Silver: Thank you, operator, and good morning, everybody. Thanks for taking the questions. Cromwell, you had mentioned that you are looking to build on the momentum in Corporate Services in 2026. And there were a lot of new companies added to OTCQX and QB, but a lot of that was offset by companies leaving as well. Just curious as to your high-level thoughts on momentum in Corporate Services given the flow of companies coming on and off those markets over time? Or markets, rather. Cromwell Coulson: Yes, Steve. I think that is a very good question. You know, every subscription business deals with churn, and there are different reasons for churn. Clients get taken over. Clients go to competitors. Clients have financial distress. And so targeting how we are selling our service into securities that have a foothold of trading liquidity in the U.S., and educating and engaging those companies to use the Corporate Services tools we have built to create better information on investor screens, and better data in brokers’ machines to really close the gap in functionality from the user perspective with exchange-listed securities. And then there are all the activities that once a company takes ownership of a symbol, that they can do around their brand, around their current investor base, and around their potential investor base. You know, successful companies over the long term connect share ownership with other communities of consumers and business partners. And that part of it, I think is for us going to be an important strategy going forward. One bright light is you have seen large issuers joining OTCQX and seeing the value there. And that is, you know, part of it when you use the OTCID to change the conversation. We are addressing churn at the low end by having a product for anybody who is willing to publish and certify information, and it brings in other companies wanting to use our full suite. Steven Silver: Great. And one more if I may. You talk a little bit about increasing visibility into OTCID and ATS Moon contributing to revenues in 2026. But then you mentioned that OTC Overnight is still kind of building that connective tissue and has not yet commenced trading. Is there a timeline for that? Is that anticipated to launch in 2026, or is that still maybe a little further out? Cromwell Coulson: Well, it is live. The industry is figuring out NMS overnight. And the real activity is, while it is broad, most of the activity is trading in a narrow list of names by the bulk of the activity, and it is a big lift for the industry. So the industry is moving thoughtfully forward on that. My belief is that we will see some activity this year. It is a chicken-and-egg game, but the same brokers trade these during the daytime. So it is moving through the development queues for firms, and it will move along. And I have always said, we wanted to do NMS because our clients want that now. And what we learned from NMS is going to be incredibly helpful in bringing the complexity of OTC securities into overnight trading. Steven Silver: Great. Thank you so much for the color, and best of luck throughout the year. Operator: Our next question comes from Brendan Michael McCarthy with Sidoti. Brendan Michael McCarthy: Great. Good morning. Congratulations on a strong quarter and strong year. I just wanted to circle back to the Corporate Services segment and a follow-up question there. On OTCQB, which looks like you had really strong growth in total dollar volume, also very strong growth in dollar volume per security. Is there any, you know, noticeable trend going on there? Cromwell Coulson: Fannie Mae and Freddie Mac. Bill Ackman’s tweets. Brendan Michael McCarthy: Got it. That makes sense. And what is the pivot to? Okay. Simply— Antonia Georgieva: Just to add to that. As we launched our OTCID campaign, that gave us an opportunity to reengage with our entire addressable market for our tiered markets. And many of our potential subscribers considered the full lineup of offerings, and many ended up opting for higher tiers such as QB, as they were being approached to evaluate or consider OTCID. So we saw some of that upselling contribute to the number of companies and the volume as well. Brendan Michael McCarthy: That makes sense. I appreciate the additional color there. And on that topic, Antonia, I think I saw OTCID had just a small drop in subscribers from Q3. Is that primarily due to uplisting, or is there anything to read through there? Antonia Georgieva: In terms of OTCID, you will see fairly regular ups and downs. We have a highly automated process to tag companies as qualifying for OTCID, and around reporting cycles, you may see certain companies being somewhat late, perhaps in filing or failing to meet any of the criteria that the automated process looks for to tag them as OTCID. What we do see is that movement month to month, so I would not necessarily read too much into it. We will continue to monitor the trends in ID subscribers over time, but it is too early to say what that trend really looks like, and the month-to-month variability has to do with just regular filing cycles and other events that occur at our company. Brendan Michael McCarthy: Understood. Brendan Michael McCarthy: And wanted to ask a question on OTC Link. Can you talk about your pricing strategy there? I think I read in the annual report that you are considering potentially competing on price going forward. Maybe talk about your pricing strategy and how that plays into your competitive position. Cromwell Coulson: We—our pricing strategy is a Costco-type strategy, which is subscription-based with quality products on the shelf. And when you buy volume, you get great value. I mean, we like to make money. We do not like to make as much money as the exchanges. Brendan Michael McCarthy: Got it. Thanks, Cromwell. Last question for me. Just wanted to ask about tokenization. It just seems to be a growing topic of discussion across many different industries. We saw ICE announce plans for the New York Stock Exchange to develop a platform for on-chain tokenized securities. Are you taking a similar approach here, or are you awaiting regulatory clarity? How can investors think about your stance on the topic? Cromwell Coulson: We are very involved in the discussion. So there are a lot of tokenized assets that are not securities. There are not many lawful tokenized securities yet. So there are a lot of different discussions and experiments about how these securities will trade, how efficient such trading will be, what is the cost of such trading. We are deeply involved in discussions with regulators, with how do we bring tokenization into the complexity of securities markets, which we have an experience and history of helping brokers trade, publishing data out on them, and assisting issuers in demonstrating their compliance with securities law, and helping brokers understand the risks and lawfulness of different securities. All of that complexity is showing up. We will be there with tokenized securities when they are free trading and lawful. Brendan Michael McCarthy: Understood. Understood. That is all for me. Thank you. Operator: Our next question comes from Walter Hopkins with Eighteenth Square. Walter Hopkins: Hi. Thanks, and congrats on the big quarter and the year. First question is just a sort of high-level question about the company’s overall strategy with organizing the markets. Do you think the current state of the market, with the addition of OTCID, likely reflects the end state of how OTC Markets Group Inc. sort of views the organization of the market into OTCQX, QB, ID, and Pink Limited? Cromwell Coulson: Thank you, Walter, for that question. I would say it is our current state. Bringing out OTCID lets us improve the standards for the higher markets. I would view that standards are always going to be a work in progress. But if you think about the four—if you add the Expert Market, five—buckets that we place securities in, they are pretty well formed from our perspective. They will be tuned over time. We will both add and remove standards as we learn, with the ultimate goal of incentivizing issuers to maximize the amount of information, governance, compliance that actually improves market quality and their investor experience and the broker experience. Now, OTCID was launched in the middle of last year. It is very new. It seems old to us. However, our user bases are just learning to understand it. So this is a long-tail build-out, and we have work to do around building the positive momentum of our premium markets, but we also have work to do educating investors about the reasons for risks and discounts in the Pink Limited Market and the responsibility lying with the managements of those companies, that they have chosen proactively not to do the base-level things that are fiduciary for shareholders and a company that wants to be compliant with rules and regulations in all jurisdictions where they operate or they have investors. That is really important. And as we build that out, you know, that understanding across all the different constituencies, the tiered market structure will become more powerful. And, you know, the future is on screens and in machines. That is where our markets are built for. But the information does not come directly from us. We need others to buy in, and when they buy in, it becomes more powerful. Walter Hopkins: Thank you. And next question is about Moon. Congrats on creating Moon’s success and traction out of thin air. It seems to kind of follow a tradition at OTC Markets Group Inc. creating new products that customers value without, you know, necessarily investing a lot of CapEx. I just have a couple questions on it. To the extent you are willing to share, it looks like daily volume is up significantly so far in Q1. Can you share the sort of run rate that you are seeing so far in the quarter? Antonia Georgieva: We will start putting out more information about Moon volumes in the near term. At that point, you will be able to see more specific statistics. Walter Hopkins: Okay. Thank you. Cromwell Coulson: Walter, the view of platforms is it really takes five years to turn it into a profitable franchise when you are doing the electronic platform business. And so you are doing these steps to gain traction, and then you are building out on it. And it is—you know, we have got a great team, but it is a grinding and elbow grease and one-on-one conversations to really build it out and understand how we can provide unique value to our broker-dealer clients on a competitive basis. Walter Hopkins: Understood. I saw that a competitor suggested that once you get to breakeven, that they thought they would see 90% incremental margins above breakeven. And I guess that is just two questions on that. You know? Is it—given the existing broker-dealer network and the sort of upfront investments that came through IT expense—are—is OTC Markets Group Inc. already at breakeven on the overnight trading side? Cromwell Coulson: They have a different understanding of transactional businesses than I do. So I wish I had that magic, but we are not so special. We have to work harder. Walter Hopkins: Okay. And I saw that they also said that they expected, you know, about half of the revenue to come from transaction volume and the other half to come from market data licensing. Does that seem like a realistic split for OTC Markets Group Inc.? Cromwell Coulson: They have a different view of competitive dynamics in the market data business than I do. Walter Hopkins: Okay. Okay. Understood. And then the last question is just kind of a technical one. I noticed that the OBV drove the GAAP taxes up a good bit, but drove down the near-term cash tax payments. So maybe this one is for Antonia. Do you mind just describing what is going on there and what you might expect the medium- and long-term effect on cash taxes to be? In other words, you know, what is the normalized effective cash tax rate look like for the company? And is it lower? Antonia Georgieva: I will ask our Chief Corporate Controller, Jeff Jim, to weigh in on those questions. Walter Hopkins: Thanks, Antonia. Jeff Jim: Walter, as you have seen on cash flow, where we disclose our tax payments over the past three years, the trend is going down because the OBB were allowed a more beneficial deduction on R&D credits as well as its deductions. So for the next couple years, you will see very similar trends, and with the adjustments, there is a lingering tax benefit that we will take in 2026, and then you will see a slight upward trend in cash taxes. Therefore, for your benefit, the accounting standards were expanded, particularly focusing on additional disclosure in the tax notes. So we provide significantly more enhanced disclosure about our GAAP provision for income taxes as well as cash tax information in the back. If you would like to review that in our annual filing, it is a newly adopted standard, so newly provided enhanced disclosure. We will be happy to follow up with you with a more thorough discussion, but please review our new tax disclosure in Note 14 to the annual report. Walter Hopkins: Okay. Thank you. That is all for me. Thank you all. Operator: Our next question comes from Jonathan Isaac with Quilt Investment Management. Jonathan Isaac: Hi. Thanks for taking my question. Congrats on the quarter. Can you hear me okay? Antonia Georgieva: Yes. Jonathan Isaac: Great. Great. Wondering, can you discuss changes to your capital allocation philosophy? You mentioned in the preamble paying a higher quarterly dividend and better balancing the quarterly and the special dividend, but you also mentioned—and this is music to my ears, by the way—opportunistic buybacks. In the past, buybacks have mostly been used to limit the impact of stock-based compensation, if my memory serves. What specific metrics do you think about when considering opportunistic buybacks? And what influenced you to evolve your capital allocation philosophy? Thanks. Cromwell Coulson: Well, Jonathan, we should question everything, and then we should look around and see what other successful companies have done, especially ones that tend towards enduring. So, you know, looking at our dividend strategy, looking at our buyback strategy, and looking at the ratio, from—you know, I took a look at Hermès as a company that, you know, builds sustainable value over time. You know, they are a luxury brand product, but they put real value into their products. They are not incredibly greedy about margin, and they have had a special dividend for a long time. Then if you switch over to the financial services industry, the CME is an example too. And as you and others have pointed out about in-the-market buybacks, for us, the desire is to be buying back some shares in the market as well. The challenge with buying back in the market is around—you know, let us say 10% for argument’s sake—of our stock turns over in a year. Now I think it is fantastic that we have happy shareholders who do not want to sell. We have a lot of community banks in our market that have the same problem. And I do not think it is actually a problem. I think it is a great thing if you have shareholders who are with you for the long term, so you do not have to run your business quarter to quarter, and the CEO does not have to spend a third of their time convincing new people to buy their stock because others are flipping out of it. However, starting to buy back in the market, and doing it in a manner that we are not putting our finger on the scale, is important. We are a profitable, cash-flow-positive company, so we will look opportunistically. We do not want to be doing it in a manner which could feel overwhelming to other buyers wanting to come in. But we will be opportunistic. And, you know, we are in a position with our financial strength and cash flow, where a mixture of quarterly dividends, special dividends, and buying back stock both as we have to give employees consistency around their stock compensation and, as you said, reduce dilution, but also in the market as well. So I think that is kind of how we look at the lens today, and, you know, we will, as we move forward and find areas in which we can deploy capital for shareholders, we may adjust it. But if we are creating more capital than we need, we are a big believer in being the kind of company that sends its excess capital back to shareholders because we have a group of very intelligent shareholders who know how to deploy that capital in other areas. Jonathan Isaac: Great. Thanks. Considering the firm’s large cash position, which is rather idiosyncratic for your industry, should we expect the new capital allocation philosophy to potentially result in a lower cash balance or even in a net debt position over time? Antonia Georgieva: Jonathan, one clarification on the cash position. There is a clear and well-defined seasonality in our cash position if you look over the years, with the fourth quarter and year-end cash position tending to be the largest, considering that we have an annual renewal cycle for our OTCQX subscription that starts in the fourth quarter of the year prior to the new cycle of QX subscriptions. So we tend to have significantly more collections and cash inflow in the fourth quarter, followed usually by a meaningful reduction in the same cash balance by the end of the first quarter in connection with year-end expenses related to incentive compensation and taxes. So it is more appropriate in our view to look at the cash balance as an average over the year or to trace its general evolution quarter to quarter, rather than focus exclusively on one particular quarter that happens to be our high point. Cromwell Coulson: And, Jonathan, you know, there is a course they teach using spreadsheets at Harvard Business School called “Everything looks better with leverage,” and then every market cycle, there is the school-of-hard-knocks course called “Until it does not.” We run our books conservatively. Now, if we were to acquire something, we would look at debt, but just leveraging up our balance sheet because it makes the numbers look better is not really what I have any interest in for the company where I have the majority of my personal wealth and many of my friends, family, and colleagues here have significant amounts of. It could look better in the short term. Now, if there was a durable cash flow asset that we could buy, that can change. And the companies that you are comparing us to are larger; they have a history in the capital markets. For the most part, they are in the S&P 500. So they have an incredibly low cost of equity capital, and they have a low cost of debt. So, you know, I think that is not something that is in our strategic outlook anytime in the near future. Jonathan Isaac: Thanks for taking my questions. Operator: That concludes today’s question-and-answer session. I would like to turn the call back to Cromwell Coulson for closing remarks. Cromwell Coulson: Thank you, operator. I want to thank each of you for joining us today. I would encourage you to read our full 2025 annual report, the risk statements, and the earnings press release for more information. Links to both are available on our Investor Relations page of our website. On behalf of the entire team, we look forward to updating you on our key initiatives that will continue to shape the integrity and competitiveness of the public markets. Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.
Operator: Hello, and thank you for standing by. Welcome to ATN International, Inc. Fourth Quarter 2025 Earnings Conference Call and Webcast. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, please press *11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press *11 again. I would now like to hand the conference over to Michele Satrowsky. You may begin. Michele Satrowsky: Thank you, operator, and good morning, everyone. I am joined today by Brad W. Martin, ATN International, Inc.’s Chief Executive Officer, and Carlos R. Doglioli, ATN International, Inc.’s Chief Financial Officer. This morning, we will be reviewing our fourth quarter and full-year 2025 results and providing our 2026 outlook. As a reminder, we announced our 2025 fourth quarter results yesterday afternoon after the market closed. Investors can find the earnings release and conference call slide presentation on our Investor Relations website. Our earnings release and the presentation contain certain forward-looking statements concerning our current expectations, objectives, and underlying assumptions regarding our future operations. These statements are subject to risks and uncertainties that could cause actual results to differ from those described. Also, in an effort to provide useful information for investors, our comments today include non-GAAP financial measures. For details on these measures and reconciliations to comparable GAAP measures, and for further information regarding the factors that may affect our future operating results, please refer to our earnings release on our website at ir.atni.com or the 8-K filing provided to the SEC. Now I will turn the call over to Brad. Brad W. Martin: Good morning, and thank you for joining us to discuss ATN International, Inc.’s fourth quarter and full-year 2025 results. Before I get into the details, I want to recognize the exceptional work of our teams across all of our markets. The progress we delivered this year, both in our financial performance and the underlying health of the business, reflects their commitment to operational excellence and to building long-term value for our customers and shareholders. Our fourth quarter results show the continued execution of our strategic plan and further validate the operational improvements we have been implementing across our business segments. We grew revenue, expanded adjusted EBITDA, and improved operating income while continuing to expand our base of high-speed broadband homes passed and high-speed subscribers. For the full year, that execution translated into higher operating profitability, stronger cash generation, and a business that is better aligned with our strategic focus on mobility, high-speed data, and differentiated carrier and enterprise solutions. While there is still more work ahead to fully optimize the business, I believe we are on the right track. 2025 was a turning point for ATN International, Inc., as we shifted from stabilizing the business to clearly demonstrating progress against our strategy. We increased net cash provided by operating activities, reduced capital intensity while continuing to invest in our networks, and grew and improved the quality and durability of our mobility and high-speed subscriber bases across our markets. At the same time, we improved operating income, expanded full-year adjusted EBITDA, and held revenues essentially flat year over year. Together with the recently announced pending sale of our Southwest U.S. portfolio of towers, this positions us to enter 2026 with greater resilience, more flexibility, and with a clear focus on our core strategic objectives. Let me take a moment to review the performance of our two business segments in the fourth quarter. In our International segment, our network investments and focus on service quality are driving growth in mobility and high-speed data subscribers and contributing to adjusted EBITDA expansion. We are seeing the benefits in better network performance, stronger customer retention, and higher data usage, which together support a more durable earnings profile in these markets. We remain focused on deepening customer relationships, continuing to upgrade our networks, and optimizing our operations to further enhance profitability and long-term value. In our U.S. segment, we are seeing tangible benefits from the strategic shift we have been executing in response to changing industry dynamics, particularly in combat. As our large carrier customers have expanded and matured their own product offerings, our approach has been to deepen our role as a partner, to increase carrier managed services while steadily pivoting away from legacy subsidized and lower-margin consumer offerings in certain Southwest consumer markets. This strategy is gaining traction, and we are seeing improved performance as a result, particularly in the 2025. We have a durable presence in Alaska and New Mexico anchored by fiber, fiber-fed fixed wireless infrastructure that is supporting growth in the consumer broadband and carrier services. Over the past year, number of homes passed by high-speed broadband increased 25%, driven primarily by Alaska’s deployment of fiber-fed fixed wireless solutions across Anchorage, Fairbanks, Juneau, and the Kenai Peninsula. These efforts contributed to fourth quarter revenue growth and create opportunity for additional subscriber growth. At the same time, our structural cost actions drove higher operating income and improved margins, particularly in the 2025. Domestically, our broadband infrastructure expansion continued to progress as planned, with several government-supported projects advancing through key milestones during the quarter. These investments remain central to our long-term U.S. growth strategy, enhancing our network capabilities and creating new revenue opportunities as deployments are completed. We continue to leverage available government funding, including federal broadband programs, while maintaining a careful, disciplined approach to capital deployment and aligning spend with the highest return opportunities. We also recently advanced several important strategic initiatives. First, we received notice of provisional BEAD awards and preliminary commitments totaling more than $150 million in key markets such as New Mexico and Alaska, expanding our opportunity past additional homes with fiber and high-speed broadband in underserved communities, and reinforcing our position as a partner of choice in these regions. We are approaching these programs selectively, and expect to invest approximately 10% to 15% of total project costs with our own capital, ensuring that these supported builds align with our financial return thresholds and long-term infrastructure strategy. We currently expect these initiatives to begin contributing to our business results in 2027 and beyond. In addition, we completed the sale of certain U.S. spectrum assets, allowing us to unlock value and further optimize our operations, reinforcing our focus on infrastructure and service-based revenue streams. Taken together, these actions support the long-term growth potential of our U.S. business and demonstrate our ability to attract incremental government funding for network expansion and monetize non-core assets in a disciplined way. Just after year-end, we took another important step with the announced pending sale of our Southwest U.S. tower portfolio for up to $297 million in total cash consideration. Upon full completion, we expect the divestiture to modestly reduce revenue and EBITDA associated with those assets, while providing meaningful proceeds to strengthen our balance sheet and support our long-term growth plans. This transaction unlocks value from an asset we have built over many years, and importantly, allows us to sharpen our focus across ATN International, Inc. on our mobility, broadband, and carrier services business. Combined with the operational improvements we delivered in 2025, the tower sale increases our financial flexibility and enhances our ability to invest in sustainable long-term value creation. Throughout 2025, we did what we said we would do: advance our strategic plan to improve the profitability and cash generation of our operations, maintain high-quality revenue streams and customer relationships, optimize our operating structure, and strengthen the balance sheet. We also grew our mobility and high-speed subscriber base across our markets. These outcomes reinforce our confidence that we are building a stronger, more efficient ATN International, Inc. Looking ahead, we are encouraged by the steady momentum across our business segments and remain focused on disciplined execution. Our priority for 2026 is to convert the network and system investments we have made over the past several years into margin expansion, cash flow, and further balance sheet strength. We are entering the year with positive momentum in both our International and U.S. business segments with a more efficient operating model. We are maintaining a disciplined approach to capital allocation and leveraging available government funding to support continued network growth while enhancing returns. The pending tower sale is a key milestone in unlocking asset value and strengthening our balance sheet, and we intend to use the added flexibility to support our highest priority growth opportunities. Before I turn it over to Carlos for a detailed review of our financial performance, I want to leave you with a clear takeaway. Our 2025 results show that ATN International, Inc. is stronger, more efficient, and better positioned than it was a year ago. We remain confident in our ability to build on this progress and generate long-term value for our shareholders. With that, I will hand it over to Carlos for a detailed review of our financial performance. Carlos R. Doglioli: Thank you, Brad. And good morning, everyone. Let me walk you through the 2025 results and provide some context on our 2026 outlook. Our fourth quarter capped a year of improved financial performance, especially in the second half of the year. Total revenues for the fourth quarter grew 2% to $184.2 million, compared with $180.5 million in the prior-year quarter. Excluding construction and other revenues, communication service revenues increased 3% driven by growth across multiple service offerings. For the full year, revenues were essentially flat at $728 million and in line with our expectations. Increases in carrier services, construction, and other revenues offset decreases in mobility and fixed revenues driven in part by our transition away from legacy offerings in our U.S. markets. Operating income was $15.7 million in the fourth quarter, up from $8.7 million in the same period last year. The improvement reflects the benefit of cost management efforts, including reductions in selling, general, and administrative expenses, and gains on asset dispositions. For the full year, operating income increased to $28.4 million compared with an operating loss of $0.8 million in 2024, which included a $35.3 million goodwill impairment charge. Net loss attributable to ATN International, Inc. stockholders in the fourth quarter was $3.3 million, or $0.32 per share, compared with net income of $3.6 million, or $0.14 per diluted share, in the prior-year quarter. The change reflects the absence of an $8.9 million tax benefit that positively impacted Q4 2024, along with higher other expense resulting from marking a minority equity investment to market in 2025. For the full year, our net loss narrowed to $14.9 million, or $1.38 per share, versus a net loss of $26.4 million, or $2.10 per share, in 2024. Adjusted EBITDA for the fourth quarter was $50.0 million, up 8% from $46.2 million in the prior-year quarter. For the full year, adjusted EBITDA increased 3% to $190.0 million compared with $184.1 million in 2024. The year-over-year growth in both the quarter and the full year reflects our ongoing focus on cost management and margin improvement. Turning now to segment performance. Our International segment continued to deliver top-line growth and margin expansion in 2025. The combination of targeted capital investments in support of our commercial progress and disciplined cost management contributed to higher adjusted EBITDA even as we navigated heightened competitive dynamics in certain markets. Specifically, for the fourth quarter, International revenues increased nearly 3% to $97.3 million from $94.8 million in the prior-year quarter, and for the full year 2025, revenue was up 1% to $381.9 million from $377.5 million for full-year 2024. Adjusted EBITDA for the International segment increased 1% to $32.7 million for the fourth quarter and approximately 4% to $131.6 million for the full year. In our Domestic segment, during the fourth quarter, revenues increased 1% to $86.9 million from $85.8 million in the prior-year quarter, and for the full year 2025, revenue declined just under 2% to $346.1 million compared with $351.6 million for full-year 2024. Adjusted EBITDA for the Domestic segment increased 11% to $21.6 million for the fourth quarter, and declined approximately 2% to $78.5 million for the full year. Our results for the segment reflect the impact of transitioning away from legacy and subsidy-driven revenue streams in the first half of the year and the benefits of stronger performance in carrier solutions in the second half, supported by continued margin improvement efforts. Total cash, cash equivalents, and restricted cash increased to $117.2 million at December 31, 2025, compared with $89.2 million at the end of 2024. Total debt was $565.2 million versus $557.4 million a year ago, resulting in a net debt ratio of 2.36x as of year-end, an improvement from 2.54x at 12/31/2024. Just as a reminder, approximately 60% of total debt resides at the subsidiary level and is non-recourse to ATN International, Inc. parent. Net cash provided by operating activities increased 5% year over year to $133.9 million, driven in part by improved working capital management. Capital expenditures for the full year were $90.0 million, net of $84.6 million in reimbursable capital expenditures, compared with $110.4 million, net of $108.5 million in reimbursements, in 2024. Our capital spending for the year was in the lower end of our guidance range, driven by the timing of some investments that are now expected and incorporated in our 2026 outlook. The year-over-year reduction in net capital spending also reflects our commitment to maintaining more normalized levels of CapEx. We maintained our quarterly dividend of $0.275 per share, paid on January 9, 2026 to shareholders of record as of December 31, 2025. We did not repurchase any shares during the quarter. Turning to the 2026 outlook. As Brad mentioned, earlier this month, we announced that our ComNet subsidiaries agreed to sell a portfolio of 214 Southwestern U.S. towers and related operations to an affiliate of Everest Infrastructure Partners for up to $297 million in an all-cash transaction. We continue to expect the initial closing to occur in 2026 with gross proceeds of approximately $250 million to $270 million, with additional closings occurring over the following twelve months tied to construction and operational milestones. For full-year 2026, and excluding any impact from the pending sale of our U.S. tower portfolio, we expect adjusted EBITDA to increase modestly from 2025 levels to a range of $190 million to $200 million. Our 2026 outlook incorporates a headwind of approximately $5 million related to the conclusion of high-cost funding support for our U.S. Virgin Islands market. Based on current expectations of the second quarter timing of the initial closing for the tower sale, we would anticipate a reduction of approximately $6 million to $8 million to that annual adjusted EBITDA outlook. We also expect capital expenditures to remain within a disciplined range of $105 million to $115 million, net of reimbursable expenditures and reflective of the timing of some investments initially expected in 2025. Together with available government funding, this supports continued network growth while maintaining our focus on cash generation and managing leverage. We plan to revisit and update our 2026 outlook as appropriate after the initial closing of the tower portfolio sale. Before handing the call back to Brad, let me provide some insight into how we expect the quarters to play out in 2026. In the first quarter, we expect adjusted EBITDA to improve compared with the prior-year period, and we expect the second half of the year to deliver the majority of our annual results, consistent with our typical business seasonality. As part of the actions embedded in our plan to achieve our adjusted EBITDA outlook for the year, we expect to incur restructuring and reorganization expenses of $3 million to $4 million in the first half, with most of those costs occurring in the first quarter. Looking ahead, our financial focus remains unchanged: drive operating efficiencies to support margin expansion, continue to allocate capital in a disciplined way, maintain a healthy balance sheet, and expand cash flow. We believe our 2025 results and 2026 outlook show progress toward our long-term objectives and are in line with maximizing shareholder value. With that financial overview, I will turn the call back to Brad for closing comments before we open it up for questions. Brad W. Martin: Thanks, Carlos. To summarize, we closed 2025 with solid operating momentum, stronger cash generation, and a more focused, higher-quality revenue mix that supports our long-term strategy. We are entering 2026 with a healthier balance sheet, more efficient cost structure, and a clear line of sight to further benefits of our strategic initiatives and the pending tower transaction. We will now open for questions. Operator: Thank you. Ladies and gentlemen, as a reminder, to ask a question, please press *11 on your telephone, then wait for your name to be announced. To withdraw your question, please press *11 again. First question comes from the line of Greg Burns with Sidoti. Greg Burns: Morning. Could you just help us understand maybe how the sale of the tower assets might impact your business model in the U.S.? Does that in any way impact your ability to provide managed services to carriers? Brad W. Martin: Morning, Greg. Yes, so really, it is an unchanged business model. Today, we provide our carrier managed services on third-party towers and owned towers, almost about half and half. So really, the continuation business model will remain. We will just be doing more on third-party towers. Greg Burns: Alright, great. And then I see you continue to grow your high-speed data subscribers. Total broadband subscribers continue to decline. Are we nearing a point where maybe some of these legacy services that you are turning down or deemphasizing stop detracting from the overall growth of that business? Or what should we expect next year in terms of maybe your view on broadband subscriber growth? Brad W. Martin: So, Greg, yes, as you mentioned, some of the broadband reductions have been from us shutting down legacy services. That is inclusive of legacy copper services in some markets where we have overbuilt and shut down services and decided not to rebuild in areas, and similarly, in areas in the Southwest where we have taken down where we had unprofitable areas, and we decided to not necessarily compete at the consumer level as we mentioned in my prepared remarks. We will be continuing to partner with major carriers. Yes, we do have BEAD outcomes I spoke to in my remarks. We do expect that to be a key driver in the out years to expand our high-speed subscriber base and obviously expand our assets and facilities. Greg Burns: Okay. And with the expansion of the high-speed data to reach your network in Alaska, could you just talk about maybe some of the changes you have made in your go-to-market or sales strategy to start to accelerate maybe the penetration and growth of your services? Brad W. Martin: Yes. So Alaska, our Alaska market has been historically heavily weighted towards enterprise and carrier. In this past year, they announced a pretty large build-out of a fixed wireless solution. We have been building fiber facilities, fiber-to-the-home, in certain areas of Alaska as well. We do have a new leadership team in Alaska in the last couple of years. We are investing in back-office platforms to effectively enhance the customer interaction, so that is something we are targeting and continue to focus on improving our ability to execute there. But we have work to do. We did see some progress in the back half of the year on subscriber acquisitions, specifically in Alaska. Albeit starting on a small base, but we did actually show over 11% year-over-year improvement in our high-speed data subscribers. Greg Burns: Okay. Thank you. Thank you. Operator: Ladies and gentlemen, I am showing no further questions in the queue. I would now like to turn the call back over to Brad for closing remarks. Brad W. Martin: Thank you, operator. Thank you all again for joining us today and for your questions. We are encouraged by the progress we have made in 2025. We are confident in the path that we are on. We are focused on executing against the priorities we have outlined on today’s call. In the weeks and months ahead, our teams will be meeting with many of you at conferences and one-on-one meetings. We look forward to continuing the dialogue and continuing to update you on our progress as we move to 2026. Thanks. Have a great day. Operator: Ladies and gentlemen, that concludes today’s conference call. Thank you for your participation. You may now disconnect.
Operator: I will be your conference operator today. At this time, I would like to welcome everyone to the NACCO Industries, Inc. 2025 Fourth Quarter and Full Year Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. To ask a question, simply press star 1 on your telephone keypad. To withdraw your question, press star 1 again. It is now my pleasure to turn the call over to Christina Kmetko, Investor Relations. Please go ahead. Christina Kmetko: Good morning, everyone, and thank you for joining us for today’s 2025 fourth quarter and full year earnings call. I'm Christina Kmetko, and I'm responsible for Investor Relations at NACCO Industries, Inc. I'm joined today by NACCO Industries, Inc.’s President and CEO, J.C. Butler, and Senior Vice President and Controller, Elizabeth I. Loveman. Yesterday evening, we announced our fourth quarter and full year results and filed our 10-Ks with the SEC. Both documents are on our website for your reference. We will refer today to several non-GAAP metrics to give you a clearer picture of how we think about our business. Reconciliations to GAAP can also be found on our website. Before beginning our discussion, let me remind you that today’s remarks will include forward-looking statements. As always, actual outcomes may differ materially due to various risks and uncertainties, which are described in our earnings release, 10-Ks, and other filings. We undertake no obligation to update these statements. With those quick notes out of the way, I will turn the call over to J.C. for his opening remarks. J.C.? J.C. Butler: Thanks, Christie, and good morning, everyone. Before I begin, I would like to take a moment to discuss an incident that happened at one of our Florida operations. The safety and well-being of our employees has always been a cornerstone of our company’s values. Despite this focus, a tragic incident in December resulted in the loss of two employees. This loss deeply affected us, and we extend our heartfelt condolences to the family, friends, and colleagues of these two individuals. This is a solemn reminder of the importance we place on protecting the well-being of our people every day. In the aftermath of this tragedy, we are actively reinforcing our safety expectations across the organization. Our employees are the nucleus of our success, and their safety will always come before all else. I will now discuss our operating performance. We delivered a strong close to 2025. Our fourth quarter operating profit rose 95% over last year and almost 12% sequentially. All three of our reportable segments reported improved year-over-year results, led by a significant increase in the Utility Coal Mining segment. Overall, we continued to build upon the improving profitability and growth we experienced in the third quarter, highlighting the second half that overcame operational challenges experienced during the first half of the year. We disclosed over the past several quarters that we were terminating our pension plan during the fourth quarter, and I am happy to report that we have now successfully settled all future pension obligations. As a result of completing this process, we recognized an after-tax termination charge of $6,000,000. This charge, and an increase in tax expense which Liz will explain in more detail, contributed to our reported fourth quarter net loss of $3,800,000. These transactional anomalies aside, I feel good about our underlying operating results, which contributed to the 59% year-over-year and 14% sequential increase in adjusted EBITDA. I believe these results represent a business delivering on its potential. Our Utility Coal Mining segment, which features long-term mining contracts, remains the foundation of our business. I am pleased to say that our Utility Coal Mining segment reported a gross profit this quarter after a number of quarters of losses. For more than a year, I have discussed Mississippi Lignite’s unfavorable contract mechanics that resulted in a lower per ton sales price that unfavorably affected results. The team at Mississippi Lignite Mining Company has worked diligently to mine efficiently and control costs. And this quarter, the mine produced and sold more tons and, as a result, benefited from higher production efficiency and a lower cost per ton sold. Production also outpaced deliveries in the period, leading to certain production costs to be capitalized into inventory. These factors drove the current quarter gross profit compared with the prior-year loss when results were affected by a significant inventory write-down. I would like to be able to say the results at Mississippi Lignite Mining Company are moving in the right direction now, especially with an anticipated increase in the contractually determined price per ton. However, the customer’s power plant began a maintenance outage in mid-February, which is affecting first quarter demand. The power plant is expected to resume operations in mid-March. We are expecting year-over-year improvements at Lignite Mining Company in 2026, but any delay or further changes in demand or dispatch or any reduced power plant mechanical availability could alter our expectations. On our third quarter earnings call, we secured a multiyear dragline services contract as part of a U.S. Army Corps of Engineers dam construction project in Palm Beach County, Florida. This project is already starting to ramp up. We are excited about this opportunity as it advances our growth into large-scale infrastructure projects. This project also provides an opportunity to showcase the efficiency and environmental advantages of the new electro-drive Emtek draglines. We also anticipate commencing operations at a new limestone quarry in Arizona in 2026. Turning to Minerals and Royalties, this segment grew year over year. Royalties from our legacy natural gas assets benefited from higher prices and production, more than offsetting the impact of lower oil prices and production. The Catapult team continues to actively pursue additional investment opportunities to support future growth in earnings. At Mitigation Resources, we expect increasing profitability over time from the sale of mitigation credits and as reclamation and restoration services expand. While performance is currently variable due to permit and project timing, Mitigation Resources is expected to generate a profit in 2026 and move toward more consistent results over time as the business expands. We continue to invest in our businesses to drive future growth. Again, in 2026, we anticipate making significant capital investments. The majority of these planned expenditures relate to business development opportunities, and we will only make those investments if the projects meet our strict investment criteria. Overall, I continue to believe we are well positioned for meaningful growth. We are entering 2026 with clear opportunities to build on our 2025 momentum as we execute our growth strategy and create long-term value for our shareholders. Our approach is rooted in long-term contracts and investments which continue to deliver strong earnings and steady cash flow for compounding, annuity-like returns. We executed on this strategy over the past decade, and momentum continues to build. I remain confident in our businesses and in our ability to deliver strong 2026 results and continued progress in the years to come. Before I turn the call over to Liz, I would like to say thank you to all of our employees. Our team delivered strong 2025 fourth quarter and full year earnings, and their hard work and commitment will enable us to continue to deliver in the future. We have an incredibly strong team across the company, and I am proud of the work that they do. With that, I will turn the call over to Liz to provide a more detailed view of our financial results and outlook. Liz? Elizabeth I. Loveman: Thank you, J.C. I will start with some high-level comments about our consolidated fourth quarter financial results compared to 2024. In the 2025 fourth quarter, we generated consolidated gross profit of $12,000,000, an increase of 42% year over year, while our fourth quarter revenues of $66,800,000 increased 5%. We reported consolidated operating profit of $7,600,000, up from $3,900,000 in 2024, driven by improvements at all three of our reportable segments. These favorable results were partially offset by higher unallocated expenses. Consolidated adjusted EBITDA increased 59% to $14,300,000 versus $9,000,000 for the same period last year. As J.C. discussed, we completed the termination of our pension plan and, as a result, recorded a $7,800,000 noncash pension settlement charge, or $6,000,000 after tax. This charge, combined with the fourth quarter true-up of tax expense to the full-year effective tax rate, resulted in a net loss for the quarter of $3,800,000, or $0.52 per share. This compared to net income of $7,600,000, or $1.02 per share, in 2024. Moving to the individual segments, the Utility Coal Mining segment reported operating profit of $7,200,000 in 2025, a significant increase over the $2,000,000 generated in the 2024 fourth quarter. Segment adjusted EBITDA increased to $9,700,000 from $4,200,000 in the prior year. These year-over-year improvements were driven by the stronger operating performance at Mississippi Lignite Mining Company that J.C. discussed. Lower general and administrative employee-related expenses also contributed to the higher segment operating profit. Looking ahead, we expect an increase in operating profit in 2026 compared with 2025. Improvements at Mississippi Lignite Mining Company as a result of an increase in the contractually determined per ton sales price are expected to be partly offset by lower earnings at the unconsolidated mining operations. The lower unconsolidated mining earnings are due to reduced income at The Sabine Mining Company associated with the wind-down of reclamation services. In the Contract Mining segment, revenues, net of reimbursed costs, grew 9% over the prior year, primarily driven by higher parts sales, partly offset by increased volumes of lower-price tons. Operating profit of $900,000 and segment EBITDA of $3,300,000 were comparable to the prior year. Improved margins at the mining operations and an increase in parts sales were offset by a $1,100,000 loss contingency and lower employee-related expenses. The loss contingency is related to costs associated with the incident J.C. discussed previously. Looking forward, higher customer demand, earnings contributions from new contracts, and continued momentum from 2025 activities are expected to lead to a significant year-over-year increase in results in 2026. The Minerals and Royalties segment delivered year-over-year growth in revenues, operating profit, and segment adjusted EBITDA driven by improved natural gas pricing and increased production volumes due to increased royalty revenues. These benefits were partly offset by lower royalty oil revenues resulting from reduced oil prices and volumes. Lower employee-related expenses and higher earnings from an equity investment also contributed to the year-over-year profit improvement. At the Minerals and Royalties segment, newer investments are expected to contribute favorably to 2026 results. However, commodity price forecasts as well as development and production assumptions are expected to result in an overall year-over-year decrease in operating profit and segment adjusted EBITDA, particularly in the second half of the year. It is important to note that our forecast was developed prior to the recent developments in the Middle East. Any significant changes in commodity prices or production as a result of this conflict could change our expectations for 2026. Overall, we anticipate meaningful year-over-year improvements in consolidated operating profit, net income, and EBITDA in 2026. Turning to our liquidity, for the 2025 full year, we generated cash from operations of $50,900,000 compared to $22,300,000 in 2024. At December 31, we had outstanding debt of $100,900,000, up modestly from $99,500,000 at 12/31/2024. Our total liquidity was $124,200,000, which consisted of $49,700,000 of cash and $74,500,000 of availability under our revolving credit facility. As a result of the anticipated capital investments in 2026, we expect a use of cash before financing greater than in 2025. With that, I will turn the call back to J.C. for closing remarks. J.C. Butler: Thanks, Liz. To wrap up, I remain confident in our trajectory and long-term opportunities. Our businesses provide critical inputs for many industries. As the need for uninterrupted energy grows, industry fundamentals in natural resources are expected to continue to strengthen, reinforcing the critical need to keep existing reliable baseload resources online. In 2026, the National Coal Council, which is an advisory committee to the U.S. Secretary of Energy, was reestablished. This council is focused on advising the Department of Energy on reinforcing coal’s strategic role in U.S. energy policy and providing actionable advice on sustaining coal plant operations and prioritizing coal to support grid reliability, which supports our country’s economic competitiveness and national security. The reestablishment of this council and the underlying improving regulatory environment reinforce my confidence in our prospects for 2026, as well as our overall business trajectory and longer-term growth opportunities. The building blocks for durable compounding growth at NACCO Industries, Inc. are firmly in place. Our team is focused on execution, operational discipline, and delivering long-term returns for shareholders. We will now open for questions. Operator: As a reminder, to ask a question, simply press star 1 on your telephone keypad. Again, that is star 1 to ask a question. Our first question is from the line of Doug Weiss with DSW Investments. Please go ahead. Doug Weiss: Good morning. I guess starting with the coal division, can you quantify how much the step down in Sabine work is? Elizabeth I. Loveman: We have not quantified that number. Doug Weiss: Okay. J.C. Butler: But, I mean, Doug, what I would say—Doug, I think what I would say is, you know, when the plant—when the mine and the plant were operating and we were delivering coal, that was the highest level of income that we received from Sabine. As we step down into reclamation, that, you know, appropriately because, you know, we are scaling down the amount of work, that fee was reduced. As we exit that, you know, that situation, that is when it goes away. So it is not—I just want you to know that it is not going from, like, full-bore production level, which we had, you know, a couple years ago, to zero. It is stepping down from a lower level. Doug Weiss: Right. Okay. And at the same time, your, you know, your price index goes up this year. Right? J.C. Butler: Yes. You are speaking at Red Hills at Mississippi Lignite Mining Company. Yes, we believe—know it is based on what happens to indices month to month, but we believe that we are going to see an increase in price during the course of the year. Doug Weiss: Okay. And does that flow in—you know, is that weighted towards one—is there a seasonal element to that when that really starts to benefit you? J.C. Butler: It is a formula that compares current prices for relevant indices to prior indices. So, you know, it is tracking movements over a one- and five-year period. And so, you know, just as we look at what was happening in the prior periods and what our expectations are in the future periods, we are able to, you know, develop a forecast. There is not really a seasonal component to price. However, you know, there is generally a seasonal component to deliveries. In, you know, particularly in the South, power plants operate at their heaviest in the winter when it is cold, in the summer when it is hot, and the shoulder seasons typically do not operate at the same high level. Doug Weiss: Okay. Yeah. So seasonal was a bad choice of words. I really just meant when in the year do you really start to see the benefit from that index reset? J.C. Butler: Yes. You know, it is really just going to depend on how the indices play out over time. I think we have mentioned before that, you know, petroleum is represented in the basket of indices. And, you know, who knows how that is going to play out with what is going on in the Middle East. But very, very difficult to forecast that at this time. Obviously, when we developed our forecast, we did not know what the Middle East situation was going to develop. Doug Weiss: I see. I mean, could that create kind of a windfall situation given the spike in oil prices? J.C. Butler: I mean, look, I think we could play out lots of scenarios. I think you could say spikes in, you know, various things are going to drive the price up. But, you know, we can also see things happen in the market that cause some of those indices to drop as well. So I think it is really hard to forecast. I mean, every day you pick up The Wall Street Journal and you can read, even in just one newspaper, various views of how this might play out with respect to controlling prices, inflation, interest rates, and all the other stuff. Doug Weiss: Well, and I had understood from your previous comments that it was not actually the wholesale petroleum price. It was more of the diesel price at the pump. Is that true, or did I misunderstand there? J.C. Butler: So the price is based on published indices. So it is not like—it is not like we drive by the local gas station and see what diesel is selling for. It is the nationally, you know, federally published indices. Doug Weiss: Okay. I gotcha. I guess moving on to Contract Mining, how large is the—you know, I know you probably do not want to quantify it, but just relative to a typical contract is the Army Corps of Engineers contract? J.C. Butler: It is a significant contract. We are very excited about the opportunity, as, you know, we mentioned. It is an opportunity for us to apply our skills in a new market. Instead of, you know, mining aggregates that are going to be used either in a cement plant or, you know, sold as crushed aggregates or sand or gravel, this is an opportunity to go use our skills for infrastructure projects. So it is a pretty sizable project for us, and we are excited about the new opportunity and the partnership. Doug Weiss: And what is the timing of that in terms of when that starts and when it gets up to full production? J.C. Butler: We are already ramping up production. I do not actually know when it gets to full production. Liz, do you know that? Elizabeth I. Loveman: I think it is going to depend a little bit on the timing of getting the additional dragline sessions, but it will ramp up throughout this year. Doug Weiss: Yeah. It is going to ramp up throughout the year. J.C. Butler: And, you know, it will be full steam ahead. One of the things that I find interesting about this project that I think we all are encouraged or excited by—this feature is, you know, this is not a contract where we are delivering aggregates. We are mining aggregates for a customer that is responding to customer demand. This is a contract where we have been asked to go in and move X amount of material. And, you know, obviously, we have to work in coordination with our customer to do that. But this is not a contract that has any exposure to market forces. So, you know, I think it is a pretty predictable, nice contract for us. Doug Weiss: Yeah. You think there is an opportunity to add more business like that? J.C. Butler: Well, we do not know, but I think we hope so. Doug Weiss: Yeah. Okay. And how about Phoenix? How substantial is that new business? J.C. Butler: I mean, that also is a nice contract. It is a sizable dragline that we have moved out there. As you know, Phoenix is just exploding with growth. So it seems like, you know, lots of potential there. Doug Weiss: Mhmm. Okay. Interesting. You gave your capital expense targets. I guess two questions on that. Well, I guess I will start—just I will break them up. On the first one, is it reasonable to think that capital will be allocated in a manner similar to 2025 in terms of the divisional breakout? J.C. Butler: You mean, like, the pie chart of CapEx? Doug Weiss: Yeah. Like, how much is going to mining and how much is going to oil and gas and— J.C. Butler: Well, I mean, I guess I would break that down by saying, you know, we are really clear that we budget $20,000,000 of investment capital for our minerals business. And, you know, there is nothing saying that we have to spend that $20,000,000. It is just what we put in our budget. So we spend twenty and, you know, if we do, great. If we do not, that is okay too. We are only going to spend it if we find the right project. So that is kind of a fixed number generally. You know, the total of that we published is a pretty big number. And we said that, you know, the majority of what we are going to spend is with respect to growth. So I think it really determines how those opportunities play out. I think we do disclose a breakout in the 10-K. Liz can probably point us to that in a second. But, ultimately, this is going to depend on what opportunities do we really find. If you are talking about our forecast, it is in the 10-K. If you want to talk about where it actually gets spent, it really is dependent upon what projects we find and which ones, you know, meet our investment criteria. I think we have been really clear about how we think about deploying capital, and if we do not meet our investment criteria, then we just do not invest. Doug Weiss: Right. So in terms of the—sorry. Go ahead. Elizabeth I. Loveman: No. I was going to say you can find the breakout in the 10-K in our MD&A, where we have a discussion of 2025 actual and 2026 planned CapEx. Doug Weiss: Okay. Okay. Great. In terms of the Army Corps of Engineers work and the Phoenix work, that capital has already been spent. Right? So this would be capital for new contracts. Is that right? J.C. Butler: There is some additional capital for the Army Corps of Engineers project. That is going to end up being a three-dragline project. And so we are still getting the final draglines commissioned in order to construct and commissioned in order to do that project. Doug Weiss: Oh, okay. You be able to say about how much is left on that project? Elizabeth I. Loveman: We have not disclosed that. I mean, I would say what we spend in 2026 is included in the $36,000,000 we have for the Contract Mining segment. J.C. Butler: Okay. So that number is in the $36,000,000. Doug Weiss: Yeah. Okay. I guess in terms of allocating to the minerals segment, does Eiger give you—you know, do you have an opportunity to continue to invest capital in that operation? Is that an attractive use of your capital, you know, as they expand? J.C. Butler: Well, I mean, a couple pieces of that. We think it is a very attractive use of our capital. It is why we, you know, invested an additional amount in their operations. I think—and we are very enthusiastic about the investments that we have made with them. I think it is a great piece of our Minerals and Royalties platform. You know, the work that they are doing, I think, is for the most part funded. So I do not—one, I do not know that there would be additional opportunities to invest. But I also think, you know, we want to pay attention to diversifying our investments. You know, the whole premise of Catapult—or our minerals segment—is we started with a highly concentrated investment in Appalachian natural gas assets, and the goal here is to diversify into other basins and other minerals. Eiger is a piece of that. Taking more Eiger, I think, you know, is more concentration as opposed to more diversification, which is our primary goal. Now I am not going to rule out that we would ever invest more in Eiger, but I would say, generally, we are more likely to end up, you know, investing in mineral and royalty interests like we have in the past. Doug Weiss: Mhmm. Okay. If you hit that capital target, my guess is you are going to be somewhat cash negative for the year. Do you have a leverage level where you feel, you know, where you get uncomfortable or where you are willing to go up to? J.C. Butler: Well, I do not ever want to get to a level where I start to feel uncomfortable. You know, we talk often about our desire to have a conservative financial structure. As we have discussed, you know, we have been through a period of investing in all these businesses, and we believe that we are, you know, entering a period of significant harvest in a, you know, investment-harvest business model. So, you know, one, we do not know whether we are going to spend the entire $89,000,000. And, two, we are going to watch our level of harvest that is going on during the year, and we will certainly manage in an appropriate way so that we do not ever get to a point where we are having a call and I am like, I am a little uncomfortable with where we are in our leverage. I do not want to get there. Doug Weiss: Yeah. Okay. I guess last question from me is just on Mitigation Resources. So is most of the revenue in the unallocated line, is that mostly Mitigation Resources? J.C. Butler: Yes. Doug Weiss: Okay. And how are you feeling about that business in terms of growth and, you know, I saw that you said it would be profitable at the end of the year. Is that something you expect to continue going forward into next year? J.C. Butler: Yes. You know, yes, we expect it to reach profitability and grow from there. The mitigation banks—you know, there are two parts to that business. One is the mitigation banking business. Speaking of invest and then harvest, you know, we have identified properties in high-growth areas. In some instances, we will acquire property with opportunity to improve the streams and/or wetlands on that property. And, you know, you get permits approved with the Army Corps of Engineers, and then there is basically a ten-year process where we do work that would involve improving the streams and/or wetlands and then monitoring. And you receive credits. We know upfront how many credits we are going to get, and the mitigation banks that we have already got in place have a very large value of credits that are going to be released from them over time. So we have got a pretty good horizon on the—you call it credit inventory—that we will be able to sell in the future from just our existing credits. Now, you know, that is all subject to timing because, obviously, you have got to get through the Army Corps of Engineers upfront permitting process. Then you have got milestones that we need to hit with the work that we are doing. We are confident that we could be successful with that. But then you also have got, you know, what are customer projects, what is their timing look like, when do they get their Army Corps permit, and how does their development proceed. So we think all of this is moving in a positive direction, and will continue to do so in the future. And all of that gets mixed in with shorter-term reclamation and restoration projects, you know, that we are finding really nice success in that part of the business. So you blend those two together, and we think this business is on a really nice trajectory—trajectory that will really start taking hold later this year. Doug Weiss: Okay. Great. Well, nice quarter, and glad to see things continue to go well overall. And so thanks. Thank you for your hard work and for taking my questions. J.C. Butler: Great. Doug, we always appreciate your questions. Thank you for your interest. Operator: And with no further questions in queue, I will now hand the call back over to J.C. for closing remarks. Christina Kmetko: This is Christina. With that, I will conclude our Q&A session. Before we conclude, I would like to provide a few reminders. A replay of our call will be available online later this morning. We will also post a transcript on the Investor Relations website when it becomes available. If you have any questions, please reach out to me. My phone number is in the press release. An audio recording of the event will be available via the Echo Replay platform. The Echo Replay will expire on Thursday, March 12, 2026, at 11:59 PM. Operator: This does conclude today’s conference call. You may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to Aquestive Therapeutics, Inc. Fourth Quarter 2025 Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press *11 on your telephone. You will then hear an automated message advising your hand is raised. Please note that today's conference is being recorded. I will now hand the conference over to your speaker host for today, Faith Pomeroy Ward. Please go ahead. Faith Pomeroy Ward: Thank you, operator. Good morning, and welcome to today's call. On today's call, I am joined by Dan Barber, President and Chief Executive Officer, and Ernie Toth, Chief Financial Officer, who are going to provide an overview of the company's reported financial results for the fourth quarter and full year ended 12/31/2025 and a progress update on the company's key 2026 objectives, followed by a Q&A session. During the Q&A session, the team will be joined by Dr. Matt Greenhawk, Chief Medical Officer, Molina Chaffee, Senior Vice President, Regulatory Affairs, Sherry Korczynski, Chief Commercial Officer, and Dr. Matthew Davis, Chief Development Officer. As a reminder, the company's remarks today correspond with the earnings release that was issued after market close yesterday. In addition, a recording of today's call and related supplemental materials will be made available on Aquestive Therapeutics, Inc.'s website within the investor section shortly following the conclusion of this call. To remind you, the Aquestive Therapeutics, Inc. team will be discussing some non-GAAP financial measures this morning as part of its review of fourth quarter and year-end 2025 results. A description of these measures along with a reconciliation to GAAP can be found in the earnings release issued yesterday, which is posted on the investors section of Aquestive Therapeutics, Inc.'s website. During the call, the company will be making forward-looking statements. We remind you of the company's safe harbor language as outlined in today's earnings release as well as the risks and uncertainties affecting the company as described in the Risk Factors section and in other sections included in the company's Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission on 03/04/2026. As with any pharmaceutical company with product candidates under development, and products being commercialized, there are significant risks and uncertainties with respect to the company's business and the development, regulatory approval, and commercialization of its products and other matters related to operations. Given these uncertainties, you should not place undue reliance on these forward-looking statements, which speak only as of the date made. Actual results may differ materially from these statements. All forward-looking statements attributable to Aquestive Therapeutics, Inc. or any person acting on its behalf are expressly qualified in their entirety by this cautionary statement and the cautionary statements contained in the earnings release issued yesterday. The company assumes no obligation to update its forward-looking statements after the date of this conference call, whether as a result of new information, future events, or otherwise, except as required under applicable law. I will now turn the call over to Dan Barber. Thanks, Faith. Dan Barber: Good morning, everyone, and thank you for joining us. Today, my message to you is simple and clear. This is a great moment in Aquestive Therapeutics, Inc.'s evolution, and I am filled with optimism for our future. I am filled with optimism because I believe our path has never been clearer. I believe our risk profile has never been lower. I believe our transparency allows all of you to see this as well. Let me walk you through where we are today on bringing ANNAFILM to market here in the U.S. as well as around the world. We believe we have a very clear and achievable set of from the FDA on resubmission of our NDA. We have submitted our Type A meeting request and expect to have a discussion with the FDA within the next 30 days. We have already selected our clinical research organizations for both the human factor study and PK study and continue to prepare for dosing. We are agreeing to everything the FDA requested with one minor clarification on the arms required for the PK study. We have already modified our packaging to make the pouch easier to open, and this has no impact on stability or durability. We are reiterating today our commitment to filing our resubmission in the third quarter of this year. You can also find more specific details on our program, including pictures of the revised packaging, in our supplemental materials found on our website. While it is great to have a clear path and plan, you also need the right team. And I am fortunate that we have a fantastic development team here at Aquestive Therapeutics, Inc. With the recent addition of Dr. Matt Greenhawk, a world-renowned allergist and this year's recipient of the prestigious Distinguished Clinician Award by the American Academy of Allergy, Asthma, and Immunology, or Quad AI, and the addition late last year of Dr. Matthew Davis, a seasoned development leader from large established organizations, we have the clinical expertise to efficiently conduct our development studies, interact effectively with the FDA, and appropriately inform the medical community of our clinical results. This is by far the strongest clinical team Aquestive Therapeutics, Inc. has ever had. In fact, it will be important that we get our scientific and medical information out to the community as broadly and deeply as possible this year. That is why, in addition to Dr. Greenhawk joining us, we are more than doubling the size of our medical affairs organization. This will allow us to attend more conferences, educate more physicians on our data, and provide the community with more scientific publications in the coming months. This clinical and medical prowess also aligns with our work outside the U.S. We remain on track to file in Europe and Canada before the end of the year. We also will be meeting with the U.K. Health Authority, known as MHRA, in the coming weeks. We are confident that ANNAFILM can benefit all humans, and we want to expand access to our product outside of the U.S. as rapidly as possible. Now, let us turn to the commercial side. Launching a prescription drug in the U.S. is extremely difficult. It requires considerable capital, patience to work through the complexities of the payer world, and significant marketing efforts across a variety of channels. Similar to development, this takes having the right people. As you may recall from my comments a month ago, Sherry Korczynski, our Chief Commercial Officer, and I made the decision to keep the core commercial leadership team intact following our CRL. That team continues to do great work and prepare for launch. This extra preparation time allows us to think bigger, and we are guiding today that we will launch with 50% more sales reps upon approval compared to our previous guidance. This means we expect to have 75 reps at launch versus the previous guidance of 50. Our planning process indicates we should be able to do this from a close to cash neutral position by 2027. Speaking of cash, as stated before, launching a drug takes tremendous amounts of capital. Accessing this capital means making sure you have the right investors who believe in your product, your story, and your team. That is why we were excited to announce today that RTW has extended their revenue-sharing agreement with us to consummate any time before 06/30/2027 and has also agreed to invest additional capital in the company. We appreciate the faith put in us by the RTW team, and like all of our investors and shareholders, take this responsibility seriously. This, along with our cash guidance that Ernie will discuss in a few minutes, we believe positions us well for a potential launch. In terms of the underlying allergy market, we continue to see overall prescription growth. EpiPen and generic auto-injectors grew by approximately 5% in 2025, and the overall market grew by just over 9%. Importantly, we also continue to see a market that seems to be waiting for the the first oral epinephrine product. Over 90% of prescriptions remain with auto-injectors. And obviously, the entire market continues to use medical devices. As I have stated in the past, we believe seeing is believing with our oral medication. When patients have the physical film in front of them, our data indicates they will almost always choose the film over auto-injectors and nasal sprays. Given the potential near-term launch of ANNAFILM in the U.S., if approved by the FDA, we will continue to both simplify and grow our overall business where possible. From a litigation standpoint, this means we will continue to seek ways to simplify our workload while also appropriately defending our business. In December, we reached a settlement agreement in a nine-year long defamation lawsuit brought by a competitor, and I am pleased to remove this distraction from the business. This marks the fourth lawsuit we have been able to have withdrawn, get thrown out of court, or reasonably settled over the last four years. We are also guiding that due to the timing of a potential ANNAFILM launch, our initial focus with Libervant will be licensing the product in the U.S. We have several parties already interested and actively engaged in discussions. We will keep you updated on this as the year progresses. We continue to believe Libervant is a tremendous product that can meaningfully improve patients' lives. We also note that the two nasal spray products available for the treatment of seizure clusters are forecasted to exceed over $400,000,000 in sales this upcoming year. We continue to progress nicely with multiple parties in Europe for a license of ANNAFILM and expect to use a licensing approach for that market. Finally, we also have our eyes towards the long-term future of the company. We continue to believe in the long-term multiproduct potential of Adrenoverse, our prodrug epinephrine platform. We successfully opened an IND for AQST-108 in December 2025, completed dosing of our initial safety study last month, and expect to have top-line clinical data in the near future. We will keep you informed on this program as we move forward. In summary, now is a great time for Aquestive Therapeutics, Inc. We have a clear path to market for ANNAFILM. We have a clear path to the necessary capital to launch ANNAFILM if approved by the FDA. We have the right clinical, regulatory, and commercial leaders to effectively execute on our strategy. We are focused on out-licensing activities for Libervant and ex-U.S. for ANNAFILM, and we continue to progress our long-term pipeline. I will now turn the call over to Ernie. Ernie Toth: Thank you, Dan, and good morning, everyone. By now, you have seen our financial results in our earnings release that was issued last evening. As we typically do, we will address most of the discussion related to the fourth quarter 2025 and full year 2025 results in the Q&A. During 2025, we made great progress in positioning Aquestive Therapeutics, Inc. for future success, including submitting the NDA for ANNAFILM, the first and only noninvasive, orally delivered epinephrine product, if approved by the FDA; closing an $85,000,000 equity raise from high-quality institutional healthcare investors; secured $75,000,000 in revenue interest financing from RTW upon approval of ANNAFILM; and ended 2025 at $121,000,000 with cash runway to support costs associated in preparing for the ANNAFILM NDA resubmission, including the new human factors validation study and supportive PK study; precommercial infrastructure costs to increase awareness of ANNAFILM through the execution of its medical affairs strategy, including presenting scientific data in medical forums throughout 2026; planned regulatory submissions in Canada and in the EU; and the 108 Phase 1 clinical trial. As outlined in the press release issued last night after market close, we announced an extension until 06/30/2027 of our agreement with RTW. This extension secures the availability of the revenue interest financing to support the commercial launch of ANNAFILM if approved by the FDA. RTW has also agreed to an additional strategic investment of $5,000,000 in Aquestive Therapeutics, Inc., showing continued confidence in the company. Now let us turn to the recap of our quarterly and full-year financial results. Total revenues increased to $13,000,000 in the fourth quarter 2025 from $11,900,000 in the fourth quarter 2024. This 10% increase in revenue was primarily driven by increases in manufacturer and supply revenue. Manufacturer and supply revenue increased to $12,000,000 in the fourth quarter 2025 from $10,700,000 in the fourth quarter 2024, primarily due to increases in Suboxone revenues and ONDEEF revenues. Excluding the impact of one-time recognition of deferred revenues during the full year 2024, total revenues decreased by $1,500,000, or 3%, to $44,500,000 for the full year 2025. As a reminder, the one-time recognition of deferred revenue in the prior year was due to the termination of a licensing and supply agreement. Including the deferred revenue recognized in the prior year, total revenues decreased to $44,500,000 for the full year 2025 from $57,600,000 for the full year 2024. Manufacturer and supply revenue increased to $40,200,000 for the full year 2025 from $40,000,000 for the full year 2024, primarily due to increases in ONDEEF revenues partially offset by decreases in Suboxone revenues. R&D expenses decreased to $3,200,000 in the fourth quarter 2025 from $4,900,000 in 2024. The decrease in R&D expenses was primarily due to a decrease in clinical trial costs associated with the continued advance of the ANNAFILM development program and a decrease in share-based compensation. R&D expenses decreased to $17,200,000 for the full year 2025 from $20,300,000 in the full year 2024. The decrease in R&D expenses was primarily due to lower clinical trial costs associated with the continued advancement of the ANNAFILM development program partially offset by increases in product research expenses and share-based compensation. Excluding one-time legal expenses, selling, general, and administrative expenses increased to $19,600,000 in the fourth quarter 2025 from $16,000,000 in 2024. Including the one-time legal expenses, selling, general, and administrative expenses increased to $32,800,000 in the fourth quarter 2025 from $16,000,000 in 2024, primarily due to higher legal expenses of approximately $13,600,000, higher commercial spending of approximately $3,700,000 in preparation for the launch of ANNAFILM, higher personnel expenses of approximately $800,000, and higher share-based compensation of approximately $200,000, partially offset by lower severance expenses of approximately $1,700,000 and lower regulatory and licensing fees of approximately $500,000. Excluding one-time legal expenses, selling, general, and administrative expenses increased to $66,600,000 for the full year 2025 from $50,200,000 for the full year 2024. Including one-time legal expenses, selling, general, and administrative expenses increased to $79,800,000 for the full year 2025 from $50,200,000 for the full year 2024. The increase primarily represents higher legal fees of approximately $14,300,000, higher commercial spending of approximately $9,600,000 in preparation for the launch of ANNAFILM, the ANNAFILM PDUFA fee of $4,300,000, higher personnel expenses of approximately $1,900,000, higher regulatory expenses related to ANNAFILM of approximately $1,000,000, and higher share-based compensation expenses of approximately $900,000, partially offset by decreases in severance expenses of approximately $2,800,000 and lower insurance expenses of approximately $600,000. Excluding one-time legal expenses, Aquestive Therapeutics, Inc.'s net loss for the fourth quarter 2025 was $18,700,000, or $0.15 for both basic and diluted loss per share, compared to the net loss for the fourth quarter 2024 of $17,100,000, or $0.19 for both basic and diluted loss per share. Including one-time legal expenses, Aquestive Therapeutics, Inc.'s net loss for the fourth quarter 2025 was $31,900,000, or $0.26 for both basic and diluted loss per share, compared to the net loss for the fourth quarter 2024 of $17,100,000, or $0.19 for both basic and diluted loss per share. The increase in net loss was primarily driven by increases in selling, general, and administrative expenses, and manufacturer and supply expenses, partially offset by decreases in research and development expenses and increases in revenue and interest income and other income. Excluding one-time legal expenses, Aquestive Therapeutics, Inc.'s net loss for the full year 2025 was $70,600,000, or $0.66 for both basic and diluted loss per share, compared to the net loss for the full year 2024 of $44,100,000, or $0.51 for both basic and diluted loss per share. Including one-time legal expenses, Aquestive Therapeutics, Inc.'s net loss for the full year 2025 was $83,800,000, or $0.78 for both basic and diluted loss per share, compared to the net loss for the full year 2024 of $44,100,000, or $0.51 for both basic and diluted loss per share. The increase in net loss was primarily driven by increases in selling, general and administrative expenses, and manufacturer and supply expenses, and decreases in revenue, partially offset by decreases in R&D expenses and increases in interest income and other income. Excluding one-time legal expenses, non-GAAP adjusted EBITDA loss was $14,100,000 in the fourth quarter 2025, compared to non-GAAP adjusted EBITDA loss of $11,000,000 in the fourth quarter 2024. Non-GAAP adjusted EBITDA loss, excluding adjusted R&D expenses and one-time legal expenses, was $10,800,000 in the fourth quarter 2025, compared to non-GAAP adjusted EBITDA loss, excluding adjusted R&D expenses, of $6,600,000 in the fourth quarter 2024. Excluding one-time legal expenses, Aquestive Therapeutics, Inc.'s non-GAAP adjusted EBITDA loss was $49,700,000 for the full year 2025, compared to non-GAAP adjusted EBITDA loss of $23,000,000 for the full year 2024. Non-GAAP adjusted EBITDA loss, excluding adjusted R&D expenses and one-time legal expenses, was $34,400,000 for the full year 2025, compared to non-GAAP adjusted EBITDA loss, excluding adjusted R&D expenses, of $4,000,000 for the full year 2024. As of 12/31/2025, cash and cash equivalents were at $121,200,000. As outlined in the press release issued last night after market close, our outlook for 2026 is total revenue of $46,000,000 to $50,000,000 and non-GAAP adjusted EBITDA loss of $30,000,000 to $35,000,000. We expect to end 2026 at approximately $70,000,000, excluding any additional proceeds from RTW or out-licensing transactions. Our non-GAAP adjusted EBITDA loss guidance for 2026 includes costs associated with the resubmission of the NDA for ANNAFILM, continued precommercial infrastructure spending for ANNAFILM, clinical trial costs for AQST-108, and regulatory applications for ANNAFILM in Canada and the EU. Current guidance does not include costs associated with the sales and marketing of ANNAFILM if approved by the FDA. I will now turn the line back to the operator. We will now open for questions. Operator: Thank you. To ask a question, you will need to press *11 on your touch-tone telephone. To withdraw your question, simply press *11 again. Please standby while we compile the Q&A roster. Our first question comes from the line of Roanna Ruiz with Leerink Partners. Your line is now open. Roanna Ruiz: So a couple for me, starting with the Type A meeting with the FDA. I just wanted to confirm I heard it correctly. It sounds like you submitted a request, but it has not been scheduled yet, but that could happen soon. And secondly, could you elaborate a bit on your main goals going into this meeting? And is there any additional information you need to prepare for the FDA for this meeting? Dan Barber: Sure. Good morning, Roanna. I will hand it over to Molina in a second here. Just a couple of basic things. We have submitted. We expect that meeting to happen shortly. I will let Molina walk you through the contract that the FDA has to uphold. From a goals perspective, we do not need a lot out of this meeting, and I will also let Molina elaborate a little bit on that. Molina Chaffee: Thank you, Dan. So in terms of the timing, the FDA guidelines state that the agency should meet with the sponsor within 30 days from the date that we submitted our meeting request and our briefing book. So if they go according to the timeline, we should be able to meet with them towards the end of this month or very early April. In terms of the goals of the meeting, we shared with them our briefing book that outlined our commitment to conduct the two studies that they requested in the CRL. And we also asked questions to ensure that we walk away essentially from this meeting with clear alignment on how best to execute for the purpose of the research. Dan Barber: Right. And Roanna, I would just remind you and those on the call, it has been 31 days since we received our CRL. And in those 31 days, we have not only written the protocols, contracted our CROs, changed our packaging, written a briefing book, resubmitted that briefing book to the FDA, but obviously also brought on a new Chief Medical Officer, and we designed our deal with RTW. So we feel really good that we are on track in every way. And the Type A meeting is just one part of that. Roanna Ruiz: Yep. And a follow-up on that, I think you mentioned doing a modification to the proposed protocol that the FDA mentioned in the CRL? Or could you just explain a bit more about that? Is it relatively straightforward? And, you know, how should we think about it moving with the FDA interaction with you coming up? Dan Barber: Yeah. That is in my view. So we will not get into the exact question. We will obviously be able to share that in a few weeks here. But that is literally the only question we have for the FDA, and we are fine with the answer either way. So the minor modification Matthew Davis and his team just want to make sure they understand how the FDA is thinking about it. And once we have the answer, there is nothing more we need. Operator: Okay. Great. Thank you so much. Our next question comes from the line of Kristen Kluska with Cantor Fitzgerald. Your line is now open. Kristen Kluska: Good morning, everybody. Thanks for taking my questions. I have a couple as well. First, on the RTW, great to see you extended that option. I noticed that the language was through June next year. You had told us that your expectation is that it would be a six-month review upon submitting. Is the timeline here just to give you a little bit of buffer room on the back end? And then, also, can you just confirm that it is still $75,000,000 and that those terms have not changed? Dan Barber: Yeah. The second question, I will turn over to Ernie in a second. But in terms of the timing of why 06/30/2027, that is easy, because it is easy to modify by one year. We in no way expect to need anywhere near that amount of time to bring our product to market, but it is just an easy way to update the contract. But I will let Ernie talk about any other changes. Sure. Ernie Toth: Hi, Kristen. Yes. We confirm that none of the terms have changed. I think the important thing is here, with the additional purchase of $5,000,000, you know, we appreciate their continued support as we move forward through the process this year of resubmission and, hopefully, an approval and launching the product next year. Kristen Kluska: Okay, thank you. And then I know Sherry and team have been doing a lot of work in terms of mapping territories this past year. So I wanted to ask a little bit more on this decision to add 50% more sales reps. Was this just driven by seeing new pockets where you think you would need more boots on the ground, or is there anything specific that led to the decision as well as the specific percent more that you will be adding? Dan Barber: Sure. I will let Sherry pick that. Sherry Korczynski: Hi, Kristen. How are you? Thanks so much for asking this question. We are very excited about our decision. Why did we do it? We went back, as we have been doing with all of our commercial work that we were preparing for launch, to say how many more reps would we need to cover much deeper, penetrate much deeper into the allergist market, and in the same regard ensuring that the reps will be calling on the pediatricians that are the high-decile pediatricians. We took a look at the reach and frequency that we are able to achieve by moving towards approximately 75 reps. There are a couple reasons why that made sense. One was obviously, with smaller territories, it allows our reps to have greater efficiency, as that will allow them not to have to travel hours to see all the important physicians. So one, it is greater efficiency. Two, it closes white space. So as I am sure you can imagine, with 50 reps, we would have had a lot of white space. We would have handled that through inside sales reps. However, again, by moving to the 75 reps, it gives us much greater coverage. Dan Barber: And, Kristen, I think you can see that our investment in the allergy community is growing in general, so it is not just the reps, but with Matt Greenhawk and the medical affairs team getting bigger as well, our ability to be out there with publications. You saw our presence at Quad AI last week. We are the furniture. We are front and center as being ready to launch. Operator: Thanks, everyone. Dan Barber: Thank you. Operator: Our next question comes from the line of David Amsellem with Piper Sandler. Your line is now open. David Amsellem: Thanks. So just a couple for me. One is maybe taking a step back, can you talk about how you settled on the trial design and are you prepared to make any modifications to the design coming out of the meeting with the FDA if necessary? Just wanted to get a window into your thought process in terms of how you designed the trial. So that is number one. Number two is, with the Salesforce, the bigger Salesforce, I wanted to ask how you are thinking about DTC. Are you going to take a more expansive approach to DTC? And that is particularly in the context of your competitor being fairly aggressive here. So I wanted to get your thoughts on that. Then lastly, on 108, real quick question. I think you made a comment in the press release about indication selection. So just want to be clear. Is it going to be alopecia areata, or are you thinking about other indications or maybe pivoting to something else? Just wanted to clarify on that. Thank you. Dan Barber: Sure. Good morning, David. So let me take the Salesforce DTC question first, and then I will hand it over to Matthew to talk about trial design, especially on the PK side, and how we can be ready for any modifications if necessary. So from a DTC perspective, we still believe that DTC is best served once you have a reasonable market share. And we also have a competitor, to your point, who is spending a lot of money on DTC, which we see growing the overall market. So it is growing the auto-injector market. So we continue to believe, let the competitors spend money in that area, we focus on our touches directly with reps. But let me pass it over to Matthew on your question number one, which was how we settled on our trial design and if we have to make modifications. Matthew Davis: Thank you very much for the question. We have the optionality of doing two things at the same time. So upon looking at the FDA's request, we have a trial design that is in line with what the information they want to seek. And we also believe, based on our 11 other PK trials that we have done, we have enough information to categorize some of that information and, with the updated human factors research that we are going to do, believe that maybe not all the arms are going to be necessary. But if the FDA at the meeting provides these trial designs to be exactly what they asked in the CRL, we are also ready to do that. So at the end of the FDA meeting, we are going to have the clarity for the trial design. We already have protocols to take optionality into account, and we will meet our commitments that Dan has already stated for the finishing of the trial and the resubmission of Ativan. And I will actually stick with Matthew here for the third one, which is the indication selection for 108. I will say alopecia areata remains the indication we are focused on. But Matthew can give his thoughts on, as we go through the development process, if there are other opportunities we might see. Matthew Davis: Now I am going to elaborate more once we have got the results of the current trial that we have done. But in a 50,000-foot view, not only do we look at alopecia areata, we also looked at healthy patients. And looking at the product's pharmacokinetics and safety, and other factors like proteomics. This will help inform us of future indications. So more to come on that, but we are making sure we have optionality to continue on with alopecia areata and also look at other topical indications that 108 would be designed for. David Amsellem: Okay. That is helpful. Thank you. Dan Barber: Okay. Thank you. Operator: Our next question comes from the line of François Brisebois with LifeSci Capital. Your line is now open. François Brisebois: Hey. Thanks for the questions. I was just wondering, in terms of the added reps here, the 50% more reps, can you remind us the timing of the hiring here? Is this kind of a post-approval or pre-approval? Or just remind us of your thinking? Sherry Korczynski: Yeah. Thanks for the question. Yes. We will continue to follow the same path that we were prepared for for a launch this year. We will be interviewing and going through the process so that once we do have approval, then we would flip them immediately to full-time employees. So think about it the same way. Contingent offers go out, and we are ready to go upon launch. Dan Barber: And, François, I will just add to Sherry’s comments. Just like before, that does not delay our launch at all. So there is a natural period of a few weeks after approval, as you know, where the supply chain has to kick in, and Sherry and her team have done a great job of being ready to strike during that period and make sure we have all of our reps ready to go by the end of that supply chain work. François Brisebois: Okay. Great. And then if I can follow up, just any updates on this citizen’s petition? Where does that stand? And then maybe if you can also touch on, you know, you were just at Quad AI. I assume it was a busy weekend. I am just wondering any takeaways from your perspective on how Quad AI went for Aquestive. Dan Barber: Sure. Yes. So the citizen petition that was filed by a competitor was denied by the FDA last week, which to us obviously was what we expected, but it is another validating point for our data package. So, in addition to the strong outcome and the de-risking event you saw out of the CRL where it is focused on human factors, we also now see, just a matter of a couple of weeks later, a moment where the FDA is once again validating the strength of our package. So we feel really good about where we are with the FDA, especially from a clinical perspective. As you heard from the team, we are on track, and we are ready to go. In terms of Quad AI, which was last weekend for those who are not familiar, and that is the biggest allergy conference in terms of attendance in a year, my biggest learning, and I will toss it over to Sherry in a second too—you know what, let us actually let Matt Greenhot join in as well. So in a second, I will pass it over to Matt instead of Sherry. But from my perspective, what I heard consistently were two things. One, the allergist community believes in our ability to get to approval given what was in the CRL. And two, they cannot wait for our product. So, very excited on both those fronts. Matt, maybe you could give a couple of your thoughts. Hi. Good morning. Matt Greenhawk: As usual, the Quad AI is a very busy and intense meeting. There are a lot of allergists, not only from the U.S., but globally, so it is a good draw. What I observed was a lot of excitement and curiosity about a new option for treating patients. As a practicing allergist, something like this adds a lot of potential to how we can help serve patients. So to be able to interact with allergists and other people coming up to the booth and seeing us walking through the halls, the feedback is very consistent with what Dan just said, that there is excitement, there is curiosity. So it is exciting. In a year from now, I think it will be even more exciting. Operator: Excellent. Thank you. Thank you. Our next question in queue comes from the line of Andreas Argyrides with Oppenheimer. Your line is now open. Andreas Argyrides: Good morning, and thanks for taking our questions. A couple from us here. So how are you viewing the requirements of the PK study as diverging from previous PK studies, including chewing and with or without water intake? How are you thinking about addressing the FDA's concerns around tolerabilities despite what you point to are minimal cases? And you recently presented additional data at Quad AI around diastolic blood pressure, citing no dip there. Can you elaborate on the importance of these data with regards to the FDA? Thanks so much. Dan Barber: Sure. Good morning, Andreas. So I will spread the wealth with these three questions. I will have Matthew in a second talk about the requirements from PK prior, including chewing. I will ask Matt to talk about diastolic blood pressure, and then I will finish up on tolerability. But Matthew, why do you not start? Matthew Davis: So this would be our twelfth trial on this product. So like the other studies, we are going to use the same vendor that we had excellent experience with. We are going to use the same laboratory that we had excellent experience with. We are going to, as the FDA requested, have all patients have healthcare-administered ANNAFILM. Like the FDA requested, we are going to have all patients also have an injection of intramuscular epinephrine, and we have done this for our other pharmacokinetic drugs. As the FDA requested, we are also going to have patients, some patients, receive self-administered epinephrine ANNAFILM that is going to follow the new updated Instructions for Use that are going to be tested and validated in the human factors form. In addition, the FDA has requested top of tongue, and that was by far our largest observation in the last human factors trial. Of course, we will be doing this. We will have a discussion with the FDA on your other question on chewing. We believe that this information can already be informed in the labeling by the fact that patients have already been tested and swallowed ANNAFILM with eight ounces of water, and those patients did reach a therapeutic level of above 100 grams per milliliter. So we will have that discussion with the FDA. If the FDA believes that we have enough information to inform the label, as we believe, then we will proceed with the design that I just stated. If the FDA would like us to continue with the design that they stated, we also will do what they request. Either way, we are ready for this trial. Matt Greenhawk: Diastolic blood pressure is one of these interesting things clinically. You need your diastolic blood pressure to help maintain feeding blood to your coronary arteries during the shock. So one of the things that has been observed now for a number of years, with additional data with auto-injectors, is that with the injectable route you see a slight dip for a couple of minutes where the diastolic blood pressure goes down and then comes up. And film operates a little bit differently than that, in that there is no initial shift. So what that may lead to is potential improvements in something called mean arterial pressure, which in shock, it is a distributive shock. You think about your plumbing system. There is runoff downstream, and there is low pressure. You want to increase your mean arterial pressure. It will help perfuse your coronaries. It will keep the system running at a higher pressure. When you are resuscitating a patient, that is really what you are aiming for. So you seem to see fairly ideal properties that one would want on paper for how you would resuscitate somebody. And, you know, it is exciting to be able to report those data. These are very interesting studies. You learn a lot about the epinephrine space with each of these studies that gets reported. Dan Barber: And, Andreas, let me take the tolerability piece. One of the things we did not overly focus on in our original submission is what tolerability looks like across all of the products. So it is interesting when you step back and you look at the experience with the medical devices, there are multiple tolerability issues that occur, and we do not need to go into the specifics for each product on this call. But in our resubmission, we will definitely be making sure we characterize our product versus the alternatives that are available. And then, as we stated in the supplemental material that you can see, if you go back to our study, there are very few cases. There are four individuals who had any ability to point to tolerability, one of the individuals who said unprompted, well, if my life was at risk, I would leave the product in as long as I needed to. So I think on this issue, I would put it at much ado about nothing. And we will make sure that we better characterize the current state in this space in our resubmission. Andreas Argyrides: Great. Thanks, guys. Operator: Thank you. Our next question comes from the line of Raghuram Selvaraju with H.C. Wainwright. Your line is now open. Raghuram Selvaraju: Thanks so much for taking our questions. Firstly, I was wondering if you could comment on any fundamental changes in your anticipated promotional campaign for support of ANNAFILM as and when the product gets approved in the context of the revised Salesforce sizing. And if you see any recent moves by the folks promoting Nessie that would guide promotional decisions that you are making in advance of the ANNAFILM launch? Dan Barber: Sherry, you want to take that? Sherry Korczynski: Sure. Thanks so much for the question. As Dan mentioned earlier, our commercial infrastructure has mainly stayed intact. And so because of that, it is giving us time to go back and really refine our launch plan, aligned with having 75 reps and being well positioned if ANNAFILM is approved by the FDA. I do think, though, that it continues, as you know, to be—there is a significant unmet need in what continues to be a growing market. And as Dan had mentioned, with the competitive DTC, they continue to grow the market. And so that is a really positive thing. But there is still a need for an oral, easy to carry, easy to use, non-needle, non-device. We heard it over and over again this weekend at Quad AI. So what I would say, there are not fundamental changes in the work we are doing or the messaging, but we are taking the time, Ram, to really refine our positioning and refine all of the tactics that our reps will take to launch. As it relates to the competitors, look, we are always looking at the tactics and the promotional efforts, and it is informing us, looking at their share of market, and evaluating what is working and what is maybe not working as well. And so that is all going to inform our launch plan. Raghuram Selvaraju: Very helpful. Thank you. Secondly, I was wondering if you could just clarify how you are thinking about the timeline for future clinical development of AQST-108 relative to the timeline for the ANNAFILM NDA resubmission and potential approval and launch timing for ANNAFILM. Are you thinking about these two things completely independently? If they are connected in any way, can you give us a sense of how? And maybe just provide some granularity regarding the timing with which you expect to conduct the next stage of clinical development with AQST-108. Thank you. Dan Barber: Yeah. No, thanks, Ram. And look. Given the size and the focus of our organization, the only answer to this one is they absolutely are linked. And ANNAFILM is always going to win when there is a competition between ANNAFILM and 108. I am lucky to sit in this room with some great executives, as you have heard this morning, but they are the same executives who are over 108. So we will prioritize ANNAFILM, both from a resource perspective and a monetary perspective in the short term. Having said that, we do have the ability to keep 108 moving, to keep learning, as Matthew talked about, around what we have got on our hands and how many different ways we can use it. And to keep progressing it clinically once we get past the ANNAFILM resubmission and we really hand over ANNAFILM to the commercial side, I think that is when you will see the workload on 108 pick up with our development team. Raghuram Selvaraju: Okay. Great. And then just two very quick ones. Can you indicate perhaps, through the commercial evidence with regard to at least one or more of the diazepam-based formulations that are currently available on the market, if this provides any kind of market intel or foreshadowing, as it were, of what the future peak sales potential could be for Libervant in the United States? And then also, if you could just clarify for us whether the specific amount of the settlement with Norellis was actually disclosed. Thank you. Dan Barber: Yeah. I will start with the second one. Unfortunately, as tends to happen with these litigation settlements, it is confidential, so we cannot disclose the settlement terms. Obviously, you can see our financial disclosures and make your own assessment. What I would say is we put into our press release what we were happy about and what led us to getting to the settlement is from a 2026 perspective, we believe it is cash neutral. So whether we had done the settlement or not, same place on cash. In terms of Libervant and looking at that opportunity and what peak sales could be for Libervant, this one is bittersweet, Ram. I would love to launch Libervant. And we have put our heart and soul into what we believe is a great product that will help patients in this space. But we cannot launch Libervant and ANNAFILM within a month of each other, it is just not humanly possible for companies even much larger than us. So we have made the decision that ANNAFILM is the priority. We do have some great potential partnerships and licensing opportunities that our team is looking at. I do think that if you look at how Valtoco and NAYZILAM have penetrated in that market, there is still a great opportunity, especially where portability, convenience, speed of use are important, for this product to become an important component in that space. Operator: Thank you. Our next question comes from the line of Thomas Flaten with Lake Street Capital Markets. Your line is now open. Thomas Flaten: Good morning, everybody. Thanks for taking the questions. Are there any current analogs that give you some faith in a potential accelerated approval? I know FDA in its current incarnation can be a little bit confusing. Dan Barber: Sure. That is an easy one—our competitor. Our competitor got a CRL and resubmitted with a six-month clock and got their approval in four months. So we will do it nicely, but we will definitely be reminding this review division that they did that. And that our expectation is we are hitting in a very thin package to meet their requests. And it should not take six months to review. Now whether they act fast or not, Thomas, to your underlying point, is completely up to them. Thomas Flaten: Got it. And then is it safe for us to assume that any submissions outside the U.S. will be after the full package has been resubmitted to FDA, just timing-wise? Dan Barber: Yes. Yes. We are guiding that Europe and Canada will be in 2026, but they will come after the U.S. Canada literally, we could put in whenever we get it done. But it has just got to come after the U.S. So some of this is just making sure we prioritize the U.S. over everything else. Thomas Flaten: Got it. And then, I guess, regardless of approval time, can you clarify a little bit? Because I know there are a few things going on, including hiring reps and some of the product-related work you have to do. So from approval to full commercial launch, can you give us a sense of what that timing will look like? Dan Barber: Yeah. Approval to—if by full commercial launch you mean reps in the field and product in distribution—I think it is the same timeline we guided to this last go around, which was, if you think about it, around an eight-week window. So precisely, it is under eight weeks. It is all dependent on how much we lean forward ahead of approval. So call it zero to eight weeks. Thomas Flaten: Got it. Appreciate that. Thank you. Operator: Thank you. I am showing no further questions in the queue at this time. I will now turn the call back over to Dan Barber for any closing remarks. Dan Barber: Thank you, operator, and thank you, everyone, for joining us today. As you heard, we are on track in every way right now. The epinephrine market continues to grow. And we are excited for patients to have access to ANNAFILM as soon as it is approved by the FDA. We look forward to keeping you updated on our progress in the weeks and months to come. And with that, operator, let us end the call. Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation, and you may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to the FTC Solar, Inc. Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear automated messages by hearing a hand is raised. To withdraw your question, please press star 1 again. Please be advised that today's conference is being recorded. I would like to hand the conference over to your first speaker today, Bill Michalek, VP of Investor Relations. Please go ahead. Bill Michalek: Thank you, and welcome, everyone, to FTC Solar, Inc.'s Fourth Quarter 2025 Earnings Conference Call. Before today's call, you may have reviewed our earnings release and supplemental financial information which were posted earlier today. If you have not yet reviewed these documents, they are available on the Investor Relations section of our website at ftcsolar.com. I am joined today by Yann Brandt, the company's President and Chief Executive Officer, Cathy Behnen, the company's Chief Financial Officer, and Patrick Cook, the company's Head of Capital Markets and BD. Before we begin, I remind everyone that today's discussion contains forward-looking statements based on our assumptions and beliefs in the current environment and speaks only as of the current date. As such, these forward-looking statements include risks and uncertainties and actual results and events could differ materially from our current expectations. Please refer to our press release and other SEC filings for more information on the specific risk factors. We assume no obligation to update such information except as required by law. As you would expect, we will discuss both GAAP and non-GAAP financial measures today. Please note that the earnings release issued this morning includes a full reconciliation of each non-GAAP financial measure to the nearest applicable GAAP measure. With that, I will turn the call over to Yann. Yann Brandt: Thanks, Bill, and good morning, everyone. I am pleased to share that we have achieved another quarter of strong growth in Q4 and continue to position the company for long-term success. Our financial results came in at the high end of our targets, as we work to strengthen our product, operational performance, and overall positioning, including enhancements to one of the most innovative 1P tracker platforms in solar. Every day, we are seeing excellent commercial momentum as we build a foundation for future growth. In terms of financial results, we achieved several key milestones in the fourth quarter. Our results came in at the high end of our target ranges on all metrics. Revenue grew by 26% sequentially, which follows the 30% sequential growth posted in the third quarter, and one of the best in company history, and came in at the highest quarterly level since 2023. Gross margin for the quarter was our best as a public company, and we posted our best adjusted EBITDA performance in six years, and our best since going public, coming in just shy of breakeven for the quarter, missing our 2025 target of breaking even by the narrowest of margins, not bad considering the insane year that solar went through with tariffs and legislative disruption. Our fourth quarter results were fitting into an incredible year of progress for FTC Solar, Inc. A year I am proud to call my first at the company. For the year, we grew revenue by more than 110% versus the prior year, significantly improved margins, added multiple gigawatts of MSAs and secured purchase orders from Tier 1 customers, added new cash to our balance sheet with strategic financing, saw new incredible talent join our team, especially in sales, and have positioned our product platform as the most innovative tracker portfolio in the market, by far the easiest and fastest to install. Turning to customers. Our commercial momentum is starting to accelerate at every level, from approved vendor list additions to project bidding, bookings, and contract conversion. It takes time and will not impact revenue tomorrow, but our progress here is clear, accelerating, and to me means everything. It is the foundation of our future growth. It is what is making this company successful and has me excited about where FTC Solar, Inc. is going. So first, we are getting on approved vendor lists. Just in Q4 alone, we were added to the AVLs of four of the top 10 EPCs, bringing the total to eight of the top 10. We are getting increased visibility and are bidding with more customers and larger project sizes, actively providing proposals on the pipelines of these new EPCs, and of those of many new customers. FTC Solar, Inc. is winning projects and seeing previously announced MSAs convert into bookings, including with the top-tier customer base. In the fourth quarter, we received bookings from two leading EPCs, and we expect some MSAs to start expanding in volume from the original capacity in the near future. We have had improving net bookings for the past three quarters and had a significant increase in the fourth quarter. With a positive book-to-bill, or positive net bookings in the period, we are starting to convert our MSAs into firm orders and book new projects. Since our last earnings call, we added $61 million to our contracted backlog, or roughly a $29 million addition net of Q4 revenue. We expect this progress to continue and to accelerate. In addition to the positive net bookings, we have had recent wins in the form of multiyear MSAs that are not yet included in that backlog, with more expected to be announced in the near future. One notable addition we are announcing today is a new 1 gigawatt supply agreement with a leading developer and operator of wind and solar farms. This is a three-year agreement for 1 gigawatt of our 1P and 2P trackers at sites across the U.S. This agreement also includes our SunPath software to achieve additional energy yield at these sites. Another example we announced just last week is a multiyear MSA with Lubanzi in South Africa. That was for about 840 megawatts of trackers delivered across the country and is a great win on the international front. The first project under that agreement is expected to begin midyear. So those are MSA wins on top of the net backlog additions we announced which brings us to over 9 gigawatts of MSAs added in just one year. The leading indicators on the customer front are what will drive this business, and they are starting to look very good. They are improving, and we have a lot of momentum. From MSAs, AVLs, and strong bidding activity, these are clear signals that show us that FTC Solar, Inc. is a critical part of the tracker diversification trend that we are seeing every day. While we have very admirable competitors, a market without choice is no market at all. And every meeting I am in, I hear about the need for diversification. Having met with most of the top 10 EPCs, I can tell you they are happy FTC Solar, Inc. to be in the room, innovative, bankable, and competitive. Our team is a known counterparty with decades of relationships, and our product continues to show very well. FTC Solar, Inc. is now a valued 1P tracker provider, and we see a significant opportunity to gain share. Our goal remains to be a top three tracker provider before long. And we hope to have much more to share on the new MSAs and new contracts backlog in the weeks ahead as we work toward that. On the product front, independent row architecture is the gold standard for solar. It has the highest production for asset owners, and has the best long-term effectiveness for solar farms. It is also ideally suited for automation in construction and O&M activity. I have shared that I believe we have what is unquestionably the fastest and easiest to install tracker in the marketplace, independent row or otherwise, a product that is superior on a total installed cost basis, one that can be built from piles to mounted modules with an unmatched efficiency of 0.053 labor hours per module. Driven by our innovative Python clips, slide-and-glide rails, and open trunnion design and power cinch clips. You can see from the customer comments as we have announced some of the recent wins, that customers are already recognizing the benefits of this efficiency. And our team is focused on achieving another 20% in labor. This is crucial as labor shortages are increasingly a pinch point for the industry, and expected to continue, and as labor continues to increase as a proportion of the total project cost. We have engaged with Tier 1 EPCs and developers. Due to our constructability savings, they tend to look at the total install cost of our tracker rather than just price. As more in the industry recognize our total cost of installation advantage, it should help further insulate us from pricing concerns or competition on projects. 2025 was a strong step forward in positioning for what is ahead. As we doubled sales while expanding the balance sheet, built out the product set, expanded our pipeline, and continued building a foundation of new project wins and MSAs. We have definitely been on a steady upward trajectory during my time with FTC Solar, Inc. Quarterly revenue levels for Q4 were three times higher than when I had started, gross margin went from double-digit negative to double-digit positive, and adjusted EBITDA loss improved to where we nearly reached some breakeven milestone. Our enthusiasm does not stem from what happened in the past alone. It comes from what is ahead. While the solar industry endured a challenging 2025 from a regulatory uncertainty standpoint that will have some carryover effects into 2026, FTC Solar, Inc.'s positioning is significantly improved, and we are closer to achieving broad adoption from Tier 1 players than we have ever been. Our financial progression will not always be linear, but we have made great progress so far and are building a solid base of orders to enable strong long-term growth. We have done a great deal to prepare the company and lay the groundwork for the strong growth ahead and aiming for a top market share position, and I firmly believe that is possible. I remain incredibly optimistic about the prospects of the business and I look forward to providing you with continued updates on our progress in the months ahead. With that, I will turn it over to Cathy. Cathy Behnen: Thanks, Yann, and good morning, everyone. I will provide some additional color on our fourth quarter and full-year performance and our outlook. Beginning with a discussion of the fourth quarter, revenue came in at $32.9 million, which was above the midpoint of our guidance range of $30 million to $35 million. The quarterly revenue level represents an increase of 26% compared to the prior quarter and an increase of 149% compared to the year-earlier quarter. GAAP gross profit was $6.9 million, or 21% of revenue, compared to gross profit of $1.6 million, or 6.1% of revenue, in the prior quarter. Non-GAAP gross profit was $7.7 million, or 23.4% of revenue, marking one of the highest levels in company history and our best as a public company. The strong gross margin performance was driven primarily by a favorable product mix in the quarter. This quarter's result compares to non-GAAP gross profit of $2.0 million in the prior quarter and a $3.4 million gross loss in the year-ago quarter. GAAP operating expenses were $10.6 million. On a non-GAAP basis, operating expenses were $8.2 million. This compares to non-GAAP operating expenses of $7.4 million in the year-ago quarter and $8.0 million in the prior quarter. Moving to GAAP net loss, as a reminder, the warrants which were issued as part of last year's capital raise are subject to liability rather than equity accounting, and therefore require us to reflect changes in the warrant fair value each quarter in our GAAP financials. If our share price goes up during the quarter, as it did in Q4, it will show as a noncash loss, and conversely, a share price decline would show as a gain. The share price appreciation we saw in the fourth quarter drove an increase in the fair value of the warrant liability of about $26 million. This is a noncash accounting adjustment that does not reflect the underlying business performance or cash flow, and will be excluded for purposes of adjusted EBITDA, but does impact our GAAP financials. So including that adjustment, GAAP net loss was $33.7 million, or $2.23 per diluted share, compared to a loss of $23.9 million, or $1.61 per diluted share, in the prior quarter and a net loss of $12.2 million, or $0.96 per diluted share post-split in the year-ago quarter. On an adjusted EBITDA basis, we almost achieved breakeven, posting a loss of just $300,000, which is our strongest result since becoming a public company. That excludes the net of approximately $33.5 million for the change in fair value of the warrant liability, certain transition costs, as well as other noncash items. This represents our best adjusted EBITDA result in six years and a substantial improvement from adjusted EBITDA losses of $4.0 million in the prior quarter and $9.8 million in the year-ago quarter. Overall, another solid quarter of financial progress delivering some of the best results we reported in years. The contracted portion of our backlog now stands at $491 million, with approximately $60 million added since November 12. To touch briefly on annual results, for the full year 2025, revenue was $99.7 million, representing a 111% increase over 2024. The increase was primarily attributable to higher product and logistics volume, partially offset by a decline in ASP. GAAP gross profit was $1.1 million, or 1.1% of revenue, compared to a gross loss of $12.6 million, or negative 26.6% of revenue, in the prior year. On a non-GAAP basis, gross profit was $3.2 million, or 3.2% of revenue, compared to a gross loss of $10.9 million, or negative 23% of revenue, in the prior year. The higher volumes and increased absorption were the primary drivers of the significant year-over-year improvement, which was partially offset by higher tariff costs. GAAP operating expenses were $34.5 million. On a non-GAAP basis, OpEx was $29.4 million, which compares to $35.5 million in the prior year. So we were able to take OpEx costs down 11% on revenue that was doubled year over year, demonstrating our continued focus on efficient growth. GAAP net loss was $76.9 million compared to $48.0 million in 2024. Adjusted EBITDA loss, which excludes the change in fair value of warrants, stock-based compensation expense, and other noncash items was $24.3 million compared to a loss of $43.1 million in 2024. With that, let us turn our focus to the outlook. Our targets for the first quarter call for the following: revenue between $20 million and $25 million; non-GAAP gross profit between negative $500,000 and positive $2.3 million, or between negative 2.5%–9.2% of revenue; non-GAAP operating expenses between $8.2 million and $8.9 million; and finally, adjusted EBITDA loss between $9.6 million and $5.9 million. For the full year 2026, we expect to continue to grow faster than the industry as our recovery progresses. Due to the timing of orders, which followed some regulatory uncertainty in 2025, as well as the ramp-up of our MSA project, we expect the results will be weighted to the back half of the year. With that, we conclude our prepared remarks, and we will turn it over to the operator for any questions. Operator? Operator: Thank you. At this time, we will conduct a question-and-answer session. As a reminder, to enter a question, you need to press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. First question comes from the line of Philip Shen of Roth Capital Partners. Your line is now open. Philip Shen, your line is now open. Can you unmute? Philip Shen: Hey, all. Sorry about that. Congrats on strong results, and good news that you have in the quarter. I wanted to check in with you on the 2026 outlook. So you talked about significant growth. I am guessing you may not want to quantify, but was wondering you could qualify or provide some color on, you know, what kind of growth we could see in '26 year over year. Yann Brandt: Yes. No, thanks, Phil. Appreciate the question. Yes, look, we are really excited about where FTC Solar, Inc. is sitting from a competitive landscape standpoint vis-à-vis our peers. The overall market dynamic, obviously, you know, continuing to sign MSAs with large volumes both in the U.S. and abroad. You know, we are seeing good growth, you know, obviously, some seasonality around the timing of the early part of the year. Really strong ending to 2025, and results '25 compared to '24. But, you know, it really comes down to where we are from an execution standpoint that gives us the enthusiasm and optimism, really adding strong talent to the sales pool. We, you know, we and me in particular, who has been on the road full-time talking to the EPCs and developers and IPPs around the world. There is a strong need for diversification. There is a need for constructability features that puts FTC Solar, Inc. into a product mix with each of the companies. So I think a really important quantifiable trend and I will qualify it, is around approved vendor lists, particularly with the EPCs that make a large number of the procurement decisions of who they are going to use on their pools of projects. You know, now being on eight of the top 10 EPC AVLs, is a strong indicator, and it gives our sales team the ability to go and now close those projects. But that is, you know, that is what comes along with the process of developing a product portfolio is you develop it on a technical basis, then you have to go out and sell it and get into a position to be approved. And, obviously, our improved bankability throughout the year and the growth has been a good indicator for those EPCs to then add us to the approved vendor list and put us into the bidding cycles. Philip Shen: Great. Thanks, Sean. Hey. You guys also talked about the backlog does not include almost two big ones you guys have publicly announced since Q1. And then think you alluded to more MSA signings to come. And so you have a couple here that seem meaningful. Historically, we have seen some of your MSAs not pan out. So I was wondering if you might be able to give some color on, you know, the timing of these MSAs. Like, do we see meaningful revenue in '26 and '27 and then the ones that you might sign, maybe a little bit of insight into what they might look like. Thanks. Yann Brandt: And you bring up a good point, Bill, is when we talk about backlog, we talk about ink on paper, delivery schedules, etcetera. Right? So it is, you know, compared to our peers, a little bit more, you know, farther in the cycle. You know, it does not include verbals, for example. And the MSAs, you know, I know where you are coming from, and it is a great start. What I always tell to the team, but we are starting to see those MSAs flow through. And we expect to be able to announce some expansions of those MSAs in the near future as we have been working through them. And that is an indication of both strong partnerships, you know, us being able to convert through the project list that our partners have had. You know, some are developers, some are EPCs. And, you know, while there is obviously some air pocket in '26 and '25, that, you know, kind of caused projects to have to wait for capital to come in or some permits, you know, things that all obviously, everyone in the solar industry has been working through. You know, we have been able to find the right projects, get some moving forward. But we do anticipate an acceleration of the utilization of the MSA volume to accelerate here in 2026. Philip Shen: Then shifting to, you were talking about some of the air pockets of activity and challenges from last year. What are you seeing now? Do you think things have stabilized? Or, you know, we have been talking about some challenges sometimes on the front end with tax equity and FIOC uncertainty. And so I was wondering if you could provide some perspective on if there are some issues now on the front end of the chain. And then if you can address your liquidity situation a little bit more and help us understand, you know, from a you are getting to breakeven. You were almost breakeven last year for the full year. But what do you see ahead? Thanks. Yann Brandt: Yes. I, one of the important aspects is for FTC Solar, Inc. in particular is that we are looking at a lot more. Right? So on an FTC Solar, Inc.-specific basis, having more projects in the pool of possible additions for, you know, both bookings and revenue is that we are in more deals. And so that gives us more at-bats in terms of, you know, finding the projects that get to the start-of-construction phase. Right? And that is, I think, an important variable in the overall equation. Every project has a path to get to start of construction. There are positives. Obviously, the offtake environment for projects is as good as I have seen since I have gotten into solar in 2006. While, you know, some projects obviously have to contend with federal permit issues or wetlands, you know, there are certain challenges that come into it. But overall, I would say the trend is optimistic around more projects getting to the start of construction for the overall market, but specifically for us as I look at our both pipeline of projects in MSAs, for example, and the projects that we are bidding, it seems like there is an overall trend that it is trending in the right direction. And, you know, we are obviously trying to put ourselves into a position where we are in the best projects that are, that have the ability to move forward. And I think that is where the alignment is with the goals that both the developers and the EPCs have. We want to be building solar for the American consumers and companies that need the electricity more so than ever. And being part of that product mix where projects are allocated for diversification's sake amongst, you know, two or three tracker vendors, you know, FTC Solar, Inc. being a part of those top selected trackers more than I would say ever, and I think our financial results speak to that since going public. You know, it bodes well for where I think we are going. From a liquidity standpoint, you know, I am happy with where we ended up, you know, at the end of the year. Obviously, we had really great growth from '24 to '25. You know, just the back half alone, up 44% when our peers were flat to down. You know, we look at our Q4 results and by the narrowest of margins nearly hit the breakeven for profitability, which would have been phenomenal, but yet, still the best results that FTC Solar, Inc. has ever had. So I am, you know, I am happy for where we have been able to guide the company, you know, this kind of growth, while lowering overall operating expenses, is a good indicator of the efficiencies that we can gain. And I think there is more to be had, and we are certainly running the company as such. But, ultimately, it comes down to, you know, putting a, you know, great product into the market, being accepted by getting onto the AVLs, and then putting just a phenomenal sales team in the field that has the relationships. You know, I think when I think about the meetings that we are having and the feedback that we are getting, our sales team is going to be in a really good spot to take advantage of this consolidating market landscape in trackers and put ourselves in this top three position that I believe is in our future. Philip Shen: Great. Thanks, Yann. I will pass it on. Yann Brandt: Of course. Thanks, Phil. Operator: Thank you. One moment for our next question. Our next question comes from the line of Sameer S. Joshi of H.C. Wainwright. Your line is now open. Sameer S. Joshi: Hey, good morning, and thanks for taking my questions. So you have a considerable pipeline of $491,000,000 or other backlog. Do we know who the end customers are? Like, what industries or commercial or any other type of users are there? And then if more specifically, of the $61 million new orders received this quarter, any insight into the end customers would be great. Yann Brandt: Yeah. No. Great, great question. We do. You know, we have, obviously, the counterparty that is buying from us, you know, oftentimes, the EPC, but there are times including our new bookings in Q4 where we have more global relationships with the asset owners. You know, asset owners view the longevity of the product as well as, you know, the long-term benefit on the total installed cost basis that FTC Solar, Inc. has an advantage of, you know, as something that they want to invest in by going into multiple projects. So, you know, for the most part, our counterparties end up being the EPCs. You know, if you are talking about the counterparties on the offtake, certainly, big data center players are fighting over the generation. We are starting to see a pipeline of the behind-the-meter concept, you know, the bring-your-own-generation concepts that we see in the data center headlines. That is certainly starting to happen. You know, in the past quarter, we saw a project that had some interconnection cost issues that maybe would not pencil. That project is now under consideration for bring-your-own-generation data center play. Right? So, you know, that obviously will open up a new field of opportunities for solar at large, that FTC Solar, Inc. will be able to compete in. Sameer S. Joshi: Thanks for that color, Yann. And this, I think Phil asked you about this, but I will just dig a little bit deeper. The two MSAs just announced, the 1 gigawatt and the 840 megawatt. And they are three years. When should we start seeing, like, actual orders from this? And, also, are there any kind of regional exclusivity or any kind of exclusivity with these customers? Yann Brandt: Yeah. So let me speak about the Lubanzi one first, the one we announced last week. We, you know, that we do expect to start. We have projects that are slated for midyear. So, you know, the MSAs, the way they work is the MSAs and, you know, some MSAs are announced, some are not, where they then, you know, what we do is we oftentimes negotiate a standard template for purchase order. It makes contracting a lot easier. And we start doing co-designs on those sites. So, you know, the Lubanzi one, certainly, we have multiple projects that will start hitting in 2026. The new one we named here in this, in my announcements this morning, you know, that is a pretty large pipeline here in the U.S. We are excited about where that is going to go. We are deep in design on several of the sites. But they have to go through permitting. It is likely that there is, or it is possible that there are projects in the back half of the year that will start to book. But it also depends on, you know, it could very well accelerate if offtakers come to the table. You know, those projects in particular are more in a regulated market. So, you know, that is where the regulated utilities are under extreme pressure by offtakers to increase generation and make generation accessible to them. So we actually have seen some strong movement in the negotiations for the offtakes of those agreements that will then flow through and make permitting easier. And, you know, some do have projects listed. From an exclusivity standpoint, some are more volumetric in approach, but there is a win-win for both, i.e., a partnership where FTC Solar, Inc. is investing in resources to provide design services, things of that nature, and, obviously, priority access to some both design as well as capacity, and so it is something that you are seeing, you know, since I have gotten here. More and more customers wanting to enter into them, and that is what has gotten us to the 9 gigawatts. Sameer S. Joshi: Understood. Thanks for that color. And will you remind us of what the revenue model is for the SunPath software? Like, are there recurring revenues, or what kind of structure it is? Yann Brandt: Yeah. SunPath is actually, you know, a great tool, and it is an interesting one, you know, just looking at it from my seat. And, you know, FTC Solar, Inc. has been around a long time, so it has been under development and refinement for quite a long period of time. So it is, you know, while our 1P tracker is a relatively new addition to our overall portfolio, you know, our ability to bring 3D backtracking to the market is, you know, as good as anyone in the market. Right? So, and I think people see that. And, you know, revenue models differ by geography. There is a, you know, some customers prefer to pay for it upfront for a period of time. Some people view it as a recurring revenue model. You know? And it really depends on the site itself. It is a, I will say, the 3D backtracking software is particularly advantaged, you know, for FTC Solar, Inc. and for, you know, particularly for independent row architecture. When sites have undulating uneven terrain, the need for 3D backtracking for energy-yield increases is really important. And independent architecture where motors can run each row independently of each other, especially over the course of the year, is where you are going to see the best energy-yield advantages, which is why the market is consolidating around this independent architecture in my opinion. Sameer S. Joshi: And it includes your value proposition. Good to know. Just a question. Maybe this is for Cathy. The service margins were lower despite sequential growth in service revenue. Is this some GAAP reason, or are there more structural reasons? Cathy Behnen: No. Thanks for the question. So I think what you are kind of seeing flow through there is, you know, our service revenue includes all of our logistics services that we provide. And so as you see the increasing tariffs that came through, those are pass-through costs. And so that kind of squeezes a little bit of that margin. Sameer S. Joshi: Got it. Understood. Thanks for taking my questions, and good luck for 2026. Operator: Thank you. Thank you. One moment for our next question. Our next question comes from the line of John Wyndham of UBS. Your line is now open. John Wyndham: Thanks for taking the questions. I wanted to follow up on, I think, Phil Shen's a little bit about the liquidity. There is obviously the note in the release about not being in compliance with the purchase order covenant for the credit agreement. Can you just talk through the status of that and then what you need to do to be in compliance for it? Thanks. Yann Brandt: Yeah. No. Appreciate the question. You know, I will give you the high level, and I think we put in the note accordingly. This is, you know, our opinion is, and our lenders believe, it is a technical issue and a technical default. The language in the agreement was a little bit unintentionally restrictive and led to a surprising kind of accounting outcome, even from the lender's perspective. So while it sort of came in in the audit process, we have not yet resolved the issue, but we anticipate that we will. It was related to the bona fide purchase orders, bookings that we signed, and believe, you know, like I said, a technicality that led to a handful being excluded for the covenant. John Wyndham: Completely shifting gears, a lot of your competitors, Nextracker, Array, GameChange, have been making diversifying acquisitions in a tangential product category, whether it be wires, foundations, Nextracker is all the way out to inverters at this point. Just love your thoughts about how—your strategy around that, and whether you think you need to provide a more diversified product lineup to be competitive or you like single product? Just your general thought. Thanks so much. Yann Brandt: Yeah. I mean, look. I appreciate that they are doing that. And in some ways, understand the premise of it. Obviously, you know, our relationships as tracker vendors with procurement teams is, you know, such that they, obviously, the procurement teams are buying other things. While there is overlap with who you are talking to, the value proposition really, you know, depends on each unique product. Right? So, you know, obviously, when, you know, we are growing at a pace that exceeds what our peers are doing, so they are looking for, in my opinion, for growth in other things. So I certainly understand where they are coming from. You know, our focus is, like I said in the recording, is getting, you know, becoming a top three tracker provider, and we are well on our way for that. That is the importance of it. Hence, we have been adding to our sales team and growing, growing those, you know, our ability to do just that. It is a, like I said, dynamic tracker landscape for sure, you know? And both in what you are describing of our peers going elsewhere. But if you compare our growth here in 2025, and even heading into 2026, we believe our growth will be significant and well ahead of the market. And so we are going to, at the moment, focus on exactly what we are doing, which is, you know, getting on AVLs, converting the MSAs into projects. And that is exactly what we are going to do. John Wyndham: Can I ask a quick follow-up on that? Sorry to throw in three, but you, I mean, you make a great point. You are talking about being a top three tracker provider. Let us see. Let us use Array as a benchmark, $1,200,000,000.0 of revenue. That is 12x growth for FTC Solar, Inc. from here. So how do you think about timelines of achieving that? And then how do you feel about your ability to expand capacity to deal with that level of growth? Yann Brandt: Yeah. I mean, look. It is, like I think I said this before. It is not going to happen overnight. And it is likely not going to be linear. But if I compare the projects we are looking at on my first day at the company versus what we are looking at now, you know, I see 300, 400 megawatt projects on a weekly basis that we get to bid, and we are on the approved vendor list on both the IPP side and the EPC side. Right? Like, those are some of the prerequisites that come along with it. The headways that we have made on the product portfolio in order to get there, you know, the longer tracker, the washerless trackers, the terrain-following features, those are all things, you know, sometimes uniquely for a particular set of customers, because they are focused in a particular region or they have a certain way of installation. I do not think that we are going to have a capacity constraint if we are able to convert, you know, the MSAs or project opportunities into bookings. That is not going to be a limit to, you know, what we are able to do. We have a strong supply chain, both with our acquisition of Alpha Steel in Q4. That is going to put us in our own control of it, as well as our contract manufacturing, you know, both here and across the world. You know, it really comes down to what the customers are saying. Right? What are the EPCs telling us? What are they telling you around what the tracker mix is going to look like? Things can change pretty quickly. Right? And a couple years ago, it changed in a bad direction for FTC Solar, Inc. Now it is pivoted and moving into the right direction for FTC Solar, Inc. You know? And I would point to the back half growth in 2025 versus our peers as a leading indicator of that. But fundamentally, you know, I am relaying the optimism that I get when I sit down with customers, you know, both here in the U.S. and abroad, that they want diversification. There is a lot of concentration within some of the customers that they are trying to get themselves out of. And that is not a negative thing about our peers. Some are doing a really good job. But it is the need for what is the architecture that works for the sites that are evolving and who is going to do what they say they are going to do. And they are going to look at relationships in order to leverage their decision-making. And so it is an important moment for FTC Solar, Inc. to deliver what we are saying what we are going to do, and I think you see that in '25 that we were able to get customers to trust us and to buy from us. I think every MSA is another indicator of that. And so I do not look at it as a 5x, 10x, 12x, or more equation. I view it as, you know, I sit across the table, my team sits across the table of a customer, and we win one project at a time and one portfolio at a time. And that starts with MSAs, AVLs, etcetera. John Wyndham: Thank you so much. I appreciate your attention to my questions and your patience with me. Operator: Go ahead. There. Thanks. Thank you. One moment for our next question. Our next question comes from the line of Jeffrey David Osborne of TD Cowen. Your line is now open. Jeffrey David Osborne: Thank you. Maybe just a few follow-up questions. The debt that John mentioned, $19,900,000.0, what, Cathy, specifically needs to happen to be in compliance with that? I missed the answer to that. Then in the event you needed to tap the ATM, I think you still have outstanding. Is that available to you, or can you just remind us of your liquidity options beyond what is on the balance sheet today? Cathy Behnen: So as John was saying, it is really just a technical definition that is in the agreement. So we are really working with the lenders to develop the right solution for that. So it is just ongoing discussions, you know, we have good confidence that it is all moving in the right direction. So we will be able to get to the resolution quickly. Yes. We still have, we still have the ATM available to us. We did use the ATM in Q4. It continues to be available to us moving forward. And so that, and we also have expanded liquidity also within the debt with our lender. Jeffrey David Osborne: Got it. Maybe just switching gears then for Yann. Post the FIAK announcement and maybe just give us a sense of the past month or so, what has the shifting patterns been as it relates to delivery schedules? Would be helpful to understand. And then maybe just at a high level, the sequential decline with Q1, how much of that is normal seasonality versus the adverse weather conditions that we have had across the U.S. over the past few weeks. Yann Brandt: Yeah. Look. I mean, I think you guys are more of an expert in the FIAK announcement, but some things were answered, some things were not. So overall, I think the market is continuing the way it was, and some tax equity providers are a little bit more cautious than others, but we have not seen that affect us in any particular way on a project or otherwise. And, you know, the cyclicality around Q1, I mean, I think it is pretty normal when you look at historically for us as well as our peers. You know, it is a, you know, our midpoint is modestly up year over year. Obviously, from a growth standpoint versus our peers that are down significant year over year in Q1. And I would like, if I were to put a root cause, I think, particularly for us, is it was rather difficult to contract in the middle of March and tariff Q2, Q3 last year? And I think that is what you are starting to see. You know, that is sort of a lagging indicator of what was really going on in Q2, Q3 of last year that muted where I was hoping we would be here in Q1. But, you know, it is not like the projects have gone away. It is just, you know, getting the contracting and really for them, for our customers, get the capital into those projects were delayed as the legislation and tariffs were figured out. Jeffrey David Osborne: Perfect. That is all I had. Thank you. Operator: Thank you. I am showing no further questions at this time. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.
Operator: We have reconnected with our speakers. Please proceed, Mary. Mary Chen: Thank you, Betsy, and welcome to our 2025 fourth quarter and full year earnings conference call. Joining me on the call today are Donald Dunde Yu, Tuniu Corporation's Founder, Chairman and Chief Executive Officer, and Anqiang Chen, Tuniu Corporation's Financial Controller. For today's agenda, management will discuss business updates, operational highlights, and financial performance for the fourth quarter and fiscal year 2025. Before we continue, please refer to our Safe Harbor statements in the earnings press release, which apply to this call, as we will make forward-looking statements. Also, this call includes discussions of certain non-GAAP financial measures. Please refer to our earnings release, which contains our reconciliation of non-GAAP measures to the most directly comparable GAAP measures. Finally, note that unless otherwise stated, all figures mentioned during this conference call are in RMB. I would now like to turn the call over to our Founder, Chairman and Chief Executive Officer, Donald Dunde Yu. Donald Dunde Yu: Thank you, Mary. Good day, everyone. Welcome to our fourth quarter and full year 2025 earnings conference call. In the fourth quarter, our business continued to maintain solid growth momentum. Net revenues increased by 20% year over year, exceeding our previous guidance, while revenues from our core packaged tour products grew at an even faster pace, rising 35% year over year. At the same time, we achieved profitability for both the quarter and the year. This also marks the third consecutive year following the pandemic in which we have delivered a full year non-GAAP profitability. We have announced a long-term shareholder return plan totaling up to $50 million to be carried out during the three-year period from March 2026 via cash dividends and share repurchases. This plan reflects both our commitment to provide shareholders with sustainable returns and our confidence in the long-term outlook of the travel industry. The travel market continued to grow in a healthy manner in the past year. The extension of national holidays and other favorable policies further stimulated domestic travel demand, while the increasing number of visa-free destinations makes it easier for Chinese travelers to explore more destinations overseas. In 2025, we adopted a more proactive product strategy. By differentiating our products and product lines, we targeted distinct customer segments and offered a richer, more tailored portfolio based on customer needs. Meanwhile, we leveraged our supply chain growth to enhance price competitiveness and attract more customers. During the year, we continued to pursue an open and collaborative approach, attracting high-quality partners to expand new channels and enhance service quality for our customers. Contributions from channels such as live streaming, offline stores, and corporate clients continued to increase as a share of Tuniu Corporation's transaction volume. In addition, we actively embraced new technologies, leveraging innovation tools to further enhance our product and service and improve operational efficiency. Now I will walk you through our key achievements in more detail. First, our strong supply chain remains the foundation for delivering high-quality and price-competitive products. In 2025, we further enhanced our direct and centralized procurement strategy in order to lower purchasing costs. Moreover, based on customer needs and pain points, we consolidated flight resources and introduced several connecting flights for select long-haul travel products to niche destinations. This approach further expanded our departure city coverage, making it more convenient for travelers from lower-tier cities to travel abroad. It also enabled us to take advantage of airline discounts available in those hubs, allowing us to offer even more competitive pricing to our customers, and further boosted demand for related destinations. Many hub cities such as Chengdu are popular tourist destinations themselves, allowing travelers to combine stopovers with leisure visits. As a result, these products gained strong traction upon launch. For example, our Caucasus series using connecting flights recorded over 500% year-over-year growth in transaction volume in 2025. We will continue to expand these offerings by adding more departure points and destinations. In terms of products, we continue to adopt a differentiated strategy to better serve distinct customer segments. As the core customers of our New Tour products, experienced travelers and repeat customers tend to prioritize travel experience and typically have greater flexibility in both time and budget. In 2025, New Tour introduced a wider range of niche destination products, including the organizer tours to the Caucasus region in April and to South America in October. At the same time, we further enhanced the travel experience of New Tour products by implementing a zero-shopping policy throughout the trip and by including curated experiences such as Michelin-star dining and helicopter tours. In 2024, we launched our New Select series, offering a wider range of cost-effective products and further expanding Tuniu Corporation's price tiers. In 2025, we expanded our New Select offerings to cover a broader array of international destinations. With more competitive pricing, the New Select products have attracted a wider customer base, enabling travelers to either reduce their travel budgets or explore additional destinations within the same budget, an option that strongly appeals to travel fans, particularly younger ones. The New Select Singapore–Malaysia tour series launched in June recorded over 10,000 paid bookings during the summer holiday period. We also observed a continued rise in demand for self-guided tours, particularly in the domestic travel market. Last year, we expanded the supply of our Hotel Plus X products, with hotels at the core and supported by dynamic packaging technology. We broadened the coverage to all provinces in China's mainland and further penetrated lower-tier markets. During the 2025 Labor Day and National Day holidays, transaction volume for our self-drive tour products recorded triple-digit year-over-year growth. Going forward, we will continue this strategy by expanding the supply and destination coverage of our self-guided tour products. In addition, in 2025, we continued to explore and expand diversified channels. Live streaming is playing an increasingly important role for our sales. In 2025, both payment and verification volume through our live streaming channel continued to record double-digit year-over-year growth, while achieving profitability through a single channel. The live streaming channel contributed over 15% to our total transaction volume in 2025, compared to approximately 10% in 2024. On the product side, first, we expanded the range of live streaming offerings. Beyond the traditional hotel plus scenic spot packages, we added personalized service products such as travel photography as well as more high-ticket items like long-haul outbound travel products, enriching customers' choices. Second, we fully leveraged our supply chain advantages to ensure competitive pricing. For example, our New Select products are highly popular with live stream audiences due to their good value for money. In terms of format, we increased the number of our outdoor live streaming shows, including inviting live streamers to broadcast live from destination sites. In March, Tuniu Corporation partnered with multiple live streamers to conduct a 21-day on-site live streaming campaign across 10 islands in the Maldives, generating cumulative sales of over RMB100 million. On the service side, with more than a decade of experience in the travel industry, we provide professional tour guidance and comprehensive travel-related services. In addition, we have a dedicated verification team and specialized system support in place to deliver a smoother redemption experience for customers. Offline stores remain an essential part of our overall sales and service network. As of 2025, we operated more than 400 stores nationwide. We expanded our store presence in key cities, including major popular tourist destinations and transportation hubs such as Chengdu and Xi'an, building scale in local markets to enhance operational efficiency and reduce costs. In 2025, transaction volume from offline stores increased by nearly 20% year over year. We also continued to develop channels such as traffic platforms and corporate clients, tailoring our product offerings to the specific needs of each channel. On traffic platforms, sales of standalone products such as air tickets and hotel bookings grew rapidly. For corporate clients, in addition to providing business travel booking services, we leveraged our extensive experience in the leisure segment to offer customized group travel solutions as well as personal and family vacation products for employees. In 2025, transaction value from corporate clients increased by more than 20% year over year. In terms of technology, we are exploring the application of AI agents across various business scenarios. Last April, Tuniu Corporation officially launched our self-developed travel AI agent, AI Assistant Xiao Niu. The assistant integrates vertical travel application scenarios with large language models to provide customers with one-stop services, including smart search, automated price comparisons, personalized recommendations, and dynamic packaging. At the same time, we continued to integrate technological tools into our daily operations. These initiatives have improved efficiency and helped control operating costs. We are encouraged by the growing adoption of our AI tools among both customers and employees. In addition, we have adopted an open collaboration approach by gradually providing external AI agents such as OpenClaw with the same comprehensive travel booking capabilities available in our app via MCP interface, enabling them to search and place bookings directly. We will continue to embrace new technology to support high-quality growth. Over the past year, we have made steady progress while managing a range of challenges. Overall, the company continues to move forward on the sustainable development path. In the year ahead, we will remain focused on customer needs, continue refining our products and services, and expand our reach through diversified channels to support stable and sustainable growth. I will now turn the call over to Anqiang Chen, our Financial Controller, for the financial highlights. Anqiang Chen: Thank you, Donald. Hello, everyone. Now I will walk you through our fourth quarter and fiscal year 2025 financial results in greater detail. Please note that all amounts are in RMB unless otherwise stated. You can find the U.S. dollar equivalent of the numbers in our earnings release. For the fourth quarter of 2025, net revenues were RMB123.5 million, representing a year-over-year increase of 20% from the corresponding period in 2024. Revenues from packaged tours were up 35% year over year to RMB102.1 million and accounted for 83% of our total net revenues for the quarter. The increase was primarily due to the growth of organized tours and self-guided tours. Other revenues were down 21% year over year to RMB21.5 million and accounted for 17% of our total net revenues. The decrease was primarily due to the decrease of merchandise sales. Gross profit for the fourth quarter of 2025 was RMB70 million, almost in line with gross profit in the fourth quarter of 2024. Operating expenses for the fourth quarter of 2025 were million, down 16% year over year. Research and product development expenses for the fourth quarter of 2025 were RMB12.3 million, down 8% year over year. The decrease was primarily due to the decrease in research and product development personnel-related expenses. Sales and marketing expenses for the fourth quarter of 2025 were RMB44.1 million, up 3% year over year. The increase was primarily due to the increase in promotional expenses. General and administrative expenses for the fourth quarter of 2025 were RMB12.8 million, down 52% year over year. The decrease was primarily due to the impairment of property and equipment, net, recorded in the fourth quarter of 2024. Net income attributable to ordinary shareholders of Tuniu Corporation was RMB1.5 million in the fourth quarter of 2025. Non-GAAP net income attributable to ordinary shareholders of Tuniu Corporation, which excluded share-based compensation expenses and amortization of acquired intangible assets, was RMB3.5 million in the fourth quarter of 2025. As of December 31, 2025, the company had cash and cash equivalents, restricted cash, certain investments, and long-term deposits of RMB1.1 billion. Cash flow generated from operations for the fourth quarter of 2025 was RMB68.8 million. Capital expenditures for the fourth quarter of 2025 were RMB0.5 million. Now, moving to full year 2025 results. In 2025, net revenues were RMB578 million, representing a 13% year-over-year increase. Revenues from packaged tours were up 21% year over year to RMB493.5 million and accounted for 85% of our total net revenues in 2025. The increase was primarily due to the growth of organized tours and self-guided tours. Other revenues were down 20% year over year to RMB84.5 million and accounted for 15% of our total net revenues in 2025. The decrease was primarily due to the decrease in the commission fees received from other travel-related products. Gross profit was RMB335 million in 2025, down 6% year over year. Operating expenses were RMB323.7 million in 2025, up 10% year over year. Research and product development expenses were million in 2025, up 12% year over year. The increase was primarily due to the increase in research and product development personnel-related expenses. Sales and marketing expenses were RMB193.9 million in 2025, up 8% year over year. The increase was primarily due to the increase in promotional expenses. General and administrative expenses were RMB71.8 million in 2025, down 18% year over year. The decrease was primarily due to the decrease in general and administrative personnel-related expenses and impairment of property and equipment, net. Net income attributable to ordinary shareholders of Tuniu Corporation was RMB31.1 million in 2025. Non-GAAP net income attributable to ordinary shareholders of Tuniu Corporation, which excluded share-based compensation expenses, amortization of acquired intangible assets, and impairment of property and equipment, net, was RMB42.6 million in 2025. Capital expenditures were RMB4.4 million in 2025. For 2026, the company expects to generate RMB100 million to RMB131.6 million of net revenues, which represents a 7% to 12% increase year over year. Please note that this forecast reflects our current and preliminary views on the industry and our operations, which are subject to change. Thank you for listening. We are now ready for your questions. Operator: We will now open for questions. There are no questions at this time. I will now turn the call over to Tuniu Corporation's Director of Investor Relations, Mary Chen. Mary Chen: Once again, thank you for joining us today. Please do not hesitate to contact us if you have any further questions. Thank you for your continued support, and we look forward to speaking with you in the coming months. Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a good day.
Operator: Good day, and welcome to today's conference call to discuss Stratasys Ltd.'s fourth quarter and full year 2025 financial results. My name is Donna, and I am your operator for today. A question-and-answer session will follow the formal presentation. As a reminder, I would now like to hand the call over to Yonah Lloyd, Chief Communications Officer and Vice President of Investor Relations for Stratasys Ltd. Mr. Lloyd, please go ahead. Yonah Lloyd: Good morning, everyone. And thank you for joining us to discuss our 2025 fourth quarter and full year financial results. On the call with us today are our CEO, Dr. Yoav Zeif, and our CFO, Eitan Zamir. I would like to remind you that access to today's call, including the slide presentation, is available online at the web address provided in our press release. In addition, a replay of today's call and access to the slide presentation will be available and can be accessed through the Investor Relations section of our website. Please note that some of the information you will hear during our discussion today will consist of forward-looking statements, including without limitation, those regarding our expectations as to our future revenue, gross margin, operating expenses, taxes, and other future financial performance, and our expectations for our business outlook. All statements that speak to future performance, events, expectations, or results are forward-looking statements. Actual results or trends could differ materially from our forecast. For risks that could cause actual results to be materially different from those set forth in forward-looking, please refer to the risk factors discussed or referenced in Stratasys Ltd.'s annual reports on Form 20-F for the 2024 year and for the 2025 year, the latter of which will be filed with the SEC on or about today. Please also refer to our Operating and Financial Review and Prospects for 2024 and 2025, which are included as Item 5 of our annual reports on Form 20-F for 2024 and 2025. Please also see the press release that announces our earnings for 2025, which is attached as Exhibit 99.1 to a report on Form 6-K that we are furnishing to the SEC today. Stratasys Ltd. assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates. As in previous quarters, today's call will include GAAP and non-GAAP financial measures. The non-GAAP financial measures should be read in combination with our GAAP metrics to evaluate our performance. Non-GAAP to GAAP reconciliations are provided in tables in our slide presentation and today's press release. I will now turn the call over to our Chief Executive Officer, Dr. Yoav Zeif. Yoav, Yoav Zeif: Thank you, Yonah. Good morning, everyone, and thank you for joining us. Our fourth quarter performance caps a year in which we successfully maintained our operational discipline, delivered solid cash flow generation, and protected our margin profile. We demonstrated once again the resilience that distinguishes Stratasys Ltd. Importantly, even in a market environment marked by macro spending constraints, we continued to improve our position in our focused target areas, as we drove positive cash flow and profitability, setting us apart from our industry peers. To that end, as we share each year, in 2025, we generated 37.5% of our revenues from manufacturing, up from 36% in 2024 and from just over 25% when we started tracking in 2020. We expect to see this percentage continue to grow every year, which we see as a key driver of consumables utilization to help deliver increased margins. Throughout 2025, our focus on additive manufacturing delivering compelling solutions relative to conventional production resulted in robust customer engagement that was strategically focused. We have made meaningful progress building on the foundational infrastructure of our highest-value target use cases, which notably grew in revenue year over year, led by aerospace and defense, as well as automotive tooling, dental, and medical. These are not transient opportunities. They represent durable competitive advantages that position us for sustained leadership as market conditions normalize. Our long-term value strategy continues to center on the powerful megatrends reshaping global manufacturing: increasing aerospace and defense budgets, the corporate drive for efficiency, cost optimization, supply chain localization and onshoring, next-generation mobility platforms, advancing sustainability mandates, and mass personalization. These secular forces have intensified, and they align directly with additive manufacturing core trends. Our commitment to innovation remains unwavering. Supported by a strong balance sheet and continued R&D investment, our cutting-edge product, materials, and software capabilities cement our industry leadership. As we enter 2026, we do so with proven operational excellence, strategic clarity, and the technology portfolio to capitalize on the inevitable return of customer spending. Importantly, in the fourth quarter, we delivered $9.2 million in adjusted EBITDA, a 6.6% margin, and $0.07 in adjusted EPS. We remain confident that when capital spending constraints ease, our operational efficiencies will result in sustainably higher profitability in coming years. We continue to maintain a healthy balance sheet of $244.5 million in cash and equivalents and no debt. This provides stability and optionality that will support our growth through both organic investments and accretive acquisition opportunities. Stratasys Ltd. is a world leader in industrial polymer 3D printing for high-requirement use cases. We provide comprehensive solutions that include innovative, reliable hardware, the largest portfolio of materials in the industry, award-winning software, post-processing, and a full suite of services and support for complete end-to-end workflow solutions. Our leading example of our requirements is aerospace and defense. It is our largest contributing target sector, highlighted in the fourth quarter by the announcement of our transformational partnership with Airbus, which produced over 25,000 flight-ready parts last year using our ULTEM 9085 filament. This brings the total certified Stratasys Ltd. parts in active service at Airbus to more than 200,000 across the A320, the A350, and A400M aircraft. This collaboration demonstrates true production-scale additive manufacturing, delivering 43% weight reduction, 85% lead time reduction, and eliminating minimum order quantities while enabling distributed manufacturing that reduces aircraft downtime and supply chain risk. Beyond Airbus, we are seeing comprehensive solution adoption across the commercial sector. Boeing 737 Innovation Center purchased two of our newest F3300 printers for production tooling in the fourth quarter, and another leading aircraft manufacturer acquired two more F900s for flight-grade parts, increasing their fleet to nine Stratasys Ltd. systems. We also secured strong sales to several major U.S. drone companies for applications such as power production and wind tunnel testing, with expanded demand from traditional defense primes in unmanned and space sectors. In fact, in 2025, our top three customers at our SBM parts manufacturing division are all large military drone suppliers, and our fourth quarter sales spanning from startup to traditional primes across multiple F3300 and F900 systems for flight-grade parts, supported by high adoption of premium service contracts position us at an inflection point where certified additive manufacturing is becoming mainstream across aviation globally. Automotive continued to demonstrate strong momentum, highlighted by major wins with leading manufacturers deploying our advanced technologies for production applications. Subaru of America became among the first customers to implement our new T25 high-speed head for the F770 printer, achieving over 50% reduction in tooling development time, 70% cost reduction in prototyping and tooling, and nearly twice the printing speed on large parts compared to standard heads. This breakthrough enabled Subaru to consolidate production in-house, improving repeatability while reducing reliance on outsourced manufacturing with eight to twelve weeks lead times. Additionally, Rivian’s extensive deployment of 28 Stratasys Ltd. systems demonstrates our technology’s scalability, with the F900 system operating at over 90% utilization and newer F3300s delivering nearly twice the printing speed, processing 6,000 requests annually, equaling tens of thousands of parts used in product development, tooling, and production. And we are proud to congratulate our performance partner McLaren Formula One on winning the 2025 Constructors’ and Drivers’ Championships, where they leverage our SLA, FDM, and PolyJet technologies to support race-winning innovation. These partnerships exemplify how our automotive manufacturers are integrating additive manufacturing into production workflows, from Formula One racing innovation to electric vehicle manufacturing, positioning us strongly within the rapidly evolving automotive market. Now let me touch on some recent partnership updates. Evidencing our progress in workflow solutions, we have partnered with nTop, a leading generative modeling design and simulation software company, to integrate their nTop simulation technology into our GrabCAD Print Pro. This creates the industry's first complete validated workflow for FDM that no other 3D printer manufacturer offers. This eliminates costly trial-and-error testing, reducing validation time from weeks to hours, with early customers achieving up to 35% weight reductions on load-bearing parts. The solution positions Stratasys Ltd. as the production-ready additive manufacturing leader, with early access launching in Q2 2026 for our F3300, F900, and Fortus 450mc systems. We also recently announced two new partnerships. We launched our post-processing partnership program with PostProcess Technologies, a company revolutionizing additive manufacturing with the only automated end-to-end post-processing solutions for 3D-printed parts. As the first partner in this area of focus, they enable customers to purchase validated post-processing equipment through a single Stratasys Ltd. order alongside our systems. This simplifies procurement, reduces sales risk, and addresses the complexity of manual post-processing by providing an integrated solution, guaranteeing compatibility across our FDM, PolyJet, SLA, and P3 technologies. This alignment positions us to capture more value across the entire additive manufacturing workflow. And on the go-to-market front, we recently partnered with Oak Ridge Systems, a leading award-winning provider of additive manufacturing engineering and manufacturing tools, technology, services, and training in the U.S. and Canada. The collaboration will expand market reach by adding our PolyJet, SLA, and P3 technologies to their portfolio as we target aerospace, automotive, medical, and industrial customers. This collaboration leverages Oak Ridge's application expertise and customer proximity to accelerate adoption of our industrial printer suite, strengthening our American sales capabilities and driving industrial additive manufacturing momentum. Building on the success of our industrial customer advisory board, which has brought together 14 manufacturing leaders such as Boeing, Toyota, Lockheed Martin, and TE Connectivity to advance additive manufacturing at scale, Stratasys Ltd. has also established a new medical advisory board. Both are focused on strengthening collaboration with industry leaders to drive innovation and to accelerate the adoption of 3D printing in their respective industries. This new medical-focused board convened clinical and med-tech experts in healthcare. The board is focusing on the unique requirements of medical-grade applications, regulatory alignment, and patient outcomes. Initial members include eight senior executives from leading medical technology companies such as Medtronic, the world's largest medical device manufacturer, and Edwards Lifesciences, global leader in structural heart disease and critical care technologies, alongside other organizations spanning pharmaceutical, cardiology, orthopedics, and clinical education. To sum up, time and again, some of our most exciting use cases are in the most demanding environments and under the most unforgiving conditions. This includes aerospace and defense applications and advanced manufacturing workflows across a multitude of industrial sectors. We continue to deliver differentiated products and solutions to customers as we further penetrate production applications at scale, supported by strategic partnerships that provide complete end-to-end additive manufacturing solutions, including simulation, post-processing, and expanded channel reach. The stage is set for sustained growth based on accelerated adoption of additive manufacturing in mission-critical applications where customers are achieving measurable operational improvements and moving beyond prototyping to true production-scale manufacturing. I will now turn the call over to Eitan to share the financial results and our initial outlook for 2026. Eitan? Eitan Zamir: Thank you, Yoav. And good morning, everyone. Our fourth quarter results underscore the operational discipline and financial resilience we have built throughout 2025. Despite persistent revenue headwinds and margin pressures that characterized the year, we delivered positive adjusted operating income and adjusted EBITDA, strong operating cash flow generation, and solid adjusted earnings per share for the full year. This performance reflects the sustained benefits of the cost-control initiatives implemented in mid-2024, which are now fully embedded in our operating model, as well as our team's continued focus on execution and efficiency. The diversification of our revenue streams continues to provide stability through the cycle and distinguishes our financial profile relative to peers in the sector. As we look to 2026, we remain committed to maintaining this operational rigor while preserving the strategic investments necessary to sustain our technology leadership position. For the fourth quarter, consolidated revenue of $140 million was down 6.9% as compared to the same period last year. Product revenue in the fourth quarter fell to $97.6 million compared to $105.1 million in the same period last year. Within product revenue, system revenue was $37.8 million, 18% higher sequentially from the third quarter. This compares to $46.7 million in the same period last year, as constrained capital budgets continue to impact customer buying behavior for new systems. Consumables revenue in the fourth quarter was $59.8 million, up 2.4% as compared to the same period last year. Service revenue was $42.4 million for the quarter, compared to $45.3 million in the same period last year. Within service revenue, customer support revenue was $29.6 million, compared to $30.6 million in the same period last year. For the full year 2025, consolidated revenue was $551.1 million, compared to $572.5 million in 2024. Product revenue in 2025 was $380.3 million, compared to $392 million in 2024. Within product revenue, system revenue in 2025 was $131.6 million, compared to $140.3 million in 2024. Consumables revenue was $248.7 million in 2025, compared to $261.7 million in 2024. For the full year 2025, service revenue was $170.8 million, compared to $180.5 million in 2024. Within service revenue, customer support revenue in 2025 was $119 million, compared to $124.7 million in 2024. Now turning to gross margins. GAAP gross margin was 36.8% for the quarter, compared to 46.3% for the same period last year. The results reflect higher restructuring charges, the tariff impact, lower revenues, and change in mix. Non-GAAP gross margin was 46.3% for the quarter, compared to 49.6% for the same period last year. The year-over-year change in gross margin was the result of the tariff impact, lower revenues, and change in mix. GAAP gross margin was 41.2% for the full year 2025, compared to 44.9% for the same period last year. Non-GAAP gross margin was 46.9% for the full year, compared to 49.2% in 2024. The full-year decline in non-GAAP gross margin was a result of the tariff impact, lower revenues, and change in mix. GAAP operating expenses were reduced to an improved $72.2 million for the quarter, compared to $79.4 million during the same period last year, and non-GAAP operating expenses were reduced to an improved $60.8 million, compared to $65.2 million during the same period last year, reflecting the impact of cost-saving initiatives previously discussed. Non-GAAP operating expenses were flat at 43.4% of revenue for the quarter, compared to 43.4% for the same period last year. For the full year, non-GAAP operating expenses were 45.4% of revenues, as compared to 48.4% in 2024, primarily due to the cost-saving measures associated with the restructuring plan we announced in August 2024 that had a full-year impact in 2025, as well as the additional cost initiative we introduced in 2025. In absolute dollar terms, non-GAAP operating expenses were $26.7 million lower in 2025 as compared to 2024, due in part to the cost-saving measures from our restructuring plan. Regarding our consolidated earnings for the quarter, GAAP operating loss for the quarter was $20.8 million, compared to an operating loss of $9.7 million for the same period last year. The change was due primarily to the lower gross profit, partially offset by the lower operating expenses. Non-GAAP operating income for the quarter was $4.1 million, compared to $9.4 million for the same period last year, reflecting the lower gross profit, partially offset by the lower OpEx due to the cost-saving measures associated with the restructuring plan. GAAP net loss for the quarter was $18.9 million, or $0.22 per diluted share, compared to a net loss of $41.9 million, or $0.59 per diluted share for the same period last year, which included the non-cash impairment charge of $30.1 million, or $0.42 per diluted share, related to the investments we made in UltiMaker as part of the merger with MakerBot. Non-GAAP net income for the quarter was $6.2 million, or $0.07 per diluted share, compared to net income of $8.5 million, or $0.12 per diluted share in the same period last year. Adjusted EBITDA was $9.2 million for the quarter, compared to $14.5 million in the same period last year. This equates to 6.6% EBITDA margins, compared to 9.6% in 2024. Regarding our consolidated earnings for the full year 2025, GAAP operating loss was $72.5 million, compared to a loss of $85.7 million for 2024. Non-GAAP operating income for the year was $8.3 million, compared to $4.9 million in 2024. This equates to 1.5% non-GAAP operating margins, compared to 0.9% in 2024. GAAP net loss for the year was $104.3 million, or $1.28 per diluted share, compared to a net loss of $120.3 million, or $1.70 per diluted share for last year. Non-GAAP net income for the year was $12.7 million, or $0.15 per diluted share, compared to $4.2 million, or $0.06 per diluted share last year. Adjusted EBITDA of $28.5 million, 5.2% of revenue, compared to $26 million, or 4.5% of revenue in 2024. The 9.6% increase reflects the improvement or decrease in operating expenses that more than offset the lower revenues and gross margins. We generated $4.8 million of cash from operations during the fourth quarter, compared to $7.4 million in the same quarter last year. For the full year, we generated $15.1 million of cash from operations, compared to $7.8 million in 2024. We ended the year with $244.5 million in cash, cash equivalents, and short-term deposits, compared to $255 million at the end of 2025. Our balance sheet and cash generation profile remain strong, supporting our ability to capitalize on value-enhancing opportunities. Now let me turn to our outlook for 2026. We expect 2026 revenue to be in the range of $565 million to $575 million, with revenues growing sequentially each quarter through the year, resulting in higher revenues in the second half of the year as compared to the first. For the year, we expect consumables revenue in 2026 to increase over 2025. We also expect the first quarter to have the lowest revenue and profit margin profile on a relative basis to the rest of the year. Non-GAAP gross margin for 2026 is expected to be in the range of 46.7% to 47.1%, with the second half stronger than the first half, based primarily on the expected growing revenue over the course of the year. In 2026, we expect our operating expenses to range between $260 million to $262 million. This outlook includes anticipated adverse impact from foreign exchange rates as compared to last year. Specifically, if these current exchange rates hold for the full year, we expect approximately $10 million of adverse impact on our operating expenses. Absent this factor and the full-year impact of increased tariffs, both of which are beyond our control, we would expect to deliver continued improvement in profitability for 2026. We expect operating income to be in the range of 0.7% to 1.5% of revenue, with the second half stronger than the first half, based on the anticipated rise in revenue throughout the year. We expect a GAAP net loss of $67 million to $83 million, or $0.76 to $0.95 per diluted share, and non-GAAP net income of $8 million to $12.5 million, or $0.09 to $0.14 per diluted share for 2026. Adjusted EBITDA for 2026 is expected to be in the range of 4.5% to 5% of revenue, or $25 million to $30 million. This range includes approximately $17 million of combined adverse impact from FX and tariffs, and therefore is not reflective of the higher profitability we would otherwise expect to deliver, particularly as we grow the top line. We expect our capital expenditures for 2026 to range between $20 million and $25 million. Finally, we expect to deliver positive operating cash flow for the full year, subject to uncertainty around FX and tariffs. With that, let me turn the call back over to Yoav for closing remarks. Yoav? Yoav Zeif: Thank you, Eitan. As we begin 2026 and look toward the future, we do so with confidence in our strategic positioning and the fundamental underpinnings of our industry. Throughout 2025, we maintained the disciplined execution necessary to navigate challenging conditions while preserving our capacity to lead and increase profit when market dynamics improve. The progress we are making in our target industries of aerospace and defense, automotive tooling, dental, medical applications, and precision industrial components reinforces our conviction that we have built the infrastructure for durable, profitable growth. Customer engagement remains substantive and strategically focused, and we continue to see encouraging signals that adoption timelines, while extended, are advancing toward inflection. Our margin discipline and operational resilience have enabled us to protect profitability through the cycle. Combined with our strong balance sheet, this positions us to capitalize on inorganic opportunities that we continue to explore, to sustain our technology leadership through continued strategic investment in the innovations that will define the next era of digital manufacturing. As the industry leader with a comprehensive portfolio spanning systems, materials, and software, we have the capability, the customer relationships, and the financial foundation to capitalize on the significant opportunities ahead. Our penetration into high-value production applications continues to deepen, and we remain committed to maximizing long-term shareholder value as additive manufacturing’s role in global production expands. I want to close by acknowledging our global team. Their dedication, professionalism, and relentless focus on customer success continue to drive the engagement and trust that position Stratasys Ltd. for sustained leadership. We are excited about what 2026 and beyond holds for Stratasys Ltd. With that, we will now open for questions. Operator? Operator: Thank you. The floor is now open for questions. Limit yourself to one question and one immediate follow-up. Again, that is star one to register a question at this time. First question is coming from Gregory William Palm of Craig-Hallum. Please go ahead. Danny Eggerichs: Hey, thanks. This is Danny Eggerichs on for Greg today. Appreciate you taking the questions. Maybe we could just start with aerospace and defense, kind of the market that everyone wants exposure to right now. Any way to size up how big that market is for you? And kind of think about the growth outlook moving forward, especially with everything going on, increased spending, and like you said, some of these drone opportunities really starting to develop. So just feels like a really big opportunity there and just curious on how you are thinking about it on a larger scale? Yoav Zeif: Thank you, Danny. Well, you know, we do not like wars. But over the years, Stratasys Ltd. developed the best polymer position in aerospace and defense by far. And what do I mean by position? It is all about having the right certifications to have parts, line parts, and parts that are being used in the field with a lot of experience, customer relationships, and programs that we are running with those customers. Just to give you a ballpark, aerospace and defense, before we talk about the future, is the highest contribution in 2025 to our use cases and to our vertical. This is the largest vertical and this is a great example of a high-requirement vertical where only companies like Stratasys Ltd. can do it. Because coming from the bottom with good-enough machines and printers is not good enough for qualified flying parts. And we have many trusted customers, and only on this call we mentioned Airbus, we mentioned Boeing, the two leaders in aviation. Now let us look at the future, what happened with the defense budget. It is a step-up change. It is a bit different across the globe because we are selling to defense both in Asia, in EMEA, and America. I would say that when we look at the opportunity, the U.S. is more advanced, and then Europe is committed to one ERDOF budget, but they are not there yet with programs. But it is coming. So I will take as an example the drones. We have experience with companies that are leading this industry like General Atomics. We are not coming to this new era of defense and trying to build our credibility and trust. We are already there. And when you look at the U.S., and just take the drone program, and our capabilities, both, by the way, in printing parts with Stratasys Direct Manufacturing, but also with certified parts, it is a major, major future for us, and we put all our resources on it and develop unique end-to-end solutions that will put additive as the main tool to build weekly drones both online, but also in the field. And this is sustainable. This is not something that is, okay, we do it now, and maybe tomorrow it will not be in place. It is a very sustainable, growing market for us because it comes from the high requirements, from the qualifications, from the certifications that we already have. As to the fact that unfortunately we have also a lot of experience with Israeli defense tech—successful experience—this is also another advantage, that we are bringing real field experience with parts, with additive parts, for a new era of defense. Danny Eggerichs: Okay. Yes. That is all good stuff. Appreciate the color there. Maybe if I can just hit one last one on the guide here. It is good to see a return to growth expected for this year. But maybe specifically as relates to kind of the FX and tariff impacts, I think you said what was implied in the FX is kind of the exchange rates you are seeing today. But I guess both lumped in, are those both kind of assuming levels you are currently experiencing? Or is there any maybe worsening baked into those to provide a little level of conservatism? Just trying to get a feel for what to assume here if either of these kind of dynamics changes throughout the year? That is great. Yes. Eitan Zamir: Thank you, Danny, for the question. Listen, I will relate to the question about FX and tariffs and just want to make sure that our investors and analysts understand. We wanted to explain, to touch on these two elements, because they are changes in 2026 relative to 2025, and we wanted to make sure that, you know, we separate between the fundamentals of the business and items like FX, specifically the shekel, that change over time. And in 2026, we see a very strong shekel that has a negative adverse impact on our results. But we wanted to also help you model how our results look like absent or excluding those items. With respect to the shekel, first, I will say that as part of our strategy, we hedge certain currencies, mainly the shekel and the euro, that are more significant to our financials, to our operations, with the Israeli shekel naturally depending on the levels of that currency at the point of time that we try to hedge it. For 2026, if you check very quickly online, you will see that the shekel is at the strongest and the highest level for quite many years. So it is not the time to hedge it. During 2026, as the shekel weakens relative to the dollar, we will consider and may put hedges in place that will improve 2026 relative to the guidance that we provided you today. And we wanted to share with the audience to be able to model its properties. Operator: Thank you. The next question is coming from James Andrew Ricchiuti of Needham & Company. Please go ahead. James Andrew Ricchiuti: So appreciate the detail on the manufacturing business for 2025. Yes, it looks like that business, the manufacturing business, based on the percentages you gave, was flat year over year versus 2024. And just given the use cases you highlighted, I would have thought it would have been a bit better. So how do you see that going forward? Yoav Zeif: Thank you, Jim, for the question. So what we are experiencing here—and by the way, you are right—when we are looking at overall, we are a bit higher than flat. But what we are experiencing here is practically a change in the market. So we are investing with programs with our customers, high-end customers, in those high-end, high-requirement applications like aerospace and defense, like dental, like medical, like tooling, and those customers, except for aerospace and defense, have a whole portfolio. Part of the portfolio is our key use cases. All of them grew. When I am saying use cases, it is a specific application, like tooling for automotive. Drones—we have a set of things for aerospace and defense. Aerospace and defense, as I said, their whole vertical grew. But there are also other parts that are not part of the use cases, but they are part of manufacturing and part of the vertical. Capex constraints, by the way, mainly in industries like automotive. And when you have some that the uncertainty did not do good for them, then you see some type of balancing. But overall, the target markets, all of them grew. And then you have the whole portfolio, manufacturing, and if it is enough—when we have a large installed base, in some part of the installed base there is less utilization or less capex—but it is not the mainstream, it is not the target market. But still, we grew. Not a lot, but we grew. So I am very optimistic. We will keep consistently growing the ratio of our sales to manufacturing, I have no doubt about it. Because we are focusing on the right thing, and we have the right programs with our customers. Another significant effect that was on our sales to manufacturing was the shutdown of the government. The shutdowns of the government in H2 had an impact on the pipeline; all those large deals were to manufacturing. And we also mentioned those large deals in previous calls. But I have no doubt that they will come back. They were only pushed forward, nothing was dropped. Even despite the macro headwinds, despite the shutdown, despite some industries with challenging capex constraints, we grew. Not a lot, but we grew. James Andrew Ricchiuti: Okay. So we are about, what, a little over two months into Q1. I am wondering if you could give us a sense as to the demand trends you are seeing, and maybe just how to think about the sequential, the seasonal—normally you see some seasonality in Q1—any color on that? Eitan Zamir: Yes, for sure. So as we wrote in the guidance, we are seeing sequential growth over this year. And the sequential growth—by the way, in general, our Q1 is the weakest quarter of the year. This is historically right because Q4 usually is a stronger one. When we decided and we planned the year and we reflected it in our guidance, it is clear what is going to happen over the year from our perspective. Of course, you never know about uncertainty and things like tariffs and wars and all this. But when we look forward, we see better government and defense demand. We see it now; we started to see it in Q1, by the way, but there was this small shutdown, and probably we have some type of impact. We also see the plan of launching new products, most of them in H2, so you will not see significant effect in Q1 and Q2, but those are really promising products addressing our use cases. And we have some new businesses that we acquired, the most important one is XSTRAND and the Forward AM portfolio. We bought them from insolvency. Practically they were not operational, but we ramp them up during the year. So when you combine all this, you will see sequential growth quarter over quarter over quarter, with Q1 solid, but most of the growth will come as we move through the year. Operator: Thank you. The next question is coming from Brian Drab of William Blair. Please go ahead. Brian Drab: Hey, good morning. Thanks for taking my questions. First one, just—I think you made this clear, but I just want to really make sure—the midpoint of guidance implies about 3.5% revenue growth and the midpoint of the guidance ranges implies about 4.5% growth in OpEx in 2026. And is that increase in OpEx related—can you kind of break down what that incremental OpEx is associated with? Is it mainly the shekel and the tariff impact? Or are there other modest series of, you know, like, areas of modest investment that are happening in '26? Eitan Zamir: Thanks, Brian, for the question. So the answer is quite simple. As you may recall, we introduced in the last couple of years a few cost-saving programs that saved significant—two, three, four years ago—OpEx levels. If you go back to 2020, you know, we were a company of, you know, close to $300 million OpEx a year, and we are down in 2025 to actual OpEx of $250 million. The main increase, almost the only increase year over year for 2026, is driven by the shekel. That is why we also highlighted this today. And that is something that we consider naturally as temporary in nature relative to the FX cycles over time. Brian Drab: Got it. Thank you. And can you just clarify exactly what you mean by mix when you talk about mix in the context of margin headwind that you saw in the quarter? Eitan Zamir: Sure. So mix can be driven by two elements. It could be a mix within hardware revenue—we have systems that come with very high gross margin, and we have systems that are still in the ramp-up or less mature than others that come with slightly lower gross margin. So that is one type of mix. And it is also the mix between hardware, consumables, and services that come with different gross margins. Now, as you may recall, we have a huge portfolio of hardware, consumables, and as well the services. So it is a matter of changes within the products, but nothing significant. Brian Drab: Okay. Okay. Thank you very much. Operator: Thank you. The next question is coming from Troy Donavon Jensen of Cantor Fitzgerald. Please go ahead. Troy Donavon Jensen: Hey, gentlemen. It is actually Cantor, FitzGerald, as you know, but congrats on the good execution here in 2025. Maybe a quick follow-up on Jim's question earlier just about the production applications. I have always been told that material pricing is just the biggest variable. I would just be curious if you guys feel like that is any type of a headwind in the adoption of additive or FDM in production. And tie it into material sales where, you know, down year over year this year and, you know, is that a function of utilization or pricing? Yoav Zeif: Maybe I will start and then Eitan can add on the material sales. But let us start with a bit of perspective, and thank you for the question, Troy. Our strategy is very clear. We go and we are growing in high-value, high-requirement use cases. We have five like those, within verticals that we believe are the verticals where Stratasys Ltd. is shining. Shining means we are the leader, to be honest. And our key manufacturing use cases are the aerospace and defense, dental, medical, tooling, and some industrial applications. And we grew significantly in those key four that I mentioned. Significantly. In 2025. Now add to it our execution capabilities and any change in the market, we are ready. Because we have the leadership position in terms of the technology and the solution and the ability to deliver to our customers. And, also, by the way, when you talk about execution capabilities, it is a good time for capturing value-creation opportunities. And once we see those, and this pent-up demand exists—how do I know? Because what we see, and I did not mention it to Jim, but it is important. For the last three quarters, we see a decline in our sales cycles. What does it mean? That when we look at closed-won, the deals that we closed, and we ask ourselves, on average, how long it took us to close those deals, there is a decline in the sales cycle, which, by the way, till mid-2025 from 2022 were just increasing. So there is a demand there. It is coming. We are well positioned to be there. And the fact that we kept our position in manufacturing and growing it in the key use cases is also being reflected in our guidance because we are saying this year we will move from decline to growth. And look at our history, when we are saying something, we do everything to meet it. Because our guidance is saying there is a shift in our industry from rapid prototyping to manufacturing. We are leading this shift. We are improving profitability, and I will relate to your question about profitability and materials. And as a result, we will have better EBITDA. The fact that we are adjusting for $17 million for tariffs and FX, this is really an exception because of the situation, the geopolitical situation, and what we are experiencing now. But it is not sustainable. It is not the real value of the shekel. And tariffs will be different long-term. When I am looking at those use cases and I am asking, okay, what is the future? The future is significantly higher utilization. A machine that is standing in one of our large corporate customers like GM—or choose any—or Boeing or any manufacturing customer, is consuming between seven to twelve times more than an average rapid prototyping printer. And we have the data because we collect the data. So, and maybe we need to sell it a little with lower prices. But to be honest, there is no pressure there because those applications are so unique. They are coming with the part of certified—you need to go through sometimes three or four years of qualifications—and then there is no alternative. The customers know about the price, and the price if you print a part in a missile is not a real factor. And we are the leader in those areas, especially in aerospace and defense. And our secret weapon, going back to how we are penetrating there, is the customer relationships that we have in those areas. Customer relationships, I mean trust and credibility. From their perspective, we are the most reliable provider. Just lately, with the customer advisory board, one year of work together with our customers will increase our reliability by 22% of our largest machine. Because we are focused on manufacturing. And the other factor of our secret weapon is our teams. Because no doubt the industry is going through a change—this shift to manufacturing. But we have the right teams to adapt on time. Back to your question, material—if you focus on the high-performance material, higher utilization and all the value is there. Maybe another important data point: you look at the material, the overall additive manufacturing polymers, 70% of the volume of material is low-end consumer entry-level machines. But it is only 20% of the value. We are a value player. We want to capture the 80% of the value. I hope it was comprehensive enough. Troy Donavon Jensen: Yeah. Thank you very much, gentlemen. Good luck this year. Yoav Zeif: Thank you. Operator: Thank you. The next question is coming from Alek Valero of Loop Capital Markets. Please go ahead. Alek Valero: Hey, guys. Thank you for taking my question. My first question is, last quarter you mentioned the large tech company purchased four F3300s for prototyping with plans to move to production. Have they placed any follow-on orders? And have they started the transition yet? Any update there? Thank you. Yoav Zeif: That is a great question. Thank you for the question. Unfortunately, we cannot share because this is confidential. I can just say that they are very happy with the solution. And we cannot share anything that they are not approving in advance. Alek Valero: Got it. No, understood. I guess my follow-up, on SaaS, I saw that you launched the PA12 qualification with Boeing, Raytheon, and a few others last month. I just wanted to ask, what is the time to completion there? And how do you size the revenue opportunity? Yoav Zeif: It is a large revenue opportunity. We usually do not disclose exactly. It is a large revenue opportunity. Those are the programs, and this is only one out of many programs that we have with those large customers, because we listen to them, we sit with them, they share with us their needs, and then we launch a program. Some programs are more on software, some on materials, some on hardware. And it is a large opportunity, and the qualification also depends on the class of the part. So there are different classes of parts, and it takes different timeframes, durations to qualify the part. It can go from one year to three years. Alek Valero: Got it. Yoav Zeif: Thank you. Operator: Thank you. At this time, I would like to turn the floor back over to Dr. Zeif for closing comments. Yoav Zeif: Thank you for joining us. Looking forward to updating you again next quarter. Operator: Ladies and gentlemen, this concludes today's event. You may disconnect your lines or log off the webcast at this time and enjoy the rest of your day.
Operator: Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Riley Exploration Permian, Inc. Fourth Quarter and Full Year 2025 Earnings Release and Conference Call. [Operator Instructions] I would now like to turn the conference over to Philip Riley, Chief Financial Officer. Please go ahead. Philip Riley: Good morning. Welcome to our conference call covering our fourth quarter 2025 and full year 2025 results. I'm Philip Riley, CFO. Joining me today are Bobby Riley, Chairman and CEO; and John Suter, COO. Yesterday, we published a variety of materials, which can be found on our website under the Investors section. These materials in today's conference call contains certain projections and other forward-looking statements within the meaning of the federal securities laws. These statements are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied in these statements. We'll also reference certain non-GAAP measures. The reconciliations to the appropriate GAAP measures can be found in our supplemental disclosure on our website. I'll now turn the call over to Bobby. Bobby Riley: Thank you, Philip. 2025 was a transformation year for Riley Permian and we look forward to discussing our fourth quarter results and our 2026 plan this morning. Over the course of the year, we made significant progress across several strategic initiatives, positioning us for long-term value creation. Through our Silverback acquisition, which closed in July, we enhanced depth and duration of our undeveloped inventory in our portfolio. Combined with our previous acquisitions in New Mexico and our legacy Champions position, we have 7 to 8 years of high cash on cash return undeveloped inventory. In December, we sold our interest in our New Mexico Midstream project to Targa, a best-in-class Fortune 500 midstream infrastructure company with a premier integrated asset network for $123 million in cash, plus $60 million in future potential earnouts. The project will provide flow assurance for our New Mexico gas production and enable us more robust development of our New Mexico assets as originally intended. This transaction eliminates all liabilities and future construction costs associated with the project, allowing us to focus more capital into the drill bit and less into infrastructure. The project is underway and Targa expects the project to be operational in the second half of 2026. We reduced our debt by $120 million during the fourth quarter, reinforcing our financial flexibility and positioning the company to accelerate development in 2026. The disciplined groundwork late in 2025, portfolio expansion, infrastructure build-out and balance sheet improvement sets the stage for more active and value-enhancing development program in 2026 and the years ahead. We authorized a stock repurchase program of up to $100 million of currently outstanding shares of the company's common stock and began repurchasing outstanding shares in January of this year. We repurchased approximately 152,000 shares at a weighted average price of $26.54. The decision for accelerated growth is not in response to the recent increase in oil price levels, but rather the result of Riley Permian's multiyear positioning and our long-term view on value creation. For 2026, we forecast over 20% year-over-year oil volume growth. While we are excited about this growth potential, we will remain flexible and ready to moderate activity and spend appropriately should oil price environment deteriorate. I would like to thank our entire team for the success and transformation we realized in 2025. We're positioned for an exciting 2026 and beyond thanks to our strong financial position and asset base. With that, I'll turn the call over to John Suter, our COO, for operational highlights, followed by Philip Reilly, our CFO, and who will review financial performance. John Suter: Thank you, Bobby, and good morning. I'll briefly cover fourth quarter and full year results followed by 2026 development plans. Beginning with the fourth quarter, our development activity was focused in Texas. Activity levels match the ranges we provided in guidance with more drilling and completions than new wells turned to sales. wells drilled, but not turned to sales during the fourth quarter should come online over the first and second quarters of 2026. Oil production increased by more than 1,700 barrels of oil per day or 9% quarter-over-quarter. This was primarily from improving volumes from the new wells brought online earlier in 2025 that continued to increase as well as from the 3 new wells turned to sales during the fourth quarter. Comparing the fourth quarter of 2025 to 2024 and oil production increased by 26%. As for the full year 2025, I'd like to begin by highlighting another year of excellence in safety here at Riley Permian. We achieved a total recordable incident rate of 0 in 2025. We also achieved 95% safe days, a metric requiring no recordable incidents vehicle accidents or spills over 10 barrels. Full year oil production increased by 15% year-over-year while total equivalent production increased by 29%. The overwhelming majority of our full year production increase was from pre 2025 development with modest contributions from 2025 new wells and smaller contributions from the Silverback acquisition for the second half of the year, including the benefits of workover volumes as discussed last quarter. Full year development activity counts were relatively modest compared to 2024 levels as we reduced activity midyear last year, following the oil price decline and our Silverback acquisition. In total, we drilled 18 net wells in 2025 or 28% fewer than in 2024 and turned to sales 16.3 net wells or 23% fewer than in 2024. I highlight these metrics for a couple of reasons. First, we achieved impressive organic volume growth with relatively limited activity. This is a testament to our high-quality drilling portfolio. Volumes from the acquisition accounted for only 8% of total annual volumes. Second, this reinforces what Bobby discussed on framing our 2026 plans for significant increased activity relative to the lower activity in 2025 and readiness positioning with midstream and water takeaway projects. In Texas, we essentially held over 11,000 barrels of oil per day of oil production flat year-over-year with only 10 net wells turned to sales again, demonstrating the productivity and efficiency of our wells. In New Mexico, production has been more consistent and reliable. Since commissioning the expansion of the compressor station in December, we've been able to send more gas to the high-pressure system, increasing uptime and unburdening the low-pressure system by which the remainder of our gas is gathered. Overall, New Mexico oil production grew by 74% and or over 2,500 barrels of oil per day year-over-year, benefiting from just 6.3 net wells turned to sales and from the Silverback volumes. New Mexico represents a growing share of our total company oil production from 23% of the total in 2024 to 34% in 2025. That trend will continue into 2026 and beyond. The Silverback acquisition continues to surpass by case expectations, producing at a 65% higher oil rate at year-end than anticipated. This is primarily due to strategic workovers, including wellbore cleanouts, artificial lift optimization and return to production operations. As for drilling and completion operations, we're down 25% in cost per lateral foot in Red Lake year-over-year. Similar results were achieved in Texas with a 15% cost reduction per lateral foot in 2025. Both achievements were driven primarily by a focus on pad drilling and increase in time spent drilling and completion and optimization. It should be noted that while completion optimization helped on the cost reduction side, we're also seeing it result in an increase in productivity in both our Texas and New Mexico wells with both sets of wells generally beating internal forecasts. We're also optimistic about future optimization that could further drive costs down. including increasing completed lateral length and testing new completion methodology in New Mexico. Let's now discuss our plans for 2026. Our current plans call for significant increases in activity and volume with activity and spending being more concentrated during the first half of the year, while volumes may grow each successive quarter. On a full year basis, we're essentially running slightly more than an equivalent continuous 1-rig program. In actuality, we have 2 rigs running for approximately 3 months through May, back down to 1 rig for the summer, down to 0 potentially for the fall before picking 1 up again later in the year. We picked up the second drilling rig last month that began drilling in New Mexico to complement the rig already running in Texas that was put in service October of last year. This 2-rig program allows us the ability to continue to grow our Texas production base while also setting the stage for more New Mexico asset development when the long-haul high-pressure line to Targa is completed in Q3. We'll begin to build volumes, striving to meet our volume commitment payouts as per the terms of the sale of the midstream asset in Q4 2025. Both rigs have relatively short contract terms, allowing us to be flexible in the event market conditions change rapidly. We currently forecast drilling 46 to 53 gross wells, which may correspond to approximately 37% to 43% on a net basis. Net completions and wells turned to sales may be slightly higher as we have a small inventory of DUCs to draw from as I referenced during my commentary on fourth quarter activity. New wells turned to sales will focus in Texas during the first half of the year and transition to New Mexico for the second half. This is predicated on the Mexico gas infrastructure being completed and ready by that time, as Bobby described. Additionally, we've been working with partners to secure sufficient water disposal for this development plan. This will increase operating expenses, which we see impacted later in the year while we're also tackling initiatives elsewhere to offset this increase. Philip, I'll now turn the call back to you. Philip Riley: Thank you, John. I'll also cover both fourth quarter and full year 2025 results with a few additional notes on 2026 guidance. The company's financial results for the fourth quarter were favorable to all guidance levels. Fourth quarter prices after hedges were lower quarter-over-quarter across all 3 commodities, though total hedge revenue decreased by only $3.8 million or 3% quarter-over-quarter, benefiting from $8 million of positive hedge settlements. We experienced negative natural gas and NGL revenues after basis and fees. Like many other Permian operators who have reported this earnings cycle, pipeline maintenance constrained Permian gas egress and pressured Waha pricing during the quarter. We're monitoring the regional infrastructure build-out, which is forecast to improve by next year, absent delays. We have a material amount of Waha basis hedged next year at minus $1 to Henry Hub, which combined with higher index pricing and higher forecasted volumes, has the potential to translate to material positive revenue starting in 2027. Core cash operating costs being LOE, production taxes and G&A before stock compensation, decreased in total by 13% quarter-over-quarter. LOE also decreased by 13% quarter-over-quarter or by 21% on a dollar per BOE basis with cost savings across many categories. Workover expenses were the largest contributor coming off the third quarter with higher workover activity immediately following the Silverback closing. We hope to continue realizing some aspects of the cost savings, while other aspects were unique to the quarter and may not recur going forward. G&A before stock compensation decreased by 20% and G&A inclusive of stock compensation decreased by 18%, partly on account of coming off of an unusually high third quarter. A few items caused third quarter G&A to be materially higher, including the impact of a transition services agreement with Silverback immediately following the close, which was completed by the fourth quarter. Net income increased by $69 million quarter-over-quarter, benefiting from nonrecurring items such as the $72 million gain from the midstream sale and from $20 million of higher hedging gains, which were mostly noncash and partially offset by $16 million of higher income tax expense due to the midstream sale gain. Adjusted EBITDAX increased 3% quarter-over-quarter to $66 million as $5.8 million of lower costs more than offset lower hedge revenue, increasing margin from 59% to 63%. Cash flow from operations increased 2% quarter-over-quarter. Accrual capital expenditures for the quarter were $50 million, compared to $18 million in the third quarter. The CapEx increase represented a return to more normalized upstream activity compared to an exceptionally low level in the third quarter and an increase in midstream capital spend which is ultimately reimbursed with midstream sale. In aggregate, capital expenditures were at the low end of our fourth quarter guidance range, primarily due to a few new drills and smaller infrastructure projects that were deferred to 2026. We converted 27% of operating cash flow to $17 million of upstream free cash flow and $1 million of total free cash flow. Note, the proceeds of the midstream sale did not flow through total free cash flow, while the CapEx does reduce free cash flow. I'll point out again that the midstream CapEx was reimbursed as part of the sale so the free cash flow metric has a bit lower utility this quarter. Debt decreased by $120 million quarter-over-quarter due to proceeds from the midstream sale resulting in a fourth quarter 2025 balance of $255 million. As of 12/31, our credit facility was 28% utilized based on a $400 million borrowing base. Trailing debt to EBITDAX leverage was 1.0x on an as-reported EBITDAX basis or 0.9x on a pro forma basis, including first half 2025 Silverback EBITDAX. On a full year basis, to EBITDAX and free cash flow decreased by only 8% year-over-year despite 15% lower oil prices. Total free cash flow was 31% lower year-over-year driven by lower prices and higher midstream spend, which, of course, is nonrecurring. We allocated 41% of total free cash flow to dividends, up from 26% in 2024 as dividends increased and free cash flow declined. We had a very active year of acquisitions and divestitures, as you can see on our cash flow statement. Silverback is represented as the $118 million business combination. The $2.2 million of acquisitions of oil and gas properties represents a small acquisition of minerals underneath our New Mexico properties that we completed earlier in the year. We also had a good amount of success in 2025 with our land ground game reflected in a $1.3 million acquisition and effectively $3 million of new leasehold embedded in CapEx, which is labeled as the additions to oil and natural gas properties on the cash flow statement. In total, we estimate that we replaced about 2/3 of our completed locations from 2025 via new land, corresponding to a very attractive cost of entry of less than $300,000 per net undeveloped location. Moving on to 2026. We currently forecast a capital plan of $200 million, corresponding to the activity that Bobby and John described. As of today, we forecast more than 2/3 of the capital spent in the first half of the year, at least on an accrual basis with a particularly large second quarter, then falling in each of the third and fourth quarters while oil volumes may rise through the year given the lag effect of investments converting to production. We see this investment benefiting not only this year, but providing a tailwind to 2027 as well. In our investor presentation, we provide a 2-year outlook, illustrating 2026 and 2027 spending and production levels. Overall, we forecast a materially higher allocation rate of cash flow to CapEx this year. Of course, we'll monitor markets and aim to stay flexible throughout the year and will protect the dividend in lower price environments. We entered 2026 well hedged, partially on account of the midstream capital commitment we're occurring until mid-December and partially on account of universal calls for an oil surplus and weak pricing. And we've done some hedging over the past week. As of March 2, we had approximately 70% of forecasted oil volumes at midpoint guidance hedged at a weighted average downside price of approximately $60 per barrel with 36% of those hedges structured as collars, preserving upside participation. Thank you all for your support and attention. Operator, you may now turn it over for questions. Operator: [Operator Instructions] Our first question will come from the line of Derrick Whitfield with Texas Capital. Derrick Whitfield: Congrats on a strong year-end and also thanks for providing a multi-period outlook as well. Regarding 2026 and 2027, while I understand there could be off brands at a lower price environment. Could you help us shape production cadence for the year under the status quo plan as the implied average oil production for Q2 through Q4 is about 10% above the Street at present. And then additionally, as we kind of think about capital efficiency over this period of investment throughout 20 would you expect it to improve in 227 as you optimize D&C designs get for Repsineti? And as you back out some of the DUC impacts 2026. Philip Riley: Yes, sure, Derrick. This is Philip. So you're going to see the production increase each quarter this year. And I guess to clarify, you're going to see a dip in quarter 1 is what we're forecasting. John could follow here with a little more color. But we experienced some downtime and some deferred production this quarter. We had some shut-ins from our legacy midstream partner, which caused a little bit of a dip there in the first quarter, but then we hope to achieve a nice ramp in the second quarter and third quarter and fourth quarter. I hope that answered the first question. I'll go to the second and then pass to John. On '27, yes, depending on how you define capital efficiency, we've got a few different metrics. But yes, you could find that next year is more efficient and that's just the function of the delayed aspect of the investment converting to the production dim. So we hope to achieve another increase next year. It may not be the 25% increase like we hope to get this year, but maybe it's 10% or so based on, frankly, kind of flattish CapEx is what we're showing for now. 2027 is a long way, of course, but we did put that in there. I'm glad you appreciate it because it does show that kind of lag effect benefit there. John, do you want to say anything else on kind of the Red Lake shut-in? John Suter: Yes, sure. Yes, like Philip said, we did have some downtime in the -- due to some of the heavy weather freezing temperatures and then like you said, some issues with our pipeline. But all the more reason why we're really looking forward to Q3 when we'll have our new pipeline in place. We're excited about that. Like we -- several of us mentioned that there'll be heavy champions activity in the first half of the year. And then we're we kind of reduced in the third quarter and then in the fourth quarter, we're shifting to New Mexico again, we need that trunk line in place from Targa, and that's on schedule to happen. And so really excited about that. We'll start ramping up our completions still won't get the full impact of it in Q4 because a lot of things are being completed then and we'll have to dewater a little bit, but all the better for '27 as we should be able to start drilling more efficiently in Denver in New Mexico and completing those wells as we go. So should be more efficient without having to wait on some water infrastructure and some gas takeaway like we are this year. Derrick Whitfield: Great. And John, maybe staying with you, in your prepared remarks, you mentioned completion optimization. Could you elaborate on some of the notes that you're turning for completion optimization or D&C optimization? And what you're seeing in well performance versus past designs. John Suter: Sure. Well, we -- again, we've been mostly in champions. We're trying to do zipper fracs on pad drilling, zipper fracs on everything we do. We kind of think we found the optimal recipe there. We've reduced from say, 700 to 800 pounds per foot down to 250 to 300 pounds per foot of sand. And so that's a big change over time. goes against what we hear in the shale world. So we're getting a big cost savings from that. We also have found that 2040 works better than 40 70, which is often more readily used. But we've also -- the other thing is we've reduced our clusters, but still are using the same amount of sand, but we've -- it reduces our water volume and of course, less pump time, which is a cost benefit. In Mexico, there is upside there that we have tested a little bit. We plan to test more in 2026. The hepatic layer of the blindary is very similar to the San Andres over in Texas. And we would like to test more cross-link fracs there. We've done it once in 2025, I believe, and we've seen good outcome, but we have a lot more testing to do, but it could provide a significant financial benefit somewhere between $0.5 million plus per well. So we're excited to do some more testing there. Again, once we have that pipeline, we'll have the freedom to do a little bit larger scale drilling. Derrick Whitfield: Maybe, John, just to clarify on the optimization. It sounds like it's more cost and you're getting similar performance. Is that the right way to characterize it. John Suter: I would say in champions, that's probably true, albeit our wells are outperforming our general type curves right now. Some of that is due to, again, more child wells are being drilled in champions because again, we're later in the development stage there. those wells tend to reach peak oil faster. So that's another reason that's causing that in Champions. Operator: Our next question will come from the line of Neal Dingmann with William Blair. Neal Dingmann: Great update. Phil, maybe a question for you or Bob or John. Just again sticking with that Slide 10. I've always loved the flexibility. Again, it certainly seems like in past years, it hasn't been 1 rig that you've needed to have very material production growth that I'm just wondering, given now today in shoot, we're almost now back to $80 oil. How flexible is this plan? And I know a lot of larger companies, I would say, hey, we're just going to target flat and target free cash flow growth. But again, given your returns that you show on other slides, would you think about trying to capture this oil upside and even potentially grow quicker than just maybe talk about the flexibility of the plan, I guess, is the best way to ask it. John Suter: Yes. I might diverse some of that to Bobby for a longer-term view of that of increasing. But certainly, we're talking about drilling, what 45 to low 50s gross wells. The beauty of of our wells being so shallow that compared to the Delaware is that we can knock well out from spud to TD, maybe 4 or 5 days, certainly a week by the time you get everything wrapped up and then doing pad drilling, it's really quick sliding to the next one. So 1 rig can effectively drill let's just say, upper 40s to low 50s wells per year if you're able to not do a lot of regional moving. So it would not take much in deployment to be able to really drill quite a few wells. So we have the capability. I may star that back to Bobby to see what he thinks about drilling at a higher oil price. Bobby Riley: Thank you, Neal, for the comments you made. I'm going to say we're probably not in a position today to be reactive to a $5 increase or $4 increase in the price of oil. I think we have a solid plan laid out for 2026 with a pretty significant D&C capital spend that really we're looking into '27 and beyond and how that going to affect this company in any price environment, whether it be $55 or $85. We have the ability with the flexibility like John mentioned, we could either shut these rigs down if we needed to or keep the rig running for the entire year. We have that option ahead of us. It's just too early to immature to really say what we would do at this point. Neal Dingmann: Yes, that makes sense, Bobby, and love the flexibility. Second question, Phil, you know I can't help but ask on the powers. Obviously, there's positive on that. I know I was looking at Slide 16, you guys talked about, I think, now even on the second project, it's in the final stage. Could you talk maybe just update on that, where that second project sits? And have you considered even adding more power beyond project #2 because, again, obviously, I'm a fan of this. And again, I think as the market would love just to hear any more plans to be on Project 2. Philip Riley: Sure. Thanks. Yes. So the second project is this merchant project we have in ERCOT in which we take our lower-cost gas and convert that to electrons to sell to the ERCOT grid that project itself has 4 sites, and the first of the 4 sites is in the final stages of commissioning. With ERCOT that has a kind of 4-week process where you're testing with ERCOT demonstrating your ability and competency to reliably deliver that power we're getting ready for that. And then we should be in a position to enter effectively the day-ahead trading, which is the kind of power that we plan to provide and offer for the grid. It's not a long-term thing, but it's something that we then think is flexible. You can react. We -- our partner has a very active trading desk there that you can look at the dynamics, both gas and power and make decisions on that kind of basis. Ultimately, this is for it's for a few things, but one of the primary things is, frankly, to try to improve effective netbacks on our gas. Now that may not show up on our revenue, like I mentioned on our negative revenue we experienced in the fourth quarter. But basically, it's taking that same inherent energy that's embedded in that molecule, right, and turning it into something that maybe the market would value more. We'll see. We're excited for it. We think it can make some sense. We've seen some other companies sign up to do something like that as they also have challenges with in-basin gas realizations. As for doing more, man, how much has changed with power in the last 2 years, right? We announced this. And so what I'd say is, I mean, I think we'd like to see how this goes. These are very, very small sites, 10-megawatt compared to the gigawatt type of sites you're seeing now. Gigawatt plants and data centers are massive operations, incredibly capital intense. You got the hyperscalers now right, committed to what, $600 billion of CapEx combined with them. And then that's all the way up to the President, right? We said, okay, you guys now need to be in charge of your own power. So we're talking big, big, big scale. And then at the same time, that tends with that arena of infrastructure CapEx and investors tends to push down returns. And so I think for now, we're being cautious and we're waiting to see. We're opportunistic. I mean that's usually the way we treat things. I encourage you to think about it as like opportunistic projects. We did one with midstream. This is another type of project like that is how we're thinking about it for now. Neal Dingmann: Philip, again, fantastic deal also on the midstream project. Operator: [Operator Instructions] Our next question will come from the line of Nicholas Pope with Roth Capital. Nicholas Pope: There were some comments made about the New Mexico operations that I guess, in the fourth quarter, maybe even earlier in the third quarter, when the compressor system came online kind of helped boost production on top of artificial lift just downhole work on the wells that have really kind of yielded some real nice results there and kind of maintaining the production levels without a lot of drilling. I was curious like where -- I guess where that New Mexico side kind of is with your taking over operations and kind of some of that field production level optimization right now? And maybe is there -- do you all think you are fairly kind of through kind of integration of all those assets? Or do you think maybe there's more of that kind of quick hit, low-hanging fruit type production work that you got going to New Mexico? John Suter: Yes. I would say related to the fourth quarter, some of the -- there was a couple of early pads that we've drilled that were just outstanding performance, we're really excited about that we've done some testing on. Certainly, we have integrated the Silverback acquisition that's on the west side of our of the Red Lake asset we originally had. We have worked on a lot of integration there. We've combined our workforces got down to 1 office kind of benefited for some water handling optimization, reducing some costs again, just numerous things. But we do have that, I would say, fully integrated -- there has been some strong work overperformance, which is what we've concentrated on in the early stages of this. We found a lot of low-hanging fruit there wellbore cleanouts, -- we've been switching from some of their artificial lift methods, even from ESP to large pumping units and doing it earlier in their life, and we're saving up to $20,000 a month per installation as we've been able to find those. So we're kind of working through those that's what's been a big contributor to -- like I mentioned, just kind of the outperformance in the first 6 months of Silverback was fantastic, kind of keeping it way flatter than we thought we would, and it's from the strong workover performance. Nicholas Pope: Got it. And do you think there's -- I mean, are you still finding these opportunities in that area? I mean do you think -- I mean, it didn't seem like there was a big uptick in LOE in the fourth quarter despite kind of the positive number. So I was just curious, like, is that still ongoing? Is there still pretty hurdle ground there to optimize? John Suter: Yes, it is. There's certainly quite a few wells. I can't remember how many horizontals they had maybe 3-ish, if I remember right, I met a lot of verticals. But again, we're just prioritizing seeing what's the most effective way to start -- and then, yes, just working through just blocking and tackling with some of these wells, we've been able to restore to near initial production. So again, it's something that there's not hundreds of them. but we're certainly taking care of them, and that's allowing us to keep that steady and holding that while we develop our what we call kind of our Artesia West on our main Red Lake asset that we've had. So we'll kind of do this in phases from an inside-out approach as we are trying to be effective with Targa's infrastructure. They'll be laying to support this. But we're excited about the large number of upside type things there are here. Nicholas Pope: That's great. One housekeeping item. The divestiture they all made that non-Jukum County assets. Was there any production associated with that small divestiture. Bobby Riley: No, it's a very, very small amount. That was a legacy asset that we brought in. I think progress, if you can go in public, I don't know what the number will 200 barrels Yes, a couple of hundred barrels. Operator: Our next question comes from the line of Noel Parks with Tuohy Brothers. Noel Parks: Just wanted to ask a couple. I think I sort of caught everything from the various moving parts that you were talking about reserves and costs for the reserves for the year. But I -- just -- is there anything about the balance of in the costs incurred between what shows up as under the acquisition side versus the development side? Because the development CapEx is sequentially lower -- well, lower year-over-year by a good bit, of course. And just doing my calculation, it just looked like the 1-year drill bit F&D came out especially low, which is a good thing. But I just wondered if there was anything sort of unusual about the bookings this year, bringing new areas onto the books and I'm sure reallocating CapEx with the SEC 5-year rule and so forth. So any insight on that would be helpful. Philip Riley: Okay. Noel, I'll take a stab and follow up with you if you need to. The direct answer is that there's nothing nuanced or new going on with regard to how we're booking. I think it's primarily the fact of what Jon described, we had lower activity in '25. Go back to April, May, Liberation Day, prices fall. At the same time, we captured that acquisition, and we try to preserve capital for that. had a little bit of competition for the allocation given the midstream. So we work through the year like that. We're able to grow organically with modest activity like he described, 16.3 net wells put online. So I think a lot of it is that, combined with the cost savings on D&C. And so that probably translates to what you're seeing in the cash flow statement. When I convert that to reserves. I think we had about $13 a barrel cost to add proved developed reserves on a per barrel basis, not per barrel of oil. And so that was a positive, I think, roughly flat with last year. On reserves, just service announcement for everybody, we aim to take a pretty conservative philosophy of booking. I don't know that we booked a single PUD with Silverback, for example, just being the public company with the SEC in the 5-year rule, as you mentioned, we just find it's easier to book as you go at the kind of minimum. So we focus on predeveloped probably more so than total approved. John Suter: Yes, I think that's right, Philip, just with our relatively conservative pace, you could book most of champions as a PUD if you wanted to all but the very Eastern exterior wells, but we've chosen not to do that. New Mexico, until we start drilling more, then we'll be able to expand our PUD base as we start developing more, but we've been limited again with gas takeaway, water takeaway that now has been fixed. We do pad drilling and so that hurt you from being able to go out and drill 6 different areas instead of 6 wells on the same pad, you can certainly book more PUDs if you do that. But I would agree with Philip where we've taken a pretty conservative stance here, but we have a lot of optionality in the future to improve that. Noel Parks: Great. That does fill in a couple of gaps I had in my understanding. So that's great. And I was thinking just on the question before you were talking about the really nice low-hanging fruit that you have from maintenance, maintenance tasks, workovers, making wellbore cleanups and so forth. And I do recall just, I think, talking about both of your significant pieces of New Mexico acquisitions, especially with the most recent one, Silverback that the assets being in the hands of folks who really were coming from more of a private equity sort of financing background as opposed to being sort of just your typical operators. As you look around the other vintages of entries into the base in the conventional plays that various parties have done over the last 5-plus years or so. do you anticipate similarly -- I don't know if I call them neglected, but just similar packages out there that have low-hanging fruit that's similar I do recall you saying in the past that the issue is that there isn't really enough upside in a lot of what's been available. But I just wondered if deal something like some back is something that maybe over the next few years, you could replicate easily. John Suter: Yes. That's -- there's a lot of different things in there. I think various companies just focus their capital on different things, whether they're trying to drill and flip or if they want to develop it as a legacy asset. I do think our team is particularly good at it. I will say that of recognizing it and then acting on it. But that being said, various companies deal with that in different ways. I think that we can find a lot of fruit in most assets. But again, we bought Silver back for the most part for all of the drilling opportunity. The -- it's a ton of acreage, right along trend in the Yeso play. That's why we bought it. all of this other stuff with production optimization is just bonus in my book. Operator: Our next question comes from the line of Jeff Robertson with Water Tower Research. Jeffrey Robertson: Bobby, you talked about restarting the share repurchase program. Can you just talk about how that plan fits into your overall capital allocation with dividends, debt reduction potential for acquisitions? Bobby Riley: Yes. Thanks for the question, Jeff. It basically is just another tool in our tool test to where we look for being opportunistic. If we feel like the share price, which we do is undervalued, it may be behooves to continue more aggressively in a share buyback. Obviously, in these accelerated prices, the returns we get on the drill bit are extremely great for us. So that may not lend to buy back at that particular time. But the fact that we're flexible and can spend our money either to stock buyback or development that's where we want to be. You saw from the comments and from the falls, I think we averaged the buyback around $26.50 a share or something like that. When the share price is out, I'm definitely buying. So I don't know if I answered your question, but basically, it's there and it's ready when we need it. And if we feel like the return is better on the share buyback than drilling, then that's what we're going to do. Jeffrey Robertson: John, in your comments, I think you said -- or maybe, Philip, you said you replaced 2/3 of the 2025 drilled locations for -- I wrote down less than $300,000 per location. Can you provide any color as to where those locations fit in the chart you have on Slide 5, where you talk about locations by return on investment. And then secondly to that, do you have a goal or an objective to how many locations you would like to replace that you'll drill in the 26 program? Philip Riley: I will attempt to answer that. Yes. So the locations, I'd say, they fall in kind of the middle of the 2 to 3x DRI. You're looking at just referencing Page 5 of our presentation, right third, we've got a chart in there. The lower tier there just for the benefit is a small section kind of on the perimeters of Red Lake, but most of our stuff is great, and we're excited about it. This that we got was we think nice down the fairway type of locations, just under a dozen there. So we're thrilled to do that. This might be a Bobby answer, but I'll attempt it. Look, our goal is to would replace as much as we can. If we could replace 100%, then that's fantastic, right? And in a depletion business, you've got to have something like that, to some degree, the closer you can get to 1x or 100%, that's great. So we're thrilled with 60% last year. Now of course, it was easier coming off of putting on 18 wells versus 40, but we're always out there looking for things. You've seen us have an active A&D track record so far. We'll do the best we can. Bobby Riley: Yes. Let me add a little bit to that. we're focusing this year with our land group where we kind of restructured it to 1 of our key focus is going to be what we call the ground game, which is this is not going out and buy a competitor. This is actually just digging in and adding acreage in and around our existing footprint. And the goal would be to replace 100% of what we drill every year or more. And I think we have that opportunity in New Mexico. We're executing a few of those opportunities in our legacy Yokee this month as we speak. We're a little bit more limited there on where we think the rock creates opportunity than we are in New Mexico. But that's 1 of our big focuses this year is going to be what we call the ground game and executing that. replacing our drilling inventory at least 100% with the bolt-ons. Jeffrey Robertson: And Philip, you all Riley signed an agreement with WaterBridge, which I believe takes effect in September of 2026. Will that agreement with respect to saltwater disposal, lower your cost? Will it just improve efficiencies in the Red Lake area? Or how do you -- how should -- how do you characterize that the benefit of that. John Suter: Yes. This is John. It's going to increase our cost. But what it does is it allows for full-scale development the rest of the way for this field. So it's -- we did an agreement, I would say, at industry standard rates, and we're really pleased with it. But more than any kind of minor efficiency, it's just like the target is for gas. It's to allow full field development without having to worry if there's any capacity somewhere. Philip Riley: And let me just add on in that what we hope to achieve is that we're managing the costs over time and that we achieve, at the same time, as some of those water bridge costs are impacting us, we get overall efficiencies just with the scale as a larger percentage of the Red Lake production becomes horizontal, which is much higher margin, lower cost versus right now, you've got some component of that that's just, frankly, the vertical that was holding the land, it's how we got it from a seller, right? John Suter: Right. And we do have a lot of undedicated acreage at this point. So we still have flexibility for future options as well. Jeffrey Robertson: And lastly, Philip, you spoke about hedges for 2026. Given the shape of the curve today where you've got for 2027 prices, I think your oil are in the mid-60s. Can you just provide any color on how you're thinking about hedging in a volatile market. Philip Riley: Yes. So we talk about it approximately 27 times a day and then think about it through the night. We've been through years of volatility, right? We're trying to position ourselves and protect the program ahead. Our philosophy historically is when we've got higher capital obligations and debt loads, then we might benefit from the hedging. We had that as of December. We don't now. But since you hedge in advance, absent liquidating some of those, we have those on the books and I mentioned this in my prepared remarks, we also entered the year with everybody calling for a surplus and $50 or $55 WTI. So we're happy with where we are. We be happy to write a check to the hedge counterparties if oil is at 70% for many months. We're not holding our breath, and we don't need that to execute on our plan. Like I said, 2/3 of the hedges this year are in the form of swaps with the balance in collars, the callers kind of have a range of weighted average, call it, 58 to 72%. And so we feel good about that. There's plenty of room in there to make some margin. We -- last thing I'll say is we remember what it was like coming out of COVID in 2020 or coming out in 2021 with the prices rising, and we enjoyed that seeing the daylight and getting that, but we have to be careful to hedge too much as we monitor the cost environment and John's group has to react to potentially changing service costs. Now I think we're in a different environment, and we don't hope to see the same type of of inflation across the board like we did then, which I think was also related to the Fed printing money and so forth. But anyway, that's kind of a long answer of saying we're quite hedged. We feel fine about it. We've got a lot of volumes to work with. We can always do more. We could do less, but feeling good on the setup for now. Bobby Riley: Jeff, let me -- this is Bobby. Let me follow up, just to give you a little bit more color on your question on our kind of our ground game and our inventory. One of the things that we're doing here with our subsurface team is really looking at the way our completions in New Mexico through microseismic through different tracer surveys to where we optimize what our wine rack looks like, so to speak. I mean, right now, we have a very conservative approach of about 5 wells, 3 in 1 bench and 2 and another bench. But we're kind of going to where we're going to add a whole another bench in the San Andres and some of our acreage and then modifying possibly by adding a well or 2 per section in the wine rack that we have right now. So that's going to organically increase our well count considerably. When we get to finalizing that. I don't I do know there will be an increase. I don't know just how impactful it will be, but it will move the needle there. John Suter: Yes. And that spacing you were mentioning is 320. Jeffrey Robertson: Yes. Okay. Those would be locations added on existing acreage. So there's really no incremental cost. Bobby Riley: No incremental cost in the acreage, that's correct. Operator: This concludes the question-and-answer session and our call today. Thank you all for joining. You may now disconnect.