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Operator: Good day, and welcome to Cresco Labs Inc. Fourth Quarter 2025 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. Please note this event is being recorded. I would now like to turn the call over to T.J. Cole, Senior Vice President, Corporate Development and Investor Relations for Cresco Labs Inc. Please go ahead, T.J. And welcome to Cresco Labs Inc.'s Fourth Quarter 2025 Earnings Conference Call. T.J. Cole: On the call today, we have Chief Executive Officer and Co-Founder, Charles Bachtell; Chief Financial Officer, Sharon Schuler; and President, Greg Butler, who will be available for the Q&A. Prior to this call, we issued our fourth quarter earnings press release, which has been filed on SEDAR and is available on our Investor Relations website. These preliminary results for the fourth quarter are provided prior to completion of all internal and external reviews and therefore are subject to adjustment to the filing of the company's quarterly and annual financial statements. We plan to file our corresponding financial statements and MD&A for the quarter and year ended 12/31/2025 on SEDAR and EDGAR later this week. Before we begin, I want to remind you that statements made on today's call may contain forward-looking information. Actual results may differ materially. The risks, uncertainties, and other factors that could influence actual results are described in our earnings press release and in the most recent Annual Information Form and MD&A filed with securities regulators. This call also contains non-GAAP measures also outlined in our earnings press release and in the MD&A filed with the securities regulators. Please also note that all financial information on today's call is presented in U.S. dollars and all interim financial information is unaudited. With that, I will turn the call over to Charles. Good morning, everyone, and thank you for joining Cresco Labs Inc.'s Q4 and full year earnings call. Over the past year, we have been executing against a clear long-term plan to improve margins, generate cash, optimize our footprint, and reinforce the balance sheet so we can invest strategically and position ourselves for growth. In Q4, we made measurable progress against that plan. We generated $162,000,000 in revenue, we produced $84,000,000 in adjusted gross profit, $40,000,000 in adjusted EBITDA, and $27,000,000 in operating cash flow. For the full year, we delivered $656,000,000 in revenue, $157,000,000 in adjusted EBITDA, and $73,000,000 in operating cash flow, while materially strengthening our balance sheet and simplifying our operations. I want to sincerely thank our team for making measurable progress across core financial priorities. They produce products that consumers want while making cultivation and manufacturing more efficient, give the customer the in-store experience that they need while prioritizing higher-return channels, and they manage capital with discipline. Today, the team is staying the course, focused on meeting the needs of the customer while building the most productive and cash-generating platform possible. Let me walk through how we are executing on that strategy. First and foremost, we are building a solid balance sheet with consistent cash generation. In 2025, we strengthened our financial position through concrete actions. We generated strong operating cash flow and refinanced our debt, extending maturities to 2030. These steps improved our capital structure, reduced near-term risk, and sharpened our operational focus. Tailoring and simplifying our footprint has been central to this effort. Exiting California was an intentional decision to reallocate capital and our internal resources toward markets where we have stronger returns. Our capital allocation framework is straightforward. We generate cash through tight execution. We deploy capital selectively when opportunities meet clear return and integration thresholds to protect and strengthen the balance sheet. All these actions enhanced our financial flexibility and positioned us to capitalize on attractive opportunities in 2026 and beyond. With internal cash flow as our primary source of capital, we are excited about inorganic investments that will strengthen operating leverage and enhance market density while meeting our financial standards. Second, our focused footprint positions us to win with organic growth in core markets and targeted expansion in markets where we see compelling returns. We are going deeper in core markets where we can leverage our existing infrastructure, and small investments will have higher incremental returns. Throughout 2025, we have evaluated multiple investments against strict risk-adjusted criteria. While most acquisitions did not meet our standards, we have identified several attractive tuck-in opportunities that have the potential to drive operating leverage. Our current pipeline for strategic acquisitions is as robust as we have seen, and we are excited to share updates on those opportunities as they progress. In Ohio, we are applying a prudent, density-driven approach. There, our focus remains on increasing retail concentration to find more scaled efficiencies and margin expansion. Our border store strategy is proving particularly effective. Sunnyside Procterville, located near the West Virginia border, is exceeding expectations and validating our site selection model. We are building on that success with two additional store openings scheduled for early this year. In Kentucky, our operations are coming together quickly. Our cultivation facility is operational with plants now in the building, shifting the market from the capital investment phase into the revenue-generating phase as initial harvests come online. We are building responsibly as the broader medical program rolls out slowly, preparing to serve patients soon without overextending capital. Internationally, our capital-light pilot in Germany has been a great success, with products selling out ahead of schedule. While our global strategy remains measured, this result validates both the strength of our brand portfolio and the portability of our operating model in a tightly regulated European environment. Across all of these initiatives, discipline is a key theme. Every expansion is evaluated against clear return thresholds, execution capability, and capital efficiency. By balancing organic growth within core markets with targeted acquisitions, we are building a platform that is positioned to expand margins over time. And lastly, our proven retail and wholesale capabilities will keep enabling us to outperform the market. Our wholesale business remains a core strength: the number one branded market share in Illinois, Pennsylvania, and Massachusetts, and leading positions across our limited-license markets according to Headset. That leadership reflects cultivation consistency, portfolio quality, and our ability to reliably supply both our own stores and third-party partners with high-velocity brands. It is further reinforced by our retail execution, where we hold the number one share in Illinois and rank among the leading operators in Ohio and Pennsylvania. We are building on that scale advantage through deliberate differentiation. For example, we are introducing Sunnyside exclusives, including our new Sunnyside house brand called Louder. Designed for champion shoppers who purchase regularly, Louder reduces price comparability and creates compelling reasons to choose Sunnyside beyond convenience. The in-store experience is another key differentiator. We continue refining operations and removing friction across the customer journey to ensure orders are fulfilled quickly, reliably, and with expert care. Our 4.9 average Google rating across the network reflects our consistency, an achievement that is difficult to sustain in large high-volume retail environments, and I cannot thank the team enough for working so hard to achieve this incredible feedback from customers. Together, our leading brand share, retail density, smart pricing strategies, and shopper innovations equip Cresco Labs Inc. to continue to gain and defend share in competitive environments without sacrificing margin. We win where we operate. This year, we strengthened our balance sheet, expanded our footprint strategically, maintained leadership positions across key markets, and improved profitability metrics. I am pleased to share that today, Cresco Labs Inc. is more focused, more efficient, and structurally stronger than it was a year ago. With that, I will turn it over to Sharon to walk you through our Q4 financial performance in more detail. Sharon Schuler: Thank you, Charlie, and good morning, everyone. In Q4, we continued to optimize mix and channel strategy across the organization, resulting in improved profitability despite modest revenue softening. We reported $162,000,000 in revenue and expanded margin across our major profitability metrics. We prioritized first-party retail shelves and higher-margin channels over lower-margin third-party wholesale volumes. As a result, wholesale revenue declined approximately 6% quarter over quarter while retail revenue remained essentially flat, reflecting continued store productivity and improved basket quality across key markets. We improved cultivation efficiencies and shifted mix towards higher-margin products and channels, which drove adjusted gross margin expansion to 52.2%, up from 48.8% in Q3. In Q3, we discussed selling through high-cost flower as new production ramped. In Q4, improved yields, mix optimization, and channel prioritization translated into margin improvements. Additionally, gross margin in the quarter benefited from certain favorable discrete items, which may not repeat to the same extent going forward. We maintained tight cost controls while supporting incremental store additions and growth initiatives, resulting in adjusted SG&A of $49,000,000, or 30.5% of revenue. While dollars increased modestly from Q3, overhead growth remained controlled relative to the size of the operation. As part of our strong accounts receivable management, we also were able to reduce bad debt reserves during the quarter, which contributed to favorable expense leverage. By expanding gross margin and maintaining expense controls, we delivered adjusted EBITDA of $40,000,000, representing 25.0% of revenue, up from 24.1% in Q3. This underscores the operating leverage in the business as mix improvements and cost control drove sequential margin expansion despite modest revenue deceleration. We continued to convert earnings into cash, generating $27,000,000 in operating cash flow in Q4 and $73,000,000 for the full year. After $9,000,000 in capital expenditures during the quarter, we ended the year with $94,000,000 in cash and no near-term maturities, reinforcing our financial flexibility. In the first quarter, we will see the impact of Michigan's excise tax changes and our exit from California, along with the effects of normal seasonality and ongoing price compression and competition in our core markets. As a result, we expect a high single-digit sequential decline in revenue with the majority of impact driven by Michigan and California. While cultivation efficiencies continue to improve structurally, we expect seasonal mix shifts and ongoing competitive pricing to result in gross margin normalization from Q4's elevated levels. We are maintaining strong expense management as we support incremental store contribution and growth initiatives. As a result, we expect SG&A to remain generally consistent with recent run rates, so we will not see a repeat of prior period benefits such as the reduction in bad debt reserves. Importantly, we do not see Q1 as a change in direction. The operational improvements we have implemented remain intact, and we expect performance to build from Q1 levels as the year unfolds. With that, I will turn it back to Charlie for closing remarks. Charles Bachtell: Thank you, Sharon. Reflecting on the quarter and year, the most important takeaway is sustained progress executing against a clear improvement plan. We are strengthening margins, generating cash, reinforcing the balance sheet, and sharpening our footprint around markets where we have structural advantages. We are building a company designed to win where we operate and expand thoughtfully into additional states and international markets when the opportunities are accretive and aligned with our return thresholds. We are not chasing growth for growth's sake. Adult-use conversions in core states, strategic acquisitions, and building density in markets where we already lead all create a pathway for high-return growth and long-term value creation for our stakeholders. At the same time, federal reform momentum is real. Rescheduling executive order is hugely consequential, and when implemented, will change the entire industry's economic landscape. That said, while reform represents real upside, that upside must be layered over a strong financial and operational foundation. We have more work ahead, but the trajectory is clear. We are confident in our direction and in our ability to continue strengthening the business quarter by quarter regardless of the federal reform timeline. Thank you for your continued interest in Cresco Labs Inc., and thank you to all the stakeholders, especially the Cresco Labs Inc. team that continue to drive us forward. We will now open for questions. Operator: Thank you very much. Our first question comes from Aaron Grey from AGP. Your line is open, Aaron. Please go ahead. Aaron Grey: Hi, good morning, and thank you very much for the questions here. Charlie, you gave some good color in terms of the M&A opportunity, talking about the pipeline being as robust as you have seen. I will get some additional detail in terms of maybe some of the dynamics that are leading to that pipeline being so robust. Is it some of the maybe distressed assets that you see in the marketplace? Maybe some of the operators and owners becoming more reasonable in the multiples they are for? Because I know the private markets had been a little bit elevated as of late. So any more color in terms of maybe some of the dynamics that you are seeing that are leading to that more robust pipeline? Thanks. Charles Bachtell: Hey. Good morning, Aaron. Thanks for the question. You actually hit on several of them. I think the rationale or the reason for the pipeline being as robust as it is is dynamic. There are several reasons for it. I think we are seeing operators that have been in the industry for a while that are realizing that they may be better suited to look at an exit and look at some sort of an M&A opportunity. I think we are seeing the limited availability and the cost of capital weighing on that scenario too. And I would also say there is more regulatory clarity on optionality from a structural standpoint, etc., that could lead to the viability of M&A transactions being structured. So when you look at all the factors that are there, it puts Cresco Labs Inc. in a really good position based on the work that we have put in over the last couple of years to really prepare ourselves, fortify the foundation to be acquisitive. And as we have said before too, we are going to make sure that we are very patient, that we are very strategic, and that we allocate capital as efficiently as we can for that long-term success. So excited. Looking forward to sharing more in the near future. Aaron Grey: Okay. Great. Appreciate that color. Second question for me, I just want to talk about some of the retail and wholesale dynamics. You talked about there being a bit of a shift from third party to first party, selling to your own stores. So I want to talk a little bit more in terms of what is driving that decision. Obviously, it led to some higher margins in the quarter, but some of the offset might be some of the branding and brand building and larger sales opportunities. So maybe you could talk about those dynamics? And then if at all, that M&A strategy and kind of bolt-on that you referenced might become a natural unlock for some more brand distribution as well. Thank you. Charles Bachtell: Yeah. I will start, and then Greg has some insights here too. You are right. And as the industry matures, I think as these—especially the larger operators—mature too, our approach to the market continues to get refined. Operational execution is a big part of it. We know what we can do. We know what we can produce, not only on the production side of the business, but at a retail level, the customer experience, being able to operate a very high-volume, higher-margin business, especially supported by owned brands. You are just seeing the continued development and maturity of a strategic model that lends itself to a greater concentration. I think as you mentioned also, the M&A and the strategic alliance structures that can be put in place in these markets will also lend itself to greater densification for a term on how we approach these markets. But it is a natural evolution from the operators that have been in the industry for a while on how to make your revenue as durable as you can and defensible. So we are really pleased and encouraged by what the team has been able to do. Greg, additional? Greg Butler: Good morning, Aaron. Only a couple of things to add to that. One is, if you look at our retail platform, we now have over half a million people engaged in our loyalty programs and growing. Seventy-five percent of our sales is going through a digital gateway. That, to us, gives us unbelievable data on pricing, price elasticity, velocity, what SKUs are turning. So you mentioned first-party growth. For sure, we saw that in our financials, but it is actually driven by a much more rigorous analytical approach to how we are thinking about not only assortment but pricing that we are able to do now through just the rich data that is coming in. And that gives us fewer cities, store trading zone pricing, we are getting a lot more competitive on how we think about bespoke promotions versus blanket always-on. And that is driving more of what you are seeing in our percent of assortment or source, but also how we are dealing with continued pricing challenges but finding ways to maximize margin through mix. And I think, to Charlie's point, as you look to other retailers, there are some phenomenal retailers out there that are probably asking themselves what do they want to do. Do they want to partner with someone or do they want to potentially get left behind? And they have unbelievable operations. So I think another push on this is we tend to always look at distressed operators. We see a lot of operators that are not distressed that are thinking about how they find a partnership with a partner that can help them drive better results for their business and then clearly also partner for any sort of longer-term foundational change here that happens in the industry. Aaron Grey: Okay. Great. Thanks for the color, both Charlie and Greg. I will go ahead and jump back in the queue. Charles Bachtell: Thanks, Aaron. Operator: Our next question comes from Frederico Gomes from ATB Cormark Capital Markets. Your line is open. Please go ahead. Frederico Gomes: Thank you. Good morning. Thanks for the questions. First question is just on Germany. You mentioned the success, I guess, that you are seeing there in terms of that initial, you know, experiment or, I guess, a pilot launch. Could you talk more about that, whether you expect to launch new products there anytime soon or maybe enter that market in a more meaningful way? Thank you. Charles Bachtell: Yeah. Thanks, Frederico. So very encouraged by our initial approach. And as we mentioned, it is a light touch. It is a limited, low-risk approach to exploring what international markets can look like for us. The pilot so far has been really successful. Products selling out ahead of time and ahead of expectations is a great result to achieve. We made the decision to continue to reinvest the profits that we have been able to gain from this pilot so far. So we are increasing the size of it, but I do want to confirm that that is a measured approach. We are definitely still in the test-and-learn phase, and it is a low-risk approach to this exploration of what we think is going to be a very robust market internationally as a whole. But it is going to play out over time, and we are going to take a measured approach. Frederico Gomes: Perfect. Thanks for that. And then my second question, just on the pricing outlook. I mean, we keep talking about price compression, and that is something that is expected to continue. But I wonder if you have seen any reduction or normalization in prices across different states? And specifically, if you would expect maybe a price relief if and when we see the intoxicating hemp ban becoming effective maybe November this year. Thank you. Charles Bachtell: Great. I will start. We are starting to see some stabilization in markets. It is the continued natural evolution of it. As it relates to the hemp impact, without question, we do think intoxicating hemp has had an impact on several of the main markets that we are in. In the event that that does diminish going forward, we do see that sort of ancillary benefit of a broadened and grown consumer base that now has had the ability and the opportunity to get to understand cannabinoids better, and that will naturally, at some capture rate, come over to the regulated, licensed cannabis market in the event that that happens. But specifically, Greg, you want to add more context? Greg Butler: No. The only thing we would add to this is as we look at pricing in Q4 and we look at the first half of this year, pricing is probably a little bit better than even we anticipated. So still seeing some slight price reduction as you mentioned, but better than we assumed. I think as we look to the second half this year, there are a couple of major factors that we are watching closely that I think help us see even better price improvement. One is, as we talked M&A and retail, retail consolidation does help. As you get away from aggressive price promos around key selling weekends, fighting to win traffic over new stores, if that starts to slow down, that helps relieve some of the top-line pressure to retail. I think in wholesale you are going to see from us—I think you are seeing from others—really focusing on mix and how do you find and push forward higher-velocity premium SKUs, which we are now getting an unbelievable amount of data on price elasticities and what actually moves our products and other partner products that are in our stores through our own leading wholesale network. And you will see more of that—how we start to flex our muscle on price promos and SKU mix. And then I do think hemp—anything that happens on hemp here towards the second half of the year—will help. We do know that hemp does compete for the same occasions where cannabis plays too. So it is a lower-price substitute. So relief on hemp availability would relieve not only some of the pressure we are seeing with consumers who might be supplementing their purchases with a hemp product—that would come back to our stores—but also slow down just the amount of hemp that seems to be flowing through the market that is causing some price noise. Frederico Gomes: Thank you very much for the color. I will hop back in queue. Operator: Our next question comes from Bill Kirk from ROTH Capital Partners. Your line is open, Bill. Please go ahead. Nicholas Anderson: Yeah. Good morning. This is Nick on for Bill. Thanks for taking the questions. First for me on New York, the state is seeing strong dispensary growth, up to around 600 locations now at about a $2,000,000,000 annual run rate. Wondering how that translates into wholesale growth for you and what your current penetration is there. If you could just unpack that write-down a little bit more, that would be helpful. Thank you. Charles Bachtell: Sure. Thanks, Nick. Those go kind of hand in hand. For us, we still evaluate New York and further investment in New York against the other opportunities that we see out there in the space and that are in the pipeline. And still to date, New York struggles as we look at not only that comparison today, but the long-term durability. Structurally, New York has challenges. And so for us, furthering our penetration into New York, especially from a wholesale standpoint, is muted, and we do not expect—unless there is further investment from us—that that would change. And currently, that explains the impairment charge that we took, while we continue to evaluate the business viability and especially when it comes to the additional capital allocation to New York. It is just the reality that the accounting requirements lead to us taking that impairment this year, which we thought was not only a requirement but the best solution to just deal with it while, again, we will continue to evaluate New York. To your point, it is a very large market. We expect that it will continue to be a very large market. But just because the market is large does not mean that it is actually a good structural model for the operators within it. We have seen that in several other very large markets like California and Michigan too. Nicholas Anderson: Understood. I appreciate that color. Second for me, just on Sunnyside.shop, can you unpack the success there? What differentiates it from other platforms? And just what are the differences in consumer spending on the platform versus in-store? Any color there would be helpful. Thank you. Charles Bachtell: Certainly. I will give it to Greg directly. Greg Butler: Yeah. So I think one of the biggest things for us on the Sunnyside site is that it is really providing value to our shoppers. It is not just a loyalty program that you are earning something on every purchase, but you are getting unique offers, you are getting a personalized experience, and in cases you are finding out about new product launches through our site. And so we are rewarding our shoppers through an elevated experience on Sunnyside. I think the fact that we also start our relationship with them digitally—most of our purchases start online; they come online as a pickup—that is enabling us to collect a lot of information and create that relationship with our shoppers, which then enables us to scale that through different pieces of communication. From an overall business perspective, though, the site for us gives us an incredible tool that, if you think about our product launch, it radically reduces our cost of acquisition because we are able to launch on our site and get it out there without spending a significant amount of media to drive awareness. It enables us to tailor custom price promotions and how we think about that. So from a business perspective, it is wonderful that we are able to delight our shoppers, but it is also enabling us to make really smart business decisions on margins and how to protect margins and launch different SKUs and push different SKUs on-site. Nicholas Anderson: Got it. That is it for me. I appreciate the color. I will pass it on. Operator: Thank you. We currently have no further questions at this time, so I would like to hand back to Charlie for some closing remarks. Charles Bachtell: Yes. I want to thank everybody for joining the call today. And we will talk to you again here after Q1 pretty soon. Thank you. Operator: This concludes today's call. We thank everyone for joining. You may now disconnect from the call.
Operator: Good morning, and welcome to John Wiley & Sons, Inc.'s third quarter fiscal 2026 earnings call. As a reminder, this conference is being recorded. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. At this time, I would like to introduce John Wiley & Sons, Inc.'s Vice President of Investor Relations, Brian Campbell. Please go ahead. Brian Campbell: Good morning, everyone. With me today are Matthew Kissner, President and CEO; Craig Albright, Executive Vice President and CFO; and Jay Flynn, Executive Vice President and General Manager of Research and Learning. Our comments and responses reflect management views as of today and will include forward-looking statements. Actual results may differ materially from those statements. The company does not undertake any obligation to update them to reflect subsequent events. Also, John Wiley & Sons, Inc. provides non-GAAP measures as a supplement to evaluate underlying operating profitability and performance trends. These measures do not have standardized meanings prescribed by U.S. GAAP and, therefore, may not be comparable to similar measures used by other companies, nor should they be viewed as alternatives to measures under GAAP. We will refer to non-GAAP metrics on the call, and variances are on a year-over-year basis. We will exclude divested assets and the impact of currency. Additional information is included in our filings with the SEC. A copy of this presentation and transcript will be available at investors.wiley.com. I will now turn the call over to Matthew Kissner. Matthew Kissner: Thank you, Brian. Hello, everyone, and welcome to our fiscal Q3 earnings update. Before I get to our performance and progress, I want to acknowledge our price amid AI fears across the market. The fact is we do not share those same fears. Quite the opposite. We could not be more confident in our position in the AI economy given our proprietary content advantage, wide moat in peer review research, and unparalleled partnership ecosystem. The ongoing opportunity is twofold. AI is expected to greatly accelerate scientific discovery and research publishing output, and our enriched data and AI solutions are foundational for corporate R&D, AI models, and applications. I will discuss this in more detail later in our call. The third quarter was fully in line with our stated expectations. Revenue performance was impacted by an unfavorable comparable in research, which we called out in the second quarter, and soft market conditions in learning. We continue to accelerate in all major areas of focus. Research publishing continues to outpace the market with global output up 11%, revenue up 4% excluding AI revenue, and steady growth in our multiyear renewals. In AI and data services, we announced new leadership, launched our clinical outcome assessments partnership with IQVIA, and after quarter close, executed a strategic multiyear partnership with Open Evidence to deliver trusted research at the point of medical care. We also secured a new AI model training customer, our first outside the U.S., and realized $7,000,000 of AI revenue. We are rapidly advancing our technology transformation initiatives with the announcement of a multiyear managed services partnership with Virtusa. We also continue to deliver corporate expense savings, on an adjusted EBITDA basis, down 21% in the quarter, or $9,000,000 versus prior year. We continue to deliver material margin expansion and cash flow growth with adjusted operating margin of 280 basis points, adjusted EBITDA up 250 basis points, and operating cash flow nearly doubling to $103,000,000. And we are returning more cash to shareholders, with repurchases doubling in Q3 to $70,000,000 year to date as part of a $100,000,000 full-year target. We have returned $120,000,000 in dividends and repurchases in just nine months, a 37% increase over prior year. Let us turn to how we are executing on our fiscal 2026 commitments. Our first objective is to lead in research. It has been a robust year for research, with revenue up 4% at constant currency and adjusted EBITDA up 6%. We continue to outpace the market in submissions and output of 26–11%. Strong demand is evident across all regions. We have now migrated over 80% of journals to our competitively advantaged Research Exchange platform. Importantly, this migration is what transforms our content from published articles into AI-ready data, the foundation that makes everything we are doing in Gateway, licensing, and subscription knowledge feeds possible. And we continue to expand our journal portfolio through organic investment in our flagship Advanced collection, with eight new journals planned for launch and revenue growth of 50% in our leading open access journal, Advanced Science. Our second objective is to deliver new growth in AI and adjacent markets. We have generated a record $42,000,000 in AI revenue year to date, above last year’s total of $40,000,000, with one quarter remaining. We continue to make critical inroads into the corporate market with strategic projects executed with healthcare innovators IQVIA and Open Evidence, and other customers for subscription knowledge feeds. We are now at 36 publishing partners for our Nexus content licensing service, and we are in active discussions with others. Finally, we continue to see strong researcher interest in our AI Gateway for scholarly search delivered through partnership with leading companies like Anthropic and Amazon Web Services. Our third objective is to drive operational excellence and discipline across our organization. We continue to streamline our cost structure with corporate expenses, on an adjusted EBITDA basis, down 21% for the quarter and 12% year to date. Tech transformation took a significant step forward with our recent managed services partnership, which Craig will talk more about in detail. Let me run through our four key strategic priorities and value drivers. First, we are accelerating research core growth and delivering shared gains from our wide moat scale and highly favorable demand trends from global expansion and AI productivity. The research publishing market is growing at 3% to 4%, and we expect to deliver at the top end of that this year. We are delivering new AI and data analytics growth from our proprietary content in critical AI domains and our extensive partnership ecosystem. As noted, we have already surpassed last year’s AI revenue total with $42,000,000 and a quarter remaining. We are driving multiyear margin expansion with our EBITDA margin up 500 basis points since fiscal 2023 and plans for continued material improvement going forward. Finally, underpinning all of this is our discipline in managing our portfolio, deploying capital on high-return investments, and returning cash to shareholders. Let us turn to our core. For much of calendar 2025, we have been navigating around U.S. funding cuts to science and education. A year ago, I said that we remain fully confident that U.S. research would continue to receive federal support given the essential role that it plays in U.S. economic growth and U.S. global competitiveness. I am pleased to report that federal investment in scientific research remains resilient, with Congress ultimately enacting significantly smaller reductions than those proposed by the administration, and in key cases, maintaining or increasing agency budgets. This outcome reflects continued bipartisan recognition that sustained funding is critical to the nation’s scientific infrastructure, long-term competitiveness, and innovation capacity. Our calendar 2026 renewal season is about 82% complete, and we are encouraged by the growth we are seeing there. Our subscriptions and transformational agreements are must-have content, which is core to institutions and essential to their missions. We recently marked a milestone of 125 multiyear transformational agreements for consortia representing over 3,000 institutions. Our recurring models representing about 70% of research publishing remain robust. Let us talk about open access as an incremental growth engine. As discussed, research output is ever increasing, driven by global R&D spend and other factors. Submissions remain at record levels as the number of global researchers increase and productivity gains accelerate. The rate of research output is expected to rise significantly with AI. One recent study showed a threefold increase in the number of papers by researchers who use AI, and we are just at the beginning. Big global publishers like John Wiley & Sons, Inc. stand to benefit most. This volume increases the value of our multiyear subscription and transformational agreements and accelerates growth in author-funded open access, where revenue is a function of price times quantity. This model is growing consistently above 20%, and demand and pricing power remain robust. I want to call out our investment in the Advanced journal brand and Advanced Science in particular. Researchers are drawn to multidisciplinary publications like Advanced Science for the brand, the impact factor, and the breadth of the audience it reaches. It has become one of the leading open access journals in the world. The Advanced portfolio as a whole will exceed $70,000,000 in revenue in fiscal 2026, growing at strong double digits. Long-term trends in research look increasingly favorable. AI is expected to be a major output accelerator, and research publishing remains essential for not only discovery and prestige, but to advance researchers’ careers and secure additional funding. This is what makes the business and its growth so strong and durable through continuous technological and societal change. Because of this and expected AI-driven volume acceleration, we are expanding our journal portfolio and modernizing our published platform and workflows to continuously benefit from this evolution. Large-scale, high-quality publishers like John Wiley & Sons, Inc. are reporting market share gains, and we expect this trend to continue for the foreseeable future. And as we have seen time and time again, research funding and publication remain must-haves across economic cycles and political uncertainties. What makes us so well positioned for the AI economy? First, we provide access to much of the world’s proprietary scientific, technical, and medical content through our own portfolio and that of our publishing partners. As we know, science is constantly evolving. In fact, over 14,000 new peer-review articles are published every day. Second, we enjoy an industry-leading position in fast-growing knowledge domains that are especially relevant for AI: chemistry, material science, oncology, technology and engineering, food science, and finance. John Wiley & Sons, Inc. is the lifeblood. Third, in an ever-changing world, saturated with wrong information and skepticism, our trust and reputation are distinct advantages. Our moats are not only our journal brands but our unmatched peer review networks and editorial boards. We are home to hundreds of Nobel Prize winners and the world’s leading societies, from the American Cancer Society to the American Geophysical Union. Fourth, we are not bound by legacy platform businesses that we are trying to defend. We have embraced an AI-first approach and enjoy first-mover advantage with model developers and corporations building out AI models and applications. So much so that other publishers want to be part of our network. Fifth, we have built an unparalleled partner ecosystem. How many companies can point to a partner network that spans the world’s most prestigious universities and academic societies, the largest LLM providers and AI innovators, multinational corporations, and global publishers? Our ecosystem approach is our secret sauce. We are partnering, not competing. We are integrating, not building. We have the luxury of not having to defend existing business models which may be threatened by AI. Finally, this gives us an advantageous capital-light model. We have the content advantage. We can then leverage external interoperability while enabling broader collaboration across the ecosystem. This reduces our capital requirements and creates network effects that benefit all participants. It also means we do not have to bet on a particular technology, as our open approach works across all platforms. We see this already with our IQVIA and Open Evidence momentum, and with our connector on Claude and AWS. With that in mind, let us turn to our AI and data strategy. At the foundational level, we are a research and learning publisher leveraging our proprietary content and data for AI. Then comes our Gateway platform, which addresses a problem every researcher faces today. AI tools are proliferating, but most are built on unverified or incomplete scientific content. The full potential of AI in science will only be realized if researchers have complete confidence in the authenticity of their AI tools and the AI environment. Gateway solves this by embedding peer-reviewed full text, John Wiley & Sons, Inc. and partner content, directly into the platforms where researchers already are: Claude, AWS, Perplexity, and others. We are gratified by the early response. In just four months, 9,000 researchers have registered on the platform, in addition to a growing number of institutions signing up for enterprise access. This is early, but clear evidence of product-market fit. Gateway is not just a search tool. It is the access layer through which trusted scientific knowledge enters the AI workflow, and the layer institutions will increasingly require as a baseline for responsible AI use in research. Finally, our enriched and AI solutions become the foundation for domain-specific intelligence, which we have referred to as subscription knowledge feeds or retrieval augmentation generation. Customers here include corporations and partners in life sciences, healthcare, engineering and industrials, food and agriculture, and financial services. John Wiley & Sons, Inc. is at a pivotal point in its upward trajectory as AI-related demand for our content and research intelligence accelerates across industry verticals. The time was right to bring in a world-class leader to convert our content advantage into high-margin data services and commercialize our AI-driven offerings, and so we recently announced the appointment of Armahan Rafat as our Chief AI and Data Services Officer. Armahan brings over 25 years of experience leading technology and data organizations, serving in senior roles at North Stella, Thomson Reuters, Clarivate, and others. His track record for developing analytics products generating hundreds of millions of annual revenue has been exceptional. As he stated in the recent announcement of his appointment, in an era where AI is only as effective as the data that fuels it, the proprietary content John Wiley & Sons, Inc. publishes represents the verified foundational truth that AI and machine learning require. In terms of underlying momentum, we now count 10 corporate customers for our subscription services, and we have secured a new LLM customer for our training services. We continue to add more publishing partners to our licensing network. We expect to deliver AI revenue of $45,000,000 to $50,000,000 this year, up from $40,000,000 in fiscal 2025 and $23,000,000 in fiscal 2024. We anticipate another big year for total AI revenue in fiscal 2027. I would like to share some examples of real use cases where we are converting our content advantage into practical solutions for major corporations and through recurring revenue models. First, clinical outcome assessments, or COA, are scientifically validated instruments used in pharmaceutical trials to measure how patients feel, function, and respond. COAs are essential for demonstrating treatment impact and meeting regulatory standards for drug approval. John Wiley & Sons, Inc. and its partners have one of the largest collections of COAs going back decades. It is a rapidly growing area for us, expanding from $800,000 in 2021 to nearly $7,000,000 today. What makes this different is what it means for the pharmaceutical customer. Previously, running a clinical trial meant assembling multiple vendors, from COA licensing to regulatory guidance. That friction costs time and money. John Wiley & Sons, Inc. IQVIA consolidates that into a single trusted relationship. IQVIA is the world’s largest contract research organization, driving $16,000,000,000 of annual revenue, bringing deep pharmaceutical relationships, regulatory expertise, and implementation scale. John Wiley & Sons, Inc. brings the validated instruments, a portfolio of 100+ COA instruments managed on behalf of our society partners, and trusted scientific heritage. So it is not just a licensing deal. It is a recurring workflow transformation, the kind of deeply embedded relationship that compounds in value as trials grow more complex and the regulatory bar rises. We are really excited about this opportunity now and the scaling potential ahead. We have executed COA agreements with the top 20 pharma companies, and our global pipeline continues to grow. Two days ago, we announced the strategic partnership with Open Evidence, the most widely used clinical decision support platform among U.S. physicians, with more than 40% of doctors using the platform daily across 10,000 hospitals. Open Evidence will bring our trusted scientific content and that of our partners into their rapidly expanding AI platform. The terms of the deal include a five-year, multimillion-dollar licensing agreement for a selection of over 400 journal titles and reference books, as well as the Cochrane Database of Systematic Reviews. As part of the partnership, John Wiley & Sons, Inc. has taken a small equity position in Open Evidence, underscoring our mutual commitment to building the future of clinical AI together. Important to note, we consider this a first step in our multiyear collaboration. Let me finish with a quote from Open Evidence CEO and founder, Daniel Nadler. The hard problem in medicine right now is not just generating new knowledge. We are living through a golden age of biomedical research. The hard problem is also that it takes 17 years for a fraction of that research to reach the bedside. John Wiley & Sons, Inc. is an ideal partner in solving this problem for physicians. The depth and breadth of John Wiley & Sons, Inc.’s content reinforce the advantages of Open Evidence for physicians, and that compounds over time. As with IQVIA, this partnership is not just a licensing arrangement. John Wiley & Sons, Inc. is embedding itself into the daily clinical decision-making of physicians. Our equity position reflects our conviction that this is where trusted scientific content meets its highest value application. And importantly, we see this as a template for many others, bringing John Wiley & Sons, Inc.’s content advantage directly into the workflow platforms where critical high-stakes decisions are made. As I mentioned earlier, our partner ecosystem is a huge strategic advantage for us, bringing together AI innovators, R&D corporations, leading institutions, and other publishers. It is only the beginning. I will now turn the call over to Craig. Craig Albright: Thank you, Matt, and hello, everyone. Three summary points that define where we stand today. Research publishing is growing at the high end of the market’s long-term rate, AI revenue is tracking ahead of expectations, and importantly, we are beginning to see leading indicators of recurring revenue growth in new partnerships, pilots, and pipeline, which is where the real value gets built. And our balance sheet is very strong, giving us the capacity to invest in high-return growth opportunities. Learning continues to face macro and channel headwinds that are masking the underlying earnings power of our business, but we are managing through it with discipline and agility while keeping our focus squarely on the businesses and investments driving long-term value creation. Turning to our fiscal third quarter results, we projected a light quarter due to unfavorable comps, and overall revenue came in as expected, up 1% on a reported basis and flat at constant currency. Growth in Research Publishing and Academic was offset by moderate declines in Research Solutions and Professional. Reflecting our commitment to operating discipline, we delivered strong margin expansion and profit growth even with revenue softness. Adjusted operating income, adjusted EPS, and adjusted EBITDA were all up double digits, or 22%, 19%, and 12%, respectively. Our adjusted operating margin improved by 280 basis points, and adjusted EBITDA margin by 250 basis points. Adjusted EPS growth was driven by our operating performance and the lower share count as we remain in the market acquiring shares. This was partially offset by a higher adjusted effective tax rate. Let me turn to our segment performance, starting with Research. Research was up 1%, with a 40-basis-point improvement in EBITDA margin. Research Publishing performance was impacted by $9,000,000 of AI revenue in the prior-year period. Absent AI revenues, Research Publishing was up over 4%, driven by record submissions, solid growth in our recurring revenue models, and over double-digit growth in author-funded open access. As Matt noted, journal licensing renewals are around 82% complete and signs look good. As a reminder, about a third of our renewals come up each year, and customer retention remains above 99%. Our solid renewals combined with our continued submissions and output growth give us good visibility and confidence heading into fiscal 2027. Research Solutions declined 3% due to lower corporate spending on recruiting and lower database revenue offsetting AI revenue. Year to date, Research revenue and adjusted EBITDA were up 4%–6%, respectively, with EBITDA margin improving 50 basis points. Moving over to Learning, revenue was down 2% in the quarter, with a 5% decline in Professional offsetting 1% growth in Academic. Professional was impacted by corporate and consumer spending headwinds, notably the previously noted Amazon inventory management adjustments, although they are now beginning to stabilize as expected. We are strategically calibrating our editorial focus toward higher-value franchises where we see stronger demand and better margins. Academic rose 1%, driven by higher rights and licensing revenue and digital book sales. We saw good momentum in our Advanced content business, which includes scientific and technical books for research libraries. We increased our title signings, notably around veterinary science and health, and recently announced a publishing partnership with the International Society of Automation. John Wiley & Sons, Inc. will assume control of ISA’s backlist of approximately 70 titles and collaborate on publishing ISA’s pipeline of automation topics. Year to date, Learning revenue was down 7%, with adjusted EBITDA down 8%. Segment EBITDA margin declined 50 basis points to 34.8%. Now on to our financial position and cash generation, which continue to strengthen. All year-over-year metrics are favorable, with our leverage down to 1.7 from 2.0, CapEx down by 11%, operating cash flow up $51,000,000, and free cash flow up $57,000,000. We are tracking very well to our free cash flow outlook of approximately $200,000,000. As Matt noted, one of our four value drivers is continuing our multiyear margin expansion. Over the past three years, we have improved our margin profile by 500 basis points, and we are not done. The focus right now is technology transformation. We are creating an AI-first, data-enabled tech organization, optimizing our geographic footprint, rationalizing our application portfolio, and outsourcing support for enterprise technology. We recently announced a five-year managed services partnership with Virtusa, an important first step in accelerating this transformation. Virtusa is a leading product and platform engineering services company based in Massachusetts, with delivery centers in India and Sri Lanka. It enjoys top-tier global rankings in consulting and IT services and deep relationships with major Fortune 100 and 500 clients. The partnership is expected to lead to material operational efficiencies and cost savings, help us modernize how we manage enterprise technology, and allow our teams to focus on product innovation that benefits our customers and stakeholders. It will also free up capital for high-return AI solutions for our customers and partners. As part of this partnership and our own consolidation plans, Virtusa has assumed ownership of John Wiley & Sons, Inc.’s Sri Lanka technology operation. Overall, we continue to make good progress, with corporate expenses on an adjusted EBITDA basis down 21% in the quarter and 12% year to date. We reduced total corporate costs before allocations by $17,000,000 year to date, with tech transformation responsible for approximately 85% of those savings. Our fourth and final value driver is to optimize our portfolio and drive disciplined capital allocation. We continue to deploy capital strategically to expand our journal portfolio and content advantage. We are investing to grow presence and share in our fast-growing research markets, notably China and India. China has been a great success story with noteworthy growth in submissions and output renewals and corporate sales. India remains a huge and still-emerging growth market. A year ago, we executed on India’s One Nation, One Subscription initiative, expanding access to over 6,000 Indian institutions and supporting 18,000,000 researchers and students. Demonstrating the increasing demand we are seeing in this important market, John Wiley & Sons, Inc. India submissions are up 43% year to date. Matt talked about our capital-light model and partnership ecosystem approach to AI, which positions us well for stronger profitability, high cash flow generation, high returns on invested capital, and nimbleness in scaling. Regarding our portfolio, we continue to evaluate and manage specific businesses and products for profitability and strategic fit. We divested a small business in Research Solutions earlier this year, and we will continue to be very active on this front. Regarding acquisitions, we are in a very strong position to continue to pursue high-impact journals in Research Publishing where we see strategic value, synergies, and highly attractive returns. Last quarter, we acquired the high-impact journal NanoPhotonics, strengthening our physics portfolio and putting us at the forefront of the fast-growing optics field. And we will continue to accelerate our organic growth strategy of developing proprietary high-value research content and data. Finally, I want to highlight our share repurchases, approaching record levels with $70,000,000 returned year to date and a further target of $30,000,000 for Q4. That would put us around 3,000,000 shares repurchased for the year. On top of this, our current dividend yield is approximately 4.5%, supported by a healthy payout ratio. Turning to our outlook for fiscal 2026, we are raising our adjusted EBITDA margin and adjusted EPS guidance to the high end of the range. We remain confident on all other metrics. Revenue growth is expected to be in the low single digits. Research remains strong, expected to finish at the top end of the market. Learning has been challenged this year by the difficult macro and channel conditions. Adjusted EBITDA margin is now expected to finish at the high end of our 25.5% to 26.5% range, up from 24% last year. Adjusted EPS is also expected to be at the high end of our $3.90 to $4.35 range, up from $3.64 last year. Finally, we reaffirm free cash flow of approximately $200,000,000, driven by EBITDA growth, lower interest payments, and favorable working capital. CapEx is expected to be comparable to last year’s total of $77,000,000. With that, I will pass the call back to Matt. Matthew Kissner: As I wrap up, I want to say a few words about fiscal 2027. We will provide formal guidance in June, of course, but I want to give you a sense of what we are seeing. Expect Research growth and strong momentum to continue, driven by robust publishing output, steady growth in renewals, market share gains, and society wins. We see Learning improving to a steady state as we focus on franchise authors, digital growth, and inclusive access, and we will continue to tackle our cost base. AI momentum is expected to further accelerate from our executed multiyear partnerships and increased corporate uptake, and we expect another big year in AI revenue. We will start to see the benefits of streamlined business development and product innovation under Armahan. Finally, we anticipate copyright court decisions to start to materialize. We have talked about the Anthropic copyright settlement, the largest in U.S. history, and that is still in the claims process. We expect to know our share of that by the summer. Important to note, there are approximately 70 copyright lawsuits currently underway in the U.S. involving AI. Our operational excellence initiatives are fast-tracking with full launch of our Research Exchange platform, the kickoff of our new managed services partnership, and the momentum of our AI Center of Excellence. We expect to drive meaningful margin expansion again from tech transformation, corporate expense reduction, and AI productivity gains. And we remain focused on portfolio optimization and disciplined capital allocation to drive higher ROIC and recurring revenue growth, scale up in Research Publishing, and reward our long-term shareholders. Let me quickly review some key takeaways before opening the floor to questions. We are accelerating our progress on all major areas of focus, driving meaningful growth and momentum in Research and AI, expanding margins and cash flow, deploying capital strategically, and improving ROIC. Q3 was in line with our expectations, and we are on track to achieve our full-year outlook at the high end for margin and EPS. And finally, John Wiley & Sons, Inc. remains extremely well positioned for the AI economy. Our core publishing business is robust and uniquely secure. Our proprietary content, domain-specific intelligence, and partnership ecosystem are in continuously high demand. AI is only as good as the data that fuels it. This is where John Wiley & Sons, Inc. comes in. Thank you to our 5,000 colleagues around the world for all you do to transform knowledge into the breakthroughs that matter, and to our investors for joining us and seeing the long-term value-creation potential of our business. We will now open for questions. Operator: At this time, I would like to remind everyone: in order to ask a question, press star, then the number 1 on your telephone keypad. We will pause for just a moment. Your first question comes from the line of Daniel Moore with CJS Securities. Your line is open. Daniel Moore: Thanks, Matt. Thanks, Greg. A lot of detail there. Greatly appreciate it. Let me start, I guess we will start with AI. You know, you just laid it out very well. But two years ago, signed your first, you know, kind of initial nonrecurring deals. You know, since then, AI-related revenue doubled from $23,000,000 to $40,000,000 on our way to $45,000,000 to $50,000,000. What can you tell us about the momentum and direction of AI-related revenue and contributions that, you know, maybe you could not two years ago, as we think about fiscal 2026 as a platform for growth? Matthew Kissner: Yes. Let me start, Dan. Thanks, by the way. And that is exactly what you are seeing. It is kind of you are seeing the market evolve, and I will turn it to Craig in a minute to get a little more specific, but—and then the emergence of the business models around recurring revenue. And so you see what we have done with IQVIA and Open Evidence. Almost think of them as blueprints for what a much bigger market opportunity might look like. And you know, I know you want specifics. You know, we can talk a little bit about these, but you know, there is a lot more to come as these expand. So let me turn it over to Craig to add some more light on that. Craig Albright: Thanks, Matt. Yes. We like to think of AI opportunity in the market really moving in different kind of growth curves. As you know, we kind of, a few years ago, as you mentioned, kind of really started learning and getting into the market and partnering. And we moved into the training model. The first growth curve, if you will, was largely evidenced by nonrecurring revenue, but important for us to gain partnerships, learn, start to develop where we are headed with our next curve. And then that next curve being the one where we start to get into the recurring revenue models, subscription models, ways where we can really create true sustainable value over time. And we have really started to see that materialize. In the first growth curve, we have seen a little bit more legs to it than we initially imagined, and we are now starting to see the ramp-up of the second growth curve. So this year, we are slightly under 10% of our $45,000,000 to $50,000,000 in terms of recurring revenue, and we expect that to triple next year. And we are going to continue to work to drive that even higher. So we are excited about the progress we are making. It is still early days. And I would say we are moving as fast as our customers are moving, but really trying to seize every opportunity as we go forward. Matthew Kissner: Yes. I want to add two important points to help with the understanding. One is that comment about we can move as fast as our customers are moving because, you know, I think everyone is learning how to bring AI into their core business processes. So a lot of the growth here is going to be based on the customers’ learning on how to use AI to improve research productivity, shorten cycles, et cetera. We are there with them side by side. Second is, as I mentioned, we have a new leader for our AI and data services focus in Armahan, and he is now building out a growth plan. And, you know, I would expect as he completes that plan, we can provide more transparency into how we see this evolving. Daniel Moore: Really helpful. Appreciate it. I was going to ask you about the moat, but I think we covered that in the first 10 or 15 minutes really well. On the margin side, the—mhmm. Obviously, you reduced corporate expense, I think, million this quarter, down 20% plus. On track for 26% plus EBITDA margins. Two different questions, but one, maybe elaborate on the partnership with Virtusa, the implications around potential cost and savings as we move forward, and what does that imply about the direction of EBITDA margins in kind of fiscal 2027 and beyond? Thanks, Dan. Craig Albright: We are very excited about the partnership with Virtusa. You know, we have a preexisting relationship, and we are really expanding that on a significant scale. This relationship for us is a—you know, roughly, right, it is $150,000,000 over five years in terms of their contract size. We expect it to generate both productivity as well as agility. So we see it contributing towards, you know, our margin expansion objectives. We also see it compelling—propelling us into AI-type tools and AI-first technology infrastructure that is going to really help us continue to find innovation and productivity through the years. I would say from a margins perspective, I will not get into the details about, you know, specifics on what it yields. But I will say that tech transformation broadly has been a significant driver of our expansion this year, and we expect that to continue going forward, into the coming years, as we layer on other types of initiatives as well that are going to really help to continue to drive multiyear margin expansion. Daniel Moore: Perfect. And just Research Publishing up 4% adjusted. Article submissions, you know, continue to be really strong, up 26%. You know, I guess, outside of China, you mentioned India, any other kind of fast-growing regions or pockets of strength? And, you know, given double-digit growth in submissions this quarter, double-digit growth in output, would we expect that 4% growth to trend even higher? Or is that a good place to be from your perspective here for the near term? Matthew Kissner: Jay, why do you not begin, and I may wrap up. Jay Flynn: Yes, sure. Hi, Dan. Thanks again for the questions. Yes. We are seeing growth across, you know, a broad set of regions. The strongest momentum continues to come from the major global research markets. We saw good growth in China, as you mentioned, and India, as you mentioned, but in North America too—submissions, article volume up there. European markets as well really rebounded strongly for us. Happy to see Japan growing again after a tough couple of years in that market. So at the same time, you know, we like what is happening in the Middle East, and we like what is happening from a research and investment perspective there. Governments and universities are investing more heavily in research output and in international collaborations. That, taken together with the strong performance in the core markets, gives us confidence about the trajectory of that business. It is really important to state, as we did a year ago, that growth is not concentrated in any single geography. It reflects the continued expansion, as Matt noted in the prepared remarks, of the global research ecosystem, and that is showing up across submission and publication volumes that are growing at a healthy pace. So, as we said, you know, top end of market range for this year, and with the investments we continue to make in our top brands, with the tailwind that AI is going to provide in the core for submissions and for researcher productivity, we feel confident as before in the trajectory of the business. Matthew Kissner: Yes. That is a great summary. I think, today, what we are seeing is the resilience and durability of research on a global scale, the benefit of the global diversification that we have, as Jay pointed out, and also, our business is performing quite well, and I would expect it to continue performing at the top of the market. Daniel Moore: Looks great. Maybe one or two more and I will pass it along. But on the Learning side, yes, I think you talked about getting back to stability. If I sort of bifurcate the Academic versus Professional, you know, pieces of the business. Do we need the, you know, the library on the Professional side to feed either AI, or is it, you know, synergistic? It is just that piece of the business stands out as a little bit, you know, kind of noncore when we think about the real tilt to focus on growth and Research and wondering your thoughts on that. Matthew Kissner: You know, we have talked about this in the past, and it is, you know, these are great franchises but not growth franchises. You know. And so they are producing strong earnings and cash flow. And, you know, we are always mindful of capital allocation, as I talk about in my remarks. So there are not any sacred cows here. So, you know, we will be looking at this as we go forward, as we do routinely, Dan. Daniel Moore: Perfect. Last one. I know it is rhetorical. You know, obviously, really strong quarter, outlook very healthy. You know, you are trending toward $5 of cash—of cash earnings per share. The stock is a little over five times EBITDA. Leverage is going to be close to return pretty soon. You know, strong double-digit free cash flow yield. Other than buying back stock and, you know, making the case that you are today, very, you know, articulately, anything else we can do to keep trying to unlock shareholder value? And I know that is, you know, not a fair question, but just throwing it out there. And I appreciate all the color today. Matthew Kissner: No. It is a good question. Tough question. Craig, do you want to start? And then— Craig Albright: Yes. I think, Dan, you know, we wake up every day thinking about this: how we create value for John Wiley & Sons, Inc., for our colleagues, for our shareholders, and for all our stakeholders. You know, we think importantly about organic growth investments. You know, with Armahan coming on board, with our focus on AI and data analytics, we see a lot of potential opportunity to really create new value for customers and for—and for John Wiley & Sons, Inc. overall. You know, we continue to think where we have existing core strengths. You know, the Research business is one that continues to show strength and resolve, growing at the top end of the market. So when we think about investments we have made, whether it is Advanced brands or geo diversity, we continue to think very broadly about organic growth opportunities where we have sustainable competitive advantage in our business. You know, beyond that, you know, portfolio and capital allocation is a way of life. You know, it is—it has been part of what John Wiley & Sons, Inc. has been focused on for several years. And as we mentioned during our earnings call, we had—in my comments, we had divested a small business earlier this year. It shows evidence that we continue to look very strategically and thoughtfully about our business and where to kind of draw the resource and capital to the most effective places for the business. Beyond that, I think we are continuing to be very active on thinking about how we return capital to shareholders. We have a very healthy payout ratio. We have doubled our share buybacks, given the opportunity we have had with a strong cash flow, and we continue to do that while investing in the business. So we are not making any trade-offs here. I think the opportunities continue to be very robust in front of us, and we are excited to help bring that forward as we tell more of our story. Daniel Moore: Sounds good. Again, appreciate all the color. Matthew Kissner: Thank you, Tim. Operator: Again, if you would like to ask a question, press star, then the number 1 on your telephone keypad. Operator: At this time—There are no further questions. I will now turn the call back over to Mr. Kissner for closing remarks. Matthew Kissner: Yes. Thanks, everyone. I want to thank you for your continued confidence in us. You know, you see we are building a solid foundation for the future while delivering strong current results, which was our commitment we made, you know, two and a half years ago. And we are really looking forward to getting together in June in that regard and talking about how we close out the year. Brian Campbell: See you then. Thank you. Operator: Ladies and gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect.
Operator: Ladies and gentlemen, thank you for standing by. My name is Desiree, and I will be your conference operator today. At this time, I would like to welcome everyone to the Global Ship Lease, Inc. Fourth Quarter 2025 Earnings Conference 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. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. I would now like to turn the conference over to Thomas Lister, Chief Executive Officer. You may begin. Thank you very much. Thomas Lister: Hello, everyone, and welcome to the Global Ship Lease, Inc. Fourth Quarter 2025 Earnings Conference Call. You can find the slides that accompany today’s presentation on our website at www.globalshiplease.com. As usual, Slides 2 and 3 remind you that today’s call may include forward-looking statements that are based on current expectations and assumptions and are, by their nature, inherently uncertain and outside of the company’s control. Actual results may differ materially from these forward-looking statements due to many factors, including those described in the Safe Harbor section of the slide presentation. We would also like to direct your attention to the Risk Factors section of our most recent annual report on our 2024 Form 20-F, which was filed in March 2025. You can find the form on our website or on the SEC’s website. All of our statements are qualified by these and other disclosures in our reports filed with the SEC. We do not undertake any duty to update forward-looking statements. The reconciliations of the non-GAAP financial measures to which we will refer during this call, to the most directly comparable measures calculated and presented in accordance with GAAP, usually refer to the earnings release that we issued this morning, which is also available on our website. I am joined, as usual, today by our Executive Chairman, George Youroukos, and our Chief Financial Officer, Anastasios Psaropoulos. George will begin the call with high-level commentary on Global Ship Lease, Inc., and then Anastasios and I will take you through our recent activity, quarterly results and financials, and the current market environment. After that, we will be pleased to answer your questions. So turning now to Slide 4, I will pass the call over to George. Thank you, Tom. George Youroukos: And good morning, afternoon, or evening to all of you joining us today. Both the supportive supply and demand trends and heightened geopolitical uncertainty that we have previously highlighted remained firmly in place throughout 2025 and then, in recent days, have clearly ratcheted up even more. Tariffs, the prospect of new port fees in the US and elsewhere, security concerns in and around the Red Sea, and now the situation in Iran shifting from tense to violent conflict—the list goes on. These and other factors have all combined to increase unpredictability and volatility, fundamentally alter and fragment trade patterns, and make supply chains more inefficient as a consequence. At the same time, and perhaps surprisingly, given the noise, aggregate global containerized trade increased in 2025 by 5%, with import volumes to the US also growing year over year. In this environment, demand for midsize and smaller container ships has remained remarkably strong. As a result, we have continued to lock in charter coverage at attractive rates, with $2,240,000,000 in contracted revenue over the next 2.7 years, with 99% contract coverage for 2026 and 81% in 2027. Maximizing optionality remains a key focus for us in order to both mitigate risk and seize value-accretive opportunities. With this in mind, we have transformed our balance sheet, reduced debt, and increased liquidity, all serving to bolster our resilience and agility in the process. This progress has been reflected by the affirmation of our strong credit ratings by leading rating agencies and has also supported payment of a quarterly dividend, which we raised again with a dividend paid in December 2025. On an annualized basis, we now pay $2.50 per common share. Another thing at the front of our minds is strategic but highly selective fleet renewal. We were pleased to announce a transaction in December for three vessels that make our fleet younger and larger, and replace some of our aging cash cows, which we had previously monetized at a cyclically attractive flat price. Tom will discuss this more in a few minutes, but we see these as great ships that are in the post-Panamax sweet spot, acquired at a fantastic price, de-risked right out of the gate, and with compelling upside potential. In short, just the sort of deal for which we keep our powder dry. Taken together, this progress and these successes are possible because we have worked diligently to maximize optionality in order to manage risks and seize opportunities in a cyclical industry and a turbulent world. On Slide 5, we thought that it would be helpful for newer investors, and a nice refresher for our friends who have stuck with us and made money with us over time, to put our current status in some historical context. Over the past five years, we have transformed the business and dramatically increased all of our key earnings and cash flow metrics while simultaneously de-risking our balance sheet. And we have returned capital to shareholders both by way of opportunistic share buybacks and by introducing a dividend, which we have repeatedly upsized as we made progress on delevering and building our contract cash flow. And our share price has responded accordingly, tripling over the period. The profound improvements that you can see here are a testament to a dynamic capital allocation policy, the discipline and patience to stick with it through the cycle, and the ability and confidence to seize opportunities as they arise. We fully intend to continue building on this track record, generating shareholder value by making Global Ship Lease, Inc. even more competitive, robust, and resilient for the long term. With that, I will turn the call over to Tom. Thomas Lister: Thank you, George. Hello again, everyone. Please now turn to Slide 6, where you will see our diversified charter portfolio. As of December 31, we have over $2,200,000,000 in forward contracted revenues, with 2.7 years of remaining contract cover. Throughout 2025 and the first two months of this year, we added 52 charters, including options exercised, for $1,260,000,000 in additional contracted revenues. So it has been a pretty good year. Turning to Slide 7, we take a look at our dynamic capital allocation policy, through which we are able to mitigate the risks and capitalize on the opportunities inherent in the natural cyclicality of our industry, not to mention the so-called black swan events the industry seems now to be confronting on a regular basis. We have delevered our balance sheet to reduce risk and build equity value. Our increased cash position has made us more resilient and capable of handling whatever may arise, from upheaval in the Middle East, to tariffs, to an evolving regulatory landscape, and, of course, to opportunities as they appear. And, as always, a top priority is returning capital to shareholders, and in late 2025, we upsized our dividend yet again to reach $2.50 per share on an annualized basis. We aim to provide investors with a liquid and stable platform from which they can participate in the shipping cycle, maximizing access to upside opportunities while minimizing exposure to downside risks. Slide 8 shows our patient and disciplined approach regarding investments. As you can see from the chart, we have a strong track record of buying ships during market downturns when asset values are low and then contracting them on super lucrative charters to lock in the good times of the upcycles. It is easy to say “buy low,” but it is much more difficult to do, especially as access to capital also tends to be constrained during downturns. That being said, I would underline the following points. First, our capital allocation policy is dynamic and has us well prepared to pounce on value-accretive opportunities when they arise. Second, our relationships throughout the industry give us insight into nascent deal opportunities, often before they are known in the broader market. And third, our combination of long-term focus and balance sheet strength puts us in a position to take a holistic and through-the-cycle view of risk, returns, and option value. Which brings us to Slide 9. On December 1, we announced the purchase of three high-specification, fuel-efficient 8,600 TEU container ships that were built in 2010 and 2011, and had already been fitted with valuable eco-upgrades by their previous owners. This deal was executed on short notice with cash on hand, is de-risked from the get-go, and offers high upside potential in the years to come. Moreover, as these are sister ships to high-demand, high-earning ships already in the Global Ship Lease, Inc. fleet, we have the added advantage of extensive firsthand knowledge of their operating and commercial profiles. By purchasing the ships with below-market charters attached, we were able to achieve an aggregate purchase price of $90,000,000, which is not far off what a single ship would cost charter-free, meaning this is essentially a three-for-the-price-of-one deal. Added to which, their aggregate scrap value alone is around $40,000,000, and long-term historic average charter rates for ships like these are over $40,000 per day. So we are looking at just the sort of low-risk, high-upside-potential deal we like very much. And there is a nice symmetry in that we funded this fleet renewal almost to the dollar with proceeds from the sale of much older, smaller ships that we had monetized at cyclically high values during the course of 2025. With that, I will pass the call to Anastasios to discuss our financials. Anastasios? Anastasios Psaropoulos: Thank you, Tom. Slide 10 shows our finance highlights in 2025. I would like to emphasize a few key takeaways. Full-year earnings and cash flow were up compared to 2024. Our cash position is $637,000,000, of which $164,000,000 is restricted. The remainder ensures that we can fully cover our covenants, working capital needs, and manage the potential financial implications of geopolitical issues, which seem to be arising with increasing frequency and intensity. It also provides dry powder from a position of almost net zero debt, both for CapEx to keep our existing fleet commercially relevant and for disciplined investments in fleet renewal when the right opportunities emerge. And all of this without compromising our ability to reliably pay a healthy and recently enlarged dividend. The latest $85,000,000 refinancing has pushed our average debt maturity to 4.5 years and our blended cost of debt down to 4.49%. We also realized a $46,200,000 gain from the sale of four older ships, and we have strong credit ratings from the leading credit agencies. Slide 11 highlights our progress in delevering our balance sheet and building equity value. The graph on the left shows our lower outstanding debt, which stood at $950,000,000 at the end of 2022, was under $700,000,000 at the end of 2025, and is on track to be well below $600,000,000 by the end of 2026. The graph on the right tells a similar story, but with broader context. We have worked diligently to reduce our leverage from 8.4x in 2018 to 0.5x today. These comprehensive efforts are shown further on Slide 12, where we have lowered our borrowing costs from a blended 7.56% in 2018 down to 4.49% in 2025. We have also maintained low breakeven rates through multiple years of inflation by aggressively reducing our interest expense. This keeps us both competitive and resilient in any market environment. With that, I will turn the call back over to Tom to discuss the market and our fleet. Thomas Lister: Thanks, Anastasios. On Slide 13, we put our fleet in context, restating our focus on midsize and smaller container ships between 2,000 TEU and 10,000 TEU. In contrast to the really big ships, which require specialized port infrastructure and tend to be constrained to the big East-West “mainlane” trades, midsize and smaller container ships are highly flexible and can be employed worldwide without being reliant on or captive to any industry or country. As such, they provide the liner companies, our customers, with valuable optionality at a time when trade patterns are in flux. And, by the way, it is often overlooked that roughly three-quarters of containerized trade by volume already takes place in the non-mainlane North-South and intraregional trades, like intra-Asia. We will discuss this further over the coming slides. On Slide 14, we turn to the situation in the Middle East, a subject that is, of course, top of mind for us as it is for many across the shipping industry and beyond. We will not pretend to be geopolitical analysts or forecasters here, but we can provide some facts and context. Fundamentally, two key Middle East shipping chokepoints, the Red Sea and the Strait of Hormuz, are now more or less closed at the moment. First, the Red Sea and Suez Canal, through which around 20% of containerized trade volumes would normally transit. Here, the initial green shoots of cautious optimism have been decisively cut back, with the Houthis calling for renewed vessel attacks in the southern Red Sea. Even before this setback, a large majority of transits continued to go the long way around, around the Cape of Good Hope, which absorbs around 10% of global fleet supply in the process. Recent updates suggest that this is likely to remain the case for the time being. The new chokepoint to address is the Strait of Hormuz, through which shipping traffic has pretty much ceased since the outbreak of hostilities, with multiple major regional ports suspending operations in part or in full. While it is more famously a gateway for global energy flows, a normal year would also see between 3%–4% of global container volumes move through the Strait of Hormuz, serving ports such as Jebel Ali in Dubai, which is the ninth-busiest port in the world, as well as Doha, Abu Dhabi, and Dammam in Saudi Arabia. While the overall volumes themselves are not huge, the knock-on effects are much bigger given, among other things, the importance of Jebel Ali as a transshipment hub and the challenges of serving Gulf destinations by alternative routes. So this is a big deal. Container supply chains, which were already complex, now have additional challenges and inefficiencies to confront. We will see how the liner companies adapt, but we are, of course, in the very early days of all this. In summary, the situation is highly dynamic, and the longer-term implications are unclear. However, the paramount concern for the industry amid the turmoil is, and must continue to be, seafarer safety. Turning to another source of disruption, on Slide 15 we look at tariffs. While the sands keep shifting on this issue, looking back to February, tariffs under the first Trump administration could be at least directionally instructive in how things develop moving ahead. As expected, the tariffs in 2019 did indeed result in a reduction in direct trade between the US and China. Perhaps unexpectedly, however, there was an increase in demand for midsized and smaller container ships during this period as supply chains shifted and decentralized. Intraregional trade, particularly intra-Asia containerized trade volumes, rose. Trade networks grew more complex and more inefficient, and those conditions tend to be supportive of earnings for providers of shipping capacity like Global Ship Lease, Inc. Slide 16 is where we cover some of the other geopolitical and regulatory trends affecting the shipping world. This slide is backward-looking, as who knows what other surprises 2026 has in store. USTR port fees were introduced by the US in October 2025, and while they caused some disruption, the industry was able to adapt to the new circumstances given the lead time with which they were announced. However, China’s port fees did not offer the same lead time and were much more disruptive as a result. Fortunately, the port fees from both countries were suspended until the fourth quarter of 2026. While these policies and their implications have been deferred for now, the situation was a reminder of how fast things can change and how optionality is more valuable than ever within the current global framework, both for us and for our customers. Notably, the White House’s recently unveiled Maritime Action Plan points to the possibility of future such port fees. Along with the rest of our industry, we will certainly closely monitor future developments on this front. The IMO’s net zero framework faced a similar delay to 2026. This decision is expected to provide a boost to existing conventionally fueled vessels such as those in the Global Ship Lease, Inc. fleet. Amidst this heightened geopolitical uncertainty, we will stay prudent, disciplined, and agile, doing our best to maintain and to leverage the optionality at our disposal. On Slide 17, we highlight supply-side dynamics and scrapping trends, where little has changed from last quarter. Both idle capacity and scrapping activity have remained near zero. With minimal slack in the system due to fragmented and inefficient supply chains, the charter market rate environment has remained strong, and charterers have proven willing to pay attractive rates even for late-in-life ships. Unsurprisingly, owners have responded by keeping those ships on the water and profitably in service for as long as possible. Slide 18 shows the order book, which has grown meaningfully in recent years, but importantly, mostly in the larger vessel segments where Global Ship Lease, Inc. does not participate. For ships over 10,000 TEU—in other words, the really big ships—the orderbook-to-fleet ratio stands at 55.5%, which drives the overall orderbook-to-fleet ratio to almost 35%. However, for the size segments below 10,000 TEU, the ones relevant to Global Ship Lease, Inc., that number halves to 16.9%, with deliveries spread over the next five years or so. In addition to the smaller order book, if we were to assume all ships 25 years or older were scrapped through 2030, the sub-10,000 TEU fleet would actually shrink more than 6%. If supply remains low and rates remain high, we will be happy to continue locking in coverage at attractive rates. If, on the other hand, the market were to experience a normalization or even a downturn, we would expect the arrival of new ships to be offset, in large part at the very least, by a sharp rise in scrapping activity. Similarly, we would expect such a scenario to yield interesting investment opportunities for a patient and well-capitalized owner such as Global Ship Lease, Inc. We take a look at the charter market on Slide 19, and it is important here to remember that our daily breakeven rate is just over $9,800 per vessel per day, which is well below market rates. In these supportive conditions, we have been hard at work locking in as much charter coverage as possible, to the tune of $2,240,000,000 over the next 2.7 years or so, providing good forward visibility and insulation against any downside turbulence. And on that note, I will turn the call back to George on Slide 20. George Youroukos: Thank you, Tom. To summarize, we have continued building our forward visibility on cash flows, now with $2,240,000,000 in contract revenues over 2.7 years, with 99% coverage for 2026 and 81% for 2027. Optionality remains a core focus. Even with the deferral, for the time being, of US and China port fees and of the IMO’s net zero framework, the geopolitical and regulatory environments remain volatile, and we are constantly at work to make Global Ship Lease, Inc. more resilient, robust, and able to capture opportunities. The current situation in the Middle East and around the Strait of Hormuz, of course, adds more complexity to a situation that was already highly complex and dynamic. The supply chains have become fragmented, decentralized, and increasingly inefficient, which drives further demand for midsize and smaller container ships. We have successfully delevered, pushed down our cost of debt, extended our average debt maturities, and lowered our daily breakeven rates to well below market rates. Our fortress balance sheet, which brings us close to being net-debt neutral, positions us well for the opportunities and challenges of the market. We increasingly look to renew our fleet in a disciplined, prudent manner to support earnings now and into the future. And we always look to return capital to shareholders. To this end, we increased our quarterly dividend in 2025, now up to $2.50 per share on an annualized basis. Finally, looking back on the last five years, it is gratifying to see the credit rating agencies acknowledge the progress we have made. Much more gratifying still is to see the stock price triple over the same period, and we will do our best to ensure that positive momentum continues. Now, with that, we will be very pleased to take your questions. Thank you. Operator: We will now begin the question-and-answer session. If you have dialed in and would like to ask a question, please press star then the number one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset to ensure that your phone is not on mute when asking your question. Again, press star one to join the queue. Our first question comes from the line of Liam Burke with B. Riley Securities. Liam Burke: Yes, thank you. Hi, George, Tom. George Youroukos: Hi, Liam. Liam Burke: Hello. This is probably bad timing for this question, understanding the geopolitical situation both in the Red Sea and the Strait of Hormuz. But the gap between charter and freight rates is staying wide. All things being equal, is there anything that you would anticipate to have those movements converge, in terms of freight and charter rates converging? Thomas Lister: Good question, Liam. I will have a crack at it and no doubt George will add to it. It is very difficult to comment on the freight market side of that equation, which is obviously much more responsive to day-to-day events, given the contract cover is much more limited in terms of duration. However, I can comment on the charter side of things. What we are seeing is that appetite from charterers remains to lock in charters at attractive rates. So, at least for the time being—and it is very difficult to predict anything in today’s slightly crazy world—but for the time being, we are seeing our customers looking to continue to lock in charters at high rates for meaningful durations. Of course, it is worth highlighting at this stage that 99% of our positions for 2026 are already contracted, and over 80% for 2027 are already contracted, but broadly speaking, there is still charter market appetite. Liam Burke: Great. Thank you. Your leverage ratios are low. You pay a very healthy dividend through the cycle. What about the cash, and how do you see allocating it this year and next year? Thomas Lister: Sure. In this cyclical industry, the way to make genuinely attractive returns for our shareholders is making sure that we have cash to move on opportunities—ideally at the bottom of the cycle, when no one else has capital. That is when you make the most money for shareholders within shipping. So holding that cash on our balance sheet, we see as super valuable in that respect. In fact, the three ships that we mentioned during the course of the call, these three 8,600 TEU ships that we acquired at the tail end of last year, are a perfect representation of that. We went from zero to completion within about 30 days or so on that deal, and you can only do that if you have capital at your disposal, which, happily, we did. Liam Burke: Great. And I apologize for asking such a specific question, but Anastasios, SG&A jumped considerably. Is there a one-timer in there, or is that just another level to anticipate? Anastasios Psaropoulos: No. It has to do with the valuation of the incentive plan that we have, calculated in the order we have calculated. It is a non-cash item, and you could see much more detail in our upcoming 20-F. Liam Burke: Great. Thank you, Anastasios. Thank you, Tom. Thomas Lister: Pleasure, Liam. Thanks a lot. Operator: And, again, if you would like to ask a question, press star then the number one on your telephone keypad. Our next question comes from the line of Omar Nokta with Clarksons Securities. Your line is open. Thank you. Omar Nokta: Hi, guys. Good afternoon. Thank you for the update. You obviously touched on this, Tom. I think—Hi, Tom. I think you talked about this and maybe touched on it also in response to Liam’s question, but just about what is going on in the Middle East and the turmoil and whatnot. There has been clearly a lot of focus on the impact on energy and exports out of the region. But in terms of containers—and presumably it is a lot more of an import market than export, I would think—but just in general, what has been the impact? We have seen a spike in different commodity prices, and we have seen energy shipping rates go through the roof. What have you seen here over the past few days with respect to your business? Have you seen any shift in the freight market dynamics or time charters? Thomas Lister: I would say not in time charters. The appetite remains, as I mentioned to Liam, from charterers at attractive rates and for attractive durations. I think in the freight markets, the industry is just struggling to adjust to this massive curveball. Although only 3%–4% of containers actually flow into or out of the Persian Gulf, there is a tremendous volume actually transshipped there, particularly in Jebel Ali. So although the overall numbers are comparatively modest in percentage terms as far as global trade is concerned, the ramifications through the liner company networks are considerable. I think one analyst calculated that roughly 10% of the global fleet actually under normal circumstances calls at ports within the Persian Gulf. So, although the volumes in terms of import and export are not huge, the implications for liner companies’ networks are much bigger than that, and that confusion and complexity breed disruption in the networks, which breeds inefficiency, which breeds the necessity for more ships. That is what we are seeing so far, but it is very early days. George, do you want to add to that? George Youroukos: Yes. What I would add is that we see clearly the statement of Houthis that they will resume their attacks in the Red Sea, so the Red Sea is out of the question right now. There was a process where planners were returning slowly, but right now this is not the case. And then the second thing—we should see this very similar to COVID. There is going to be a big region that is not going to be serviced by ships until this conflict is over or at least this conflict is to a point where ships can cross the Hormuz. There is going to be a big starvation of cargos in the region. As you can imagine, this is going to create disruption, and I think it will lead to raising the freight rates at the point when passing through the Hormuz is possible but not clean-cut as it was before the war. I think the freights are going to go up for the ships that are going to go through, and once the Hormuz is open completely, there is going to be a lot of cargos that need to go that have not been going for a while, and hence backup trade in the ports. They are going to be waiting, and all of that—a similar mini situation over the region, a mini situation of COVID, I would imagine. So if you ask me, I think the earnings of liner companies should increase for a period of time, and the fleet is going to tighten further for a period of time again. Omar Nokta: Thanks, George. That is quite helpful. And thanks, Tom. You answered the second question in there for me, so thank you. And then maybe just one final quick follow-up on the balance sheet. I noticed a big jump in the long-term restricted cash, going from $23,000,000 to $113,000,000 quarter over quarter. Is that actual restricted cash due to a financing, or is that just a long-term bank deposit? Anastasios Psaropoulos: It is actually, Omar, a revenue received in advance. Like the previous time that we had in our account, we have received a revenue received in advance, which has to be restricted, and it will be released following the service of the charter. Omar Nokta: Okay. And how long of a duration is that? Anastasios Psaropoulos: If I remember correctly, it is three years. Omar Nokta: Okay. Okay. Thanks, Anastasios, and thanks, guys. I will turn it over. Thomas Lister: Omar, I think, just to correct, I think it is actually five years. Five years. Omar Nokta: Okay. Thank you. Operator: There are no further questions at this time. I would like to turn the call back over to Thomas Lister for closing remarks. Thomas Lister: Thank you very much, operator, and thank you, everyone, for joining today’s call. We look forward to regrouping for our 1Q earnings once they are ready. Stay safe. Thanks for joining. Bye-bye. Operator: Ladies and gentlemen, that concludes today’s call. Thank you all for joining in. You may now disconnect.
Operator: Good morning, ladies and gentlemen, and welcome to the Altimmune, Inc. year-end 2025 financial results conference call. After the speakers' presentation, there will be a question-and-answer session. You will then hear an automated message advising your hand is raised. To withdraw your question, please press 1-1 again. As a reminder, this call is being recorded. I will now introduce your host for today's conference call, Lee Roth, President of Burns McClellan, Investor Relations Advisor to Altimmune, Inc. Lee, you may begin. Lee Roth: Thanks, Gigi, and good morning, everyone. Thank you for joining us for Altimmune, Inc.'s fourth quarter 2025 financial results and business update conference call. On today's call, you will hear from Jerry Durso, our Chief Executive Officer; Christophe Arbet-Engels, Chief Medical Officer; Linda Richardson, Chief Commercial Officer; and Greg Weaver, Chief Financial Officer. Following management's prepared remarks, we will open the line for the Q&A session. Our fourth quarter and full year 2025 earnings release was issued this morning and can be found on the Investors section of the Altimmune, Inc. website. Before we begin, I would like to remind everyone that remarks made about future expectations, plans, and prospects constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Altimmune, Inc. cautions that these forward-looking statements are subject to risks and uncertainties that could cause our actual results to differ materially from those indicated. For a review of the risk factors that could affect the company's future results and operations, we refer you to our filings with the SEC. I also direct you to read the forward-looking statements disclaimer in our press release issued this morning, which is now available on our website. Any statements made on this call are only as of today's date, 03/05/2026, and the company does not undertake any obligation to update any of these forward-looking statements to reflect events or circumstances that occur on or after today's date. As a reminder, this call is being recorded and will be available for audio replay on the Altimmune, Inc. website. With that, it is now my pleasure to turn the call over to Mr. Jerry Durso, President and CEO of Altimmune, Inc. Jerry? Jerry Durso: Good morning, everyone, and thank you for joining us today for our fourth quarter financial results and corporate update. This is my first earnings call since joining Altimmune, Inc. as CEO in January. I would like to start with some comments to reinforce why I am excited about the opportunities ahead of us with PEMB. Altimmune, Inc. is exclusively focused on liver disease, an area where I have spent a good part of my career. Despite a number of therapeutic breakthroughs in the past several years, there remains significant unmet need and treatment gaps among patients living with serious liver diseases like NASH. We believe that PEMB has the potential to bring meaningful benefit to people affected by a variety of hepatic diseases. The balanced one-to-one agonism of glucagon and GLP-1 in a single molecule achieved with PEMB makes it potentially well-suited for the conditions we are targeting. Glucagon's direct effect on the liver can drive reductions in liver fat, inflammation, and fibrotic activity, while GLP-1 can mediate weight loss and appetite suppression and may contribute to anti-inflammatory effects. Additionally, PEMB incorporates our proprietary U-port structure, which slows absorption and is believed to drive improved tolerability, potentially reducing GI and other side effects, which can lead to greater treatment adherence. Importantly, keeping patients on therapy at the right dose is crucial to the management of chronic diseases such as NASH. The data we have generated to date across multiple preclinical and clinical trials, including our Phase IIb MATCH study, reinforce our belief in the strong therapeutic potential of PEMB, as well as its ability to stand out among competing therapeutic options if approved in NASH. As we evolve the PEMB plan, we are focused not only on advancing into Phase III, but also ensuring that the potentially unique benefits of PEMB for patients, payers, and physicians are addressed in our program with a keen eye to competitive advantages in PEMB’s targeted product profile. Based on our ongoing discussions with hepatology KOLs and other practitioners, it is clear that clinical practice in NASH is evolving and will continue to evolve as new therapies become available. The prevailing sentiment is that no single therapy will be able to effectively address the needs of all patients. This is already being acknowledged by the industry as a number of companies are pursuing combination strategies to meet the needs of broader segments of the patient population. With PEMB's dual mechanism, we have a combination therapy in a single molecule, with the potential to address both the hepatic and metabolic drivers of disease at once, which could differentiate PEMB from these multidrug approaches that aim to achieve the same benefits we are providing with a single compound. In our Phase II MATCH study, PEMB showed strong and early NASH resolution at just 24 weeks and clear antifibrotic activity at 48 weeks. The key measures were consistently moving in the right direction, with important noninvasive markers of fibrosis and inflammation improving as therapy progressed in the trial. In addition to efficacy, patients need a therapeutic regimen that they can adhere to in order to realize the full benefit of treatment. As we have shared, the favorable tolerability, leading to low discontinuations due to adverse events that we saw in our Phase II MATCH trial, can be a key differentiator that PEMB may deliver. Likewise, for patients and physicians, the simple dosing aspect of PEMB could play an important role. The one- or two-step titration scheme we will be incorporating into the PEMB Phase III trial could prove to be key when compared to the much more complex dosing of other injectable compounds. The potential of PEMB was recently recognized with FDA Breakthrough Therapy designation in NASH. Breakthrough is granted to medicines that are intended to treat a serious or life-threatening condition and have shown preliminary clinical evidence indicating the potential for substantial improvement over available therapies on a clinically significant endpoint. We look forward to proving this out in our upcoming Phase III trial. I hope this gives you some additional perspective into why we are so encouraged about the future of PEMB and excited for what is to come. Now as to how we are preparing to deliver on this potential, one of my top priorities since becoming CEO is strengthening Altimmune, Inc.'s foundation to equip us for the continued successful advancement of PEMB and support our strength as a late-stage development company. I am pleased to report that over the last several months, we have enhanced our team with the addition of new leaders who bring expertise in liver disease, late-stage clinical development, commercial strategy, and other key areas. We continue to build onto the strong Altimmune, Inc. team strategically to make sure we are able to deliver. We have also remained focused on strengthening our financial position. The $75 million capital raise completed in January was an important step in our ongoing efforts to prepare for the planned initiation of our Phase III this year. We remain committed to securing access to the capital required to successfully drive our clinical programs and create long-term value. At the end-of-Phase II meeting with the FDA, which was held in the fourth quarter based on 24-week data from our Phase II MATCH study, we received valuable guidance on the Phase III trial and we made excellent progress on the in-depth planning of a major global NASH trial like this. We are clear on the overall design elements and the endpoints and we are now in the process of making the final detailed decisions on the protocol and the full operational plan. Christophe will share more on the trial with you this morning. While we have significant focus on our MATCH program, we are also executing well on our other Phase II trials. As a reminder, last fall, we completed enrollment of the Phase II AUD trial ahead of schedule, and we are now on track to report top-line data from this study in the third quarter of this year. We are also expecting to complete enrollment of our Phase II trial assessing PEMB in ALD in 2026. PEMB represents a unique and compelling opportunity to improve the lives of people with NASH and other liver conditions. It has the potential to become an important tool for physicians as they look to improve upon the current treatment paradigm. This is a very exciting time for the team at Altimmune, Inc. We are moving quickly with intent and focus on bringing PEMB to patients and creating long-term value for our shareholders. With that, I will now turn the call over to Christophe for a clinical update. Thank you, Jerry. As we shared on our conference call in December, the 48-week data from the IMPACT trials of PEMB and MATCH, which evaluated the 1.2 mg and 1.8 mg doses, was very encouraging. Christophe Arbet-Engels: The 48-week dataset, including key noninvasive markers of liver inflammation and fibrosis, weight loss, and tolerability, showed strong evidence of antifibrotic effect at week 48 following the early NASH resolution shown already at week 24. The 48-week data established a clear dose response that supports our plan to focus on the 1.8 mg dose in the Phase III trial, while also evaluating the 2.4 mg dose, which could provide additional benefits on both weight loss and, most importantly, liver efficacy. We saw substantial improvements both from baseline and from week 24 to week 48 in ELF and liver stiffness, with the results achieved at the 1.8 mg dose being particularly clinically relevant and comparable to or greater than that observed with the approved NASH product. These measures are clear indicators of antifibrotic activity, and we believe that they will translate into measurable histologic improvement at the 52-week time point in Phase III, which, along with NASH resolution, will be the basis for potential accelerated approval. In addition to the strong benefit in ELF and liver stiffness results, treatment with PEMB demonstrated statistically significant improvement in liver fat content and liver health as measured by ALT and cT1 imaging, with particularly impressive results observed in the 1.8 mg treatment arm. While these NITs tell the story of PEMB's robust direct beneficial effect on the liver, the 48-week data also provided evidence of the ability to address metabolic drivers of NASH, with patients receiving 1.8 mg PEMB achieving 7.5% weight loss at 48 weeks with no plateauing. As noted, the inclusion of a 2.4 mg dose could result in greater weight loss in the upcoming Phase III trial and be an opportunity for additional efficacy on NASH endpoints for accelerated approval. As Jerry pointed out, adherence to treatment in this chronic disease is currently a substantial challenge. Long-term treatment is key to demonstrating clinical outcomes as well as delivering benefits to patients in the real world. Therefore, safety and tolerability are of paramount importance in addition to demonstrating efficacy in NASH. I am very pleased to say that the low treatment discontinuation rates in the 48-week Phase II study were maintained in patients taking PEMB. We attribute these key benefits to the favorable safety and tolerability profile of PEMB with limited GI adverse events despite the absence of titration. The timing of the GI-related adverse events in the IMPACT trial, which were predominantly occurring in the first one or two months of treatment, informs our plan to introduce a simple one- or two-step titration depending on the dose in the Phase III program. We expect this to further improve the tolerability profile over what we observed in the Phase II study. On the regulatory side, the minutes from our end-of-Phase II meeting with the FDA, which we received in January, confirmed our takeaways from the meeting. We are aligned with the agency on all key aspects of the design for a pivotal Phase III study, which will assess PEMB in patients with moderate to advanced fibrosis. Participants in the PEMB arms will start at 1.2 mg and follow a one- or two-step monthly titration to either the 1.8 mg or 2.4 mg dose. The trial's primary population will enroll 990 patients with biopsy-confirmed F2 or F3 NASH, evenly split between placebo, PEMB 1.8 mg, and PEMB 2.4 mg, and measure improvements in either of two primary endpoints: NASH resolution or fibrosis improvement at 52 weeks, with an AI-assisted tool used to aid the histologic assessment. The 52-week endpoint is designed to support potential accelerated approval, with five-year clinical outcome data on liver-related events needed for an eventual final approval. A second cohort, following the same dosing and titration parameters, will enroll approximately 800 patients with NIT-assessed F2 and F3 NASH and measure changes in these noninvasive tests over the same three treatment periods. This population will support safety and long-term clinical outcome evaluations. In total, we will enroll approximately 1,800 patients in this pivotal study. Other key endpoints in the program will include safety, weight loss, and additional potential differentiation attributes such as body composition, quality of weight loss, and patient-reported outcomes. This will be a global trial with sites in North and South America, Europe, and Asia. In addition to the alignment with the FDA, we have submitted requests for scientific advice to both the European Medicines Agency and the MHRA. We have incorporated learnings from previous programs and believe that our Phase III design is well positioned for these regulatory agencies. Overall, we have made great strides toward preparing to initiate our Phase III trial this year. We are finalizing our protocol, and we have aligned with the FDA on the trial design. We have incorporated feedback from key opinion leaders and we look forward to execution of the Phase III study. We will be providing updates on our progress as appropriate. Now looking beyond NASH, PEMB has the potential to address major unmet medical needs in both AUD and ALD because of a similar liver physiopathology to NASH in these indications, and both of those Phase II trials are progressing well. First, RECLAIM, our AUD trial, completed enrollment in 2025 and we look forward to reporting the top-line data in Q3 of this year. In addition to patient-reported measures of alcohol consumption, the trial will also assess an objective biomarker associated with alcohol intake, PEMB's effect on body weight, and safety in this population. For the RESTORE trial in ALD, which will evaluate PEMB's effect on liver-related noninvasive tests, markers of alcohol consumption, and body weight, it is continuing to enroll, and we expect to complete enrollment later this year. Both trials will further expand the already robust body of evidence for PEMB in serious liver disease. And with that, I will turn the call to Linda for a commercial perspective on PEMB. Linda Richardson: Thanks, Christophe, and good morning, everyone. As we move toward Phase III initiation, establishing the future commercial competitiveness of PEMB in NASH remains a primary focus, both in the design of our trial, as Christophe described, and in identifying and addressing unmet needs in the marketplace. Despite early excitement with the first two classes of approved therapies for NASH, it is clear there is significant room for new therapies to address treatment gaps and needs. We recently conducted market research with 75 U.S. healthcare professionals who treat NASH patients to assess unmet needs in the market and satisfaction levels with current and future therapies. I will share some key insights now. First, we learned that physicians are identifying emerging needs in patient subgroups. This includes options for NASH patients who have discontinued semaglutide for either tolerability or efficacy reasons and now need alternatives. Tolerability failure was seen as an area of high or very high unmet need by the majority of the respondents. Half of all physicians surveyed agreed that there is a high or very high unmet need for therapies appropriate for NASH patients at risk for loss of muscle mass. A recent review of the literature shows that nearly one in four patients with MASLD is at risk for additional muscle loss or sarcopenia, and this rate is higher in more advanced NASH patients. In addition, healthcare professionals in our research see several fundamental limitations with currently approved and potential future therapies, setting up a clear need for potential novel options like PEMB. Many physicians acknowledge that the lack of weight loss with FGF21s and resmetirom are limitations of these options, and 44% agree that the tolerability profile of GLP-1 and GLP-1-based therapies causes many patients to drop off. Over one-third believe that lengthy titration schemes to improve the tolerability of these drugs creates adherence challenges. A similar number agreed that the loss of lean muscle mass is a concern when initiating GLP-1 or GLP-1/GIP therapy, echoing the concerns regarding sarcopenic patients I mentioned earlier. From our Phase II data seen to date, we believe that PEMB and its dual mechanism of action may address many of these unmet needs. Our existing clinical program already shows that PEMB has a favorable tolerability profile relative to current and investigational therapies. This may be highly differentiating and is clearly important in this market where patients must remain on drug therapy to achieve efficacy and weight loss benefit. Furthermore, other NASH therapies have trial designs with long titration schedules using multiple subtherapeutic doses to try to mitigate side effects. As Christophe highlighted, our Phase III trial will start with an active 1.2 mg dose in each arm and have only one or at most two titration steps to possibly further improve our favorable tolerability profile. The inclusion of a 2.4 mg dose with a two-step titration over only eight weeks should help maintain tolerability and allow us to evaluate potential further increases in efficacy and weight loss. Weight loss is an important element of managing NASH. It is clear that lean muscle preservation is a growing concern among HCPs. This is an unmet need that we may be able to address. As we have seen lean mass preservation in our PEMB obesity trial, we will be generating additional data on this element in our further studies of PEMB in NASH patients. Now I will share how physicians reacted to our blinded product profile in this market research. We developed our projected product profile based on our current data for IMPACT, showing early and significant NASH resolution, anti-inflammatory and fibrosis effects from NITs, and included data we anticipate seeing in our Phase III program, such as quality weight loss in the 8% to 10% range with lean muscle preservation. HCPs surveyed recognized significant promise in our efficacy, including direct action on the liver with our glucagon agonism, metabolic improvements, straightforward titration, quality weight loss that preserves lean muscle mass, and PEMB safety and favorable tolerability. In fact, in this market research setting, over 70% reported a very high or high likelihood to prescribe PEMB. Physicians projected using PEMB in 43% of their F2 patients and 51% of F3 patients. Over 80% saw PEMB as both a first- and second-line option. PEMB's potential efficacy, safety, and tolerability profile may allow for use in patients needing greater efficacy than a GLP-1 alone or providing quality weight loss not seen in certain other classes of drugs like FGF21s and resmetirom. As we add to our understanding of PEMB's clinical performance and data, and amplify our storyline regarding our unique combination of attributes, we believe we will be well positioned to enter the NASH marketplace. What we see today and continue to hear from healthcare professionals certainly signals strong interest in PEMB. It is not enough to be differentiated; you must have meaningful differentiation, and PEMB's projected profile provides that. I will now turn it over to Greg to review our financial results. Greg Weaver: Thank you very much, and good morning. I will begin with a brief review of our fourth quarter 2025 P&L. R&D expense in the fourth quarter of 2025 was $18.4 million compared to $19.8 million in the same period of 2024. The variance in R&D spend related to the end of the Phase IIb trial in late 2025. Breaking that down further, the Q4 2025 R&D spend included $12.8 million of direct costs related to PEMB development, of which $3.1 million was for the IMPACT Phase IIb trial, $7.4 million for the Phase II trials in AUD and ALD, and $1.2 million in CMC-related expenses. Fourth quarter 2025 R&D also included $1.3 million in noncash stock-based compensation, which is flat in comparison with the same quarter prior year. Moving to G&A, the G&A expenses were $10.5 million and $5.1 million for the quarters ended 12/31/25 and 12/31/24, respectively. The Q4 increase in G&A year-over-year was driven by a one-time noncash and cash stock compensation and payroll charge due to executive transition, which totaled $2.6 million, along with increases in professional fees and other compensation-related expenses. Fourth quarter 2025 G&A also included total noncash stock-based compensation of $3.6 million compared to $1.8 million in the prior year period. Net loss for 2025 was $27.4 million, or $0.27 per share, compared to a net loss of $23.2 million, or $0.33 per share, in 2024. Total full-year 2025 cash OpEx was approximately $67.5 million, excluding noncash compensation of $16 million. We anticipate the use of cash will trend up this year as we approach the launch of the NASH Phase III trial. As Christophe mentioned earlier, we are actively finalizing the last details of the study plan and the other last important details for Phase III. When ready, we will update you and provide more guidance on the timing of cash flows and related details. Now moving over to the balance sheet, we reported total cash of approximately $274 million at year-end 2025. We made a great deal of progress in building the financial position, having recorded net proceeds totaling approximately $208 million last year, in a combination of approximately $174 million in net equity capital raised and $35 million in funding off the Hercules tranche loan facility. In addition, we raised $75 million in the registered direct offering announced in January with Al Eskan Investment Group. The proceeds from this offering, along with $8 million raised off of our ATM facility in January, equate to a pro forma cash position today of approximately $340 million. We forecast that our current cash position would provide an operating cash runway into 2028 based on our current expectations for the scope and timing of the NASH Phase III plan, along with the cost of both the AUD and ALD Phase II trials. Our intent is on having the cash resources necessary to execute the NASH Phase III trial. We will continue to be strategic and opportunistic in our approach to securing access to the forecasted capital needed to fund Phase III, and we will keep you updated on our progress. And with that, I will turn the call back to Jerry. Jerry Durso: Thanks a lot, Greg. As we highlighted today, we have entered 2026 with a great deal of momentum. We have made significant progress as we evolve into a late clinical-stage organization, and we are committed to further advancing our promising, differentiated liver therapy and creating long-term value for our shareholders. This concludes our formal remarks. We will now open for questions. Operator? Operator: Thank you. To withdraw your question, please press 1-1 again. Our first question comes from Roger Song of Jefferies. Your line is open. Roger Song: Excellent. Congrats for the update, and thank you for taking our questions. So first question related to the Phase III. We all see the FDA have some new single pivotal framework. Just curious, have you talked with the FDA about that potential change, and then is that possible you can further save the cost from the Phase III if FDA allow you to do some amendment for the Phase III? Thank you. Jerry Durso: Thanks for the question, Roger. Christophe, maybe you get on that one? Christophe Arbet-Engels: Yes. No. So we have not discussed this at the end-of-Phase II meeting. The path for approval for the NASH programs is one single trial for accelerated approval and then all the way to final approval for clinical outcomes. So this does not really apply directly for us. That is new. It does not change anything in how we are approaching our development program towards approval. Roger Song: Got it. That makes sense. And then just knowing you are still finalizing the protocol, just any statistical plan you can share at this point in terms of the interim versus the final outcome of alpha split and then different two primary endpoint for the interim, if anything. Thank you. Jerry Durso: Yes. Thanks, Roger. A lot of progress there. Maybe Christophe can give the big picture on that. Christophe Arbet-Engels: Yes. So the first is we are having a fairly standard design for the Phase III. We have our two primary endpoints per the FDA guidance, which are NASH resolution without worsening of fibrosis and fibrosis improvement without NASH worsening. And this is how we have powered our study. Our study is powered more than 90% on these endpoints, and that gives us a sample size that is around 990 patients, so 330 patients per arm. As we highlighted, that power should give us sufficient patients to reach the approval. And the split of the alpha is, as you know, for the accelerated approval, for part one, 0.1, and then the rest of the alpha goes all the way to the clinical outcome. The last thing is we have powered based on our assumptions for the 1.8 mg dose. So as mentioned, we are very well powered for this. In our trial, we have the option for an upside with the 2.4 mg dose, and so we are really hoping that we will see some added benefit there. Roger Song: Thank you so much. Jerry Durso: Thanks, Roger. Operator: Thank you. And our next question comes from Ellie Merle of Barclays. Your line is open. Jasmine: Hi. This is Jasmine on for Ellie. Thank you for taking our questions. I have two. So first, from your conversation with the FDA, where does the agency stand now on flexibility to consider NITs as a potentially registrational endpoint? Is the thinking for including the NIT cohort that we could potentially see more flexibility on this in the future, that you might be able to amend and use this cohort for approval more quickly? And then secondly, can you talk about your plans in NASH F4 and potential timelines there? Thanks. Jerry Durso: Thanks, Jasmine. Maybe I will start and then turn it back to Christophe. On the first question, we did broach the point of endpoints on NITs in the end-of-Phase II process. The agency at that point said it was premature to consider that, which is why you see the biopsy-driven endpoints. Nonetheless, we will capture all of that data, so that process at the agency will be ongoing. But again, as we finalize the protocol, you will see the biopsy-driven endpoint as part of that. Maybe you want to pick up the second—sure—second half. Christophe Arbet-Engels: In the context of the AI-assisted approval, we see the agency slowly moving towards that direction. So we have incorporated this in our trials, and we have put everything in case they change during the conduct of the study. So we are in good shape here if they were to go there. The other question is on the F4. I mean, current focus is clearly on the F2, F3. We believe there is some potential here with the mechanism of action and the direct effect on the liver to impact the F4. At this point in time, the team is really dedicated towards the execution of the Phase III and putting all the last pieces in place to start. Jasmine: Okay. Thank you. Jerry Durso: Thanks, Jasmine. Operator: Our next question comes from Yasmeen Rahimi of Piper Sandler. Your line is open. Dominic: Hi. This is Dominic on for Yasmeen. Congrats on all the updates, and thank you for taking our question. So we just had a few here. The first one related to the Phase III for NASH. What are the rate-limiting steps to kick off that study? And how are you thinking about the timelines for enrollment and top-line data? Jerry Durso: Okay. Maybe I will start on the first half and then Christophe can take the second. We are very focused on bringing PEMB to patients as soon as we can. I think we are approaching the preparation on both the financial and the operational fronts. As Christophe outlined, we like where things sit on the clinical side. Good clearance from the FDA. Good insight on our proposal regarding Europe. So all things are moving in parallel. We expect that all will be in line to start the trial as we progress through this year, and we will narrow the guidance as things come to fruition. Again, the teams are moving quickly here, and this parallel approach is going to lead us to initiation of the trial. Christophe Arbet-Engels: Yes. I mean, I can just add to what Jerry said. We are preparing everything on the regulatory side. We have alignment with the FDA. We have done our homework on what is expected from the European or the MHRA. We are in good shape here. We do not expect any major changes in our approach. It is about now execution, getting the team to finalize the last details, whether it is in our protocols, some of the key aspects of the protocol, and then moving forward to be ready to start as soon as possible. Dominic: Okay. Great. Thank you. And then I just have one more question on RECLAIM. We are excited for that trial. What are your thoughts on what you hope to see, and what would you consider clinically meaningful on alcohol usage for that? Thank you so much. Christophe Arbet-Engels: So this study on the AUD is analyzing the heavy drinking days over a period of seven days or a week. And we have powered the study to see a fairly conservative change, so hopefully we will see that. We are also capturing other endpoints like the zero drinking days as well as some of those WHO risk categories because this could be endpoints that will be discussed with the FDA as we move that program forward. So we are going to look at all these aspects when we get the data, and hopefully we will see some improvement. As a reminder, the mechanism of action is well suited for this, both on the reward system through the GLP-1 side of it, as well as the direct effect on the liver, which is quite unique compared to what other programs have currently in development. Dominic: Great. Thank you. Operator: And our next question comes from Corinne Johnson of Goldman Sachs. Your line is open. Anupam: Hi. This is Anupam on behalf of Corinne Johnson. Maybe can you just tell us about the additional financing through the year and what you are anticipating needing to reach the completion of the Phase III in the NASH program? Any color on that? Jerry Durso: Yes. So maybe I will start on that, and then Greg could pick it up. Thanks. I mentioned a couple of times already, including in the prepared remarks, we are preparing on both the financial and the operational side. On the financial side, as Greg outlined, we have improved our position. He referenced roughly $340 million on the balance sheet as of February. That gives us runway into 2028. We would like to make further progress as we progress to initiate the trial. We believe we have good line of sight on some options on how we would approach that in parallel to all the good operational work that Christophe and his team are doing. And then we will access the appropriate tools along the way. Greg, anything else you want to reiterate? Greg Weaver: I will just pick up that thread. I think we have a sense of purpose here in making sure we have the strength of our resources in hand as we begin the next necessary steps to launch this trial this year. Just basically, we have a clear line of sight on what that looks like, how much that is going to take, and we are confident that we will get there. Anupam: Okay. Thank you. Christophe Arbet-Engels: Thank you. Operator: And our next question comes from Annabel Samimy of Stifel. Your line is open. Annabel Samimy: Hi, thank you for taking my question. Thanks for all the color on the profile and the physician receptivity. So I just want to ask from a competitive landscape, we will likely be seeing more data from Retta and Serva in obesity this year with the full knowledge that this is in obesity. What are some of the key data points that you as a team are looking for that may translate into NASH and could potentially have implications for the competitive landscape on the glucagon agonist front? Maybe you could just give us an idea of how you are thinking about the entire competitive landscape for these specific dual agonists. Thanks. Linda Richardson: Sure. We are always paying attention to what is happening in the marketplace. And we look at ourselves and what we have in terms of great tolerability, quality weight loss that we have not seen with these other agents, our simplicity of our titration and tolerability, which we have emphasized, is really seen as something quite important. For very obese patients, I think that there is going to be a role for managing that, but that has to be balanced with tolerability and efficacy elsewhere. And the direct-acting effects that we have shown in the ratio that we are showing, in the one-to-one ratio, we believe are very important. If you are talking about the results in obesity, there may be some read-over there, of course, but the trial that they are looking at should not read out for quite some time on outcomes. Our trial will be very heavily focused on NASH patients. So that is our focus—F2, F3—and the size of the market is such that there are going to be enough patients who need help that there will be ultimately many roles, I think, for PEMB, particularly if we deliver on the differentiation in the profile that we just talked about. Jerry Durso: I think—and just maybe one other point Linda touched on—the ratio matters. I think when you think about the BI compound, for instance, I mean, obviously we will see some additional data from them. But I think the work we have done with our own compound, we believe the balanced ratio is part of what is driving some of the elements around the tolerability profile, which, again, we saw a good solid picture in our Phase II without a titration. Now we have the opportunity to put a simple titration and maybe move forward on that as well. So we are looking at all of the competitive entrants. It is why we focused on this call, frankly, a lot more detail on the differentiation story because it is how we view the work that we are doing currently executing the Phase III and also really always understanding how we are going to position PEMB to bring the benefit to the patients that need it the most. Linda Richardson: Yes. And let me—I just want to correct myself right now. The cirmidutide study is with their eight-to-one GLP/glucagon that is in the NASH population. I was looking at the retitutri trial in my head. So I just want to make sure I correct that. Either way, I think the tolerability for Serva was going to be quite significant for them. And when you look at the complicated titration schedule, that is going to be of concern as well. Annabel Samimy: Okay. Great. Thank you very much. Thank you. Operator: And our next question comes from Patrick of H.C. Wainwright. Your line is open. Luis Santos: Good morning. Luis Santos here in for Patrick. Congratulations on all the progress. My question is regarding the NASH noninvasive tests that you are using. So now that you have alignment with the FDA, did they provide any clarity on using it as primary rather than just surrogate, as well as the AI biopsy reads for an accelerated approval. Christophe? Christophe Arbet-Engels: Yes. So on the discussion with the FDA, as mentioned, the NITs are too premature now, and we just want to be really ready on this. However, the opportunity with our two cohorts is actually several fold. One, it fulfills some of the requirements for the safety as well as the long-term clinical outcome, but also to enroll a little faster our Phase III trials because we know, and we have done that, that PIs will be happy to actually have the patients having different options—so the biopsies and the NITs—so that will give us some advantage there, and we are hoping this will play in our favor. With regard to the AI assist, this is still a consensus based on the pathology reading. At the end, the pathologist is responsible. Where we believe this could help us is actually in reducing variability, potentially, if we do the right training, etc., having a lower variance and trying to play in our favor. So we are putting those pieces into place right now. We are having a lot of discussions with key pathologists and with the AI assist company, and we are putting all the pieces of that and getting very close to having a really strong path toward biopsies, but also, as mentioned before, having the flexibility around the NITs in case the FDA changes their mind. Luis Santos: That sounds great. Very quickly, can you update us on your CMC readiness? And do you plan to scale for global trial manufacturing supply for both obesity and NASH simultaneously, or do you plan to partner on that end? Jerry Durso: Yes. M. Roberts can take the question. Just one point on the front is that we are focused on the NASH trial. Okay? We are focused on positioning PEMB as a liver compound. M. Roberts: Yes. That is exactly right. And as far as readiness for the Phase III, we believe that we are there. We are ready to go on that. As far as NASH, a global trial—that is really not an issue. For NASH, you know, we were originally developing the process for obesity. We can scale to that size as necessary, but the company is focused on NASH. And for those indications in the U.S. and the rest of the world, we are exactly where we need to be. Luis Santos: Great. Thank you so much. Thanks. Operator: Thank you. And our next question comes from Michael DiFiore of ISI. Your line is open. Michael DiFiore: Hi, guys. Thanks so much for taking my questions. Two for me. The first one, just want to drill down on a prior question that was asked. Now that you received the FDA minutes, are the key elements fully locked, and what is the single biggest remaining variable that you are still optimizing? And secondly, with the request for EU scientific advice now submitted, is there any early read on whether EU feedback could change anything meaningful versus the FDA-aligned plan? Thank you. Jerry Durso: Thanks for the questions, Michael. Christophe? Christophe Arbet-Engels: Yes. So on the FDA minutes and the discussion with them, we are really in the last phases of finalizing our protocol. We have all the elements, like I mentioned—the sample size, we talked to all of our biostatisticians, we have the primary endpoints aligned, the population, etc. What we are looking at is finalizing some—like, for example, the biopsy is a critical point, and we want to really take the time to do it in the most comprehensive manner and having our A-team of pathologists with us. So we are taking the time to do this the most appropriate way, and these are the kind of last details—some of the QC, for example, things like this. So these are really the final stages of those aspects. With regard to the EU, we have worked with regulatory consultants. We have a good understanding. We actually even have biostatisticians that are advising the EMA that work with us. We have put together all the pieces, so we do not expect anything to hold us back. And our protocol and the design of the study should not change based on the scientific advice. Michael DiFiore: Great. Thank you. Jerry Durso: Thanks, Michael. Operator: Thank you. And our next question comes from John Wolleben of Citizens. Your line is open. John, your line is open. Catherine: Hello. This is Catherine on for John. Hi. Are you hearing me? Jerry Durso: Yes. Hi, Catherine. Thank you. Two quick ones, mostly on the RECLAIM program. Firstly, how am I speaking about the mechanism of action, like as far as having GLP and glucagon, specifically maybe being beneficial over just GLP-1 agonism, in the alcohol-related diseases? And also, logistically, how do you guys plan on moving forward with the Phase III program? Are you guys going to move forward with AUD and then wait for ALD data, or do you want to see both before moving forward? Thank you. Jerry Durso: Yes, maybe I will start with the second question and then Christophe can take the mechanistic one. So as we said, we are going to expect the readout on the AUD trial in quarter three. We will assess the data and then plan next steps. That would happen immediately upon receipt of the data. No need to wait for ALD. We like the fact that we have a second Phase II going in ALD, but as the enrollment will finish this year, that will be a later readout. Christophe Arbet-Engels: Yes. On the mechanism of action, it is well recorded in the literature that GLP-1 has a central effect on the reward system and the type of alcohol use that those patients will have. The difference is the direct effect on the liver. There are now more and more—and recently in January at the MASH-TAG conference—there was clearly a talk discussing the fat in the liver of these patients, but also some elements of early fibrosis. So it would be very suited for these populations to not only treat the alcohol use and the cravings and that reward aspect, but also treat directly the liver because the liver is already substantially damaged and even with early fibrosis. Clearly the dual mechanism of action, and the tolerability, I will add, in that particular population is extremely suitable for a product like PEMB. This population feels good. They are not having—you do not want to add side effects or complications to them. So they really want to get their liver treated as well as the cravings. Catherine: Thank you so much. Jerry Durso: Mhmm. Operator: Mhmm. Thank you. And our next question comes from Andy Hsieh of William Blair. Your line is open. Andy Hsieh: Thanks for taking our questions. We have two questions. One is related to the prepared remarks that you made, highlighting that SEMA failures might be a potential segment to provide clinical differentiation. So can you tell us a little bit about the exclusion/inclusion criteria regarding the length of the washout period in the upcoming Phase III trial? So that is question number one. Question number two has to do with the pathologist panel that you decided. I am curious if it is just a two-person panel, three-person panel. Could you talk about the education process if you do not mind? Thank you. Christophe Arbet-Engels: So I will start with the first one. Clearly, what we hear and what has been presented in the past conferences is that SEMA is hard to tolerate, that most patients do not reach the NASH-effective dose, that the titration is complex for them, and that there are a lot of dropouts of treatment after already six months to a year. So this is a challenge there. If that is the case, for us, clearly, we will accept these patients in our Phase III trials. And we want to be able, if they have not tolerated SEMA, to bring them on board, because they will have an option with PEMB, again, to have—and I want to remind you here the extremely strong efficacy we have seen in our Phase II study as well as the tolerability. So both together are a perfect option for this population with a real chance now to address the liver and their metabolic causes for that NASH. With regard to the pathologists, we are still finalizing these details. We are towards the end of this. Our thinking right now is to have—it has to be a consensus. So we are thinking to have a few pathologists, and the reading would be a two-plus-one type of reading with the consensus; the plus one would be if there is no consensus between the two pathologists. Clearly, the advantage here for us is the AI assist. It really decreases the variability and helps that consensus. It should also accelerate and streamline the process. And so for us, these two aspects—decreasing variability and streamlining the process—are good positive perspectives to execute our study in the best possible way. Andy Hsieh: That is helpful. Thank you. Operator: Thank you. And our next question comes from William Wood of B. Riley Securities. Your line is open. William Wood: Thank you so much for taking our questions. Two from us, if we may. On your RECLAIM trial, it is focused on drinks per day and alcohol consumption. But I was curious if there are any NITs looking at the liver or additional measurements that could read through to either your ALD or Phase III trials. You will be evaluating the 2.4 mg dose in both the AUD and ALD, and then obviously the Phase III. As well as, could you provide any color on how far along you are in your ALD trial enrollment? And then I have a second follow-up. Christophe Arbet-Engels: Alright. On the AUD, we do not have too many. We have the typical liver enzymes, etc. We are looking at the heavy drinking days, we are looking at the zero day of drinking, we are looking at the WHO risk classification, if you wish, and how these patients will change. We also, since it is a patient-reported outcome, have blood tests such as the PEth test, which is a little bit like you would see in the HbA1c, which reflects the alcohol impregnation. So we believe that here we have—and we have all the other markers of the effectiveness of the drug such as weight loss, etc. So we have in our AUD a number of things that will be very helpful to prepare for discussions with the FDA, granted the data come out positive on this. On the ALD, we are enrolling as per plan. As you know, this is a more severe population, so it will be more difficult to enroll. We successfully enrolled very rapidly our AUD trial, much faster than anticipated. But here on the ALD, we are on track as per plan and moving forward smoothly. I cannot give you any more forecast on that at this point. William Wood: Okay. And then in your Phase III trial, maybe I missed it, but will you be evaluating any benefits, or maybe how do you plan to assess MACE since you are not conducting a separate CVOT trial? Christophe Arbet-Engels: No. This is a great question. First, we have already seen some great improvements on the lipids. On the inflammation—we clearly have a decrease in inflammation with PEMB. We have seen improvement in lipids at week 24 and similarly at week 48. So we believe there is a real potential here to see some cardiovascular benefits. We will clearly look at this in our Phase III NASH trial. However, the FDA does not want us to include this as the clinical outcome for liver-related events. Clearly, they are two separate aspects, but we will have the data built in our Phase III. William Wood: Okay. Okay. Thank you. Thank you. Operator: And our next question comes from Boris Peaker of Titan Partners. Your line is open. Boris Peaker: Great. Thanks for squeezing me in. I guess I just want to focus on the muscle preservation, and obviously it is one of the key differentiating elements of the drug. Just curious—the observed weight loss to date, can you comment whether the muscle preservation was stronger at the lower or the higher end of the BMI scale? And what can you potentially do in the Phase III study in terms of enrollment to maximize the impact of this muscle preservation, particularly considering it is a large and international study? Christophe Arbet-Engels: Yes. So the mass preservation and the lean mass is critical, as you say, because this is something that in that population that is aging—our average patient is 55 and older—and they start losing their bone and their muscles, and so we do not want to add anything to this. So we want to keep the muscles in this population. We have demonstrated some very interesting data already in our VCT trial. And we would like to continue demonstrating this. How we are integrating this in the Phase III—we are actually in some discussions right now, whether it is a full mechanistic study or if it is a sub-study that is put into the trial. It is something that we are designing as we are speaking today. Regarding the BMI, there is no difference between the BMI networks. It is all different types of BMI, and it is consistent throughout. That is what we have seen in our VCT study. Boris Peaker: Got it. I am just curious. What specific tests or biomarkers are you monitoring to better understand this muscle preservation? So is it just a DEXA scan, hand strength, MRI? What are you specifically monitoring, and what do you think you would need to potentially get a claim in a label on some kind of muscle preservation? Christophe Arbet-Engels: Yes. That is a complicated question because getting a claim would require some—clearly, we will have MRI. We will have the DEXA. We would like to better understand—we have some ideas how this is working as well. We believe that one-to-one ratio is one of the key aspects that could lead to this. So if we can make that link during our Phase III, clearly, it would be an important distinction and differentiator at launch. So we are putting all these pieces together as we are—first, we are finalizing that protocol for the NASH and putting the pieces on that lean mass preservation as well in parallel. Boris Peaker: Great. Thank you very much for taking my questions. M. Roberts: Thank you, Operator: Thank you. I show no further questions at this time. I would like to turn it over to Jerry Durso for closing remarks. Jerry Durso: So thanks, everybody, for joining us today. A lot going on in the company, a lot of progress. We are moving forward towards the Phase III execution. We have work to do, but we are in a good position. And we definitely look forward to providing further updates as we progress. Thanks, everybody, and have a great day. Operator: This concludes today's conference call. Thank you for participating, and you may now disconnect.
Operator: Thank you for standing by, and welcome to the Clean Capital Energy Carriers Corp. Fourth Quarter 2025 Financial Results Conference Call. We have with us Today, Mr. Jerry Kalogiratos, Chief Executive Officer; Mr. Brian Gallagher, Executive Vice President, Investor Relations; and Mr. Nikos Tripodakis, Chief Commercial Officer. [Operator Instructions] I must advise you that this conference is being recorded today, Thursday, March 5, 2026. Statements in today's conference call that are not historical facts including our expectations regarding the seller acquisition transactions their expected effects on this cash generation, equity returns and future debt levels, our ability to pursue growth opportunities, our expectations or objectives regarding future distribution amounts, or share buyback amounts dividend coverage, future earnings, future leverage, capital allocation as well as our expectations regarding market fundamentals and the employment of our vessels, including delivery dates, redelivery dates and charter rates may be forward-looking statements as such as defined in Section 21E of the Securities Exchange Act of 1934 as amended. These forward-looking statements involve risks and uncertainties that could close the stated or forecasted results to be materially different from those anticipated. Unless required by law, we expressly disclaim any obligation to update or revise any of these forward-looking statements whether because of future events, new information, a change in our views or expectations to conform to actual results or otherwise. We make no prediction or statement about the performance of our common shares. I would now like to hand the call over to our speaker today, Mr. Brian Gallagher. Please go ahead. Brian Gallagher: Thank you, operator. Good morning or afternoon to wherever you are, and thank you for listening to the Capital Clean Energy Carrier's Q4 2025 Earnings Call. As a reminder, we'll be referring to the supporting slides available on our website as we go through today's presentation. Let's start with the highlights on Slide 4. An exceptionally busy quarter has continued with subsequent events into the current quarter, but it's pleasing to report the companies continue to make progress on multiple fronts. The key highlights from Q4 was our contracting of 3 latest technology LNG carriers. This opportunistic transaction illustrated our capability to act with conviction and speed and capturing what we believe will be valuable and timely additions to our fleet. More details from Jerry on that later on. Elsewhere, early on in the quarter -- current quarter, we welcome the Active into our fleet, the world's first 22,000 cubic meter liquid CO2 multi-gas carrier, but we also said goodbye to another container vessel as we pressed on with our focus on gas transportation. In terms of our governance and ongoing focus on sustainability, the company was pleased to gain accreditation from CDP in our first submission to that particular platform. Finally, the LNG shipping spot market had a robust if short-lived upturned during Q4 with freight rates touching $100,000 per day. This is an encouraging feature for the future development and potential earnings power from the sector, and there are some key underlying trends, which will require consideration and they'll be covered later on in the presentation. We are acutely aware of the current and fast-moving dynamic in the Middle East, impacting LNG and gas shipping sectors, which are Head of Commercial, Nikos Tripodakis, will provide some thoughts on later on. And naturally, management will be available to take questions after the formal presentation. Moving back to Q4 and our reporting net income from continued operations for the quarter came in at $28.4 million from which we fulfilled our commitment to a fixed distribution of USD 0.15 dividend per share to our shareholders, retaining the company record of distributing a cash dividend for every single quarter since our listing in March 2007. With that, I'll hand it over to our Chief Executive, Jerry Kalogiratos to run through, firstly, the financial highlights. Gerasimos Kalogiratos: Thank you, Brian, and good morning or afternoon to everyone listening in today. It has almost become routine to report further container sales, and the fourth quarter of 25% is no different. As Brian pointed out, we have now classified Buenaventura Express under discontinued operations due to its sale, which nevertheless had a full quarter before being delivered to its new owners in January. The sale of the Buenaventura represents the 14th container carrier sale in 24 months, consistent with the company's strategy to pivot to gas transportation. The classification of the Buenaventura Express under discontinued operations affected our results compared, for example, to the previous quarter. This leaves the company with just 1 container vessel. It continues to generate positive cash flows for the company as it is on the long-term charter with a blue-chip partner to 2033 and options to extend to 2039. We have made significant progress in our pivot, but we have always remained focused on ensuring value creation for our shareholders. We will only look to sell the last container asset. If it is accretive this strategy has served us well with the 14 other vessels, and we will continue on the same path. The dividend payout remains a core component of the company's value proposition to shareholders. The $0.15 dividend was paid on February 12 to shareholders of record on February 3. This was the 75th consecutive quarter that the company has paid a cash dividend. Moving now to the balance sheet on Slide 7. We closed the year with a solid cash position of $296 million, including restricted cash and the net leverage ratio just short of 49%. As mentioned earlier, we also finalized the sale of 13,700 TEU container vessel in early '26, continuing our disciplined capital recycling strategy. Finally, just a week ago, we issued a 200 million-euro bond listed at the AtenStock Exchange, further enhancing our balance sheet flexibility. We continue to work closely with different sources of finance and the funding of the 9 LNG carriers still due for delivery, and we are very encouraged with the progress of these discussions. We hope to be able to report much more on this front in the next quarterly call. Moving to Slide 9. Our LNG fleet continues to provide long-term visibility and stability. We have 90 years of contracted backlog at an average of DCE of approximately 86,800 per day, representing $2.7 billion of contracted revenue. If all extension options are exercised, this increases to 123 years or approximately $3.9 billion in contracted revenues. I recently announced order for 3 new LNG care newbuilds shown at the bottom of this slide, positions us to benefit from increased LNG Cpi demand towards the end of the decade. We continue to be in constant alogue with counterparties regarding our LNG fleet in what has become increasingly a more active period market and looking for the right employment structure for our remaining 6 open new builds. In terms of fleet update, we will have 4 upcoming dry docks for our LNG fleet. In the first quarter of this year, we have the Adamas. And in the next quarter, we expect to have the dry docking of the Arista House, Tatas and [indiscernible]. In terms of cash cost, the guidance remains the same as in previous quarters at $5 million all-in cost per dry dock and around 20, 25 days of hire. Importantly, we will welcome 2 more vessels during the second quarter of 2026, our second liquid C2 carrier and LPG carrier, the Amadeus at the end of April and also our first dual fuel 45,000 cubic medium LPG carrier various genes in early June. Turning to the next slide. Funding of our newbuilding program is well supported. We have already paid a portion of the required CapEx supported by -- generated cash flows, asset monetization and attractive debt financing terms. As we progress through 2026 and '27, we expect CapEx to be mostly weighted towards the LNG carriers for which we assume on average approximately 70% debt financing. The picture that you see is before tapping into the proceeds of the EUR 250 million bond issue. This leads neatly to look briefly at the key events for the company during the quarter, namely the contracting of 3 new LNG carriers on Slide 11. As mentioned earlier, we secured 3 state-of-the-art LNG carriers with deliveries scheduled of 1 vessel in the fourth quarter of '28 and 2 in the first quarter of '29. These vessels include enhancements to fuel efficiency, boil of rates as well as liquefaction capacity, placing them among the highest-performing LNG carriers globally. We secured the spares at HD Hyundai Samho in South Korea on attractive terms. The delivery profile is optimized for a market period where the order book looks particularly undersupplied in view of the anticipated demand giving us significant commercial optionality. Now after quarter end, we delivered the world's first 22,000 cubic liquid CO2 multi-gas carrier, the Active. This vessel is capable of transporting liquid CO2, LPG and ammonia and other petrochemicals and remains fully competitive in the conventional semi ref gas market. The vessels already employed on a 6-month charter, transporting LPG, an optional extension, demonstrating immediate commercial demand. As mentioned earlier, we successfully raised last month EUR 250 million through a newly issued unsecured bond, take advantage of a favorable interest rate environment. After hedging the currency and interest rate exposure of the new bond, we expect the online cost to be approximately so 1 for $295 million in dollar terms. But to the process of the new bond will be used to refinance our outstanding bond of EUR 100 million -- EUR 150 million issued in 2021, maturing later this year. The rest of the proceeds will be used to finance our newbuilding program and for general corporate purposes. I would like now to turn to our Chief Commercial Officer, Nikos, who will run through our LNG market slides. I will then be available to answer your questions along with Nikos Brian at the end of the call. Nikos, over to you. Nikolaos Tripodakis: Thank you, Jerry, and good morning or afternoon, everybody. Currently, of course, the war in the Middle East and how it will affect the energy model. And in our case, the shipping market is in everyone's mind. I will come back to this at the end of my presentation. Please allow me to start with the main highlights of Q4, which has been the unexpectedly strong spot market. As Slide 14 shows, spot rates rose strongly to exceed $100,000 a day in mid-December, the highest level of the past 2 years. An unexpected surge in LNG production from the U.S. pockets of East West arbitrars and logistical constraints led to an absorption of available tonnage and the significant increase in spot rates. This served as a stark reminder of the fragility of the LNG shipping supply-demand balance during winter months when modest changes in -- economics, production volumes or port and canal logistics can collectively have a disproportionate impact on freight markets. However, as we will see on Slide 15, all vessel types benefit in a similar way from a surge in spot rates. Turning to Slide 15. As we can see on the left-hand side, we see the 5-year quarterly average freight rates up to 2024. What is interesting is that the charter rates for steam vessels during that period captured around 50% of the rate of a 2-stroke modern vessel. But in 2025, that percentage dropped to 20%, even though the market has been consistently lower compared to the 5-year average. What is also worth noting is that even though 2-stroke charter rates rose by approximately $32,000 a day on average through Q4, steam rates only rose about 7,000 a day and continue to trade below OpEx levels. This clearly indicates that 2 stroke vessels, like the 1 CCF owns and operate capture the lion's share of the benefits in a rising market, while older vessels remain unattractive as long as 2 stroke vessels are available even if the charter rate for 2 strokes is approximately 400% higher as it was during the Q4 of 2025. This widening rate gap underscores the increasing obsolescence of older technology and supports our strategy for investing exclusively in modern high-efficiency LNG carriers. Turning now to Slide 16. The challenging market conditions for older vessels described so far have led to 2025 becoming a record year in terms of scrapping with 61 vessels exiting the fleet. Looking at the age, the redelivery profile from current charters and the fact that these vessels would operate below their OpEx breakeven in the spot market, even when the spot market goes through its seasonal spikes, the commercial removal of those vessels either through laying up or scrapping becomes inevitable. Our attention now turns to the other end of the spectrum and specifically new buildings on Slide 17. As we look at Slide 17, a clear pattern emerge in Q4 with an increase in ordering, something we were part of with a 3-vessel order. In December alone, there were almost as many orders placed as for the rest of the year combined, indicating greater confidence amongst the ship owners regarding the dynamics of the LNG market. This has led to a slight uptick in newbuilding prices as we can see in the right of Slide 17. We expect this trend to continue as limited yard capacity for deliveries in 2028 and 2029, meets the surge in demand for LNG carriers stemming from the doubling of U.S. LNG production from the U.S. This limited capacity for 2028 and 2029 provides a very good opportunity to look at the order book availability and CCEC's market share of open newbuildings. Turning to Slide 18. It is demonstrated that out of the 30 new buildings in the order book, 6 of those or 20% are controlled by CCEC. This makes us the owner with the largest market share of the open order book and in prime position to capitalize from the increased demand expected in 2027 onwards as charter sick molded tonnage. Moving on to Slide 19. We would like to summarize our view on the long-term supply and demand picture of LNG freight. As with any shipping segment, there are always a lot of cross current and moving parts. We have tried to incorporate the recent supply and demand developments on this chart. Firstly, to explain the chart, the orange dash line represents the maximum potential growth in demand for LNG carriers and global energy projects extending to 2032. The blue dash line represents the number of LNG vessels required based solely on those projects that have reached an FID status, which is a relatively conservative approach as we expect more projects to reach FID in the months to follow. The gray bar represents the gross number of LNG carrier deliveries expected on a cumulative basis year-on-year with the orange bars being the estimate from CCEC on LNG vessel removals. The dark gray bars finally represent the net number between vessel deliveries and removals. In summary, we anticipate the LNG shipping market to reach an inflection point in late 2027 or early 2028 with new energy supply requiring a substantial number of additional vessels. Accounting for scrapping of older ships, demand is anticipated to outpace vessel supply, creating a constructive long-term outlook. Now as mentioned at the beginning of my presentation, we need to address the current situation in the Middle East. The U.S. Iran conflict following the coordinated U.S. Israel strikes on Iran on the 28th of February, has significantly increased geopolitical risk in the Persian Gulf and particularly around the strait of Hermosa a critical energy shipping checkpoint. Most commercial vessels are avoiding the area due to security concerns, missile and drone attacks, AIS interference and the withdrawal of more risk insurance. This has disrupted significantly any normal shipping patterns and the flow of energy commodities and has created a situation where Western affiliated vessels faced particularly high risks and costs when transiting in the region. The conflict has major implications for the global LNG market as roughly 20% of the global LNG exports originate from the Arabian Gulf, mainly from Qatar -- further. Israel has shut down at least 2 major gas due to security concerns, potentially forcing Egypt and Jordan to increase imports by up to 65 cargoes per year to replace lost pipeline gas supply. Combined with the Arabian Gulf export disruptions and the withdrawal of more risk insurance for vessels operating in the region, the situation could significantly tighten global energy markets as a prolonged closure of the strait of -- will lead to increased competition for the limited flexible supply, mainly from the U.S. and result in significant price increases in gas worldwide. Now the most important unknown right now is the duration of the conflict. We can place lost pipeline gas supply, combined with the Arabian Gulf export disruptions and the withdrawal of more risk insurance for vessels operating in the region, the situation could significantly tighten global energy markets as a prolonged closure of the strait of -- will lead to increased competition for the limited flexible supply, mainly from the U.S. and result in significant price increases in gas worldwide. Now the most important unknown right now is the duration of the conflict. We cannot speculate on how long the situation will last, but the effect in the gas and shipping markets in less than a week are very clear. Global gas prices for the pro months have more than doubled at some point during this week with Asian gas prices combining a significant premium over TTS. The increase in global prices in combination with the surge in ton mile demand due to an open arbitrars to the East has led to our nonprecedented rise in spot charter rates from circa $40,000 a day last week to around $300,000 per day on a -- basis for March and April loadings at even rates above $100,000 a day for 12 months on modern vessels. One thing is clear. the longer the situation continues, markets will price the risk accordingly and the rise in commodity prices will further support the rising freight rates. This concludes our presentation for today, and happy to open the floor to any questions. Operator: [Operator Instructions] Our first question is from Alexander Bidwell with Webber Research & Advisory. Alexander Bidwell: I just wanted to see if you guys could give a little bit more color on, I guess, the potential implications of this shutdown of Middle Eastern supplies on the carrier market. We've seen -- I guess, as you mentioned, we've seen spot rates climb pretty drastically over the last couple of days. But what is the -- I guess, the longer-term implications of having a significant amount of supply taken off-line. Gerasimos Kalogiratos: It's probably more than million-dollar question right now, but we'll try to answer it in the best way we can. As we mentioned, the supply for Middle East mainly supplies Asian markets. And unlike what happened in 2022 when Russian gas flows to Europe were cut and Europe into place tight gas with LNG from the U.S. There is no way to replace this Qatar volumes in Asia. So the only way that Asia could replace this, Olivan fuel switching would be to increase the price. That would lead to an increased open arbitrars to the east and the market already now is undersupplied for vessels if this situation were to continue, i.e., an open arbitrage with healthy gas prices to the East. What would mean for freight rates I mean, we already saw the spike in the front, if this were to continue, you could expect term rates to rise significantly. Now how much is something that remains to be seen. Alexander Bidwell: All right. And then just kind of switching gears. So I believe 1 container vessel left in the fleet. Can you give us a sense of how you're looking at disposal options and just a general idea of what that time line might be? Gerasimos Kalogiratos: Yes. So we have been always quite opportunistic in the way that we have approached the sale of our container vessels and especially these ones, the last 3 that -- these last [indiscernible], the 13,000 EU containers, we have already sold 2 were down to 1. They have a long-term charter and good cash flow visibility, good counterparty. There -- the financing also on this vessel is less flexible than others. So while it's not impossible to transfer or sell this asset, it's more difficult because it has tax equity in the structure. So I think we're going to be quite opportunistic if we see a similarly attractive deal, we will look at selling the vessel or we might simply stick with it until closer to the end of the charter. Again, we will be driven more by the opportunity and less by a specific time line to divest from this container. I mean we have sold already 14 out of the 15 we feel quite comfortable. Operator: Our next question is from Jon Chappell with Evercore ISI. Jonathan Chappell: The capital exposure to the conversation and what's happening today, it looks like the more meal becomes open later in '26, 1 newbuild delivers later this year. and 1 in early '27. So is it right to assume that this parabolic move in spot rates does not have any immediate term effect on you? And I guess the follow-on to that would be as some of these new builds become closer to the delivery date. And as mentioned, some of the time charter rates are moving up as well. Is it kind of a wait and see how this plays out? Or is there any increased inquiry and opportunity to maybe time charter some of the newbuilds even at shorter duration to take it then, I hate to say and take advantage, but to take advantage of the of the move in the charter rates. Gerasimos Kalogiratos: Let me comment on the first part, and then maybe Nikos can pick up the second part with regard to the long-term curve. But -- the -- you are right to point out that in terms of redeliveries, the first vessel that we have is the more in Q3, but we do have some of our newbuilds coming early in much earlier in Q3 and while some of them we have already have employment in place, we have flexibility in swapping this with other later sisters. So there is the potential for us if we see the market interest to be able to offer earlier positions very late Q2 or early Q3. . I think it will very much depend on how long this lasts Nikos said, which -- and we don't have immense visibility here. Nikos, would you like maybe to say a few words as to how you see the long-term curve being affected right now? Nikolaos Tripodakis: Yes. So as mentioned, this all depends on how long the situation will last. We will need to make something very clear now. There have been a lot of charters out there that were happy to play the spot market given the arbitrage pointing to Europe and a sensible oversupply of vessels in the Atlantic. But now what this situation has created and the longer it lasts, it will make companies that use this strategy more aware and more eager to take the position is that a prolonged arbitraries to the East has made this market very tight. So -- the longer the situation lasts, more and more companies will try to secure shipping even at higher rates, just to be able to lift those volumes. And we have already seen inquiries for terms for some of our new buildings, obviously, are not at the rates we mentioned for the spot market, but already at higher levels than what we saw let's say, 2 or 3 weeks ago. So it has certainly affected the market, but we need to see the situation last for a bit longer for dealers to be concluded in the 5, 7 years space. Jonathan Chappell: Okay. And then maybe the terms are a little bit commercially sensitive, but I think it's super important in the context of trying to understand the new market for the LCO2, is there any way to kind of help frame out the charter rate that the active has for the 6 months and then maybe the extension? And then I guess the other thing I'd ask on the LCO2 is, I don't see the delivery schedule in the presentation or the press release anywhere. Just want to make sure that the delivery schedule is last presented was still the same for the remainder of this year and those ships going forward. Gerasimos Kalogiratos: Yes, of course, Jon, yes, the table has not changed, deliveries have not changed. So as I said during my prepared remarks, we are expecting the next LCO2 hand the LPG carrier towards the end of April and the 45,000 cubic fuel [indiscernible] in early June. These are the next couple of deliveries and the delivery schedule for the rest remains as previously described. Now in terms of the Active, the Active really went directly into the trade as a semi-ref LPG ammonia carrier. It's -- and I think this is how we should be thinking about it until we see a more mature LCO2 market. So in terms of numbers, the -- if you want to think about TC after the ballast days and repositioning from the shipyard into the trade, that's probably for the first 6 months, you can assume close to $21,000 per day. The rate was $25,000, but as I said, the repositioning was in on the first 6 months. And then there is an option for the charter if it's exercised than the headline rate is $32,000 per day. So assuming that option is exercised, the blended average, including repositioning is around $25,000, $26,000 per day for the whole year. Operator: Our next question is from Liam Burke with B. Riley Securities. Liam Burke: Jerry, I know the timing is not great in light of the shortage of LNG carriers, but what is the general tenor of discussions on the future deliveries of the non-LNG carriers for longer-term charters? Gerasimos Kalogiratos: Yes, this market is a shorter term market. So typically, there, you will find a lot of liquidity anywhere between 6 to 12 months. And then -- there is some demand in the 2- to 3-year type of periods occasionally 5 years. but definitely shorter than the 7, 10, 12 years or more that you see in the LNG market. But I think you could safely say that the most liquid part, the most volume is on the 6 to 12 months TCs. Liam Burke: The liquid part, okay. if you look on the longer durations that they're kicked around, is there a sufficient return on those rates? Or do you prefer to keep them in on the shorter 6 months to the year. Gerasimos Kalogiratos: With the kind of rate that we see nowadays. I mean, since the delivery of the first vessel market has tightened both for handysize LPG carriers as well as for MGCs, I think the returns are quite decent. And if we see the opportunity, we will try to lock them in for longer. Market today for 45,000 cubic dual-fuel vessel it's probably somewhere around the $40,000 per day mark, give or take, which is quite decent returns. Operator: [Operator Instructions] Our next question is from Omar Nokta with Clean Securities. Unknown Analyst: Obviously, a lot of stuff I guess I just wanted to ask in terms of the developments in the Middle East, is there any of your vessels that are directly affected by this, specifically, say, the force majeure that was put in by Qatar Energy. I believe you might have 1 ship on contract with them. Does that at all affect the terms of the charter? Gerasimos Kalogiratos: No. So far, we haven't been affected at all. all charters continue with their ongoing charter commitments, and we don't have any vessels in -- within the Gulf. So it's relatively smooth if you can describe it that way given the turmoil in the background. Unknown Analyst: Okay. And then just completely separate, just an accounting question. Just in terms of the remaining newbuild CapEx that's roughly that $2.4 billion. How much of that do you have secured in bank lines? And then how much are you intending to put in place? Gerasimos Kalogiratos: So all the MDCs and LCO2s have been already financed -- and the -- we are in advanced discussions for the remaining LNG carriers as we typically do, you should expect that we will be financing the earlier deliveries and then wait out for later deliveries. I mean we're not going to finance everything this year, simply because we don't want to incur commitment fees. I expect next quarter, we will have a lot more news on the financing of the LNG carriers to be delivered this year and next. In terms of the breakdown, let me suit you an e-mail later on with the exact amounts. Operator: There are no further questions at this time. I would like to turn the conference back over to Mr. Kalogiratos for closing remarks. Gerasimos Kalogiratos: Thank you, operator, and thank you, everyone, for joining us today. Operator: Thank you. This will conclude today's conference. You may disconnect at this time, and thank you for your participation.
Operator: Good day, everyone. My name is Luke, and I will be your conference operator today. At this time, I would like to welcome you to the Mistras Group, Inc. Q4 2025 Earnings Conference 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. If you would like to ask a question during this time and if you have joined the webinar, please use the raise hand icon which can be found at the bottom of your webinar application. At this time, I would like to turn the call over to Thomas Tobolski, Senior Vice President, Finance and Treasurer. Thomas Tobolski: Good morning, everyone, and welcome to Mistras Group, Inc.'s fourth quarter 2025 earnings conference call. I am joined today by Manuel Stamatakis, Executive Chairman of the Board, Natalia Shuman, President and Chief Executive Officer, and Edward J. Prajzner, Senior Executive Vice President and Chief Financial Officer. Before we start, I want to remind everyone that remarks made during this conference call, as well as supplemental information provided on our website, contain certain forward-looking statements and involve risks and uncertainties as described in Mistras Group, Inc.'s SEC filings. The major factors that can cause Mistras Group, Inc.'s actual results to differ are discussed in the company's most recent Annual Report on Form 10-K and other reports filed with the SEC. The discussion in this conference call will also include certain non-GAAP financial measures that we believe are useful to investors evaluating the company's performance but that were not prepared in accordance with U.S. GAAP. Reconciliations of these non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures can be found in the tables contained in yesterday's press release and in the company's related Current Report on Form 8-Ks. These reports are available at the company's website in the Investors section and on the SEC's website. I will now turn the conference over to Natalia Shuman. Natalia Shuman: Good morning, everyone. Thank you for joining us today. It is my pleasure to report to you highlights of our fourth quarter and full year financial performance and provide an update on the progress made to date on our strategic plan and our outlook for 2026. Let me first start with fourth quarter results. I am pleased to report that we delivered consolidated revenue growth of 5.1% in the fourth quarter versus the prior year. As we communicated earlier this year, we successfully executed on a number of critical initiatives to restart revenue growth in 2025. In particular, we generated double-digit revenue growth across several key areas of our business, namely within the aerospace and defense, power generation, and infrastructure end markets. Our aerospace and defense business, which is our long-term growth engine, led the way with $4.5 million of growth in the fourth quarter, increasing 21.9% over the prior-year quarter. Power generation was up $3.3 million, representing 33.2% growth over the prior-year quarter. The industrials and infrastructure verticals were also up 6.7% and 26.8%, respectively, over the same time frame. These increases more than offset the anticipated decline in oil and gas revenue due to timing of projects and the closure of unprofitable labs. Our aerospace and defense operations, as we have reported throughout the year, have made significant improvements in 2025, driven by new leadership supported by targeted capital investments. We have rebuilt the structure, introduced a hub-and-spoke operating model, and implemented dynamic pricing strategies. In addition to commercial aerospace strength, demand within the private space and defense industries has also played a favorable role in expanding our growth in this market. These actions led to the record high performance in our laboratories business, which grew by 661% in our fourth quarter as compared to the prior year. Aerospace and defense expansion, posted double-digit growth in other key industries already mentioned, has resulted in favorable business mix, which in turn was a major driver behind the 190 basis point improvement in gross profit margin to 28.4% on gross profit of nearly $51.5 million for the fourth quarter. This contributed to our GAAP net income of $3.9 million and EPS of $0.12 in the fourth quarter, and non-GAAP net income and EPS of $7.9 million and $0.20, respectively. We achieved adjusted EBITDA of $24.8 million, which was up 18.2% over the prior-year quarter, representing a 13.7% adjusted EBITDA margin, which was a 160 basis point improvement over the prior-year comparable quarter. Our fourth quarter adjusted EBITDA and adjusted EBITDA margin represent the highest ever fourth quarter performance achieved in the company's history. Equally important, this performance reflects improved pricing discipline, mix, and operating efficiency, and not only one-time actions, such as restructuring and lab closures. Next, I would like to provide a few highlights of our full year 2025 results. On a full year basis, consolidated revenue was $724 million, which was slightly up year over year excluding the impact of laboratory closures. Revenue was up for the full year in our aerospace and defense, industrials, power generation, and infrastructure end markets. Our International segment delivered revenue growth of nearly 6% for the year, driven by a diversified platform, most notably solid performance within the industrials and aerospace and defense markets. We had anticipated our second half revenue performance to exceed that of the first half of the year, and this trend materialized, driven by significant improvements across key growth markets while improving margins. We expect to continue this trajectory of profitable growth in the future. Our overall efforts in 2025 resulted in the generation of adjusted EBITDA of $91.1 million for the year, with an EBITDA margin of 12.6%, which exceeded our previously issued outlook. Our intense focus throughout the year was to deliver EBITDA margin improvement. We, in fact, achieved these goals utilizing financial and operational discipline while establishing a strong foundation in 2025 and providing credibility to the market which our results demonstrated. To summarize our 2025 results, I am very pleased with our performance, achieving adjusted EBITDA at an all-time record. This is a testament to our proven business model and client-first mindset. In 2025, I was focused on building a new executive team, eliminating unprofitable business, and streamlining the organization while focusing on the strategic direction and building new capabilities and developing a winning culture. We have already experienced early success, including recent wins, improved margins, adoption of new pricing strategies, and an overall new sense of purpose, direction, and intensity, which position us very well for the future. Let me now shift to a brief overview of our most recent progress against our three key priorities in our strategic plan, Vision 2030, the first of which is expanding our share of wallet and transforming our current services into more comprehensive, integrated, and innovative solutions for our customers. Our Data Solutions business plays a key role in executing on this priority. This business derives significant value from its more than twenty years of inspection data that we have collected, analyzed, and transformed into actionable insights for our customers. Specifically, within this business we achieved great success within our Plant Condition Management Software, PCMS, offering, which grew by 20.7% in 2025 and 25.2% for the full year versus the prior-year comparable period. This growth was driven by market demand, new customer adoption, and increasing the number of in-house implementations. This offering is a specialized industrial software platform with a high level of recurring revenue. This platform is a part of broader OneSuite asset protection software ecosystem, a cloud-based integrated platform that brings together our various software tools, data services, analytics into a single connected environment which helps to keep complex infrastructure safe, compliant, and operating effectively. We expect to enlarge our market share related to our data analytical solutions business as we expand our platform from its original compliance focus to its current risk-based inspection, which will ultimately transition to a more sophisticated predictive maintenance and AI-centric platform, reflecting our commitment to continued innovation in data-driven inspection. We are monitoring and driving this Data Services revenue growth by measuring several interrelated metrics, including sustaining a high year-over-year renewal rate, expanding the percentage of available applications utilized by each customer, and increasing our customer retention. We intend to prospectively report upon the growth rate of this business utilizing this and related metrics so that you can monitor our progress going forward. In addition to doing more for the existing customers in the oil and gas market, we are also winning projects with new customers, allowing us to diversify our business, which is the second priority within our strategic plan. Examples of successful end market diversification include two recent wins in bridge monitoring contracts in the U.S., where our innovative monitoring and data analytical capabilities set us apart. These projects helped to contribute to the growth in our infrastructure end market, which grew by $2.5 million, or 26.8%, in the quarter and $4.5 million, or 13.2%, for the full year. This growth, coupled with recently announced strategic hires, including a Vice President of Building and Infrastructure, further expands our capabilities and creates new opportunities across an exciting end market. Another example of executing on this second priority is our recent announcement in December 2025 of a win over a long-term construction project with Bechtel related to a new LNG terminal for Woodside, which is a multibillion-dollar LNG production and export facility under construction in Sulfur, Louisiana. This project is one of the most significant energy infrastructure developments in the world and represents a major investment in the U.S. Gulf Coast energy capacity. Additionally, we continue to pursue data center business. Our services provide integrated support throughout the data center life cycle, which is responding to high demand within this sector. Currently, we are performing projects with some of the largest data center owners with the ability to further scale our services throughout the entire life cycle of the data center projects. This is illustrated in our previously announced partnership with Bachelor and Kimball to deliver our suite of specialized inspection services to BBNK's data service center projects. Our overall diversification efforts, including targeted capital expenditures as well as additional strategic sales hires, have bolstered our growth in power generation, industrials, and infrastructure in the second half of the year. This diversified revenue growth demonstrates the success of our differentiated solutions and ability to deliver on customer expectations. The third priority of our strategic plan is focused on building operational leverage by doing what we do today but better through efficiency and productivity gains. We have invested in innovative proprietary technology to assist with digitalization of timekeeping and scheduling to more efficiently monitor the utilization of equipment and productivity of our technicians. In addition, we continue to strengthen our sales and business development teams, all of whom bring industry experience and fresh perspective to our business. In summary, we have executed on several planned actions and initiatives throughout 2025 which have produced favorable outcomes. We believe that this growth reflects the strength of our people, integrated offering, and continued focus on driving efficiencies across the business. I will share more thoughts on 2026 later, but let me now turn the call over to Ed for more details on fourth quarter results and the highlights of full year 2025. Edward J. Prajzner: Thank you, Natalia. Given some early successes of our strategic efforts, gross profit increased to nearly $205.0 million for the full year 2025, up 6.4% from $192.0 million for full year 2024, representing a gross profit margin of 28.4%, which was a 190 basis point improvement year over year, compared to 26.3% in the prior year. As noted in our press release yesterday, our results reflect certain overhead and personnel expenses have been reclassified from SG&A to cost of revenue. The effect of this for the fourth quarter 2024 was $5.5 million, and for the full year 2024 was $20.9 million reclassification from SG&A to cost of revenue. This redistribution of overhead and personnel expenses had no impact on operating income, net income, or adjusted EBITDA comparability. Selling, general, and administrative expenses were up $3.6 million in the fourth quarter compared to the prior-year comparable period, attributable to strategic investments to grow our business and unfavorable foreign translation conversion. SG&A for full year 2025 was $139.9 million as compared to $135.5 million in the prior year, an increase of $4.4 million, again due primarily to unfavorable foreign translation conversion in addition to strategic investments to grow our business. The selling component of SG&A, whereas general and administrative overhead spending has been and will continue to be tightly controlled. During the current fiscal year, we have revised our presentation of foreign currency losses and gains, which are now included within other expense and income line, net. Previously, such amounts were presented within selling, general, and administrative expenses. The prior year amounts have not been reclassified due to immateriality. This change in presentation had no effect on previously reported net income. GAAP income from operations in the fourth quarter 2025 was $10.4 million compared to $10.5 million in the prior-year period. GAAP income from operations for the full year improved to $40.6 million from $39.8 million in the prior year. Non-GAAP income from operations in the fourth quarter improved to $15.7 million from $14.3 million, an increase of nearly 10%. On a full year basis, non-GAAP income from operations improved to $55.0 million from $46.2 million, which is an increase of nearly 19%, or 130 basis points year over year. We recorded $12.6 million of reorganization and other costs for the full year 2025 and $4.8 million during the fourth quarter, related to our continuing initiatives to reduce and recalibrate overhead cost in addition to incremental cost of other related actions. Our effective income tax rate for the full year 2025 was 24.7% as compared to 22% for the prior year. We anticipate our effective income tax rate for 2026 to be in the mid-25% range. Interest expense was $3.7 million for the fourth quarter, down by $0.2 million from the prior-year period. For the full year 2025, interest expense was $14.6 million, down $2.5 million from the prior year. For the fourth quarter, we reported GAAP net income of $3.9 million, or $0.12 per diluted share. On a non-GAAP basis, we reported non-GAAP net income of $8.0 million, or $0.25 per diluted share, for the fourth quarter. This resulted in GAAP net income of $16.8 million, or $0.53 per diluted share, for the full year 2025, and non-GAAP net income of $28.1 million, or $0.88 per diluted share, for the year ended 12/31/2025. This compares to GAAP net income of $19.0 million, or $0.60 per diluted share, and non-GAAP net income of $22.7 million, or $0.72 per diluted share, in the prior-year period due primarily to incremental reorganization and other costs incurred in 2025. As committed in the third quarter, we delivered positive free cash flow in 2025. I am pleased to report that we generated $32.1 million of cash from operations and $24.6 million of free cash flow in 2025. This compares to $25.7 million of cash from operations and $20.8 million of free cash flow in the prior-year comparable period. For the full year 2025, we generated $33.0 million of cash from operations and $3.8 million of free cash flow, as compared to $50.1 million of cash from operations and $27.1 million of free cash flow in the prior-year period. While full year free cash flow declined versus last year, this was driven by three identifiable factors: elevated DSO during our ERP stabilization period, higher restructuring activity, and growth-related CapEx. Two of these three factors are already moderating, and we expect improved cash flow conversion as we move through 2026. We will build upon this cash improvement achieved in the fourth quarter and continue to prioritize improving our cash flow performance in 2026, specifically by leveraging a newly hired Vice President of Working Capital Management as well as by improving back office structure, tools, and accountability to accelerate the order-to-cash cycle and lowering accounts receivable. Our total accounts receivable balance was $154.7 million as of 12/31/2025, up $27.4 million as compared to $127.3 million as of 12/31/2024. This was due to the timing of working capital throughout the year. We are intently focused on reducing our accounts receivable balance below fiscal 2024 levels throughout 2026. In addition, increased restructuring charges of $7.0 million and incremental CapEx investments of $6.2 million year over year, which were anticipated as a part of our strategic plan, also adversely impacted our cash flow. Specifically, our CapEx in 2025 was $29.2 million as compared to $23.0 million in the prior year. This increased capital expenditure spending in 2025 was heavily focused on the selective expansion of lab capabilities and capacity, in addition to strategic equipment purchases focused on improving the safety and efficiency of our field operations. We anticipate maintaining CapEx at this higher level into 2026 to approximately 4.5% of revenue, but maintaining spending thereafter at our prior depreciation level. This will enable us to continue to expand and upgrade capacity, particularly at our in-lab aerospace and defense facilities which have been partially constrained by capacity. These investments are targeted towards areas where demand already exists. The primary return mechanism is improved utilization and throughput, which allows us to convert existing demand into revenue more efficiently rather than relying on speculative growth. Gross debt was $178.0 million at 12/31/2025 compared to $169.7 million at 12/31/2024, an increase of $8.3 million. Net debt was $150.0 million at 12/31/2025, compared to $151.3 million at 12/31/2024, a decrease of $1.3 million. Our bank-defined leverage ratio was approximately 2.5x at 12/31/2025, which is up versus approximately 2.3x as of 12/31/2024, yet is well within the maximum allowable leverage ratio of 3.75x. Our capital allocation strategy is to use residual free cash flow to pay down debt to a 2.0x leverage ratio while maintaining a temporarily elevated CapEx level. We will continue to emphasize debt reduction as our priority use of our residual free cash flow, and we are targeting a debt pay down of approximately $20.0 million in fiscal 2026 in addition to the significant pay down we made in 2025. This would result in a defined bank leverage ratio of approximately 2.0x by the end of fiscal 2026. In summary, this significant financial improvement reflects our proactive cost management, operational efficiency leverage, and focus on higher-margin businesses. And this success was attributable to a new and invigorated executive team reducing unprofitable business and being laser-focused on our strategic direction, all while building new capabilities and developing the culture to win. Let me now turn the call back over to Natalia for her to give us her outlook on 2026. Thank you, Ed. Natalia Shuman: Given that we have established the foundation for future success in 2025, we view 2026 as an opportunistic time to continue on a number of management imperatives towards executing on our strategic plan in order to position Mistras Group, Inc. to unlock its inherent value over the longer term. First, as Ed mentioned, we will be increasing capital expenditures from our historic five-year average of approximately 3% to 4.5% of revenue to expand and upgrade capacity and remove constraints for targeted growth. These investments will be primarily focused on our in-lab business serving the fast-growing aerospace and defense market. Scale is key for our customers within this market who demand integrated services and large capacities from their supply chain partners. Additionally, we will invest in CapEx related to innovative AI capabilities in our Data Solutions businesses. This will enable faster and more accurate analytics and insights for our customers. Our overall CapEx plan reflects confidence in our customer demand trends with compelling ROI expectations. Most importantly, these investments are targeted and sequenced. We do not view margin erosion, leverage creep, or negative free cash flow as acceptable trade-offs. Our intent is to protect the earnings base while expanding long-term earnings power. Secondly, we will be focused on our go-to-market strategy and invest in our sales-related technological and other initiatives. This investment will focus on advancing our effort in marketing and selling our leading proprietary technology and innovative data-centric solutions, such as ART crawlers and OneSuite digital applications, as a suite of data-centric services providing predictive solutions and strategic insight. By undertaking the strategic initiative and investing organically for long-term market-leading growth, we will leverage our competitive advantages and strengths to best position ourselves for success and future growth. Accordingly, for 2026, we anticipate full year revenue to be between $730 million to $750 million and adjusted EBITDA to be between $91 million to $93 million. While we are addressing both CapEx and targeted operating investments in 2026, we expect adjusted EBITDA margins to remain resilient, as we plan to maintain operational discipline and cost control. We also expect net income and EPS to exceed 2025 performance. Importantly, our 2026 outlook does not assume a macro acceleration or strong rebound in oil and gas activity or any contribution from acquisitions. I would now like our Executive Chairman of the Board, Manuel Stamatakis, to offer his remarks. Manuel Stamatakis: Thank you, Natalia, and good morning, everyone. I would like to offer you a brief board-level perspective as we look ahead. 2025 was a very good year for the company, particularly in strengthening our position in data-driven inspection, mission-critical testing, and aerospace and defense programs. I am pleased with the operational progress and the platform that management has built across these end markets. Particularly, I want to commend the meaningful strides we have made this year in significantly improving our executive team under the direction of our CEO. We strengthened leadership and sharper execution have materially improved our performance and strategic focus. As we enter 2026, the Board fully supports management's view that this will be an investment year focused on transforming and modernizing our platform. In our industry, long-term value is created by investing to meet demand within our end markets—in data integrity, digital inspection capabilities, specialized talent, and accreditation for higher-complexity aerospace and defense work. Such investments take time to translate into revenue and margin expansion, but they are essential to sustaining durable growth. Most importantly, the Board views 2026 as an acceleration of our strategy via increased investments and a deliberate step to deepen our technical differentiation and expand our relevance to customers operating in regulated, mission-critical environments. We are confident in the execution plan, the capital allocation priorities, and the long-term ambitions, particularly as risk-based inspection and aerospace and defense spending continue to evolve. I wanted investors to hear clearly that the Board views 2026 as a targeted year which will strengthen the foundation for future growth. I will now turn it back to Natalia for her to give you her closing thoughts. Natalia Shuman: Thank you, Manny. I will close by thanking all of our customers and partners who contributed to our superior results throughout 2025. And in particular, I would like to sincerely thank all of our Mistras Group, Inc. team members, from the front lines to the back office, for their tireless efforts in executing on their day-to-day tasks while embracing transformative change and the evolving strategy of our company. These efforts are creating value for our customers and, in turn, for our shareholders. We look forward to updating you on our performance as we progress further in 2026 towards our strategic goals. And with that, let me turn the call back to the operator for questions. Operator: Thank you. We will now begin Q&A. For today's session, we will be utilizing the raise hand feature. If you would like to ask a question, simply click on the raise hand button at the bottom of your screen. Once you have been called upon, please unmute yourself and begin to ask your question. Thank you. We will now pause for a moment to assemble the queue. Our first question comes from Mitchell Brad Pinheiro with Sturdivant & Co. Please unmute your line and ask your question. Mitchell Brad Pinheiro: Hi. Can you hear me? Okay, great. Good morning. So, hey, I—you know, a couple questions. So aerospace and defense, it is your—it had a great quarter, and it is obviously a big part of—it is your longer-term growth engine, I think you said. So I am curious, you also, in other remarks, you talked about good visibility. So I guess when you look at backlog of your customers, both in the space side and the aerospace side and then on the defense side, what kind of confidence do you have in that? Number two, from a capacity—you talked about expanding capacity. Is that at all revenue-limiting in 2026, or do you have plenty of capacity to do what you need to do? And then, you know, are you winning new business with these customers, and if so, how are you doing that in terms of capabilities? Or is it—you know, just curious how you are doing. Natalia Shuman: Yes, thank you. Thanks for this question. I will start with customers. Indeed, we do have very good close relationships with our customers. We meet with them in aerospace and defense—I am talking about—we meet with them monthly to evaluate their demands. We know what they—And as I mentioned before, for them, capacity matters. We also have established the hub-and-spoke model that allows us to use that platform at large for our customers. So regardless of their location, we are able to assist that. But, again, by expanding the capacity. When talking specifically about capacity and your questions whether we do have constraints, yes, we do have constraints, and that is exactly where we are going to invest—to remove those constraints, to then increase the utilization, increase the throughput, increase the productivity, and then sort of unlock the demand into really into the revenue. So that is essentially what we are doing in aerospace and defense. We have great visibility into demand, and these customers are—as you know, you know, in aerospace and defense, there is a strong demand for NDT, particularly NDT testing. And they do not have enough of in-house capabilities. So they are certainly looking for other suppliers who can support them and who can be large enough to support them. And, yes, we are winning new business, so we are celebrating adding a few new customers this year. And this is all thanks to our team that is there on the ground, and they are doing a really good job. Mitchell Brad Pinheiro: And then just one more question on aerospace and defense. In terms of capabilities, is this a target area for maybe a tuck-in acquisition? Do you have any plans for something like that, or are you looking at that? Or do you think you can sort of do it just through your own CapEx, your own internal investment? Look. Natalia Shuman: You are absolutely right. The growth and differentiation comes from the capabilities depth in that business specifically. So we have commented before that we are in-lab enlarging our offering. In addition to NDT tests, we now do welding, machining, repairs, cleaning, and so on. So that is quite critical for our customers. In terms of acquisitions, as you can imagine, it is very pricey—acquisitions—at this moment. Of course, we are always looking at our capital allocation strategy. But at this time, we believe that the highest return is organic expansion. And we believe that we are capable of building these capabilities and organically expanding our capacities. I can give you a good example. In, you know, Q4 demonstrated the—to respond on demand, we, in one lab, we added 100%—we—of headcount. Basically, we enlarged headcount, we removed that constraint, and we were able to generate an increase in revenue of 61%. Can we repeat it? Probably not to that extent, but we already see the ways how we can remove existing constraints to generate additional revenue. Mitchell Brad Pinheiro: Helpful. Thank you. And then, you know, I mean, with the—obviously, the disruption in the Middle East, I would love to hear your thoughts about how, you know, it may be affecting operations or how you—you know, how you view the first quarter. Is there any insight you could provide there would be helpful. Natalia Shuman: Yes, certainly. We have not seen a material direct impact. Our footprint in that region is very limited. But, of course, there is a lot of uncertainty, and we continue to monitor developments. Our customers are still evaluating, you know, what it means to them. Obviously, as you well know, if the oil price—as a result of these events—if oil price goes up, the upstream activities will be intensified within the U.S., and it will positively impact us. But at this time, it is too premature to say. Mitchell Brad Pinheiro: Okay. And then just one more question. So, you know, in terms of—obviously, oil and gas is the majority of your business at the moment, and the faster-growing segments, aerospace, the energy—you know, your power generation, I guess I could say—Infrastructure, they are going to be your focus or, obviously, you know, your growth focus, let us say. Could you talk about new customer wins, bid activity in those applications, in those segments? You know, what do you think the growth is going to come from—existing customers, a balance between existing customers and new customers? And also, if you could talk about, like, sort of the margin profile of these growth businesses as compared to, you know, say, your company average? Natalia Shuman: Yes. Thank you for this question. It is a very good one. It actually touches on two of our strategic priorities that we are intently focused on. One is to use oil and gas customers where we are expanding our offerings and services. And that is where, again, we believe very strongly that we are able to participate in oil and gas customers' digitalization effort, and by offering to them our data services and data analytics and AI tools, we are able to help them to be more efficient as they are looking at their performance. So there, we are talking about expanding that existing client base, or expanding the share of their wallet, and we are talking about expanding the margins. Right? We are intently focused on margin profile in our core markets of oil and gas. The second priority is the diversification, and those—like you mentioned—is infrastructure, power generation, where we again, we are winning new contracts. There, it is all about capabilities and all about building that go-to-market strategy. So while we are working on capabilities, while we are investing in that part, we are also looking at how to best competitively position ourselves. You know, again, a great example will be data centers. We have what it takes when it comes to data centers. It is the same services we already provide for our core client base like oil and gas. But here, we are using a new use case. So it takes a little time to get this going, but we already had wins. And margin profile, to answer your question, is higher because those services are in high demand at the moment, and the demand is very visible. So that allows us to, again, position ourselves competitively well and still generate a sufficient amount of margins. Mitchell Brad Pinheiro: And, by the way, just one more question. I am sorry. When you look at the revenue guidance for this year, you know, the difference between the low end of the range and the high end of the range is what? What type of—why would we be at the low end versus why would we be at the high end? Natalia Shuman: Good question. So basically, the reason is—so there is a couple of scenarios that we are looking at. Right? And our large share of our business is still in oil and gas. And so our customers, although they did already present themselves as—I would describe it—less pessimistic, but they are still quite cautious. So it is a large portion of our business. So depending on how oil and gas customers do this year would largely impact our performance. So we are quite confident when it comes to, you know, aerospace and defense. In power generation, we will generate a sufficient amount of growth there. But, again, it is a smaller share of our total revenue. And, therefore, we are dependent on the oil and gas market. We are making it—again, all this strategic plan is about to diversify as much as possible so we are less dependent. But at this time, this is our scenario where all depends how well we do in the oil and gas market. Mitchell Brad Pinheiro: Right. Well, thank you. That is all from me. Operator: Thank you. Our next question comes from John Franzreb with Sidoti & Co. Please unmute your line and ask your question. John Franzreb: Good morning, everyone, and thanks for taking the questions. I would like to start with the fourth quarter results, especially the improvement in the gross margin profile. I was wondering if you could quantify how much of that is pricing versus mix versus maybe exiting some of the unprofitable businesses. Can you kind of, you know, put a bandwidth around where the improvements came from? Natalia Shuman: Absolutely. I will start qualitatively, and then Ed will add if anything. So there are three distinct factors that influenced our performance in Q4. It is a favorable revenue mix, number one. Number two, it is improved pricing discipline. And number three is really the operating efficiency. So there is less impact of the unprofitable branches or laboratories closures, and we will talk about it. But let me unpack it a little bit. So, obviously, revenue mix comes with the expansion of the aerospace and defense, right? It is our laboratory business—contributed really well, as well as our Data Services. So, again, we saw great growth in PCMS due to multiple implementations. So that is revenue mix that contributed to higher gross margins. If I have to quantify—so let me touch on the pricing first. So pricing discipline—so we, as we already mentioned, in 2025 in the beginning, we had established very rigorous pricing programs, and now they are working really well. So the pricing discipline and, again, in Q4 when we had a surge in demand in aerospace and defense, we were able to apply that pricing discipline, and we had some expedited fees, and, in fact, it again had a positive impact on our gross margins. So if I have to quantify it, it is probably—think about it as 25% price and 75% volume, specifically in aerospace and defense. And then on operating efficiencies, right, it is—obviously, there is some restructuring impact, but it is minimal. It is around 1.5%. But it is not big. So it is really the effect of price and the mix. John Franzreb: Got it. And just maybe to reframe one of the previous questions, is there a way to call out how much of your aerospace and defense revenues are just in defense? Natalia Shuman: Just in defense, I probably would say—and we can follow up with you on that—I probably would say it is 70% aerospace commercial—commercial aerospace—and private space, and about 30% to 35% in defense. We have very—we have good presence in defense in International segment. And that is where we, you know, we see that increase—again, defense budgets going up. So it clearly benefits and creates positive impact. John Franzreb: Understood. And, Natalia, it seems to me like you are taking maybe a more cautious view to the oil and gas market in 2026 than you were, say, three months ago. Does that extend into the current upcoming turnaround season, or are you just looking at 2026 as a whole? Natalia Shuman: Couple of comments here. Let me start with turnarounds, right? So we had a good turnaround season in 2025. So whenever turnarounds happen, it is usually not every year, because customers have to extensively plan for turnarounds. So it is usually once in three years, once in two years. So this particular year, 2026, is not that robust when it comes to turnarounds. So that is number one. That certainly will have some impact. We still have quite good visibility into turnarounds for Q2 and Q3. But, certainly, this is something that we are still working on. Secondly, you know, if you look at oil and gas, again, what we hear from our customers, they actually do not spend as much on CapEx. They are projecting to be flat or somewhat down. What it means for us is they will maintain their maintenance budgets, right? So they want to get more life out of their assets, basically. And so that means that it should favorably impact us. So I do not foresee some negative impact in oil and gas by any means. I do see that we have a very good opportunity, and especially with our Data Services. But we have to be a bit, you know, cautious. Again, to me, I think it largely depends on, you know, on the spending of our oil and gas customers. John Franzreb: Understood. And I have got a bunch of more questions, but I will ask this last one to get back into queue. Regarding the CapEx increase to 4.5%, is that viewed as a one-time 2026 phenomenon? Or do you expect to be spending at an elevated level for maybe a couple years? Natalia Shuman: That is right. We anticipate CapEx to remain at elevated levels in 2026 and into 2027. But then we anticipate the intensity to moderate after that and kind of following the completion of our key initiatives that is driven by our strategic plan. So that is the outlook. And then we expect our CapEx to return to our historical depreciation levels after 2027 to about 3% of revenue. John Franzreb: Got it. Thanks for taking the questions. I will get back in the queue. Operator: Our next question comes from Gao Xi Sri with Singular Research. Please unmute your line and ask your question. Gao Xi Sri: Yeah. Hi. Can you hear me? Natalia Shuman: Yes. Hi. Gao Xi Sri: Good morning. Yeah, just a few questions from my side. Firstly, on the International, the profitability seems to have improved quite nicely. So just was wondering, are those gains concentrated in just a couple of standout contracts or countries? Or do you feel that you have made more systemic changes in pricing, cost structure, or customer mix that should make that improvement more sustainable in 2026 as well? Natalia Shuman: It is structural improvement. Just to answer your questions directly, we did—International had a good year, a very good year. We had overall 6% increase in our revenues and improved margin profile. So there, in International, we have quite a diversified platform. So, in fact, oil and gas was slightly down in International for the year. But we did have good increase in aerospace and defense. We had good increase in infrastructure. Good increase in power generation. So the International segment and the team in Europe and elsewhere did really, really well. So from margin profile, you know, we will invest slightly in our International facilities as well. So we will see some capacity enlargement and capacity constraints removal. So we would anticipate margins to be sustainable in the long run. Gao Xi Sri: Okay. And then secondly, on your largest strategic accounts, particularly in the oil and gas sector, how has your wallet share and contract duration trended over the last 12 to 18 months as you have shifted towards, you know, higher value, more integrated offerings? Are you seeing any change in competitive dynamics or insourcing there that would make the wallet share harder to hold in 2026? Natalia Shuman: I would not—and thank you for this question—I would not say it is harder to hold the wallet share. It is just we see more appetite from our customers to consider the—to consider digital platforms, to consider data analytics, data insights. So, and we see this as a very good opportunity for us to introduce the higher value work to them, right, that benefits them as they continue to execute capital discipline. Having said that, they are also increasing their risk-managing spending. So, again, to increase the efficiency, the operational excellence, the asset life extension. And so they have higher demands. All our strategic customers come to us to help them to create that digital data platform now, right? So there is much more appetite to look at these types of solutions, the integrated offering. So that is what we see particularly there. So it is not that it is harder to keep and retain the volume, but we are shifting away from the commoditized kind of just NDT services to more value-driven solutions where we are expanding our offerings to include data analytics, to include digital data, to include the platform—digital platform. And that is what we are essentially doing, expanding that services portfolio for our existing oil and gas customers. And, again, you know, from the bid activity, from our sales activity, we see that increased interest because, again, they are very much in tune with what they need to do in terms of the risk management when they expect more from their assets, right? Because, you know, there is more load, right, the bigger probability of failure. So they have to manage their risks. Gao Xi Sri: Okay. Understood. That is helpful. That is all from my side. Thank you. Natalia Shuman: Thank you. Thank you. Operator: Our next question comes from Alex Ragiel with Texas Capital Securities. Please unmute your line and ask your question. Alex Ragiel: Thank you very much. Very nice quarter. As it relates to the restructuring actions over kind of like the last twelve months or so, can you talk to or quantify the long-term cost savings and also address sort of any negative revenue headwinds that you could be facing in 2026 because of those. Edward J. Prajzner: Thanks, Alex. I will address that question. So, yeah, the restructuring was elevated in 2025 over 2024, as you saw. That $12.0 million—that is a combination of severance in there from headcount reductions. There are lease breaks in there and other strategic actions we have taken to really drive, you know, efficiencies and productivities. So there is a good payback on much of that. I mean, the facilities, the lab closures that we talked about throughout the year, you know, there is payback there. That is an uplift to the margins. You know, there was no contraction of business. There is not a negative revenue from those restructurings. We really, you know, are streamlining and driving for efficiency, more throughput. Natalia mentioned earlier, you know, getting another shift of operational effectiveness out of an existing site by really, you know, debottlenecking our own sort of self-induced capacity constraints. That is a big part of what restructuring is about, is really to have clean line of sight, delayering the organization to speed up, you know, decision making. So there are a lot of soft benefits as well there, but most of that cost is out. Again, some of the heads got replaced. That is not a direct one-for-one savings, but facilities is definitely a savings. And there were some one-time expenses here driving strategy and other things in restructuring in 2025. This number will moderate significantly in 2026, so that number will come back down. It was also, you know, a drag on our free cash flow a little bit. But we look for returns on the, you know, the restructuring expense that we booked here, and, you know, you will see that kind of reflecting itself in 2026. Alex Ragiel: And then as we look out longer term, can you help us to—or remind us what your sort of longer-term organic revenue growth and EBITDA margins could look like for this business that you are improving? Natalia Shuman: Yes. Thanks, Alex. So when we look at our strategic plan, we are looking at a CAGR of about 5% through 2030. And for margins, our aspirations are to reach 15% margins—EBITDA margin. That is the profile we are looking at. Alex Ragiel: Very helpful. Operator: Thank you very much. Thank you. At this time, I see no callers in the queue. I will hand the call back to Ms. Shuman for her closing remarks. Natalia Shuman: Thank you, Luke. And thank you, everyone, for joining this call today and for your continued interest in Mistras Group, Inc. I look forward to providing you with an update on our business, strategic plan, and progress achieved towards our ongoing initiatives on our next call. Thank you, everyone. Operator: This ends today’s conference call. You may disconnect at this time.
Operator: Good day, ladies and gentlemen, and welcome to the Miller Industries, Inc. Fourth Quarter 2025 Results Conference Call. Please note, this event is being recorded. And now at this time, I would like to turn the call over to William G. Miller at Miller Industries, Inc. Please go ahead, sir. William G. Miller: Good morning, everyone. And thank you for joining us for our fourth quarter and full year 2025 earnings call. I want to begin by thanking our employees around the world for dedication throughout the year. Our results and strategic progress reflect the commitment and passion of our team, our suppliers, our customers, and our shareholders. As always, our remarks today will include forward-looking statements. Actual results may differ materially. Please refer to our SEC filings and the Safe Harbor statement included in today's presentation. I would like to start with a brief overview before I hand the call over to Deborah L. Whitmire, who will review our results in greater detail. We were pleased to deliver a fourth quarter that led to generating full year revenue in line with our revised expectations despite a challenging industry environment. I am incredibly proud of the way our team rose to the challenge this year, focusing on operating discipline in the areas of the business within our control. We have over 1,500 employees across Tennessee, Pennsylvania, France, the United Kingdom, and Italy. And our footprint gives us unmatched reach, capability, and reliability. During the year, we made many difficult but necessary decisions to protect the long-term health of the business. These included strategically decreasing production in response to elevated field inventory in our North American distribution network, rightsizing our cost structure for the current environment, and strengthening our supply chain to mitigate the impacts of tariffs. We also achieved meaningful milestones, completing the acquisition of OMARS in an effort to expand our European footprint and take advantage of the strong demand we are seeing in the region, particularly for our heavy-duty products. More on that shortly. Our core philosophy remains exactly as it has been since day one. Miller Industries, Inc. has the best people, the best products, and the best distribution network in the towing and recovery industry. That philosophy is the backbone of Miller Industries, Inc.'s 35-year history and continues to position the company for future growth. I want to directly acknowledge our teams across the United States, Europe, and the United Kingdom, who delivered through a challenging market and delivered recalibration of production. Their execution enabled us to finish the year with momentum and enter 2026 from a position of strength. I will now turn the call over to Deborah L. Whitmire, who will provide an update on our financial results in more detail, before returning with some more specific thoughts on our markets in 2026, capital allocation priorities, and guidance. Deborah L. Whitmire: Thank you, Will. Before I begin, I would like to note that we closed the acquisition of OMARS on December 2, so our fourth quarter results only reflect approximately one month of contribution from OMARS. For the fourth quarter, revenue was $171,200,000, down 22.9% year-over-year as expected. This decline reflects our decision earlier in the year to reduce production and allow distributor inventories to return to historically normalized levels. Gross profit was $26,500,000, or 15.5% of sales, and diluted EPS was $0.29 per share. We saw sequential improvement in retail order activity late in the quarter, and that momentum has continued into 2026 consistent with our expectations. As a result, we have already begun to increase production levels at all the U.S. facilities to meet this demand. For the full year 2025, revenue was $790,300,000, down 37.2% from 2024. Gross profit was $120,400,000, or 15.2% of sales, and net income was $23,000,000, or $1.98 per diluted share. With distributor inventory now back to historical levels, we have greater visibility into retail demand and are operating with an improved production cadence. Our SG&A expenses increased on a year-over-year basis for both the fourth quarter and full year 2025 primarily due to one-time expenses related to the voluntary retirement program in the third and fourth quarter, and as we executed planned workforce transitions across the organization. Also, transaction and integration costs related to the OMARS acquisition, which represent an important investment in our European growth strategy, and higher stock compensation expenses to retain key leadership talent and further align the executive team to the interest of shareholders. These were all planned and strategic investments and expenses that advance our future growth strategy. Now I will turn the call back to William G. Miller to discuss our markets and our outlook for 2026. William G. Miller: Thank you, Debbie. In the domestic market, we now see normalized distributor inventory, steadier retail demand, and improved sales order entry. As we move into 2026, we expect production levels to rise methodically throughout Q1 and Q2 to match this demand recovery. Our export business remains a major, and the 2026 outlook is very encouraging. Three drivers stand out in particular: consistent European demand; growing demand in other international markets such as Australia, Japan, Mexico, Indonesia, and many others; and a robust pipeline of global military RFQs, which we will discuss further later in the presentation. These should provide a strong multiyear growth tailwind. In the acquisition of OMARS and our expansion of GEA, both will play large roles in this expected growth. Our integration of OMARS, Italy's premier towing equipment manufacturer, continues to progress extremely well. As we have previously shared, we expect our OMARS acquisition to be accretive in the first year. OMARS provides Miller Industries, Inc. with new sales, a stronger brand presence in Europe, and a strategic manufacturing and distribution hub in a key growth reach. OMARS is critical to our long-term growth in the European market. This acquisition should also increase U.S. production levels to supplement OMARS integration capacity and equip them with the necessary resources and scale to capitalize on the strong demand for their products. At Zuzain in France, our €8,000,000 expansion is on schedule and is anticipated to double their heavy-duty integration capacity. We are expected to complete the expansion project by mid-2027. Meanwhile, at Boniface in the United Kingdom, we are investing in production efficiencies to increase capacity and support the growing need for both light- and heavy-duty products. Demand in Europe remains strong, and to support this, our U.S. operations, especially Uttarwat, increased heavy-duty production capabilities. We will supply Xizhe, Boniface, and OMARS with reduced lead times, consistent quality, and increased production volumes. Earlier, I mentioned our robust pipeline of military RFQs. We began 2026 with more than $150,000,000 military, with production scheduled to begin in 2027, with the majority of revenue to be recognized in 2028 and 2029. We are also actively engaged in a substantial pipeline of additional military RFQs. This level of military activity is unprecedented for our company and represents a major long-term growth factor. To service future demand, we are beginning one of the most significant projects in our history: a 200,000-plus square foot addition to our Oodawa facility. This estimated $100,000,000 investment should unlock new capacity, streamline heavy-duty workflow, and enhance our manufacturing efficiencies. With more than $150,000,000 in military commitment secured and additional global RFQs underway, the new facility will be key to producing global, high-volume, defense-grade recovery vehicles as well as meeting increased demand for our global export markets while maintaining the ability to service our North American customer base. We anticipate the new facility will be production ready in late 2027. As we continue our strong cash generation, and debt continues to decline, we anticipate funding the majority of our expansion organically through operating cash flow over the next several years. We remain disciplined in how we allocate capital, focusing on five key priorities: paying a consistent quarterly dividend, which the Board of Directors increased 5% to $0.21 per share this quarter; debt reduction, which has been reduced to $20,000,000 in January 2026 through our diligent reduction in working capital; share repurchases, including $2,200,000 in 2025; selective M&A opportunities; and ongoing investments in automation, innovation, people, and capacity. We are extremely proud that we have paid our dividend for 61 consecutive, and in 2025, we returned approximately $15,100,000 to shareholders between our dividend and share repurchase program. This balanced approach strengthens the company while also returning value directly to shareholders. For 2026, we expect revenues between $850,000,000 and $900,000,000. We also expect that performance will accelerate into the second half of the year as manufacturing activity increases throughout the first and second quarters and product mix normalizes. We anticipate that revenue will approach $250,000,000 per quarter by the 2026. Additionally, as product mix shifts to a historical percentage of manufactured product and chassis, we would also expect gross margins to return to historical levels in the mid-13% range for the full year. We look forward to meeting with investors to speak about these exciting developments throughout 2026 at the Three Heart Advisors Conferences in New York, Chicago, and Dallas, at D.A. Davidson's Industrial Conference in Nashville, and additional non-deal roadshows to be scheduled. We always welcome continued dialogue with our shareholders. In closing, I want to emphasize that 2025 was a difficult year, and our team managed multiple challenges extremely well. We now enter 2026 with normalized distributor inventories, stronger retail demand visibility, a growing international platform, major military momentum, a significant expansion of our U.S. manufacturing footprint, and a strengthened balance sheet. We are exceptionally well positioned for long-term global growth, and I am proud of the work our team has done to get us here. As always, I would like to thank our employees, customers, suppliers, and shareholders for their ongoing support of Miller Industries, Inc. Thank you again for joining us. Operator, please open the line for questions. Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. You will hear a prompt that your hand has been raised. If you wish to decline from the polling process, please press star followed by the two. And if you are using a speakerphone, please select the handset before pressing any key. First question comes from Michael Shlisky at D.A. Davidson. Please go ahead. Michael Shlisky: Absolutely. Good morning, guys. So help me understand, yes. Hey, guys. So I guess I am, I guess I am trying to figure out the margin story first. I would just say that the gross margin expectation for 13% range is better than you have seen in the past for the mix that you are expecting. I am trying to make sure that the cost suggestions that you have undertaken are kind of having the desired effect. Or at least that we might see on the operating margin line an improvement when you consider your cost reductions, you know, now that they are behind you. Or is it better or worse than it has been in the past? It is what I am trying to figure out here. I believe they are normalizing. William G. Miller: I think our margins are better than they were pre-COVID levels in 2019, where we saw margins in the mid-12% to high-12%. But I think you will see that return back to, on an average year, if you look at 2023 and 2024, in those mid-13s, although we did have some fluctuations quarter to quarter due to chassis availability and timing of shipments of chassis. But I think over a year period, you are going to see them normalize back in the mid-13% range. Michael Shlisky: So the cost reductions that you have had, the people cost, etcetera, that you have done over the last 12 months, they have not had any impact on margins? Or I am just trying to figure out whether you are seeing a better margin profile. Maybe it is operating margin rather than gross. Do you feel you are going to get the benefit that you are expecting on the margin end from all those cost reductions? William G. Miller: Well, most of our people reduction was hourly employees that were focused on the reduction or lower levels of production. As we start to ramp back up, we will intentionally add some people back. We did have some retirements that will help on the SG&A level. However, some of those employees have also been replaced as we moved on, and we progressed to the had plans to replace them throughout the process. Michael Shlisky: Okay. That makes sense. I get it. That is totally fair, Will. And then the top line outlook, I think back a year, what happened back then, you know, we on our end were blindsided by some of the, you know, how fast tightened. I think some of that even surprised you in the swiftness of how the market changed and things that happened in 2024. So the outlook you have now for 2026 at this time of the year, do you feel like you have got a better sense of the confidence in this time around than you had this time last year? What has changed, etcetera, that makes you feel like you have got the $850,000,000? William G. Miller: I think our confidence level is higher this year. We saw an abrupt change and downward projections mid-year last year, and really a couple of things. We have utilized the technology that we have internal to be able to better analyze and project what our distribution needs and retail activity is going to be on an average basis. We have a lot more—we had the data, but actually putting it into a format to be able to project what we think future needs will be. Also, distribution inventory is back to, as we said, historical average levels. We are starting to see that order intake pick back up. And really what we are looking at is retail activity. Retail activity or retail demand from our distributors to the end users was consistent throughout all of 2025, and we see that consistency moving right back into 2026. So, really, what we are projecting is that we are just ramping back production to meet the average retail demand levels that we saw consistent through 2025 and into 2026 so far. Our confidence level is pretty high. Michael Shlisky: And so you would characterize the mix between the chassis-plus-tow sales and the tow-only kind of packages as more normalized in 2026 and in your current outlook? William G. Miller: Absolutely. Michael Shlisky: And does that mean that is 50/50 or some other kind of fraction? William G. Miller: No. It is not one-for-one, as you realize, that we do have distributors that provide their own chassis—what we call customer-supplied chassis. You also have municipalities that drive their own chassis along with all of our export product and our sales over in Europe. So it is not one-for-one, but it is returning to a normalized level. I mean, every tow body that we manufacture does have to have a chassis to create a tow truck, but that does not mean that we sell every chassis with the body. Michael Shlisky: Right. Okay. Just switching over to OMARS real quick. You have an outlook for accretion in 2026, if I am not mistaken. But it sounds like your description of it, Will, was more that OMARS is going to help in a lot of other ways, help your U.S. capacity, help your European business with some synergies and cross-selling and some cross, I guess, cross-manufacturing. Your comment that it was going to be accretive just based on, you know, just layering in the existing OMARS P&L, it is something that there is a lot more accretion that could happen once the synergies start to roll. Is that a verification? William G. Miller: Yes. It is more of a long-term play. Right? Currently, you are going to see their P&L drop in dollars, and we do believe that they will be accretive in year one. However, moving forward, we are now focused on, in our European facilities, what product we should build where and what is most successful. And also looking at purchasing throughout those three facilities and how to best purchase product. And then augmenting OMARS’ heavy-duty production, which they make a great heavy-duty product, but also giving them additional production capabilities in the United States so we can export to them to increase their sales capacity, similar to what we are doing with Xizhe, as both Xuzhou and Boniface currently use about 50% of their heavy-duty product manufactured in the United States that they sell in the European market. So we believe there is a significant level of synergies other than bringing on just their additional revenue to our organization. Not to mention they have an amazing state-of-the-art factory with some great capacity and capabilities as well. Michael Shlisky: Sounds great. I appreciate all the color. I will pass it along. Thank you. William G. Miller: Thank you, Mike. Operator: Thank you. We have no further questions. I will turn the call back over to William G. Miller for closing comments. William G. Miller: Thank you. I would like to thank you all again for joining us on the call today, and we look forward to speaking with you on our first quarter conference call. If you would like information on how to participate and ask questions on the call, please visit our Investor Relations website at millerind.com/investors, or email investor.relations@millerind.com. Thank you. May God bless you, and may God bless our troops. Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.
Operator: Good day, and thank you for standing by. Welcome to the fourth quarter and full year 2025 NCS Multistage Holdings, Inc. earnings conference call. At this time, participants are in a listen-only mode. After the speakers’ presentation, we will open up for questions. 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 call is being recorded. I would now like to hand it over to your speaker today, Corbin Woodhall, Hayden Investor Relations. Please go ahead. Corbin Woodhall: Thank you, Victor. I would like to welcome everyone to the conference call and thank NCS Multistage Holdings, Inc. management for hosting today’s call. Us on the call today are Mr. Ryan Hummer, CEO of NCS Multistage Holdings, Inc., and Mr. Mike Morrison, the CFO. I want to remind listeners that some of today’s comments include forward-looking statements, such as our financial guidance and comments regarding our future expectations for financial results and business operations. These statements are subject to many risks and uncertainties that could cause our actual results to differ materially from any other expectations expressed herein. Please refer to our most recent Annual Report on Form 10-K and our latest SEC filings for risk factors and cautions regarding forward-looking statements. Our comments today, as well as the results of operations included in our earnings release, contain the following non-GAAP financial measures: EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted EBITDA less share-based compensation, adjusted gross profit, adjusted gross margin, free cash flow, free cash flow less distributions to noncontrolling interest, net working capital, return on invested capital, net operating profit after tax, and average invested capital. These non-GAAP measures and reconciliations to the most comparable GAAP financial measures are provided in our quarterly earnings release, which can be found on our website at ncsmultistage.com. I will now turn the call over to Ryan Hummer. Ryan Hummer: Thank you, Corbin, and welcome to our investors, analysts, and employees who are joining our fourth quarter and full year 2025 earnings conference call. I will begin my discussion with the financial highlights for 2025, and I will review certain commercial and operational accomplishments from 2025 and early 2026 that are aligned with NCS Multistage Holdings, Inc.’s vision and core business strategies. I will also discuss the integration of ResMetrics, and outline our strategic objectives for the year. Mike will follow, covering the financial results for the quarter and our near-term guidance. 2025 was a very important and successful year for NCS Multistage Holdings, Inc. Strong performance in the fourth quarter capped a year in which we exceeded the high end of our guidance range for the quarter and full year, for revenue, adjusted EBITDA, and free cash flow. Year over year, we grew revenue by 13% compared to 2024, and 10% excluding the contribution from ResMetrics, which we acquired in July 2025. We achieved revenue growth in each of the U.S., Canada, and international markets despite the challenging industry environment. Adjusted EBITDA increased by 20% year over year, outpacing our revenue growth and reaching $26.7 million with an adjusted EBITDA margin of 15%. Free cash flow, after distributions to noncontrolling interest, totaled $18.9 million and represents over 70% adjusted EBITDA-to-free cash flow conversion, which highlights the impact of our asset-light model. We strengthened our balance sheet while completing the strategic acquisition of ResMetrics, enhancing our global position in the tracer diagnostics space. ResMetrics is a highly complementary addition to our business that I will discuss further. So starting with our strategy, our vision at NCS Multistage Holdings, Inc. is to advance more efficient, intelligent, and sustainable energy development by enabling unmatched well performance. In practice, we deploy this vision in pursuit of the approximately $10 billion global completions market through a cohesive product and service offering that is designed to enable our customers to reliably maximize the value of their unconventional assets. This applies across diverse markets, in the more mature markets in North America, in emerging, high-growth unconventional developments in Argentina and the Middle East, and in more conventional geographies like the North Sea and Alaska, where we are successfully deploying unconventional technologies and techniques, collaborating with our customers to open new markets for our products and services in technically demanding environments, including innovative solutions for heavy oil utilizing steam-assisted gravity drainage, or SAGD, for deepwater offshore markets, and for enhanced geothermal systems. We also continue to partner with our customers to pursue further applications of our products and services during the production phase of the well. As we have discussed before, we have three core strategies that are supported by two guiding principles. I will review each, including recent progress, to demonstrate how we are creating long-term value for our stakeholders. The first core strategy is to build upon our leading market positions. This includes our market share and relationships in Canada, our extensive global track record in fracturing systems, and our expertise in tracer diagnostics, which has been strengthened through our combination with ResMetrics. This strategy is evident when we partner with our customers to introduce our solutions in new markets, often based on our extensive track record and the partnership that we have built with our customers over time. An example includes the first use of our fracturing systems technology for stimulation in a SAGD project in Canada in 2025, which also utilized our tracer diagnostic services to corroborate production results. Another example is the first expected installation of our Raytec Propex sliding sleeve system with integrated screen technology that we expect to deliver to our customer later this year for use in the deepwater Gulf of America. A second core strategy is to capitalize on high-margin growth opportunities worldwide. Over the years, I have highlighted the growth of our customer base in the North Sea, which continues to expand. We have received orders from two new customers already this year, each operating in the Dutch sector of the North Sea. We completed our first well in the Middle East utilizing our fracturing systems technology in 2025 and expect further applications in that market in 2026. And we have made the first sales of Repeat Precision frac plugs in the Middle East in 2025 with continued sales to two customers in the region so far and continuing during 2026. Our final core strategy is to commercialize innovative solutions to complex customer challenges. This proved to be an effective and exciting year for us with several significant achievements. In Canada, we recently installed our first Terrus AICV system, which has an integrated autonomous inflow control valve to improve the production profile of more mature wells, reducing produced water volumes while allowing for potential increases in oil rates. We look forward to additional installations of this system during 2026. Customer adoption of our StageSaver solution at Repeat Precision has been a meaningful contributor to growth, with new customers added during 2025 and early 2026 reflecting the value that our customers place on the contingency mitigation offered by the product, paired with the proven performance of our Purple Seal frac plugs. We are capitalizing on our investments in new tracer diagnostic solutions, including our RapidTrace on-site tracer detection solution, our Luminate multi-day composite samplers, and expanded use of ResMetrics SmartProp particulate tracer into Canada and other geographies. I will now speak to the two guiding principles that underpin our long-term strategy. First, seek to maximize financial flexibility. Our business model reflects this strength, with a net cash position at year end of approximately $29 million and an undrawn revolver. During 2025, we generated $22 million in free cash flow, $19 million of which is free cash flow after distributions to our noncontrolling interest. This free cash flow after distributions constitutes over 70% of our adjusted EBITDA for the year, reflecting meaningful conversion, especially considering our 13% year-over-year revenue growth. Our second guiding principle is to uphold the promise. Our company values are embedded in the promise, which represents the commitments that we make as a company to our employees, customers, vendors, and other stakeholders related to how we conduct business. It also speaks to our focus in the areas of technology, quality, health, safety, and the environment. Now I will provide a brief update on the integration of ResMetrics. This combination immediately strengthened our tracer diagnostics platform, increased our exposure to new markets in the Middle East, and aligned well with NCS Multistage Holdings, Inc.’s culture and our capital-light business model. I am pleased to say that we are operating under the ResMetrics commercial brand in the U.S., having integrated our sales and business development team. We have also upgraded our laboratory information management systems to incorporate certain ResMetrics processes, allowing us to uniformly plan and execute jobs for our customers. Operational and manufacturing integration will soon follow, with manufacturing and U.S. lab operations to be centralized in Tulsa by midyear. We have a clear line of sight to achieve the cost savings that we identified with this transaction, and we are progressing to deliver on revenue synergy opportunities we originally characterized as upside potential from the combination. I will close this section by reviewing our goals for the year, which are straightforward and are aligned with our long-term strategy. In 2026, we aim to grow revenue in excess of underlying market activity in the U.S. and internationally, with an objective to grow total revenue relative to 2025 inclusive of a full-year contribution from ResMetrics. We are targeting the conversion of more than 50% of our adjusted EBITDA to free cash flow. We expect to advance commercial adoption of our recent and new technology introductions, drive further commercial success for our product and service offerings, and also continue to penetrate the newest markets that we have entered. We are working to continuously improve our employee engagement and to ensure workplace safety, and we expect to advance initiatives currently underway to participate in higher temperature and production markets, to drive better data-enabled decision-making, and to expand our gross margin by implementing strategic actions to drive our efficiencies and optimize the cost and performance of our products and services. Mike will now provide more detail for our results for 2025 and our guidance for 2026. Mike Morrison: Thank you, Ryan. As reported in yesterday’s earnings release, our fourth quarter revenues were $50.6 million, a 13% increase compared to the fourth quarter of last year, and comfortably above the high end of our guidance range. Growth for the quarter was driven by healthy double-digit percentage improvements in both product and services revenue. From a geographic standpoint, the U.S. led with a 69% year-over-year increase, with international up 5% and Canada down 7%. The increase in the U.S. was due to the improved NCS Multistage Holdings, Inc. fracturing system sales, higher plug revenue from Repeat Precision, and a $2.9 million contribution from ResMetrics, a business we acquired on July 31, 2025. The decline in Canada for the quarter reflected moderately lower activity levels due to a general market headwind. Our fourth quarter revenues were the highest of the year and sequentially increased by 9%, with increases in Canada and the U.S. partially offset by a decline for international. Our adjusted gross profit, defined as total revenues less total cost of sales, excluding depreciation and amortization expense, was $21.2 million in the fourth quarter, representing an adjusted gross margin of 42% compared to an adjusted gross margin of 43% for the same period in 2024. Despite the favorable contribution from ResMetrics, the slight decline in adjusted gross margin was attributable to the mix of international tracer diagnostic jobs and fracturing system service activity, positively offset by an expansion in gross margin for our product sales. Selling, general and administrative costs were $14.2 million for the fourth quarter, down 5% compared to the same period last year, reflecting the timing of incentive bonus accruals recorded in the fourth quarter last year, as well as lower professional fees and share-based compensation expense associated with our cash-settled awards, which we recognize as expense as our stock price changes. During the quarter, ResMetrics contributed $600,000 to our SG&A. The provision for litigation, net of recoveries, was a benefit of $900,000 and resulted from a 2025 ruling by the Federal Court of Appeal of Canada, which remanded a prior judgment against NCS Multistage Holdings, Inc. in a patent dispute to the trial court and reduced the cost award. Accordingly, $900,000 of the cost award was returned to NCS Multistage Holdings, Inc. in November 2025. Other income of $1.1 million declined from $2.4 million for 2024, driven primarily by timing of royalty income licenses associated with our intellectual property, with 2025 activity aligning with our expected normalized rate of approximately $1.0 million per quarter. Net income for the fourth quarter was $15.0 million, or diluted earnings per share of $5.34, which included a positive impact of $9.8 million related to the release of our deferred tax valuation allowance. This reversal demonstrates confidence in our continued profitability and our ability to fully utilize our deferred tax assets in the future. Adjusted EBITDA was $9.2 million, or an adjusted EBITDA margin of over 18%, which exceeds the high end of our quarterly guidance range and is above the $8.2 million for the fourth quarter last year. Now turning to our full year 2025 results. Our revenues were $183.6 million, an improvement of over $21 million, or 13%, compared to 2024, exceeding the 5% midpoint of our initial guidance range for the full year. Excluding the revenue contribution of ResMetrics, which totaled $5.2 million for the five months following the acquisition and was slightly above our expectations, revenue for the year increased by 10%. All regions delivered an increase in total revenue for the year. Our adjusted gross margin for fiscal 2025 was stable at 41%, a slight decline of approximately 40 basis points compared to last year. For 2025, our SG&A expense was $58.8 million, an increase of $1.0 million compared to last year. ResMetrics contributed $1.1 million of SG&A in 2025, while increased share-based compensation expense also drove higher SG&A expenses. However, these increases in SG&A were partially offset by lower professional service fees, R&D expenses, and other SG&A reductions. Other income declined to $4.8 million from $7.3 million in 2024, primarily driven by the timing of royalty income recognition we previously discussed. Also, the prior year benefited from a technical service agreement with our local partner in Oman that ended in November 2024. Net income for 2025 improved to $23.7 million, or diluted earnings per share of $8.65, which includes a net positive impact of $11.5 million related to the release of our U.S. and Canadian deferred tax valuation allowances, as previously discussed. In the prior year, net income was $6.6 million, or diluted earnings per share of $2.55. Adjusted EBITDA was $26.7 million, up 20% compared to $22.3 million in 2024, with an adjusted EBITDA margin expanding to 14.5%, up from 13.7%. Turning to the balance sheet. On December 31, we had $36.7 million in cash and total debt of $7.6 million, which consisted entirely of finance leases, resulting in a net positive cash position of $29.1 million. The borrowing base availability under our undrawn ABL facility was $24.4 million, resulting in total liquidity of approximately $61 million. Turning now to a few points of guidance for the 2026 first quarter. We currently expect first quarter total revenue in the range of $49 million to $53 million, implying an increase of 2% at the midpoint compared to 2025. We expect U.S. revenue to range from $19.5 million to $20.5 million, international revenue from $3 million to $4 million, and Canadian revenue from $26.5 million to $28.5 million. Adjusted gross margin is expected to be between 39% and 41%, a modest decline compared to 2025. Adjusted EBITDA is expected to be between $6.5 million and $8.5 million. Our first quarter depreciation and amortization expense is expected to be approximately $1.6 million. With that, I will hand it back over to Ryan, who will provide our full year 2026 guidance and closing remarks. Ryan Hummer: Thank you, Mike. We expect the market environment to be challenging again in 2026. Based on our current outlook, we expect flat to lower overall customer activity in North America for 2026 compared to 2025, and for customer activity to increase in the primary international markets that we serve, though the improvements are likely to be weighted towards the back half of the year, especially in the Middle East. Accordingly, our full year guidance for 2026 is as follows: We currently expect full year revenue to range from $184 million to $194 million and for full year adjusted EBITDA to be between $26 million and $29 million. We expect our revenue growth to come primarily from the U.S. and international markets, where we are well positioned to outperform underlying market trends through continued market share gains, particularly at Repeat Precision, and also through new product adoption and continued international expansion. We currently expect Canadian revenue to be lower year over year as we face some headwinds from a lower total rig count, especially in Q1, and from specific customer consolidation that is likely to result in reduced pro forma activity levels. Our financial guidance does not incorporate any meaningful additional impacts from the currently volatile trade environment, including the potential imposition of new or retaliatory tariffs involving the U.S., Canada, and Mexico. The guidance also does not reflect the potential impact of the current conflict in the Middle East, either on operations in the region or potentially resulting from a sustained increase in commodity prices. We expect our gross capital expenditures for 2026 to be between $1.5 million and $2.0 million. In addition, we paid $1.5 million of contingent consideration associated with the ResMetrics acquisition in January 2026, which will be reflected in cash flow from investing activities. We expect our free cash flow after distributions to our JV partner of $12 million to $16 million, further strengthening our robust balance sheet and positioning us to pursue strategic investment opportunities. Due to the seasonality of our business, and consistent with prior years, we would anticipate that the achievement of our annual adjusted EBITDA guidance range will be weighted towards the second half of the year, with free cash flow weighted towards the end of the year. Before Q&A, I will close with a few comments. I am very proud of what the team at NCS Multistage Holdings, Inc. accomplished in 2025. We grew revenue, adjusted EBITDA, and free cash flow in a challenging market environment, delivering the benefits that we expect as we executed our strategic plan. We have the infrastructure in place to support revenue growth. Over time, we would expect our incremental adjusted EBITDA margins to be 25% to 35%. We are benefiting from the successful introduction of new solutions that meet the needs of our customers, adding to our portfolio and expanding our addressable market. We are operating as a unified tracer diagnostics business with ResMetrics. We have completed the work required to realize most of the anticipated synergies of this combination, with more benefit to come as we consolidate our U.S. lab and manufacturing footprint and increasingly focus on revenue synergy opportunities. We maintain a strong balance sheet and liquidity position, with total liquidity, including availability under our revolver, of over $61 million. We are efficiently converting our adjusted EBITDA to free cash flow, with free cash flow after distributions to noncontrolling interest totaling $19 million in 2025, which constituted over 70% of adjusted EBITDA. We expect our free cash flow after distributions to noncontrolling interest to exceed 50% of adjusted EBITDA again for 2026. As of yesterday, the midpoint of our free cash flow guidance for 2026 would represent a free cash flow yield of approximately 132% to our market capitalization. Finally, we uploaded our new investor presentation yesterday, which touches on a few of the items I discussed earlier in the call: our efforts to open new addressable markets, the progress we are making on the areas of emphasis from our corporate strategy, and the actions that we are taking across our product lines to improve profitability. We also added a new slide highlighting our return on invested capital, which illustrates the significant improvement in our business over the past few years. While we continue to be focused on core metrics, including revenue and EBITDA growth, margin improvement, and free cash flow, I think it is important to keep in mind that we are competing for investment capital not only with our industry peers, but the broader market as well, and return on invested capital is an important indicator of a company’s ability to create value for its shareholders over time. I am proud of the progress we have made, achieving after-tax returns of over 11% in 2025, reflecting our disciplined capital allocation and the operating leverage inherent in our business as we grow. Over time, our objective is to continue to improve our returns, with a medium-term objective of 15%, which we believe to be highly competitive across industries. With that, we welcome any questions from the audience. Operator: Press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Please limit yourself to one question and one follow-up in the interest of time. We will now open for questions. Please stand by while we gather the candidate roster. One moment for our first question. Our first question will come from the line of Dave Storms from Stonegate. Your line is open. Dave Storms: Morning, and thank you for taking my questions. Ryan Hummer: Morning, Dave. Dave Storms: Just wanted to get started with the puts and takes on guidance. I know there is now a couple of quarters in a row you guys have telegraphed that a lot of your revenues this year are going to be weighted towards the back half. Is there potential for some of that to get moved up, or is a lot of maybe some of the Middle East stuff still in qualification phases that is pretty locked into Q3, Q4? Ryan Hummer: Yeah, Dave. I think you will see that profile continue. Right? Part of it has to do just with the seasonality of our business and our weighting to the Canadian market where, while Q1 is generally relatively strong, we see spring breakup in the second quarter and then more normalized activity in the second half of the year. Certainly, acquisition of ResMetrics, which is more U.S. and international focused, will help to mitigate that bit, as well as some of the market share gains that we have made with frac plugs in Canada, which tend to go to work that is more year-round. But I think we will continue to see that seasonality. I think as we look to certain specific opportunities, you know, for NCS Multistage Holdings, Inc., they are not just kind of market-driven. We do see a lot of the projects for 2026 developing such that we will see that pattern again with the majority of the earnings and the cash flow coming in the back half of the year. Dave Storms: Understood. That is very helpful. Thank you. And then I know you mentioned in your prepared remarks, you spent a little bit of time talking about some of the cross selling that you have been able to do specifically in Canada. Is it too early to talk about some cross selling potential in the Middle East with the ResMetrics, excuse me, with the ResMetrics transaction, or should we still wait on that until later in the year? Ryan Hummer: Yeah. So with ResMetrics internationally, we started to see some benefits. It is really more within North America, however. For example, I mentioned a product, a type of particulate tracer that ResMetrics has called SmartProp that was developed and utilized initially with their customers in the U.S., and we have now deployed that and have utilized it with some customers in Canada who really appreciate that technology. We are seeing, and what I would say is, kind of as you look to international markets, we are really looking at the combination of some of the new technologies that we have across that tracer diagnostic platform. One of those that is really applicable internationally is something called RapidTrace, and that is an on-site tracer detection capability for us. And that really brings value in remote markets where it might be hard to collect a sample and ship it to a lab and wait for that time to see results, but also where decisions that you make as you see that tracer result can enable a customer to take an asset off location and save significant dollars. So that is one of the things I think will help us in multiple international markets. The international work that ResMetrics has is really under long-term contracts. We mentioned they have work in the Emirates and in Kuwait. So those contracts, because they are multiyear, can certainly work to expand scope. We can also work to bring some of the best practices we identify across the organization. But as far as kind of revenue cross selling, that will take a little bit more to develop outside of North America. Dave Storms: That is great color. Thank you. I will get back in line. Operator: Thank you. Once again, that is 11 for questions. 11. One moment for any questions to queue up. Alright. One moment for our next question. We have a follow-up from Dave Storms from Stonegate. Your line is open. Dave Storms: Appreciate that. I did also want to ask maybe about what you are seeing in the North Sea. I know it tends to be pretty project by project. Maybe just any updates on the pipeline there as you continue to expand deepwater and some other unique capabilities. Ryan Hummer: Yeah. Thanks, Dave. Obviously, North Sea has been a great success story for us over the last several years, especially with our fracturing systems technology. I believe last year in 2025, we worked with, I believe it was seven customers across the North Sea, either having sold sleeves or, you know, complete completions work out on the platforms. And I mentioned earlier in the comments that, you know, we have orders in place to add two customers to that roster that are operating in, you know, the Dutch sector of the North Sea. So we are now, you know, working with customers in Norway, in the U.K., in the Netherlands. So, yeah, I think just the breadth of the customer base that we have developed speaks to kind of the product market fit that we have in that region and the results that customers are seeing utilizing that technology. And I think in a prior call, we might have mentioned, you know, a workshop that we held in Norway where we had great, you know, customer engagement and feedback for operators that were operating not just in Norway but across the entire region. So we feel, you know, really, really good about the work that we have in the North Sea. So as far as kind of how that might develop and play forward and, you know, that technology into other markets? You know, one of our North Sea customers is a project partner in the deepwater Gulf of America well that we expect to participate in later this year. So you have some connectivity there. There is also a customer that we have in the North Sea that we are talking to about other project opportunities in shallow water markets outside of the North Sea. So, you know, I would expect that to continue to develop over the course of the next year or two, but we certainly are looking to build on that success in shallow water offshore markets, taking that outside of the North Sea and then leveraging and moving into mid and deeper waters over time as well with our technology. Dave Storms: If I could just ask one follow-up on that. You mentioned the drill that you are expecting later this year in the Gulf of America. It is kind of a new market opportunity for you. How would you characterize maybe in the medium to long term some of your other new market opportunities that you might go after? Ryan Hummer: Yeah. No. Thanks for the question, Dave. And I think one of the things that came through in the prepared comments is the work that we have been doing to open up new addressable markets for our technology. So certainly, the deepwater is one, and that is a long, you know, a long sales cycle and product development cycle to get to it. So we feel really encouraged to be able to deploy that technology for the first time, hopefully, this year, and we believe that will open up additional opportunities with that customer, but then, you know, also opportunities for other customers that are targeting the same type of reserves going forward. The other areas where, you know, we have, you know, development initiatives in place, one is higher temperature more broadly. That does play into some deepwater markets. It is offshore in traditional oil and gas. It also plays into the thermal oil developments in Canada. I had mentioned SAGD. It also plays into enhanced geothermal systems, where customers are looking to leverage technology developed by the oil and gas industry, horizontal drilling, hydraulic fracturing, to access, you know, the heat in situ, you know, deep underground to provide baseload power that can be used to power data centers and other things. So I think, you know, the SAGD or the heavy oil market in Canada is one that we feel, you know, will open up some opportunities for us over the medium term. I think geothermal is one as well. Those are all relatively early days, will take time to scale, but good examples of what we are looking to do to participate in those markets. The other one is that, you know, historically, we focused primarily on supporting our customers during their completions. And within our fracturing systems portfolio, we do have an enhanced recovery suite of technology. You know, historically, that has been around what we would call injection control, so helping customers be more precise in the way they inject fluid, typically water, but in a waterflood or secondary recovery regime, when they are doing that with a horizontal injector, to being able to compartmentalize the well to create efficient sweeps and optimize the value of those waterfloods. We do have a development underway which is called TERIS AICV. I mentioned that earlier, which is more of a production control solution, which should help our customers to reduce the water cut that they are seeing in their wells, and, you know, handling produced water is an expense for our customers. So the deployment of the solution, we can help them reduce their production operating costs, but then also, through kind of preferentially producing through this specialized valve, preferentially producing the oil relative to the water, you may be able to see an oil production uplift as well. So if we can help our customers both improve their revenue profile and reduce their cost profile on existing assets, that is something that we think will have good application for our customers in the industry over time. And then, again, sort of speaking to one of your earlier questions on the ResMetrics integration and how that plays into some of this enhanced recovery and production space. Historically, we have been a little bit limited in our ability to pursue deploying tracers in waterflood projects. But with some of the new lab and chemical deployment techniques that, you know, we have been able to utilize from that ResMetrics brought to the table, that has opened up new opportunities for us in the production space on the waterflood, and our Canadian team in particular has been very successful this year going out and participating in projects that we probably were not as competitive in before without those capabilities. Dave Storms: That is great color. I really appreciate it. Thank you for taking my questions, and good luck in the quarter. Ryan Hummer: Alright. Appreciate it. Thanks, Dave. Operator: Thank you. Once again, that is 11 for questions. 11. And I am not showing any further questions in the queue. I would now like to turn it back over to Ryan Hummer, CEO, for closing remarks. Ryan Hummer: Thank you, Victor. On behalf of our management team and board, we would like to thank everyone on the call today, including our shareholders and analysts, and especially our employees. I truly appreciate the depth and breadth of the expertise of our people at NCS Multistage Holdings, Inc., at Repeat Precision, and the folks that have joined us from ResMetrics, and the passion and the effort that our people bring to their work. Our team continues to provide excellent service to our customers, commercializing new products and services that will enable our customers to be more successful. We are taking on demanding and technically challenging work and delivering results. We appreciate everyone’s interest in NCS Multistage Holdings, Inc. We look forward to speaking again on our next quarterly earnings call.
Operator: Good morning, and welcome to Ranger Energy Services, Inc. Fourth Quarter and Full Year 2025 Earnings Conference Call. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Joe Meath, Vice President, Finance. Please go ahead. Joe Meath: Good morning, and welcome to Ranger Energy Services, Inc. Fourth Quarter and Full Year 2025 Earnings Conference Call. Appreciate you joining us today. Before we begin, Ranger Energy Services, Inc. has issued a press release outlining our operational and financial performance. The press release and accompanying presentation materials are available in the Investor Relations section of our website at www.rangerenergy.com. Today's discussion may contain forward-looking statements about future business and financial expectations. Actual results may differ significantly from those projected in today's forward-looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the Securities and Exchange Commission. Except as required by law, we undertake no obligation to update our forward-looking statements. Further, please note that non-GAAP financial measures will be referenced during this call. A full reconciliation of GAAP to non-GAAP measurements is available in our latest quarterly earnings release and conference call presentation. Joining me today are Stuart Bodden, our Chief Executive Officer, and Melissa Cougle, our Chief Financial Officer. Stuart will begin with a strategic and operational overview outlining our accomplishments in 2025, and provide an outlook for Ranger Energy Services, Inc. for 2026. Melissa will then walk through a financial summary of the results for Ranger Energy Services, Inc.’s fourth quarter and fiscal year. Following their remarks, we will open the call for Q&A. With that, I will turn it over to Stuart. Stuart Bodden: Thanks, Joe, and good morning, everyone. I appreciate all of you joining us today to discuss our fourth quarter and full year 2025 results. I will spend some time walking through our operational performance during the quarter, highlight the strategic milestones we achieved in 2025, and then talk more broadly about the trajectory we see for the business as we move into 2026. Let me start with an overview of the year. We posted total company revenue of $547,000,000 with adjusted EBITDA of $73,200,000. I am pleased with how the organization executed throughout 2025, particularly against the backdrop of a market environment that required discipline, adaptability, and continued focus on operational performance. Across the board, our teams delivered consistent execution in the field, maintained strong alignment with customers, and supported the integration of new assets and capabilities that will position Ranger Energy Services, Inc. well for the long term. In the fourth quarter specifically, activity levels were generally consistent with our expectations. The market continued to reflect the same characteristics we have spoken about over the past several quarters: relatively stable demand, customers focused on high-quality service execution, and a continued emphasis on efficiency and cost management. Against that backdrop, Ranger Energy Services, Inc. continued to perform well. Our well service operations, wireline offerings, and ancillary services demonstrated solid utilization and maintained the margin profile we had built through disciplined pricing, cost control, and operational efficiency. Let me turn now to a few of the strategic initiatives that shaped the year. Starting with the American Well Services acquisition. We completed this transaction with a strategic intent to broaden our footprint, enhance scale, and strengthen our service offerings in the Permian Basin. I am pleased to report that the integration is progressing well. Our focus during the fourth quarter, and continuing into early 2026, has been on ensuring that the combined operations function cohesively, that our teams remain aligned with the expectations we established at the outset, and that our shared best practices are implemented efficiently. All of these areas have integration milestones that are on track and being achieved. The operational overlap continues to progress well, and we see nothing approximately 120 days into our combination that would derail our long-term synergy plans. We have maintained transparency with our teams and customers, and we have ensured continuity of service while beginning the process of capturing efficiencies that the combined platform enables. The AWS team has been collaborative, and their operational culture aligns well with Ranger Energy Services, Inc.’s emphasis on safety, efficiency, and reliability. The acquisition also strengthens our customer reach and enhances our competitive position. We are solidifying relationships with operators who value scale, responsiveness, and the ability to execute consistently. We continue to see opportunities to drive incremental value from this combination as we move through 2026, and we are encouraged by early results. The other strategic initiative that saw meaningful progress in 2025 was our ECO rig program, which has been one of the most exciting internal developments in our history. As many of you know, ECO represents a significant advancement in well technology—one that reduces emissions while also delivering greater overall control and safety on location. As we rolled out our first two ECO rigs in 2025, we continued to validate the platform's performance with customers, and the feedback has been very reassuring. As one example of the efficiencies of our ECO rigs, in the first 450 hours of deployment last year, one of our ECO rigs used less than 22 hours of generator power, with the balance coming from the onboard battery system being recharged through the regenerative capabilities of the rig. At the beginning of this year, we signed a contract for 15 ECO rigs to be built with a key operator in the Lower 48. This contract reflects a few important themes. First, customer interest remains strong. Operators are increasingly looking for ways to improve operational efficiency and safety on-site while also reducing emissions. ECO directly addresses those needs and provides a flexible platform that can work independently or leverage infield or coal power. Second, the platform is beginning to demonstrate real, measurable value. We have worked to quickly address any issues identified, and we are starting to quantify the operational efficiencies produced. The theme we continue to hear from operators is that the ECO platform is differentiated. We are still early in the broader adoption curve, but the pace is accelerating—faster than what we initially expected when we launched ECO. The pipeline of interest remains robust, and as customers gain more experience with this technology, we expect those conversations will continue to mature. ECO is one of the most meaningful strategic investments we have made as a company. We are excited about the momentum it continues to generate heading into 2026. Outside of the accomplishments on the growth side with AWS and ECO, our legacy core Ranger Energy Services, Inc. businesses have continued to perform well despite the headwinds that were present through most of 2025. Our high-spec rig fleet continued to benefit from operational consistency, steady workload, and disciplined labor management—areas that have long been strengths for Ranger Energy Services, Inc.—with holiday scheduling at year-end showing more resiliency than expected. Although our ancillary services segment performed well as a whole, the situation was more nuanced, with some service lines finding new growth avenues in the fourth quarter, while others contended with white space. Finally, our wireline services continued to navigate a challenged business environment in the fourth quarter. That said, we have seen recent signs of improvement and experienced a couple of key customer awards. We also maintained our commitment to capital discipline throughout the year and deployed capital in a balanced and deliberate manner, investing in opportunities that support our strategic goals while maintaining flexibility on the balance sheet. As Melissa will discuss in more detail later, our free cash flow generation allows us to both pursue growth opportunities and return meaningful capital to shareholders. In 2025, we used approximately $40,000,000 of our free cash flow towards the purchase of American Well Services, while also repurchasing nearly 1,000,000 of our own shares last year, which represents almost 5% of shares outstanding. This disciplined approach to capital deployment positions us well as we move into 2026, where we expect to continue generating healthy levels of cash while also supporting the rollout of our ECO fleet and completing the integration of AWS. Let me now touch briefly on the broader 2026 outlook. We expect the operating environment to remain generally stable and similar to 2025 from an activity level standpoint, making 2026 a year of execution and strategic evaluation. We will continue to integrate American Well Services, support our teams in the field, advance the rollout of the ECO platform, and explore opportunities to strengthen our service offerings where it aligns with our capabilities and our financial strategy. We will stay focused on the fundamentals: safety, efficiency, cost control, and customer service, and we will continue to make decisions that support long-term shareholder value. Despite expectations for a relatively flat 2026, there is reason to be excited about the future looking to 2027 and beyond. Our pro forma financial profile with the AWS acquisition gives us an annual EBITDA generation opportunity of more than $100,000,000 in 2026, with room far beyond in a supportive macro environment when commodity supply begins to tighten. By 2027, we expect to have 15 new ECO rigs operating in the Lower 48, and we believe more contracts for further rig deployments will be underway, providing for an ever more differentiated service offering with best-in-class assets. Over the next 18 to 24 months, we believe the U.S. onshore market will see activity improvement, and Ranger Energy Services, Inc. will be ready with high-quality assets to be deployed. Both oil and gas markets are seeing more incremental support than expected this year, even before geopolitical developments in the past seven days. Whether taking a near, medium, or long-term view, we will remain disciplined in our deployment of capital, ensuring long-term value creation. Before I hand things over to Melissa, I want to again thank the entire Ranger Energy Services, Inc. team for their hard work and commitment throughout 2025. The company delivered solid results through consistent execution, thoughtful decision-making, and strong discipline at every level of the organization. We have momentum entering 2026, and we are confident in our ability to continue building on that foundation. Our field personnel continue to be the heartbeat of this organization, and throughout 2025, our crews delivered safe, reliable, and efficient work for our customers in a variety of operating conditions. And our commitment is evident in the trust we continue to earn from operators across all service lines. As we have said before, Ranger Energy Services, Inc. differentiates itself through execution, and our teams continue to validate that every day. With that, I will turn the call over to Melissa to walk through our financial results. Melissa Cougle: Thanks, Stuart, and good morning, everyone. I will now take you through our financial results for the fourth quarter and full year 2025. Starting at the top line, revenue for the fourth quarter was $142,200,000, up from $128,900,000 in the third quarter and essentially flat with $143,100,000 reported in 2024. The sequential increase reflects higher activity in our High Specification Rigs and Processing Solutions and Ancillary Services segments brought about from a partial quarter of included AWS results. These increases were partially offset by continued softness in wireline. Breaking out the revenue by segment, High Spec Rigs generated $92,300,000 of revenue in the quarter, up meaningfully from $80,900,000 in the third quarter and up from $87,000,000 in 2024. Rig hours grew 16% sequentially to 128,500 hours in the quarter. Processing Solutions and Ancillary Services contributed $37,500,000 of revenue, representing a 22% sequential increase from Q3. This reflects both organic performance and the contribution of service lines acquired through the American Well Services transaction. Wireline Services revenue was $12,400,000, down from $17,200,000 in the third quarter and consistent with expectations given lower completed stage counts during the quarter. On the profitability side, net income for the fourth quarter was $3,200,000, or $0.14 per diluted share, compared to $1,200,000, or $0.05 per diluted share, in the prior quarter. Adjusted EBITDA for the quarter was $20,300,000, representing a 14.3% margin, compared to $16,800,000, or about 13%, in the third quarter and $21,900,000 in the fourth quarter of the prior year. The sequential improvement reflects stronger revenue and margins in our High Specification Rigs and Processing and Ancillary segments, partially offset by continued margin pressure in wireline. When looking to 2026, we did see heavy winter storm impact in January that will likely put our first quarter results largely in line with Q4, although early March activity levels give us confidence that our full year 2026 goals remain within reach. Turning to the full year, Ranger Energy Services, Inc. generated $546,900,000 of revenue compared to $571,100,000 in 2024. While modestly below last year, the result reflects consistent execution and a generally stable operating environment in our core business, with some softening in activity in specific service lines in wireline and ancillary segments. Full year adjusted EBITDA was $73,200,000, representing a 13.4% margin, compared to $78,900,000 and a 13.8% margin in 2024. From a segment perspective, full year financial results remain stable and aligned to the drivers we have outlined throughout the year. HSR continued to anchor our earnings profile with strong utilization and disciplined pricing. Processing and Ancillary delivered improved performance driven by the incremental contribution from the AWS acquisition. Wireline saw headwinds related to lower utilization and pricing and remains an opportunity set for Ranger Energy Services, Inc. in the future. Turning to CapEx, Ranger Energy Services, Inc. continues to invest capital in a disciplined and measured manner. Total capital expenditures for 2025 were $26,100,000, down from $34,100,000 in 2024. The year-over-year decrease reflects reduced growth spending, as 2024 included approximately $10,000,000 of growth-related CapEx. Growth capital in 2025 was deployed selectively and focused predominantly on the ECO rig deployments. We continue to employ the same rigorous return on capital screening for growth investments that have served us well for several years. Our full year 2026 pro forma financial profile of more than $100,000,000 of annual EBITDA remains supported with a highly disciplined approach to capital deployment. Maintenance CapEx is anticipated to be aligned with historical trends and run at approximately 4% to 5% of revenue. ECO CapEx will push that number higher this year, but recall that these contracts include provisions that include upfront CapEx in many cases that will result in deferred revenue and/or guaranteed hourly commitments in the future. We will call out specific ECO spend that is significant in future periods. Turning now to cash flow, which continues to be one of the most important elements of Ranger Energy Services, Inc.’s financial profile. For the full year 2025, cash provided by operating activities was $69,000,000 compared to $84,500,000 in 2024. The year-over-year decline reflects financial dynamics such as lower profitability in wireline, timing of working capital, and costs associated with integration activities. Free cash flow for the full year was $42,900,000, or $1.89 per share, compared to $50,400,000 in 2024. Our EBITDA-to-free-cash-flow conversion rate posted at nearly 60% for a third straight year in a row. This strong and consistent cash flow generation continues to be a hallmark of Ranger Energy Services, Inc.’s financial model and reflects disciplined operational execution and tight control over capital spending. In 2026, we expect that our free cash flow conversion rate will be closer to 50% as a consequence of the timing of ECO rig capital, and we will be transparent about those impacts and expectations as the year develops and as delivery and payment timing is more solidified. We also ended the year with $67,700,000 of total liquidity, consisting of $57,400,000 of availability on our revolving credit facility and $10,300,000 of cash on hand. We finished the year with $3,500,000 in outstanding borrowing. Ranger Energy Services, Inc. was able to optimize working capital through the end of the year and finish in an incredibly strong liquidity position. We do expect to see borrowings in the first quarter as we anticipate a working capital build as spring arrives and activity levels increase, coupled with typical labor costs unique to the first quarter. On the capital returns front, we take great pride in sharing that we returned over 40% of free cash flow to shareholders in 2025 through a combination of dividends and stock repurchases. During the year, we repurchased nearly 1,000,000 shares at an average price of $12.26, totaling $12,300,000. This capital return strategy continues to be an important part of our value creation framework and reflects our confidence in Ranger Energy Services, Inc.’s long-term cash generation capability. As we enter 2026, we remain focused on maintaining operational discipline, supporting the integration of AWS, pacing the deployment of our ECO fleet, and continuing our track record of consistent financial performance. With that, I will turn the call back over to Stuart. Stuart Bodden: Thanks, Melissa. As we close out the fourth quarter, I want to reflect on the progress we have made and the opportunities ahead. The acquisition of American Well Services is a clear example of our disciplined approach to growth. It is a transaction that enhances our scale, expands our service offerings, and strengthens our position. With AWS, we are not changing who we are. We are building on what we do best. Our integration plan is already in motion, and we are confident in our ability to execute. We have done this before, and we will do it again with measured urgency, precision, and a focus on creating value for our customers and shareholders. At the same time, our ECO Hybrid Electric Rig program continues to gain traction. These rigs represent the future of well servicing, and the AWS acquisition gives us a better platform upon which we can accelerate that future. We are committed to being the best well services provider in the Lower 48 on behalf of our customers, employees, and shareholders. Strong free cash flows and strong returns to investors remain our guiding principles, and we will continue to make our strategic decisions and allocate our capital with discipline and foresight. With our balance sheet in excellent shape, our integration playbook in action, and our technology roadmap expanding, I am more optimistic than ever about the next chapter for Ranger Energy Services, Inc. I want to thank our Ranger Energy Services, Inc. employees, customers, and shareholders for their partnership and commitment this past year. With that, operator, we will now open for questions. Operator: We will now begin the question-and-answer session. The first question comes from Don Crist with Johnson Rice. Please go ahead. Don Crist: Morning, guys. Hopefully, you all are doing well this morning. Stuart Bodden: Yeah. We are. Good morning, Don. How are you? Don Crist: I am doing well. My first question is surrounding the ECO buildout and the conversations you are having with customers there. Just an update on how those conversations with other operators are going and, as a second step to that, what is the capability of your partners? Do you have a lot of capability there to put a lot more orders on the books? Just any comments around that. Stuart Bodden: Yeah. Thanks for the question. Obviously, very excited about the contract that we signed earlier in the year. We are in a couple of pretty advanced conversations. I think what we found historically is sometimes it takes a while and then it happens really fast. But we are having really, you know, kind of very productive conversations. As far as manufacturing, we have been working with our vendor pretty closely and feel like we can expand manufacturing if needed. I would highlight these are refurbs, and so there are some things that we can do on our side to streamline the process and increase throughput. So we do not feel like manufacturing should be a bottleneck for us. There are some long lead time items that we are pretty mindful of, but other than that, again, we feel like we can respond to the market demand. Don Crist: That is reassuring. And I do not believe you mentioned it in your prepared remarks—I did want to touch on the plug and abandonment contract that you put in the press release. The comment about regulatory agencies, I do not know if you want to disclose who this contract is with, but if I remember correctly, this could probably expand your P&A fleet pretty significantly. Any comments around that? Stuart Bodden: Yeah. It is the Texas regulator, so it is public—you can look it up. What this is, Don, and I think one of the reasons we are excited about it and wanted to call it out in the script, is that these are for complex wells in particular. We really have been trying to position ourselves on some of the government P&A programs as a contractor of choice for some of the more complex P&As. And so that is really what this represents. And you are right. I think it is something that we think we have growth opportunity within this regulator and in other states as well. Don Crist: Okay. And how many rigs do you think that is going to occupy? I mean, if I remember correctly, it was low single digits that were kind of dedicated to P&A in the past. Any kind of metrics around that? Stuart Bodden: Yeah. It is still kind of three-ish, plus or minus depending on the program at the moment. But certainly, if we needed to ramp it up, we could. But it is kind of low single digits right now. That is right. Don Crist: Okay. And one for you, Melissa. As we kind of think about CapEx for the ECO rig program through the year, any kind of metrics around quarter-by-quarter dollar amounts that we could kind of put in the model? Melissa Cougle: So what I would say, Don—it is a very good question, that is part of my comments around it—we will let you know. A lot of it depends because there are progress milestone payments. You will see a little bit start to trickle in in the first half of the year, but the reality is most of that CapEx really starts to show up as we make milestones and we start to have deliveries month after month in the back half of the year. So I think we have got a long way to really organize how that flows. We have a model, but I also think we are too early in the build cycle to probably give hard guidance on that. That said, I think you will see light build in the first half of the year as just kind of some progress payments are made, but then it will really ramp up in the back half of the year. And just calling attention to the wording was pretty intentional when we said the conversion rate has deteriorated a bit this year on timing, because in some cases we have capital coming in from customers timed alongside this. So what you will see is—and I am just trying to get a sense of the complexity—you might see us lay out capital that ultimately ends up getting refunded to us further down the line too. But we will try to call that out each quarter to any degree it is material, which I suspect it will start to be material as well in 2026. Don Crist: But it is safe to say that you should still build cash through the quarters, even with this CapEx? Melissa Cougle: Yes. I think the one thing we were calling out, Don, is Q1. There are a few things going on in Q1—actually less so on the ECO side, more just to do with seasonality and working capital builds. So I think you will not see cash start to really come in until Q2, Q3, Q4. But our guide right now is closer to a 50% conversion rate for the year, and most of that will show up, as is typical, in the later quarters of the year and not in Q1. Don Crist: I appreciate the color. Thank you so much. I will turn it back. Melissa Cougle: Thanks for the question. Thanks, Don. Operator: The next question comes from Derek Podhaizer with Piper Sandler. Please go ahead. Derek Podhaizer: Good morning. Stuart Bodden: Good morning, Derek. Derek Podhaizer: Patrick is my cousin. Sticking on the ECO rig buildout, should we think about the 15 rigs plus the two rigs under operation as far as maybe like a percentage of your fleet? And then where could this go if you continue to execute on additional contracts? And then also, are these all incremental rigs to the fleet, or are you replacing some of your older legacy assets? Just maybe some color on that as well. Stuart Bodden: Yes. I will try to take it in pieces. Obviously, we have the two in the field and a contract for 15 to 17. Right now, once they are deployed, that would be a little less than 10% of the active fleet, which does include some rigs that are constantly in refurb, repaint, maintenance, etc. As far as the conversations, I think it is really hard to put a number on it, and the reason I say that is that based on the conversations we are having, there is a scenario where it could be the same number again, but I think probably it looks like the next contract would be for less than 10, most likely. So that gives you a sense. And then I think depending how the next 18 to 24 months go, we do think there is longer-term demand for this. Remind me of your second question, sorry, Derek. Derek Podhaizer: Just as far as incremental or replacement. Stuart Bodden: It is very customer dependent on that answer. I think for a lot of the ones that we are deploying right now, if there is not a change in the macro environment, they will do some replacement of existing rigs. I think what we had highlighted is that given who the customers are that are interested in ECO, the rigs that get displaced tend to be high-spec and very high-quality rigs, and so we are certainly thinking that they will find homes pretty quickly. That said, I think we want to be open and transparent that the first wave of ECO rigs will replace some of our existing rigs. Derek Podhaizer: Right. That makes sense. That is helpful. And then how should we think about the earnings power with the ECO rig buildout? Just looking at your margins right now in High Spec, you are in the low 20s to end the year. As we move over the next 18 to 24 months and these start to become a bigger part of your rig mix, where could those margins start going to when we also start thinking about integrating AWS, and now with the buildout of ECO, how should we think about the margin profile? Melissa Cougle: It is a good question, Derek, and I would tell you we are still working on how that can come together. Again, you have a little bit of timing. Each one of these contracts sort of looks and flavors itself out differently. So in some cases where you would have a contract that has more upfront capital, we will have deferred revenue, which actually turns into amortization. So you are not going to get—even though we are getting probably pulled-forward returns—it is not going to be as readily obvious in margins because it will be an amortization item as opposed to a current revenue item and collection item. On the inverse side, where we get more hardcore rate uplift over the like, you will see margin uplift. So it is going to be a little bit of a mix of both coming through the pipeline. On the AWS side, what we are seeing is the best of operating leverage and the worst of operating deleverage, because what we saw, for example, in December, where we had a lot of good activity in utilization, we saw real margin expansion in just one single month. That said, the winter storm in February hit us hard, and we had the opposite effect. So I think we are still trying to get a better cadence and flow. I think there is margin to be expected this year. I just think it is too early to tell you that it is 200 bps or 100 bps or 300 bps. It is probably not 5%, though, I would tell you that. Derek Podhaizer: Right. Right. Great. That is all helpful. Thank you. I will turn it back. Stuart Bodden: Thanks, Derek. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Stuart Bodden for any closing remarks. Stuart Bodden: Thank you, operator. Thank you, everyone, for joining. Thank you for your interest in Ranger Energy Services, Inc., and have a great day and a great rest of the week. Thank you. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Thank you for your continued patience. Your meeting will begin shortly. Press star-zero, and a member of our team will be happy to help you. Thank you for your continued patience. Your meeting will begin shortly. A team member will be happy to help you. Thank you. Good day, ladies and gentlemen, and welcome to the fourth quarter 2025 ACRES Commercial Realty Corp. earnings conference call. Currently, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session with instructions to follow at that time. If anyone requires assistance during the conference, please press the appropriate key. As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Kyle K. Brengel, Vice President, Operations. You may begin. Kyle K. Brengel: Good morning, and thank you for joining our call. I would like to highlight that we have posted the fourth quarter 2025 earnings presentation to our website. This presentation contains summary and detailed information about the quarterly results of the company. Before we begin, I want to remind everyone that certain statements made during this call are not based on historical information and may constitute forward-looking statements. When used in this conference call, the words “believes,” “anticipates,” “expects,” and similar expressions are intended to identify forward-looking statements. Although the company believes these forward-looking statements are based on reasonable assumptions, such statements are based on management's current expectations and beliefs and are subject to several trends, risks, and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. These risks and uncertainties are discussed in the company's reports filed with the SEC, including its reports on Form 8-K, 10-Q, and 10-K, and in particular, the risk factors of its Form 10-K. Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The company undertakes no obligation to update any of these forward-looking statements. Furthermore, certain non-GAAP financial measures may be discussed on this conference call. A presentation of this information is not intended to be considered in isolation as a substitute to the financial information presented in accordance with GAAP. Reconciliations of non-GAAP financial measures to the most comparable measures prepared in accordance with generally accepted accounting principles are contained in the earnings presentation for the past quarter. With me on the call today are Mark Steven Fogel, President and CEO; Andrew Dodd Fentress, Chairman of ACRES Commercial Realty Corp.; and Eldron C. Blackwell, ACRES Commercial Realty Corp.'s CFO. I will now turn the call over to Mark Steven Fogel. Mark Steven Fogel: Good morning, everyone, and thank you for joining our call. Today, I will provide an overview of our loan operations, real estate investments, and the health of the investment portfolio, while Eldron C. Blackwell, our CFO, will discuss the financial statements, liquidity condition, book value, and operating results for the fourth quarter 2025. Of course, we look forward to your questions at the end of our prepared remarks. The ACRES team remains focused on executing on our business strategy by investing in high-quality CRE loans, actively managing the portfolio, and growing earnings for our shareholders. In the fourth quarter 2025, we closed new commitments of $571,000,000, offset by loan payoffs and net unfunded commitments totaling $127,200,000, producing a net increase to the loan portfolio of $443,800,000. The weighted average spread on newly originated loans is 2.83%. New loan production in 2025 and in 2026 put us in a position to structure and price a new CRE securitization in January. On February 12, we closed ACRES 2026-FL4, a $1,000,000,000 deal that has leverage of 86.5% and a weighted average debt spread of 1.68%. The weighted average spread of the floating-rate loans in our $1,800,000,000 commercial real estate loan portfolio is now 3.35% over 1-month Term SOFR rates. The portfolio generally continues to perform, demonstrating sound and consistent underwriting and proactive asset management. The company ended the quarter with $1,800,000,000 of commercial real estate loans across 53 individual investments. At December 31, our weighted average risk rating was 2.7, a decrease from 3.0 at September 30, and the number of loans rated 4 or 5 was 10, down from 13 at the end of the third quarter. The portion of our CRE loan portfolio rated 4 or 5, based on the company's economic interest, was 17% at December 31, down from 32% at September 30. During the quarter, another 4-rated loan paid off at par, highlighting again that the vast majority of our 4- and 5-rated loans do not suffer principal losses. Looking back through our history, when ACRES assumed the management contract of ACRES Commercial Realty Corp. in 2020, the company had 23 loans with a par balance of $411,000,000, or 24% of the portfolio, risk-rated either 4 or 5. As of 12/31/2025, only two of those 4 or 5 loans remain unresolved in the portfolio. Our exceptional asset management team created sponsor-specific solutions to successfully resolve 21 of those loans, $368,000,000 of par value, recognizing a loss of only $4,800,000 on those resolutions, or just 1.3% of the par balance of those loans. We expect the same or better results on the remaining 4- or 5-rated assets in our portfolio as we work actively and strategically with our sponsors to create positive resolutions. The majority of these assets have manageable stabilized LTVs of 80% or less. To further highlight this point, as a firm since inception twelve years ago, ACRES has incurred minimal realized losses on almost $8,000,000,000 of invested capital. We are also excited to announce that we sold one of our REO assets collateralized by an office property in Austin, Texas, this quarter, which resulted in an earnings available for distribution, or EAD, gain of $1,300,000. During the quarter, we charged off a legacy $4,700,000 mezzanine loan that was originated prior to ACRES Management in 2018 and whose loss was fully reserved for and recognized in both GAAP and book value in 2022. We recognized the EAD impact this quarter in connection with settlement of that loan. We will now have ACRES Commercial Realty Corp.'s CFO, Eldron C. Blackwell, discuss the financial statements and operating results during the fourth quarter. Eldron C. Blackwell: Thank you, and good morning, everyone. GAAP net loss allocable to common shares in the fourth quarter was $3,000,000, or $0.43 per share. GAAP net loss for the quarter included $10,700,000 in net interest income, which was an increase of $2,300,000 over the prior quarter. This increase in net interest income was driven by net loan originations of $443,800,000 and corresponding facility draws during the quarter. GAAP net loss for the quarter also included a $3,000,000 net increase; the performance of our net real estate operations to net income of $156,000; and a $1,500,000 net loss on the sale of the previously mentioned office property in Austin, Texas. We saw a decrease in current expected credit losses, or CECL, reserves of $1,300,000, or $0.19 per share, as compared to a decrease in CECL reserves during the third quarter of $4,000,000, which was primarily driven by loan payoffs and net improvements in the model credit risk of our CRE portfolio, offset by a general decline in projected macroeconomic factors during the quarter. Also, as previously mentioned, ACRES Commercial Realty Corp. recorded a charge-off of $4,700,000 on a mezzanine loan that was fully reserved for in 2022. The total allowance for credit losses at December 31 was $20,400,000 and represented 1.11%, or 111 basis points, on our $1,800,000,000 loan portfolio at par, and was composed entirely of general credit reserves. Excluding the loss from the mezzanine loan that was fully reserved for in 2022, EAD for the fourth quarter 2025 was $0.20 per share. When the mezzanine loan is included, the company reported an EAD loss of $0.48 per share as compared to earnings of $1.01 per share for the third quarter. Book value per share was $30.01 on December 31 versus $29.63 on September 30. Additionally, during the quarter, we used $10,000,000 to repurchase 493,000 common shares at an approximate 33% discount to book value at December 31. In December 2025, the authorized amount was fully utilized, and since November 2020, the company has repurchased 5,300,000 shares at an average discount to book value of 49%. Available liquidity at December 31 was $108,000,000, which comprised $84,000,000 of unrestricted cash and $24,000,000 of projected financing available on unlevered assets. Our GAAP debt-to-equity leverage ratio increased to 2.8x at December 31 from 2.7x at September 30 from net originations on our CRE loan portfolio. At the end of the fourth quarter 2025, the company's net operating loss carryforward was $32,100,000, or approximately $4.89 per share. With that, I will now turn the call to Andrew Dodd Fentress for closing remarks. Andrew Dodd Fentress: Thank you, Eldron. We are pleased with continued execution of our plan to drive shareholder value. In the fourth quarter, we originated $571,000,000 of new loans, we repurchased shares at accretive levels, sold an REO asset, improved the credit quality of the portfolio, and positioned the company to resume paying a dividend to common shareholders. Mark Steven Fogel: Since assuming the role of manager in July 2020, ACRES Commercial Realty Corp. book value has increased a total of 66%. Andrew Dodd Fentress: All the team here at ACRES is energized by the opportunity that we see in front of us, both in the asset class and the competitive landscape. We will continue to deploy capital through careful underwriting, and then manage each investment to the optimal outcome for shareholders. We greatly appreciate your continued support and investment in ACRES Commercial Realty Corp., and we look forward to your questions. This concludes our opening remarks. I will now turn the call back to the operator for questions. Operator: Thank you. Press star-one on your keypad. To leave the queue at any time, press 2. Once again, that is star-one to ask a question. We will pause for just a moment to allow everyone a chance to join the queue. Our first question comes from Matthew Erdner with JonesTrading. Please go ahead. Your line is now open. Matthew Erdner: You touched a little bit more on the loans that you guys completed this quarter. It is a really impressive number in terms of net loan growth. I heard you mention the 2.83% spread there, but could you give any additional kind of color on that? And then, as well, what the current pipeline looks like? Mark Steven Fogel: Sure, Matt. This is Mark. The color on that portfolio is it was mostly multifamily-type execution. The average loan size was probably about $40,000,000 to $50,000,000. Spreads range between 2.50% and 3.25%, and we purposely focused our origination effort on multifamily this quarter and the next quarter in that we were in the process of looking to execute a new CLO, and CLO execution was extremely dependent on a significant amount of multifamily. On the bright side, our CLO execution includes reinvestment opportunity to do up to 40% of our assets outside of multifamily. Matthew Erdner: Got it. And then how long is that reinvestment period? Is it 24 months? Mark Steven Fogel: Thirty months. Matthew Erdner: Got it. Awesome. And then, with the additional kind of equity investments—page 11 of the deck—what is your plan for that? Would we, or should we, expect an exit from any of those assets as we go through the year? Mark Steven Fogel: I think on one of them right now, you can expect an exit at one of the smaller land deals that we have. We are actually under LOI right now to sell that asset. One of the other assets is out on the market right now. We expect that we will get some offers during the year, and we will make a decision based on where those offers come in. Matthew Erdner: Got it. That is helpful. And then last one for me, I just noticed something on the balance sheet. Non-controlling interest jumped up to about $130,000,000, call it, from about $1,000,000. I was just curious what that was. Andrew Dodd Fentress: Sure. This is Andrew. The company sold a position, or a portion, of its previously issued financing arrangement with JPMorgan, and so that interest is recorded as an NCI. Matthew Erdner: Got it. That is helpful. Thank you, guys. Operator: Thank you. We will now move on to Christopher Muller with Citizens Capital Markets. Your line is now open. Christopher Muller: Hey, guys. Thanks for taking the questions. Nice to see originations come in really strong, and based on your illustrative earnings slide, it looks like there is some, at least, ability to grow the portfolio and push leverage a little bit. Could we see this pace of deployment we saw in the fourth quarter in the near term, or was that mostly due to the CLO execution in January? Mark Steven Fogel: No, Chris. We expect we will see a decent amount of additional deployment. A significant amount of it occurred in 2026. We are projecting net growth in the portfolio of $500,000,000 to $700,000,000 in 2026. Christopher Muller: Got it. That is great to hear. And, I guess turning gears a little bit, I believe the capital loss carryforwards expired at the end of the year. So thinking about potential upside to book value, would any future gains on REO be fully taxed going forward, or are there any other offsets that would apply? Eldron C. Blackwell: Hey. This is Eldron. No. We—well, let me start with—we still have remaining NOLs to reach $2,100,000 at the QRS, so that is available to us. That is a when, not an if. But as long as we continue to have depreciation and some of our normal operating expenses, I do not expect in the future that any gains on those capital items would be taxable. Christopher Muller: Got it. That is helpful. Eldron C. Blackwell: Yeah. We also have NOLs in our TRS, so any activity down there is also protected. Christopher Muller: Got it. Got it. So there is still a little bit that will flow through. I guess just a quick clarifying one. The $3,400,000 of realized losses on core activities, was that just the mezzanine loan write-off that you guys talked about, or is there something else in there? Mark Steven Fogel: That was a big chunk of it. We recorded a $4,700,000 EAD loss attributable to this mezzanine loan that we inherited as part of our taking control of the REIT and recorded a specific reserve for that back in 2022. Christopher Muller: And the specific, or the CECL, reserve release in the quarter, that was a specific reserve release related to this asset. Is that right? Eldron C. Blackwell: Part of it was a specific reserve, the $4,700,000. The other $1,300,000 was just improvement in net credit of the portfolio on our general reserves. Christopher Muller: Got it. Got it. Got it. I appreciate you guys taking the questions today, and great to see the capital deployment picking up. Mark Steven Fogel: Thanks, Chris. Operator: And once again, if you would like to ask a question, please press star-one on your keypad now. Thank you. We will move on to Gabe Poggi with Raymond James. Your line is now open. Gabe Poggi: Hey, good morning, and thanks for taking the questions. I have got a couple. For year-to-date originations, has there been any change in spreads? Has there been any mix shift away from multifamily? Just anything you could provide there would be helpful. Pardon me. Mark Steven Fogel: In 2026, originations to date have mostly been multifamily. As said, we were geared towards ramping up for our CLO. Spreads overall in that portfolio are about 2.83%. We are seeing spreads come down on the multifamily side, for sure, across the board. But as I said, we are looking at other asset classes for reinvestment activity and, going forward, you will see a different type of mix within our portfolio. We are pretty heavily weighted towards multifamily right now and would expect that some of that will start to fall off over the course of 2026. Gabe Poggi: Got it. So is the goal there to kind of maintain that 2.83% spread while mixing out to other asset classes, or are you content to kind of have asset yields bleed a little bit lower just because of the competitive nature of the market? Mark Steven Fogel: No. Our intent is to be above and beyond 2.83%. There are certainly a lot of opportunities in other asset classes where spreads are better. There is more risk-reward opportunity in self-storage and office and retail. Historically, our portfolio has been only 60% to 65% multifamily, and that is where we expect it to get back to. Gabe Poggi: Okay. Thanks for that. Question on repayments in 2026. You have got about $400,000,000 update there. Obviously, the CECL reserve has come down. Do you expect just a normal cadence of repay activity for 2026? Anything in there that we should be aware of? Mark Steven Fogel: No. We expect that repayments in 2026 will be—we are projecting about $500,000,000 of repayments in 2026, mostly older vintage assets. And importantly, what that does for us, if you mix in new originations in 2026, is it brings down our older vintage, call it 2023 and older-type assets, down to about only 15% of the portfolio. Gabe Poggi: Thank you for that. And one more, and this is kind of a high-level question. But as you guys think about ramping the portfolio—right, in Slide 14 in the deck—and taking total leverage to three and a half, because of the capital structure and prefs versus common, you tilt more to a higher leverage ratio on the common level. Where is the comfort level as you think about leverage to the common? Where do you want to max out there in that ramp? I see the current state, the mid, and then the full tilt, but just how do you think about that in the bigger macro environment—where the comfort level is leveraged to the common equity? Thank you. Andrew Dodd Fentress: Yeah, Gabe. It is Andrew. I think what we show is we are inside of our comfort level at that—inside of four turns. And I do not think you will see us go above that. Gabe Poggi: Got it. So inside of four on total, my words, leverageable capital, which then could push the leverage on the common higher, but total leverageable capital inside of four. Andrew Dodd Fentress: Correct. Gabe Poggi: Okay. Helpful. Thank you, guys. Operator: At this time, there are no further questions in queue. I will now turn the meeting back to our presenters. Andrew Dodd Fentress: Thank you, everyone. We appreciate your support, and we look forward to reconnecting with all of you in the coming weeks. If you have any questions, please reach out to myself or Eldron. Have a great day. Operator: Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.
Operator: Good morning, and welcome to the Park-Ohio Holdings Corp. Fourth Quarter and Full Year 2025 Results Conference Call. At this time, all participants are in a listen-only mode. After the presentation, the company will conduct a question-and-answer session. Today's conference is also being recorded. If you have any objections, you may disconnect at this time. Before we get started, I want to remind everyone that certain statements made on today's call may be forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected. A list of relevant risks and uncertainties may be found in the earnings release as well as in the company's 2024 10-K, which was filed on March 6, 2025, with the SEC. Additionally, the company may discuss adjusted EPS, adjusted operating income, and EBITDA as defined on a continuing operations or consolidated basis. These metrics are not measures of performance under generally accepted accounting principles. For reconciliation of EPS to adjusted EPS, operating income to adjusted operating income, and net income attributable to Park-Ohio Holdings Corp. common shareholders to EBITDA as defined, please refer to the company's recent earnings release. I will now turn the conference over to Mr. Matthew V. Crawford, Chairman, President, and CEO. Please proceed, Mr. Crawford. Matthew V. Crawford: Great. Thank you, Daryl, and welcome, everyone, to our end of 2025 fourth quarter conference call. I am very proud of our Park-Ohio Holdings Corp. team throughout 2025 and especially during the fourth quarter. Strong cost management combined with the benefit of improved productivity in key locations offset demand volatility in many industrial end markets, caused by tariffs and general economic uncertainty. This uncertainty also delayed new business launches throughout the year and some new business awards in a few cases. Also during the fourth quarter, we made cash management a priority and met our debt reduction goal of $40,000,000. Most importantly, though, we focused on our long-term goals regarding asset allocation, durable growth, and deleveraging. Regarding asset allocation, we continue to invest above our maintenance capital levels as we improve productivity and lower our cost to serve through automation, information technology, and vertical integration. While we continue this journey through 2026 and beyond, we are beginning to see the positive impacts on new business and improved profit flow-through. Our growth capital investment, which represented more than a third of our total capital expense, will not only underpin our significant growth in 2026, but is also targeted in products and services where we have above-average margins and a sustainable competitive advantage. Lastly, while we are still above our target— Patrick W. Fogarty: We have some music— Matthew V. Crawford: —there, Daryl. Are we okay, or did everyone hear that last sentence? Operator: You are okay. I apologize for the technical difficulties. Matthew V. Crawford: Okay. I am going to reread the last couple sentences just in case. I will read the last paragraph. I apologize if anyone heard music there for a few seconds. Most importantly, we focused on our long-term goals regarding asset allocation, durable growth, and deleveraging. Regarding asset allocation, we continue to invest above our maintenance capital levels as we improve productivity and lower our cost to serve, through automation, information technology, and vertical integration. While we continue this journey through 2026 and beyond, we are beginning to see the positive impacts on new business and improved profit flow-through. Our growth capital investment, which represented more than a third of our total capital expense, will not only underpin our significant growth in 2026, but is also targeted in products and services where we have above-average margins and a sustainable competitive advantage. Lastly, while we are still above our target net debt leverage ratio, our cash performance in the fourth quarter and the investment we have made toward 2026 growth, including additional working capital, should put us in a good position to take a step forward in this area. So we start 2026 extremely excited to be rewarded with above-average growth, and with solid incremental operating leverage in all profitability metrics. Thank you for your support, and thank you to all of our outstanding partners in our business. Now over to Pat to cover the quarter results. Patrick W. Fogarty: Thank you, Matt, and good morning. Overall, we are pleased with our accomplishments in 2025, many of which will support future sales growth and drive improved operating margin and free cash flow. Our accomplishments during the year included the following. First, we refinanced our $350,000,000 senior notes with new senior secured notes maturing in 2030. In addition, we amended our revolving credit agreement to extend the maturity date by five years. Refinancing completed during 2025 provides us with the capital structure to support our sales growth and investment in future years. Second, we invested $12,000,000 in information technology during the year and began the implementation of new ERP systems in Supply Technologies and in our Industrial Equipment Group. We expect significant benefits from these investments, including lower working capital levels, lower operating costs, and improved information flow to and from our supply base and our customers. In Supply Technologies, we broke ground on a new state-of-the-art North American distribution center which will be operational this year. This important investment will significantly improve how we service our customers and provide best-in-class warehouse operations with lower costs, lower working capital, automated sorting and kitting, and additional value-added services to support our customer. Also, in our fastener manufacturing business, we invested in automation equipment to improve plant floor productivity and operating margins in several locations. Our capital investments in this business are focused on increasing production capacity to meet the strong demand for our self-piercing and clinch products. In Assembly Components, we won new business during the year, rolling over $40,000,000 of incremental annual sales which will launch in the second half of this year and continue through 2027. We also implemented product price increases as well as plant floor improvements to increase profitability in 2026. And finally, in our industrial equipment business, we achieved record annual bookings totaling $217,000,000, including a record $47,000,000 reduction heating order placed by a leading steel producer. As a result, our backlogs were $180,000,000 at December 31, an increase of 24% over the prior year levels. Patrick W. Fogarty: Before I discuss our fourth quarter and full-year results, I want to comment on our 2026 guidance. As outlined in our press release, we expect consolidated revenues to grow to $1,675,000,000 to $1,710,000,000, an increase of 5% to 7% over 2025 consolidated revenues, driven by sales growth in each business segment. We expect adjusted earnings per share to increase to $2.90 to $3.20 per diluted share, an increase of 7% to 19% year over year. EBITDA, as defined, to range from 8% to 9% of net sales and we expect full-year free cash flow to range from $20,000,000 to $30,000,000. In our Supply Technologies segment, demand in power sports, industrial equipment, and heavy-duty truck end markets are expected to recover from low production levels in 2025, and we expect continued sales growth from electrical distribution customers supporting the AI data center expansion and continued strong growth from semiconductor, aerospace, defense, and agriculture end markets. Also, our fastener manufacturing business will continue to expand its products into new applications and will benefit from the continued use of lightweight materials and electrification. Patrick W. Fogarty: In our Assembly Components business segment, sales of our molded and extruded rubber and fuel-related products are expected to grow year over year, driven by increased production volumes and business launched in 2025 and improved customer pricing. In our Engineered Products segment, revenues are expected to be at record levels in 2026 driven by strong new equipment backlogs in many end markets including oil and gas, steel, and aerospace, and continued growth in global aftermarket demand. In addition, our forging equipment business recently won a new equipment order with an aerospace customer, and strong aftermarket order activity will drive an increase in 2026 revenues. Our Engineered Products segment is also seeing increased order activity from customers supporting the expansion of AI data centers. For example, we recently were awarded new business for power generation products including transformers and power generators used to control and regulate power to data centers. And we are actively responding to strong demand for our forged products from turbine generator customers who also provide power for data centers. Turning now to our fourth quarter and full-year results. Our fourth quarter was highlighted by operating cash flow of $49,000,000 and free cash flow of $36,000,000. We used our free cash flow and excess cash to reduce long-term debt by $40,000,000 during the quarter. Our full-year operating cash flow increased $42,000,000 from $35,000,000 in 2024, with the increase driven by lower working capital usage compared to 2024. CapEx totaled $40,000,000 in 2025 with investments in information technology totaling over $12,000,000 during the year. Consolidated fourth quarter net sales were $395,000,000, an increase of 2% year over year. The sales growth was driven by higher sales in our Supply Technologies and Assembly Components segments. Engineered Products demand was stable year over year as growth in our Industrial Equipment Group offset lower sales levels in our Forged and Machine Products Group. Full-year sales totaled $1,600,000,000, a decline of 4% from 2024 levels, with the decline occurring primarily in North American industrial end markets. Patrick W. Fogarty: Our fourth quarter gross margin is 17.3%, which was 70 basis points higher than a year ago, resulting from higher sales levels and implemented profit improvement initiatives across several of our businesses. Full-year gross margins were 17% in 2025, which were comparable to 2024 gross margins despite the lower sales levels. Excluding special items in both periods, fourth quarter adjusted operating income increased 4% to $20,000,000 compared to $19,000,000 in the 2024 period. Special items in the fourth quarter included a non-cash write-off of certain assets in our Forged and Machine Products Group, totaling $8,900,000 to align our investments in tooling and production assets with current business levels. Our effective tax rate was 12% in 2025, which is lower than the U.S. statutory tax rate due to research and development tax credits recognized during the year. We expect a more normalized tax rate in 2026 ranging from 18% to 20%. Adjusted earnings per share in the fourth quarter was $0.65 per diluted share compared to $0.67 in 2024, with the decrease due primarily to higher interest expense in the 2025 quarter. Our full-year adjusted earnings per share was $2.70 compared to $3.59 in 2024. And with respect to our segment results, in Supply Technologies, fourth quarter sales were $187,000,000 compared to $182,000,000 in the 2024 period, and operating income increased 31% to $21,000,000 compared to $16,000,000 last year. Operating income margin was up 240 basis points and was 11.1% of sales compared to 8.7% last year. The improved year-over-year fourth quarter results in 2025 were driven by higher sales and favorable impact of cost control measures taken during the quarter. Full-year sales in this segment were $748,000,000 compared to $776,000,000 in 2024, driven by lower customer demand in certain end markets, primarily in North America, including power sports, heavy-duty truck and bus, and industrial and agricultural equipment, offset by continued strong demand in data center, electrical, and semiconductor end markets. Full-year operating income in this segment was $72,000,000 compared to $75,000,000 in 2024. Operating margin was 9.7% in both periods, due to our efforts to reduce variable operating costs given lower demand levels. In our Assembly Components segment, fourth quarter sales were $92,000,000, up 2% from $90,000,000 a year ago. Adjusted operating income was stable at approximately $4,000,000 in both periods. Full-year sales in this segment were $381,000,000 compared to $399,000,000 last year. Lower unit volumes on certain auto platforms and production delays on new business launches impacted revenues during the year. Full-year adjusted operating income was $22,000,000 in 2025, compared to $27,000,000 in 2024, with the decrease driven by the lower unit volumes. We expect our operating margins in this segment to improve, resulting from expanding our rubber mixing, production plant floor automation, and improved margin flow-through from increased sales. In Engineered Products, fourth quarter sales were approximately $116,000,000 in both 2025 and 2024. We continue to see strong sales in our industrial equipment business, which grew 5% but was offset by lower sales in our Forged and Machined Products business. Fourth quarter adjusted operating income decreased to $3,000,000 due to lower profitability from the Forged and Machine Products Group. Full-year sales in this segment were $471,000,000 compared to $482,000,000 in 2024. The decrease was driven primarily by the closure of a small manufacturing operation in 2024 and lower demand from the railcar end market, which impacted our Forged and Machine Products Group. We continue to see growth in our industrial equipment business in 2025, driven by 7% growth in our aftermarket business. Adjusted operating income was $17,000,000 compared to $21,000,000 last year, with the decrease driven by lower sales levels and lower profitability in our Forged and Machine Products business. We expect significant improvement in operating profits in this segment in 2026, based on our strong new equipment backlogs, aftermarket demand, and operational improvements made in several of our plants. Now I will turn the call back over to Matt. Matthew V. Crawford: Great. Thank you, Pat. Before I turn it over to questions, I do want to emphasize Pat's comments around the fourth quarter. We returned to growth in the fourth quarter. Year over year, we were down a bit, but as I mentioned, things were a bit choppy earlier in the year regarding tariffs and global uncertainty in the industrial market. So getting back to growth in the fourth quarter is great. We plan on building on that in 2026 meaningfully. I also want to point out that we continue to absorb some expenses related to some of the IT transformation, new business launches, etcetera. So I think we will begin to see payback in 2026 and be able to build on that going forward as well. So some of the improvements, I think, are being masked by that. But we are very excited to demonstrate a big step forward in 2026. With that, I will turn it over and answer some questions. Operator: Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, you may press star 1 on your telephone keypad. You may press star 2 to remove your question from the queue. One moment please while we poll for your questions. Our first questions come from the line of Steve Barger with KeyBanc Capital Markets. Please proceed with your questions. Jacob Moore: Hi. Good morning. This is Jacob Moore on for Steve Barger today. Thanks for taking our questions. Good morning. I just wanted to start with the guide. Specifically the 5% to 7% sales growth. I see at least one mention of pricing in the slide. So can we just begin with your assumptions for price versus volume in that overall sales number? Then maybe you could finish with a by-segment view of growth contributions for the year. Patrick W. Fogarty: Sure. This is Pat. The price increases that are included in our 2026 sales guidance is primarily in our Assembly Components group. And I would say it is a small part of the increase that we are seeing in revenues. We will see an increase in revenues relating to tariffs and the recovery of such tariffs with our customer base in our Supply Technologies segment. But I would say the majority, call it 75% of our growth in 2026, will be a result of production volume increases from our customers. And then relative to improvements in gross margin by business, I am going to refrain from giving any type of guidance on segment profitability in 2026 other than we expect improved flow-through in each of the business segments based on the increase in revenue that we are guiding to. So as we have experienced in 2025, and really for the last year and a half, our operating margins in both Assembly Components and Engineered Products group are below our expectations. And we expect improvement in each of those segments in 2026. Matthew V. Crawford: Jacob, I want to add to that while I completely agree with Pat's comments. There are tactical pricing discussions going on across the business. As you can see, a lot of our backlogs are very strong. So we are quoting new business in multiple areas. And we are also making sure that we dissect our customer base and our current pricing models and standards coming into the new year. So every one of our business continues to be evaluated, and I could think of a dozen different pricing conversations going on right now. Much more tactical, I think, than we would have seen in the past. So I think to Pat's point, the growth leans heavily towards new business or expanded current relationships. You know, that does not mean a percent or two in our model is $25,000,000 or $30,000,000 in price increases. So those are happening consistently across the board on a more tactical basis. Jacob Moore: Understood. That is really helpful. Thank you. And I want to dig into sales growth by segment as well, if you could comment on that. Patrick W. Fogarty: Yeah. Once again, we will not comment on individual business segments. But I would say, as I mentioned in my comments, that our guidance on increased revenues are across the board. And so they vary across the board. Engineered Products will be at record sales levels in 2026. We see continued growth in Assembly Components based on new business that we have already launched. That new business will be at full production levels in 2026. And then in Supply Technologies, we have seen nice growth in the AI data center space, where our business is focused on the switchgear manufacturers, those customers that provide digital infrastructure around data centers. We are seeing nice growth in that business. For example, two years ago, we had very little revenue in that space. Today, revenues are approaching $150,000,000 annually with that end market. So we expect that to continue into 2026 and beyond. Matthew V. Crawford: Jacob, I think that to Pat's point, we will see it across the board. AI and defense and power management really affecting Engineered Products and Supply Technologies. But we have talked consistently about the large $40,000,000 in new business that we have launched inside of Assembly Components. So, without commenting specifically, I think it should be relatively broad-based. I think it also depends. We have had significant backlogs in Engineered Products. As we can clear those backlogs, that should be a tailwind as well. Jacob Moore: That is really good color. I appreciate it. And if I could just follow up with the last one here on free cash flow. I know you are guiding to $20,000,000 to $30,000,000. The last couple of years have been in the low single-digit millions. I know you have been investing, you highlighted, but it sounds like you still have a lot to juggle this year too. So I want to ask what makes you confident that you have turned the corner, that the asset base can start to consistently produce cash flows? And what is your confidence level in that guidance? Matthew V. Crawford: Yes. Great question. Pat can give you a better answer. But I do want to comment. I talked earlier about volatility going back a couple years in the supply chain. Then I have talked, I think, about volatility in demand last year related to tariffs and global uncertainty. These last couple years have been really difficult to manage supply chain issues and demand issues. It has been not the best environment to predict the business needs of your customers and to manage your suppliers. So we have been heavy consistently, and I think we have been transparent on that, on working capital. I think as we come into 2026, whether it is some of the productivity tools we have talked about or whether it is just a little better visibility. I commented, I think, back in the second quarter call of last year, that while the sales were relatively stable year over year for the business, and let us use Supply Technologies as a kind of last mile; that is a good proxy for the economy. There was total turmoil under the hood in terms of end market. And aerospace and defense and AI was holding it up. Other key markets, most of the other key markets, were down. So that was a very difficult environment. We predict something slightly more, better visibility, and we are more prepared, I think, to handle it. So I think we can manage the business a little better on the cash side because of that. And, again, we are also going to begin to benefit from some of these data management tools as well. But it was a tough year last year to manage these things on top of investing heavily in the business. Patrick W. Fogarty: And, Jacob, I would add that our free cash flow estimates are a result of increased profits but also lower working capital usage relative to every dollar of sales increase. So we still have some embedded working capital that we expect to harvest in 2026. But we expect that as a percentage of sales, our growth will not require us to invest in as much working capital as we have in the past. Jacob Moore: Got it. Thank you very much. I will jump back in queue. Operator: Thank you. Our next question comes from the line of Dave Storms with Stonegate. David Joseph Storms: Good morning, and thank you for taking my questions. Matthew V. Crawford: Morning, Dave. David Joseph Storms: Wanted to just go back to the guide here, and maybe just get your thoughts on general cadence for 2026. Should we expect that it will be maybe a more typical seasonal year? Or is there anything that we should keep an eye out for that might throw that off? Patrick W. Fogarty: I think we would expect a similar trend of sales in each business segment as we have in the past. So I do not see anything that would change the look of the individual quarters in 2026. David Joseph Storms: That is perfect. Thank you. And then just wanted to kind of turn to the record backlog you have in EP. Is there anything more you can tell us about that? Maybe expected burn rate? Are there any outsized contracts in there that are going to demand a lot of focus, margin profile, anything like that would be very helpful. Matthew V. Crawford: I do not think there is anything unusual in there. I would say that our expertise in managing large power has provided more opportunity across the industrial segment, including things like data centers and AI. So the breadth of opportunity, I think, has grown in what 30 years ago was largely focused on the steel market and some related forming markets and hardening markets. So I would say the breadth of managing large power has increased the opportunity, if you will. So I would say that is a tailwind in the business. We are a global leader on the technical side in managing large amounts of power in industrial spaces. So we have names on our customer list that we just would not have seen five years ago, and trying to do things that they were not trying to do five years ago in battery steels and high-strength steels and so forth, as well as new energy markets and things like that. So I do think that that is a particular tailwind. You know, I also think we have talked a lot about durable sales. We love our aftermarket business there. And we continue to reinforce and support what increasingly is a global effort to upgrade the industrial space. I know our team, including Pat here, was just in Europe. I mean, we are absolutely seeing green shoots in the reinvestment of the industrial space over there. Whether that means new facilities, which we do not see as much of there, but certainly upgrading old facilities. So I think those markets are continuing to show life globally. David Joseph Storms: That is great color. I really appreciate that. And then maybe one more for me. You have mentioned a couple times now, we have talked about this in the past, the automation and information systems improvements. Just would love to get an update on how you think those are going, how much more runway you have there, and just any further thoughts on that. Matthew V. Crawford: Yes. That is a great question. And we are attacking this piece in lowering our cost to serve on multiple fronts. And I say it a lot because it is really something we did not focus on as much when we were growing so quickly over the years. First, I will start with data management. Our efforts, enterprise-wide in some cases, but more often by the different segments, to invest in tools that begin with creating really clean data. A lot of people want to talk about AI, and we have some tremendous use cases going on both on the sales funnel side and on the productivity side. But the reality of it is the journey begins with really getting clean, usable data. So I am very excited at the strides we are making to manage data better and give the tools to our— I have talked a lot in the past about the strength of our management teams increasingly, and giving them the tools to have the visibility to do everything from manage pricing and manage cash flow and working capital the way that we discussed. The opportunity is huge, particularly in a business like Supply Technologies. So I would say that. I think on the automation side, we continue to attack vigorously costs in the business that a few years ago were not a big deal. So, for example, warehouse space. Warehouse space has been explosive in terms of costs. So opening up, as Pat mentioned, a new distribution center, a larger one, allows us to have increased volumes and velocity, which allows us to invest in automation tools. Our flagship fastener manufacturing facility up in Toronto just invested several million dollars in finishing and packing equipment. This is not just about doing things more cheaply; it is about doing more. So we are really looking at those kinds of investments too, which are not just robotics. They are about really stripping long-term costs out of the business model while growing. It is about productivity today, but it is really about getting the flow-through that we talked about on the next $100,000,000 in sales. And then lastly, you did not mention it, but I will. When we talk about durable sales at higher margins, the vertical integration piece, particularly in Assembly Components, we have a wonderful footprint in the U.S., Mexico, China, a global footprint, and with very competitive position products with tremendous know-how, and I think it is critical that we continue to invest in the whole value stream. So as we look at improving material science and mixing capabilities on the rubber side, this is going to be really important to controlling our value stream. David Joseph Storms: Understood. Thanks for that commentary, and good luck in the next quarter. Matthew V. Crawford: Thank you. Patrick W. Fogarty: Thanks, Dave. Operator: Thank you. Our next questions come from the line of Jim Dowling. Please proceed with your questions. Jim Dowling: Two big picture questions. Pat mentioned the data center business running at a rate of $150,000,000. Could you expand that and give us your top five end markets across the entire company and what percentage of the total those top five might be? For example, steel, automotive, energy, etcetera. Matthew V. Crawford: Well, I will take the least exciting one, Jim, because that will give Pat a second to think. You have known us when automotive, light truck and auto, was north of a third of the business. Today, I will give Pat a chance to think, but that number probably hovers closer to about 20%, a little over 20%. So we have meaningfully culled the herd, so to speak, and gotten rid of some business that was too focused, I think, not just on the automotive space, but too much on the North American automotive space, and I think also were more capital intensive. So we have moved out of those businesses today. While that is still our biggest market, I want to be very clear that that is a business that today not only is global in nature, we compete very successfully in Asia, for example, but also I think it is a business that is extremely well diversified into products where we either have IP or we have business process or hard assets that put us in a very, very durable competitive position. So that is still our biggest market. But we really like where we are relative to the customer mix and the products that we are supplying. And while we do not see it in the margins yet, Jim, that is probably our biggest opportunity, as we have repositioned that business and invest in that business for growth. Are we looking to be 50% or 40% or even 30% OE automotive? No. But we like where we are today, and we will continue to invest in those positions that we have great accretive margins. Patrick W. Fogarty: Yeah. Jim, this is Pat. We are very fortunate to be a very diversified industrial company. Matt talked about the auto side of the business as that has decreased over the years. But within that block of business that we have, we are very diversified in terms of products, in terms of customers, in terms of the type of auto platform that we are providing our products to. Once you get beyond that, heavy-duty truck, semiconductor, power sports, steel, AI data center-related, electrical, oil and gas, are the top markets that would follow. And each of those individual markets do not represent more than 15% of our revenue base. So no one end market is really dominating our revenues. From that perspective, we are very diversified. Jim Dowling: In broad terms, what percentage of the business is going for OEM application versus aftermarket? Patrick W. Fogarty: I would say that Supply Technologies is 95% OE. Obviously, we do not always track perfectly what the OE does with that, because we do sell to their service arms too. So tracking exactly what goes into their service areas versus their direct OE business can be difficult. But you can think of that as primarily an OE supplier. I think on the aerospace side, even the MRO side, I guess, is still, in some cases, going into assemblers. I think on the automotive side, again, the vast majority is OE. We do sell aftermarket, both direct aftermarket on the extruded hose side. We also sell, obviously, to customers that use them as service parts. But, again, in both those cases, I would say that. I think on the equipment side and the forging business side, the equipment side is a bit more discrete in terms of their building capacity or improving capacity or investing in productivity inside their plants. And then the aftermarket, which is a $150,000,000 part of that business, is obviously all aftermarket. And that is, again, one of the exciting parts of the business model. So, while I would say in general the first two are largely OE-based, I think that the Engineered Products business is a bit more complex and skews a little bit more towards not being entirely OE. Jim Dowling: Okay. Thanks. One last for me. How did China do last year versus the previous year? Matthew V. Crawford: China continues to be a good market for us. We have, I think, in a couple different ways. First, I think that we have really reshaped— I talk a lot about allocation of capital. While we have invested less money— we generate cash in China, and we generate cash exporting cash out of China— we have really focused on the businesses we have there that we can be successful with. So the products we sell there today, the service and the customer we service, are often sometimes Chinese companies, but in most cases, global companies are looking for global partnerships. So that gives us a little buffer from a competitive standpoint. It is a tough market to do business in, no mistake. But it is a growing market. It is a market in which we have accretive margins. And, again, it is not one that we are necessarily pulling back from, albeit more often we will see that as a jumping off point for Southeast Asia and other areas of even faster growth. Jim Dowling: Okay. Thank you. Operator: Our next questions come from the line of Steve Barger with KeyBanc Capital Markets. Please proceed with your questions. Jacob Moore: Hi. Thanks for letting me jump back in. I just wanted to ask about the other part of your strategy that I have not touched on yet, which is reshaping the portfolio. I know, Matt, you have talked about it a little bit already today, but I just wanted to ask you a little more directly. Is the current portfolio set of assets that you want to be in longer term? Matthew V. Crawford: I think we are constantly tweaking and thinking about where we want to allocate capital. I think that we made the big moves over the last couple years. And I think I have often said I really like the businesses we are in. Each of them, I think, has real opportunity for growth. And not only growth, but durable growth at accretive margins. Having said that, I think that we are not operating at the highest level across the board. So we will continue to fine tune that as we go forward. But, again, I think that from a revenue perspective, the core businesses we have are fantastic. Patrick W. Fogarty: Yeah, Jacob. We have discussed on prior calls, and I know Matt has highlighted, the allocation of capital strategy, that we are allocating capital to our best products, our highest margin businesses. And to the extent that there are businesses that are not going to get fed the same amount of capital, those are the businesses that we will make decisions on going forward. But right now, we are happy with where we are at. Jacob Moore: That is really good color. Thank you. And then just the last thing from us, and it is maybe one for each of you. Pat, what do you see as the variables or watch items that could drive upside or downside to your 2026 outlook? And for Matt, what programs, initiatives, or trends are you most excited about this year and why? Matthew V. Crawford: Those are some big questions, Jacob. So let me just comment and say I think that, as I mentioned earlier, we have a little better visibility this year going into the planning year. I would say, only half joking, that last year, pretty early in the year, the economic uncertainty and the specter of tariffs changed our ability to plan the business and made some of our business plans almost irrelevant by the end of the first quarter. So I think this year, a lot of the inventories that were really overbuilt or pre-bought or prebuilt at the beginning of last year, a lot of that inventory is cleared in some of our traditional markets. A lot of the transportation markets in particular. I am not talking auto. Some of the markets have been at historic lows. For example, the train market, and the track market. Some have been reasonably soft, the heavy-duty truck market. So there are a number of markets that we have some exposure to that have been sort of bumping along the bottom. So I think those businesses are in a position— those markets are in a position to stabilize, perhaps a little upside. That should allow us to benefit from some of the faster-growing areas of the business that Pat has recognized. What do I think the risk is? It is less, I think, on the customer side this year and more on the macro side. It is somewhat surprising to me that the markets, with the exception perhaps of the oil market, have been as calm as they have been. And most of our key customers have been insulated from that. But it is hard to imagine that an inflationary cycle that burns through this global economy, or here in the U.S., because of the ongoing war on two fronts, would not in some way impact our business. It may help on the aerospace and defense side, but it probably will create some challenges and some demand chaos as we saw last year. So those are a couple things we are thinking about. And that is one of the reasons we continue to invest well above our historic norms is because we want to be in a better position to respond to that kind of activity. Patrick W. Fogarty: Hey, Jacob. This is Pat. To answer the question directed at me, obviously higher production levels in the end markets that we serve will drive higher levels of profitability. But I think more importantly than that, and because our guidance reflects where we think the end markets are going to be, better throughput of our products through our plants— whether that be in our capital equipment business; the more we can push through the plant, the more efficiently we push new equipment orders through our plant— will drive profitability. The same is true in our manufacturing plants in Assembly Components. The more efficient we become, the better absorption we are able to obtain, and the higher levels of profitability will result. And so those are the two areas that we are focused on, and that will drive any upside that we might see in our 2026 guidance. Jacob Moore: Okay. Thank you very much. I know we had a lot for you today, so I really appreciate your help. Matthew V. Crawford: No. Great. Thank you. Operator: We have reached the end of our question-and-answer session. I will now hand the call back over to Matthew V. Crawford for any closing comments. Matthew V. Crawford: Great. Thanks, everyone. Appreciate your attention and your patience as we transform this business going forward. Thank you. Have a great day. Operator: Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.
Operator: Good day, and thank you for standing by. Welcome to the Invivyd, Inc. Fourth Quarter 2025 Earnings Conference Call. At this time, participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Katie Falzone, Senior Vice President of Finance. Please go ahead. Katie Falzone: Thank you, operator. A short while ago, we issued a press release announcing our Q4 2025 financial results and recent business highlights. That press release and the slides that we are using on today's webcast can be found in the Investors section of the Invivyd, Inc. website under the Press Releases and Events and Presentations sections, respectively. Today's discussion will be led by Marc Elia, Chairman of Invivyd, Inc.'s board of directors. He is joined by Timothy Lee, Chief Commercial Officer; William Duke, Chief Financial Officer; and Dr. Robert Allen, Chief Scientific Officer. During today's discussion, we will be making forward-looking statements concerning, among other things, our corporate and commercial strategy, our research and development activities, our regulatory plans, certain financial expectations, our future prospects, and other statements that are not historical facts. These forward-looking statements are covered within the meaning of the Private Securities Litigation Reform Act and are subject to various risks, assumptions, and uncertainties that may change over time and cause our actual results to differ materially from those expressed or implied today. Forward-looking statements speak only as of the date of this call, and Invivyd, Inc. assumes no duty to update such statements. Additional information on the risk factors that could affect Invivyd, Inc.'s business can be found in our filings made with the U.S. Securities and Exchange Commission, including our most recent Form 10-K, which are also available on our website. I will now turn the call over to Marc. Marc Elia: Thank you, Katie, and good morning, everyone. I will make a few quick remarks by way of executive summary, and then we will discuss our clinical progress. Of note, this morning, you may have seen that we have brought an esteemed physician-scientist into the Invivyd, Inc. fold to serve as our Chief Medical Officer. Michael was unable to join our call this morning; I am sure many of you will enjoy hearing from him going forward. After the clinical discussion, Timothy Lee, our Chief Commercial Officer, will review our work with PEMGARDA, and some of our pre-commercial preparation for VYD2311. William Duke, our Chief Financial Officer, will touch on our financial results for Q4, then we will be happy to take your questions. Now on to the highlights. Our Revolution clinical program is well underway, with the aim of providing Americans with an option for what we believe is needed protection from symptomatic COVID disease. We know investors have many questions about our progress, and we will provide as much detail today as we can. Our commercial work with PEMGARDA continues, and we were pleased to demonstrate growth in the fourth quarter. Commercial activities are establishing an attractive basis for broader commercialization of VYD2311, if approved, by demonstrating the power and durability potential of Invivyd, Inc. monoclonal antibodies. We are continuing to build awareness and understanding of our work with monoclonal antibodies among HCPs, professional societies, vulnerable populations, and government public health entities. We believe that the ongoing American experience with COVID vaccination has left an extraordinarily high medical and economic value opportunity to advance standard of care via monoclonal antibody prophylaxis. In the pipeline, we are excited to begin clinical exploration of our antibodies in long COVID and post-vaccine syndrome as disclosed earlier this quarter. We are very interested that the Advisory Committee on Immunization Practices, or ACIP, a group which advises the U.S. Centers for Disease Control, has recently announced that they are having a full discussion on both topics. The ACIP meeting is currently scheduled for March, and we will be watching with interest. Our collaboration with key academic thought leaders in this space, the SPEAR study group, has yielded a clinical trial design we are moving with all haste to action in light of the substantial unmet need for millions of Americans suffering from long COVID and vaccine injury. In the fourth quarter, we were pleased to share our identification of a highly potent, potentially best-in-class RSV antibody. As you may know, there are today two RSV antibodies approved and recommended for the prevention of RSV in certain neonatal and pediatric populations, and we believe the properties of our antibody are highly competitive with standard of care. As we advance our work across multiple infectious diseases, you may notice a special interest in pediatrics. RSV, COVID, and indeed other viruses exert substantial medical burden on both the elderly and the very young, as well as immunocompromised persons. Finally, as previously guided, expect us to update the Street on our measles program in the first half of this year. In light of the substantial and rapidly growing burden of disease, we are excited to share our progress with you, as well as describing what we see as the potential medical value of such an antibody, which we hope can be both first and best in class. Slide five. Moving on to our clinical update. On slide six, we know that there are investors who are new to the Invivyd, Inc. story, and so we would like to review quickly the medical and scientific background for our work with VYD2311, which hopefully will add context to the updates we provided on the Declaration study in our press release this morning. First, it is important to remember that SARS-CoV-2 has been an extraordinarily unwelcome and ongoing medical burden on the human species. As an ACE2 receptor accessing betacoronavirus adapted for high human virulence and transmissibility, it has exerted medical toll in two distinct phases. In the initial pandemic phase, the virus swiftly moved through the human population, exerting substantial morbidity and mortality, especially among vulnerable populations such as the elderly, and people with relevant comorbidities such as preexisting cardiovascular and renal disease. After vaccination and mounting seropositivity, we see a predictably less violent mortality but still extraordinary medical burden from this virus generally in the same populations. As a vascular, prothrombotic, immunomodulatory virus that circulates pervasively, we now see accelerated human aging and broad health effects in Americans from acute infection, with attendant risks through the substantial growth in long COVID prevalence. Even American economic data collected by the Fed appears to show an unwelcome, impressive growth in American disability since COVID entered our population. We must be less tolerant of this burden. Second, given all of the relevant sociopolitical and medical aspects of this controversial field, we must touch on the evidentiary and regulatory history we have in COVID prophylaxis. The mRNA-based COVID vaccines were each formally studied in a single placebo-controlled clinical trial in 2020. These studies assessed vaccine safety and efficacy versus placebo in a seronegative American population against highly immunologically responsive Wuhan-derivative virus variants, for about seven to eight weeks before unblinding. These studies demonstrated high short-term protection and short-term safety. However, these original datasets also reflect the last opportunity we had as a species to assess absolute safety in randomized, placebo-controlled trials. Given the broad vaccine mandates and rapid virus spread, we as a human species are now all routinely exposed to SARS-CoV-2 and its spike protein, which we see as a type of toxin. And absent a new medical option, we as a species have no real opportunity to avoid exposure to spike protein chronically going forward. Shortly after those original vaccine studies and rollout, our entire species became immunologically educated or seropositive, either through the original campaign or circulating virus, all while undergoing excess morbidity and mortality. Omicron phylogeny virus arose quickly following an evolutionary acquisition of population immunity. Omicron viruses are defined by immune evasiveness or the functional avoidance of human immunologic pressure, whether vaccine-induced or natural. One major consequence of Omicron virus was a natural, predictable, apparent reduction in COVID vaccine efficacy, which has been reliably estimated by epidemiologists at CDC over the past years, and was directly measurable in diminished vaccine titers when vaccine manufacturers updated COVID vaccine compositions from Wuhan-variant virus to Omicron BA.4/5 virus. These analyses can be seen in the relevant vaccine labels, and we see them as predictive of diminished efficacy. COVID vaccine boosts have undergone five structural updates since Wuhan virus vaccines, just on the basis of immunologic comparison. Ongoing new placebo-controlled vaccine studies should provide us all with more insight into these issues in the coming quarters. By contrast, Invivyd, Inc. is now conducting its third randomized, placebo-controlled trial for a COVID monoclonal antibody in five years. Our antibodies change one to the next, rather like the vaccines, to make allowance for virus evolution, although we hope to stay ahead of virus variation rather than chasing it from behind. On a percentage basis, our antibodies change by about the same tiny amount as vaccine antigens, but in contrast to COVID vaccines, we see our antibodies as a much more natural, welcome approach to prophylaxis than serial exposure to spike protein in vaccine form. To us, given the apparent short duration of vaccine-induced protection and the potential risks of administering spike protein in either mRNA or protein form, it is natural to now move to supplemental immune support via monoclonal antibody to exert protection. From an evidentiary and regulatory point of view, our antibodies have undergone more extensive placebo-controlled characterization than the COVID vaccines, including now multiple placebo-controlled clinical trials and, in our recent CANOPY study, long-term characterization of pemivibart in a modern seropositive population and against Omicron virus variants. That brings us to our latest antibody, VYD2311, designed as an alternative to COVID vaccination. VYD2311 is much more potent than pemivibart in vitro, and has a longer measured half-life—properties which we believe may combine to deliver equivalent protection to PEMGARDA, but in a much more scalable and convenient intramuscular form. You can see on slide eight a reminder of the initial pieces of the Revolution clinical program. The Declaration study is a triple-blind, randomized clinical trial once again evaluating the safety of VYD2311 and its ability to reduce the risk of symptomatic disease versus placebo. Our target enrollment for Declaration is approximately 1,770 human subjects, randomized 1:1:1:1—three active arms, one placebo arm. We were recently notified that the Declaration clinical trial has reached target enrollment, and indeed, as is normal in these situations, may modestly over-enroll as sites are given permission to complete any ongoing screening and enrollment before closing. Of note, recently, the Declaration Independent Data Monitoring Committee, or IDMC, conducted a prespecified review of unblinded safety and tolerability data associated with initial experience of Declaration subjects. While the IDMC is completely separate from Invivyd, Inc., we are pleased to relay their written communication to us following that review, which included three recommendations. First, that pregnant and breastfeeding women may now enroll in the study. Second, that women of childbearing age enrolled in the study are no longer required to use contraception. And third, that prespecified safety visits at days 8, 38, and 68 post dosing are no longer required. Finally, Declaration is a study designed to assess the performance of VYD2311 in lowering the risk of symptomatic, PCR-positive COVID-19 versus placebo. In every infectious disease prophylaxis study, a sponsor like us faces an unknown so-called attack rate, or the rate of infection observed in the study, to power our efficacy assessments. Because monoclonal antibody technology in COVID has typically involved a very high efficacy hazard ratio or VE traditionally, it has not taken more than a high single-digit or low double-digit number of events in a study to generate statistical significance. As you may recall, alignment with the FDA on the VYD2311 clinical development pathway included recognition that in our CANOPY clinical trial, pemivibart’s placebo-controlled arm demonstrated robust exploratory efficacy with strong statistical support on the basis of nine total COVID events at three months. America is in the middle of a COVID wave, and we are pleased with the speed of our study recruitment. The majority of our recruitment has occurred only in the past few weeks, and COVID events have begun to appear in our study. We see Declaration event accumulation as on track to date, and on a projected basis, we anticipate suitability for robust assessment of VYD2311 effectiveness if the clinical performance of VYD2311 matches our modeling and prior experience with COVID antibodies. Of course, attack rate in the community and in our study is outside of our control and could change going forward. As a result, Declaration includes a prespecified upsizing algorithm to allow for additional patients in the trial should our event rate projections indicate that Declaration would benefit from more statistical power. This resizing feature is dependent on overall progress, and at this point, our best estimate is that such an analysis would take place in approximately April. We will make an announcement to the Street about our next steps one way or the other at that time. However, depending on overall recruitment rates, with which we have been very pleased so far, a modest upsizing to add statistical power may not meaningfully delay our achievement of “mid-year” timing guidance for Declaration, which we consider as Q2 or Q3 2026. Of course, any upsizing would have some level of timing impact, but we would endeavor to stay within our original guidance boundaries. When we get to that point, we will be happy to provide any updated timing estimates. Irrespective of the overall number of COVID events, we are looking forward to data and believe that it may be a profound next step for our company and for infectious disease medicine if Declaration can demonstrate attractive VYD2311 safety, high antiviral titers, and a demonstration—for the third sequential time—of the vaccine-free protection that an avid monoclonal antibody can provide. With that, I would like to turn the call over to Timothy Lee to discuss our commercial update. Tim? Timothy Lee: Thanks, Marc. It is a pleasure to update you all on our work. As we see it, more and more clinicians are turning to monoclonal antibodies. And, frankly, it is common sense. Thomas Paine once wrote that common sense is often the most powerful kind of reasoning. In health care, when evidence accumulates and risk is clear, the logical course becomes difficult to ignore. Our goal is straightforward. It is not simple. We want to give people a choice as they seek protection against COVID. We believe that choice has significant potential because there are still millions of individuals who remain vulnerable and underserved. The medical community increasingly recognizes the importance of antibody therapy, and the long-term consequences of COVID continue to be serious. From in utero exposure risk to children, neurological effects, cardiovascular complications, and more, avoiding infection matters. That perspective is reflected in clinical guidelines. Leading organizations, including the Infectious Diseases Society of America and the National Comprehensive Cancer Network, recommend monoclonal antibodies for prevention of SARS-CoV-2 infection in appropriate high-risk patients. This inclusion of PEMGARDA in the NCCN guidelines for B-cell lymphomas underscores that recognition. We are encouraged to see growing interest and utilization across hematology, oncology, rheumatology, infectious disease, transplant, neurology, and other appropriate specialties. The adoption curve is expanding, and that momentum reinforces our belief in the long-term value of this platform. There is a great deal reflected here on this slide. Many of these data points we have discussed on prior calls. I am pleased that we continue to grow PEMGARDA to serve certain adults and adolescents who are moderately to severely immunocompromised, thus leaving them vulnerable to infection from SARS-CoV-2. What you are seeing is Invivyd, Inc. is building a category. This category has served to expand upon the foundation that is PEMGARDA. Nationally, we see continued growth of accounts who have utilized PEMGARDA, clearly understanding the benefits of protection offered by antibody therapy. We have created this durable foundation with a high degree of accounts reordering PEMGARDA at 77%. We continue to increase available sites of care nationally and across multiple specialties, showing a high confidence for repeat utilization. Our GPO sites of care continue to grow, and the team has been busy providing education at conferences across the nation in hematology, oncology, rheumatology, neurology, pulmonology, transplant, and more. As a team that is defining a treatment paradigm, we are in the right places talking to the right audiences, and our position is strengthening after each engagement. We secured more than 15,000 contracted GPO sites, significantly expanding our commercial footprint. Taken together, these milestones position us to evolve beyond serving a more limited patient population that we have today with PEMGARDA. With our next-generation monoclonal antibody, we see the potential to redefine COVID prevention, moving toward a vaccine-alternative strategy designed to protect broader populations against viral infection. Invivyd, Inc. is proud to partner with Lindsey Vonn because she exemplifies the power of disciplined preparation as the foundation of enduring strength. In her memoir, “Rise: My Story,” Lindsey writes, “Preparation is the one thing I can control, so I have always controlled it to a capital T.” Lindsey prepared at an elite level to always perform at her best, and that requires foresight to minimize anything that can get in her way. That mindset really mirrors our approach. Invivyd, Inc.’s monoclonal antibody platform is built on the belief that proactive immune protection—preparing the body before viral exposure—is the most effective way to preserve performance continuity and long-term health. Viruses should be kept in check to allow everyone to give their best performance. Staying well helps you continue showing up for the moments that matter, and antibodies can help a person stay well. For this reason, Lindsey is an amazing partner to help educate on the importance of antibodies in all of our well-being. With that, I will turn the call over to William Duke to discuss our financials. Bill? William Duke: Thank you, Tim. I will quickly review our financials, and then we will open the line for your questions. Our PEMGARDA net revenues continued to grow in the fourth quarter, up 31% over third quarter 2025 and up 25% over fourth quarter 2024. Full net revenues in 2025 totaled $53.4 million, reflecting our continued efforts on driving awareness in the market. After raising over $200 million in 2025, we ended the year with $226.7 million of cash and cash equivalents. This leaves Invivyd, Inc. well capitalized through anticipated pivotal data for VYD2311 in mid-2026 and, depending upon continued PEMGARDA growth and continued operational discipline, potentially well beyond. With that, operator, please open the line for questions. Operator: Our first question comes from the line of Patrick Trucchio with H.C. Wainwright. Your line is now open. Patrick Trucchio: Thanks. Good morning, and congrats on all the progress. Just a couple of follow-up questions from us. Just curious, I think it was mentioned that the potential trial resizing decision in the Declaration program could occur around April depending on event rates. Can you talk a little bit more about that, what the specific statistical criteria would be that would sort of trigger that decision, whether enrollment expansion may be needed? And then just separately, I think, beyond symptomatic PCR-confirmed COVID, I am wondering if you are collecting secondary endpoints such as viral load, symptom duration, or health care utilization, and how that could help the clinical benefit profile that is emerging. Marc Elia: Sure. Thanks for the questions, Patrick. Happy to do my best to enlighten. So on your first question on the resizing, everything we do related to powering is, of course, effectively a two-by-two matrix. Right? You have to understand both the expected VE for which you are powering and then the number of events that accumulate that would allow you to project a final study power. And so right now, as we sit here, we feel pretty good about our progress in the study. All of these algorithms are essentially prespecified, of course, to avoid the potential for bias. And so I think the way I would look at it is like this. And again, I am speaking in concepts because, of course, we are not at that resizing yet, and we do not know what the next few weeks will hold. I think if we were to not trigger the upsizing trigger, it would be because we are highly confident in our ability to statistically assess even a lower-than-anticipated VE, or hazard ratio. And if we do, it really could not even be read as a concern about underpowering as such. It would be simply because the way the trigger is designed it would serve to potentially add power in case the target efficacy is lower than we might otherwise anticipate. So we think of it as really a safety mechanism to ensure, to the best of our ability—which, again, is unfortunately subject to that—the best of our ability to support the power of the study in case VE pencils out as lower than our modeling would suggest. Now the good news in all of that is actually related to the speed of our recruitment. The upsizing target is not particularly onerous. Okay? So you can imagine, in your mind’s eye, approximately another 30% of the study or so as an upsize target. And importantly, of course, that cohort would be time-shifted, right? A little deeper into the spring and then into the summer, which you might imagine collectively would add to the probability that you accumulate more cases, for example, in a future COVID wave. So while perfect is unavailable here and we are not endowed with godly insight into the future weeks, what we can confidently say is we are very pleased with what we are seeing, and we truly do not know whether such a resizing would be triggered. I think what is nice to consider is that if it is, we would simply be in a position to feel better about ultimate study powering. And I think, stepping back way back to reflect on this endeavor, our goal is to have a successful study, if that is what the clinical profile of 2,311 allows. And so to the extent that such an upsizing might incur a relatively modest timing and overall financial penalty, I think we would rather “make the mistake” of having upsized and then only later find out we did not need to, than do it the other way around. So I hope that adds some level of color around the design and thinking. I think it will be very difficult for us to elaborate much more because we speak to the Street only periodically. And, of course, these things occur semi-stochastically. Right? We have just recruited up the bulk of the study. We just have most of the exposure out there, and so far, things are looking great. So we will make sure to update you as we go forward. In terms of secondaries, of course, you can imagine in a study like this, we will be recording all manner of interactions between participants and, for example, the health care complex, which is behind one of the questions you asked. And I am sure a great deal more will always come from this study as it did from CANOPY. I think I would caution on expecting meaningful powering of low-frequency clinical events, e.g., hospitalization or death. I think that would be well beyond the intended power of this exercise. But I think that is also for a reason. Meaning, at this stage in the game, I think we see pretty clear linear biophysical truth—if not, you know, that is sort of a level beyond plausibility, but let us just say it like that—that if you do not get sick from SARS-CoV-2, it is pretty unlikely for you to be hospitalized with SARS-CoV-2 or die from SARS-CoV-2. And so our progress as a species, I think, over these last six years has demonstrated that one of the best ways to stay well is to not get sick. And that is really what we are fixated on trying to demonstrate here. I think that is an evergreen principle. I think it has been well elaborated in all manner of these studies. I think those relationships are pretty clear in all of the data, even from the vaccines. And so our primary focus is really on, I guess, a revisit of what was an earlier-in-the-pandemic message: do not get sick. Most good things, we would think, would follow linearly and logically from that. I think that is the regulatory paradigm in which we are pleased to operate. And I would suspect that if we are successful going forward, there will be many, many opportunities, as our antibodies move into bigger and bigger populations, to demonstrate these kinds of things in, you know, classically post-approval registry and other-type situations in which we will all look eagerly to make sure that we are right—in effect, that not getting a symptomatic infection following virus is just a globally good thing. So, again, not trying to be coy or not answer. I think we will collect a lot of stuff. I do not know how meaningful many of those endpoints will be from a quantitative empowering standpoint, but they will certainly be collected. Patrick Trucchio: Yeah, that is really helpful. If I could, I would just like to ask about the measles antibody program. I think there is an update expected in the first half of this year. Can you give us a little bit more detail on what the envisioned use case is? Is it outbreak prophylaxis? Is it sort of a pediatric bridge therapy, you know, before newborns could get the vaccine? Or are we looking at more of a broader prevention strategy? Marc Elia: Great. So thanks for asking, and I hope it does not diminish your interest when we are in a position to more formally update. So I will just stay in concept land for a little while. Look, you have hit upon the use cases, I think, quite nicely in large part. Right? One of the things we very much like about this modality is that there is not a pharmaceutical premise that we—or use case we—prosecute separate from what native human immunobiology prosecutes. So why do we all have antibody suites? It is to prevent the presentation of symptomatic disease, to treat and knock down viremia once an infection is established, and yeah, as you know, that means we could use such an antibody theoretically for treating active disease. It means we could use—and by the way, that is, we have noted in the past, I think, something that sometimes we will use intravenous immunoglobulin, or IVIG, to do. You could imagine, of course, responding to outbreaks with essentially ring immunization via monoclonal antibody, which might be, you know, an enhanced way to look at the kinetics and potency of what we are able to put on board relative to vaccination. And then more generally, you highlighted something there that I think we have been putting a lot of thought into, which is—I think you used the concept of bridge to vaccine. We think about it almost more in the sense of vaccine enhancement. Meaning, I would just observe, and I think this is noncontroversial, children—babies—are born without a fully developed adaptive immune system, especially the B suite. And so there are data demonstrating that delaying vaccination actually has the ability to improve the profile of vaccination, meaning higher, more durable titers from vaccinating older and older kids, and potentially lower possibility of seronegativity or failure to seroconvert after vaccination, not to mention the potential benefits associated with allowing for early childhood neurocognitive, motor development, all these other things. So look, we are going to be in a position, we hope, to contemplate a lot of things that really, I think, the medical complex has not been in a position to contemplate before, and that is because, justifiably, absent other tools, I think that pediatric schedule is thoughtfully assembled in order to try to have the least vulnerability possible beginning with vaccination at an early age. Well, certain antibodies, especially, you know, nirsevimab (Beyfortus) and others, have demonstrated the benefits associated with passive prophylaxis in the very young. There may be other benefits we can explore going forward, but look, it is premature to say more, although Robert Allen is leaning in, and that usually tells me he wants to add something. So I am going to stop in a second. But I guess I would just say stay tuned because I think we are really intrigued by the potential for some use cases, as you put it, that just have never been contemplated before. And I think our view is there is a potential substantial quantum of medical and potentially economic value to create. Dr. Robert Allen: Yeah, I would agree with that answer. And I think that the main thrust of this has come from inbound requests from HCPs for something to provide them with a solution in cases where they have a need for treatment or for post-exposure prophylaxis for measles. And this antibody has been designed with those use cases in mind, as well as some of the potential future use cases that Marc mentioned. So that is really where we are headed with this antibody at this point. Patrick Trucchio: Terrific. Thanks so much. Operator: Thank you. As a reminder, to ask a question at this time—our next question comes from the line of Tom Schrader with BTIG. Your line is now open. Tom Schrader: Good morning. Congratulations on the progress. I think you are making positive event comments, and certainly the safety news is fantastic. We have talked a little bit, Marc, about your ability to sculpt the trial a little bit to try to hit hot-spot areas. If you could talk in broad brushstrokes about how well that has gone, and is that in fact self-enforcing—that the people who enroll are, in fact, they know they are in areas where it is a big deal? And then a more specific question: On the myocarditis monitoring, is that going to be clinical myocarditis—yes/no—or is that a more detailed study where you are looking at, I do not know, muscle protein, things like that? Or is that a deeper study, or is that just the rare clinical myocarditis event? Thanks. Marc Elia: Hey. Good morning, Tom. Thanks for the questions. Happy to give you some view here. So, okay, listen. With respect to the Declaration study, the what we have been discussing is, on the margin, our ability to have sites that are in areas that are, we believe, undergoing some level of community COVID attack rate. Right? Now you can see some of that in the ways that we see it—whether it is clinical sequencing, whether it is wastewater sequencing, or sometimes whether it is, for example, emergency department or, you know, sort of one of those things called the sort of, like, low-acuity walk-in clinic kind of census data on where people are reporting symptomatic, positive COVID. So, look, we operate a U.S. study with a relatively broad catch area because a lot of this was designed in October, November, December timeframe, and we were not in possession of such a map. But, you know, we have some ability on the margin to try to place exposures where we see COVID. I think it is also a risk to over-interpret the map because these things move. And they move fast. And so, for example, over the next few weeks or months, to the extent that air conditioning goes on across the U.S. South, the map can move. But we feel pretty well prepared and pretty well configured to hopefully keep seeing event accrual. Now is it self-reinforcing? I could not even begin to answer because I have never even contemplated such a thing. So I guess I will leave it as I do not know. But we will see, in hindsight, whether there is any discernible behavioral aspect to it. On myocarditis, I think at first pass, this is going to be a yes/no exercise mainly because the LIBERTY study where we are looking for that is small, and I think the risk of overt myocarditis or pericarditis following vaccination is relatively low. Now, like all clinical studies, we gather samples. We will look at data. There can always be room for more detailed exploration or follow-up. And again, if we were to see such an event following vaccination, I think we would become very—I will not speak on behalf of the broader scientific or academic community or regulators—but I imagine a lot of people might be interested in that. I just want to double underline: myocarditis/pericarditis is not something we see with antibodies. Right? This is a function of studying mRNA-based COVID vaccination in our comparative and combination LIBERTY study. So, look, we will see. Right? LIBERTY is certainly not powered, or even close to powered, to detect events that we would imagine are at that lower frequency. But let us all find out together. Tom Schrader: And if I can ask a quick follow-up, you apparently have an RSV antibody you like. That would seem to be a high bar. That has been a very active area for a long time. Can you give us any detail on maybe what you are improving or how hard you think it would be to have an antibody that was good enough to take on what is a pretty entrenched competition? Thanks. Marc Elia: Sure. And now I really saw Dr. Robert Allen’s body language change, so I know he is going to have some thoughts on this topic. But I would just say this. You know, the RSV antibody field goes back, I believe, to 1998 with palivizumab, or Synagis, and was really only updated at the molecular level, I want to say—and forgive me if I am wrong—in 2023 with the arrival of nirsevimab (Beyfortus). Now nirsevimab is a lovely antibody. We think ours is a lovely antibody, and I think it has some properties that we see as quite compelling. And so, you know, typically in the pharmaceutical industry, when we look at a blockbuster, high-growth antibody space, it is hard to sit back and conceive of the fact that that will be the one thing forever and only and always. And indeed, at the molecular level, we really like what we are seeing and expect to have the ability to compete. I will let Robert elaborate in a minute, but I would also just note we look at RSV as a really attractive component of an emerging strategy. You might well notice now as we go from COVID to RSV, perhaps to measles, perhaps onward to other viruses in which having a commercial portfolio and a real presence in pediatrics has the potential to open or expand on a field that is, I would argue—by contrast to your assertion—in its infancy, no pun intended. Nirsevimab, in year three now, is early. I think its dramatic commercial success is a function of the quality of the medicine. And so, to the extent that we feel great about the quality of our medicine, I can say we are very much looking forward to competing. And now that is a long way off, but we have opportunity in front of us to be clever in clinical trial design, to be clever in, you know, some other aspects that might define our overall profile. And now that Robert is good and warmed up, why do you not add color as you see fit? Dr. Robert Allen: I think, you know, what you can know is that we learned a lot in the era of generating COVID antibodies about trying to be upfront about addressing evolutionary drift. Drift represents a change in context that deserves to be addressed periodically. When we look at RSV, in the time since the screening was done for the two known actives that are in the market now, there has been a considerable amount of drift, and really the design of our program was meant to address that. And with that drift, also address some of the known liabilities for the two known actives and overcome those liabilities by design. And so this is where we find ourselves with a very high-quality antibody that is contextualized by the recent evolutionary past of that virus. And I think that, as we see with RSV, we can depend on it to drift—not as much as SARS-CoV-2, rather—but it will drift, and so we will continue to address that as it comes up. It is really the overall strategy that we have with our antibodies: to be very upfront about updating antibodies periodically to match the environment that we find ourselves in. I hope that helps. Tom Schrader: Yeah. That is perfect, thank you. Dr. Robert Allen: Thank you. Operator: And I am currently showing no further questions at this time. I would like to hand the call over to Marc Elia for closing remarks. Marc Elia: All right. Well, thank you very much, all of you, for joining us this morning. We will look forward to having, I am sure, some follow-up calls throughout the day. Have a great day. Thank you. Operator: This concludes today’s conference. Thank you for your participation. You may now disconnect.
Operator: Good afternoon. Welcome to the Amprius Technologies, Inc. Fourth Quarter and Full Year 2025 Earnings Conference Call. Joining us for today's presentation are the company's CEO, Thomas Stepien, and CFO, Ricardo Rodriguez. At this time, all participants are in listen-only. Following management's remarks, we will open the call for questions. Please note that this presentation contains forward-looking statements, including, but not limited to, statements regarding our financial and business performance, our business strategy, future product development or commercialization, new customer adoption and new applications, our growth and the growth of the markets in which we operate, and the timing and ability of Amprius Technologies, Inc. to expand its manufacturing capacity, scale its business, and achieve a sustainable cost structure. These statements involve known and unknown risks, uncertainties, and other important factors that may cause Amprius Technologies, Inc.'s results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied in such forward-looking statements. For a more complete discussion of these risks and uncertainties, please refer to Amprius Technologies, Inc.'s filings with the Securities and Exchange Commission. This presentation includes a non-GAAP financial measure, which is adjusted EBITDA. This non-GAAP financial measure does not replace the presentation of Amprius Technologies, Inc.'s GAAP financial results and should only be used as a supplement to, not a substitute for, Amprius Technologies, Inc.'s financial results presented in accordance with GAAP and may not be comparable to calculations of similarly titled measures by other companies. A reconciliation of adjusted EBITDA to net loss, the most directly comparable GAAP financial measure, is included in our press release, a copy of which is filed with the SEC and posted on our website. Finally, I would like to remind everyone that this conference call is being webcast and a recording will be made available for replay on the company's Investor Relations website at ir.amprius.com. In addition to the webcast, the company has posted a press release that accompanies these results, which can also be found on the Investor Relations website. I will now turn the call over to Amprius Technologies, Inc.'s CEO, Thomas Stepien, for his comments. Sir, please proceed. Thomas Stepien: Welcome, everyone, and thank you for joining us this morning. Let's start with Slide two. 2025 was a landmark year for Amprius Technologies, Inc. Our second generation SiCore silicon anode batteries gained broad adoption with many unmanned aerial vehicle customers. One recent win I would like to highlight is Nokia Drone Networks, whose commercial drone-in-a-box system is one of the most capable platforms on the market. Amprius Technologies, Inc.'s balanced cells provide Nokia drones with the burst power needed for takeoff and the sustained energy required for extended flight, ensuring obstacle avoidance, return to home, and other safety-critical subsystems remain powered throughout the mission. Our technology enables drones to fly longer, carry more, and operate in conditions once considered impractical, helping customers improve safety, reduce downtime, and increase mission value. In early January, we were honored to receive a Best of Innovation Award at CES. Our silicon anode lithium-ion battery was selected from the thousands of entrants for delivering an industry-leading 520 watt-hours per kilogram. For perspective, that is nearly twice the energy density of conventional graphite-based lithium-ion cells. Our cells are lighter, longer, and stronger. In December 2025, the U.S. updated the National Defense Authorization Act. Under the revised NDAA, batteries used in Department of War UAVs must meet two sourcing requirements. First, final battery assembly must be conducted by a non-foreign entity of concern, typically located in the United States or in an allied nation. Second, functional cell components must not be sourced from or produced by FEOC. For new DOW acquisition programs, both of these requirements must be met by 01/01/2028, approximately 22 months from now. NDAA is important in the context of our contract with the Department of War's Defense Innovation Unit. Awarded in July 2025 through a competitive solicitation from the 2024, the contract was recently increased and now totals $14,800,000. The DIU contract provides prototyping funds for Amprius Technologies, Inc. to accelerate production of NDAA-compliant SiCore pouch cells used in military unmanned autonomous systems. The contract includes milestones for supply chain diversification, pilot line expansion in Fremont, California, and the selection of NDAA-compliant contract manufacturing partners. Amprius Technologies, Inc. is ahead of schedule on NDAA compliance. One of our South Korean contract manufacturing partners has been delivering cells to customers since September 2025. We have expanded the Amprius Technologies, Inc. Korea Battery Alliance to three contract manufacturing partners, and in early January, we announced our first U.S.-based partner, Nanotech Energy, located in Northern California. I am happy to report that our scorecard for the battery component sourcing is 11 out of 11. All internal SiCore components—anode, cathode, electrolyte, separator, and seven additional elements—are now sourced from primary and secondary suppliers in NDAA-compliant countries. We are prepared to supply domestic cells to customers such as L3Harris Technologies, which delivers integrated solutions across space, air, land, sea, and cyber in support of national security. On the financial front, we completed our aftermarket financing facility during the fourth quarter. We also fully exited our Colorado facility and settled the remaining lease and expense obligations. Fourth quarter revenue reached a record $25,200,000, representing an 18% quarter-over-quarter improvement and a 137% year-over-year increase. Gross margin improved to 24%, a nine percentage point increase quarter over quarter and a 45 percentage point increase year over year. Full year 2025 revenue reached $73,000,000, 3x our 2024 level. Gross margin for the year was 11%, up significantly from the minus 76% in 2024. Later in this call, Ricardo will share additional financial details and color. Now turning to Slide three. Amprius Technologies, Inc.'s customers choose our batteries because they materially improve the performance of their products. By replacing standard graphite-based cells with our silicon-based cells, customer drones achieve significantly longer flight times. One way to think about our batteries is through the analogy of espresso. Espresso delivers the same amount of caffeine energy as a standard cup of drip coffee but in a much smaller volume. And if you match the volume and weight of the two, espresso gives you roughly twice the energy. Drone customers tell us this consistently. Amprius Technologies, Inc. batteries extend their flight time. In many cases, flight times double. Amprius Technologies, Inc. Xpresso batteries give customers the extra energy they need to elevate system performance. We elevate without compromise. The Amprius Technologies, Inc. silicon anode platform spans 22 cell designs across multiple chemistries, pouch and cylindrical formats, and a range of sizes. We have tuned and optimized cells for specific customer duty cycles, giving us the precision to deliver ideal solutions for energy-focused missions, the takeoff power required by air taxis, and applications demanding high cycle life. This tunability is a significant differentiator for Amprius Technologies, Inc. Slide four looks at our market segments. We serve five principal end markets. The first is UAVs, including drones used for defense, public safety, security, and logistics. Defense platforms that require high energy density typically support long loiter missions and are primarily ISR—intelligence, surveillance, and reconnaissance. Public safety drones are typically DFR—drone as first responder—systems integrated directly into 911 emergency workflows. In the U.S., more than 1,500 emergency departments now operate DFR programs as a part of real-time response operations. Drones are pre-positioned in fixed launch stations across the city and are dispatched automatically or semi-automatically the moment a 911 call is received. The objective is to get a camera over the scene in under two minutes, well before police, fire, and EMS units can arrive. Market segment number two is satellites and space. Satellite launch providers charge customers by the gram, making our ability to deliver the same energy at roughly half the weight—our espresso advantage—extremely valuable. Alto, a division of Airbus, is a long-standing customer in this segment. Its Zephyr high-altitude pseudo satellite are solar-powered aircraft that operate at 70,000 feet for months at a time. The persistent ISR capability that Zephyr provides is strategically important for both defense and commercial applications. Amprius Technologies, Inc. cells are also gaining strong traction in light electric vehicles—e-motorcycles, scooters, and e-bikes. Wins in this segment typically align with the launch of new models, so revenue tends to be lumpier than in other markets. This category also includes a healthy replacement and range extender sub-segment, an area we are beginning to explore. Robotics is our fourth market segment, and while still early, it is developing quickly. Robot performance is closely tied to battery capability, and Amprius Technologies, Inc.'s tunable cells can deliver both the high power needed for tasks like lifting and the energy required to maximize time between charges. With strong growth rates and expanding use cases, this segment is highly promising. The final segment that depends heavily on our industry-leading energy density is the electric vertical takeoff and landing aircraft, eVTOL, and other advanced air mobility. Customers are developing autonomous, point-to-point regional transport for both passengers and cargo. Several companies are currently testing our cells, and we have a customer-funded joint development program underway with one leading company. In this program, we are tuning our chemistry to meet the specific power and energy requirements of their aircraft. Turning to Slide five. Amprius Technologies, Inc. captures customer interest through our flexibility. We work closely with customers to understand their energy, power, and cycle life requirements, then select internal components that meet those needs while aligning with country of origin constraints. Because SiCore cells are produced on standard lithium-ion equipment, we can secure early design wins from our California pilot line and seamlessly transfer cell recipes and process steps to our contract manufacturing partners as volumes scale. During Q4 2025, we introduced three new cells to our silicon anode platform and retired one. The portfolio now stands at 22 designs spanning energy, power, and balanced cells in both pouch and cylindrical formats. We continue to offer the tunability, speed, and flexibility our customers rely on. Now turning to Slide six. Increasingly, customers care about the country of origin for both battery cells and internal components. Much of this is driven by the NDAA requirements discussed earlier, and the impact now extends to non-defense customers as well. Avoiding foreign entities of concern has become a compliance mandate, not just a marketing detail. Procurement teams are asking detailed questions about where cells are manufactured, where anodes and cathodes are processed, and where critical minerals originate. Fortunately, we anticipated this shift and began executing more than a year ago. In 2025, we announced our first NDAA-compliant contract manufacturer in South Korea, which delivered cells to customers just one quarter later. Last week, I was in South Korea with several of my Amprius Technologies, Inc. colleagues visiting component suppliers, checking in with current contract manufacturing partners, supporting new partners coming online, and meeting customers at our booth at DroneShow Korea. We still have work ahead on the NDAA supply front. With multiple contract manufacturers, 22 cell models, and 11 internal components, aligning every variable is operationally intensive. But we got an early start, we invested wisely, and we consistently share our progress with customers. They understand our roadmap, for both cell manufacturing and for cell content sourcing, and they respect our ability to deliver the right cell from the right location at the right time. On Slide seven, we present our high-level cell roadmap. The Amprius Technologies, Inc. roadmap highlights our industry-leading energy density on the vertical axis over the next 18 months. It organizes our portfolio into three cell types: high energy cells, where long uptime drives range and usability—key segments here include drones, robotics, and LEDs; high power cells, which deliver short, intense power bursts—applications include power tools, data center backup systems, and aviation platforms such as eVTOLs and drones that require power pulses for takeoff and landing; and long-life balanced cells designed for applications that demand both power and energy along with extended cycle life—these include eVTOL, satellite, and bendable device applications. We routinely share this high-level roadmap and the detailed information behind it with customers. We listen closely to their needs, incorporate their feedback, and adjust the roadmap as required. I will now turn the call over to Ricardo Rodriguez, for the financial results. Thank you, Tom, and good morning, everyone. Ricardo Rodriguez: I am very happy to be reporting another record-breaking quarter on behalf of our team, starting on Slide eight. In the 2025, we delivered $25,200,000 of revenue. This translates into 18% growth over the third quarter and is over 2.3x higher than the same quarter last year. I am particularly excited about crossing the $100,000,000 annual revenue run-rate mark, which positions us to deliver over $1,000,000 of revenue per employee, joining a very selective and unique group of companies. Echoing Tom's remarks, clearly the monster role technical edge has continued driving demand for our products as we broadened the portfolio and expanded our capacity in close collaboration with our manufacturing partners. For the year, our revenues were $73,000,000, in line with our expectations and just over three times higher than 2024. Our Q4 cost of goods sold, at $19,300,000, did not increase at the same rate as the revenue, thanks to a favorable product mix and higher volumes. This enabled gross profit margins of 24%, a significant improvement over our Q3 gross margin of 15%. Our lower SiMax line mix was now below percent of revenues, providing a powerful driver of our gross margin improvements. For the year, gross margins were 11%, reflecting a step-change improvement over negative 76% gross margins in 2024 as our revenue from SiCore increased around the world. Our resourceful culture enabled the team to only spend $8,900,000 of OpEx, which excludes a one-time charge of $22,500,000 linked with our decision to not develop a facility in Colorado and the decommissioning of some equipment in Fremont. The quarter-over-quarter increase in OpEx of $900,000 was driven by a targeted investment in our sales and go-to-market efforts along with the reallocation of some R&D expenses from cost of goods sold to OpEx as development services agreements are completed. These expenses, including the one-time charge of $22,500,000 that I mentioned earlier, bring our Q4 operating loss to $25,400,000 compared to an operating loss of $4,700,000 in the prior quarter. Without the one-time charge, our operating loss would have been $2,900,000, which would have reduced our operating loss by 37% quarter over quarter. A similar dynamic applies to our annual operating loss of $46,600,000, which would have been $24,100,000 without the same one-time charge and the 48% reduction of the operating loss of $46,200,000 from 2024. Our GAAP net loss for the third quarter was $24,300,000, or negative $0.18 per share, based on 132,100,000 weighted average shares outstanding. Without the one-time charge, our loss would have been only $1,900,000, or $0.01 per share. In Q4, we recorded adjusted EBITDA of negative $1,800,000 compared to negative $1,400,000 in the prior quarter. With $1,600,000 in operating costs from Colorado, we would have actually had positive adjusted EBITDA of $177,000 in 2025. As a reminder, we define adjusted EBITDA as net income or loss before interest, taxes, depreciation, amortization, stock-based compensation, and other items that we do not believe are indicative of our core operating performance. In Q4, these adjustments included $1,200,000 of depreciation, $1,900,000 of stock-based compensation, $1,100,000 of interest and other income, along with $1,600,000 of quarterly operating cost linked to the Colorado facility. If we adjust our EBITDA for the costs that we will now not be incurring in Colorado, our adjusted EBITDA in 2025 would have been negative $5,300,000, reducing our EBITDA loss by 77% year over year and putting us on a path to have positive adjusted EBITDA above our current revenue run-rate. As of the 2025, we had 134,500,000 shares outstanding, which was up by 4,100,000 from the prior quarter. The change includes approximately 2,300,000 shares issued from option exercises and RSU vesting along with 1,800,000 shares issued under our at-the-market offering program. Now turning over to cash flow and the balance sheet. We ended the third quarter with $90,500,000 in cash and no debt. The main drivers of cash flow in the quarter were the following: $13,500,000 used in operating cash flow was mainly driven by a near-term $1,800,000 increase in accounts receivable and a $2,100,000 increase of inventory. $2,240,000 of Q4 investments that are being funded by the Defense Innovation Unit, or DIU, as part of our project to stand up NDAA-compliant pilot and manufacturing lines. This brought our total CapEx in 2025 to $4,400,000. And lastly, $23,100,000 from financing activities consisting of $19,600,000 from the issuance of common stock under our at-the-market sales agreement and $3,500,000 of proceeds from warrants and option exercises. As we announced on January 12, we have now terminated our at-the-market offering program. Before I turn the call back to Tom, I would like to take a moment to frame out our outlook for 2026 and the North Star beyond that using Slide nine as the backdrop. With what we know today, we believe that by leveraging our platform and existing relationships, we can deliver at least $125,000,000 of revenue in 2026, which would enable us to have our first full year of adjusted positive EBITDA of at least $4,000,000. This baseline level of profitability would translate into a net loss of $8,000,000 for the year, or $0.06 per share, assuming 134,500,000 shares. When we say at least, we mean that we believe that while we are positioned to deliver additional upside, we would rather size this incremental opportunity as it happens than commit to delivering it as we work our way through what can be a great year for Amprius Technologies, Inc. Our CapEx for the year will be less than $10,000,000 as we have made a decision to strategically invest in diversifying our supply chain and expanding manufacturing capacity within our Fremont facility to include electrode manufacturing. As noted earlier, we are doing this in collaboration with the U.S. Government Defense Innovation Unit and have secured a contract for $14,800,000. With what we know today, we expect this funding to cover most of our capital over the next several quarters as we work to develop a growing and resilient source of supply in a dynamic trade environment. Last month, alongside the announcement of our agreement to produce cells with Nanotech Energy in the U.S., we also reported that we eliminated a lease and related expense obligation of over $110,000,000 in Colorado by settling it for $20,000,000. As a result, you can expect our cash position in Q1 to decrease by that amount, along with the reduction of $13,400,000 in right-of-use assets and the $33,200,000 reduction in near-term liabilities in our balance sheet. In forecasting our cash burn, we believe that our current revenue level and even slight improvements from these can put us on a path to mainly consuming cash for working capital versus funding operating expenses in the near term. Looking further ahead, we believe that as we work through 2026, it will become increasingly clear that our plans to build an efficiently scaled, multi-market leader that sets the technical pace in high energy and density power cells are realistic. As we close out the decade, we are targeting making the most of over $600,000,000 of contracted capacity by enabling our customers’ most mission-critical duty cycles and positioning us to deliver over 30% gross margins. By maintaining our resourceful culture and low-cost structure, we can then translate that into at least 20% EBITDA margins. Most importantly, the capabilities in go-to-market, product development, quality assurance, and enabling scale that we would have by then would position us for additional growth beyond 2030. That opportunity has our team energized and motivated to work together to meet and hopefully even surpass these goals by improving ourselves and how we work. With that, I am happy to turn the call back to Tom for his closing remarks. Thank you very much for your attention and continued support. Thomas Stepien: 2025 was a very strong year. We delivered consistent quarter-over-quarter revenue growth, expanded our customer base to more than 550, demonstrated state-of-the-art technical performance, and achieved three consecutive quarters of positive and growing gross margin. The lithium-ion battery market is intensely competitive, and we embrace those challenges. In 2026, we remain focused on delivering next-generation silicon anode performance that raises the bar for energy density and sustained power without compromising safety or reliability. We are equally committed to meeting the cell manufacturing and content country of origin requirements our customers expect. We will broaden our product portfolio to unlock new market opportunities and convert a growing number of customer engagements into formal qualifications and deployments, particularly across mobility-centric platforms. We are starting 2026 in a financially clean position, having completed our ATM program, fully exited the Colorado facility, and transitioned all legacy SiMax Generation One customers to our Generation II SiCore platform. We are incredibly bullish about the opportunities in front of us. We look forward to meeting and reconnecting with many of you as we participate in a number of upcoming investor conferences. Thank you for your continued interest and support of Amprius Technologies, Inc. With that, I will turn it back to the operator for questions. Operator: Thank you. We will now open for questions. Ricardo Rodriguez: I ask you please limit yourself to one question and one follow-up. Operator: The first question is coming from the line of Eric Stine with Craig Hallum. Please proceed with your question. Eric Stine: Hi, Tom. Hi, Ricardo. So curious—maybe if we could start just with the selection of the 11 components. I mean, a quite significant step. But just curious, you talked about it a little bit, Tom, but just maybe a little bit more in-depth about what you need to do now, what some of the steps might be in 2026. Obviously, you have got a head start, but those steps as you work towards gaining that full compliance, and I would assume you are trying to do that well in advance of the 01/01/2028 date. Thomas Stepien: Yes, good question. So we have technically selected anode, cathode, electrolyte, separator, and [other elements] that make up the internals of our battery and give us the internal performance that we talked about. We have primary vendors and secondary vendors. It went through a pretty rigorous testing process. This all started with the DIU project back when it started in July '25. So we have had six, eight months to turn the knobs here. So we are happy with the performance of the cells with the different internals. In fact, in some cases, we see slightly improved performance compared to the legacy components. So that is where we are. The work that remains includes productizing and getting all of those new suppliers under multiyear agreements. Part of what I was doing in South Korea last week is talking to some of those suppliers because Korea is, outside of China, probably the second largest country in terms of suppliers. There are ones in Japan. There are suppliers here in the U.S., etc. So we need to put those agreements in place, make sure that we can operationalize it, get them to deliver their components to our contract manufacturer. So there is some operational work. There is some supply chain work that is still on our plate to complete to finally deliver full cells at quantities that our customers are demanding. Eric Stine: Got it. So it sounds like you are really through all the technical or the engineering side of it. It is now more about just making sure that—yes, you have qualified those sources—but can you lock those down and be able to incorporate those in your products for, obviously, larger volumes? Thomas Stepien: That is a good way to summarize it. The heavy lifting on the technical side is done, and now it turns over to our operational teams who need to do exactly that and get the supplies. Eric Stine: Appreciate that. And then just maybe for my follow-up, saw the first Gauntlet Awards under the Drone Dominance Plan, and I know there were 25 awardees. I do not know if you are able to give specifics or any color around this, but of those 25 awardees, just kind of curious how many of those are your customers? How do you view that as an opportunity? And then obviously, just your outlook for the next steps under the executive order? Thomas Stepien: Yes. The gauntlet one of the Drone Dominus program had 25 invitees. We should see here in the next couple of days the results of the actual fly-off that has completed. Our understanding is that it was done last week and there is a down-select going. We are all over that in terms of understanding where is Amprius Technologies, Inc. inside in each of the 25. We are looking forward to understanding the official down-select list that, again as I mentioned, should be [out shortly]. So that is where we are. Stay tuned on specifics. I think as that list is published, we may be able to talk about [more]. Understand there is a second, third, and fourth gauntlet, so this will happen over the next 18 months or so. This is early, but we feel good about where we are today. Operator: Thank you. Our next question is from the line of Austin Volle with Needham and Company. Please proceed with your question. Austin Volle: Hey, guys, thanks for taking my question and congrats on the great results. I just wanted to dive into the new customer wins. Historically, this was a metric you guys were giving. In the deck, it says that you are working with 550 customers. So, my question is, is it fair to assume you guys added over 100 new customers in the quarter? And then just trying to get a sense of where they are in volume production. Are we still kind of in the early design phase for the majority of these? When do we get to those high-volume production levels? Thomas Stepien: It is fair, Austin, to assume that it is more than 100. It was 444 in the last call in November. You said 550. So yes, we continue to add to that. We have both repeat customers, of course, which is an interesting signal that we have earned the trust and can grow that, and we continue to expand the funnel with over 100 new logos. In general, the 100 new ones are new evaluations, right? Some of these are a couple of hundred cells for testing. They come from our Fremont pilot line, which is set up exactly to win these [programs]. So we keep track of those because we are planting seeds first. The average PO—we looked at that just the other day—during Q4 increased relative to Q3. Customers are purchasing larger volumes. But it is still early days here. You can obviously do the math on our revenue; we are at single-digit market share in these markets, and growing. So, it is early. We have a lot of work to do to capture what we believe is our fair share given our tech. Austin Volle: Okay. Thank you for that. And just one quick follow-up. Looking at your guidance and kind of what is baked in from a geographic perspective—historically, Europe or international has been the main driver. Could you talk about what is baked into that and what we should be expecting from a regional perspective? Ricardo Rodriguez: Yes, sure, Austin. We see a continuation of the same trends that we saw especially in Q3 and Q4, and are really waiting to see where the U.S. comes out in terms of enabling us to deliver additional upside. So, frankly, within the guide, we expect our mix to look pretty similar to where we were in Q2, Q3 of last year. Austin Volle: All right. Well, thank you, guys, and best of luck for the rest of the year. Ricardo Rodriguez: Thanks, Austin. Thank you. Operator: Our next question comes from the line of Mark Schubert with William Blair. Please proceed with your question. Mark Schubert: Tom and Ricardo, congrats on the great progress in 2025. Question about some recent geopolitics. The war in Iran—we are starting to see the U.S. drone warfare capabilities. But at the same time, we are starting to see some strain in the munition stockpiles. So I am wondering, in the past six days, have you had any increased urgency from any U.S. military defense contractors? Are they looking for you to ship more batteries yesterday? Thomas Stepien: Yes. Over the weekend, we actually had one customer who themselves have a reconnaissance drone—tends to fly for hours and days at a time—that was a little bit on hold that is getting a pull themselves, which creates a pull for us. And that is where this pilot line we have here where, for Ricardo and I, are in Fremont and quickly do a student body right. Okay, let's make those in this one and eight cells. Deliver them quickly, i.e., in a couple of weeks, to that. So we are seeing some of that. It is hard to talk about more than that, just a single customer, but that is one data point to share. Mark Schubert: The Nanotech partnership we thought was a creative solution to find some capacity. How much demand are you seeing from these super NDAA-compliant customers where they need U.S. manufacturing? And are you looking to find more creative solutions like another Nanotech, or do you think that the pilot line that you are increasing capacity in Fremont with the DIU investment will provide enough capacity later this year? Thomas Stepien: Yes. The pilot line is well named because it is primarily to win initial designs. And once there is volume that is a couple of thousand cells, that is when we transfer to one of our partners. Nanotech helps us on cylindrical cells, and we are getting a really strong pull. I was at [customer meetings in] December. As the NDAA changes [rolled out], they are okay with some of the cells they are getting today from the countries and content today, but they really want to understand the when. We mentioned that earlier. So we share with them the roadmap—here is when we are really going to have volume from either Nanotech or others. And there will be more coming. That is clear. The pull is there. This will balance out in a couple of years. Some of our customers are insensitive to this, and Korea is serving that, as I mentioned. As we know, we have sales from Korea today, and some must have U.S. So it will balance out maybe one-third, one-third, one-third, in a couple of years, grading that transition. Operator: Thanks, Tom. Your next question comes from the line of Colin Rusch with Oppenheimer. Please proceed with your question. Colin Rusch: Thanks so much, guys. Tom, I would love to get a better understanding of what is happening here within the technology roadmap. Are these fundamental changes in some of the electrolyte and binder technologies or any of those separator technologies as you move towards these higher performance cells? And how mature is the testing process to give you comfort that you will be able to execute on these over the next 18 to 24 months? Thomas Stepien: Yes. We think that—let's go inside the battery a bit. So the anode with our silicon design, which took us a little while to get right, we think is pretty strong. So the big question is, okay, why cannot we go above 450, 500—depending on the cell type—watt-hours per kilogram? Is that some of the other components, as you alluded to? Primarily on the cathode. So there are knobs being turned by our R&D folks. The thinking is that cathode may be slowing down the overall package. So there is some work being done. We had a Board meeting yesterday and shared our goals to the Board on specifics related [to that], and it is very focused on improving that. We are big believers you get what you measure. We are measuring our energy density inside. We are R&D focused on that. On the testing part, we feel pretty good. We have got a pretty robust system here at the small scale, the manual scale P&L, and then as these 30 different tools arrive, funded by the defense unit, that is getting stronger. Colin Rusch: The performance that you are talking about here from a technology perspective is just fundamentally advantaged and looks defensible in a pretty material way. And the target market that you guys are looking at are so much larger than what it looks like the target is for 2030. So can you talk a little bit about the considerations around the pacing of growth, pricing and margin, kind of internal targets as you think about growing this platform and doing it sustainably? How should we think about the key gating items and how we should think about potential acceleration relative to those targets? Ricardo Rodriguez: Yes, Colin. So again, I think this all really just starts with the technical performance that we are able to deliver. So in our view, if we deliver everything that is there on Slide seven, and the markets grow—maybe not even to the full extent, but half of what we have on Slide four—we look at some of the main drivers. And as we were looking at the markets, one element that people forget about: there is a bit of a replacement dynamic within some of these end applications. And then it really comes down to us leveraging the capacity that we have contracted, having that capacity in the right place, so that we can deliver the right cell at the right time from the right place. And, yes, when we look at it, I agree with you. I think that is why we have $600,000,000 plus. We will find out over time what capacity is needed in 2030. But with the way we are looking at the world today, I think this is, as you mentioned, pretty achievable. Colin Rusch: Thanks so much, guys. Thomas Stepien: Thank you, Colin. Operator: The next question comes from the line of Ryan Pfingst with B. Riley Securities. Please proceed with your question. Ryan Pfingst: Hey, good morning, guys. Thanks for taking the questions. Hey, Ricardo. Tom, you mentioned market share earlier. Could you frame how you are thinking about your aviation market share today, maybe for drones globally? Or if you could get more specific within military drones or advanced drones? Thomas Stepien: Yes. Thanks, Ryan. It is, as we have said, single digits. These markets are large and growing. We have updated—and you see that on Slide four—our understanding that also goes into our 10-Ks. We are trying to really double-click on that for some of the specifics. Drone taxonomy is groups one through five. Okay, we know that batteries are used in one, two, and half of three. Not in four and five. How much of that is industrial versus defense? What is going on by region? DFR—drone as [first responder]. We have not yet found a good source for that double-click. We got the first click to understand as we present it, but our goal is to have more definition that we can have both internally and share externally. We have started—we have a good third party who is helping pull that together. But it is so early and it is changing so fast, right? This dominance program, the U.S. has admitted that, hey, we got to catch up. So what we have today is what we can share. We are not holding anything back, but we are certainly trying to get smarter and understand that better. Ricardo Rodriguez: And Ryan, the point that we are trying to drive here is that our share depends on how you subsegment the market. In some cases, our batteries basically enable the duty cycle. By the time you power the drone, a camera, a gimbal, a radar, multiple sensors, you wonder how there is energy left in the battery to still make the drone fly a couple of miles away. And so we are seeing our share be pretty high on those drones that have a lot of other power-draining devices, while those more inexpensive drones—some of them are frankly using remote control car batteries—and therefore that is not a market for us to play in, even though the volumes are pretty high. So we do believe, just through process of elimination of the folks who are not yet customers, that we are positioned to do very, very well in that high power, high energy draw drones—tend to be the larger ones that are used for surveillance or more complex missions. Ryan Pfingst: Got it. Appreciate that detail. And then just a follow-up on guidance. Could you give more detail around what is baked into the baseline revenue estimate, maybe what needs to happen to exceed it? And what your revenue capacity is roughly today? Thomas Stepien: Yes. I will answer it sort of in reverse order. In our assumptions is what we see from current customers and some prospects that we are looking to convert here into customers in Q3 and Q4. Sort of going back to Austin's question, we still see the UAV market accelerating from being pretty well established in Europe. And what is not baked in fully just yet is any [incremental upside] that could come from additional drone production and sourcing here in the U.S. So in our guide, we are still assuming that the mix is meaningfully outside of the U.S. for 2026. And as I said, we will size the upside here as we deliver it because there are some pretty quick decisions being made on the U.S. side around what this demand could be. Alongside some of the calls that we got here this weekend and have been getting this week, we do see this evolving favorably from a demand perspective, but we want to size it with POs, not with some loose idea of what the pipeline is. Ryan Pfingst: Appreciate it, guys. I will turn it back. Thomas Stepien: Thank you. Operator: The next question is from the line of Ted Jackson with Northland Securities. Please proceed with your question. Ted Jackson: Thanks very much. I hope you can hear me—a xylophone band literally set up behind me in the airport while I was on this call. So it is really loud. I have got a lot of really nice ambient music for you. I had a couple of questions. So, a real simple one. You made a comment, if I recall, that your SiMax revenue has fallen about 60% of total—I guess, we are ongoing—and then you have transitioned your Gen One SiMax customers to Gen Two SiCore. So I guess my question is, what was the mix of revenue SiMax or SiCore coming into the year? What was it coming out? Where do you see it at the '26? Ricardo Rodriguez: At the '26, we see it zero. And coming in it was about 25%. Ted Jackson: Okay. Then my next question—with the NDAA compliance success that you have had, in terms of getting all your suppliers in place and your contract manufacturing in place—where do you think you stand in that process vis-à-vis the market as a whole? Do you think that you are on a path with everyone else or perhaps a few lengths ahead? And do you see the ability to get there first as a competitive advantage? Thomas Stepien: Yes. So we think that we are near the front. It is hard to know whether we are at the front. Every battery manufacturer got the memo and is looking to serve. We tend to take “only the paranoid survive,” so we never really want to think of ourselves as being at the front. We are happy with our industry-leading advantage, etc. We are working hard. We have got work to do for sure. As I mentioned, there is more announcing here—work is underway. You can imagine that there is a lot of effort long before things get announced. So we are happy with where we are. We are very focused on making sure that we keep up with [demand] because it is [evolving quickly]. So happy, but work to do. Ted Jackson: Okay. And then my last question—just looking over at Slide four over to the right where you have your OEMs and key market players. You have a lot of corporate logos up here. Have all of these logos in some form or fashion sampled or looked at the Amprius Technologies, Inc. product? Are they customers? How much do you give to someone with this—like, some of them you have clearly announced as customers, some we have not. Are these all people that you actually have kept making your battery in the past for some form or fashion? Thomas Stepien: Yes. You are right. Some are customers. The title of that column on Slide four is appropriate, key market players. So some are customers that we can talk about publicly, some are potential customers where we are in testing, and other ones we have to earn their trust. So that is the mix that we have on that right-hand column. Ricardo Rodriguez: But in general, these are all folks for whom it would be logical to buy cells from us. And they may have bought cells at low volumes for testing as well. Ted Jackson: Okay. I will step out of line. Thanks very much and congrats on the quarter. Operator: Thanks, Ted. Thank you. Our next question is from the line of Derek Soderberg with Cantor Fitzgerald. Please proceed with your question. Derek Soderberg: Yes. Hey, guys. Thanks for taking the questions and my congrats as well on the results. First one on the Nokia—hey, the first question is on the Nokia Drone Networks. Is this sort of a single product win? Is it more of a platform win? Can you talk a bit about the unit volumes and ramp timing for that? And then as we sort of look into exiting the decade, can you sort of talk about how large the opportunity would be with the Nokia piece? Thomas Stepien: We like Nokia, Derek, because it is a communications platform generally, right? Our understanding of this platform is that it is able to beam 5G signals to difficult-to-reach places where you cannot easily install cellular. It is a platform. If you talk to the Nokia guys, there is a lot of work that they have planned in the future, and they have their roadmap, of course. We do not tend to break out specific customer volumes and share those. We do like this because it emphasizes what we say—this espresso advantage. Nokia drones with our batteries can fly 40%, 50% longer, and other customers twice the flight time compared to standard batteries. That is what led them to us. Derek Soderberg: Got it. That is helpful. And Tom, you have got a validated technology, hundreds of customers. You have been commercial for seven, eight years now with Fortune 500s. You really have had a head start, at least in the drone opportunity. How do you think you can best leverage that position to really accelerate the growth of the business? Thomas Stepien: Yes. It is about execution on the operational side for sure—to get the customers what they want, when they want it, and from the right place. We are also investing into the customer-facing side of the house. We have added to our sales team. We have a pack partner program that is embryonic but growing. Some of our cells go directly to the folks who make crafts—products that fly or roll or walk around like robots do. Others go through pack houses, and those packs then go into those end-use products. So we are investing there for sure. We are investing in some of our internal processes. We want to be able to meet and exceed this demand that we see. Derek Soderberg: Super helpful. Thanks, guys. Operator: Thank you. Our next question is from the line of Chip Moore with ROTH Capital. Please proceed with your question. Chip Moore: Hey, good morning. Thanks for taking the question. I want to follow up—actually, you brought up a good point on the replacement dynamic for batteries. Have you done any sort of analysis on what replacement can become as some of these markets mature, understanding that some of them are still pretty nascent? Where do you think that can go over time? Ricardo Rodriguez: I think it can be pretty meaningful depending on the market. In eVTOLs, it could very well be even more than the initial install volume if these things are—almost the same way, if you look at jet engine manufacturers in planes today, the maintenance and the replacement of those parts within those jet engines make the Rolls Royces of the world more money than selling the jet engine the first time. And that is a dynamic that you obviously do not see in EVs because you hopefully do not have to replace the battery—you just replace the whole car. But in UAVs, in robotics, in eVTOLs, we are seeing a little bit of a razor–razor blade dynamic, where the replacement market could be even larger than the initial sale market. And so, of course, depending on what assumptions you have for that, you end up with completely different market sizing. There is also a lot of work that can be done here to develop a standardized battery pack, and so this is something that we think about pretty frequently. We are looking for the right way to frame this out for the industry so that we do not have customers pulling in different directions when the duty cycle and the requirements are pretty clear and where we can drive meaningful convergence. Chip Moore: Yeah. No. That is helpful, Ricardo. And maybe just for my follow-up—appreciate all the new detail in the slides, great job. On the market slide, on Slide four—huge opportunities. What about opportunities outside of those core markets—fast charge and discharge capabilities, data center at the rack level, higher-volume electronics? Just maybe quickly address some of the adjacencies. Thomas Stepien: Yes. We alluded to this in Slide seven. There is a little picture of a data center there for the high power cells. That is an opportunity. Another one that we are looking at are battery packs for military applications. So the average soldier carries over 100 pounds of gear, and the standard battery packs currently use standard lithium-ion cells. If we bring higher energy density, we believe that we can cut the weight of those packs in half, potentially even make them more powerful. And if you combine them with something like a supercap, you can even trim the upper bounds of power peaks that tend to degrade batteries further. So, theoretically, we could cut the weight of those things in half or double their capacity. Then at the same time, almost double the life of those battery packs, therefore reducing the need to replace them as frequently. So, outside of what we have in Slide four, high power cells for data centers are obviously a market. And then anywhere else where you are using a battery pack, particularly in military applications—looking to leverage some of the customers that we already have—those would be other ancillary opportunities. Thomas Stepien: And maybe just to pile on, some of the characteristics that we show on Slide three are inherent with the silicon platform. Fast charge is up—and by the way, we also can charge a lot faster—and we have a wider temperature range. So we lead with our strengths—our only-ness is energy density, or metric density. But some of these other ones really help secure the win and secure the long-term relationships that we are building with customers. Chip Moore: Excellent. Thank you very much. Ricardo Rodriguez: Thanks, Chip. Operator: Thank you. Our last question comes from the line of Amit Dayal with H.C. Wainwright. Proceed with your question. Amit Dayal: Thank you, guys. Good morning. With respect to trying to bring manufacturing costs down or the price of the batteries down, do you have any room as you iterate on your side and how much of that may come from the engineering side from your end versus what the contract manufacturers can support you with? Thomas Stepien: Yes. Certainly design is a big lever for sure. Volume plays a part also. As we get volumes up, there is some pricing that we see with the 11 suppliers we have. And then we are getting into that, as we mentioned, as we go full NDAA with the contracts and the negotiations with suppliers on the 11. So we are in the midst of some of that. But the good news is that volumes are increasing. That is a big lever. And then we will see that. When we do talk to customers and they are insisting on U.S., that is where this interesting dynamic comes in—where they want U.S., but they want pricing. So we tend to have a little bit of an arm-wrestle. But in general, we are happy with the margins we see. And you, of course, understand the guidance. I think we can get [there]. Amit Dayal: Understood. Thank you, Tom. And then just last one for me. In terms of your balance sheet, it looks really solid with over $90,000,000 in cash. It looks like at this point, you really do not need to tap the ATM anymore. Especially going into sort of a capital-light strategy with Colorado out of the picture now, what are the uses of that cash that we can think of that could maybe accelerate sales or product development? Any color on that would be helpful. Ricardo Rodriguez: Yes. I mentioned in my remarks, Amit, with the current balance sheet, we are really only looking to fund working capital. As I mentioned, our CapEx will be funded by the DIU here in Fremont. Any little bit of incremental CapEx that could be needed at the contract manufacturers to accelerate production if demand ramps up even beyond our expectations will also be funded by the balance sheet. We are also looking at putting in place a working capital line with some of our banking partners to further scale the balance sheet. And then, yes, as you mentioned, earlier this year we put out an announcement saying that we are basically done with the ATM. I think the ATM did its job over the last two years. And right now, as you mentioned, the balance sheet is solid. We think our current strategies are more than fully funded. Amit Dayal: Understood. Thank you, guys. That is all I have. Thomas Stepien: Thanks so much. Take care, Amit. Ricardo Rodriguez: Thank you. Operator: This concludes our question and answer session. I will now turn the floor back to management for closing comments. Thomas Stepien: Thank you so much for joining us on the call. Stay tuned. We look forward to meeting some of you on the road here as we attend a couple of Investor Relations events. Be well, and thanks for your support. Ricardo Rodriguez: Absolutely. As we talked about, 2025 was a great year. We think 2026 can be even stronger as we play to our strengths—our energy density—and continue to push new products, expand our portfolio, respond to the country of origin requests. We are in a fortunate position. We are certainly in it to win it, and we appreciate your support. Operator: Ladies and gentlemen, this will conclude today's conference. You may disconnect your lines at this time and have a wonderful day.
Operator: Ladies and gentlemen, thank you for your continued patience. Your meeting will begin shortly. If you need assistance at any time today, please press 0, and a member of our team will be happy to help you. Please standby; your meeting is about to begin. Good morning, everyone. Welcome to the Janus International Group, Inc. fourth quarter and full year 2025 earnings conference call. Currently, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference today, you may press 0. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Ms. Sara Macioch, Senior Director, Investor Relations of Janus International Group, Inc. Please go ahead, ma’am. Sara Macioch: Thank you, operator, and thank you all for joining our earnings conference call. I am joined today by our Chief Executive Officer, Ramey Jackson, and our Chief Financial Officer, Anselm Wong. We hope that you have seen our earnings release issued last night. We have also posted a presentation in support of this call, which can be found in the Investors section of our website at janusintl.com. Before we begin, I would like to remind you that today’s call may include forward-looking statements. Any statements made describing our beliefs, plans, strategies, expectations, projections, and assumptions are forward-looking statements. The company’s actual results may differ from those anticipated by such forward-looking statements for a variety of reasons, including, but not limited to, tariffs, interest rates, and other macroeconomic factors, many of which are beyond our control. Please see our recent filings with the Securities and Exchange Commission, which identify the principal risks and uncertainties that could affect our business, prospects, and future results. We assume no obligation to update publicly any forward-looking statements, and any forward-looking statement made by us during this call is based only on information currently available to us and speaks only as of the date when it is made. In addition, we will be discussing or providing certain non-GAAP financial measures today, including adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted EPS, and net leverage. Please see our release and filings for a reconciliation of these non-GAAP measures to their most directly comparable GAAP measure. On today’s call, Ramey will provide an overview of our business. Anselm will continue with a discussion of our financial results and 2026 guidance before Ramey shares some closing thoughts and we open up the call for your questions. I will now turn the call over to Ramey. Ramey Jackson: Thank you, Sara, and good morning, everyone. Thank you all for joining our call today. To begin, I would like to express my appreciation for our team at Janus International Group, Inc. for their hard work and dedication. 2025 was a challenging year as our markets remained constrained due to macroeconomic concerns and sustained high interest rates. We focused on execution, operating safely, and serving our customers as we worked to stabilize the business, delivering $884.2 million in revenue and $168.2 million in adjusted EBITDA for the year. Despite an unfavorable backdrop, we realized several key wins in 2025 as we worked to position the business for long-term success. On the self-storage side, Janus International Group, Inc.’s Nokē products were present at five out of six facilities earning Facility of the Year awards from Modern Storage Media. Our Betco business announced a comprehensive expansion of its metal decking product line and received a certification from the Steel Deck Institute, achieving an exceptional score and reinforcing our commitment to quality. We also unveiled a redesigned web portal for our Nokē Smart Entry platform, and in Europe, we launched a new high-security swing door. On the commercial side, our ASTA business rolled out its high-performance product offering and achieved Miami-Dade certifications, further strengthening its portfolio. From a financial standpoint, our strong liquidity and cash generation allowed us flexibility to be opportunistic with regards to capital allocation priorities in 2025. We completed a voluntary prepayment of $40 million on our first lien term loan in 2025 and repurchased 1.9 million shares for $16 million throughout the year under our share repurchase program, which had $80.5 million of remaining authorization at year-end. We were also pleased to receive an upgrade of our credit rating from S&P in October. While we anticipate market conditions will continue to be constrained, principally in new construction in North America, in 2026 we will continue to execute and focus on what we can control. As a diversified solutions provider with a global network of manufacturing and installation capabilities, we are committed to executing our strategy of further penetrating the self-storage market, increasing our share in the commercial market, driving adoption of access control technology, and pursuing strategic accretive acquisitions. I will now expand on each of these priorities. First, in the self-storage market, we have shared our strategy of increasing our content in facilities. Our acquisition of Kiwi II Construction announced in January exemplifies this approach by expanding and strengthening Janus International Group, Inc.’s exterior solutions offering and design-build capabilities. Kiwi II is a premier self-storage buildings provider. It is well respected within the industry for its high-quality service and engineering prowess. They have an established, active base of institutional customers and a solid presence on the West Coast and in Florida. Kiwi’s business is complementary to our design-build business, Betco, which has a stronger geographic presence on the East Coast and primarily serves non-institutional customers. Kiwi also aligns well with our Janus International Group, Inc. core business, which focuses on interior self-storage solutions, including doors and hallways, and this integration will allow Kiwi to offer a full end-to-end solution for self-storage. We are very pleased to welcome Kiwi to the Janus International Group, Inc. family, and our early integration efforts are progressing well. Another key driver of our self-storage market penetration is leveraging our differentiated R3 platform. We estimate that nearly 65% of the facilities in the United States are over 20 years old, supporting sustained renovation activity. Industry consolidation is further accelerating this trend as large operators invest to bring aging assets to modern standards. Janus International Group, Inc. is uniquely positioned to meet these needs as the category creator for self-storage restore, rebuild, and replace services. Our International segment represents another important lever in advancing our self-storage penetration. Over the past several quarters, we have carefully refined our product offering and go-to-market strategy to better serve our customers, which has been a driver of our international revenue growth this past year. We are committed to continuing the momentum we saw in 2025 by focusing on increasing scale in our Nokē product as well as pursuing targeted geographic expansion into new countries that will support strategic growth moving forward. The second priority of our growth strategy is increasing our share in the market for commercial doors. The commercial door market is vast, and as a smaller player in the space, we see plenty of opportunity to drive growth over time. As demand for commercial construction continues to grow, we are working to refine our offering and leverage our manufacturing expertise to provide a robust suite of commercial door solutions. We are seeing positive results from our expanded distribution footprint, as well as our multiyear efforts to secure product specifications. We are pleased to share some of our rolling steel doors are now being specified in data centers, representing a meaningful step forward for Janus International Group, Inc. in a fast-growing segment. Next, on the access control front, adoption of our Nokē Smart Entry system continues to progress. Our industry-leading smart security system improves efficiency for operators by streamlining labor needs, reducing theft, and increasing unit-level security. Nokē also offers operators high-value customer insights such as usage trends and other unit-level data. At the same time, the smart locking solution enhances the customer experience, allowing for a seamless access solution and features such as remote monitoring and digital key sharing that provide a competitive advantage for operators. As of year-end, we had 458,000 installed units, representing an increase of 25.5% year over year. As I shared on our last earnings call, we have seen an increase in interest from large institutional customers for our Nokē products. We are encouraged by this momentum as we continue to enhance our offering and move towards scale and improved margin performance in our Nokē business this year. Finally, we will continue to pursue strategic acquisitions to build on our track record of identifying, executing, and integrating acquisitions to support our growth. As we have stated, M&A is part of our DNA. We will continue to seek value-added opportunities that have a strategic fit within our organization in order to expand our product and solutions offerings. Consistent with the priorities I just outlined, we are initiating our 2026 guidance range. We expect revenue in the range of $940 million to $980 million, which represents an 8.6% increase at the midpoint from 2025. Adjusted EBITDA is expected to be in the range of $165 million to $185 million, a 4% increase at the midpoint from 2025. As I conclude, I would like to emphasize that our strategic priorities remain intact. Despite the near-term challenges, household utilization for self-storage continues to grow. With sustained high occupancy rates in the industry, we believe demand will only increase when the housing market improves. While the market headwinds we are facing, particularly in new construction, may persist, we are committed to focusing on what we can control in the near term. We are the industry leader in self-storage solutions with significant scale, financial discipline, and attractive adjacencies for expansion. As we look ahead, we believe we will be well positioned in the markets we serve when macro conditions improve. I will now turn the call over to Anselm for a further review of our quarterly financial results along with more details on our initial 2026 guidance. Anselm? Anselm Wong: Ramey spoke to our full-year results at a high level, and I will focus my remarks on our financial performance in the fourth quarter followed by a discussion of our initial 2026 guidance. For the fourth quarter, consolidated revenue of $226.3 million declined 1.9% as compared to the prior-year quarter. In total, our self-storage business was down 0.4%. New construction decreased 8.1%, and R3 was up 12.7% for the quarter. The decline in revenues for new construction was driven by weaker demand for development in the Americas from our non-institutional customers, partially offset by strength in our International segment. The increase in R3 revenue was driven by increases in door replacement and renovation activity. In the fourth quarter, our International segment saw total revenues increase to $26 million, up $6.5 million, or 33.3%, compared to the prior year, driven by growth in new construction and market share gains as well as positive foreign exchange rates. For the quarter, revenue in our Commercial and Other segment decreased by 5%. The decline was primarily driven by softness in demand for commercial sheet doors, partially offset by strength in rolling steel and TMC. On a consolidated basis, the impact to revenues for the quarter was roughly 90% price and 10% volume. Fourth quarter adjusted EBITDA of $37.2 million was up 7.5% compared to 2024. This resulted in an adjusted EBITDA margin of 16.4%, an increase of approximately 140 basis points from the prior-year period. The increase in margins year over year is primarily attributable to the prior year being negatively impacted by adjustments to our provision for credit losses and an additional warranty reserve, which was partially offset by volume declines and the impact of geographic segment and sales channel mix. We are seeing benefits from our previously announced cost reduction program, achieving the target of $10 million annual pre-tax cost savings in 2025. We continue to regularly evaluate opportunities to improve our efficiencies. To this end, in early 2026, we successfully completed an expansion of our facility in Surprise, Arizona. With the additional capacity now available at our Arizona facility, we were able to optimize our manufacturing space by combining two of our facilities in Houston. This streamlining of our operational footprint will not affect our product offerings, quality standards, or customer service levels. For the fourth quarter, we produced adjusted net income of $15.6 million, down 15.2% compared to the prior-year period, and adjusted EPS of $0.11. We generated cash from operating activities of $24.8 million and free cash flow of $19.2 million in the quarter. On a trailing twelve-month basis, this represents a free cash flow conversion of adjusted net income of 137%. Capital expenditures in the quarter were $5.6 million. We ended the quarter with $260.5 million in total liquidity, including $194.4 million of cash and equivalents on the balance sheet. Our total outstanding long-term debt at year-end was $551 million, and net leverage was 2.1x. Following the acquisition of Kiwi II Construction, as stated in the press release, our net leverage is expected to remain within our target range of 2.0x to 3.0x. These liquidity levels provide us optionality with regard to capital deployment, and we had $80.5 million remaining on our share repurchase authorization at year-end. In February, we were also pleased to announce a repricing of our first lien term loan, reducing our interest rate by 50 basis points from SOFR plus 250 to SOFR plus 200, significantly lowering our cost of capital and enhancing our financial flexibility. Now moving to our 2026 guidance. As Ramey mentioned, full-year revenue is expected to be in the range of $940 million to $980 million. This includes approximately $90 million to $100 million in inorganic revenue from the Kiwi II Construction acquisition. Our guidance does not include any embedded assumptions of an improvement in market conditions. We expect North American organic self-storage revenues to be down mid-single digits compared to 2025, driven mostly by continued softness in new construction. In our commercial sales channel, we anticipate a return to growth in 2026, driven by our ASTA business. On the International side, we expect high single-digit revenue growth. 2026 adjusted EBITDA is expected to be in the range of $165 million to $185 million. This reflects an adjusted EBITDA margin of 18.2% at the midpoint. Consolidated EBITDA margin will continue to be impacted by both geographic segment and sales channel mix. We expect that Kiwi II’s EBITDA will be a drag on overall margins for 2026, and synergies from the acquisition are expected to be back-end loaded for the year. Cash flow remains robust, and for 2026, we anticipate being around the higher end of the free cash flow conversion of adjusted net income target range of 75% to 100%. Please refer to the presentation we have posted for details on the key planning assumptions for 2026. Thank you for your time. I will now turn the call over to Ramey for his closing remarks. Ramey? Ramey Jackson: Thank you, Anselm. Janus International Group, Inc. has a solid position in a great industry. We are the partner of choice for our customers through the full life cycle of their projects, from design and build-out to maintenance and facility upgrades. While we face a dynamic operating environment, we continue to focus on the factors we can control. Consistent with our growth strategy, we are optimistic about our recent acquisition of Kiwi II Construction, and we are confident in our plan to achieve our 2026 guidance of total revenue in the range of $940 million to $980 million and adjusted EBITDA in the range of $165 million to $185 million, reflecting growth of 8.6% at the midpoints, respectively. As I mentioned, household utilization for self-storage continues to grow. This, coupled with sustained high occupancy rates in the industry, is a positive signal for increased future demand with recovery in the housing market. Our strong balance sheet and cash flow foundation position us to further build upon our industry leadership position, expand into adjacent markets with attractive fundamentals, and support our future growth. Taken together, I remain confident in our strategy and in our ability to deliver long-term value for our stakeholders. In closing, I would like to thank our team, customers, and shareholders for your support. We appreciate your participation on today’s call. Operator, we will now open for questions. Operator: Certainly, Mr. Jackson. Thank you, sir. Ladies and gentlemen, at this time, if you would like to ask a question, please press 1 on your telephone. If you find your question has been addressed, please press 1 again to withdraw. Once again, that is 1 for questions. We will go first this morning to Daniel Moore with CJS Securities. Will Gildea: Good morning. This is Will on for Dan. Ramey Jackson: Hey. Good morning. Good morning. Will Gildea: You have always described the core self-storage business as having two to three quarters of visibility. How does your visibility today compare to historic averages? Anselm Wong: I think we still have similar visibility from what we see in that two to three quarters based on the backlog that we have. It has been similar in terms of visibility, and we reflect that in our guide. Ramey Jackson: In terms of new construction, we are going to continue to see pressure there, but we are certainly optimistic around R3 and some of the initiatives that we are focused on like Nokē, the R3 efforts, and just remaining super competitive and having that dominant strength in new construction and commitment to our customers. It is all reflected in the guide. Will Gildea: Thank you. And just a follow-up: what are the one or two key metrics your REIT customers are looking for that would give them confidence to start to invest and build out new capacity once again? Ramey Jackson: It is 100% interest-rate driven. We have been very consistent in terms of the driver. The number-one driver of self-storage is mobility around housing. That is on the sidelines today. When you look at how operators are performing, there is certainly some noise around pricing, but it is a very stable operating environment, lacking the largest driver, which is mobility around housing. Once people start moving around, you are going to see a different operating environment. Will Gildea: Thank you. Operator: Thank you. We will go next now to Jeff Hammond of KeyBanc Capital Markets. David Tarantino: Good morning, everyone. This is David Tarantino on for Jeff. Ramey Jackson: Hey, David. David Tarantino: Maybe starting with margins, could you give us a bit more color on the degree of headwind from the higher International mix in 4Q and what you have assumed in the guide on the margin line from an organic perspective? And then maybe any thoughts on how long you expect these mix headwinds to last would be helpful. Anselm Wong: Thanks for the question. If you saw what we printed for the quarter, you saw International continue to grow pretty strongly, as it did for the full year. If you look at their EBITDA margins, obviously it has improved year over year, but it is still significantly down versus our North America. Going into next year, as Ramey said in his remarks, we are still seeing softness in our new construction in our Janus International Group, Inc. core Americas business, which is a meaningfully higher margin rate. We cannot predict when that turn is going to be, but as long as we are going to see some of that pressure on the new construction piece in the Americas, we will probably have some margin and mix headwinds from that. David Tarantino: And just to follow up quickly there, is it fair to assume that the guide assumes that these mix headwinds persist through 2026? Ramey Jackson: Yeah. Definitely. David Tarantino: Okay. Great. And then on commercial, it seems like it weakened if you adjust for the TMC catch-up, and you called out some commercial sheet door decline. So could you give us some color on the softness here? And I just want to clarify on the guide: is it high single digits just for ASTA, or what are we thinking for the whole business? Anselm Wong: For commercial, if you include everything together, it is in the high single-digit range, but not if you actually back out the TMC piece. Looking at Kiwi in there and the other pieces balances the number, but if you look at the guide, we are probably mid-single digit for commercial for the full year. Just additional color: a lot of the softness in commercial is coming from commercial sheet. We are actually seeing growth in our ASTA business, which we highlighted. Ramey Jackson: We have been consistent in terms of the messaging around architectural specifications effort, and we have certainly secured some work around the data center space, which is an exciting space to be in, and we have worked really hard to get specced. So we are excited about that and expect growth in the rolling steel business. David Tarantino: Great. Operator: Thank you. We will go next now to Reuben Garner of The Benchmark Company. Reuben Garner: Thanks. Good morning, guys. Morning. Reuben Garner: I think that you are roughly implying low single-digit organic revenue declines if we strip out an assumption for Kiwi. One, is that accurate? And two, can you break down the components of that price and volume? And then you mentioned commercial, but what about your assumptions for new versus R3 on the self-storage side as we sit today? Anselm Wong: That is about right, Reuben. We are looking at an organic decline in the core business. The biggest piece, as we described, is really in that new construction Americas piece. That piece is going to continue to be a drag in terms of what we are seeing in the environment today, and that is what brings down the revenue year over year for the organic piece. Reuben Garner: And in terms of price versus volume? Anselm Wong: Price right now, as we described, we had more price in 2025 that will roll into the first half of this year. So think about a similar type of price impact in the first half, barring anything that happens with steel in the back half. Reuben Garner: Okay. And then can you—you have talked about the margin profile a little bit of Kiwi, but can you break out what gross margin looks like for that business? And then on the synergy front, can you go into detail on the synergies? I assume that there are some top-line potential synergies at some point as well. Just refresh us on the opportunities there. Anselm Wong: We have not disclosed any of the details on the synergies, Reuben. But if you think about EBITDA margins, we have given a range where it would be in that low-teens range to start with because of integration costs and getting that business integrated into Janus International Group, Inc. Longer term, we said that it has potential to get into the high teens as a business. Reuben Garner: Okay. Thanks, guys, and good luck. Ramey Jackson: Just to add to that, Reuben, as a stand-alone—I think you are asking the question as a stand-alone—but part of the acquisition strategy was Kiwi had never gone to market with the full solution, meaning door and hallway. Now they can offer their customers end to end both buildings and interiors, and as you know, the Janus International Group, Inc. core business is higher margin. We expect to see some pickup in the Janus International Group, Inc. core sales by going to market with Kiwi, so we will experience some higher-margin stuff at core with the acquisition. Reuben Garner: Great. Very helpful. Thanks, guys. Operator: Thank you. We will go next now to Phil Ng of Jefferies. Phil Ng: Hey, guys. Hey. Good morning. The outlook—you are not assuming much of an improvement here, which seems more than reasonable. But, Ramey, you talked about what is going to drive volumes perhaps reaccelerating as housing turns—housing mobility. We could look at that from existing home sales and certainly rates coming down. All good. Help us unpack what is the lag if we look at that turnover inflecting. How does that impact your business, whether it is R3 or new construction? The other piece you have teased out in the past on rates is really more for your non-institutional customers. Maybe credit has been more challenged into less mortgage rates, more shorter-term rates, and maybe their ability to pursue more projects. Any color on that front if the credit markets have loosened up a little bit? Ramey Jackson: That is a great question. I do not know that I can answer a lot of that, but from a confidence perspective, when things start to turn and things feel better, you will see increased activity and investment. As we sit today, the mom-and-pops are essentially on the sideline, and that is a big—it is 70% of the market. Any momentum we can get with that segment will certainly have incremental value. When you think about R3, obviously acquisitions matter, and I think we are hearing from the REITs that this should be a good year for acquisitions, which should bode well for R3. I cannot predict the interest rate and what is going to get people moving around. I have no earthly idea—you probably know that better than me. We are focused on being in the right position so when this turns around we can take advantage of it, sticking to our corporate strategy, making sure that we are lean, focused, and able to optimize everything and take advantage of what the market has to offer. Phil Ng: That is great color, Ramey. Then your outlook on R3 sounds a little more upbeat. I may have missed it if you quantified what you are assuming for R3. Is that mostly M&A—that you are talking about big REIT guys doing more renovation work that is driving that—or are you seeing other avenues that give you enthusiasm on that inflection in R3? Certainly you have had some headwinds with the retail side of things that seem to have bottomed out. Give us a little more perspective on what is driving the inflection in R3. Ramey Jackson: You hit it. It has a lot to do with acquisitions. Obviously some of the big names we all know—we kind of track that activity—and that has been a big driver. What we are finding with our Nokē product line is folks that are interested in adopting Nokē are taking advantage of that opportunity to disrupt the unit, disrupt the tenants, and do full door replacement. That is a newer use case that is driving the R3 kind of renovation door replacement. Keep in mind, 60% of the installed base is over 25 years old, so there is still a meaningful replacement cycle that exists, and we just have to continue to put ourselves in position to take advantage of that. Phil Ng: Okay. And, Ramey, since you brought up Nokē—good milestone this past year, up quite a bit. I believe we are not far away from that breakeven threshold of 500,000 units where it swings to a much bigger kicker to your profitability. What are you assuming this year in terms of Nokē contribution, and any big ones you want to call out in terms of some of these bigger REITs that have perhaps adopted or committed to more Nokē units for this year? Ramey Jackson: I will let Anselm talk about the metrics, but we remain super optimistic with Nokē. Nokē is addressing a few industry issues right now. A lot of customers are experiencing increased operating costs; our Nokē customers are watching those operating costs go down. There is an issue in the industry around theft and security; our Nokē customers are addressing that and eliminating that element. It is really resonating and building out additional use cases. I am not going to mention names at this point in terms of the larger folks who are working with the solution, but it continues to increase. We are in a much better place in terms of enterprise-grade software. The team has done a phenomenal job on uptime and stability. We plan on rolling out additional products this year, and we are excited. You hit the nail on the head—we are going to hit 500,000 units this year. Anything past that is going to help improve the bottom line, so I am even more optimistic today than I was in the past. Operator: Thank you. We will go next now to John Lovallo of UBS. Matt Johnson: Thanks, guys. This is Matt Johnson actually on for John. I appreciate the time. First off, sales in the quarter were a bit stronger than we were expecting—I think they were above the top end of the outlook as well—while EBITDA was closer to the midpoint, so margin was a bit lower than we were expecting. I think you mentioned it a little bit in the prepared remarks, but were there any mix impacts to call out, particularly on the gross margin side? How should we think about the trajectory of gross margin as we move into 2026? Anselm Wong: As we said earlier, it is the trend of the mix of the North American business being down a bit more than the other BUs that we have. As you know, the margin is a lot different. You saw International continue to be strong in the quarter, and their margin rate is lower than the Americas. That is the trend we saw, and that is what we indicated is going into 2026 in our guide. Matt Johnson: That makes sense. And within the context of the 2026 outlook, how should we think about sales and EBITDA in the first quarter, and how impactful was adverse weather in January? Anselm Wong: If you look at the trend, the trend we talked about continues into Q1, where new construction in the Americas is a bit softer. There is a little weather impact that we have seen as well, so I would expect a slower start for the year. Matt Johnson: Thanks, guys. Operator: And, gentlemen, it appears we have no further questions today. Mr. Jackson, I would like to turn things back to you, sir, for any closing comments. Ramey Jackson: Thank you all for joining us today. We appreciate your support of Janus International Group, Inc. and look forward to updating you on our progress. Have a great day. Operator: Thank you, Mr. Jackson. Thank you, Mr. Wong. Again, ladies and gentlemen, that will conclude the Janus International Group, Inc. fourth quarter and full year 2025 earnings call. Thanks so much for joining us, everyone. We wish you all a great day. Unknown Speaker: Goodbye.
Operator: Good morning, and welcome to the CorMedix Inc. Fourth Quarter and Full Year 2025 Earnings and Corporate Update Conference Call. Today's conference call is being recorded. There will be a question and answer session at the end of today's presentation, and instructions on how to ask a question will be given at that time. At this time, I would like to turn the conference call over to Daniel Ferry from LifeSci Advisors. Please go ahead. Daniel Ferry: Good morning, and welcome to the CorMedix Inc. fourth quarter and full year 2025 Earnings and Corporate Update Conference Call. Leading the call today is Joseph Todisco, Chairman and Chief Executive Officer of CorMedix Inc., and he is joined by Elizabeth Masson-Hurlburt, EVP and Chief Operating Officer, and Susan Blum, EVP and Chief Financial Officer. In addition, Beth Zelnickauffen, EVP and Chief Legal and Compliance Officer, Mike Seckler, EVP and Chief Commercial Officer, and Dr. Matthew T. David, EVP and Chief Business Officer, are also on the line and will be available during the Q&A session. Before we begin, I would like to remind everyone that during the call, management may make what are known as forward-looking statements within the meaning set forth in the Private Securities Litigation Reform Act of 1995. These statements are statements other than statements of historical facts regarding management's expectations, beliefs, goals, and plans about the company's prospects and future financial position. Actual results may differ materially from the estimates and projections on which these statements are based due to a variety of important factors, including the risks and uncertainties described in greater detail in CorMedix Inc.'s filings with the SEC, which are available free of charge at the SEC's website or upon request from CorMedix Inc. CorMedix Inc. may not actually achieve the goals or plans described in these forward-looking statements. Investors should not place undue reliance on these statements. CorMedix Inc. does not intend to update these forward-looking statements except as required by law. During this call, the company will discuss certain non-GAAP measures of its performance. GAAP to non-GAAP financial reconciliations and supplemental financial information are provided in CorMedix Inc.'s earnings release and the current report on Form 8-Ks filed with the SEC. This information is also available on the Investor Relations section of CorMedix Inc.'s site. At this time, it is now my pleasure to turn the call over to Joseph Todisco, Chairman and Chief Executive Officer of CorMedix Inc. Joseph, please go ahead. Joseph Todisco: Thank you, Dan. Good morning, everyone, and thank you for joining us on this call. 2025 was truly a transformational year for CorMedix Inc. While DEFENCATH achieved peak sales of just under $260,000,000, we are excited to have both announced and closed the acquisition of Melinta Therapeutics in the third quarter of the year. In addition, the team worked expeditiously to facilitate integration and achieve our target synergy of $35,000,000 during 2025. This was a monumental achievement and truly a testament to the operational execution capabilities of the CorMedix Inc. leadership team. As we turn our attention to the year ahead, there is much focus on our post TDAPA add-on period strategy for maintaining patient utilization rates for DEFENCATH in outpatient hemodialysis. As a reminder, on July 1, the TDAPA reimbursement for DEFENCATH will transition from a buy-and-bill format to a bundled add-on mechanism. We have had multiple conversations with our top customers and are in the process of finalizing supply pricing for Q3 2026 as well as for 2027. At this time, we are affirming our 2026 DEFENCATH guidance of $150,000,000 to $170,000,000 and 2027 DEFENCATH guidance of $100,000,000 to $125,000,000. With respect to 2026, we expect much of the revenue concentration to be front-loaded in the first half of the year as price erosion related to the post TDAPA add-on occurs in the fourth quarter. Assuming CMS utilizes the same methodology to calculate the 2027 bundle addition, we do expect a meaningful increase in traditional Medicare provider reimbursement in 2027, which we expect to translate into a higher net selling price in 2027 compared to Q3 2026. To that extent, we took the extra step of issuing 2027 DEFENCATH guidance based on existing patient utilization rates as well as our current estimates for the range of net selling prices and it does not include potential upside from new customers or managed care contracting. In addition to DEFENCATH guidance, the company is also affirming full year 2026 financial guidance of revenue of $300,000,000 to $320,000,000 and adjusted EBITDA of $100,000,000 to $125,000,000. That said, we are actively in discussions with multiple Medicare Advantage providers as well as new potential customers for DEFENCATH in both the inpatient and outpatient settings of care, focused on execution of sales and marketing efforts for RIZEAO, Minocin, and Vabomere, and we will evaluate appropriate updates to financial guidance as we progress throughout 2026. This past month, we completed our first analyst R&D Day, which we focused on educating our analysts and investor community on the market opportunity for our antifungal product, RIZEAO, its current approved indication in the treatment of invasive fungal infections, as well as our key pipeline assets of RIZEAO in development for prophylaxis of invasive fungal infections and DEFENCATH in development for prevention of CLABSI in adult patients receiving total parenteral nutrition. Elizabeth will provide an update on the status of these development programs shortly. During the Analyst Day event, stakeholders were given the opportunity to engage with multiple panels of physician thought leaders around key aspects for each of these three growth opportunities for CorMedix Inc. The webcast of the event and associated materials remains available on our website and I encourage all investors to review those materials. The feedback from thought leaders was excellent and underscores our view for the large potential market opportunity for RIZEAO, which we estimate at approximately $2,500,000,000 across both potential indications, and for DEFENCATH in TPN, which we estimate between $500,000,000 and $750,000,000. 2026 is expected to be a transitional year for CorMedix Inc., with a heightened investor focus on new catalysts and value drivers, most notably our Phase III RESPECT data for RIZEAO in prophylaxis which is on track for the second quarter of this year. With the acquisition of Melinta, not only did we acquire what we believe will be an exceptional growth asset in RIZEAO, but also added highly durable institutionally administered products like Minocin and Vabomere, which we expect to provide a stable base of revenue while the company builds toward future growth. I believe CorMedix Inc. has done an exceptional job of maximizing the value of the initial TDAPA period afforded to DEFENCATH in outpatient hemodialysis and parlayed that success into building a pipeline that positions the company for long-term sustainable growth. I would now like to turn the call over to our Chief Operating Officer, Elizabeth Masson-Hurlburt, to provide an update on clinical activities. Elizabeth? Please go ahead. Elizabeth Masson-Hurlburt: Thank you, Joseph, and good morning. The combined clinical development and operations teams, along with field medical affairs, have been working diligently on numerous clinical activities. As we shared last fall, enrollment for the global Phase III RESPECT study evaluating RIZEAO for the prophylaxis of fungal infection in adult allogeneic bone marrow transplant patients completed in September. This pivotal trial is being conducted by our global partner, Mundipharma, who has confirmed that all sites have completed study participation and they are on track for an anticipated database lock later this month. We expect to announce top-line data from the RESPECT study in 2026. Top-line results will include the primary efficacy outcome of fungal-free survival at day 90, discontinuation of study drug due to toxicity or intolerance, all-cause mortality and attributable mortality with invasive fungal disease as determined by the Data Review Committee, and the cumulative incidence of invasive fungal disease at day 90 by the Data Review Committee and by azole choice. Additionally, safety data, overall adverse events, treatment-emergent adverse events, and serious adverse events are expected to be included in top-line results. The team continues to work closely with investigators and clinical experts in the field to deepen our understanding of the evolving clinical practices and the needs of these patients as we prepare to support a potential commercialization in 2027. As Joseph mentioned earlier, our panel of thought leaders provided excellent insights into the market opportunity for a long-acting echinocandin in the prophylaxis of invasive fungal infections and we are looking forward to our Phase III data readout. Turning to DEFENCATH, I am pleased to share that the Phase III NEUTROGUARD clinical study, which is evaluating the impact on central line-associated bloodstream infections, or CLABSI, in adult patients receiving total parenteral nutrition via a central venous catheter, is approximately 30% enrolled toward our minimum patient target of 90 patients. We are working to increase enrollment rates as we progress throughout 2026 with new sites in Turkey. At this time, we are still anticipating study completion in early 2027. The adaptive design is 90 minimum and a maximum of 200 participants based on the incidence rate of CLABSI. An interim assessment will be made by the independent data monitoring committee after 15 participants have experienced a CLABSI event. I would now like to turn the call over to Susan to discuss the company's fourth quarter and full year financial results and financial position. Susan? Susan Blum: Thanks, Elizabeth, and good morning, everyone. We are pleased to share our fourth quarter and full year 2025 financial results, which reflect our ongoing commercial and operational execution. A few things to note on the financial results before I jump in. Following the close of the Melinta acquisition on 08/29/2025, 2025 represents the first full reporting period incorporating Melinta's operations into our consolidated results. Also, the company has filed its annual report on Form 10-K for the year ended 12/31/2025, and I encourage you to review this filing for a more comprehensive discussion of our financial performance and operating results. As Joseph mentioned, we had a strong quarter on the revenue front. For the fourth quarter, revenue of $128.6 million reflected continued growth across our commercial portfolio, driven primarily by DEFENCATH, which contributed $91.2 million, and supplemented by a full-quarter contribution from the Melinta portfolio, which totaled $37.4 million, compared to net revenue of $31.312 million in 2024 which included only results from DEFENCATH. This represents a meaningful year-over-year increase and highlights the company's ability to execute on product launches and business development initiatives. Total revenue on a pro forma basis for 2025, which is full year revenue for both the CorMedix Inc. and Melinta businesses, was $401.3 million, which is in line with our previously established guidance. Of the total, DEFENCATH generated $258.8 million in net sales for the year. Turning to OpEx, fourth quarter operating expenses of $48.2 million increased from $17.1 million in the comparable prior-year period, reflecting the expected expanded cost structure of the combined organization, merger-related costs associated with the Melinta acquisition including severance expenses, and additional investment in expanded indications for DEFENCATH, most notably our Phase III clinical program focused on the prevention of CLABSI in TPN patients. Our operating expenses for the fourth quarter were consistent with our expectations and aligned with our strategic focus on building a platform for long-term sustainable growth, which was supported by the execution and integration of the Melinta acquisition. Our employee base has grown significantly in connection with the merger and scaling of the business. Last year at this time, we had a workforce of approximately 100 people and today have just under 200 employees. The expanded infrastructure serves to support growth and is expected to provide significant operating leverage in the periods to come. Now that we have successfully streamlined the two organizations, we can focus on executing our business growth strategy in preparation for the anticipated new launch opportunities of DEFENCATH in TPN and RIZEAO for prophylaxis. On the bottom line, CorMedix Inc. recognized net income of $14.0 million in 2025. Net income was impacted by tax expense of $42.4 million, the majority of which was non-cash, resulting from the utilization of deferred tax assets that were established in 2025. On a pre-tax basis for the fourth quarter, income was $56.4 million, an increase of $43.0 million from 2024. Turning to non-GAAP results, adjusted EBITDA for the fourth quarter was $77.2 million, which was within our previously established guidance and reflects modest growth quarter over quarter. This metric excludes one-time acquisition-related and reorganization costs, stock-based compensation, and the tax benefit and expenses recognized during the year, and it provides additional insight into the strength of our core operating performance. A reconciliation to GAAP results is included in the press release issued with our earnings announcement. From a liquidity perspective, we ended the quarter with cash and cash equivalents and short-term investments of $148.5 million, driven by strong operating cash flow of almost $100 million during the quarter and ongoing working capital optimization. Where we stand today, given our financial flexibility and commercial momentum, we believe we are well positioned for both organic growth from existing pipeline and promoted assets and potential inorganic growth from new business development opportunities. I am excited to be a part of the journey as we move forward. And now I will turn the call back to Joseph for closing remarks. Joseph Todisco: As I mentioned, 2025 was a transformational year. 2026 will be a transitional year that we believe sets up CorMedix Inc. for long-term sustainable growth in 2027 and beyond. We recently announced the share repurchase program and have been repurchasing shares throughout the first quarter. We intend to continue to be active throughout the year, subject to normal blackout periods, applicable volume restrictions, and other business needs, as we believe our balance sheet has sufficient flexibility to pursue this repurchase while leaving sufficient dry powder for new business development opportunities. The company sits here today with a diversified product portfolio, multiple late-stage pipeline opportunities, financial flexibility, and a capital structure to support future growth. We remain confident in the outlook for this year, our path to future growth, and sustained profitability. I would like to now open up the call for Q&A. Operator: We will now begin the question and answer session. The first question today comes from Roanna Clarissa Ruiz with Leerink. Please go ahead. Roanna Clarissa Ruiz: Hey, good morning everyone. A couple of questions from me. I was thinking in terms of your conversations with dialysis customers and talking about supply and contract pricing for DEFENCATH, could you give a little bit more color on how those are going? You trying to build in certain features to drive DEFENCATH volume in 2026 and beyond? Or how are you thinking about these different levers? Sounds good. And then I had a different question about RIZEAO. It sounds like you are going to share a lot of interesting information with the top line for the Phase III. Could you help frame what in that information you think is most clinically meaningful for physicians? How do you plan to leverage some of this data in potential future discussions with payers, etc., if all goes well and the top line is positive? Joseph Todisco: Hey, thanks, Roanna. So I would say conversations that I believe are going fairly well. The near-term focus is on preserving patient utilization through the back part of 2026 and creating a structure for an increase in selling price in 2027. And that is what we have been working toward negotiating with customers, and that is what we are hopeful we will be finalizing shortly. We are also setting these up with flexibility to allow for changes in the event we are successful with Medicare Advantage contracting as we progress through this year and into next year. So overall, I am happy with the progress that we have made and hopeful in the near term we will have some things finalized for the back part of the year. Thanks. Before I let Elizabeth comment, I will just give you a little bit of my thoughts. And the way I look at the RIZEAO top-line data, I think there are obviously various degrees of success, right? There is meeting the top-line endpoint and then there are going to be different aspects of pathogen data within the top-line data as well as the secondary endpoint around the discontinuation of the standard of care. And I think, obviously, what we are able to show will guide toward the commercial utility and how we are going to think about marketing and promoting the product. But Elizabeth, do you want to add any further? Elizabeth Masson-Hurlburt: Sure. Roanna, I think when it comes to how we are going to use the data, a lot of this is going to be dependent on the data that we see in top line. Obviously, the more, the better. I think if we are successful in the way that RESPECT reads out, there is a lot of opportunity for us to be able to talk to the payers about an option that does not have the drug–drug interactions that the azoles and some of the other therapeutics are presenting right now, and we are hopeful that that will lead to understanding around less hospitalizations, getting patients out quickly, and to, you know, more safely be on their cancer regimen. It will be certainly data dependent, but I am confident that once it comes out, we will be able to take a look at that data and strategically place it with payers and the clinical community. Roanna Clarissa Ruiz: Understood. Thanks. Operator: And the next question comes from Leszek Sulewski with Truist Securities. Please go ahead. Jeevan Larson: This is Jeevan on for Les. Thanks for taking our questions. First, any developments on the bipartisan proposed TDAPA extension bills and if the timing here has changed based on recent global events? And then also any updates on a potential partnership with the other LDO and how post TDAPA dynamics change the odds here? Thank you. Joseph Todisco: Thanks. Look, legislation is always speculative. What I can say is that we have spent a lot of time, we are working closely with the other company that is actively in TDAPA, Akebia. We have been pounding the pavement on the Hill as well as with career staff at CMS and political appointees at CMS. We have a large number of co-sponsors of the bill now. Timing is tricky, right, because this likely needs to be attached to another piece of legislation. There is a war in the Middle East. So we really cannot speculate on whether this can happen before June 30 or December 31. I think if it happens after June 30, I think there is a pathway for potential retroactivity of some aspects of the bill to impact positively on DEFENCATH. That is something we would actively be working on as well behind the scenes. But it is really hard to pinpoint a timing with everything that is going on in Washington right now. With respect to the other LDO, I cannot comment on ongoing discussions with customers. Operator: And your next question comes from Serge D. Belanger with Needham & Company. Please go ahead. John Todaro: Hey, good morning. This is John on for Serge today. One on DEFENCATH and then another one on the Melinta product portfolio. So first, just curious if you have any updates on the inpatient opportunity with DEFENCATH. You know, have the sizes of the current contributions been growing and just curious what growth profile you see from this segment in 2026 and 2027? And then on the Melinta portfolio, you mentioned Minocin and Vabomere being, you know, potential significant contributors along with RIZEAO. Curious if there is anything promotionally sensitive that you could kind of reinforce into these products to see some growth in the future? Joseph Todisco: All right. Thanks, John. And I am not sure I fully understood your DEFENCATH question, but what I will kind of touch on is our guidance and how we constructed our guidance for 2026–2027. So the way we looked at 2026, obviously, the way CMS did the calculation for the bundle adjustment, the $2.37 that goes into the bundle for the third and fourth quarter, it does not fully reimburse providers based on current utilization rates. They used an older period of time to do that calculation that was based on our first year of launch. But we had provisions in our agreements with customers that allow for that type of situation, where there is certain floor pricing under these contracts. What we are working on now is hopefully getting a little bit better than that floor pricing. But our guidance was somewhat based on the floor, and we are working through that process now. Now for 2027, what we wanted to do was give investors comfort that there is at least a base business level of DEFENCATH, which we expect to see price appreciation and hopefully stable volumes based on what we are doing now in the outpatient hemodialysis sector to kind of steady the market with customers. Now we elected not to include in that 2027 guidance potential upside from what we are trying to do with Medicare Advantage contracting with potential new customers both in outpatient hemodialysis and on the inpatient side, because when it comes to guidance, it is very difficult to guide towards something that is still underway in terms of execution. So as we progress throughout the year and should we get a Medicare Advantage contract across the goal line and we have the ability to look and make a forecast around volumes, we would up our guidance accordingly as we progress through the year. John Todaro: On the Melinta portfolio question, Joseph Todisco: look, I think Minocin and Vabomere are two really good durable products that have entrenched utilizations in the hospital inpatient segment for treatments of niche infections, right? I think Minocin is closing in at around $50,000,000 in sales. Vabomere is just under $30,000,000. So we do have a little bit of promotional efforts on there. We do not think that they are usually promotionally sensitive the way a launch product would be. But we think there is a couple of percentage points of growth there that we expect to get this year. John Todaro: That is helpful. Thanks. Operator: And your next question comes from Brandon Richard Folkes with H.C. Wainwright. Please go ahead. Brandon Richard Folkes: Hi, thanks for taking my questions and congrats on the quarter. Maybe just two from me. Firstly, DEFENCATH, can you just talk about the customer mix currently and whether you anticipate any change of that in your 2026 and 2027 guidance? How should we think about the opportunity in the other mid-sized operators for DEFENCATH? And if I just ask one more. I know you mentioned you filed the 10-Ks, sorry, have not been through it. But can you just talk about the operating cash flow in the quarter? It looked very strong. So just anything to consider there? And then also how we should think about it in 2026? Thank you. Joseph Todisco: So right now, I would say we are fairly heavily concentrated volume-wise with one of the LDOs and then two of the three mid-sized players are driving probably 90-something percent of our volume amongst the three of them. There is a third mid-sized provider that is utilizing but not at the scale of others. And then we have a number of small accounts that, even if they are utilizing it fairly broadly, do not represent as large of a market impact, as they may only have 20 clinics or 15 clinics. So that is certainly kind of the mix today. Now, terms of changes we would anticipate in 2026 and 2027 would depend in large extent on our ability to onboard either the other LDO or to get the third mid-sized player to meaningfully increase volume. So those are the only things that would really, I think, change the mix in any meaningful fashion. What we are doing on the inpatient side in terms of promoting DEFENCATH, while that is a good dollar market opportunity, we believe the volumes there would be much lower from a volume distribution standpoint. So I hope that answers the question. Yes. Look, I think roughly, we would like to say that EBITDA could be a proxy for cash flow for the year. I think there are some items that could impact in terms of our need to maybe stockpile some inventory this year as we are working through a few tech transfers. We also have some rebates, large accrued rebates that you will see on the balance sheet, that will get paid out in the early part of this year. So those are kind of really the big items that impact cash flow. Susan, anything you want to add to that? Susan Blum: No, you covered it, Joseph. Brandon Richard Folkes: Great. Thanks very much. Operator: This concludes our question and answer session. This concludes today's conference call. Thank you for attending today's presentation. You may now disconnect.
Operator: Greetings, and welcome to the Olaplex Holdings, Inc. Fourth Quarter 2025 Earnings Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Michael Oriolo, Vice President of Investor Relations. Thank you. You may begin. Michael Oriolo: Good morning, everyone. Welcome to our fourth quarter fiscal 2025 earnings call. Joining me today are Amanda Baldwin, Chief Executive Officer, and Catherine Dunleavy, Chief Operating Officer and Chief Financial Officer. Before we start, I would like to remind you that management will make certain statements today are forward-looking, including statements about the outlook for the Olaplex Holdings, Inc. business and other matters referenced in the company's earnings release issued today. Each forward-looking statement is subject to risks and uncertainties that could cause actual results to differ materially from those projected or implied by such statements. Additional information regarding these factors appears under the heading “Cautionary Note Regarding Forward-Looking Statements” in the company's earnings release and the filings the company makes with the Securities and Exchange Commission that are available at www.sec.gov and on the Investor Relations section of the company's website at ir.olaplex.com. The forward-looking statements on this call speak only as of the original date of this call, and we undertake no obligation to update or revise any of these statements. Also during this call, management will discuss certain non-GAAP financial measures, which management believes can be useful in evaluating the company's performance. The presentation of non-GAAP financial measures should not be considered in isolation as a substitute for results prepared in accordance with GAAP. You will find additional information regarding these non-GAAP financial measures and a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures in the company's earnings release. A live broadcast of this call is also available on the Investor Relations section of the company's website at ir.olaplex.com. Additionally, during this call, management will refer to certain data points, estimates, and forecasts that are based on industry publications or other publicly available information as well as our internal sources. The company has not independently verified the accuracy or completeness of the data contained in these industry publications and other publicly available information. Furthermore, this information involves assumptions and limitations, and you are cautioned not to give undue weight to these estimates. For today's call, Amanda will start by providing highlights of fourth quarter and fiscal year performance and discuss the progress we have made on our strategic areas of focus. Then Catherine will discuss our financial results and 2026 outlook. Following this, we will turn the call over to the operator to conduct the question-and-answer session. With that, I will now turn the call over to Amanda. Amanda Baldwin: Thank you, Mike, and good morning, everyone. I am pleased to be here today to share that for the full year of 2025, we delivered on our financial expectations while advancing our transformational goals. Net sales were flat at $423 million and adjusted EBITDA margin was strong at 22.2% even as we invested to strengthen our foundation for the future. The year ended on an encouraging note, with fourth quarter revenue growth of 4% and adjusted EBITDA outperforming expectations. I am incredibly proud of this team and feel that we are well on our way in our transformational journey to deliver long-term sustainable growth built on the incredible scientific foundation that is at Olaplex Holdings, Inc.'s core. As a reminder, in 2024, we focused on the research and foundational work needed to build a brand and a business at a global scale. We began the development of our innovation and marketing functions, reconnected with our pros and our partners, designed new business processes, and assembled an experienced and passionate executive team. In 2025, we introduced our Bonds and Beyond vision to create a foundational health and beauty company powered by breakthrough innovation that starts with and is inspired by professional hairstylists. We moved from planning to making that vision a reality across three priorities: generating brand demand, harnessing innovation, and executing with excellence. As I reflect on where we are today, we have reclaimed our rhythm, sharpened our tools, and solidified what we believe is a stable investment model. Now we step into a new chapter focused on optimizing our investments and moving faster with both purpose and precision. From the start, we have called out that transformation is not linear, and that remains the case. But we believe that we have made great progress toward delivering long-term value creation in an industry that is healthy and growing. Our industry remains vibrant. According to Euromonitor, premium hair care is forecasted to grow at 6% to 7% through 2029. We believe hair care is in the early innings of premiumization, with premium hair care representing only 20% of the overall hair care market. As beauty, health, and wellness continue to converge, we believe Olaplex Holdings, Inc.'s scientific capabilities, new brand positioning, and transformational agenda position us well to participate in and get back to leading the premium hair care market. As I just mentioned, to capture this objective, we introduced our Bonds and Beyond vision and outlined three strategic priorities for 2025: generate brand demand, harness innovation, and execute with excellence. I am pleased to share progress against each. Our first priority in 2025 was to generate brand demand. To achieve this, we launched a comprehensive new visual identity supported by a 360-degree marketing engine. We successfully refreshed the brand across every touch point, physical and digital, in an effort to ensure that our market presence reflected both our scientific credibility and the emotional resonance of our professional heritage. This transformation included a revamped website featuring elevated brand storytelling, refreshed in-store visual merchandising across our key retail and professional partners globally, and a revitalized content strategy spanning social media, influencer partnerships, and education. The results of this relaunch were clear and measurable. According to our brand health tracker at the end of 2025, brand awareness rose 7%, sentiment improved 3%, and purchase intent trended upward against our pre-launch baseline. We saw significant gains in key brand associations, specifically, we saw improvement in Olaplex Holdings, Inc. as essential to my beauty routine, and Olaplex Holdings, Inc. as containing special ingredients. Beyond sentiment, we significantly expanded our share of voice. In 2025, we increased earned media value by 14% year over year, engaged with nearly 4,000 creators, and generated approximately 2 billion impressions across our 2025 campaign. Our commitment to a pro-first philosophy remains at the center of the flywheel of our business. We moved beyond simple outreach to execute a multilayered strategy designed to put the pro back in the picture. A key highlight was our market blitz program. By deploying teams across seven high-density markets, we reestablished direct, high-touch relationships with stylists. These markets outperformed the baseline, driving average sell-through mid-teens higher on a percentage basis in the 60 days following an activation. In an effort to foster long-term retention, our newly scaled professional education team overhauled nearly 60 core educational assets, modernizing our curriculum to be modular and digital-forward. By integrating these assets with our field efforts, we are providing the professional community with a platform designed to reinforce our position as their most trusted partner. With our new visual identity and 360-degree marketing engine now fully operational, we believe the foundational work of our brand relaunch is complete. As we transition into 2026, our focus shifts from building the engine to high-performance execution. We are committed to raising the bar with every launch, better optimizing our investments, and remaining agile as we continue to sharpen our messaging in a dynamic market. Our second priority for 2025 was harness innovation. Over the past two years, we have worked to systematize our go-to-market engine, aiming to transform our scientific heritage into a consistent pipeline of high-impact launches. We aim to capture the unmet needs for both pros and consumers with the right product, timing, and global support. The potential of this engine was on full display this year, Olaplex Holdings, Inc. delivered four of the top five prestige hair care launches in the industry, according to Circana. To further fuel our long-term trajectory, we made the strategic acquisition of Pervala Bioscience. Pervala specializes in transformative, bio-inspired technologies that can be utilized to enter additional verticals across health and beauty. With a highly curated portfolio of only approximately 30 SKUs, we see significant white space ahead of us. Our third priority for 2025 was to execute with excellence. We have built out the people, processes, and tools we believe are needed to drive executional excellence and efficiency on a global scale. We developed integrated business planning, established clear KPIs, and implemented data analytics designed to improve our speed and outcomes. Additionally, we executed an international realignment that aims to ensure consistent execution globally and prioritizes investments of both time and dollars in markets with the greatest growth potential. We built a strong culture and believe we have hired the right talent that is committed to our vision and driving results. In conclusion, we continue to refine our approach as part of our transformation. Putting in place all the building blocks I have just discussed has already led to sales and sell-through metrics moving in the right direction. After a 35% decline in 2023, and an 8% decline in 2024, we stabilized sales in 2025. While for the full year of 2025, sell-through remained down, we exited the year with improving trends. In fact, in December, we recorded positive sell-through in key accounts reflecting the cumulative efforts of our strategic priorities over the year. The team and I are energized by and confident in the road ahead. So now turning to 2026. In 2026, we will enter a new chapter of our transformation. We have moved beyond the heavy lifting of a strategic recalibration and process building. Today, our focus shifts from our successful initial implementation to crisp execution, optimization, and the deliberate acceleration of our Bonds and Beyond strategy. We believe our foundational pillars are now firmly in place: a 360-degree marketing engine, a robust innovation pipeline, a realigned international strategy, and a strong leadership team. With our core infrastructure stabilized, productive partnerships, and the professional community reengaged, we are ready for our next phase. To drive this next phase, we have identified three strategic priorities for 2026 that continue to align with our Bonds and Beyond framework. First, energize our hero products. Second, fuel science-based innovation. And third, expand our diversified, scalable, go-to-market model. Let us dive into each of these. Our first priority is to energize our hero products. This year, we are utilizing our 360-degree marketing engine to maximize the productivity of our core franchises, which remain the most significant contributors to our brand health and overall volume. As I mentioned earlier, in December, we recorded positive sell-through in key accounts, reflecting the cumulative efforts of our strategic priorities over the year. In 2026, we intend to build on our sell-through momentum by positioning our heroes as the definitive choice in the market. We are upgrading and expanding our core assortments by capitalizing on what makes Olaplex Holdings, Inc. unique, specifically our proprietary claims and compelling proof of performance. We intend to continue to elevate our science-meets-style positioning through targeted marketing support and elevated storytelling. To support these assortments, we are focused on turning our brand awareness into consistent, repeatable conversion. Our second priority is to fuel science-based innovation. Olaplex Holdings, Inc. has always been about bringing technical solutions to real-world hair concerns, and in 2026, we are focused on doing that with even greater emphasis. This year, in addition to our heroes, we are continuing to build out our foundational portfolio. Our R&D and new product development processes have been refined to quickly prioritize innovation that addresses specific, meaningful consumer and professional needs. Our disciplined approach allows us to pursue growth in new verticals that are a natural extension of where we exist today. We are focusing on targeted, science-backed solutions that simplify the user experience and deliver visible results, and as a result, we expect to bring even more innovation in 2026 than we did in 2025. Our third priority is to expand our diversified, scalable go-to-market model. Following the success of our 2025 initiatives, we are focused on sharpening our execution across every channel. First, we intend to capitalize on our renewed professional momentum. After successfully reengaging the stylist community this past year, 2026 is about turning that advocacy into a high-velocity flywheel, ensuring our pro partners have the tools and support to remain our most powerful brand ambassadors. Second, we are deepening our point-of-sale partnerships to ensure our marketing and messaging translate well at every touch point, and utilizing key promotional windows to drive visibility while protecting our premium positioning. Finally, we intend to scale our global reach in a disciplined, repeatable way. Through our three-tiered international strategy, we are prioritizing high-potential regions and improving local execution. This priority also includes efforts to optimize our points of access to meet our consumers where they shop and ensure that as we extend our footprint, we do so with an unwavering commitment to brand integrity. The execution of our three priorities is already visible in our first activations of 2026, which center on the three icons that started it all: No. 1, No. 2, and No. 3. In January, we relaunched our original pro-focused No. 1 Bond Multiplier and No. 2 Bond Perfector with new messaging, education, and available as stand-alone products. This was in direct response to stylists' feedback, intended to remove purchase friction and allow pros to restock their backbars with greater flexibility. This relaunch is a critical reset moment for our professional community. We are currently executing a global retraining program with our partners aimed at allowing our pros to be the ultimate authority on bond building and hair health. Additionally, last week, we unveiled our most significant product innovation for 2026, No. 3+. Over a decade ago, we created the at-home treatment category with No. 3 Hair Perfector. It became a global phenomenon, selling on average one unit every six seconds since 2019. Nevertheless, consumer needs have evolved and so has our science. No. 3+ represents the next evolution in bond repair. Powered by Olaplex Holdings, Inc.'s patented bond-building technology and its new Damage Defense Cationic Complex, No. 3+ now repairs damage across the hair's inner structure and surface simultaneously. It delivers the long-term strength Olaplex Holdings, Inc. is known for, while providing the immediate softening and conditioning that today's consumer looks for, all in a fast, intuitive, three-minute in-shower treatment. The result is hair that is visibly transformed with clinically proven results: three times stronger, three times softer, and healthier-looking after just one three-minute use. In addition, we launched a backbar size to ensure that this new technology is available to our pro community. We believe the opportunity for this product is significant. Our internal research, supported by Circana panel data, indicates that there are approximately 40 million prestige hair care consumers who experience daily damage from heat, mechanical stress, and the environment, yet are not currently using a prestige treatment. Many of these consumers find the category overwhelming and the marketing claims confusing. It is our job to offer a solution. To mark the launch of No. 3+, we have built on our Billion platform with the launch of a campaign “Science Never Looked So Good,” inviting consumers into the Olaplex Holdings, Inc. lab to discover the innovation behind the formulas that have defined the bond repair category for over a decade. The work features actor and comedian Chloe Fineman as Olaplex Holdings, Inc.'s Chief Hair Officer, whose long-term relationship with the brand through her stylist, Olaplex Holdings, Inc. ambassador Jacob Schwartz, offers an authentic perspective on how advanced hair repair shows up in real life. The campaign brings joy and approachability to complex hair science, reinforcing Olaplex Holdings, Inc.'s transparent, science-led, and future-focused approach to hair care innovation. To maximize this moment, we are coordinating a unified global launch across media, influencers, and retail and pro partners. This includes a refreshed visual identity for our No. 3+ packaging that elevates our package design to match our scientific credibility. This refreshed packaging will be brought across our entire portfolio, reflecting our new brand identity with a phased implementation. In summary, we entered the year with brand momentum, a robust innovation pipeline, stabilized margins, and strong cash flow. Our strategic priorities are designed to accelerate our Bonds and Beyond vision. We believe that we have the right model, the right team, and the right actions in place to create long-term shareholder value built on the incredible scientific foundation at Olaplex Holdings, Inc.'s core. With that, I will turn it over to Catherine to review our fourth quarter and fiscal year 2025 results and 2026 outlook. Catherine? Catherine Dunleavy: Thank you, Amanda, and good morning, everyone. We are pleased with our results, which reflect the disciplined execution of our transformation plan. For the full year 2025, we delivered or exceeded the expectations we shared across net sales, adjusted gross profit margin, and adjusted EBITDA margin. Beyond the numbers, we have fundamentally strengthened our operating architecture, implementing more rigorous processes and establishing what we believe is a more stabilized adjusted EBITDA margin base upon which we can build for long-term growth. Fourth quarter net sales reached $105.1 million, a 4.3% increase year over year, led by strong holiday performance across professional and D2C channels. For the year, sales were $423 million, or flat year over year. Perhaps most encouraging and reflective of our transformational progress is our fourth quarter ending velocity. While total fourth quarter sell-through was slightly lower compared to the prior year, we exited December with positive year-over-year sell-through trends across our key accounts. We are moving into 2026 with clear sequential momentum. By channel, professional increased 18.9% year over year in the quarter to $36.8 million, with net sales increasing 5.5% for the year. In the fourth quarter, growth was driven by high-impact U.S. innovation and strong participation in global holiday events. As we execute our three-tiered go-to-market strategy, we deliberately shifted international volume towards the professional channel as a primary growth engine. Specialty retail declined 14.5% year over year in the quarter to $24.7 million, with net sales decreasing 8.3% for the year. This reflects our deliberate strategic pivot in international distribution, moving volume away from retail distribution partners towards pro partners. Additionally, sell-through remained down on an annual basis, but we saw encouraging momentum exiting the fourth quarter as our initiatives hit the market. Despite the top-line decline, retail outperformed our expectations in the fourth quarter. It is important to note that we believe inventory levels at our key partners are healthy. Direct-to-consumer increased 6.6% year over year to $43.6 million in the quarter, with net sales increasing 3.1% for the year. Our revamped digital strategy successfully captured demand around key shopping events. In the fourth quarter, we delivered strong holiday performance, which led to richer replenishment activity. Over Cyber Weekend, we outperformed select retail partners' expectations with our Wash and Shine kit ranking number one in shampoo and conditioner and our No. 7 ranking number one in hair oil within the premium hair care category. Additionally, we successfully sold on TikTok Shop during the fourth quarter, and while a small contributor to overall revenue, it significantly outperformed our expectations. We expect to expand the strategic channel in 2026 with a focus on recruiting new customers and boosting our overall content engine. By region, in 2025, U.S. net sales were down approximately 3% with international sales up approximately 3%. U.S. net sales remained down while we continue to focus on sequentially improving sell-through. International benefited from the execution of our new go-to-market strategy and our increasingly disciplined promotion process. Adjusted gross profit margin for the quarter was 70.6%, up 200 basis points year over year, driven by supply chain management, which offset lower margin on new products that have not yet reached full production scale or efficiency. Fiscal year 2025 adjusted gross margin was 71.8%, a 40 basis point improvement. Adjusted SG&A was $61.4 million for the quarter and $211.4 million for the year, an increase of $40.8 million year over year. This increase is aligned with our strategic priorities and primarily reflects increases in sales and marketing, which increased $5.9 million year over year in the quarter compared to the previous year and $26.7 million for the year. We entered 2025 with a clear intent to invest in our brand, our people, and our core infrastructure. We believe that we have now reached the right level of investment, and our focus in 2026 turns to refining and optimizing this spend. Adjusted EBITDA was $12.9 million for the quarter, representing a 12.2% margin. This compares to a 17.4% margin in the fourth quarter 2024. For the year, adjusted EBITDA was $93.9 million, representing a 22.2% margin compared to 30.7% in the prior year. This year-over-year change reflects the strategic investments in marketing and people we are making to position our business for sustainable long-term growth. We generated positive operating cash flow again in the fourth quarter. For the year, we generated operating cash flow of $58.7 million, reflecting strong management of our working capital and the power of our asset-light business model. We ended the quarter with cash and cash equivalents of $318.7 million and debt of $352.3 million. Inventory was $60.2 million, down $15 million from $75.2 million in 2024, representing our improved working capital discipline. Regarding our 2026 outlook, we expect net sales in the range of approximately minus 2% to plus 3% versus fiscal year 2025, adjusted gross profit margin between 71% and 72%, and adjusted EBITDA margin of 21% to 22%. This guidance assumes no material impact from tariffs. While the trade environment remains fluid, we believe our global supply chain is minimally exposed. Furthermore, it does not include disruption that may occur from the geopolitical environment. The full range of our outlook balances the momentum we see exiting 2025 and the confidence in our 2026 plan with a recognition that we remain in a state of transformation. Key drivers of our net sales guidance include improved sell-through. We expect sell-through to improve sequentially and turn positive for the year. The range reflects the magnitude and the pace of this recovery. Brand evolution and supply chain. 2026 marks the rollout of new packaging following our February 2025 visual identity launch. While we have robust plans in place, managing this transition alongside a multiyear innovation pipeline adds operational complexity. Our outlook prudently accounts for these evolving supply chain processes. Additionally, this guidance reflects a normalized impact from promotional activities in 2026 as compared to 2025. Macroeconomic context. Finally, we continue to monitor an uncertain global macroeconomic environment and shifting consumer sentiment. Ability to hit the high end of the range is tied in large part to the speed and effectiveness with which we execute on our three core priorities: energizing our hero products, fueling high-impact innovation, and expanding our diversified go-to-market model. As we continue through our transformation, we expect the slope of our demand to be weighted toward the second half of the year. We expect sell-through for both our heroes and our new launches to build sequentially throughout the year as our strategic initiatives take full effect. Specifically, for the first quarter, we expect sales to land below our full-year guidance range on a percentage basis compared to the prior year. We are strategically pacing the sell-in of No. 3+, whereas early 2025 innovation sell-in was more concentrated to the first quarter. Furthermore, EBITDA will be significantly pressured in the first quarter as we front-load marketing to support No. 3+. For the remaining of the year, we expect to see marketing efficiency improve year over year. We will also begin to fully lap our 2025 foundational investments, which started late in 2025, which we believe will allow us to optimize marketing spend. We expect non-sales and marketing operating expense to increase as we annualize the 2025 investments in people and processes that we believe are integral to the success of our transformation. Importantly, we believe our expected 2026 adjusted EBITDA margin range is a sustainable base upon which we can execute our vision, drive sustainable long-term growth, and unlock Olaplex Holdings, Inc.'s true potential. We entered 2026 with stable revenue and EBITDA margins, and are squarely focused on executing our transformation to support our long-term growth. As it relates to our capital allocation, we possess an advantaged asset-light business model that generates consistent, robust cash flow. This, along with our strong balance sheet, allows us to invest in opportunities to accelerate our strategic priorities and drive growth, explore tuck-in acquisitions similar to Pervala, and expand our long-term potential, and evaluate opportunities to return value to shareholders. In conclusion, we met or exceeded our financial expectations in 2025 while restoring brand momentum and strengthening the fundamentals of our business. We are navigating this transformation with discipline, and we enter 2026 with more stabilized margin and clear strategic priorities designed to accelerate our Bonds and Beyond vision and move Olaplex Holdings, Inc. towards consistent long-term value creation. Operator, we are now ready to take questions. Operator: Thank you. We will now be conducting a question-and-answer session. Please limit yourselves to one question and one follow-up, and requeue for any additional questions. The first question is from Susan Anderson from Canaccord Genuity. Susan Anderson: I guess maybe just to start out, maybe if you could talk about, I guess, just the discrepancy between the specialty retail and DTC. I guess, the retailer destock in the quarter? Did the specialty retail channel kind of play out as you expected? And then as we look to next year, you mentioned just first quarter being a little bit lower, but maybe also if you could talk about kind of the cadence the rest of the year and then any major launches you are expecting to impact the sales of the quarters? Thanks. Catherine Dunleavy: Thanks for the question. So let me take the first one you were asking about, which is our specialty retail. And again, we run the business and encourage everybody to look at it as our flywheel, and we also run the business for a total year. Our job is to put the product in front of the customer wherever they want to buy it, and initiatives that we might put in place that appear in the pro channel may actually drive revenue into the D2C channel. So we feel very pleased with the way our flywheel is working. Specialty retail, as we mentioned, outperformed expectations in the fourth quarter, and sell-through did improve sequentially in the fourth quarter versus the third quarter level. We had strong exit rate sell-through velocity, and our top customers turned positive. Additionally, when you look at consolidated retail performance, there continues to be noise with our international realignment, which serves as a headwind to that channel. So in conclusion, in retail, we are pleased with the momentum we are seeing, and sell-through turning positive we believe sets us up for a nice 2026. The second part of your question was about just the first quarter and going through the year. Let me take us on the journey of where we are as a company. 2025 was really our year of initial implementation. We went from planning in 2024 to our initial implementation in 2025. We introduced our Bonds and Beyond vision. We had our first three priorities against that vision: generate brand demand, harness innovation, execute with excellence. We are pleased, as Amanda just went through, with the progress we have made. We successfully relaunched our brand. We launched a full 360 marketing campaign. We accelerated our innovation. We built people, processes, and tools we need to actually execute. We executed our international alignment. And the progress was measurable. Sales were flat after an 8% decline in 2024 and a 35% decline in 2023. Sell-through improved sequentially throughout the year. Awareness, sentiment, purchase intent all increased. We had four of the top five prestige hair care launches. So we are in a much healthier place as we enter 2026 than we were in 2025. The first quarter revenue is going to be below the range and EBITDA significantly below the range. In the first quarter of last year, 2025, we had a very significant pipe for our No. 4 and No. 5 launch, and the pipe for the No. 3 this year is more balanced throughout the year. However, we are putting a lot of marketing spend against the launch of No. 3, which we expect to benefit all the rest of this year and well into the future. And that laps 2025, where we had not yet started to invest in marketing. We think we started at the end of the first quarter. So those two factors combined really drive our EBITDA margin outside of the range for the first quarter. As you think about the second and third and the fourth quarter, we expect sell-through to sequentially improve as we go through the year as we launch our innovations and our initiatives take effect, and our marketing outside of the first quarter you will start to see leverage. We put in place our foundational investments in 2025, and we get to benefit from those in 2026. That benefit will be partially offset by the people cost from the hiring that we did in the back half of 2025 annualizing throughout 2026. So for the year, our SG&A cost will be relatively flat, and we are confident in the EBITDA margins that implies. And we plan to hit our guidance just like we did in 2025. Susan Anderson: Okay. Great. Thanks for all the color there. Good luck this year. Catherine Dunleavy: Thank you. Operator: The next question is from Sidney Wagner from Jefferies. Please go ahead. Sidney Wagner: Can you share more on those additional verticals across beauty? Just curious, maybe any sense on timing of those? And then where do you see the most opportunity or consumer permission? And then one more just on where are the easy wins in share gain opportunity? You mentioned that you were seeing premiumization in hair. We have certainly seen that as well. How do you think about the TAM in terms of maybe a mass shopper trading up to prestige for the first time? Anything strategically or from a marketing perspective that you need to do to capture those consumers? Thank you. Amanda Baldwin: Hi, Sidney. It is Amanda. I will talk about that. And, obviously, innovation is the lifeblood of Olaplex Holdings, Inc. and certainly something that we have been focused on from, you know, over two years ago when I joined the organization. Job number one was to get this innovation engine going because there is so much opportunity. I would really focus this on things that we see as opportunity within hair care and the fact that we are a 30-SKU business, which if you look in comparison to other competitors in the market, the large competitors in the market, is significantly under what you might see. And as we talked about innovation and our strategy going forward this year, I think there are two different buckets. One that we are highlighting is the impact of hero SKUs, No. 3+ being obviously the most important of that and a real core launch for us this year. I think that there is a lot of opportunity, to your point about bringing people into this industry and into the premiumization. Through hero SKUs is often how one is able to do that. We have done research, and we alluded to this in the call today, that there are a significant number of consumers. We all experience daily damage due to everything that is going on, and our launch around No. 3+ today is that many do not yet understand the power of a treatment to fix that. And one of the things that I have seen in the hair care category, and we spent a lot of time, you know, again, very research-driven, very data-driven, a lot of social listening, and I have concluded that this is the highest passion, highest confusion category that exists in beauty, which I think is an extraordinary opportunity for us as a brand given that we are very fact-based and science-led. And so we will really be focusing, and I think we have talked over the last couple of years about the opportunity to put the marketing and the education behind our hero SKUs. We are now ready for it. We have not been ready for it yet, and so I think that is a really, really important moment for us. The second that we highlighted was this idea of science-based innovation and finding other areas where we can compete. You know, I will not share yet the future innovation pipeline in this organization. But I will say that it is quite robust, and as Catherine spoke to, we expect to have more innovation coming this year than we have in the past and just getting that engine going. We see a lot of white space in areas where we just simply do not compete. And lastly, that Pervala acquisition allows us to do these things with forward-thinking science and efficacy-driven positioning. Catherine Dunleavy: Yeah, I would just add on that, you know, as Amanda said, one of the first things she did when she came was to restart that innovation engine. We worked throughout 2025 to put in place robust operating processes that allow us to focus innovation and get to market as quickly as we can. We look out not just in 2026, but we have a multiyear innovation calendar where we have competing priorities for every slot that there is. We have more products that could fill that, so it is a nice place to be when you think about the strength of our innovation pipeline that has been built. Operator: The next question is from Owen from Northland Capital Markets. Please go ahead. Owen: Can you just walk us through and provide maybe a little more color on the strong performance in the professional channel and whether it was distributor restocking, new salon wins, stronger sell-through per door, the Blitz program—just any more color there would be great. Amanda Baldwin: I can speak to that. Nice to hear your voice, Owen. So really, there were two things that were job number one and job number two. Job number one was innovation. Job number two was get back to supporting the pro. This is the heritage of the brand, and so we really have been focused on this as the center of our flywheel from day one. It is a lot of different moving pieces, as you spoke about, that really come to being in contact with the pros, supporting the channels in which they purchase. The Blitz program was a very important piece of this, and I would also highlight our education program. That is something that is really brand new, overhauled over the course of approximately the last year when we put leadership in place into our education team, built out that team, built out the assets, and this—this, I think, of pro is something that does operate slightly different than the consumer business. It is much more human-to-human and education-focused than you might see in what I will call classic marketing in a consumer business. So we are just starting to see the benefits of that. We also had benefits of how we are handling promotions in that channel across the organization. We are just being a lot more thoughtful and disciplined in that approach. So there is a combination of a lot of things. And lastly, the international realignment that you also spoke about is the other key driver of this, and that was really about making sure—and this has been a story also over the course of the last two years—making sure that we have the right partners who are invested in supporting the pro is a really important piece of how we are thinking about our international business. Owen: Got it. Super helpful. And then secondly for me, focusing on that international front, strong year-over-year growth there. What markets drove that performance? And does 2026 guide assume that international continues to grow faster than domestic? Catherine Dunleavy: Thanks for the question. We really manage our business as a global business, as a global flywheel, and so we do not typically break out regional performance. We are pleased with our international strategy. We believe that it is what you are seeing in the numbers, and we are optimistic about our global guidance for 2026. Operator: The next question is from Olivia Tong from Raymond James. Please go ahead. Olivia Tong: Great. Thanks. Good morning. First question is just around the top-line progression, better understanding the Q1 expectation on sales. You mentioned obviously the base period comparison to a driver of a tougher start to the year, but I am a bit confused by that as you saw a lot of destocking last year, and it sounds like that is less of a factor this year. So, you know, when I look at the comps on a one-year basis, you have got a negative; on a two-year basis, you have the least demanding comp on a two-year stack. So just wondering if you could provide a little bit more color on sort of the cadence as the year progresses. And then what gets you on a full-year basis from the high end to the low end of the year given it is plus or minus a few points around flattish? Just trying to understand what is embedded in that expectation. Catherine Dunleavy: Thanks for the question. So let us talk about the first quarter. As we have consistently said, we manage the business annually, especially as we are moving through a transformation. Revenue performance in the first quarter is largely driven by the timing difference in the innovation shift. In 2025, we had a large concentration of shipments of No. 4 and No. 5. This year, we are strategically phasing in our No. 3+ innovation. So that is what you are seeing in the numbers. I can talk about the adjusted EBITDA margins again. You know, we will be significantly pressured in the first quarter as we are investing to support that launch, and you are going to see that return during the entire year. Amanda Baldwin: I would just build on that also to say that it was a very deliberate and strategic choice to launch No. 3+ at this moment in time. And so I think we have the opportunity to focus on our hero and really think about how that can build throughout the entire year. So it is just a very strategic choice to make sure that we are coming out of the gate strong. Operator: The next question is from Katie Sarah Grafstein from Barclays. Please go ahead. Katie Sarah Grafstein: Thanks. When you think about the development of the prestige hair care category over time, why do you think it has been less developed than the other prestige beauty categories? And is there a benefit of being a scaled player in this category just as you think about the importance of the pro channel? Thank you. Amanda Baldwin: Yes. Thanks for the question. I think there are a couple of different things at play. I think that historically in prestige hair, the channels were much more tightly defined than they exist today. So the flywheel that we are talking about is relatively new. The history of premium hair, if you rewind, I am going to go with probably ten years ago, there was a very strong line between products that were available in the pro channel for salons and things that were available elsewhere. So you really did not see premium or pro hair available outside of the salon. So just the size opportunity and scale opportunity of the channel has changed dramatically as we are able to access retail channels and direct-to-consumer, which is obviously where much of the business in the beauty industry is happening. I think the other thing is actually intention of the consumer. Like I said, there is a lot of passion around hair. I think that there is a growing interest in hair and how it actually works. It is something that I think we have actually seen in the skincare industry before. I think it is an interesting model of comparison to look at where there was a probably earlier-stage prestige skincare business, and we have seen that grow significantly over time as people have learned to understand the impact of a more premium product and the impact of science on the efficacy and the results that we see. I think that is why Olaplex Holdings, Inc. is so well positioned at this moment in time, and I would venture to say that Olaplex Holdings, Inc. really started the conversation around scientific and science-led hair care. And we are really excited to get back to leading that conversation. So I think it is a lot around consumer behavior. There is channel behavior. And what we are seeing from our partners around the globe is that they are very excited about what the potential is in this category, which I think bodes well for our future. Operator: The next question is from Andrea Teixeira from JPMorgan. Please go ahead. Andrea Teixeira: Hi, good morning, Amanda and Catherine. Thanks for the question. I was hoping if you can please talk about your distribution and shelf into this innovation? And is the outlook that you are embedding in 2026 for distribution to be flattish, or any movement up or down? And then when you think about sell-in and sell-out, I was just hopeful to see how you exit. And you talked about sell-through getting better in December, which is encouraging. But I was hoping to see as you launched March, I just want to see how those dynamics have been playing out and the same with the pro, anything that you have—you talked about the backbar and then the way they have been encouraged with the relaunches. So just to feel like how the sell-through, the sell-in and sell-out have been pacing and consumption in general. If you can talk about consumption into the first few months of the year, that would be wonderful. Thank you. Amanda Baldwin: Yes. What I can say is that there is no pull forward of anything in this launch, and we do not talk about specifics of exact distribution. But I think if you go in and you look at our product on shelf, you will see the No. 3+, and it really looks great in stores. And so we are very pleased that we are starting to really hit our stride around all the investments that were made in visual merchandising and the opportunity around the brand. So that is what I would comment at this point. Operator: This concludes the question-and-answer session. I would like to turn the floor back over to Amanda Baldwin, Chief Executive Officer, for closing comments. Amanda Baldwin: I just wanted to say thank you to everyone for being with us here today, and we hope you have a great day. Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Operator: Thank you for your continued patience. Your meeting will begin shortly. If you need assistance at any time, please press 0 and a member of our team will be happy to help you. Thank you for your continued patience. Your meeting will begin shortly. If you need assistance at any time, please press 0 and a member of our team will be happy to help you. Thank you for your continued patience. Your meeting will begin shortly. If you need assistance at any time, please press 0, and a member of our team will be happy to help you. Welcome to the Stabilis Solutions, Inc. Fourth Quarter 2025 Earnings Conference Call. At this time, all participants have been placed on a listen-only mode. Following the presentation, we will open the line for questions. Lastly, if you should require operator assistance, I would now like to turn the call over to Andrew Lewis Puhala, Chief Financial Officer. Mr. Puhala, please go ahead. Good morning. Andrew Lewis Puhala: And welcome to Stabilis Solutions, Inc. fourth quarter 2025 results conference. I am President and CFO of Stabilis Solutions, Inc. And joining me today is our Executive Chairman and Interim President and CEO, J. Casey Crenshaw. We issued a press release after the market closed yesterday, detailing our fourth quarter and full year operational and financial results. This release is publicly available in the Investor Relations section of our corporate website at stabilissolutions.com. Before we begin, I would like to remind everyone that today’s conference call will contain forward-looking statements within the meaning of the Private Securities Reform Act of 1995 and other securities laws. These forward-looking statements are based on the company’s expectations and beliefs as of today, 03/05/2026. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected. The company undertakes no obligation to provide updates or revisions to the forward-looking statements made in today’s call. Additional information concerning factors that could cause those differences is contained in our filings with the SEC and in the press release announcing our results. Investors are cautioned not to place undue reliance on any forward-looking statements. Further, please note that we may refer to certain non-GAAP financial information on today’s call. You can find reconciliations of the non-GAAP financial measures to the most comparable GAAP measures in our earnings press release. Today’s call is being recorded and will be available for replay. With that, I will hand the call over to J. Casey Crenshaw for his remarks. J. Casey Crenshaw: Thank you, Andy, and good morning to everyone joining us on the call. We closed out 2025 with strong execution as we successfully wound down operations on two major multiyear contracts: our truck-to-ship marine bunkering contract with Carnival Corporation and our contract with a leading global provider of mobile power generation servicing an electrical cooperative in Louisiana. The completion of these agreements resulted in a year-over-year decline in revenue and adjusted EBITDA for the fourth quarter. The conclusion of the contracts during the quarter reduced fourth quarter revenues by approximately 28%. In both cases, we remain in a strong position to continue supporting these clients as they assess their future needs for our integrated last mile LNG solutions. Their ongoing engagement is a testament to our platform and the strength of our team and our people. As we move into 2026, we continue to see significant, significant and growing demand across our key markets. That said, we expect lower revenues and profitability in the first half of the year as we bridge toward the startup of several new customer contracts that are expected to begin in mid-2026 and early 2027. As we announced on February 17, we were awarded an estimated $200,000,000 two-year contract to support behind-the-meter power generation for a U.S. data center. Upon commencement, it will represent the company’s largest ever contract in operation. Deliveries will begin in 2027 and are expected through 2029. As the United States continues its historic investment in data center infrastructure, the rapidly expanded power needs of these facilities create a substantial opportunity for behind-the-meter LNG-based power generation. Over the past several months, we have seen a notable increase in customer interest in LNG for both commissioning and bridge power for U.S. data centers where pipeline-delivered gas or electrical power is not available. Our last mile LNG solutions network is a highly reliable solution in these environments. We are also seeing strong demand in our aerospace market where commercial launch activity remains robust. Our commercial team continues to pursue opportunities with both new and existing customers in this sector. At the same time, we work toward FID on our Galveston liquefaction project. We are also seeing strong long-term demand trends for the marine bunkering offtake. We continue working toward a final investment decision on the Galveston facility. We are in active discussions and negotiations with potential project equity sponsors and lenders on the financing structure. In parallel, we have 60% of the facility’s planned capacity contracted and are working to sell the remaining available capacity. We continue to work with our advisors on a special purpose vehicle structure funded with project-level debt and equity from third-party investors. This structure is expected to create long-term value for all stakeholders while enabling Stabilis Solutions, Inc. to further expand our core operations amid accelerating end market demand for flexible LNG fuel solutions. As we work toward FID, we are actively engaged in engineering design and ordering long-lead-time items to maintain the project schedule. We remain committed to providing periodic updates to our shareholders as key project milestones are achieved. In summary, 2026 represents an important transitional year for Stabilis Solutions, Inc. Achieving FID on our Galveston liquefaction facility will mark a foundational milestone, positioning the company for meaningful change in long-term value creation. At the same time, our commercial and operational teams remain focused on delivering best-in-class service, reliability, and quality across our other growth markets. Contracts we have in hand provide strong visibility into sustainable multiyear growth beginning in 2027 with momentum building as we progress through late 2026. As always, we remain committed to creating sustainable long-term value for our shareholders and look forward to keeping you updated in the quarters ahead. With that, I will turn the call over to Andy for a detailed review of our financial performance. Andrew Lewis Puhala: Thank you, Casey. I will begin with a discussion of our fourth quarter performance followed by an update on our balance sheet and liquidity. Fourth quarter revenue decreased 23% year-over-year driven by a 22% decrease in lower rental and service revenue. At an end market level, marine bunkering revenues fell 42% year-over-year while power generation revenues decreased 56% due to the conclusion of the large multiyear contracts in both markets. This was partly offset by a 17% increase in aerospace revenues and a 12% increase in industrial revenues compared to the same quarter last year. Adjusted EBITDA was $1,500,000 during the fourth quarter, compared to $4,000,000 last year. Adjusted EBITDA margin was 11.5%, down from 23.2% in the fourth quarter of last year. The decrease in our adjusted EBITDA margin primarily relates to the conclusion of the two large contracts, a nonrecurring favorable SG&A adjustment, and a gain on asset sale, both occurring in the prior-year quarter. Cash from operations totaled approximately $670,000 for the quarter. Liquidity at quarter end was $10,200,000, consisting of $7,500,000 of cash and approximately $2,700,000 of availability under our credit facilities. Capital expenditures totaled $3,100,000 during the quarter, primarily related to early engineering and design work and long-lead items for the proposed Galveston facility. In 2026, we anticipate $1,000,000 to $2,000,000 of additional capital in the project and for routine maintenance CapEx. Additionally, we expect to invest additional capital into mobile equipment and related assets required for the significant data center contract set to begin in early 2027. This capital investment will be funded by prepayments made by the customer. That concludes our prepared remarks. Operator, please open the line for the Q&A session. Operator: Thank you. The floor is now open for questions. At this time, if you have a question or comment, please press 1 on your telephone keypad. If at any point your question is answered, you may remove yourself from the queue by pressing 2. Thank you. Our first question comes from Martin Whittier Malloy with Johnson Rice. Please go ahead. Your line is open. Martin Whittier Malloy: Good morning. Congratulations on all the progress you have made on the data center front and Galveston LNG and aerospace. A lot of moving parts here, a lot of positive news. First question I have is about data centers, and I think there is a growing recognition that behind-the-meter power for these data centers might be utilized over a longer period of time, and then you have some temporary backup power needs. Can you maybe talk about what you are seeing in terms of customer demand in the data center market? And I know this contract that you have talked about is for two years in initial length. Can you talk about opportunities to extend that? J. Casey Crenshaw: Yes, sure. Happy to. And by the way, thanks for joining today and I appreciate your feedback. So when we think about the last mile LNG solution for the behind-the-meter data center or high-speed computing area, there are really a couple of different areas that Stabilis Solutions, Inc. can participate really well in. And I am going to take it from the shortest to longest duration. The first is around the commissioning of these facilities, where it could be 50 to 100 megawatt volume and could last anywhere from three to nine months, where they are working to commission blocks of these data centers, and these are one range of activity. They may be waiting on gas pipeline or different power electrical hookup during that period of time, but they are trying to commission the facilities in advance of that, whether it be the water, the cooling, and all the different things they are commissioning. The second, which is similar to this other project, is what we call a bridge solution where we are providing last mile LNG solution to a power generation company and they are providing either a two- to five-year bridging while they are waiting on the natural gas pipeline or the power lines to be brought into the facility. And so there is a chance that things do not work out on perfect scheduling and there are extensions to those contracts. And the last is there is a growing volume of permanent gas power generation for data centers, and LNG becomes a backup solution on those. So they have a pipeline connected in, they have natural gas, they have natural generators that are running off natural gas, but they bring in LNG as a backup solution in case there is any outage or issues with the pipeline. So I hope that explained the three different sectors and where we participate in the space of behind the meter for specifically data centers. And I want to add Stabilis Solutions, Inc. is actively providing distributed power activities around all different types of applications, not just data centers. But data centers are definitely a growing area right now for the company. Martin Whittier Malloy: Okay. And I was wondering if you might be able to, you know, this contract is much larger than what we have seen previously. Could you talk about any factors that we should consider in thinking about EBITDA margins on this kind of contract that would cause it to be above or below or on average with historical averages, or maybe not the specific contract, but just in general, larger contracts that you might be looking at. J. Casey Crenshaw: Well, there are a couple of different things we have worked on this one. And one is to have the client support us on additional CapEx that is related to the project and to be able to perform around contracting third-party supply, etc. So we have structured the contract to give the most solution around very strong results for the client and protecting the downside for Stabilis Solutions, Inc. if there is any delay or gap in service. And so we have done that through customers supporting us with credit enhancing features to support us on the CapEx and the OpEx related to locking down the supply to support them. That is one thing we have done as a risk mitigator. When I think about EBITDA margins and some of that stuff, I feel it is consistent with historical business, and we do not prefer to give any project-based specific details around that out, other than to acknowledge that it is not it for the clients and stakeholders and it is not anything different than historically would be provided other than they provided a lot of credit enhancement to protect us in case there are any scheduling delays. Martin Whittier Malloy: Great. Thank you. Very helpful. I will get back in queue. Operator: Thank you. Our next question comes from Tate H. Sullivan with Maxim Group. Please go ahead. Your line is open. Tate H. Sullivan: Hi, thank you. Good day. A follow-up to your last comments too on the two-year contract estimated revenue of $200,000,000, do you base that on forward prices for your LNG supply? Or can you go a little bit into how you generate that $200,000,000? J. Casey Crenshaw: Yes. So that is based on—thank you for the question and thank you for being on the call today. And that is a good question. That is based on expectation of the cost of the LNG and all the additional costs associated with delivering it, and that is based on their expected demand that they have given us over that two-year period. Not any extensions or none of that. So maybe I hope that answered the question. Tate H. Sullivan: Okay. Yes. Thank you. And then when you talk to customers such as the data center owner or operator, what are the pricing discussions like when they are talking about diesel generators versus backup energy storage systems, or how do you address any pricing concerns from customers of LNG and other solutions? J. Casey Crenshaw: Yes, I think that is a great question. And I think when we really think about where—and I hope we are being clear about this to you guys—that these three different areas where LNG really can participate. One is the shorter term, you know, three months to one year where we are doing the commissioning and support. Sorry, them on the power generation for the commissioning. That is probably the least price sensitive area. Bridging is more price sensitive. And then that final area is the most price sensitive, if you are permanent installed power base, you know, are competitive projects and they are looking at what their kilowatt per hour and everything is. And so, you know, we are always comfortable competing with diesel. But if you look at kind of, you know, grid cost power or you are looking at pipeline cost, those are normally cheaper than an LNG turnkey solution. Tate H. Sullivan: Okay. Thank you for the background. Thanks. Have a good day. J. Casey Crenshaw: Thank you. Operator: Thank you. Our next question comes from William Dezellem with Tieton Capital. Please go ahead. Your line is open. William Dezellem: Thank you. I have a group of questions. First of all, discuss with this large contract how you are going to fulfill a couple hundred million in revenues. I mean, it is clearly, that is not—presumably, that is not coming from George West. So walk us through just practically how this will unfold, if you would, please. J. Casey Crenshaw: Bill, thanks for the question. I appreciate that because I think that will add some clarity. This project is not in a region that is going to be supported by our own liquefaction facilities. So we are using our third-party network. We speak a lot about this third-party network of Stabilis Solutions, Inc., you know, through our acquisitions and the buildup of who Stabilis Solutions, Inc. is today through a number of companies that did not have their own liquefaction capacity and always used third parties. So we are using third-party liquefaction offtake agreements, and we are providing the turnkey LNG solution providing the logistics and then the on-site storage and regasification of the molecule back to the gaseous state to hit the generator. So that is, you know, the way we are doing it. And there is LNG available in these regions in these markets. And it really provides an easy data point of why Stabilis Solutions, Inc. is unique and special in the fact that we do have our own liquefiers and then we have the ability to provide this kind of turnkey solution even if we are not making the LNG ourselves. So I hope that answers it. Yes. It is not in the Gulf Coast region, and due to some confidentiality protections, we do not talk about where it is in the United States or in North America. William Dezellem: So, Casey, with that in mind, is there any reason that you could not do, I mean, hundreds of these type of contracts? And I recognize there are not hundreds out there, but really an unlimited number since it is not your molecule that is being consumed. J. Casey Crenshaw: Well, eventually, yes. Bill, that is a great question. So let us break it back down to those three options. One is the commissioning. We can do a lot of those. Those are really good, you know, six months to one year projects. Really good, lots of that is available. We are working on lots of conversations around that. And then this bridging project is really good as well. Yes, we can do a lot more. It is not limited by our liquefiers, but there is some limit to the total available LNG out in the different regions and how far we can move it via truck. So what happens is it becomes more price sensitive. And then when you then look at the backup solution at longer term, that is where, you know, the economics of these facilities, how long they are bridging, what their timeline is, all plays into the price that they are willing to pay and how far we have to move it to provide that. So first phase, the commissioning testing, lots of opportunity, lots of availability, just really strong. Bridging a little bit less, two to five years. There are some projects that will absolutely do that. We do believe we can scale that as well. And then the backup is a really strong longer-term opportunity where they really do not want to do the backup with diesel if they could help it. They want to continue to do their backup with natural gas, and they want to be toggling between grid prices and their own behind-the-meter power generation is kind of the perfect world for these data centers. And, you know, there is still, you know, to be honest with you, we are still early stages in the development of how to optimize the power on all of these, and they are just trying to get them in. So what we are excited about at Stabilis Solutions, Inc. is that we are an active participant in the distributed power market. This is the data center part of it. We are excited that we are working on it. We have been talking to you guys about it. We are equally excited about the aerospace business. We are equally excited about the marine bunkering activity and what we are seeing there. But this is an area that we are recently seeing contracting activity and we are delighted to be able to share with you guys some tangible contracted success around the space. In the data center, distributed power we have been in and doing and continuing to do. William Dezellem: Thank you. One additional data center question before we jump to marine bunkering. So is rolling stock a limitation at some point because of production capacity, or is this—I guess I am trying to understand what other limitations are there besides the ones that you aptly laid out in your response to my question? J. Casey Crenshaw: Well, I will go over all three of them. One is third-party supply or self-generated supply. And some of these projects are long enough, they may want us to build liquefaction nearer to the facility. So some of them are that bridging where they say, hey, could you consider putting a plant up nearer the facility and truck it in. So it is the molecule availability, and it is the logistics equipment, and then it is on-site storage and regasification equipment. All three of those are gating items and are really determined by the volume needed at the site and the distance. So we go into this with the largest logistics fleet and regasification fleet in the country due to the fact that Stabilis Solutions, Inc. had consolidated and been in this space in a number of end markets for years. And so we have the largest cryogenic fleet and regasification storage fleet in the United States. So that is an inherent benefit. As we continue to have growth in this space beyond what our logistics and on-site storage equipment and even liquefaction is, these customers are working with us to support and enhance the credit of the contracts to allow this solution, which we saw in this project where they were supportive of that on how they handled the contracting. So in this contract that we have discussed, we are adding logistics equipment. We are adding, you know, n+3 kind of protection around on-site storage and regasification. So they are super supportive on making sure they have everything in place that performs for their data center needs. William Dezellem: Alright, thank you. And then moving to the Galveston facility, since we are talking about FID by the end of the month, I mean, that looks like it is fully on track. But I will take the negative side of the question: what could derail it at this point since we are 25 or 26 days away from the end of the quarter? J. Casey Crenshaw: Yes. Well, hopefully, we have laid it out. There are a couple different things that we are in conjunction working on. One is the additional offtake. So we said we have 56% of the offtake contracted. We are in active discussions with customers around contracting the balance of the facility. The balance of the facility offtake agreed to optimize the capital structure in the project. Secondly, the capital structure. We are still in active negotiations and working with our capital partners, both the term debt part and then the preferred equity kind of sponsor in the SPV. So those work in conjunction with the offtake, and so we are working all that as one group. And then we are working to have the timeline be consistent with what our clients that have already contracted need that to be. So long-lead items, engineering, so we continue to work on it while we are trying to get that locked up and finalized. William Dezellem: One derailleur of timeline might be a global war, which we happen to start this past weekend or started this past weekend. So that kind of changes the dialogue. J. Casey Crenshaw: We think it enhances the need for stable, low-price, consistent fuel in the United States, specifically in the Houston Ship Channel. We think this enhances the project long term and shows why Stabilis—means Greek for stable—means having capacity and supply in the Houston Ship Channel, Galveston area is positive for the United States and the customers that call on these ports. So we think it is an enhancer, but it definitely is a new variable that got inserted in the process this week. So I hope I have laid it out. There is the commercial side. There is the financing matching with that. And then there is just the lead time and execution for the current clients that have the 56% of the offtake. And then there are kind of third-party things that are in play like the conflict in the Middle East, which is driving up the global cost of LNG, which is making the LNG that we can produce more optimal for our clients to contract. William Dezellem: That is helpful. And let me ask relative to the Carnival contract not being renewed. As it was shore to—or truck to—ship, would you please walk us through the dynamics of why they are not renewing, then what they are going to do for fuel in the intermediate time period before the Galveston plant is up and running. J. Casey Crenshaw: Sure. I will give you a little bit of color. I cannot always—we cannot speak for our client, but I will speak to what we understand and what we are, you know, pretty comfortable telling you guys is that they would have liked to have extended that contract. The Jones Act vessel that they had contracted separately that we delivered to, that delivered the fuel to them, was no longer going to be available starting in 2026. And that availability of a Jones Act bunkering vessel for this project is what made the extension not happen. William Dezellem: So they had, you know, verbally and letter agreements— J. Casey Crenshaw: Told us they wanted to extend it. But it was based on them having that available vessel, and that vessel was not available. That changed their ability to extend. In the medium term, short term, they will have to either have their vessel rerouted to an area where they may get LNG, whether that be The Bahamas, or do some routing difference, or they will have to use marine gas oil, which is called MGO, which we refer to as MGO. It is their alternative fuel source. Does that answer your question or is there any follow-up to that? William Dezellem: Yes, it answers the question, but maybe this is highlighting the lack of equipment for bunkering—that maybe that I certainly did not appreciate or understand. So maybe just as my final question, would you lay out the supply-demand dynamics of the bunkering vessels that exist and how rare or prevalent they are and why this particular bunkering vessel was no longer available to continue the contract. J. Casey Crenshaw: Absolutely. I think the best way to think about it is the maturity of the different bunkering markets. And I would say the most mature bunkering market with Jones Act bunkering vessels is in the Florida or the southern part of the United States in the Florida area. It was the first to start adopting and became the earliest, and I believe my number may be off by one, but I think it was about five Jones Act vessels that are bunkering LNG in the United States, and they are all in Savannah or in Georgia down through Florida. And so that is the availability of Jones Act LNG bunkering vessels in the United States, there are five or six and those are all in that area. And so that area was developed first. And so one of the reasons we are excited to bring this to the Gulf Coast and, over time, in other areas is because it is not a new technology. This is adopted, is working. It is just a shortage of vessels. And so that vessel was able to be moved back and have plenty of work over in that region. William Dezellem: That is helpful. Thank you, and good luck with the FID process. Operator: Thank you. We will move next to Ed Proskovich with WP Capital. Please go ahead. Your line is open. Ed Proskovich: Good morning. Casey and Andy, I have been involved in Stabilis Solutions, Inc. for some years, probably going back to GTLS—GTLS, Chart Industries’ initial investment. I have just a quick question, a good follow-up question. I see you have leased or chartered a vessel from Seaspan, the Garibaldi? I am wondering how that fits into the SLNG picture since it cannot bunker the United States, but it could bunker places in The Caribbean or Panama Canal. Hello? Operator: Just one moment please. We are having technical issues. Please remain on the line. To our location line, we are having technical issues. Speakers are back in conference. Ed Proskovich: Anyway, hey, guys. Hey, I have been a holder since the Jeep days. I really like the company. Everything is super. I have one question that feeds in well to the previous question. I see we leased a bunkering vessel, granted not Jones Act approved. Can we get any updates on that? What is it going to be used for? Are we not going to use it or what? J. Casey Crenshaw: Well, we are still in process on that. We would like to circle back with you on the next call. That was a plan to work toward trying to support our clients and customers, but let us circle back with you on the details on that. But— Ed Proskovich: Okay. We are not prepared to go over that— J. Casey Crenshaw: Just yet. Okay. I will speak to you guys later. Thanks for joining, and we appreciate you being a shareholder and being active on the call today. Thank you. Thanks, Ed. Ed Proskovich: Okay. Thank you very much. Bye. Operator: Thank you. We do have a follow-up from Martin Whittier Malloy with Johnson Rice. Please go ahead. Martin Whittier Malloy: Thank you for taking my follow-up question. Just wanted to ask kind of a bigger-picture question relating to aerospace. I guess the potential has been out there for years that we might see something more on the contracting side there with respect to aerospace. Now with more demand for LNG for, yeah, data centers, manufacturing, bunkering, is there any change in the way that the aerospace companies, space companies, are viewing their LNG supply and maybe trying to secure it more with a contract, have more visibility on the security of the supply there? J. Casey Crenshaw: Well, I will start and I will let Andy kind of come back on this. Like we do have contracted work we do with them. And it is done on one-year and re-extended contracts, etc. And we have a number of contracts inside the space. But when we think about contracting, we are talking about multiyear take-or-pay type discussions. And so we are contracted, they are just not multiyear take-or-pay contracts. And, you know, it is an exciting time for them. Their commercial consistency on really, you know, making money, sending stuff up and how that works with satellites and what their total business is and how that interlocks with the data center AI kind of growth and macro—they are really together. They are actually coming together on activity, not separating. And we do think there is going to be a lot of need for closer supply both in Florida and in the other areas where they launch and how they go about that. And then there are still quality differences on what their rockets need and how they need it. We continue to work with all of our clients in that area about how we can put, you know, specific-purpose liquefiers in for them, how we can contract longer term. They are, as they are continuing to grow their needs and develop more consistent flights, I think that is becoming more and more of a question and an issue. You know, obviously, some of them like to self-perform everything. Some of them want to do more outsourcing. So, you know, I think there is just a blend there. So not trying to not answer it real directly, but I do want to say we are contracted with these good companies. We do expect to see meaningful growth in overall revenue in 2026 versus 2025. North of 30-plus percent growth, maybe more than, more 40% growth in that space. That is our expectation and we are seeing it grow. But we have not today a line of sight on putting an asset in for one of them yet as in the liquefier fit for purpose. And we are actively having discussions with that being available. We just have not got that contracted yet. Martin Whittier Malloy: Great. Thank you. Very helpful. Appreciate it. Operator: Thank you. We will move next with Spencer Lehman, a Private Investor. Please go ahead. Your line is open. Spencer Lehman: Hi, good morning. I am very excited about what you guys are doing, what you have got lined up. Sort of my dream come true. After many years. And I just turned 90, so I think maybe I am going to get a chance to watch all this develop. I do wonder if you had considered the possibility of instead of going alone, maybe merging with a larger company where all the financing could be done by their balance sheet. But it looks like the train sort of left the station. Right? And is that still a consideration? Or you think you can handle this whole thing? It seems like it is pretty ambitious for such a small company, but you feel pretty confident? J. Casey Crenshaw: Yes, Spencer, we do. And first of all, just thanks for being a long-term shareholder and we are more excited than you because we are just big believers in how this turnkey LNG solutions is just a game changer on all three of these growth markets, aerospace and the distributed power and the marine bunkering, and we are just, you know, wildly excited about it. Yeah. You know, I think we laid it out that in the marine bunkering project where we are doing a lot of infrastructure right now, we are talking about how to finance that through a project financing special purpose vehicle and we think that is the most optimized capital structure. It allows us to retain our equity, while we believe the equity is not fully priced into the opportunities and growth of Stabilis Solutions, Inc. And so it allows us to have growth without meaningful dilution. And so we still believe that is the right path. When we look at distributed power, customers are supportive and credit enhancing to help us meet that growth with them. And when we look at space, you know, we are absolutely—or aerospace—available to put in some assets and do some stuff if they contractually would like us to do that. So we are not against putting debt, enhancing the capital structure, or really doing anything that unlocks value for the shareholders. And furthermore, we have a duty to unlock that value for the shareholders. And so you are not going to hear us in the management team saying never say never on anything. Our goal is to grow the company profitably with these three big end markets that we are discussing. For you shareholders to know that we want to grow the company, and we believe this is a growth space—both infrastructure, logistics—there is just all kinds of growth. And as we need to tap different financial markets to accomplish that, we have a duty to go do that and we intend to. And so we appreciate the question. Right now, we feel like we have got adequate support with the clients and the contracts right now. But we do not want to pretend there is a negative bent on anything other than profitable growth for our shareholders and for our stakeholders. Spencer Lehman: Well, thank you. And I think that is a great answer, and I am very pleased that you try to keep the dilution at a minimum. So thank you very much. J. Casey Crenshaw: We are in alignment there. Okay. Spencer Lehman: Alright. Go get them. Thank you, Spencer. Appreciate you joining this morning. Sorry our phone got disconnected. Yeah. Okay. Operator: Thank you. We will move next to George Berman with Cabot Lodge Securities. Please go ahead. Your line is open. George Berman: Good morning, and I also want to join the previous callers congratulating you to a very, very good job. I think things are looking definitely up, up and away for us. One particular question I have, I discussed this with your CFO a few times. We are owners of an ownership stake valued at about $10,000,000 on your balance sheet that is throwing off about $1,000,000 a year with a China joint venture. Is there any chance of maybe monetizing that because I think that would add some nice firepower for your current projects. J. Casey Crenshaw: Well, I appreciate the question. And we are really proud of that stake with that partnership with BAMKO and with our joint venture in China. We are proud of the company. We are proud of the management team. And we are delighted to be partners with Baumco in that business. Because we are not the majority shareholder and we are a partner and heavily represented on the board, we do not control all the perfect timing of how that strategic asset would be monetized. There are specific things in the joint venture agreement that allow it to be monetized at certain time periods. And those are specific. But it is a wonderful company. I think there is a lot of value, but I think the negative with that is, you know, the geopolitical challenges associated with China right now make that a bit of a, you know, is this the most time to do something there or not? Should we wait till things normalize better? Is that a better step-up value? But it is a great company. It is a wonderful group over there and if you know, that was part of the existing company that Stabilis Solutions, Inc. reverse merged into. You know, one of the only assets inside the company as we reverse merged into it. But we are delighted to have that. We participate as board members, both me and Andy, and are actively in that and have an executive that watches it and is in China working on it for us. And the million dollar plus a year that you received is nothing to shake a stick at either. We are proud of their performance and their consistency on providing the shareholders dividends and cash dividends as it relates to that business. George Berman: Right. And you are currently—you have the one big plant in, I believe, it is George, Texas, produce the LNG. You also mentioned last year on a conference call that you had already acquired the necessary equipment to build a second one. Has that gone any further? Is that part of the overall picture right now where to put it? J. Casey Crenshaw: Yes, that is. We have two liquefiers, one in Port Allen, real near Baton Rouge, Louisiana, and one in George West, Texas. And then we acquired a complete additional plant to—we call it a train or a plant or a liquefier—to install. The best place to install that is George West. That is where we would like to install it because the construction cost is lower and we get the benefits of having all the infrastructure already there. However, we have both marine clients and distributed power clients and space clients all looking at maybe they would like it near their offtake agreement. And so we have left it as an uninstalled asset to try to come up with where the most interested customer and client might want it with the longest term, you know, opportunity and offtake being. So it is available to deploy and has not been finalized on where that deployment is because we have not had the customer finalization of where to put it. George Berman: Right. So you would say—or we could say—that you basically right now are in the driver’s seat, fielding offers, and whatever is most appropriate for the company, you can take it and proceed. J. Casey Crenshaw: Yes. I appreciate the comment. We believe customers are in the driver’s seat. We are just waiting on which one would like to have that availability and that surety of supply. We are kind of under their direction. But it is a valuable strategic asset to have and have the ability to deploy it quickly relative to a greenfield application. George Berman: Right. Right. Well, Mr. Crenshaw, I also want to thank you for taking over the leadership there. I think we are definitely going in the right direction, and I will be looking forward to much higher equity prices once we get the financing for these big opportunities on the ground. J. Casey Crenshaw: Well, I agree that we have a great team here. I am looking forward to higher equity pricing for all of us as well. We have an amazing management team here. Andy, you will get to speak to a lot—our CFO, our balance of team here with Matt and Sage and Colby and just can go on and on with our team here. I mean, it is hard for me to throw out names because we would have to throw them all out. We have an incredible team, the most skilled turnkey LNG solutions team in the world. And these three core markets that we talk about with the best team in the world, period. Getting to the most profitable growth and the most profitable projects is something that we need to keep working on and optimizing for the shareholders. But we have a great team, a great set of assets, great set of logistics, plants and customers and end markets, and we are just so lucky to have all of our good clients. And we are working hard to keep them. And even though we had these two contracts roll off, the fact that we are still working with both clients and active with both clients is a testament, as we stated earlier, to our company and our team and people. So thank you for calling in today. George Berman: Thank you. Operator: Thank you. This concludes the Q&A portion of today’s call. I would now like to turn the floor over to Andrew Lewis Puhala for closing remarks. Andrew Lewis Puhala: Well, thank you all for joining the call today and your support of the company, and we look forward to keeping you updated as we have things to share and look forward to speaking with you on next quarter’s call as well. Thank you. Operator: Thank you. This concludes today’s Stabilis Solutions, Inc. Fourth Quarter 2025 Earnings Conference Call. Please disconnect your line at this time, and have a wonderful day.
Operator: Good day. Welcome to Teads Holding Co.'s fourth quarter and full year 2025 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the call over to Teads Holding Co.'s Investor Relations. Please go ahead. Good morning. Matt (Investor Relations): And thank you for joining us on today's conference call to discuss Teads Holding Co.'s fourth quarter and full year 2025 results. Joining me on the call today we have David Kostman and Jason Kiviat, the CEO and CFO of Teads Holding Co. During this conference call, management will make forward-looking statements based on current expectations and assumptions, including statements regarding our business outlook and prospects. These statements are subject to risks and uncertainties that may cause actual results to differ materially from our forward-looking statements. These risk factors are discussed in detail in our Annual Report on Form 10-K for the year ended December 31, 2024, as updated in our subsequent reports filed with the Securities and Exchange Commission. Forward-looking statements speak only as of the call's original date, and we do not undertake any duty to update any such statements. Today's presentation also includes references to non-GAAP financial measures. You should refer to the information contained in the company's fourth quarter and full year 2025 results announcement for definitional information and reconciliation of non-GAAP measures to the comparable GAAP financial measures. Our earnings release can be found on our IR website, investors.teads.com, under News and Events. With that, let me turn the call over to David. David Kostman: Thank you, Matt. Good morning, everyone, and thank you for joining us. About a year ago, we brought Outbrain and Teads Holding Co. together. The goal was and still is to build a best-in-class digital advertising platform that delivers results across every screen, from the phone in your pocket to the TV in your living room and for every advertiser objective, from branding to actual sales. Year one was a transition. We managed the friction of merging two different cultures, technologies, businesses, while navigating some tough market conditions. Also make a deliberate choice to build a sustainable premium marketplace and walk away from some low-quality revenue. It was a hard call, but we believe it was a necessary one to protect our marketplace and ensure that we can grow our business with the world's biggest brands. The lessons we learned allowed us to sharpen our focus in the second half of the year. We have simplified the org chart, right-sized our cost, and brought in fresh leadership. Now we believe we are moving into 2026 with strong alignment on our strategic priorities and a well-defined execution plan. We expect this to be the inflection point and the year we return to growth. Looking at Q4, we hit the high end of our guidance on ex-TAC, beat our adjusted EBITDA target, and generated positive free cash flow. Beyond the numbers, there are a few key indicators I want to highlight. First, CTV is accelerating. Our focus on the living room is paying off. We crossed the $100 million annual revenue mark with growth hitting 55% in Q4, and with strong growth on the home screen placements. Second, performance cross-selling was scaling. We saw a 300% jump in sales to enterprise customers compared to Q3. Now to be clear, that is still just a few million dollars per quarter, but we believe it demonstrates how much headroom we have to grow. Third, in Q4, we renewed several of our joint business partnerships with leading global brands and have many more in process of resigning in Q1. The feedback from surveying our partners, one year into the merger, is excellent, highlighting creative excellence, innovation, and media-added value, and the renewals demonstrate the strategic nature of these relationships. On the operational side, we expect that our December restructuring would save us between $35 million to $40 million annually. In addition, we have added top-tier talent like Molly Spielman, our Chief Commercial Officer, Danny Christian, our Chief Marketing Officer, and Eiralee Jain, who heads our North American business. We have also flattened the leadership structure to make sure our teams can move faster and drive speed and accountability. For 2026, the strategy for our enterprise advertisers is built on three pillars. First, we will continue to lead with our CTV offerings by focusing on two clear differentiators: home screen leadership and omnichannel branding to performance. On the home screen, we are continuing to win. We are not just another ad midstream. We are an entry point to the living room and TVs. And our leadership is anchored by our strategic partnership with leading OEMs like LG, Samsung, NVIDIA, and Vizio. In Q4, we further solidified our position by expanding our relationships with LG, signing exclusive partnerships in Italy and Greece, and in Q1 of this year, we expanded our footprint through an exclusive partnership with Samsung TV in certain regions in Asia-Pacific. We are further expanding this reach through new integrations with Google TV and Rakuten, all focusing on integration of these OEMs and bringing these premium, highly visible, and valuable placements directly into Teads Ad Manager. In terms of scale, we have access now to well over 500 million addressable TVs globally and already ran well over 3,500 campaigns on home screens. What we hear from our partners is that they choose to work with Teads Holding Co. due to the unique combination of our direct relationships with the most premium brands of the world through our 50-plus joint business partnerships, the quality of our creative services in ensuring the creatives are well adapted to the unique environment of the home screen, and the integration with our platform, Teads Ad Manager, which makes transacting on multiple OEMs easier and faster. And we are proving that CTV plus web is a winning combination. Our thesis is simple: using the big screen for awareness, then retargeting on mobile drives measurable sales. For example, our recent partnership with Accor, a global hotel operator, demonstrated that omnichannel activation on Teads Holding Co. not only drove 23% lift in brand favorability, but also a 17% increase in purchase intent. That is a massive win for our advertisers and a differentiator for Teads Holding Co. Second point on enterprise: we are deepening our strategic relationships with agencies. We are working on integration of our audiences with the world's leading agencies and on other data collaborations. A great example of this is our new integration with Havas, which allows their planners to activate our audiences directly from their own planning environment, driving both speed and efficiency. Third, we are scaling our performance business for enterprise advertisers. We are integrating performance capabilities, leveraging Outbrain know-how directly into Teads Ad Manager designed to create a frictionless experience for agencies buying full funnel. And we are advancing our algorithmic capabilities and investing in superior post-campaign measurement. We expect these investments to drive continuous improvements in ROAS and overall campaign performance for our enterprise advertisers. Turning to our direct response advertisers. They are purely focused on ROAS, plain and simple, and internally on driving efficiencies that grow profitability. The 2025 trimming of our supply and demand sources to ensure higher quality will impact our year-over-year comparisons early on, but the foundation of our business is significantly stronger today than it was a year ago. We also see here exciting opportunities such as running direct response performance campaigns on CTV. In Q4 of last year, we had several million dollars of such sales. One general comment: you will hear our peers discuss supply path shortening as a new initiative, but for us, it is a foundational architecture. We provide a straight line to the source of premium supply, whether that is an LG home screen or a top-tier global publisher, which is one of the reasons we can deliver superior outcomes from branding to performance. AI is the engine behind many of these growth areas. It is both a performance driver for our clients and a productivity tool for our engineers and teams. On the algorithmic side, we have progressed on the integration of our AI and data infrastructure, and we are already seeing tangible results. In addition, by using LLM models to sharpen our predictive delivery, for example, by analyzing the content of ads to extract additional relevant signals, we are achieving two goals at the same time. We are hitting better KPIs for our advertisers, specifically by lowering the cost per acquisition, and we are seeing the path forward expanding our own margins at the same time. We are also investing in transitioning from manual campaign setups and toward agentic-driven goal setting, which we believe will simplify the experience for our partners and allow our technology to optimize for outcomes more effectively. To sum it up, I believe the heavy lifting of the transition is behind us. We have used the second half of last year to build a leaner, faster, and better Teads Holding Co. We saw some positive indicators in Q4 into Q1. We have started the year with strategic clarity, a well-defined execution plan, and the right leadership, which I am confident will allow us to make 2026 a breakout year. I will now turn it over to Jason to walk through the financials. Jason Kiviat: Thanks, David. As David mentioned, we achieved our Q4 guidance for ex-TAC gross profit at the high end of our range and exceeded our range for adjusted EBITDA, generating positive adjusted free cash flow in both the quarter and for the full year. Revenue in Q4 was approximately $352,000,000, reflecting an increase of 50% year over year on an as-reported basis, primarily reflecting the impact of the acquisition. On a pro forma basis, we saw a year-over-year decline of 17% in Q4. I spoke last quarter about the drivers of volatility in our top line, stemming from both legacy Teads Holding Co. operating businesses. I will reiterate them briefly here in the context of what we anticipate for 2026. But an important takeaway is that since we last reported in November, we have seen a more stable top line. Within our enterprise clients, we saw a deceleration in our top line starting in June that we attribute largely to operational challenges and distraction of the merger. This primarily impacted us in several key markets, most notably the U.S. and U.K. However, the changes we implemented in leadership and operations in Q3 are yielding positive indications in Q4 and into Q1, giving us confidence that we can see a return to growth by Q4 of this year. TPV growth has accelerated, top line in the U.K. has stabilized, and our sales of performance campaigns to enterprise customers, including cross-selling, is accelerating. Within our direct response clients, through both strategic decisions around quality and external factors, including deliberately exiting lower-quality demand and supply sources from our ecosystem, we turned a small but meaningful segment of arbitrage-based customers. This impacted our revenues primarily in H2, and most meaningfully in Q4. And while we feel we have a healthier long-term business from these changes, we expect that this will impact our year-over-year comps through much of 2026. The year-over-year comparison impact for 2026 is expected to be a headwind of approximately $20,000,000 of ex-TAC with the vast majority of that in H1, phasing down to a minimal amount by Q4. X-TAC gross profit in the quarter was $152,000,000, an increase of 122% year over year on an as-reported basis and a decline of 19% on a pro forma basis. Note that ex-TAC gross profit growth is outpacing revenue growth due to a net favorable change in our revenue mix post-acquisition, as well as the continuation of improvements to revenue mix and RPM growth that we have been seeing for the last few years. Other cost of sales and operating expenses increased year over year, primarily reflecting the impact of the acquisition as well as a non-cash impairment in goodwill. As a result of recent declines in our share price and overall market capitalization, we were required under accounting standards to perform an impairment assessment and ultimately recorded an impairment to goodwill of around $350,000,000. This accounting adjustment is entirely non-cash and does not impact our liquidity, operating cash flows, or our debt covenants. I also want to be clear and emphasize we fully believe in the fundamental strategy of our omnichannel full-funnel offering, but as we have reported, the operational challenges have led us to a timetable longer than we initially anticipated, resulting in this impairment charge. As our actions exemplify, we are committed to returning to growth and improving profitability, and to that end, in the quarter, we recognized $6,000,000 of restructuring charges, primarily related to the reduction in force we announced largely executed in December. The restructuring is expected to save approximately $35,000,000 to $40,000,000 annually from the elimination of both filled and unfilled roles. Adjusted EBITDA in Q4 was $37,000,000, and adjusted free cash flow, which, as a reminder, we define as cash from operating activities plus CapEx, capitalized software costs, as well as direct transaction costs, was approximately $3,000,000 in the fourth quarter and $6,000,000 for the year. As a result, we ended the quarter with $139,000,000 of cash, cash equivalents, and investments in marketable securities on the balance sheet, and continue to have €15,000,000, or about $17,500,000, in overdraft borrowings, classified in our balance sheet as short-term debt. Additionally, we have $628,000,000 in principal amount of long-term debt at a 10% coupon due in 2030. As we have said in the past, we are always evaluating our cost and capital structure opportunities to improve our financial profile. In that regard, we are evaluating opportunistic alternatives that may be available to us to strengthen our balance sheet and build a more durable capital structure. Now I will turn to our guidance. We are focused on operating as a cash flow generating business. We have taken recent steps to improve our cost structure, we will continue to look for opportunities as we further advance our integration and leverage the exciting avenues to streamline operations that are now available with AI. We have taken steps to realign our team, appoint new leadership, and enhance our focus on the areas that we feel will help us return to top line growth. While we feel good about the steps we are taking and the progress we are seeing, we acknowledge the uncertainty of the overall environment and how it may impact the timeline and progress as we pursue a return to top line growth. With that, we have provided the following guidance. For Q1 2026, we expect ex-TAC gross profit of $102,000,000 to $106,000,000. We expect adjusted EBITDA of breakeven to $3,000,000. And for full year 2026, we expect adjusted EBITDA of approximately $100,000,000. While this level of annual EBITDA could potentially result in a small use of cash, we are comfortable with our cash balance and borrowing ability, and additionally, we see opportunities to generate positive free cash flow this year. Now I will turn it back to the operator for Q&A. Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from the line of Laura Martin with Needham and Company. Please proceed with your question. Laura Martin: Sure. Thank you very much for taking the questions. On the salesforce, I was just wondering, are we pretty much staffed up now on the salesforce from the integration, and do you expect smooth sailing going forward on those kinds of hires? And then secondly, I was really interested, David, in your comments on the exclusive deals with Samsung and LG. Are those for home page programmatic the way Nexon is talking about, or is that for—I was just wanting you to expand on what rights you have that are exclusive right now. Thank you. David Kostman: Thanks, Laura. Good morning. So first on the salesforce, we are confident we have the right leadership team and the right team in place. So do you anticipate smooth sailing? Nothing is smooth, but we are very confident. We have a good team. I think we replaced the people we wanted to replace, and I am very confident with what I have seen the last few months with the new leadership. On the home screens, we have been at this for about two years working on a home screen. So we have exclusive in certain geographies with LG. We have an exclusive relationship in certain geographies with Samsung. We had until last year an exclusive relationship with Vizio, which now also NexGen is involved. But what we do and where our advantage is really that we work directly integrated between Teads Ad Manager and the home screen. It is a very unique special format, and the advantages we have around creative adaptation to the different formats and the ability of advertisers to really buy and optimize across multiple OEMs in one platform, that is a huge advantage. You can activate it programmatically, but when you activate it programmatically, it is very different in terms of the, you know, outcomes that you can drive. The premium brand relationship we have directly are a big factor why these companies work with us exclusively. We have a global footprint in more than 50 markets. They do want those premium brands on that home screen. I mean, there is no tolerance for the type of brand, so that is a huge advantage that we have. So between Teads Ad Manager direct integration, ability to run campaigns across multiple OEMs, the creative adaptation, and the premium brands, that gives us a, you know, a huge scale and then I think a huge heads up on that business. And it is also driving other parts of our business. We talked on—I mentioned on the call the omnichannel, so the ability to activate on the home screen and then on the web is a big advantage. And the ability to drive just performance campaigns. So we believe we have a two-year head start there, and it is a great differentiator for us. Operator: Our next question comes from the line of Matthew Condon with Citizens. Please proceed with your question. Matthew Condon: Thank you so much for taking my questions. The first one, just can you provide additional color just on the securitization of the business, and just what trends are you seeing so far in Q1? Do you see confidence that you have got this back on the right track? My second one is on the organizational changes. Just do we have the right team in place today across the entirety of the business? And should we expect anything else and or any other changes going forward? Thank you so much. Jason Kiviat: Thanks, Matthew. So this is Jason. I could take the—I think I got—this is a little broken, but I think your first question is about Q1 trends and what gives us confidence, so if I miss anything you said, I will just start there. Yeah. Look. I think we are seeing improvements in Q1. Right? Maybe—I know the numbers might be a little funky with the timing of the acquisition last year being a few days into February, and so the pro forma and the as-reported periods are slightly different. On an as-reported basis, we are guiding, you know, at our midpoint to something, you know, fairly flat year over year for ex-TAC. And on a pro forma basis, it is down, but not down to the same level we saw in Q4 where we were down a bit more. So what we are seeing, you know, in this early part of Q1 and what we expect for the full quarter is, you know, closing of the gap quite a bit here, and, you know, that means we are better than what is typical in Q1 relative to Q4. And it is really concentrated in the areas that we are focusing on, which obviously when you are focusing on something and you see improvement in it, it gives you some confidence. Right? So, you know, CTV is accelerating, you know, through the home screens and the omnichannel as David said. You know, we are focused on driving more performance sales. Obviously, a big part of the kind of synergies of the combination, and we do see momentum there. And then I know I have talked a little bit about some of the operational challenges that have been driving the headwinds for much of the last year or six months or so. And, you know, U.K. and U.S. are the countries I have kind of called out. You know, in the U.K., we do see a relative improvement and a big shrinking of the gap, you know, starting in Q1 here. As David mentioned, in the U.S., we had new leadership in Q1, and we do feel good and gain some confidence from the pipeline that we see in March and beyond. So, you know, cautiously optimistic, but, you know, we have taken meaningful steps to focus and reduce cost and focus and realign around the things that we think will drive growth, and we are starting to see good indications of those things. David Kostman: And I think, maybe in terms of the team, I am very comfortable. I mean, we started the year with a very clearly defined execution plan. We sort of elevated to the leadership team some people from the product and tech side. So I am very comfortable with where we are. We rolled out very specific goals and targets. And I think the execution plan is well defined with the right team at this point. Matthew Condon: That is very helpful. Thank you so much. Operator: Our next question comes from the line of James Heaney with Jefferies. Please proceed with your question. James Heaney: Yeah. Great. Thank you, guys. Just what are the assumptions behind the full year EBITDA guide? How should we think about the linearity of growth and margin as we move throughout the year? And then any color you can maybe also provide around linearity of ex-TAC gross profit growth? I think you said getting to growth in Q4, but any other things to think about moving throughout the year? Jason Kiviat: Sure. Yeah. Thanks, James. I will take that. It is Jason. I mean, our guidance of approximately $100,000,000 of EBITDA, it does not, you know, imply a full year ex-TAC growth on a, you know, on a pro forma basis. But we do expect to get to growth by the end of the year by Q4. So maybe some color on kind of how we see that playing out, you know, a couple points of context. You know, for one, I did mention on the call, we have this year-over-year, you know, comp headwind—about $20,000,000 of ex-TAC from the quality cleanup. And just to put that into kind of when we see that happening, you know, it started to really impact us, you know, fully in Q4, and, you know, maybe about half of the impact we talked about in Q3 from the supply cleanup and some of the early impacts there. So the full impact, about $8,000,000 of a headwind in Q4 of ex-TAC, and we expect that same $8,000,000 to impact Q1 and Q2 as well before starting to, you know, shrink in Q3 and be de minimis for Q4. So the comps do ease as the year goes on. That is the biggest kind of headwind that we see kind of moving forward. And, generally, you know, we expect it will take a few quarters to build back to growth from the year-over-year decline that we reported in Q4. We see improvement, as I said, in Q1. We think it will take a few quarters to get to growth, but believe, you know, that our changes in focus, leadership, and operations are driving this change, start to see it in Q1 from the things we did last year, and the things that we are doing in Q1 will help more and more as the year goes on. So on a pro forma basis, we expect to see improvement each quarter of the year and then Q4 being where we hit the positive growth. In terms of expenses to get to EBITDA, you know, obviously, you can see in our guidance for Q1, it is substantially reduced expenses from, obviously, from the restructuring and the step-up of, you know, full year of synergies now that we have compared to last year. So you can see the lower cost base, and that is even, you know, despite FX headwinds of a few million dollars that we see from the weakening of the dollar versus, you know, the euro and the shekel. But, you know, for the rest of the year, a few million dollar step-up probably in Q2 and Q3 just based on seasonality, revenue-related items, and some, you know, fully staffing where we have some empty roles right now, and then a normal Q4 seasonal step-up as you have seen in our results this year as well would be what I expect. James Heaney: Yeah. Very thorough answer. Thank you. Maybe just quickly, for either of you, anything on just specific ad verticals that you would want to call out in terms of strength or weakness? I mean, any particular standouts that you would want to highlight. Thank you. David Kostman: Maybe I will take that. I mean, there is nothing really that is material. I mean, we do not have any vertical that is sort of double digit even. So we see some weakness in CPG and automotive, some strength in health and finance, but nothing really of note. James Heaney: Great. Thank you. Operator: Our next question from the line of Zach Cummins with B. Riley Securities. Please proceed with your question. Zach Cummins: Hi. Good morning, David and Jason. Thanks for taking my questions. I wanted to ask about the Google TV opportunity. I mean, can you maybe go a little more into detail around that announcement, and what type of growth opportunity does that unlock for you as we move forward in 2026 for CTV home screen? David Kostman: Overall, CTV home screen is a huge opportunity for us. We are, as I said, I mean, two years into it. We have a huge base of OEMs. We added Google TV to that. I am sorry. This is the New York background noise. So we added Google TV recently. We added TCL, Vewd, and many others. So the overall opportunity is huge. I mean, it today accounts for a big percentage of our CTV business. We have grown 455% and expect similar growth rates or better for this year on the business. And I said it earlier, I think we have clear differentiators there. I think the direct access is a big differentiator. The premium direct premium advertiser relationship is a big advantage, and that is why I think these OEMs and other applications on CTV really sign up with Teads Holding Co. in order to make sure that that experience on the home screen is the best they can offer to the audiences. So it is a large opportunity and it also helps us to, as I mentioned earlier, to omnichannel sales, sell more campaigns to our advertisers also around the online video, combining the CTV home screen and the web. So it is a very big opportunity. It is a big area of investment for us, and we are very excited about it. Zach Cummins: Understood. And my one follow-up question is just around the proactive cleanup of some of the inventory throughout 2025. Obviously, a meaningful headwind when you think of ex-TAC over the next couple of quarters. But is that process largely behind us now? Do you have the ideal mix of inventory now that you are focusing more so on enterprise-level brands? David Kostman: Yes. I think it is behind us in terms of executing on that cleanup or trimming of supply and demand quality. So we walked away from about $20,000,000 in revenue. The impact will continue into the first half of this year. It was about an $8,000,000 headwind in Q4. It will continue through the first half of this year, but we have a much healthier network. We are actually delivering better ROAS for our performance advertisers, and the network and the marketplace is much more suitable for the premium brands we work with. Zach Cummins: Great. Well, thanks for taking my questions, and best of luck with the rest of the quarter. Operator: And this concludes—we have reached the end of the question and answer session. I would like to turn the floor back over to David Kostman for closing remarks. David Kostman: Thank you very much for attending today. As you can hear, we are somewhat encouraged by the sequential trends that we see. We do believe that 2026 will be an inflection point for us. We are very focused on execution and also finding the sort of right to invest in the attractive growth areas that we see, like CTV. So excited about the future and look forward to updating you. Operator: Thank you. And this concludes today's conference, and you may disconnect your lines at this time. We thank you for your participation. Have a great day.
Operator: Welcome to CPI Card Group Inc.'s Fourth Quarter 2025 Earnings Call. My name is Kate, and I will be your operator today. If you are viewing on the webcast, you may advance the slides forward by pressing the arrow buttons. The call will be open for questions after the company's remarks. If you would like to get in the queue for questions, please press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again. Now I would like to turn the call over to Michael A. Salop. Michael A. Salop: Thanks, operator. Welcome to CPI Card Group Inc.'s fourth quarter 2025 earnings webcast and conference call. Today's date is March 5, 2026, and on the call today from CPI Card Group Inc. are John D. Lowe, President and Chief Executive Officer, and Tara Grantham, Interim Chief Financial Officer. Before we begin, I would like to remind everyone that this call may contain forward-looking statements as they are defined under the Private Securities Litigation Reform Act of 1995. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. For a discussion of such risks and uncertainties, please see CPI Card Group Inc.'s most recent filings with the SEC. All forward-looking statements made today reflect our current expectations only; we undertake no obligation to update any statement to reflect the events that occurred after this call. Also, during the course of today's call, the company will be discussing one or more non-GAAP financial measures, including, but not limited to, EBITDA, adjusted EBITDA, adjusted EBITDA margin, net leverage ratio, free cash flow, and net sales growth excluding the impact of the accounting change implemented in the second quarter. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in the press release and slide presentation we issued this morning. Copies of today's press release as well as the presentation that accompanies this conference call are accessible on CPI Card Group Inc.'s investor relations website investors.cpicardgroup.com. In addition, CPI Card Group Inc.'s 2025 Form 10-K will be available on CPI Card Group Inc.'s investor relations website. On today's call, all growth rates refer to comparisons with the prior-year period unless otherwise noted. The agenda for today's call can be found on slide three. We will open the call for questions after our remarks. I will now turn the call over to John D. Lowe. John D. Lowe: Thanks, Mike, and good morning, everyone. We are very pleased to report strong fourth quarter performance and solid results for 2025, a year which featured significant strategic, operational, and technological advancements. As we discussed throughout the year, we anticipated our business to accelerate in the fourth quarter, and we successfully executed to deliver that growth with a record quarter, growing revenue 22%. In addition to the contribution from AeroEye, this performance exceeded our expectations. We delivered strong growth across our debit and credit portfolio in the fourth quarter, driven by sales of contactless cards and ongoing double-digit growth from our software-as-a-service-based instant issuance solution. Revenue growth and the resulting operating leverage contributed to a 34% increase in adjusted EBITDA in the quarter and a 170 basis point increase in margins, and we generated exceptional cash flow. For the full year, we delivered 13% revenue growth and 5% adjusted EBITDA growth despite more than $4,000,000 of tariff expenses. We generated $60,000,000 of cash from operating activities and $41,000,000 of free cash flow, both large increases over 2024, allowing us to maintain net leverage around three times at year end. Overall, I am proud of our team's execution, which resulted in a solid end to 2025 and significant advances with our strategic initiatives. Now before I cover some of our significant accomplishments in 2025, I would like to take you to slide five covering how CPI Card Group Inc. is continuing to evolve with the market and the successes we are having executing on that strategic evolution. After being CEO for two years, and after nearly eight years here at CPI Card Group Inc., I have recognized we are a company that is constantly adapting with our markets, evolving with technology, and finding new solutions for our customers in whatever forms they need. Historically, the company has been and remains a leading producer of debit and credit cards for the U.S. market, and chances are we are in your wallet. However, while debit and credit card production and personalization are solutions we focus on advancing every day, they do not define CPI Card Group Inc. or the key role that we play in the U.S. payments market. We are broader than that, with deep value in what we have built over many years and continue to build. We are a connector, an innovator, a company that educates our customers on the next big thing and how their customers can pay, and more importantly, how they can stay top of wallet both physically and digitally. At our core, our solutions help our customers win, allowing them to enable their customers to pay whether in the form of a physical debit, credit, or prepaid card; a digital mobile wallet; a digital card; a service that provides cloud-based instant issuance; or other evolving digital alternatives. To summarize, CPI Card Group Inc. has evolved into a payment technology company that provides a comprehensive range of physical and digital payment solutions for thousands of U.S. financial institutions, processors, fintechs, prepaid program managers, and more. Our proprietary platform and expertise uniquely position us to deliver today and into the future as the market expands and payment methods evolve. Our strategy is to continue providing payment technology solutions that help our customers win, driven by three primary growth pillars that underpin our value proposition. First, a proprietary technology platform with a vast reach into the U.S. payments ecosystem. Second, our marketable base of thousands of deep and broad relationships across the U.S. payments market. And third, our proven track record of delivering evolving payment solutions that reflect changing market needs. Let me spend a few minutes discussing each of these pillars. Starting with our proprietary technology platform and a vast reach into the U.S. payments ecosystem, our capabilities make it simple for any customer to offer flexible payment solutions to their customers. Over more than fifteen years, CPI Card Group Inc. has built a vast network of technology integrations and connections. In simple terms, we call these connections into the payments ecosystem pipes so an issuer's payment programs can be agnostic to any service provider, maintaining their sticky, long-term relationship with CPI Card Group Inc. while offering their customers, U.S. consumers and businesses, the payment options they want. Our connections are broad and include thousands of financial institutions, fintechs, credit union service organizations, program managers, processors, core banking systems, payment brands, mobile providers, and mobile app development companies, among others. We prove this every day when we see our customers change their processor or banking core, where we simply move the pipes to maintain our relationships. CPI Card Group Inc. enables payments and informs the market on what is next. Today, it is debit, credit, and prepaid accounts accessed via cards, mobile wallets, and apps. While probably many years away, we may see other forms for consumers to pay gain broader market acceptance, such as crypto and biometrics. CPI Card Group Inc.'s platform expands with our customers' growth and their ambitions to meet market needs. Our second pillar is our marketable base. As CPI Card Group Inc. has evolved, our long-standing deep and broad relationships continue to grow. Through a robust network of thousands of customers, partners, and service providers, CPI Card Group Inc. solutions reach deep into the U.S. consumer base. As the market shifts to add new payment methods, the fundamental need to securely deliver payment credentials does not change. That is where CPI Card Group Inc. shines with our reach. As consumer needs evolve beyond the physical and complementary digital issuance and usage grows, issuers count on CPI Card Group Inc. to enable innovative solutions to meet those needs. We have kept their trust by always delivering. That trust, built over decades, is why our customers count on CPI Card Group Inc. for their ongoing payments innovation. They know we will execute. And if you are developing an innovative service that adds value for issuers, CPI Card Group Inc. can connect you to our broad marketable base, further solidifying our value. Our final pillar is our evolving payment solutions. By leveraging our proprietary technology platform and our marketable base, CPI Card Group Inc. has a proven track record of delivering evolving payment solutions that reflect changing market needs. Through significant investments in digital solutions, we are increasing CPI Card Group Inc.'s value to customers, driving new and incremental recurring revenue streams, and expanding access to CPI Card Group Inc.'s platform to enable future digital capabilities. So why are we doing this? According to a prominent study, digital issuance was the number one new capability debit issuers planned to introduce in 2024 and remained the most cited priority for 2025, and we hear the same directly from many of our customers. Additionally, we expect digital issuance to not only be incremental, but to outnumber physical cards as penetration grows. That will be positive for CPI Card Group Inc.; we would expect digital to have greater economics than physical. Let me give you one example to demonstrate what all this means, and that is our software-as-a-service-based instant issuance business. The value of instant issuance is not rooted in delivering a payment card. It is about enabling issuers to instantly provide account access to their customers through a cloud-based service that is plug-and-play for a financial institution. We spent over a decade building the pipes to deliver the service to virtually any financial institution in the U.S. We integrated with and connected to all the major players in the financial ecosystem, resulting in CPI Card Group Inc. being able to offer the service to nearly any issuer regardless of what processor, core banking system, or other relationship they operate through. With instant issuance, we leveraged our proprietary technology platform, provided a service to our marketable base, and evolved our solutions to provide a plug-and-play cloud-based service meeting the needs of the market. In this case, the solutions enable account access leveraging a payment card, but we have been evolving to use these pillars to provide access to mobile wallets and other forms as well, which indicates where we see our solutions going in the future. To summarize our evolving strategy, our decades-long-in-the-making connections, people, and solutions enable payments both physically and digitally for a broad and expanding customer base, and these customers count on us to deliver what is next. CPI Card Group Inc. will continue to evolve with the market, delivering market evolution to our customers while creating more value for our shareholders along the way. Let me take you to slide six for how we will execute and share our progress. To advance our strategy and drive long-term growth, we recently announced a new organizational structure, promoting several leaders to new roles, heightening the focus on our customers, our operations, and our digital capabilities. Along with the structure change, we are also reorganizing our reporting segments. Driven by the success of our software-as-a-service-based instant issuance and other digital solutions, and to better reflect how we manage CPI Card Group Inc. today, this change will provide more visibility on our technology-driven solutions, as well as highlight the growth and diversification of our business. Our new reporting structure includes three segments: Secure Card Solutions, Prepaid Solutions, and Integrated PayTech. Secure Card Solutions represents our business as a leading debit and credit payment card and personalization provider in the U.S. market, and we estimate we produce about one out of every four cards in the U.S. We believe we have gained significant market share over the years, and we will continue to push to gain more share in growing markets through innovation, quality, and customer service. Prepaid Solutions consist of our market-leading open-loop prepaid card and secure packaging solutions as well as our growing prepaid healthcare payment solutions. We intend to grow our value in the prepaid market by creating innovative packaging for our open-loop market, expanding into the larger closed-loop market, and providing fraud-preventing chip-based solutions to the broader prepaid market, which we believe should further expand its value. Integrated PayTech, our newest segment, which was formerly a part of our debit and credit segment, has reached the success level where it now represents more than 20% of CPI Card Group Inc.'s profitability. We need Integrated PayTech to reflect its value, the profit of integration CPI Card Group Inc. has built over the last decade into the U.S. payments ecosystem, enabling it to provide ever-evolving payment technology to our customers. This segment represents an incremental addressable market opportunity additive to physical payment cards. When we help our customers stay top of wallet digitally, we are not only creating greater value for our customers, we are adding incremental growth per customer for CPI Card Group Inc., and we expect those who adopt digital usage to do so in greater number than they do with physical cards, using that same credential across multiple mediums, such as a mobile phone, watch, tablet, or laptop. As we continue to grow our pipes into the U.S. payment ecosystem, our addressable market for these solutions continues to grow. For a bit more context on Integrated PayTech's profile, it has roughly 55% gross margins, approximately 40% EBITDA margins, and a 95% plus customer retention rate, and an expected growth rate of over 15% in the coming years, as we intend to invest to accelerate our digital solutions growth faster than we did with our instant issuance solutions. Now let us turn back to the 2025 results. I would like to highlight some key accomplishments on slide seven. In Secure Card Solutions, we acquired ArrowEye and made significant integration progress, paving the way for future revenue and cost synergies while driving strong results during the process. ArrowEye contributed $43,000,000 of revenue and more than $6,000,000 of adjusted EBITDA in less than eight months in 2025, implying approximately $9,000,000 of adjusted EBITDA on an annualized basis even before most of our expected synergies have been realized. Post-acquisition, ArrowEye has signed more than a dozen new customers, showing the value proposition they have in the market when combined with CPI Card Group Inc.'s packaging. We also completed the build-out and transition to our new state-of-the-art Secure Card production facility in Indiana, which will provide operational efficiencies, increased capacity, and additional capabilities. And we invested in automation in our Colorado facility, which we believe will drive even more efficiencies. We believe these investments have already helped us gain share in 2025, including being a key driver to winning another four years with Valera. Valera is one of our larger, long-standing secure payment card customers and the premier payments credit union service organization in the U.S., servicing 4,000 financial institutions. We made significant improvements to our personalization operations, which allow us to continue to increase capacity and maintain high quality all while driving greater efficiency as we grow. We believe these advancements were a key contributor to winning one of the largest credit unions in Texas in 2025. And we expanded our metal card offerings, providing market-competitive options to our marketable base. This expansion, while still small relative to the overall market position, contributed to our strong contactless card growth during the year with nearly $15,000,000 in metal sales in 2025. In Prepaid Solutions, we developed production and operational capabilities to enter the closed-loop prepaid market, which we believe has volumes greater than five times the open-loop market and will increase in value as fraud prevention features are further adopted. We had a successful start in the fourth quarter and have already signed multiple deals since launch, including with a leading provider TDS Gift Cards, who services many blue-chip customers in the U.S., such as Uber, DoorDash, and others. Our reputation for quality, innovation, and execution in the open-loop market is proven, and we are leveraging these attributes to drive our closed-loop expansion. While our prepaid business was down in 2025, we see strong signs of the transition starting to occur in the prepaid market. Fraud continues to drive either higher-value packaging or greater use of chip-embedded gift cards, both of which would result in a unique market position for CPI Card Group Inc., as we are the only U.S. company that is a leader in both categories. And in our new Integrated PayTech segment, we grew revenue nearly 20% as we continue to increase our instant issuance penetration and further built out integrations and customer pipelines for our evolving proprietary technology platform, including to expand the addressable market for push provisioning for mobile wallets. We expect to continue to see great things out of this segment, including strong growth and high margins, leveraging our market-leading value proposition. One driver of our expected growth is our recently signed deal with a large U.S. processor and global leader in payments and financial technology, where we have gained preferential access to more than 450 financial institutions and 3,500 banking locations, representing an opportunity to grow our software-as-a-service-based instant issuance solution footprint by 25% over the coming years. We also invested in an Australian fintech and program manager, Carta, to introduce into the U.S. chip-embedded prepaid cards which enhance security and provide a user-friendly physical-to-digital experience. Our ownership in Carta after our investment is 20% with the option to purchase an additional 31%. As we have worked with the Carta team, we continue to be impressed by their growth as a program manager in Australia, a large opportunity to grow their digital card validation solution, branded as Safe to Buy, in the U.S. prepaid market, and their potential value as a program manager in the U.S. Our agreement with Carta also makes us their exclusive U.S. supplier of their Safe to Buy solution, providing contactless prepaid cards with chip technology embedding Carta's Safe to Buy applet. Carta's solution eliminates the need for data to be printed on cards, significantly reducing the risk of prepaid fraud. And as a reminder, prepaid gift cards in the U.S. rarely are embedded with chip technology. So between Carta's technology to reduce fraud and CPI Card Group Inc.'s prepaid and chip solutions, we were a perfect fit to drive meaningful and positive change in the prepaid market. We are currently in the second stages of a pilot for this solution with a large national retailer across hundreds of locations in the U.S., and we are seeing encouraging results. Overall, we are proud of what our teams delivered in 2025, and we look forward to continuing to advance these initiatives and their benefits over the next several years. In 2026, we expect to deliver good growth again, and Tara Grantham, our new Interim CFO, will give you more color on our outlook in a few minutes. Tara brings a wealth of CPI Card Group Inc. and industry knowledge and experience to this role, including most recently leading CPI Card Group Inc.'s enterprise growth and strategy area, and previous leadership of our financial planning and analysis and treasury teams, among others. She has been with the company for nearly ten years, and I want to congratulate Tara for being promoted into this new role, and I am happy to have her join us for the call today. Tara will now take us through the fourth quarter results and 2026 outlook in more detail. Tara Grantham: I am pleased to be here and look forward to meeting many of you in the coming months. I will begin the detailed review on slide nine with the fourth quarter results. Fourth quarter revenue increased 22% to a record $153,000,000, which reflects a strong $18,000,000 contribution from ArrowEye as well as double-digit organic growth from our debit and credit portfolio. Debit and Credit segment revenue increased 40% including the impact of ArrowEye. Organic growth for this segment was 20%, driven by strong sales of contactless cards and continued excellent performance from our instant issuance solutions. Our personalization services also delivered a solid sales increase in the quarter. Prepaid revenue declined 27% compared to the exceptionally high prior-year fourth quarter, when sales increased 59% to $33,000,000, but revenue increased 4% compared to the third quarter. As we said at the beginning of the year, we expected prepaid growth to be constrained due to comparisons with the very strong year in 2024, and we ended the year down 3% when adjusting for the impact of the revenue recognition accounting change in the second quarter. And as John said, the prepaid market is transitioning, but we expect that to be a positive for CPI Card Group Inc. We began closed-loop prepaid shipments in 2025, and we expect this business to ramp significantly in 2026. Turning to profitability, fourth quarter gross profit margin declined from 34.1% to 31.5%, although it increased from 29.7% in the third quarter. Compared to prior year, the margin decline was driven by increased production costs including increased depreciation and tariffs, and unfavorable sales mix, partially offset by benefits from operating leverage on sales growth. Mix trends stabilized, though, and were comparable to the third quarter. Production costs in the quarter compared to prior year included $2,000,000 of increased depreciation primarily related to ArrowEye and a new Secure Card production facility and $1,600,000 of tariff expenses. Fourth quarter SG&A expenses increased $3,300,000 from the prior year primarily due to ArrowEye integration costs of $1,800,000 and the inclusion of ArrowEye operating expenses, partially offset by reduced medical benefit expenses compared to a high level in prior year. Our tax rate for the quarter was 27%, which brought our full-year rate to 31%, higher than anticipated coming into the year due primarily to nondeductible expenses related to the ArrowEye acquisition. Net income increased 9% in the quarter to $7,400,000 as the benefit of sales growth was offset by integration costs related to ArrowEye and a higher tax rate. Fourth quarter adjusted EBITDA increased 34% to $29,400,000, and margins increased by 170 basis points from 17.5% to 19.2% driven by sales growth and the resulting operating leverage. Full-year results and variance explanations can be found on slide 10. Highlights for the year include revenue increasing 13%, led by double-digit growth from contactless cards and instant issuance solutions and a $43,000,000 contribution from ArrowEye following the May 6 acquisition. We believe ArrowEye is already benefiting from being part of CPI Card Group Inc., driving strong execution and increasing its ability to sell into the market. Net income decreased 23% to $15,000,000, reflecting $6,000,000 acquisition and integration costs and a higher tax rate, partially offset by lower debt retirement costs compared to prior year. Adjusted EBITDA increased 5% to $96,500,000 as profitability from increased revenue was partially offset by the impact of unfavorable sales mix and $4,400,000 of tariff expenses. Turning to slide 11, we had very strong cash flow generation in the fourth quarter and for the full year. Our cash flow generated from operating activities for the year increased from $43,300,000 last year to $59,500,000 in 2025, with $40,000,000 generated in the fourth quarter. The increase in operating cash flow was driven by lower working capital usage, including better receivables and inventory management, and cash tax benefits from the U.S. Budget Reconciliation Bill. Full-year free cash flow increased from $34,000,000 in prior year to $41,000,000 in 2025, driven by lower working capital usage, partially offset by increased capital spending. We spent $18,000,000 on CapEx in 2025, double the prior-year level, as we invested heavily in our new Indiana production facility and other advanced machinery to support operating efficiency, capacity expansion, and new capabilities such as closed-loop prepaid. On the balance sheet, at quarter end, we had $22,000,000 of cash, $25,000,000 of borrowings on our ABL revolver, and $265,000,000 of senior notes outstanding. Our net leverage ratio at year end was 3.1 times as cash flow generation mostly offset the funding of the ArrowEye acquisition in May. During the course of 2025, significant capital allocation included the acquisition of ArrowEye for $46,000,000, an investment in Australian prepaid fintech Carta, and completion of the new production facility in Indiana, as well as retirement of $20,000,000 principal of our 10% senior notes in July. Before turning to our 2026 outlook, I would like to share the new business segment reporting John mentioned we are implementing this year on slide 12. Beginning with the first quarter reporting, our business segments will include Secure Card Solutions, Prepaid Solutions, and Integrated PayTech. Secure Card Solutions includes our debit and credit card production and personalization businesses, including our ArrowEye on-demand solutions. This business should provide steady growth over time driven by ongoing cards-in-circulation growth and share gains from our leading innovation, quality, and service. As noted in our appendix slide, cards-in-circulation in the U.S. continue to increase, with the latest U.S. cards-in-circulation trends from Visa and Mastercard showing a 7.5% compounded annual growth rate for the three years ended September 30. Prepaid Solutions, which has not changed from our prior prepaid segment, includes our open-loop gift cards and secure packaging, healthcare payment solutions, and closed-loop. We expect open-loop growth to be driven by continued innovation in fraud prevention packaging and the introduction of chip cards into the prepaid market, and overall segment growth to benefit from expansion of healthcare and development of our closed-loop solutions. Our third business unit is Integrated PayTech. As John said, as our success has grown, we are now breaking this out as our fastest-growing, highest-margin unit consisting of strong recurring revenue businesses that rely on our vast and expanding technology connections into the U.S. payment ecosystem to provide various payment solutions to our customers. The majority of our revenue in this segment today is driven by our software-as-a-service-based instant issuance solution, but we expect to ramp digital push provisioning for mobile wallets and other digital solutions in the coming years. On a pro forma basis, this segment would have represented 14% of our 2025 revenue and more than 20% of our EBITDA at an 18% growth rate with EBITDA margins of approximately 40%. Over the next few years, we expect more than 15% annual top-line growth from the Integrated PayTech business segment, while the EBITDA growth will be impacted by investments to accelerate our top-line growth. Turning to our 2026 financial outlook on slide 13, we expect another good growth year while continuing to invest heavily toward our strategic initiatives. We are currently projecting high single-digit revenue growth with growth across our portfolio, led by expected double-digit growth from our Integrated PayTech segment. Our adjusted EBITDA outlook for the year is low- to mid-single-digit growth, which reflects benefits from sales growth and cost savings activities, partially offset primarily by approximately $4,000,000 in incremental spending to drive Integrated PayTech growth and penetration and other technology investments. Our outlook reflects $6,000,000 of tariff expenses, similar to our instant issuance trajectory, which took years of investment before scaling and turning into a high-margin, recurring revenue business. We are still in the investment phase with many of our digital solutions, which is impacting our overall near-term profitability. While some level of PayTech investments will continue into future years, we expect our digital solutions profitability to expand greatly once revenue begins to ramp and scale in the next two to three years. Regarding tariffs, there is still uncertainty on how the newly announced tariffs will be applied and what permanent tariffs may be enacted later in the year. At this point, our outlook reflects estimates based on a full year of the tariffs we paid in 2025. We are working hard and pursuing various avenues to seek refunds for tariffs paid in 2025 based on the recent Supreme Court ruling. We expect a tax rate between 30%–35% in 2026 and strong cash flow conversion, with capital spending likely similar to 2025 levels as reductions in spending on physical capital are replaced by increased technology capital spending. We would also expect free cash flow conversion at similar levels to 2025 and continued improvement in our net leverage ratio, ending the year between 2.5 and 3 times. As we complete integration of ArrowEye in 2026, we are projecting approximately $5,000,000 to $7,000,000 of final integration costs. Similar to 2025, we expect revenue and EBITDA levels to ramp during the year, with the fourth quarter again being the largest, although revenue growth rates will benefit early in the year from the addition of ArrowEye. However, we expect adjusted EBITDA in the first half of the year to be flat to down slightly with prior year due to digital and technology investments and a slow start of the year in prepaid. Overall, we believe the environment is healthy, and our momentum is strong, and we look forward to delivering a good year in 2026 while continuing to invest and advance various key strategic initiatives for long-term growth. I will now turn the call back to John for some closing remarks. John D. Lowe: Thanks, Tara. Turning to slide 14 to summarize before we open the call for Q&A, we had an exceptional fourth quarter with revenue growth acceleration, strong adjusted EBITDA growth and margins, and excellent cash flow generation. For the full year, we achieved solid revenue and adjusted EBITDA growth and generated over $40,000,000 free cash flow. We accomplished many strategic and operational objectives, including the ArrowEye acquisition and investment in Carta, the completion of our new Secure Card production facility, entry into the closed-loop prepaid market, and the ongoing build-out for our other digital solutions. We are excited about our new organizational structure to drive our strategy and the long-term opportunities to enhance incremental growth. We intend to continue leveraging our expanding proprietary technology platform, our extensive marketable base, and our evolving portfolio of payment solutions to meet the market needs, drive growth, and enable our customers to win. We are confident in our strategies and teams, and we expect to deliver another good year in 2026. Operator, we will now open the call up for any questions. Operator: We will now open the call for your questions. If you would like to ask a question, press star then the number 1 on your telephone keypad. Your first question comes from the line of Jacob Stephan with Lake Street Capital Markets. Your line is open. Jacob Stephan: Hey, guys. Good morning. Congrats on the results. Welcome, Tara. Maybe just to touch on something that you kind of talked on, the closed-loop market being five times larger, so pretty significant opportunity for you guys. How are these sales cycles any different from, you know, potentially other prepaid deals? And, you know, do you have to change anything internally to kind of capture this market? John D. Lowe: Yeah, Jacob, good morning. So it is interesting. The closed-loop market, you are right, five times larger in volume, probably slightly higher than that. The value of closed-loop we expect to continue to grow and become even greater as we expect packaging to become more pervasive, if you will, across the United States mainly due to regulatory changes and fraud. From the sales cycle perspective, we actually have a slightly accelerated sales cycle versus our normal, just our broader portfolio in general. And that is because, you know, on the open-loop side, we have been working for most all the program managers that are out there. With the addition of ArrowEye, now we work for all of the major program managers. So we have relationships with, I would say, more than half the market that is already selling into the closed-loop space. So as we build out our capabilities, we have the proven ability to execute and deliver, and so that has given us the right, if you will, to move into the closed-loop market fairly quickly, winning some deals, locking down contracts, and really building out the whole operation in late last year. And, ultimately, we believe we are going to have a decent growth out of that in 2026. Jacob Stephan: Okay. Got it. Helpful. Maybe just to kind of put a cap on that. So can you kind of help us think through the recent announcement with the TDS, and, you know, how the closed-loop opportunity kind of plays into the high single-digit growth guidance for 2026? I know you guys kind of talked about that being an important driver this year. John D. Lowe: Yeah. Yeah. No. And, Jacob, good question. There are a lot of moving parts in our business. We have diversified quite a bit over the years. You know, the prepaid market in general is—it is kind of odd because it is actually a little bit choppy right now, but that is positive for us. And the reason I say that is because if you look at the broader prepaid market, fraud has been prevalent for a number of years. It has been a bit of a cat-and-mouse game. That has caused, on the open-loop side where we are the market leader by far, that has caused significant kind of improvement in fraud-preventive packaging, if you will, that, you know, we are constantly trying to innovate with our customers to stay ahead of the, you know, I would say, the criminal activity from a fraud perspective. But because of that, you are also starting to see on the closed-loop side the same thing happen. Right? You are starting to see states' regulations that say the closed-loop gift card has to be in a package or has to have a chip in it. And you are starting to see, as an example, the open-loop side, just like, you know, our investment in Carta, where we own 20%, have a call option to grow to 51%. We are using their unique technology with one of our larger customers on the prepaid side and ultimately one of the larger national retailers in the United States to go through a second stage of pilot where we are putting chips in prepaid cards to reduce fraud, and those results have been very strong. That said, it creates kind of this environment in the prepaid market where the program managers, the distributors, others, the merchandisers are trying to understand, okay, do we move towards greater packaging? Do we move towards putting chips in prepaid cards more broadly? It is more expensive. But, ultimately, you know, if you think about CPI Card Group Inc. and what we do, right, we are by far the leader in open-loop packaging. We have the scale that no one else in the market has. We are also one of the leaders in the United States from a chip-embedding perspective in the debit and credit market. So we are the only player in the U.S. market that has strong capabilities on both sides. And so while the prepaid market is choppy this year, and actually, you know, we are starting the year slow, and we would expect that to ramp up over the course of the year but still have a fairly flat year to slow-growth year, ultimately, over the long term, it is going to be really positive for us given how we are positioned in the market. So I know a lot to take in there, but hopefully that helps. Jacob Stephan: Yeah. And you kind of touched on my last question. Obviously, fraud has been a pretty important theme over the last, you know, year, year and a half. As we kind of look out to 2026 and maybe even beyond, you know, is there potentially another sort of, like, recurring revenue-type business that you would be interested in, you know, potentially acquiring with, you know, AI kind of boosting fraud rates? And I am wondering if there is any sort of additional software solution that can help on the fraud prevention side that you guys might be interested in? John D. Lowe: Well, we do already resell one major fraud solution that uses AI in their modeling, if you will, in their machine learning, to prevent fraud on the debit and credit side. That is something that—they are a fairly large player in the debit and credit market—connected into a lot of the processors to kind of—it builds off our proprietary technology platform and our ability to provide those types of services to our financial institution base broadly. But fraud is a market that is constantly changing, and so from an acquisition perspective, it would have to be a software that is proven and has an ability to constantly pivot on the fly. So right now, our strategy on fraud is really to help from kind of the production perspective as well as producing technology from what Carta produces to be able to prevent fraud on the prepaid side where we believe there is probably a lot more value, and ultimately, on the debit and credit side, provide solutions from a more commercial perspective. But if you think about on the prepaid side of our business, what Carta does—they are taking data off the prepaid card and ultimately using their solution to not only reduce fraud just by the fact that you cannot steal the data off the card, but their solution also loads the prepaid gift card onto your mobile wallet and is a digital issuance platform as well. So there are kind of multiple value propositions on the Carta side. But from a fraud side, it is constantly changing, so it has to be someone who has really unique technology to look at them from an M&A perspective. Jacob Stephan: Okay. Got it. I appreciate it, guys. Thanks. Operator: Your next question comes from the line of Craig Irwin with ROTH Capital Partners. Craig Irwin: So, John, when I look at my wallet, I am seeing new cards from Chase, Wells Fargo, and Fidelity, provided by CPI Card Group Inc. These are large issuers. Now I am not asking you to comment about any of these specific large issuers, but I am sure there are probably others. Can you maybe just give us a high-level commentary on, you know, these customers that I do not think you did a lot of business with over the last several years? Are you seeing an increased capture rate with large issuers? You know, what was the contribution, if you could give us color, on the 40% growth there in debit and credit from large issuers? John D. Lowe: Yeah. Craig, thanks for the callout. We will be happy to have you on our marketing team anytime you want to join. But, no, in all seriousness, the largest—we are based—I mean, we have said this over time. We work with about half of them. You know, you mentioned a couple different names there. One of those we are actually doing metal with as part of our metal growth. I will not name names, but—so very positive in terms of our relationships we have with the large issuers. We have been growing share over the last, I would say, five years with the larger issuers. But I would not comment specifically on their growth rates in Q4 or 2025. What I would say is just broadly the larger players in general. So go beyond the large issuers that are the names you are thinking of. Think of the credit union service organizations. We mentioned Valera this morning, that we signed another four-year deal with. Think of the large processors out there. There are a number of partners that we have that are fairly large that we also have been growing share with. And so we are excited about our position in the debit and credit market. Our Secure Card Solutions side, between our card production, our personalization business, the acquisition of ArrowEye, really gives us a unique value proposition and allows us to continue to execute on our strategy and win share not only in the large issuer market but in the broader FI, fintech, and other markets. Craig Irwin: Thank you for that. My second question is about headcount. Right? When I looked at your K, I saw you now have about 1,700 employees beginning 2026. It is up about 13% or a little over 13% consistent with your revenue growth last year. Now that does not kind of point to leveraging the model. And I know there are a bunch of initiatives you were staffing up, particularly on the technology side and some of these things with, you know, incredible long-term potential. Can you maybe flesh out for us, you know, where you would likely be hiring in 2026? And, you know, would you expect mid- to high single-digit growth consistent with revenue, or do we potentially see a more tempered rate of hiring? John D. Lowe: So a lot of our hiring last year, when you just look at a headcount perspective, was through the acquisition of ArrowEye. Right? I mean, they have—I do not know the exact number, I think it is 250 people roughly in Las Vegas. So fairly decent-sized business there. So you have to kind of take that into account, Craig. But if you went out and looked at who we are hiring and who we have hired over time, it has been predominantly in the go-to-market side to try to, you know, push our solutions further into the market, expand our go-to-market efforts, as well as on the technology side within our Integrated PayTech segment. So those are probably the two areas where we will continue to invest in, and we continue to invest broadly in the business as we grow. But I think if you stripped out ArrowEye, you would realize we are definitely growing in the number of people that we have, but I would not say we are not getting leverage out of the model, and you saw that in Q4 from our growth in Q4 and what we pushed to the bottom line. Craig Irwin: No, that—an excellent quarter, the fourth quarter. Congratulations. Thanks for taking my questions. I will hop back in the queue. Operator: Your next question comes from the line of Hal Goetsch with B. Riley Securities. Hal Goetsch: Hey. Questions on CapEx. CapEx was up, you know, from $8,000,000 to in the high teens. You said it is going to be similar to that in 2026. Is this a number we should expect going forward, or is this a number that might come back down after, you know, a two- or two-year investment period. John D. Lowe: Yeah. That is a good question, Hal. I would say it probably will come down in the outer years. It has grown, you know, quite a bit in 2025 as we built out closed loop. We built out Indiana. But I would say it is more on the physical side in 2025 than more on the digital side in 2026 and what we might expect in coming years. But, Tara, do you want to add to that? Tara Grantham: Yeah, just to add to that, we did spend about $5,000,000 in CapEx in 2025 on our new factory in Indiana. So that is going away. But we are replacing that with higher investments in our technology spend. So that is on the CapEx side to the growth of our Integrated PayTech business and also to help upgrade some of our other technology as well. I will say that even with that CapEx spend, we are expecting similar cash flow conversion in 2026 as we had in 2025. So we are happy to be investing in the business and continuing to convert on the cash flow side as well. Hal Goetsch: Yep. Goal is to drive leverage down even while investing. So could you share with me on the tax side? It seems like your tax rate is higher than most of the companies I follow that are, you know, mostly domestic. And I think you said over 30%. Is that correct? And what was the cash flow impact, free cash flow impact, this year from the big, beautiful bill or tax change that might have lifted free cash flow this year, and what might be the impact next year from tax law changes to your free cash flow? Tara Grantham: Hal, we did get a slight benefit; I do not think it is a huge number. I think it is in the few-million range. Just on the tax rate in general, I think the big impact this year was due to the ArrowEye acquisition and integration costs that are not necessarily tax deductible. But I do not know if you have any other comments. Yeah, so we are expecting a benefit between 2025 and 2026 from the U.S. budget bill of $3,000,000 to $5,000,000 across 2025–2026. Just a reminder, though, that that is a cash impact, and it does not impact our ETR. Hal Goetsch: Yeah. And follow-up, last question for me. On kind of, like, modeling. Are you going to provide pro formas for the new three segments going back maybe at least quarters for 2025? That we can project trends and margins off of? Thank you. John D. Lowe: Hal, I think we did. I think there is a filing this morning, if I am not mistaken. It has 2025 quarters as well as the full year. Hal Goetsch: Okay. Terrific. Thanks. Operator: As there are no further questions in the queue, I would now like to turn the call back over to John Lowe for closing remarks. John D. Lowe: Thanks, operator. Well, first, I would like to thank all of our CPI Card Group Inc. employees for what they accomplished in 2025 and their ongoing commitment to serving the company, our customers, and executing on our strategy to win in the market. I hope everyone enjoyed learning more about CPI Card Group Inc.'s evolution this morning. We are proud of our 2025 and year-end performance, and we look forward to sharing more on our progress in future calls. Thank you all for joining, and we hope you have a great day. Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.
Operator: Good day, everyone, and welcome to MediWound Ltd.'s Fourth Quarter and Full Year 2025 Earnings Call. Today's conference call is being recorded. At this time, I would like to turn the conference call over to Gaia Seamus of LifeSci Advisors. Please go ahead. Gaia Seamus: Thank you, operator, and welcome, everyone. Earlier today, premarket open, MediWound Ltd. issued a press release announcing financial results for the fourth quarter and full year ended December 31, 2025. You may access this press release on the company's website under the Investors tab. I would ask you to review the full text of our forward-looking statements within this morning's press release. Before we begin, I would like to remind everyone that statements made during this call, including the Q&A session, relating to MediWound Ltd.'s expected future performance, future business prospects, or future events or plans are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. These statements may involve risks and uncertainties that could cause actual results to differ materially from expectations and are described more fully in our filings with the SEC. In addition, all forward-looking statements represent our views only as of today, and MediWound Ltd. assumes no obligation to update or supplement any forward-looking statements, whether a result of new information, future events, or otherwise. This conference call is the property of MediWound Ltd., and any recording or rebroadcast is expressly prohibited without the written consent of MediWound Ltd. With us today are Ofer Gonen, Chief Executive Officer of MediWound Ltd., and Hani Luxenburg, Chief Financial Officer. Barry Wolfenson, EVP of Strategy and Co-Development, is also participating in today's call. Following our prepared remarks, we will open the call for Q&A. Now I would like to turn the call over to Ofer Gonen, Chief Executive Officer of MediWound Ltd. Ofer? Ofer Gonen: Hi, and thank you, Gaia. 2025 was a pivotal year for MediWound Ltd. We ended the year with two significant growth drivers firmly in place: a Phase III VALUE trial advancing as planned, and an operational and expanded manufacturing facility for NexoBrid positioning us for long-term commercial growth. At the same time, we strengthened our balance sheet and outlined a multiyear revenue trajectory. Despite the ongoing conflict with Iran, we at MediWound Ltd. are fully prepared and will continue operating with the resilience and discipline that have guided us through similar challenges in recent years. Our team remained focused on our clinical milestones and commercial objectives, continuing to support patients and partners worldwide. Let me walk you through the progress. Let us start with an update on EscharEx, our late-stage enzymatic debridement therapy for chronic wounds. Enrollment is ongoing in the global Phase III VALUE study in venous leg ulcers, with the majority of sites active and enrolling. We are targeting enrollment of 216 patients across approximately 40 sites in the United States and Europe, and we expect both the prespecified interim assessment and enrollment completion by year-end 2026. Importantly, we are expanding the EscharEx clinical program beyond just VLUs. We have aligned with both the FDA and EMA on the Phase II protocol in diabetic foot ulcers and plan to initiate the study in 2026. In addition, a prospective investigator-initiated study in pressure ulcers is also expected to begin in 2026. This expansion broadens the clinical footprint of EscharEx across the three major chronic wound indications. We continue to see meaningful industry validation; B. Braun has joined the EscharEx clinical development program through a research collaboration agreement and will take part in the planned Phase II study in diabetic foot ulcers. This adds to the existing collaborations with Coloplast, ConvaTec, Essity, Mölnlycke, Solventum, and MiMedx. Taken together, continued clinical execution, regulatory alignment, expansion into additional indications, and industry engagement support the advancement of EscharEx as a long-term growth driver for MediWound Ltd. Now turning to NexoBrid. Our expanded manufacturing facility is now operational, increasing the production capacity sixfold to support growing global demand. Commercial availability from this site remains subject to regulatory approvals, which we expect in 2026. In the United States, adoption continues to expand, with utilization across more than 70 burn centers, representing the majority of Vericel's approximately 90 target accounts. To illustrate the driver of demand, here are some of the latest examples. Recently published real-world data from the Israel Defense Forces covering nearly 5,000 documented combat casualties showed that NexoBrid was clinically applicable in 71% of war-related injuries. In addition, a 15-year military analysis across multiple conflicts demonstrated a 50% increase in the proportion of severe burns among wounded soldiers. In parallel, we reported peer-reviewed prospective data showing that NexoBrid reduced embedded particles in ablation and blast injuries by more than 90%, supporting the role in acute trauma care. More recently, survivors in the tragic bar fire in Trans Montana, Switzerland, were treated with NexoBrid in medical centers across Switzerland, Italy, and Germany, underscoring the importance of pre-deployment of an advanced burn therapy for mass casualty events. Taking all this together, growing clinical evidence from both military and civilian settings reinforces NexoBrid's role in the treatment of severe burns. Following regulatory clearance of our expanded facility, we intend to prioritize support for national preparedness initiatives, including stockpiling and collaboration with military and emergency response systems. With that overview, I will now turn the call over to Hani. Hani? Hani Luxenburg: Thank you, Ofer, and good morning, everyone. Let us turn to our financial results for the fourth quarter and full year of 2025. Revenue for the fourth quarter was $1.9 million compared to $5.8 million in 2024. The decrease was primarily driven by lower development services revenue, mainly attributable to the U.S. government shutdown, which delayed budget approval and the initiation of new contracts and agreements. Gross profit for the quarter was $300,000, or 14.9% of revenue, compared to $900,000, or 15.5%, in the prior-year period. R&D expenses were $4.5 million compared to $3.0 million in 2024, reflecting continued investment in the EscharEx VALUE Phase III study. SG&A expenses totaled $3.6 million compared to $4.0 million in the same period last year, mainly reflecting lower marketing and share-based compensation expenses. Operating loss for the quarter was $7.8 million compared to $6.1 million in 2024. Net loss was $7.2 million, or $0.56 per share, compared to a net loss of $3.9 million, or $0.36 per share, in the prior-year period. The increase was primarily attributed to lower noncash financial income from the revaluation of warrants. Adjusted EBITDA loss was $6.5 million compared to a loss of $4.9 million in 2024. Looking at our performance for the full year 2025, revenue for the year was $17.0 million compared to $20.2 million in 2024. The decrease was primarily attributable to the U.S. government shutdown and lower product sales to Vericel. Gross profit was $3.3 million, or 19.2% of revenue, compared to $2.6 million, or 13%, in 2024. The margin improvement reflects a more favorable revenue mix. R&D expenses increased to $14.0 million compared to $8.9 million in 2024, driven by investments in the EscharEx VALUE Phase III trial. SG&A expenses were $14.2 million versus $13.1 million in 2024, mainly reflecting higher marketing authorization order expenses. Operating loss for the year was $25.3 million compared to $19.4 million last year. Net loss for 2025 was $23.9 million, or $2.10 per share, compared to $30.2 million, or $3.30 per share, in 2024. The reduction in net loss was primarily driven by $2.2 million of noncash financial income from the revaluation of warrants in 2025 compared to $10.7 million of noncash financial expenses in 2024. Adjusted EBITDA loss was $20.3 million compared to $14.8 million in 2024. Turning to our balance sheet, as of December 31, 2025, we had $53.6 million in cash, cash equivalents, and deposits compared to $43.6 million at year-end 2024. During 2025, we used $21.4 million in cash to fund our operating activities. In addition, our balance sheet reflects the completion of a $30.0 million registered direct offering and $3.5 million in proceeds from Series A warrant exercises. We believe our current cash position provides the financial flexibility needed to advance our key program and continue execution on our strategic priorities. That concludes my review of the financials. Ofer, back to you. Ofer Gonen: Thank you, Hani. So before we conclude, let me briefly address our outlook. We reaffirm our revenue guidance of $24 million to $26 million for 2026, $32 million to $35 million for 2027, and $50 million to $55 million for 2028. This guidance assumes continued support from BARDA and the U.S. Department of War, and the 2028 outlook includes potential initial contribution related to EscharEx, subject to regulatory approval. These projections reflect the foundation we built in 2025 and the milestones ahead. In summary, 2025 was a year of infrastructure build-out and clinical advancement. We advanced our Phase III program for key milestones. We completed and commissioned our expanded manufacturing facility. And we strengthened our balance sheet and established a multiyear revenue framework. As we move into 2026, we are focused on disciplined execution, advancing EscharEx towards pivotal milestones, securing regulatory approvals for our expanded facility, and converting our operational progress into meaningful long-term value creation. Operator? Operator: Ladies and gentlemen, at this time, we will begin the question-and-answer session. Using a touch-tone telephone, to withdraw your questions, you may press star and 2. If you are using a speakerphone, we do ask that you please pick up the handset prior to pressing the keys to ensure the best sound quality. So, again, that is star and then 1 to join the question queue. We will now open for questions. Our first question today comes from Josh Jennings from TD Cowen. Please go ahead with your question. Josh Jennings: Morning. Thank you for taking the questions, and I hope everyone on the team is safe, and we are thinking about you guys. I wanted to start with just a question on NexoBrid and the manufacturing expansion project that has been successful. Just maybe review the pent-up demand in international regions and the timing. I think you can take this all into your multiyear guidance forecast, just the timing of MediWound Ltd. filling that demand over the next 12, 18, 24 months. Ofer Gonen: Hey, Josh. Good speaking with you. So our expanded manufacturing is now operational, and the capacity has now increased sixfold. The commercial output in this site remains subject to regulatory approvals that are expected later in 2026. Once we are approved by EMA or FDA, the product that we are manufacturing during the validation process that we are doing now can be released to the market. Our guidance assumes a regulatory approval clearance in 2026. I think it is an assumption that we believe is reasonable given where we stand today. As for the demand, it is much larger than we can actually manufacture across the territories. Having said that, I do not know if it will be the case once we can manufacture. Therefore, we guided according to what we expect, and I hope it will be better going forward. Josh Jennings: Thanks for that, and congratulations on the pace of the VALUE trial, and it sounds like things are going well there. I wanted to ask about the pressure ulcer trial. It is my understanding that, just in terms of your team's assessment of the peak sales in the U.S. down the line for EscharEx, it does not include contributions from the pressure ulcer indication. Maybe just talk about or review the size of that opportunity in the U.S. and how that will be unlocked with this trial. Thanks for taking the questions. Ofer Gonen: I have to admit that I did not hear anything. Is it because of my line or because of yours? Do you hear me? I am sorry. It may have been because of my line. Can you hear me now? I do not hear you. Operator, is it his line? Should I reconnect? Operator: I am hearing both of you. Are you able to hear me, sir? Can you, sir? Ofer Gonen: Yes, I hear you loud and clear. Josh, can you speak again? Josh Jennings: Certainly. Can you hear me now? Ofer Gonen: Yes. Can you repeat the question? Sorry. Josh Jennings: Sorry for the technical difficulties. Maybe that was on my line. Yes, I was just saying that you are making nice progress on the VALUE trial, which is a good signal. I just wanted to dive a little bit deeper into the pressure ulcer indication. My understanding is that that is not included in your team's assessment or forecast of peak sales in the U.S., which is a little bit of conservatism there. But just wanted to either review that pressure ulcer indication and the kickoff of this pressure ulcer study later this year. Thanks for taking the question. Ofer Gonen: Okay. Barry, do you want to take this one? Barry Wolfenson: Sure, absolutely. As you know, we are going to start an investigator-led pressure ulcers study this year, and along with that, we will have a third-party market research project initiated that will replicate what we did with regard to diabetic foot ulcers and venous leg ulcers. And so, ultimately, those peak sales, as you mentioned, will increase. I think from a back-of-the-envelope perspective, I would say to think about pressure ulcers as the third of the big three ulcer types along with DFUs and VLUs. There are probably more pressure ulcers than there are the other two. We still need to do the work to see how many of them require debridement and would be applicable to EscharEx. But back of the envelope, I would anticipate that when all is said and done, it will be roughly a third of the business. Josh Jennings: Thanks for that, Barry and Ofer. Appreciate it. Operator: Our next question comes from Jeffrey Jones from Oppenheimer. Please go ahead with your question. Jeffrey Jones: Thank you very much for taking the question. Josh and Ofer, I hope everyone is safe there. You mentioned in the 2026 revenue guide that this assumed continued support from BARDA and DOW. Can you clarify how much of that is based on new contracts that are not currently committed versus the award that you are anticipating, and perhaps give us an update on what you know there? Ofer Gonen: Hi, Jeff. So good to have you on as well. Let us start with BARDA. In August 2025, BARDA issued an RFP covering stockpiling, warm-temperature stable formulation, and trauma and blast injury indications. Vericel, which holds the U.S. commercial rights on NexoBrid, is leading the process in the United States. We will provide full technical and development support. Now, with federal operations normalized, we expect BARDA to resume progress on this RFP and related development and procurement activities, subject, of course, to standard government processes. I cannot add more to that. As for our collaboration with the Department of War, as you know, NexoBrid room-temperature stable formulation is being developed for a nonsurgical burn treatment for the use for the U.S. Army. We have been awarded to date a total of $18.2 million in nondilutive funding from the U.S. department for order to support this development. We are moving forward. So part of the revenue is supposed to be from BARDA and part of it from the Department of War. Jeffrey Jones: Thank you for that. You mentioned the research collaboration in the context of the DFU study, I believe. Can you speak in a little more detail about what some of these collaborators are providing and how that guides to your long-term strategy in VLU, DFU, and beyond? Ofer Gonen: Okay. Barry, do you want to speak on this? Barry Wolfenson: Sure. I mean, as you mentioned in the call, between the VLU and the DFU study, at this point we have seven of these research collaborations, all with market-leading advanced wound care companies. They include Coloplast, through their acquisition of Kerecis, Essity, Solventum, Mölnlycke, ConvaTec, MiMedx, and now the most recent one being B. Braun. Just a little bit about B. Braun: they are one of the world's leading privately held medtech companies. They are headquartered in Germany, founded in 1839. They generate over $9 billion in annual revenue, operate in over 60 countries, and employ more than 60,000 people globally. They are known for products that are used daily across hospitals, surgical centers, dialysis clinics, and outpatient settings, so they are a perfect partner when it comes to wound care. They have a big wound care franchise. Specifically with B. Braun, they are taking part in the DFU Phase II study. As with the other collaborators, they will be supplying one of the key products that is for optimal care of wounds, which will be used in both arms of the study. Specifically, they are supplying their market-leading antimicrobial wound cleanser, Prontosan, to be used during dressing changes. So each of these collaborators are putting in one kind of product, whether it be a wound dressing. In the VLU study, compression therapy is required. Post wound healing, there is a different kind of compression device that keeps everything in place. So they all supply things that are needed for the standard of care in wound care, and it allows for the study design to be that only one thing needs to be changed between the two arms, and that is the active and the control, and so it reduces any sort of variability in the study, and we get cleaner results. For the companies, the collaborators, they get the benefit of having their product used as standard of care in these very, very large, hopefully successful studies, and it also provides the opportunity for relationship building between MediWound Ltd. and these collaborators. So as we get closer to the product making it to the market, and if there are any partnering transactions to consider, all these companies will be up to date with the program, know the details of it intimately, and it will just facilitate conversations at that time. Jeffrey Jones: Great. Thank you very much for the detail. We will get back in queue. Operator: Thank you. Our next question comes from Swayampakula Ramakanth from H.C. Wainwright. Please go ahead with your question. Swayampakula Ramakanth: Thank you. This is RK from H.C. Wainwright. Good afternoon, Ofer, and I am glad to hear your voice. Just a couple of quick questions. On the VALUE trial, which includes the provision of adaptive adjustment that you could do at a 65% enrollment mark, what clinical scenarios would there be if you had to increase your sample size, and if you end up doing that, what sort of an impact would it have on your timeline? Ofer Gonen: Hi, RK. So thank you for joining. Yes, as you mentioned, the prespecified interim sample size assessment will be conducted after approximately 65% of the patients complete the treatment. Based on this assessment, the study may continue as planned, which means that the sample size stays 216 patients. The sample size may increase if necessary. We want to preserve the approximately 90% statistical power. As you know, at MediWound Ltd., we succeeded in all the 14 clinical trials that we conducted and all the three Phase II studies that we conducted with EscharEx. So we have no intention not to make it to the finish line in this study as well. So the outcome could be the study should finish the enrollment as planned, which means 216 patients, and as we guided, it would be by the end of 2026. If, let us say, we are at 80% statistical power, not good enough, we will increase the number of patients. If it is increasing by 20–40 patients, it means adding another couple of months to the study and another few millions of dollars, which is not a drama. If the outcome is that we need to increase it by 100 patients, it will be at least six months, and it will cost us another $10 million. Let us hope that the data will be very similar to what we saw in the Phase II studies, and we will be able to finish the enrollment by the end of this year. Swayampakula Ramakanth: Thank you for that. And then the question I have on supply chain for the clinical studies: as we understand how things are in and around Israel at this point because of what is going on in the geopolitical world, is that impacting anything in terms of supplying clinical product to the various centers, and if so, how are you managing it? Ofer Gonen: So it is a great question because we just had a discussion about it this morning. We checked in across the sites in Europe and in the United States. There is enough EscharEx that can support continuation of the trial for the next at least six months, so we are in a good place. On top of that, the other ancillaries are from global companies, so all of them should be in the sites. So we do not anticipate any issue regarding the supply chain that will impact the clinical study. Swayampakula Ramakanth: Thank you for that. And then the last question from me is, the revenues for 2025 were below what was expected, and is that partially a stocking issue through Vericel, or is it the pull-through in some of these active burn centers? Hani Luxenburg: RK, so the revenue for 2025 totaled $17.0 million, as you said, less than the $24.0 million that was expected. The decrease was primarily due to the U.S. government shutdown, which delayed, as you imagine, the budget approval and the initiation of new contractual agreements. There was a small part that belonged to the sales to Vericel, but the main part is the U.S. government shutdown. Swayampakula Ramakanth: So when you say that, I was just wondering about the 2026 revenue guidance. How much of the BARDA RFP award expectation is in the $24 million to $26 million that you are talking about? Ofer Gonen: We are not sharing the split. We have potential of getting from BARDA, potential from or indirectly by Vericel. We have potential to get it from the DOW, and we have revenue from product. We feel comfortable achieving the $24 million to $26 million, but we are not giving the split. Swayampakula Ramakanth: Thank you. Thank you both for taking all my questions. Operator: Next question comes from Chase Knickerbocker from Craig-Hallum. Chase Knickerbocker: Hello, everyone. This is Jake on for Chase. Wondering if you could provide a little bit more color and further discuss the decision to move forward with a Phase II for DFU rather than the adaptive Phase II/III design as previously planned. What kind of feedback from the FDA did you receive that indicated that this was the best path forward? Ofer Gonen: Hi, Chase. Good to have you with us. So the main program, as you know, is the VLUs, and we decided to expand the program into two additional chronic wound indications, as said, DFU and pressure ulcers. There are some changes in the administration. We are not certain that it will be required to execute a very large Phase III study in order to have an approval for a DFU indication. We consulted with the agencies, both with EMA and FDA, asked them what they are expecting to see in order to see the advantage of EscharEx in treating DFU patients, and the outcome was this study with 50 patients, as we detailed in our corporate deck. And if I may add, it is a 50-patient study, which is the kind of Phase II, and if we see that we need to have additional, I do not know, 100, 150 patients to finalize the Phase III, we will do it study after study. So it is a kind of a timing impact, but we are not certain that it will be done before the product is approved. Chase Knickerbocker: Appreciate that color, Ofer. That is helpful. And then same type of question on the pressure ulcers. Is it your understanding that the pressure ulcer would require a separate Phase III to get the potential EscharEx label? Barry Wolfenson: Thank you for the question. As Ofer intimated in his answer with regard to DFUs, there is a change in the stance with regard to the FDA and how they are trying to make it, let us say, easier for drugs to be approved, the most notable thing being that they are moving from the need to do two well-designed, well-controlled Phase III studies in order to get approval, and they are moving that to needing only one. And when we look at that, and we also look at, if you recall, at the end of last year, the FDA agreed that our second primary endpoint would be the facilitation of wound closure, which basically takes the onus of the closure portion away from EscharEx and puts it into the hands of already approved products like a CTP or an autograft. We intend to have a discussion with the FDA around the necessity of these large-scale Phase III studies for each and every indication, i.e., DFU, pressure ulcers, or any other chronic wound indication that is out there. The necrotic material on these wounds is all very similar from wound to wound to wound. We have excellent data and a growing base of data that EscharEx works on all of that necrotic material, owing to its several different enzymes that are in the API and multiple different targets towards the necrotic material. And we believe, in the end, that it would be likely sufficient to have, as we are doing in the DFU study, a well-designed Phase II study complemented by post-marketing real-world data to expand the pack insert to include additional indications. Chase Knickerbocker: Appreciate that additional color, Barry. Thanks for taking the questions. Operator: Thank you. Our next question comes from Michael Okunewitch from Maxim Group. Michael Okunewitch: Hey, guys. Thank you so much for taking my questions today. I guess to start off, I would like to ask a little bit about the pressure ulcer program, and in particular, the strategic considerations around prioritization in chronic wounds. We know about the prioritization between VLUs and DFUs, but pressure ulcers do seem to be a little bit overlooked in this market. So I am curious if you could comment on the market and why pressure ulcers seem to be prioritized less so than the other two chronic wounds. Ofer Gonen: Hi, Michael. I do not think it is less prioritized. The largest unmet medical need is definitely at venous leg ulcers, because these wounds are extremely painful, and you do not have any alternative. The knife, the scalpel, is not an alternative for that. Pressure ulcers are very different one from another, might be very deep. There are all kinds of complications that might be associated. For us, it seems to be the more complicated ones to treat. So we are going to start with relatively mild pressure ulcers. Having said that, it is important for us, as Barry said previously, EscharEx works on burns, it works on wounds, it does not care which type of wounds it is applied on. So our motivation is making sure that when we are very close to the finish line, having data in our venous leg ulcer trial, to make sure that everyone understands—the potential partners, the investors—that everyone understands how large this market is and how big is the unmet medical need. So the current trial with pressure ulcers will be a very small trial. We will do in parallel, as Barry said, that just demonstrates that EscharEx can debride. By a third-party consultant and market research, we will understand exactly the portion of the patients that need to debride their wounds, and only then we will know how large is our accessible market. I hope I answered your question. Michael Okunewitch: Thank you. I appreciate that. And then could you just provide an update on the status of the head-to-head study? Are there any additional outstanding items before you can get that up and running? Ofer Gonen: Yes. So, as you know, the main focus of the company, and this will definitely determine our value, is the Phase III study. In parallel, we need to conduct some supportive studies that we are doing. One of them is a PK study, for instance, one of them is a human factors study. We are doing all kinds of small trials to support the BLA submission. Specifically regarding the head-to-head study versus collagenase or other types of nonsurgical standard of care, we are doing that in order to support future market access discussions. We guided, and we are going to do that, that we will start the trial around mid this year, maybe the second part of the year. For us, it is a very important study, since it will enable us to determine what the actual price of EscharEx will be. Michael Okunewitch: Alright. Thank you. And then one last one for me before I hop into the queue. In terms of your enrollment, the complete enrollment targets for the VALUE study and the interim analysis, is that based on the current rate of enrollment, or does there need to be some additional ramp or acceleration at the sites to meet that? Ofer Gonen: To protect the study integrity, we are not sharing enrollment numbers or trends. But we feel very comfortable with the target that we gave, which means interim assessment and completion of the enrollment of the study by the end of the year. Michael Okunewitch: Alright. Thank you very much for taking my questions today. Operator: And our next and final question for today comes from Scott Henry from A.G.P. Please go ahead with your question. Scott Henry: Thank you, and good afternoon. First, just to clarify, as far as the interim analysis, when you talk about year-end, should we expect that to mean Q4? Ofer Gonen: Hi, Scott. I would expect it to be by year-end. Hani Luxenburg: Which means in the end, in the end of Q4. Ofer Gonen: I do not want to overpromise. Scott Henry: Okay. That is helpful. Thank you, Ofer. And then with regards to revenue and timing, as far as the BARDA revenues, I assume there were none in 2025. Should we expect any revenues in 2026? Just a couple of weeks left in the quarter. You might have a sense at this point. Ofer Gonen: So once BARDA agreement is signed with Vericel, I guess all of us will know. Our revenue guidance assumes that the initial revenue from those specific agreements will be only from Q2. Scott Henry: Okay. Great. So when we do model this out, just confirming, we should really expect a pretty significant increase in revenues in 2026 over the first half of 2026, given the manufacturing capacity coming on stream, given the BARDA revenue. So just want to make sure I am thinking about that correctly. Thank you. Hani Luxenburg: Yes. Scott, it was always that the second half is better in revenue than the first half. Of course, given the fact that in our model BARDA's revenue will be only recorded from Q2, and also the capacity will increase at year-end or the second half. You are very much correct. Scott Henry: Okay. Great. Thank you for taking the questions. Ofer Gonen: Thank you so much. Operator: And ladies and gentlemen, with that, we will be ending today's question-and-answer session. I would like to turn the floor back over to management for any closing remarks. Ofer Gonen: Thank you, everyone, for joining us today. We look forward to updating you again on our quarterly call. Operator: And with that, we will conclude today's conference call and presentation. We do thank you for joining. You may now disconnect your lines.