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Yu Guo: Good morning, everyone. I am Guo Yu Godfrey, MMG Chief of Staff. Welcome to our 2025 Annual Results Investor Conference. Today, there are 55 participants on site and 123 online. A quick note for our investors attending in person. Inside your seatback, you will find the Chinese version of the results presentation booklet. Please contact my colleagues at present. First, I would like to introduce the leadership attending today's meeting. Mr. Cao Liang, Chairman of the Board; Mr. Zhao Jing, Chief Executive Officer and Executive Director; Mr. Qian Song, Chief Financial Officer and Executive Director; Mr. Wang Nan, Chief Operating Officer; and Ms. Guan Xiangjun, Interim Executive General Manager of Commercial and Development. In addition, Mr. Troy Hey, Executive General Manager of Corporate Relations; Mr. Chen Xuesong, President of Las Bambas; and Mr. Xia Weiquan, President, Africa, also joining the meeting online. At the same time, we are honored to have the Chief Non-Executive Director of the company, [ Mr. Leung Cheuk Yan ] with us; and Non-Executive Director, Mr. Yue Wenjun, who is also present today. Please take note of the disclaimer on the screen. Today, we will report on the company's 2025 performance review, financial results, strategy and outlook. The management team will be available to answer your questions after the presentation. Now I would like to invite Mr. Zhao Jing, Chief Executive Officer of the company, to speak. Jing Zhao: Thank you, Guo Yu. Welcome, everyone, to today's results conference. I'm very pleased to see so many investors, analysts and friends from the media here in person. And I also thank those joining us online. Let's now begin today's presentation. First, I would like to report on the company's safety performance. Safety has always been a core value at MMG and our commitment and focus in this critical area have never wavered. In 2025, the company's significant events with energy exchange frequency was 0.8 per million hours worked. Total recordable injury frequency was 2.1 per million hours worked. While our safety performance consistently ranks favorably among peer companies of the International Council on Mining and Metals, safety indicators showed a slight increase compared to 2024. Therefore, we emphasize that the company will continue to focus on risk management and advance the prevention and control of high potential injury events. In practical terms, before any task begins, all potential risks, especially those involving personal safety must be fully identified and effective control measures implemented in advance. Work can only proceed when risks are under control. Safety is not just a slogan on the wall. It is embedded in how our work is planned and executed and the commitment to ensuring every employee returns home safely. Going forward, we will continue to maintain the highest standards. Next, I will cover the company's operational performance. I still recall that at last year's results conference, our company leadership mentioned, thank you, investors, for crossing the winter with us. Spring is about to arrive. Looking back now, for MMG, 2025 can be described as a spring of blossom and the harvest of fruit. It marked our first bountiful year. As you may remember, at the end of 2022, our Las Bambas mine faced 3 consecutive months of transport disruptions. It was a difficult period for the company, and it was during that challenging time that I took on my role at Las Bambas. Now thanks to the efforts of the company's management and all employees. We can see the light at the end of the tunnel. Las Bambas has achieved 3 consecutive years of stable operations. And in 2025, its copper production ranked among the global top 10. At the same time, production of other metals, such as zinc, gold and silver has also advanced steadily. Building on the strong momentum in the metals market, our financial performance has also seen significant improvement. In 2025, we set new historical records. Full year revenue reached USD 6.22 billion, a 39% year-on-year increase and full year net operating cash flow reached USD 2.69 billion, a 67% year-on-year increase, driven by revenue growth. Our net profit after tax reached USD 955 million, a 161% year-on-year increase with net profit attributable to shareholders reaching $509 million, a strong lift from $162 million in 2024. At the same time, our balance sheet continued to improve. In 2025, net debt fell to USD 3.35 billion, gearing ratio further down to 33%, both hitting historic lows. It is a fundamental truth in our industry. A mining company's long-term growth is built on its resource base. For this reason, resource replenishment has always been a core strategic priority for MMG. We consistently strengthen our foundation through ongoing exploration of existing mines and through high-quality external acquisitions. According to the company's resources and reserve statement as of June 30, 2025, our copper equivalent resources are close to 27 million tonnes with copper resources about 18.6 million tonnes. Geographically, our resources are diversified across a global asset portfolio spanning South America, Africa and Australia. This broad spread effectively reduces our exposure to risk in any single region and then significantly enhances our overall operational resilience. Exploration is a strategic imperative for MMG, essential for both unlocking resource potential and maximizing asset value. Our growing operating cash flow enabled us to increase exploration spending across all our mines in 2025. We'll continue to prioritize these efforts to drive resource growth and ensure long-term sustainability. In terms of sustainable development, in 2025, we officially joined the United Nations Global Compact, embedding the highest standards of human rights, labor and the environment into our corporate culture. At Las Bambas, our 3 years of stable operations signify not only continuity in production and transport, but also our commitment to the symbiotic existence of the environment and the community. Through the Corazon de Las Bambas project, we support local enterprise development, leveraging the government's works for taxes policy. We support local education and infrastructure construction, ensuring that development dividends truly benefit thousands of households. In Australia, the Rosebery mine has been operating for 90 years. Since 1936, the vitality of this mine has been sustained, not only by the professionalism and dedication of generations of miners, but also by the long-term -- long-standing trust and cooperation of the local community. We're guided by the principle that corporate value is built on the foundation of social responsibility. From the Andes to Africa to Australia, we are committed to responsible operations that deliver sustainable value for the long term. With a diverse portfolio spanning copper, zinc, gold, silver, molybdenum, lead and more, MMG is well positioned to navigate volatile markets. And 2025 was a year that put that diversity to the test and delivered. The metals market was marked by strong performance across the board. Copper prices rose 44%, gold climbed 65%, and silver surged an impressive 148%. These gains were driven not only by industrial demand, but also by the growing role of metals as financial hedging assets. Copper, our core metal illustrates the structural shift underway. The energy transition from EVs to AI data centers has made copper the lifeblood of the new industrial economy. Yet new supply faces mounting challenges, social and environmental approvals, geopolitical pressures and rising extraction costs. The result is a widening global supply gap. In this environment, our diversified and resilient portfolio is a distinct advantage. We are embracing the new cycle with confidence, well positioned to create sustainable value for our shareholders. Our vision for copper is clear to build a scalable, future-oriented portfolio that delivers long-term value. This starts with maintaining stable operations at our existing sites while driving strategic growth through disciplined expansions and new developments. Our twin-track strategy in South America and Africa is the backbone of that vision. Las Bambas provides a foundation of stability and cash flow. In Africa, we are unlocking the full potential of Khoemacau. Construction of the 130,000 tonne expansion is on track for first half 2028 commissioning. And this year, we begin a pre-feasibility study for a potential 200,000 tonne expansion, a clear signal of our conviction in the asset. While organic growth is our core focus, we're also actively pursuing external opportunities. Through disciplined M&A, technological innovation and early-stage positioning, we'll continue to strengthen our resource base and expand our growth horizons. There's a clear thread running through our zinc strategy. We see beyond the metal itself. We are transforming from a pure zinc producer into a multi-metal value creator while embedding low-carbon principles into everything we do. At Dugald River, we are steadily advancing the green energy transition, bringing clean energy to the heart of operations. At Rosebery, we are unlocking value from byproducts so much so that precious metals now contribute more than zinc, rewriting the story of this historic mine. That concludes the operational update. Now I'd like to hand over to Mr. Qian to walk us through financials. Song Qian: Thank you, Mr. Zhao. Good morning, honorable investors and analysts on site and online. I will present the financial performance and related outlook. As Mr. Zhao just mentioned, 2025 marked a historic breakthrough across multiple financial metrics for the company, driven by higher metal prices and increased production. Full year revenue reached USD 6.2 billion, up 39% year-on-year. EBITDA hit USD 3.4 billion up 67%, with EBITDA margin expanding to 55%, positioning us at a highly competitive level within the industry. Net profit after tax was around USD 960 million, up 161% year-on-year. Operating cash flow and free cash flow exceeded USD 2.7 billion and USD 1.6 billion, respectively, injecting strong momentum into our growth. On this foundation, our balance sheet continued to strengthen. Net debt fell to USD 3.4 billion, a historic low. Our gearing ratio improved by a further 8 percentage points to 33%, building an even more stable foundation for our future strategic initiatives. Now let's take a closer look at the financial performance of each mine. In 2025, Las Bambas delivered EBITDA of USD 2.83 billion, a 78% increase year-on-year with EBITDA margin of 64%. Ores from the Ferrobamba and Chalcobamba pits are blended with throughput reaching record highs and copper recovery consistently above 90%. With the mine achieving the scale effect of 400,000 tonnes of annual copper production, unit operating costs fell by 26%. Combined with higher copper and precious metal prices, this generated very strong cash flow. The Las Bambas joint venture declared its first ever dividend to shareholders with total distribution of USD 1.854 billion, of which MMG's share was USD 1.159 billion. Since March 2023, Las Bambas has now achieved 3 consecutive years of stable production with a very solid operational foundation. This steady step-by-step progress has brought Las Bambas to a major milestone from stable operations to dividend returns. It has truly become the engine and cornerstone of the company's value. At Khoemacau, following a profitable first full year after its 2024 acquisition, EBITDA reached USD 167 million in 2025, a 43% increase year-on-year. A new mining contractor is now fully mobilized and construction of the paste fill plant is progressing steadily. These efforts continue to strengthen the mine's operational foundation, paving the way for future capacity expansion. On February 6, 2026, construction of the 130,000 tonne expansion project officially began. Once commissioned, the mine's C1 cost is expected to fall below $1.6 per pound, positioning it among the global cost leaders and opening new avenues for future profit growth. We are fully focused on breaking through production bottlenecks and unlocking growth momentum with operational progress and market opportunities now moving in sync. At Kinsevere, EBITDA reached USD 100 million, up 49% year-on-year. This reflects higher production, lower cost, the continued ramp-up of the expansion project and the positive impact of higher copper prices. After a clear-eyed assessment of the challenges, including cobalt export quotas, power supply volatility and fiscal and tax uncertainties in the DRC, the company recognized an asset impairment of USD 290 million. We believe this impairment creates the conditions for Kinsevere to improve its asset base, shed past burdens and move forward with greater agility to unlock future value. We are confident in overcoming the power supply bottleneck and building strength through these challenges. On one hand, we're taking multiple measures to secure power supply, including continued deployment of a 12-megawatt diesel generator set and battery energy storage system, while actively expanding our power cooperation with SNEL. On the other hand, upgrades to core facilities are progressing in an orderly manner, including flotation line, roaster and electrowinning tank house, laying a solid hardware foundation for higher capacity and optimized costs. Now turning to the financial performance of our 2 zinc mines. In 2025, the Dugald River mine produced 183,000 tonnes of zinc, a 12% increase year-on-year, a new record since commissioning. Recovery rates remained consistently above 90% and core throughput exceeded 2 million tonnes for the first time. This strong production performance, combined with higher zinc and silver prices drove mine EBITDA to USD 176 million, up 4% year-on-year. The Rosebery mine continued to demonstrate the unique value of its multi-metal model, driven by strong prices for byproducts such as gold, silver and copper, mine EBITDA reached USD 168 million, a 36% increase year-on-year. Notably, mine EBIT also exceeded USD 100 million, 2.5x that of 2024. This multi-metal synergy has added significant depth to this century-old mine, positioning Rosebery to move steadily toward its next century. This concludes the summary of our asset financial performance. In 2025, we saw not only a significant increase in copper prices, but also month-on-month gains in precious metal prices. With effective cost control across our mines, gold and silver made substantial contributions to the C1 cost credit becoming an important pillar of our profitability. Supported by strong operating cash flow from stable operations and a favorable market environment, we will steadily advance our CapEx plans. In 2026, CapEx is planned between USD 1.6 billion and USD 1.7 billion, focused on 2 key areas. First, securing the presence, sustaining CapEx to strengthen our existing operational base focused on core mines such as the Ferrobamba mining area and the tailings storage facility expansion at Las Bambas, providing a solid foundation for stable production. Second, investing in the future. Approximately USD 400 million is planned for the Khoemacau expansion project in 2026, using growth capital to drive our future growth engine. The project's total capacity intensity per tonne of copper is expected to be controlled below USD 15,000. Every investment we make is aimed at more stable output, better costs and more sustainable growth. While advancing our CapEx plans, we remain firmly committed to maintaining a healthy balance sheet. Two key initiatives contributed to this in 2025. First, the inaugural dividend from the Las Bambas JV, of which MMG's share was USD 1.159 billion. Second, the successful issuance of a $500 million zero coupon convertible bond, replacing existing shareholder loans. Leveraging these initiatives, we made several early debt repayments, including the early repayment of USD 500 million in debt for the Khoemacau JV, further reducing our interest-bearing liabilities. As of the end of 2025, our gearing ratio reached a new low, and our asset liability structure was further optimized. Compared to our peers, our gearing ratio is now below the industry average. A healthy balance sheet is the foundation that allows us to navigate cycles and achieve stable long-term growth. Now let's warmly welcome Mr. Cao Liang, Chairman of MMG, to address us. Liang Cao: Good morning, everyone. It's a pleasure to be with you today. This year's report is particularly meaningful for me. In my new role, I am deeply focused on governance and long-term strategy on behalf of the Board and our major shareholder. And I'm genuinely proud of what we've accomplished, steady progress and real results across the business. So I would like to thank Mr. Xu Jiqing, our former Chairman, for his effort and contribution to the company's development. Now on this slide, you can see our overall corporate governance framework. For MMG, our tangible strengths are clear, high-quality assets and operational excellence. But our true competitive edge comes from something less visible, yet more fundamental, our mature high standard governance principles and the professional international multilingual management team. This is the very foundation of our stable and long-term development and the key driver of our continued success. We have built a strong, reliable and effective corporate governance framework. The Board oversees the company's strategies and policies, ensures adequate capital and management resources to support their execution and provides comprehensive oversight of financial controls and compliance. Our Board committees such as audit and risk management, and governance, remuneration, nomination and sustainability provide strong support for strategic decision-making and risk control. At the operational level, the Executive Committee manages day-to-day operations and reports business progress to the Board. With extensive international mining experience, our senior management team ensures seamless coordination across asset operations, acquisitions, business development and stakeholder engagement. This year, we established the Innovation and Technology Steering Committee to guide the strategic direction and governance of our technology portfolio, driving digital transformation and smart innovation to power the next phase of growth. Looking ahead, we will harness the collective energy of our Board, employees, partners and stakeholders to build a truly global mining enterprise. With an open mind, we will build consensus. With pragmatic action, we will meet challenges. And with firm conviction, we will create lasting value together. And here on this slide, you can see our vision. Building on the solid governance framework, MMG's management has a long-term vision to create a leading international mining company for a low-carbon future. As the flagship overseas mining platform of China Minmetals Corporation, MMG plays a critical role in supporting its major shareholders' strategic goal of achieving over 1 million tonnes of copper production by 2030. On this journey, we'll advance on 3 fronts. First, driving operational excellence through innovation, controlling costs rigorously, maximizing efficiency and unlocking value through technology. Second, deepening organic growth, focusing on copper and strengthening our production base through optimization and expansion of existing assets. Third, positioning for external growth, building a robust pipeline of opportunities with an emphasis on early-stage projects to create new possibilities and growth momentum. With these measures, I'm confident that MMG will navigate any future metal market cycle with resilience and live up to the trust of every shareholder. For 2026, our goals are clear and our priorities are focused. On the production front, we expect full year copper output of 490,000 to 530,000 tonnes, and zinc output of 220,000 to 240,000 tonnes. To achieve this, we'll focus on 4 priorities: strengthening operational excellence, advancing stable growth, building financial resilience and delivering sustainable returns to our shareholders. Finally, on behalf of the Board, I want to express my sincere gratitude to all employees, shareholders, partners and friends for your continued trust and support. Thank you all. Unknown Executive: Thank you, Mr. Cao. And thank you to all our leaders for their presentations. MMG attaches a lot of importance to market value management and shareholder return. We're of the view that market value is not only the market's fair judgment of our company's value. If we do a good job in market value management, it is also an important communication platform with investors. By listening to the market and investors, we can better understand market expectations, and we can also integrate internal and external wisdom. Now in 2025, altogether, we have organized 164 investor communication sessions. And then we also organized on-site visits to Las Bambas. For the whole year, there are more than 2,000 investors whom we have communicated with. So this is a reflection of the IR department's work. Looking into 2026, so on the screen, you can see 6 points. So we will continue to do a good job. We will work hard to achieve win-win for the company as well as investors. Yu Guo: Now we will move on to Q&A session. You are most welcome to ask questions. First question, the lady on the second row here. Hanyin Yang: Management, I am Hannah from MS. Congratulations on the company's outstanding results this year. I have a few questions. First, this year, well, it is March now. And then in Peru, it is quite close to the election. So regarding Las Bambas, can you comment on the overall operation and also some update on the Peru election? Second question, for Phase 2 Khoemacau, it was approved, and it is expected that it would be commissioned in the first half 2028. In relation to the amount of resource and production volume, do you have concrete plan and goal for the 15th Five-Year Plan? In Canada, for the copper zinc mine, will there be some projects that will be started? Third question. So regarding the Brazil acquisition, what is the latest status? Do you have any time line that you can share with us? Jing Zhao: Thank you for the questions. First question is about Peru and Las Bambas operation and also the impact from their election. Well, Mr. Chen is now responsible for the operations of Las Bambas. I will defer to him. And then later on, I will elaborate. And then the next question is about Phase 2 of Khoemacau production volume. And then we will ask Mr. Chen to answer and Mr. Wang can supplement. And then regarding Brazil acquisition, Ms. Guan can comment. Okay. Mr. Chen, please. Can you please answer the question on Las Bambas? Xuesong Chen: Okay. Thank you very much for your question. For Las Bambas, for 3 consecutive years, we achieved very stable operation. In 2025, we had very good production outcome. As you said, in Peru, in April this year, they would have election. In order to stabilize operation, together with the local communities and various tiers of government, we had already entered communication -- forward-looking communication and continuous dialogue. At the same time, we have put in place a contingency plan. On site, we have established a strategic mine reserve so that for our mine, even under special circumstances, it can still achieve stable production. Besides, we will continue to pay attention to external situation and make adjustments to our strategies in order to guard against risk. In this way, we can ensure the security and stability of our annual production. Jing Zhao: Thank you for the question. Let me supplement. Las Bambas has been operating in Peru for more than 10 years. And over the past 10 years, we had seen the changeover of government and President a number of times. So our major work is to ensure stable relation with local communities and government. At the same time, there is also local project in Las Bambas to enhance our community relations. So basically, we focus a lot on making all preparations with local communities and local government. As I said earlier, in order to guard against risk, we have done a lot of preparation to stabilize production. For example, reserve and also supplies of important materials are being ensured so that we have the room -- enough room to guard against risk. That's the first question. Xuesong Chen: Next question about Khoemacau Phase 2. Regarding Khoemacau Phase 2 project, in -- at the end of Q1 2028, it would achieve 130,000 tonnes of capacity scale. And then during 15th Five-Year Plan period in 2026, in the first year of the 15th Five-Year Plan, we already started the Khoemacau 200,000 tonne pre-study or examination. So by 2030, we believe that we are able to achieve the production scale of 200,000 tonnes. Jing Zhao: Mr. Nan, please, can you supplement? Nan Wang: Yes. Yes. Let me supplement. Regarding resource volume at Khoemacau, since MMG's takeover, we have already started a lot of exploration work. At present, a lot of exploration equipment and personnel have already entered the site and have started work. So we firmly believe that in 2026 and the years thereafter, through all the exploration work of target areas and actual exploration work as well as exploration work by drones, we will be able to expedite our work. Hanyin Yang: Well, regarding the company's mines, well, not only about Khoemacau reserve and production target, I would like to also ask about the other mines during the 15th Five-Year Plan. Jing Zhao: For the 15th Five-Year Plan, we are now devising the strategies. And when we have clearer guidance, then we can let the market know. The next question is about the Brazil Nickel project. Ms. Guan, please. Xiangjun Guan: Thank you for the question. Now actually, last year, in October, our company announced to the market an update on our exploration work. As said earlier, regarding the project, we have put in place a 3-year exploration plan. So through these 3 years exploration work, we hope to be able to enhance the Izok and High Lake mines resource volume. Based on current exploration result, especially the work done last year, progress is very satisfactory. However, we will do further analysis so that our resource volume this year can be better realized in the exploration report. Regarding our work this year, we'll continue our exploration work, and it will continue in the coming 2 years. Regarding the development plan, for this asset, resource volume has a good foundation. However, it is close to North Pole. So there is a lack of infrastructure. So in the past almost 10 years period all along, we have been urging the Canadian government to work more on infrastructure, including roads and ports. And when various governments pay more attention to critical metals, the Canadian government had also enhanced this item in their agenda. So recently, we have expedited our work with the Canadian government and also local indigenous villages communication. So we can only develop this project with the support of local government and indigenous communities. So regarding this project, it is going to be of a longer term. Comparing with the Botswana expansion project, this is going to be of longer term. Early this year, well, you can see a better relationship between China and Canada. This is a good timing. It is favorable to our further studies and further plan of this project. The second project is about Brazil Nickel, okay? At present, we are in the process of EU's approval. And at present, we are working closely with another working partner to get the approval. So we hope that within first half this year, we can get the approval from EU and then we can complete the settlement of this project. Thank you. Yu Guo: Okay. The gentleman on the first row, please. Unknown Attendee: Congratulations on your good results. I have 2 questions. I'm a reporter. For Las Bambas, last year, copper concentrate produced 410,000. This year, the target is 400,000 tonnes. So it is rather conservative as a target. Is it related to the election? What will be copper price like in 2026? Are you going to spend some CapEx on the expansion of other potential projects? Jing Zhao: Thank you for your questions. You talked about 410,000 tonnes Las Bambas production volume and this year's estimate. Well, Mr. Qian can comment and then our CFO will talk about CapEx. Song Qian: Thank you. Let me -- thank you for your question. In 2026, we believe that regarding our production volume guidance, it is going to be a reasonable one. Based on existing resource volume and foundation, we will maintain a high level production. So we will optimize the Ferrobamba and Chalcobamba pits. At the same time, for the process plant and also related facilities and technology, we will make investment. So we are now in the process of assessment of various options. When we achieve critical progress, we will disclose to the market. We think that the existing production volume guidance is a reasonable one. It is not a very conservative one. Jing Zhao: Right. Mr. Qian, please. Song Qian: Regarding copper price outlook, well, we are positive, especially for the long-term copper price increase. But for short-term copper price, we will not make a concrete judgment. That's the first point. Secondly, regarding CapEx, in 2026, our CapEx will be at USD 1.6 billion to USD 1.7 billion. Now we have taken into consideration the market environment with rapid increase in copper price, how can we deliver maximum return to shareholders? We'll seize this opportunity to increase production volume as soon as possible. So we are thinking of different solutions in different angles to increase our production volume. At Las Bambas, our plan is that next year, we will increase CapEx by USD 800 million to USD 850 million on upgrading and revamping existing production facilities. And just now, we already reported that at the existing process plant and also the extraction plants, we will build infrastructure. And for existing infrastructure, we will redevelop and relocate them. At the same time, at Khoemacau, we plan to complete the Phase 2 expansion project. And in February this year, that had started already. For the whole year, that will mean an increase of expenses by USD 400 million. Unknown Attendee: Just now in your booklet, you stated that by 2030, you will achieve copper production volume of 1 million tonnes. So is it possible that there are some potential expansion projects that have not been announced yet? Do you have that consideration? Jing Zhao: At present, for China Minmetals Group, there is a strategic goal by 2030 to achieve 1 million tonnes. And for MMG, as an important overseas resource developer and operating platform of China Minmetals, we will try our best to help the group to achieve this goal. However, we still have to look at our existing operation of our good quality assets and do a good job. At the same time, we will also identify internal organic and inorganic growth potential. We will let the market know right away as long as we can satisfy market disclosure requirements. Yu Guo: Okay. The lady on the second row, please, can you please briefly introduce yourself? Unknown Analyst: Management, I am from -- I'm [ Merriam ] from Merrill Lynch. Congratulations on the outstanding results. I have a few questions. First, just now, you said that very quickly, you will formulate a 5-year plan. So do you have a concrete time line in which month or in which quarter will it be released? Second, regarding your dividend policy, what is your dividend policy? This year, if copper price continues to remain high and if cash flow improves, then this year, is there the possibility of dividend payment? Third question, you have a USD 170 million loss from a kind of hedging. So what is your hedging policy in relation to your mines? And in the future, how do you see this situation to evolve? My fourth question is, at present, in Congo, regarding cobalt, will there be production? And you still have quota of a few hundred tonnes. So how are you going to deal with it? Jing Zhao: Thank you for your questions. First question is about MMG's 5-year strategic plan. So as I said earlier, we have started to formulate our coming 5-year plan. And now we have to look at the overall group and various mines strategies for the coming 5 years. We are working on it now. And at appropriate time, we will make disclosure. Regarding dividend and hedging, Mr. Qian will answer. And for cobalt in DRC, I will ask Mr. Weiquan to answer. Song Qian: All right. Regarding dividend policy of our company, we attach much importance to shareholders' return. At the same time, we will put in place very prudent long-term asset allocation framework so as to ensure a stable return for shareholders, and we can also meet future capital needs. Every year, the Board assesses our company's financial position and make decision on dividend. At present, if you look at the order of capital allocation, first of all, we have to support organic and extension growth projects so as to make sure that given the current environment, we can make sure that our production is favorable to our long-term value and shareholders' return. Capital will be invested into projects that are higher than investment cost in terms of exploration and expansion. At the same time, we want to lower our debt level. And number three, we will try to remove obstacles in paying dividend. According to Hong Kong laws, listed companies can only pay out dividend from retained earnings. As of end 2025, we have accumulated retained loss of more than USD 500 million. So the number has already decreased by about USD 200 million. In 2025, our main mine, Las Bambas already distributed dividend to direct shareholders. And it had already reduced the accumulated loss to the parent company. So when conditions are right, we will carefully consider the situation, and we will then make decision to pay dividend to shareholders. Jing Zhao: And then regarding to value preservation, well, the management considers this as a very prudent risk management measure. We will also strictly comply with internal control process of MMG. By doing value preservation hedging, we can ensure certainty of cash flow. So we do not only consider market circumstances, we will also consider overall operation of the company. MMG's goal in hedging and value preservation is to ensure that we will not be affected by downside risk, especially when the market is volatile. We want to ensure safe cash flow. At the same time, we can enjoy the benefit from upside in the market. So for our annual strategy, we do not have a ceiling in terms of hedging. We want to make sure that it would be -- that there would not be excessive hedging. At the same time, we do not allow speculative hedging activities. I would like to supplement that when it comes to such measures, it is part of our approval process every year, it has to be evaluated and it has to be scrutinized. And based on our operating plan and risk situation every year, we will make decisions. So we are very prudent in risk management. So we are positive in relation to the long-term fundamentals. At the same time, we'll consider short-term factors that may lead to short-term volatility. Those factors are also carefully considered by us. So all the hedging decisions will be in line with our annual strategy devised by the Board. We want to make sure that these 2 are consistent, and we will make sure everything will be stable. Yes. Now the Board approves an annual hedging strategy. And in fact, we do have a preestablished ceiling or upper limit, and we won't go beyond that ceiling or upper limit. That is the point I would like to correct on. Now Mr. Xia, please. Weiquan Xia: Regarding DRC, cobalt sale quota and also Kinsevere production. In 2025 for Kinsevere, we have got 75 tonnes of cobalt quota. In 2026, based on existing communication, we believe that the quota will be 30 tonnes per month. And the annual quota document has not been released yet. Our company will actively communicate with the government to strive for more quota. As of the end of February 2026, regarding the 2025 quota, there are 30 tonnes of cobalt metal that had been already packed into vessels. And for 2025 and 2026, if all cobalt quotas are sold, then based on the cobalt price in February 2026, we believe that Kinsevere can achieve a USD 25 million revenue. And then regarding production strategy, given the current market environment, whether our company will resume cobalt production, that will depend on the market and also regulatory changes. We'll also consider the government's quota policies. So we are prepared. We are ready to resume cobalt production any time. Yu Guo: Next, the gentleman on this side, please. We have adequate time today. So don't worry, you will all have opportunities. Jingshan Feng: Management I am Feng Jingshan, Jimmy from Citi. Congratulations on your outstanding results. I have 3 questions. First question for Mr. Zhao. Looking at your 15th Five-Year Plan, you have the plan to produce 1 million tonnes of copper. So will it be mainly from internal growth or you need to do M&A? And then what is the project progress in Peru? And then what will be your interface with MMG in relation to spin-off or stripped mine resources, will they be incorporated into MMG or China Minmetals Group? That's my question. Jing Zhao: Thank you for your question. This is a challenging question. Starting last year, we set this goal of 1 million tonnes of production. So now we are producing 500,000 tonnes within MMG. And then there are a few 10,000 tonnes in other areas. So that explains the remaining 500,000 for 1 million. So basically, they are from the few greenfield projects. You mentioned those projects or assets and there are some stripped assets. And just now, you also talked about Glencore in Peru. Those are also greenfield projects. So they are some major components. Apart from greenfield, we do not rule out M&A. So regarding 1 million tonnes, I think there are 3 parts. One is the existing -- the other -- the existing ones that are under production, the other is those that are within exploration. The other is the existing ongoing projects. So for the Peru projects, I think 10-odd years ago, around in 2008 and 2009, we made some acquisitions. And there has been a certain time period in the past that we plan to develop it, but it is in the south of Peru, and it is to the north of Las Bambas, but then there are different community concerns. But during the development process, there are community issues in nearby mines. So we were not able to continue to work. So our work was suspended in 2012. And then at that time, we also did some maintenance. After the past 10-odd years, there are other mines near that project. And later on, neighboring community relations have improved. So the overall community situation has improved. Our relationship with the government has also improved. A few years ago, copper price was only $2. Now it's $5 to $6 already. So all these are favorable factors. And now for the majority shareholder, we have taken note of these positive changes. So starting last year, we started to do some study and research, and we have formulated teams. Now we have got a 20-odd person team. There are Chinese and also foreigners in the team. So gradually, we have been ironing out some issues, and we have also renewed some scientific studies. Can we complete the work within the 15th Five-Year Plan period? We will do our best. We cannot guarantee. But then actual conditions have seen quite big improvement. So can they be incorporated into MMG's resources? Well, we have to wait and see. You talked about 3 other copper assets. One is in Pakistan, 20,000 to 30,000 tonne production volume. There is one in Afghanistan and Pakistan. So in 2008 and 2009, that was acquired in Pakistan, that project was newly explored. It is quite heavy grade or heavyweight one. Well, we are not that familiar with those projects. They are related to another listed company, but those projects are up to 10 million level in production. And will they be incorporated into our listed company and also whether Glen will be incorporated into MMG, our focus is to operate our existing assets well. There are 3 mines that are in production. The 3 are copper mines, 2 are zinc mines, and then there is a greenfield project in Canada, Izok Lake. So for these projects, we want to stabilize production volume. We want to enhance their assets. And then there are also early-stage exploration and so on. We have to work well in cost control and CapEx. We are already very busy with all these work. Besides, we need to maintain good relationship with local communities and governments so as to ensure stable, highly efficient operations. On this basis, we will also consider M&A, not only assets within our group, but also external assets. And then we will comply with all the rules. So we will do all necessary due diligence and assessment. We will comply strictly with all the requirements of the Hong Kong Exchange. And then under the supervision of all nonexecutive directors, we will make sure to deliver transparent disclosure. Jingshan Feng: My next question is about CapEx in 2026. Just now you said that there would be a bigger increase of CapEx for Las Bambas. Regarding subsequent CapEx, how should we consider its continuity? So in the future, will it be more or less the same in 2026? Or will it go back to the past level? So for future production volume at Las Bambas, will there be some room for increase in the future? Looking at 2026 CapEx, there will be some increase. Looking at current copper price, your free cash flow is quite adequate. So in 2026, regarding debt reduction and dividend, how are you going to split the free cash flow, the remaining free cash flow? Song Qian: Thank you, Jimmy. Regarding CapEx, well, every year in our budget, we will consider the next year's CapEx plan, and we will also disclose to the market. For future years arrangement, so we have to wait till the process being completed in the second half before we can disclose. And then you also asked a question about -- okay, yes. Yes. As you said, strong market growth delivers to the company very good cash flow performance. And regarding utilization of cash flow, as I mentioned earlier, we will follow the order that I mentioned. We have to first make sure that we can deliver the organic growth projects. And at the same time, we will also do exploration and development of neighboring areas to make sure that existing operating projects can stabilize production. And finally, we'll consider to improve dividend policy limitations so that our company will gradually possess the conditions to pay dividend to investors. Jingshan Feng: My last question is regarding your one-off expenses and loss. In the second half of the year for impairment and hedging, if these are accelerated, then profit is very good. For one-off loss, just now you talked about your policy of hedging. In 2026, given your expectation about copper price, this year, regarding your hedging policy, how will it be executed? Yes, I know that there is upper limit, but how -- what will you consider in the execution of strategies for hedging loss in 2026, how do you see will be the profitability? For impairment for Kinsevere, there was one big provision. In the future, regarding the other mines, what is your expectation about impairment? And will there be further impairment risk for Kinsevere? That's all from me. Song Qian: Okay. Let me continue my answer. Thank you, Jimmy. For hedging loss, well, my view is our company wants to make sure the stability of our cash flow. At the same time, we want to enjoy the benefits from market upside. This is the major goal. So the inevitable result will be the hedging. We want to make sure that it will be opposite to our sales direction. So when price increases on one hand, my profit increases fast. I want to make sure that at the same time, for the hedging work that I have done, it may lead to a loss. It will lead to a loss. This is for sure. So looking into the future, we will still put in place a sound risk control policy to make sure that while we enjoy benefit from market upside, we can still avoid or prevent some uncertain factors that may lead to important threats done to our cash flow. So we want to guard against that. So that is our basic policy. It will not change. Your second question is about impairment. Regarding impairment at the end of each year, according to rules, listing company rules, we will do an impairment test on all our mine assets. The principle is to compare the recoverable amount and the book amount. If recoverable amount is lower than the book value, then that part will have to be subject to impairment. At the end of last year, we have prudently assessed various mines, and we realized that for DRC, as reported earlier, the cobalt policy -- sales policy has changed, and there are issues about power supply, and there is also unstable fiscal policy. So for the recoverable amount, there is a gap of USD 290 million. So that's why we made the impairment. Apart from that, for all the other mines, we have rather adequate headroom. We have quite adequate room. So at the moment, we do not see any impairment risk. For Kinsevere, power supply is such that we are trying our best to resolve the problem. Production system is ramping up for copper production. So I believe that in 2026, at present, we do not see any big need of impairment. Yu Guo: The gentleman on the third row, please. Unknown Analyst: Management, I am [ Lu Zhen Xiang ] from BOCI. I have 2 questions. First, regarding Las Bambas. This year, CapEx was quite big. So for this mine, how long will this high CapEx last? And for this mine, how much is the maintenance CapEx besides -- this mine has started dividend distribution. So what is its dividend policy apart from CapEx? Is it true that dividend will be paid out as much as possible? My second question is, some time ago, I read some media reports saying that the DRC government may raise electricity tariff. So regarding Kinsevere, do you see an increase in tariff really? Jing Zhao: Okay. Thank you for your questions. Regarding Las Bambas expenses and dividend, I will defer to Mr. Qian. For electricity tariff, Mr. Xia can answer. Song Qian: Thank you, Mr. Zhao. Thank you for your questions. Regarding Las Bambas, expenses are all maintenance expenses. There is no growth expenses. As I said earlier, for the 2 major mines of ours and the process plant facility, the TSF and so on, all these need maintenance expenses. The purpose is to maintain the production capacity of 400,000 tonnes at the TSF. As said earlier, at Las Bambas, since our takeover, the original owner designed capacity was only 300,000 tonnes. But in our hands, we adopted different ways to increase production steadily so as to reach 400,000 tonnes. But the grade of the mine is being lowered, and we are doing our best to stabilize production. So for these measures, they also entail maintenance CapEx. So that's the reason. If the market maintains the current strong trend, then it can generate strong cash flow. And as you said, if there is no other expansion or neighboring M&A, then we will try our best to distribute dividend as much as possible. So dividend will be given priority. Jing Zhao: Regarding electricity tariff, Mr. Xia, please. Weiquan Xia: For DRC government, right now, the tariff is around USD 0.10, and we have not received any update in relation to tariff increase. Unknown Attendee: Congratulations to you, management. Last year, your results were very good, your cash flow, your liabilities level all performed well. So that is the result of many years of work at Las Bambas after there was a problem. Mr. Zhao had done very good work to achieve this result. So I'm grateful. I am an individual investor. Last year, in October, I attended this event as well. So it has been less than a year, but you have achieved a lot. I have a question about supply, global supply. At present, copper price rises fast, especially this year, no matter whether you talk about year-on-year or half-on-half basis, there was a big increase. So will this increase mean very fast increase in CapEx globally so as to increase supply? Now my concrete question is, first, will there be big investment into the capital market? If yes, then this increase in capital investment, of course, there will be a lagging behind effect. A few years later, it would lead to a meaningful increase in supply. So there would be an increase of a considerable scale in supply, right? Besides, we will consider also scrap copper and also existing mines. So with an increase in production volume, there may be a lowering in grade. So overall speaking, in the coming 5 years or even longer period, how will be supply like 5 years later, that is in 2030? For MMG in 2030, according to my calculation, comparing with last year, there will be an increase by 200,000 tonnes. So within the coming 5 years, if copper price stays high or if there is a big growth, then I think the situation will be very good. So my question is basically about supply. Unknown Executive: Thank you. Thank you for your question. Last year, we had much communication. Thank you very much for your support. Regarding CapEx, well, you asked a very difficult question. I will try to answer it because it is more of a macro level. Regarding investment, well, copper as a metal has many financial attributes. Looking at the current industrial demand, it is not satisfied yet. So in the future, if you look at AI, big data centers, electricity and other industries demand, there would be continuous increase in revenue. And in the past 10 years, many big mining companies invested not as much as what we have expected into project development and infrastructure. So in the past 10, 15 years, there have not been many newly developed mines. So -- as a result, well, copper price will have to reach a certain high level in order to motivate these mining companies to put in big CapEx. So based on what you said, the current price is still not enough to lead to very fast increase in CapEx, right? Well, apart from rise in copper price, other costs also rise quite significantly. So various mining companies will have their own judgment about their psychological copper price or to which level the copper price has to reach before they make big investment. And based on development timetable of various recent projects, the development cycle is getting longer and longer, sometimes more than 10 years. And that also includes getting local approval. For Las Bambas and our Peru projects, we have seen that. So for a new project, from formation of the project, including all the environmental assessment and all the audits and so on, the whole journey is very long. There may be other sudden happenings. So we think that very often such cycle will be longer than 10 years. So we believe that certain conditions have to be met before an increase in investment. Different companies will have different judgment. Some may have mines with better endowments, and they would advance their investment. But for other situations, well, the cycle may be longer. So now do we need to do more exploration since the cycle has lengthened? Well, different cycles are investing more into maintenance and operations and exploration in order to achieve growth. Now you talked about scrap copper as well. In fact, for steel and iron, we have seen the situation already. Different metals have different cycle. So when the demand-supply equilibrium is reached, well, we have attended some other association meetings, but it seems that copper -- the copper equilibrium has -- will not be reached so quickly. So -- I don't know whether Ms. Guan will supplement. Unknown Executive: Let me supplement. Looking at current dynamics in the market, basically, people or everybody likes copper, everybody likes to increase resource volume and production volume of copper. For newly increased resource volume, it will save CapEx by working on green projects and M&A. But looking at current recent market transactions for BHP, hoping to acquire British and American resources or the merger with Teck and also some time ago, there were also some very hot transactions. Everybody wants to increase its exposure to copper through these transactions. So right now, for our greenfield projects and mature greenfield projects, there is a lag. So as a result, for big mining companies, they'd rather do M&A between companies rather than identifying new greenfield resources to develop. So regarding transactions, for mature projects, there is still inadequate mature projects in the market. That's the point I would like to add. Jing Zhao: Well, I have 2 points to share with you. Unknown Executive: Well, because of time, can you please be concise? Jing Zhao: Yes. First point, for MMG, as said earlier, in 2030 or last year, there was an increase in volume by 200,000 tonnes. So based on what you said, the ratio of increase is quite big. This amount, 200,000 tonnes doesn't sound big, but then in fact, the impact is already quite good, right? So another point is regarding injection of assets. At present, looking at current copper price, operating cash flow this year should see an increase by more than USD 1 billion. Then in that case, you should have the strength to acquire some assets, other group's assets. So as a minority shareholder, I hope that this can be accelerated. So what do you think? For your first point, what is your actual -- what is your specific question? Okay. As we reported earlier, we give priority to existing expansion projects. For example, to stabilize the 400,000 tonnes production of Las Bambas and also Khoemacau, 200,000 tonnes. This is now underway. So these developments are quite certain in our existing pathway. You mean the increase of 200,000 tonnes? That also includes the volume in Southern Africa. So it is within our plan already. Regarding injection of assets and M&A, Ms. Guan, can you comment? Xiangjun Guan: Regarding injection of assets, our view is this. For our company all along, we define our company as a growth company. So we will actively consider various M&A opportunities apart from organic growth. So we will consider other M&A targets, but we do not limit ourselves to assets owned by the group. We consider a wider scope. So we will assess our existing resource and reserve volume. At the same time, we will have to consider various risks and the economic considerations as well. So we do not rule out possible M&A of group assets. But if there are other opportunities better than existing assets within the group, then we will attach different priority. So we will assess the economic value of various projects that will be given more priority. Jing Zhao: Well, in 2024, we acquired Khoemacau. So you can see that basically, we will select a region with better potential to do M&A, and we rely on our own operation and exploration capability to do a better job. And of course, we will give a lot of deep thoughts and consideration. So in the future, regarding future M&As, they will be in line with our current M&A strategies. Any further questions? Last question, please. Unknown Analyst: Management, I am from Huaxin Securities. I have a question regarding Las Bambas. Last year, the cost was USD 1.14 C1 cost. So this year, it's slightly higher than last year, right? So what is the consideration? Is it because of the mining grade coming down? Or is it because an increase in logistic costs? So the recovery rate from the milling or process plant would be higher, right? So that's my question. Jing Zhao: Mr. Qian, C1 cost of Las Bambas, please. Song Qian: So you are asking about C1 cost, correct? Well, you may have realized from estimates and long-term investors of our company will know that our guidance, our production guidance and so on, our budget are relatively conservative because we want to make sure that even if there are unfavorable changes in the market, all our estimates and budget and assumptions can support our company's long-term development. So they will deviate a bit from our actual cost as a result. Last year, our guidance indicators are higher than the actual C1 cost metrics. So given the same price assumptions, if we adopt the current market price, then for Las Bambas, actual production cost may be lower than our guidance by USD 0.20 to USD 0.30. Yu Guo: Okay. We will give this lady an opportunity. Unknown Analyst: I'm [ Zhu Wei ] from Goldman Sachs. I have a question about strategies. Now how do you evaluate M&A opportunities in the market? 2 years ago, you said that after Khoemacau, copper price has been breaking record. And so how are M&A opportunities of copper right now? Apart from copper, well, you have also acquired Brazil Nickel. So for other basic metals and gold and precious metals, which will be your focus in M&A? Jing Zhao: Ms. Guan, please? Xiangjun Guan: Greetings. Well, talking about our strategies, well, the timetable is longer. From short-term M&As perspective, in the coming 3 to 5 years, if we look at commodities, we like copper most. But as you said just now, in the market, everybody likes copper. This is a consensus, so to speak. So right now, if we want to acquire a large-scale producing copper asset in a good region, then basically, there is no such opportunity right now. So what we need to consider is -- so we may have to lower our target a bit from this high year's target. So we will focus more on Latin America and Africa. There are certain risks relatively speaking, but we have mature experience in these regions. So we like those projects with a certain scale. But then if you look at projects that are being built right now, there are still some opportunities. For greenfield projects, we like more mature greenfield projects. So no matter whether we are talking about permit available or the studies being completed to a more mature stage. So from a project point of view, we do have some targets that we are looking at. But for some of the targets, we think that within the near future, they may be available in the market. But right now, they are still not. So we are still doing technical assessments. From commodities point of view, we like best -- we like copper best. You also mentioned precious metals just now. For us, we will consider precious metals and also concurrent copper and gold assets and so on. But precious metals within the short term are not within our consideration. Jing Zhao: Okay. Because of time, once again, thank you all for your interest and support for our company. And MMG is happy to develop a brighter future together with long-term capital and patient capital. We have prepared some snacks outside for you to enjoy. So thank you very much. [Statements in English on this transcript were spoken by an interpreter present on the live call.]
Colin Hunt: Good morning, and welcome to the presentation of AIB Group's results for 2025, a landmark year for our company. I'm going to spend some time outlining the macroeconomic backdrop and giving an overview of the progress on our '23 to '26 strategy before handing over to Donal, our CFO, who will bring us through the details of our financial performance. 2025 was another year of successful delivery by AIB Group against our strategic objectives, priorities and targets. We're pleased to be delivering a profit after tax of over EUR 2.1 billion, representing a RoTE of 25%. In a looser monetary policy environment, our NII remained resilient, coming in ahead of expectations at EUR 3.75 billion. The strength of our financial performance and the scale of organic capital generation allowed us to grow our business, to invest in our business and to propose total distributions of EUR 2.25 billion, payout ratio of 105%, while still delivering an exceptionally strong capital outturn with CET1 ending the year at 16.2%. And 2025 was the year that AIB returned to full private ownership, having returned a cumulative circa EUR 21 billion to the Irish state. So it was a landmark year, a year of progress and closure, a year that positions us to build an ever better, ever stronger, trusted AIB in the interest of all our stakeholders and the economies and the communities that we serve. We remain resolutely committed to the sustainability agenda, an agenda that sits at the core of our strategy and at the very heart of our purpose. We're making good progress towards meeting our long-established 2030 targets with almost EUR 23 billion of green and transition lending deployed since 2019. And last year's new green lending reached an all-time high for us of 43% of all new lending, well on track to hit the 70% target we've set for ourselves. We're also continuing to decarbonize our own business with 92% of our electricity needs sourced from our virtual power purchase agreement from the output of 2 solar farms. The scale of the environmental and social lending opportunity and our excellent credentials in this space create the platform for continued success in ESG bond issuance, and I'm very proud of the fact that AIB is now one of the world's leading issuers of ESG paper globally. Our confidence in the outlook for AIB in 2026 and beyond is underpinned by continuing solid and consistent performance by the Irish economy. Growth in modified domestic demand surprised somewhat on the upside in 2025, and is expected to hover around 2.5% to 3% over the next few years, a rate of expansion that is reasonable in an Irish context and stellar compared to our neighboring economies across the Irish sea and indeed further afield. Our population continues to grow, and it's likely to exceed 6 million in the next decade. And our labor force exceeded 2.8 million people at the end of last year, representing an increase of an incredible 59% since 2000. And now that demographic bounty is a key driver of Ireland's economic success, and it creates a very positive operating backdrop for AIB, Ireland's leading financial institution. And while we've seen remarkable growth in the numbers of work in the country's GDP, the balance sheets of the country, businesses, households, individuals are all very conservatively positioned. Net government debt fell to 40% of gross national income last year and the downward trajectory is expected to remain a feature of the budgetary landscape over the coming years. Now the government is in a very strong position to deliver on its ambitious national development plan, which will see EUR 275 billion deployed in building a world-class public and social infrastructure here over the next decade. And meanwhile, households continue to delever with debt to disposable income running at about 40% of the post-GFC peak with the savings ratio running at 15%, an indicator of which is very well reflected in our own liabilities performance. Ireland remains a preferred destination for foreign direct investment. Now we will, of course, continue monitoring the international trade climate, but it's only fair to say that the performance in 2025 surprised on the upside, both in terms of investment and also in terms of export volumes. I made mention already of the government's NDP, a plan which will see a much needed ramping up of infrastructure -- of investment in critical infrastructure. And if this country is to consolidate and sustain its economic progress, we need to close existing gaps in housing, water, energy and transport infrastructure, and we need to do it at pace. We look forward to continued progress on the delivery of new housing with 2025 seeing over 36,000 new homes being completed. And that was the best output performance since the GFC, but it's still well a drift of the level of housing completions needed to satisfy demand. And we expect to see housing output continuing to grow year in, year out with the level of completions forecasted 45,000 in 2028, representing an increase of some 25% on the 2025 performance. But given the scale of unsatisfied demand that's out there, housing supply is going to have to reach levels well ahead of in-year structural demand if the market is to return to equilibrium. So challenges remain, but we are seeing good progress, and we are optimistic about the supply outlook and the opportunities that creates for our lending businesses, both in mortgages and development finance. Now looking back to the lending performance last year, new lending was 2% higher than in 2024. We saw a 4% decline in new mortgage lending in a growing market with our mortgage market share falling to 30%. Now I've remarked on many occasions that we do not target mortgage market share per se. Instead, we are focused on writing the right business at the right price. That said, it is important to note that not all mortgage market shares are the same. And we have a strong preference for having direct relationships with our customers as they embark on the biggest financial decisions of their lives. In the direct-to-consumer market, we remain by some distance, the leading player with a market share of 46% and the pipeline for the early months of 2026 looks very good. Personal lending was 4% ahead and now 88% of personal loans are applied for digitally across the group. Total property lending saw an increase of 25% of the subdued base of recent years. Corporate lending had a good performance with new lending up 8%, but this was offset by a quieter year for Climate & Infrastructure Capital in a noisy external environment. A number of deals which we expected to close in December tipped into January, and that business is off to a very good start this year. Now given the macro backdrop and the strong and visible pipeline ahead for the operation divisions, we are confident in our ability to deliver a medium-term lending growth CAGR of 5% out to the end of 2027. Our franchise remains exceptionally strong, and we are very pleased to be now serving more than 3.4 million customers with more new customers choosing AIB than any other financial institution in Ireland. And the trust that our customers, both long-standing and new place in us is underpinned by the resilience of our digital offering with level 1 service availability running at 99.99% in 2025 and by the strength of our physical presence with AIB having the largest branch network in Ireland. And that community engagement is key to our relationship with our customers, particularly for the very biggest moments in their financial lives who know that we are digitally trustworthy and we are there in person when it really matters. I'm pleased with the response of our customers to our enhanced savings and investment offering through AIB Life and Goodbody with total AUM now comfortably exceeding EUR 18 billion with plenty of growth in the pipeline. On a stand-alone basis, AIB Life is now showing real traction with AUM reaching EUR 3 billion, which was a 20% increase in 2025. Now as Ireland ages and government policy evolves, we believe there is potential for significant additional growth in savings and investments in '26 and beyond. We remain the bank of choice for new account openings with the group enjoying a market share of 49% of the flow and 40% of the stock of current accounts in 2025. Our Corporate and Business Banking franchise remains exceptionally strong, and we're going to continue to invest in secure and speedy digital enablement over the years ahead as we meet the evolving needs of these critical parts of Ireland's economic success. And of course, we remain the country's leading green bank, standing we will maintain as we grow the share of green lending and broaden and enhance the range of green products and services across the group. Looking now at the first of our strategic priorities, the focus on customers, their expectations and their needs is key to the long-term success of AIB. Through a data-driven approach to customer segmentation, we understand those expectations and needs like never before. And that unrelenting focus on our customers is paying dividends in the form of Net Promoter Scores with all-time highs in 5 of the 6 key customer journeys being recorded in 2025. Meanwhile, service levels in our customer engagement centers remain very strong, and we continue to invest in delivering an easier, more engaging and protective relationship with our customers. And we will use AI extensively to help us deliver that high-quality relationship of real trust. ABBYY, our AI digital assistant, whom we launched in December of 2024, is engaging now with an ever greater number of customers. Covering 66 customer journeys, ABBYY has assisted over 1.3 million customers since her rollout, and the feedback has been very positive, with particular reference being made to the speed and the ease of dealing with our digital assistant. 80% of our customers who call our engagement centers choose to continue dealing with ABBYY. We are continuing to make steady progress on our second strategic priority, greening our business. We're playing an active role in financing the transition to a more sustainable future. We've now deployed almost EUR 23 billion of the EUR 30 billion Climate Action Fund. And we lent an additional EUR 6.3 billion in new green and transition lending in '25, with the greatest contribution coming from retail banking, predominantly in the form of green mortgages, which now account for 62% of all new Republic of Ireland mortgage lending. Across corporate and business banking, we are the leading player in financing sustainable lending to the engines of economic development, while Climate and Infrastructure Capital is continuing to play an important role in funding solar, wind, bioenergy, waste-to-energy assets in Ireland, Britain, the European Union and in North America. The loan book in this division has now expanded to more than EUR 6 billion, and we expect to see further significant growth in '26 and beyond. And notwithstanding our ambition to be a champion of the transition to a greener future, the scale of the opportunity is simply enormous and continues to grow, allowing us to be highly selective in choosing the technologies and the geographies where we are willing to put the group's capital to work. Our third strategic priority speaks to ever greater operational efficiency and resilience, and I am very pleased to report accelerating progress right the way across the organization. We've invested significantly in resilience because it is fundamental to customer trust, and trust is the prerequisite for any credible digital ambition. We're continuing to strengthen, simplify and streamline AIB with a 40% decline in the number of legal entities within the group and ongoing decommissioning of legacy applications and increased digital automation of customer contact. We've invested wisely in AI with Copilot now deployed across the organization and the first wave of internal agentic assistance is now being deployed. We're making great progress in enhancing credit decisioning through nCino, which now handles 2/3 of all new SME lending. Our platforms remain resilient with world-class Level 1 service availability and 0 critical cyber incidents in 2025. And the rollout of push notifications on our app is making a material difference to the quality of our everyday customer engagement. There is so much more to come with our next-generation app set to launch in the summer. And by design, it will be more agile and flexible than any other app previously deployed by us, and it will be capable of rapid and high-frequency enhancements. Allied with the imminent launch of Zippay across the Irish retail banks, our customers are going to enjoy and experience a significant improvement in the quality of their digital interaction with us over the coming months. Now this foundation gives us the right to accelerate. Our new digital platforms can scale confidently because the underlying estate is stable, secure and well governed. The pace of technological change that we're seeing is unprecedented in the history of banking. Now our team has demonstrated clearly and consistently the efficiency, security, resilience and customer experience gains that they are capable of delivering. And given that track record of achievement and the speed of change that is now readily apparent, we believe that we can credibly build the future faster at AIB. Our annual investment in the business has increased from an average of EUR 300 million recent years to EUR 350 million last year and will rise to EUR 400 million this year and beyond. And the bulk of that increase is devoted to strategic projects, which will allow us to continue enhancing our customer experience, our digital agility and the resilience and the durability of our systems. We will build the future faster here and in so doing, continue to earn the trust of our 3.4 million and growing customer base. We are now well embarked on the final year of the strategic cycle. And while we're very focused on delivering on our targets for 2026 and continuing to generate attractive shareholder returns, our minds are inevitably turning to the next strategic cycle, which will bring us to 2030. And as we move through the months ahead, our plans and our targets will take more concrete form and we'll seek Board approval for what comes next in December before we share the full details with our investors and the analyst community. Now it would be premature of me at this stage to outline the set of performance indicators and parameters, which will guide the next phase of AIB's development. However, they will, I believe, be fully reflective of my own 2030 ambitions for this organization. I want AIB to be the best bank in Europe and the most trusted brand in Ireland. Now these may be audacious aspirations, but they're grounded in what we have already achieved together. We have made huge progress in recent years in reshaping and transforming the group in the interest of all our stakeholders. We have the leading customer franchise. We're generating shareholder value, including a RoTE of 25% and return on assets of 1.4%. Our organization is in great shape with 370 basis points of organic capital generation and EUR 2.25 billion return to our shareholders. And I'm very excited about what I know it can and will deliver over the months and years ahead. Now 2025 was a landmark year. We delivered against the commitments we set for ourselves. We performed ahead of expectations, and we did so with positive momentum across the business. However, 2025 was a milestone. It wasn't a destination. We've come a huge way in recent years with a strong capital base, a very clear strategic ambition and a market-leading position. AIB is well positioned for the future, and I remain convinced that our best days still lie ahead as we work relentlessly to build a better, stronger, more resilient AIB in the interests of all those who put their trust in us. Donal? Donal Galvin: Thank you very much, Colin, and good morning, everyone. I'm very happy and pleased to be able to deliver the financial highlights for AIB for 2025. We've delivered a profit after tax of EUR 2.1 billion with a return on tangible equity of 25% and earnings per share of EUR 0.933. Our total income was EUR 4.5 billion, which was down 8% on the year. That's broken down between a net interest income reduction of 9% and net fee and commission income increase of 4%. Our costs were slightly lower than expected at EUR 1.99 billion, which is up 1% on the year, and that gave us a cost/income ratio of 44%, and our FTEs were 3% lower year-to-year. Our gross loans increased 2% or 3% on an underlying basis to EUR 72.3 billion, and that included EUR 14.7 billion of new lending, which was up 2% year-on-year. Our asset quality remains resilient and our ECL coverage remains at 1.6%. We had an ECL charge of EUR 172 million, which represents a 24 basis points cost of risk. And our NPEs finished the year at 2.2% of gross loans, which is the lowest for a number of years in AIB. Our funding position remains exceptionally strong. We have customer deposits of EUR 117.2 billion, and that represents a 7% increase on the year, which is well ahead of our own expectations. Within wholesale markets, we issued AT1, Tier 2, Euro senior and Dollar Senior, leaving us with a very strong funding position. Our capital at the end of the year, our CET1 was 16.2%, well ahead of regulatory requirements, but that incorporates very strong organic capital generation of 370 basis points and very strong performance on RWA optimization initiatives. Our total distributions for the year are EUR 2.25 billion, representing a 105% ratio. EUR 263 million was already paid in November as an interim. We have a EUR 988 million proposed final ordinary cash dividend. And we've announced and already begun to execute a EUR 1 billion on-market buyback. I'll say on the income statement, I don't want to really repeat myself too much. Obviously, income was down 8%, as I previously mentioned. But notwithstanding that fact, we can see earnings per share flat year-on-year. Total cash dividend per share of EUR 0.5858 is up 58%. So really strong performance there, we feel on the returns. Our bank levies and regulatory fees were EUR 114 million in the year, and that includes EUR 94 million for the Irish banking levy. As we look into 2026, we don't expect any material exceptional items and our bank levies and regulatory fees, we currently estimate will be around EUR 140 million. Net interest income of EUR 3.748 billion, down 9%. I'll just try to walk through the moving parts here. There's a 42 basis points benefit from our structural hedge program. Obviously, related to this, a 45 basis points reduction in net interest margin from cash held with central banks. Customer loans and investment securities are down 22 and 19 basis points, again, just reflecting those lower interest rates. And on the liability side, we had a strong benefit from wholesale funding costs of EUR 119 million, and we had an associated cost of EUR 88 million as customers termed out some of their deposits. Our Q4 exit NIM was 2.69%, and it ends the year overall at 2.73%. This is an important slide, I think, for us to show how we have managed our interest rate exposure through the last number of years. Obviously, interest rates going from minus 50% up to 4% and landing down at 2% has meant that we have been -- have had to proactively manage our balance sheet. As we give our guidance for 2026, the assumptions that we make is that we'll have an ECB deposit rate of 2% and that deposit beta will remain at 20% as it was throughout 2025. We're very comfortable with our NII resilience, which we believe we have shown over the last number of years. And what gives me the great confidence going into '26 and beyond is that we have a growing and granular deposit base, which we have seen grow significantly over the last number of years. We see growth in all of our core markets of around 5% per annum, and we very proactively manage our balance sheet. We do this through our structural hedge program. I think last year, in the midyear, I would have referenced a EUR 15 billion increase in our structural hedge in 2025. Already this year, in the last number of days, we have executed an additional EUR 10 billion of structural hedge. The average yield on that was 2.3% and the average life was 5 years. So the impact that has is reducing our NII sensitivity to 100 basis point move or shock from EUR 378 million down to EUR 286 million. Some of the other moving parts with the structural hedge are that we expect to have EUR 6 billion of swaps maturing in '26, EUR 6 billion of swaps maturing in '27. Throughout '24, '25 and even earlier this year, I've talked about wanting to extend the duration, which is now expected to be 5% -- 5 years by the end of 2026. So we expect at the end of '26 to have a received fixed yield of 2.3% on euros and 2.7% on sterling. In addition, as we've talked about before, we have a large quantum of fixed rate mortgages of around EUR 21 billion. They have a yield of 3.1% and a weighted average life of 1.9 years, and that's relevant because we leave them unhedged, really to add a little bit of natural duration to our balance sheet. So I've really tried to summarize the position for year-end. We'll have an average life of 5.1 years on our euro hedge, and that will remain in place over the next number of years. And our received fixed yield is around 2.3%, so at stroke in the money. So looking through that and looking at that, that's what really underpins and gives us the confidence for our NII guidance to be circa EUR 3.8 billion in 2026. Other income was EUR 756 million, and our net fees and commissions were up 4% in the year. I think the main standouts really was in our cards business, which was up 11%, our wealth and insurance business, which was up 7%. And as we've talked about previously, this is a huge area of focus for the organization going forward. We have EUR 18.3 billion of AUM, as Colin would have mentioned, a number of years ago. Obviously, that would have been a much lower number or approximately 0. But obviously, post the acquisition of Goodbody, post the start-up of our joint venture with AIB Life, we feel we have a very strong foundation. So the Goodbody AUM is EUR 15.3 billion, which grew by 7% in the year. The AIB Life AUM is EUR 3 billion, which grew 20% in the year. I think in the coming years, what you should expect to see in this area is AUM growth of 10% per annum and revenue growth of 15% per annum. But that is going to be a massive area of focus for the organization linked to the huge customer numbers that we have, obviously, linked to a lot of the activity we are embarking on with respect to digitalization and personalization. Other income, some of the other line items can always be a little bit more volatile. I try to just update and guide as the year progresses. But overall, for 2026, other income greater than EUR 750 million. Our cost performance was strong in 2025, outturn of EUR 1.99 billion, which is up 1%. A few different moving parts here. Staff costs were down 1%, mainly due to reduction in headcount. G&A expenses up 6%. We're seeing some inflationary impacts there, higher business volume impacts there and also higher OpEx-related investment spend. So not all of our technology spends get capitalized, some also goes through our OpEx, and you will see it here. And our depreciation number is down 3% on the year, as we really tightly manage the execution of our big programs. So overall, that gives us a cost/income ratio of 44%. Like I said, our FTE reduction was down 3%, ending the year with 10,207 employees. And this is a trajectory we expect to maintain in the coming years. We believe that we'll be able to do it on an organic basis, obviously, as we go through the next number of years. Colin mentioned that we were going to increase our investment spend from EUR 300 million to EUR 350 million, up to EUR 400 million now in 2026. And we're going to really look to accelerate our digitization, which will enable faster innovation, scalability, enhanced security and obviously, operational efficiency. As a result of this, you can expect to see our depreciation grow by 3% or 4% per annum, but that is obviously going to be partially offset by ongoing cost-saving initiatives and efficiencies that come from the rollout of these large programs. But for 2026, we expect our cost to increase by 2%. With respect to asset quality, we had an ECL charge of EUR 172 million for the year, which represents a 24 basis points cost of risk. I'll just really simply break it down into 3 different areas. We had a write-back of EUR 52 million from macros, and that's really reflecting the fact that the way we saw the different range of outcomes post Liberation Day, the outturn, particularly in Ireland, ended up being significantly better. We had a EUR 210 million net charge relating to underlying credit performances, which is really just the normal movement of credit between stages. And lastly, with our PMA, we had a small charge of EUR 14 million in the year, leading us overall to that charge of EUR 172 million. So we have an ECL stock of EUR 1.1 billion and an ECL cover rate of 1.6%. We have PMA of EUR 254 million represents around 26% of our ECL stock. So notwithstanding all of the volatility that remains in the world at the moment, we feel we are very, very conservatively provided. So for 2026, we expect a cost of risk within the range of 20 to 30 basis points, and I look to narrow that as the year progresses. Main movements on the balance sheet side. Obviously, loans increased 2%, liabilities increased 7%. That obviously gives us an excess liquidity position. So what you're seeing here is an increase in the amount of investments we make in the treasury world. We bought an additional EUR 2.4 billion worth of bonds in the sovereign and supranational space in the Eurozone. And for 2026, I think you can expect to see that grow by another EUR 4 billion or EUR 5 billion. Loans to banks was EUR 48 billion, which included EUR 36 billion at the CBI and GBP 3.8 billion with the Bank of England. Overall, our loans increased by 3% on an underlying basis or 2% on a reported basis. Big FX impacts in the year, slight impact from some disposals in the year. But overall, I think we are more confident now than ever that we will be able to reach and achieve our 5% asset growth targets for '26 and '27. What we saw in 2025, I would say, was our wholesale businesses performed very strongly. Property market, still a little bit muted, recovering from the interest rate changes and valuation shock. Our personal consumer business performed very, very strong. And on our mortgage business, we saw growth overall in the year. As I look to 2026, I think what you can expect to see is growth in all of these areas, just slightly more. So our funding and capital position remains very strong. LDR of 61%, LCR of 204% and a net stable funding ratio of 163%. Our MREL ratio was 35.2% in excess of our requirements. So very, very strong foundation there. But I think the big story on the liability side or the balance sheet side for 2025 was really deposits and the deposit growth. So notwithstanding the fact that we had a movement of around EUR 2.4 billion of our customers moving to term, we actually had an increase overall in our current account and demand deposits. So 7% growth was an exceptionally strong outturn, though we do expect that to temper somewhat in 2026, more in line with modified domestic demand. There's no other reason there, no competitive environments that we're necessarily concerned about. It's just we feel that 2025 was maybe an unusually large growth area, but that remains to be seen, and we will obviously be able to watch that quarter-by-quarter. Capital generation for 2025 in AIB was exceptionally strong. We started the year at 15.1%. And then early in Q1, we had a Basel IV impact of 120 basis points. We had organic capital generation of 370 basis points from our business activity. We have a reduction of 390 basis points for distributions, as we've talked about. We engaged with the government and we canceled the warrants that they were granted in 2017 around the time of the IPO, and that had a cost of 70 basis points. Given our strong business performance, we had really strong DTA utilization benefit of 40 basis points. with some other equity movements of 20 basis points cost, which is really just AT1 coupons. And then in other RWA movements, we have a number of RWA optimization items where we had a strong outperformance. That includes execution of a mortgage SRT in quarter 4, the sale of our 49% shareholding in AIB Merchant Services and also the implementation of a new IRB model for our Climate and Infrastructure Capital business, which also had a positive benefit. That doesn't even incorporate the EUR 1.2 billion directed buyback that we did with the government in the first half of the year where we bought back EUR 1.2 billion of stock at a price of EUR 6.25 because that was obviously deducted from the prior year's returns. So the outturn of 16.2% is very strong, over 6% of capital generated in the year, which is really, really strong, and we're very happy with that, obviously, comfortably above all of our buffers. With respect to how we think about capital, same as prior years, come in on the 1st of January and drive a stronger business performance as is possible. So obviously, 370 basis points was the outturn for 2025, but I think you should be thinking even for the medium term, greater than 320 basis points on a sustainable basis and our deferred DTA benefit of circa 35 basis points steady state going forward. We're going to invest in our business in 2 ways. Number one, increase our investment spend and change in technology up to EUR 400 million. And we're obviously going to utilize more of our capital as we grow our balance sheet on a 5% annualized basis. We will continue to optimize our balance sheet wherever we can in whichever format we can. So we will do this through SRTs, where we've already issued 2 transactions, 2 different asset types. Obviously, the corporate transaction was done in '24. The mortgage -- AIB mortgage transaction was done in '25. And in 2026, we will look to execute an SRT transaction within our project finance or Climate and infrastructure capital portfolio. IRB model adoption and development is an ongoing theme. We do expect to have 80% of our balance sheet on IRB models by 2028. I've mentioned the benefit from the project finance model. 2026, we have 2 different portfolios, which we're hoping to review and conclude that being EBS mortgages and commercial real estate, but it's a little bit too early to know what the outturns there are going to be. And lastly, we look to deliver market-leading distributions. We've paid out over 100% in 2024 and 2025. We've paid out EUR 6.5 billion in distributions since 2023. For our ordinary dividend policy, we look to pay a sustainable dividend within a 40% to 60% payout range. Our ordinary dividend will be paid in cash. Our interim dividend will be paid up at 1/3 of the prior year's ordinary distribution -- ordinary dividend per share. With respect to additional distributions, we have capacity for above policy payouts, subject to annual review and necessary approvals. We have optionality to utilize share buybacks, special dividends or a combination of both as we look to move towards our medium-term target of greater than 14%. So wrapping it all up, our 2025 performance, we feel was strong, already achieved or outperformed our 2026 targets. 2026 guidance will be interest income circa EUR 3.8 billion, other income greater than EUR 750 million. Costs are expected to grow by 2%. We expect a cost of risk between 20 and 30 basis points. Loans will grow by 5%, and we expect deposits to grow by 2% or 3% and we will deliver a return on tangible equity greater than 20%. So for 2026 and beyond, we expect to deliver a strong performance in the final year of our strategy. Moving into the next strategic cycle, we have a lot of positive momentum in our business. Sustainable business growth and returns, strong organic capital generation, increased investment in our business and market-leading shareholder distributions. Our medium-term targets continue to guide the business and will be refreshed for our next strategic cycle this time next year. Thank you all very much. Colin Hunt: Thank you very much indeed, Donal. And now we're going to take some time for questions, and we're going to the phone lines. Colin Hunt: The first question comes from Denis McGoldrick in Goodbody. Denis McGoldrick: Just 2, please, if I may. So firstly, you're guiding to circa EUR 3.8 billion NII for 2026. Can you talk us through the moving parts within that year-on-year, along with any color you could give on NII beyond this year, please? And then secondly, you delivered 7% deposit growth in 2025. But could you talk us through the mix within that between interest and noninterest-bearing and how you see that evolving this year? Donal Galvin: Thanks, Denis. I'll take that one. Look, on the liability side, I think it's fair to say that the savings ratio in Ireland is a little bit higher than what people would have imagined. And I think the impact on the Irish banking system was pretty consistent. Notwithstanding that fact, we do think that the deposit market will normalize in 2026, which is why we think that the increase will be 2% to 3%. So it seems like a big drop, but I would argue that that's more due to 2025 outperformance, but we will be able to keep an eye on this on a quarterly basis. I think we don't expect any particular change in mix. Our deposit beta in 2025 was around 20% 2026. We expect to see something similar. So I would just use the same mix as you go forward. And overall, with NII, really nothing new here. I think -- I mean, taking the year-end position of 2025, believing and putting that 5% growth over the coming years, I think, is how you will be able to get closer to the numbers I have. Indeed, as I look at -- if I look at consensus for 2026, '27, '28, I've obviously given you '26 numbers, which are slightly better than consensus. '27 is in and around where we see things. I think 2028 consensus seems a little bit light on loans and obviously, on associated interest income. But for all of those years, '27, '28 will be greater than 20% return on tangible equity as well. I can certainly commit to that. Colin Hunt: Thank you very much indeed, Donal. We're now going to Diarmaid Sheridan at Davy. Diarmaid Sheridan: Two, if I may, please. Just firstly, on the capital and distributions. Could I just invite you to maybe talk to us about when you expect to get to your greater than 14% target, please? And I guess, Donal, you provided some of the outlining measures. But just given how strong capital generation is, I mean, unless you're significantly exceeding your distributions that you've exceeded -- that you've delivered in the last couple of years, it's kind of hard to see how it gets to that level without something maybe from an inorganic or maybe is there something we're missing? The second question just on new lending, just in terms of what the key drivers to get from to bridge from that kind of 2% to 5% growth. I appreciate underlying 3% in '25. And specifically, just on the mortgage market, I get the point you make around the direct channel. Clearly, the broker channel has become a much more significant part. I just challenge you as to whether it's sensible to remain out of that channel? Or is that an area that you're comfortable not to play a significant role in. Colin Hunt: Well, first of all, we don't remain out of the mortgage channel out of the intermediary channel. We have a presence there through Haven. And we've had a big prioritization of green mortgages in the past number of years. And in the final quarter of last year, we made some adjustments to our non-Green mortgage rates. We haven't really seen a huge increase in the size of the intermediary channel in the past number of years. But we do prioritize our direct relationship with our customers. That's what we want to maintain that direct relationship with our customers. But certainly, on foot of the quality of our digital engagement, quality of our in-branch advisory service, the length and breadth of the country and given those price adjustments we made for non-green rates in the closing quarter of last year, what we're seeing coming through now in terms of pipeline is very, very encouraging about the volume of mortgage growth we're reporting in 2026. Donal Galvin: Diarmaid, yes, I think with respect to the capital question, the -- moving towards our medium-term target of 14% being ambition for quite a period of time. That obviously as a baseline represents the amount of capital the organization thinks that it needs to run the business successfully, which is why we are focused on trying to get to that as soon as we possibly can. I would say 2025 was more around a significant outperformance on the capital front than any reluctance to return capital. I mean, and I'd say every of the big initiatives that we worked on, we came out on the right side of that, which isn't always the case. But generating 6% of CET1 in any particular year is a particularly large amount. But look, that's what we worked hard to do. And on any opportunity where we get to look at our balance sheet or any of our activities and make things more efficient, we are going to do that. Even if it drags me or pulls me further higher away from 14%, we will do that, okay? So we executed a mortgage SRT in quarter 4, cost me money, generated 25 basis points of CET1, but it was an implied cost of equity of 3% or 4%, okay? So we will continue to look to do the right things to optimize our capital. And on an annual basis, that's what puts us in a stronger position as possible to move towards that 14%, give our stakeholders, the regulator, the Board, the comfort and confidence for us to maintain payouts similar to the last number of years. Colin Hunt: Thanks, Diarmaid. Now we're going to Sheel Shah at JPMorgan. Good morning. Sheel Shah: Two questions from my side, please. Firstly, on the distributions. So the dividend payout ratio looks to be at the top end of your target range. Can I ask how you're thinking about the split of distributions going forward into '26 and beyond. Would you expect EPS to, for example, grow considering that we're already at the top of the payout ratio range and maybe attributable profits may be taking a bit of a step down next year? And then secondly, can I ask about the investment spend and maybe sort of leaning towards the mobile app and your data insights. Could I ask how much sense do you have of the number of AIB customers that can be potential wealth customers. And how much leakage do you have in terms of AIB customers that maybe go to other providers for services? I'm wondering how much of this you can capture within the group going forward? Colin Hunt: I'll take the second question and then Donal can do the distributions. Do you want to go first, Donal? Donal Galvin: Yes. Look, with respect to the distributions, I mean, from the half year, obviously, we knew the position that we were going to be in, by and large, financially speaking. So I mean, the way we try to look at our distributions, we'll talk to investors, we'll engage with the regulator and then we'll have our own particular thoughts on what the right mix is. This is the first year for us, obviously, being out of state ownership. We announced a new dividend policy, obviously, last year as well, and we were very focused on ensuring that we delivered cleanly, clearly and consistently against that. . So then the makeup with respect to the buyback and the cash dividend, it was -- I mean, a number of factors we had to take into account, one of them being market liquidity as well. We do a buyback that was particularly larger, it might even be difficult to execute within a particular year as well. So that's something that goes into our thoughts. We came out for the first time last year, and we said we'll pay a cash dividend within the range of 40% to 60%. And we decided to pay out at the top end of that range for 2025. Obviously, that's a strong indication of our desire to deliver strong returns to our shareholders. But look, on a go-forward basis, the most important thing, having a conversation around distributions, it goes back to how we think about capital and how we manage ourselves. When we come in on the 1st of January, work hard, deliver on the plans, then you'll generate strong returns. Like without doing that, you're not even having a conversation. So that really is our focus, and then we look and analyze the best makeup of returns in the last quarter of the year. Colin Hunt: Thanks very much indeed. In relation to the app, yes, we have 3.4 million customers, 85% of our customers are digitally active. The app is in the final stages of development. In fact, we have a pilot out there, which is getting very, very positive reaction at the moment, and we look forward to launching it in the summer months. And it's going to be a significant change to what we currently offer. It's going to be far, far more intuitive, far, far easier to navigate, far, far better functionality, and it will encompass all aspects of your relationship with AIB Group. The simple truth is that we really didn't have savings and investment products in the wealth space until we acquired Goodbody and until we established AIB Life. And we've seen our AUM now grow to the point of 18.3%. There's significant further gains to be made there. I've absolutely no doubt about it over the next number of years, and the app is going to make a difference in that regard as well. But that isn't the sole reason that we're increasing our investment spend. What we're looking at is a progressive transformation of our architecture. We've built a data warehouse in the cloud, world-class. We are investing in a new credit life cycle management system. We are building a unified mortgage platform, all of which will allow us to respond to our customers' needs in a far, far more agile, rapid and secure way because ultimately, this is about trust. We're going to turn now to Aman at Barclays. Good morning. Aman Rakkar: I wanted to just come back on capital, please. There's quite a few moving parts in terms of capital generation going forward. In particular, the SRTs and potential headwinds. So I think previously, you've kind of called out CRE, the kind of give back of the CRE component within Basel as a potential headwind. I don't know if you could kind of give us a kind of updated take on whether you still think that is the case. And if you could, in any way, quantify that, that would be really, really helpful. And I just wanted to just ask a bit more about SRTs and around the quantum -- like is there a limit on the amount of SRTs aggregate or cumulative SRTs that you'd be looking to have out at any one point in time? I just want to get a sense of the kind of ongoing run rate of SRTs beyond the kind of existing stock when we're thinking about building out capital from here? Donal Galvin: Yes. Look, with respect to commercial real estate, huge beneficiary from Basel IV effective rough numbers, the risk weightings went from around 100% down to 80%. I don't think that I'm going to have line of sight on that outturn until probably the end of 2026. And I don't actually expect an inspection until 2027. But I'm naturally just going to assume that we'll be given up some of that, but I can't quantify that at the moment. With respect to SRTs, the way we think about those and the way I've talked about this from the start, I want to have a program set up on multiple asset classes executed over multiple years. The reason I want to do this, it's not necessarily for capital generation, okay? We have plenty of capital. And obviously, with every SRT, I'm moving away from 14%, but it's really, for me, an RWA optimization tool and a risk management tool. It helps us at entity level or a business level manage returns. So corporate transaction done successfully in '24, AIB mortgages in '25. Similar sizes, like we look to target 20, 25 basis points of CET1 per transaction. We don't look to be very aggressive and do massive jumbo deals, okay, because it's -- that is not the exercise that we're trying to execute. 2026, we look at our Climate & Infrastructure business. It has a newly approved project finance model, a slotting approach. I'm going to imagine it will be -- there will be less inefficiencies. So the SRT may be less effective than others that we've done. It's just I want to have that asset class in an SRT program, which will help us risk manage it going forward. Beyond that, I will look at commercial real estate. I need to understand all of the data that we're getting from our IRB analysis, and then that will help me figure out how we want to target that market. That's more than likely going to be 2027. And then EBS mortgages as well is another area and another portfolio that I want to look at. I need to wait for the EBS to complete and conclude its own IRB on-site inspection, again, so we can see what the underlying data is telling us. I think they're the main asset classes that I want to get up and running. I want to have them up and running. They will endure. They will remain in perpetuity, certainly as long as they're allowed. I think the question sometimes comes up if different firms maybe max out, let's say, quantums, et cetera, then there's kind of questions from the regulator around associated counterparty risk. But we kind of want to do regular smaller transactions, very diverse investor base over the coming years. But each transaction look to save 20 to 25 basis points of CET1. Each transaction probably going to cost EUR 10 million, EUR 15 million. Cost of equity to date has been very, very attractive for us, but they are the kind of metrics you should be thinking about. Colin Hunt: Thanks very much indeed. And now we're turning to Guy Stebbings at BNP. Good morning, Guy. Guy Stebbings: I think most of my questions are covered. But just one bigger pitch question for Colin. You talked about wanting to be the best bank in Europe in sort of longer term. Could be seen sort of quite an ambitious statement. I guess best bank means different things to different people. So just interested in terms of what sort of metrics you would be thinking about when benchmarking this as such. Colin Hunt: Yes, it's an interesting question and one that was predicted to be landed on top of me today. Ultimately, this is -- we won't decide if we're the best bank in Europe. It will be our stakeholders that do. So whatever -- how do our customers regard us? How do our shareholders regard us. How do our employees regard us and of course, very importantly, how do our regulators look at us. And so it will be a compendium of their views that will determine if we will be a judge to be the best bank in Europe. I know what the team here are capable of. I know the scale of the ambition that we have, and I am very confident that we are going to do our utmost to be ranked amongst all those stakeholder groups as the best bank in Europe. And we'll obviously be updating you in 12 months' time when we have the actual parameters and metrics around how we are going to evaluate that. But it will be in the eyes of the various important stakeholder groups that we deal with every single day. Now turning to Rob Noble, Deutsche Bank. Robert Noble: Two for me, please. So the Climate Capital segment is the one that's growing fastest and presumably will grow fastest going forward as well. There's quite a pickup in Stage 3 loans and the cost of risk has stepped up. So what's going on in this division? And what sort of returns do you see that part of the business generating compared to the group as it scales up. And then just a follow-up on all the capital questions. At the bottom line, what sort of RWA growth you're expecting in 2026 pre the unknown IRB changes? And then do those IRB changes, do they affect your Pillar 2 requirement at all? And could that potentially lead you to lower the 14% core Tier 1 target? Donal Galvin: Rob, thanks for the questions. I'll take that. With respect to Pillar 2, let's wait and see. Overall, we have very detailed programs in place, working with the regulator where we're trying to close out various items on the to-do list. We've been very, very, I would say, efficient in closing those down and over the last number of years have seen a slow, steady improvement in our add-ons, but we are very ambitious in this area as obviously, our add-ons are one of the key ingredients to our medium-term targets. With respect to climate capital, a few different things there. So I mentioned that we have a new slotting model, which is approved, which is really what is used for the bulk of the activities in that area. We've begun to roll that out in quarter 3 and quarter 4. But looking through it all, if it had a -- if that business had a risk weighting density of around 90% pre that model, post the model, it's around 75%, okay? So that's one of the key inputs that you need for your returns analysis. The margins on the business are pretty consistent in different jurisdictions. And I would probably think about that being like a 2.2% margin business or certainly, that's what we model for when we're looking at the business and its growth and its trajectory. Costs are very low, obviously, given it's a very small professional wholesale team. And then it comes down to the cost of risk. For 2025, that division stand-alone had a very high cost of risk of around 110 basis points. Within that, there was around EUR 0.5 billion, EUR 500 million worth of fiber type transactions, all originated around 2019, 2020. And that's to do with the rollout of fiber throughout Europe, okay? Ireland, U.K., France, Germany, Italy, et cetera. So all of those deals are now -- or a lot of them, some are performing exceptionally well, such as in Ireland. U.K., not so much, delays from COVID, et cetera, et cetera, they are coming through now. So we took a few PMAs, quite an amount of PMAs, really just to ensure that in all eventualities, we were really well provided for. So you are seeing refis and equity recaps happening in that business at the moment. But if you took out that fiber portfolio, the cost of risk for that book was probably 5 or 6 basis points. Certainly for our planning assumptions, we use a cost of risk of less than 20 basis points. So if you put all that together, you can see the growth trajectory, and you can see that this is an accretive business for AIB and very heavily supported and strategically important for us. Colin Hunt: Thank you. Now I go to RBC. Good morning, Pablo. Unknown Analyst: I wanted to ask on fee income first. So you're guiding to AUM CAGR of 10% to 2028 with related revenue growth above that at 15% per year. So could you just please provide a bit more detail on what will drive that revenue growth going forward besides the demographic trends that you have already mentioned and perhaps also what the required investment -- additional investments are in that part of the business going forward? My second question was more on your deposit growth. I know that you've mentioned you expect that deceleration to -- from the 7% that you saw in 2025 to be more in line with the evolution of MDD. And I believe you also mentioned that you didn't necessarily expect a material headwind from changes in the competitive environment in Ireland. So I just wanted to check what you have been seeing in the last months in this year as well. And if you expect any material disruption given potential new entrants into the market, the ongoing transaction in Ireland, et cetera? Donal Galvin: Yes. Look, on the wealth, the way we're set up, and I'll just try to explain the guidance we gave you a little bit there. We imagine 10% AUM growth. I'd like to imagine that, that is on the conservative side. We have 2 businesses, high net worth within Goodbodys and then more mass market through AIB Life. Goodbody is obviously -- I mean, if we're able to acquire any smaller roll-up businesses in that space, we're really aggressively looking to pursue that avenue. And that will be, I would say, in Ireland, we would say EUR 1 million up of net worth. The AIB Life business has performed really, really well. It only started up a number of years ago. That is now fully functioning within the AIB construct. So it's a joint venture with Great-West Lifeco, where there's 140 advisers operating throughout the country and working through AIB branches with AIB colleagues. I think the statistics were maybe 40,000 face-to-face meetings or 35,000 face-to-face meetings last year with our customers. And we do expect this to just grow as we continue to roll out new products. And obviously, as the population matures and also educates a bit more on wealth products. So that's what gives us the confidence in this area, massive area of focus for us, not just with respect to customer acquisition, but also connectivity with our mobile presence and mobile banking apps as well, making that as easy as we possibly can for customers. On deposits, it's -- look, it's where -- I'm trying to be as open and clear about this as possible. And I will admit over the last number of years, I have underestimated liability growth for the organization. We're certainly very comfortable with our position in the market, okay? 49%, 50% of all new accounts being opened, and that's a huge area of focus for us, 40% of the stock. So we have no concerns necessarily over competitive threats in this area. It's just we felt that at some stage, a normal savings ratio deposit impact is going to come to pass. I was expecting a slightly different outturn in 2025. Obviously, I was wrong, and it was an outperformance. So let's see how it turns out in 2026. Is it conservative? I mean, who knows. But certainly, that's what our econometric models would show us. And indeed, if it's wrong, I'm sure we'll know it at the next quarterly Central Bank of Ireland report in any case. Colin Hunt: Now we're past the top of the hour, and we're going to draw matters to a close there. Thank you so much indeed for your attendance and for your questions this morning. If you have any other questions or any points of clarification, please do reach out to Niamh, to Siobhain, to John and Bernie on the IR team, and we look forward to engaging with you and indeed our investors face-to-face as the roadshow commences later on today. Thank you so much indeed.
Operator: Thank you for standing by, and welcome to the Quantum-Si Fourth Quarter and Year-End 2025 Earnings Call. [Operator Instructions] As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Lindsay Risa (sic) [ Risa Lindsay ]. Please go ahead. Risa Lindsay: Good afternoon, everyone, and thank you for joining us. Earlier today, Quantum-Si released financial results for the fourth quarter and full year ended December 31, 2025. A copy of the press release is available on the company's website. Joining me today are Jeff Hawkins, our President and Chief Executive Officer; as well as Jeff Keyes, our Chief Financial Officer. Before we begin, I would like to remind you that management will be making certain forward-looking statements within the meaning of the federal securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated. Additional information regarding these risks and uncertainties appears in the section entitled Forward-Looking Statements of our press release. For a more complete list and description of risk factors, please see the company's filings made with the Securities and Exchange Commission. This conference call contains time-sensitive information that is accurate only as of the live broadcast date today, March 3, 2026. Except as required by law, the company disclaims any intention or obligation to update or revise any forward-looking statements. During this call, we will also be referring to certain financial measures that are not prepared in accordance with U.S. generally accepted accounting principles or GAAP. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is included in the press release filed earlier today. With that, let me turn the call over to Jeff Hawkins. Jeffrey Hawkins: Good afternoon, and thank you for joining us. On today's call, we will provide a business update and review our operating results for the fourth quarter and full year of 2025 and provide an outlook for 2026. After that, we will open the call for questions. Before diving into specific updates, I want to first frame at a high level how we are thinking about 2026. We expect that 2026 will be a transition year with revenue primarily driven by consumable utilization from our installed base and some new placements, very modest new capital sales and a laser focus on Proteus development and preparing the market for a strong commercial ramp in 2027 and beyond. As a reminder, our 3 corporate priorities for 2025 are as follows: to accelerate commercial adoption, to deliver on our innovation road map and to preserve our financial strength. Our first corporate priority was to accelerate commercial adoption. Our revenue for the fourth quarter was $451,000 as top line results continued to be impacted by the capital sales headwinds in the market. As we look to 2026, we believe that our placement program will continue to allow us to engage with new customers and capture consumable revenue, but that capital sales of our first-generation Platinum Pro instrument will be very limited, given the deliberate focus on market preparation for the Proteus launch at the end of 2026. We will provide more color on this topic throughout the call. As a reminder, during the second quarter of 2025, we announced the launch of an expanded set of instrument acquisition options that allow customers to have our instrument in their lab and purchase and run consumables without having to find the capital dollars to acquire the instrument upfront. By all measures, this program has been a success, and we view it as a key market development program to continue with during 2026 as we build momentum into the Proteus launch. Since launching the program, we have secured 17 new customers spanning academic labs, pharma and biotech. It has allowed us to access key opinion leaders in some of our direct markets that we had not had access to prior to this program. We view these labs as strong long-term prospects for Proteus, and we believe that being able to engage with them now and have their laboratory staff get hands-on experience with our technology will improve the prospects of them adopting Proteus once launched. In addition to capturing consumable revenue from these 17 customers, we are also building a strong publication pipeline that will help to further demonstrate the value of our technology across a range of applications. Turning now to scientific affairs. As we have previously shared, developing a publication pipeline takes focus and effort over an extended period of time. During 2025, we had 5 manuscripts submitted for publication and built a strong pipeline of additional studies and manuscripts for future publication. The time we invested in this area in 2025 continues to yield results, and we have already seen 3 new manuscripts released via publication or preprints in the first 2 months of 2026. More important than the number of new manuscripts is the range of applications we are beginning to see emerge. One of the papers from Dr. Lowe of Stanford University showcased the potential of our technology to be applied in the field of clinical proteomics to address complex conditions like hemoglobinopathies that are not easily resolved using current technologies. The second example of a new application of our technology was captured in a manuscript from the researchers at the U.S. Naval Research Laboratory. They described a modified workflow that enabled biological sample to result in under 24 hours for rapid pathogen and toxin detection, an area that is underserved by existing technologies. We believe that these papers and others in the pipeline will continue to demonstrate that the potential opportunity for our technology extends well beyond the basic research markets that we operate in today. We believe that this is important since these new applications move us towards customers who typically have high consumable utilization rates and repeat ordering patterns. Beyond these initiatives, we continue to monitor and evaluate several partnership opportunities that may further accelerate certain components of our development activities spanning from new customer applications to sample preparation and enrichment and applications of artificial intelligence tools that could extract deeper insights from the protein sequencing data our system generates. Novel enrichment technologies for very low abundance, high-value biomarker analysis is a key area of interest for us, and we are currently exploring some promising partnership opportunities in this space. As I stated earlier, our focus in 2026 is on the development of the market for Proteus, which we expect to launch at the end of this year. This started in earnest at our October 2025 Investor and Analyst Day, where we showed data demonstrating that Proteus is surpassing our first-generation technology across all key performance metrics. While we indicated during the event that sharing the early Proteus data would likely impact Platinum Pro sales, we believed that sharing this data would allow us to more effectively engage with potential customers and channel partners about budgeting for Proteus well in advance of its launch. Based on customer and channel partner feedback to date and to continue to advance the Proteus prelaunch discussions, we decided to pull forward the announcement of our list price from the second quarter of 2026 to today. Accordingly, we announced that the list price for Proteus will be $425,000. We believe this list price strikes the appropriate balance between capturing the premium value of Proteus and the expected launch capabilities while also making the platform more accessible to a larger number of potential customers than existing technologies. Our second priority was to deliver on our innovation road map. 2025 was a successful year across all of our development programs. We launched our version 4 sequencing kit and an expanded set of 24 barcodes during the third quarter of 2025, our version 3 library prep kit in the fourth quarter of 2025, and most importantly, demonstrated sequencing on a prototype Proteus system, which exceeded our current system across all performance metrics at our November 2025 Investor and Analyst Day. We also shared our progress and plans for expanded proteome coverage and PTM analysis capabilities as well as the feasibility of a controlled cleavage chemistry, a critical piece of core technology that ensures we have a clear, executable path to our long-term goal of enabling de novo protein sequencing at scale. As we look to 2026, our full focus is on Proteus development. I am pleased to report our instrument development efforts remain on track. Our prototype systems continue to perform well and are fully deployed within our internal R&D efforts. We have also received our first fully integrated Proteus instruments and are working with our partners to continue to manufacture and deliver additional instruments to support the scale-up of our internal development work. Next, I want to provide an update on our efforts to improve proteome coverage, which spans 2 key areas: one, expanding the number and frequency at which we detect individual amino acids and two, the sequencing read length we achieved. I would like to take a few minutes to touch on both areas. First, during our November 2025 Investor and Analyst Day, we shared details about our proprietary amino acid recognizer development program. Specifically, we shared about how we had recently seen a significant improvement in our performance of developing new amino acid recognizers, through a combination of applying state-of-the-art artificial intelligence tools trained on our proprietary data and by scaling up the throughput of our candidate screening and selection process. At the November 2025 event, we stated that we believe that we would be able to launch Proteus with detection of 18 amino acids and would further demonstrate detection of all 20 amino acids in 2026. I am pleased to report that we are progressing ahead of expectations on both goals and expect to provide a more quantitative update on this topic in the near future. The second component to proteome coverage is sequencing read length. Prior to sequencing, customers prepare their protein sample using our library prep kit. The library prep process digests the proteins into smaller pieces called peptides and then attaches a linker that allows the peptides to bind to the nano-wells on our consumable. Based on the method of digestion our library prep kit deploys, the average length of the peptides generated is approximately 18 to 20 amino acids. As we shared at our November 2025 event, the early data on Proteus indicated that the average sequencing read length on Proteus was superior to our existing platform. This means that the number of amino acids we can sequence per peptide was more than we can with platinum. A longer sequencing read length is important as we look to unlock certain high-value applications for customers like deep PTM analysis and profiling. I'm pleased to report that we are continuing to observe longer sequencing on Proteus, and based on continued promising results, we have dedicated some members of our R&D team to focus on maximizing sequencing read length. We look forward to providing more quantitative updates on this area in the months ahead. Finally, I want to take a moment to review our progress and forward plans with library prep. We launched our version 3 library prep kit during the fourth quarter of 2025. The version 3 kit enables customers to sequence samples with as little as 1 to 2 nanograms of protein. Overall, the version 3 kit delivered a more than 100-fold reduction in input required over our prior library prep kit. As part of that development effort, the R&D team identified some potential avenues to explore for even further reduction in input requirements. We have a small team working on technical feasibility now, and we'll have more updates to provide on our next earnings call. Our third priority was to preserve our financial strength. We believe that the data will continue to demonstrate that Proteus is not only a new architecture with greater throughput and automation, but also a significant leap forward in terms of sequencing performance and application breadth. We also believe that Proteus is well positioned to be the long-term driver of commercial adoption, revenue growth and our path to profitability. We are fortunate to have a strong balance sheet that allows us to execute on this strategic plan with a focus on long-term value creation but also acknowledge that the Proteus focus in 2026 will impact top line results. We are committed to continuing to operate with a high level of fiscal discipline while ensuring the core strategic initiatives are appropriately funded to deliver on time and with the capabilities customers are asking for. I will now turn the call over to Jeff to review our financial results. Jeffry Keyes: Thanks, Jeff. I'll now walk through our operating results for the fourth quarter and full year 2025 and then provide our outlook for 2026. Revenue in the fourth quarter of 2025 was $451,000, consisting of revenue from our Platinum line of instruments, consumable kits and related services. Gross profit was $122,000, resulting in a gross margin of 27%. Gross margin in the quarter was primarily impacted by revenue mix with a higher proportion of consumable revenue to hardware as well as certain inventory adjustments recorded during the period. For the full year 2025, revenue was $2.4 million, gross profit was $1.2 million and gross margin was 47%. Full year gross margin benefited from a higher mix of instrument sales and a lower overall impact from inventory adjustments compared to the fourth quarter. As Jeff stated earlier, we have been impacted by capital headwinds throughout 2025, first, starting with delays in NIH funding and concern over the overall NIH budget and indirect reimbursement rates as well as general uncertainty around tariffs and putting customer capital budgets in limbo as they look to prioritize what they spend capital dollars on in an uncertain environment. Turning to expenses. GAAP total operating expenses for the fourth quarter of 2025 were $21.2 million compared to $31.3 million in the fourth quarter of 2024. Adjusted operating expenses were $18.3 million compared to $26.7 million in the prior year quarter. For the full year 2025, GAAP total operating expenses were $117.3 million compared to $110.2 million in 2024, while adjusted operating expenses were $86.3 million, down from $99 million in the prior year. The year-over-year reduction in adjusted operating expenses reflects continued cost discipline, more focused R&D activities and targeted resource allocation towards advancing the Proteus platform. Included in full year GAAP operating expenses were charges of approximately $18.7 million, primarily related to the accounting adjustment of a net termination payment and associated asset write-off from a leased facility in New Haven, Connecticut, as well as settlement and preliminary settlement of certain legacy litigation matters. Dividend and interest income was $2.2 million in the fourth quarter of 2025, consistent with the prior year quarter and $9.7 million for the full year of 2025 compared to $11.4 million in 2024. The year-over-year decrease for the full year reflects lower interest rates and changes in invested balances. As of December 31, 2025, we had $215.8 million in cash, cash equivalents and investment in marketable securities. Turning to our outlook for 2026. We are anticipating total revenue to be approximately $1 million with adjusted operating expenses of $98 million or less and total cash usage of $93 million or less. We view 2026 as a deliberate transition year for the company as we prepare for the anticipated launch of Proteus at the end of 2026, we are making intentional choices that prioritize long-term platform adoption over near-term revenue maximization. This includes embedding upgrade pass into Platinum Pro units, which has a near-term revenue impact as well as impacts of customer delayed purchases as they plan for Proteus as we continue to educate and prepare the market about the leapfrog capabilities of our next platform. From an operating expense standpoint, our guidance reflects the activities required to complete the development in support of the successful commercial launch of Proteus by the end of the year, while continuing to manage costs with discipline. Our expected cash usage also includes modest inventory build and commercial readiness efforts ahead of the launch. With $215.8 million in cash and investments at year-end, we believe we are well positioned to execute on our strategy and support operations into the second quarter of 2028. As we look past 2026, I will remind you that we have built our operating expense structure that leverages key external partners for development-related activities as we complete these activities, including launching Proteus, we have the ability to reclaim this operating expense spend to augment our cash runway or strategically redeploy some to other activities such as commercialization activities. I will reiterate what Jeff said on how we're thinking about the business in 2026 and as we move forward. Again, 2026 reflects a transition year with intentional trade-offs. We're expanding our installed base in a capital-efficient way, maintaining customer engagement and data generation and positioning the company for the Proteus launch rather than optimizing for near-term instrument revenue. Importantly, we are executing the strategy from a position of financial strength. We have the flexibility to fund development, commercial readiness and ongoing operations without being forced into near-term capital decisions. Finally, management and the Board remain deeply aligned with shareholders. Insider ownership remains very meaningful and recent Form 4 activity reflects routine tax-related mechanics associated with equity compensation vesting with no management team members selling shares outside of planned mandated selling for required tax withholdings. Overall, we believe we are making the right trade-offs, prioritizing long-term platform value over short-term optics and positioning Quantum-Si for what we believe will be a highly meaningful next phase of growth. With that, we're happy to take your questions. Operator: Certainly. And our first question for today comes from the line of Scott Henry from Alliance Global Partners. Scott Henry: Just a couple of questions. First, what are you seeing as far as consumable trends, as far as the trends within the installed base? Jeffrey Hawkins: Yes, Scott. So we're continuing to see customers purchase at a consistent rate. As we said in the past, the academic customers will sometimes purchase more episodically, buy consumables, complete a set of experiments, then publish data before buying again. Other segments of the market will have a more consistent order pattern. But if you think about -- maybe one way to think about it is the guidance we gave for revenue this year, we're expecting very modest CapEx. But what is baked into that guidance is we're expecting a more than 25% increase in the number of consumable kits that are being run by our customers. So we are seeing that utilization improve. And we think -- what we're learning and how to do that and how to really drive that, we think learning that now and getting that really well understood process will be obviously very important as we get to Proteus and look to drive the utilization of that system as well. Scott Henry: Okay. So if I'm interpreting that correct, for 2026, in anticipation of the Proteus launch, we should really factor in very few placements with almost all the revenue coming from consumables and service revenue? Jeffrey Hawkins: Yes, I think that's correct. A lot of the revenue obviously coming from consumables or the services revenue. In terms of the capital equipment side, maybe just a couple of pieces of information. The first is, yes, we expect a fairly modest number of Platinum Pro machines being purchased for capital. The other point to make on that, that's a little bit of a nuance, but it's important, Jeff talked about in his remarks that in some instances, customers are -- might want to buy a Platinum Pro, but they'll be asking for a credit for a future Proteus machine. And if we offer that credit it can sort of alter the revenue recognition in the short term, capturing it over the full period of time when they eventually purchase a Proteus. So there is that component to it as well if people have that credit, it sort of reduces the recognized revenue in the short term. Scott Henry: Okay. And then I know you're not looking to give guidance into 2027. But in a bigger picture type of way, can you talk a little bit about how we should think about the launch curve for the Proteus? Would you expect early adopters to use it right away and then kind of the typical S-curve? Or just how we should think about the traction, given that you already have the Platinum on the market, so it's somewhat educated customer base. But just kind of qualitatively, how you would think about that? Jeffrey Hawkins: Yes, I think about it in a couple of distinct sort of groups of customers. To your point, we have existing Platinum users and some number of those people will certainly move over to the Proteus over the course of the first year or 2 of the launch. I think it really is going to depend upon exactly which applications are available at launch. And then sort of what are the other potentially transitional financial incentives we might give to those customers to help them move with us earlier in the launch curve. So I think about the existing installed base in that way. A lot of people do know about Platinum and Platinum Pro, but I can tell you from the early feedback I'm hearing from our team in the field as they're out talking about Proteus, we are also getting in front of a lot of people that we've had no access to or fairly limited access to prior because the applications that we are offering on Platinum Pro might not have met their needs, where now with some of those capabilities being communicated as coming with Proteus is opening the door to be able to talk with those potential customers. I think that's a new sort of set of customers that don't have a Platinum today and are now engaging with us. So I think about those folks, they'll probably follow a more sort of sequenced. Some people will adopt early, some will wait to see. So that group probably moves in a more classic new technology introduction sort of way. And I think the third piece, the third sort of leg of the stool in this case is really our channel partners. As we've talked about on prior calls, we've built a global channel partner network. We think we've got all of the major markets covered with that. Will every one of those markets be a good fit for Proteus? That's something we're really working through. We do have a really important channel partner meeting coming up this month where we're going to get together in person with these partners. I think we'll learn a lot at that meeting about really which of those partners and which of the markets are going to be good opportunities for Proteus. And obviously, that -- the access to those markets can help us early in the launch as our partners are also investing and working to build out their installed bases. So that's how I think about it. I mean, there will always be some stepwise fashion to the commercialization. But I think this year and what we're committed to is really helping you understand exactly how we're building that momentum towards that launch to try to have that sort of curve, go efficiently and sort of reach that inflection point we want over sort of maybe a longer early access period that we went through with the Platinum machine. Scott Henry: Okay. Great. And just a final question, which is just more clarification. The $98 million in guidance for operating expenses, is that -- does that include stock comp? Or is that more of just a cash expense guidance number? Jeffry Keyes: Scott, this is Jeff. Yes. So that includes -- that's kind of our adjusted operating expense number. And for adjusted operating expense, we do pull out stock-based compensation. We think that's -- on an adjusted basis, that's kind of the more reasonable way to look at OpEx that's more cash oriented as we look forward. Operator: And our next question comes from the line of Swayampakula Ramakanth from HCW. Swayampakula Ramakanth: With you announcing the price point for Proteus, I'm just trying to understand what it means. Does this mean that you have some secured preorders or letters of intent that you feel comfortable enough to put the dollar amount -- I mean, the price point out this early. Jeffrey Hawkins: Yes. Good question, RK. We don't have any secured orders to communicate at this time. I think we're putting the price out because what we're seeing as we're out talking with customers and some of the questions we're getting from our channel partners in preparation for our meeting this month is they're looking for that price point to be able to do their capital planning. We are aware of a few grants that some customers are working on that are going to be due over the next couple of months for their sort of regular capital planning cycle. And to ensure we get incorporated in those submissions, we need to be able to provide that price. So we see this as sort of helping to continue that dialogue with customers, help them have the data they need at the time frame when their grants or their tenders if they're located in international locations are due, they're going to need that price point. So that's why we're releasing it now is to ensure we get incorporated into those proposals and that we get incorporated at the right level in that to the extent they get funded, they've got the right amount of dollars set aside to purchase the machine. Swayampakula Ramakanth: Okay. And then based on some of the commentary that you've been talking about how people's spending on capital expenditure is -- it has been a tough one for -- at least in 2025. So going into 2026, with this particular price point, do you see folks go the lease purchase method? Or do you think that there will be decent number of potential clients who would actually purchase it for cash? Jeffrey Hawkins: Yes, RK. So maybe the first point to make here is at this time, we've only communicated a list price and an ability to purchase a Proteus through a straight capital purchase. We haven't extended some of the other purchase or acquisition sort of models to Proteus at this time. We're going to continue to do those other models with Platinum Pro, but we haven't yet committed to doing that with Proteus. I think we're watching a couple of things. I think the first thing is, obviously, some of the NIH uncertainties, at least appear on paper to be improving. The most recent NIH budget is about a 1% reduction over the prior year, so much less dramatic cuts than originally thought. I think importantly, and Jeff called this out in his remarks, but to reiterate, the indirect overhead rates are not changing in 2026. That was a pretty significant concern for customers in '25 as indirects often are a source of the funding for new equipment. So I think it's -- we're sort of fortunate in that regard. Proteus is probably the bigger impact on Platinum sales. But on the flip side, we'll get to see sort of a more stable NIH environment for a year here before we're in the market with Proteus. And again, taking steps deliberately in our engagement with customers, including with the list price to really try to get into those grant applications, those tender proposals here early such that those capital dollars would be ready when we get to launch in our delivering units out into 2027 and beyond. So that's really how we're thinking about it and sort of the things we're watching. Swayampakula Ramakanth: Okay. And then the last question for me is, when you're talking about trying to identify more amino acids than what you thought you would have by the time you get Proteus into the market. So are we thinking that we could be closer to 20 amino acids by the time you launch? Or I know you didn't give specifics, but I'm just trying to understand from your excitement. So where do you think we'll be heading by that time? Jeffrey Hawkins: Yes. So RK, we're thinking about it in a couple of different ways. I think that I commented on, and maybe I'll try to add a little bit of color here. So we're focused on, obviously, how many of the 20 amino acids can we detect. And in that regard, we said we believe we'd be able to launch Proteus with 18, and we would demonstrate 20 this year. Now when we communicated that, we, of course, expected to demonstrate 20 by the end of the year as we show in our Investor Relations materials. And obviously, the later in the year that is, then it pushes out sort of the delivery into 2027 with enough time to sort of do reagent development. So as we are able to sort of make progress there sooner, it opens up the prospects of that getting -- all 20 getting into a kit sooner into the launch of Proteus than maybe we originally anticipated. The other factor is we're really looking at the combination of a number of amino acids, the frequency at which we detect those in all the different sequencing context and then adding in sort of that additional layer of how long is the sequencing read length. And if you put all these together, what we're really focused on is how much of the protein are we sequencing, how much of that protein are we seeing? And the more we're seeing, the more sort of applications open up, the deeper the ability to analyze samples for PTMs and other things become. So I think we're seeing sort of progress across all of these areas sort of ahead of the pace we expected when we laid out sort of that road map at our Investor and Analyst Day. And I think we're committed to you and the rest of analysts and investors that -- we'll provide some more quantitative sort of milestones on this as we go this year to help you understand sort of what level of improvement has been made here over, say, the existing commercial kit. We're going to do that as we move through the year, but it's sort of on all of those factors where we're seeing really positive progress from our teams and feel good about the capabilities we'll be able to deliver not only at launch but getting to that full 20 as soon after launch as we possibly can. Operator: And our next question comes from the line of Michael King from Rodman & Renshaw. Michael King: Congrats on the progress on the technology front. I'm just wondering, as far as Proteus is concerned, when you look at your existing customer base versus the potential customer base for Proteus. How much overlap do you think there really is? Are the -- are they similar? Are they the same? Or are they not the same at all? And if the latter, will each of your sales be sort of a conquest sale as opposed to repeat customer sale? Jeffrey Hawkins: It's a good question, Michael. So we haven't really tried to quantify exactly what the overlap is. But maybe I'd speak about it a little more qualitatively. So we've talked about before our Platinum machine is in sort of a wide range of labs. So a good number of our Platinum machines, as you can sort of pick up on by looking at the publications are in what I would call a core lab, a large academic center, who's got mass spec and other technologies and a lot of sort of proteomic analysis capabilities. So a good number of our machines, both in academia, but also in pharma are in what I would call more classic proteomics core labs. Those folks are, in our view, are going to be a very good potential fit to move from the Platinum or Platinum Pro machine and into the Proteus. Some of our machines, though, because of the price point of the Platinum Pro machine are in what I would call smaller basic research laboratories, perhaps a single investigator with a fairly small laboratory staff. So some of those folks might not quite have the volume of research or the level of funding needed to move to Proteus. That said, there could be groups of, say, 2 or 3 investigators in some of those institutes that may pool funds together to purchase a Proteus. So a little harder to figure out the exact ratio of those smaller individual investigator labs converting to Proteus, but we think some of them will. Really where we're focused with some of this initial sort of transition or upgrading will be amongst those larger core labs, proteomic centers of excellence that really are pretty ideal fits and where we think that overlap between use of Platinum today and use of Proteus in the future could be a pretty high level. Michael King: Okay. for the additional color. I'm just wondering, you talked about in your formal remarks, the interaction you've had with clients and the -- not necessarily implementation, but the design or conceptualization of kits. Are there sort of a couple of applications that are low-hanging fruit, whether it's, I don't know, kinase pockets or other GPCRs, other sort of validated drug targets or perhaps detection technologies like for biomarker work. Where do you see sort of the top 2 or 3 applications giving you a tailwind on launch? Jeffrey Hawkins: Yes. I think we're -- we obviously, through the Platinum machines being in the market are working with customers, not only across a lot of segments, but across a lot of different sort of disease areas. I think we talked a little bit in the prepared remarks about some of the data that came out recently from Stanford that's in hemoglobinopathies. That's an example of sort of a clinical application, something we hadn't really conceived of when we came to market with Platinum, but a great application of sequencing, a single amino acid change drives the diagnostic drives the sort of the treatment outcomes. I think when we think about Proteus, I still think about it right now in somewhat broader set of capabilities, and I think we'll refine our point of view on maybe specific disease areas or research areas as we get closer to market. But I think the broad capabilities we really want to make sure we have is with the Proteus having a lot more sequencing output, one clear opportunity is to really work with much more complex biological samples, right? So that's -- that today is a limitation with our current platform. That opens up people doing work in sort of identifying new biomarkers that could be academically, that could be in -- that could also be in pharma and biotech. Post-translational modifications, Michael, is a big focus of ours. That's an area today that some people have applied our tech to. It takes a little more work on customers' side today to do that with our current technology and the capabilities and the analysis tools. But it's an area that we're dedicating a lot of time to. And as we lift this overall proteome coverage, it's really going to enable that area. And we think that's important in discovery of biomarkers. That's important in translational, on validating those biomarkers on a high number of samples. And whether that's for a therapeutic target or for a diagnostic biomarker, the PTMs, we think, is a key part. And that sort of ties me to the last piece, which is that translational lab is a lab we haven't been in as much today. We're often in -- we're in a core lab or we're in a basic sort of biology research lab, doing very fundamental research. Translational labs, taking those defined biomarkers and trying to scale up that work on a large number of samples to validate its link to disease or its diagnostic potential or treatment response, whatever that end point might be. We don't have as much exposure in those labs today, but we think the ability to look at PTMs, the ability to look at more complex samples really helps us start to line up to fit into that translational lab where we would expect them to be doing that type of work, and those labs are typically also your more consistent consumable utilizers than some of the more fundamental research labs. Michael King: Great. And then sorry, if you just indulge me one more. Just as far as the total spend is concerned, does that include or anticipate some increase in the field sales force? Are you going to be adding bodies to get out there? Jeffry Keyes: Michael, this is Jeff Keyes. Yes. So for 2026, our total spend includes completing out the Proteus development program and augmenting our commercial team to be able to be launch ready as we get into the end of the year and into 2027. As I mentioned as well, once we're done with the development of the Proteus program, we've utilized a lot of outside spend for development activities. And once the program is concluded, we have the ability to pull a lot of that outside spend back and then either bank it for additional cash runway or redeploy it to other activities. So there's also an opportunity to redeploy to commercial activities. But as we plan for our 2026 guidance, we are fully funded from a commercialization standpoint. And obviously, that will be evaluated over the course of 2026 to make sure we have the right resources, right partners and right deployment for the Proteus launch. Operator: And our next question comes from the line of Kyle Mikson from Canaccord Genuity. Kyle Mikson: You didn't provide a ton of detail on this. So I want to ask this question of what exactly you've heard from customers that gave you confidence to slow things down on the Platinum side and then move all focus to Proteus. And I'm wondering if that came from -- just maybe just elaborate a little bit on what the feedback was and if that came from the new customers that Proteus kind of affords you or if it was from the existing base? Jeffrey Hawkins: Yes. I think, Kyle, the way to think about it is for some of the customers, it's really a question of do they deploy capital dollars today or a Platinum when the Proteus is coming. I think for those customers who see an opportunity to use the existing technology for their work today and eventually grow into the Proteus, we are taking advantage of our ability to use the placement program to get access to them. As we said in the prepared remarks, I think it's a good data point since we launched that program, we've placed 17 instruments in unique customer end points. So I think when the current tech fits, and it's really more about they don't want to purchase today, knowing something new is coming, we do have that placement option to work with them, get them on the technology, get them utilizing it and then convert them in the future. I did mention earlier, if someone is purchasing a Platinum machine and wants to make sure they're protected from sort of the Proteus launch and making sure they have some financial benefit of that, we're certainly prepared to extend credits to those folks. And then I think there are a third bucket of customers, which are they want to be able to do something in terms of maybe the complexity of the sample or the throughput of work that just doesn't match up well to Platinum. So Proteus will be their entry point to working with Quantum-Si. So I sort of break people into those 3 buckets, and I think many people fit in either the first one where we access them today with the placement, moving them into a Proteus in the future or they're going to be Proteus first because it really is more about aligning what they're trying to accomplish with the capabilities of that platform. Kyle Mikson: Okay. And it's just interesting because like in theory, labs that were willing -- like would be willing to buy a Platinum for less than $100,000, would be willing to -- are comfortable with this price point. So I wanted to ask you about the list price a little bit. I know that was -- I think you touched on it earlier in a prior question. But the price is obviously almost equal to what you just did in revenue in the fourth quarter. I know there's a lot of dynamics going on, but maybe there are some new customers that you'll be able to target now that have access to more funds or they're more affluent. And overall, just again, just kind of curious what gives you comfort that the price point is going to be appropriate given the uptake that we've seen with Platinum thus far. Jeffrey Hawkins: Yes. I think there's a couple of factors in play here. I think, obviously, there are some new customers that we can get to that we just can't access today. I think, as an example, we've talked about this in the past. In core labs today, we're often sort of a complementary platform to other platforms. And some of our labs then are the smaller individual investigator labs. So obviously, Proteus wouldn't be a great price point in those smaller individual investigator labs. But in the core labs, if you think about the price point we're at and the capabilities we're talking about, $425,000 is sort of about in the middle of what they're sort of -- maybe even the lower end. I mean, some of the best sort of the high-end mass spec machines can run upwards of $850,000 up to over $1 million each. So we don't think $425,000 in terms of those core labs and some of those higher volume sites is at all an impediment. I think it really comes down to what are the capabilities of the platform and do they address either very difficult things to do with their existing tech? Are they answering very important questions that researchers want to study? And if you do those things and we believe Proteus is going to have those capabilities, specifically things like PTMs, the complex biological samples, the increased proteome coverage, we'll have to do things like sequencing antibodies and looking at variable regions. These sort of things that are very difficult to do unless you own that $1 million mass spec machine and have all the custom infrastructure. When you start positioning Proteus in that context, a $425,000 price point, I think, is a very reasonable place to be at. It captures our value but makes it more accessible than those sort of $1 million price points. But yes, I think you're correct in one way that is that smaller individual investigator who has a lot less funding is probably not going to be the perfect target. But again, the way we view those is might there be 2 or 3 of those investigators that would look to pool money together to purchase a machine and have this capability. That's not something we've had to do today with Platinum or Platinum Pro, but certainly something you see in our industry in spatial and other areas where smaller investigators pool together to have the capability to do things when sometimes it's not offered at the core lab or somewhere nearby for them. Kyle Mikson: Got it. Can you just clarify, would you launch Proteus with the reagent rental kind of program as well? Or would it just be solely kind of direct instrument sales [ and shipments? ] Jeffrey Hawkins: Yes. Right now, we are -- we've only announced the list price and the intent to do direct capital sales. We -- I think we'll start there. We'll get feedback in the market and then decide if we want to open up other acquisition models. But right now, our intent is to launch with only the ability to do a direct capital acquisition and then sort of get the market feedback and decide if we open that up to other things over time. Kyle Mikson: Okay. And then Jeff Keyes, it sounds like the mix will be mostly consumables this year, almost entirely consumables. So that would typically mean higher margins for most tools companies. But I think in your case, consumables seem to have a lower margin compared to the instrumentation. So I guess, I know you're not guiding to gross margin, but how low could it get to this year relative to the mid- to high 40s that you've been at recently in the past couple of years? Jeffry Keyes: Yes. So I think your comments are reasonable and everything else being equal, our consumables have a lower margin than capital equipment, but there's a couple of things going on here, too, because during the course of 2026, we expect to have some capital sales and some placements as well as consumable revenue, but the caveat on that is on the capital sales. We anticipate a lot of them to have this credit towards Proteus for future acquisition of a Proteus model that has deferred revenue that, that will be impacting our overall margin as well. So I don't think we're going to have specific guidance for margin specifically. But having said that, I think you can expect reasonably it's going to be lower than that kind of 40% to 50% range that we've had for the full year. And it will evolve and be impacted simply on the number of credits that we provide for Proteus for the actual capital equipment sales, if that helps, Kyle. Jeffrey Hawkins: In the entire -- Kyle, maybe I can add one additional piece of color. I think consumable volumes in terms of production volumes are still rather modest today for us. And obviously, in our industry, getting to scale on that is a key component to achieving sort of the desired gross margins for consumables. I'd say that, though, and just remind us all that and we've talked about this on other calls, and we talked about it extensively at our Investor Day, one of the reasons to move to the new architecture with Proteus was not just sequencing output and automation, but the consumable architecture, moving from a CMOS-based chip to a passive nano-well array. There's a significant advantage to us in terms of our cost of producing those, not only at scale, but even in the earlier days of building that product. So I think there's a couple of factors in play here, the consumable architecture we're on and being at fairly low volume. And again, we factored both of these things into that technology decision as we sought out to develop Proteus and the associated consumable architecture. Kyle Mikson: Okay. And then Jeff Hawkins, I want to ask like a Proteus question for you. So what would be the biggest risks, I guess, to launching Proteus this year? Like in this R&D ramp that you got going on, what could happen to the downside that could cause that to slip out to '27, for example? And then secondly, I'm just wondering how important is to actually obtain that 20 amino acid kind of milestone because maybe that's not like a big driver in '27, '28, but maybe that's more critical to like the long-term aspect -- like the long-term growth drivers such as de novo sequencing or PTM detection and things like that. Jeffrey Hawkins: Yes, Kyle. So I'll work backwards with you on this one. So I would agree with you that I don't think the 20 amino acid detection is the key driver, certainly in the early days of the Proteus launch. I agree with you that coverage is obviously -- it's always a net positive to customers when you can detect more amino acids. It's obviously clearly important as you try to get to de novo sequencing. But I would agree with your general thesis that the 20 is not -- 18 versus 20 is not going to be the major driver of customer adoption of Proteus when we launch it. I think in terms of risk of launch, I always break product development programs down into sort of 2 key things. One is have you gotten through the innovation and invention phase of the program, meaning the technical risk, has been taken off. And for us, the answer to that is unequivocally yes. The invention occurred, the big innovation leaps have been made. We've demonstrated sequencing on prototypes. We've got multiple running. We're getting integrated units and expect to communicate sort of progress on those over the coming months. So I feel like that technical risk component of the development where you still have to get that big breakthrough come up with that aha moment, that's behind us now. This is really now a focus on the second phase I see in product development, which is really the hardware integration, the bringing up of the manufacturing capabilities, working on things like optimizing performance and reliability, these what I would call more classic system integration or sort of hardware engineering. That's where we're at, and those are the things we're doing. Could you hit a bump in the road and that take a little bit longer? Sure, that could happen. But I think when those -- when you're in that phase of development, if you get delayed, you're talking about delays sort of on the level of a few months, you're not talking in quarters and years like you are if you're back in that innovation phase. So again, we feel good about launching by the end of 2026. But if you want me to paint for you what the risk is, I think the risk is some of those steps of getting the performance where we want it to be, the reliability where we want it to be, the manufacturing quality where we want it to be. If any of those things get delayed, again, I think we're talking about a much shorter time scale than some of the big chunks of delays you see with technologies that are still back in that innovation and invention sort of phase of development. Kyle Mikson: Awesome. And then just final one. I think you guys are one of the last tools companies to report earnings here, and it's timely given the White House OMB, the Office of Management and Budget. They've been slow to authorize the release of NIH awards. We obviously have had this new budget that you referenced, Jeff. There might be a deadline kind of soon for this for OMB. So are you hearing anything on that front? And maybe any risk or more uncertainty with respect to kind of NIH academic funding like this year? Jeffrey Hawkins: We haven't heard anything new beyond the color I gave. I think we're aware of what you're describing. We haven't heard that though through the customer channel, meaning people saying they need to get a budget in by a certain time. I think what we're focused on with customers are often -- sometimes it's related to NIH, but often it's just what's the capital budgeting cycle of their institution. They have to have their request in by April or May in order to be funded in a certain time frame or tenders internationally, they have to be in by a certain time in the summer to fund the next year. So we're dealing more with like sort of financial calendars than we are sort of a push right now related to anything out of OMB or out of the NIH. But I think we'll keep a close ear to the field as that unfolds. But nothing coming yet inbound from customers. We'll have to sort of see if that changes as the information works its way through the market and to our customers. Operator: This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Jeff Hawkins for any further remarks. Jeffrey Hawkins: Thank you for joining our call today. We look forward to providing more updates on the Proteus program and the continued progress towards commercial launch on our next earnings call. Thank you. Operator: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.
Operator: Good morning, everyone. Welcome to DRI Healthcare Trust 2025 Fourth Quarter and Full Year Earnings Call. Listeners are reminded that certain statements made in this earnings call presentation, including responses to questions, may contain forward-looking statements within the meaning of the safe harbor provisions of Canadian provincial securities laws. Forward-looking statements involve risks and uncertainties, and undue reliance should not be placed on such statements. Certain material factors or assumptions are applied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements. For additional information about factors that may cause actual results to differ materially from expectations and about material factors or assumptions applied in making forward-looking statements, please consult the MD&A for this quarter, the Risk Factors section of Annual Information Form and DRI Healthcare's other filings with Canadian securities regulators. DRI does not undertake to update any forward-looking statements. Such statements speak only as of the date made. Today's presentation also references non-GAAP measures. The definitions of these measures and reconciliations to measures recognized under IFRS are included in our earnings press release as well as in our MD&A for this quarter, both of which are available on our website and on SEDAR+. Unless otherwise specified, all dollar amounts discussed today are in U.S. dollars. I want to remind everyone that this conference call is being recorded today, Wednesday, March 4, 2026. DRI's quarterly results press release and the slides of today's call will be available on the Investor page of the company's website at drihealthcare.com. I would now like to introduce Mr. Ali Hedayat, CEO of DRI Healthcare. Please go ahead, Mr. Hedayat. Ali Hedayat: Thank you, operator, and good morning, everyone, and thank you for taking the time to join us today. Joining me here on the call are Navin Jacob, our Chief Investment Officer; and Zaheed Mawani, our Chief Financial Officer. On the call today, I will provide a recap of our 2025 highlights, followed by financial performance for the full year. Navin will then discuss our portfolio assets and share insights into our market outlook. Zaheed will cover off our key financial highlights for the fourth quarter, and I will close out the prepared remarks with our 2026 financial outlook and share some thoughts on our longer-term growth framework before moving on to Q&A. Looking back on 2025, we worked through a year of exceptional change for the company while executing at a high level across the organization. Our investment team continued to deliver on innovative and well-structured transactions, leading us to exceed our 5-year deployment goal of $1.25 billion with the upfront and committed capital deployments in our Viridian and Ekterly deals. Beyond the capital deployed, these deals demonstrate DRI's leading capacity to structure win-win solutions that advance the needs of our counterparties and provide our unitholders with great returns. On the operational side, we continue to execute at a similarly high level. The internalization of our manager was a large and complex step for the organization, but a critical one to align both our governance and incentives with unitholders and to achieve a meaningful uplift to our economic returns. This year has already demonstrated significant gains from that process, and we feel better about the pace and magnitude of benefits than we did when we first presented the transaction. We optimized our cost structure, leading to our highest ever margins on a normalized basis and made improvements across processes in every functional area. One achievement I'm particularly proud of is the establishment of our proprietary risk assessment framework introduced this year. This data-driven framework helps us to evaluate risks across our royalty assets, the broader royalty market, our balance sheet and the overall backdrop for our business. It guides our decisions on where to invest, which deals to pursue, how to price them and how to manage sizing in our portfolio. Lastly, we continue to lead the sector on the integration of AI into our workflows with 2 dedicated team members and internal compute now working to make our execution better in speed and in quality. I would also like to take a moment to discuss the investments we are making internally to strengthen our bench and fuel our growth agenda. In early January, we welcomed Wesley Nurss as our new SVP, Head of Research. Wes brings a deep investment background in the biotech space and will lead our commercial and pre-commercial diligence efforts as part of Navin's investment team. On the balance sheet side, we also took steps to increase unitholder value through a series of meaningful transactions. We repurchased and canceled roughly 1.4 million units, reducing our unit count by nearly 3%. This comes in addition to our regular dividend of $0.10 per quarter, which we are increasing to $0.11 per quarter starting in the first quarter of 2026. Between these 2, we have returned in excess of $36 million to unitholders over the year. We reduced the number of preferred shares outstanding in the second quarter by redeeming and canceling $10 million of face value of our Series C preferred securities for $9.5 million, along with outstanding and accrued interest. Subsequent to the end of the fiscal year, the trust entered into an agreement with a private placement investor to partially redeem and cancel an additional $9.9 million face value of preferred securities for $9.8 million plus accrued interest. As you have seen in Monday's press release, we have also reached an agreement with 2 of our preferred holders to swap the vast majority of the remaining preferred share balance into a convert at attractive terms that further reduces both our coupon payments and extends our maturities. We expect that the small residual preferred share balance will be paid down at or before its call date in 2029 with cash on hand. Turning to our credit lines. We have further amended them in the fourth quarter to allow greater flexibility and to unlock the remaining gap between our effective capacity and the headline size of the overall facility. Lastly, we are pleased to announce that we have priced a private placement debt transaction with large institutional investors that terms out a portion of our bank facility to 5- and 7-year maturities with attractive costs and greater flexibility for the trust. We expect the private placement to have broadly similar covenants as the bank facility, but the terming of our financing allows us to invest more flexibly and provides us with more diversified sources of funding. Coming out of 2025, we continue to be well positioned to capitalize on the opportunities ahead of us. Turning to our full year financial performance. We delivered record performance across all our financial metrics. Total income of $198.6 million grew 6% over last year and together with disciplined expense management and internalization synergies led to an adjusted EBITDA margin of 84%. Normalized for nonrecurring costs, that adjusted EBITDA margin was 88%, which is the highest annual margin in our history as a public company. These outcomes are underpinned by our resilient portfolio with several assets delivering double-digit cash receipt growth, including our Orserdu, Xenpozyme and Xolair franchises. Notably, as of the fourth quarter, we have now fully returned our investment on Orserdu I. Partially offsetting these strong comps, we had softer performance from Omidria, Oracea and Zytiga. Regarding Omidria, we have been closely monitoring the structural challenges affecting the asset performance throughout the year, and we believe it was prudent for us at this point to take an impairment in the fourth quarter of $9.7 million. While this is always disappointing, it is important that we adjust the performance expectations going into 2026, given the sequential softness throughout 2025. Navin will provide more color on this shortly. But as a reminder, our policy is to never write up assets. So our balance sheet adjustments will only reflect negative revisions while our outperformance is only captured at the level of receipts and EBITDA. We made big strides this year operationally, financially and in our investment strategy. I will come back shortly to talk more about how that feeds through to our 2026 outlook and our longer-term growth agenda. But for now, I will turn the call over to Navin Jacob, our Chief Investment Officer. Navin Jacob: Thank you, Ali. Touching first on our portfolio performance. Slide 8 shows the individual royalty receipts for the fourth quarter and full year 2025 compared to the same periods in the previous year and the previous quarter. For the full year, our portfolio generated total cash receipts of more than $196 million, an increase of $6.5 million or 3.4% growth versus 2024. The increase was driven by several factors, including: one, strong Orserdu sales and removal of certain deductions previously incurred on the Orserdu II transaction; two, growth from the additional Xenpozyme II royalty stream; three, growth of Xolair following its launch for the food allergy indication; and four, additional receipts earned from the Casgevy and Ekterly assets, which both earned their first receipts in 2025. These increases were partially offset by the following items: one, the timing of Empaveli payments; two, weaker-than-expected Omidria royalty receipts; three, a nonrecurring milestone of $5 million from Vonjo II received in 2024 that makes for a tough year-over-year comparison; four, increased competition and generic entry impacting the sales of Oracea and Zytiga; and finally, five, Rydapt, which is nearing the end of its royalty term and has an expected step down in its royalty rate. Turning to specific individual product performance. Let me start with Omidria, which was, as we have indicated before, has been performing below our expectations for several quarters now. As we have previously communicated, Omidria has been the subject of continued impact from the Merit-based Incentive Payment System, or MIPS. Consequently, there has been a resetting of the demand by physicians as they calibrate the demand such that they are not penalized by the MIPS program. The MIPS program is the basis for physicians receiving reimbursement from cataract surgeries. As a result, through the first 3 quarters of 2025, we experienced cash receipt declines from Omidria. While we have seen some stabilization, what we're not seeing is a significant amount of growth in the HOPD or hospital setting. Our original forecast driven by payer and physician feedback was that new Medicare reimbursement in 2025 would generate growth in the HOPD setting. But thus far, we're not seeing material growth. Rayner is actively taking steps to improve the performance by continuing to leverage the Omidria sales force to maximize the number of surgeons and market access coverage within each account. Importantly, Rayner is looking to negotiate payer contracts to ensure inclusion of separate reimbursement associated with the HOPD Medicare reimbursement. While these steps are encouraging, we are taking a conservative stance with our updated forecast, which now predicts flat sales or no growth for Omidria over the next few years. This has led to a $9.7 million impairment, which was booked in Q4 2025. Vertex reported Q4 2025 sales of $54 million for Casgevy. Recall, we are paid in 2 ways for Casgevy. Firstly, DRI is entitled to an annual license fee for which we will record $5 million in Q1 2026. Secondly, we may be eligible in the future for annual sales-based performance fees if annual sales are over $1 billion. Casgevy uptake to date is roughly 1 year faster than we anticipated. And as such, DRI may be eligible for one more sales-based payment than we had built into our acquisition forecast. Looking now at Ekterly, we began earning royalties in the third quarter of 2025 and recorded our first cash receipt of $0.8 million in Q4 2025. Since its approval, Ekterly has shown strong performance with KalVista's U.S. business receiving 1,318 patient start forms as of December 31, 2025. KalVista reported Q4 2025’s Ekterly sales of $35 million, which results in DRI receiving cash royalties of $1.8 million in Q1 2026. Q4 '25 sales imply an annual run rate of over $140 million, which is above our acquisition forecast for 2026. As of February 2026, KalVista has received regulatory approval for Ekterly in several key markets outside the U.S., including the United Kingdom, European Union, Australia, Singapore and Japan. Orserdu continues to outperform our expectations with royalty receipts reaching $19 million in Q4 2025, a 38% year-over-year increase versus Q4 2024. Q4 '25 sales were also strong, and we anticipate receiving approximately $22 million in royalty receipts in Q1 '26. Furthermore, Q4 '25 sales were so strong, it triggered a milestone payment to DRI of $5 million, which will be received in Q1 '26. So in total, for Q1 '26, we anticipate receiving approximately $27 million of cash receipts for Orserdu consisting of $22 million of royalties and $5 million from the milestone payment. Despite the continued outperformance, we maintain our view that 2025 is a peak year for Orserdu due to competition from other oral SERDs as well as other mechanisms such as novel PI3K inhibitors. With that said, we note that the outperformance has led to the Orserdu I transaction breaking even on an earned basis in Q4 '25, which is near record speed for DRI. The oral SERD market has been receiving meaningful attention over the past few months, driven by data generated by Roche and AstraZeneca. There is increasingly a belief among industry experts and analysts that this market could be significantly larger than initial expectations. Roche recently noted that its oral SERD giredestrant could be its largest drug ever, which implies giredestrant peak sales of over $8 billion. This is driven by giredestrant's data in the adjuvant setting of HER2-negative/HR-positive breast cancer and by its data in combination with everolimus in all-comer second-line HER2-negative/HR-positive breast cancer. As a reminder, Menarini is running studies of Orserdu in similar settings and combinations as Roche. ELEGANT is a Phase III study of Orserdu versus standard endocrine therapy in patients with ER-positive/HER2-negative early breast cancer with high risk of recurrence. ADELA is a Phase III trial of Orserdu in combination with everolimus in advanced breast cancer patients with ER-positive/HER2-negative ESR1 mutation. These studies, if positive, could represent substantial upside to our expectations. Turning to Spinraza. In the fourth quarter of 2025, the cash receipts were essentially flat year-over-year as Spinraza revenues were significantly impacted by the timing of shipments outside the U.S., while increased competition from Roche's Evrysdi continued to impact Spinraza's market share. Spinraza's performance is in line with our expectation. Moving on to Vonjo. Q4 '25 cash receipts were 11% lower versus the same period last year. Sobi recently commented development work continues with the confirmatory Phase III study PACIFICA, which, if successful, is necessary for regulatory filing outside the U.S. Clinical trials to investigate the potential for Vonjo in new indications are underway. These new indications were not included in our original acquisition forecast. Sobi reported Q4 '25 sales of $35 million, which should translate to royalty receipts of $3.7 million in Q1 '26. Recall, during Q3 '25, we had lowered our expectations on Vonjo and the latest quarter's estimates are in line with our reforecast of the asset. Finally, on Xempozyme, we recorded $2.5 million of royalty receipts for Q4 '25, which is a marked increase versus the prior year, driven largely by ex-U.S. launches that have been faster than our expectations. Sanofi reported worldwide Xempozyme sales of $71 million for Q4 2025 and over $250 million of sales for full year 2025, which is ahead of our expectations. Before I close, I'd like to touch on thoughts regarding the market and our positioning for 2026. Citing just the fourth quarter of 2025, there have been approximately 8 royalty deals for a total of $1.5 billion in announced value and at least 70 equity deals for a total of $13 billion raised by biopharma companies. 2025 was a banner year for royalty deals with a total value surpassing $8 billion. In closing, we expect the market to continue to grow, driven by favorable industry tailwinds and amplified by continued market awareness for royalties. We remain well positioned to capitalize on the $3 billion pipeline. Notably, we are experiencing significant volume of inbound calls, but we remain, as always, selective for the right opportunities. I will now turn the call over to Zaheed Mawani to review our fourth quarter financial performance. Zaheed Mawani: Thank you, Navin. Turning to the fourth quarter results. We are pleased with our overall performance during the quarter. Our total income was $61.7 million for the quarter. On a reported basis, this was flat versus the fourth quarter last year. However, notably in the Q4 of 2024, our royalty income included a onetime $18.2 million back payment related to our Orserdu asset. Of that $18.2 million, $2.5 million was related to the fourth quarter of 2024, but the balance of $15.7 million was associated to prior quarters. Normalized for this onetime $15.7 million item from the fourth quarter of 2024, our total income in the quarter increased 35% year-over-year. As Navin mentioned, royalty income in our fourth quarter also included a $5 million milestone related to Orserdu, which will be received in Q1. Turning to expenses. Our total expenses were $54 million, approximately $0.5 million lower year-over-year. This was primarily driven by internalization synergies, including the elimination of performance fees as well as lower compensation, being partially offset by higher unit-based compensation as a result of mark-to-market adjustments and higher other expenses. We're pleased with our progress on the internalization savings, which continue to pace ahead of our expectations. All in, our adjusted EBITDA for the quarter was $46.2 million, which was a 25% increase over the fourth quarter last year. On a rate basis, our adjusted EBITDA margin was 91% versus 83% in the fourth quarter of 2024. Key drivers for this positive outcome, as mentioned, was our strong top line performance, coupled with prudent expense management and a 14% increase in cash receipts. The increase in cash receipts was partly attributable to the onetime $15.7 million of cash receipts received in the first quarter of 2025 for the prior period catch-up of Orserdu as referenced earlier. In addition, as mentioned earlier by Navin, we also posted increases on Xolair, Xempozyme and Ekterly. We generated adjusted cash earnings per unit of $0.77, and we were pleased to announce yesterday an increase in our quarterly distribution to $0.11 per unit payable on April 20, 2026, to unitholders of record on March 31, 2026. Turning to Slide 12. We continue to generate strong cash flow from our assets. Over the last 12 months ending December 31, 2025, we recorded royalty income of $188.9 million plus the change in the fair value of financial royalty assets and the unrealized and realized gains on marketable securities and other interest income for a total income of $198.6 million. After adjusting for receivables, the unrealized and realized gains on marketable securities, the net change in the financial royalty asset and other noncash items, we achieved normalized total cash receipts of $196.4 million. After taking our operating expenses, management fees and performance fees, which totaled $31.4 million net of performance fees payable into account, adjusted EBITDA was $165 million with a trailing 12-month adjusted EBITDA margin of 84%. We also generated adjusted cash earnings per unit of $2.26. Moving to Slide 13. As of December 31, we had $42.4 million of cash and cash equivalents. We also had $59.7 million of royalties receivables and $239 million of credit availability from our bank facilities. We continue to be well capitalized and well positioned to fulfill any forthcoming milestone commitments as well as continue to invest in new assets. During the year ended December 31, 2025, the Trust acquired and canceled 1.4 million units at an average price of $9.82, totaling $14.2 million. As of December 31, 2025, in aggregate, we have acquired and canceled 4.6 million units at an average price per unit of $7.08, totaling $32.7 million under all current and previous NCIB plans. From December 31, 2025, to February 26, 2026, we acquired an additional 75,938 units under the May 2025 NCIB plan at an average price of $11.31 totaling $859,000 under the AUPP. As part of our overall capital allocation strategy, we expect to renew our NCIB program into 2026. We will provide an additional update on our Q1 conference call in May. With that, I will turn the call back to Ali Hedayat to discuss our 2026 guidance longer-term growth aspirations and key priorities for 2026. Ali Hedayat: Thank you, Zaheed. Before I turn to our 2026 guidance and long-term view on the business, I would like to recap our 2025 performance against the targets we communicated. As I mentioned earlier in the call, inclusive of our Viridian commitments, we are pleased to achieve our deployment target of $1.25 billion over the last 5 years. Our royalty income target as defined for 2025 was between $172 million and $182 million. We surpassed the high end of this target with our 2025 royalty income coming in at $188.7 million. Finally, we set out a CAGR guidance of high single-digit royalty income growth through 2030 off a 2022 base. At the end of 2025, we are currently tracking well above this target with our current view indicating a 12% CAGR. I would like to take a few minutes to lay out how the work we have done over the course of 2025 lays the foundation for driving our investment capacity and the results in the years to come. First, we have achieved meaningful margin expansion after internalizing the manager. While we don't expect our current quarter's low 90s adjusted EBITDA margin to be our baseline going forward as we intend to reinvest in our team, we do expect our run rate EBITDA margins to be roughly 500 basis points higher than the low to mid-80s margins of our pre-interalization model. At our current scale, each percent of EBITDA margin adds a little shy of $2 million to run rate cash flow and can be passed through our leverage covenants on a backwards-looking basis, meaningfully increasing our credit capacity. Similarly, we have achieved significant reductions in our debt amortization payments and interest costs between the private placement I mentioned earlier and the cancellation of the preferred shares we retired. While these don't pass through our leverage ratios, they do add in excess of $25 million to our annual cash flow relative to last year's run rate. While some of this is offset by the reduction in Omidria cash flows linked to our forecast revision, we will still exit the year in a substantially better cash flow position than we entered it. These improvements help to drive our guidance for 2026 and our long-term 2030 aspirations on Slide 16. The guidance for 2026 shows meaningful growth over our 2025 baseline. Now turning to our 2030 aspirations. We aim to invest between $800 million and $1 billion in the 2026 to 2030 period, a number that is fully funded with our existing capital structure and cash flows. Based on our current expectations for deal mix and returns, we believe this should underwrite a low teens CAGR in adjusted EBITDA from now through 2030 with sequential growth rates that accelerate through that period and beyond. Importantly, none of this requires any additional equity. And even in the absence of any further investment, we believe our portfolio EBITDA will grow organically through 2030 with the current perimeter of assets. Slide 17 helps to bring this all down to a set of priorities. We intend to compound cash flow per share meaningfully over the coming years by focusing on a combination of best-in-class operational and financial execution and continuing to allocate capital in a disciplined and innovative way to further our mission of funding innovation in the industry. We can only do that because of the hard work our team has done. And I want to take a moment to thank all of my colleagues at DRI for putting up a fantastic year in 2025 across all of our functional areas. We have great things ahead of us, and I couldn't be prouder of what we have done together this year. That concludes our prepared remarks. And with that, let's open the call to questions. Operator: [Operator Instructions] Your first question comes from Douglas Miehm with RBC Capital Markets. Douglas Miehm: My first question just has to do with the new guidance. Management is typically quite conservative. And when you do look at what was spent on a per year basis versus what the guidance is, it is a bit lower. So would it be correct in characterizing the pacing and overall expected investment as being conservative? And -- or is this a function of changes within the market in terms of increased competition? Ali Hedayat: Doug, it's Ali. Thanks for the question. I think there's a few ways to put a lens on that. The first is really when you compare the current guidance on deployment to what we achieved over the past 5 years, I think one of the things that's worth keeping in mind is we started the prior 5 years with an underleveraged balance sheet. And in the middle of it, we had the TZIELD transaction, which was essentially a round trip that added something on the order of $250 million to $300 million on a levered basis to our deployment. And I think those 2 effects basically caused the backwards-looking deployment numbers to be a little bit higher than what we're forecasting over the next 5 years. The second one, which is relatively important, is also the mix of deals that we're doing. So to the extent that we do a deal that is earlier stage, either immediately preapproval or, let's say, early in the launch of a drug, those deals obviously don't have backward-looking cash flows. And as a result, it's difficult to lever those transactions based on the way that our financing works. It's still attractive to do them given the higher leverage -- sorry, the higher returns and the duration, but it's definitely something that sort of feeds through the capacity to deploy via the leverage covenant. So I think when you put those 2 things together, you get a bit of a sense of where that number is coming out. And I think those bands reflect a bit the variance in the mix. So to the extent that we do a higher number of approved deals, you should expect us to be sort of towards the higher end of those bands. And to the extent that we do a higher number of preapproved deals, we'll sort of be towards the lower end of those bands, and that's the way to think about it. Douglas Miehm: Okay. And when you think about the lower end and the preapproved deals, you are anticipating higher returns. My follow-up question has to do with Orserdu. And when I think about that product, you seem to be faring quite well relative to the Lilly launch, but you're still contemplating a down year this year. I recognize that as we get into 2027 with what's coming from Roche and also Astra in the form of Cami, we are going to see definitely increased competition. But do you think there's a chance here given the strength of the Lilly product relative to Orserdu that you might do a little bit better than anticipated? And I'll leave it there. Ali Hedayat: Yes, Doug, I'll let Navin answer that one in detail. But one framing point, and I think this feeds a little bit into our '26 numbers in terms of guidance is, look, we have obviously revised our Omidria and our Vonjo numbers over the course of the year, and that's baked into our guidance numbers. When you think about the things that could be a positive variance for us over the year, we have been relatively conservative in the way that we assume the competitive environment for Orserdu evolves. And despite excellent execution out of the gate by the KalVista management team on Ekterly, we have not really factored in that cadence into our guidance either. So I would say that the range of things in terms of potential positive outcomes, those are the 2 biggest variables to think about. And Navin, I don't know if you want to dig into OSEDU in a bit more detail. Navin Jacob: Sure. Thanks for the question, Doug. So on Orserdu, remember that when -- the asset has been almost from day 1 outperforming our expectations. And so it's easy to get excited by that and assume that it's going to continue to outperform our expectations, entirely possible, right? But what we're confident about is that this is the year, this is sort of the dynamic year for Orserdu, for lack of a better term, the time lines of when we anticipated these competitor oral SERDs to come into the market are exactly what we anticipated at the time of the acquisition. And so while the launch has gone faster than expected, the competition and how that is -- how heavy that competition is, is exactly as we anticipated. And all of those start hitting this year. Well, Lilly, this is going to be their first full year and it is Eli Lilly. So Roche, obviously, as you pointed out, is coming in 2027 and with very different data and differentiated data that we've seen thus far. So there is -- I think it would be imprudent of us to change our outlook that this is going to be a down year relative to our -- relative to 2026 -- 2025, excuse me. Having said that, I think what we were trying to provide in our commentary is to suggest that, look, the Menarini has been performing quite well, both commercially, but also with regards to their clinical strategy. You can see the strategy that they've taken forward, which is different than Eli Lilly or AstraZeneca is much more in line with Roche. And Roche is now talking about giredestrant being the largest drug they've ever had. And from a risk-reward perspective, given that we've been conservative, that kind of level of upside is nowhere near close to any of the upside that we had anticipated for the product. So all of that just speaks to the risk reward that we try to build in for investors. Operator: Your next question comes from Erin Kyle with CIBC. Erin Kyle: I wanted to ask on the pipeline. And maybe if you can just dig into that $3 billion pipeline and how much of that -- what the split is between pre-commercial and commercial deals in it, how many deals you're tracking in there and what the range is per transaction? And then just whether your near exclusivity on any deals would be helpful. Navin Jacob: Erin, thanks. So on the pipeline, a large proportion of the deals are skewed towards pre-commercial. Having said that, I would argue that the nearer-term pipeline, call it, over the next 6 to 8 months is more skewed to post-approval drugs. So I would say that the deals in, call it, month 8 and beyond that could come to fruition are definitely skewed towards pre-commercial, but more near term, again, 6 to 8 months where the deal pipeline has shaken out, so it's closer to being commercial assets. Erin Kyle: Okay. That's helpful. And then just the sort of the range of size in the pipeline, is it kind of in line with your historical acquisition size? Navin Jacob: Correct. It's in line with our acquisition size of $50 million to $150 million has been the sort of sweet spot we played in. And I neglected to answer your question on exclusivity. We're not in exclusivity with someone. I'll just leave it there. Erin Kyle: Okay. And then I just wanted to ask another question on kind of the competitive environment. And I hate to be the one to ask an AI question here, but with AI fears kind of hitting nearly every industry here, I did want to ask if whether you see any risk to your business from the possibility of it possibly being easier to build a database to track existing royalties or biopharma companies that are capital constrained. Yes, I'll leave it there and ask the question. Ali Hedayat: Erin, I'll take the AI one. I think we actually see AI as an opportunity. We spent a lot of time investing in that over the past year, year and a bit. As I mentioned on the call, we have 2 team members who are basically solely dedicated to improving throughput and efficiency of our various processes with AI. We actually have bought a number of GPUs and are using them to sort of run models that have been trained and modified to work on our own data sets. I think in terms of lowering the competitive barrier, I think there's probably areas in which that will be easier, if you will. So processing large amounts of patent filings and the like. I never really viewed those things as something that were a material edge for us. They were just hard in the sense that you required dedicated people to go through large amounts of paper. I think the edge is really a combination of relationships, industry expertise, deal structuring capacities and the like, which I don't think really will be particularly impacted by AI. But if you will, the velocity and sort of speed of processing through a deal will be impacted by AI. But I would say we are probably, at this point, doing a better job than most in terms of adapting our processes to that. I think in terms of the pipeline, I'll let Navin take the question or the competitive environment, rather, I'll let Navin take the question. Navin Jacob: Yes. With regards to how that affects our ability to compete, we have not thus far seen anything remotely close to affecting our ability to compete with regards to AI. If anything, Ali has been well ahead of, I'd say, most folks on the AI front and him and the management team at large, prior management had been investing in this space. And so it's -- we've been working on this for a couple of years. So if anything, we're ahead. Operator: Your next question comes from Michael Freeman with Raymond James. Michael Freeman: Congratulations on the year. I wanted to -- maybe following on Erin's question. I wonder if you could dive into the risk assessment framework that you discussed, Ali. Maybe give some examples of how you're using the tool? And what areas maybe in the current pipeline you're looking at, areas that you're seeing this tool steer you toward investing in maybe areas that it's steering you away from? Ali Hedayat: Yes. Thanks for the question. I think the right way to look at this is if you think about the business and you think about the various range of degrees of freedom that we have in terms of our balance sheet and leverage covenants and the like, that range will always be bigger than, let's say, what we should do. And what we should do, I think, is defined by a combination of thinking through risk, thinking through cash flow dynamics, portfolio construction and the like. And really, the purpose of the risk framework is to say, all right, yes, we could, let's say, this year, deploy another $150 million into pre-approval deals, should we do that? Because we already have one large preapproval asset on the portfolio right now. And even though we could technically let's say, do more, is that the right decision? And the answer to that, I think, depends on where we are in terms of our leverage ratios and our current exposures, where we are in terms of the ability to unlock our balance sheet based on trailing 12-month cash flows and feeding through our debt covenants and various things like that. And what the risk framework does is it pulls all of that together and says, all right, here's the current parameters in terms of various risks to the business, and that could be approval, it could be things like regulatory risk, pricing risk for the various drugs given what's going on in the world. It could be some bigger picture factors, performance of our specific assets. And it says, given all of that and given what we have on deck in terms of potential avenues of future deals, which one should we be chasing? How should we be sizing them? How should we be structuring them? And it's sort of an overlay that I think takes our degrees of freedom and focuses them down on 2 or 3 things that we think will be the best risk-adjusted decisions to make for the portfolio overall. Michael Freeman: Okay. All right. Maybe this one could be for Navin. Looking at the Viridian assets, I wonder if you could just give us a view of the pipeline dynamics in this space. In December, we saw the failure of argenx thyroid eye disease assets. I wonder if that -- how that and maybe other action in this space adjusts your market share expectations for Veligrotug? Navin Jacob: Well, to be honest, we had built in a fair amount of competition, including Roche's satralizumab into our expectations. That asset has played out not particularly well. One trial was successful, one trial was not. This is the anti-IL-6. So there is potential upside to our expectations. With that said, given the changes with the FDA moving towards Phase III trial being enough for approval, perhaps satralizumab gets approved. With that said, the data there for that drug was not as good as Veligrotug, and we don't anticipate we'll be close to Veligrotug, which is the new asset that we also have a stake in that was formerly called VRDN-003. All this to say that there is certainly upside to our acquisition forecast with the failure or weak data, let's put it, of the Roche asset and what looks to be like mediocre assets as well in the rest of the pipeline. Operator: Your next question comes from Nate Po with National Bank Capital Markets. Nathan Po: So you spoke to record margins this year. And if your prior aspirations for high single-digit royalty income growth still stand and you pair that with your new aspirations for low teens EBITDA growth, where -- can you expand on where you see incremental margin accretion opportunities coming from? Ali Hedayat: Nate, like I said on the prepared remarks, our objective really isn't to grow margins meaningfully beyond where we're at right now. If anything, I think we'll probably -- relative to sort of this low 90s number that you're seeing now, we'll probably reinvest a bit into the business on the team side. I think when you think about that low teens aspiration out to 2030, I think that's really being driven by the top line. We probably have a little bit of both operating leverage and 1 or 2 remaining bits of low-hanging fruit. But I think what you're really seeing there in that longer-term aspiration is confidence around the top line rather than further margin expansion. Nathan Po: Great color. And you did also -- you mentioned reinvesting in your team as well. So to support the deployment aspirations you guys have, how do you see your current deal teams capacity? Or if you're investing in other places, could you just expand on that? Ali Hedayat: I think the deal team capacity is pretty well matched to the balance sheet capacity. I think one of the things that we're thinking about a lot is, a, in an AI-centric world, what the mix of people on the team should be. So as these tools expand our capacity to do things, for example, do we need more vertical domain expertise and the ability to assess pre-approval assets, for example, or do we need other areas of vertical expertise. So I think what you'll see us do is maybe fill in various areas of the deal team to match where we're trying to take the business. And I think that will be very much with the mind of -- to use the [indiscernible] expression, skating where the puck is going in terms of AI expanding our capacity to do things. Operator: Your next question comes from Louise Chen with Scotiabank. Louise Chen: Congratulations on all the progress this quarter. I wanted to ask you first on Viridian's product. And if the Veligrotug, if it gets approved this year, will there be upside to your adjusted EBITDA guidance? Or is it already incorporated into there? And then on the VRDN-003 product, just curious what you think might be a clinically meaningful outcome? Do you expect to have efficacy advantage over a drug like TEPEZZA? Or is it more the convenience? Ali Hedayat: I think in terms of thinking about our guidance, we don't tend to price in things where we don't have a lot of visibility, right? And as I mentioned earlier on the call, even areas like the launch of Vector, which the execution there has been superb out of the gate without getting a few quarters behind us that really feed into a well-grounded set of assumptions, it's pretty hard for us to sort of tweak things up. So I think when you put a lens on the Viridian portfolio or any of our earlier-stage assets or assets that are sort of early in their launch curve, you should assume that we're not sort of taking a very dynamic pricing up or revising up of our forecast based on things coming out of the gate a little bit stronger until we get some data behind us to justify that. Navin Jacob: And Louise, on elegrobart, which is the new name for VRDN-003, our expectation is that, listen, if it achieves what TEPEZZA has achieved in the active TED setting, it's a home run, right? But we don't necessarily need it to achieve that for this to be a very big drug because of the convenience factor. Veligrotug, just to be clear, we think is a superior product to TEPEZZA given both its activity in active TED and in chronic TED. And it has -- as a reminder, both trials were static positive, while with regards to the Amgen trial, the chronic trial was -- had mixed results. Furthermore, you have diplopia data with Veligrotug, which you don't have very clear efficacy on with TEPEZZA. So elegrobart, if it comes even close to that, it will be a fantastic product given significant convenience advantages. Operator: Your next question comes from Justin Keywood with Stifel. Justin Keywood: Nice to see the results. My question is around some of the initiatives for the business model improvement and capital structure refinement. It appears to be leading to somewhat better valuation in the shares, but still lagging certain peers, including the largest one out there. And depending on what metric you look at, DRI could be valued at half that peer. I'm wondering if there's any remaining initiatives that could help bridge the valuation gap? And is a NASDAQ listing potential in the future as well? Ali Hedayat: Thanks for the question. Look, we're constantly thinking about things that could help to bridge that valuation gap. And I personally agree with your assessment there in terms of where we sit in terms of valuation. I think in terms of the NASDAQ listing, I think the scale of the business probably needs to reach a point that will attract more attention from the U.S. investor base. And I think we're not quite there yet. I think we're well on track to get there. But I think we don't want to put ourselves in a position where we're sort of orphaned as a smaller and less focused on equity in the U.S. market because it's just not productive to be there. I think we have good support across all aspects of the capital markets in Canada, whether it's sort of debt or equity. I think our financing partners here have been fantastic across the spectrum. I'm really happy to see the reception that we got for the private placement. Those are all top-tier big U.S. institutional investors. And I think we'll continue to sort of penetrate that market on the debt side as we grow the business. And that's a very encouraging step for us in terms of broadening our capital base. Operator: The next question comes from Leszek Sulewski with Truist Securities. Leszek Sulewski: Congrats on the progress. Ali, maybe on the near-term pipeline, where are you seeing the better risk-adjusted spreads right now as it relates to categories of assets and perhaps indication areas? And how would you rate the quality of the assets from what you framed as increasing inbounds? And then as a follow-up, to the extent that you can share, can you provide or walk us through where you are standing on the early stage versus late-stage due diligence process? And what have been some of the gating factors on closing a transaction? Ali Hedayat: Yes. I'll let Navin take those. But I'd broadly say in terms of return and risk characteristics, I don't think we have seen a significant move one way or the other. I think the business -- the inbounds of the business remain very attractive from a risk-adjusted return perspective. I think the need for capital as Navin addressed in the call earlier, is still very significant. We've seen the royalty market grow in terms of penetration pretty meaningfully over last year, right, like we exited at something around $8 billion of deals in the sector. So we're pretty happy with what we see out there in terms of pipeline. I don't know, Navin, if you want to get into some of the granular aspects. Navin Jacob: I wouldn't -- I would characterize this as mid-stage on a couple of potential deals. But everything else, I would characterize as somewhat early stage. For the reasons that Ali had pointed out, our pace of deployment over the next 1, 2 years may be a little bit slower than what we had been conducting for the past 3, 4 years, largely because of being -- as I'll just reiterate, we were highly under-levered before at the start of that 4-, 5-year period. And then we benefited from TZIELD, which gave us more capacity. And while the capacity exists and as we -- today, because we're going through this transition of taking on a greater proportion of pre-approval deals, that's not to say, just to be very clear, that we're not going to be doing approved drug deals, we are. And as I noted, our near-term deals are more weighted towards approved drugs. There is a bit of a transition going on. And as that transition goes on, because of the shape of the cash flows associated with the preapproval drugs, versus approved drugs and the subsequent leverage capabilities, there is sort of a 1- to 12-month to 24-month period where we have slightly slower deployment pace than we have historically seen. And then after that, it will be back to normal as these preapproval drugs kick in as we're seeing with KalVista and with what will hopefully be the Veligrotug in the second half of this year. So you can understand why there's a slight bit of change in pace for the next 12 to 24 months. Ali Hedayat: And I think one thing just to round out the color there. When you look at that $8 billion of deals last year, it was actually while a significantly higher dollar value of deals, it was a lower number of deals, right? And that's kind of interesting. And you see that migration in deal size, which is something that we've consistently seen over the past 2 or 3 years to bigger deals. And I think that feeds in a little bit to Navin's comments, which is I think the kind of [indiscernible] cadence of a small- to medium-sized deal every 6 months or something like that is probably while still possible, a bit less likely, I think what you'll see is larger transactions with a bit more spread out time lines from us because I think that's really what we're seeing in the market. Operator: Your next question comes from David Martin with Bloom Burton. David Martin: First question, does Sobi have any upcoming new program initiatives to reverse the Vonjo weakness, excluding any new indications? Navin Jacob: Excluding new indications, I would argue that the new indications are the largest driver of growth on a go-forward basis. They do have some life cycle management programs where they expand beyond not just new indications as in true new indications, new therapeutic areas, which they're working on. But there are some life cycle management programs that, for instance, ensuring that physicians understand the value of the product in the anemic setting, which we would argue is as good as momelotinib. However, GSK took full advantage of the profile of momelotinib and have penetrated there. We firmly believe Vonjo has a similar product profile as that product in the anemic setting, but there is work that's being done by Sobi to ensure that physicians understand the strength of the asset in that setting. David Martin: Second question, you're doing some pre-commercial deals, and they're relatively new for you. Are your competitors following that as well? Are you seeing them chasing those same types of deals? Ali Hedayat: Our competitors have been in that space for some time in varying ways, right? And I think there are some competitors who operate in more sort of fixed income adjacent spaces who don't do that, but the ones that have operated in what I would say are more equity-like in philosophy, they have been reasonably active in that space to varying degrees. I don't think our exposure or direction stands out in any way there. I think if anything, we are sort of reasonably conservative in our pre-approval exposure as a percentage of assets. But it's nothing sort of hugely new for the industry. And frankly, nothing new for us, right? We have had implicit exposure to new indications in many of our prior deals has been combined with some existing cash flows from potentially those same assets. But a lot of our prior deals, the economics have been driven in no small part by a broadening of the indications for a given therapy. So I would say it's not a huge divergence from the industry or even from our history in many ways. Operator: [Operator Instructions] Your next question comes from Ash Verma with UBS. Ashwani Verma: I was just like trying to understand the top line. So I see a lot of these assets, the cash receipts when you look at Slide 8 are declining and bulk of the growth is coming from a handful of key products. So as you think about 2026, just on a product basis, is it a continuation of the same trend? And just like when you are talking about the 2026 outlook, how much of your EBITDA growth is coming from the internalization savings as opposed to top line growth? Ali Hedayat: Ash, I think it's a mix of things. I think naturally, our seed portfolio, as we've stated many times, was always going to decline at some point, and you're seeing some degree of that as we work through the next couple of years. We obviously have 2 very early-stage assets that we're very excited about, the strong out-of-the-gate performance you're seeing from Ekterly and what we view as a tremendous potential in the Viridian portfolio. I think Orserdu is probably a big potential variable there in terms of rate of decline. We don't have full visibility on that, but we think we've been relatively conservative in the way that we're looking at it. I would say when you think about '25 through '26, the role there is going to be probably a mix of top line and margin expansion. I think the year-on-year margin expansion probably will account for, let's say, something in the region of half or maybe a little bit more than the EBITDA growth and a little bit of top line will account for the rest, and then that accelerates sequentially through the rest of our sort of aspirational guidance horizon. So as you get into '27, '28, especially that sort of '27 to '30 period, you're really seeing a lot of top line expansion. Sorry, as I mentioned on the call as well, even in the absence of any further investments, we do believe we can grow EBITDA through 2030. I mean, obviously, not at the rates that we laid out because those imply reinvestment, but we do think the current perimeter of the business is growing. Operator: There are no further questions at this time. I will now turn the call over to Ali for closing remarks. Ali Hedayat: Thank you all for joining us, and thank you again to the DRI team for a great year, and we look forward to speaking to you on our next call in May. Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.
Yu Guo: Good morning, everyone. I am Guo Yu Godfrey, MMG Chief of Staff. Welcome to our 2025 Annual Results Investor Conference. Today, there are 55 participants on site and 123 online. A quick note for our investors attending in person. Inside your seatback, you will find the Chinese version of the results presentation booklet. Please contact my colleagues at present. First, I would like to introduce the leadership attending today's meeting. Mr. Cao Liang, Chairman of the Board; Mr. Zhao Jing, Chief Executive Officer and Executive Director; Mr. Qian Song, Chief Financial Officer and Executive Director; Mr. Wang Nan, Chief Operating Officer; and Ms. Guan Xiangjun, Interim Executive General Manager of Commercial and Development. In addition, Mr. Troy Hey, Executive General Manager of Corporate Relations; Mr. Chen Xuesong, President of Las Bambas; and Mr. Xia Weiquan, President, Africa, also joining the meeting online. At the same time, we are honored to have the Chief Non-Executive Director of the company, [ Mr. Leung Cheuk Yan ] with us; and Non-Executive Director, Mr. Yue Wenjun, who is also present today. Please take note of the disclaimer on the screen. Today, we will report on the company's 2025 performance review, financial results, strategy and outlook. The management team will be available to answer your questions after the presentation. Now I would like to invite Mr. Zhao Jing, Chief Executive Officer of the company, to speak. Jing Zhao: Thank you, Guo Yu. Welcome, everyone, to today's results conference. I'm very pleased to see so many investors, analysts and friends from the media here in person. And I also thank those joining us online. Let's now begin today's presentation. First, I would like to report on the company's safety performance. Safety has always been a core value at MMG and our commitment and focus in this critical area have never wavered. In 2025, the company's significant events with energy exchange frequency was 0.8 per million hours worked. Total recordable injury frequency was 2.1 per million hours worked. While our safety performance consistently ranks favorably among peer companies of the International Council on Mining and Metals, safety indicators showed a slight increase compared to 2024. Therefore, we emphasize that the company will continue to focus on risk management and advance the prevention and control of high potential injury events. In practical terms, before any task begins, all potential risks, especially those involving personal safety must be fully identified and effective control measures implemented in advance. Work can only proceed when risks are under control. Safety is not just a slogan on the wall. It is embedded in how our work is planned and executed and the commitment to ensuring every employee returns home safely. Going forward, we will continue to maintain the highest standards. Next, I will cover the company's operational performance. I still recall that at last year's results conference, our company leadership mentioned, thank you, investors, for crossing the winter with us. Spring is about to arrive. Looking back now, for MMG, 2025 can be described as a spring of blossom and the harvest of fruit. It marked our first bountiful year. As you may remember, at the end of 2022, our Las Bambas mine faced 3 consecutive months of transport disruptions. It was a difficult period for the company, and it was during that challenging time that I took on my role at Las Bambas. Now thanks to the efforts of the company's management and all employees. We can see the light at the end of the tunnel. Las Bambas has achieved 3 consecutive years of stable operations. And in 2025, its copper production ranked among the global top 10. At the same time, production of other metals, such as zinc, gold and silver has also advanced steadily. Building on the strong momentum in the metals market, our financial performance has also seen significant improvement. In 2025, we set new historical records. Full year revenue reached USD 6.22 billion, a 39% year-on-year increase and full year net operating cash flow reached USD 2.69 billion, a 67% year-on-year increase, driven by revenue growth. Our net profit after tax reached USD 955 million, a 161% year-on-year increase with net profit attributable to shareholders reaching $509 million, a strong lift from $162 million in 2024. At the same time, our balance sheet continued to improve. In 2025, net debt fell to USD 3.35 billion, gearing ratio further down to 33%, both hitting historic lows. It is a fundamental truth in our industry. A mining company's long-term growth is built on its resource base. For this reason, resource replenishment has always been a core strategic priority for MMG. We consistently strengthen our foundation through ongoing exploration of existing mines and through high-quality external acquisitions. According to the company's resources and reserve statement as of June 30, 2025, our copper equivalent resources are close to 27 million tonnes with copper resources about 18.6 million tonnes. Geographically, our resources are diversified across a global asset portfolio spanning South America, Africa and Australia. This broad spread effectively reduces our exposure to risk in any single region and then significantly enhances our overall operational resilience. Exploration is a strategic imperative for MMG, essential for both unlocking resource potential and maximizing asset value. Our growing operating cash flow enabled us to increase exploration spending across all our mines in 2025. We'll continue to prioritize these efforts to drive resource growth and ensure long-term sustainability. In terms of sustainable development, in 2025, we officially joined the United Nations Global Compact, embedding the highest standards of human rights, labor and the environment into our corporate culture. At Las Bambas, our 3 years of stable operations signify not only continuity in production and transport, but also our commitment to the symbiotic existence of the environment and the community. Through the Corazon de Las Bambas project, we support local enterprise development, leveraging the government's works for taxes policy. We support local education and infrastructure construction, ensuring that development dividends truly benefit thousands of households. In Australia, the Rosebery mine has been operating for 90 years. Since 1936, the vitality of this mine has been sustained, not only by the professionalism and dedication of generations of miners, but also by the long-term -- long-standing trust and cooperation of the local community. We're guided by the principle that corporate value is built on the foundation of social responsibility. From the Andes to Africa to Australia, we are committed to responsible operations that deliver sustainable value for the long term. With a diverse portfolio spanning copper, zinc, gold, silver, molybdenum, lead and more, MMG is well positioned to navigate volatile markets. And 2025 was a year that put that diversity to the test and delivered. The metals market was marked by strong performance across the board. Copper prices rose 44%, gold climbed 65%, and silver surged an impressive 148%. These gains were driven not only by industrial demand, but also by the growing role of metals as financial hedging assets. Copper, our core metal illustrates the structural shift underway. The energy transition from EVs to AI data centers has made copper the lifeblood of the new industrial economy. Yet new supply faces mounting challenges, social and environmental approvals, geopolitical pressures and rising extraction costs. The result is a widening global supply gap. In this environment, our diversified and resilient portfolio is a distinct advantage. We are embracing the new cycle with confidence, well positioned to create sustainable value for our shareholders. Our vision for copper is clear to build a scalable, future-oriented portfolio that delivers long-term value. This starts with maintaining stable operations at our existing sites while driving strategic growth through disciplined expansions and new developments. Our twin-track strategy in South America and Africa is the backbone of that vision. Las Bambas provides a foundation of stability and cash flow. In Africa, we are unlocking the full potential of Khoemacau. Construction of the 130,000 tonne expansion is on track for first half 2028 commissioning. And this year, we begin a pre-feasibility study for a potential 200,000 tonne expansion, a clear signal of our conviction in the asset. While organic growth is our core focus, we're also actively pursuing external opportunities. Through disciplined M&A, technological innovation and early-stage positioning, we'll continue to strengthen our resource base and expand our growth horizons. There's a clear thread running through our zinc strategy. We see beyond the metal itself. We are transforming from a pure zinc producer into a multi-metal value creator while embedding low-carbon principles into everything we do. At Dugald River, we are steadily advancing the green energy transition, bringing clean energy to the heart of operations. At Rosebery, we are unlocking value from byproducts so much so that precious metals now contribute more than zinc, rewriting the story of this historic mine. That concludes the operational update. Now I'd like to hand over to Mr. Qian to walk us through financials. Song Qian: Thank you, Mr. Zhao. Good morning, honorable investors and analysts on site and online. I will present the financial performance and related outlook. As Mr. Zhao just mentioned, 2025 marked a historic breakthrough across multiple financial metrics for the company, driven by higher metal prices and increased production. Full year revenue reached USD 6.2 billion, up 39% year-on-year. EBITDA hit USD 3.4 billion up 67%, with EBITDA margin expanding to 55%, positioning us at a highly competitive level within the industry. Net profit after tax was around USD 960 million, up 161% year-on-year. Operating cash flow and free cash flow exceeded USD 2.7 billion and USD 1.6 billion, respectively, injecting strong momentum into our growth. On this foundation, our balance sheet continued to strengthen. Net debt fell to USD 3.4 billion, a historic low. Our gearing ratio improved by a further 8 percentage points to 33%, building an even more stable foundation for our future strategic initiatives. Now let's take a closer look at the financial performance of each mine. In 2025, Las Bambas delivered EBITDA of USD 2.83 billion, a 78% increase year-on-year with EBITDA margin of 64%. Ores from the Ferrobamba and Chalcobamba pits are blended with throughput reaching record highs and copper recovery consistently above 90%. With the mine achieving the scale effect of 400,000 tonnes of annual copper production, unit operating costs fell by 26%. Combined with higher copper and precious metal prices, this generated very strong cash flow. The Las Bambas joint venture declared its first ever dividend to shareholders with total distribution of USD 1.854 billion, of which MMG's share was USD 1.159 billion. Since March 2023, Las Bambas has now achieved 3 consecutive years of stable production with a very solid operational foundation. This steady step-by-step progress has brought Las Bambas to a major milestone from stable operations to dividend returns. It has truly become the engine and cornerstone of the company's value. At Khoemacau, following a profitable first full year after its 2024 acquisition, EBITDA reached USD 167 million in 2025, a 43% increase year-on-year. A new mining contractor is now fully mobilized and construction of the paste fill plant is progressing steadily. These efforts continue to strengthen the mine's operational foundation, paving the way for future capacity expansion. On February 6, 2026, construction of the 130,000 tonne expansion project officially began. Once commissioned, the mine's C1 cost is expected to fall below $1.6 per pound, positioning it among the global cost leaders and opening new avenues for future profit growth. We are fully focused on breaking through production bottlenecks and unlocking growth momentum with operational progress and market opportunities now moving in sync. At Kinsevere, EBITDA reached USD 100 million, up 49% year-on-year. This reflects higher production, lower cost, the continued ramp-up of the expansion project and the positive impact of higher copper prices. After a clear-eyed assessment of the challenges, including cobalt export quotas, power supply volatility and fiscal and tax uncertainties in the DRC, the company recognized an asset impairment of USD 290 million. We believe this impairment creates the conditions for Kinsevere to improve its asset base, shed past burdens and move forward with greater agility to unlock future value. We are confident in overcoming the power supply bottleneck and building strength through these challenges. On one hand, we're taking multiple measures to secure power supply, including continued deployment of a 12-megawatt diesel generator set and battery energy storage system, while actively expanding our power cooperation with SNEL. On the other hand, upgrades to core facilities are progressing in an orderly manner, including flotation line, roaster and electrowinning tank house, laying a solid hardware foundation for higher capacity and optimized costs. Now turning to the financial performance of our 2 zinc mines. In 2025, the Dugald River mine produced 183,000 tonnes of zinc, a 12% increase year-on-year, a new record since commissioning. Recovery rates remained consistently above 90% and core throughput exceeded 2 million tonnes for the first time. This strong production performance, combined with higher zinc and silver prices drove mine EBITDA to USD 176 million, up 4% year-on-year. The Rosebery mine continued to demonstrate the unique value of its multi-metal model, driven by strong prices for byproducts such as gold, silver and copper, mine EBITDA reached USD 168 million, a 36% increase year-on-year. Notably, mine EBIT also exceeded USD 100 million, 2.5x that of 2024. This multi-metal synergy has added significant depth to this century-old mine, positioning Rosebery to move steadily toward its next century. This concludes the summary of our asset financial performance. In 2025, we saw not only a significant increase in copper prices, but also month-on-month gains in precious metal prices. With effective cost control across our mines, gold and silver made substantial contributions to the C1 cost credit becoming an important pillar of our profitability. Supported by strong operating cash flow from stable operations and a favorable market environment, we will steadily advance our CapEx plans. In 2026, CapEx is planned between USD 1.6 billion and USD 1.7 billion, focused on 2 key areas. First, securing the presence, sustaining CapEx to strengthen our existing operational base focused on core mines such as the Ferrobamba mining area and the tailings storage facility expansion at Las Bambas, providing a solid foundation for stable production. Second, investing in the future. Approximately USD 400 million is planned for the Khoemacau expansion project in 2026, using growth capital to drive our future growth engine. The project's total capacity intensity per tonne of copper is expected to be controlled below USD 15,000. Every investment we make is aimed at more stable output, better costs and more sustainable growth. While advancing our CapEx plans, we remain firmly committed to maintaining a healthy balance sheet. Two key initiatives contributed to this in 2025. First, the inaugural dividend from the Las Bambas JV, of which MMG's share was USD 1.159 billion. Second, the successful issuance of a $500 million zero coupon convertible bond, replacing existing shareholder loans. Leveraging these initiatives, we made several early debt repayments, including the early repayment of USD 500 million in debt for the Khoemacau JV, further reducing our interest-bearing liabilities. As of the end of 2025, our gearing ratio reached a new low, and our asset liability structure was further optimized. Compared to our peers, our gearing ratio is now below the industry average. A healthy balance sheet is the foundation that allows us to navigate cycles and achieve stable long-term growth. Now let's warmly welcome Mr. Cao Liang, Chairman of MMG, to address us. Liang Cao: Good morning, everyone. It's a pleasure to be with you today. This year's report is particularly meaningful for me. In my new role, I am deeply focused on governance and long-term strategy on behalf of the Board and our major shareholder. And I'm genuinely proud of what we've accomplished, steady progress and real results across the business. So I would like to thank Mr. Xu Jiqing, our former Chairman, for his effort and contribution to the company's development. Now on this slide, you can see our overall corporate governance framework. For MMG, our tangible strengths are clear, high-quality assets and operational excellence. But our true competitive edge comes from something less visible, yet more fundamental, our mature high standard governance principles and the professional international multilingual management team. This is the very foundation of our stable and long-term development and the key driver of our continued success. We have built a strong, reliable and effective corporate governance framework. The Board oversees the company's strategies and policies, ensures adequate capital and management resources to support their execution and provides comprehensive oversight of financial controls and compliance. Our Board committees such as audit and risk management, and governance, remuneration, nomination and sustainability provide strong support for strategic decision-making and risk control. At the operational level, the Executive Committee manages day-to-day operations and reports business progress to the Board. With extensive international mining experience, our senior management team ensures seamless coordination across asset operations, acquisitions, business development and stakeholder engagement. This year, we established the Innovation and Technology Steering Committee to guide the strategic direction and governance of our technology portfolio, driving digital transformation and smart innovation to power the next phase of growth. Looking ahead, we will harness the collective energy of our Board, employees, partners and stakeholders to build a truly global mining enterprise. With an open mind, we will build consensus. With pragmatic action, we will meet challenges. And with firm conviction, we will create lasting value together. And here on this slide, you can see our vision. Building on the solid governance framework, MMG's management has a long-term vision to create a leading international mining company for a low-carbon future. As the flagship overseas mining platform of China Minmetals Corporation, MMG plays a critical role in supporting its major shareholders' strategic goal of achieving over 1 million tonnes of copper production by 2030. On this journey, we'll advance on 3 fronts. First, driving operational excellence through innovation, controlling costs rigorously, maximizing efficiency and unlocking value through technology. Second, deepening organic growth, focusing on copper and strengthening our production base through optimization and expansion of existing assets. Third, positioning for external growth, building a robust pipeline of opportunities with an emphasis on early-stage projects to create new possibilities and growth momentum. With these measures, I'm confident that MMG will navigate any future metal market cycle with resilience and live up to the trust of every shareholder. For 2026, our goals are clear and our priorities are focused. On the production front, we expect full year copper output of 490,000 to 530,000 tonnes, and zinc output of 220,000 to 240,000 tonnes. To achieve this, we'll focus on 4 priorities: strengthening operational excellence, advancing stable growth, building financial resilience and delivering sustainable returns to our shareholders. Finally, on behalf of the Board, I want to express my sincere gratitude to all employees, shareholders, partners and friends for your continued trust and support. Thank you all. Unknown Executive: Thank you, Mr. Cao. And thank you to all our leaders for their presentations. MMG attaches a lot of importance to market value management and shareholder return. We're of the view that market value is not only the market's fair judgment of our company's value. If we do a good job in market value management, it is also an important communication platform with investors. By listening to the market and investors, we can better understand market expectations, and we can also integrate internal and external wisdom. Now in 2025, altogether, we have organized 164 investor communication sessions. And then we also organized on-site visits to Las Bambas. For the whole year, there are more than 2,000 investors whom we have communicated with. So this is a reflection of the IR department's work. Looking into 2026, so on the screen, you can see 6 points. So we will continue to do a good job. We will work hard to achieve win-win for the company as well as investors. Yu Guo: Now we will move on to Q&A session. You are most welcome to ask questions. First question, the lady on the second row here. Hanyin Yang: Management, I am Hannah from MS. Congratulations on the company's outstanding results this year. I have a few questions. First, this year, well, it is March now. And then in Peru, it is quite close to the election. So regarding Las Bambas, can you comment on the overall operation and also some update on the Peru election? Second question, for Phase 2 Khoemacau, it was approved, and it is expected that it would be commissioned in the first half 2028. In relation to the amount of resource and production volume, do you have concrete plan and goal for the 15th Five-Year Plan? In Canada, for the copper zinc mine, will there be some projects that will be started? Third question. So regarding the Brazil acquisition, what is the latest status? Do you have any time line that you can share with us? Jing Zhao: Thank you for the questions. First question is about Peru and Las Bambas operation and also the impact from their election. Well, Mr. Chen is now responsible for the operations of Las Bambas. I will defer to him. And then later on, I will elaborate. And then the next question is about Phase 2 of Khoemacau production volume. And then we will ask Mr. Chen to answer and Mr. Wang can supplement. And then regarding Brazil acquisition, Ms. Guan can comment. Okay. Mr. Chen, please. Can you please answer the question on Las Bambas? Xuesong Chen: Okay. Thank you very much for your question. For Las Bambas, for 3 consecutive years, we achieved very stable operation. In 2025, we had very good production outcome. As you said, in Peru, in April this year, they would have election. In order to stabilize operation, together with the local communities and various tiers of government, we had already entered communication -- forward-looking communication and continuous dialogue. At the same time, we have put in place a contingency plan. On site, we have established a strategic mine reserve so that for our mine, even under special circumstances, it can still achieve stable production. Besides, we will continue to pay attention to external situation and make adjustments to our strategies in order to guard against risk. In this way, we can ensure the security and stability of our annual production. Jing Zhao: Thank you for the question. Let me supplement. Las Bambas has been operating in Peru for more than 10 years. And over the past 10 years, we had seen the changeover of government and President a number of times. So our major work is to ensure stable relation with local communities and government. At the same time, there is also local project in Las Bambas to enhance our community relations. So basically, we focus a lot on making all preparations with local communities and local government. As I said earlier, in order to guard against risk, we have done a lot of preparation to stabilize production. For example, reserve and also supplies of important materials are being ensured so that we have the room -- enough room to guard against risk. That's the first question. Xuesong Chen: Next question about Khoemacau Phase 2. Regarding Khoemacau Phase 2 project, in -- at the end of Q1 2028, it would achieve 130,000 tonnes of capacity scale. And then during 15th Five-Year Plan period in 2026, in the first year of the 15th Five-Year Plan, we already started the Khoemacau 200,000 tonne pre-study or examination. So by 2030, we believe that we are able to achieve the production scale of 200,000 tonnes. Jing Zhao: Mr. Nan, please, can you supplement? Nan Wang: Yes. Yes. Let me supplement. Regarding resource volume at Khoemacau, since MMG's takeover, we have already started a lot of exploration work. At present, a lot of exploration equipment and personnel have already entered the site and have started work. So we firmly believe that in 2026 and the years thereafter, through all the exploration work of target areas and actual exploration work as well as exploration work by drones, we will be able to expedite our work. Hanyin Yang: Well, regarding the company's mines, well, not only about Khoemacau reserve and production target, I would like to also ask about the other mines during the 15th Five-Year Plan. Jing Zhao: For the 15th Five-Year Plan, we are now devising the strategies. And when we have clearer guidance, then we can let the market know. The next question is about the Brazil Nickel project. Ms. Guan, please. Xiangjun Guan: Thank you for the question. Now actually, last year, in October, our company announced to the market an update on our exploration work. As said earlier, regarding the project, we have put in place a 3-year exploration plan. So through these 3 years exploration work, we hope to be able to enhance the Izok and High Lake mines resource volume. Based on current exploration result, especially the work done last year, progress is very satisfactory. However, we will do further analysis so that our resource volume this year can be better realized in the exploration report. Regarding our work this year, we'll continue our exploration work, and it will continue in the coming 2 years. Regarding the development plan, for this asset, resource volume has a good foundation. However, it is close to North Pole. So there is a lack of infrastructure. So in the past almost 10 years period all along, we have been urging the Canadian government to work more on infrastructure, including roads and ports. And when various governments pay more attention to critical metals, the Canadian government had also enhanced this item in their agenda. So recently, we have expedited our work with the Canadian government and also local indigenous villages communication. So we can only develop this project with the support of local government and indigenous communities. So regarding this project, it is going to be of a longer term. Comparing with the Botswana expansion project, this is going to be of longer term. Early this year, well, you can see a better relationship between China and Canada. This is a good timing. It is favorable to our further studies and further plan of this project. The second project is about Brazil Nickel, okay? At present, we are in the process of EU's approval. And at present, we are working closely with another working partner to get the approval. So we hope that within first half this year, we can get the approval from EU and then we can complete the settlement of this project. Thank you. Yu Guo: Okay. The gentleman on the first row, please. Unknown Attendee: Congratulations on your good results. I have 2 questions. I'm a reporter. For Las Bambas, last year, copper concentrate produced 410,000. This year, the target is 400,000 tonnes. So it is rather conservative as a target. Is it related to the election? What will be copper price like in 2026? Are you going to spend some CapEx on the expansion of other potential projects? Jing Zhao: Thank you for your questions. You talked about 410,000 tonnes Las Bambas production volume and this year's estimate. Well, Mr. Qian can comment and then our CFO will talk about CapEx. Song Qian: Thank you. Let me -- thank you for your question. In 2026, we believe that regarding our production volume guidance, it is going to be a reasonable one. Based on existing resource volume and foundation, we will maintain a high level production. So we will optimize the Ferrobamba and Chalcobamba pits. At the same time, for the process plant and also related facilities and technology, we will make investment. So we are now in the process of assessment of various options. When we achieve critical progress, we will disclose to the market. We think that the existing production volume guidance is a reasonable one. It is not a very conservative one. Jing Zhao: Right. Mr. Qian, please. Song Qian: Regarding copper price outlook, well, we are positive, especially for the long-term copper price increase. But for short-term copper price, we will not make a concrete judgment. That's the first point. Secondly, regarding CapEx, in 2026, our CapEx will be at USD 1.6 billion to USD 1.7 billion. Now we have taken into consideration the market environment with rapid increase in copper price, how can we deliver maximum return to shareholders? We'll seize this opportunity to increase production volume as soon as possible. So we are thinking of different solutions in different angles to increase our production volume. At Las Bambas, our plan is that next year, we will increase CapEx by USD 800 million to USD 850 million on upgrading and revamping existing production facilities. And just now, we already reported that at the existing process plant and also the extraction plants, we will build infrastructure. And for existing infrastructure, we will redevelop and relocate them. At the same time, at Khoemacau, we plan to complete the Phase 2 expansion project. And in February this year, that had started already. For the whole year, that will mean an increase of expenses by USD 400 million. Unknown Attendee: Just now in your booklet, you stated that by 2030, you will achieve copper production volume of 1 million tonnes. So is it possible that there are some potential expansion projects that have not been announced yet? Do you have that consideration? Jing Zhao: At present, for China Minmetals Group, there is a strategic goal by 2030 to achieve 1 million tonnes. And for MMG, as an important overseas resource developer and operating platform of China Minmetals, we will try our best to help the group to achieve this goal. However, we still have to look at our existing operation of our good quality assets and do a good job. At the same time, we will also identify internal organic and inorganic growth potential. We will let the market know right away as long as we can satisfy market disclosure requirements. Yu Guo: Okay. The lady on the second row, please, can you please briefly introduce yourself? Unknown Analyst: Management, I am from -- I'm [ Merriam ] from Merrill Lynch. Congratulations on the outstanding results. I have a few questions. First, just now, you said that very quickly, you will formulate a 5-year plan. So do you have a concrete time line in which month or in which quarter will it be released? Second, regarding your dividend policy, what is your dividend policy? This year, if copper price continues to remain high and if cash flow improves, then this year, is there the possibility of dividend payment? Third question, you have a USD 170 million loss from a kind of hedging. So what is your hedging policy in relation to your mines? And in the future, how do you see this situation to evolve? My fourth question is, at present, in Congo, regarding cobalt, will there be production? And you still have quota of a few hundred tonnes. So how are you going to deal with it? Jing Zhao: Thank you for your questions. First question is about MMG's 5-year strategic plan. So as I said earlier, we have started to formulate our coming 5-year plan. And now we have to look at the overall group and various mines strategies for the coming 5 years. We are working on it now. And at appropriate time, we will make disclosure. Regarding dividend and hedging, Mr. Qian will answer. And for cobalt in DRC, I will ask Mr. Weiquan to answer. Song Qian: All right. Regarding dividend policy of our company, we attach much importance to shareholders' return. At the same time, we will put in place very prudent long-term asset allocation framework so as to ensure a stable return for shareholders, and we can also meet future capital needs. Every year, the Board assesses our company's financial position and make decision on dividend. At present, if you look at the order of capital allocation, first of all, we have to support organic and extension growth projects so as to make sure that given the current environment, we can make sure that our production is favorable to our long-term value and shareholders' return. Capital will be invested into projects that are higher than investment cost in terms of exploration and expansion. At the same time, we want to lower our debt level. And number three, we will try to remove obstacles in paying dividend. According to Hong Kong laws, listed companies can only pay out dividend from retained earnings. As of end 2025, we have accumulated retained loss of more than USD 500 million. So the number has already decreased by about USD 200 million. In 2025, our main mine, Las Bambas already distributed dividend to direct shareholders. And it had already reduced the accumulated loss to the parent company. So when conditions are right, we will carefully consider the situation, and we will then make decision to pay dividend to shareholders. Jing Zhao: And then regarding to value preservation, well, the management considers this as a very prudent risk management measure. We will also strictly comply with internal control process of MMG. By doing value preservation hedging, we can ensure certainty of cash flow. So we do not only consider market circumstances, we will also consider overall operation of the company. MMG's goal in hedging and value preservation is to ensure that we will not be affected by downside risk, especially when the market is volatile. We want to ensure safe cash flow. At the same time, we can enjoy the benefit from upside in the market. So for our annual strategy, we do not have a ceiling in terms of hedging. We want to make sure that it would be -- that there would not be excessive hedging. At the same time, we do not allow speculative hedging activities. I would like to supplement that when it comes to such measures, it is part of our approval process every year, it has to be evaluated and it has to be scrutinized. And based on our operating plan and risk situation every year, we will make decisions. So we are very prudent in risk management. So we are positive in relation to the long-term fundamentals. At the same time, we'll consider short-term factors that may lead to short-term volatility. Those factors are also carefully considered by us. So all the hedging decisions will be in line with our annual strategy devised by the Board. We want to make sure that these 2 are consistent, and we will make sure everything will be stable. Yes. Now the Board approves an annual hedging strategy. And in fact, we do have a preestablished ceiling or upper limit, and we won't go beyond that ceiling or upper limit. That is the point I would like to correct on. Now Mr. Xia, please. Weiquan Xia: Regarding DRC, cobalt sale quota and also Kinsevere production. In 2025 for Kinsevere, we have got 75 tonnes of cobalt quota. In 2026, based on existing communication, we believe that the quota will be 30 tonnes per month. And the annual quota document has not been released yet. Our company will actively communicate with the government to strive for more quota. As of the end of February 2026, regarding the 2025 quota, there are 30 tonnes of cobalt metal that had been already packed into vessels. And for 2025 and 2026, if all cobalt quotas are sold, then based on the cobalt price in February 2026, we believe that Kinsevere can achieve a USD 25 million revenue. And then regarding production strategy, given the current market environment, whether our company will resume cobalt production, that will depend on the market and also regulatory changes. We'll also consider the government's quota policies. So we are prepared. We are ready to resume cobalt production any time. Yu Guo: Next, the gentleman on this side, please. We have adequate time today. So don't worry, you will all have opportunities. Jingshan Feng: Management I am Feng Jingshan, Jimmy from Citi. Congratulations on your outstanding results. I have 3 questions. First question for Mr. Zhao. Looking at your 15th Five-Year Plan, you have the plan to produce 1 million tonnes of copper. So will it be mainly from internal growth or you need to do M&A? And then what is the project progress in Peru? And then what will be your interface with MMG in relation to spin-off or stripped mine resources, will they be incorporated into MMG or China Minmetals Group? That's my question. Jing Zhao: Thank you for your question. This is a challenging question. Starting last year, we set this goal of 1 million tonnes of production. So now we are producing 500,000 tonnes within MMG. And then there are a few 10,000 tonnes in other areas. So that explains the remaining 500,000 for 1 million. So basically, they are from the few greenfield projects. You mentioned those projects or assets and there are some stripped assets. And just now, you also talked about Glencore in Peru. Those are also greenfield projects. So they are some major components. Apart from greenfield, we do not rule out M&A. So regarding 1 million tonnes, I think there are 3 parts. One is the existing -- the other -- the existing ones that are under production, the other is those that are within exploration. The other is the existing ongoing projects. So for the Peru projects, I think 10-odd years ago, around in 2008 and 2009, we made some acquisitions. And there has been a certain time period in the past that we plan to develop it, but it is in the south of Peru, and it is to the north of Las Bambas, but then there are different community concerns. But during the development process, there are community issues in nearby mines. So we were not able to continue to work. So our work was suspended in 2012. And then at that time, we also did some maintenance. After the past 10-odd years, there are other mines near that project. And later on, neighboring community relations have improved. So the overall community situation has improved. Our relationship with the government has also improved. A few years ago, copper price was only $2. Now it's $5 to $6 already. So all these are favorable factors. And now for the majority shareholder, we have taken note of these positive changes. So starting last year, we started to do some study and research, and we have formulated teams. Now we have got a 20-odd person team. There are Chinese and also foreigners in the team. So gradually, we have been ironing out some issues, and we have also renewed some scientific studies. Can we complete the work within the 15th Five-Year Plan period? We will do our best. We cannot guarantee. But then actual conditions have seen quite big improvement. So can they be incorporated into MMG's resources? Well, we have to wait and see. You talked about 3 other copper assets. One is in Pakistan, 20,000 to 30,000 tonne production volume. There is one in Afghanistan and Pakistan. So in 2008 and 2009, that was acquired in Pakistan, that project was newly explored. It is quite heavy grade or heavyweight one. Well, we are not that familiar with those projects. They are related to another listed company, but those projects are up to 10 million level in production. And will they be incorporated into our listed company and also whether Glen will be incorporated into MMG, our focus is to operate our existing assets well. There are 3 mines that are in production. The 3 are copper mines, 2 are zinc mines, and then there is a greenfield project in Canada, Izok Lake. So for these projects, we want to stabilize production volume. We want to enhance their assets. And then there are also early-stage exploration and so on. We have to work well in cost control and CapEx. We are already very busy with all these work. Besides, we need to maintain good relationship with local communities and governments so as to ensure stable, highly efficient operations. On this basis, we will also consider M&A, not only assets within our group, but also external assets. And then we will comply with all the rules. So we will do all necessary due diligence and assessment. We will comply strictly with all the requirements of the Hong Kong Exchange. And then under the supervision of all nonexecutive directors, we will make sure to deliver transparent disclosure. Jingshan Feng: My next question is about CapEx in 2026. Just now you said that there would be a bigger increase of CapEx for Las Bambas. Regarding subsequent CapEx, how should we consider its continuity? So in the future, will it be more or less the same in 2026? Or will it go back to the past level? So for future production volume at Las Bambas, will there be some room for increase in the future? Looking at 2026 CapEx, there will be some increase. Looking at current copper price, your free cash flow is quite adequate. So in 2026, regarding debt reduction and dividend, how are you going to split the free cash flow, the remaining free cash flow? Song Qian: Thank you, Jimmy. Regarding CapEx, well, every year in our budget, we will consider the next year's CapEx plan, and we will also disclose to the market. For future years arrangement, so we have to wait till the process being completed in the second half before we can disclose. And then you also asked a question about -- okay, yes. Yes. As you said, strong market growth delivers to the company very good cash flow performance. And regarding utilization of cash flow, as I mentioned earlier, we will follow the order that I mentioned. We have to first make sure that we can deliver the organic growth projects. And at the same time, we will also do exploration and development of neighboring areas to make sure that existing operating projects can stabilize production. And finally, we'll consider to improve dividend policy limitations so that our company will gradually possess the conditions to pay dividend to investors. Jingshan Feng: My last question is regarding your one-off expenses and loss. In the second half of the year for impairment and hedging, if these are accelerated, then profit is very good. For one-off loss, just now you talked about your policy of hedging. In 2026, given your expectation about copper price, this year, regarding your hedging policy, how will it be executed? Yes, I know that there is upper limit, but how -- what will you consider in the execution of strategies for hedging loss in 2026, how do you see will be the profitability? For impairment for Kinsevere, there was one big provision. In the future, regarding the other mines, what is your expectation about impairment? And will there be further impairment risk for Kinsevere? That's all from me. Song Qian: Okay. Let me continue my answer. Thank you, Jimmy. For hedging loss, well, my view is our company wants to make sure the stability of our cash flow. At the same time, we want to enjoy the benefits from market upside. This is the major goal. So the inevitable result will be the hedging. We want to make sure that it will be opposite to our sales direction. So when price increases on one hand, my profit increases fast. I want to make sure that at the same time, for the hedging work that I have done, it may lead to a loss. It will lead to a loss. This is for sure. So looking into the future, we will still put in place a sound risk control policy to make sure that while we enjoy benefit from market upside, we can still avoid or prevent some uncertain factors that may lead to important threats done to our cash flow. So we want to guard against that. So that is our basic policy. It will not change. Your second question is about impairment. Regarding impairment at the end of each year, according to rules, listing company rules, we will do an impairment test on all our mine assets. The principle is to compare the recoverable amount and the book amount. If recoverable amount is lower than the book value, then that part will have to be subject to impairment. At the end of last year, we have prudently assessed various mines, and we realized that for DRC, as reported earlier, the cobalt policy -- sales policy has changed, and there are issues about power supply, and there is also unstable fiscal policy. So for the recoverable amount, there is a gap of USD 290 million. So that's why we made the impairment. Apart from that, for all the other mines, we have rather adequate headroom. We have quite adequate room. So at the moment, we do not see any impairment risk. For Kinsevere, power supply is such that we are trying our best to resolve the problem. Production system is ramping up for copper production. So I believe that in 2026, at present, we do not see any big need of impairment. Yu Guo: The gentleman on the third row, please. Unknown Analyst: Management, I am [ Lu Zhen Xiang ] from BOCI. I have 2 questions. First, regarding Las Bambas. This year, CapEx was quite big. So for this mine, how long will this high CapEx last? And for this mine, how much is the maintenance CapEx besides -- this mine has started dividend distribution. So what is its dividend policy apart from CapEx? Is it true that dividend will be paid out as much as possible? My second question is, some time ago, I read some media reports saying that the DRC government may raise electricity tariff. So regarding Kinsevere, do you see an increase in tariff really? Jing Zhao: Okay. Thank you for your questions. Regarding Las Bambas expenses and dividend, I will defer to Mr. Qian. For electricity tariff, Mr. Xia can answer. Song Qian: Thank you, Mr. Zhao. Thank you for your questions. Regarding Las Bambas, expenses are all maintenance expenses. There is no growth expenses. As I said earlier, for the 2 major mines of ours and the process plant facility, the TSF and so on, all these need maintenance expenses. The purpose is to maintain the production capacity of 400,000 tonnes at the TSF. As said earlier, at Las Bambas, since our takeover, the original owner designed capacity was only 300,000 tonnes. But in our hands, we adopted different ways to increase production steadily so as to reach 400,000 tonnes. But the grade of the mine is being lowered, and we are doing our best to stabilize production. So for these measures, they also entail maintenance CapEx. So that's the reason. If the market maintains the current strong trend, then it can generate strong cash flow. And as you said, if there is no other expansion or neighboring M&A, then we will try our best to distribute dividend as much as possible. So dividend will be given priority. Jing Zhao: Regarding electricity tariff, Mr. Xia, please. Weiquan Xia: For DRC government, right now, the tariff is around USD 0.10, and we have not received any update in relation to tariff increase. Unknown Attendee: Congratulations to you, management. Last year, your results were very good, your cash flow, your liabilities level all performed well. So that is the result of many years of work at Las Bambas after there was a problem. Mr. Zhao had done very good work to achieve this result. So I'm grateful. I am an individual investor. Last year, in October, I attended this event as well. So it has been less than a year, but you have achieved a lot. I have a question about supply, global supply. At present, copper price rises fast, especially this year, no matter whether you talk about year-on-year or half-on-half basis, there was a big increase. So will this increase mean very fast increase in CapEx globally so as to increase supply? Now my concrete question is, first, will there be big investment into the capital market? If yes, then this increase in capital investment, of course, there will be a lagging behind effect. A few years later, it would lead to a meaningful increase in supply. So there would be an increase of a considerable scale in supply, right? Besides, we will consider also scrap copper and also existing mines. So with an increase in production volume, there may be a lowering in grade. So overall speaking, in the coming 5 years or even longer period, how will be supply like 5 years later, that is in 2030? For MMG in 2030, according to my calculation, comparing with last year, there will be an increase by 200,000 tonnes. So within the coming 5 years, if copper price stays high or if there is a big growth, then I think the situation will be very good. So my question is basically about supply. Unknown Executive: Thank you. Thank you for your question. Last year, we had much communication. Thank you very much for your support. Regarding CapEx, well, you asked a very difficult question. I will try to answer it because it is more of a macro level. Regarding investment, well, copper as a metal has many financial attributes. Looking at the current industrial demand, it is not satisfied yet. So in the future, if you look at AI, big data centers, electricity and other industries demand, there would be continuous increase in revenue. And in the past 10 years, many big mining companies invested not as much as what we have expected into project development and infrastructure. So in the past 10, 15 years, there have not been many newly developed mines. So -- as a result, well, copper price will have to reach a certain high level in order to motivate these mining companies to put in big CapEx. So based on what you said, the current price is still not enough to lead to very fast increase in CapEx, right? Well, apart from rise in copper price, other costs also rise quite significantly. So various mining companies will have their own judgment about their psychological copper price or to which level the copper price has to reach before they make big investment. And based on development timetable of various recent projects, the development cycle is getting longer and longer, sometimes more than 10 years. And that also includes getting local approval. For Las Bambas and our Peru projects, we have seen that. So for a new project, from formation of the project, including all the environmental assessment and all the audits and so on, the whole journey is very long. There may be other sudden happenings. So we think that very often such cycle will be longer than 10 years. So we believe that certain conditions have to be met before an increase in investment. Different companies will have different judgment. Some may have mines with better endowments, and they would advance their investment. But for other situations, well, the cycle may be longer. So now do we need to do more exploration since the cycle has lengthened? Well, different cycles are investing more into maintenance and operations and exploration in order to achieve growth. Now you talked about scrap copper as well. In fact, for steel and iron, we have seen the situation already. Different metals have different cycle. So when the demand-supply equilibrium is reached, well, we have attended some other association meetings, but it seems that copper -- the copper equilibrium has -- will not be reached so quickly. So -- I don't know whether Ms. Guan will supplement. Unknown Executive: Let me supplement. Looking at current dynamics in the market, basically, people or everybody likes copper, everybody likes to increase resource volume and production volume of copper. For newly increased resource volume, it will save CapEx by working on green projects and M&A. But looking at current recent market transactions for BHP, hoping to acquire British and American resources or the merger with Teck and also some time ago, there were also some very hot transactions. Everybody wants to increase its exposure to copper through these transactions. So right now, for our greenfield projects and mature greenfield projects, there is a lag. So as a result, for big mining companies, they'd rather do M&A between companies rather than identifying new greenfield resources to develop. So regarding transactions, for mature projects, there is still inadequate mature projects in the market. That's the point I would like to add. Jing Zhao: Well, I have 2 points to share with you. Unknown Executive: Well, because of time, can you please be concise? Jing Zhao: Yes. First point, for MMG, as said earlier, in 2030 or last year, there was an increase in volume by 200,000 tonnes. So based on what you said, the ratio of increase is quite big. This amount, 200,000 tonnes doesn't sound big, but then in fact, the impact is already quite good, right? So another point is regarding injection of assets. At present, looking at current copper price, operating cash flow this year should see an increase by more than USD 1 billion. Then in that case, you should have the strength to acquire some assets, other group's assets. So as a minority shareholder, I hope that this can be accelerated. So what do you think? For your first point, what is your actual -- what is your specific question? Okay. As we reported earlier, we give priority to existing expansion projects. For example, to stabilize the 400,000 tonnes production of Las Bambas and also Khoemacau, 200,000 tonnes. This is now underway. So these developments are quite certain in our existing pathway. You mean the increase of 200,000 tonnes? That also includes the volume in Southern Africa. So it is within our plan already. Regarding injection of assets and M&A, Ms. Guan, can you comment? Xiangjun Guan: Regarding injection of assets, our view is this. For our company all along, we define our company as a growth company. So we will actively consider various M&A opportunities apart from organic growth. So we will consider other M&A targets, but we do not limit ourselves to assets owned by the group. We consider a wider scope. So we will assess our existing resource and reserve volume. At the same time, we will have to consider various risks and the economic considerations as well. So we do not rule out possible M&A of group assets. But if there are other opportunities better than existing assets within the group, then we will attach different priority. So we will assess the economic value of various projects that will be given more priority. Jing Zhao: Well, in 2024, we acquired Khoemacau. So you can see that basically, we will select a region with better potential to do M&A, and we rely on our own operation and exploration capability to do a better job. And of course, we will give a lot of deep thoughts and consideration. So in the future, regarding future M&As, they will be in line with our current M&A strategies. Any further questions? Last question, please. Unknown Analyst: Management, I am from Huaxin Securities. I have a question regarding Las Bambas. Last year, the cost was USD 1.14 C1 cost. So this year, it's slightly higher than last year, right? So what is the consideration? Is it because of the mining grade coming down? Or is it because an increase in logistic costs? So the recovery rate from the milling or process plant would be higher, right? So that's my question. Jing Zhao: Mr. Qian, C1 cost of Las Bambas, please. Song Qian: So you are asking about C1 cost, correct? Well, you may have realized from estimates and long-term investors of our company will know that our guidance, our production guidance and so on, our budget are relatively conservative because we want to make sure that even if there are unfavorable changes in the market, all our estimates and budget and assumptions can support our company's long-term development. So they will deviate a bit from our actual cost as a result. Last year, our guidance indicators are higher than the actual C1 cost metrics. So given the same price assumptions, if we adopt the current market price, then for Las Bambas, actual production cost may be lower than our guidance by USD 0.20 to USD 0.30. Yu Guo: Okay. We will give this lady an opportunity. Unknown Analyst: I'm [ Zhu Wei ] from Goldman Sachs. I have a question about strategies. Now how do you evaluate M&A opportunities in the market? 2 years ago, you said that after Khoemacau, copper price has been breaking record. And so how are M&A opportunities of copper right now? Apart from copper, well, you have also acquired Brazil Nickel. So for other basic metals and gold and precious metals, which will be your focus in M&A? Jing Zhao: Ms. Guan, please? Xiangjun Guan: Greetings. Well, talking about our strategies, well, the timetable is longer. From short-term M&As perspective, in the coming 3 to 5 years, if we look at commodities, we like copper most. But as you said just now, in the market, everybody likes copper. This is a consensus, so to speak. So right now, if we want to acquire a large-scale producing copper asset in a good region, then basically, there is no such opportunity right now. So what we need to consider is -- so we may have to lower our target a bit from this high year's target. So we will focus more on Latin America and Africa. There are certain risks relatively speaking, but we have mature experience in these regions. So we like those projects with a certain scale. But then if you look at projects that are being built right now, there are still some opportunities. For greenfield projects, we like more mature greenfield projects. So no matter whether we are talking about permit available or the studies being completed to a more mature stage. So from a project point of view, we do have some targets that we are looking at. But for some of the targets, we think that within the near future, they may be available in the market. But right now, they are still not. So we are still doing technical assessments. From commodities point of view, we like best -- we like copper best. You also mentioned precious metals just now. For us, we will consider precious metals and also concurrent copper and gold assets and so on. But precious metals within the short term are not within our consideration. Jing Zhao: Okay. Because of time, once again, thank you all for your interest and support for our company. And MMG is happy to develop a brighter future together with long-term capital and patient capital. We have prepared some snacks outside for you to enjoy. So thank you very much. [Statements in English on this transcript were spoken by an interpreter present on the live call.]
Karen Chan: Good morning, everyone. Thank you for attending the DFI Retail Group 2025 Full Year Results Presentation. I'm Karen Chan, Strategy and Investor Relations Director. Joining us today is Scott Price, Group Chief Executive; and Tom Van der Lee, Group Chief Financial Officer, who will be providing remarks on our full year results, followed by a Q&A session. Today's presentation is being webcast in its entirety. In addition, the full text of our results announcement and slide presentation are uploaded on to our IR website. And before we start, I would like to remind you of the following regarding information to be provided during the presentation. The information about to be presented is for information purposes only and is not intended to be investment advice for any person. There's no intention to imply for any dealings in any securities. There may be forward-looking statements mentioned in the presentation materials, which include statements regarding our intent, belief, expectation with respect to DFI Retail Group businesses operations, market conditions, et cetera. You're expressly advised not to rely on these forward-looking statements as they are subjective views, which are subject to risks and uncertainties. And with that, I'll pass it over to Scott. Scott, please. Scott Price: Good morning, everyone. Thank you, Karen. A pleasure to be here talking about our full year of 2025 results and also sharing with you some of the insights that we gleaned from the second half of the year versus the last time we gathered here. We're seeing a more confident customer in the second half of 2025. They're still careful. They're still not going back to, I think, the spending pre-COVID. But we are seeing customers willing to invest in Convenience, invest in their own wellness and also fun, which has been quite interesting. So some of the headlines, we're now up to about 115,000 daily e-commerce orders. So again, that focus upon Convenience. A lot of that is coming from our 7-Eleven China business. A significant increase in what we would call the wellness category within Health and Beauty, where customers, in particular, around derma, supplements are interested in functional value, in particular, a younger customer that I think are more focused upon wellness than particularly previous generations. Collectibles and characters across, I think, not only our 7-Eleven, but also our Own Brand. Cute always works, and we're seeing it as an opportunity for us to grow. I think that we had good strong like-with-like growth. I'll talk about that in a couple of minutes. Good progress overall on the business. And I think from a financial viewpoint, very pleased with the strength of our balance sheet now as we have paid down debt and are in a net cash position. And as we look forward to 2026, I think as Tom will share towards the end, our overall guidance, I think that we're having now an opportunity to benefit from really 18 months of hard work pivoting our business to far more of this customer-centric value plus, again, areas where they're willing to spend a bit money. We obviously have to focus upon becoming a modern retailer, which means the digital -- and the role of digital within our business is critical. We'll share some of the statistics there. We are very much focused upon financial returns, the TSR, our return on capital employed. So a key metric that we're using is increasing our revenue and profit per square foot across the business, which is a great metric within retail to really test how you're doing and continuing to invest in our digital ecosystem, which I'll describe in a little bit more detail. In terms of overall results, which have been released, revenue from our core operating subsidiaries up 0.5%. Now that was 0.8% in the second half. So again, we're seeing this recovery across the total portfolio after a couple of years of challenging revenue. Underlying profit up 34.7%. We have absolutely focused upon everyday low cost across the entirety of the business, which has continued to drive a much higher growth in profit than revenue. I mentioned net cash position at $538 million to $70 million. That is after paying a very significant special dividend of $600 million. So 58.3%. We announced a full year dividend of 10.7% after approval from our Board of Directors yesterday. Overall, we're seeing some interesting trends. High-value tourists are coming back to Hong Kong. We see now in many of our tourist stores great growth. I'll talk a little bit about that, in particular, Health and Beauty. So tourist locations versus the previous tourists who prided themselves on coming to Hong Kong and spending nothing, bring their own water, their own food. We're now seeing a return of high-value tourists, which is a great sign. Good mix now from cigarettes to ready-to-eat, little bit more detail in that shortly. Food growth benefited from the Singapore consumption, the government prior to the elections gave each citizen SGD 600, and that obviously benefited the Food as we saw in our performance there. Great progress in IKEA. We'll talk about that in a few minutes. I mentioned the doubling of our e-commerce transactions. And again, the total shareholder return for the year was 93%. So I'm going to turn it over to Tom for a little bit more detail. Tom Cornelis Van der Lee: Thank you, Scott. Let me take you through the financials for 2025. Starting with the income statement. We closed 2025 with the underlying profit of $270 million, up 35% year-on-year. And with this, we delivered the top end of our guidance. This performance was driven by consistent like-for-like recovery, margin improvement across most formats and decisive portfolio actions, notably the divestment of Yonghui, Robinsons and Singapore Food. For clarity and comparability, we present 2 additional views here. First, a restated 2024 base, reflecting only the comparable periods for divested businesses. Second, a reset 2025 view, assuming full year deconsolidation of Singapore Food and Robinson Retail. And this provides a clearer picture of our going-forward earnings profile. On revenues, revenue from subsidiaries were $8.9 billion, up 0.5% year-on-year on an organic basis, excluding divested businesses for the comparable period. Maxim's revenue, our associate, up 0.4% on improved mooncake sales and Southeast Asia restaurant performance, offset by weaker sales in Hong Kong and Mainland China. Subsidiaries underlying profit, $183 million, up 19% on a comparable basis. All formats improved their operating margin with the exception of Convenience due to reduced cigarette volumes. Our financing costs reduced as we paid down almost all our debt. The share of underlying profit from Maxims, up 9% due to stronger sales and lower costs. And the underlying profit is $270 million, as said, 35% up year-on-year or 18% up year-on-year on a restated comparable basis, excluding the loss-making Yonghui in 2024. The nontrading items, $36 million, they primarily reflect the losses of the divestment of Yonghui and Robinsons Retail, partially offset by the disposal gain on Singapore Foods. These items are all nonrecurring. The ordinary dividend per share, the $0.14 here, that's based on our new dividend policy, which we announced last year of 70%. The special dividend, $0.4430 we paid out last year. I think overall, full year 2025 represents a clear inflection point for the group. We transitioned from a portfolio-driven structure to a much more focused operating company with stronger earnings quality, lower leverage and a greater strategic flexibility heading into this year 2026. Going to the sales summary. As outlined in our Investor Day, growth, margins and returns are the key building blocks for us driving TSR. Turning to sales here on this page. We continue to see sales recovery across the format in 2025, reflecting improving execution and early signs of demand recovery. Overall, consistent like-for-like recovery, reaching 2% in the second half of 2025. Turning on to the formats. On H&B, we saw an almost 7% growth driven by continued share gains in wellness, stronger tourist traffic in Hong Kong and the growing e-commerce presence in Southeast Asia. Convenience, the total sales declined 1.5% due to cigarette volume reduction following a tax increase in Hong Kong in February 2024. Excluding cigarettes, sales increased 1% as we focus on growing higher-margin non-cigarette categories with RTE being the main focus. Food, sales were broadly flat, excluding the divested businesses as price reinvestment supported volume and transaction amid value-focused consumer environment. Home Furnishings, although sales declined 3.5%, a clear improvement from a decline of 12% in 2024. And that's driven by price resets, range rationalizations and accelerated digital penetration. And as said, Maxim grew 0.4% due to stronger mooncake performance and Southeast Asia restaurants. Breaking this down a bit more detail into half year numbers, so you can see the trends here better. Sales and like-for-like trends continue to improve throughout 2025 with a clear step-up in the second half across all formats, reflecting strong execution and stabilized demand conditions. On Health and Beauty, Health delivered sustained like-for-like growth, supported by continued share gains in wellness and the growth of tourist arrival in Hong Kong as well as this e-commerce I mentioned earlier, in Southeast Asia, particularly Indonesia and Vietnam, so double-digit like-for-like sales growth in 2025. A very strong performance in these 2 markets. On Convenience, sales remained pressured by cigarette volumes declines for the tax hikes, although a clear improvement here is seen in the second half of 2025, and that's driven by continued growth in higher-margin non-cigarette categories, particularly RTE. In South China, like-for-like sales were impacted by the intense subsidy competition from food delivery platforms, particularly in the first half of 2025. As we continue and grow RTE with margins about 4x as much as cigarettes, we expect the financial impact from cigarette sales decline to moderate from 2026 onwards as we anniversary the full year cycle of the cig tax increase. On Food, stable like-for-like despite a challenging trading environment. In Hong Kong, pricing reinvestment in the core basket items drove volume up 2%. Singapore Food, as Scott commented, benefited from the government consumption vouchers, which were only redeemable at supermarkets and hawker centers. And Cambodia delivered a very strong like-for-like, both in sales and also improved underlying margins. In Home Furnishings, you can see also here a clear improvement compared to 2024 and also the second half is much better. And that reflects all our efforts on price reductions, better entry price range options and we rationalized the noncore items throughout the portfolio. As a result, you can see that the volumes in the second half are growing. Sales might not grow yet, but the volumes -- underlying volumes in the second half for IKEA has been growing. If we then turn on to the operating profit by format. And you can see here also quite strong results and also a good recovery in the second half. Starting with Health and Beauty. The operating profit here reached $228 million, up 9% year-on-year, driven by strong performance on sales across all our markets. And the margin improved 20 basis points to 8.7%. Convenience, operating profit of $97 million, although down 6% due to the low reported cigarette sales, although the second half here also returned to profit growth, driven by the favorable mix towards higher-margin RTE categories. Food operating profit reached $62 million, a 15% year-on-year increase, driven by earnings recovery mainly in Singapore Food following the distribution of the government consumption vouchers we led to higher sales. Again, here, Hong Kong pricing investment drove volume growth but did not impact our margin because we offset the lower prices with better sourcing in our business. And last, Home Furnishings. Here, we can see improved margins year-on-year despite slightly lower sales, and that's because of significant cost optimization across labor, supply chain and rent across most of our markets. As a result of that, we had a $10 million uplift in profit for IKEA or Home Furnishings in 2025. Turning to the total subsidiary operating profit and the underlying profits. Starting with the subsidiary operating profit. The operating profit is post-IFRS increased 7% year-on-year, driven by broad-based improvements in subsidiary profitability with operating margin now 4.2%, up 30 basis points. The underlying profit, as mentioned earlier, is up 35% to $270 million, supported by stronger subsidiary earnings, as you see above, lower financing costs. We moved from a net debt to a net cash and a higher contribution from associates following the divestment of the loss-making Yonghui. The reported SG&A costs are slightly up, but on a like-for-like basis, they are down. There are a few one-offs, which are not recurring, and you will see this year that costs are coming down on the SG&A line. Turning to cash flow. Strong cash flow, $430 million cash -- operating cash flow, up almost 30% year-on-year. And our free cash flow grew 78% to $281 million in 2025, both because of underlying profit improvements, improved working capital efficiency and the interest savings, which I highlighted earlier. CapEx. Our CapEx was clearly below our guidance and ended at $149 million. Of the CapEx we spent, 50% of the CapEx is spent on stores and refurbs, 30% on digital and IT and the remaining supply chain stability and maintenance. We, however, remain committed, as you will see later in the guidance, to invest $200 million to $220 million per year, again, focused on store renewals and technology, particularly AI, as we will highlight later. Following the $1 billion of divestment proceeds, we moved from a net debt to a net cash even after returning $600 million to shareholders via a special dividend. And that move to the return to shareholders, as you can see here. Our total ordinary dividend is $0.14 in 2025, up 33%, and that reflects a stronger earnings, but also the increased payout from 60% guidance to 70% policy. We returned $740 million to shareholders, including $600 million special dividends, while we strengthened the balance sheet. We delivered a total shareholder return of 93% in 2025, driven by earnings recovery, portfolio simplification and disciplined capital deployment. And with this, we've outperformed our retail peers and major global indices. And last, the ROIC (sic) [ ROCE ] improved to 9.4% with a clear pathway to 15% by 2028 as we announced during our Investor Day. And with that, I would like to turn it to Scott for strategy and business updates. Scott Price: Thank you, Tom. For those who attended our Investor Day, this framework was presented. And the strategic deliverables are really just the anchoring structure by which we focus our investments and as well the priorities for each one of our formats in the business. We talk about the key deliverables in 2025, retail excellence, being really good retailers. We have, I think, a portfolio that brings synergy across, but each one has a different assortment. We have thousands of products in each one of our stores. The reaction to the inflationary environment meant that we really had to focus upon repivoting. So we had a good, I think, 12 to 18 months of really resetting our customer proposition and being really good retailers. In Health and Beauty, curating the range moving out of commodities, much more into functional value product lines. We're seeing great progress there. On Convenience, moving away again from tobacco into far more of the RTE, ready-to-eat. Food, really strengthened our proposition there as well the value to customers. And on Home Furnishings, enhancing the value of the product lines as well accessibility by the way that we have gone to market, in particular, in Southeast Asia, Indonesia on platforms. Access to customers, we have targeted, I think, appropriately, if we focus upon TSR and ROCE, the Convenience and the Health and Beauty range. There may be stores available in Food, Cambodia, 1 or 2 stores potentially in IKEA, in Taiwan. But for the most part, the majority of our store growth will come from those smaller format, high return and low CapEx because of the franchise model. Omni digital, more than 90 digital channels, that's apps, loyalty programs, the launch of our DFIQ vendor platform, all increasing the mechanisms by which we build a more powerful digital P&L moving forward. Good initial progress on media. So as you go through our stores, you'll see screens, you'll see advertising. Our proposition rather than going with Alphabet or Meta, we're going to have a higher purchase conversion because that new product launch is going to be right next to the product as opposed to seeing it late at night on your phone and trying to remember it the next morning. I think the retail media is quite a powerful opportunity for us as we presented in the Investor Day. And we continue to make progress. I think in terms of divestments, pretty comfortable with the portfolio as it stands today, now ensuring that we redeploy our capital moving forward into the highest value opportunities for shareholder return. We go through some of the formats in particular. I'm not going to go through each one of the aspects here. Tom unpacked the sales and the operating profit in detail. But overall, just this growing wellness focus upon, I think, the generation that traditionally has been the silver hair, they call it, I put myself in that category. But this next generation is far more health focused. And we are finding then an opportunity to pivot towards a younger generation on the health. We still have beauty, appropriate beauty, but it's functional beauty, hair care that has a far more beneficial derma as opposed to more traditional cosmetics. Hong Kong, Macau, again, tourists coming back. Our tourist stores had a 9% revenue growth in 2025, the second half higher than the first half. So we see that as an improvement. We exited the stores in China, return on capital invested being a huge driver of that and then focusing on the GBA strategy. A good increase in sales with Vietnam and Indonesia, a 10% and greater like-for-like growth across our stores. Own Brand, a critical part of delivering value while also good functional, I think, benefits to customers through our products, 35% improvement in gross profit productivity. We did close the nonperforming stores. Any healthy retailer continually assesses things change relative to pattern, competitive landscape. At any given time, you're looking at a single-digit percent of your store portfolio to ensure that you stay healthy. And a 38% growth across e-commerce in the Health and Beauty area. On Convenience, it was a year of transition, I think. So first, a good portion of our sales traditionally came from tobacco. 31% of our sales were tobacco-related transactions. Generally, that's a 1 or maybe a 2-item basket, and we shared that in the Investor Day. They're low margin. So there's a huge opportunity to pivot to ready-to-eat and also, I think, collectibles, creating fun transactions for customers who come into our stores to buy something new and generally then a larger basket. The innovation that we look at for ready-to-eat, it seems like half the population of Hong Kong goes to Japan at least twice a year, if not more often. And so again, that Japanese themed ready-to-eat excellence, and that is one of the benefits of the franchisor. Our penetration now, excluding cigarettes at 33% of sales, ready-to-eat, a substantially higher margin than traditional tobacco. Asians prefer hot food, and we see, in particular, in China. So across our stores, we're launching out food bars, which really is a small quick service restaurant. The challenge that we had is with that proposition, when you saw a bit of that platform battle that occurred, we were not part of that subsidy drive for the big players who apparently were trying to kill each other. And not making any money at it, from what we can see. But we were excluded from that, but we were picked up by the platforms from August as a quick service restaurant, and we saw obviously the value in that, in particular, when it came to those e-commerce click and collect, order online as you've gotten onto the train, pick up at the 7-Eleven near your office, bring that breakfast or that lunch back into the office. We also see, again, franchisee penetration is a great way for us to drive our ROCE with a lower CapEx intensity in terms of revenue growth. We've got, I think, good progress by the team. I think always want more faster, broader, bigger, our 7-Eleven team is looking very nervous right now, but I'm pleased with the progress and looking forward to more. Moving on to Food. Food was a huge year of pivot. The news last year, everyone going north to buy their groceries. And to me, that was a substantial risk. I see a huge opportunity for us based upon the deep knowledge of our Food team and the experiences they bring to drive basically affordable food in Hong Kong. We should not become the food desert that you see in many capital cities around the world. Hong Kong, I think, is unique in that way. So we have embarked upon pretty substantial investment in re-sourcing our product line to be able to eliminate traders, middlemen, all the ones who were adding an incremental margin and go direct across many of the product lines. We strategically identified 3 to 4 competitors in Shenzhen. We identified the 200 most common items in the basket. We shopped that basket and then we came here to Hong Kong. It was 18% more expensive at the beginning of last year. We achieved a 1% difference during Chinese New Year. As a result, with increased profit, we now are able to really, I think, bring forward quite a very powerful proposition in terms of the confidence that Hong Kong customers can shop here. They're not going to get a better deal in Shenzhen as well. We saw that in the volume growth. So we had a 2% volume growth as a result of all these efforts and a good solid start to the year during Chinese New Year, which tells me we are on the right path moving forward. Those strategic price investments, et cetera, while protecting margin we've seen in the results, again, second half better than the first half. Tom mentioned the Singapore government vouchers. We also, I think, have a unique opportunity in Cambodia, a business that was pretty small, not really doing much, all of a sudden became very interesting to us as a part of the portfolio. And we now plan 50 new stores, has a very good margin and a very good return on capital employed. So an interesting business. And we completed the Singapore divestment. Frankly, I think we divested at the right time. I think ex those Singapore vouchers from the government, the business will not be, I think, as attractive. And similar to Hong Kong to Shenzhen, you have the same challenges between Singapore and Johor Bahru, in particular, as we open up the train lines and ease up on the border, you're going to see a lot of those baskets going north. So I think our timing was very good. On Home Furnishings, excellent progress. Look, all of our formats were challenged by this change in customers, but I'd say IKEA was the most challenged by the macroeconomics. The fact that we do not have a high level of real estate transactions in 2025. Look, when people don't move, then they don't do home renovation and they don't buy heavy furniture, which meant that a good part of our portfolio assortment was challenged in 2024 and 2025. But we've made really good progress focusing on what matters. And so sensible, I think, investments for customers coming in, in particular, our marketplace area. But with that understanding of a different economic relative to the basket and the margins for the businesses, the team did an outstanding job of really cutting costs, which meant that despite challenged revenue we delivered, I think, quite a strong profit position. Taiwan continues to be a very good market for us with greater than 10% profit margins. We are quite unique in Indonesia. IKEA, the franchisor has only approved 2 markets around the world to test platforms. So we have a mainly Jakarta-based Indonesia, IKEA business with 1 store in Bali. We went on to Shopee in Indonesia and now are able to offer a good relevant part of our assortment to the entire country of Indonesia. which, of course, as in archipelago of 200-plus islands with 200-plus million consumers. So find that as an interesting opportunity moving forward. Again, those are more of those sensible splurges around portable items. No one's ordering a leather sofa online. So it's an appropriate assortment. And then scaling our Food business. Everyone loves a good Swedish meatball. We now, through research, we now know that 45% of our customers visit IKEA for food. And so you'll see that we have increased the overall proposition as well, importantly, reset the stores to make it more convenient to engage in our food assortment. On our digital, great progress on the digital ecosystem you see across here in terms of driving our online penetration, driving launches. And as a result, we had outstanding economic results. So our retail media grew 400%, 1,000 new in-store digital screens, which we are now making available to our vendors to invest in a media present. We now have 13 million active users. We now have 100 million-plus visits to our store each month. So that's, in essence, 20 million transactions a week now across the DFI portfolio, which is a very powerful data source and now 33 million loyalty members across all of our programs in the markets in which we operate. Yuu continuing to expand across platforms. We're now on Foodpanda with access to the data, which is very important as you think about when you interact with the overall platform. So this is another area where the media -- the digital media team and the data team know that we can do so much more, and I'm looking at them. And so we want to move faster, bigger, harder. He shake his head yes, which is a good thing. So with that, I'm going to turn it over to Tom to review our business outlook. Tom Cornelis Van der Lee: Thank you, Scott. On to the full year 2026 outlook. Starting with the revenue. Excluding Singapore Food, which we deconsolidated last year December, we expect to grow our top line organically by 2% to 3% as we continue to gain market share across our formats. The underlying profit expect that to grow to between $270 million to $300 million. And that implies a 13% to 25% growth, excluding the discontinued Singapore Food and Robinsons. So we go from $230 million restated last year basis to $270 million to $300 million. CapEx, we are further we're going to spend about $200 million to $220 million this year, half again on new stores and store refurbs, about 25% to 30% on digital and IT. And split on formats, about 65% on Health and Beauty and on Convenience, the remainder on Food and IKEA. The dividend payout, the policy we announced last year, 70% payout and our return on capital employed will go from 9.4% to between 11% to 13% for 2026. And with this, I hand over to Karen for the Q&A. Karen Chan: And with that, we'll open up the floor for Q&A. [Operator Instructions] First question, Jeffrey. Ming Jie Kiang: I'm Jeff from CLSA. So my first question would be regarding the organic revenue guidance, 2% to 3% for 2026. Presumably, we exited 2025 with a similar momentum. So can you walk us through maybe year-to-date, what you are seeing across different formats on the revenue momentum? And my second question would be on the guidance for -- sorry, CapEx for 2025. So it is quite meaningfully below the previous guidance we've received. So I just want to understand, was this some timing difference? Or was this something that happened that makes the CapEx has been low? Just anything would be helpful on that front. Scott Price: So I'm going to cover the first one. And Tom, who knows my view on the second one, will cover our performance on CapEx because I'm not a happy camper. But in any event, we had a solid start to the year across all formats and saw positive total and positive like-for-like consistently. I really do think 2025 was a very important year for us relative to the change in proposition, much more value-based, much more attuned to the customers relative to what they're willing to spend their money on. So very pleased in line with guidance is what I would say. And I think we can do more. Collectively, we gained share across most of the banners in 2025. I would like to see that continue into 2026. Tom, how do we feel about CapEx? Tom Cornelis Van der Lee: Let me try to answer this. I think -- first, understand is a big impact of Singapore Food. So we divested Singapore Food. And as we announced the divestment, we stopped most of our CapEx. There's no point to invest. But still, even without that, we're still materially below our guidance. And here, I think we have to significantly improve our planning. There is still a culture of holding on to your budget to the last minute and then realizing you can't spend it. So we have to improve planning. We have to make sure that if we give you a guidance that we are going to spend it because the spend is not just for spend's sake, it's to make sure we drive revenue and drive profits. So that has to improve this year so that we get back to our guidance $200 million to $220 million because we don't want to miss opportunities to get the top line and bottom line improved. Scott Price: As I said to our Board of Directors yesterday, as God is my witness, we will spend and invest the midpoint of our CapEx guidance in 2026. Karen Chan: Next question, please. Brian? Unknown Analyst: This is [ Brian ] from Citi. So I have 2 questions. My first question is that I see that 2026 guidance is actually not far away, I mean not too far away from 2028 guidance. So I'm getting a feel that we are getting more optimistic on the overall performance in the midterm. So I just want to check how you feel about that? And are we revising any of our medium target that we released in December? That's the first question. The second question is that just looking at 2026 alone, for each business format, is there any quantitative or qualitative the main target, main missions that you need to achieve in 2026? Scott Price: Tom, why don't you cover the first one? Tom Cornelis Van der Lee: On guidance, we've laid out the guidance in our Investor Day in December. And we said we want to underpromise and overdeliver, right? So we've seen good progress last year. This year, we expect also significant improvements on the back of improved underlying performance as well as lower cost. And on the back of that, we'll see how 2027 goes for that. But we are quite confident that we can at least meet and hopefully, at some point, exceed the guidance we've given you last year December. Scott Price: In terms of the by format, [ con call ], we were very thoughtful around how we positioned the Investor Day by format strategy. And again, in a customer-first environment, that retail excellence and being laser-focused on a winning proposition for customers, communicating that and ensuring that we are modernizing our digital proposition. I think in 2026, to Tom's point, we want to underpromise and overdeliver. '26, based upon the first few months and this sense of renewed customer confidence gives me good hope. But look, we live in a challenging world. Who knows what oil prices are going to do, what that could do to energy costs. Therefore, do we go back to a far more value-oriented customer. Some of that splurging may end. There is great strength in being a daily essential retailer, but it's not without its challenges relative to consumer confidence and people saying, you know what, I'm going to spend 10% less and save that or I need to paycheck to paycheck, put more into paying my electricity bill. So I'm cautiously optimistic, but it's way too early to change midterm guidance. Karen Chan: Any questions? Ben? Unknown Analyst: This is [ Ben ] from UBS. So I have 2 questions from my side. So first one is it's been 2 months after the Investor Day. So just wondering if you could share some updates with us on the e-commerce penetration and also the progress made on retail media, specifically 2 months into 2026. And then the second one would be regarding on -- in Hong Kong market. You know that Chinese e-commerce platform has been aggressively penetrating the market with cost subsidies. So how long do you expect this to last? And what would be our strategy? Scott Price: So on the -- again, it's been roughly 73 days. So a little early to change our minds in terms of, again, the midterm guidance. E-comm penetration, we made great progress. I think it was 140 basis points up to 6.2%. And look, we are after fair share. I'm not trying to win in the digital world. As you think about overall spend, what percent is e-commerce, we want to have a fair share of that. So we don't want to be left behind. The market interaction is wildly different. In Hong Kong, for example, it is some of the lowest e-commerce penetration in the world because there's one store every 20 meters. So why would you wait for someone else as well, there's a substantial for families, number of helpers who get sent out to do a lot of the shopping. Where I see us needing to focus is instant commerce. That will grow. You see this through the platforms. People forgot something, they want something quickly and as well retail entertainment or retailing -- no, that's not what it is. Retail entertainment, there used to be a word for it, I have forgotten, apologies. But people do shop online because it's interesting and it's an assortment that you can't necessarily get in the store. So I think we are in a good shape to continue to drive our e-commerce penetration relevant to the market share. It will grow because in markets like in Indonesia, it's very high. Access to goods in stores and brick-and-mortar is very limited, same as I think in Vietnam, where we see much higher growth. We will keep up and focus on that fair share, not ready to change the environment. In terms of the platform battle that took place in the North, I think that is calming down a bit. We actually, other than really the Guangdong impact to our 7-Eleven business, didn't necessarily see across the rest of our format portfolio a significant impact. I don't think trying to get across the border, a lot of those products don't move very well through the approval process with some of the ingredients, et cetera, in particular, in Health and Beauty. What we see is actually a reverse opportunity, which is there is a very large amount of our product line here in Hong Kong that's very interesting. Certainly, we see it through the Mainland to be able to now digitalize that and make that available in Guangdong. So we see the -- actually rather than necessarily a risk, we see it as an opportunity for us to be able to grow our business through some of those assortments being made available for purchase. We've expanded now the Yuu loyalty program into Guangdong. So I think that is a first step in being able to create a digital ecosystem that is far more in line with the retail porous border that's envisioned with the Greater Bay Area. Karen Chan: Okay. We'll move to online questions. Question from Jayden Vantarakis of Macquarie. He has 3 questions here. First, at the recent Investor Day, management provided clear segment and market targets for M&A. Are there any updates to share? Second, how is the progress on the franchising model for Guardian in Indonesia? And third question, margin improvement at IKEA is stronger than expected relative to what has been shared at the Investor Day. So what has gone well during second half of 2025? And is there more room for higher margins in 2026? Scott Price: Tom, I'll leave the margin improvement to you. So on the M&A, we're very clear what we will and what we will not do on M&A. I think that what we divested relative to minority positions will tell you very clearly what we don't want to do. We only want operating businesses that bring scale synergy to our existing business to allow us to continue to deliver on improved ROCE and improved TSR. This is a situation where we're in the market. We continue to look, I think, more strategically in the Health and Beauty and the Convenience store area, but would not say, I think, no to interesting affordable options in digital. The affordable piece is a little bit more challenging given the multiples on which many of the digital assets trade. So we will follow the policy. We will follow the procedure. M&A activity is episodic. And so we'll update you at the appropriate time. On Indonesia, we have 2 trial stores. You have to get the model right. You have to be able to ensure that a franchisee can make a living income and that this is a good return on investment for them. So you cannot go out with a proposition that has not been trialed and tested. So we trialed 2 stores. We're pleased with it. We'll do another 40 stores this year in terms of the Indonesia franchise stores. This is a model that you perfect over a couple of years before you really go after the substantial growth. So pleased with the pace, and it is, as referenced, in line with our commitment that we made during the Investor Day in December. IKEA margin... Tom Cornelis Van der Lee: On IKEA. So... Scott Price: Other than brilliant leadership by the IKEA team, right? Tom Cornelis Van der Lee: Absolutely. Martin and team did a fantastic job last year. But if you look at 2025, the big improvement in underlying profit is because of lower cost. So labor cost, rents, but also supply chain, so significantly lower cost in IKEA. Part of the lower costs, we have invested in lower pricing. So we saw that volumes are picking up, although sales are still down last year. So we now need to make sure that sales are up. And if sales are up, we will expect better results, but that will take some time. Investing in margin and investing in price will take time before it turns into higher sales numbers. But the initial signs are positive. So hopefully, we'll get at least a revenue stabilization in 2026, and then we'll see higher profits in the following years. Karen Chan: Your next question comes from Meg Kandy of CGS International. Congratulations on an exceptional year. Now with a strong foundation built looking forward into 2026, can you give us some color of the levers you're tapping for further shareholder return from here onwards? Scott Price: Tom? Tom Cornelis Van der Lee: On shareholder return, I think what we announced earlier is, for us, the most important driver is top line growth, right? So growth, and you see that the first 2 months of this year, we are in line with our guidance. And hopefully, some will exceed. So growth is a key driver. And we do that with the right pricing, the right ranging and the right stores. In addition to that, we started last year with a large cost optimization project. And we've seen the results in IKEA, but also across all our formats and also on our SG&A, our costs are coming down. So you can expect this year that SG&A on group level is coming down. That's another lever where you can see profits come to be increased. But in the long term, it's sales and margin. In the medium term, you'll see costs coming down. Scott Price: And probably what I would add to that is there needs to be an incremental value to this portfolio versus the breakup value. Otherwise, what's the point of it. And where I see value is across 3 areas. First, it's cost optimization. We have relentlessly focused on being able to ensure that we're an everyday low-cost operator. As a result, we are able to, I think, operate at a lower overhead as a percent of revenue than any nearby competitor by format. So that's first and important. The second is the synergy of the digital ecosystem. It is -- would be very expensive for all of our individual formats to try and create their own ecosystem, which means the e-commerce platforms and the e-commerce transactional capability, their own loyalty program, their own ability to drive retail media as well data monetization. And then the third is the value of the data holistically that we're able to bring through our loyalty programs. So we know customers better than anyone else and the ability to partner with vendors and be able to say through purchase behavior in IKEA, we understand that this is a young family about to have a child. That helps Health and Beauty personalize offers that are relevant to prenatal and then baby assortment moving forward. So the ecosystem to me is going to be a huge driver of this TSR moving forward relative to investing in a competitor who does a single format only. Karen Chan: Thank you, Scott. Next question comes from Adrian Loh of UOB Kay Hian. Congratulations on the strong set of results. For the Convenience business, you had around 100 net new stores in South China 2025. What are your targets for this in the near to medium term? Second question, on the M&A front, is there any more divestment on the horizon or we're feeling more comfortable with the portfolio we are standing at right now? Scott Price: Tom, why don't you cover the CVS? Tom Cornelis Van der Lee: As we shared in our Investor Day, the medium term 2028, our goal is about 2,400 stores by 2028 in Southern China and overall about 4,000 stores for 7-Eleven as a whole for all our markets. We did open last year 100 stores net. We did close some stores, those were loss-making. And we do always -- we open more stores and we close a few so making sure that the overall portfolio remains healthy. Scott Price: On the divestment side, I think that we have for the most part, eliminated the parts of the business that have been dilutive in terms of TSR and ROCE. It was not too many years ago. I think it was 2023. We had a 1.7% ROCE. We're now up to a 9%. And as Tom said, we aim for a 15% by 2028. In general, I think we've got the right portfolio. I think we have to keep a pulse as changing customer behavior. If we see a substantial move away from stores into digital, we may rethink maybe some of our store commitments moving forward and pivot more towards revenue coming out of the e-commerce, which we are on a good path to make neutral to accretive versus an in-store margin. So overall, I think we're in good shape, but we constantly evaluate. We've had a great year when it comes to TSR. We want to continue to maintain that great opportunity for the capital markets to use DFI as a mechanism to invest broadly in retail in Asia because we're multi-format, multi-country. Karen Chan: Your next question comes from Selviana Aripin of HSBC. Could you share your thoughts around the impact of inflationary pressure, such as higher oil price on your guidance in 2026? And if you could share some thoughts around sensitivity to oil prices, that would be helpful. Scott Price: Maybe, Tom, you add on. So just we've looked at it. We've actually looked at our supply chain. We've looked at our sourcing. We have modeled a 20% increase in oil prices. The reality is that as a large-scale daily essential, that as a percent of our net product is not substantial. We now have over 50 country of origins from which we source. We have the ability to pivot in terms of not only geographically where we source, but also, I think, through the right mix, able to mute any impact on customer pricing. If it becomes substantial at any given time, clearly, there'll be an inflationary impact. I think we would like to be the last to raise prices as a strategy. I think there's other things that we can do to protect the bottom line while also being able to serve our customers. Tom Cornelis Van der Lee: I think to add on, if we model a 20% increase in oil price for this year, we will still stay within our guidance. So it has an impact, and we'll do all we can to minimize the impact, but it will remain within the guidance. Karen Chan: Your next question comes from [ Tong Honxi ] of DBS Bank. Congrats on the strong results. Two questions here. First, given the recent Dingdong acquisition by Meituan, is there any change to your Hong Kong Food strategy? Second question, in Malaysia is your second largest geography outside of Hong Kong. Your biggest competitor is planning a listing this year with a valuation as high as USD 5 billion, which could bolster the firepower for expansion. Could you share your views that, that will affect, if at all, your overall competitive environment? Scott Price: In terms of the DDL, we actually are involved and engaged and are very aware of what that transaction. We have an exclusive relationship here in Hong Kong. We have their commitments. Frankly, we are a valuable customer to them. They are not a direct competitor to us in Hong Kong. So we see no conflict nor issue from that. In terms of how we look at the listing of AS Watson. I was raised in retail by Walmart. And it always was a bit perplexing to me, but now appreciate this view that says you want a really strong competitor. It is to your value to keep you on your toes constantly looking as to how you can be better. So if a listing helps them become a stronger competitor, net, I think we have an opportunity to, one, have a benchmark, but also it just ups our game as well as we move forward. So I don't see that as really a threat. We'll watch with interest, but we're focused on ensuring that we beat everyone, including those admirable competitors at serving our customers. Karen Chan: Thank you, Scott. Any questions from the floor? Unknown Analyst: I guess I have a follow-up question on the DFIQ. I know we are like 70 days after the presentation during Investor Day, but that we've launched the DFIQ portal, right? And for the DFIQ media, we also increased the revenue by fourfold. So are we like that serious about the 1% revenue contribution by 2028? And how do you see about the EBIT margin? Because if it's like more than 50%, then we have a meaningful contribution to the bottom line by 2028? Scott Price: So as we think about our TSR model, I'm very well aware that an omnichannel retailer has far superior P/E multiples than the traditional brick-and-mortar only. As we map our way forward, we are pioneers in this area. There is no substantial retail media player in the markets in which we operate today. DFIQ is a critical enabler for us to be able to create a seamless ability for vendors to go through DFIQ and access-specific screens in specific locations in the Health and Beauty in certain markets. At some point, I'd call us retail media 1.0, 2.0 is also going to get to a time a day relative to traffic patterns, et cetera, et cetera. We believe, again, through conversion of immediacy, a much higher effective proposition for a very substantial above-the-line media budget, including digital penetration coming across to us. It's been 90 days. Internally, the team knows more and more and more and more. If I were to say what is the area where we would potentially relook at midterm guidance, it's going to be in this area because it is so new. I do think in the future, I'm talking 5 to 10 years from now, 15 years from now, my North Star would again be the progress that Walmart has made in this area. We will never have digital as a reporting operating unit. It's too complicated and it's artificial. It's embedded across our formats. But speaking about what is the penetration of sales growth and profit growth from the digital proposition is an area that we're focused on as we progress forward. So I'd say watch this page, too early to guide anything other than what we said in December. Karen Chan: Thank you, Scott. If there are no further questions, this will conclude our session for today. Thank you very much for your participation, and we look forward to seeing you in our next analyst presentation.
Operator: Ladies and gentlemen, welcome to the PALFINGER IR Call Earnings Release Full Year 2025. I'm Lorenzo, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Felix Strohbichler, CFO. Please go ahead, sir. Felix Strohbichler: Thank you. Good morning, ladies and gentlemen. A warm welcome to our presentation of the results of the financial year 2025 for PALFINGER AG. First of all, let me remind you a little bit about what is PALFINGER about. So PALFINGER is a true global player with a revenue of EUR 2.34 billion revenue in 2025. We are present worldwide with engineering centers with 30 production sites and, of course, thousands of sales and service points around the world with around 12,000 employees at the end of 2025. What makes us stand out? What is the equity story of PALFINGER? PALFINGER is, at the same time, technology leader and industry leader. So it's not just about being the top player in terms of technology, but also leading the market in volume at the same time. Second topic is PALFINGER is highly resilient. We have a very broad product portfolio. We are globally present. We have a huge industry diversity. And due to local value creation, we are much less dependent on developments like tariffs, et cetera, compared to other players. Third point is PALFINGER is clearly a growth company. On the one hand, there is a momentum in Europe and a big potential or even a huge potential in Europe, and we focus on growth markets like North America, APAC and Marine. And of course, there is a major growth potential in the Service segment, which is also over proportionately profitable. And when we talk about profit, also the earnings potential of PALFINGER is significantly above current levels because we can still increase our profitability, not only through growth, but also through digitization, standardization and optimization of our footprint. I mentioned resilience. On this slide, you can see our customer segmentation. And obviously, this is very well balanced. The first and the most important industry segment is infrastructure. And obviously, this is a growing segment, and we expect more to come here, not only from Germany, but also from other markets. And then you see that the second biggest industry segment is Marine, and then it's very well balanced between 7% and 11% of share of our revenue for each customer segment. I also would like to highlight the public sector and railway in this sector, we also find the defense share of revenue. On the next slide, you see, again, our product portfolio. You know it, it has not changed. On the one hand, we have solutions on trucks and rail cars like different sorts of cranes, aerial work platforms, hook loaders, tail lifts, et cetera. On the other hand, we have our Marine Solutions from very large offshore cranes on oil rigs to wind cranes on wind farms, targets and boats Wind System and Slipway Systems, for example, for defense applications and what all those solutions have in common are the digital solutions, which make our products connected and which bring us even closer to our customers. Last year, we launched our new Strategy 2030+, reach higher and the key pillars of this strategy are 3 strategic directions. On the one hand, lifting customer value; secondly, balanced profitable growth; and last but not least, execution excellence. These 3 strategic directions are backed by in total 18 programs to drive our growth and profitability, and we have defined 5 key must-win action themes, which are also mentioned here. On the one hand, it's to further improve our positioning as customer-focused technology and market leader. Secondly, a massive expansion of service and spare parts business with a big impact on profitability. Third point is aerial work platforms have to become an additional core pillar of PALFINGER in our portfolio. In execution excellence, we focus on supply chain optimization, footprint optimization and setup of our global footprint in an even better way. And last but not least, process system and data optimization is a key lever for the future to be able to leverage also artificial intelligence and possibilities of the future. Coming now to our segments. As you might recall, we have 3 segments. On the one hand, the segment Sales and Service, which includes all the Sales and Service activities, then we have the segment Operations with all factories for assembly and manufacturing. And last but not least, we have the segment Other nonreportables. I will come to this later. Starting with the segment Sales and Service. Let me walk you through the individual markets which had quite a different development last year. Even within EMEA, we didn't see a unified picture. On the one hand, we have already a very good development in Southern Europe over the last years. In Northern Europe, we could see a good improvement in 2025. Germany had also come back a little bit from a very weak situation in 2023 already at the end of 2024. However, the infrastructure package in Germany did not show any positive effect yet in 2025. Hopefully, we will see something in 2026. Coming to North America, obviously, the tariff situation, especially Section 232 had an impact on the demand. This was actually the biggest impact of the tariffs and also, of course, the tariffs which could not 100% be passed on to our customers, lead in total to reduced profitability. In LATAM, on the other hand, despite of the volatile situation in Argentina, we could report a record revenue in LATAM. In APAC, we also have a very different development within the region on the one hand. In China, we didn't see any major economic recovery since COVID. On the other hand, India is the key growth driver in APAC, big growth rates, a very attractive market and a market we will invest in heavily in the years to come. The Marine business has an excellent performance, driven by major orders from offshore wind, oil and gas, cruise ships and other segments. So everything is performing very well. So we have a consistently good order intake, and there is no sign of a change here. And last but not least, as you might recall, we have a setup in Russia, which is completely ring-fenced, acting autonomously. Here, we have now a major impact of the sanctions in 2025, which means that there was a decline in revenue and also in earnings, not making losses, but also no contribution to the bottom line for PALFINGER. So coming now to the KPIs of the segment Sales and Service. First of all, you can see the external revenue was on the same level, so very stable. EBIT margin went up by 9.5%. However, we also have to acknowledge that if you look at the 2 segments, allocations and transfer pricing have an important effect. This is why I recommend to rather focus on the group numbers. However, what is important to mention is mainly the numbers you see at the bottom of the slide. First of all, order book development. You recall that in the COVID phase or post-COVID phase, there was a huge demand. We had an order backlog of 1 year in 2022. In 2023, we still had a very quick order book at the end of the year, and this even spilled over to a certain extent into 2024. We had a good start in 2024 due to the backlog from the past. And in 2025, we managed to keep the order book almost stable, so only a very slight decline despite of the fact that we don't benefit anymore from the backlog of the post-COVID time. So this means that the order intake is more or less on the same level as the output, and we have a reach of 4 to 5 months visibility, which is a very good situation to be, which is also in line with the customers' demand in terms of delivery times. Our Service business share went up from 15% in 2023 now to 17.4%, in line with our strategy to push the Service business share. And of course, this development should go and we want to exceed the 20% mark within the next years. Coming now to the segment operations. First of all, we have seen here capacity adjustments in both directions. On the one hand, we had to expand, fortunately, our capacity in Europe, especially for aerial work platforms and for loader cranes. On the other hand, due to the tariff policy and the dampened demand, we had a lower capacity utilization in the United States and of course, also reduced output in the CIS due to the economic situation in Russia. Coming to the numbers of the segment operations. First of all, let me highlight the external revenues. This is extremely stable, so the same level as last year, which also shows because we already had almost EUR 200 million in the past that the overall economic situation is still somehow on a low level. And this, of course, also translates into the profitability of production of third parties. So of course, the main activity in the segment operations is production for our segment Sales and Service, but in the external revenue, we only see production for third parties. I already mentioned when I talked about the EBIT of Sales and Service that there are always shifts in terms of transfer pricing and allocation. So the reduction you see here is to a large extent also due to a shift of allocations. Coming now to the segment Other nonreportable segments. This includes, on the one hand, the holding activities, so strategic initiatives for the whole group. And on the other hand, it includes the segment Tail Lift, which is too small to be reported separately. In the external revenue line, you see the development of the Tail Lift business. Unfortunately, in 2025, the market was extremely difficult in Germany as well as in the U.S. for reasons everybody knows, which led to a decline in external revenue. The EBIT line was stable in this segment with around EUR 44 million negative, of course, because this is a cost center to a large extent for the holding project. What does this mean now for the group numbers? 2025 was the third best year in history in terms of revenue and EBIT despite a very volatile environment, especially in North America and CIS. So we managed actually to almost compensate the situation in North America and CIS with positive developments in Latin America, in APAC, in Marine and also to a certain extent, in EMEA. So the revenue was almost the same, minus 0.9% reduction to EUR 2.339 billion. EBIT at EUR 174.3 million, which is a decline of 6%. However, what is the most important topic for our investors, shareholders is the consolidated net result. You can see only a very small decline of 3%. So we can report here EUR 96.7 million of consolidated net result, which in combination with the good cash flow we will come to in a minute, allows us to propose a dividend of EUR 0.90, which is together with the dividend in 2024, the second highest dividend ever in PALFINGER's history. On the right hand, you see the revenue share of PALFINGER, so 60% EMEA, around 1/4 North America and the rest split between LATAM, APAC and CIS. And here, you can also see that CIS is constantly reducing the importance in terms of overall revenue going now down to 4% in the total picture. I already mentioned that free cash flow has been positive. I have to correct this. Free cash flow has been great. It's the best free cash flow ever in PALFINGER's history, EUR 181.5 million of free cash flow compared to the already very good free cash flow of last year of EUR 120 million. How was this possible? The starting point with the EBITDA is more or less the same. However, we had another positive impact in the working capital with EUR 57 million. And we have also been rather low on the investing activities with around EUR 100 million. There will be some compensation of this relatively low number in 2026. However, in total, this is a very big success to come with this high number of free cash flow. Of course, a good cash generation, a good operational performance also helped a lot to improve our balance sheet. The equity ratio has gone up to 43% coming from 35%. Gearing ratio at very healthy 50%. Net debt to EBITDA, the KPI banks are looking at 1.71 is a great number, far below 2.0. So a very good set of balance sheet KPIs. Even more impressive is if you look at the last line of this slide, the net debt has been reduced by more than EUR 200 million to a level of EUR 460 million. So we came down from EUR 662 million to EUR 460 million within a year. You also see that the interest rate has again come down, however, comparing to the years 2020, 2021, when we were talking about 2%, it's still relatively high. And despite of the fact that we have repaid quite a few debt positions in the last 12 months due to the good cash flow, we still have a very good remaining term debt of 3.17 years. So I mentioned that the operational performance was a major lever to lead to this very strong and rock-solid balance sheet. The second big pillar was the sale of treasury shares, which was implemented in summer last year. So we placed shares for proceeds of EUR 100 million, which support the implementation of our Strategy 2030+. So this will help us with the expansion of our service locations, our mobile service in North America, with our investments in defense projects. We opened last autumn our spare parts hub in North America. We are going to further expand our service locations in EMEA, and we are also going to invest in a new plant in India, just to name a few out of the strategic initiatives in our Strategy 2030+. Of course, next to this increase in room for maneuver, it also helped to improve our equity ratio, gearing, et cetera, the whole balance sheet. And this measure also increased the free float to nowadays 43.8%, which was the basis for the inclusion in the ATX. And I'm very happy to be able to report that yesterday, it was made official that PALFINGER will be part of the ATX index as of 23rd of March. On the bottom of this slide, you see the share price development last year. So a plus 30% share price increase within 2025, also another increase in 2026 despite of the actual developments in the Middle East. And what this ATX inclusion will lead to is improved visibility. So PALFINGER now officially ranks among the top 20 stock titles on the Vienna Stock Exchange. Index funds will have to invest in PALFINGER, which further increases our liquidity and in total, this should give us easier access to international investors because now it's more or less official that the liquidity of PALFINGER has now reached a healthy level, which is attractive for our investors. Coming now to the outlook, first of all, for 2026. So we have an order backlog, I mentioned it before, of about 4 to 5 months. So we already have a visibility into summer and beyond the first half of 2026. So from today's perspective, we can say that for the first half year, we expect revenue as well as EBIT to be slightly above the prior year level. We are also confident for the full year. So we do see that in the first months of the year, for example, in Germany, order intake has gone slightly up. It's not yet the full recovery. So what we need in order to achieve our financial targets by 2027 is a further recovery in Germany and also an upswing in the U.S., which we do not yet fully see. This has to happen now in the coming months to be able to get to the EUR 2.7 billion revenue, 10% EBIT margin and more than 12% ROCE by 2027. We have set ourselves ambitious financial targets for 2030 in our strategy reach higher. We want to reach more than EUR 3 billion, and please do not forget more than -- this is important to highlight at the 12% EBIT margin and 50% ROCE, of course, as the #1 for crane and lifting solutions in our industry. Where do this -- where does this growth come from? On this chart, you can see the contributors to the growth. And obviously, Service with a very high impact also on profitability is a very big lever. But also recovery EMEA is a big potential for us because EMEA is still far below its potential. Aerial work platform is another big pillar, also a key initiative for us where we expect a lot of growth. And then we have other activities like TMF in North America, which is important for us. In APAC, we will invest in the plant in India. In Latin America, we expect further growth. And then you can also see Marine and Defense. And you would, for example, expect that Marine and Defense would show a larger share. You have to account for the fact that a lot of the revenue in Marine, but also in Defense is allocated to Service because these are very service-intensive parts of our business. On the next slide, this is translated into the profitability improvement levers. So this is just the additional profitability where should it come from. And obviously, it's the same level as on the last chart, but there is an additional lever, which is footprint and efficiency optimization, which will also help us to get to the profitability targets on top to the growth initiatives. All those initiatives are based on growth with basic or let me say, normal development of the world. On top of this, there are some global investment programs on the horizon, which account in total to EUR 2.8 trillion. And these create huge opportunities to PALFINGER, even if not all the EUR 2.8 trillion will be probably spend, not everything will go in industries where PALFINGER will benefit from, but still there will be some business, some substantial business for PALFINGER in these initiatives. Just let me highlight the fiscal package in Germany, EUR 500 billion. Rearm Europe, EUR 800 billion, InvestEU, almost EUR 400 billion, REpower Europe. The U.S. Stargate Project, EUR 500 billion, which, by the way, shows major effects already for us. So we deliver a lot of cranes, which are linked to this U.S. Stargate Project for infrastructure, for artificial intelligence. And last but not least, reconstruction of Ukraine will also need EUR 500 billion of investments in infrastructure, housing, et cetera, and PALFINGER is very well positioned to benefit from this. And this is something which should support us also in the years to come. Thank you for your attention. I'm looking forward to your questions. Operator: [Operator Instructions] The first question comes from the line of Markus Remis from ODDO. Markus Remis: Congrats to the ATX inclusion. First question relates to the order intake. If you could shed some light on the development early in the year, as you pointed out, the dynamics will be very, very crucial to get to 2027. So how was the beginning of the year with -- maybe with a special focus on the U.S. and the situation in that market? Felix Strohbichler: First of all, I can say that in EMEA, we had 2 strong months, January and February. However, it's too early to say that this is now a sustainable development. This is why I'm still cautious. However, the first 2 months were clearly above previous year's numbers. And this makes us also confident that we have a good chance here to see an improvement in the coming months. However, it's a little bit early after 2 months to say this is now really a start of a recovery. We also have, of course, some geopolitical developments at the moment where we need to look what this means. But coming back to your question, very clearly, the first 2 months actually were higher than in the last year and showed a good momentum, especially in EMEA. In the U.S., the situation is still a little bit calm. So here, we clearly need more momentum to be able to get to the 2027 targets. Markus Remis: Can you also give us an indication where the North American market stands in terms of order intake year-on-year? Felix Strohbichler: Year-on-year, the order intake is stronger because it's a low basis. But again, in order to reach our target, we need here a stronger recovery in the U.S. Markus Remis: Okay. Okay. Very clear. Then the second question, staying with the U.S. We've seen Hiab putting out some news that they're going to expand in the -- especially in the Service market. Can you share your thoughts on how your competition is shaping up at the moment? Felix Strohbichler: Well, of course, it's always difficult to talk about competition. What we can see is because Hiab is publishing, of course, also their order intake and their service revenue by region that we are winning market shares in every region compared to the Hiab numbers, which also underlines the fact that PALFINGER is putting the right focus on customer proximity, pushing Service business, investing in our Sales and Service setup. Hiab in the last years has been extremely cost focused, which also is translated, of course, in the profitability, which really has to be acknowledged as outstanding. However, our customers obviously seem to feel a difference here between a supplier who is investing in Sales and Service and the supplier who is rather focused on cost cutting also in areas where customers can feel it. And I think this is probably the main difference between the approaches of Hiab and PALFINGER in the last 24 months. Markus Remis: Okay. Okay. Sorry, I have again to stay with the U.S. I think in the last year, you had a burden of roughly EUR 15 million related to the tariffs. So if I remember correctly, it's kind of already including the countermeasures. What's kind of the scope for 2026 and especially now that, I mean, again, Trump has changed the tariff framework. How does that impact your outlook? Felix Strohbichler: Yes. So first of all, if we look at the tariff implication in the meantime, we had, of course, the chance also to analyze in detail what was the real impact. And even if we don't disclose the final number, actually, the tariff implication was a little bit smaller than we had anticipated and estimated. So in fact, the amount we had to pay in total in tariffs was still a significant double-digit million EBIT amount, but not as high as anticipated and estimated. The major impact was actually the decrease in the market. So the lower demand, demand was compared to the budget, an even bigger impact than what remained in terms of tariffs because the tariffs could be compensated, of course, to a certain extent with measures like price increases, et cetera. There is still a gap which is significant. And this gap will be closed on the one hand with measures in terms of supply chain, but I guess this will be even faster as soon as the North American market picks up every supplier and every competitor will, of course, strive to pass on cost increases of the past, which has not been fully possible in a rather low market environment. So I think that this year, we can talk about still an impact, but it won't be a game changer for PALFINGER. So probably it's a double-digit million EBIT amount, but not a high one. So a low double-digit million amount, maybe the impact. And as soon the market recovers, of course, this will further decrease with countermeasures, especially with price increases. Markus Remis: Okay. And then the last question relates to your cash flow. So I mean, congrats on the development here, but partially, it was helped by factoring, at least as far as I can see, about half of the working capital improvement came from factoring. Can you outline your strategy here going forward now that the balance sheet is arguably on a much more solid footing? Is it going to stay at these levels? Or do you now see the leeway to reduce factoring again? Felix Strohbichler: I think actually, we do not have plans to reduce factoring. However, if you look at the total picture of our balance sheet, it's now extremely healthy. We have no intention to make the picture worse. As you know, our strategy is clearly organic growth. There are investments, of course, involved and the next years will still be years of rather heavy investments. So we are talking about investment volumes of about EUR 150 million per year for the 3 years to come as we have some strategic projects on the go. But in total, our balance sheet will at least remain on this solid level. And the plan is, of course, for the years to come to even further improve it despite of the growth initiatives as there is no M&A included, at least not on a major scale and nothing which would change the picture to the negative. Operator: The next question comes from the line of Daniel Lion from Erste Group. Daniel Lion: I would like to follow up a little bit on the order intake situation and then going forward, in order to meet '27 targets, when would you expect to -- that it would be necessary to see a tickup in order intake in order to make '27 realistic? Felix Strohbichler: Yes. So it will be very clear in the second quarter. So at the latest in the communication of our half year results, it will be clear or hopefully, it will be clear based on the order intake, if we can ramp up capacities. And this is actually the starting point, and this is the decisive factor. When do we dare to ramp up capacities to be able to reach an output of EUR 2.7 billion in 2027. We will only there to ramp up capacities if there is a healthy order intake over several months. So this is, so to say, the preconditions. If in summer, we do not sit on an order book, which makes us confident that we can increase our capacity and our output to this level, then probably it will become difficult because we need some lead time to ramp up capacities and output. Daniel Lion: So this would mean just to put it some figures indicatively does it mean like 20% intake in order intake at least or like 10% to 20%, 15%, I don't know, what range would you require in order to step up capacity expansion? Felix Strohbichler: Yes. This is not so easy to answer because it's depending on product lines. So of course, it's depending on regions and product lines. And in some areas, we have even overcapacity like in the U.S. So it's relatively easy to ramp up in other areas, it's perhaps a little bit more complex. So it's not like one number, which has to come in. It's a mix of factors. It's also a product and regional mix question. But of course, we need some improvement. And in the U.S., for example, if we say a 10-plus percent increase is already significant and helps a lot. In EMEA, it's even not 10% because the basis is relatively high. But if we assume that there would be a 10% improvement in the U.S. and in Europe, I would feel confident to say that we could increase capacity. Of course, this is not a strict message. But as an indication, I would say a 10% increase would give us the necessary confidence to increase capacity to the required level. Daniel Lion: Can you maybe also look back at '25, can you quantify the FX impact to some extent, especially the U.S. dollar, just to get a feeling of sensitivity in case we see some shifts or changes here in '26? Felix Strohbichler: We have around 25% of our revenue in the U.S. or in U.S. dollars. So it's above EUR 500 million. Of course, if we have a fluctuation of exchange rate by 10%, it's a EUR 50 million impact in the one or the other direction. However, this is not completely true because if, for example, we have a change in exchange rate, we have some products where we have components exported from Europe, where also all our competitors are exporting from Europe, like, for example, for the loader crane, in such case, we adjust the prices and the USD effect is not as big because it's translated into higher prices than in U.S. dollars. So it's not a 100% effect, probably it's a 70% effect. Daniel Lion: What about EBIT level? Felix Strohbichler: Can you repeat the question? Daniel Lion: What about EBIT level, EBIT margin level? How do you see the impact there? Felix Strohbichler: You mean in the U.S.? Daniel Lion: From FX, yes. Felix Strohbichler: Yes, the impact of the exchange rate is limited because on the one hand, we have products which come from Europe and where also competition is coming from Europe. So here, there is more or less no major impact. Of course, in absolute terms, for the revenue share of USD, which is translated where also the EBIT line is translated, of course, the EBIT share goes down as well as the revenue share. So this is more or less the same factor. But in terms of operational EBIT margin in the region, the impact is very limited. Daniel Lion: Okay. And then a situation on the -- or a question on the situation in Middle East. Do you see any direct impact or maybe indirect impacts on the business in the near term or going forward? Felix Strohbichler: Well, first of all, of course, we have stopped our operations. We have some offices there and also some Service activities. So of course, we are not asking people not to go to work, but this is not an impact you will see in the year-end or even not in the quarterly results, but this is, of course, the first obligation of the management to make sure that we protect our people. In terms of business, of course, now we see energy prices going up. PALFINGER is not that energy intensive. So this is also not the major impact. In terms of supply chains, we also do not expect any impact. I think the biggest impact would actually be if there is a longer-term conflict. If the global economic outlook would deteriorate, of course, this would also have an impact on PALFINGER. Apart from this, we do not expect a major impact on PALFINGER if the war ends rather soon, of course, we rather have to take into consideration. We have seen this, for example, in Israel with the destruction, I have to say, of the Gaza Strip that we see a huge improvement of demand in Israel. And historically, Iran, for example, was a core market for PALFINGER with 70% market share in the ancient times. So if the sanction should go away, if there would be a regime change, this could be a major opportunity even for PALFINGER. So of course, we hope that in the midterm, this could even turn out as an opportunity. Daniel Lion: And last one on Defense demand and development. Could you provide some more insight how your revenue share is and how you expect this to develop in the coming, say, 1, 2, 3 years? Felix Strohbichler: Sorry, you were talking about Service revenue share? Daniel Lion: No, Defense. Felix Strohbichler: Defense, sorry, connection is not always that good. So the Defense share at the moment is at roughly 2%. We expect it to grow to 4% and you have to take into consideration that the Defense business is very service intensive. So this helps not only in the Service revenue share of Defense, but also helps, of course, in the growth of Service business. And the profitability, obviously, is relatively high also because the investments to be able to participate in this business, the risk also to enter this business and eventually not to get the tender is higher. So also the profitability has to be higher. Operator: The next question comes from the line of Lars Vom-Cleff from Deutsche Bank. Lars Vom Cleff: Two quick follow-up questions, if I may. One is a quick housekeeping question. Tax rate for '26, I think '25 was 23%, 24%. Is that a fair assumption for '26 as well? Felix Strohbichler: Well, we had quite some good tax rates in 2024 and 2025. So I would, for a model, not recommend to take this number, but I think slightly below 25% is a good assumption going forward. Lars Vom Cleff: Okay. Perfect. And then, unfortunately, so far, you're only providing us with a qualitative guidance on the first half and the full year. I mean, if we take slightly up year-on-year for the first half and compare it to the current Bloomberg consensus, which looks for a revenue increase of 3% and an EBIT increase of 7%, does that cause sweaty palms Or is that something you can live with? Felix Strohbichler: Well, I would say that in terms of EBIT improvement of 7%, this is aggressive for the first half year. In terms of revenue increase, it's rather modest. Operator: The next question comes from the line of Lasse Stueben from Berenberg. Lasse Stueben: Could you provide just some color on the Q4 EBIT margin? That was a bit weaker. I understand Q4 has some seasonality impacts, but if there's any kind of operational sort of reasons why the margin was lower there. I'm guessing probably caused by the U.S. But any color would be helpful. And then the second point is just on working capital and CapEx. The colleague already mentioned the factoring in the working capital. Are you expecting a further reduction in sort of working capital as a share of revenue in the coming years? Or is this kind of the level where you feel comfortable? And if you could remind us on the level of CapEx spending planned for the next 2 to 3 years, that would also be helpful. Felix Strohbichler: Okay. So first of all, development of the quarter. So if we compare EBIT level of Q4 2025 to Q4 2024, it was a significant increase. And I think you were comparing now Q4 to which quarter because I do not see now where you see the deterioration in the fourth quarter. So the EBIT margin, of course, if you look at the EBIT margin, it went down. However, there are several effects in there. It's mainly in the contribution margin. So it was a mix effect to a certain extent, but this is not a substantial change. It's rather, I would say, a timing issue. Lasse Stueben: Okay. That's clear. And then on working capital and CapEx. Felix Strohbichler: Well, in working capital, of course, we have some good opportunities in the last 2 to 3 years to compensate for the massive increases in working capital in the post-COVID times. This effect to counteract with measures against the high increases is going away more and more. So we still have some small pockets where we believe that we still have overstocked some topics, which we can further reduce. But now it's going more into hard work to consistently optimize our stock levels. So here, the potential to reduce working capital with further inventory reductions is getting more and more limited. So you won't see this big lever in terms of free cash flow for working capital in the years to come. So the main lever to further improve our free cash flow is actual profitability. It's the -- it's a starting point of the cash flow statement rather than working capital reductions even if there are still some opportunities to further improve. But as I said, this is now rather small compared to what we have seen in the past few years. And then you were asking about CapEx development. Last year was relatively low at EUR 100 million. At the beginning of last year, I mentioned probably EUR 130 million, which was our budget and which was our plan for several reasons. Some investments took a little bit longer than planned. Unfortunately, this doesn't mean that these investments will disappear. It will just take a little bit longer and the time shifts. So these investments will happen now in 2026, which means that we are expecting around EUR 150 million of CapEx in 2026. And it will remain -- the CapEx level will remain on a similar level also until 2029 as we have some major CapEx programs ongoing also linked to our Strategy 2030+. Operator: The next question comes from the line of Miro Zuzak from JMS Investment. Miro Zuzak: I have mainly 2 questions. The first one is on order intake. I mean you do not report order intake, but you do backlog and sales. And if I take just the difference between the 2 numbers, basically, I can give -- calculate a proxy on order intake. Now if I look at Q4, the number has sequentially come down. So Q1 and Q2, Q3 were very strong against, let's also say, a lower base. Q4, the base was a bit more difficult, but still it was now negative. And you mentioned before that you expect H1 2026 to be above H1 2025. Does this refer to order intake or sales? Maybe you can also comment on what I just said, whether it's correct or not. Maybe take the second question afterwards. Felix Strohbichler: Yes. So first of all, you talked about our order book development, and it's a matter of fact that the last months of the last year were not overproportionately strong. However, the output, especially in December was very strong. So we had a strong fourth quarter in terms of revenue. And this was, so to say, the combination of those 2 effects where you saw this decrease in order book in the fourth quarter. Now looking at our guidance for the first half year, when we say slightly better, as I said before, talking about revenue, but also EBIT and of course, also order intake because even if now we have more or less the first half year already in hand. So of course, you can always have some surprises. But in terms of order book, the first half year is quite safe. But still, we also expect an improvement in order intake compared to the last year, also because the first 2 months were actually a good start. Miro Zuzak: Okay. Cool. The second question is basically relates to your 2027 guidance of 10% EBIT. And then trying to model the 10% in the next 2 years, basically. If I look at the last 2 years, I see that the gross margin was good and has improved in 2025 by 80 basis points, which is in line with basically your aspiration of improving operational efficiency and so on. But if I look then at the OpEx cost, I see that more than that is basically eaten up by the Service cost and also R&D cost and also G&A costs, basically in percentage of sales, all these 3 lines, they worsened 2025. And if you now make the bridge to the 2027, the 10%, what is basically the mix between these 2, let's say, 2 lines, the COGS line and the OpEx line. Where does the improvement of 250 basis points come from? Felix Strohbichler: So first of all, the beauty of the last 2 years was that the tailwind wasn't really there. So we had no increase in revenue, but 2 years in a row, a slight decrease in revenue. At the same time, we had a strong inflation, especially on the personnel cost. So even if material costs have remained quite stable or in some cases, have even come down, inflation on personnel cost was a major impact in absolute terms in Europe and in the U.S. in relative terms, even stronger than also, for example, in countries like in the Eastern European production sites. So this was one impact. The second impact was we have a growth strategy, and we are investing to grow the company to more than EUR 3 billion. And this is nothing you can do overnight. So this requires investments with a certain confidence in the future. Unfortunately, these investments are not only CapEx, it's also OpEx. It's like implementation of our EP system globally. It's a lot of R&D investments we have done. And all those things, unfortunately impact structural cost. This is a big delta, as I also mentioned before, to our competitor Hiab. They are, of course, in the same market. Their reaction is different. they have started to dramatically cut cost. PALFINGER has taken the decision to further invest in the future. And the main lever for the profitability increase is actually to benefit from the growth we have been preparing ourselves over the last 2 years. So this is the main lever to get to the 10% EBIT margin because we have the structures in place to get there. But in the last 2 years -- and not only in the last 2 years, probably in the last years, you can see that PALFINGER has invested in structures, in Service sites, et cetera. And in early phases of such investments, it's a cost and not a benefit. Miro Zuzak: And to answer then the question, that would mean that the improvement mainly comes from the OpEx lines because... Felix Strohbichler: Within the time frame of 1.5 years, it can only come from the top line because such a short-term cost improvement on the structural cost would not be possible to such an extent, not without cutting arms or legs. Operator: We have a follow-up question from the line of Markus Remis from ODDO. Markus Remis: The first one would be on Russia. What's kind of the expectation for that business? You indicated a roughly breakeven situation in 2025. So what's kind of the scope for revenue development? And is there a risk of Russia falling into losses? And then the second question is a very specific one. In Q4, I see that in the holding and nonreportable segment, EBIT was negative at EUR 14 million, which is quite a hefty number, almost double or more than double of last year and also sequentially compared to Q3, the loss doubled. Were there any specifics that you would like to outline here? Felix Strohbichler: Actually, I would have to look it up because it's not one single impact, but what happens typically in Q4 that certain positions take effect or provisions are made. So it's not an operational topic. This is rather an accounting and timing issue. There was no special event in Q4, which would have led to this change in the result. Markus Remis: Okay. And on Russia? Felix Strohbichler: Yes. So for Russia, if you ask me for an outlook, this is, of course, very difficult to say. As we are also not controlling those entities, we rather report the numbers and get the information, so to say, and then report with the wisdom of hindsight. However, what I can say is that in 2025, the situation was really difficult. The management managed to turn around the liquidity situation to achieve a clearly positive cash flow in the second half of the year after a negative first half year, the profitability was slightly positive, and we already see a slightly positive development. But of course, if I talk about the positive development, I mean that we expect a slightly positive situation and no losses, we won't see double-digit EBIT margins in Russia. So I cannot answer the question based on fact figures and my knowledge deep inside the market. But what I can say is that from today's perspective, and this is also reflected in our budget, we expect that the entities will remain stable in terms of liquidity and also stable in terms of profitability. And the good thing is that we have a very experienced management there, and they have proven in the meantime, in some cases, over decades that they know what they are doing. Markus Remis: Okay. And maybe a very nice one to have it specifically mentioned here. When you say regarding the first half, you say, okay, revenues should be higher. And then the notion on the earnings, should also be EBIT and margin be higher or just EBIT? Felix Strohbichler: So as I said, we expect the revenue to be higher and also the EBIT to be higher, the revenue a little bit more than the EBIT, but this is what is our guidance now for the first half year. Markus Remis: Okay. So slightly lower EBIT margin then? Felix Strohbichler: Slightly lower EBIT margin or almost stable, but probably a slightly lower EBIT margin, but a higher revenue and also slightly better EBIT. Operator: Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Felix Strohbichler for any closing remarks. Felix Strohbichler: Yes. Thank you very much for your attention and for your questions. I just want to remind you once again at the end of this call, PALFINGER is a very attractive company as a market and technology leader with a lot of growth potential and earnings potential with a highly resilient setup. So please keep -- stay tuned, and we have good opportunities for the future, and I'm confident that at the half year, we will have the next good news for you. Hopefully, we hear each other in 3 months again for the quarterly call. Thank you. Bye. Operator: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your line. Goodbye.
Operator: Hello, and welcome to CrowdStrike's Fiscal Fourth Quarter 2026 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the call over to Andy Nowinski, Vice President of Investor Relations and Strategic Finance. Andy, please go ahead. Thank you. Andy Nowinski: Good afternoon, and thank you for your participation today. With me on the call are George Kurtz, Chief Executive Officer and Founder of CrowdStrike; and Burt Podbere, Chief Financial Officer. Before we get started, I would like to note that certain statements made during this conference call that are not historical facts, including those regarding our future plans, objectives, growth, including projections and expected performance, including our outlook for the first quarter and fiscal year 2027, and any assumptions for fiscal periods beyond that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent our outlook only as of the date of this call. While we believe any forward-looking statements we make are reasonable, actual results could differ materially because the statements are based on current expectations and are subject to risks and uncertainties. We do not undertake and expressly disclaim any obligation to update or alter our forward-looking statements, whether as a result of new information, future events or otherwise. Further information on these and other factors that could affect the company's financial results is included in the filings we make with the SEC from time to time, including the section titled Risk Factors in the company's annual and quarterly reports. Additionally, unless otherwise stated, excluding revenue, all financial measures disclosed on this call will be non-GAAP. A discussion of why we use non-GAAP financial measures and a reconciliation schedule showing GAAP versus non-GAAP results is currently available in our earnings release, which may be found on our Investor Relations website at ir.crowdstrike.com or on our Form 8-K filed with the SEC today. With that, I will now turn the call over to George. George Kurtz: Thank you, Andy, and thank you all for joining CrowdStrike's Q4 FY '26 Earnings Call. I couldn't be more pleased with our results. AI is driving elevated demand for the Falcon platform and is a key accelerant for our business. At the same time, AI is weaponizing adversaries to attack with increased speed, sophistication and precision. We're seeing this play out in real time in the Middle East as emboldened adversaries fuel nation state activity. FY '26 was CrowdStrike's best year yet capped by a blockbuster Q4 where we set new records across the business. Summarizing our results: one, all-time record net new ARR of $331 million for the quarter, which grew 47% year-over-year, coming in well ahead of our expectations. For the year, we delivered $1.01 billion in net new ARR, up 25% year-over-year, our first year delivering over $1 billion of net new ARR. Two, ending ARR of $5.25 billion, crossing the $5 billion milestone, which accelerated to 24% growth year-over-year. CrowdStrike is the fastest and only pure-play cybersecurity software company to achieve this milestone. Three, record free cash flow of $376 million for the quarter or 29% of revenue. And for the year, we delivered record free cash flow of $1.24 billion or 26% of revenue. Four, all-time record operating income of $326 million for the quarter or 25% of revenue. This is the third consecutive quarter of record operating income. For the year, we delivered $1.05 billion of operating income, exceeding the $1 billion operating income milestone for the first time. Five, record net new ARR from cloud, Next-Gen Identity and Next-Gen SIEM collectively. Ending ARR for these solutions collectively grew more than 45% year-over-year. Amidst today's AI backdrop, our endpoint business accelerated for the second consecutive quarter. Six, dollar-based net retention of 115% and gross retention of 97%, showcasing best-in-class durability and stickiness, which leads to my final point. Seven, we delivered $1.69 billion in ending ARR from accounts that have adopted the Falcon Flex subscription model, growing more than 120% year-over-year, turbocharging our land-and-expand motion. Our Q4 and FY 2026 execution showcases CrowdStrike's leadership in every theater, every segment and every route to market. In our third consecutive quarter of net new ARR acceleration, the voice of the market is clear. CrowdStrike is durable, mission-critical infrastructure for both securing AI and accelerating global AI adoption. We find ourselves in one of the most defining times in the history of modern technology. AI has gone from dream works to reality, now increasingly in production across the enterprise. From CrowdStrike's founding, we've been building AI innovation for cybersecurity, yet the pace of AI innovation is broadly misunderstood. Novel discoveries are often interpreted as the death knells of existing categories. The market is questioning enterprise software's role in an agentic world. It's in moments like these where opportunity is created. In the same way that we anticipated the cloud revolution, we pioneered and built for the agentic revolution. Here's what I see unfolding in the market. We see the AI revolution creating 2 disparate groups of software companies: Group 1, those who are now existentially vulnerable. These are historically nice-to-have technologies that are productivity features and point products geared to legacy pricing models; Group 2, those who will thrive. These are mission-critical, trusted infrastructure technologies necessary for global continuity with deep IP. These technologies are net data creators producing novel, fresh and proprietary data that doesn't exist elsewhere, data that is fuel for the agentic business outcomes. In these companies, proprietary data is just one part of the advantage. The other is trusted enterprise architectural superiority, which drives stickiness, adoption and scale. Here's why CrowdStrike is winning and how AI is driving even more competitive success for us. One, our competitive moat is becoming an opportunity ocean. Falcon is a vertically integrated net data creator and third-party data aggregator. We generate real-time data that no one else has from customer environments and our world-class threat intelligence. What frontier AI labs cannot do, we've been doing for over a decade, cyber reinforced learning from human feedback or RLHF at scale. Our MDR analysts, threat hunters and incident responders produce expert label data as a byproduct of operations. These labels don't come from Internet text. They come from stopping real breaches in real time. Threat Graph correlates more than 1 trillion security events per day across approximately 2 trillion vertices, analyzing 15-plus petabytes of data, structured, queryable, security signals at scale no one can replicate. Frontier models can augment security, summarize alerts, draft queries, speed up triage. That's extremely valuable, but stopping breaches requires sensors, real-time telemetry, continuous expert validation and enforcement, a closed-loop system, not a text model. As our technology evolves, our data improves. As our data improves, our platform evolves. As our experts validate outcomes, our AI agents get better. This is a flywheel and network effect that no one else has in cybersecurity at our size and scale, and it's how we stand behind our brand promise of stopping breaches. This dynamic is not cyclical. It is structural. Two, we win because Falcon is purpose built for securing AI at every layer. The layers of the new AI stack are the attack surface of the future, and Falcon can secure all of them. AI must be secured at every level, including: one, GPU foundation, partnering with NVIDIA, AMD, Intel and others to secure AI at the source; two, hardware and infrastructure OEMs, securing AI factories such as Dell, HPE and Super Micro; and novel AI operating systems such as VAST Data; three, neoclouds and hyperscalers, securing where AI happens in the cloud across AWS, OCI, GCP, Azure and inference disruptors such as CoreWeave, Nebius and Crusoe; four, token factories, securing the use of frontier model creators like Anthropic, OpenAI and Google Gemini; and five, AI applications and in agents securing AI native software and the agentic workforce. Not only do we secure the use of each of these companies' products, but we also secure nearly all of the companies themselves. We secure the world's AI future by securing the world's AI leaders. And three, we win because efficacy and precision matter more than ever. In cybersecurity, you simply cannot have a hallucination. You can't prompt twice. It's first time final. It's the difference between thwarting an adversary or experiencing a breach. Cybersecurity is a unique paradigm. Success for us and our customer is did we stop a breach. We win because cybersecurity needs to be faster and more deterministic than ever before, and we uniquely deliver superior outcomes. Our agentic SOC and AI technologies are transforming security. CrowdStrike's AI innovation is setting new adoption standards on the journey to delivering security AGI. Charlotte is our flagship agent, and now we have 10 other agents representing specific security skills and roles within security teams. Between Charlotte and our other agents, we can already see the mobilization of security's agentic workforce working hand in hand with human security professionals. Coming back to Charlotte, our agentic SOC workforce built from multiple models allowing us to optimize from the latest and greatest LLMs. We couple industry innovation with our own AI expertise, training and models from security's richest data source, Falcon adversary, threat and security analyst training data. We saw Charlotte usage soar more than 6x year-over-year as ARR more than tripled. A thematic win was in a leading cloud software provider in an 8-figure re-Flex transaction. The re-Flex expanded the adoption of next-gen SIEM and Charlotte. Their 30-day use of Charlotte tells a compelling story, achieving a 3x faster mean time to respond, using the power of our domain-specific AI, Charlotte accelerates, streamlines and democratizes security outcomes. Technology innovation is just one part of our success. Our results are also driven by our go-to-market innovation, creating the revolutionary Falcon Flex subscription model, which we now see mimic across cybersecurity. The model transformed our discussions with customers to demand planning based on risk, data, attack surface and overall platform capabilities. Let me share our Q4 Falcon Flex performance within the now $1.69 billion ending ARR cohort of Flex account value, growing greater than 120% year-over-year. We now have more than 1,600 customers who have adopted Falcon Flex and added more than 350 Flex customers in Q4. That amounts to nearly 4 new Falcon Flex customers each day of the quarter. The average Flex customer's ending ARR is greater than $1 million. The proof of Falcon adoption success is in the re-Flex. Customers are using what they buy and expanding their Flex commitments. More than 380 Flex accounts have already re-Flexed, representing more than 23% of the Flex customer base, up from 5% in Q1. The average ARR lift after a re-Flex is 26%, happening on average within 7 months. And the platform adoption grows even further from there. We're now tracking the number of customers who are repeat re-Flexers. Nearly 100 customers have re-Flexed multiple times. The multiple-time re-Flex cohort now represents approximately 6% of total Flex customers and over 1/4 of all re-Flex customers. Our multiple-time re-Flexers, on average, have an ARR lift of an additional 48% from their initial Flex subscription. In summary, Falcon Flex unlocks never-seen-before adoption for customers. Flex is now how we go to market. A key win includes a major enterprise software player that started with using 1 module, threat intelligence, and spending low 6 figures. Through Falcon Flex, this customer is now using 25 modules and spending $86 million in total Flex contract value with us. Flex is creating its own flywheel. Demand drives use. Use drives more demand. Flex is the stage on which our platform solutions shine. Collectively, our Next-Gen Identity, cloud and Next-Gen SIEM businesses grew more than 45% year-over-year reaching more than $1.9 billion in ending ARR. Our Next-Gen Identity business ended FY '26 with more than $520 million of ending ARR, growing more than 34% year-on-year, a double-digit acceleration versus 2 quarters ago. Key drivers include our privileged account security solution, which grew more than 170% sequentially. Falcon Shield ending ARR grew more than 300% year-over-year, more than 5x since our acquisition of Adaptive Shield, as customers protect the rapidly growing agentic SaaS attack surface. Our ability to secure both human and agentic identities wherever they exist is rapidly turning CrowdStrike into our customers' identity secure control play. A key identity win, an iconic department store selecting CrowdStrike over an SMB point product in a 7-figure deal driven by the ease of use of our ITDR and PAM solutions in a Flex consolidation. While our Next-Gen Identity business had an excellent quarter, we're most excited for what's ahead. We recently closed the acquisition of SGNL.ai. This is S-G-N-L, bringing the power of 0 standing privilege for all identities to the Falcon platform. With SGNL.ai, CrowdStrike is delivering high fidelity, content-driven, real-time authorization to the market, enabling our customers to rapidly reduce their identity attack surface even as they rapidly expand the number of identities within their organization. We're moving access from static point in time to real time and redefining Zero Trust. Access should be always on, granular and dynamic. But we're not stopping there. Our recent acquisition of Seraphic turns any browser into a secure enterprise browser without impacting user behavior. The browser has become the front door for AI applications, and Seraphic meets human and nonhuman users where they are and where they're going, agentic browsers for real-time visibility and protection. Turning to our cloud business, where net new ARR growth accelerated for the second consecutive quarter and ending ARR grew more than 35% year-over-year. For the first time, our cloud business exceeded $800 million in ending ARR as our customers look to us to secure the infrastructure powering their AI future. Our unique ability to operate in runtime at scale continues to set us apart from the rest of the market. A key win in our cloud business was with a major enterprise data platform company who deployed Falcon Cloud Security in an 8-figure total deal value Flex. After extensive testing, this account ripped out their existing provider for our runtime protection-first approach, realizing the integrated benefits of CSPM, CIEM, CDR, and OverWatch threat hunting, which resulted in a 90% reduction in mean time to detect and respond for their cloud environment. Turning to our Next-Gen SIEM business, where we delivered a record quarter. Our Next-Gen SIEM business grew over 75% year-over-year, delivering ending ARR of more than $585 million. Next-Gen SIEM has proven itself a scaled market disruptor where our performance and cost advantages set us apart from legacy competitors. At the same time, our launch of agentic security workflows is powering the cybersecurity operating system of the future. With Falcon Onum, we're enabling our customers to connect data sources quickly and efficiently, resonating with both security and IT teams. A key win in the quarter was with a Fortune 500 retailer highlighting our strength and momentum in the next-gen SIEM space. In a 7-figure deal, we replaced a legacy SIEM and its attached point product data pipeline. Falcon's fully native data pipeline and an expected 80% faster query performance was a game changer in helping this customer build out their agentic SOC. Rounding out our product portfolio, I want to touch on our endpoint and other AI-specific businesses. Amidst the backdrop of accelerating AI proliferation, our endpoint business accelerated for the second consecutive quarter. The endpoint is rapidly becoming the epicenter of AI usage driven by the growth of technologies ranging from MCP servers to coding tools to localized LLMs. AI is the fastest growing attack surface on the endpoint. As of Q4, our sensors detected more than 1,800 distinct AI applications running on enterprise devices, representing nearly 160 million unique application instances across our customer base. And with the acquisition of Seraphic, we now give our customers even more control over their knowledge workers' usage of AI tools. Lastly, I want to touch on our recently launched AIDR offering. In just a short time, AIDR has become one of our most in-demand products, growing more than 5x versus last quarter despite having only been available for a few weeks. AI adoption is moving faster than can be controlled, and our AIDR offering gives customers immediate visibility into their employees' usage of AI tools, including the specific models being used as well as detections into potentially malicious or noncompliant usage. Bringing model scanning, visibility, guardrails and detections to AI usage positions CrowdStrike as a catalyst for enterprise AI adoption. Concluding the discussion on our platform solutions. Seeing is believing. Please reference our investor deck, which now includes a link to product demo videos, showcasing AI innovation across the Falcon platform. Our partner go-to-market delivered beyond expectations this past year. We saw growing practices across EY, Accenture, Deloitte, HCL, Wipro, KPMG and Infosys taking shape focused on next-gen SIEM migrations. Our MSSP business also continues to grow at a rapid pace. In just over 3 years, we've gone from a sub-$100 million MSSP business to more than $1.3 billion spanning market-leading partners like Kroll, Pax8, and NinjaOne. Finally, our hyperscaler leadership continues to differentiate CrowdStrike from every other cybersecurity player. This past year alone, we did nearly $1.5 billion of total contract value on the AWS marketplace, growing nearly 50% year-over-year. Then a few weeks ago, Satya Nadella and I spoke to CrowdStrike's go-to-market team together. We are now open for business on the Microsoft marketplace and customers can use their Microsoft Azure consumption commitment dollars on Falcon. This is a watershed moment reflecting a clear evolution of how our companies see each other and how Microsoft and CrowdStrike are working together to make the world a safer place. In summary, we didn't just have a great partner year. We built an ecosystem to win the next decade. Closing my remarks today, I'm proud of the team and our partners for executing a terrific FY '26. Here are my key takeaways as I look at the business today and into the future. First, CrowdStrike is an AI adoption accelerator. Our customers are safely and securely using more than 1,800 distinct AI applications on their endpoints, which would not be possible without CrowdStrike. Second, AI use necessitates AI security. Every enterprise deploying AI needs an independent protection layer for visibility, compliance and enforcement. As AI adoption grows, CrowdStrike becomes even more of a necessity to these organizations. And third, our data moat creates a structural advantage. Delivering cybersecurity at scale requires more than a prompt. It requires expert label telemetry from our global sensors, MDR analysts and elite incident responders. It is a structural advantage no LLM provider can replicate. In addition, agentic cybersecurity requires in-line prevention as well as real-time remediation. Since the founding of CrowdStrike, we created an AI-native platform. Enterprises have trusted us to help them safely navigate market transitions like digital transformation and cloud migration. The AI revolution is now upon us, and just like prior market transitions, adoption of AI will be secured by CrowdStrike. Thank you for your trust. I'll now turn the call over to Burt Podbere, CrowdStrike's CFO. Burt Podbere: Thank you, George, and good afternoon, everyone. As a quick reminder, unless otherwise noted, all numbers, except revenue mentioned during my remarks today are non-GAAP. We delivered exceptional fourth quarter results and a record finish to the year, exceeding expectations across all guided metrics driven by continued Flex and re-Flex momentum and strong organic growth across the platform. FY '26 was a milestone year for CrowdStrike. For the full fiscal year, ending ARR growth accelerated to 24% and net new ARR accelerated to 25% year-over-year. We delivered this record top line performance while exceeding our profitability and free cash flow targets. Operating income reached a record $1.05 billion or 22% of revenue, and we delivered record free cash flow of $1.24 billion or 26% of revenue. The combination of growth, scale, profitability and cash flow puts CrowdStrike in rare air. The strength of our platform and the significant market opportunity ahead further reinforce our conviction in the path to achieving our future growth milestones of $10 billion and $20 billion of ending ARR as well as our target profitability model. Our full year momentum was punctuated by an exceptional fourth quarter. We achieved record net new ARR of $330.7 million, up 47% year-over-year and well ahead of our stated expectations, driving ending ARR to $5.25 billion. Our fourth quarter results showcased the success of our Flex-led go-to-market strategy. Momentum was broad-based across customers of all sizes from enterprise to down-market and MSSPs, achieving another record quarter in our corporate business. Customers continue to leverage Falcon to consolidate their security needs and lower their total cost of ownership resulting in higher retention rates over the prior quarter and strong module adoption rates. As of Q4, 50% of subscription customers are now using 6 or more modules. 34% are using 7 or more, and 24% are using 8 or more modules. Our gross retention rate remained high at 97%, and our dollar-based net retention rate increased to 115% in the quarter. At our more than $5 billion ending ARR scale, these retention rates highlight the durability of our customer relationships and our ability to both retain and expand our customer base. Our strong business momentum and Q1 record pipeline entering FY '27, which grew 49% year-over-year, gives us conviction in our ability to deliver profitable growth throughout FY '27 and beyond. As we lapse the 1-year mark from the end of our highly successful CCP program, we have seen that accounts that took CCP deals have gross and net retention rates higher than the company average, have shown a strong trend of early renewal and have already expanded more than twice the total $80 million of ARR value we provided. Moving to the P&L. Total revenue exceeded our guidance range and grew 23% over Q4 of last year to reach $1.31 billion. Subscription revenue grew 23% over Q4 of last year to reach $1.24 billion, and professional services revenue remained strong at $63.1 million, up 26% year-over-year, driven by the elevated threat environment. The geographic mix of fourth quarter revenue consisted of approximately 66% from the U.S. and 34% from international geographies with both EMEA and APAC year-over-year revenue growth accelerating compared to Q3. We saw broad strength across all our major geographic markets with the U.S., Japan, Europe, the Middle East and Africa all exceeding expectations. Total Q4 non-GAAP gross margin was a record 79%, and Q4 non-GAAP subscription gross margin was a record 81% of revenue, primarily as a result of continued cloud optimization. Fourth quarter non-GAAP operating income was a record $325.8 million, and non-GAAP operating margin was 25%, exceeding our guidance. The outperformance was driven by our strong top line performance, gross margin improvement and sales execution, underscoring our commitment to durable, profitable growth as we continue to balance strong net new ARR growth and operational excellence. In Q4, we delivered positive GAAP net income attributable to CrowdStrike of $38.7 million. Non-GAAP net income attributable to CrowdStrike was a record $289.1 million or $1.12 on a diluted per share basis, exceeding our guidance. Moving to cash. Our cash and cash equivalents increased to $5.23 billion. We generated record cash flow from operations of $497.9 million and record free cash flow of $376.4 million or 29% of revenue. Our FY '27 outlook reflects our confidence in the durability of CrowdStrike's growth trajectory, profitability expansion and cash flow generation. The fundamental tailwinds, platform consolidation, AI proliferation and Flex adoption are continuing to gain momentum. As George mentioned earlier, we see the AI revolution creating 2 disparate groups of software companies: one, those who are now existentially vulnerable; and two, those who will thrive. CrowdStrike is thriving amid the AI revolution as we not only leverage AI within our entire platform, but our platform helps organizations adopt AI safely and securely. The AI revolution represents a new and generational growth opportunity for CrowdStrike as accelerating AI adoption necessitates security built for this next era of technology. As AI adoption accelerates, combined with our record Q1 pipeline and continued platform consolidation momentum, we have strong conviction to once again raise our FY '27 ARR outlook. The outlook we are providing today includes the acquisitions of SGNL and Seraphic, both of which closed in February and are expected to contribute a combined $5 million to $8 million of acquired net new ARR in Q1. We are assuming minimal organic contribution from these acquisitions in the remaining quarters of FY '27 as we remain committed to natively integrating their capabilities into the Falcon platform before fully scaling go to market, consistent with our proven M&A strategy and brand promise. We expect FY '27 net new ARR seasonality to remain unchanged relative to FY '26 with approximately 41% in the first half and 59% in the second half. Beginning in Q1, we are changing the sales commission amortization expense period from 4 to 5 years to reflect our longer customer relationship periods. We expect this change to benefit non-GAAP operating income by $85 million to $95 million in FY '27, partially offset by additional operating expenses resulting from the integration of our recent acquisition of SGNL, Seraphic, Onum and Pangea of $74 million to $80 million. For a detailed breakout of the acquisition impacts to our guidance, please refer to the guidance slides of our Q4 FY '26 earnings presentation available at ir.crowdstrike.com following our prepared remarks today. Additionally, we remain confident in our previously provided assumptions for FY '27 partner rebates to represent approximately 0.8% of total revenue. Moving to interest income. Based on expected market rates and cash outlay from our recent acquisitions, we are assuming interest income of $160 million to $170 million for FY '27. Moving to cash. At the midpoint of our guidance, we expect free cash flow margin to be approximately 33% in Q1 and at least 30% for the full fiscal year. In FY '27, we expect the seasonal mix of free cash flow dollars between the first and second half of the fiscal year to be 43% in the first half and 57% in the second half, with Q2 remaining our seasonally lowest quarter. We anticipate capital expenditures as a percentage of revenue to be 7% to 8% in FY '27 with these investments more weighted to the first half of the year. Finally, as of March 2, we repurchased approximately 144,000 shares following our fiscal year-end and had approximately $950 million remaining under our current share repurchase authorization. We will remain opportunistic in returning capital to shareholders as we remain focused on capturing the significant growth opportunities ahead of us. For the first quarter of FY '27, we expect annual recurring revenue to be in the range of $5.502 billion to $5.504 billion, inclusive of the estimated acquired ARR and reflecting a year-over-year growth rate of 24%, translating to net new ARR of $249 million to $251 million, reflecting a year-over-year growth rate of 29% to 30%. We expect total revenue to be in the range of $1.360 billion to $1.364 billion, reflecting a year-over-year growth rate of 23% to 24%. We expect non-GAAP income from operations to be in the range of $308 million to $310 million and non-GAAP net income attributable to CrowdStrike to be in the range of $275 million to $277 million. We expect diluted non-GAAP net income per share attributable to CrowdStrike to be approximately $1.06 to $1.07, utilizing a 21.0% tax rate and weighted average share count of approximately 259 million shares on a diluted basis. For the full fiscal year 2027, we expect annual recurring revenue to be in the range of $6.466 billion to $6.516 billion, reflecting a year-over-year growth rate of 23% to 24% and translating to net new ARR of $1.213 billion to $1.264 billion, reflecting a year-over-year growth rate of 20% to 25%. We expect total revenue to be in the range of $5.868 billion to $5.928 billion, reflecting a growth rate of 22% to 23% over the prior fiscal year. Non-GAAP income from operations is expected to be between $1.422 billion and $1.462 billion. We expect fiscal 2027 non-GAAP net income attributable to CrowdStrike to be between $1.241 billion and $1.271 billion. Utilizing a 21.0% tax rate and approximately 260 million weighted average shares on a diluted basis, we expect non-GAAP net income per share attributable to CrowdStrike to be in the range of $4.78 to $4.90. George and I will now take your questions. Operator: [Operator Instructions] Our first question comes from Joe Gallo at Jefferies. Joseph Gallo: Really nice results and guide. George, securing AI is a huge market opportunity. Would love your thoughts on, one, when securing AI materializes to ARR meaningfully for you? Is that a fiscal '27 story? And then two, how much of the new market opportunity goes to pure-play cyber vendors? In cloud, people certainly use the hyperscalers for some of their security needs. So just curious how much of that new AI market goes to pure-play cyber vendors like yourselves. George Kurtz: Yes. Thanks, Joe. Obviously, we're still in the early innings, but we continue to ramp in protecting AI and it's happening today in terms of ARR growth. And we're obviously blown away of what we've seen with Pangea and AIDR. It was up 5x quarter-over-quarter from when we acquired the company. So we're really excited about that. The other piece to keep in mind is that not only is it going to drive AIDR growth, but we're going to see growth in protecting attack surfaces like cloud. We're going to see growth in next-gen SIEM. We're going to see growth in other areas that all touch AI. So from that standpoint, as I said, early innings but lots of opportunity for us. And I think with regards to hyperscalers, I'm glad you asked the question because when I started the company in 2011, we pioneered cloud-delivered security. And over the years, as cloud was maturing, I heard a lot about the hyperscalers actually providing all the security services. Well, that didn't happen. In fact, as you've seen with our results and our partnership with AWS, as an example, we transact billions through these platforms, and they're a great partner, and there's a lot more exposure in the cloud. So we see the same thing happening what I call AI hyperscalers, being able to actually partner with these hyperscalers leveraging AI and their LLMs, and also being able to leverage the technology to provide better outcomes within the platform of record for our customers, which is Falcon. Operator: Our next question comes from Rob Owens at Piper Sandler. Robbie Owens: George, you talked about the 10 other agents that you guys have besides Charlotte and some of the traction that CrowdStrike's seeing with security agents. But can you provide color on some of the recent acquisitions? When we look at agentic security more broadly, where are customers in their journey? And do you see identity as maybe one of the main hurdles for them getting agentic deployments at scale? George Kurtz: Yes, Rob, identity is one of the biggest threat vectors right now that we see. In fact, one of our latest threat reports, 80% of the breaches are non-malware-based, right? So a lot of it is around identity. And between the identity stack that we've built over the years, again, we got into identity security in 2020. We've built that out. It's a big business. And now really with the addition of SGNL.ai. This is, in my mind, game-changing technology to have 0 standing privileges to be able to protect nonhuman identities and human identities in a much more modern stack than anything else that's out there in the market. It's a perfect fit to CrowdStrike and our platform. You combine that then with something like Seraphic in browser security. So now you're able to protect the front door of really where these attacks happen, plus where AI takes place and you add the identity layer to that. And again, we're providing something that we think is going to be very unique in the industry. And of course, Pangea, which is our AIDR product, when you look at EDR, in today's market, EDR is a must. It's compliance mandate, and we believe that EDR will be a similar opportunity -- sorry, AIDR will be a similar opportunity to EDR in the coming years, driven by compliance and the need to accelerate protecting AI. Operator: Our next question comes from Fatima Boolani at Citi. Fatima Boolani: George, I wanted to direct this to you. Had a question about the next-generation SIEM opportunity. There are very much percolating fears that the open-ended SOC modernization share capture opportunity that had thus far been pretty open ended has -- is perceived to maybe be at more risk from what the frontier labs may or may not be pursuing. So maybe in the context of the opportunity ocean commentary in your prepared remarks, can you help us with a deeper explanation and understanding of what your current nature of relationship, partnership and integration is with the frontier labs and the frontier models? And how should we very critically think about the durability of your moat from any potential commoditization from an architectural or technical or, frankly, any other relevant contextual standpoint? George Kurtz: Yes, great question. So when you look at what we've built, and I talked about this in the prepared remarks, we're a net data creator, right? We have telemetry that we create from our agents and from other parts of our platform that is unique. We put it into various data stores, including next-gen SIEM and our Threat Graph. And we're able to understand the threats in real time with real-time prevention. That's vastly different than what the LLM providers and frontier models do. Now certainly, we leverage the frontier models. We have our own small language models. We have our own curated data. So I think we get the best of both worlds, but we're doing this in a platform that is driving consolidation that we've got millions and millions of workflows on already and becomes very, very sticky. So from the standpoint of our next-gen SIEM, you've got to look at the next-gen SOC opportunity and what we're doing with Charlotte and the agents that we've created, where we're driving meaningful change in a SOC or overall driving down costs and getting better outcomes, and we're doing it in a compliant way. To be a security vendor, you have to have trust. Customers are driven by compliance, and we are the epicenter of creating this data. So what we also are open to is having an open model. We have customers that create their own agents that leverage our technologies, that leverage our MCP services. And this is part of having an open platform, which is why our customers love CrowdStrike. Operator: Our next question comes from Saket Kalia at Barclays. Saket Kalia: Great finish to the year. George, maybe for you. The cloud security business, I think, is the biggest piece of kind of that 3 platform product group, if you will. And it's continued to add a consistent amount of net new ARR dollars over the last few years, which has been great to see. Maybe the question is how do you see the competitive environment in cloud security right now. And how do you think about the longevity of the growth in that market as you look out onto the future? George Kurtz: Well, when we look at the cloud market, I couldn't be prouder of our execution and the products that we brought to market. One of the areas that we focused on, as you know, for a long time, is runtime protection, and that's the technology that really is focused on stopping breaches. And I think customers have realized just by having the ability to understand sort of exposures doesn't mean you're going to stop the breach. So with our CSPM technology with -- a lot of the other technologies that we have acquired like Falcon Shield, it has become an extremely potent offering for our customers. And again, why is it resonating? One, the technology works. Two, it all works together, and we're able to drive down cost, complexity and get a better outcome, which is stopping the breach. It's not just about reporting on some exposures. It's about understanding the overall control plane in the cloud and being able to protect it. And we're giving the customers what they want, and that's the right outcome at a much lower cost than the competitors that are out there. So I think that's why, in a nutshell, you're seeing the results in our cloud business. Operator: Our next question comes from Brian Essex at JPMorgan. Brian Essex: Congrats on some nice results. And Burt, congrats on the return to GAAP profitability. Really good to see. Maybe a quick question for you, George, on identity. Great to see the acceleration there. Could you unpack that business a little bit and help us understand? I mean, obviously, identity was one of the segments that was part of the CCP incentive plans that you guys were pursuing. How much of the resurgence in growth there on the identity side is, I guess, renewal of CCP or Flex deals versus net new kind of emerging identity product? It would be great to get a feel underneath the covers there. George Kurtz: Well, it's one of the modules everyone wanted, and certainly, it was a fan favorite in the days of CCP. So we're seeing success from that. And as I have mentioned many times, once a customer engages with the module, there's an extremely high percentage that they're going to continue to renew that. So we continue to see that. But I think overall, you have to look at the threat landscape and the fact that identity is really one of the -- compromised identity, it's really one of the #1 drivers of breaches, and customers are being -- are focused on being able to protect those identities, both in the cloud and on-premise, if you will, and there's a massive compliance need for something like ITDR. So we're getting the benefit from the platform consolidation piece, and we're also getting the benefit from having a very mature stack now. Not only can we prevent these sort of breaches with ITDR, but you include now Falcon Shield protecting SaaS identities. And then you kind of look at what we've done with our PAM offering. It's been very, very well received by our customers. So I think that's why you're seeing our opportunity to continue to grow there. And as I said earlier, we couldn't be more excited about the SGNL.ai acquisition that we just completed. Operator: Our next question comes from Brad Zelnick at Deutsche Bank. Brad Zelnick: George, Burt, congrats on a really strong finish to the year, an impressive ARR guidance out of the gate for next year, implying 22.5% net new growth, which is above your prior commentary and now off of even a higher base. After such a strong fiscal '26, this obviously stands out in a very good way. Can you talk about the building blocks that get you there and especially how to think about the renewal opportunity that you have visibility to and the expansion opportunity given just how much you can address today versus when many of those customers might have last transacted? Burt Podbere: Brad, thanks for your comments, and I'll give you an insight into how we thought about the guide. I mean first and foremost, it starts with the strong momentum that we're seeing in the business. We saw in Q4 broad-based demand from all sizes of businesses -- from all business sizes, whether it's enterprise all the way down to MSSPs. And then that rolled over into Q1 when we talked about the record Q1 pipeline, which grew 49% year-over-year. Then as George mentioned, CrowdStrike is thriving in this AI revolution. We are not only leveraging AI within the entire platform, but our platform also helps organizations use AI security, and that's the key. And then I think we're still benefiting from the consolidation tailwinds. Customers continue to seek the best outcomes at the lower TCO, which we [ help ] to provide. And the consolidation really comes from the strength of our platform. You look at cloud, Next-Gen Identity and Next-Gen SIEM collectively, we posted a record net new ARR, resulting in $1.9 billion in ending ARR, up 45% year-over-year. Now look at endpoint. That accelerated for the second straight quarter on the heels of AI-driven demand. And then you tag onto that the success that we saw in Flex. We added over 350 Flex customers in Q4. The average Flex customer ending ARR that was over $1 million, those guys have adopted nearly 10 modules well over our company average. And then re-Flex, we have greater than 380 re-Flex customers. The average time for our re-Flex is 7 months. 100 customers re-Flexed multiple times with the average ARR lift post re-flex for this cohort was 48%. These are really, really great numbers for us. And so you combine all those things and other things gave us the confidence to be able to come out with the guide that we came out with for that new ARR for next year. Operator: Our next question comes from Matt Hedberg at RBC. Matthew Hedberg: Congrats from me as well. George, I wanted to ask about pricing. Obviously, Flex and re-Flex is doing extremely well, but there's obviously a lot of concerns that I think we're all seeing out there about potentially fewer knowledge worker seats in the future due to AI. The flip side to that is way more agents. So I guess two-part question. First, how do you think about agent pricing? And second, how well does Flex position customers for this potential mix shift? And could consumption become a bigger element to the growth algorithm? George Kurtz: Well, when we look at the overall threat landscape and how we go to market, obviously, we protect endpoints and cloud workloads. You have to look at those in totality, but now we have the opportunity to protect AI agents, and industry stats is that each knowledge worker will have 90 AI agents. So even if the mix moves around, we have a massive opportunity to protect AI agents. We have a massive opportunity to protect all of these AI cloud workloads. And from what I've seen in different technology shifts, we tend to create more opportunity as technology advances, not less opportunity. So that's the way we would view that piece of it. In terms of Flex, look, it's been a smashing success. There's a reason why some so many other companies sort of copied our model or tried to copy it. Customers like it. You can see the success in the numbers, and it just makes it so much easier to help customers very quickly. You look at the acquisitions we did. They were available immediately to customers as soon as the deal closed and/or we went to a GA, but we didn't have to go through another procurement cycle. So that's really the model that we're leading with going to market this year, and we couldn't be more excited about it. And I think the Flex results speak for themselves. Operator: Our next question comes from Roger Boyd at UBS. Roger Boyd: Great. Can you hear me okay? Andy Nowinski: Yes, go ahead. Roger Boyd: Okay. Great. George, I want to go back to your comments on why you're best positioned to benefit from AI SOC. And I appreciate your comments around your approach of tech plus human expertise and the flywheel that creates, giving you an advantage in terms of operationalizing this technology. I think it's also maybe the lowest friction way for some enterprises to benefit from some of this emerging tech. And I guess with that in mind, what sort of growth are you seeing with some of the managed service offerings like completing Overwatch relative to the acceleration you're seeing in the overall endpoint business right now? George Kurtz: Yes. Those businesses continue to grow extremely well. And when you look at why, it's because we're getting the right outcome that customers need. One of the things that we track is mean time to detection, mean time to remediation. We are absolutely best in class for customers. Very difficult for them to replicate what we do. Why? Because it's the network effect, right? It's the full view that we see in over 176 countries where we actually have our software operating. So when you're at the tip of the spear in seeing the activity through our technology, the tip of the spear in responding to some of the biggest breaches in the world combined with our threat intelligence, you've got the right understanding and the right DNA to create the right technology and outcome for customers. So that's what we continue to see. Obviously, they're leveraging our technology, and we're providing the automation. But there are many, many customers who don't have the skills or expertise to get the outcomes that we provide, which is stopping the breach, identifying these sort of threats, remediating much faster than they ever could and ultimately giving them the best outcome for a cost that it's very hard to replicate. And that's why it's been a fantastic success for us. Operator: Our next question comes from Gabriela Borges at Goldman Sachs. Gabriela Borges: George, I really appreciated your description on what LLMs are not and as it pertains to the RLHF commentary. I want to ask you the opposite question. What do you think the role is of Anthropic in cybersecurity use cases, whether it's on the coding side or the pen testing side or even the data aggregation side? What role do you think they should have? George Kurtz: I mean, I guess, I'll talk just in general terms for LLM providers. And they're certainly good at a lot of things. You can help sort through lots of data very quickly. And it's something that the security industry and most security players are leveraging. In our particular case, we certainly leverage technology like that, but we've built our own bespoke models depending on the module and trained in a certain way, with the vertical expertise to get the right outcome. Here's what you have to remember, is that what customers want is real-time prevention. You have to be in line. You have to be able to get the data in milliseconds, and you have to make a decision. That's not the case with an LLM. There's many great things it can do, and it's certainly a fantastic technology, but it's not stopping any breaches in real time. And that's one of the areas, I think, again, where we shine. So from my perspective, we continue to work with them. We continue to partner with them and amazing technologies. And I think it really is going to be the better together approach as the industry goes forward. Customers want to leverage their own models. We leverage Nemotron with NVIDIA. It's an unbelievable time to be in tech, and you're going to have agents talk to agents and our agents talking to customer agents that are inside their network. But at the end of the day, as the platform system of record for security, this is where you want to be. It is a very sticky place. We create the data. We curate the data. And again, we want to be open and work with any of the models that are out there, and we want to meet our customers where they have AI and leverage their technologies as well as ours. Operator: Our next question comes from Todd Weller at Stephens. Todd Weller: Yes. Appreciate the question. George, this is the second quarter of endpoint acceleration. Can you talk about what's driving that, how you think about the durability of the growth acceleration? And then related to this, there's been a lot of action in the market recently around browser security. Do you see that as a new category or as an extension of endpoint? George Kurtz: Well, when you think about endpoint acceleration, it's a simple answer, AI. We've talked about it, and we're showing it in the results. And I mean one of the biggest things you look at -- OpenClaw comes out. Our customers immediately are looking at all of our technologies to be able to identify it, put controls around it and make sure that they can leverage these technologies in an efficient and compliant way. So that's where AI meets -- the rubber meets the road, is at the endpoint, and that's how people consume it. So that's where we're seeing it. And then you combine that with browser security. That's really the front door now for how people are interacting with AI models and LLMs and the various technologies that are out there as well as how threats get into the environment. So you combine that with our agent and the ability to have protection across any browser, not just ask an organization to switch their browser. We can protect any browser that's out there. We tie it into our identity stack. And I can tell you, the feedback from our customers, as soon as we made the announcement, they were looking at how fast can we get this technology because they know on our platform, it's going to be additive for them. And we're excited about the category and the great company in Seraphic that we acquired. Operator: Our next question comes from Dan Ives at Wedbush. Daniel Ives: Yes. It's a great, great quarter as always. I -- So George, I was going to say what -- when it comes to Anthropic and Claude and obviously all the worries out there and you hear in the Q&A., to some extent, can't this also be a huge benefit to you as it just further spreads the word and customers realize essentially what they don't have and you do have, especially with the Microsoft partnership at the same time? George Kurtz: Yes, Dan, as I said in my prepared remarks, AI is a tailwind for us. And I mean I take a simple approach, is will we have more AI in the next year or 2 or 5 years. And for me, the answer is absolutely yes. And if that AI is being deployed with AI agents, you're going to need protection. You're going to need something like AIDR. You're going to need identity security. You're going to need browser security. You're going to need compliance around this. And that's the way we look at it. And again, we leverage the technologies that are out there. Why wouldn't we? And we have our own unique IP and our own model. So we get the best of both worlds, and there's many things that customers are looking for in these workflows and sort of data curation and knowledge in the security industry that you can't just get from a general LLM model. So I've talked about this before, and it's a great opportunity to work together. And that's really what we're focused on. Operator: This concludes today's question-and-answer session. George Kurtz: All right. So thanks, everyone, for their time today. We appreciate your continued support and look forward to seeing you at our upcoming events. Thanks so much.
Operator: Good morning, everyone. Welcome to DRI Healthcare Trust 2025 Fourth Quarter and Full Year Earnings Call. Listeners are reminded that certain statements made in this earnings call presentation, including responses to questions, may contain forward-looking statements within the meaning of the safe harbor provisions of Canadian provincial securities laws. Forward-looking statements involve risks and uncertainties, and undue reliance should not be placed on such statements. Certain material factors or assumptions are applied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements. For additional information about factors that may cause actual results to differ materially from expectations and about material factors or assumptions applied in making forward-looking statements, please consult the MD&A for this quarter, the Risk Factors section of Annual Information Form and DRI Healthcare's other filings with Canadian securities regulators. DRI does not undertake to update any forward-looking statements. Such statements speak only as of the date made. Today's presentation also references non-GAAP measures. The definitions of these measures and reconciliations to measures recognized under IFRS are included in our earnings press release as well as in our MD&A for this quarter, both of which are available on our website and on SEDAR+. Unless otherwise specified, all dollar amounts discussed today are in U.S. dollars. I want to remind everyone that this conference call is being recorded today, Wednesday, March 4, 2026. DRI's quarterly results press release and the slides of today's call will be available on the Investor page of the company's website at drihealthcare.com. I would now like to introduce Mr. Ali Hedayat, CEO of DRI Healthcare. Please go ahead, Mr. Hedayat. Ali Hedayat: Thank you, operator, and good morning, everyone, and thank you for taking the time to join us today. Joining me here on the call are Navin Jacob, our Chief Investment Officer; and Zaheed Mawani, our Chief Financial Officer. On the call today, I will provide a recap of our 2025 highlights, followed by financial performance for the full year. Navin will then discuss our portfolio assets and share insights into our market outlook. Zaheed will cover off our key financial highlights for the fourth quarter, and I will close out the prepared remarks with our 2026 financial outlook and share some thoughts on our longer-term growth framework before moving on to Q&A. Looking back on 2025, we worked through a year of exceptional change for the company while executing at a high level across the organization. Our investment team continued to deliver on innovative and well-structured transactions, leading us to exceed our 5-year deployment goal of $1.25 billion with the upfront and committed capital deployments in our Viridian and Ekterly deals. Beyond the capital deployed, these deals demonstrate DRI's leading capacity to structure win-win solutions that advance the needs of our counterparties and provide our unitholders with great returns. On the operational side, we continue to execute at a similarly high level. The internalization of our manager was a large and complex step for the organization, but a critical one to align both our governance and incentives with unitholders and to achieve a meaningful uplift to our economic returns. This year has already demonstrated significant gains from that process, and we feel better about the pace and magnitude of benefits than we did when we first presented the transaction. We optimized our cost structure, leading to our highest ever margins on a normalized basis and made improvements across processes in every functional area. One achievement I'm particularly proud of is the establishment of our proprietary risk assessment framework introduced this year. This data-driven framework helps us to evaluate risks across our royalty assets, the broader royalty market, our balance sheet and the overall backdrop for our business. It guides our decisions on where to invest, which deals to pursue, how to price them and how to manage sizing in our portfolio. Lastly, we continue to lead the sector on the integration of AI into our workflows with 2 dedicated team members and internal compute now working to make our execution better in speed and in quality. I would also like to take a moment to discuss the investments we are making internally to strengthen our bench and fuel our growth agenda. In early January, we welcomed Wesley Nurss as our new SVP, Head of Research. Wes brings a deep investment background in the biotech space and will lead our commercial and pre-commercial diligence efforts as part of Navin's investment team. On the balance sheet side, we also took steps to increase unitholder value through a series of meaningful transactions. We repurchased and canceled roughly 1.4 million units, reducing our unit count by nearly 3%. This comes in addition to our regular dividend of $0.10 per quarter, which we are increasing to $0.11 per quarter starting in the first quarter of 2026. Between these 2, we have returned in excess of $36 million to unitholders over the year. We reduced the number of preferred shares outstanding in the second quarter by redeeming and canceling $10 million of face value of our Series C preferred securities for $9.5 million, along with outstanding and accrued interest. Subsequent to the end of the fiscal year, the trust entered into an agreement with a private placement investor to partially redeem and cancel an additional $9.9 million face value of preferred securities for $9.8 million plus accrued interest. As you have seen in Monday's press release, we have also reached an agreement with 2 of our preferred holders to swap the vast majority of the remaining preferred share balance into a convert at attractive terms that further reduces both our coupon payments and extends our maturities. We expect that the small residual preferred share balance will be paid down at or before its call date in 2029 with cash on hand. Turning to our credit lines. We have further amended them in the fourth quarter to allow greater flexibility and to unlock the remaining gap between our effective capacity and the headline size of the overall facility. Lastly, we are pleased to announce that we have priced a private placement debt transaction with large institutional investors that terms out a portion of our bank facility to 5- and 7-year maturities with attractive costs and greater flexibility for the trust. We expect the private placement to have broadly similar covenants as the bank facility, but the terming of our financing allows us to invest more flexibly and provides us with more diversified sources of funding. Coming out of 2025, we continue to be well positioned to capitalize on the opportunities ahead of us. Turning to our full year financial performance. We delivered record performance across all our financial metrics. Total income of $198.6 million grew 6% over last year and together with disciplined expense management and internalization synergies led to an adjusted EBITDA margin of 84%. Normalized for nonrecurring costs, that adjusted EBITDA margin was 88%, which is the highest annual margin in our history as a public company. These outcomes are underpinned by our resilient portfolio with several assets delivering double-digit cash receipt growth, including our Orserdu, Xenpozyme and Xolair franchises. Notably, as of the fourth quarter, we have now fully returned our investment on Orserdu I. Partially offsetting these strong comps, we had softer performance from Omidria, Oracea and Zytiga. Regarding Omidria, we have been closely monitoring the structural challenges affecting the asset performance throughout the year, and we believe it was prudent for us at this point to take an impairment in the fourth quarter of $9.7 million. While this is always disappointing, it is important that we adjust the performance expectations going into 2026, given the sequential softness throughout 2025. Navin will provide more color on this shortly. But as a reminder, our policy is to never write up assets. So our balance sheet adjustments will only reflect negative revisions while our outperformance is only captured at the level of receipts and EBITDA. We made big strides this year operationally, financially and in our investment strategy. I will come back shortly to talk more about how that feeds through to our 2026 outlook and our longer-term growth agenda. But for now, I will turn the call over to Navin Jacob, our Chief Investment Officer. Navin Jacob: Thank you, Ali. Touching first on our portfolio performance. Slide 8 shows the individual royalty receipts for the fourth quarter and full year 2025 compared to the same periods in the previous year and the previous quarter. For the full year, our portfolio generated total cash receipts of more than $196 million, an increase of $6.5 million or 3.4% growth versus 2024. The increase was driven by several factors, including: one, strong Orserdu sales and removal of certain deductions previously incurred on the Orserdu II transaction; two, growth from the additional Xenpozyme II royalty stream; three, growth of Xolair following its launch for the food allergy indication; and four, additional receipts earned from the Casgevy and Ekterly assets, which both earned their first receipts in 2025. These increases were partially offset by the following items: one, the timing of Empaveli payments; two, weaker-than-expected Omidria royalty receipts; three, a nonrecurring milestone of $5 million from Vonjo II received in 2024 that makes for a tough year-over-year comparison; four, increased competition and generic entry impacting the sales of Oracea and Zytiga; and finally, five, Rydapt, which is nearing the end of its royalty term and has an expected step down in its royalty rate. Turning to specific individual product performance. Let me start with Omidria, which was, as we have indicated before, has been performing below our expectations for several quarters now. As we have previously communicated, Omidria has been the subject of continued impact from the Merit-based Incentive Payment System, or MIPS. Consequently, there has been a resetting of the demand by physicians as they calibrate the demand such that they are not penalized by the MIPS program. The MIPS program is the basis for physicians receiving reimbursement from cataract surgeries. As a result, through the first 3 quarters of 2025, we experienced cash receipt declines from Omidria. While we have seen some stabilization, what we're not seeing is a significant amount of growth in the HOPD or hospital setting. Our original forecast driven by payer and physician feedback was that new Medicare reimbursement in 2025 would generate growth in the HOPD setting. But thus far, we're not seeing material growth. Rayner is actively taking steps to improve the performance by continuing to leverage the Omidria sales force to maximize the number of surgeons and market access coverage within each account. Importantly, Rayner is looking to negotiate payer contracts to ensure inclusion of separate reimbursement associated with the HOPD Medicare reimbursement. While these steps are encouraging, we are taking a conservative stance with our updated forecast, which now predicts flat sales or no growth for Omidria over the next few years. This has led to a $9.7 million impairment, which was booked in Q4 2025. Vertex reported Q4 2025 sales of $54 million for Casgevy. Recall, we are paid in 2 ways for Casgevy. Firstly, DRI is entitled to an annual license fee for which we will record $5 million in Q1 2026. Secondly, we may be eligible in the future for annual sales-based performance fees if annual sales are over $1 billion. Casgevy uptake to date is roughly 1 year faster than we anticipated. And as such, DRI may be eligible for one more sales-based payment than we had built into our acquisition forecast. Looking now at Ekterly, we began earning royalties in the third quarter of 2025 and recorded our first cash receipt of $0.8 million in Q4 2025. Since its approval, Ekterly has shown strong performance with KalVista's U.S. business receiving 1,318 patient start forms as of December 31, 2025. KalVista reported Q4 2025’s Ekterly sales of $35 million, which results in DRI receiving cash royalties of $1.8 million in Q1 2026. Q4 '25 sales imply an annual run rate of over $140 million, which is above our acquisition forecast for 2026. As of February 2026, KalVista has received regulatory approval for Ekterly in several key markets outside the U.S., including the United Kingdom, European Union, Australia, Singapore and Japan. Orserdu continues to outperform our expectations with royalty receipts reaching $19 million in Q4 2025, a 38% year-over-year increase versus Q4 2024. Q4 '25 sales were also strong, and we anticipate receiving approximately $22 million in royalty receipts in Q1 '26. Furthermore, Q4 '25 sales were so strong, it triggered a milestone payment to DRI of $5 million, which will be received in Q1 '26. So in total, for Q1 '26, we anticipate receiving approximately $27 million of cash receipts for Orserdu consisting of $22 million of royalties and $5 million from the milestone payment. Despite the continued outperformance, we maintain our view that 2025 is a peak year for Orserdu due to competition from other oral SERDs as well as other mechanisms such as novel PI3K inhibitors. With that said, we note that the outperformance has led to the Orserdu I transaction breaking even on an earned basis in Q4 '25, which is near record speed for DRI. The oral SERD market has been receiving meaningful attention over the past few months, driven by data generated by Roche and AstraZeneca. There is increasingly a belief among industry experts and analysts that this market could be significantly larger than initial expectations. Roche recently noted that its oral SERD giredestrant could be its largest drug ever, which implies giredestrant peak sales of over $8 billion. This is driven by giredestrant's data in the adjuvant setting of HER2-negative/HR-positive breast cancer and by its data in combination with everolimus in all-comer second-line HER2-negative/HR-positive breast cancer. As a reminder, Menarini is running studies of Orserdu in similar settings and combinations as Roche. ELEGANT is a Phase III study of Orserdu versus standard endocrine therapy in patients with ER-positive/HER2-negative early breast cancer with high risk of recurrence. ADELA is a Phase III trial of Orserdu in combination with everolimus in advanced breast cancer patients with ER-positive/HER2-negative ESR1 mutation. These studies, if positive, could represent substantial upside to our expectations. Turning to Spinraza. In the fourth quarter of 2025, the cash receipts were essentially flat year-over-year as Spinraza revenues were significantly impacted by the timing of shipments outside the U.S., while increased competition from Roche's Evrysdi continued to impact Spinraza's market share. Spinraza's performance is in line with our expectation. Moving on to Vonjo. Q4 '25 cash receipts were 11% lower versus the same period last year. Sobi recently commented development work continues with the confirmatory Phase III study PACIFICA, which, if successful, is necessary for regulatory filing outside the U.S. Clinical trials to investigate the potential for Vonjo in new indications are underway. These new indications were not included in our original acquisition forecast. Sobi reported Q4 '25 sales of $35 million, which should translate to royalty receipts of $3.7 million in Q1 '26. Recall, during Q3 '25, we had lowered our expectations on Vonjo and the latest quarter's estimates are in line with our reforecast of the asset. Finally, on Xempozyme, we recorded $2.5 million of royalty receipts for Q4 '25, which is a marked increase versus the prior year, driven largely by ex-U.S. launches that have been faster than our expectations. Sanofi reported worldwide Xempozyme sales of $71 million for Q4 2025 and over $250 million of sales for full year 2025, which is ahead of our expectations. Before I close, I'd like to touch on thoughts regarding the market and our positioning for 2026. Citing just the fourth quarter of 2025, there have been approximately 8 royalty deals for a total of $1.5 billion in announced value and at least 70 equity deals for a total of $13 billion raised by biopharma companies. 2025 was a banner year for royalty deals with a total value surpassing $8 billion. In closing, we expect the market to continue to grow, driven by favorable industry tailwinds and amplified by continued market awareness for royalties. We remain well positioned to capitalize on the $3 billion pipeline. Notably, we are experiencing significant volume of inbound calls, but we remain, as always, selective for the right opportunities. I will now turn the call over to Zaheed Mawani to review our fourth quarter financial performance. Zaheed Mawani: Thank you, Navin. Turning to the fourth quarter results. We are pleased with our overall performance during the quarter. Our total income was $61.7 million for the quarter. On a reported basis, this was flat versus the fourth quarter last year. However, notably in the Q4 of 2024, our royalty income included a onetime $18.2 million back payment related to our Orserdu asset. Of that $18.2 million, $2.5 million was related to the fourth quarter of 2024, but the balance of $15.7 million was associated to prior quarters. Normalized for this onetime $15.7 million item from the fourth quarter of 2024, our total income in the quarter increased 35% year-over-year. As Navin mentioned, royalty income in our fourth quarter also included a $5 million milestone related to Orserdu, which will be received in Q1. Turning to expenses. Our total expenses were $54 million, approximately $0.5 million lower year-over-year. This was primarily driven by internalization synergies, including the elimination of performance fees as well as lower compensation, being partially offset by higher unit-based compensation as a result of mark-to-market adjustments and higher other expenses. We're pleased with our progress on the internalization savings, which continue to pace ahead of our expectations. All in, our adjusted EBITDA for the quarter was $46.2 million, which was a 25% increase over the fourth quarter last year. On a rate basis, our adjusted EBITDA margin was 91% versus 83% in the fourth quarter of 2024. Key drivers for this positive outcome, as mentioned, was our strong top line performance, coupled with prudent expense management and a 14% increase in cash receipts. The increase in cash receipts was partly attributable to the onetime $15.7 million of cash receipts received in the first quarter of 2025 for the prior period catch-up of Orserdu as referenced earlier. In addition, as mentioned earlier by Navin, we also posted increases on Xolair, Xempozyme and Ekterly. We generated adjusted cash earnings per unit of $0.77, and we were pleased to announce yesterday an increase in our quarterly distribution to $0.11 per unit payable on April 20, 2026, to unitholders of record on March 31, 2026. Turning to Slide 12. We continue to generate strong cash flow from our assets. Over the last 12 months ending December 31, 2025, we recorded royalty income of $188.9 million plus the change in the fair value of financial royalty assets and the unrealized and realized gains on marketable securities and other interest income for a total income of $198.6 million. After adjusting for receivables, the unrealized and realized gains on marketable securities, the net change in the financial royalty asset and other noncash items, we achieved normalized total cash receipts of $196.4 million. After taking our operating expenses, management fees and performance fees, which totaled $31.4 million net of performance fees payable into account, adjusted EBITDA was $165 million with a trailing 12-month adjusted EBITDA margin of 84%. We also generated adjusted cash earnings per unit of $2.26. Moving to Slide 13. As of December 31, we had $42.4 million of cash and cash equivalents. We also had $59.7 million of royalties receivables and $239 million of credit availability from our bank facilities. We continue to be well capitalized and well positioned to fulfill any forthcoming milestone commitments as well as continue to invest in new assets. During the year ended December 31, 2025, the Trust acquired and canceled 1.4 million units at an average price of $9.82, totaling $14.2 million. As of December 31, 2025, in aggregate, we have acquired and canceled 4.6 million units at an average price per unit of $7.08, totaling $32.7 million under all current and previous NCIB plans. From December 31, 2025, to February 26, 2026, we acquired an additional 75,938 units under the May 2025 NCIB plan at an average price of $11.31 totaling $859,000 under the AUPP. As part of our overall capital allocation strategy, we expect to renew our NCIB program into 2026. We will provide an additional update on our Q1 conference call in May. With that, I will turn the call back to Ali Hedayat to discuss our 2026 guidance longer-term growth aspirations and key priorities for 2026. Ali Hedayat: Thank you, Zaheed. Before I turn to our 2026 guidance and long-term view on the business, I would like to recap our 2025 performance against the targets we communicated. As I mentioned earlier in the call, inclusive of our Viridian commitments, we are pleased to achieve our deployment target of $1.25 billion over the last 5 years. Our royalty income target as defined for 2025 was between $172 million and $182 million. We surpassed the high end of this target with our 2025 royalty income coming in at $188.7 million. Finally, we set out a CAGR guidance of high single-digit royalty income growth through 2030 off a 2022 base. At the end of 2025, we are currently tracking well above this target with our current view indicating a 12% CAGR. I would like to take a few minutes to lay out how the work we have done over the course of 2025 lays the foundation for driving our investment capacity and the results in the years to come. First, we have achieved meaningful margin expansion after internalizing the manager. While we don't expect our current quarter's low 90s adjusted EBITDA margin to be our baseline going forward as we intend to reinvest in our team, we do expect our run rate EBITDA margins to be roughly 500 basis points higher than the low to mid-80s margins of our pre-interalization model. At our current scale, each percent of EBITDA margin adds a little shy of $2 million to run rate cash flow and can be passed through our leverage covenants on a backwards-looking basis, meaningfully increasing our credit capacity. Similarly, we have achieved significant reductions in our debt amortization payments and interest costs between the private placement I mentioned earlier and the cancellation of the preferred shares we retired. While these don't pass through our leverage ratios, they do add in excess of $25 million to our annual cash flow relative to last year's run rate. While some of this is offset by the reduction in Omidria cash flows linked to our forecast revision, we will still exit the year in a substantially better cash flow position than we entered it. These improvements help to drive our guidance for 2026 and our long-term 2030 aspirations on Slide 16. The guidance for 2026 shows meaningful growth over our 2025 baseline. Now turning to our 2030 aspirations. We aim to invest between $800 million and $1 billion in the 2026 to 2030 period, a number that is fully funded with our existing capital structure and cash flows. Based on our current expectations for deal mix and returns, we believe this should underwrite a low teens CAGR in adjusted EBITDA from now through 2030 with sequential growth rates that accelerate through that period and beyond. Importantly, none of this requires any additional equity. And even in the absence of any further investment, we believe our portfolio EBITDA will grow organically through 2030 with the current perimeter of assets. Slide 17 helps to bring this all down to a set of priorities. We intend to compound cash flow per share meaningfully over the coming years by focusing on a combination of best-in-class operational and financial execution and continuing to allocate capital in a disciplined and innovative way to further our mission of funding innovation in the industry. We can only do that because of the hard work our team has done. And I want to take a moment to thank all of my colleagues at DRI for putting up a fantastic year in 2025 across all of our functional areas. We have great things ahead of us, and I couldn't be prouder of what we have done together this year. That concludes our prepared remarks. And with that, let's open the call to questions. Operator: [Operator Instructions] Your first question comes from Douglas Miehm with RBC Capital Markets. Douglas Miehm: My first question just has to do with the new guidance. Management is typically quite conservative. And when you do look at what was spent on a per year basis versus what the guidance is, it is a bit lower. So would it be correct in characterizing the pacing and overall expected investment as being conservative? And -- or is this a function of changes within the market in terms of increased competition? Ali Hedayat: Doug, it's Ali. Thanks for the question. I think there's a few ways to put a lens on that. The first is really when you compare the current guidance on deployment to what we achieved over the past 5 years, I think one of the things that's worth keeping in mind is we started the prior 5 years with an underleveraged balance sheet. And in the middle of it, we had the TZIELD transaction, which was essentially a round trip that added something on the order of $250 million to $300 million on a levered basis to our deployment. And I think those 2 effects basically caused the backwards-looking deployment numbers to be a little bit higher than what we're forecasting over the next 5 years. The second one, which is relatively important, is also the mix of deals that we're doing. So to the extent that we do a deal that is earlier stage, either immediately preapproval or, let's say, early in the launch of a drug, those deals obviously don't have backward-looking cash flows. And as a result, it's difficult to lever those transactions based on the way that our financing works. It's still attractive to do them given the higher leverage -- sorry, the higher returns and the duration, but it's definitely something that sort of feeds through the capacity to deploy via the leverage covenant. So I think when you put those 2 things together, you get a bit of a sense of where that number is coming out. And I think those bands reflect a bit the variance in the mix. So to the extent that we do a higher number of approved deals, you should expect us to be sort of towards the higher end of those bands. And to the extent that we do a higher number of preapproved deals, we'll sort of be towards the lower end of those bands, and that's the way to think about it. Douglas Miehm: Okay. And when you think about the lower end and the preapproved deals, you are anticipating higher returns. My follow-up question has to do with Orserdu. And when I think about that product, you seem to be faring quite well relative to the Lilly launch, but you're still contemplating a down year this year. I recognize that as we get into 2027 with what's coming from Roche and also Astra in the form of Cami, we are going to see definitely increased competition. But do you think there's a chance here given the strength of the Lilly product relative to Orserdu that you might do a little bit better than anticipated? And I'll leave it there. Ali Hedayat: Yes, Doug, I'll let Navin answer that one in detail. But one framing point, and I think this feeds a little bit into our '26 numbers in terms of guidance is, look, we have obviously revised our Omidria and our Vonjo numbers over the course of the year, and that's baked into our guidance numbers. When you think about the things that could be a positive variance for us over the year, we have been relatively conservative in the way that we assume the competitive environment for Orserdu evolves. And despite excellent execution out of the gate by the KalVista management team on Ekterly, we have not really factored in that cadence into our guidance either. So I would say that the range of things in terms of potential positive outcomes, those are the 2 biggest variables to think about. And Navin, I don't know if you want to dig into OSEDU in a bit more detail. Navin Jacob: Sure. Thanks for the question, Doug. So on Orserdu, remember that when -- the asset has been almost from day 1 outperforming our expectations. And so it's easy to get excited by that and assume that it's going to continue to outperform our expectations, entirely possible, right? But what we're confident about is that this is the year, this is sort of the dynamic year for Orserdu, for lack of a better term, the time lines of when we anticipated these competitor oral SERDs to come into the market are exactly what we anticipated at the time of the acquisition. And so while the launch has gone faster than expected, the competition and how that is -- how heavy that competition is, is exactly as we anticipated. And all of those start hitting this year. Well, Lilly, this is going to be their first full year and it is Eli Lilly. So Roche, obviously, as you pointed out, is coming in 2027 and with very different data and differentiated data that we've seen thus far. So there is -- I think it would be imprudent of us to change our outlook that this is going to be a down year relative to our -- relative to 2026 -- 2025, excuse me. Having said that, I think what we were trying to provide in our commentary is to suggest that, look, the Menarini has been performing quite well, both commercially, but also with regards to their clinical strategy. You can see the strategy that they've taken forward, which is different than Eli Lilly or AstraZeneca is much more in line with Roche. And Roche is now talking about giredestrant being the largest drug they've ever had. And from a risk-reward perspective, given that we've been conservative, that kind of level of upside is nowhere near close to any of the upside that we had anticipated for the product. So all of that just speaks to the risk reward that we try to build in for investors. Operator: Your next question comes from Erin Kyle with CIBC. Erin Kyle: I wanted to ask on the pipeline. And maybe if you can just dig into that $3 billion pipeline and how much of that -- what the split is between pre-commercial and commercial deals in it, how many deals you're tracking in there and what the range is per transaction? And then just whether your near exclusivity on any deals would be helpful. Navin Jacob: Erin, thanks. So on the pipeline, a large proportion of the deals are skewed towards pre-commercial. Having said that, I would argue that the nearer-term pipeline, call it, over the next 6 to 8 months is more skewed to post-approval drugs. So I would say that the deals in, call it, month 8 and beyond that could come to fruition are definitely skewed towards pre-commercial, but more near term, again, 6 to 8 months where the deal pipeline has shaken out, so it's closer to being commercial assets. Erin Kyle: Okay. That's helpful. And then just the sort of the range of size in the pipeline, is it kind of in line with your historical acquisition size? Navin Jacob: Correct. It's in line with our acquisition size of $50 million to $150 million has been the sort of sweet spot we played in. And I neglected to answer your question on exclusivity. We're not in exclusivity with someone. I'll just leave it there. Erin Kyle: Okay. And then I just wanted to ask another question on kind of the competitive environment. And I hate to be the one to ask an AI question here, but with AI fears kind of hitting nearly every industry here, I did want to ask if whether you see any risk to your business from the possibility of it possibly being easier to build a database to track existing royalties or biopharma companies that are capital constrained. Yes, I'll leave it there and ask the question. Ali Hedayat: Erin, I'll take the AI one. I think we actually see AI as an opportunity. We spent a lot of time investing in that over the past year, year and a bit. As I mentioned on the call, we have 2 team members who are basically solely dedicated to improving throughput and efficiency of our various processes with AI. We actually have bought a number of GPUs and are using them to sort of run models that have been trained and modified to work on our own data sets. I think in terms of lowering the competitive barrier, I think there's probably areas in which that will be easier, if you will. So processing large amounts of patent filings and the like. I never really viewed those things as something that were a material edge for us. They were just hard in the sense that you required dedicated people to go through large amounts of paper. I think the edge is really a combination of relationships, industry expertise, deal structuring capacities and the like, which I don't think really will be particularly impacted by AI. But if you will, the velocity and sort of speed of processing through a deal will be impacted by AI. But I would say we are probably, at this point, doing a better job than most in terms of adapting our processes to that. I think in terms of the pipeline, I'll let Navin take the question or the competitive environment, rather, I'll let Navin take the question. Navin Jacob: Yes. With regards to how that affects our ability to compete, we have not thus far seen anything remotely close to affecting our ability to compete with regards to AI. If anything, Ali has been well ahead of, I'd say, most folks on the AI front and him and the management team at large, prior management had been investing in this space. And so it's -- we've been working on this for a couple of years. So if anything, we're ahead. Operator: Your next question comes from Michael Freeman with Raymond James. Michael Freeman: Congratulations on the year. I wanted to -- maybe following on Erin's question. I wonder if you could dive into the risk assessment framework that you discussed, Ali. Maybe give some examples of how you're using the tool? And what areas maybe in the current pipeline you're looking at, areas that you're seeing this tool steer you toward investing in maybe areas that it's steering you away from? Ali Hedayat: Yes. Thanks for the question. I think the right way to look at this is if you think about the business and you think about the various range of degrees of freedom that we have in terms of our balance sheet and leverage covenants and the like, that range will always be bigger than, let's say, what we should do. And what we should do, I think, is defined by a combination of thinking through risk, thinking through cash flow dynamics, portfolio construction and the like. And really, the purpose of the risk framework is to say, all right, yes, we could, let's say, this year, deploy another $150 million into pre-approval deals, should we do that? Because we already have one large preapproval asset on the portfolio right now. And even though we could technically let's say, do more, is that the right decision? And the answer to that, I think, depends on where we are in terms of our leverage ratios and our current exposures, where we are in terms of the ability to unlock our balance sheet based on trailing 12-month cash flows and feeding through our debt covenants and various things like that. And what the risk framework does is it pulls all of that together and says, all right, here's the current parameters in terms of various risks to the business, and that could be approval, it could be things like regulatory risk, pricing risk for the various drugs given what's going on in the world. It could be some bigger picture factors, performance of our specific assets. And it says, given all of that and given what we have on deck in terms of potential avenues of future deals, which one should we be chasing? How should we be sizing them? How should we be structuring them? And it's sort of an overlay that I think takes our degrees of freedom and focuses them down on 2 or 3 things that we think will be the best risk-adjusted decisions to make for the portfolio overall. Michael Freeman: Okay. All right. Maybe this one could be for Navin. Looking at the Viridian assets, I wonder if you could just give us a view of the pipeline dynamics in this space. In December, we saw the failure of argenx thyroid eye disease assets. I wonder if that -- how that and maybe other action in this space adjusts your market share expectations for Veligrotug? Navin Jacob: Well, to be honest, we had built in a fair amount of competition, including Roche's satralizumab into our expectations. That asset has played out not particularly well. One trial was successful, one trial was not. This is the anti-IL-6. So there is potential upside to our expectations. With that said, given the changes with the FDA moving towards Phase III trial being enough for approval, perhaps satralizumab gets approved. With that said, the data there for that drug was not as good as Veligrotug, and we don't anticipate we'll be close to Veligrotug, which is the new asset that we also have a stake in that was formerly called VRDN-003. All this to say that there is certainly upside to our acquisition forecast with the failure or weak data, let's put it, of the Roche asset and what looks to be like mediocre assets as well in the rest of the pipeline. Operator: Your next question comes from Nate Po with National Bank Capital Markets. Nathan Po: So you spoke to record margins this year. And if your prior aspirations for high single-digit royalty income growth still stand and you pair that with your new aspirations for low teens EBITDA growth, where -- can you expand on where you see incremental margin accretion opportunities coming from? Ali Hedayat: Nate, like I said on the prepared remarks, our objective really isn't to grow margins meaningfully beyond where we're at right now. If anything, I think we'll probably -- relative to sort of this low 90s number that you're seeing now, we'll probably reinvest a bit into the business on the team side. I think when you think about that low teens aspiration out to 2030, I think that's really being driven by the top line. We probably have a little bit of both operating leverage and 1 or 2 remaining bits of low-hanging fruit. But I think what you're really seeing there in that longer-term aspiration is confidence around the top line rather than further margin expansion. Nathan Po: Great color. And you did also -- you mentioned reinvesting in your team as well. So to support the deployment aspirations you guys have, how do you see your current deal teams capacity? Or if you're investing in other places, could you just expand on that? Ali Hedayat: I think the deal team capacity is pretty well matched to the balance sheet capacity. I think one of the things that we're thinking about a lot is, a, in an AI-centric world, what the mix of people on the team should be. So as these tools expand our capacity to do things, for example, do we need more vertical domain expertise and the ability to assess pre-approval assets, for example, or do we need other areas of vertical expertise. So I think what you'll see us do is maybe fill in various areas of the deal team to match where we're trying to take the business. And I think that will be very much with the mind of -- to use the [indiscernible] expression, skating where the puck is going in terms of AI expanding our capacity to do things. Operator: Your next question comes from Louise Chen with Scotiabank. Louise Chen: Congratulations on all the progress this quarter. I wanted to ask you first on Viridian's product. And if the Veligrotug, if it gets approved this year, will there be upside to your adjusted EBITDA guidance? Or is it already incorporated into there? And then on the VRDN-003 product, just curious what you think might be a clinically meaningful outcome? Do you expect to have efficacy advantage over a drug like TEPEZZA? Or is it more the convenience? Ali Hedayat: I think in terms of thinking about our guidance, we don't tend to price in things where we don't have a lot of visibility, right? And as I mentioned earlier on the call, even areas like the launch of Vector, which the execution there has been superb out of the gate without getting a few quarters behind us that really feed into a well-grounded set of assumptions, it's pretty hard for us to sort of tweak things up. So I think when you put a lens on the Viridian portfolio or any of our earlier-stage assets or assets that are sort of early in their launch curve, you should assume that we're not sort of taking a very dynamic pricing up or revising up of our forecast based on things coming out of the gate a little bit stronger until we get some data behind us to justify that. Navin Jacob: And Louise, on elegrobart, which is the new name for VRDN-003, our expectation is that, listen, if it achieves what TEPEZZA has achieved in the active TED setting, it's a home run, right? But we don't necessarily need it to achieve that for this to be a very big drug because of the convenience factor. Veligrotug, just to be clear, we think is a superior product to TEPEZZA given both its activity in active TED and in chronic TED. And it has -- as a reminder, both trials were static positive, while with regards to the Amgen trial, the chronic trial was -- had mixed results. Furthermore, you have diplopia data with Veligrotug, which you don't have very clear efficacy on with TEPEZZA. So elegrobart, if it comes even close to that, it will be a fantastic product given significant convenience advantages. Operator: Your next question comes from Justin Keywood with Stifel. Justin Keywood: Nice to see the results. My question is around some of the initiatives for the business model improvement and capital structure refinement. It appears to be leading to somewhat better valuation in the shares, but still lagging certain peers, including the largest one out there. And depending on what metric you look at, DRI could be valued at half that peer. I'm wondering if there's any remaining initiatives that could help bridge the valuation gap? And is a NASDAQ listing potential in the future as well? Ali Hedayat: Thanks for the question. Look, we're constantly thinking about things that could help to bridge that valuation gap. And I personally agree with your assessment there in terms of where we sit in terms of valuation. I think in terms of the NASDAQ listing, I think the scale of the business probably needs to reach a point that will attract more attention from the U.S. investor base. And I think we're not quite there yet. I think we're well on track to get there. But I think we don't want to put ourselves in a position where we're sort of orphaned as a smaller and less focused on equity in the U.S. market because it's just not productive to be there. I think we have good support across all aspects of the capital markets in Canada, whether it's sort of debt or equity. I think our financing partners here have been fantastic across the spectrum. I'm really happy to see the reception that we got for the private placement. Those are all top-tier big U.S. institutional investors. And I think we'll continue to sort of penetrate that market on the debt side as we grow the business. And that's a very encouraging step for us in terms of broadening our capital base. Operator: The next question comes from Leszek Sulewski with Truist Securities. Leszek Sulewski: Congrats on the progress. Ali, maybe on the near-term pipeline, where are you seeing the better risk-adjusted spreads right now as it relates to categories of assets and perhaps indication areas? And how would you rate the quality of the assets from what you framed as increasing inbounds? And then as a follow-up, to the extent that you can share, can you provide or walk us through where you are standing on the early stage versus late-stage due diligence process? And what have been some of the gating factors on closing a transaction? Ali Hedayat: Yes. I'll let Navin take those. But I'd broadly say in terms of return and risk characteristics, I don't think we have seen a significant move one way or the other. I think the business -- the inbounds of the business remain very attractive from a risk-adjusted return perspective. I think the need for capital as Navin addressed in the call earlier, is still very significant. We've seen the royalty market grow in terms of penetration pretty meaningfully over last year, right, like we exited at something around $8 billion of deals in the sector. So we're pretty happy with what we see out there in terms of pipeline. I don't know, Navin, if you want to get into some of the granular aspects. Navin Jacob: I wouldn't -- I would characterize this as mid-stage on a couple of potential deals. But everything else, I would characterize as somewhat early stage. For the reasons that Ali had pointed out, our pace of deployment over the next 1, 2 years may be a little bit slower than what we had been conducting for the past 3, 4 years, largely because of being -- as I'll just reiterate, we were highly under-levered before at the start of that 4-, 5-year period. And then we benefited from TZIELD, which gave us more capacity. And while the capacity exists and as we -- today, because we're going through this transition of taking on a greater proportion of pre-approval deals, that's not to say, just to be very clear, that we're not going to be doing approved drug deals, we are. And as I noted, our near-term deals are more weighted towards approved drugs. There is a bit of a transition going on. And as that transition goes on, because of the shape of the cash flows associated with the preapproval drugs, versus approved drugs and the subsequent leverage capabilities, there is sort of a 1- to 12-month to 24-month period where we have slightly slower deployment pace than we have historically seen. And then after that, it will be back to normal as these preapproval drugs kick in as we're seeing with KalVista and with what will hopefully be the Veligrotug in the second half of this year. So you can understand why there's a slight bit of change in pace for the next 12 to 24 months. Ali Hedayat: And I think one thing just to round out the color there. When you look at that $8 billion of deals last year, it was actually while a significantly higher dollar value of deals, it was a lower number of deals, right? And that's kind of interesting. And you see that migration in deal size, which is something that we've consistently seen over the past 2 or 3 years to bigger deals. And I think that feeds in a little bit to Navin's comments, which is I think the kind of [indiscernible] cadence of a small- to medium-sized deal every 6 months or something like that is probably while still possible, a bit less likely, I think what you'll see is larger transactions with a bit more spread out time lines from us because I think that's really what we're seeing in the market. Operator: Your next question comes from David Martin with Bloom Burton. David Martin: First question, does Sobi have any upcoming new program initiatives to reverse the Vonjo weakness, excluding any new indications? Navin Jacob: Excluding new indications, I would argue that the new indications are the largest driver of growth on a go-forward basis. They do have some life cycle management programs where they expand beyond not just new indications as in true new indications, new therapeutic areas, which they're working on. But there are some life cycle management programs that, for instance, ensuring that physicians understand the value of the product in the anemic setting, which we would argue is as good as momelotinib. However, GSK took full advantage of the profile of momelotinib and have penetrated there. We firmly believe Vonjo has a similar product profile as that product in the anemic setting, but there is work that's being done by Sobi to ensure that physicians understand the strength of the asset in that setting. David Martin: Second question, you're doing some pre-commercial deals, and they're relatively new for you. Are your competitors following that as well? Are you seeing them chasing those same types of deals? Ali Hedayat: Our competitors have been in that space for some time in varying ways, right? And I think there are some competitors who operate in more sort of fixed income adjacent spaces who don't do that, but the ones that have operated in what I would say are more equity-like in philosophy, they have been reasonably active in that space to varying degrees. I don't think our exposure or direction stands out in any way there. I think if anything, we are sort of reasonably conservative in our pre-approval exposure as a percentage of assets. But it's nothing sort of hugely new for the industry. And frankly, nothing new for us, right? We have had implicit exposure to new indications in many of our prior deals has been combined with some existing cash flows from potentially those same assets. But a lot of our prior deals, the economics have been driven in no small part by a broadening of the indications for a given therapy. So I would say it's not a huge divergence from the industry or even from our history in many ways. Operator: [Operator Instructions] Your next question comes from Ash Verma with UBS. Ashwani Verma: I was just like trying to understand the top line. So I see a lot of these assets, the cash receipts when you look at Slide 8 are declining and bulk of the growth is coming from a handful of key products. So as you think about 2026, just on a product basis, is it a continuation of the same trend? And just like when you are talking about the 2026 outlook, how much of your EBITDA growth is coming from the internalization savings as opposed to top line growth? Ali Hedayat: Ash, I think it's a mix of things. I think naturally, our seed portfolio, as we've stated many times, was always going to decline at some point, and you're seeing some degree of that as we work through the next couple of years. We obviously have 2 very early-stage assets that we're very excited about, the strong out-of-the-gate performance you're seeing from Ekterly and what we view as a tremendous potential in the Viridian portfolio. I think Orserdu is probably a big potential variable there in terms of rate of decline. We don't have full visibility on that, but we think we've been relatively conservative in the way that we're looking at it. I would say when you think about '25 through '26, the role there is going to be probably a mix of top line and margin expansion. I think the year-on-year margin expansion probably will account for, let's say, something in the region of half or maybe a little bit more than the EBITDA growth and a little bit of top line will account for the rest, and then that accelerates sequentially through the rest of our sort of aspirational guidance horizon. So as you get into '27, '28, especially that sort of '27 to '30 period, you're really seeing a lot of top line expansion. Sorry, as I mentioned on the call as well, even in the absence of any further investments, we do believe we can grow EBITDA through 2030. I mean, obviously, not at the rates that we laid out because those imply reinvestment, but we do think the current perimeter of the business is growing. Operator: There are no further questions at this time. I will now turn the call over to Ali for closing remarks. Ali Hedayat: Thank you all for joining us, and thank you again to the DRI team for a great year, and we look forward to speaking to you on our next call in May. Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.
Operator: Thank you for standing by, and welcome to the Endeavour Group's Half Year 2026 Results Briefing. [Operator Instructions] I'd now like to hand the conference over to Jayne Hrdlicka, Managing Director and CEO. Please go ahead. Carla Hrdlicka: Thank you, and good morning, everyone. Thanks for joining us today for Endeavour Group's Half Year 2026 results. I'm joined today by Kate Beattie, our Chief Financial Officer, who was most recently our Interim Chief Executive Officer. I'd like to begin today by acknowledging the Gadigal people as the traditional custodians of the land we're presenting from today and pay my respects to their elders, past, present and emerging. I'll start on Slide 4 and speak briefly to the group's half 1 highlights. In the first half, the group delivered underlying EBIT of $563 million, which is the upper end of the range we provided in our January trading update. In Retail, our continued focus on value and price leadership has been embraced by our customers and is delivering both sales growth and market share gains. The market remains highly competitive and despite a very strong holiday trading period, consumer softness continues to be evident. In Hotels, the business continued to perform well, supported by positive trends in food and bar transactions and targeted investment in renewals and new EGMs. Customer responsiveness to our investment in new games and improvements in the gaming experience is fast and links to broader engagement in the venue. This collectively is enabling very strong revenue growth. Moving to Slide 5. As foreshadowed in our January trading update, the group's underlying earnings were impacted by our decision to invest in lower shelf prices for our customers and also to compete more vigorously against the elevated promotional environment currently at play in Retail. Further, in half 1 F '26, the group incurred a pretax net expense of $45 million relating to significant items, and Kate will provide detail on that later in the presentation. During the half, we remain focused on managing cost out of the business. We delivered savings of $24 million through our endeavourGO optimization program, taking the total cumulative program benefits over 4.5 years to $289 million. The Board has approved payment of a fully franked interim dividend of $0.108 per share, which represents a dividend payout ratio of 70% of underlying NPAT. Slide 6 provides a snapshot of both the Retail and the Hotels business. Firstly, in Retail, sales increased by 0.2% to $5.5 billion in the first half, with sales momentum improving across Q2. Excluding specialty businesses, Dan Murphy's and BWS, delivered combined sales growth of 0.7%, reflecting the group's commitment to price leadership in a highly competitive market. In Hotels, sales grew by 4.4% to $1.2 billion in the first half, with sales momentum broadly consistent across both Q1 and Q2. Investment in Hotels, in both electronic gaming machines and venue renewals, combined with positive momentum in Food and Bar, contributed to the sales growth result. Now turning to Slide 7. In Dan Murphy's, we've returned our focus to delivering unbeatable value for our customers. This was achieved by resetting our shelf prices to reflect clear and meaningful price leadership in the market, both in-store and online as well as investing in competitive promotional activity. This has clearly resonated with customers, delivering both sales growth and market share gains. Half 1 highlights include a record level of purchase intent and value for money customer engagement scores, which in turn supported an all-time record sales month in December. Dan Murphy's achieved its biggest ever trading weeks leading to both Christmas and New Year's Eve with Christmas Eve setting a new daily sales record. Turning to Slide 8. BWS is undisputed as Australia's most convenient drinks retailer with more than 1,450 stores nationwide and even more pathways to purchase through delivery partners, providing the convenience of fast delivery in increasingly more locations. In half 1, we continued to deepen our customer engagement with record value for money and e-commerce voice of customer scores. This helped us to deliver our highest ever e-commerce sales month in December. More competitive settings are being established in BWS to ensure the team is fulfilling the mix of needs of their convenience-oriented customers. This can already be seen in increased activity in Everyday Rewards offers and increased focus on great value promotions, both in-store and online. Supported by our in-app promotion offering, Appy Deals, the BWS app now has 850,000 monthly active users with over half of these being millennial and Gen Z customers. Turning to Slide 9. In Hotels, we achieved strong trading results around key social occasions, including Father's Day, Spring Racing Carnival, Footy Finals, Christmas Day and New Year's Eve. These were bolstered by major international live music acts in Australia, including Oasis and Lady Gaga and continued in January with the Ashes and 2 UFC events. Gaming remained resilient, delivering mid-single-digit sales growth, supported by targeted investment in gaming room refurbishments and upgraded electronic gaming machines, with more than 800 new cabinets installed in half 1. In Victoria, we continue to gain market share, demonstrating good return on the investments made in the state. Sales growth in Food and Bars was supported by better tailoring of menus and record trading during key events. Our pub+ loyalty program now has over 600,000 active users, accounting for 29% of our F&B transactions, and our guest experience continues to strengthen with voice of customer score achieving 9.1 out of 10. Turning to Slide 10. We completed 21 hotel renewals during the half and have been pleased with the strong performance uplift they are delivering. Our FY '24 cohort of renewed venues continues to deliver collectively over 20% ROI in year 2 post the renewal, ahead of our 15% target. I encourage you to get out and visit some of our newly renovated hotels, including the Palace in Camberwell in Victoria, the Royal Beenleigh and Northern Grounds in Queensland and the new gaming -- the new premium gaming concept at the Skyways Tavern in Victoria. Moving to Slide 11, One Endeavour, which is a program established to separate our systems from Woolies and simplify our technology landscape. Last year, the decision was made to accelerate the stand-alone ERP system implementation and defer the store system separation to start after the ERP program. I'm pleased to report that the ERP system build phase is on track to complete in half 1, so in roughly 18 months -- half 1 of FY '28, so roughly 18 months from now. In F '26, planned OpEx is expected to be at the lower end of the previous guidance range of $50 million to $60 million and planned CapEx is expected to be below the guidance range, of $40 million to $50 million. Slide 12 provides a summary of the opportunities in the immediate property development pipeline. We continue to make good headway on our 5 highest priority redevelopment opportunities. The development applications for both the Forest Hotel and Chelsea Heights have been approved. Two additional applications have been lodged for the Morrison Hotel and Camberwell sites, and we are planning to launch the application for Doncaster Shoppingtown by the end of F '26. The 2 new DAs are freehold sites with current zoning classification for mixed-use development, which includes accommodation. In aggregate, these 5 sites have been independently valued at between $100 million and $150 million. We believe there is further upside to those valuations once our development applications have been approved. Turning to Slide 13. I'm pleased to say we've continued to progress our sustainability commitments. While I won't go through all the highlights on this slide, the most important point is that we remain committed to doing the right thing, including the responsible service of our products. Now turning to Slide 15. I know the majority of you would like to have a more fulsome discussion on our strategy today. And while we are well progressed, we're not yet ready to have a detailed and comprehensive strategy discussion. That is now in the diary for the 27th of May at the Forest Hotel in Sydney. But for now, I will share a few things. Our process started with getting the facts clear about our business and its performance, while at the same time, understanding the industry through the eyes of our customers. The customer work we did was both for Retail and for Hotel guests. The combination of those 2 pieces of work enabled us to see our business with fresh perspective, which led us to draw some simple conclusions. The first is that over the last few years, the strategy really was to focus on margin. And it's clear this caused us to lose focus on value for our customers at a time when they needed it most. This has now been addressed. You can see clearly from today's results that our customers have responded very well to the decisive action we've taken on price. The second, we are working on regaining the sharpness in what we stand for with customers across both Retail and Hotels. With Dan Murphy's, this clarity triggered the quick moves with respect to reestablishing material price leadership in the second quarter. With BWS, this gave us clarity on what value for money means for convenience shoppers. And in Hotels, it's clear we have work to do in leveraging our scale for good in the eyes of both our people and our guests. The third point is we have significant untapped potential across our portfolio, both in taking cost out as well as generating meaningful revenue growth. And the fourth, the cross-business potential and interconnected nature of our portfolio means it makes sense for shareholders to maintain a combined Retail and Hotels portfolio. I don't think those 4 things are probably of much surprise to anybody on the call, but it's important to note, we have very strong clarity on where we're headed off the back of those 4 points. While we have high-level clarity and the outline of our strategic priorities, this work is ongoing to ensure we have a detailed blueprint across the many initiatives that will create the backbone of our transformation. We look forward to sharing as much as we can when we meet in May. In the meantime, as you've witnessed, we are not hanging back waiting for the detail to be finished before we act. Where we have obvious moves to make, we are making them and with no regrets. The first of the obvious moves is that we're competing in retail. And to be clear, the intention is Dan Murphy's will not be beaten on price by anyone at any point for any reason. And importantly, BWS has significant growth opportunities in further differentiating itself as the market leader in convenience. The second of the obvious moves is acceleration of investment into our Hotels portfolio to fuel continued growth. We will get more sophisticated as we go, but we're in it to win it, and we are out of the gate. We look forward to talking about this more in May. Turning to Slide 16. I want to introduce our new executive leadership team. You'll have the chance to meet them properly in May, but I'm incredibly excited by the mix of perspective and extensive experience we have sitting around the leadership table. It is already making a very big difference. These are experienced industry leaders from top-tier consumer brands, but more importantly, each member of our leadership team brings an owner's mindset and a sharp eye to execution excellence, and we are in lockstep on our strategy reset. Turning to Slide 17. One of the ways we unlock value going forward is leveraging our scale in sites, infrastructure and customer data to unlock both significant continued cost reduction as well as revenue growth. There is significant value to be delivered for our shareholders from this unique portfolio, and we will take full advantage of the opportunities it presents. Slide 18 is the last slide before I hand over to Kate. I won't take you through the words on this slide, but the intent and focus should be clear. In Retail, we are resetting our multi-brand strategy to ensure we put the customer first, delivering more of what they value. In Hotels, we are accelerating investment. Underinvestment in the past has left us with a significant opportunity to accelerate both venue renewals and electronic gaming machine replacements. Using our now proven model to deliver very strong results is the intent. We are also focused on better leveraging our group scale to deliver more local autonomy for our teams and reduce costs while also enhancing our pub+ loyalty program. At a group and at a business unit level, we are simplifying the way we operate to drive both cost and bureaucracy out of the business. progressing our technology separation from Woolworths and looking at all of our assets to determine where and how we should participate. With that, I'll hand over to Kate to take you through our financial results for the first half in more detail. Kate Beattie: Thank you, Jayne. Moving to Slide 20. In the first half, as Jayne said, group sales were up 0.9% versus the prior comparative period, reflecting improved momentum in both Retail and in Hotels. Our underlying group EBIT, which includes $20 million of One Endeavour program costs in Retail, declined by 5.4%, with growth in Hotels more than offset by a decline in Retail. Finance costs of $155 million decreased by 1.9%, primarily driven by our lower average net debt through the half. Underlying profit before income tax of $408 million declined 6.6% versus the first half of F '25, which was largely as a result of the lower retail earnings performance. As we previously flagged in our trading update on the 13th of January, our first half underlying earnings excludes the impact of a pretax net expense of $45 million related to significant items. This amount consists of a $40 million provision relating to our estimated one-off cessation costs, which are arising from the planned closure of the Melbourne Liquor Distribution Centre in 2028. It also includes a $4 million net gain relating to a one-off gain on the sale of gaming entitlements, offset by hotel property impairments and $9 million of advisory fees related to our strategic review. Moving to Slide 21. The group delivered a strong cash realization ratio of 165%, generating $997 million of net operating cash flows in the half. The reduction of $39 million compared with the same period last year is primarily due to the lower earnings, as explained earlier. Free cash flow was lower by $153 million, reflecting accelerated investments, including 16 new retail stores and 21 hotel renewals, with over 800 new EGMs installed. Turning to Slide 22. You can see that net debt has decreased by $34 million compared with the first half of F '25. This reduction is supported by reduced trade working capital as well as proceeds from asset sales. Underlying leverage ratio of 3.3x was supported by the reduction in group net debt, noting, however, that our operating cash flows are seasonally weighted to the first half, so we expect our net debt and consequently, our leverage ratio to be higher again at year-end. At balance date, the group had $1 billion in undrawn debt facilities, giving us ample headroom. The F '26 full year finance costs are expected to be broadly in line with F '25. Turning to Slide 23. You can see gross capital expenditure increased by $71 million in half 1. The increase compared to half 1 F '25 largely reflects our network expansion in Retail and renewal programs in Hotels. In Retail, we opened 5 new Dan Murphy's and 17 new BWS stores. And in Hotels, we completed 21 hotel renewals, including 15 whole of venue repositioning projects, while we continue to upgrade our gaming fleet, as we've spoken about. Net capital expenditure increased by $85 million after including $24 million in proceeds realized from asset sales. For F '26, we have revised our total CapEx guidance upwards to $460 million to $500 million, reflecting the continued acceleration of growth investment in hotel renewals. Turning to our segment results in a little more detail and starting with Retail on Slide 25. In the first half, total Retail sales increased by 0.2% to $5.5 billion. Our core brands, Dan Murphy's and BWS delivered combined sales growth of 0.7% for the period, noting this excludes our specialty businesses. In a competitive market landscape, combined sales for Dan Murphy's and BWS grew by 2.2% in the second quarter, or 0.6% adjusting for the estimated $45 million sales impact of supply chain disruption in the prior comparative period. Our online business continues to be a highlight with sales growing at 35.1% to represent 11.3% of the combined Dan Murphy's and BWS sales. Gross profit margin declined by 84 basis points to 23.9%. This reflects our focus on price leadership alongside elevated promotional activity across the market. Underlying cost of doing business remained flat year-on-year at 18% of sales with inflationary headwinds, including a 4% award-wage increase, mitigated by savings from our endeavourGO optimization program, restructuring benefits and lower One Endeavour technology program costs. While costs have been well controlled, the lower GP margin led to an underlying EBIT of $327 million, a decline of 11.6% compared to last year. The bridge chart on the bottom left of this page shows an indicative sizing of these respective performance drivers. Turning now to Hotels performance on Slide 27 for the detail. In the first half, the Hotels business delivered a strong result with sales growth of 4.4%, growing to $1.2 billion. On a comparable hotel basis, sales grew by 4.2%. Performance was strong across all key sales drivers. Food and bar sales growth benefited from menu optimization and record trade during major-event periods. Gaming remained resilient, delivering mid-single-digit growth, and this was supported by our investment in over 800 new machines installed during the half. Accommodation continued to deliver strong growth by successfully capturing peak demand during key events. Gross profit margin expanded by 12 basis points to 85%, driven by a favorable sales mix, better buying initiatives and optimized menus. Underlying cost of doing business grew by 4.4%. Similar to Retail, the 4% award-wage increase was a material headwind, which we managed alongside our continued investment in guest experience. Our result also reflects higher repairs and maintenance and a step-up in depreciation and amortization following our accelerated investment in EGMs and renewal programs. These impacts were partially offset by the cycling of prior year One Endeavour technology program costs. Underlying EBIT grew by 5% to $275 million, resulting in an underlying EBIT margin expansion of 13 basis points to 23.5%. Again, the chart on the bottom left provides further detail on the sizing of these EBIT drivers. I'll now hand back to Jayne to take you through the outlook. Carla Hrdlicka: Thank you, Kate. So Slide 29. In a competitive and challenging liquor market, we've continued to gain share in Retail. However, sales growth in both Retail and Hotels moderated in February compared to January. It should also be noted that Retail sales in the first 7 weeks of the prior comparable period were impacted by ongoing effects of supply chain disruption. While the outlook for consumer spending remains uncertain given elevated inflation, a war in the Middle East and rising interest rates, the group's scale, value proposition and market-leading brands means we are well positioned to compete and win in a market where consumers remain focused on value for money. Finally, in closing, I'd like to thank our 32,000 team members for their focus on delivering outstanding value products and importantly, experiences for our customers and guests. We are confident and energized about our future and are committed to delivering on the very significant opportunity we see in our portfolio. I will now hand back to the operator for Q&A. Operator: [Operator Instructions] Your first question today comes from Bryan Raymond from JPMorgan. Bryan Raymond: Just my first one is just on gross margins. Obviously, it's down 84 basis points in the first half but you're cycling availability issues. So we sort of understand some of that. And there's obviously a reset in pricing going on. I just wanted to understand sort of the drivers for the second half and particularly around the sales outcome you achieved. Like if I look at underlying like-for-like growth, in the trading update, is probably close to flat, just for industrial action. So if it doesn't respond and get to a certain threshold, I'm not sure what that threshold is, should we assume this pace of gross margin compression continues in the second half and even into '27? Carla Hrdlicka: Look, let me start on that, and then I'll hand it to Kate to add more. But I guess the first thing with respect to the first half gross margin compression. One thing to note there is that it's really roughly half the month that we had, a reset on price and increased promotional activity by us. And then we also had the offset of the lack of stock to promote in December of last year. And so those 2 things probably offset each other. So 84 basis points for the first half is not a bad start in thinking about the second half. And the second half with respect to the sales dynamic, we're seeing green shoots everywhere in the portfolio. So we're encouraged by that. But we have to continue to compete. We will continue to compete. And so that is against the entire market. And that dynamic is impossible to perfectly predict. And so our commitment we've made is loud and clear that we are going to have a material price leadership in Dan Murphy's, and we are going to be competing, and the level of promotional activity will be driven by the market. Bryan Raymond: Okay. Just as a follow-up to that, if your sales momentum remains close to 0, and obviously, it's a tough market at the moment, should we be expecting on -- like, just promotions being used as a driver to try to drive that? Or is there other levers that you could switch to? Because I think we're just trying to work out as the market leader, market share gains are getting probably incrementally more difficult. I'm just trying to think about if there's other levers you can pull other than gross margins. Carla Hrdlicka: Yes. Yes, we might think about it a little bit differently, Bryan. We're really encouraged how quickly consumers responded to the reset in price, but we haven't gotten started yet with respect to really marketing the changed posture of Dan Murphy's, and there's a lot more to come in terms of what consumers will experience in Dan's in particular as well as BWS. And so I don't think you can look at a tick done with respect to what we plan to do to compete better in Retail. We've just gotten started, and these are early gains, not a run rate expectation from our standpoint. And so I think this is early days. We're really excited to see green shoots quickly, but we're nowhere near our run rate in terms of the benefits associated with the investments that we've made. Operator: Your next question comes from Shaun Cousins from UBS. Shaun Cousins: Maybe just a question on volumes in the half and maybe trading to date. I mean given the price investment, can we assume that Endeavour Retail has actually been growing volumes? And I guess, for the industry, have you seen the price discounting that's been led by Dan Murphy's? And then where you've matched others, has that actually driven overall industry volume growth? Or are we just seeing Endeavour Retail regain some of the lost volume and value share from prior years? Carla Hrdlicka: Yes. I think the market itself is soft. We saw record results in Retail in December. That's record results in our history. So we were doing a lot of really good things in December in a soft market. And so we're definitely taking share in every lens we take on it. Shaun Cousins: Our volumes up? Carla Hrdlicka: In the market, the volumes... Shaun Cousins: No. Sorry, pardon me. For both, for yourself and the market. Carla Hrdlicka: Kate, do you want to talk about absolute volumes? Kate Beattie: I think it's definitely up for us as we cycled last year, clearly. But I think that it's hard to take a read through that to say that, that represents an underlying trend. As Jayne said, I think we would say the market is in volume decline. Within that context, we are gaining share. So our volume momentum is certainly improving, and that's been improving steadily since we began the shelf price reset, which was approximately back in August last year. Shaun Cousins: Fantastic. And just to follow up to that on the online growth that you called out, sort of, Kate. That was a highlight in the second quarter. It looks like it was up some 47%, but even your 2-year stack sort of jumped quite a lot. How does Endeavour consider balancing the growth in online where you've also seen a lot of competitive promotional activity and then what a negative impact that has on store economics because we're sort of seeing store sales in decline. So how do you think about managing that, particularly in terms of what it means for CODB and size of the network? Carla Hrdlicka: Look, I'll take a crack at that. We're really delighted to see the volume. And if customers want to buy online versus being in store, then we're quite happy to support that. We have an omnichannel business. And the majority of the volume growth in online came through Click & Collect. That's moving through our stores. That's leveraging the fixed cost in the store. So while it doesn't affect the calculations on same-store sales growth, it's actually activity that's coming out of the store. And so we're pleased with the growth momentum that we achieved with the reset, and the promotional activity is market competitive. And so we're not concerned about that being something that is creating some sort of structural problem in the business. Operator: Your next question comes from Michael Simotas from Jefferies. Michael Simotas: If we look at the price investment that you've made so far and sort of think about the second quarter run rate, do you think if there's no change in market competitive dynamic, you've invested enough in price? And just a follow-on from that, what are your customers telling you on value? When we look at the overall NPS score, there hasn't been a lot of change, but just interested in the detail underneath that. Carla Hrdlicka: Look, I'd say it's early days, right? So it's impossible to be definitive where we sit today. And the most important thing in here is we are going to compete. And we recognize that to be a great retailer going forward, we're going to have to do a great job of taking cost out of the business, improving sophistication in the way that we bring better value to customers and continue to invest in customer experience and ensuring that we've got the sharpest prices in the marketplace. And for Dan Murphy's, that means materially better. Michael Simotas: And when you look at your customer metrics, is that price investment being materially reflected in your customers' opinion of value? Carla Hrdlicka: Again, I'd say it's early days. We see the signs that they're really happy with what we're doing. The value for money scores are improving. But again, I'd say it's early days, and we have just gotten started. And the marketing push and the way we think about engaging customers will all reflect a different stance and tone with respect to both BWS and Dan's. And all of this will be a virtuous cycle that continues to support our core messages to customers. Kate Beattie: I might add another data point to that. I think it's important to note, and it's probably important to the context of Bryan's comments about underlying sales being broadly flat, it's, are we seeing good momentum? And Dan Murphy's and BWS combined have now delivered 6 consecutive months of sales growth to the end of February. So I think that talks to the good momentum we're seeing. And yes, there's some cycling of MLDC in that, but the growth trajectory is strong, and it commenced well before that cycling impact kicked in. It started when we started to invest in lowering shelf prices and of course, has continued through since then. Operator: Your next question comes from David Errington from Bank of America. David Errington: Look, I understand totally the strategy, to be unbeatable in price and to leverage your muscle. I mean it's ridiculous that the market leader isn't leading the market. So I totally get that. But the question I've got is on your cost management. It looks as though your first half, you've done an outstanding job with endeavourGO. And while we're driving gross margins down 85 basis points. To keep the shareholders reasonably interested and happy, you just got to drive those costs out, which you have in this first half. My question is, can you go into detail, please, how you did that? I mean we touched on it a little bit with your trading update in January, but you didn't go into too much detail. Can you basically go into how you're driving those costs out? What happened -- endeavourGO, I think you've pulled $24 million out, a large chunk of that, obviously, Retail. Can you go into where that's coming from? And what opportunities you've got as being able to drive those costs out that will enable you to sustain relatively that we don't just bludgeon earnings. Can you go into detail as to how you're going to keep driving those costs out, what opportunities you've got so that you can get on this retail spiral that you're obviously trying to achieve? But yes, first half, great outcome with costs, but the sustainability and the ability not to damage customer experience by going into this cost-out program. If you could go into that with some details, that would be really appreciated. Carla Hrdlicka: So, David, I'll let Kate talk about the first half in as much as we're prepared to talk about the details. What I would say with respect to forward-looking view, we're really keen to engage in May on that in as much detail as we're comfortable. But we're not worried about our ability to continue to manage cost out. We see plenty of opportunity to continue to manage cost out of the business, and that's probably as far as we can go with respect to outlook. And -- but Kate, do you want to comment on first half? Kate Beattie: Yes. Thanks, Jayne. I think I'd point to 2 things. You're absolutely right to point to the endeavourGO optimization program. I think it's self-evident that over the period that we've been reporting savings against that program, it's continued to deliver. And you might note that we had a target of $290 million, and we're now within $1 million of having delivered that target, which is just in time because it was an F '26 target. So we're there, right? We've delivered $290 million cumulatively in savings across that program, and that continued to deliver in the half. And we've spoken before about the fact that, that program addresses both cost of supply chain, so costs that sit in GP as well as costs that sit both in the front line and in the head office of the business. It's also probably worth remembering that in the second half last year, we spoke about the fact that we had undertaken restructuring across the business, and that has also been a material driver of cost savings in the half. David Errington: It's a cheeky follow-up, and it's probably -- hopefully, it's not considered a second question, but it's a follow-up with One Endeavour. Are you going to start getting tailwinds to those costs in '27, do you think? Or do you think it's going to be roughly the same level? It's a bit cheeky, the question, but obviously, that's a big chunk of costs that you're wearing. Can that ultimately be a tailwind in '27? Or do you think that's going to be sustained? Carla Hrdlicka: You mean in terms of the run rate benefit associated with those costs? Kate? David Errington: Yes. Yes. Well, you're chewing $50 million in costs in Retail in '26. When can we start seeing a bit of a tailwind to that coming in because that will obviously -- when those costs come out, that will obviously be supportive of your Retail earnings as well? Kate Beattie: It's a good question. I think we've said before that the program we expect broadly to continue to around F '30 because we've still got the store system separation to come after ERP. At the moment, we're not in a position to comment on next year's numbers for that program, recognizing we'd still be building the plan for that, but we will do so in due course as we have been update you on the program expectation on a go-forward basis. But yes, eventually, that program disappears and those costs should come down to 0 for that program, recognizing all companies go through technology investment cycles. So hard at this point to say what the outlook on a multiyear basis would be. David Errington: Good job on costs in the first half. Operator: Your next question comes from Tom Kierath from Barrenjoey. Thomas Kierath: Yes, mine is on Hotels. I think when you strip out the One Endeavour costs in the PCP, it looks like the Hotels profit is pretty flat year-over-year. When I look at Slide 10, it says that the hotel renewals have been delivering really strong returns. So is the way to interpret that like the Hotels rather that aren't being touched by renewals, the profitability in those is actually going backwards? And how should we kind of think about, I suppose, that kind of legacy or the ones that you aren't touching going forward? Carla Hrdlicka: Kate? Kate Beattie: Yes, I certainly think it's fair to say that to the extent we haven't touched a venue in a long time, we would be incurring elevated levels of, for example, repairs and maintenance expenditure. And I think some of that's reflected in the results for the half. But we are obviously accelerating the renewal program to address that. Our goal is to catch up on that tail of untouched venues that do require some investment. And I'd say in addition to that, we've uplifted investment in a couple of key areas in guest experience. So that would include, for example, investment in bands and acts, which are a key part of customer attraction. We've also got a degree of elevation of security costs, which again in the context of well-understood market dynamics requiring that and in service, in particular parts of the guest experience. So all of those are contributors to the results for the half. Thomas Kierath: Great. And maybe just a follow-up on the Hotels side. Like how are you guys thinking about mandatory carded play going forward? Just -- I don't know, just a few high-level observations just on that -- on that kind of development would be helpful. Carla Hrdlicka: Yes, that's an open topic. There are lots of moving parts state by state. And so we don't have a crystal ball to predict what's happening there. We're really comfortable with the settings that exist today, and we don't see a dramatic change coming there. And I guess I would just add the obvious, which is, this is important revenue for each of the states. So it's in nobody's interest to do anything dramatic. It's in everybody's interest to make sure that we're being responsible. Operator: Your next question comes from Craig Woolford from MST Marquee. Craig Woolford: Can I ask a question about Pinnacle? It doesn't get a lot of airtime in the release at all, but how did that portfolio perform? And in the context of what you're inferring in the strategy outlook, there's some rightsize on shape and size of the portfolio. Does that relate to Pinnacle as well? Carla Hrdlicka: Sure. I guess I'd start by saying Pinnacle is a really critical part of our strategy, has been and will be. It's our private label portfolio. It's beer, spirits and wine. It is a mix of things that we produce ourselves, which is commercial wine largely, and it is also third-party contracted supply for principally beer and spirits and some imported products across the portfolio. So it is a really important part of our sales mix. The added margin that comes from Pinnacle is material and important for shareholders, is not different to the way I think Coles and Woolies, think about their portfolio of private label sales. So it's a critical part of the portfolio going forward. It's performed well. But like every consumer products portfolio, we need to continue to and will continue to look at how well each individual SKU performs, and we are managing the tail of underperforming SKUs or lesser performing SKUs, just like we do with our third-party suppliers. And we've already taken action with a handful of SKUs. Kate, I don't know if you have the absolute number, it probably doesn't matter, but there are SKUs that are already on the way out, and we'll continue to evaluate the portfolio as we go forward. Kate Beattie: Yes, I think that's right. I would add, we have included a note, I think, in our ASX announcement that highlights the fact that we introduced 110 new owned and exclusive products through the Pinnacle portfolio in the half. So as we've said previously, it's always important to recognize that Pinnacle plays a really critical role in our fast path to product innovation because we can use our customer insights to work through that portfolio on what's trending and what's upcoming and make sure that we're continuing to provide attractive new products to our customers. Craig Woolford: So was Pinnacle like influential on the gross margin outcome? Or was it inconsequential? Carla Hrdlicka: Inconsequential in the context that it's providing the same margin support that it's provided in the past. Operator: Your next question comes from Caleb Wheatley from Macquarie. Caleb Wheatley: I wanted to follow up on the hotel side, if I could. Yes, guiding to about 35 renewals or so for the year. Just keen to get any updated thoughts on how we should think about the pathway to sort of get that back to the required run rate to sort of maintain average age there? And then obviously, any incremental comments around sort of balance sheet settings, noting that the payout ratio on the dividend and the sort of target leverage numbers don't seem to have been reiterated like they have been at the back of the presentation pack, please? Carla Hrdlicka: Well, I'll tackle the first bit of it at a high level. The game plan is to renew as fast as we can, and that's both renewing and adding new EGMs to the portfolio. And so we've got a game plan to do that. We've got a refined formula now on what works, and we're doubling down on that. In every new renewal, we learn, and the next one is better. So there is no constraint on renewals other than just the process and time it takes to both get the planning done and then get the execution delivered. And we're very mindful to how much we invest as we do that and making sure we're learning and getting smarter and managing our costs appropriately, both on the CapEx side and the OpEx side. But Kate, you want to talk to the other parts of the question? Kate Beattie: Yes. I think the other thing I would add on renewals is, what we've been working on for some time and delivering good success in is building a growing pipeline of funnels of hotels. So we're effectively putting more -- have more opportunities to put through the renewal funnel. And the way we're thinking about it is there are going to be some venues which would benefit from relatively light touch but is still going to refresh the guest experience materially without needing to go through DAs and so on. So it's working on how do we keep a steady stream of those going while also working on the bigger, more impactful whole of venue repositionings, for example, and making sure we've got a good healthy and a mixed bag of those opportunities so that as and when we get approvals or things need to shift around, we can still continue to invest, and we're very confident with that growing pipeline. In the context of balance sheet settings, I think it's certainly safe to say at the strategy update, we'll talk about how we're thinking about our capital management framework in the context of our intention to accelerate that investment. Caleb Wheatley: Okay. And just as a follow-up, the refined formula comments that you made there, Jayne, is that sort of more around most effective projects from a return point of view? Is that something around the cadence and looking to accelerate that or otherwise? Any additional color you can provide on that refined formula learnings within that? Carla Hrdlicka: I'm sorry, was the question basically do we expect to deliver the same sort of returns? Kate Beattie: What's the refined formula. Carla Hrdlicka: The refined formula is effectively making sure that we're learning from each renewal and we're adjusting as we go. So we don't have a set and forget model. And to Kate's point, that's led us to, gee, there are a whole lot of venues that we can touch very lightly and make a difference commercially. We don't need -- they don't all need to be major refurbishments. And so yes, we're just working across a broader funnel of opportunity than maybe we had in our sites before. Operator: Your next question comes from Phil Kimber from E&P Capital. Phillip Kimber: I just had a question. You noted that February sales have slowed in both Retail and Hotels. I was wondering if you could give a little bit of color on that. I know it's a short time period, but was it an aggressive slowing? Or are you just sort of calling out something more modest? So just any color you could provide would be great, given it's both Retail and Hotels. Carla Hrdlicka: Kate, do you want to talk to that? Kate Beattie: So I think we did talk about the fact that the Retail sales in the first 7 weeks were impacted by the cycling of the prior year, the supply chain disruption. I think other than that, we don't think there's a material read-through. We're always wary about providing point-in-time comments on very short trading periods, and this is an example of that. It's definitely too early for us to tell whether specific things like the recent interest rate increase or indeed the more recent impact of the what's happening in the more global context, having an impact on consumers. But it is safe to say, and I think we said it in the context of our market, there is no doubt that we do expect cost of living pressures to continue to be impactful to our customer base, and therefore, we do need to and will do everything we can to make sure we are providing good value for money across the board. Carla Hrdlicka: And I'd also say that in the context of such a big December, it's not surprising that February is a bit softer than it would historically have been, just given the 6 wallets that most of our market stares into in managing their budgets every month. And what we're encouraged by really is the robustness of the experience economy. We play squarely into the experience economy in both Retail and our Hotels business. And so I think Kate's point around not overreacting to February, which is, I think across most of Australia, February will have been a softer month. Operator: Your next question comes from Richard Barwick from CLSA. Richard Barwick: Can I just clarify a little bit of what you're talking about on your hotel renewals, particularly in the context that you've upped the CapEx guidance. So in the first half, 21 renewals, including 15 whole of venue, 800 EGMs. And yet you're talking about in the second half only doing 14 renewals and 800 EGMs, but the CapEx budget is up. So I guess is the implication that the 14 you're doing particularly large projects? I'm just a bit surprised, the numbers don't seem to stack up in terms of the number of renewals. Kate Beattie: Yes. I think, Richard, I would talk to the comments I made about a mixed portfolio of small and large. The amount we spend in any half, which is reported in the CapEx number, is going to be a function of the individual projects timing and size. And so I don't think there's a direct correlation that can be drawn between count and dollars, which is why we're giving you guidance on where we think CapEx is going. Richard Barwick: Right. Okay. All right. So it's not -- you can't -- we can't look at sort of renewals, or CapEx divided by renewals equals the average number and model on that because it's going to bounce around much. Is that what you're saying? Kate Beattie: No, definitely not. And maybe to quantify that further, I think when we look -- when we talk about a venue repositioning, we're typically talking in the order of approximately a $5 million spend sort of around that value on average. But some of these are much smaller and they're more like the $1 million or even $0.5 million. I think we don't report below $200,000 because we call that just a very minor upgrade. But there really is a big mix in between those bookends. And at the top end, of course, you are spending much more months both on the project and therefore, in disruption to trade, but then also a much bigger payback when you get it in terms of dollars returned to the business as a result. But there isn't a law of averages here. It really is project by project. Operator: Your next question comes from Sam Teeger from Citi. Sam Teeger: I wanted to discuss Paragon. Can you let us know how much capital is tied up here? And also given the industry oversupply, would it be advantageous for shareholders if you were to source wine from third parties opposing to make it -- instead of making it yourself? And then also, given Treasury Wines found it difficult to divest their commercial portfolio in 2024, is there anything different about Paragon we should consider as to why it might be easier for Endeavour to sell it if you decide to go down that path? Carla Hrdlicka: So I guess the first thing I'd say which is important to note is that we produce to what we sell. And we're very sophisticated about how we do that. So for us, our portfolio of brands deliver very strong margins because we don't have a big inventory problem, which is the challenge that most of the -- rest of the wine industry is staring into right now, given how far in advance they're trying to forecast volume and then there's been some market disruption for them that's of magnitude, out of China, et cetera, et cetera. So we're quite different because we're producing for our own retail needs. I'll let Kate talk about the asset base. I'm very confident she's not going to go into detail, but I'll let you have a crack. And you would assume that we're having a hard look at everything in the portfolio, and we're eyes wide open with respect to the dynamics at play in the market. But I just want to return to my first point, which is, we don't have a problem with respect to our fine wine brands that are in our private label portfolio because we are producing to what we need to sell. And are there ways to optimize and buy third-party grapes, et cetera, you'd expect we look at all those options on a regular basis to make sure that we're optimizing the cost position of everything that we produce. But Kate, I'll let you have a crack at the Paragon question. Kate Beattie: Thanks, Jayne. I'll add a couple more comments. I think the first thing to note is our very small handful of premium wineries represent a very, very small volume of the premium and ultra-premium wine that we sell. The vast majority is sourced from third parties, including exclusive brands and imports as well. So it's -- I would say immaterial -- boutique and immaterial in the context of our total sales portfolio. And also even within those wineries, we are continuing to optimize how we source the grapes that flow into the product. So -- in the half, for example, if you look at our assets held for sale on our balance sheet, you'll notice that there's a couple of vineyards that we are in the process of finding a buyer for. So we are always looking at how we manage the balance of what we hold versus what we source to make sure that we're optimizing the asset base. Operator: Your next question comes from Michael Toner from RBC Capital Markets. Michael Toner: Just on gaming, noting your commentary on Hotels still growing share in Victoria. I'm curious how Hotels are performing in Queensland relative to market. Is that gap to market sort of consistent with what we've seen in recent results? And is that trend of clubs outperforming pubs and sort of regions outperforming metro as you've previously called out, still a headwind there to achieving the level of market growth that, that state has experienced? Carla Hrdlicka: Kate, do you want to talk to that? Kate Beattie: Yes, I will. Thank you. So we've seen improved performance in Queensland. It's not the only state we've seen improved performance in, but we're really pleased with the momentum. We would say that's primarily driven by our investments, both in the experience in the venue as well as in the gaming machines themselves. So we are certainly moving in the right direction, but as with all things, these things take time. I think that's probably the primary comment to make here. We're happy with how we're progressing in what is a really buoyant market. Carla Hrdlicka: I would just add to Kate's point, the focus on renewals and adding new gaming machines is impacting positively the entire portfolio, not just Victoria. Kate Beattie: We've previously made the comment, and I would reiterate it here that where we have invested in renewals, we see on average that the performance is in line with the rest of the market. So it does shift our relative performance up in a way that is really pleasing. Carla Hrdlicka: Yes. Michael Toner: Okay. And if I may, just very quickly clarify something in the presentation on One Endeavour. So that spend coming in terms of the lower end of guidance, is that kind of pushing out the total spend, i.e., like maybe there's some delays to the program? Or is that just reflecting a total lower spend when we think about our forecasting out to like FY '30 plus? Kate Beattie: Yes. That, we're pleased to say that reflects lower expected spend for the program than we had previously thought would be incurred. So it's not pushing out and the program. It's certainly not delayed. We're really happy that we've finished the end of the design phase for the ERP program now, and we're about to start the build phase. And... Carla Hrdlicka: Team there are doing an exceptional job. Kate Beattie: That's right. Operator: Your next question comes from Peter Meichelboeck from Select Equities. Peter Meichelboeck: Just in relation to the Hotels business, you upgraded the 800 EGMs in the half, and I think you indicated doing another 800 in the second half, and that sort of follows, I think, 1,000 that you did and accelerated sort of 1,000 in the last year. That sort of annualized rate of 1,600, is that the sort of long-term rate that we should now be thinking of going forward? Carla Hrdlicka: I don't think we're wanting you to lock on a particular number going forward. We are accelerating. I think we might deliver more than 800 in the second half, but we're saying that's the floor. And so we're not capping or setting targets. We're looking at the portfolio and the commercial opportunities and working with our suppliers to figure out how quickly we can get into a position where we're incredibly competitive as a portfolio. Peter Meichelboeck: And sorry, can I just follow up on the 800 that you did in the first half, would most or all of them be within the 21 renewal sites, or they spread more? Carla Hrdlicka: No. It's definitely spread more broadly than that. So think about them as 2 disconnected things. When there is a renewal happening in the -- in a particular gaming venue, the renewal will take place to upgrade the experience of the gaming venue. It may coincide with the turnover of some machines in that venue, may mean that there are more machines going into that venue. It's a case-by-case situation. But the portfolio of gaming machines, we're looking at across all venues, not just those who are going through an upgrade. Operator: Your next question is a follow-up from Bryan Raymond from JPMorgan. Bryan Raymond: Just on -- back on the Retail business. Just -- I'd be interested if the sales growth is particularly much stronger or weaker in either BWS or Dan Murphy's? I don't expect specific numbers, but just directionally because Coles saw convenience -- the convenience networking growth and implies large declines in their warehouse format. Did you see the inverse? And also given the Dan Murphy's investment in price. I'm just interested in the relativities there. Carla Hrdlicka: I'll let Kate talk about specifics, but BWS is performing well. We are very pleased with the BWS portfolio. Dan Murphy's has had faster major changes put to it. And Dan Murphy's also during Christmas -- I mean, Dan Murphy's is the place to go during Christmas for family gatherings and events and things. So there's an obvious migration towards Dan's that takes place in December. But I think we're the undisputed leader from the standpoint of convenience retailing, and we don't intend to be beaten there as well as we're not intending to be beaten with Dan's. Kate, do you want to add anything to that? Kate Beattie: I think the key thing to say is, as I said, both businesses combined have been delivering sales growth for 6 consecutive months. To the extent that Christmas attracts a disproportionate share to Dan Murphy's irrespective, which it does, and we were cycling supply chain disruption last year, there's been an impact in the half that I wouldn't regard as normal. We're very pleased with the momentum in both businesses. And I also want to take the opportunity to underscore the profitability of the portfolio because the flow-through of the momentum into EBIT margins also continues to be very healthy for our sector. Carla Hrdlicka: Yes. Operator: Your next question is a follow-up from Michael Simotas from Jefferies. Michael Simotas: Just a follow-up to Bryan's question actually. Woolworths has had some very good volumes in the last several weeks and the inverse of that would have been a drag on your convenience business or BWS format. Do you think that change in foot traffic into Woolworths stores has had a material benefit to your business? Or is it too early to call that yet? Carla Hrdlicka: No, I'd say a couple of things on that count. One is that our relationship with Woolworths continues to strengthen and improve and the way in which we work together between BWS and the Woolworths Supermarkets has improved and will continue to improve. You can see that in the way that they're promoting online and the way we feature in online shopping as a grocery customer of Woolworths. You can see that in the way that we're working together with Everyday Rewards. And so we are competing together much better than we ever have before. And that is on top of the fact that they've got more foot traffic going through their stores. So to underscore, I think, a question that Bryan made, there's no -- looking at one of our competitors' results, we look at BWS. There's -- our portfolio is strong. It's performing well, and we're really pleased about that, but we're also really excited about its opportunity going forward to compete even better. Operator: There are no further questions at this time. I'll now hand back to Ms. Hrdlicka for any closing remarks. Carla Hrdlicka: Fabulous. I'll just finish by saying this is a result that shows green shoots. We're pleased with that. We've taken fast action on a couple of things that we thought were really important, notably competing and competing strongly from a retail standpoint, which triggered a price reset in Dan's and ensuring then that we're also matching off promotional activity that is taking place around us. We've got one major competitor, and we've got lots of smaller competitors, and they're all competitors, and we're very conscious of all of them. And so this is the beginning of a journey that we're really excited about. And I think the Hotels business, doubling down and investing in renewals and electronic gaming machines is one piece of the story that will come with Hotels, but it's an important first step, just like the price reset in Dan's is an important first step. And we're really looking forward to the conversation in May and getting into more of the detail with all of you at that point. So this is the beginning of a journey, and we're really excited about that journey. So thank you all for joining us this morning, and we appreciate this is a very busy day at the end of a very busy season. So we're grateful for the interest. And again, I'll finish on thanking our 32,000 employees who all made a big difference in this period. Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.
Karen Chan: Good morning, everyone. Thank you for attending the DFI Retail Group 2025 Full Year Results Presentation. I'm Karen Chan, Strategy and Investor Relations Director. Joining us today is Scott Price, Group Chief Executive; and Tom Van der Lee, Group Chief Financial Officer, who will be providing remarks on our full year results, followed by a Q&A session. Today's presentation is being webcast in its entirety. In addition, the full text of our results announcement and slide presentation are uploaded on to our IR website. And before we start, I would like to remind you of the following regarding information to be provided during the presentation. The information about to be presented is for information purposes only and is not intended to be investment advice for any person. There's no intention to imply for any dealings in any securities. There may be forward-looking statements mentioned in the presentation materials, which include statements regarding our intent, belief, expectation with respect to DFI Retail Group businesses operations, market conditions, et cetera. You're expressly advised not to rely on these forward-looking statements as they are subjective views, which are subject to risks and uncertainties. And with that, I'll pass it over to Scott. Scott, please. Scott Price: Good morning, everyone. Thank you, Karen. A pleasure to be here talking about our full year of 2025 results and also sharing with you some of the insights that we gleaned from the second half of the year versus the last time we gathered here. We're seeing a more confident customer in the second half of 2025. They're still careful. They're still not going back to, I think, the spending pre-COVID. But we are seeing customers willing to invest in Convenience, invest in their own wellness and also fun, which has been quite interesting. So some of the headlines, we're now up to about 115,000 daily e-commerce orders. So again, that focus upon Convenience. A lot of that is coming from our 7-Eleven China business. A significant increase in what we would call the wellness category within Health and Beauty, where customers, in particular, around derma, supplements are interested in functional value, in particular, a younger customer that I think are more focused upon wellness than particularly previous generations. Collectibles and characters across, I think, not only our 7-Eleven, but also our Own Brand. Cute always works, and we're seeing it as an opportunity for us to grow. I think that we had good strong like-with-like growth. I'll talk about that in a couple of minutes. Good progress overall on the business. And I think from a financial viewpoint, very pleased with the strength of our balance sheet now as we have paid down debt and are in a net cash position. And as we look forward to 2026, I think as Tom will share towards the end, our overall guidance, I think that we're having now an opportunity to benefit from really 18 months of hard work pivoting our business to far more of this customer-centric value plus, again, areas where they're willing to spend a bit money. We obviously have to focus upon becoming a modern retailer, which means the digital -- and the role of digital within our business is critical. We'll share some of the statistics there. We are very much focused upon financial returns, the TSR, our return on capital employed. So a key metric that we're using is increasing our revenue and profit per square foot across the business, which is a great metric within retail to really test how you're doing and continuing to invest in our digital ecosystem, which I'll describe in a little bit more detail. In terms of overall results, which have been released, revenue from our core operating subsidiaries up 0.5%. Now that was 0.8% in the second half. So again, we're seeing this recovery across the total portfolio after a couple of years of challenging revenue. Underlying profit up 34.7%. We have absolutely focused upon everyday low cost across the entirety of the business, which has continued to drive a much higher growth in profit than revenue. I mentioned net cash position at $538 million to $70 million. That is after paying a very significant special dividend of $600 million. So 58.3%. We announced a full year dividend of 10.7% after approval from our Board of Directors yesterday. Overall, we're seeing some interesting trends. High-value tourists are coming back to Hong Kong. We see now in many of our tourist stores great growth. I'll talk a little bit about that, in particular, Health and Beauty. So tourist locations versus the previous tourists who prided themselves on coming to Hong Kong and spending nothing, bring their own water, their own food. We're now seeing a return of high-value tourists, which is a great sign. Good mix now from cigarettes to ready-to-eat, little bit more detail in that shortly. Food growth benefited from the Singapore consumption, the government prior to the elections gave each citizen SGD 600, and that obviously benefited the Food as we saw in our performance there. Great progress in IKEA. We'll talk about that in a few minutes. I mentioned the doubling of our e-commerce transactions. And again, the total shareholder return for the year was 93%. So I'm going to turn it over to Tom for a little bit more detail. Tom Cornelis Van der Lee: Thank you, Scott. Let me take you through the financials for 2025. Starting with the income statement. We closed 2025 with the underlying profit of $270 million, up 35% year-on-year. And with this, we delivered the top end of our guidance. This performance was driven by consistent like-for-like recovery, margin improvement across most formats and decisive portfolio actions, notably the divestment of Yonghui, Robinsons and Singapore Food. For clarity and comparability, we present 2 additional views here. First, a restated 2024 base, reflecting only the comparable periods for divested businesses. Second, a reset 2025 view, assuming full year deconsolidation of Singapore Food and Robinson Retail. And this provides a clearer picture of our going-forward earnings profile. On revenues, revenue from subsidiaries were $8.9 billion, up 0.5% year-on-year on an organic basis, excluding divested businesses for the comparable period. Maxim's revenue, our associate, up 0.4% on improved mooncake sales and Southeast Asia restaurant performance, offset by weaker sales in Hong Kong and Mainland China. Subsidiaries underlying profit, $183 million, up 19% on a comparable basis. All formats improved their operating margin with the exception of Convenience due to reduced cigarette volumes. Our financing costs reduced as we paid down almost all our debt. The share of underlying profit from Maxims, up 9% due to stronger sales and lower costs. And the underlying profit is $270 million, as said, 35% up year-on-year or 18% up year-on-year on a restated comparable basis, excluding the loss-making Yonghui in 2024. The nontrading items, $36 million, they primarily reflect the losses of the divestment of Yonghui and Robinsons Retail, partially offset by the disposal gain on Singapore Foods. These items are all nonrecurring. The ordinary dividend per share, the $0.14 here, that's based on our new dividend policy, which we announced last year of 70%. The special dividend, $0.4430 we paid out last year. I think overall, full year 2025 represents a clear inflection point for the group. We transitioned from a portfolio-driven structure to a much more focused operating company with stronger earnings quality, lower leverage and a greater strategic flexibility heading into this year 2026. Going to the sales summary. As outlined in our Investor Day, growth, margins and returns are the key building blocks for us driving TSR. Turning to sales here on this page. We continue to see sales recovery across the format in 2025, reflecting improving execution and early signs of demand recovery. Overall, consistent like-for-like recovery, reaching 2% in the second half of 2025. Turning on to the formats. On H&B, we saw an almost 7% growth driven by continued share gains in wellness, stronger tourist traffic in Hong Kong and the growing e-commerce presence in Southeast Asia. Convenience, the total sales declined 1.5% due to cigarette volume reduction following a tax increase in Hong Kong in February 2024. Excluding cigarettes, sales increased 1% as we focus on growing higher-margin non-cigarette categories with RTE being the main focus. Food, sales were broadly flat, excluding the divested businesses as price reinvestment supported volume and transaction amid value-focused consumer environment. Home Furnishings, although sales declined 3.5%, a clear improvement from a decline of 12% in 2024. And that's driven by price resets, range rationalizations and accelerated digital penetration. And as said, Maxim grew 0.4% due to stronger mooncake performance and Southeast Asia restaurants. Breaking this down a bit more detail into half year numbers, so you can see the trends here better. Sales and like-for-like trends continue to improve throughout 2025 with a clear step-up in the second half across all formats, reflecting strong execution and stabilized demand conditions. On Health and Beauty, Health delivered sustained like-for-like growth, supported by continued share gains in wellness and the growth of tourist arrival in Hong Kong as well as this e-commerce I mentioned earlier, in Southeast Asia, particularly Indonesia and Vietnam, so double-digit like-for-like sales growth in 2025. A very strong performance in these 2 markets. On Convenience, sales remained pressured by cigarette volumes declines for the tax hikes, although a clear improvement here is seen in the second half of 2025, and that's driven by continued growth in higher-margin non-cigarette categories, particularly RTE. In South China, like-for-like sales were impacted by the intense subsidy competition from food delivery platforms, particularly in the first half of 2025. As we continue and grow RTE with margins about 4x as much as cigarettes, we expect the financial impact from cigarette sales decline to moderate from 2026 onwards as we anniversary the full year cycle of the cig tax increase. On Food, stable like-for-like despite a challenging trading environment. In Hong Kong, pricing reinvestment in the core basket items drove volume up 2%. Singapore Food, as Scott commented, benefited from the government consumption vouchers, which were only redeemable at supermarkets and hawker centers. And Cambodia delivered a very strong like-for-like, both in sales and also improved underlying margins. In Home Furnishings, you can see also here a clear improvement compared to 2024 and also the second half is much better. And that reflects all our efforts on price reductions, better entry price range options and we rationalized the noncore items throughout the portfolio. As a result, you can see that the volumes in the second half are growing. Sales might not grow yet, but the volumes -- underlying volumes in the second half for IKEA has been growing. If we then turn on to the operating profit by format. And you can see here also quite strong results and also a good recovery in the second half. Starting with Health and Beauty. The operating profit here reached $228 million, up 9% year-on-year, driven by strong performance on sales across all our markets. And the margin improved 20 basis points to 8.7%. Convenience, operating profit of $97 million, although down 6% due to the low reported cigarette sales, although the second half here also returned to profit growth, driven by the favorable mix towards higher-margin RTE categories. Food operating profit reached $62 million, a 15% year-on-year increase, driven by earnings recovery mainly in Singapore Food following the distribution of the government consumption vouchers we led to higher sales. Again, here, Hong Kong pricing investment drove volume growth but did not impact our margin because we offset the lower prices with better sourcing in our business. And last, Home Furnishings. Here, we can see improved margins year-on-year despite slightly lower sales, and that's because of significant cost optimization across labor, supply chain and rent across most of our markets. As a result of that, we had a $10 million uplift in profit for IKEA or Home Furnishings in 2025. Turning to the total subsidiary operating profit and the underlying profits. Starting with the subsidiary operating profit. The operating profit is post-IFRS increased 7% year-on-year, driven by broad-based improvements in subsidiary profitability with operating margin now 4.2%, up 30 basis points. The underlying profit, as mentioned earlier, is up 35% to $270 million, supported by stronger subsidiary earnings, as you see above, lower financing costs. We moved from a net debt to a net cash and a higher contribution from associates following the divestment of the loss-making Yonghui. The reported SG&A costs are slightly up, but on a like-for-like basis, they are down. There are a few one-offs, which are not recurring, and you will see this year that costs are coming down on the SG&A line. Turning to cash flow. Strong cash flow, $430 million cash -- operating cash flow, up almost 30% year-on-year. And our free cash flow grew 78% to $281 million in 2025, both because of underlying profit improvements, improved working capital efficiency and the interest savings, which I highlighted earlier. CapEx. Our CapEx was clearly below our guidance and ended at $149 million. Of the CapEx we spent, 50% of the CapEx is spent on stores and refurbs, 30% on digital and IT and the remaining supply chain stability and maintenance. We, however, remain committed, as you will see later in the guidance, to invest $200 million to $220 million per year, again, focused on store renewals and technology, particularly AI, as we will highlight later. Following the $1 billion of divestment proceeds, we moved from a net debt to a net cash even after returning $600 million to shareholders via a special dividend. And that move to the return to shareholders, as you can see here. Our total ordinary dividend is $0.14 in 2025, up 33%, and that reflects a stronger earnings, but also the increased payout from 60% guidance to 70% policy. We returned $740 million to shareholders, including $600 million special dividends, while we strengthened the balance sheet. We delivered a total shareholder return of 93% in 2025, driven by earnings recovery, portfolio simplification and disciplined capital deployment. And with this, we've outperformed our retail peers and major global indices. And last, the ROIC (sic) [ ROCE ] improved to 9.4% with a clear pathway to 15% by 2028 as we announced during our Investor Day. And with that, I would like to turn it to Scott for strategy and business updates. Scott Price: Thank you, Tom. For those who attended our Investor Day, this framework was presented. And the strategic deliverables are really just the anchoring structure by which we focus our investments and as well the priorities for each one of our formats in the business. We talk about the key deliverables in 2025, retail excellence, being really good retailers. We have, I think, a portfolio that brings synergy across, but each one has a different assortment. We have thousands of products in each one of our stores. The reaction to the inflationary environment meant that we really had to focus upon repivoting. So we had a good, I think, 12 to 18 months of really resetting our customer proposition and being really good retailers. In Health and Beauty, curating the range moving out of commodities, much more into functional value product lines. We're seeing great progress there. On Convenience, moving away again from tobacco into far more of the RTE, ready-to-eat. Food, really strengthened our proposition there as well the value to customers. And on Home Furnishings, enhancing the value of the product lines as well accessibility by the way that we have gone to market, in particular, in Southeast Asia, Indonesia on platforms. Access to customers, we have targeted, I think, appropriately, if we focus upon TSR and ROCE, the Convenience and the Health and Beauty range. There may be stores available in Food, Cambodia, 1 or 2 stores potentially in IKEA, in Taiwan. But for the most part, the majority of our store growth will come from those smaller format, high return and low CapEx because of the franchise model. Omni digital, more than 90 digital channels, that's apps, loyalty programs, the launch of our DFIQ vendor platform, all increasing the mechanisms by which we build a more powerful digital P&L moving forward. Good initial progress on media. So as you go through our stores, you'll see screens, you'll see advertising. Our proposition rather than going with Alphabet or Meta, we're going to have a higher purchase conversion because that new product launch is going to be right next to the product as opposed to seeing it late at night on your phone and trying to remember it the next morning. I think the retail media is quite a powerful opportunity for us as we presented in the Investor Day. And we continue to make progress. I think in terms of divestments, pretty comfortable with the portfolio as it stands today, now ensuring that we redeploy our capital moving forward into the highest value opportunities for shareholder return. We go through some of the formats in particular. I'm not going to go through each one of the aspects here. Tom unpacked the sales and the operating profit in detail. But overall, just this growing wellness focus upon, I think, the generation that traditionally has been the silver hair, they call it, I put myself in that category. But this next generation is far more health focused. And we are finding then an opportunity to pivot towards a younger generation on the health. We still have beauty, appropriate beauty, but it's functional beauty, hair care that has a far more beneficial derma as opposed to more traditional cosmetics. Hong Kong, Macau, again, tourists coming back. Our tourist stores had a 9% revenue growth in 2025, the second half higher than the first half. So we see that as an improvement. We exited the stores in China, return on capital invested being a huge driver of that and then focusing on the GBA strategy. A good increase in sales with Vietnam and Indonesia, a 10% and greater like-for-like growth across our stores. Own Brand, a critical part of delivering value while also good functional, I think, benefits to customers through our products, 35% improvement in gross profit productivity. We did close the nonperforming stores. Any healthy retailer continually assesses things change relative to pattern, competitive landscape. At any given time, you're looking at a single-digit percent of your store portfolio to ensure that you stay healthy. And a 38% growth across e-commerce in the Health and Beauty area. On Convenience, it was a year of transition, I think. So first, a good portion of our sales traditionally came from tobacco. 31% of our sales were tobacco-related transactions. Generally, that's a 1 or maybe a 2-item basket, and we shared that in the Investor Day. They're low margin. So there's a huge opportunity to pivot to ready-to-eat and also, I think, collectibles, creating fun transactions for customers who come into our stores to buy something new and generally then a larger basket. The innovation that we look at for ready-to-eat, it seems like half the population of Hong Kong goes to Japan at least twice a year, if not more often. And so again, that Japanese themed ready-to-eat excellence, and that is one of the benefits of the franchisor. Our penetration now, excluding cigarettes at 33% of sales, ready-to-eat, a substantially higher margin than traditional tobacco. Asians prefer hot food, and we see, in particular, in China. So across our stores, we're launching out food bars, which really is a small quick service restaurant. The challenge that we had is with that proposition, when you saw a bit of that platform battle that occurred, we were not part of that subsidy drive for the big players who apparently were trying to kill each other. And not making any money at it, from what we can see. But we were excluded from that, but we were picked up by the platforms from August as a quick service restaurant, and we saw obviously the value in that, in particular, when it came to those e-commerce click and collect, order online as you've gotten onto the train, pick up at the 7-Eleven near your office, bring that breakfast or that lunch back into the office. We also see, again, franchisee penetration is a great way for us to drive our ROCE with a lower CapEx intensity in terms of revenue growth. We've got, I think, good progress by the team. I think always want more faster, broader, bigger, our 7-Eleven team is looking very nervous right now, but I'm pleased with the progress and looking forward to more. Moving on to Food. Food was a huge year of pivot. The news last year, everyone going north to buy their groceries. And to me, that was a substantial risk. I see a huge opportunity for us based upon the deep knowledge of our Food team and the experiences they bring to drive basically affordable food in Hong Kong. We should not become the food desert that you see in many capital cities around the world. Hong Kong, I think, is unique in that way. So we have embarked upon pretty substantial investment in re-sourcing our product line to be able to eliminate traders, middlemen, all the ones who were adding an incremental margin and go direct across many of the product lines. We strategically identified 3 to 4 competitors in Shenzhen. We identified the 200 most common items in the basket. We shopped that basket and then we came here to Hong Kong. It was 18% more expensive at the beginning of last year. We achieved a 1% difference during Chinese New Year. As a result, with increased profit, we now are able to really, I think, bring forward quite a very powerful proposition in terms of the confidence that Hong Kong customers can shop here. They're not going to get a better deal in Shenzhen as well. We saw that in the volume growth. So we had a 2% volume growth as a result of all these efforts and a good solid start to the year during Chinese New Year, which tells me we are on the right path moving forward. Those strategic price investments, et cetera, while protecting margin we've seen in the results, again, second half better than the first half. Tom mentioned the Singapore government vouchers. We also, I think, have a unique opportunity in Cambodia, a business that was pretty small, not really doing much, all of a sudden became very interesting to us as a part of the portfolio. And we now plan 50 new stores, has a very good margin and a very good return on capital employed. So an interesting business. And we completed the Singapore divestment. Frankly, I think we divested at the right time. I think ex those Singapore vouchers from the government, the business will not be, I think, as attractive. And similar to Hong Kong to Shenzhen, you have the same challenges between Singapore and Johor Bahru, in particular, as we open up the train lines and ease up on the border, you're going to see a lot of those baskets going north. So I think our timing was very good. On Home Furnishings, excellent progress. Look, all of our formats were challenged by this change in customers, but I'd say IKEA was the most challenged by the macroeconomics. The fact that we do not have a high level of real estate transactions in 2025. Look, when people don't move, then they don't do home renovation and they don't buy heavy furniture, which meant that a good part of our portfolio assortment was challenged in 2024 and 2025. But we've made really good progress focusing on what matters. And so sensible, I think, investments for customers coming in, in particular, our marketplace area. But with that understanding of a different economic relative to the basket and the margins for the businesses, the team did an outstanding job of really cutting costs, which meant that despite challenged revenue we delivered, I think, quite a strong profit position. Taiwan continues to be a very good market for us with greater than 10% profit margins. We are quite unique in Indonesia. IKEA, the franchisor has only approved 2 markets around the world to test platforms. So we have a mainly Jakarta-based Indonesia, IKEA business with 1 store in Bali. We went on to Shopee in Indonesia and now are able to offer a good relevant part of our assortment to the entire country of Indonesia. which, of course, as in archipelago of 200-plus islands with 200-plus million consumers. So find that as an interesting opportunity moving forward. Again, those are more of those sensible splurges around portable items. No one's ordering a leather sofa online. So it's an appropriate assortment. And then scaling our Food business. Everyone loves a good Swedish meatball. We now, through research, we now know that 45% of our customers visit IKEA for food. And so you'll see that we have increased the overall proposition as well, importantly, reset the stores to make it more convenient to engage in our food assortment. On our digital, great progress on the digital ecosystem you see across here in terms of driving our online penetration, driving launches. And as a result, we had outstanding economic results. So our retail media grew 400%, 1,000 new in-store digital screens, which we are now making available to our vendors to invest in a media present. We now have 13 million active users. We now have 100 million-plus visits to our store each month. So that's, in essence, 20 million transactions a week now across the DFI portfolio, which is a very powerful data source and now 33 million loyalty members across all of our programs in the markets in which we operate. Yuu continuing to expand across platforms. We're now on Foodpanda with access to the data, which is very important as you think about when you interact with the overall platform. So this is another area where the media -- the digital media team and the data team know that we can do so much more, and I'm looking at them. And so we want to move faster, bigger, harder. He shake his head yes, which is a good thing. So with that, I'm going to turn it over to Tom to review our business outlook. Tom Cornelis Van der Lee: Thank you, Scott. On to the full year 2026 outlook. Starting with the revenue. Excluding Singapore Food, which we deconsolidated last year December, we expect to grow our top line organically by 2% to 3% as we continue to gain market share across our formats. The underlying profit expect that to grow to between $270 million to $300 million. And that implies a 13% to 25% growth, excluding the discontinued Singapore Food and Robinsons. So we go from $230 million restated last year basis to $270 million to $300 million. CapEx, we are further we're going to spend about $200 million to $220 million this year, half again on new stores and store refurbs, about 25% to 30% on digital and IT. And split on formats, about 65% on Health and Beauty and on Convenience, the remainder on Food and IKEA. The dividend payout, the policy we announced last year, 70% payout and our return on capital employed will go from 9.4% to between 11% to 13% for 2026. And with this, I hand over to Karen for the Q&A. Karen Chan: And with that, we'll open up the floor for Q&A. [Operator Instructions] First question, Jeffrey. Ming Jie Kiang: I'm Jeff from CLSA. So my first question would be regarding the organic revenue guidance, 2% to 3% for 2026. Presumably, we exited 2025 with a similar momentum. So can you walk us through maybe year-to-date, what you are seeing across different formats on the revenue momentum? And my second question would be on the guidance for -- sorry, CapEx for 2025. So it is quite meaningfully below the previous guidance we've received. So I just want to understand, was this some timing difference? Or was this something that happened that makes the CapEx has been low? Just anything would be helpful on that front. Scott Price: So I'm going to cover the first one. And Tom, who knows my view on the second one, will cover our performance on CapEx because I'm not a happy camper. But in any event, we had a solid start to the year across all formats and saw positive total and positive like-for-like consistently. I really do think 2025 was a very important year for us relative to the change in proposition, much more value-based, much more attuned to the customers relative to what they're willing to spend their money on. So very pleased in line with guidance is what I would say. And I think we can do more. Collectively, we gained share across most of the banners in 2025. I would like to see that continue into 2026. Tom, how do we feel about CapEx? Tom Cornelis Van der Lee: Let me try to answer this. I think -- first, understand is a big impact of Singapore Food. So we divested Singapore Food. And as we announced the divestment, we stopped most of our CapEx. There's no point to invest. But still, even without that, we're still materially below our guidance. And here, I think we have to significantly improve our planning. There is still a culture of holding on to your budget to the last minute and then realizing you can't spend it. So we have to improve planning. We have to make sure that if we give you a guidance that we are going to spend it because the spend is not just for spend's sake, it's to make sure we drive revenue and drive profits. So that has to improve this year so that we get back to our guidance $200 million to $220 million because we don't want to miss opportunities to get the top line and bottom line improved. Scott Price: As I said to our Board of Directors yesterday, as God is my witness, we will spend and invest the midpoint of our CapEx guidance in 2026. Karen Chan: Next question, please. Brian? Unknown Analyst: This is [ Brian ] from Citi. So I have 2 questions. My first question is that I see that 2026 guidance is actually not far away, I mean not too far away from 2028 guidance. So I'm getting a feel that we are getting more optimistic on the overall performance in the midterm. So I just want to check how you feel about that? And are we revising any of our medium target that we released in December? That's the first question. The second question is that just looking at 2026 alone, for each business format, is there any quantitative or qualitative the main target, main missions that you need to achieve in 2026? Scott Price: Tom, why don't you cover the first one? Tom Cornelis Van der Lee: On guidance, we've laid out the guidance in our Investor Day in December. And we said we want to underpromise and overdeliver, right? So we've seen good progress last year. This year, we expect also significant improvements on the back of improved underlying performance as well as lower cost. And on the back of that, we'll see how 2027 goes for that. But we are quite confident that we can at least meet and hopefully, at some point, exceed the guidance we've given you last year December. Scott Price: In terms of the by format, [ con call ], we were very thoughtful around how we positioned the Investor Day by format strategy. And again, in a customer-first environment, that retail excellence and being laser-focused on a winning proposition for customers, communicating that and ensuring that we are modernizing our digital proposition. I think in 2026, to Tom's point, we want to underpromise and overdeliver. '26, based upon the first few months and this sense of renewed customer confidence gives me good hope. But look, we live in a challenging world. Who knows what oil prices are going to do, what that could do to energy costs. Therefore, do we go back to a far more value-oriented customer. Some of that splurging may end. There is great strength in being a daily essential retailer, but it's not without its challenges relative to consumer confidence and people saying, you know what, I'm going to spend 10% less and save that or I need to paycheck to paycheck, put more into paying my electricity bill. So I'm cautiously optimistic, but it's way too early to change midterm guidance. Karen Chan: Any questions? Ben? Unknown Analyst: This is [ Ben ] from UBS. So I have 2 questions from my side. So first one is it's been 2 months after the Investor Day. So just wondering if you could share some updates with us on the e-commerce penetration and also the progress made on retail media, specifically 2 months into 2026. And then the second one would be regarding on -- in Hong Kong market. You know that Chinese e-commerce platform has been aggressively penetrating the market with cost subsidies. So how long do you expect this to last? And what would be our strategy? Scott Price: So on the -- again, it's been roughly 73 days. So a little early to change our minds in terms of, again, the midterm guidance. E-comm penetration, we made great progress. I think it was 140 basis points up to 6.2%. And look, we are after fair share. I'm not trying to win in the digital world. As you think about overall spend, what percent is e-commerce, we want to have a fair share of that. So we don't want to be left behind. The market interaction is wildly different. In Hong Kong, for example, it is some of the lowest e-commerce penetration in the world because there's one store every 20 meters. So why would you wait for someone else as well, there's a substantial for families, number of helpers who get sent out to do a lot of the shopping. Where I see us needing to focus is instant commerce. That will grow. You see this through the platforms. People forgot something, they want something quickly and as well retail entertainment or retailing -- no, that's not what it is. Retail entertainment, there used to be a word for it, I have forgotten, apologies. But people do shop online because it's interesting and it's an assortment that you can't necessarily get in the store. So I think we are in a good shape to continue to drive our e-commerce penetration relevant to the market share. It will grow because in markets like in Indonesia, it's very high. Access to goods in stores and brick-and-mortar is very limited, same as I think in Vietnam, where we see much higher growth. We will keep up and focus on that fair share, not ready to change the environment. In terms of the platform battle that took place in the North, I think that is calming down a bit. We actually, other than really the Guangdong impact to our 7-Eleven business, didn't necessarily see across the rest of our format portfolio a significant impact. I don't think trying to get across the border, a lot of those products don't move very well through the approval process with some of the ingredients, et cetera, in particular, in Health and Beauty. What we see is actually a reverse opportunity, which is there is a very large amount of our product line here in Hong Kong that's very interesting. Certainly, we see it through the Mainland to be able to now digitalize that and make that available in Guangdong. So we see the -- actually rather than necessarily a risk, we see it as an opportunity for us to be able to grow our business through some of those assortments being made available for purchase. We've expanded now the Yuu loyalty program into Guangdong. So I think that is a first step in being able to create a digital ecosystem that is far more in line with the retail porous border that's envisioned with the Greater Bay Area. Karen Chan: Okay. We'll move to online questions. Question from Jayden Vantarakis of Macquarie. He has 3 questions here. First, at the recent Investor Day, management provided clear segment and market targets for M&A. Are there any updates to share? Second, how is the progress on the franchising model for Guardian in Indonesia? And third question, margin improvement at IKEA is stronger than expected relative to what has been shared at the Investor Day. So what has gone well during second half of 2025? And is there more room for higher margins in 2026? Scott Price: Tom, I'll leave the margin improvement to you. So on the M&A, we're very clear what we will and what we will not do on M&A. I think that what we divested relative to minority positions will tell you very clearly what we don't want to do. We only want operating businesses that bring scale synergy to our existing business to allow us to continue to deliver on improved ROCE and improved TSR. This is a situation where we're in the market. We continue to look, I think, more strategically in the Health and Beauty and the Convenience store area, but would not say, I think, no to interesting affordable options in digital. The affordable piece is a little bit more challenging given the multiples on which many of the digital assets trade. So we will follow the policy. We will follow the procedure. M&A activity is episodic. And so we'll update you at the appropriate time. On Indonesia, we have 2 trial stores. You have to get the model right. You have to be able to ensure that a franchisee can make a living income and that this is a good return on investment for them. So you cannot go out with a proposition that has not been trialed and tested. So we trialed 2 stores. We're pleased with it. We'll do another 40 stores this year in terms of the Indonesia franchise stores. This is a model that you perfect over a couple of years before you really go after the substantial growth. So pleased with the pace, and it is, as referenced, in line with our commitment that we made during the Investor Day in December. IKEA margin... Tom Cornelis Van der Lee: On IKEA. So... Scott Price: Other than brilliant leadership by the IKEA team, right? Tom Cornelis Van der Lee: Absolutely. Martin and team did a fantastic job last year. But if you look at 2025, the big improvement in underlying profit is because of lower cost. So labor cost, rents, but also supply chain, so significantly lower cost in IKEA. Part of the lower costs, we have invested in lower pricing. So we saw that volumes are picking up, although sales are still down last year. So we now need to make sure that sales are up. And if sales are up, we will expect better results, but that will take some time. Investing in margin and investing in price will take time before it turns into higher sales numbers. But the initial signs are positive. So hopefully, we'll get at least a revenue stabilization in 2026, and then we'll see higher profits in the following years. Karen Chan: Your next question comes from Meg Kandy of CGS International. Congratulations on an exceptional year. Now with a strong foundation built looking forward into 2026, can you give us some color of the levers you're tapping for further shareholder return from here onwards? Scott Price: Tom? Tom Cornelis Van der Lee: On shareholder return, I think what we announced earlier is, for us, the most important driver is top line growth, right? So growth, and you see that the first 2 months of this year, we are in line with our guidance. And hopefully, some will exceed. So growth is a key driver. And we do that with the right pricing, the right ranging and the right stores. In addition to that, we started last year with a large cost optimization project. And we've seen the results in IKEA, but also across all our formats and also on our SG&A, our costs are coming down. So you can expect this year that SG&A on group level is coming down. That's another lever where you can see profits come to be increased. But in the long term, it's sales and margin. In the medium term, you'll see costs coming down. Scott Price: And probably what I would add to that is there needs to be an incremental value to this portfolio versus the breakup value. Otherwise, what's the point of it. And where I see value is across 3 areas. First, it's cost optimization. We have relentlessly focused on being able to ensure that we're an everyday low-cost operator. As a result, we are able to, I think, operate at a lower overhead as a percent of revenue than any nearby competitor by format. So that's first and important. The second is the synergy of the digital ecosystem. It is -- would be very expensive for all of our individual formats to try and create their own ecosystem, which means the e-commerce platforms and the e-commerce transactional capability, their own loyalty program, their own ability to drive retail media as well data monetization. And then the third is the value of the data holistically that we're able to bring through our loyalty programs. So we know customers better than anyone else and the ability to partner with vendors and be able to say through purchase behavior in IKEA, we understand that this is a young family about to have a child. That helps Health and Beauty personalize offers that are relevant to prenatal and then baby assortment moving forward. So the ecosystem to me is going to be a huge driver of this TSR moving forward relative to investing in a competitor who does a single format only. Karen Chan: Thank you, Scott. Next question comes from Adrian Loh of UOB Kay Hian. Congratulations on the strong set of results. For the Convenience business, you had around 100 net new stores in South China 2025. What are your targets for this in the near to medium term? Second question, on the M&A front, is there any more divestment on the horizon or we're feeling more comfortable with the portfolio we are standing at right now? Scott Price: Tom, why don't you cover the CVS? Tom Cornelis Van der Lee: As we shared in our Investor Day, the medium term 2028, our goal is about 2,400 stores by 2028 in Southern China and overall about 4,000 stores for 7-Eleven as a whole for all our markets. We did open last year 100 stores net. We did close some stores, those were loss-making. And we do always -- we open more stores and we close a few so making sure that the overall portfolio remains healthy. Scott Price: On the divestment side, I think that we have for the most part, eliminated the parts of the business that have been dilutive in terms of TSR and ROCE. It was not too many years ago. I think it was 2023. We had a 1.7% ROCE. We're now up to a 9%. And as Tom said, we aim for a 15% by 2028. In general, I think we've got the right portfolio. I think we have to keep a pulse as changing customer behavior. If we see a substantial move away from stores into digital, we may rethink maybe some of our store commitments moving forward and pivot more towards revenue coming out of the e-commerce, which we are on a good path to make neutral to accretive versus an in-store margin. So overall, I think we're in good shape, but we constantly evaluate. We've had a great year when it comes to TSR. We want to continue to maintain that great opportunity for the capital markets to use DFI as a mechanism to invest broadly in retail in Asia because we're multi-format, multi-country. Karen Chan: Your next question comes from Selviana Aripin of HSBC. Could you share your thoughts around the impact of inflationary pressure, such as higher oil price on your guidance in 2026? And if you could share some thoughts around sensitivity to oil prices, that would be helpful. Scott Price: Maybe, Tom, you add on. So just we've looked at it. We've actually looked at our supply chain. We've looked at our sourcing. We have modeled a 20% increase in oil prices. The reality is that as a large-scale daily essential, that as a percent of our net product is not substantial. We now have over 50 country of origins from which we source. We have the ability to pivot in terms of not only geographically where we source, but also, I think, through the right mix, able to mute any impact on customer pricing. If it becomes substantial at any given time, clearly, there'll be an inflationary impact. I think we would like to be the last to raise prices as a strategy. I think there's other things that we can do to protect the bottom line while also being able to serve our customers. Tom Cornelis Van der Lee: I think to add on, if we model a 20% increase in oil price for this year, we will still stay within our guidance. So it has an impact, and we'll do all we can to minimize the impact, but it will remain within the guidance. Karen Chan: Your next question comes from [ Tong Honxi ] of DBS Bank. Congrats on the strong results. Two questions here. First, given the recent Dingdong acquisition by Meituan, is there any change to your Hong Kong Food strategy? Second question, in Malaysia is your second largest geography outside of Hong Kong. Your biggest competitor is planning a listing this year with a valuation as high as USD 5 billion, which could bolster the firepower for expansion. Could you share your views that, that will affect, if at all, your overall competitive environment? Scott Price: In terms of the DDL, we actually are involved and engaged and are very aware of what that transaction. We have an exclusive relationship here in Hong Kong. We have their commitments. Frankly, we are a valuable customer to them. They are not a direct competitor to us in Hong Kong. So we see no conflict nor issue from that. In terms of how we look at the listing of AS Watson. I was raised in retail by Walmart. And it always was a bit perplexing to me, but now appreciate this view that says you want a really strong competitor. It is to your value to keep you on your toes constantly looking as to how you can be better. So if a listing helps them become a stronger competitor, net, I think we have an opportunity to, one, have a benchmark, but also it just ups our game as well as we move forward. So I don't see that as really a threat. We'll watch with interest, but we're focused on ensuring that we beat everyone, including those admirable competitors at serving our customers. Karen Chan: Thank you, Scott. Any questions from the floor? Unknown Analyst: I guess I have a follow-up question on the DFIQ. I know we are like 70 days after the presentation during Investor Day, but that we've launched the DFIQ portal, right? And for the DFIQ media, we also increased the revenue by fourfold. So are we like that serious about the 1% revenue contribution by 2028? And how do you see about the EBIT margin? Because if it's like more than 50%, then we have a meaningful contribution to the bottom line by 2028? Scott Price: So as we think about our TSR model, I'm very well aware that an omnichannel retailer has far superior P/E multiples than the traditional brick-and-mortar only. As we map our way forward, we are pioneers in this area. There is no substantial retail media player in the markets in which we operate today. DFIQ is a critical enabler for us to be able to create a seamless ability for vendors to go through DFIQ and access-specific screens in specific locations in the Health and Beauty in certain markets. At some point, I'd call us retail media 1.0, 2.0 is also going to get to a time a day relative to traffic patterns, et cetera, et cetera. We believe, again, through conversion of immediacy, a much higher effective proposition for a very substantial above-the-line media budget, including digital penetration coming across to us. It's been 90 days. Internally, the team knows more and more and more and more. If I were to say what is the area where we would potentially relook at midterm guidance, it's going to be in this area because it is so new. I do think in the future, I'm talking 5 to 10 years from now, 15 years from now, my North Star would again be the progress that Walmart has made in this area. We will never have digital as a reporting operating unit. It's too complicated and it's artificial. It's embedded across our formats. But speaking about what is the penetration of sales growth and profit growth from the digital proposition is an area that we're focused on as we progress forward. So I'd say watch this page, too early to guide anything other than what we said in December. Karen Chan: Thank you, Scott. If there are no further questions, this will conclude our session for today. Thank you very much for your participation, and we look forward to seeing you in our next analyst presentation.
Operator: Dear ladies and gentlemen, a warm welcome to the Continental AG Analyst and Investor Call Full Year Results 2025. [Operator Instructions] Let me now turn the floor over to your host, Max Westmeyer, Head of Investor Relations. Max Westmeyer: Thank you very much, and welcome, everyone, to our Q4 and full year 2025 results presentation. Today's call is hosted by our CEO, Christian Kötz, and our CFO, Roland Welzbacher. A quick reminder that both the press release and the presentation of today's call are available for download on our Investor Relations website. The annual report will be published later this month on March 19. Before we start, I'd like to remind everyone that this conference call is for investors and analysts only. If you do not belong to either of these groups, please kindly disconnect now. Following the presentation, we will conduct a Q&A session for sell-side analysts. [Operator Instructions] With that, let me now for the first time, hand you over to our new CEO, Christian Kötz. Christian Kotz: Thank you, Max, and welcome -- a very warm welcome also from my side to everyone online. Thank you for joining us today. I'm actually glad to have the chance to join this earnings call. And as Max said, for the first time as the CEO of Continental. 2025 was a year of significant transformation and delivery for Continental. We may decisive strategic progress while achieving our financial targets. As you all know, we've completed the sale of OE-related part of ContiTech business, the so-called OESL business in February 2026. With this, we have materially reduced the OEM auto exposure of ContiTech. And with this, started sales process for the remaining ContiTech business. We are continuously executing our strategy to become a pure-play tire company. So let me really summarize the key developments in Q4. Starting with sales. So in a challenging environment, we delivered organic growth of 0.8%, resulting in EUR 19.7 billion of sales. The tire contribution is actually a growth of -- organic growth of 2.4%, whereas we have seen and experienced a negative impact organically of 3.3% on the ContiTech side organically. Adjusted EBIT reached EUR 2 billion with a margin of 10.3%, mainly driven by healthy price/mix in tires as well as strict cost discipline and resilient replacement demands. So ContiTech continue to face challenging automotive and industrial markets, especially in APAC and North America with pressure on mix and volumes, particularly in Q4. The transformation, which I initially mentioned also had an impact on our result. So our NIAT was significantly burdened by special effects of around EUR 1.7 billion mainly related to the Automotive spin-off, the AUMOVIO spinoff and the transformation of ContiTech and the individual effects are shown on the chart. Adjusted cash free -- cash flow, however, came in at EUR 959 million, so at the upper end of our guidance, driven by solid operational performance, mainly in the tire sector. Thanks to the strong free cash flow generation in Q4, we further reduced net debt and improved the pro forma leverage ratio to around 2.0 as planned, as anticipated and as was also communicated at our last Capital Markets Day. So overall, I think we navigated this transition in 2025 very successfully, giving us the opportunity to return some of the earnings to our employees, but also, of course, to our shareholders. And as previously mentioned and explained, we adjusted our NIAT for noncash and nonrecurring items of a total of EUR 1.2 billion, resulting in a dividend payout basis, so an adjusted NIAT of around EUR 1.1 billion. This means we will propose a dividend for the financial year 2025 of EUR 2.70 per share to this year's Annual General Meeting for approval. The proposal reflects, therefore, our clear commitment to the target payout corridor of around 40% to 60%. As communicated at our last Capital Markets Day and the proposed dividend basically sits right in the middle of this corridor, and this ensures an attractive dividend yield of 4.8%, while maintaining financial flexibility during the ongoing transformation. So now a quick glance at the Q4 results by sector. Overall, group performance came in broadly in line with prior year. So once again, this was supported by a very strong fourth quarter in Tires. I think Roland will touch on that in more detail. Particularly proud we are that we managed to organically grow in Tires. I mentioned the total year results, but also in Q4 and to keep earnings stable despite headwinds from tariffs and FX. So now over to Roland for more details on our Q4 financials. Roland Welzbacher: Yes. Thank you, Christian, and welcome, everyone, from my side as well. Turning now to the market environment for Tires. On Slide 7. Over the course of the year, the replacement market in Europe has changed quite a bit, strong Asian imports, initially supported market volumes. But as these imports slowed, total market volumes declined year-on-year. This effect was further reinforced by tough comparisons with last year. Despite this, we achieved organic sales growth in EMEA in Q4, underscoring the resilience and strength once again of our business. I'll speak about our regional mix in more detail later on. North America and China, however, grew slightly compared to a weaker Q4 2024. Light vehicle production in China continued to show solid momentum while development in Europe and North America were more mixed. Over to Slide 8. Let me briefly focus on the truck tire markets. In Europe, truck tire replacement market showed continuous resilience also in Q4. North America picked up during the year after a slow start into '25, resulting in slight growth in Q4. This is mainly driven by the continued variable volume in commercial vehicle production in North America, so the OE business, which we also had to manage in Q4. In Europe, however, production figures continued to rebound and at least we're seeing a little bit more positive tonality from the U.S. truck OEMs as well. Over to Slide 9. Let's now discuss the Tires performance in this environment. Despite facing continued strong FX headwinds, lower volumes and a tough comparison based on the volume side, we managed to reach the prior year profitability level with sales of EUR 3.6 billion in Q4. We achieved an adjusted EBIT margin of 13.9%, supported once again by healthy price/mix of 3.4% which underlines the robustness of our business. Price/mix was once more driven by many areas, product, channel and regional mix. A mid-double-digit million euro tailwind also came from lower raw material prices. In addition, first positive impact from our portfolio measures started to provide a slight support to our adjusted EBIT margin as well. Slide 10. If we look at the regional picture on Slide 10, the underlying dynamics of our business become even clearer. We saw mixed volume trends. Positive support on the PLT side came mainly out of APAC and the U.S. and Canada, but overall, the Americas remained a challenging environment for us, particularly in the truck tire business. However, positive price/mix as well as the passenger car tire volumes in the U.S. and Canada helped to stabilize our results even though on a comparably low level given the headwinds from tariffs and FX. In EMEA, negative volumes were fully offset by strong price/mix effects, also supported by a positive development in truck tires. This resulted in an organic sales growth of 1.1%. Also APAC delivered strong organic growth, driven by a recovery in both OE and replacement passenger car tires in China. This more than compensated for the loss of volumes following the closure of the truck tire business in the region. In addition, a healthy price/mix performance in the region was able to substantially offset the significant foreign exchange headwinds, which mainly came from the Chinese renminbi as well as the Australian dollar. On Slide 11, you can see the result of the ongoing mix improvement and increasing UHP share. We managed to increase the share for both Continental branded tires as well as for our broader passenger car tire portfolio. Across all brands, the UHP share now stands at 55%, up 3 percentage points compared to last year. Remaining figures were rather resilient and did not change much compared to last year, perfectly reflecting our business model. Replacement tires accounted once again for 76% of total sales. Continental branded tires represented 77% of passenger car tire sales and also our regional mix did not change materially compared to '24. Let me now turn to ContiTech on Slide 12. ContiTech continued to be impacted from a delay in market recovery. In the fourth quarter, sales declined organically by 5.2%, reflecting weak demand in the automotive business and also ongoing industrial headwinds such as the conveyor belt business in China and the North American distribution and off-highway business. Customer caution and the deferral of business orders into '26 further constrained our results towards year-end, something we saw starting to partially reverse already in Q1. The adjusted EBIT margin before IFRS 5 came in at 2% as a result, impacted by the discussed unfavorable mix as well as earlier incurred stand-alone costs coming from a faster-than-anticipated progress in the transformation and carve-out related one-offs. Very important to mention ContiTech has defined a lot of self-help measures which are firmly in place and are expected to materialize over the course of 2026. This will help to further strengthen our Industrial business, which delivered sales of EUR 4.4 billion and an adjusted EBIT margin of 7.1% in 2025. Turning now to our cash flow on Slide 13. Free cash flow in the fourth quarter was particularly strong. This was driven by the less seasonal pattern in CapEx throughout the year, disciplined cost management, and as always, on the Tire side, a strong cash inflow from working capital in Q4, mainly driven from the winter tire business in Europe. And just some further comments on the bridge. The EBITDA decline year-on-year was mainly due to noncash restructuring and transformation costs. You can see the offsetting effects in the other line. Slide 14 highlights the positive impact of our strong cash generation on the balance sheet. Working capital followed. As I said, its typical seasonal pattern in Q4, clearly decreasing after a buildup in the previous quarters. The change compared to prior year, however, is mainly driven by the accounting change for OESL. Their assets and liabilities are now classified as held for sale, therefore, no longer part of our working capital. Without this, it would have remained broadly unchanged compared with the prior year. As a result of the Q4 cash flow, our net debt declined in the first quarter, resulting in a pro forma leverage ratio of around 2.0 fully in line with our expectations that we have already communicated during the 2025 Capital Market Day. Let me now turn to our market outlook for '26 on Slide 15. This year, light vehicle production is currently forecasted to remain below last year's level in our key markets in Europe and North America and even in China, resulting in our expectation of slight decline in OE production worldwide. Passenger car replacement market forecast, however, hint towards minor growth well across all regions. And this is also true for the truck business in Europe. In the U.S., however, we're seeing a bit more mixed picture, slight rebound in commercial vehicle production throughout the year against a very weak comps of '25 should have an adverse impact on the truck replacement business, however, in that region. Overall, we are expecting no growth to very low growth environment for tires. ContiTech industrial production is expected to remain mixed. On Europe, we expect a gradual growth following periods of stagnation, while the American market remains highly volatile due to U.S. tariff measures and ongoing geopolitical tensions. Slide 16, all of this translates into our guidance for 2026, which is summarized now. On this page, it includes currently effective tariffs and is based on foreign exchange rate also at current levels. And let's be very clear, it does not yet reflect potential changes to input costs or other impacts of the recent geopolitical tensions with regard to Iran and the Middle East. For the group, we expect sales of around EUR 17.3 billion to EUR 18.9 billion with an adjusted EBIT margin between 11% and 12.5%. This is, of course, mainly coming from Tires, where we expect sales of EUR 13.2 billion to EUR 14.2 billion and an adjusted EBIT margin in the range of 13% to 14.5%. This broad range just as for ContiTech and the group is mainly a result of the uncertainty we're seeing from the volatility in currency development, where particularly the U.S. dollar is trending into or has been trending into an unfavorable direction, the uncertain volume development also driven by the changes in tariffs and geopolitics as well as a net impact from raw material in 2026. For ContiTech, sales are expected to come in between EUR 4.2 billion and EUR 4.8 billion with margins of 7% to 8.5%. This does include the general result of OESL, which stood at EUR 117 million sales, slightly above breakeven profitability. Adjusted free cash flow is expected to be around EUR 0.8 billion to EUR 1.2 billion. This includes CapEx of around 7%, mainly driven by ongoing investments into our Tires business. PPA is going to be significantly down to around EUR 25 million per year, mainly from ContiTech. Other special effects should amount to roughly EUR 250 million, already including the deconsolidation effect from OESL as well as the expected costs associated with the sale of ContiTech. And in the current setup of Continental, we should currently anticipate to see a slightly decreased tax rate of around 24%, given the change in our country mix compared to our previous setup, including AUMOVIO. And with that, I would like to hand over now the rest of the time to you. So operator, could you please open the line for the Q&A? Operator: [Operator Instructions] The first question comes from Akshat Kacker of JPMorgan. Akshat Kacker: Akshat from JPMorgan. I have 3 questions, please. The first one on ContiTech margins. You mentioned, excluding OESL, the business was at 7% margins roughly in 2025, 4.6% margins in Q4. Could you just give us some more details in terms of the start of the year? How should we think about margins in Q1? And if you could help us think about the second half margin profile, how much improvement should we expect based on the cost actions that you have taken in this division last year? That's the first question. The second one is a quick one on the sales process. So the announcements last month said that the first round of bids were expected in March. Could you confirm if the process is on track? And what is the time line from here, please? And the last one on the tire business. You have talked about some kind of pressure in the Americas, which is similar to what we've heard from your peers in terms of higher inventories and sell outcomes in that region. Could you talk about overall pricing for Conti in that market? You were successful in increasing prices against tariffs last year? Do you see those price increases sticking in the U.S. market? Roland Welzbacher: All right. Akshat, I'm going to take the first one. We thought about how to put more flavor on the Q1 expectations on ContiTech, and it's a little bit difficult because there is no Q1 '25 we can refer to. So what we would like to do instead is guide you a little bit compared to Q4. So in order to allow for like-for-like comparison, excluding OESL, we're focusing on the sequential development. In the last 3 months, we still did not see a material improvement in the industrial sector, even expecting volumes to be slightly down in Q1. The anticipated mix improvements I talked about earlier, however, should help to compensate for most of the lost volume on both the top and the bottom line. FX should presumably not be a factor sequentially. In addition, we're expecting a low to mid-double-digit contribution from not repeating negative one-offs in Q4 as well as some onetime safeguarding measures in Q1, helping the bottom line to clearly improve versus Q4. Nevertheless, we still most likely will not be able to reach the lower end of our EBIT guidance for the full year already in Q1. This is true for the industrial business itself, but also because we see the EUR 170 million January sales contribution from OESL just above breakeven, also going into our Q1 results, given the closing only happened beginning of February. Now we talked about the second half. So despite the fact that the margin is not yet in the guidance range, the year is starting as planned. So we see stepwise improvements in the upcoming quarters, also supported by continued safeguarding and restructuring measures, which we have already put in place and where we expect benefits coming through, specifically in the second half. So number two, M&A process. We started the M&A process. We reached out to investors already in December and then started the full-pron process. In Jan end indeed, we're expecting offers to come in, in March. Now it remains to be seen right now, we're on track in terms of timing, and we still believe we can close the transaction within the year 2026. Christian Kotz: Yes. So let me jump in then here. Akshat, by the way, from my side, as well. Just to add in maybe on point number two and also in anticipation of maybe a potential follow-up question. So we also don't really see that the current military conflict in the Middle East is impacting our process to sell ContiTech. So if this is a question you might have or concern you might have we really don't see an impact for the time being. And to your third point, Tire business in the U.S., first of all, let me differentiate between the 2, let me say, burdens or the pressure points. One country-specific pressure points and the other one on the other side are the more generic industry pressure points. So the country-specific pressure points are very much related to the fact, as you all know, we are importing quite a number of tires from Europe. So our business was under pressure, is under pressure in the U.S. simply due to FX. So producing in euro and selling in dollar is obviously much less interesting and attractive as it is used to be. And number 2, the tariffs are impacting us potentially a little stronger than the one or the other competitor. Those are the country-specific pressure points, which put the burden on our results and are challenging us. Let me say, the second part are then more the generic industry pressure points. So the weak market demand plus the high pressure from the imports. Are we able to offset those impacts? I mean I'm not going to comment on pricing stand-alone. Clearly, we continue to focus on finding the sweet spot in terms of price mix and volume and being still underrepresented, as you know, in the U.S., mainly in the U.S. and Canada. We do believe we have good opportunities to find the sweet spot and finding ways offsetting these negative pain points, let me say, as good as we can. An environment, which is definitely specifically in Q1 still challenging because you compare in Q1 than still last year quarter without tariffs versus this year, a quarter with tariffs, last year, a quarter with exchange rates, which were still favorable versus this year, a quarter with very unfavorable exchange rate effects. So challenges, specifically in the U.S. in Q2 and Q1, but optimistic to sequentially improve during the course of the year. Operator: Then we are moving on to the next question. Next question comes from Christoph Laskawi from Deutsche Bank. Christoph Laskawi: The first one on the exposure to energy costs, please. We've seen, obviously, oil and gas prices spiking this week and thinking back to end of '22 when the debate around the inflation around gas prices, in particular, back then, it would be great to get a refresher of roughly the euro amount exposure as a percent of sales in absolute terms in your sourcing? And also in general, how you manage to pass these on to customers potentially in the past? And also how you source these essentially oil and gas for heating in the production, et cetera? Is it hedged throughout the year? Or are you closely aligned to spot? And then the second question on more shorter-term tires, please. One of your competitors was very negative on volumes in Q1 [indiscernible] said they don't share that. Could you comment too? Do you see the market down 10% or is it better? It's probably fair to assume volumes down in Q1. Could you comment on inventories and how you generally see entire Q1 trading? And if we should assume you are in the guidance range or would be rather on the door and if you can make a comment at this point at all? Roland Welzbacher: All right, Christoph, it's Roland here. Let me take the first one. Your questions about the energy cost. Let me approach this from a slightly different angle. So across Continental and in each sector, basically, tires kind of take energy-related purchasing accounted to clearly below 5% of the total ticket mix of the total purchasing volume, of which natural gas and electricity account for roughly 75%. So 5% of purchasing is energy, 75% of the 5% is the natural gas and electricity. Now we have seen gas prices doubling in the last couple of days. So it remains to be seen whether this higher level will then be sustainable or not? That's a key question for us with regard to the impact on our financials, obviously. The same is true for oil prices. So currently, we see an increased level of oil prices and it remains to be seen for how long the crisis continues and whether we see it a long period of time, high oil price levels, which will then have, of course, an impact on our financials. And again, same as you remember last time, it was tariffs and FX. We put in mitigation measures in place, same here, if we would see an elevated level now coming from the crisis going into our raw material and in energy prices. And obviously, we would look for offsetting measures on the cost side as well as market related. And usually, part of is covered with indexation clauses in certain contracts with customers and a certain part is not. Before we turn to Christian for the volumes, let me pick up your last question on a little bit more flavor in Q1 tires in general. What we expect now is indeed that volumes remain weak. We have seen that already in Jan and in Feb. To some extent, we believe March is going to be better, but still volumes will be somewhat disappointing. But we also see price/mix coming in strong and potentially offset the volume negative. And what we see and already anticipated because we're in Q1 now and Q1 last year was a completely different environment in terms of FX that we have strong headwind on the FX side. Now going into a P&L. In Q1, the U.S. dollar has slightly come down a little bit over the last 2 days. We don't know whether this is going to be sustainable or even continues and would have a slightly offsetting effect that remains to be seen. But for now, we expect this to be, again, a drag on our Q1 financials. You know that we are looking forward for the raw material tailwinds we have seen in Q4 continuing now into Q1. We have slightly offsetting effect potentially from reevaluation of stocks if the raw materials have declined now our period of time. On the tariff side, again, the cross effect is similar to Q4. And you know that wages and other input costs, logistics costs were also going up. Again, we have an inflation effect and, of course, a negative consequence then on our financials. Christian Kotz: Yes. I mean, Roland, obviously, a very comprehensive answer. Let me just add 1 or 2 things maybe. So Christoph, you asked specifically for the volumes, inventory levels, I think Roland already alluded to the fact that, yes, we believe Q1 from a volume standpoint, probably below last year for various reasons, the OE business is not starting off strong. You see probably also the OE volumes in China since quite a while, maybe not as strongly developing as we used to see it during the course of last year. We had some special effects. So the winter storms in the U.S. did not have -- to have a strong start into the year. We had, as you all know, also in Europe, pretty challenging, let me say, weather conditions which are not necessarily good for sell-in. Nevertheless, we do believe that these conditions have been good or are good for the total year because it helps our customers to sell off inventory. So we believe the inventories are trending towards a more favorable situation. So all in all, and I tried to explain this earlier, most probably -- and we believe Q1 will be the most challenging quarter of this year we are facing. Is it in the guidance range or without the guidance range, to be honest, it's too early to tell. I mean you also know that even in Q1, the seasonality is pretty strong. March is the dominating months within this first quarter. So it depends very much now on how March will come in plus many other effects. But yes, Q1 is the most challenging quarter from today's perspective. Christoph Laskawi: And if I might sneak in 1 follow-up just on the tire bridge, obviously, because it's discussed a lot currently. On your assumption for the positive raw materials, is it fair to assume around mid-double digits, mid- to high-double digits is factored in the guide as a positive? Or is it smaller than that? Roland Welzbacher: I would say mid to high, pretty much our expectation. As I said, we're still trying to understand some reevaluation effects on the stock side, which already offset this, but I would say this is also broadly in line with our expectation. Operator: The next question comes Ross MacDonald of Citi. Ross MacDonald: It's Ross MacDonald at Citi. I have 3 questions, please. The first one, just linked to Christoph's question around 2022, and obviously, the experience around some of the shocks we saw back then. Obviously, this is a different conflict. But one thing that stood out back in 2022 for Conti was the impact of marine shipping rates. I know these haven't been rising too much, but can you maybe speak around how hedged you are for the next 12 months on the marine shipping side, just in case we see any inflation in spot rates on the logistics piece? The second one on FX, on the tire bridge. Could you maybe give us your assumptions around the USD rate you're assuming in the bridge there and potentially the drop-through from FX to EBIT that we should assume from the modeling side? And then a final one, just again a modeling question. On the other/consolidation line, I think it dropped to a very low level in Q4, how should we model that for 2026, please, on revenues and EBIT for new leaner Conti? Roland Welzbacher: All right. Let me start with the FX question. First of all, the drop rate in '26 will not be so much different from the drop rate in '25. It's usually between 40% and 50%. On the -- in Q1, FX will be substantial the effect because we started the U.S. dollar last year at [ 104 ]. And then in Q1, it was still pretty strong and then it got a lot weaker. And now compared to Q1 '26 with Q1 '25, we expect a significant FX headwinds going into P&L, probably more significant to what we have seen in Q4 last year. On the consolidation side, I'm not sure whether I understood. Christian Kotz: Yes. behavior, let me just add on that. I think what we've seen in Q4 on the other or holding line slightly or very low amount mainly to a revaluation of some accruals as well as some transformation-related charges that we could make. So this is nothing that we would see on a sustainable level. So if you would look into our 2026 assumptions, we are rather looking into, let's say, EUR 150 million-ish cost item on the holding side, obviously, very much depending on how stand-alone costs were developed at which point we will look into stand-alone cost. But I think this should be a fair ballpark for you to look at. Roland Welzbacher: Maybe then some -- just one -- some comments and Ross, by the way, I -- 1 or 2 comments on your first question, especially with regard to logistic costs and the potential impact. So obviously, as you all know, the region is not necessarily primarily relevant for us. We generate less than 1% of sales in that region. But the direct impact or the indirect impact on our P&L via raw material cost and logistics and/or logistic cost is what we need to obviously take a very close look. And let me say, evaluate and supervise the situation carefully. I mean, as you said, we don't necessarily see a jump in the energy costs or the shipping costs yet. I think it is very much dependent, to be honest. So the Strait of Hormuz is not relevant here. It's a question of whether you see an impact on to the Suez canal. So longer delivery times, supply versus demand evaluation or development, which might impact us. But this can also be besides being a challenge at a potential negative cost impact, it could also be a significant opportunity, because for the ones producing in the market for the market and this is what we have done and concentrated on since so many years, we are for sure much less exposed through those logistic costs that many other, especially the big importers. So yes, it's an area which can create besides material costs, second burden -- cost burden. On the other side, we should be like some others significantly underexposed to these costs, and that can also, therefore, drive an opportunity and not just a challenge. Operator: [Operator Instructions] The next question is from Harry Martin of Bernstein. Harry Martin: The first one, I just wanted to push a little bit more on the ContiTech margin. If I look at Slide 15, it actually shows industrial production was up in every region this year, but the margins ex-OESL have kept coming down. So I mean what really gives the conviction that you can have the step-up in margin in 2026, when as you point out, the industrial production growth isn't a significant accelerator and maybe just some color on which are the really high-margin regions or product lines that need to come back for the new guidance to be hit. And then on the tire side, I just wanted to ask the expectation for volumes to be around flat for the full year. That's probably a touch below some of the peers that have reported. We've heard from 2 of the largest players in the industry, they're going to have a big step-up in new product launches this year versus last year. Perhaps is that why they expect some volume share gain? Or do you have a similar step-up in new products as well? Roland Welzbacher: Do you want to start with the first one? Roland here. Let me take the ContiTech question. Different Q1 was the expectation, '26. So if we look at what didn't went well or was remained pretty soft on ContiTech in Q4 in terms of market segments that was... Operator: So ladies and gentlemen, here's the operator, the sound seems to be missing. We seem to have some sort of issues here. Dear speakers, can you hear me? Are you still there? Roland Welzbacher: Maybe this works on the backup line, no? Operator: Yes, this works perfect. Roland Welzbacher: Sorry, we lost the connection somehow. And I don't know, Harry, where did you lose us? Harry Martin: Right at the beginning of your answer. Roland Welzbacher: Of my answer. So you got -- correct? Harry Martin: No, I think it dropped at the very beginning when Roland started talking about which segments were the weakness in Q4. Roland Welzbacher: Let me repeat, no problem at all. So I said -- the question was about Q4 and then what sector specifically would need to increase in the '26 in order to bring us to the point where we wanted to be. So the industrial business is burdened in most of the business areas, so ContiTech in Q4, that is energy, construction, mining, auto aftermarket. And if you look specifically, which needs to turn around, those who were specifically weak in Q4, that is APAC, particularly China, continue to be difficult. The American Off-Highway business remains soft as well and the distribution business, which is a high-margin business for us, also experienced unexpected weaknesses towards the end of the year. And this needs to rebound. So we first signs talking to customers, the confidence is growing. We also see first light at the end of the tunnel, looking at our order book in '26, although Jan and Feb remained also somehow soft. We see first signs that are going to improve, and it will be a stepwise process. Christian Kotz: Okay. And then I was trying to comment on your second question with regards to the volume expectations. So first, yes, we basically assume stable volumes for us year-over-year on the PLT side, but basically also on the truck side with significant nuances, so to speak, region by region, segment by segment. And yes, we are also launching new products in order to be able to at least defend our market share or gain market shares. So if markets do recover stronger than what we anticipate and what we have explained. We do believe we might also have then some volume chances. And just to highlight some examples, we are in process of just launching in the U.S. our very first all-weather tire, the Secure Contact AW, where we have very nice preorder book and where we are cautious in terms of our forecast. So we might have some opportunities, but we are also launching new truck tires, bus tires, like the Efficient Pro in Europe, which is clearly outperforming the industry on the commercial vehicle OE business side or we are investing significantly in terms of size range, not only in Conti, but also in all of our second and third line brands in the area of UHP tires. So yes, we are cautious. I mean, we have seen in the last couple of years that being too optimistic on volume side has proven to be a challenge, and that's why we consciously decided to take a more conservative approach. If markets do recover stronger than what we account for, we believe we are well prepared as far as our product portfolio, our product performance is concerned to also benefit then from a potentially stronger rebound of the market. And apologies for the technical challenges. Operator: So dear ladies and gentlemen, at the moment, there are no further questions in the queue. But before that, I have seen a question shortly appearing from Monica Bosio. [Operator Instructions] I see a follow-up from Ross McDonald, Citi here. Ross MacDonald: I'll make most of this opportunity to ask 2 follow-up questions. Maybe a longer-term question, given you've just taken over responsibilities as CEO. Could you maybe update us on your strategic priorities? Obviously, ContiTech sale and navigating this geopolitical uncertainty I imagine is the key focus maybe longer term, if you can give some words on what stamp you want to leave on the business and how we should think about the group segments, whether you would look at inorganic growth, maybe M&A in some specialty categories we'd be interested on the long-term vision. I know we've just had the CMD last year, but potentially an update there? And then secondly, linked to the ContiTech sale, you've obviously been very generous with the dividend this year. But how should we think about as and when that deal is done, how you think about the split between de-gearing special dividend, if applicable, and buybacks? Those would be my 2 questions. Christian Kotz: Yes. Okay. Thank you, Ross. Let me take the first one, and then we can probably share the second one. Roland and I saw more on the long-term side. I mean, as you know, I'm new in the CEO role, but I'm not new in the tire area. So you will not see significant surprises for me how I want to drive and how I believe we should develop the tire business. So first priority, obviously, now is to successfully complete the transformation. And we all know these are challenging tasks. We are very, to a certain extent, proud that we accomplished everything we have accomplished in 2025, even though we only had really very limited time. So successfully spinning AUMOVIO successfully now closing the OESL gives us really confidence that we can close this transformation during the course of 2026. Then obviously, a second priority, which goes in parallel is to further optimize, let me say, healthiness -- the organic healthiness of our tire business which partly goes also into your second question. So how can we optimize and yes, further improve our balance sheet, but how can we also further optimize our organic operational performance? And there, clearly, the focus is on, as we always mentioned and as we explained also at the Capital Markets Day, on the one side, the very consistent and consequent focus on the UHP tire development and the business development where we still see lots of opportunities, you will see us to continue to consequently focus on our portfolio. We have done quite some steps also there during the course of last year. So as you know, we've exited our agricultural business. We have closed 2 facilities, truck tire production in India and our facility in Malaysia. We have optimized -- further optimized our retail footprint with some significant adjustments. We're in process of closing our textile production in the U.S., and you will see us to do some further steps in order to optimize, let me say, our operational performance without any inorganic shape. And then third, and I can only then repeat what I said in the past. We do believe at the end of this transition, we are then a very, very healthy tire company, very solidly financed with strong operational performance, this should bring us into the situation that in case consolidation takes place, in case there are reasonable and justifiable inorganic growth opportunities we should be ready to be able to participate, and we would actively look for opportunities. But as I mentioned in the past and I can only repeat myself, it needs to make financial sense. It needs to be complementary and we will see whether those opportunities will arise, yes or no. But clear, we want to be fit for that and ready for opportunities in case they might arise. So then your second question was on the utilization of the potential proceeds. I mean before Roland chips in and this relates and also to what I said earlier, obviously, we were partly in line with what we communicated at the Capital Markets Day. We will use these proceeds really in 2 ways: one, to improve our balance sheet and second, to also let our shareholders participate. So how we do this and which shape, we do this, we will need to decide. Roland, anything to add there from your side? Roland Welzbacher: Not really much to add just probably in terms of timing. First of all, what we need in order to approach this decision-making process is more visibility on the potential proceeds of the ContiTech sale. And then we can better assess what the right way and right format would be. That's all. Christian Kotz: And I hope the voice quality is okay because we are really working with... Operator: I can hear you quite well. Christian Kotz: Is it okay? Good. Good to know. Operator: Yes, yes, we can hear you very well. The next question is from Monica Bosio, Intesa Sanpaolo. Monica Bosio: Yes. Sorry, maybe I lost a part of the speech. But I just wanted to ask if you -- so the company is expecting tailwinds in raw materials obviously, now the situation could change. But as things are, can you quantify the raw material tailwinds? And I was just wondering if you have a sort of sensitivity in terms of price -- petrol price per barrel on the raw material side, in general. And my second question is on the PLT tires, the shares of the ultra high performance tires you are guiding for flat volumes, both in passenger cars and trucks, but can you please just give us some flavor on the volume trend in the ultra high performance tires maybe 1%, 2% something similar. And what do you expect to gain market share the most in terms of geographical area if I may ask? Christian Kotz: So where do we start? I can start maybe from the back. On the UHP side, so obviously, you are right. We -- and even though we count on that market, we do believe that we have significant UHP growth opportunities. We believe the markets will grow annually by roughly 8% CAGR. That's what we assume in terms of global UHP growth. And obviously, we don't want to lose market share. We want to rather gain market share. But this gives you -- even if we would only grow in line with the market, the growth rates we should accomplish in the area of UHP tires and the share of UHP tires of our total business, I think this was in the presentation all the details are in the 55% for our total portfolio, I think, 65% or 62%, sorry, of our Continental branded business. And this should further significantly increase. Market share gains besides UHP, I mean, you know, we generated 53% of our total business last year in the EMEA region, 33% in Americas and 14% in APAC. So obviously, it will be probably difficult to gain relevant market shares in the EMEA region, where we are definitely more in the defending mode, whereas we have significant growth opportunities with the market, but beyond the market by gaining market share in the Americas, focusing on North America and in Asia, given the size of the market relative to the share of our total business, I think it becomes very clear that we have the significant growth opportunities. Roland Welzbacher: Let me continue, Monica, Roland here with your question on raw mat and oil price and assumptions and so on. So let me start with the raw mat impact. As I said earlier, in Q1, we're expecting a mid- to high-double-digit euro million amount then probably partially offset by some revaluation effect on the stocks. For the full year, then obviously, it's going to fade out substantially in the second half. So for the full year, it would still be a triple-digit euro million amount, the base assumption. So big plus in the first half and then leveling out in the second half. Now that was before Iran. That's a pre-Iran situation. So also on the oil prices, we anticipated that basically the level of Jan and Feb will basically continue throughout the year. It remains to be seen now to what level and which level is sustainable throughout the year '26. And if it would be a substantially higher level than we initially assumed. And obviously, we have a lot of less tailwind on the raw material side. And then we would also have to look into measures in order to bring down costs in other areas and also then look at market-based mitigation measures like we did with tariffs and FX last year. Does that answer your question? Monica Bosio: Okay. Yes. Operator: The last question for today, a follow-up from Akshat Kacker again. Akshat Kacker: Akshat from JPMorgan. A couple of quick follow-ups. The first one on the free cash flow bridge. Could you just share your expectations around the different elements? You clearly expect EBITDA to improve year-over-year, absolute CapEx is expected to be higher, so that might be an offset. Do you see any room for working capital optimization or improvement with your free cash flow guide for 2026? That's the first one. And the second one, a follow-up on the tire bridge. You talk about business inflation being partly offset by portfolio measures. Could you just give us some more details on expected business inflation this year and how much of that can be offset? Roland Welzbacher: Yes. Akshat -- let me -- Roland here. Let me take the first question on the cash flow. I think you would expect some improvement on the EBITDA side, obviously, because this must be our target for this year to improve earnings and we have all the right measures in place to be able to do that. CapEx, I would say, slightly increased in terms of percentage on net sales as well as an absolute amount, not a big step but slightly increased. And then on working capital side, I would not see much room for movement or contribution. So that's my view on cash flow. And your second question? Christian Kotz: I think if I got it right, Akshat, you asked for how much of the general -- I mean, in my words, how much of the general inflation we feel we can offset with portfolio measures, more or less, was this the question? Akshat Kacker: Yes, please. Christian Kotz: Okay. So I mean if you take a look at 2025 without going into the details, we had obviously some -- I mean we had the general inflation effect. And we had some on the cost side, especially on the period expense side. And we had some, let me say, compensating effects. One is, as much as FX overall hurts. It obviously helps a little bit to offset and compensate the inflation in euros. And the second part is the portfolio measures. And we more or less for 2025 kept, therefore, our costs in euros -- the fixed costs roughly stable. Very, very little inflation. So dependent on how things will develop in 2026, we definitely have the intent to get to, hopefully, similar levels but it remains to be seen, obviously, on the one side, what happens to the FX. So it helps us on the cost side. It hurts us on the sales side. If I can wish, then I definitely wish for a stronger dollar for the bottom line. And second part is how much of the pending portfolio measures we are working on. And you know, for example, we are working on trying to sell our retail operations in France, which would have a pretty significant impact depending on how much progress we can accomplish in all of those projects. Intent continues to be to offset at best, all of the inflationary effects, but too early to quantify now. Operator: Thank you all so very much for my side, ladies and gentlemen. As there are no questions in the queue, I am closing the Q&A session and handing the floor back over to your host. Max Westmeyer: Yes. Thank you very much, spot on in terms of timing. Thank you all for participating in today's call. And sorry again for the technical difficulties. As always, we, on the Continental Investor Relations site are available, should you have any follow-up questions. And as I mentioned already, our annual report with all the details around 2025 will be published on March 19. With that, we conclude today's call. Thank you very much, and goodbye.
Operator: Good day, ladies and gentlemen, and welcome to the Fortitude Gold's 2025 Year-End Conference Call. [Operator Instructions] And please note, this conference is being recorded. I will now turn the conference over to your host, Mr. Jason Reid, CEO and President of Fortitude Gold. Sir, you may begin. Jason Reid: Great. Thank you, sir. Good morning, everyone, and thank you for joining Fortitude Gold Corp's 2025 Year-end Conference Call. Following my extended comments and associated presentation for those who joined online, we will have a question-and-answer period. Joining me on the call today for the Q&A portion will be Ms. Janet Turner, our Chief Financial Officer. If you have the ability to join the web version, you will want to see the exciting exploration potential we have uncovered in numerous areas. I highly suggest you join the web version of this call. Let me remind everyone that certain statements made on this call are not historical facts and are considered forward-looking statements. These statements are subject to numerous risks and uncertainties as described in our annual report on Form 10-K and other SEC filings, which could cause our actual results to differ materially from those expressed in or implied by our comments. Forward-looking statements in the earnings release that we issued yesterday, along with the comments on this call, are made only as of today, March 4, 2026, and we undertake no obligation to publicly update any of these forward-looking statements as actual events unfold. You can find a reconciliation of non-GAAP financial measures referred to in our remarks in our Form 10-K filed with the SEC for the year-end December 31, 2025. 2025 was a year of overcoming challenges, including the hangover from the long and arduous permit backlogs caused by the Biden administration and its anti-mining BLM. That backlog was being addressed near year-end 2025 and early 2026, when we were issued our new mine permits for County Line and Scarlet South under the new Trump administration. 2025 year-end results included $18.4 million net sales, $4.7 million cash balance on December 31, 2025, 5,236 gold ounces, 32,809 silver ounces produced, $29.5 million working capital at December 31, 2025, $5.8 million dividends paid, $0.4 million net income, $10 million mine gross profit, $6.3 million exploration expenditures, 1,104 total cash after by-product credits per gold ounce sold and $1,697 per ounce total all-in sustaining cost and 611 gold ounce rounds or bullion at December 31, 2025. Throughout 2025, we took decisive action to protect the company in the face of prolonged federal permitting delays and the regulatory overhang caused by the Biden administration that materially disrupted our operating time line. We reduced our dividend by 75%. We suspended all exploration drill programs. We reduced the exploration team. We relocated to a significantly more modest office space in South Colorado Springs and eliminated company-wide bonuses. Overcoming challenges included chasing mineralization deep in the bottom of the Isabella Pearl open pit to stay in business as a mining company. This required us to deplete our cash reserves for the better part of 2025 by removing waste overburden to access Pearl deep mineralization. This program was never previously contemplated, but became a possible option as gold climbed above $3,000 per ounce at that time. The alternative would have been to stop mining and along with that, most all other operations while we continue to wait for the permit backlog to be cleared by Trump. As I stated last year, a vote for Harris would have continued the erosion of the company's viability and a clear vote against a shareholders' financial interest in the company. Shareholders should keep that in mind on elections going forward and decide if they want U.S.-based natural resource companies and our company to succeed or not. Votes matter. Had Trump not been elected, it would be questionable what the company would look like today and what our future optionality would be at this point. Fortunately, under the new Trump administration, we were granted not only our County Line permits in September of 2025, but more recently, our Scarlet South mine permits as well. In addition, we waited for 4 years under Biden to be connected to the Nevada power grid, but to no avail. Early in the Trump administration as he addressed the energy backlog first, we were granted out of the blue and without prodding our power grid permit for the Isabella Pearl operation. What a commentary on how not only unproductive and inefficient but obstructionist the Biden administration was as it opposed U.S. business, U.S. mining and U.S. prosperity. As part of our broader cost reduction and efficiency initiatives, the company terminated its mine contract during September 2025 following a comprehensive review of operating economics. This marked a strategic transition to an owner-operator model, bringing our mining fleet and workforce in-house. With the anticipated increase in tonnage from operating 3 separate mines, we expect to realize meaningful economies of scale. By utilizing our own personnel and equipment, we project a significant reduction in per ton mining costs and improved operational control. 2025 was the most challenging year in the company's history. But thankfully, with the new administration in place and new mine permits being issued, we not only have a viable but a very exciting path forward. Our goal is to obtain as many additional permits as possible under the Trump administration in case the American people vote back in a Biden-Harris anti-business anti-mining administration in the future. To underscore the differences in administrations and how Trump is pro-mining, he just executed on arguably the largest revision to the NEPA permitting process in history. I will have more on the NEPA update at the end of this call. I feel like we lost 4 years of the company's business plan during those dark Biden era years and permit backlog. We got bucked off our horse, so to speak, but we have now climbed back on because of Trump. To help us get back on our feet, subsequent to year-end and in February of 2026, we made the strategic decision to raise capital by selling a limited amount of equity. We sold in a private placement 2.5 million shares of restricted stock at a discount price of $4.75 for proceeds of $12 million. The restricted shares must be held by the placement participants for a minimum of 6 months. We welcome our new shareholders as well as existing ones that participated in the placement. Post placement, the company has only 26.8 million shares outstanding as a producer operating multiple mines. Sometimes dilution is warranted. This was one of those times. In an industry where junior explorers have hundreds of millions of shares outstanding and many producers have 0.5 billion or over 1 billion shares outstanding, we proudly placed our tight capital structure against any others in the mining industry. Private placement use of proceeds will help advance our 2 new permitted mines in production, allowing us to reengage our exploration programs immediately and pursue additional mine permits for future longevity. Had we not raised capital, it was questionable if we would have been able to reengage our drill programs at all in 2026. With these current record-setting gold prices and the long lead times of this industry, the sooner the company can increase production and increase mine life as driving catalysts that would help the company see firmly back on the horse moving forward to maximize shareholder value. There were a few silver linings that came out of the challenging 2025 year. With our drill budgets cut, our geology team focused on solid grassroots, boots on the ground mapping and rock chip sampling programs. Areas of focus included both the southeast end of our Isabella Pearl trend near our operations and our East Camp Douglas property. The Southeast end of our Isabella Pearl trend is where we just began mining Scarlet South. This slide for those participating online, shows a great image of the Isabella Pearl mine processing facility, Scarlet South, Scarlet North from up on top of Prospect Mountain. Our Isabella Pearl trend is filled with geologic structures mapped at surface and high-grade rock chip surface sampled gold. These boots on the ground geologic programs identified 4 areas near the Isabella Pearl deposit on the east end of our Isabella Pearl trend that any one of them could be another Isabella Pearl deposit. I'm personally convinced given the historic Santa Fe mine south of our trend and our Isabella Pearl deposit on trend and our lockup of the 10 kilometers of this mineralized trend going to the Northwest that there will be another Isabella Pearl or Santa Fe as deposit to be discovered. We just want to be the company who finds them. On the right of this map shows our focus on the very southeast end of our trend. In the map on the left, the map's fault structures are noted as blue lines. Note the fault structures predominantly run in a Northwest direction along our Northwest mineralized trend. Many structures are associated with high-grade gold samples noted by the yellow and orange dots. We drew a blue circle around our Isabella Pearl mine at the bottom of this map to show its spatial area where we have been mining that deposit into its sixth year. We then superimposed that same shape for demonstration purposes on 4 nearby targets that have both the spatial, structural and gold potential to possibly be another Isabella Pearl. One or several of these could be our next sizable deposit. Even if none of them turn out to be the vast vein structures, vein swarms and gold samples on our trend speak to the potential that there are more Isabella Pearl deposits on trend. Our boots on the ground geologic efforts during the Biden permit backlog have generated these new targets. But let's focus for the moment on one particular target, the Prospect Mountain area. On this map, we added topo lines that demonstrate a mineralized vertical extent of 320 feet. Along this entire vertical extent, we can pull high-grade gold rock chip samples from the top of the mountain to its thinning down into the valley. That depth of vertical extent is analogous to how deep the Isabella Pearl deposits oxide gold horizon is. This target has the surface spatial structural vertical mineralized horizon and high-grade gold components similar to Isabella Pearl and mining down on this mountain topographically could provide far less waste removal than a pit layback on flat ground if it turns out to be a deposit. In addition, a small silica lithocap similar to the one on top of Isabella Pearl before we began mining it is also present on Prospect Mountain. This is yet another touch point that the Prospect Mountain area has many of the earmarks to possibly be the next Isabella Pearl. This excellent geologic mapping and sampling program was a silver lining that came out of maneuvering through the Biden era permit backlog. Back when we were drilling our Scarlet North target, we ended our last drill program in gold before the Biden administration's BLM chose not to grant us another drill permit under an NOI to keep drilling. Under this new administration, are there any guesses if we can drill this area again? We now have in hand another NOI to keep drilling this area, and we are moving to bring a drill here as soon as possible as part of the use of proceeds from the raise. Scarlet North could also be another Isabella Pearl, and both Scarlet South and Scarlet North have the potential to expand and perhaps even connect. We are also pursuing an exploration EA along the greater Isabella Pearl trend, which would allow us to explore far more area than the typical 5-acre NOI and explore larger areas more efficiently. This brings us to our East Camp Douglas property. Our boots on the ground exploration initiative of mapping and sampling work have provided us with an increased understanding of the geologic model. This vast district size property with its southern mineralized lithocap and northern high-grade gold veins has potential to host one of one or more deposits and perhaps a major discovery. On March 2, 2026, we announced the signing of a strategic $40 million joint venture on East Camp Douglas with Hawthorne Land & Minerals, LLC, a group with massive financial firepower. Fortitude retains 60% ownership is the operator. And when we are fortunate enough to find deposits, Fortitude is in the position to mine them. We look forward to working with Hawthorne, who shares our vision of the district to discover, develop and produce gold from East Camp Douglas in the future. In the next 2 years, we expect to deploy $40 million on East Camp to advance these efforts. This is an expedited and aggressive time line to not only discover and permit more projects, but to rapidly advance the property toward production under the mining-friendly Trump administration. Use of joint venture proceeds include drilling, exploration surveys, baseline background studies, rock characterization reports, et cetera. The goal is to make a deposit discovery in the shortest time possible in tandem with permitting efforts and if possible, discover and permit a project under the Trump administration with a longer-term goal of putting more mines into production. We welcome our new JV partner and appreciate the ability to now expedite the property far faster than we ever could do alone. We gladly share 40% interest going forward for this expansive, expedited and aggressive exploration and discovery effort. We can advance East Camp Douglas on a level never experienced before in Fortitude's history. Our ability to execute our business plan is directly tied to our ability to acquire the needed permits to bring new mines into production. With the new administration's pro-business pro-mining stance, the Biden hangover is now lifting fast. And we are positioned to remain a mining company now with multiple mines selling gold at much higher gold prices, which is another silver lining and with more mine permits in the regulatory queue. This chart inspired by one of our long-term shareholders and supporters, Mr. [ Bob G ], demonstrates the downward pressure on Fortitude's stock price as a function of the Biden era permit backlog and the damage it inflicted to our company and the upward momentum of Fortitude's stock price as a function of the pro-business pro-mining Trump administration. We are coming off a 2025 year where we produced the least amount of gold in our company's history to now having 2 new mine permits as we race to get them optimized and increase production. We are also now positioned to begin drilling immediately from both a permit and available capital standpoint at County Line and the Scarlet areas, targeting additions to our mine life. We are also positioned to obtain every permit possible under the Trump administration. In addition, our new JV at East Camp Douglas is a transformational moment for the property to advance it on an expedited basis. We said goodbye to the challenges of 2025 and are excited about all our prospects in 2026 and this incredible gold price environment. Before closing, I want to read a portion of a press release from the U.S. Department of Interior dated February 23, 2026. This highlights the efforts this administration is taking to help the industry. Under the leadership of President Donald J. Trump, the Department of the Interior today announced final sweeping reforms to its National Environmental Policy Act, or NEPA, procedures, cutting red tape, accelerating project approvals and restoring NEPA to its intended role as a focused, efficient decision-making tool. The reforms led by Interior Secretary, Doug Burgum and part of a whole government approach reaffirms the recision of more than 80% of interiors' prior NEPA regulations with the majority of those regulations moved into a streamlined departmental NEPA handbook for implementing procedures. The PR goes on to say the action follows the White House Council on Environmental Quality's recent confirmation of its own rescission of NEPA regulations, clearing the way for the agency to modernize outdated and duplicative requirements. For decades, NEPA has been twisted into a weapon to block American energy infrastructure and conservation projects said Secretary of the Interior, Doug Burgum. Under the leadership of President Trump, this administration is fixing that. We are cutting unnecessary bureaucracy, speeding up approvals and putting Americans back to work while enforcing NEPA as Congress originally intended. The reforms represent one of the most consequential permitting overhauls ever undertaken by the department. This is a decisive step toward fixing a broken permitting system said Associate Deputy Secretary, Karen Budd-Falen. In addition to that press release, about 2 weeks ago, Mr. Burgum stated on national TV regarding the need to focus on mining that last year, the U.S. graduated only about 300 mining industry graduates. He went on to say that we have to get back to mining for the economic and security interest of the U.S. What a positive impact this administration is making on the industry. During Biden's tenure, he obstructed, prohibited and continued to break the mine permitting system. Fortitude had to survive that onslaught that damaged our business plan. But fortunately, Trump is actively delivering our permits and fixing the situation. This couldn't happen at a better time as we look to increase production, pursue new mine permits and move into a very aggressive exploration push to find deposit discoveries. With that, I would like to thank everyone for their time today on this conference call. Operator, would you please open up the lines for any possible Q&A. Operator: [Operator Instructions] Jason Reid: Operator, while we poll for questions, we do have several that came in via e-mail, so I'll get to those now. The first question is from Peter G. Your company has strongly opposed shareholder dilution. Obviously, you announced a recent capital raise, which increased share count. I assume you did not make this decision lightly. How confident are you that the additional funds will eventually increase the gold resource and gold production more than the share count? Peter, thank you for your question. You are correct. We don't take this lightly. And I think it's evident that even after that raise, we have arguably one of, if not the tightest capital structures for a producer in this space. Like I mentioned in my comments, most junior explorers nowhere near production will have hundreds, 200 million, 300 million, 400 million shares outstanding, nowhere near production. Most producers, $0.5 billion, $1 billion. We have now just 26.8 million shares outstanding. That is an incredibly tight capital structure. So while this raise did dilute, it's very minimal in the big picture. And yes, it was necessary. We don't take it lightly. Thank you for the question. The second question from Dr. Joe C. 3 parts. A, processing capacity. With Pearl Deep Scarlet South and County Line now delivering ore to the Isabella Pearl facility, could management comment on the current crushing and heap leach throughput capacity and whether the existing infrastructure can support higher production levels as these mines ramp up? Great question. We have actually installed our much larger crushing system that we purchased for the Golden Mile. We've installed it at Isabella Pearl. So the existing crusher was about 250 tonnes an hour. The new one is 800 tonnes per hour, huge increase. So we did that as a function of trying to maneuver through the permitting backlog and not spending extra money, knowing we'd have to crush more as we pull from various areas. So we're out in front of that. As far as the heap leach, we plan an expansion this year. We do have space right now, and we'll continue to utilize that. But yes, we're going to be bringing ore from a lot of different areas. We do need to increase capacity. And so that's in the works as well. So your part B of your question, Isabella Pearl trend development, given the roughly 10-kilometer mineralized trend at Isabella Pearl, including Pearl Deep, Scarlet South, Scarlet North and additional targets, how many open pits could realistically be sequenced along this trend using the current processing infrastructure? Dr. Joe C, I hope there's handfuls of them. That's the champagne problem we want. As far as throughput, I think is where your question drives. Could we expand in the future? Yes, we could. But more importantly, I want to get to where we maximize mine life and get out to that 10-year mine life. So if we're fortunate enough to have Scarlet North, Prospect Mountain, one of those targets I mentioned in the conference call becoming the Isabella Pearl or if we're real fortunate at 2 of them or others along this trend, the whole point is to be here for the long game. So I'm less concerned about increasing production throughput right now and more concerned with just adding mine life so that we are the ones to continue to find these mines that I believe will be on trend. I see your third part of the question is production stabilization. As operations from the 3 mines settle in during 2026, can management give investors a sense of what a normalized quarterly production level might look like once the ramp-up phase is complete. Great question. Dr. Joe C, unfortunately, no, we're not going to forecast right now. We might not even forecast this year. We have so many balls in the air. We're bringing on 2 new mines, a lot of moving parts. Whatever we would forecast would likely be wrong. So I think we're just best not to. But the whole goal, obviously, is to ramp up production. Okay. So with that, operator, are there any live calls before we get to the platform? Operator: Yes, sir. We have a question from Gary [indiscernible], who is a private investor. Unknown Analyst: Jason, congratulations on all the permits and getting everything started in this joint venture. It certainly seems like it's -- things are happening there. I just -- I had a question about the -- in terms of like the commitment that you got on the JV, $40 million puts an implied value of about $100 million on East Camp Douglas. Can you just give us a sense of what you guys saw and you guys talked about with the JV partner that got them so excited? Jason Reid: Okay. Yes. No, it's a great question. They're seeing what everybody else is seeing. And this property has been looked at by a lot of industry players. And that's why I mentioned in some of my comments that we've actually had inbound from majors, major mining companies that are very interested in the property that we're. And like my comments in the press release, we couldn't get a good deal with them. They wanted to take control. They wanted to call the shots on what the exploration would look like. It just wasn't good for shareholders, so we didn't go that direction. The JV that we did do is a very favorable deal for both parties. We will gladly share 40% of what we find for the ability to expedite exploration. But the whole deal for me focuses on we stay in control. We have 60% interest. These are things that we could have never got with the majors. So specifically coming back to your question of what things did they see that perhaps you haven't seen, nothing. I mean they're looking at this from the geologic potential. We have a huge litho cap. It's mineralized. These are the style of deposits that can be multimillion ounce. We have a high-grade component to this. We have a lithocap that could be -- is very sizable. It's also a challenge to explore. But again, that's why we're doing a big exploration budget, but we also have high-grade veins to the north. So the potential for not just one style of deposit, but a couple is there. So again, come back to your question, I'm not sure they were looking at anything that you weren't looking at. It's just they had the Fortitude were intended to pull the trigger on, let's do this, let's go find one. They are in line with us that there could be something serious there, and we want to be the ones to find it. So yes, I don't -- they weren't per se privy to something you haven't seen, Gary. Unknown Analyst: Okay. Well, that's good to know. I get that you don't want to give any like production guidance or anything for the year as you guys ramp things up. But you've got a significant amount of inventory sitting on the heap leach pad. Is it safe to assume that you guys are going to be in a position where investments aside in ramping production, like you'll be generating a good amount of cash throughout the year to fund some of that? Jason Reid: Fund some of what? Unknown Analyst: Of the different expansion projects and those types of things? Jason Reid: Yes. Okay. Well, we did the raise in large part to help us optimize the 2 mines. We never thought we'd get -- be building 2 at one time. We're like drinking from a fire hose coming off the back of a very difficult year, difficult administration. As far as the residuals on the heap leach, those are always complicated. You really can't -- yes, it's going to come off, but you can't count on a forecast because you have so many levels to a heap leach. You have cells under -- as a checkerboard, if you will, on every level. Every cell was under different time frames. It's very challenging to forecast that. And yes, you don't want to live off residuals. So I would say to everybody, don't focus on what's the historic stuff that's been on the heap, that's not the focus. You have to put new fresh ore. That's where we make our production. That's where we are able to forecast better. So yes, that's the push. Hence, the push to put 2 new mines in. We fortunately have the permits. We're moving forward on that. We have 2 more in the queue being Golden Mile and Scarlet North. And yes, the whole focus needs to be putting fresh ore on. You get this big shot in the arm initially according to the metallurgical studies we've done. And then it just takes a long time for the rest to come out. I mean it could take years. So it's very hard to forecast that. So yes, we -- coming back to your question, we don't look at the heap and say, hey, yes, we can count on that coming out at X percent, X time frame. No, we need new ore on there with that big shot in the arm, and that's the push. Does that answer your question? Unknown Analyst: Yes. That's helpful. Congratulations on everything you got going on. Jason Reid: Thanks, Gary. I'm going to take -- we have a bunch of questions piling up in the platform. So I'm going to take quite a few of these here. This is from [ Harvey Volen ]. It says, please explain the use of the $40 million in the JV. When will Fortitude spend its own funds? Harvey, good to hear from you. It's been a while. The $40 million is actually -- if you want, it's spelled out, it's actually in the 8-K in the back as an attachment for the funding. But you're going to see drill -- massive drill programs. You're going to see a lot of assay costs. You're going to see a lot of new geo hires. You're going to see all the overhead associated with those geo hires to build a bigger team to explore this property. You'll see it all spelled out in that. So if you want to delve into that, it's in the back of that 8-K. When will Fortitude spend its own funds? We won't spend any money until the $40 million is fully spent. So the way the deal is structured is that Hawthorne will spend up to the $40 million. If they ever choose not to go to the $40 million, they lose their interest. So we expect them to spend the $40 million, which puts us in a great position to absolutely aggressively explore this in the next year to 2 years, we will have hit this as hard as possible. And I believe we're in a good chance to find one, if not more deposits. At that point, when the $40 million has been spent, then we pro rata our 60-40 on anything going forward. And then hopefully, at that point, we've already have delineated a deposit or we're designing it. We're looking forward to building it. And yes, that would be the -- hopefully, what's happening at the time that we're then asked to start kicking in our 60%. Great question. The next question is from Ben [indiscernible], could you comment on the return on investment for the Pearl Deep? No, I can't, Ben. It's a good question. The Pearl Deep, we didn't have a "formal resource" for it. We knew this mineralization pocket was down there even in the initial mine plan, but it didn't make the original pit shell to begin with. Of course, that was back in 1,800 gold probably. So as the Biden permit backlog was crushing us, we had to decide are we going to shut down or are we going to keep mining. And fortunately, gold hit 3,000, which gave us the optionality to rerun some numbers for the Pearl Deep. And yes, we made the decision to stay mining instead of shut down operations. We won't know until we ultimately mine this. There's a lot of moving factors, one of which is as we go deeper and start getting into that transitional ore that you can process some of that transitional ore. But as you fully transition to the sulfides, we can't process that. So we don't quantify exactly how much. So yes, we -- I can't tell you the return on investment. That was never part of the plan. I want to say that again, that was never part of the plan. That was a maneuver to try to stay in business as a mining company as Biden locked everybody out. So thankfully, gold was high enough that it gave us that optionality. So yes, that's just -- I don't have a return on investment on that, but great question. The next question, Ben, again. Are there any issues with availability of drilling equipment crews? [indiscernible] have several parts of this, so I'll address that. I fully expect it to be very hard to get drilling companies. As gold spikes, having lived these cycles in the past, drill crews become scarce. They get busy. There's not enough of them. And I'm sure a lot of mining companies are being formed right and left as gold hits $5,000. So yes, we're trying to position ourselves to lock up drill rigs, drill crews for the long term, try to sign long contracts like East Camp, we're going to be able to sign very long contract, which keeps drillers very motivated on that. The sooner you can do it right now, the better. Another reason not to wait around until all the drill crews and companies are fully booked. Yes, you go on to say, would there be any benefit to hiring in-house drill teams in terms of cost savings and for uninterrupted ongoing drilling so that the drilling is always ahead of current mining. Yes, on a high level, that sounds reasonable, Ben. We've done that, and it just hasn't worked for us. It's a specialized situation, and we want to be a mining company. I'd rather farm out the drilling. The times with the previous company that we bought drills and brought them in-house, it just didn't work out. So having lived that, yes, we're not looking at that to go down that road again. Okay. Let's keep going here. Next question by [ Gary Simmons ]. Where -- how fast can you get the people for expedite East Camp Douglas and Isabella Pearl for exploration. Great question. I'm actively working with Al, our VP of Exploration. We just locked up a bunch more apartments for the new team we'll be hiring. He's actively recruiting new team members. So yes, we're gas pedal to the floor here trying to staff up for the East Camp Douglas. It's very challenging in this industry. As I mentioned in the comments, Doug Burgum mentioned that the U.S. only graduated 300 people in this industry. There's not a lot of the people in this industry that know what they're doing or in the industry in general. So competition is absolutely fierce. We have just recently lost a number of people to poaching. We'll be trying to poach back. But yes, it's a cutthroat situation, Gary. And yes, we're on it. We're doing all that we can to build that team. So good question. The next one is [ Pete Mumford ]. The current balance sheet shows financial lease liabilities. Is this a result of bringing the mining in-house? Yes, that will be the equipment, I'm sure. We are now leasing mining equipment. The next question from Adam. What plans do you have for the remaining sulfide gold. Is there a way to extract sulfide in parallel with oxide? Great question. Adam, we actually have a huge stockpile of sulfide gold, and we're looking at possibly selling it and just having a major who can truck -- we can truck it down the road and they can process it. So we're looking at that optionality. But no, we can't keep mining it. That was just in the function of mining from our permit perspective and when we deal with -- when we hit oxide. When you get into the thick heavy oxide stuff, you're usually below water table and our permit doesn't allow us to do that, nor do we want to go fight for the ability to do that. But good question. The next one from [ Dave Nickerson ]. Can you tell us a little bit more about Hawthorne Land & Minerals? Yes. Dave, we're getting this question a lot. All I can say is Hawthorne Land & Minerals, LLC is an extremely affluent nonpublic company that prioritizes its privacy. That's as much as I will say regarding who they are. But they do clearly share our vision of what East Camp could become. And together, we're positioned to make a significant discovery, assuming one exists on the land package. So great question. The next question from [ Michael Wolfe ]. What is the possibility of returning to the previous level of dividends? What is the possibility of shareholders receiving dividends in the form of gold coins or bullion? The first part, yes, ultimately, we'd like to someday be in the position to increase dividends. I think you get the gist of listening to the conference call, we've got fully bucked off the horse. I don't think people truly understand. If you're on this conference call and you voted for Harris, how close your vote was to putting this company under. Let that sink in for a minute. So had the election not gone the way that it did, this would be an entirely different conference call. This would be what does the company do now, out of business, not being able to mine, not being able to get drill permits. I can't underscore that enough. If you listen to this conference call and you voted for Harris, you would have put this company out of business. So when I come back to the dividends, yes, we'd love to get back there, but we got bucked off the horse. So we're trying to get back on. We are getting back on. And yes, I mean, we still pay a dividend. So we're still committed to it. But yes, it's going to be a minute before we can do that. And then your second part is, what is the possibility of shareholders receiving dividends in the form of gold coins or bullion. We're not going to probably do that again. Greg and I figured out a way to convert the cash dividends into physical and have shareholders take delivery of it with our previous company. It was the first of its kind. It was a lot of work. And in the end of the day, we maybe had 400 participants. So because of that, now like if you want our coins, you can go to the website and buy them. We don't have gold available yet. We'd like to ultimately do that. It's pretty tough when the gold price is moving so fast for mints to get a hold of rounds and then lock in prices and stuff. So it makes it a little more complicated, but they are minting silver, so you can get them that way. Next question is [ Charles Fremont ]. As an adviser of CleanTech Vanadium, how much of your time will be diverted from FTCO? Yes. Look, I will work as an adviser with CleanTech Vanadium, and I can advise them and help them move their projects forward without impacting anything here. I don't want to -- I don't have a specific time frame, and it may ebb and flow depending on what's happening with CleanTech. But yes, that's just an advisory role, and I don't expect it to impact anything I'm doing here. With that, we've gone to a lot of questions. And I guess if you're in the queue and you haven't had your question, please reach out to Greg or myself. But I've talked enough today. I think he gave you a lot of information. And let's close the conference call and look forward to updating you next quarter. And yes, it's an exciting time now. Thankfully, we have an administration that has changed our trajectory. So thank you, everybody, for listening, and we'll talk to you next quarter. Operator: Thank you. Ladies and gentlemen, this does conclude today's call. You may disconnect your lines at this time, and we thank you for your participation.
Operator: Dear ladies and gentlemen, a warm welcome to the Continental AG Analyst and Investor Call Full Year Results 2025. [Operator Instructions] Let me now turn the floor over to your host, Max Westmeyer, Head of Investor Relations. Max Westmeyer: Thank you very much, and welcome, everyone, to our Q4 and full year 2025 results presentation. Today's call is hosted by our CEO, Christian Kötz, and our CFO, Roland Welzbacher. A quick reminder that both the press release and the presentation of today's call are available for download on our Investor Relations website. The annual report will be published later this month on March 19. Before we start, I'd like to remind everyone that this conference call is for investors and analysts only. If you do not belong to either of these groups, please kindly disconnect now. Following the presentation, we will conduct a Q&A session for sell-side analysts. [Operator Instructions] With that, let me now for the first time, hand you over to our new CEO, Christian Kötz. Christian Kotz: Thank you, Max, and welcome -- a very warm welcome also from my side to everyone online. Thank you for joining us today. I'm actually glad to have the chance to join this earnings call. And as Max said, for the first time as the CEO of Continental. 2025 was a year of significant transformation and delivery for Continental. We may decisive strategic progress while achieving our financial targets. As you all know, we've completed the sale of OE-related part of ContiTech business, the so-called OESL business in February 2026. With this, we have materially reduced the OEM auto exposure of ContiTech. And with this, started sales process for the remaining ContiTech business. We are continuously executing our strategy to become a pure-play tire company. So let me really summarize the key developments in Q4. Starting with sales. So in a challenging environment, we delivered organic growth of 0.8%, resulting in EUR 19.7 billion of sales. The tire contribution is actually a growth of -- organic growth of 2.4%, whereas we have seen and experienced a negative impact organically of 3.3% on the ContiTech side organically. Adjusted EBIT reached EUR 2 billion with a margin of 10.3%, mainly driven by healthy price/mix in tires as well as strict cost discipline and resilient replacement demands. So ContiTech continue to face challenging automotive and industrial markets, especially in APAC and North America with pressure on mix and volumes, particularly in Q4. The transformation, which I initially mentioned also had an impact on our result. So our NIAT was significantly burdened by special effects of around EUR 1.7 billion mainly related to the Automotive spin-off, the AUMOVIO spinoff and the transformation of ContiTech and the individual effects are shown on the chart. Adjusted cash free -- cash flow, however, came in at EUR 959 million, so at the upper end of our guidance, driven by solid operational performance, mainly in the tire sector. Thanks to the strong free cash flow generation in Q4, we further reduced net debt and improved the pro forma leverage ratio to around 2.0 as planned, as anticipated and as was also communicated at our last Capital Markets Day. So overall, I think we navigated this transition in 2025 very successfully, giving us the opportunity to return some of the earnings to our employees, but also, of course, to our shareholders. And as previously mentioned and explained, we adjusted our NIAT for noncash and nonrecurring items of a total of EUR 1.2 billion, resulting in a dividend payout basis, so an adjusted NIAT of around EUR 1.1 billion. This means we will propose a dividend for the financial year 2025 of EUR 2.70 per share to this year's Annual General Meeting for approval. The proposal reflects, therefore, our clear commitment to the target payout corridor of around 40% to 60%. As communicated at our last Capital Markets Day and the proposed dividend basically sits right in the middle of this corridor, and this ensures an attractive dividend yield of 4.8%, while maintaining financial flexibility during the ongoing transformation. So now a quick glance at the Q4 results by sector. Overall, group performance came in broadly in line with prior year. So once again, this was supported by a very strong fourth quarter in Tires. I think Roland will touch on that in more detail. Particularly proud we are that we managed to organically grow in Tires. I mentioned the total year results, but also in Q4 and to keep earnings stable despite headwinds from tariffs and FX. So now over to Roland for more details on our Q4 financials. Roland Welzbacher: Yes. Thank you, Christian, and welcome, everyone, from my side as well. Turning now to the market environment for Tires. On Slide 7. Over the course of the year, the replacement market in Europe has changed quite a bit, strong Asian imports, initially supported market volumes. But as these imports slowed, total market volumes declined year-on-year. This effect was further reinforced by tough comparisons with last year. Despite this, we achieved organic sales growth in EMEA in Q4, underscoring the resilience and strength once again of our business. I'll speak about our regional mix in more detail later on. North America and China, however, grew slightly compared to a weaker Q4 2024. Light vehicle production in China continued to show solid momentum while development in Europe and North America were more mixed. Over to Slide 8. Let me briefly focus on the truck tire markets. In Europe, truck tire replacement market showed continuous resilience also in Q4. North America picked up during the year after a slow start into '25, resulting in slight growth in Q4. This is mainly driven by the continued variable volume in commercial vehicle production in North America, so the OE business, which we also had to manage in Q4. In Europe, however, production figures continued to rebound and at least we're seeing a little bit more positive tonality from the U.S. truck OEMs as well. Over to Slide 9. Let's now discuss the Tires performance in this environment. Despite facing continued strong FX headwinds, lower volumes and a tough comparison based on the volume side, we managed to reach the prior year profitability level with sales of EUR 3.6 billion in Q4. We achieved an adjusted EBIT margin of 13.9%, supported once again by healthy price/mix of 3.4% which underlines the robustness of our business. Price/mix was once more driven by many areas, product, channel and regional mix. A mid-double-digit million euro tailwind also came from lower raw material prices. In addition, first positive impact from our portfolio measures started to provide a slight support to our adjusted EBIT margin as well. Slide 10. If we look at the regional picture on Slide 10, the underlying dynamics of our business become even clearer. We saw mixed volume trends. Positive support on the PLT side came mainly out of APAC and the U.S. and Canada, but overall, the Americas remained a challenging environment for us, particularly in the truck tire business. However, positive price/mix as well as the passenger car tire volumes in the U.S. and Canada helped to stabilize our results even though on a comparably low level given the headwinds from tariffs and FX. In EMEA, negative volumes were fully offset by strong price/mix effects, also supported by a positive development in truck tires. This resulted in an organic sales growth of 1.1%. Also APAC delivered strong organic growth, driven by a recovery in both OE and replacement passenger car tires in China. This more than compensated for the loss of volumes following the closure of the truck tire business in the region. In addition, a healthy price/mix performance in the region was able to substantially offset the significant foreign exchange headwinds, which mainly came from the Chinese renminbi as well as the Australian dollar. On Slide 11, you can see the result of the ongoing mix improvement and increasing UHP share. We managed to increase the share for both Continental branded tires as well as for our broader passenger car tire portfolio. Across all brands, the UHP share now stands at 55%, up 3 percentage points compared to last year. Remaining figures were rather resilient and did not change much compared to last year, perfectly reflecting our business model. Replacement tires accounted once again for 76% of total sales. Continental branded tires represented 77% of passenger car tire sales and also our regional mix did not change materially compared to '24. Let me now turn to ContiTech on Slide 12. ContiTech continued to be impacted from a delay in market recovery. In the fourth quarter, sales declined organically by 5.2%, reflecting weak demand in the automotive business and also ongoing industrial headwinds such as the conveyor belt business in China and the North American distribution and off-highway business. Customer caution and the deferral of business orders into '26 further constrained our results towards year-end, something we saw starting to partially reverse already in Q1. The adjusted EBIT margin before IFRS 5 came in at 2% as a result, impacted by the discussed unfavorable mix as well as earlier incurred stand-alone costs coming from a faster-than-anticipated progress in the transformation and carve-out related one-offs. Very important to mention ContiTech has defined a lot of self-help measures which are firmly in place and are expected to materialize over the course of 2026. This will help to further strengthen our Industrial business, which delivered sales of EUR 4.4 billion and an adjusted EBIT margin of 7.1% in 2025. Turning now to our cash flow on Slide 13. Free cash flow in the fourth quarter was particularly strong. This was driven by the less seasonal pattern in CapEx throughout the year, disciplined cost management, and as always, on the Tire side, a strong cash inflow from working capital in Q4, mainly driven from the winter tire business in Europe. And just some further comments on the bridge. The EBITDA decline year-on-year was mainly due to noncash restructuring and transformation costs. You can see the offsetting effects in the other line. Slide 14 highlights the positive impact of our strong cash generation on the balance sheet. Working capital followed. As I said, its typical seasonal pattern in Q4, clearly decreasing after a buildup in the previous quarters. The change compared to prior year, however, is mainly driven by the accounting change for OESL. Their assets and liabilities are now classified as held for sale, therefore, no longer part of our working capital. Without this, it would have remained broadly unchanged compared with the prior year. As a result of the Q4 cash flow, our net debt declined in the first quarter, resulting in a pro forma leverage ratio of around 2.0 fully in line with our expectations that we have already communicated during the 2025 Capital Market Day. Let me now turn to our market outlook for '26 on Slide 15. This year, light vehicle production is currently forecasted to remain below last year's level in our key markets in Europe and North America and even in China, resulting in our expectation of slight decline in OE production worldwide. Passenger car replacement market forecast, however, hint towards minor growth well across all regions. And this is also true for the truck business in Europe. In the U.S., however, we're seeing a bit more mixed picture, slight rebound in commercial vehicle production throughout the year against a very weak comps of '25 should have an adverse impact on the truck replacement business, however, in that region. Overall, we are expecting no growth to very low growth environment for tires. ContiTech industrial production is expected to remain mixed. On Europe, we expect a gradual growth following periods of stagnation, while the American market remains highly volatile due to U.S. tariff measures and ongoing geopolitical tensions. Slide 16, all of this translates into our guidance for 2026, which is summarized now. On this page, it includes currently effective tariffs and is based on foreign exchange rate also at current levels. And let's be very clear, it does not yet reflect potential changes to input costs or other impacts of the recent geopolitical tensions with regard to Iran and the Middle East. For the group, we expect sales of around EUR 17.3 billion to EUR 18.9 billion with an adjusted EBIT margin between 11% and 12.5%. This is, of course, mainly coming from Tires, where we expect sales of EUR 13.2 billion to EUR 14.2 billion and an adjusted EBIT margin in the range of 13% to 14.5%. This broad range just as for ContiTech and the group is mainly a result of the uncertainty we're seeing from the volatility in currency development, where particularly the U.S. dollar is trending into or has been trending into an unfavorable direction, the uncertain volume development also driven by the changes in tariffs and geopolitics as well as a net impact from raw material in 2026. For ContiTech, sales are expected to come in between EUR 4.2 billion and EUR 4.8 billion with margins of 7% to 8.5%. This does include the general result of OESL, which stood at EUR 117 million sales, slightly above breakeven profitability. Adjusted free cash flow is expected to be around EUR 0.8 billion to EUR 1.2 billion. This includes CapEx of around 7%, mainly driven by ongoing investments into our Tires business. PPA is going to be significantly down to around EUR 25 million per year, mainly from ContiTech. Other special effects should amount to roughly EUR 250 million, already including the deconsolidation effect from OESL as well as the expected costs associated with the sale of ContiTech. And in the current setup of Continental, we should currently anticipate to see a slightly decreased tax rate of around 24%, given the change in our country mix compared to our previous setup, including AUMOVIO. And with that, I would like to hand over now the rest of the time to you. So operator, could you please open the line for the Q&A? Operator: [Operator Instructions] The first question comes from Akshat Kacker of JPMorgan. Akshat Kacker: Akshat from JPMorgan. I have 3 questions, please. The first one on ContiTech margins. You mentioned, excluding OESL, the business was at 7% margins roughly in 2025, 4.6% margins in Q4. Could you just give us some more details in terms of the start of the year? How should we think about margins in Q1? And if you could help us think about the second half margin profile, how much improvement should we expect based on the cost actions that you have taken in this division last year? That's the first question. The second one is a quick one on the sales process. So the announcements last month said that the first round of bids were expected in March. Could you confirm if the process is on track? And what is the time line from here, please? And the last one on the tire business. You have talked about some kind of pressure in the Americas, which is similar to what we've heard from your peers in terms of higher inventories and sell outcomes in that region. Could you talk about overall pricing for Conti in that market? You were successful in increasing prices against tariffs last year? Do you see those price increases sticking in the U.S. market? Roland Welzbacher: All right. Akshat, I'm going to take the first one. We thought about how to put more flavor on the Q1 expectations on ContiTech, and it's a little bit difficult because there is no Q1 '25 we can refer to. So what we would like to do instead is guide you a little bit compared to Q4. So in order to allow for like-for-like comparison, excluding OESL, we're focusing on the sequential development. In the last 3 months, we still did not see a material improvement in the industrial sector, even expecting volumes to be slightly down in Q1. The anticipated mix improvements I talked about earlier, however, should help to compensate for most of the lost volume on both the top and the bottom line. FX should presumably not be a factor sequentially. In addition, we're expecting a low to mid-double-digit contribution from not repeating negative one-offs in Q4 as well as some onetime safeguarding measures in Q1, helping the bottom line to clearly improve versus Q4. Nevertheless, we still most likely will not be able to reach the lower end of our EBIT guidance for the full year already in Q1. This is true for the industrial business itself, but also because we see the EUR 170 million January sales contribution from OESL just above breakeven, also going into our Q1 results, given the closing only happened beginning of February. Now we talked about the second half. So despite the fact that the margin is not yet in the guidance range, the year is starting as planned. So we see stepwise improvements in the upcoming quarters, also supported by continued safeguarding and restructuring measures, which we have already put in place and where we expect benefits coming through, specifically in the second half. So number two, M&A process. We started the M&A process. We reached out to investors already in December and then started the full-pron process. In Jan end indeed, we're expecting offers to come in, in March. Now it remains to be seen right now, we're on track in terms of timing, and we still believe we can close the transaction within the year 2026. Christian Kotz: Yes. So let me jump in then here. Akshat, by the way, from my side, as well. Just to add in maybe on point number two and also in anticipation of maybe a potential follow-up question. So we also don't really see that the current military conflict in the Middle East is impacting our process to sell ContiTech. So if this is a question you might have or concern you might have we really don't see an impact for the time being. And to your third point, Tire business in the U.S., first of all, let me differentiate between the 2, let me say, burdens or the pressure points. One country-specific pressure points and the other one on the other side are the more generic industry pressure points. So the country-specific pressure points are very much related to the fact, as you all know, we are importing quite a number of tires from Europe. So our business was under pressure, is under pressure in the U.S. simply due to FX. So producing in euro and selling in dollar is obviously much less interesting and attractive as it is used to be. And number 2, the tariffs are impacting us potentially a little stronger than the one or the other competitor. Those are the country-specific pressure points, which put the burden on our results and are challenging us. Let me say, the second part are then more the generic industry pressure points. So the weak market demand plus the high pressure from the imports. Are we able to offset those impacts? I mean I'm not going to comment on pricing stand-alone. Clearly, we continue to focus on finding the sweet spot in terms of price mix and volume and being still underrepresented, as you know, in the U.S., mainly in the U.S. and Canada. We do believe we have good opportunities to find the sweet spot and finding ways offsetting these negative pain points, let me say, as good as we can. An environment, which is definitely specifically in Q1 still challenging because you compare in Q1 than still last year quarter without tariffs versus this year, a quarter with tariffs, last year, a quarter with exchange rates, which were still favorable versus this year, a quarter with very unfavorable exchange rate effects. So challenges, specifically in the U.S. in Q2 and Q1, but optimistic to sequentially improve during the course of the year. Operator: Then we are moving on to the next question. Next question comes from Christoph Laskawi from Deutsche Bank. Christoph Laskawi: The first one on the exposure to energy costs, please. We've seen, obviously, oil and gas prices spiking this week and thinking back to end of '22 when the debate around the inflation around gas prices, in particular, back then, it would be great to get a refresher of roughly the euro amount exposure as a percent of sales in absolute terms in your sourcing? And also in general, how you manage to pass these on to customers potentially in the past? And also how you source these essentially oil and gas for heating in the production, et cetera? Is it hedged throughout the year? Or are you closely aligned to spot? And then the second question on more shorter-term tires, please. One of your competitors was very negative on volumes in Q1 [indiscernible] said they don't share that. Could you comment too? Do you see the market down 10% or is it better? It's probably fair to assume volumes down in Q1. Could you comment on inventories and how you generally see entire Q1 trading? And if we should assume you are in the guidance range or would be rather on the door and if you can make a comment at this point at all? Roland Welzbacher: All right, Christoph, it's Roland here. Let me take the first one. Your questions about the energy cost. Let me approach this from a slightly different angle. So across Continental and in each sector, basically, tires kind of take energy-related purchasing accounted to clearly below 5% of the total ticket mix of the total purchasing volume, of which natural gas and electricity account for roughly 75%. So 5% of purchasing is energy, 75% of the 5% is the natural gas and electricity. Now we have seen gas prices doubling in the last couple of days. So it remains to be seen whether this higher level will then be sustainable or not? That's a key question for us with regard to the impact on our financials, obviously. The same is true for oil prices. So currently, we see an increased level of oil prices and it remains to be seen for how long the crisis continues and whether we see it a long period of time, high oil price levels, which will then have, of course, an impact on our financials. And again, same as you remember last time, it was tariffs and FX. We put in mitigation measures in place, same here, if we would see an elevated level now coming from the crisis going into our raw material and in energy prices. And obviously, we would look for offsetting measures on the cost side as well as market related. And usually, part of is covered with indexation clauses in certain contracts with customers and a certain part is not. Before we turn to Christian for the volumes, let me pick up your last question on a little bit more flavor in Q1 tires in general. What we expect now is indeed that volumes remain weak. We have seen that already in Jan and in Feb. To some extent, we believe March is going to be better, but still volumes will be somewhat disappointing. But we also see price/mix coming in strong and potentially offset the volume negative. And what we see and already anticipated because we're in Q1 now and Q1 last year was a completely different environment in terms of FX that we have strong headwind on the FX side. Now going into a P&L. In Q1, the U.S. dollar has slightly come down a little bit over the last 2 days. We don't know whether this is going to be sustainable or even continues and would have a slightly offsetting effect that remains to be seen. But for now, we expect this to be, again, a drag on our Q1 financials. You know that we are looking forward for the raw material tailwinds we have seen in Q4 continuing now into Q1. We have slightly offsetting effect potentially from reevaluation of stocks if the raw materials have declined now our period of time. On the tariff side, again, the cross effect is similar to Q4. And you know that wages and other input costs, logistics costs were also going up. Again, we have an inflation effect and, of course, a negative consequence then on our financials. Christian Kotz: Yes. I mean, Roland, obviously, a very comprehensive answer. Let me just add 1 or 2 things maybe. So Christoph, you asked specifically for the volumes, inventory levels, I think Roland already alluded to the fact that, yes, we believe Q1 from a volume standpoint, probably below last year for various reasons, the OE business is not starting off strong. You see probably also the OE volumes in China since quite a while, maybe not as strongly developing as we used to see it during the course of last year. We had some special effects. So the winter storms in the U.S. did not have -- to have a strong start into the year. We had, as you all know, also in Europe, pretty challenging, let me say, weather conditions which are not necessarily good for sell-in. Nevertheless, we do believe that these conditions have been good or are good for the total year because it helps our customers to sell off inventory. So we believe the inventories are trending towards a more favorable situation. So all in all, and I tried to explain this earlier, most probably -- and we believe Q1 will be the most challenging quarter of this year we are facing. Is it in the guidance range or without the guidance range, to be honest, it's too early to tell. I mean you also know that even in Q1, the seasonality is pretty strong. March is the dominating months within this first quarter. So it depends very much now on how March will come in plus many other effects. But yes, Q1 is the most challenging quarter from today's perspective. Christoph Laskawi: And if I might sneak in 1 follow-up just on the tire bridge, obviously, because it's discussed a lot currently. On your assumption for the positive raw materials, is it fair to assume around mid-double digits, mid- to high-double digits is factored in the guide as a positive? Or is it smaller than that? Roland Welzbacher: I would say mid to high, pretty much our expectation. As I said, we're still trying to understand some reevaluation effects on the stock side, which already offset this, but I would say this is also broadly in line with our expectation. Operator: The next question comes Ross MacDonald of Citi. Ross MacDonald: It's Ross MacDonald at Citi. I have 3 questions, please. The first one, just linked to Christoph's question around 2022, and obviously, the experience around some of the shocks we saw back then. Obviously, this is a different conflict. But one thing that stood out back in 2022 for Conti was the impact of marine shipping rates. I know these haven't been rising too much, but can you maybe speak around how hedged you are for the next 12 months on the marine shipping side, just in case we see any inflation in spot rates on the logistics piece? The second one on FX, on the tire bridge. Could you maybe give us your assumptions around the USD rate you're assuming in the bridge there and potentially the drop-through from FX to EBIT that we should assume from the modeling side? And then a final one, just again a modeling question. On the other/consolidation line, I think it dropped to a very low level in Q4, how should we model that for 2026, please, on revenues and EBIT for new leaner Conti? Roland Welzbacher: All right. Let me start with the FX question. First of all, the drop rate in '26 will not be so much different from the drop rate in '25. It's usually between 40% and 50%. On the -- in Q1, FX will be substantial the effect because we started the U.S. dollar last year at [ 104 ]. And then in Q1, it was still pretty strong and then it got a lot weaker. And now compared to Q1 '26 with Q1 '25, we expect a significant FX headwinds going into P&L, probably more significant to what we have seen in Q4 last year. On the consolidation side, I'm not sure whether I understood. Christian Kotz: Yes. behavior, let me just add on that. I think what we've seen in Q4 on the other or holding line slightly or very low amount mainly to a revaluation of some accruals as well as some transformation-related charges that we could make. So this is nothing that we would see on a sustainable level. So if you would look into our 2026 assumptions, we are rather looking into, let's say, EUR 150 million-ish cost item on the holding side, obviously, very much depending on how stand-alone costs were developed at which point we will look into stand-alone cost. But I think this should be a fair ballpark for you to look at. Roland Welzbacher: Maybe then some -- just one -- some comments and Ross, by the way, I -- 1 or 2 comments on your first question, especially with regard to logistic costs and the potential impact. So obviously, as you all know, the region is not necessarily primarily relevant for us. We generate less than 1% of sales in that region. But the direct impact or the indirect impact on our P&L via raw material cost and logistics and/or logistic cost is what we need to obviously take a very close look. And let me say, evaluate and supervise the situation carefully. I mean, as you said, we don't necessarily see a jump in the energy costs or the shipping costs yet. I think it is very much dependent, to be honest. So the Strait of Hormuz is not relevant here. It's a question of whether you see an impact on to the Suez canal. So longer delivery times, supply versus demand evaluation or development, which might impact us. But this can also be besides being a challenge at a potential negative cost impact, it could also be a significant opportunity, because for the ones producing in the market for the market and this is what we have done and concentrated on since so many years, we are for sure much less exposed through those logistic costs that many other, especially the big importers. So yes, it's an area which can create besides material costs, second burden -- cost burden. On the other side, we should be like some others significantly underexposed to these costs, and that can also, therefore, drive an opportunity and not just a challenge. Operator: [Operator Instructions] The next question is from Harry Martin of Bernstein. Harry Martin: The first one, I just wanted to push a little bit more on the ContiTech margin. If I look at Slide 15, it actually shows industrial production was up in every region this year, but the margins ex-OESL have kept coming down. So I mean what really gives the conviction that you can have the step-up in margin in 2026, when as you point out, the industrial production growth isn't a significant accelerator and maybe just some color on which are the really high-margin regions or product lines that need to come back for the new guidance to be hit. And then on the tire side, I just wanted to ask the expectation for volumes to be around flat for the full year. That's probably a touch below some of the peers that have reported. We've heard from 2 of the largest players in the industry, they're going to have a big step-up in new product launches this year versus last year. Perhaps is that why they expect some volume share gain? Or do you have a similar step-up in new products as well? Roland Welzbacher: Do you want to start with the first one? Roland here. Let me take the ContiTech question. Different Q1 was the expectation, '26. So if we look at what didn't went well or was remained pretty soft on ContiTech in Q4 in terms of market segments that was... Operator: So ladies and gentlemen, here's the operator, the sound seems to be missing. We seem to have some sort of issues here. Dear speakers, can you hear me? Are you still there? Roland Welzbacher: Maybe this works on the backup line, no? Operator: Yes, this works perfect. Roland Welzbacher: Sorry, we lost the connection somehow. And I don't know, Harry, where did you lose us? Harry Martin: Right at the beginning of your answer. Roland Welzbacher: Of my answer. So you got -- correct? Harry Martin: No, I think it dropped at the very beginning when Roland started talking about which segments were the weakness in Q4. Roland Welzbacher: Let me repeat, no problem at all. So I said -- the question was about Q4 and then what sector specifically would need to increase in the '26 in order to bring us to the point where we wanted to be. So the industrial business is burdened in most of the business areas, so ContiTech in Q4, that is energy, construction, mining, auto aftermarket. And if you look specifically, which needs to turn around, those who were specifically weak in Q4, that is APAC, particularly China, continue to be difficult. The American Off-Highway business remains soft as well and the distribution business, which is a high-margin business for us, also experienced unexpected weaknesses towards the end of the year. And this needs to rebound. So we first signs talking to customers, the confidence is growing. We also see first light at the end of the tunnel, looking at our order book in '26, although Jan and Feb remained also somehow soft. We see first signs that are going to improve, and it will be a stepwise process. Christian Kotz: Okay. And then I was trying to comment on your second question with regards to the volume expectations. So first, yes, we basically assume stable volumes for us year-over-year on the PLT side, but basically also on the truck side with significant nuances, so to speak, region by region, segment by segment. And yes, we are also launching new products in order to be able to at least defend our market share or gain market shares. So if markets do recover stronger than what we anticipate and what we have explained. We do believe we might also have then some volume chances. And just to highlight some examples, we are in process of just launching in the U.S. our very first all-weather tire, the Secure Contact AW, where we have very nice preorder book and where we are cautious in terms of our forecast. So we might have some opportunities, but we are also launching new truck tires, bus tires, like the Efficient Pro in Europe, which is clearly outperforming the industry on the commercial vehicle OE business side or we are investing significantly in terms of size range, not only in Conti, but also in all of our second and third line brands in the area of UHP tires. So yes, we are cautious. I mean, we have seen in the last couple of years that being too optimistic on volume side has proven to be a challenge, and that's why we consciously decided to take a more conservative approach. If markets do recover stronger than what we account for, we believe we are well prepared as far as our product portfolio, our product performance is concerned to also benefit then from a potentially stronger rebound of the market. And apologies for the technical challenges. Operator: So dear ladies and gentlemen, at the moment, there are no further questions in the queue. But before that, I have seen a question shortly appearing from Monica Bosio. [Operator Instructions] I see a follow-up from Ross McDonald, Citi here. Ross MacDonald: I'll make most of this opportunity to ask 2 follow-up questions. Maybe a longer-term question, given you've just taken over responsibilities as CEO. Could you maybe update us on your strategic priorities? Obviously, ContiTech sale and navigating this geopolitical uncertainty I imagine is the key focus maybe longer term, if you can give some words on what stamp you want to leave on the business and how we should think about the group segments, whether you would look at inorganic growth, maybe M&A in some specialty categories we'd be interested on the long-term vision. I know we've just had the CMD last year, but potentially an update there? And then secondly, linked to the ContiTech sale, you've obviously been very generous with the dividend this year. But how should we think about as and when that deal is done, how you think about the split between de-gearing special dividend, if applicable, and buybacks? Those would be my 2 questions. Christian Kotz: Yes. Okay. Thank you, Ross. Let me take the first one, and then we can probably share the second one. Roland and I saw more on the long-term side. I mean, as you know, I'm new in the CEO role, but I'm not new in the tire area. So you will not see significant surprises for me how I want to drive and how I believe we should develop the tire business. So first priority, obviously, now is to successfully complete the transformation. And we all know these are challenging tasks. We are very, to a certain extent, proud that we accomplished everything we have accomplished in 2025, even though we only had really very limited time. So successfully spinning AUMOVIO successfully now closing the OESL gives us really confidence that we can close this transformation during the course of 2026. Then obviously, a second priority, which goes in parallel is to further optimize, let me say, healthiness -- the organic healthiness of our tire business which partly goes also into your second question. So how can we optimize and yes, further improve our balance sheet, but how can we also further optimize our organic operational performance? And there, clearly, the focus is on, as we always mentioned and as we explained also at the Capital Markets Day, on the one side, the very consistent and consequent focus on the UHP tire development and the business development where we still see lots of opportunities, you will see us to continue to consequently focus on our portfolio. We have done quite some steps also there during the course of last year. So as you know, we've exited our agricultural business. We have closed 2 facilities, truck tire production in India and our facility in Malaysia. We have optimized -- further optimized our retail footprint with some significant adjustments. We're in process of closing our textile production in the U.S., and you will see us to do some further steps in order to optimize, let me say, our operational performance without any inorganic shape. And then third, and I can only then repeat what I said in the past. We do believe at the end of this transition, we are then a very, very healthy tire company, very solidly financed with strong operational performance, this should bring us into the situation that in case consolidation takes place, in case there are reasonable and justifiable inorganic growth opportunities we should be ready to be able to participate, and we would actively look for opportunities. But as I mentioned in the past and I can only repeat myself, it needs to make financial sense. It needs to be complementary and we will see whether those opportunities will arise, yes or no. But clear, we want to be fit for that and ready for opportunities in case they might arise. So then your second question was on the utilization of the potential proceeds. I mean before Roland chips in and this relates and also to what I said earlier, obviously, we were partly in line with what we communicated at the Capital Markets Day. We will use these proceeds really in 2 ways: one, to improve our balance sheet and second, to also let our shareholders participate. So how we do this and which shape, we do this, we will need to decide. Roland, anything to add there from your side? Roland Welzbacher: Not really much to add just probably in terms of timing. First of all, what we need in order to approach this decision-making process is more visibility on the potential proceeds of the ContiTech sale. And then we can better assess what the right way and right format would be. That's all. Christian Kotz: And I hope the voice quality is okay because we are really working with... Operator: I can hear you quite well. Christian Kotz: Is it okay? Good. Good to know. Operator: Yes, yes, we can hear you very well. The next question is from Monica Bosio, Intesa Sanpaolo. Monica Bosio: Yes. Sorry, maybe I lost a part of the speech. But I just wanted to ask if you -- so the company is expecting tailwinds in raw materials obviously, now the situation could change. But as things are, can you quantify the raw material tailwinds? And I was just wondering if you have a sort of sensitivity in terms of price -- petrol price per barrel on the raw material side, in general. And my second question is on the PLT tires, the shares of the ultra high performance tires you are guiding for flat volumes, both in passenger cars and trucks, but can you please just give us some flavor on the volume trend in the ultra high performance tires maybe 1%, 2% something similar. And what do you expect to gain market share the most in terms of geographical area if I may ask? Christian Kotz: So where do we start? I can start maybe from the back. On the UHP side, so obviously, you are right. We -- and even though we count on that market, we do believe that we have significant UHP growth opportunities. We believe the markets will grow annually by roughly 8% CAGR. That's what we assume in terms of global UHP growth. And obviously, we don't want to lose market share. We want to rather gain market share. But this gives you -- even if we would only grow in line with the market, the growth rates we should accomplish in the area of UHP tires and the share of UHP tires of our total business, I think this was in the presentation all the details are in the 55% for our total portfolio, I think, 65% or 62%, sorry, of our Continental branded business. And this should further significantly increase. Market share gains besides UHP, I mean, you know, we generated 53% of our total business last year in the EMEA region, 33% in Americas and 14% in APAC. So obviously, it will be probably difficult to gain relevant market shares in the EMEA region, where we are definitely more in the defending mode, whereas we have significant growth opportunities with the market, but beyond the market by gaining market share in the Americas, focusing on North America and in Asia, given the size of the market relative to the share of our total business, I think it becomes very clear that we have the significant growth opportunities. Roland Welzbacher: Let me continue, Monica, Roland here with your question on raw mat and oil price and assumptions and so on. So let me start with the raw mat impact. As I said earlier, in Q1, we're expecting a mid- to high-double-digit euro million amount then probably partially offset by some revaluation effect on the stocks. For the full year, then obviously, it's going to fade out substantially in the second half. So for the full year, it would still be a triple-digit euro million amount, the base assumption. So big plus in the first half and then leveling out in the second half. Now that was before Iran. That's a pre-Iran situation. So also on the oil prices, we anticipated that basically the level of Jan and Feb will basically continue throughout the year. It remains to be seen now to what level and which level is sustainable throughout the year '26. And if it would be a substantially higher level than we initially assumed. And obviously, we have a lot of less tailwind on the raw material side. And then we would also have to look into measures in order to bring down costs in other areas and also then look at market-based mitigation measures like we did with tariffs and FX last year. Does that answer your question? Monica Bosio: Okay. Yes. Operator: The last question for today, a follow-up from Akshat Kacker again. Akshat Kacker: Akshat from JPMorgan. A couple of quick follow-ups. The first one on the free cash flow bridge. Could you just share your expectations around the different elements? You clearly expect EBITDA to improve year-over-year, absolute CapEx is expected to be higher, so that might be an offset. Do you see any room for working capital optimization or improvement with your free cash flow guide for 2026? That's the first one. And the second one, a follow-up on the tire bridge. You talk about business inflation being partly offset by portfolio measures. Could you just give us some more details on expected business inflation this year and how much of that can be offset? Roland Welzbacher: Yes. Akshat -- let me -- Roland here. Let me take the first question on the cash flow. I think you would expect some improvement on the EBITDA side, obviously, because this must be our target for this year to improve earnings and we have all the right measures in place to be able to do that. CapEx, I would say, slightly increased in terms of percentage on net sales as well as an absolute amount, not a big step but slightly increased. And then on working capital side, I would not see much room for movement or contribution. So that's my view on cash flow. And your second question? Christian Kotz: I think if I got it right, Akshat, you asked for how much of the general -- I mean, in my words, how much of the general inflation we feel we can offset with portfolio measures, more or less, was this the question? Akshat Kacker: Yes, please. Christian Kotz: Okay. So I mean if you take a look at 2025 without going into the details, we had obviously some -- I mean we had the general inflation effect. And we had some on the cost side, especially on the period expense side. And we had some, let me say, compensating effects. One is, as much as FX overall hurts. It obviously helps a little bit to offset and compensate the inflation in euros. And the second part is the portfolio measures. And we more or less for 2025 kept, therefore, our costs in euros -- the fixed costs roughly stable. Very, very little inflation. So dependent on how things will develop in 2026, we definitely have the intent to get to, hopefully, similar levels but it remains to be seen, obviously, on the one side, what happens to the FX. So it helps us on the cost side. It hurts us on the sales side. If I can wish, then I definitely wish for a stronger dollar for the bottom line. And second part is how much of the pending portfolio measures we are working on. And you know, for example, we are working on trying to sell our retail operations in France, which would have a pretty significant impact depending on how much progress we can accomplish in all of those projects. Intent continues to be to offset at best, all of the inflationary effects, but too early to quantify now. Operator: Thank you all so very much for my side, ladies and gentlemen. As there are no questions in the queue, I am closing the Q&A session and handing the floor back over to your host. Max Westmeyer: Yes. Thank you very much, spot on in terms of timing. Thank you all for participating in today's call. And sorry again for the technical difficulties. As always, we, on the Continental Investor Relations site are available, should you have any follow-up questions. And as I mentioned already, our annual report with all the details around 2025 will be published on March 19. With that, we conclude today's call. Thank you very much, and goodbye.
Operator: Ladies and gentlemen, thank you for standing by. Welcome to Leumi's Fourth Quarter 2025 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, March 4, 2026. I would like to remind everyone that forward-looking statements for the respected company's business, financial condition and results of its operations are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated. Such forward-looking statements include, but are not limited to product demand, pricing, market acceptance, changing economic conditions, risks in product and technology development and the effect of the company's accounting policies as well as certain other risk factors, which are detailed from time to time in the company's filings with the various securities authorities. I would now like to turn over the call to Mr. Michael Klahr, Head of Investor Relations. Mr. Klahr, please go ahead. Michael Klahr: Ladies and gentlemen, thank you for joining Bank Leumi's Fourth Quarter and Full Year 2025 Financial Results Webcast. Joining me today are Leumi's CEO, Mr. Hanan Friedman; and Leumi's CFO, Ms. Hagit Argov. Following their remarks, we will open the session for a Q&A. Hanan, please go ahead. The floor is yours. Hanan Friedman: Thank you, [indiscernible]. Good afternoon, and thank you for joining Leumi's annual results conference call. Before turning to our strategy and reviewing our 2025 financial results, let me briefly address the current situation in our region. 5 days ago, the United States and Israel initiated a coordinated military operation against Iran. Bank Leumi entered this war from a position of strength, with a solid capital buffers and high liquidity. The bank continues to operate almost as usual, supported by robust business continuity plans and disciplined risk management. At this stage, we do not see any material impact on the bank's financial position. We continue to closely monitor developments and ready to deal with any request of our customers. Now allow me to turn to our strategy and the key drivers of our 2025 performance and our plans for 2026 and ahead. For many years, the prevailing belief in the banking sector was that growth strategy requires a continuous expansion of the workforce, great risk taking and inevitable raising credit losses. We at Leumi fundamentally challenged this paradigm. Over the past few years, we have redefined what disciplined growth means, leveraging technology enabled us to execute sustainable and healthy growth. We did this while keeping strict risk management and did much more with fewer resources, even much fewer resources. We also got much better results in all aspects, credit portfolio quality, efficiency and customer satisfaction. We are accelerating our strategy by leveraging innovative AI tools that have the potential to reshape our cost structure and our business and technology capabilities. We view AI not as a temporary efficiency tool, but as a long-term strategic asset. We have benefited from the rapid journey we held over the last years to the cloud and from the transformation of many of our technology platforms. To ensure execution and fast execution, we established a dedicated AI center last year. Looking ahead, we are focused on the transition towards agentic AI systems that are capable to ensure proactive real-time execution rather than just the data analysis. This shift is aimed at providing hyper-personalized products and the proactive real-time service model. It will accelerate the service shift the bank has led in recent years. Furthermore, we'll integrate AI tools into high-impact core functions, including underwriting, credit portfolio management, product management and customer journeys, and probably with even more powerful impact to rapid and effective software development with much less resources and much shorter time to market, and with, of course, much greater product innovation. Leumi holds several structural advantage in this field. First, our AI leadership report directly to me, ensuring that the development is a top-down strategic priority. Second, our advanced cloud and data architecture provide the necessary foundation for scaling these tools efficiently. Finally, our access to Israeli premier technology talent is a critical advantage in our ability to execute and to execute fast. We intend to lead this transformation and not to follow, just as we have led the digital evolution of the Israeli banking system in recent years. Our financial results for 2025 validates this approach once again. Despite the significant challenges Israel has faced over the past year, we delivered record profits, the highest in our history. This performance reflects the strength of a strategy built on structural efficiency, technological transformation and effective risk management. I am proud to share that we met and in several areas even exceeded the ambitious strategic targets we set and published a year ago. Our net profit reached to ILS 10.3 billion within the ILS 9 billion to ILS 11 billion range we defined. ROE was 15.8%, fully aligned with our 15% to 16% target that we published a year ago. In addition, we achieved a responsible credit growth of 14%, above our 8% to 10% target, leveraging opportunities we picked during the year. More importantly, this accelerated growth was achieved while further strengthening our credit quality. Our NPL, the nonperforming loans, ratio declined to 0.4%, positioning us at a strong level by international standards. In other words, we are expanding above market pace while becoming structurally more resilient. Today, we also announced a ILS 1.7 billion payout, mostly cash and partially buyback in respect of fourth quarter earnings. The total payout for 2025 summed to ILS 5.9 billion, almost ILS 6 billion. This brings full year capital return of 58% of net income fully [ consistent ] with our strategic capital framework that was above 15% payout. Dividend yields reached 6.5% in 2025. Our efficiency ratio improved further to 29.3%, placing us among the most efficient banks globally. This is the direct results of our multiyear technological transformation and our clear strategy to do much more with fewer resources. And as I mentioned, even with much fewer resources. Our AI center will enable us to accelerate this transformation over the coming years and to do even better. The consistent execution of our strategy and the strength of our results are reflected in continued investor confidence. Several months ago, we became the first Israeli company traded on Tel Aviv Stock Exchange to surplus a market cap of ILS 100 billion. Earlier this year, we also became the first Israeli bank to issue covered bonds in the European market, raising EUR 750 million. These bonds were rated above Israel's sovereign credit rating and were priced at a lower interest rate, reflecting sustained confidence in the bank among international investors, many of them are first time investing in Bank Leumi and in Israel. This transaction further diversified our funding base and strengthened our access to global capital markets. Looking forward to 2026, Bank of Israel recently revised its growth focus to the Israel economy upward to 5.2%. As Israel's leading bank, we expect to play a meaningful role in supporting this economic expansion and to be benefited from that. Today, alongside our financial results, we also released our updated financial targets for 2026 and now for 2027 as well, including raising of our net profit forecast to ILS 10 billion to ILS 12 billion per year. Accordingly, we have adjusted our ROE targets for 2026 and for 2027 to 14.5% to 16%, in line with our capital surplus. Despite the expectation of declining interest rates and diminishing inflation, we are confident in our ability to maintain high profitability. The positive macro environment, combined with our ongoing integration of advanced AI and technology provides a strong foundation for continued acceleration growth and value creation for our shareholders. Our targets are to a capital return of 50% to 65% on an annual basis and annual credit growth of 8% to 10%. A meaningful portion of credit expansion will come from infrastructure financing, project finance, an important segment supported by a visible and growing multiyear pipeline. At Bank Leumi, we have identified this sector as a strategic growth engine. Accordingly, we have allocated the necessary resources and intend to continue leading the financing in this field. In addition, we'll continue to focus our growth on strategic segments such as real estate, retail mortgages and retail banking. And I want to comment as we have proved in the past, growth will not come at the expense of returns or credit quality. We'll do both of them. Discipline remains the foundation of our business model. I would like to take this opportunity and thank our Board members, my colleagues in the management team of Bank Leumi, our dedicated employees, our customers and, of course, you, our investors, for your continued trust and support. I will now ask Ms. Hagit Argov, our CFO, to walk us through the financial results in more details. Please, Hagit. Hagit Argov: Thank you, Hanan. And as you mentioned, we are living in a very challenging and dynamic times. Good day, everyone. I'm very pleased to be here with you today and to present our strong results for the fourth quarter and an excellent full year 2025. Before we dive into the numbers, I'd like to share a few words on the macroeconomic environment, which relates mainly to 2025 and our last forecast for 2026, which was made before the outbreak of the present conflict. As Hanan mentioned, we are continuing to monitor the situation closely. For this, let's move to the next slide, which highlights the very positive key macro indicators. Economic activity continued to expand in Q4 2025. Throughout 2025, Israel's market-based risk indicators improved all across the board. This includes a decline of Israel's CDS spread, Israel's yield differentials, the strengthening of the shekel and strong performance of the Tel Aviv Stock Exchange. The labor market remains tight with the 2025 unemployment rate at 2.9%, a historically low level. Inflation stabilized in 2025 at 2.6% year-over-year and declined to 1.8% in January 2026 in annual terms. It is expected to remain within the Bank of Israel price stability target range of 1% to 3% throughout 2026. In January this year, the Bank of Israel updated its estimation on the real GDP growth to 5.2% for 2026 in light of the continued economic recovery in the last 2 quarters of 2025. Regarding the latest events with Iran in the macro environment, as Hanan mentioned, this event will have both short-term and long-term economic impacts. We are monitoring them closely and remain optimistic. Moving on to the next slide, which provides our financial highlights for the especially strong full year and first quarter results. First, as mentioned earlier by Hanan, we successfully achieved the targets we set at the beginning of the year and exceeded our annual net loan growth target. Net income for 2025 was ILS 10.3 billion, an all-time high performance for the bank. ROE was 15.8%. Our excess capital remains high, amounting to ILS 10 billion. I must point out that if the excess capital were reduced to the bank's internal CET1 target, the ROE for 2025 would have been 17.9%. Driven by effective cost management and our advanced digital technology and AI, our cost-to-income ratio was 29.3%. It continues to lead the Israeli banking sector and is among the best globally. Net loans grew nicely and were up 14.1% in 2025, exceeding the annual target as mentioned earlier. This was supported by continued demand mainly from the corporate sector including infrastructure and real estate as well as mortgages, commercial and capital market segment. At the same time, it is important to note that we continue to improve our credit quality metrics and they have been consistently among the best in the sector for several years. Credit loss expenses ratio was 0.09%, reflecting the positive development in the geopolitical and macro environment and the improvement of our credit quality metrics. The book value per share increased impressively by 12% year-over-year to almost ILS 46. Looking at the fourth quarter on the right, net income was ILS 2.55 billion. ROE was 15.1% and when normalized to our CET1 internal target, the ROE would stand at 16.8%. The credit portfolio increased by 5% over the previous quarter mainly driven by continued demand from the corporate real estate and capital market segment. Now let me elaborate on breakdown of income and expenses for the full year. Net interest income increased by 2.1% year-over-year, supported by higher volumes. This was partly offset by lower CPI effects. Noninterest income was down mainly due to lower income from derivatives that age our securities portfolio. As a reminder, for accounting reasons, the cost of the derivatives is recorded in the P&L while the gains in the bank securities portfolio are recorded directly in the equity account. Overall, finance income was up 0.9% year-over-year. Fees grew strongly by 6.8%, excluding customer benefits provided under the Bank of Israel program launched in April 2025, fee income increased 10.7% year-over-year. Expenses declined mainly due to a decrease in salary cost of 7.4%. This was partly offset by higher expenses related to capital market activity due to higher volumes. As a result of the above, profit after tax, bottom right, increased year-over-year by 5%. A brief view of the next slide that summarizes our results for the quarter. Net interest income in the fourth quarter was similar to the same period last year. The impact of lower CPI was offset by strong growth in both loans and deposits. Noninterest income decreased due to a lower income from derivative year-over-year, while the gains of the portfolio were recorded directly to equity, as I mentioned before. Fees increased by 7.8% year-over-year and excluding benefit to customer by 9.7%, mainly driven by financial transactions and securities fees. Salary costs were down 5.7%, and overall expenses decreased by 0.8% compared with Q4 2024. Profit after tax increased by 5.5% year-over-year. Moving to the quarterly development of net interest income and NIM. In the first quarter, net interest income and NIM were affected by a negative CPI as well as by reductions in the Bank of Israel and the Fed interest rates. Excluding CPI impact, NIM improved over the previous quarter. This was driven by lower costs of deposits due to the favorable mix. Now let's turn to another key metric, highlighting our fee and commission income. Fees were up 6.8% for the full year in 2025 and excluding benefits to customers, were up 10.7%. In the fourth quarter, fees were up 7.8% compared with Q4 2024, and excluding benefits to customer, were up 9.7%. This was mainly due to higher financial and securities transactions. Turning to the next slide, where we clearly see the bank's continuing improvement in our excellent multiyear cost-income ratio. In 2025, once again, we proudly delivered among the strongest cost-income ratios in the sector of 29.3%. It was driven by an ongoing cost control, reflecting the impact of our sustained multiyear investment in technology. Turning to the development of credit loss provisions. For the past 8 quarters, we have recorded an income from specific provisions, which reflects our high-quality credit portfolio. Collective provisions reflect an improvement in the macro environment and in our credit quality indicators. Overall, on an annual basis, total loan loss expenses were 0.09% of gross loans compared with 0.16% in the previous year, while maintaining our strong coverage ratio. Next slide presents the high quality of our credit portfolio. Despite strong credit growth, asset quality improved further, nonperforming loans declined to 0.4% and troubled debts decreased to 1.24% of gross loans. We maintained a strong coverage ratio, while the bank's provisions for bad debts covers NPLs by 3.2x. These parameters remain the strongest in the banking sector. Now we turn to our strong credit growth. In 2025, net loans increased by 14.1%, outperforming our strategic annual target. Main growth engines this year were the corporate sector, consisting mainly of infrastructure, real estate and commercial credit, along with capital market and mortgages. In Q4, the credit grew by 5% with growth coming from corporate, including real estate and capital markets. The next slide shows the bank's diversified deposit base. Total deposits were up 11.1% in 2025, while deposits from private individuals grew by 0.5%. Liquidity ratios remained robust with the liquidity coverage ratio at 127%, well above the regulatory requirement of 100%. We also maintained a healthy loan-to-deposit ratio of 75.7%. Let's now move on to our strong capital and leverage ratios. The core Tier 1 ratio was 12.05% compared with 12.33% in the previous quarter mainly due to higher activity. The bank's capital buffer now stands at ILS 10 billion. The total capital ratio was at 14.08%, above the bank minimum requirement of 13.5% after making an early redemption of Tier 2 subordinated notes in U.S. dollar. Turning to the next slide. We see the bank's capital return. For the fourth quarter, Leumi declared a total payout of ILS 1.7 billion, of which ILS 1.3 billion is a cash dividend and the rest in buyback. This represents 65% of the quarterly net profit. The total capital return for the full year of 2025 was ILS 5.9 billion, reflecting 58% of the annual net profit and a dividend yield of 6.5% based on the average share price. Furthermore, the Board approved an updated dividend policy of the bank, according to which the total payout ratio would be between 50% and 65% of the quarterly net profit, while up to 50% of the profit is a cash dividend. In conclusion, let me just summarize our presentation. The bank continues to present consistent and strong financial performance with high ROE. We are very proud to state that our digital transformation powered by advanced AI capabilities continues to drive structural efficiency gains. In fact, above 90% of all our customer transactions are carried out through digital platforms. Our best cost-to-income ratio is a direct outcome of our advanced technology and AI, along with our strict discipline on costs, and is the leading cost-to-income ratio among Israeli banks and probably among the most efficiency globally. The bank's strong profitability and healthy capital buffer enable us to continue growing in our target segment, and also allow us to share higher returns with shareholders through dividends and our buyback program. Let me conclude with one final point. We are more than sure that going forward, we will continue achieving our targets and leading the AI transformation in the banking sector. With that, I will now open the call for questions. Operator? Operator: [Operator Instructions] The first question is from Chris Reimer. Chris Reimer: [indiscernible] From Barclays. Operator: Chris, can you hear us? Hanan Friedman: Hardly hear you. Chris Reimer: I was wondering if you could talk a little bit about what's driving your confidence around the strong loan growth targets? Hanan Friedman: All right. Thank you, Chris, for the question. The main factor is, of course, our ability to continue our growth strategy and our growth with keeping the right margins, the right ROE and, of course, the right limited risk appetite that we have. In the coming years, as I mentioned in my notes, in our pipeline, we have many infrastructure projects that we are financing largely and maybe an even huge project finance. So we know well what we have in our pipeline for the coming years. And on top of it, as we know, and we have deep knowledge of the Israel economy, in the coming years, there will be huge investments in the infrastructure in Israel, power stations, data centers, destination centers, and of course, the largest is a huge transportation projects and the largest ever is the metro of the Tel Aviv area, we have the confidence that we will be able to increase our loan book even greater [ even than ] the growth of the Israeli GDP. It's also worth to mention that the 5.2% forecast of Bank of Israel is in real terms. If you add to that the expected inflation, so it's a -- at least 2% above it. And we are aiming to grow even greater, mainly from the segments that I mentioned, the infrastructure is -- maybe is the largest opportunity, but we have many others like real estate for residential projects and mortgages. Chris Reimer: That's great color. On expenses, you touched on the benefits from AI, given the potential advantages, could we then potentially see year-on-year declines in expenses? Hanan Friedman: So firstly, we declined our expenses this year. Despite all the challenges that we have and the -- to run the bank with all the challenges that we experienced, cost money. And even though we decreased our expenses, I want also to mention that in our long-term plans, we aim to close our operational division by mid-2027 since we successfully already implemented some AI projects, and we finished it on time. We decided to close this division. It was a quite a large division of the bank at the end of 2025. So the impact of that will be mainly in the coming years. Now the AI for us, as Hagit and I mentioned, it's not just for cost saving. It's mostly on top of the cost saving for having better business advantage among the competition and on top of it to be much more efficient in our technology investments. We already experienced in a few cases, not -- yet not many, but enough to get the confidence that with AI tools we could launch new technology projects and renovate our platforms much faster than in the past. Projects that were planned for a year, we finished -- 2 projects that we have planned for over a year, we finished within a matter of a month. And this is just the beginning. I strongly believe that we could do much better in our technology investments to reduce the expenses in one end and to have much more outcome in the other end. Operator: The next question is from David Taranto. David Taranto: This is David Taranto with Bank of America. I have 4 questions, please. The first 1 is on net interest margin. Core NIM, excluding the CPI improved in this quarter. Could you please elaborate a bit on the key drivers here. During the presentation, you mentioned the positive dynamics on the deposit side, but what exactly drove the better loan spreads in this quarter? Was it a mix or repricing or any other thing? What I'm trying to understand is which of the drivers were structural rather than timing related? Hagit Argov: So regarding the NIM in the fourth quarter, as I mentioned in my presentation, it was the mix of the deposits. As Hanan mentioned, we issued the covered bond and we improved our deposits. It's also the interest rate, the decrease in the fourth quarter. And the additional driver is our growth in credit that gives us a higher margin than other assets in the balance sheet. David Taranto: Okay. That's clear. Second question is also on NIM. For 2026, should we assume relatively stronger NIM in the first half and somewhat softer in the second half as rates fall, of deposit competition and loan repricing shape the quarterly path for this year? Hagit Argov: Okay. So going forward, we believe that at least we can maintain our NIM in the same level and even improve them, thanks to the decrease in the deposit cost. And also, we believe that as Bank of Israel is the limits of the dividend payout, the capital access will be lower. So I think that we can even improve the margins in the market. Hanan Friedman: And maybe one additional comment. In the last year, we onboard much more new customers than we onboard in previous years. It's a matter of timing until we receive their deposits and their current account, which is also is the best passive tool that we could receive from them. And we are aiming to continue with this process. We invested a lot in order to become the bank with the highest customer satisfaction. According to Bank of Israel survey that was published 3 weeks ago, we became the #1 in customer satisfaction among the large banks in Israel. And we are aiming to collect the fruits of these investments. We already collect some of the fruits, but we are aiming to collect much more fruits. And I mean, mostly to have much more deposits and the balances in the current account from these customers. So this is the additional component. It's a matter of timing. Alongside with the topics that Hagit mentioned and alongside other initiatives that we are going to launch in order to win the competition in the deposit segment -- deposits segments. David Taranto: And the third question is on the macro expectations. Your '26, '27 guidance assumes an average policy rate of 3.2% to 3.7% according to the presentation. Does that imply a trough around 3% end of this year and pull back towards 3% to 4% levels by the end of next year? If not, what year-end rates are you assuming in your guidance, please? Hagit Argov: We include all these assumptions in our targets, and we think that we took into account all the assumptions that you just mentioned. And we monitor it closely in 2026 and 2027. So it include those parameters. Hanan Friedman: We detailed in the notes to the presentation and in our financials, all the assumptions that we took in our calculation. It's there, so you could review it easily. And if you have any further questions regarding that, of course, we could elaborate. David Taranto: All right. And last question is on asset quality. With coverage ratio still well above historical norms and credit quality holding firm. Is there a realistic scope for provision reversals over the coming quarters? And would such reversals require explicit regulatory approval? Or is it up to the management decision? Hagit Argov: About the provisions, we still have a large buffers in our collective provision due to the war that we had in -- during the last 2 years. It really depends what happened for going forward. No, we don't see any significant impact that we need to increase these provisions, but we will monitor it. The regulator, I believe, will not [ intervening ], if it will not be something significant to [indiscernible]. But it really depends what happens. Operator: The next question is from David Kaplan. The next question is from Canberk Benning. Canberk Benning: Can you hear me okay? Hanan Friedman: Yes. Canberk Benning: This is Can Benning from Citi. Just a couple of questions. First one is on the large excess capital amount. I'm just wondering, obviously, it's ILS 10 billion and I know you have a normalized ROE ratio on your presentation, but I'm just wondering what you're going to do with this large excess capital amount. Is that included in the 50% to 65% distribution target that you've given? Or is there going to be an extraordinary dividend perhaps in the next year? Hanan Friedman: So thank you for the question. It's an important question. So first of all, when we announced the new dividend policy of 50% to 65%. It will -- it was also -- it was partially based on the fact that we have the ILS 10 billion surplus. But assuming we will continue to produce around 15% and above that percent ROE and distribute, let's say, a bit above the half of it. It supports a growth of greater than 10% because 30% of our loan book is mortgages with much lower RWA. And therefore, we expect that the ILS 10 billion will still be a large buffer that we'll have on one hand, adverse effect on our ROE. But in the other way, give us the confidence that we will be able to pick opportunities along the way. Now we -- of course, we will have to deal with that, but we have to pick the right time and approach Bank of Israel with the relevant request to release this large amount. But in the meantime, I think in the meantime in the current macro environment that could create very, very nice opportunities for us. I think it's a bit too early. Maybe along the year, we will find the right time to deal with -- that way with Bank of Israel and get and receive their approval to distribute at least the majority of it. Canberk Benning: And then the second question is on credit growth. So you've obviously got similar targets to the previous year. I'm just wondering, is there any specific areas of credit growth if you're looking at in particular? So for instance, in the last year, you've had strong credit growth in the corporate segment. I'm wondering if that's an area you're targeting again? Or are you looking at mortgages or retail loans? Hanan Friedman: So I think that the largest opportunity and the largest credit growth potential will come from the project finance. As I mentioned in our -- my notes earlier, we established dedicated, very experienced team that deal with this very complicated deals. And the fact that the deals are a bit complicated with -- we need to have a deep understanding of the Israeli regulation and the mechanism of the market and the governmental requirements, it gives us an advantage because as you see in the -- all of the large project finance deals that were launched in the last 5 years, I think, none of the international banks act as the leader of the syndication. In the last year, the vast majority of the cases, we were the leader of the syndication. And of course, it gives us a quite large opportunity to continue with our rapid growth and the risk here is quite remote because at the end of the day, most of the projects are based by governmental guarantee or governmental minimum request, minimum demand on the day that the project will be launched. And therefore, the risk is quite remote, and we have the experience and the capabilities how to underwrite it well and how to run the portfolio well. So this is one major segment. The other, I believe, will continue to be the retail mortgages, the residential projects, the real estate residential projects that continue to be quite a nice component of our loan book, and I remind you that our credit portfolio in this segment is very, very good. The absorption -- we have no projects with absorption rate of less than 25%. And the majority, 56% of the of the projects are above 50%, which gives you some very strong color regarding how we manage the risk. And I think that the results speak for themselves, the NPL in the real estate is very low, far lower than the competition. So this will be the main focus growing segments for us for the coming years. Canberk Benning: And then my final question is actually on fees. So I noticed that you had sort of a fee growth year-on-year of about 6.8% to 7%. And I think in a lower rate environment with lower CPI, that actually could be quite beneficial. I'm just wondering what sort of you think the run rate of fees is going forward. So is it going to be around the same number, 7% year-on-year or higher or lower than that? Hanan Friedman: So maybe I will start, and Hagit will elaborate. The main driver for the fees increase derived from the capital markets activity mainly with institutional investors and the foreign banks that became -- become more and more active in the Israeli capital markets. So of course, we have benefited from that. And the Israeli institutional investors AUM is increasing dramatically every year about ILS 70 billion. It's -- the majority of the increase in these fees are not from the retail. But we also do quite a good job in the retail segment. The other main component of the fees increase is from our credit business. When we are leading syndication and other stuff, of course, we collect fees. And since the transactions that we are leaving are becoming greater and greater, we have benefited from that in the bottom line of our fiscal action. Hagit Argov: This is the main drivers for the fees, and we believe that it will be at least in the same level and even greater in the next years. Operator: Next -- David Kaplan. David Kaplan: Can you hear me the time around? Hanan Friedman: Yes. Hagit Argov: Yes. Yes. Go ahead, David. David Kaplan: Okay. Good. I had a quick question on NIM. In the fourth quarter, as you show on Slide 13, interestingly enough, the excluding CPI was higher than the reported NIM as opposed to how it is over the -- most quarters. Can you explain exactly what happened there, I guess, on the liability side or maybe on the asset side that made that happen? Hagit Argov: Yes. So as I mentioned in my presentation, thank you for the question. The NIM affected -- excluding the CPI from the mix of our deposit that were better in the fourth quarter. Thanks to the mix of the deposits and also the decrease in the interest rate and also from the significant growth in our credit portfolio. Hanan Friedman: It's both from the liability side and from the... Hagit Argov: From the both side. David Kaplan: Okay. So if we're talking about -- let's talk about deposits for a second. And on that side of the balance sheet, I see that the noninterest-bearing -- sorry, on the -- sorry, noninterest-bearing deposits are currently at around 28% of your total deposit base. Given that the interest rates have been relatively high over the last 1 year, 1.5 years as opposed to where we were at 0 interest rates a couple of years ago, I would have expected that number to be lower as a percentage of your base. And I think as we're heading now into potentially another lower interest rate environment, how do you see that playing out? Do you see people moving deposits out of the bank, looking for other areas of investing rather than deposit base? Because that -- again, it doesn't seem that either the growth of deposits or the percentage of deposits that are being put in interest-bearing is actually quite that high. Hanan Friedman: So thank you for that question. It's a very important point. So from past experience and also from the experience of the last period and also from what we seen from other banks in the state that already published figures regarding that, when the interest rates decrease, the balances in the current accounts increase. So the nonbearing interest deposits become a greater percentage of our total loan -- our total deposit portfolio. So you're right, when the interest rate was quite high, it shrink to about 20%, but the expectation from a past experience is that now it would increase step by step. David Kaplan: Okay. And then if we're talking about noninterest bearing, I'll move over to the asset side for a second. And I see you also had about 9% growth in noninterest-bearing assets year-on-year. Where is that growth coming from? Hanan Friedman: Which growth? David Kaplan: Noninterest-bearing assets. We can talk -- we can take it off-line if we can -- it should be in the Appendix 1 in the back. Anyway, we can get back to it. I can -- we can discuss it offline. My other question, just really more housekeeping question has to do with your normalized ROE of 17.9%, which you said -- which in the notes you write here is based on the bank's internal CET1 target. Is that a target that you published or discussed so that we can kind of think more broadly about generally, the -- what I like to call capital inefficiency that we see in Israeli banks. Hanan Friedman: It's the internal targets, which consists of the regulatory requirements plus the internal buffers that we decided to add to the regulatory requirements. We are -- we have a conservative approach. So in this matter, we also prefer to be conservative and to have a quite large buffer. David Kaplan: Okay. So just if I'm understanding correctly, though, you talked about a normalized ROE which takes into account the bank's internal CET1 target and that ROE is higher than the reported ROE. Hagit Argov: Yes. Hanan Friedman: Yes. David Kaplan: So I'm missing what -- where that delta is coming from? It's in -- are you at your internal target? Or are you even above your internal target because you're being conservative, I guess, is the question? Hanan Friedman: No, it's above our -- the ILS 10 billion, it's above our internal buffers. The fact that it's still there, it's because we are not allowed to distribute it as a onetime large dividend. We are -- during the war, we were kept to 40% of the quarterly net income. And now we got the permission last quarter to 75%. Now we got the permission to 65%. And we are aiming to continue with this journey. But as I mentioned, the surplus above our capital requirements plus the internal buffer is expected to remain as long as we will not make a onetime large dividend. Operator: The next question is from Mike Mayo. Michael Mayo: Can you give -- it's Mike Mayo with Wells Fargo Securities. Can you give an update on your thinking about AI and the impact on head count and there's certainly a big debate about the ability of AI to free up the no joy job or the no joy part of jobs. Hanan Friedman: So thank you for that question. We already have quite a very good experience in AI that replace people, mainly in the back office, but now also in the front office. As I mentioned, we closed our operational division. And we took the decision about 1.5 years before the initial plan because we realized that with the power of AI that we already implemented part of the initiatives and replaced many people. We will be able to to continue with this journey even in a more effective way. And as I said, we have quite good examples. We have subdivisions or departments that we entirely closed. We keep it to just 1 or 2 people just to run controls. And the AI replaced dozens of people that run this back-office job for many years. So in -- from our experience and our perspective looking forward, we will be able to leverage AI cost saving and for doing much better in our business segments. Michael Mayo: And you and the country are going through very strong times, how is your cybersecurity performing relative to your expectations? Hanan Friedman: So the cybersecurity, the CSO and this team are involved in each and every project from beginning and the way that we build the platforms and we build the capabilities are -- it's totally monitored and designed together with our cybersecurity people. Operator: The next question is from Valentina. Hanan Friedman: Valentina, we cannot hear you. Operator: Valentina, can you click the unmute button. There are no further questions at this time. This concludes Leumi's Fourth Quarter 2025 Results Conference Call. Thank you for your participation. You may go ahead and disconnect.
Michael Preuss: Hello, everybody, and welcome to our Financial News Conference for the Full Year 2025 and the Outlook for 2026. Many thanks for joining us today. To begin, Bill Anderson will share his perspective on our performance and the path ahead of us. Heike Prinz will provide an update on the progress of our Dynamic Shared Ownership operating model; and Wolfgang Nickl will provide an overview of our financials in 2025 and the group outlook for 2026. We will then hear from Rodrigo Santos, Stefan Oelrich, and Julio Triana on the performance of our divisions and the plans going forward to execute their respective strategies. We also have a chance to briefly hear from our new Board member, Judith Hartmann, who joined the company on March 1. Now before starting, I would like to briefly draw your attention to the cautionary language included in our safe harbor statement. And with that, over to you, Bill. William Anderson: Thanks, Michael. Thank all of you for joining us today, and we're really happy to go through our 2025 results and provide an outlook for 2026. But before doing that, I want to share a short update on company leadership. As we announced in November, Judith Hartmann has joined the company and the Board of Management as of March 1, and she'll take over as CFO in June. But between now and then, she'll be busy getting to know the company and its stakeholders. But we wanted to give you the chance to hear from her today. So before getting into our results, I'm going to turn it over to Judith, who's joining from one of our pharma facilities here in Germany. Judith Hartmann: Thanks, Bill. And yes, I have started my discovery tour of Bayer today here in Buckautal, Germany. It's an impressive site, and I have already had some great conversations here this morning with our Pharma R&D team. I'm eager to learn much more about all of the businesses, of course, in the next few weeks ahead of me. So yes, this is only my third day, but I'm very pleased to have joined Team Bayer. Health and Nutrition are personal passions for me, and I am very excited to contribute to a company that truly makes a difference in people's lives. The mission, Health for All, Hunger for None, really resonates with me, and I can already see many great things happening at Bayer. Our novel operating model, Dynamic Shared Ownership, our investment in AI, both of these are very important levers to accelerate our business. And most importantly, I have already been impressed by our passionate and talented people. I'm looking forward to continuing my onboarding over the next months as I prepare to take over as CFO from Wolfgang in June. I will have the opportunity to meet many people: customers, stakeholders, employees, and I'm sure many of you over time. Until then, I'll turn it back over to you, Bill. William Anderson: Great. Thanks, Judith. Well, let's start with 2025. In July, we upgraded our currency-adjusted sales and earnings guidance for the year. Today, we're announcing that we delivered that guidance, landing comfortably within the improved corridor. Sales came in at EUR 45.5 billion, and we posted core earnings per share of EUR 4.91. And our free cash flow came in at EUR 2.1 billion. Here's a picture of our businesses. Crop Science progressed in the first year of its profitability improvement program, a rejuvenated picture of our Pharmaceuticals business emerged with launch medicines establishing themselves as growth drivers and others advancing through our pipeline to the market. Our Consumer Health business suffered from market softness in the United States and China, but maintained the bottom line. And across the firm, we're seeing improvements to the way we operate. Launches are moving with great speed. Resources are moving more fluidly. Our organization is considerably flatter and leaner, less managerial and more mission oriented. We have roughly half as many layers and have reduced management by 2/3 compared with when we kicked off this work. The 88,000 people of Bayer are doing more faster with less. All-in-all, we recognized progress on our comprehensive turnaround plan, but the journey is far from over. There's much more to do in each of our priorities, in each of our businesses. Our focus is on the important work ahead. One of those key priorities is significantly containing litigation. Two weeks ago, Monsanto and plaintiffs lawyers in the U.S. announced a nationwide class settlement to resolve eligible, current and future cases in the glyphosate litigation. Today, I want to reiterate a few key points. First, the class settlement is moving through approvals. Just as we said 2 weeks ago, we're confident in the merits of the agreement. We await the judge's ruling and will be ready for any scenario. Second, Monsanto has filed its opening briefs with the U.S. Supreme Court, and the case has received strong support in the form of amicus briefs from the U.S. government, Attorneys General in 15 states the U.S. Chamber of Commerce and many others. We will continue preparing our case in anticipation of a ruling likely in the second half of June. We're particularly grateful for the backing we've gotten from farmer groups across the United States who know better than anyone how important glyphosate is for their work. In fact, the White House recently recognized how essential glyphosate is for U.S. Food Security with an executive order. We share that view, and we're fully prepared to comply. Overall, our multipronged strategy proceeds at pace. We know we have some important milestones ahead of us. We'll stay focused on taking the right steps for the company and remaining prepared for all outcomes. Beyond that, this issue has garnered a lot of attention lately. And in the coming months, we expect a rigorous debate about American agriculture and what's needed to create a food system that's robust, sustainable, healthy and regulated by sound science. We appreciate that people come to this issue with a range of opinions, and we welcome that conversation. Most importantly, we've got to be clear on the facts. Fact one, glyphosate safety is resoundingly confirmed by regulators, more than 50 countries, including the U.S., Canada, countries across Europe, all say so. These are thorough reviews, not designed at getting clicks or going viral, but carefully assessing risk and reaching scientific assessments. Fact two, Glyphosate is essential for agriculture and food systems. It keeps carbon in the soil and protects harvest from being wiped out by weeds. It keeps a trip to the grocery store affordable at a time when food prices are a topic of concern. American farmers are a bedrock of the nation's economy and a force for food security around the world. We want to keep it that way. Fact three, litigation in the U.S. is big business. Litigation costs amount to more than $600 billion a year. That's taking more than $4,000 out of the pockets of every American household every year. And it's growing, thanks to backing by private equity and foreign investors who enjoy tax-free returns. Last week, the Washington Post called on Congress to pass tort reform and specifically cited the glyphosate litigation as an example of how this system has gone wrong. The next time the narrative is framed as sticking it to the big corporation, people should question who is actually the big corporation here and who's ultimately bearing the cost. For years now, we've been on the record on this issue and many others surrounding the glyphosate litigation. We've made our case to politicians across political lines and the general public. We'll continue to be clear and transparent about our interests. We'll engage with people of different opinions, and we'll hope to find common ground. Most importantly, when it comes to questions this big, we will always start with what's true. Beyond litigation, we have a full agenda for 2026. We have ambitions to help many more patients with Nubeqa and Kerendia. 2026 will be the first full year of sales for both Beyonttra and Lynkuet, and we want to launch Asundexian as soon as possible. Our Crop Science business set the foundation in 2025, establishing its 5-year framework. Execution is underway and will continue in 2026 with the goal of improving the top and bottom line in 2026, all while preparing important launch plans scheduled for '27 and beyond. Consumer Health plans to advance its Road to Billion strategy, offsetting an uncertain market by making the right investment decisions in categories where we have the most to win. And in a year where we're bearing the brunt of the litigation-related impact, we're exercising vigilant discipline in how we manage our resources. Cash conversion is of the utmost importance. Deleveraging remains a big focus area and Wolfgang will tell you more about our financing plans for this year. And we're laser-focused on delivering the EUR 2 billion in organizational savings through our operating model. In terms of our outlook, we expect a solid performance in 2026, with product declines in Pharma and Crop Science due to loss of exclusivity and regulatory pressure in the EU, offset by continued strong performance of our launch products in our annual portfolio refresh. In addition, we want to ensure continued investment in our pipeline and launch products in 2026 to set ourselves up for growth in 2027 and beyond. Before accounting for FX changes, we see our core earnings per share landing roughly in line with last year. And as we shared 2 weeks ago, we're expecting a negative free cash flow this year due to the litigation-related payouts. So that outlook is emblematic of the company's current strategic position, strong signs of progress, but still working on a comprehensive turnaround. We've made major gains across the company, but that work is not yet complete. We focused on delivering what we've committed for 2026 and making the right long-term decisions to set Bayer up for sustained profitable growth. We have a clear picture of what needs to be done in every area. We're dialed in on the tasks at hand, and we're ready to deliver. Wolfgang will walk you through the numbers. But before that, Heike is going to tell you more about our progress in implementing our new operating model. So over to you, Heike. Heike Prinz: Thank you very much, Bill. And ladies and gentlemen, let me give you a brief overview of where we stand with the transition of Bayer to our new operating model, Dynamic Shared Ownership or DSO for short. Today, 2.5 years after its announcement, DSO is the operating model of the Bayer Group in all countries, in all divisions, in all enabling functions. We are now organized as an agile network of teams. And with redesigned HR processes, we are placing more and more decisions in the hands of our employees. The reduction in bureaucracy is also reflected in our costs, which we were able to reduce by a further EUR 700 million last year. By the end of this year, the savings achieved through DSO will total EUR 2 billion, as announced previously. But DSO has not only reduced cost. Bayer has become noticeably leaner, more flexible and more effective overall. An outstanding example of this are the recent product launches by our Pharmaceuticals division, some of which took place in record time. I myself worked in the pharma business for a long time, and I know what an enormous achievement this is and how important it is to get a new product to market and to patients quickly. With DSO, innovations are created more quickly, and they reach our customers in the shortest possible time, directly benefiting patients, farmers and consumers. And with that, I'm handing it over to you Wolfgang. Wolfgang Nickl: Thank you very much, Heike, and also a warm welcome from my side. Let's together, take a closer look at the group financials for the full year 2025. In the pivotal year, we fully achieved our raised financial guidance for all group KPIs. Group net sales grew by 1% year-over-year in currency and portfolio adjusted terms. All divisions delivered their adjusted guidance. Let me briefly highlight the main business drivers by division. For Crop Science, the anticipated regulatory headwinds from the dicamba label vacatur and the Movento expiration were offset by strong corn seeds and traits growth. That was driven by several factors. First, we had historically high corn acreage in North America; strong performance of our corn seeds and traits globally; and finally, a portion of incremental licensing revenue from the resolutions with Corteva in Q4. Let me pause here for a few additional comments on the Corteva resolutions. First, the resolutions represent licensing fees rightfully owed to us for the usage of our proprietary technology across multiple periods, including the years '25 and '26. Licensing fees are an important element of our business model and thus are accounted for as operating revenue. Second, based on content and timing of the resolutions about EUR 300 million, supported our corn performance in Q4 '25, and as you may have read in the annual report, about EUR 450 million will support our soy performance in Q1 '26, which is reflected in our outlook. We always had a high level of confidence that we would prevail, but these numbers were higher than what we had modeled before. Third, given the positive impact, we decided to advance certain strategic measures like product portfolio streamlining together with an impact on incentives. This is largely offsetting the positive effect on licensing income in '25. It is important to note that the underlying operational targets would have been achieved without these effects as well. Our Pharma business fully delivered on its raised guidance. Nubeqa and Kerendia continued their significant growth momentum and finished the year ahead of our raised expectations. With that, the launch assets performance more than offset the expected decline in Xarelto as well as headwinds in Eylea. Our Consumer Health division delivered a resilient performance in a challenging market environment with net sales stable year-over-year and in line with our revised guidance. Nutritionals were particularly affected by difficult market conditions in China and the U.S., while softer seasonality in cough, cold and allergy led to a decline in this category. As previously indicated, our group top line was impacted by material FX headwinds of around EUR 1.7 billion, largely driven by the depreciation of the U.S. dollar, the Brazilian real and hyperinflation currencies. Let's now move to the bottom line. Group EBITDA before special items came at EUR 9.7 billion compared to the prior year negative foreign exchange effects of around EUR 500 million weighed on profitability. We also saw higher incentive provisions and growth investments compared to the prior year, while top line growth and cost savings helped to compensate. An important year for our transformation, all our divisions and the enabling functions delivered on their profitability commitments, balancing necessary growth investments with disciplined resource allocation and cost savings. Core earnings per share came in at EUR 4.91. The decline versus the prior year was driven by the expected lower EBITDA before special items and includes FX headwinds of about EUR 0.30. Our core financial results came in better than expected. The core financial result improved markedly over the prior year due to lower interest expenses and positive changes in equity results. Reported earnings per share were at minus EUR 3.68. Main drivers for the delta next to the regular amortization of intangibles, other significant litigation-related provisions and our liabilities classified as special items. Litigation-related special items amounted to EUR 7.5 billion in total, including the increase that we announced 2 weeks ago. Let me also clarify that our litigation-related provisions and liabilities are based on a comprehensive assessment. The provision liabilities of EUR 11.8 billion contain all litigation-related costs we know today and can reliably forecast. Also covering past glyphosate verdicts either settled or pending in appeals. Our free cash flow came in at the upper end of our guidance range at EUR 2.1 billion. The anticipated year-over-year decrease is mainly driven by the expected higher incentive and litigation-related payouts. Net financial debt was reduced below EUR 30 billion by the end of '25. And that was due to the cash flow contribution and about EUR 1.4 billion in foreign exchange tailwinds driven by a weaker U.S. dollar. Let's now move to the outlook for 2026. Let me start by explaining the background for a methodology change that we will implement for our core earnings per share KPI as of this year. What we want to achieve is to provide enhanced transparency around our operational performance, reflecting necessary cost of doing business and moving core EPS closer to the reported EPS. Previously, our core EPS definition only included the core depreciation linked to usual depreciation of property, plant and equipment. All amortization of intangibles were excluded. As of this year, we will also factor in the amortization of certain intangible assets, in particular, software. The change in methodology leads to an approximately EUR 0.35 step-down in '25. Adjusting for the new methodology, we come from the EUR 4.91 that I just mentioned to EUR 4.57 for core EPS in 2025. For '26, we anticipate stable core earnings per share at constant currencies on a like-for-like basis. All businesses plan to further progress in their transformation, continue to execute the strategic agenda and set the basis for future growth. This includes continued savings as well as investments in innovation and launches. Overall, expected higher earnings contributions from Crop Science and Consumer Health will be offset by anticipated lower earnings in Pharma, in line with the divisional strategies. On the corporate level, our outlook assumes higher long-term incentive provisions due to the increased share price compared to the end of '25. This also results in higher reconciliation costs. We also expect higher interest expenses impacting our core financial result. This is driven by an anticipated increase in net financial debt due to the substantial litigation-related payout and the resulting negative free cash flow for 2026. Finally, on geopolitics. Let me start by addressing the recently started war in the Middle East. Our thoughts are with the people across the region. Our focus is on ensuring the safety of our people and the continuity of our business. At this point in time, we do not see a material impact on our business, and we will continue to closely monitor the situation. We are in close contact with our people on the ground and ensure continued supply of our essential products. Regarding tariffs and FX, we are prepared to deal with a new dimension of volatility across businesses and regions. In '25, we successfully managed a dynamic trade environment and limited the impact of additional tariffs. This was achieved through a combination of mitigating measures by our cross-functional teams as well as tariff exemptions based on the relevance of our products. Our new way of working provided extremely -- was provided to be extremely helpful, handling the situation, and we will continue to build on that strength going forward. For '26, our outlook includes our latest assessment of estimated direct and indirect geopolitical impacts. As mentioned previously, we expect foreign exchange rate fluctuations to remain a major swing factor based on year-on-year spot rates, we anticipate continued foreign exchange headwinds of about EUR 0.30 to our core earnings per share, as shown on the right side of the chart. Managing our FX exposure and geopolitical context has been a major priority for us in '25 and will continue to be a priority for us in '26. Overall, we will continue to monitor the situation very closely. This includes the future of the U.S. EU trade relations following the recent court ruling on our tariffs. Let me summarize with the outlook for the group KPIs for '26. We anticipate net sales of EUR 45 billion to EUR 47 billion at constant currencies, representing a gross range of 0% to 3% in currency and portfolio adjusted terms. For EBITDA before special items, we target between EUR 9.6 billion and EUR 10.1 billion in '26 at constant currencies, representing a minus 1% to plus 4% development versus the prior year. As mentioned, core earnings per share are expected to come in between EUR 4.30 and EUR 4.80 at constant currencies. Now free cash flow outlook of minus EUR 1.5 million to minus EUR 2.5 billion at constant currencies, we account for the expected significant litigation-related payout of around EUR 5 billion as we also announced 2 weeks ago. With the negative cash flow, we expect net financial debt to increase to between EUR 32 million and EUR 33 billion at constant currencies. As also announced 2 weeks ago, ultimate financing for the litigation resolutions is planned to rely on senior bonds and instruments receiving equity credit by the rating agencies and not on the AGM authorized capital increase. While finalizing these measures, please note that the current net financial debt outlook for now is conservatively reflecting straight debt financing. And with that, I'll hand it over to you, Rodrigo. Rodrigo Santos: Thank you, Wolfgang. In Crop Science, we have built a more agile organization through our DSO and strengthening our operational discipline through our 5-year framework. That discipline is already delivering tangible impacts. It shows up in three areas of our core business and the differentiated growth we see through the end of the decade. Number one, in the resilient performance we delivered in 2025. Number two, in the clear step forward, we expect in 2026. And number three, in the progress already made against our 5-year framework, laying the foundation for a stronger performance through the midterm. So before turning to 2026 specifically, let me anchor us in where we stand in the 5-year framework. Because this is the lens through which we manage the business and the road map that guides every decision we make. We are on track to deliver across the triangle, sales growth, margin and cash. We strengthened the operational foundation of the business by simplifying the portfolio and sharpening our footprint, we are firmly on course to deliver the more than EUR 1 billion margin improvement. Actions included divesting and outsourcing multiple activity ingredients exiting nearly 200 crop protection products and streamlining our global site footprint from crop protection to seed production. We are also exiting lower-return vegetable crops and the non-core seed treatment equipment business. As we advance our efforts, portfolio is streamlining and go-to-market models will largely complete by year-end. Innovation remains our engine for future growth. Protecting our proprietary traits and R&D capability is critical. Simply put it, the recent resolution with Corteva is licensing revenue for the use of our technology. It does not changes our growth outlook or license expectation. It does ensure fair compensation for our technologies today and well into the future. And it safeguards the value of our innovation engine, which advanced six projects and introduced 470 new hybrids and varieties last year. Our industry-leading pipeline position us for differentiated durable growth. Our first blockbuster Plenexos is now launched, and we will expand into Brazil this year. The icafolin submissions are complete, and the new gold Camelina is now in the market for biofuels. And the nine additional blockbusters are on track for upcoming introductions. That includes the Preceon Smart Corn introduced with biotech approach and also the Vyconic in '27 and '28. As followed closely by our fifth-generation herbicide-tolerant soybean trait, position us for double-digit share growth and put us firmly on our path to reclaim the #1 soybean trait position in North America. This is the strength of our pipeline. We have unprecedented number of market-shaping innovations on the horizon with a clear pathway for growth. So 2026 represent another step forward in delivering our 5-year framework. We expect Ag market fundamentals to remain challenging and project below average market growth. However, our resilient base and focused execution give us confidence. While we benefit from the license income, we will continue pushing hard on our 5-year framework measure. Overall, 2026 is another year of diligent execution of our strategic plan setting us for the future. Our core business growth is expected at 1% to 4% currency and portfolio adjusted. An important contributor for this growth is the recent approval of the Stryax dicamba formulation. This marks the first step in reestablishing the momentum of our North America soybean business, giving farmers the added flexibility they've been waiting for. And for 2026, we expect Stryax herbicide growth as well as pricing gains in soy and cotton. Still, we do expect -- we do not expect full recovery yet preparing for the Vyconic introduction in 2027. For corn, we expect low single-digit growth globally based on anticipated price and market share increases despite the acreage reduction in the U.S. In core Crop Protection, we anticipate softer growth on higher volumes driven by new products, offset continued pricing pressure and the EU regulatory impact, as previously expected. For glyphosate, tariffs recently have been reduced on China imports in the U.S. and the generic PRC pricing has been declining below the historical median. With that, we currently expect glyphosate sales to decrease by 2% to 6% comparing to the prior year. We will continue to monitor the situation and adjust pricing as needed to the separately managed commodity business. As we look at calendarization, the noted soy licensing revenue will benefit the first quarter. However, lower tariffs and generic price declines are adversely affecting glyphosate sales. In addition, we expect a soft start to the crop protection season on top of the continued regulatory effects in Europe. Our growth drivers, such as the Stryax sales will only emerge later in the season. On the bottom line, within our margin profile, we expect EBITDA margin before special items of 20% to 22% at constant currency inclusive of the dilutive glyphosate margins. This reflects continued cost discipline as well as pricing and mix benefits from portfolio streamlining in line with our 5-year framework. For example, in soy, we are focused on pricing to value and improved utilization rates over top line growth. We will monitor currency closely as sales seasonally in the soft currency markets like Brazil can create volatility in both top and bottom line results. Taken together, these factors underpin a realistic execution-focused 2026 outlook and underscore the momentum we are building for the years ahead. Our sharpener portfolio, leaner footprint and increasingly resilient earnings model gives us a strong confidence in delivering our midterm targets and navigating x cycles with a greater consistency. With that, over to you, Stefan. Stefan Oelrich: Thank you, Rodrigo. In the Pharmaceuticals division, we continue to make really great progress on our strategic agenda. We have now entered the last year of what we are calling our resilience phase. We're well on track in renewing our top line and our strategy of balancing expected declines for our mature products with growth from new products, which is well working out. I will shortly provide more details on our expectations for 2026. However, I want to also highlight that we're well set for our next wave of growth into the next decade. This is driven by significant sustained growth momentum of Nubeqa and Kerendia, a very successful launch of Beyonttra, the first launch of Lynkuet in the U.S. as well as very positive data presented for Asundexian only a few weeks ago. We've also demonstrated great successes in our efforts to grow our pipeline value and nourishing our foundation for future growth. Driven by our new innovation model, we have progressed 16 clinical programs across the development phases and achieved approval for five new key indications or products in 2025. I already mentioned Asundexian, but I do want to reiterate the genuine excitement we witnessed among attending physicians at ISC in New Orleans just a few weeks ago. Not many were expecting such groundbreaking results. With this potential new treatment option in secondary stroke prevention, we may have an opportunity to truly rewrite the future for stroke survivors and their families. In addition, we're continuing to leverage our new operating model for increased performance. And we have consequently been able to sustain our margin in the mid-20s range. All of this despite facing continued loss of exclusivity and pricing pressures, while we continue to invest in our launches and also in our pipeline. Moving into 2026, we expect an unbroken growth momentum for Nubeqa and Kerendia, amounting to an expected growth of approximately 50% at constant currencies. This will be driven by continued market penetration and indication expansions such as the upcoming EU approval for Kerendia in heart failure, following the recent positive CHMP opinion. This growth momentum will be further supported by the continued launch dynamics of Beyonttra and also Lynkuet. While we were able to defend Xarelto well in 2025 overall, we experienced the expected increased generic pressure towards the year-end. We, therefore, also expect a slight acceleration of relative declines in 2026 in comparison to last year, being in a range of minus 35% to minus 40%. Given the accelerated pricing pressures we have seen for Eylea with the entry of 2 milligrams biosimilars since Q3 2025, which we may have slightly underestimated, we will focus our activities to build on the strong clinical profile and unparalleled label of Eylea 8 milligrams. We plan to significantly expand Eylea 8 milligrams contribution to the Eylea franchise to approximately 70% and sustain our market-leading position in volume shares. Despite these efforts, we will likely see declines for Eylea franchise in the range of approximately 20% to 25% at constant currencies in 2026, with the pricing pressures somewhat leveling out thereafter. Since 2 milligrams biosimilars only entered the market fairly recently, we will continue to closely observe and evaluate the evolving situation and will provide updates as we gain more clarity as per our usual reporting practice. In line with the stringent shift of resources to focus our activities on our current and future growth drivers as well as our continued pricing pressures and declines in our mature product portfolio, we expect a modest contraction of our base business in 2026. In sum, we're expecting growth of 0% to plus 3% at constant currencies for this last year of our resilience phase before returning to mid-single-digit growth as of 2027. And we're hovering over a prior year during which the pricing pressures increased over the quarters and Nubeqa and Kerendia will continue to grow as this year progresses. We expect the top line for the second half of 2026 to come in stronger than in the first half. Looking at our 2026 margin, we would expect that the impact of a changed product mix and increased growth investments throughout the year will only be partly balanced by cost savings from efficiency measures. We, therefore, expect a 2026 EBITDA margin before special items of 23% to 25% at constant currencies as we keep working to expand our margin as of '28 towards 30% by 2030. And with that, over to you, Julio. Julio Triana: Thank you, Stefan. As we review our performance and set our priorities, I want to begin with the progress we're making on our Road to Billion strategy. Last year's market environment was challenging for two reasons. First, market dynamics in the U.S. and China; and second, the continuation of seasonal softness in cough, cold and allergy. Despite these obstacles, we have stayed committed to our strategic approach focusing on areas where we can create the most value and actively respond to evolving market conditions. By focusing our efforts on the highest potential categories, we continue to advance our goal of reaching billions of consumers and creating sustainable value for our business. Across markets, consumers are more deliberate in their spending. They compare, they seek more, and they have more ways to shop. E-commerce continues to scale quickly, while traditional retail consolidates. Retailers and pharmacies, particularly in the U.S. and China have reduced inventory levels to manage working capital more tightly. Despite this backdrop, the fundamentals of our business remain attractive. A growing middle class, rising self-care, adoption and constrained health care systems continue to support durable demand for our categories. In the near term, we expect continued volatility in China and the United States with performance likely to contract. Over the long term, we expect both markets to return to a sustainable healthy growth pattern. While allergy, cough and cold have been soft for 2 years, the fundamentals underlying our categories remain very solid. As one of the top 3 global players in fast-moving consumer health, we're well positioned to capture this growth. We hold leadership positions in categories such as dermatology, digestive health and cardio. Our balanced portfolio across seven treatment and prevention categories pairs global mega brands with very strong local heroes. This mix gives us resilience in the short term and significant room for expansion over the long term. A Road to Billion strategy is designed to convert this foundation into sustainable value creation. At its core, the strategy aims to increase household penetration by reaching billions of consumers through both online and offline channels as well as through our strong presence in pharmacy and health care professional settings. In the medium term, this support consistent sell-out growth and more predictable sell-in. Looking ahead to 2026, we expect continued macro geopolitical volatility. Given our geographic footprint and the segments where we compete, we expect our relevant market to grow by about 2% to 3%. This is about 100 basis points slower than the total Consumer Health market. Category dynamics, geographic mix and elevated volatility underpin our net sales growth outlook of 0% to 4% in currency and portfolio adjusted terms. Building on our 2025 base, we aim for continued value recovery. In the United States and China, our two biggest markets will play a crucial role in our overall performance, slowing growth and market volatility there could heavily influence our results. Consumer confidence remains soft. If consumer spending picks up and seasonal categories see higher incidents, we might achieve the higher end of our growth forecast. If not, growth could be toward the lower end. Given the volatility and its impact on our top line, our EBITDA margin outlook before special items for 2026 is 22% to 24% on a constant currency basis. Savings from our new operating model and active cost management are expected to offset annual cost increases. We continue to reinvest portions of these efficiencies to strengthen brand equity and gain market share. We will continue to accelerate investment in e-commerce and AI across brand building and activation, customer engagement and product supply. Prioritizing self-care and empowering people to take control of their health has never been more important. Through our Road to Billion strategy, focused on building trusted brands we're uniquely positioned to meet needs of consumers, creating lasting impact and long-term value. And with that, over to you, Michael, for the Q&A. Michael Preuss: Thank you very much, Julio, and thank you to all the Board members for the presentations. And let's now start the Q&A session. [Operator Instructions] So we have the first question coming from Annette Becker from Borsen-Zeitung followed by Antje Honing from Rheinische Post. So first question, Annette, over to you. Annette Becker: I hope you can hear me. Michael Preuss: Yes, we can hear you. Annette Becker: Okay. I have two questions. First, I'd like to know why your Q4 results are in operating version, so extremely weak? The EBITDA reduced to 16%. And then the second one, what does the negative free cash flow for this year mean for the dividend you're paying out next year because your shareholders have now 3 years of minimum dividend. And I think that's not so good for time lasting. William Anderson: Yes. Let me comment on the second one first, which is that the dividend decision will be taken at a later date when we have results of the year. But -- so we'll be making a recommendation regarding that in due time, but we don't have any comment on that right now. I'll turn it over to Wolfgang for a little more perspective on the Q4 results. You have to remember that because a large part of our business is in agriculture and agriculture is seasonal, that the EBITDA margins go up and down accordingly. But maybe Wolfgang, you could provide a little more color. Wolfgang Nickl: I think you're absolutely right. I mean, as a matter of fact, we also don't look at quarterly results too much. We were really focused on the annual results. And as we said, we fully achieved everything on every KPI. And there was nothing extraordinary in Q4 worth mentioning. William Anderson: Yes. I think we have to say we increased our results -- sorry, we increased our expectations in August of 2025. And we fully delivered on those increased expectations. So I think we feel quite good about our Q4 results. Just some historical perspective, if you go back a year to what the expectations in terms of profit for Bayer were 1 year ago, we over-delivered that by about 9%. So I don't think we would characterize it at all as weak, but rather strong. Michael Preuss: Okay. So the next question comes from Antje Honing, Rheinische Post, followed then by Jonas Jansen from Frankfurt Allgemeine Zeitung. Antje, you are next. Antje Honing: I have two questions. One to Heike Prinz. How many jobs have been cut by DSO so far? And when will the cuts be completed? And how many jobs will then we have in totally? And to Bill Anderson, Bayer will sometimes have to repay the debts incurred in settling the wave of lawsuits. Will this lead to a cost-cutting program efficiency program and further job cuts? Heike Prinz: Yes. Thank you, Antje, for your questions. As I shared with you earlier today, DSO, our new operating model has been implemented in all parts of our organization. And I think right now, really the focus is on leveraging this operating model to drive performance in our businesses. Now you will see in our publication that we are at 88,000 employees across the world. But we've also shared with you previously that DSO is not about having a head count target or a job cut target. So really, the focus, as you've heard from also the divisional heads is on driving performance in our businesses. William Anderson: Yes. And Antje, our big focus is our mission. You see it here behind us, but this is what we and the 88,000 people of Bayer come to work for every day. And we're really committed to do that in the best way possible. And we are generating a lot of cash. Every year, we're generating cash from our operations, and we plan to continue to do that by getting more productive. But whether that productivity is going to be mostly driven by revenue growth, or whether there's going to be additional cost savings, we've announced cost savings that we plan to achieve by 2029 in Crop Science. We already announced that. But I think we've got a team that is really focused on driving this mission forward. And we've got exciting opportunities in Pharma, in Crop Science, in Consumer Health. And I think we will have no problem repaying our debt. I think our main question is how high can we go, and we're determined to go really far, really fast. And we've got an operating model in place that allows us to do that. And if you look across this company, whether it's in Consumer Health, where we're launching products now in well under a year that used to be 2 to 3 years of a life cycle to launch. We've got that under 1 year. If you look in Pharma at the progress we've made in the pipeline, but not only the progress in the pipeline, but how we're doing on launching those products, on bringing those to patients around the world. We've accelerated that dramatically by putting the power in the hands of our people. And in Crop Science, the work is really amazing what's happening throughout our world in product supply, in R&D just amazing stuff in terms of our people, having the power to make gains. So you hear about AI and productivity gains, and you hear about job losses. What we're looking to do with AI is put it right into the hands of every Bayer person to extend their impact to make them more effective every day for the mission. So I think we see an opportunity to dramatically increase productivity. But we want to do that a lot through growth. Michael Preuss: Right. The next question comes from Jonas Jansen, Frankfurter Allgemeine Zeitung, followed then by Sonja Wind from Bloomberg. Jonas, please go ahead. Jonas Jansen: Hello. Good morning, and thank you for taking the time. In the outlook, you have a China tariff effect on glyphosate sales expectation. Can you maybe explain this a little bit further because I thought there's kind of a Buy American movement right now in the U.S.? Or is that still a price topic. And then regarding to the White House, glyphosate letter, could you maybe explain what that could mean looking in the future with the plans you have there for the phosphate? And do you think that the latest efforts you had surrounding glyphosate and regulation and litigation, that will have an effect on the Supreme Court or is that not directly related at all? Thank you. William Anderson: Yes. Thanks, Jonas. I'm just going to try to answer these both really quickly. So in terms of the tariff effect on glyphosate, imports into the U.S. So last year, the rates of tariffs were generally 25% to 35% even, I think, for brief periods a bit higher. As a result of the IEEPA ruling from the Supreme Court recently, that rate has dropped to 3%. So it basically has a corresponding drop in the price of generic glyphosate in the U.S. And so that results in price or volume losses for us, and we just have to deal with it. So we're dealing with that. I would say that tariff rate remains kind of uncertain for the future, but at the moment, it's about 3%. So we have to deal with that by offsetting it with gains elsewhere, and we plan to do that. In terms of the letter, the White House letter on glyphosate production, yes, this has nothing to do with the Supreme Court and it actually has nothing to do with the settlement either. This is basically the U.S. government recognizing the vital importance of glyphosate to the American farming system. Frankly, the vital -- glyphosate is vital to farming systems outside of the U.S. as well, but the administration is taking a position and not wanting to be dependent on foreign sources, for something that's essential for food security and national security. So we've received the letter. We intend to comply with it, and there's not much else to say. So thanks for the questions. Michael Preuss: The next question comes from Sonja Wind, Bloomberg, followed then by Jens Tonnesmann, Die Zeit. Sonja, over to you. Sonja Wind: Bill, you said that you're ready for any scenario regarding the judge's decision for the settlement proposal. What is your plan in case it gets denied? And do you have a rough time line of when you expect the decision? And then also coming back to a broader question, which you said in February that you will look at the company's structure in the future. Will that be in 2026? Do you expect after the U.S. Supreme Court's decision? Or is that even further in the future? William Anderson: Yes. Thanks, Sonja. So we have plans for every scenario. I don't think we're going to speculate on a denial scenario, but I would say the time line is days. So you won't have to wait long for an answer there. In terms of the company structure question, basically, what it comes down to, and you've heard that from our division heads and from Heike and Wolfgang. I mean, we just -- we have so much going on. We have five big issues we're tackling. We've made remarkable progress in 2025 and 2024, we got more to do. So we're not going to be distracted by talking about structure right now. But that said, we are -- we remain very much committed to tackling that question in due time, but I couldn't give you a particular timing. So, thanks for the question, Sonja. Michael Preuss: Next question comes from Jens Tonnesmann, Die Zeit, followed then by Bert Frondhoff from Handelsblatt. Jens, you are next. Jens Tonnesmann: Yes, you can hear me. Well, I've got two questions that may sound like beginners questions to you. Bill, you were emphasizing how much support you feel in the U.S. regarding glyphosate. And the glyphosate has been proven safe by regulators of more than 50 countries, including the U.S., of course. So, can you please once more explain why then did you even agree to the recent settlement with the plaintiffs that are putting quite a strain on Bayer financially? And doesn't that contradict your commitment to focusing on the facts and your criticism of the litigation business? And second, would it be possible for Bayer to withdraw from the settlement partly or fully if the Supreme Court rules in Bayer's favor in June. William Anderson: Well, Jens, I think those are very reasonable questions. And I wouldn't categorize them as beginner's questions. But I think we can all recognize that the litigation situation in the U.S. is very complex. This is not a true phenomenon. I remember as a boy sitting at the dinner table here in a conversation about the tort system and some of the strange results that it could produce. So this is not a new thing. But the fundamental issue that's before the Supreme Court is whether the scientific endeavors of hundreds of scientists can be basically overturned by a jury of non-experts based on a very small set of facts as opposed to an exhaustive decades long set of facts. That's kind of what's at play. Nevertheless, the system is quite challenging for companies, and we believe that this settlement offer -- this settlement agreement is the right approach at the right time, because the company needs to move on. This has been a huge drag on Bayer for almost a decade, and that needs to stop because we have a mission that's more important than a court flight. And so we got to get on with it. But yes, the Supreme Court case and the settlement are distinct. They accomplish different things. The Supreme Court case is asking of the fundamental question about whether the EPA has the authority to govern pesticide labels and questions of pesticide safety or whether that gets played out in hundreds or thousands of courtrooms. So that's really important, not just for glyphosate or for our past verdicts, but it's also very important for the future of new and innovative tools like new crop protection products that we want to launch that are important for farmers as they continue to struggle to basically put affordable food on the table. So that's very important for that. The settlement is something that's important for Bayer in terms of moving on. So thanks for your questions, Jens. Michael Preuss: Okay. Next line is Bert Frondhoff from Handelsblatt, followed by Elisabeth Dostert from Suddeutsche Zeitung. Bert, over to you. Bert Frondhoff: I hope you can hear me. No, you can't hear me? Michael Preuss: Yes, we can. You can just go ahead. Bert Frondhoff: Okay. Good. Yes, Bill, can you give us another assessment on how Bayer views the conflict in the Middle East. I guess you source many intermediate products from Asia and the pharmaceutical business, the business via hubs in the Middle East. Are you concerned about problems in the supply chain? William Anderson: Yes. Thanks, Bert. I mean, first off, as Wolfgang mentioned, and I think we all share this. Our first concern is for the safety of our employees in the Middle East region and for all the innocents there. And we hope and pray a rapid cessation and a lasting peace. And there needs to be a solution for a lasting peace there. The short answer though, regarding your question, we're not particularly concerned about our supply chain. We're not heavily dependent on Middle Eastern hubs for our supply chain. So we don't anticipate any interruptions in supply. Michael Preuss: Okay. And next question then comes from Elisabeth Dostert, Suddeutsche Zeitung, followed by Isabella Bufacchi from Il Sole. Elisabeth, over to you. Elisabeth Dostert: Bill, what was your trip with Friedrich Merz to China and which role does China play for Bayer? Is it more for your Pharmaceuticals division or do you sell Crop Science products like glyphosate in China? William Anderson: Yes. Thanks, Elizabeth. Yes, it was a very eye-opening trip. Very interesting to see continued remarkable progress in China in building out infrastructure in the strength of various innovative industries. And I think, yes, it was very useful dialogue. And we have about 7,000 people in China working in Pharmaceuticals, Crop Science and Consumer Health. Our biggest division in China is Pharmaceuticals. And we have production there. Well, we have production for all three divisions in China, but it's an important market. It's an important innovative hub. And we have very good relations with our Chinese partners. And this is, again, we have a mission of Health for All, Hunger for None. That takes us pretty much to every corner of the globe. We see, yes, the need to feed the world in a way that is environmentally sustainable as something that's everybody's business. It's sort of every citizen of the world has a stake in that, likewise with medicines and every day, human health products that we have from our Consumer Health division. So we've got -- I think we've been in China for about 150 years. And we are very pleased with our, again, our great colleagues in China and the importance of continuing to drive innovation and access to these important, yes, tools for producing food and medicines. Michael Preuss: Okay. From China to Italy, we have next in line, Isabella Bufacchi from Il Sole, then followed by Andrew Noel from Chemical ESG. Isabella you're next. Isabella Bufacchi: Good morning. Thank you for the opportunity. I have two questions. One is on your net financial debt. It went below EUR 30 billion in 2025, and it was down a lot, 8.5%, but it's going up again in 2026. Now I was looking at your ratings. You have three ratings from S&P's, Moody's and Fitch, with a negative outlook. And the level that you are a downgrade would be quite painful because you would get to the last rate before speculative grade. So I've seen that you want to avoid that. I mean, you're looking for an upgrade. But I also saw that you were a solid A rating before the Monsanto. So I was wondering whether do you think that a good solution, final on litigation would have an impact on your ratings with the possibility of going back to A? And my second question is on Europe. As Europe as in a way it's own momentum, there are flows of capital coming back to Europe. Here in Europe, the growth is weak. But do you see any potential? Are you looking at Europe to increase your investments here? Wolfgang Nickl: Yes. Thank you very much for your questions, Isabella. I'll take the first one on the net financial that -- first of all, thanks for recognizing we came below EUR 30 billion. That was significantly better than the Street expectation. It was really driven by free cash flow performance, and we had a bit of a translation effect there as well. I think you have seen that we will be up slightly because we have a negative free cash flow expected for this current year, and that's largely driven by the EUR 5 billion expected payouts for settlements and defense costs and so on. So we could be higher up. But I also said in the script that will depend on the final takeout financing. This is all simulated based on straight debt. And like we said before, we will likely use instruments that receive at least partial equity rating by the rating agencies. That brings me to the rating agencies. You should expect that we have a very, very solid dialogue with the rating agencies on an ongoing basis. That's very valuable for us. And we keep them abreast of all the developments in particular as it relates to the financing as well. And of course, like every other stakeholder, they look at the developments on the litigation front as well. And as Bill said, hopefully, over the next couple of weeks and months, we see things going the right way there. And lastly, yes, the company has always been focused on A category kind of rating, so meaning leverage of something around 2.5 or less. We like that rating from an accessibility viewpoint from a flexibility viewpoint. And that's our midterm target. And probably the last thing is '26 will be the brunt of litigation payouts. We also said that, that EUR 5 billion will reduce to EUR 1 billion per year for the subsequent 5 years, and then it will be going down significantly. And if you pair that with the growth outlook that my colleagues have specified in particular for '27, you should see the company making significant progress in that regard, and that will hopefully also be realized and recognized by the rating agencies. Bill, I think you do the Europe piece. William Anderson: Yes. Yes, thanks for the question. I think Isabella, I think it's a mixed picture, the question of investment in Europe, and it's simple. We need basically more energy. We need lower energy prices in Europe and less regulation. And I think the experiment that's been run over the last decade the idea that sort of Europe could lead out in regulation and that, that would provide a competitive advantage, I think that's a failed experiment. And I think that's becoming more and more obvious every day. So I think those are some of the things that we would be able to invest more if we had better access on energy, less regulation, less bureaucracy. That being said, we're making major investments in Europe. So for example, in Monheim, very close to Leverkusen, we're building a new state-of-the-art chemical research facility that is going to be a base for crop protection, research and development for decades. We have cell and gene therapy production that's rapidly either being built or expanding in both Berlin and in San Sebastian in Spain. In Italy, I was in Italy, I can't remember, maybe 1.5 years ago, and I got to see some production we have there in the Milano vicinity that's sending really innovative healthcare products to the world. We also -- it's one of the few countries where we launched our short stature corn system, which is going to revolutionize corn production around the world and Italian farmers are some of the lead innovators there in adoption. So I think there's amazing potential for future innovation in Europe, but there's more work that needs to be done. Michael Preuss: Right. So next question comes from Andrew Noel from Chemical ESG then followed by Yonglong He from Xinhua. Andrew, you're next. Andrew Noel: I've got two, please. I understand now it's not the time for a decision on a split. But is the work that you're doing on Crop Science portfolio in line with getting the business ready for an IPO and making it more attractive to investors? I ask because BASF and Syngenta have been doing M&A in biologicals and that makes it more attractive to the sort of investor crowd. And the second question would be probably one for Rodrigo. Is there any interest in the new molecule opportunities at FMC, the partnerships they're talking about and perhaps the same for Corteva split, I guess? Thank you. William Anderson: Okay. Maybe I'll make a comment on the first one and then hand it over to Rodrigo. I think our basis for proceeding with all of our work at Bayer with respect to our divisions, our businesses, we need to be the best home for every business, and that means we have to be the -- yes, the most innovative, the leanest, the fastest. And so, I think all the measures that Rodrigo and his colleagues are taking in Crop Science, would be a benefit to Bayer Crop Science as part of Bayer or as a stand-alone entity. I don't think there's any kind of tension there. But that's the mentality we have to have with each of our businesses is we got to be the leanest, fastest, most innovative, simply put. Rodrigo, any comments on... Rodrigo Santos: Sure. Thank you, Andrew. And again, we are -- this is part of our 5-year framework. And I think the discipline that we are on the execution of that 5-year framework is very important. That includes, Andrew, that we have a very robust pipeline of crop protection, right? We talk about Plenexos, the first one that we launched. We have icafolin coming, Conventro, Stryax, and many other products that we have in our portfolio. We are always open for collaborations and with different companies on biologics. We have an open collaboration work that we do. No specifics to the two companies that you mentioned, but -- we have a strong portfolio coming in the next years. And I'm very excited about the work that we are doing on R&D on crop protection using AI to really move faster on the invention of new molecules. So I feel that we are -- we're going to be focused on launching these new technologies to the farmers in the next years, and this is really exciting and keeping the discipline on the execution that we lay out last year. Michael Preuss: Next question comes from Yonglong He from Xinhua, then followed by Anja Ettel, Die Welt. Yonglong, you're next. Yonglong He: I have two questions for Mr. Bill Anderson following the previous questions on your latest trip to China with German Chancellor. Well, the first one is, do you have any special impressions from this visit like an impressive moment or observation then stood out to you this time? And how have you observed the living and working conditions of people there in China? And the second question is, well, this year, China started its first year of the 15th year plan underscoring openness and innovation, which is also the innovation, which is also Bayer's core strategy. So would Bayer see this more opportunity and alignment or pressure competing with other international companies, there? William Anderson: Sure. Yes, I mean there were a lot of really impressive things to see. It was great to see, for example, the partnership between Mercedes and the local companies on autonomous driving. And so the Chancellor got to actually make a tour in the car that was basically driving itself. You just put in the destination and it goes. So that's obviously pretty cool to see. We were at Unitree. So we got to see the robot demonstrations, the humanoid robots which is -- yes, that's kind of cool to experience them up close and personal. I think the -- with respect to living and working conditions, it was a short trip. But I know that our 7,000 people at Bayer are -- yes, they're very excited about the innovation that they're doing. They've implemented dynamic shared ownership also in China, which is sort of unprecedented levels of empowerment for the individuals. It's not perfect yet. It's not perfect anywhere in the world, but I know they're excited to continue to work on that. And yes, we're -- I think we have five innovation hubs now in China. And so we're excited about the opportunities to continue to innovate together with many partnerships in China. I think we have over 100 collaborations with universities in China on various projects. But what they all have in common is they're all about Health for All, Hunger for None, which is why we exist at Bayer. We have 88,000 people in the world. We have 7,000 in China. We're all working on one mission. Thanks again for the question, Yunlong. Michael Preuss: So next, we have a question from Anja Ettel, Die Welt, and then we have a final question afterwards from Akash Babu from Scrip. Anja, over to you. Anja Ettel: Just a quick follow-up to Isabela Bufacchi's question. You spoke of the goal of less regulation in Europe as a failed experiment. And just to clarify, if you were to decide what would then be your top one priority in terms of less regulation in Europe. So what should be improved first here in your view? And a personal question, because Mr. Anderson, you have now been in office for about 3 years. Time is running fast. If you were to take stock of your tenure so far, how would you assess your performance? Where are you satisfied? And where maybe have you fallen short of your own expectation? William Anderson: Yes. Thanks, Anja. Well, I'm going to give you an answer that maybe is a little different than some that you'll hear on this question of less regulation in Europe and how do you fight this bureaucracy. And I think, by the way -- at Bayer, I think we're well, we're an interesting case study in how you fight bureaucracy, because -- let me give you an example. When we started our work almost 3 years ago, we had a rule book for Bayer that was -- I think it was 1,362 pages or something -- some number like that. And we could have said, "okay, we need to cut that back," right? And we probably would have spent the last 3 years taking that 1,300-page rule book and making it 1,100 pages, that would have made zero impact. You cannot fight bureaucracy with bureaucratic methods. Like, "Hey, let's form a bunch of committees, and let's see if we can write shorter rules or let's see if we can take the 26 rules about, I don't know, office furniture arrangement and make it 20 rules." Okay? That never works because by the time you would cut back 20% of the rules, the system would have generated another 30%. So I have to say, and I give this advice when I'm asked to policymakers, politicians, you've got to create kind of some sort of safe harbors for innovation. Because the amount of rules that exist -- and by the way, I'm not blaming -- some people blame Brussels and maybe Brussels blames Berlin and Berlin blames the state. Hey, there's too much everywhere. There needs to be some innovation zones created where whether large companies or new entities can come in and get going on things. I think AI is a fascinated example because everyone is racing to regulate it. We don't even know what it is yet. We're trying to write rules for things that haven't been done yet is the biggest folly. So I think there is a real rewiring that needs to be done. And I think there's there's a big wake-up call right now on that. So again, we could talk about that a lot, but I think this is something we have to get real about. We're never going to fight bureaucracy with bureaucracy. You got to make a clean sweep. What do we do with our 1,362-page rule book? We killed it, and we replaced it with a 14-page code of conduct that everybody needs to follow. All right? And so that is how you deal with bureaucracy. You have to basically clear it out and start over from scratch. And I think there's some real thinking that needs to be done on that. In terms of assessing 3 years, first off, I don't think of it as about me because when I arrived at Bayer, I sat down with some of these folks right here as well as a whole bunch of our other leaders and we basically said, "Hey, what do we want to do? What do we want to achieve together?" And we said, we identified four and then basically five things. We said we need to rejuvenate the Pharma pipeline. We need to really build up the productivity and profitability in Crop Science. We've got to get debt down. We've got to deal with the litigation situation. And we've got to tear out bureaucracy. And I think we've made tremendous progress on all five of those things. So I think we all feel really good about that. But when I talk to Bayer people, whether they're senior leaders or frontline workers, I always ask them, so how do you feel about the progress we've made and people say, yes, good, more than we thought we could do. Almost everyone says, "Wow, we've changed more than any of us thought we could do." But then I always ask, so how much more work do we have to do? And you might think people would say, "Oh, I'm tired. Can we just take a break?" But people tell me consistently we have more to do than we've done so far. And I actually find that exciting because I think we have a lot more gains to make, and I know my colleagues feel very similarly. We're going to -- we've made tremendous changes at Bayer in the last 2.5 years. We got a lot more to come, and we're excited about what those mean for our mission, for our customers and for our shareholders. So thanks for the question, Anja. Michael Preuss: So, and we have a last question coming from Akash Babu from Scrip. Aakash Babu: Perfect. I have two actually really quick ones. So in the past, you mentioned that you would be willing to walk away from the glyphosate business if things don't really improve or get handled. Especially, since you mentioned that it has been a drag on the business. So if everything doesn't go well in the next few days and weeks, is that something that still remains on the table for you? And secondly, I know you mentioned the 88,000 employee count right now. But I just wanted to understand if there was a to-date figure in terms of job cuts specifically as part of DSO, because I think you mentioned around 12,000 job cuts as part of the program back in August. William Anderson: Yes. So Akash, we -- what we said about glyphosate is that we've been dealing with litigation over claims that are historical claims or from historical use of glyphosate. And -- but we're still providing it because of its essential nature and because basically, the verdict of, from farmers and regulators is that this is a really important option. And we said, hey, but we -- there needs to be some sort of protection or some sort of change in the legal status. So we certainly see the settlement and SCOTUS are important topics. The recent executive order from the White House is also important on that. So we have to take that all into account. I think that it's important for these tools to be available for farmers and certainly, our actions will reflect that. I think what have we said -- I think we're saying, is it 14? There've been about 14,000 job reductions since we began implementing the new system. Some of those have to do with the new system explicitly. Others are things like facilities that we closed or things that we exited that aren't specifically related to DSO, but just have to do with the changing economics of different product lines. So thanks for your questions, Akash. Michael Preuss: Okay. So thank you very much for your questions and for your interest. Thank you very much also for your answers. This concludes our financial news conference for today, and we all wish you a great day. Thank you very much.
Operator: Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the ASM International Fourth Quarter 2025 Earnings Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Victor Bareño, Head of Investor Relations. Please go ahead, sir. Victor Bareño: Thank you, operator. Good afternoon, and thank you for joining our Q4 earnings call. With me today are our CEO, Hichem M'Saad; and our CFO, Paul Verhagen. ASM issued its fourth quarter 2025 results yesterday at 6:00 p.m. Central European Time. For those of you who have not yet seen the press release, it is available on our website together with our latest investor presentation. As always, we remind you that today's conference call may contain forward-looking statements in addition to historical information. For more details on the risk factors related to such forward-looking statements, please refer to our press release and our financial reports, all of which are available on our website. Please also note that during this call, we will refer to profitability metrics, primarily on an adjusted basis. Reconciliations to the reported numbers can be found in the press release and in the investor presentation. And with that, I'll now turn the call over to our CEO, Hichem M'Saad. Hichem M'Saad: Thank you, Victor, and thanks to everyone for attending our earnings call. I'll start with a few of the highlights. Even with the revenue at a lower level, results in Q4 remained solid, and the quarter marked a reacceleration in demand. For the full year, our sales increased 12% at constant currency, our ninth consecutive year of double-digit growth and operating profit increased by 17%. Strategically, we strengthened our position with key customers with the current generation of gate-all-around going into high-volume manufacturing and with strong traction in R&D engagement for the next nodes. To power ASM's next phase of growth, we continue to invest in our people, our global footprint and in innovation. I want to thank all our people for their relentless dedication and collaboration, which contributed to another successful year for ASM. As for the agenda today, it's the standard format. Paul will start with a review of our financial results. I will then discuss market trends and provide our outlook followed by the Q&A session. With that, I'll hand it over to Paul. Paul Verhagen: Thank you, Hichem, and thanks, everyone, for joining our call. Let's start with the review of the fourth quarter results. Revenue in the fourth quarter of '25 was EUR 698 million as preannounced on January 19. This represents a 7% year-on-year decline at constant currency, but came in above the guidance range of EUR 630 million to EUR 660 million, which we provided with the Q3 results. Logic/foundry was our largest customer segment in the fourth quarter. Within this segment, advanced logic/foundry accounted for the majority with sales approximately flat compared to the third quarter and somewhat down from a very strong level in Q4 of '24. Mature logic/foundry sales, mostly from the Chinese market dropped sharply as anticipated, both compared to the prior quarter and to Q4 of '24. Memory sales were relatively steady, both year-on-year and compared to Q3 with solid advanced DRAM sales, offset by lower NAND. The contribution from the power analog wafer segment remained at a fairly low level overall. Our spares and service sales were up 22% year-on-year at constant currency. This represents a very strong performance, especially considering the tough comparison with Q4 '24 when sales grew roughly 50%, driven by accelerated demand in China. Gross margin of 49.8% in the fourth quarter was down from 51.9% in Q3, but still at a solid level, supported by a favorable mix. SG&A expenses were down 1% year-on-year, while net R&D expenses increased by 6%, largely due to phasing of R&D investments. Operating margin dropped to 25% in Q4, explained by lower revenue and related gross margin, partially offset by lower OpEx. The results from associates increased to EUR 26 million in Q4, which was for a large part, explained by a one-off benefit in ASMPT's results. Our Q4 net earnings dropped compared to Q3, mainly as that quarter included a noncash reversal gain of EUR 181 million related to the recovery in the market value of ASMPT. Our new orders in the fourth quarter amounted to EUR 803 million, up 19% year-on-year and also better than indicated Q3 results. This was driven by very strong advanced logic/foundry orders. Mature logic/foundry orders from Chinese customers were relatively soft, but showed an acceleration in demand towards the end of the quarter. Memory orders were steady compared to Q3. Power, analog and wafer orders showed some recovery and reached the highest level in '25, but we're still at a relatively soft level. Please note that starting in 2026, we will discontinue reporting of quarterly bookings. This change reflects the high volatility of quarterly orders, which has been driven more by timing effects than by underlying demand trends. We will continue to disclose the year-end backlog as part of our Q4 results. In addition, beginning in '26, we will report sales by key customer segments, logic/foundry, memory and other on a half yearly and annual basis. Let's now have a look at the full year results. At EUR 3.2 billion, our sales increased 12% in constant currency to a new record high. In terms of customer segments, logic/foundry accounted for the largest part of equipment sales. Within this segment, advanced logic/foundry represented the clear majority. Gate-all-around related sales increased very strongly as customers stepped up in investment in 2-nanometer high-volume manufacturing. Mature logic/foundry sales, mostly from the Chinese market also increased but at a more modest pace compared to the leading-edge segments. In memory, sales dropped to 16% of total equipment sales, down from 25% in '24. Advanced DRAM for HBM-related applications continue to be solid and accounted for the large majority of memory sales. However, this was offset by a normalization of memory-related sales in China. As discussed in previous quarters, memory in China is typically a small market for ASM. But in 2024, it showed an unusual high demand. The overall drop in memory sales was also explained by lower 3D NAND sales, which were still at a relatively higher level in '24. Power, analog and wafer sales dropped for the second consecutive year. As part of this, silicon carbide sales, which were still resilient in '24, dropped by more than 50% in '25, reflecting the sharp deteriorization in this market. At constant currencies, equipment sales increased 10% in '25, primarily driven by strong double-digit growth in ALD. Spares and service sales grew 18% at constant currency, an excellent performance, which was driven by strong growth in our outcome-based services. Gross margin for the year increased further, rising from 50.5% in '24 to 50.1% in '25. This improvement was primarily driven by a stronger product and customer mix, including a resilient contribution from the Chinese market. Additionally, the margin benefited from the gradual impact of cost-saving initiatives such as more move to common platforms and ongoing cost optimizations across our manufacturing and supply chain operations. Gross R&D increased 9% in '25, reflecting the continuous growth in our pipeline of new opportunities. As a percentage of revenue, net R&D expenses increased slightly to 12.5%. Our target remains to keep net R&D in a low double-digit percentage of revenue. SG&A expenses decreased 7% in '25 on the back of disciplined cost control as well as the benefits of earlier investments made to scale the organization for growth. As a percentage of sales, SG&A decreased from 10.6% to 9.2% in '25. For 2026, we project SG&A to show a further decrease as a percentage of sales. Operating profit increased 17% in '25, thanks to improvements in revenue and gross margin, SG&A discipline and with continued growth in R&D investments. The operating margin increased from 28% to a record 30.2% in '25. Now turning to the balance sheet. ASM's financial position continued to be in good shape. We ended the year with a cash slightly north of EUR 1 billion and no debt. Excluding M&A-related cash payments totaling EUR 181 million, free cash flow increased 12% to a record of [ EUR 615 million ] in '25. This growth was driven by improved profitability and lower working capital, partially offset by higher CapEx. Working capital decreased to EUR 347 million at the end of '25. This was mainly due to the phasing of revenue during the year with Q4 2025 sales at a relatively lower level, together with very strong cash collection. CapEx increased from EUR 168 million to EUR 280 million in 2025, fully in line with our guidance range of EUR 200 million to EUR 250 million. This increase is for a large part driven by spending related to the completion of our new Korean facility and ongoing construction of our new facility in Scottsdale. 2026 will be a year of continued investments for a large part related to our Scottsdale site, which remains on track for completion in the first quarter of 2027. Regarding cash spent on acquisitions, in December '25, we acquired Axus Technology, a provider of CMP solutions for EUR 81 million, net of cash acquired, along with a potential earnout up to EUR 30 million tied to performance targets over '26 and '27. In addition, we paid EUR 100 million in earn-outs as part of the earlier LPE acquisition and as already communicated with the Q3 reporting. In terms of shareholder remuneration, we spent close to EUR 300 million in cash on dividends and share buyback in 2025. And with our Q4 press release, we announced a new share buyback program for an amount of EUR 150 million as well as a proposed dividend of EUR 3.25 per share, up from EUR 3 in the prior year. And with that, I'll hand over to Hichem. Hichem M'Saad: Thank you, Paul. Let's now review the trends in our markets. In 2025, the semiconductor market continued to be driven by AI, reflected in a wave of new AI data center and infrastructure expansion plans from hyperscalers and other leading industry players. This drove solid capacity investment in leading-edge logic/foundry and in advanced memory, areas where our ALD and Epi technologies play an increasingly central role. At the same time, several other end markets, including smartphones, PCs, automotive and industrial remained relatively soft due to persistent macroeconomic and geopolitical uncertainties. Looking ahead, the fundamental technology drivers remain firmly intact. Demand continues to rise for faster, more power-efficient semiconductor devices capable of supporting the massive growth in data and compute intensity. This will further accelerate the industry's transition towards more complex 3D device architectures and the introduction of new materials. These trends increase the number of ALD and Epi layers required at future nodes, supporting healthy long-term growth in our key markets. The main engine behind our growth in 2025 was the continued strong momentum in leading-edge logic/foundry. Our gate-all-around related sales rose substantially as customers ramped 2-nanometer capacity and started to move into volume manufacturing. At our Investor Day, we reconfirmed the significant expansion of our served available market by about $400 million in the transition to first-generation gate-all-around. We also highlighted the increase in our Epi layer share from 22% to 33% and the reinforcement of our leadership position in ALD. Our product penetrations included new applications such as moly ALD and area selective deposition entering high-volume manufacturing at the 2-nanometer node. In 2026, we expect customers will continue investing in 2-nanometer expansion, supported by rising end market demand across AI, high-performance computing and advanced mobile applications. Based on public commentary from several of our customers, the 2-nanometer technology node is expected to be large and long-lasting. While 2-nanometer will continue to represent the majority of leading-edge logic/foundry investment in 2026, we have also seen an uptick in 3-nanometer related demand. The pace of innovation is not slowing down, and customers are already advancing toward the 1.4 nanometer node with pilot line investments expected to start in the second half of 2026 and volume production in 2027 and 2028. This transition is projected to expand our served available market by a further USD 450 million to USD 500 million. A significant driver of this increase is the rising importance of functional layer in the transition area, which is a core strength for ASM. As also highlighted during Investor Day, we expect these transition-related layers to increase to roughly 60% of all ALD layers at the 1.4 nanometer node, up from about 50% at the 2-nanometer node. Based on the breadth of R&D engagement and the production tool of record selection secured so far, we expect to gain further market share as the industry moves to the 1.4 nanometer node. Let's now talk about memory. Our sales in the Memory segment decreased in 2025. And as discussed, this reflected a normalization in China after an unusually strong 2024. At the same time, momentum in the advanced segment of HBM-related DRAM remained robust. AI-driven data center investments continue to require high-performance DRAM. And in this segment, ALD high-k metal gate has become essential to achieving the performance and power efficiency levels customers demand. During the year, we strengthened our position with new ALD wins for layers that are expected to ramp in 2026 and 2027. And we also recorded our first Epi win in the DRAM segment. We expect healthy growth in our DRAM sales in 2026, even though memory is likely to remain a smaller share of our business than logic/foundry in the coming years. Looking forward further out, DRAM scaling presents a significant long-term opportunity. The transition to the 4F2 architecture will require more complex 3D channel structure and additional ALD and Epi steps, expanding our served available market by USD 400 million to USD 450 million. Let's now look at the power/analog/wafer. In 2025, the power/analog/wafer market remained in a cyclical downturn. In 2026 and based on the early signs of stabilization, we expect for this segment a modest sales improvement. This recovery will be limited to silicon-based power and analog applications. The silicon carbide market will take longer to recover, but we remain well positioned with a strong portfolio, including our PE208 platform for 200-millimeter applications. China remained an important market in 2025. After 2 years of exceptional growth, we had anticipated a period of normalization. Revenue from China did decline in 2025, but the decrease was milder than expected and mostly supported by continued robust activity in the mature logic/foundry segment. Sales softened in the second half of the year, particularly in Q4, but we saw demand accelerating towards year-end. Based on this momentum, we now expect higher sales in China in 2026, an improvement from our earlier forecast of a double-digit decline. As Paul already discussed, we continue to invest in R&D and CapEx to capture the opportunities ahead of us in logic/foundry, in DRAM and also in new areas such as advanced packaging. In 2025, we completed our new expanded innovation and manufacturing center in Downtown, Korea. Combined with our key manufacturing sites in Singapore and ongoing efficiency improvement in our supply chain model, we believe we have sufficient capacity in place to support our growth well into the next decade. I'm also excited to see the progress at our new Scottsdale facility, which will enable substantial expansion of our ALD and Epi product development activity in the coming years. And last but not least, in December, we announced our intention to invest in a new site in the Netherlands, which will house our new global headquarters and a state-of-the-art clean room. In December, we also acquired Axus Technology, a provider of differentiated equipment for chemical mechanical polishing focused on markets such as compound semiconductors and more than more manufacturing. CMP fits well with our capabilities in chemistry and interface engineering and plays an increasingly critical role in emerging technologies such as 3D integration. In 2025, we made further progress in accelerating sustainability, which remains one of ASM's strategic priorities. We maintained 100% renewable electricity for the second consecutive year. We also deepened collaboration across our value chain, including a new initiative to support suppliers with energy efficiency improvement and renewable energy adoption. In addition, we continue to advance product sustainability through initiatives that improve the energy efficiency and precursor consumption of our tools, contributing not only to reduction in Scope 3 emission, but also helping our customers lower operating costs. Let's now look into the outlook for 2026. Let me recap the key points of our guidance as included in yesterday's press release. We expect advanced logic/foundry to be our strongest business in 2026. In memory, we anticipate healthy sales growth. In power/analog, we expect a modest recovery from a low base. And for China, we expect sales to increase in 2026. For the first quarter, we expect revenue to increase to a range of EUR 830 million, plus or minus 4%, with a further increase projected in Q2 compared to Q1. And we anticipate our revenue in the second half to be up from the first half. With that, we have finished our prepared remarks. Let's now move on to the Q&A. Victor Bareño: Thank you, Hichem. We'd like to ask you to please limit your questions to no more than 2 at a time, so that everyone has the opportunity to participate. Operator, we are ready for the first question. Operator: So the first question comes from Tammy Qiu of Berenberg. Tammy Qiu: So first one is on 1.4 nanometer. So I remember that last time when you said you are expecting to ramp up pilot production in the second half of the year, you were talking about only one customer, but hoping for another one. I'm just wondering what is the progress? Did you get more interest of more customer ramping up 1.4 nanometer than just one? Hichem M'Saad: Okay. Thank you for the question. I think that 1.4 nanometer is a technology node that all key customers are looking for. And right now, I cannot really be more specific on whether 1 or 2 or 3 customers are ramping up the 1.4 nanometer node, but we see interest from all leading suppliers for the high-end logic and foundry to work on 1.4 nanometer. So we are very excited about the opportunity, and we see our customers really continuing to increase their investment in the next-generation gate-all-around. The other thing that we see is that the customers are very serious about going into HBM in the 1.4 nanometer node in 2027 and 2028. Tammy Qiu: Okay. And the second question is on China. So your peers also talked of China comparing to their expectation from Q3 last year. But your comment from down year-on-year to growth year-on-year. And also, we all know that China has been a lower visibility market comparing to the rest of the market. Is that something you've seen -- significantly changed over the past few months made you to have this call at such an early stage of the year? Or is that just basically customer conversation has been giving you the confidence that it will happen? Hichem M'Saad: I think that -- I think what we have mentioned before, it was very tough for us to really give a very clear projection for China. We mentioned very, very often that it was very tough because of many factors. One of them is the changing trade restrictions and also the funding releases, which really are very unpredictable from our customer. But we did see that at the end of -- actually at the end of the year that the customers are becoming -- Chinese customers are becoming much more bullish about their business in 2026, which really was very exciting to us, and that's why we feel that 2026 is going to increase with us. For us, we see visibility with them, and we see a strong momentum from that point of view. Operator: The next question is from Andrew Gardiner of Citi. Andrew Gardiner: Sort of related one on China, but really as it pertains to your business mix and how you think that will shape up over the course of 2026. If I go back to how you were framing things in October and indeed at the Capital Markets Day in September, you had cautioned us that business mix as it pertains to gross margin would deteriorate in 2026 and the decline in Chinese revenue was going to be a large part of that. Today, as you just mentioned, China is going to grow, maybe not quite as quickly as the advanced logic demand, but still it's going to grow. And so your mix isn't going to deteriorate as much as you had previously suggested it might. How should we, therefore, take that into consideration when looking at gross margin for 2026? Hichem M'Saad: So I think for our gross margin, it's -- like you mentioned, it really depends on product and also customer mix. And China would actually help our gross margin. So with the change in the mix, then the gross margin will also depend on that. And we see that in 2026, I think we have made -- I think we have made in 2025 and 2024 significant improvement, not only in -- actually, we made significant improvement in reducing our cost structure in our tools with the commonality. So we have initiatives to commonize more and more of our products, giving us economies of scale and more leverage with our supplier base to reduce cost. And I think with the way 2026 will materialize, I mean, if the customer mix goes further and further positive on the China-wise, then yes, we expect our gross margin also to be positive from that point of view. But I think overall, I think that we have made improvement in our basic gross margin in the past few years with better cost control. And I think China also would help in gross margin in 2026. Andrew Gardiner: Just so that I'm clear, Hichem, so -- I mean, you're suggesting with less of a change in customer mix year-on-year and with those structural improvements you've made, maybe we shouldn't see much change at all in gross margin relative to last year. Paul Verhagen: Yes. Let me take that, Andrew. Basically, confirm what Hichem said. So the mix, given that China is now better than what we anticipated before is, of course, a positive plus all the structural measures that we've taken. I think it goes too far to say that it will be the same as this year or maybe even higher at this stage. But I think what is -- what we're confident to say at this point already is that it will be at the higher end of the range that we guided for. And you know that we guided for is 46% to 51%. So at the higher end of that range, I think, is a reasonable assumption to take given what we know today. Operator: The next question is from Didier Scemama of Bank of America. Didier Scemama: I've got 2 questions. First, I think if we take the sort of baseline WFE growing 15% to 20% constant currency, are you comfortable to tell us that you will at least be in line with that at constant currency? Or do you see any reason why it should be better? Hichem M'Saad: So I think that -- okay, thank you, Didier, for your question. I think that for our market -- WFE market in 2026, we see that our growth will be at least at the level of the WFE growth. So if the market is going to grow by 20%, WFE, then we grow at least at that level at the 20% level. We are very, really upbeat about our position and our growth this year and actually in the future. Paul Verhagen: Didier, as you already mentioned in your question, but I want to repeat that because there is quite a difference, of course, between the current rate that we, of course, project going forward and, of course, the average rate of last year. So the question was right at constant currencies. Didier Scemama: And sorry, I don't want to use a follow-up for that. But Paul, since you opened the door, can you tell us what your average was in '25 so that we know what the starting point is? Paul Verhagen: Yes, I think it was around 112. Didier Scemama: 112. Okay. My follow-up is, I think -- there is a bit of confusion in the market as to what you're actually trying to say when it comes to the outlook for '26 because it feels like you're saying, yes, foundry/logic or advanced foundry/logic is going to be the key growth driver for the business. And then memory is going to have healthy growth. So implicitly that memory will grow less than advanced logic/foundry. So I guess, is that the right way to interpret that? And if that's the case, why wouldn't memory outperform given how bad it was in '25 and given that DRAM WFE looks pretty healthy, at least from a top-down perspective? Paul Verhagen: Yes. Let me take that question, Didier. So basically, what we said is that we expect growth almost on all fronts, to be honest. But the base from which the growth starts is very, very different. And I think that's the key. So of course, by far, our largest business is logic/foundry. And within logic/foundry, the largest part is advanced logic/foundry and then in China, in particular, mature logic/foundry. So especially advanced logic/foundry, we continue to see strong investments supported by investments, continued investment in 2-nanometer, but also 1.4 pilot, as we mentioned mature, you just heard our comments on China, we expect to grow. So that's a positive. Memory from a much smaller base, in particular DRAM, we also expect good growth, but it will still be the much smaller part of our overall business, as you've seen also in '25. And in addition to that, although it's still also from a lower base and modest, we also expect this year a modest improvement in power/wafer/analog, excluding silicon carbide. Silicon carbide is still -- that will still take longer, as Hichem already explained, but also power/wafer/analog, which is partially in China, by the way, and partially outside of China. Didier Scemama: Okay. So your commentary was based on euro incremental growth as opposed to percentage of growth. Is that correct? Hichem M'Saad: That's correct. I think that's really what we're trying to say here, Didier. Logic is a higher base. But in percentage-wise, the growth in DRAM is higher than -- percentage-wise than logic/foundry. Percentage-wise, DRAM is higher, but we're starting from a very much lower base. Operator: The next question is from Francois Bouvignier of UBS. Francois-Xavier Bouvignies: My first question is, Hichem on your comment on the AP, you mentioned an AP win on the DRAM side. Can you give more color on what this win is, when it's going to start kicking in? And was it competitive? Just more color on this comment, that would be great. Hichem M'Saad: Okay. Thank you very much for the question. I think that we're really excited of getting win in DRAM, and this is really in HBM, which we have realized in 2025. And it's going to be incremental to our revenue starting this year in 2026. Francois-Xavier Bouvignies: And is it going to be for multiple customers or just one? Hichem M'Saad: So it's -- as I mentioned, okay, so we had the win in 2025 for this particular customer, but -- and HBM is happening this year. But at the same time, we have significant engagement with other customers in high-bandwidth memory with epitaxy, and we expect some good news also happening hopefully in this year, too. Francois-Xavier Bouvignies: Great. And maybe on the advanced logic side, I mean, as the pilot line is getting in order this year, I just wanted to check your market share. You mentioned some moly ALD and area of selective deposition design wins as well potentially. Can you maybe give some color on your market share here? I mean, on the pilot line, how do you think it's trading? Is it higher? Is it similar? And selective deposition, I mean, I thought it was something a bit later on. So I was a bit surprised to see selective deposition in your comments. So just is anything happened? Did anything happen on the selective ALD front to accelerate the road map? Hichem M'Saad: Okay. So let me answer your question first about ASD and then talk about molybdenum. So if you look into ASD or area selective deposition, I mean, to be honest with you, we are -- myself, I'm very pleased that we got some win in area selective deposition in the gate-all-around area. And the reason we saw this win is because actually it's higher yield that's experienced by customers. So I think the simplification of the process flow and the reduction in the number of process steps have given rise to improvement in yield. So we see that happening. And actually, we see that also going to happen more and more into the future, and I see even acceleration in that. A very exciting area, I mean, and there's lots of possibility going on in this realm. And when we talk about the moly, we're also excited about winning HCM capability at the 2-nanometer node. I think we have mentioned very often that the moly adoption in the industry is going to happen, but it's going to be happening in a very slow pace. We mentioned that it started with 3D NAND. The second logic adoption is happening. And third is going to happen in DRAM. The change in the -- for us, this is penetrate -- this win is the first time that ASM has moved into the metal deposition area. So we're very excited about it. It's an area that we have -- we didn't have any experience about many years. We didn't have any experience because we didn't know what -- how to integrate metal layers. We don't know how to characterize that. But right now, I feel this win shows that, okay, yes, not only we can develop this new area, but actually, we can achieve HVM capability at the customers. So we're building the expertise within our development team and our teams, and this is something that really is exciting for us. But as I mentioned, the moly adoption in logic is going to take a while. And I mentioned before, it's going to start a little bit at the 2-nanometer. You're going to have a little bit more at 1.5 4-nanometer node, a little bit more at 1.0 nanometer node, but it's not going to be at the level of what tungsten and copper is. But this is really exciting for us, to be honest with you. Operator: The next question is from Adithya Metuku of HSBC. Adithya Metuku: So I had a couple. Firstly, just on the CMP acquisition, I just wondered, Hichem, if you could give us some color on which end markets you want to focus on, what sort of applications and end markets and whether you intend to have any partnerships with your CMP tool, especially when it comes to advanced packaging. There's a lot of debate there. So any color there will be helpful. And then secondly, I wondered, Paul, if you could give us some color on how you're thinking about your OpEx growth in 2026 with a focus on R&D and SG&A. Hichem M'Saad: Yes. So thank you for the question. We have -- when it comes to CMP, we when we looked into this market, okay, we talked in our Investor Day that we have focused on also some M&A and especially in an area where it can do 2 things for us. It's an area that's strategic to ASM and it's an area where we can add value to it. And also, we mentioned, okay, that when we do some M&A, we really want to make sure that there's some technology component to it. And this is really what we saw in this CMP acquisition. The company has a very good technology, very exciting technology to be honest with you. That's very unique by itself. They have a great footprint and also very good cost of ownership, very competitive cost of ownership. And we think that this technology, CMP is actually -- is complementary to our strength in interface engineering. As you know, that when you do the bonding at the end of the day, it's really to put -- it's like to bond interfaces together. So after you do polishing, you have a new surface. And if you can make the surface better and more -- you can actually control the engineering of the surface, that can help you also do the bonding. And also, it's also complementary to our deposition technology. I mean we have CVD deposition in advanced packaging and CMP would be also complementary to that. So from all this point of view, we think that we can add value to this technology. We are going to see how it works for us in the future. This is a very small acquisition, about EUR 80 million acquisition. And we're going to test it. We mentioned that we're going to test it in the advanced packaging area, and we'll see how it materialized. But definitely, the technology is differentiated. We like the tool architecture. And we think that also cost-wise, it will be very competitive. Paul Verhagen: Yes. And then on the OpEx, what I can say is that let's start with R&D. We will continue to invest in R&D. So that will grow further. And our net R&D will grow at a higher pace than our gross R&D simply because of the increased amortization expense because more and more films that we have been working on in the last few years have entered into HCM. So we start to amortize those. But I think net R&D at constant currency again, because also I'm not going to give you a percentage now, but a decent chunk of R&D cost is also dollar-based and another decent chunk is also euro-based. So net, around 10%, I think, is a good guidance to take into account and gross will be slightly below that because net will grow faster than gross. On the SG&A, we will continue to be very strict on SG&A. There will be some increases, of course, annual inflation, merit, but also we invested in -- as you know, we are the global big bang of our new ERP system that costs under IFRS need to be capitalized. So we will start amortization of these costs as well. We might have some higher variable expenses in '26. But overall, I think if you take into account a few percent increase, that's what we try to manage. We will be very strict on SG&A. And as a percentage of revenue, for sure, that will go below 9%. Adithya Metuku: Got it. Understood. Maybe, Hichem, just to clarify on the Axus acquisition. Is this -- do you have a specific focus on hybrid bonding? Or is it more generally bonding applications? Hichem M'Saad: Yes. I think we -- really we're looking into the advanced packaging as not only hybrid bonding. So it's really packaging as overall market from that point of view. Operator: The next question is from Robert Sanders of Deutsche Bank. Robert Sanders: Maybe just if you could just discuss a bit about what you see in terms of clean room constraints at your customers. Obviously, we've seen some companies talk about that. Obviously, your tools don't take up as much footprint. And -- but in terms of looking into '27, do you see significant capacity opening up? And how does that set you up for next year? Hichem M'Saad: I think that we see -- if you look into 2026, -- we do see there's a constraint in fab space in multiple areas, which limits the really expansion for our customer. I mean it's -- I think it's very clear. It's very public information. And also, we see a growing sense of urgency from our customers really to get some of the tools. So based on that, we see that there is a good momentum as more and more capacity come in, in 2027. So we see momentum really continuing in 2027. So not only we are excited about 2026 and very positive about 2026, but we see the fact that more and more capacity -- the fact that there's a constraint right now in fab space, but that fab space is going to open up in 2027 means that also 2027 is going to be a very good year for our company. Robert Sanders: Great. And just a quick follow-up. Just a clarification on foundry/logic in '26, are you saying that's going to grow? Or are you just saying it's going to remain the largest part? I didn't quite understand. Maybe I missed that if that was asked already. Paul Verhagen: Both, yes and yes, it will remain the largest part, and it will also significantly grow. Operator: The next question is from Stephane Houri of ODDO BHF... Stephane Houri: I just wanted to come back on the decision to stop giving the orders on a quarterly basis because, yes, indeed, some of your -- other players in the industry have done the same. But it seems to me that the volatility was not such a high volatility as for others and that given your lead time, it was a good indicator. So what are you going to give apart from more granularity on the current level of sales? And I have a follow-up. Paul Verhagen: Yes. Let me take that question, Stephane. Actually, we -- multiple, let's say, stakeholders that we have discussions with gave suggestions that we should maybe like our peers, stop with quarterly bookings because the risk of an overreaction is there. As we said already, it's not always demand driven, but it's timing, just phasing, nothing else. So we see overreactions up if it's really good or overreaction down, if it's really not good, which is not helping, of course, the stock increases volatility. So that's a key reason why we're stopping. On the other hand, I think with the hopefully improved transparency on segment information, that might help. We will continue with revenue guidance, of course, like we do today and maybe some qualitative guidance if we believe that is necessary. So with that, I hope that you guys have enough to model and to come to a view on how we will develop in the coming period. But these have been the considerations. And based on that, yes, we have made this call. Stephane Houri: Okay. And what about the evolution of spares and services it has been outgrowing the equipment parts in 2025. So what is your view on 2026? Hichem M'Saad: I think on 2026, I think with the fact that the fabs are at maximum capacity, we expect continued growth in 2026. The other thing, as the market moves more and more into more advanced nodes, we see the service part of our market also growing even higher than the rest because of the complexity of the equipment at the very high-end node, which favor outcome-based services or solutions that are much more valuable and add more value to the customer. So I'm very optimistic also on the service market this year and in the future. Operator: The next question is from Jakob Bluestone of BNP Paribas. Jakob Bluestone: Just on Axus, could you maybe just help us understand how you plan to cross-sell CMP tools? And if you have any idea what share of your customers are currently already using CMP in their processes? Hichem M'Saad: I think that for -- I just want to make very clear for Axus as a company, I mean, it has a very low revenue. I mean we're talking about revenue between USD 20 million to USD 30 million per year. So this is the latest revenue they have in 2025. So this is a very small acquisition from this point of view. And we're going to leverage the -- our expertise to help this technology, bring this technology to a larger customer from that point of view. But as I mentioned, okay, this is all about a technology buy where we think that, okay, we can add some of our strengths into the CMP market. I mean if you look into CMP, it's systems for chemical mechanical polishing and that chemical part that really means chemistry. And that's where we play with. I think we have some idea on how to make the chemistry better, especially when you go into 3D integration whereby the chemical part of the CMP becomes most predominant than the mechanical part, especially as you go to 3D and the structure becomes more and more fragile from that point of view. So we think we can play a role there. We're going to see how it goes. But again, this is something that we think that we can improve. It's a very small acquisition. I think it plays on our street and going into a market that's growing a lot, which is the advanced packaging. So we are very excited to look into how can we make it even better and improve our penetration into the advanced packaging in the future. Jakob Bluestone: Great. Maybe just a quick follow-up as well just on CapEx. Can you provide any commentary on CapEx for '26, I guess, particularly in light of the expansion in Almere? Paul Verhagen: Yes. No. The expenses as per our guidance from the Investor Day, I think it was EUR 200 million to EUR 250 million in the years where infrastructure expansion. So in '26 this year, it will mainly be CapEx related to Scottsdale still. And then very likely, as we see it today, then in '27, you will start to see the first more material CapEx for Almere. Operator: The next question is from Sandeep Deshpande of JPMorgan. Sandeep Deshpande: My question is back to the M&A you've done. I mean has the policy of ASM changed at all with regards to M&A? Those of us who have covered the company for a long time, I mean this -- the company did a lot of M&A, then made a lot of exits. Now you've started doing M&A in a small way again. So has the overall policy towards M&A changed at ASM? And are there more areas apart from now the CMP acquisition that you plan to do? And does the company plan to become stand-alone players in this? Or is this just addition to existing tools, which is probably a less risky proposition. And so I just want to try to understand your thought process behind the M&A. Paul Verhagen: Yes. No. So did it change? At least in the last 5 years, it did not, although indeed, we made 3 acquisitions in the last 5 years. And in the 10 years before that, we made none. So from that point of view, you could maybe think there is a change. But I think there's not really a change because also before that, what I understand from my predecessor, they've looked at certain opportunities, but for whatever reason, they never materialized. So we look into M&A if we see an opportunity where we see clear value-creating opportunities and that helps us to grow and build our position further in certain areas that we have labeled as important/strategic to us, then we want to act. And we did that now 3 times. There's always a very clear link to strength that we have. It leverages, let's say, our strength of the capabilities of the company that we buy. It can build and leverage on our global network that we have. So yes, the logic at least for the last 3 have been actually exactly the same for Reno, for LP and now for CMP, Sandeep. And we will continue to scan the market. We have continuously said that. Our first priority in terms of capital allocation is growth. Number one is organic growth. That's why we continue to invest in R&D, very important and in infrastructure expansion, as we explained. But the second is also inorganic. If we see true value-creating opportunities, we try to do it in a very disciplined manner. We're not throwing money away because we have it, no. We only do it if we truly believe that there is a medium- to longer-term strategic play that can create a lot of value to us based on the capabilities that we have in combination with the targets. So that did not really change as far as I'm concerned, Sandeep. Sandeep Deshpande: And a quick follow-up. I mean, I think a quick follow-up. I mean, in terms of the earlier question on your improvement being seen in the logic/foundry market. Earlier last year, you had talked about a slow start to '26. So did something change in the last few months in terms of the slow start that some key customers changed how the trajectory of how they're taking delivery of the tools? Or was this slow start is what you have already guided? This is the guidance and it was underplaying what the market expected. The market was underplaying what you expected, sorry? Paul Verhagen: No, I think, no, absolutely it changed in the last, whatever, 2 to 3 months. You've seen announcements from some of our customers that have significantly increased their outlook, especially a large foundry customer, which I think that's where it started with. We just explained the improved sentiment in China in combination with a pause of some of the export control measures that were initially put in place, but then paused. Some customers will take advantage of that. But at the same time, also clearly improved sentiment there. You read about the hyperscalers and their investments in data centers and infrastructure, hundreds and hundreds of billions. It's definitely a different situation in the last 2, whatever, maybe 3 months than what we thought before. We always thought '26 would be still a good year, but starting in the slow, as you said, and then accelerating more towards whatever the second half of the year. But that acceleration that we actually had expected maybe somewhere in the course of the year, literally starts now. So there's clearly a change, yes. Operator: The next question is from Timm Schulze-Melander of Rothschild & Company Redburn. Timm Schulze-Melander: I had 2, please, one for Hichem and one for Paul. The first one is just on the CMP business model just with respect to consumables, slurry and pads. I know it's a small business, but is that going to be something that you provide? Or is that going to be provided by an external or a third party? And then I had a follow-up. Hichem M'Saad: Okay. So to answer your question, okay, regarding the CMP part of the business and the acquisition. So the -- once -- as the technology in packaging moves more and more into high end, from -- it's going to move from TCB to hybrid bonding in the future. Then what happened is that we're going to go to lower temperature processing and the surface of the interface becomes a very significant in the hybrid bonding part of the advanced packaging. So for such, interface control is very important. We have solutions, organic solutions from our ALD know-how to engineer interfaces and engineered surfaces. But also CMP is part of that whole the whole process flow. And by definition, CMP also affects the surface of the deposition layers that deposited film. So it's important for us also to understand how that interface from CMP works with our deposition films that we developed in CVD and ALD to engineer a very clear interface. So I hope that's very clear from where we stand. This is a new market for us. This is a new market, and we try to understand this market very well. We have -- as we mentioned, we have organic offering there. This organic offering are in ALD in the area of ALD. This organic offering are also in the area of CVD like PECVD, but also this offering, the organic offering is also in the area of epitaxy and silicon photonics, where we also have some traction in those things. So CMP plays a significant role in engineering the interface. It's complementary to our deposition technology. And it's very important for ASM to really know how CMP also engineers the surface and interface in addition to the offering that we have in deposition, both CVD and ALD. The next thing regarding the question that you have asked about slurry and so on and so forth. As I mentioned, the CMP part is moving more and more into the chemical part. So you have CMP, you're trying to polish. So polishing both with force, okay? That's the mechanical part, but also the chemistry, which is the slurry and so on and so forth. And that slurry thing or the chemical part is becoming much more important than the mechanical part because of the 3D drive that's happening in our device. And when you talk about advanced packaging, you're going to put things on top of each other. And you also have wafers that are very thin, they are very brittle. So you cannot put too much force. So the chemical part becomes much more important. We are a company that knows a lot about chemistry, and we have know-how and knowledge in that, which we have applied for ALD and other parts. And we think we can do the same for the CMP part of the business. Timm Schulze-Melander: Great. That's very clear. Just moving on to Paul. sincerely appreciate the improved disclosures. For one, I'd probably request for a quarterly rather than a semiannual, but the disclosure improvement is much appreciated. I just wanted to ask about the cost saves and the run rate and just kind of get a sense as to kind of what the exit rates were or are for '25 coming into '26. And maybe just trying to think about the cost savings contribution and how that might scale or how that sizes relative to the increase in R&D, which I think you're guiding is going to, on a gross level, rise by about EUR 40 million, EUR 45 million. I just wanted to get a sense of maybe the extent to which cost saves might offset how much of that they might be offsetting. Paul Verhagen: Are you specifically referring to SG&A and R&D or also to cost of goods? Timm Schulze-Melander: I'm referring to the broad A to Z cost savings and efficiency programs that you guys have across the company and just trying to scale those relative to the specific cost increase that you're guiding for in the gross R&D spend. Paul Verhagen: Okay. So on the real cost savings, it's more, let's say, margin related where we have explained before on the -- for instance, the standardized platforms. So we have more and more products now that are qualified by customers based on standardized platforms, which have a better cost structure, lower cost structure, more common parts, et cetera, which leads to cost reduction, but also to a reduction of complexity in terms of logistics will lead to somewhat improved inventory simply because of more commonality. I'm not going to give you a number there, but it's -- yes, it's a meaningful improvement, let me say it like that. The other part, but also that will go slow. So every year, you will see some benefit there is the MIT that we talked about before, the merchant transit, where we don't have everything come to Singapore first, assemble it, test it, but have the platform go straight to the customer, the process chamber that comes from Singapore then straight to the customer and assemble it there and test it there, which skips one big step, which is also a big improvement. Of course, we have value engineering initiatives on our products continuously. We have material cost savings, commercial savings. So there's across the board savings going on. On the R&D part, here, I mean, the name of the game is selecting the right priority from the many priorities and many opportunities that we see, which, of course, to a large extent, are based on the, the overall market opportunity that we see and whether or not we can have a differentiated proposition or not, but it's not so much about saving costs, although we try to be very efficient, of course, in what we do there. For SG&A, it's literally doing more with less. So we grow and grow, but we want to automate more. We want to make our processes better. We want to leverage AI better. So there instead of just adding people more and more, it's all about doing more with less and do maybe more with the same, to be honest, to support this growth without adding too much cost. So every line has a different dynamic, if you wish. Operator: The final question is from Marc Hesselink of ING. Marc Hesselink: First its a follow-up on the market share in memory. I think now you very clearly stated that whatever the industry of WFE is doing, you expect to be growing faster. So does that also imply that in the more advanced parts of the memory market, your market share is getting closer to the market share that you have in the advanced logic/foundry. Paul Verhagen: Let me take this, Marc. No, absolutely not. I wish because then we would be looking at very different numbers. No, no. So what I think we try to say is that on the small revenue base that we have today in memory, especially in DRAM, we expect significant growth -- significant growth even more as a percentage than in advanced logic/foundry. Having said that, for '26, we also expect significant growth, in particular, in advanced logic/foundry, maybe a little bit less maybe as a percentage than DRAM, but still very high. If that growth would, let's say, change significantly during the year, the percentage so that advanced logic foundries, we don't expect that this scenario would grow much lower and DRAM would suddenly go even more and stronger than we are today, then the statement that we make is maybe -- would become maybe invalid because if all the growth would be in DRAM, of course, we would not be saying what we were saying. But also, we say what we say because we believe that also the growth in advanced logic/foundry will be very significant. That is the reason why we say what we say. Marc Hesselink: Okay. That's clear. And then my second question is on -- it's more of an organizational question. So you're adding R&D capacity. You're adding -- you have introduced a new IT system. You have now a new Board member. With the growth of the company, you're adding this kind of, let's call it, another layer of professionalization within the company. Is that the way to look at it? Is there more to come? And is there more that you have to scale in the coming years given the high growth that you have going forward and what you had in the past? Paul Verhagen: Maybe one small adjustment, Marc, we did not add a new Board member. It's a new ExCo member. So senior leadership, but it's not a Management Board member. The carrier that we talked about is an ExCo member. I think what we're doing is we have -- actually, this is something that's happening for many, many years in a row. Of course, we're trying to professionalize the company and trying to get ready to scale the company in an efficient and effective manner. So for instance, the new ERP system, which we have globally implemented through a big bang is, let's say, the foundation for further, let's say, growth in a more automated fashion, in a more productive way than we would have been able to do without this because with the previous system, we had to do much more manual work than what we can do today as an example. Also AI applications, we can leverage better with the foundation that we put in place now than what we would have been able to do without this foundation. So yes, it's all about scaling. Yes, it's about professionalization of the organization. So I'm not sure if that answers your question, but this is what I can say. Marc Hesselink: The question was also a bit, is there more to do on this side? I mean, I think we had quite some announcements over the past few years. Is that -- are the large part behind it now? Or are you still taking another steps here? Paul Verhagen: Yes. I'm not sure you're referring to because so many announcements I don't think we've had. I mean, we have an Expo. We have a number of KPIs. We professionalize, I mean, our way of working, which I guess every company does. So we will continue to do that. We will not stop. It's not like, okay, from now on, you will not see any announcement anymore. But yes, I think what we do is for the reasons that I just tried to explain is to scale the company in a controlled, professional and highly productive manner. That's what we are trying to do. Operator: That was the final question. I will turn it back over to the CEO for any closing remarks. Hichem M'Saad: On behalf of Paul and Victor, I would like to thank everyone for attending today's call. We hope to meet many of you guys very soon in the upcoming investor events. Thanks again, and goodbye. Operator: Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.
Operator: Good afternoon. Thank you for attending the Accel Entertainment Fourth Quarter 2025 Earnings Call. I would now like to pass the conference over to your host, Scott Levin. You may proceed. Scott Levin: Welcome to Accel Entertainment's 2025 Fourth Quarter and Full Year Earnings Call. Participating on the call today are Andy Rubenstein, Accel's Chief Executive Officer; Mark Phelan, Accel's Chief Operating Officer and President, U.S. Gaming; and Brett Summerer, Accel's Chief Financial Officer. Please refer to our website for the press release and supplemental information that will be discussed on this call. Today's call is being recorded and will be available in the Investor Relations section of our website under Events and Presentations. Some of the comments in today's call may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties. Actual results may differ materially from those discussed today, and the company undertakes no obligation to update those statements unless required by law. For a more detailed discussion of these and other risk factors, investors should review the forward-looking statements section of the earnings press release available on our website as well as other risk factor disclosures in our filings with the SEC. Any projected financial information presented in this call is for illustrative purposes only and should not be relied upon as being predictive of future results. The inclusion of any financial forecast information in this call should not be regarded as a representation by any person that the results reflected in such forecasts will be achieved. During the call, we may discuss certain non-GAAP financial measures. For a reconciliation of the non-GAAP measures as well as other information regarding these measures, please refer to our earnings release and other materials in the Investor Relations section of our website. Following management's prepared remarks, we will open the call for a question-and-answer session. With that, I would now like to introduce Andy. Please go ahead. Andrew Rubenstein: Thank you, Scott, and good afternoon, everyone. Accel delivered a strong finish to 2025. We closed the year with record financial results, continued operating momentum, new growth opportunities, and an enhanced balance sheet. In the fourth quarter, total revenue increased 7.5% year-over-year to $341 million, and adjusted EBITDA grew 19% to $56 million, both all-time quarterly highs. For the full year, we also generated records in revenue of over $1.3 billion and adjusted EBITDA of $210 million. These results reflect the resilience of our distributed gaming model, growth from our new acquisitions, and our disciplined operating measures and capital deployment. We ended the year supporting more than 4,500 locations and nearly 28,000 gaming machines nationwide, demonstrating the breadth and durability of our platform and its predictable revenue profile. In Illinois and Montana, we continue to optimize our footprint and terminal base, driving steady hold per day improvement and margin expansion. Illinois remains our largest and most established market, and we continue to execute on our strategy to improve unit economics and expand margins through disciplined deployment and route optimization. We are excited by and are closely monitoring developments in Chicago, following public announcements regarding the introduction of video gaming terminals in licensed establishments. As the leading operator in Illinois, we believe Accel is uniquely positioned to participate meaningfully. Our existing regulatory relationships, operating infrastructure, route management capabilities, and strong financial position provide a clear advantage in our ability to service and scale this market quickly and efficiently with our existing platform. As we discussed in more detail in our January 8, 2026, press release, the city estimates 2,500 new locations in Chicago over the long term. We view this as a highly attractive opportunity that would enable Accel to further leverage its fixed cost structure and generate incremental returns at compelling margins. As always, we will remain focused on disciplined execution and creating long-term shareholder value. Turning to our developing and strategic growth markets. We continue to generate positive momentum. In Nevada, terminal count increased 13% year-over-year for the fourth quarter, supported by recent strategic and accretive route expansions. We are encouraged by the trajectory of new placements and believe the market is positioned for steady improvement. After adjusting for the stub period in 2024, Louisiana revenue increased significantly in the fourth quarter. We continue to execute our bolt-on acquisition strategy and optimize the Toucan Gaming platform. Louisiana remains a priority market for consolidation with many tuck-in opportunities that clearly fit our return thresholds. We are well-positioned as a buyer of choice. The market currently has a good pipeline. Nebraska and Georgia delivered strong growth both quarterly and on a full year basis, demonstrating the ongoing expansion and increasing leverage of our operating platform as these markets expand and develop. As our density increases, we expect continued profitability to follow. At Fairmount Park Casino & Racing, we completed our first full racing season and ramped up our casino operations following the April 2025 opening. Customer engagement has been healthy and monthly performance has continued to build as consumer awareness increases. We continue to evaluate the timing and scope of future development phases. As we have highlighted in the past, in addition to being an attractive standalone business, Fairmount diversifies our revenue mix and provides operating flexibility. Reflecting our commitment to shareholder returns and our belief that Accel represents an attractive long-term investment, we repurchased approximately 3.8 million shares of common stock during 2025, including 1.5 million shares in the fourth quarter. Our capital allocation framework, which includes our $300 million revolving credit line, remains disciplined and return-focused, balancing organic investment, bolt-on, and other strategic acquisitions, balance sheet strength, and opportunistic share repurchases. As we look ahead to 2026, our priorities remain clear: drive steady organic growth in our core markets, scale profitability in developing and new markets, execute accretive tuck-in acquisitions, and consistently convert earnings into free cash flow. Before my closing comments, I want to touch on our February 2 press release regarding the leadership transition. As we shared, I've stepped into the chairman role effective immediately, and in August, I'll transition out of the CEO role as Mark takes over day-to-day leadership of the company. This new role gives me more flexibility to leverage my local and national relationships to help Mark and the Accel team capitalize on the attractive growth opportunities in front of us, including expanding into the Chicago VGT market. I'm excited to keep working closely with Mark as we continue to profitably grow Accel. With that, I'll turn the call over to Mark, to review our operations in more detail. Mark Phelan: Thank you, Andy. From an operating standpoint, 2025 was a year of steady execution across each market with continued focus on route quality, service performance, and targeted investment. In Illinois, our team focused on improving location mix, redeploying underperforming assets, and concentrating investment into higher-yielding gaming machine placements. That work continues to drive steady improvements in revenue per machine and overall margin performance, even though it means we largely maintain flat location counts. The rollout of Ticket-In, Ticket-Out technology in Illinois is progressing as expected, with 81% of Accel locations having all gaming machines fully TITO-enabled. While still early in the penetration cycle, TITO is expected to enhance player convenience, provide benefits to Accel in terms of streamlining cash handling, and improve overall operating efficiency. As adoption continues to increase, we believe it will contribute to both revenue stability and cost improvements. Montana continues to benefit from our proprietary content and systems. The strength of that market is not just stability, it's predictability. Our teams there continue to refine gaming machine placement strategy and leverage our in-house technology to support profitability per location. Additionally, our Grand Vision Gaming wholly owned subsidiary continues to develop new content, which allows us to enhance margins through exclusivity, as well as lower our CapEx and increase free cash flow. In Nevada, the focus has been integration, expansion, and operational alignment. During the quarter, we completed the accretive acquisition of Dynasty Games, which added 20 locations and approximately 123 gaming machines across northern Nevada. This transaction expands our footprint into several new communities and further strengthens our route across the state. During the quarter, we also entered into a new route partnership with Rebel Convenience Stores, which adds 55 locations and 424 gaming machines across southern Nevada, starting in January of this year. We leveraged our deep capability across our national teams to accomplish this arduous deployment in only 6 days. The Rebel rollout demonstrates our ability to efficiently launch new locations across markets, including new markets like the City of Chicago, so location owners can begin offering gaming entertainment to their patrons as soon as possible. Accel's Nevada operations now deliver state-of-the-art gaming and technology solutions to more than 600 locations, supporting approximately 3,000 gaming machines. The integration of Toucan Gaming in the Louisiana market has progressed well, and our field teams have been focused on route optimization, gaming machine refreshes, and disciplined bolt-on acquisitions. The pipeline for acquisitions remains healthy, and we're confident in our ability to continue consolidating attractive opportunities that fit our return profile. At Fairmount Park Casino & Racing, our operational teams completed a full racing season while continuing to ramp casino performance following the April 2025 grand opening. We've gained valuable insight into customer behavior, marketing effectiveness, and operating cadence, which is informing how we approach future development phases. Importantly, we are seeing consistent month-over-month engagement growth as awareness of the park builds. Across all markets, our operational approach remains consistent: prudent capital placement, service excellence at the location level, data-driven decision-making, and strong local relationships. That operating discipline is what underpins our financial performance and supports our ability to generate growing free cash flow. With that, I'll turn the call over to Brett, to review the financial results in greater detail. Brett Summerer: Thank you, Mark, and good afternoon, everyone. I'll begin our fourth quarter results and then provide additional detail on our full-year performance on the income statement, cash flow, and balance sheet. As Andy mentioned, for the fourth quarter, total revenue increased 7.5% year-over-year to $341 million, the highest fourth quarter revenue in the company's history. Growth was driven by continued strength in our core markets, incremental contributions from developing markets, and the continued ramp at Fairmount Park. Adjusted EBITDA increased 19% year-over-year to a record $56 million. Importantly, adjusted EBITDA grew meaningfully faster than revenue, reflecting expense discipline and operating leverage across the platform. As our network grows, we continue to see margin expansion driven by route optimization, density improvements, and cost discipline. Operating income for the quarter also improved year-over-year, reflecting both top-line growth and stable overhead. Net income for the quarter was $16 million. As noted in the press release, results benefited from a $0.6 million gain related to the change in fair value of contingent earnout shares compared to a $3 million loss in the prior year period. Excluding this non-cash mark-to-market item, underlying earnings growth remained strong and consistent with our adjusted EBITDA performance. For the full year 2025, revenue was a record $1.3 billion, representing 8% growth compared to 2024. Adjusted EBITDA increased 11% year-over-year to $210 million, demonstrating continued margin expansion and scalability of our operating model. Net income for the year was $51 million. Translated into EPS, this was $0.61 basic or $0.60 fully diluted. Turning to full-year CapEx. Full-year CapEx was aligned with our expectations and remains heavily focused on revenue-producing assets. A significant portion of our capital supports growth initiatives, including new machine placements, route expansions, and the Fairmount Casino opening and track enhancements, with the remainder dedicated to maintaining and optimizing the installed terminal base. This disciplined allocation supports strong returns and sustained cash generation. Based on our current earnings and capital profile, we expect to continue generating meaningful cash flow, which provides flexibility to fund growth, maintain a conservative balance sheet, and return capital to shareholders. Moving to liquidity and leverage, we ended our year with $297 million in cash and cash equivalents and net debt of approximately $311 million, down 1% year-over-year. Our leverage profile remains conservative relative to our recurring cash flow base, providing significant financial flexibility, including our currently untapped $300 million revolving credit line. During 2025, we repurchased approximately 3.8 million shares of common stock, including 1.5 million shares in the fourth quarter. We evaluate capital allocation decisions through a rigorous return-based framework comparing organic investment, bolt-on and strategic M&A, debt optimization, and share repurchases. Looking ahead, our recurring revenue model, disciplined capital deployment, and operating leverage position us to continue converting adjusted EBITDA into cash. We remain focused on maintaining balance sheet strength while pursuing high return growth opportunities. Overall, our financial performance in 2025 extends our long-term record of growth, and we remain confident in our strong liquidity, scalable platform, and disciplined capital allocation to provide a solid foundation for continued growth in 2026. With that, operator, please open the line for questions. Operator: [Operator Instructions] Your first question comes from the line of Max Marsh with CBRE. Maxwell James Marsh: Andy and Mark, congrats on the new roles. It looks like things are moving ahead in Chicago. IGB just started accepting applications last week. Do you guys view that as just a matter of time? Or are there any political or legislative points of failure until you guys can start generating some revenue in that market? Andrew Rubenstein: Thanks, Max. This is Andy. There is a process that still needs to happen within the city, but the fact that the IGB has accepted -- begun accepting applications is a great sign. So we're still waiting on some of the procedures related to licensing in the city and how the cities will either regulate the gaming or facilitate individual establishments and getting started and obtaining a license from the city. So there is some of that still that needs to happen, but the fact that the IGB is accepting applications is a great start. Maxwell James Marsh: Great. And as we think about the market opportunity in there, should we think about that as similar to the unit economics of the state at large? Or do you guys have the potential to do a little bit better there with your established service routes and relationships in the state? Andrew Rubenstein: So it's kind of a twofold question. Operationally, we have a fantastic platform in order to service, collect, and facilitate play at all the establishments. But the reality is the actual establishments on a whole have less square footage than the establishments we operate elsewhere in the state. Obviously, that's because the city has greater density, real estate is more valuable and the taverns and establishments aren't allotted as much square footage. So we believe that we're in the rest of the state, many of the locations will easily accommodate 6 machines. There may be some constraints on certain establishments to get to that 6 machine. So we're estimating a lower amount of average equipment. We don't have that exact number than we do in the rest of our portfolio. That being said, the density of population is far greater in the city. And so therefore, the average play per machine should be higher than the average play of our existing portfolio. So the final element of all of this is the difficulties of operating in the city in terms of parking, logistics will probably impact our cost a little bit, but we'll be able to offset most of that by the fact that we have a platform that we've got -- we're able to service it from the outside. We will have to establish some type of warehouse facilities and support within the city. But all in all, it should be a very positive impact on our business. Operator: Your next question comes from Jordan Bender with Citizens Bank. Jordan Bender: We've been watching Hawthorne play out over the last several weeks. Curious to get your views around the bankruptcy that track and depending on how that plays out, you could be left with the only operational track in the state. I guess also, what does that kind of mean for your investment at your track, including the casino? Mark Phelan: Jordan, it's Mark. So I'd say as a horse racing fan, it's a tough moment for Illinois horse racing. Hawthorne's decline is painful for everyone who cares about sport racing, particularly in Illinois. And our thoughts are with the Cary family. They carry Illinois horse racing for over a century, and we wish them well and whatever comes next for them. That being said, the pari-mutuel horse racing market is facing significant headwinds nationally as well as in the state of Illinois. But we are, as you point out, still standing and still very much excited about the coming season, which starts in April, and we stand ready to support the Illinois Racing Board in any capacity that they require to help make sure racing operations specific employees, horsemen and all the backside communities have a workable path going forward. Jordan Bender: Great. And then just maybe sticking with you, Mark. As you step into the CEO role, do you have any different views across any aspects of the business, the geographic segments of how they're kind of run today? Mark Phelan: So we kind of have talked a bit in the past about how we break our markets up into core, developing and emerging. I think we're pretty excited about '25, and we're definitely excited about '26 in terms of all those different categories. They all sort of benefit from each other, and there's all sorts of overlap in terms of content and systems, which we think could drive growth in all of them. So I think what we're fundamentally trying to do is shift the route business from a real logistics-heavy business to an entertainment and hospitality business that's more nuanced, more niche and definitely more differentiated with higher margins. I'd say that's really what's driving me in terms of when I take over. But I would point out that Andy has done an amazing job, and there's a big shoes to fill and a huge platform to grow off of. Operator: Your next question comes from Patrick Keough with Truist Securities. Patrick Keough: Congrats on a really nice quarter, and congrats to Andy and Mark on the transition into new roles. For my first question, there's been some route gaining traction in state sessions like Pennsylvania, Virginia, Missouri and North Carolina. Could you talk about how you view any of these as likely to legalize this year? And could you think or talk about how you think about building versus buying to get a foothold in these markets if they go online? Mark Phelan: Patrick, it's Mark. I would say we formally included Chicago in those emerging markets. And thankfully, that's now going to be a reality. So we're pretty excited about that. That being said, there's -- these types of situations don't happen often. And so I'm a little more conservative in terms of the other markets that you mentioned, Pennsylvania, North Carolina, Virginia, Missouri. They all have outstanding legislation in terms of legalizing some form of electronic gaming machines for routes. Each of them has their own nuances, which may or may not make it a higher probability to go legal. But I would just caution a lot of these states, except for North Carolina, have a casino, which is always an issue with trying to pass legislation for VGTs and always makes it very difficult. And it's just naturally difficult to pass gaming laws. So we prepare for the best, but our budget and our expectations are prepared for not having this in this year, if that helps. Your second question in terms of -- yes, in terms of acquiring things, we actually have a pretty good ground game in a lot of these markets like Chicago, for example, where organically, we will acquire stores through our own internal customer acquisition group. But certainly, as Andy showed over the last 17 years, we will ultimately acquire other routes over time as that sort of unfolds. Patrick Keough: Great. And a question on Illinois, if I could. It looks like location count declined again quarter-over-quarter. Could you just give an update on maybe what inning you're in of pruning and where you see this trending over the next few quarters? Andrew Rubenstein: Patrick, it's Andy. So as we've talked about in the past, this is a continuous process of improving and optimizing our Illinois route and having nearly 2,700 establishments. We're always looking at the performance at the bottom and whether or not it makes sense to continue operating in those locations. And as we acquire or win new locations every month or every meeting with the IGB, we take an even deeper look at those locations and oftentimes reallocate our assets to what we expect to be higher-performing positions. So I would expect that with such large numbers, we'll continue doing this. There may be some more loss of locations, but you'll probably see as Chicago comes on for that trend to be reversed as there'll be a significant increase in locations from the Chicago market. Operator: Your next question comes from Steve Pizzella with Deutsche Bank. Steven Pizzella: Also wanted to just say thanks to Andy for the time over the years, and congratulations to you, Mark. First, just wanted to ask how you think about the increased tax returns here moving forward. Have you seen historically a direct correlation with that and increased gaming at your locations? And have you maybe seen any impact thus far recently as returns start to come in? Andrew Rubenstein: Steve, yes. So that typically has got a high correlation in terms of play. February, March, as you can imagine, are usually our best months. And we're -- we don't guide, but certainly, that seasonal impact hasn't changed this year from what we're seeing. Steven Pizzella: Okay. Then how should we think about the growth CapEx in 2026? And how do you think about balancing the buybacks versus some incremental tuck-in acquisitions? Mark Phelan: Sure. So from a capital perspective, maintenance versus growth, the way we define those two is probably important to just refresh everybody on. But the way we define it is growth is a new location we're adding machines to it or it's a location, for example, that has 5 machines and we go to 6 Capital in those 2 instances would be growth. Most of what's left is maintenance. So largely in our maintenance space, we consider a replacement of a brand-new machine in an existing location with -- that is at capacity for machines. Even though it's a brand-new machine, we consider that maintenance. That's a little bit different than other companies, but that's how we think about it. So I want to at least set the table on that. But in terms of like next year and where that's going, if you think about our space and you think about what we just got on talking about in terms of reducing our locations and kind of firing bad customers, so to speak, the need for us to continue to spend a lot to expand our locations in Illinois is low. And therefore, most of the maintenance or most of the capital that we're spending next year in our large market is going to be on that maintenance side. If you think about the other markets, those are investing in growth side. However, those are much, much smaller markets. So when you look at the company as a whole, you see most of it sitting in maintenance capital. And then refresh me of the other question, I'm sorry. Steven Pizzella: I guess how do you think about balancing buybacks versus incremental tuck-in acquisition or maybe something bigger? Mark Phelan: Yes. So I would say our position on that hasn't changed much over the last 6 months or so or even longer than that. But we look at every dollar of investment, and we look at the return on investment we can get from it, and we just measure that against our internal capital returns versus our M&A versus debt payoff and shareholder buybacks and that sort of thing. Given where things are moving and kind of just recent studies, I think M&A tends to be the most attractive if we can get the price right. So that tends to be where we focus our energy on the most. But to the extent that there's nothing in the pipeline or things that we don't like, then we'll pursue alternative activities. Steven Pizzella: I guess maybe if I could follow up real quick. Do you think about the balance sheet any different now moving forward than the current leverage profile historically of the company, which has been fairly conservative? Would you be more willing to take on additional leverage should the opportunities present itself, I guess, or potentially incremental capital return? Mark Phelan: Yes. I think the way that I -- so first of all, again, I would go back to -- we're going to evaluate the deals that they come through. But the way that I think about the fact that we have an untapped accordion feature out there, a revolving feature out there is likely going to be for something that would be significant sort of M&A. That would be the ultimate use for something like that. Most of the stuff we're going to do with our current cash balance and through tuck-ins and that sort of thing. So yes, I wouldn't think that we need to hit that revolver. And I think if anything, we're not in the business of wanting to lever up substantially for any particular reason right now. There's just not enough evidence of it. It would have to be a very some sort of very large deal or something like that, that came up for us to go down that path. Operator: Your next question comes from David Bain with Texas Capital Bank. David Bain: Congratulations, Andy and Mark, for the new roles. I know this was asked kind of early on, but maybe looking at Chicago differently, just given your infrastructure and the personnel dedicated to it, can we expect your market share or really like fair share to potentially exceed what you have in the state, again, kind of just given what you have set up today, you're better able to help locations with licensing, maybe cherry picking, if you will. Is that a fair assumption versus if a new state just opened up? I mean, how should we be looking at maybe it from that perspective? Andrew Rubenstein: So thank you for the question, David. Looking at Chicago, we see ourselves as an obvious leader from our experience, from the fact that we're the most chosen company to do business with in the State of Illinois, and we expect to continue to win in that market. That being said, I don't expect us to greatly exceed our current market share in the City of Chicago. Today, we're in the -- just shy of 30% range of the market. I don't think we're going to be any more than that. But what I do think is the performance per location will be greater than what we show in the rest of our portfolio. And we've seen things happened over the last, and we're now in our 14th year of operation that allow us to better select locations, better to equip them. And I think the performance that we'll achieve will exceed the rest of the portfolio's performance. David Bain: I guess I'll switch gears to TITO. I mean, a high percentage of machines now converted. But what inning do you think we're really in, in terms of the benefit of that transition? And do you still see that as material going forward? Mark Phelan: Yes. Yes. So we have -- it's a great question, David. We have about 81% of the machines upgraded. But what happens is not all the machines are upgraded in every location. And so there's machines that they can take their ticket and utilize for play, and there's ones that they can't. I think once we get closer into the 90s, then you're going to see -- start to see a real benefit. The other thing that really needs to happen is the player has to change its behavior. They're just learning after playing with cash entirely for the last 14-plus years that they can use their ticket to go from machine to machine. I believe that as far as the innings in the game, we're probably third inning by the time we talk again at the end of -- when we announce first quarter earnings, we'll probably be the fourth or the fifth. I think it will start accelerating through the end of the year. And it's something that we're constantly evaluating. We're just starting to optimize because we're getting some confidence that in certain establishments, the customer is comfortable with utilizing the tickets, but it's something that's, again, like third inning in terms of the implementation and results. Operator: Your next question comes from Chad Beynon with Macquarie. Chad Beynon: Just a couple for me. One, just wanted to ask a higher-level question in terms of opportunities maybe in certain markets to partner with other companies, whether it's digital or other consumer companies just to help drive additional revenues to the site or help just acquire customers. Could that be an initiative that could help your yields within any of your markets in the near term? Mark Phelan: Chad, it's Mark. So just to remind everyone, we do partner with a fairly significant gaming operator in Illinois, and that's FanDuel with Fairmount Parks online sports betting license. In terms of other markets, we're always looking for partnerships. Route gaming is really just an extension of local gaming, which if you go to other parts of the world, includes online, includes owning local casinos as well as doing distributed gaming and bars and taverns and things like that. So there's always a possibility. We also do produce our own content through our subsidiary, GrandVision Gaming. And there's always elements of partnering with content producers as content is a big driver of play in our markets. So it's a great question. We're always looking for those partners. As I mentioned before, to really drive away from being a more commodity-like vendor. We really need to specialize in content and payments and loyalty and things like that, and those are sometimes best done through other partners. So we've always got our eye on it. Chad Beynon: Excellent. And then I know you just hit on TITO, but around the W2G jackpot limits, is that something that you think can also help drive additional yields across your fleet? Andrew Rubenstein: So Chad, this is Andy. The answer is yes. But the challenge is the -- in Illinois, you need legislation for the jackpot to be raised. And then you need the manufacturers to redo the software to accommodate it. In terms of priorities, the route markets come far after the casinos because they can make those changes right away and have the leverage to be able to distribute the games with the new jackpots to many, many markets. I expect Illinois probably to be the first one to be able to experience it because it's the greatest opportunity. But -- and probably Nevada will see it because they utilize the same software that's utilized in the casinos. The other markets will follow, but I wouldn't expect a real bump from that in -- we don't expect it to happen in 2026. So eventually, it will help us, but it's kind of next step for the manufacturers. Operator: [Operator Instructions] Your next question comes from Greg Gibas with Northland Securities. Gregory Gibas: Congrats on the results. I wanted to follow up maybe on the opportunity within Chicago, and maybe what you see as kind of the total establishment count for that market. And maybe if you could share a little bit more on estimated timing there. I know that you mentioned they're accepting applications is a good sign. When do you expect to maybe hear more about that developing? Mark Phelan: Well, as Andy said, we're very confident the market will roll out given that the Illinois Gaming Board is accepting applications from locations. There are some rules that need to be promulgated. We're helping Chicago leaders work through that and provide sort of best practices to make and to expedite the rollout. If you really had to push me against the wall to say when we're going to go live, I'd say more likely later in the Q4 for '26 or potentially even Q1 of '27, just given the backlog of applications currently at the Illinois Gaming Board. But again, it depends a lot on how quickly the city can roll out these rules. So we're actually awaiting and we're helping out leadership in terms of helping them do best practices. Gregory Gibas: Okay. Fair enough. And if I could ask, I imagine organic growth is pretty close to the revenue growth. But could you maybe break that out considering, I think, Fairmount and some Louisiana acquisitions closed, I think, late in the prior year? Brett Summerer: Yes. So from a revenue perspective, and we disclosed this, but from a revenue perspective, those 2 acquisitions made up about 5% of our Q4 revenue and about 5% of our full year as well. So in terms of the revenue side, that's about what they are. We don't disclose on the EBITDA side, but those are our emerging investments, so emerging investments in the plays that we have there. So we're not making double-digit growth or anything like that on the bottom line. But on the top line, we've talked before about it, and that's about 5%. Operator: There are no further questions at this time. I will now turn the call back to Andrew Rubenstein for closing remarks. Please go ahead. Andrew Rubenstein: Thank you, everyone, for joining us again today. Accel presents a differentiated investment opportunity with enhanced financial flexibility, expanding market opportunities and a scalable platform capable of delivering steady growth and improving returns over time. I want to especially thank our partners, our shareholders and our team members. Our team members for their dedication and their continued execution. Their hard work is what drives our performance and positions us for sustained success. We appreciate all of you joining us today, and we look forward to updating you again on our progress next quarter. Thank you. Operator: This concludes today's call. Thank you for attending. You may now disconnect.
Steven Levin: All right. Good morning, everyone, and welcome to our 2025 results presentation. Before I start, we are all conscious with the very uncertain global political environment that we see, geopolitical environment. Across Quilter, our thoughts are with our colleagues and our clients in the Middle East right now. Let me get on to the results. I will start with a review of the year. Then I will cover our business highlights and talk through our flow performance. Mark will take us through the financials, and then I want to spend some time today talking about the growth outlook and the exciting opportunities that we see ahead. After that, we'll finish with Q&A as usual. I'm very pleased with our strategic and financial performance in 2025. We delivered another good year of strong profit growth from a very strong base in 2024. We saw excellent momentum in flows, taking market share in growing markets. Let me run through the highlights. Core net inflows were up a record -- to record GBP 9 billion, that's 75% higher than 2024. Our operating margin is at 30%, in line with our medium-term goal. Adjusted profit increased 6% to GBP 207 million that reflects higher revenues and good cost management, combined with increased investments. Earnings per share increased 4% to 11p and the Board has declared a dividend for the year of 6.3p, an increase of 7%. We've also announced the share buyback and a change in distribution policy, which Mark will cover later. Let's now drill down into the flows. This slide shows gross new business, outflows and net inflows for the last 2 years. New business flows on the left have continued to build momentum with sequential period-on-period improvement across both channels. Our flows in the middle temporarily picked up with a protracted speculation and uncertainty around the U.K. budget in November last year. But even so, we've seen consistent improvement in net flows on the right. And given the market share gains we achieved last year and the current level of net flows of around GBP 2 billion a quarter feels broadly sustainable. Our strong flows are no accident. It's the direct result of the strategic progress we've made. First, in distribution. We've delivered flows ahead of our targets. We've added to the number of advisers and adviser firms in our Quilter channel and we've increased their productivity. More than 100 advisers graduated from our academy, and they're now starting to build their books. In High Net Worth, we added investment managers and announced the acquisition of GillenMarkets in Ireland, building out our footprint there. Next, in propositions, our high-performing WealthSelect MPS is the largest in the market and is now on 6 third-party platforms. And early in the year, we launched smoothed funds with Standard Life. This is a unique product for clients nearing the accumulation or retirement. We've been working on our targeted support proposition, and I'll say more about this shortly. And in High Net Worth, we've added a private market proposition for those wanting alternative asset classes and a new decumulation offering for clients in retirement. In terms of becoming future fit, we've completed our simplification program, invested in our brand and progressed our advice transformation program. And we started rolling out AI productivity tools to advisers, as you will hear shortly. We've achieved a lot and we're doing it from a position of strength. We're already the U.K.'s largest single adviser platform and the fastest-growing of the large platforms. The vertical axis here shows gross flows of each platform in 2025. The horizontal axis is net flows as a percentage of opening assets and the size of the bubble is the total AuMA. We are clearly the largest and fastest growing. This gives us scale in a market where scale matters. Now what's especially gratifying is that we've been increasing flows onto our platform consistently month-on-month, year-on-year, as you can see here. The charts show cumulative monthly net flows with Quilter channel in green and the IFA channel in gray. As you can see, inflows onto the platform from the Quilter channel up 12% year-on-year, and net flows are around 18% of opening balances. Similarly, in the IFA channel, net inflows were up 92% year-on-year, and these are running at 9% of opening balances. The key to delivering results like this is providing a market-leading proposition to customers combined with excellent distribution, and that's been our focus over the last few years. Let's step back to 2020. Back then, we were only capturing around half the platform flows generated by Quilter Advisers. Following the successful migration to our new platform in 2021, we started focusing on adviser alignment and began reviewing the productivity of our adviser force and we streamlined where appropriate. As you can see on the top right, our adviser force is now smaller, more aligned and far more productive more than doubling the gross flows it generates onto our platform. In the IFA market, our focus since launch of our new platform was growing market share by deepening our share of wallet with existing relationships and winning new friends. And you can see the success of that in the black line in the bottom right, which combined with the improvement in total flows across the market has driven a trebling of gross flows over the period. There's also a slide in the appendix, which gives a helpful perspective of our performance against the market. So we've done well, and we've got real momentum, and we're continuing to invest where we see opportunity. There are 3 areas I'm focused on to drive our distribution even further. First, building the advice business of tomorrow. Our advice transformation program is giving advisers the tools to materially increase their productivity serving more customers and bringing in more new business. Quilter partner assets are also growing significantly, and these are assets that are both on our platform and in our solutions. Brand will also play an important role here. Second, on recruitment. We'll continue to add firms like the 6 we announced earlier this week, and the Quilter Academy will deliver a higher number of graduates this year. Our goal is for the Quilter Academy graduates to offset the natural attrition from adviser retirements so that all the recruitment into the advice business drives net adviser growth. Third, support. We'll continue to invest in the award-winning service and propositions which sit behind our platform and our solutions. This is key for our network and for the broader IFA community. Now let's turn to our Solutions business. We want to be recognized as the leading asset manager for advised flows. As you know, across the industry, we're seeing a move away from active management towards passive and blend solutions and a trend away from fund to funds towards MPS. That's reflected in what you see on the left. Our growth is biased towards our WealthSelect MPS as well as to passive and blend solutions with outflows in Cirillium Active. The regulatory environment is also encouraging advisers to focus on planning and to outsource investment solutions. And we've been clear beneficiaries of this. On the right, you can see our managed assets have increased from GBP 26 billion in 2023 to GBP 37 billion at the end of 2025. The strong performance and competitive pricing of our WealthSelect MPS means that it's now got over GBP 25 billion under management. It's recognized as the market leader and in direct response from requests from IFAs, it's now available on multiple third-party platforms. That means they can use it as their core investment solution across their entire client base no matter which platform those clients are on. Now to High Net Worth. Net flow growth improved year-on-year, and we continue to outperform our listed peers, as you can see on the left. We've broken down the flow picture by channel on the right-hand side, and you'll see good net flows from our own advisers in green. The more challenged picture from the IFA in the direct channel. This is generally a more mature book with higher natural redemption rates. It's also worth noting that the uncertainty caused by the pre-budget speculation was a notable concern amongst High Net Worth clients, which led to above-average outflows in Q4. This is a strong business with strong foundations, but we know it's got more potential. Over the last 12 months, we've made good progress. Advice and investment management permissions are now in a single entity. We've digitized a number of core processes, and we've launched a mobile app to provide a much better client experience. We've expanded our client solutions, and we've continued to deliver strong investment performance, but we still need to do more. So when John Goddard took over the reins in September, I gave him a clear mandate to grow the business. We are refocusing our distribution strategy across both our own advisers and the IFA markets. We've reviewed the fit of our own RFPs to deliver high net worth products and services more effectively, and we are realigning and rationalizing the team in some places. The advisers impacted by this change can explore options within our Affluent segment or exit the business. Once we've done that and enhanced productivity, we will grow the team. We're also leveraging our MPS capabilities. We're moving smaller-scale clients from DPS to MPS, which are more suited to their needs and come at a lower cost. This also frees up investment manager capacity, allowing them to concentrate on higher-value clients where discretionary solutions are more appropriate. We were the first U.K. retail wealth business to offer private market evergreen solutions, and we've led the way with decumulation offerings. It's important to offer a broader proposition range beyond the traditional DFM offering. We're aiming to attract a broader client base and as ever, distribution is the key. We intend to build a high-performance business. That means building out our digital capabilities, continuing to invest in proposition and distribution, and maintaining the strong client service and investment performance culture. We're working towards delivering mid-single-digit rate of net flows as a percentage of assets and operating margin in the mid-20s. Right. With that, let me hand over to Mark. Mark Satchel: Thank you, Steven, and good morning, everyone. Let me start by echoing Steven's comments that our business is in great shape. We delivered a strong financial performance in 2025. Let me give you my 3 key messages. One, we delivered revenue growth of 5% That included 7% growth in net management fees, partly offset by lower interest income on shareholder capital, which reduced revenue growth by around 1 percentage point. Costs are well managed and came in below our GBP 500 million guidance. We invested in initiatives such as our brand and Quilter Invest and absorbed higher national insurance costs. Our cost discipline and the remainder of our simplification initiatives contributed to 1 percentage point increase in our operating margin which has now reached 30%. And our balance sheet remains in very good shape. I'll cover the conclusions of our capital review later. Let's get into the details with my usual analysis of our P&L dynamics. Starting top left, net flows of GBP 9.1 billion were, as already covered, significantly ahead of 2024. Strong flows and positive markets meant that average AuMA was up 14%. Top right, you can see revenues grew 5% to GBP 701 million despite the impact of lower interest rates. Costs, bottom left, were up 4% to GBP 494 million, reflecting inflation and higher national insurance as well as planned business investment. As a result, adjusted profit increased by 6% to GBP 207 million. Positive [ draws ] gave an operating margin of 30%. We reported adjusted diluted earnings per share of 11p, an increase of 4%, with the difference in growth between EPS and adjusted profit attributed to a small rise in our effective tax rate. Now getting into the moving parts. Let's start with revenue margins, which are in line with guidance. On this slide, each chart shows the average revenue margin for the past 4 half year periods. The main point I'd like to draw out is the relative margin stability into the second half. In High Net Worth on the left, the overall margin was down 3 basis points from 2024, largely reflecting mix and changes to some fee structures. Touching on Steven's point earlier, in time, we expect the mix of DPS to NPS to result in a slight attrition in High Net Worth margin. That mix change will provide greater capacity for larger clients, which in turn will improve the operating margin. In Affluent, the year-on-year reduction in the managed margin largely reflected mix shift with Cirillium Active outflows offset by growth in MPS and other solutions, and this is in line with our previous guidance. I expect the managed margin to fluctuate around the low to mid 30s basis points level with the mix being the driver of movement. Given the success of our MPS solution, I expect that range to hold. And finally, our platform or administered margin was 23 basis points. Let's now turn to revenue by segment. Our High Net Worth revenues grew modestly. Higher net management fees and advice fees were offset by lower investment revenue with total revenue up 3%. In the Affluent segment, revenues grew 7%, a good performance. The main contributors were higher net management fees on both administered and managed assets and a stable contribution from advice fees. Turning now to costs. I'm pleased to report that while total costs increased 4%, that was lower than revenue growth, giving us positive operating leverage for the year. The waterfall on the right summarizes the main cost changes year-on-year. Increases came from inflation, higher national insurance and regulatory levies and the investments we've made. And these include bolt-on acquisitions such as MediFintech, brand building activities and the money needs a plan campaign, continued support to grow and develop Quilter Invest in the Quilter Academy as well as costs associated with cyber and technology functionality. Reductions principally came from our simplification program which I'm pleased to report is now completed, and I'll touch more on that shortly. With our large transformation programs now complete, many of you have asked how we expect our cost base to evolve. As a people and technology-focused business, the main drivers of our cost base are linked to salaries and technology contracts. So I previously guided to inflation plus a few percentage points. We do, of course, remain vigilant on costs and continue to focus on effective cost management to provide capacity for reinvestment in revenue-generating activities. Looking to 2026 with a significant growth opportunity ahead of us and the returns we have already seen, I expect the business to invest a bit more to support the growth opportunities we see for our business. These include costs associated with acquisitions, including GillenMarkets in Ireland. We plan to develop Quilter Invest proposition further, including targeted support. We will continue to grow the Academy to add new financial advisers. We expect to spend a bit more on technology, including AI capabilities, and we do intend to build our brand profile and we'll continue with the marketing campaigns that we kicked off in 2025. As some of this investment started in the second half of 2025, that level of cost run rate is a reasonable base to add inflation on to. And on the far right of the slide, you can see the first half versus second half cost split. So in terms of thinking about the outturn for 2026 costs, I would take the second half level, double it and add around 4% or so for inflation. That would get you to a figure somewhere between GBP 530 million to GBP 540 million, which seems a sensible base for your models with the actual outcome likely to be managed with an eye on market-sensitive revenues. I'll provide further updates on our cost expectations at the interims. I should underline that the current rate of investments, excluding acquisition activity, won't increase to this extent every year. And our longer-term guidance of inflation plus a few percentage points remains unchanged. While on the topic of transformation, I wanted to take a step back and reflect on what we've achieved with our cost programs since listing in 2018. Since then, we've done a huge amount. I won't run through it all and you can see it here on the slide. With savings coming across the business, particularly in the technology, estate, operations and support functions, while we've continued to invest in revenue generation opportunities. In total, we've delivered over GBP 160 million of savings. And this has enabled the operating margin we report today. And importantly, it also provides the foundations for efficient and disciplined growth as we continue to scale. So putting the segment revenues and group costs together, this slide shows the segmental contribution to group profitability. Affluent profit showed a healthy 14% increase to GBP 169 million, and High Net Worth delivered profit of GBP 47 million, broadly in line with the prior year. The operating margin declined marginally in High Net Worth, but improved by 2 percentage points in Affluent. As you've heard before, this part of our business is very scalable. So there's scope for further improvement here. Now let me turn to the balance sheet. As you'd expect, we've maintained a strong solvency ratio and cash position. You'll recall that last year, we raised a provision of GBP 76 million in relation to potential remediation for ongoing advice. We have now started our remediation program. And based on our current expectations of expected remediation and administration costs, we anticipate that this cost -- that this will cost us some GBP 20 million less to complete than we originally anticipated and we have, therefore, reduced the provision by this amount. You can see that come through as a positive contribution to the Solvency II ratio. Together with the utilization of the provision during the year, the provision balance at the end of 2025 was GBP 42 million. More broadly, the solvency ratio reduced marginally over the period, largely due to regular dividend payments and our proposed capital return, which I'll come to shortly. In terms of cash, you'll note the capital contributions into subsidiaries where we capitalized our regulated advice business to cover both the original GBP 76 million ongoing advice remediation provision, and provide funding for modest acquisitions to support our advice and high net worth businesses. The subsequent GBP 20 million provision release from the remediation provision is not reflected in the cash position and will be netted off against future capital contributions into the advice business. On the right, you can see we've got around GBP 270 million of cash available after payment of the recommended final dividend and the proposed buyback. That leaves us with a good buffer to cover contingencies, liquidity management and business investment while retaining balance sheet optionality. So our balance sheet is in good shape. The Board has recommended a final dividend of 4.3p per share, given a total dividend for the year of 6.3p, an increase of 7%. That was modestly ahead of earnings growth with the payout for the year at the midpoint of our current dividend payout range. The total cash distribution for the year was GBP 85 million. This next slide sums up our revised approach to capital allocation. Going forward, we plan to return 70% of adjusted post-tax, post-interest earnings to shareholders. And the other 30% will be retained to support growth, including funding bolt-on M&A as well as investments supporting business growth and development. Of course, we'll keep the amount of capital we have under review. If we do build up further excess capital, we will, of course, consider additional one-off shareholder distributions. As well as the distribution policy, the Board's capital review also looked at our stock of capital and concluded that given the strength of our balance sheet, we currently have around GBP 100 million of excess capital over and above what we are likely to need for the foreseeable future. So we'll return this to shareholders through a share buyback, which will start as soon as practical and which we anticipate will complete before year-end. And given the strength of our business, coupled with this high cash generation, we intend to switch from a dividend payout policy to a distribution policy. From 2026 onwards, we'll distribute around 70% of post-tax, post-interest adjusted profits to shareholders. Within this, we expect to see progressive growth in the ordinary cash dividend in sterling terms which, together with the reducing share count from share buybacks, will lead to progressive dividend per share growth. And starting from our 2026 full year results in March 2027, alongside the final dividend announcement, we'll also set out the amount of any buyback for the year. The buyback will represent the difference between the 70% distribution target and the dividend cost for the year. The interim dividend will be paid in cash and in normal circumstances, I expect this to represent 1/3 of the previous year total cash dividend measured on a per share basis. So for 2026, you should expect an interim dividend of 2.1p per share. Let me conclude with our usual guidance slide. Our expectation is for the operating environment to remain constructive and our margin guidance is unchanged. I spoke earlier in detail about cost expectations for the remainder of the year and dividends, distributions and capital I've already covered in detail. So let me finish by summarizing my 3 key points from our results. First, we delivered solid growth in overall revenue despite a lower interest rate environment. Second, costs are well managed, even as we stepped up the investment for future growth. And thirdly, our balance sheet remains in good shape which has given us the scope to announce the capital return plans I've set out today. And with that, let me hand back to Steven. Steven Levin: Thank you, Mark. I'm now going to talk about the opportunities that we see. We've successfully established the leading position in the advice market, and we're continuing to grow our market share. Furthermore, the market is growing driven by a need for advice in an increasingly complex tax environment, the need for individuals to invest more for their retirement and the demand for financial planning to minimize tax leakage on future intergenerational wealth transfer. As you know, there is a fundamental supply-demand imbalance. There simply aren't enough advisers to meet the overall need. Let me share some data that we've collected from Boring Money to give you a perspective. Our current adviser market is the circle on the left, around GBP 1 trillion of assets across about 4 million people. That's an average investment portfolio of around GBP 240,000. Beyond this, in the advice gap, there are a lot more people who need our help. We need to turn a nation of savers into a nation of investors. There is significant excess cash sitting in the banking system, generating subpar returns and being eroded by inflation. And there's a huge amount of wealth that will be transferred down the generations over the next 20 to 50 years. Work by Boring Money suggests they are around 12 million people with over $800 billion in assets who are currently unadvised and have got low confidence around investing. They need help, and that's the circle on the right. While the average wallet size across this portfolio is about GBP 90,000, that's smaller than our typical advise clients, they're also younger and still accumulating, so they have good long-term growth prospects. Policymakers have woken after the scale of the problem. Their response has been targeted support and a national advertising campaign on the benefits of investing. Both of these are constructive steps. We want to be recognized as a customer champion. A big focus is on breaking down the barriers to brighter financial futures for customers and unlocking the potential of their money. We believe advice and support is key to that. On the left-hand side, our customers with less complex needs that can benefit from prompts and edges from guidance and targeted support to help them make better decisions with their money. And as we move up the complexity spectrum, in the future, we expect simplified advice to reach more clients and at the far end of the spectrum, those customers with the most complex needs will continue to seek holistic personalized advice. With an additional 12 million potential customers, this is a huge market. At its heart, is the need to deliver better outcomes for customers and for society. And Quilter can be a home for clients throughout their financial life cycle from targeted support to simplified to full financial advice, and clients can move up the curve as and when it's relevant for them to do so. Importantly, we believe the role of advisers will remain critical for customers who recognize the value of having a personalized financial plan. There's been a lot of debate in the market recently about the role of AI in advice. Our view is that AI has an important role to play in making advisers materially more productive. But what AI won't do is remove the need for advice. Here's why. First, navigating the U.K. financial landscape is challenging. Each individual is different and most clients don't have the time or confidence to do it themselves, it is very complicated. The U.K. has an incredibly complex tax and pension system that changes on a regular basis. While AI may be able to provide the answers to basic planning questions or provide simple investment advice, when it comes to more complex situations, long-term tax planning, it's completely reliant on the individual knowing the right questions to ask. The role of the adviser is to help clients through the complexities of U.K. income tax, inheritance tax, trust and legacy planning and to provide the reassurance and help to make -- to let clients take actions at the key moments of their financial lives. Clients want the empathy and the coaching that an adviser provides. The more complex or vulnerable their financial situation, the more they want the help of a trusted experts. That human personal relationship and the trust that underpins it is something that AI just can't replicate. Critically, we give a regulated financial advice. This gives customers comfort and strong protections. With AI tools alone, there is no comeback. So how are we going to build on the power of AI for our adviser capabilities? We need technology and AI tools to deliver the propositions and the services needed at scale, and we need a strong brand that's recognized as a customer champion. Let me start with technology and AI. Advisers are crying out for tools that will make them more effective. The stats on this slide summarize some recent research by Next Wealth. Frustratingly, advisers say only 1/3 of their time is actually spent with clients. More than half of advisers say site compliance and regulation as their top challenge. They want streamlined compliance, automated onboarding and better system integration. Nearly half believe AI will positively impact their workload. We agree. So we spent the last 2 years working with advisers to deliver a solution to them to meet this need. As you know, driving up adviser productivity is something we've been working on for years. It started with ensuring adviser alignment and back book transfers. We've now rolled out market-leading AI tools, and I'll say more about this in a moment. The next part is a brand-new end-to-end adviser support system that we're in the final stages of development work with FNZ. It includes further AI capabilities. The aim is to help firms run more profitably, advisers to work smarter and service more clients for clients to have a smooth, intuitive digital advice experience. Our new technology will be all encompassing. We're already rolling out some of the elements ahead of full implementation in early 2027. The goal is full end-to-end technology integration between our platform and the tools that the advisers need to avoid them having to repopulate data fields across applications and allow seamless client data management. We see 3 high-impact ways in which AI will support further growth in our business. First, in enhancing productivity. We've already rolled out an AI solution for advisers that allows them to record, transcribe and summarize meetings and actions, work that took hours now takes 10 to 15 minutes. We expect it to materially expand adviser and paraplanner capacity over time, helping generate additional flows onto our platform and into our solutions, which is where we make our money. Secondly, improving client and adviser engagement through next best actions, client reporting and portfolio insights, helping advisers and investment managers to have higher-quality conversations; and thirdly, operational and process redesign, reducing the steps in the process and speeding up fulfillment while reducing operational costs. These tools will also enhance risk management by making compliance file checking and adviser oversight a lot faster. And a more efficient advice network brings greater scalability and operating margin potential. Of course, we've done all the testing and the research to make sure the systems we're giving to advisers are robust and their client data is safe and secure. Investment in AI is therefore critical to us, and it's incorporated in the guidance that Mark set out earlier. Let's now turn to brand. As we move to a world of digital delivery, it's important that the market knows who we are, and most importantly, what we stand for. So we're investing in the Quilter brand. We launched our brand awareness campaign late last year in conjunction with Quilter Nations series. The strapline is money needs a plan and the feedback has been extremely positive. This is the first step in what is a multiyear effort. We want Quilter to build on our position as a leading adviser brand to being a trusted consumer brand focused on retirement, advice and savings and investments. And ultimately, we want to be recognized as a customer champion. Let me return to our business growth plans and draw things together. Our 3 key profit drivers are platform, solutions and high net worth. We have clear goals for each, which I've summarized on the left. We know exactly what levers we've got to pull to enable us to deliver on them, and I've set these out on the right. Collectively, these will sustain our growth, deepen our competitive position and drive our operating leverage. So to conclude, we're really pleased with our performance in 2025, and we've started 2026 with strong momentum across our business. The messages I'd like to leave you with are: we operate in a large, fragmented and growing market helping us deliver sustainable growth. And there's a new nascent market opportunity that could be significant in time. Our propositions and the breadth of our distribution are both market-leading and they're delivering strong inflows. Our platform and solutions business allows us to generate scale efficiencies and operating margin progression. And through investment in technology and AI tools, we'll be able to augment these existing strengths to meet customer needs across a larger market and deliver faster growth over time. That's why we're excited about the future. All right. Let's open up for questions. We've got a mic in the room, and we'll go to the room first. Jacques-Henri Gaulard: Jacques-Henri Gaulard from Kepler Cheuvreux. The question is on cost. The way you've looked at your '26 guidance looks more like a multiyear program and don't view that negatively at all. It's more you're growing market share. It's working very well. You're going to need to invest probably more. Is there a section of your cash flow of your liquidity that you've just mentioned that you would dedicate the same way that you're dedicating part of your profits back to shareholders? I think it's a very important point because it's a bit ignored in the industry right now. Mark Satchel: Look, I mean, it's included within the overall guidance I provided. I'm not sure if you mean sort of part of the sort of the capital piece of it. I mean most of our costs -- capitalized are very little cost. So most of our costs, we expense as we incur them. So it's kind of driven through the P&L rather than necessarily through certainly the investment that we're making and that sort of stuff. When you look at our balance sheet, we've got very little capital builds up in IT and software development and that sort of stuff. Virtually everything is expensed. So the way that I like to or prefer to treat it is through the P&L, get it all out when it's incurred. Provides better flexibility later on. You don't have a recurring depreciation charge and things like that. So that's how we tend to look at it. But the reason why I've typically guided to inflation plus a few percentage points is there's a few percentage points are already there for that sort of stuff. And in different years, it will be different things and those sort of things. This year, it's sort of it's a slightly higher amount than normal. But if you think about it in overall terms, I mean, effectively -- and maybe if I sort of just maybe just a bit of a broader question on the cost side. I previously guided that I expect our costs to increase by inflation plus a few percentage points. Inflation this year for us is about 4%. That's what our salary increases are on average, et cetera, et cetera. You had a couple of percentage points of that you get into 6 percentage points. The actual guidance I provided today is the same as 8%. So it's really 2% higher than what my previous guidance has been in any event. 2% in our world is about GBP 10 million. And of that GBP 10 million, about half of it is in things like targeted support and Quilter Invest and the investment we're making there. The other half is kind of split between some of the acquisitions we made, so that's more inorganic add-on and a bit more going towards brand build and some tech investments. I mean in the grand scheme of things in pound million terms, it's relatively small amount. Unknown Analyst: Thank you. Three questions. The first one, just to clarify on the new dividend policy. You said that it will grow in absolute terms. Is that on both the per share and a total pound basis? The second question, you mentioned the opportunity in targeted support and simplified advice. Is it possible to give us a sense of where you think the margins on that may land and how long it will take to show in earnings? And the last question, you've had impressive growth in your NPS range in recent years. Any thoughts on competitors entering the market, for example, Vanguard willing to launch a low-cost product... Steven Levin: You take the first question, I'll take the other 2, Mark. Mark Satchel: First one very quickly, per share. Steven Levin: So in terms of targeted support and the margins, so one of the key things about the targeted support solution is that it will be Quilter-based funds. So actually, the margin should be pretty good because we'll get a platform margin, and we will be using our core Quilter Investment solutions. So that's good. It is -- you sort of asked about what would it do to earnings over time. I think one's obviously got to recognize it's a small business that's going to take time to build out and to grow out, and we've obviously got a very substantial business in our advice space. So I think it is going to be -- it is going to build out over time. And we look at this market and sort of say the targeted support market over the next 10 years could be very exciting. There's obviously not going to -- it's not really going to move the dial from a profitability perspective in the next 1, 2, 3 years. But from a flow perspective, hopefully, it will start picking up. And on a medium-term view, we think it's very important, but it should be a good operating margin business. In terms of MPS, our MPS range, WealthSelect is absolutely market-leading. It has got 12 years of first quartile investment performance, a phenomenal track record with a consistent investment philosophy, team approach, et cetera. I think we're quite a formidable competitor. You can see the growth that we've got. We also have -- our MPS is also very broad in terms of its options, possibly the broadest in the market. We've got -- we actually got 56 different portfolios within WealthSelect across different risk profiles, active blend, passive, responsible, sustainable, managed solutions. So a lot of people are coming up with they're launching quite simple offerings. We are very holistic in terms of the support we can provide advisers. And finally, the reporting and tools that we've got around WealthSelect are absolutely market-leading. So we're very comfortable that WealthSelect is in a very strong position and will continue to perform incredibly well. Yes, James. James Allen: James Allen from Berenberg. Could I ask 2 questions. First one, you've obviously done a really good job over the last 2 or 3 years of revamping the business, particularly in Affluent. But playing devil's advocate looking forward. So in revenues, you've still got the investment revenue drag from interest revenues coming down, interest rates coming down. The cost savings plan has now played out and the upsized shareholder returns policy is now out there in the market. So I guess if you're a new investor, where is the scope for outperformance going forward? Second question, just on the private market solutions. There's obviously been a lot of noise in the U.S. over the last few weeks around the kind of duration mismatch between wealth investors in stuff like private credit and real estate funds, which obviously have a much longer duration in their time horizons from an investment perspective. How do you plan to manage that, particularly around kind of redemption windows and things like that? Steven Levin: Sure. Thanks. So I think the first thing that is about our Affluent business is our business has got incredible operational leverage. I mean we have, as we've said before, both our platform and our asset management business, we can add a lot of extra assets without adding much in terms of extra cost to our business, and that will continue to drive strong profitability, and we would expect to see the Affluent operating margin continue to rise over time. So I think that is what is going to drive the sort of future upside as we talk about. The other thing is the size of the market and the size of the opportunity. I mean we've built up a significant market share. We still are focused on driving up our market share even higher and we believe we can. But actually, we look at the market and say we actually really see that the size of the market is continuing to increase. There's reports from independent companies who look and analyze the platform market, looking at the growth, Fundscape data on how much they expect the platform market to grow, for example. It is the place where people have to save and invest. We've got a nation, as I've talked about, of people who are oversaving and underinvesting and that is starting to change. We've got a nation where people have got to take more responsibility to look after themselves. The age of defined benefit pension funds is over. The contributions that people are typically making in this country into pensions through workplace arrangements is too little to reach appropriate replacement ratios. So this is a nation that's got to invest more, and we are incredibly well placed to do that. We are seeing improvements there, but there's more work to be done, including across all the industry, including with some of the government support. But I'm really pleased because we've got the dominant market share position in a business that's highly scalable, and we're going to continue to do things to make our business obviously more efficient. But I think there's a huge amount of upside for those reasons. Your question about private market solutions. So we've launched private market solutions. Ours are focused on private equity, not private credit. They have liquidity options. You are able to take money out in -- you have to give notice and you can take money out. There's a small 5% discount if you withdraw. But liquidity is managed. It's an evergreen solution. So we think it is appropriate. Obviously, we're not recommending clients to put large portions of their money in it. So you put sort of 5% of your portfolio and things like that. And now it is only appropriate for clients in our High Net Worth business, but it's something they have been asking for. And it's not obviously for every client, but we think it is a very attractive sort of thing to have in our toolkit. Yes, David. David McCann: David McCann from Deutsche Bank. Just 2 for me. Steve, maybe interesting remark, and obviously, we've seen it through the increased marketing that they want to resonate more with consumers rather than just advisers. Obviously, the business has come very much from an adviser-driven background. At what point does this potentially cause some kind of internal conflict in the business, particularly with the advisers if you are going down in more of the consumer channel for the reasons you've articulated around targeted support and so forth. And I guess what gives you the right to win in that area when there's a very well-established direct-to-consumer marketplace out there? And the second question, probably for Mark just more of a technical point here. You mentioned inflation exponation at 4% a number of times. Obviously, market expectations are close to 3% for that number. So I just wondered what is driving the 4% forecast for inflation rather than sort of the more market consistent 3-ish. Steven Levin: Thanks, David. Mark will enjoy that question. The -- so in terms of brands, so actually, advisers are very supportive of what we are doing in the brand. It helps them and the advice -- the brand campaign as you'll see is about money needs a plan. It is about people needing to have a plan. So it's very constructive towards advice. The plan doesn't only obviously need an advice, you need an adviser. You can do some of these things with a bit of targeted support. That's why we put those words quite carefully, but that still is a plan. You can't just sit and expect your money sitting in cash to perform for you. The -- we are not, though, looking to go and create a D2C business, just to be clear. We are working with advisers. Our targeted support proposition is about -- I talked about how clients can move through that spectrum. We've talked about how we're using targeted support, in particular through Quilter Invest to work with advisers to incubate clients for the future for them and things like that. So we're doing it very much in a way that is working to our advice core. I think that's one of the strengths that we have. Clients can start in that journey. And then if they need help, we've got one of the strongest adviser businesses and based on penetration in the IFA space to help them along the way. So that's how we look at it. We look at it as absolutely complementary and that is consistent with the feedback that we're getting from advisers as well. Mark, do you want to take the inflation question? Mark Satchel: No. David, thank you very much for that question. Just on the inflation, look, every report that we use to look at our own workforce inflation, which is about 60% of our cost base is salaries probably from about August last year was closer to 4% than it was to 3%. And that's why I'm using our numbers. It's about 4%. 4%, you'll see when our annual report comes out. This is what we're saying is the sort of average salary cost increase of our workforce across our business for this year, going from 25% to 26%, I'm referencing 4%. Using our numbers, that's what I'm getting it from. Steven Levin: Other questions in the room? No. Should we go to the lines or the web? John-Paul Crutchley: Yes. I think we just have nothing on the lines at the moment. We have one at the moment on the web from Mike Christelis at UBS. A 2-part question, one of which you partially answered, but he says, can you provide an update on New Wealth, Quilter Invest and the strategy for that business, which we've touched on it, but maybe I just want to just reinforce the points there. And then he also asked, how has the launch of the smooth managed fund being received by advisers? Steven Levin: Sure. I'm happy to take those. So Quilter Invest, the key thing that we're doing there is we are getting targeted support permissions for Quilter Invest. That is the business that we will be entering the targeted support market in. Those regulatory applications that just opened this week, and we submitted our application to be registered and authorized by the FCA to provide targeted support. So that's what we're doing and working on Quilter Invest. We're continuing to enhance the proposition and to gear up for that. We've built the capability now to do that adviser incubation that I've previously talked about. So advisers can refer clients to Quilter Invest. They can then track those clients and they can see what contributions they make. When those clients want to press a button, I want a bit of help, they go straight back to that same advisers, introduce them, et cetera. So that's the sort of stuff that we've been doing in Quilter Invest, both through our sort of adviser incubation strategy and as we're leaning into targeted support. And then the smooth managed fund that's only just very recently been launched. It was launched in January. And the feedback from the market has been very positive, but these things obviously do take a bit of time. You got it out there. We're doing -- our team out there doing lots of sales presentations and explaining the funds to advisers. It is a lot more transparent than some of the other smoothed managed funds out there, which I think has been very well received by advisers. So we're optimistic about the future there. John-Paul Crutchley: We've got a call on the line from Gregory Simpson from BNP Paribas. Steven Levin: Go ahead, Greg. Operator: We have a question from Gregory Simpson. Gregory Simpson: Just 2 questions. Firstly, on targeted support. I'd imagine a lot of the assets in bank accounts and workplace pensions. And so I'm wondering if you can outline how you access the 12 million adults if you're not a bank or workplace pension provider and don't have that direct relationship with what might be quite unengaged customers. That's the first question. And then secondly, just on AI. Do you think there's an opportunity on Quilter's own cost base from leveraging AI. There's GBP 220 million or so base costs, a lot of support staff. And you talked about inflation plus cost growth in the medium term, but why couldn't that be better if you can leverage AI to sort of manual processes? Steven Levin: Sure. So in terms of support, there is a few things to say. It's obviously a very big market. We think that there are lots of different companies that are going with different strategies. I'm sure the banks are going to participate in the targeted support market as well. But we don't look at this and sort of think there's only one model that is going to work. We've got a different model to the way I think some of the other players are going to participate through our close tie and link with advisers. And we think that gives us a really interesting angle. We are also working in our -- we've got a workplace channel as well, where we do provide support in workplaces and targeted support will also be used there. So we have got a range of distribution strategies, and we think it is an exciting market that there's going to be a lot of people that participate in it and a market of 12 million people is a significant market. In terms of the AI -- the cost base and AI, we are obviously looking at and we are implementing AI solutions across our business. We're implementing things in our call center, in our back office, in various of our -- in our middle office functions, which will look to improve productivity, reduce cost and improve efficiency, et cetera. So we will -- we are looking to things like that. We haven't changed our cost guidance as a result. But obviously, we are looking to make sure that we run our business as lean and efficiently as we can, and AI is one of the tools that we are deploying. Do you want to add anything to that, Mark? Mark Satchel: I'd probably say, Greg, look, I think there is potential in time from getting cost reductions coming from AI efficiencies. But I think given the relative immaturity of all of that at the moment, it's still a little early to actually sort of pinpoint sort of precise numbers or targets or anything else like that on it. I think it's something that will play out in the more medium term rather than having sort of a more short-term impact right now. Steven Levin: Okay. I think we're done. Thank you, everyone, for your time.
Operator: Good day, and welcome to the STAAR Surgical Company Fourth Quarter 2025 Financial Results Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Connie Johnson, Director, Investor Relations. Please go ahead. Connie Johnson: Thank you, operator. Good afternoon, and thank you for joining us. On the call today are Warren Foust, Interim Co-CEO, President and Chief Operating Officer of STAAR Surgical; and Deborah Andrews, Interim Co-CEO and Chief Financial Officer of STAAR Surgical. Earlier today, we reported our fourth quarter and fiscal 2025 results via press release and Form 8-K. We posted our results release and shareholder letter to our investor website at investors.staar.com. Today's call is scheduled for 1 hour and will include Q&A for publishing analysts. Webcast participants can also send questions for today's Q&A session to ir@staar.com. Before we get started, I want to remind you that during today's discussion, we will be making forward-looking statements. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied by such forward-looking statements. I encourage you to read the disclaimers in today's release, the shareholder letter as well as disclosures in our filings with the SEC. Except as required by law, STAAR assumes no obligation to update these forward-looking statements to reflect future events or actual outcomes. In addition, during today's discussion, we will reference certain non-GAAP financial measures, including adjusted EBITDA and constant currency sales. Please refer to today's release for definitions and reconciliations of non-GAAP metrics. For brevity, unless otherwise specified, all comparisons on today's call will be on a year-over-year basis versus the relevant period. Finally, a quick reminder. We intend to use our website as a means of disclosing material nonpublic information and for complying with our disclosure obligations under Regulation FD. Such disclosures will be included on our website in the Investor Relations section. Accordingly, investors should monitor our investor website in addition to following our press releases, SEC filings and public conference calls and webcasts. And with that, I'd like to turn the presentation over to the Interim Co-CEO, Warren Foust. Warren? Warren Foust: Good afternoon, everyone, and thank you for joining us. Deborah and I are pleased to be with you today on our first quarterly results call as Interim Co-CEOs. Before we dive in, I'd like to address our leadership structure. Deborah and I stepped into the shared role of Co-CEOs effective February 1st, and we are jointly leading the organization on an interim basis. We bring continuity to this transition. Deborah and I have worked very closely and collaboratively over the past year in our roles as Chief Financial Officer and President and Chief Operating Officer, respectively, and that partnership has positioned us well for this next chapter. We complement each other's capabilities and areas of expertise, and we are aligned on both priorities and execution. STAAR's Board of Directors has engaged Egon Zehnder, a leading global executive search and leadership advisory firm, to conduct the search for STAAR's next Chief Executive Officer. The search will include both internal and external candidates. 2025 was a difficult year of transition for STAAR. We expect 2026 to be a much better year, a year of growth, improving profitability and meaningful progress across our innovation pipeline, all of which we plan to discuss on today's call. As Connie indicated, along with today's results release, we have issued a shareholder letter that provides commentary on 2025 and discusses our plans and approach for 2026. Deborah and I have the benefit of being deeply familiar with and embedded in the operations of STAAR. We are working with our teams to evaluate our portfolio and road map after a period of uncertainty, setting clear expectations on both operational front and in terms of financial performance in order to unlock the power of our 2026 growth, profit and innovation plan. We are encouraged by the start of 2026. The team is energized and productive. Days are filled with customer engagements, distributor meetings, internal town halls, leadership alignment sessions, and global commercial kickoffs focused on clinical training, commercial readiness, sales effectiveness and message discipline. Our teams are excited because across most markets, refractive surgery continues to move toward lens-based procedures and away from laser vision correction procedures that require corneal tissue removal. EVO ICL continues to gain share even as the broader laser vision correction market struggles. Consequently, STAAR remains well positioned to reaccelerate growth in existing markets and unlock opportunities with our new product offerings. In China, our largest market, after several years of macroeconomic volatility driven by COVID, housing market weakness and uneven consumer spending, conditions stabilized in 2025 as policy support increased and the stock market rose sharply. In-market EVO ICL demand recovered at mid-single-digit rates and procedures improved as we exited the year. This recovery did not translate into China net sales growth for STAAR in 2025 as our distributors reduced inventory levels, but it does provide us with optimism about 2026. Market conditions in China appear to be positioned for a rebound, which will help drive growth for STAAR. Outside China, we also have reason to be optimistic about STAAR's future growth. We are seeing momentum in our U.S. business despite the ongoing decline in laser vision correction procedures. And with our recently announced expanded age range indication for EVO in the United States, which is now approved for myopia treatment in adults aged 21 to 60, our opportunity is even bigger. This expanded indication equates to roughly 8 million more potential candidates for EVO in the United States. Our efforts to expand our EVO labeling are helping fuel our growth in other parts of the world as well. For example, in Brazil, EVO had previously been approved for use down to minus 6 diopters and can now be used for treatment of myopia down to minus 0.5 diopters. Our growth remains steady across the Americas, and we expect to see additional expansion in Canada in 2026. In 2025, we went direct in Canada. And while the team is small, our efforts there are already paying off. In 2026, we are targeting solid growth of EVO in EMEA and in our Asia Pacific markets such as Japan, Korea and India. India, in particular, where we're laying a foundation, represents a growing opportunity for us as its economy is growing quickly and a rising portion of its population can afford refractive surgery. We're also excited about the market opportunities in Taiwan, where we received regulatory approval in 2025. In terms of profitability, we made a lot of progress in 2025, and profitability will continue to be a focus in 2026. In 2025, we took costs out and reduced our annualized adjusted operating expense run rate, and we beat our second half $225 million target communicated to investors back in Q1 2025. As revenue grows, we expect cost discipline to drive operating leverage. We are focused on enterprise-wide impacts, not isolated improvements and on new ways of working that increase the velocity of decision-making, so actions can translate more quickly into results and returns. Profitability expansion comes from reducing costs enterprise-wide, but it also comes from disciplined investing. We are focused on opportunities big and small, including manufacturing and infrastructure improvements, and we continually look for margin improvement opportunities in our sales and distribution network. We also believe that optimizing ASPs can contribute to increased profitability. We are allocating capital where it makes the greatest impact, the right programs in the right markets, supported by the right people and infrastructure. To that point, we are in the final stages of our Oracle ERP implementation, which will modernize the way we operate enterprise wide. Full deployment is expected early in the second half of the year. Alongside ERP, we are advancing Stella, our next-generation online sizing and ordering platform, which reduces friction in the adoption of EVO ICL technology. We are also advancing additional IT initiatives spanning from manufacturing process improvements to sales force enablement. We believe these investments will not only benefit our surgeon customers and patients, but will drive efficiency and profitability across the organization. Our 2026 growth, profit and innovation plan also reflects a renewed focus on innovation. I'm proud to report that we have launched EVO+ in China, and we are progressing with our rollout plan as we scale Swiss manufacturing to meet demand. EVO+ represents our first new lens in China in more than a decade. Early demand has been encouraging, and we are working to increase supply as production scales. Over time, we expect higher ASPs and margin expansion from EVO+ in China. In 2026, we are also expanding the commercial availability of the Lioli injector for EVO ICL procedures. The Lioli injector has been well established in the United States, and we are pleased to bring this new injector option to our surgeons in EMEA. We're excited about these near-term launches, but we are also focused on our pipeline for the longer term. We are building new capabilities, and our teams are establishing clear milestones and time lines for future advancements as well as the operational discipline and accountability required to stay on track in a rapidly evolving market. Before I hand things over to Deborah, I think it's important to recognize that 2025 is now in the rearview mirror and the disruption associated with our proposed merger with Alcon is behind us. Our shareholders have spoken supporting a long-term approach, and we are listening to them, embracing the opportunities for STAAR as a stand-alone company. We firmly believe that STAAR has everything it takes to deliver on our growth, profitability and innovation goals. We have superior technology. Our differentiated Collamer material is the foundation for our EVO technology and is unmatched in the market. Only STAAR has 40-plus years of history treating myopia with our innovative lens-based procedure. And the myopia and dry eye disease epidemics are only getting worse. We have trusted relationships with our partners. The STAAR surgeon community is passionate about EVO ICLs and bringing the benefits of lens-based vision correction without corneal tissue removal to their patients. The power of this devoted customer base is real and tangible. We have a talented team. Our dedicated employees and the STAAR leadership team are aligned, focused and have the capabilities to execute our goals and objectives and drive stockholder value creation. Now I would like to turn things over to my Co-CEO, Deborah, for additional commentary and to discuss our financial results. Deborah? Deborah Andrews: Thank you, Warren. I'm pleased to join you on today's call, and I'm proud to lead the STAAR organization with you as Co-CEO. As Warren said, we took a number of steps in 2025 to reduce our costs and improve our profitability. A key activity in 2025 was addressing our China inventory to position STAAR for future growth. Our most significant operational challenge in 2025 was working through rebalancing product inventory in China following weakened demand in 2024. That year saw a double-digit decline in in-market EVO ICL sales and elevated inventory levels. In response, we deliberately paused shipments, normalized channel inventory and strengthened distributor discipline. These actions were painful, but necessary. By late 2025, inventory held by our distributor customers in China had declined to contractual levels. In-market sales and procedures improved and business momentum began to return. As previously discussed, our December 2024 China shipment contributed to elevated inventory levels. This $27.5 million shipment was consumed during fiscal 2025. And by the end of Q3, we had fully recognized the revenue associated with the December 2024 China shipment. During much of this period, STAAR did not have complete visibility into downstream inventory levels or actual EVO ICL procedure volumes. Over the past year, we have invested time and effort in more comprehensive data processes and analyses that now provide improved and still evolving insight into inventories across the channel. While this work is ongoing, our visibility has improved materially and will continue to strengthen. Let me briefly touch base on tariffs and Swiss manufacturing. We are pleased to report that we were able to respond quickly in 2025 when rising China-U.S. tariffs created additional headwinds for our business. We are able to mitigate near-term exposure by deploying temporary consignment inventory and leveraging existing China held inventory, while accelerating manufacturing expansion in Nidau, Switzerland. Our Swiss facility is now producing commercial product and is focused on EVO+ for China. Products manufactured in Switzerland are not subject to U.S.-China tariffs, which will be a benefit in the near-term as we roll out EVO+ in China. We believe Swiss manufacturing can be a long-term benefit as we look to manufacture EVO and EVO+ for China in the future. Swiss manufacturing not only helps mitigate tariff exposure, but it provides flexibility and scale to support sustained growth and significantly strengthens our long-term supply chain resilience. Now I'd like to turn to fourth quarter results. I'll start with fourth quarter sales performance, then margins, profitability and cash. Total net sales for the quarter were $57.8 million as compared to $49 million in the year-ago quarter, driven by a lower-than-expected rebound in sales in China, partially offset by growth in Americas and non-China APAC regions. China net sales were $17.5 million in the fourth quarter of 2025 as compared to $7.8 million in the year-ago quarter. During the quarter, certain China subdistributors and customers returned some inventory to our distributors, resulting in lower-than-anticipated fourth quarter net sales for STAAR. We believe this was largely due to uncertainties about their future if the company were acquired by Alcon. This uncertainty also impacted sales to distributors in other parts of the world. While these disruptions depressed our fourth quarter results, we believe that reduced distributor inventories will lead to improved net sales for STAAR in 2026 and beyond. Excluding China, net sales declined by 2% year-over-year, with the Americas up 18% in the fourth quarter, EMEA down 20% in the fourth quarter, driven by a distributor transition in the Middle East and distributor dynamics across the region due to the proposed Alcon merger and APAC ex-China up 2% in the fourth quarter. Turning to margins. Gross profit margin for the fourth quarter of 2025 was 75.7% of total net sales compared to the prior year quarter of 64.7% of total net sales. The increase in gross profit versus the prior year quarter was due primarily to the timing of the recognition of the cost of sales associated with the December 2024 China shipment, decreased period costs resulting from cost reductions implemented in the first quarter of 2025 and the ramp-up of Swiss manufacturing, partially offset by higher inventory provisions. Total operating expenses for the fourth quarter of 2025 were $66.6 million compared to $59.6 million in the prior year quarter. Operating expenses for the quarter included costs related to the company's terminated merger transaction with Alcon of $11.2 million and costs related to restructuring of $0.7 million. Excluding the costs related to the merger and restructuring, operating expenses for the fourth quarter of 2025 were $54.7 million, a reduction of 8.2% from the prior year quarter. Our 2025 cost actions reversed the expense growth of prior years, and we achieved significant cost savings in 2025. As revenue recovers, we intend to maintain this cost discipline, positioning the company to return to profitability. Because our proprietary products can earn strong gross margins, our operating margin has the potential to be quite high if we execute our plans effectively. Adjusted EBITDA for the fourth quarter of 2025 was a loss of $200,000 as compared to a loss of $20.8 million in the year-ago quarter. The year-over-year improvement in adjusted EBITDA was primarily attributable to higher gross profit and lower operating expenses before merger and restructuring expenses, partially offset by merger and restructuring expenses. Turning to our balance sheet. We ended the quarter with approximately $187.5 million in cash, cash equivalents and investments available for sale, a level of cash we have held fairly steady since Q2 despite significant restructuring and merger-related expenses. STAAR has no debt. As we look ahead to 2026, we are not providing financial guidance. However, we do want to provide some color commentary as to how we think 2026 will compare to 2025. First, because we expect to significantly increase our sales in 2026 compared to 2025 and because we made significant cost reductions in 2025, we are targeting profitability in FY '26. Second, while we are driving profitability, we believe gross margin will be slightly lower in '26 relative to '25 as higher cost of inventory for our Swiss manufacturing facility is sold in '26 and increased inventory reserves from expiring product create headwinds. We will work to offset these increased costs in 2026 through higher ASPs, improved yields and efficiencies in our manufacturing, which should lead to tailwinds in 2027. Third, we achieved significant operating expense savings in 2025. For 2026, we expect to maintain our operating expense run rate at levels generally aligned to the $225 million target we communicated to investors back in Q1 2025. Finally, while cash will dip modestly in the near-term, we expect to resume cash generation in the back half of the year and end 2026 with a higher cash balance than 2025. Now I'll turn the call back over to Warren. Warren? Warren Foust: Thanks, Deborah. To summarize, 2025 was a year of transition. 2026 is about execution. We have stabilized China. We have rightsized costs. We are scaling Swiss manufacturing. We're accelerating EVO+ in China, and we are aligned around growth, profit and innovation. We possess differentiated Collamer material, exceptional optical technology and a proven ability to gain market share in a very large and growing myopia market. We are moving quickly to ensure every employee understands our growth, profit and innovation focus and carries measurable goals tied directly to execution. Our people are talented and highly capable. We recognize change can be difficult, but it's also exciting and filled with promise and opportunity. We are working to reignite the organization around sustained long-term growth. Our Board and leadership team are aligned. Our strategy is clear, and our focus is disciplined execution and long-term shareholder value creation. We are energized by what lies ahead and confident in our path forward. Thank you for your continued support. Operator, we'll now take questions. Operator: [Operator Instructions] The first question comes from Tom Stephan with Stifel. Thomas Stephan: First one, just on distributor inventory. Warren, have the reductions continued into the first quarter, or has that stabilized now that Alcon is behind you? And with that in mind, can you give us any guardrails for how to think about the first quarter and revenues maybe compared to the $77 million in 1Q '24? We're here in March. I actually think Chinese New Year ended today. So just any comments on 1Q revenue as well would be helpful. And then I have a follow-up. Warren Foust: Yes. Thanks for the question. Look, we're really pleased with the progress we've made on inventory management. I actually love the progress and the oversight. We've got a new leader based there in Asia Pacific and China. This is a highly skilled, deeply experienced senior VP who's joined us, who's helping with that process. We're looking at inventory on a weekly basis. So we understand much better than we used to. It will never be perfect, but we understand it much better than we did. So we watched at the end of 2025 inventory get cooled down all the way below or right at contractual levels as we exited 2025. And we continue to see really stable inventory levels at our distributor. In fact, we're a little bit below the 6-month contractual level that we referenced before. So inventory is in a good place. We feel like we're ready now as the market starts to come back and we'd see what the market is going to bring. So that's on inventory. And then as far as just the Q1, you heard Deborah's comments, we're obviously not going to provide guidance. But what we would say is we're pleased with how '25 ended in China end market. 2024 was a really challenging year. That was, we believe, double-digit decline in in-market demand, which in 2025 rebounded to a nice sort of mid-single-digit level, and we think that we're going to experience that as we exited '25 into '26. So we maintain optimism. Thomas Stephan: Got it. That's great. And then just my follow-up, more thematic and taking a step back. Warren or Deborah, maybe if you can spend some time just discussing sort of the health of the organization today and how it compares to pre-Alcon. Sort of curious if this is any sort of consideration, positive or negative, in the near-term or long-term as we think about the path forward for the company? Warren Foust: Yes, it's a good one. I'll start and maybe Deborah can join us because I think she's done a lot in 2025 on the financial side to really get us into a healthy place. You'll remember that we let expenses spiral out of control in advance of the Alcon merger agreement. And we really got control of that starting in the Q1 2025 timeframe. And so I think as we went through the year, despite what was going on with the disruption, and there was a lot of disruption, particularly in the Q4 timeframe, we can talk about that. But we got our expenses in line, and we've carried that discipline now through '25 and we believe into '26, and that's our plan is to make sure we maintain that discipline. So I think from a cost management standpoint, that's great. Now it's about restoring revenue. You heard us talk about this 3-pronged approach. Let's grow our revenue, let's expand our profit margin, and then we have to accelerate our innovation. And we've got the organization what we believe, even early in our new roles, aligned around those 3 focal points. So I think what you would find is post Alcon transaction, we have a very aligned Board. The Board and the management team, we all want the same thing. We want growth and profitability. The organization, I think, is happy to be past the disruption. And so now it's about can we go out and execute. And I believe that we have the talented team to lead us to do that. Operator: The next question comes from Ryan Zimmerman with BTIG. Iseult McMahon: This is Izzy on for Ryan. So to start out, I appreciate that you're not guiding for 2026, and I heard your comments there, Tom, but I just wanted to ask or maybe push a little bit more. So if we think about how China saw end market demand up mid-single digits, but the rest of the business was down, I think you said about 2% outside of China, curious if low single-digits is a good place for 2026 collectively? Any growth -- or any commentary on growth you can qualitatively, would be super helpful as we start to think about our models? Warren Foust: Thanks for the question, Izzy. Is the question -- I'll make sure I understand. Is the question that the 2% we saw in the quarter ex-China? Is it a question around ex-China? Or is it something else? Iseult McMahon: So as we think about the balance of the company, right, weighing what we've seen in China versus what you're doing in the rest of the world collectively, do you think low single-digits is a good place to be or something that could be achievable for 2026 for STAAR? Warren Foust: Got it. I think -- it's a good question. Look, I think 2025 needs a little context, particularly in Q4. There's a lot of disruption. And we watched our distributor partners all around the world, not just in Asia. We watch our distributor partners make decisions around what are they going to do with inventory. Imagine being a distributor facing into what you believe is going to be a transaction and likely thinking you're going to lose your job, you're going to skinny your inventory down. You're likely going to stop investing in some of the key things that might drive revenue to your company and so on. So we saw all of those things happen, particularly in Europe, where you see the European number pretty soft for Q4. We think those things are largely influenced by that disruption, and that disruption is behind us now. And so we're still optimistic as we've ever been around ex-China business being able to continue to grow. Clearly, surgeons are moving away from LASIK and taking steps in the direction of lens-based refractive surgery, choosing Collamer, which has been around for 30 years. We're the only one in the phakic IOL business that's been there. They're choosing ICLs. And so we're seeing that momentum continue. We think in China and we think ex-China that we're going to be able to continue that momentum. As you mentioned, we're not guiding on what we think that number is going to be, but we're pleased with where we are. Iseult McMahon: Got it. And as we think about the distributor dynamics, can you elaborate a little bit more about the specific structural changes that you've put into place with those agreements, particularly in China that will prevent us from seeing any form of inventory buildups similar to what we saw in '24 and '25? Warren Foust: You bet. Look, as I mentioned before, it's never going to be perfect. And so I don't want to pretend that we know everything about China all the way down through the different layers of subdistribution, first tier, second tier, holding companies for the hospitals and then out into the vast number of hospitals in China. What I would suggest to you is we have a lot better process around it now. We see those numbers weekly. We understand what the number -- the shipments that go from our distributors downstream into the distribution network and the returns that come against them. Therefore, we have a -- it's a proxy for net sales. It's not a true net sales number. But as the inventory levels have now rightsized in China, we now feel like we've got a good proxy for what in-market demand looks like. Operator: The next question comes from Brad Bowers with Mizuho. Bradley Bowers: Just wanted to ask the first one maybe on China. Historically, 2Q busy season. Obviously, that was obscured last year because of the distributor dynamics. But wanted to hear about how we should be modeling 2Q? Is the seasonality still expected? And are there any early reads that, that momentum that we typically see -- will be seen again this year in China? Deborah Andrews: This is Deborah. We do expect that -- from a seasonality standpoint that Q2 and Q3 will continue to be very strong for STAAR in 2026, as it has been historically. So don't expect significant changes in that area. Bradley Bowers: Okay. That's helpful. And then maybe just a high-level one, just how we should be thinking about prioritization, U.S. growth versus China growth. Obviously, historically, China has been a ballast to the business. How should we be thinking about getting back towards that versus accelerating some of the U.S. businesses and again, the prioritization of each? Warren Foust: Yes. So -- it's a good question. Look, we're proud of the progress we're making in the U.S. We continue to see success there. You saw us rightsize our cost structure last year. Some of that was relative to the U.S. business itself. Some of it was just global footprint because a lot of our headquarters -- certainly our headquarters, but a lot of our infrastructure is U.S.-based. So you saw us tone that down and still have nice double-digit growth in the U.S. And so it's just a smaller business relative to the bigger business outside of the U.S., particularly China, of course, Japan our second, and Korea and Southeast Asia, India representing big opportunity, not to mention what we do in Europe. And so we'll continue to invest with -- along with our customers that invest in EVO ICL. We'll do that in the United States. We'll do it outside of the United States as customers are interested in partnering with us. Again, we're seeing surgeons and our customers. We're seeing patients ask for alternatives to laser vision correction that requires corneal tissue removal. They're moving toward the lens-based option that's reversible. And so we're seeing that. And as customers share that with their potential patients, then we'll partner with them, and we'll put our investments there. But China is the biggest opportunity for us. It remains that way. We'll continue to double and triple down there. Operator: The next question comes from Simran Kaur with Wells Fargo. Gursimran Kaur: I guess just bouncing off of the prior question, maybe Warren or Deborah, could you help us understand like what is the true growth algorithm from here? How much is driven by the continued China recovery and growth versus ex-China recovery penetration and mix? And can you get back to that strong double-digit growth levels that you were seeing in China prior to last year and sort of that mid-teens growth level ex-China? Just help us understand how you get back to sort of the pre-2025 levels, and over what time? Deborah Andrews: Yes. Thanks for the question. I think -- I don't think in 2026 we're going to be seeing the hyper growth levels that we saw back 2023 and before that. Certainly, we're working towards that. Right now, thankfully, our Board has a very long view of the company. And while we do expect nice growth globally for the company in 2026, I would caution, I don't expect to see 20%, 25% growth, although that is definitely what we're working to, and that is definitely the opportunity for sure. Gursimran Kaur: Understood. That's very helpful. And maybe just in China, I appreciate the commentary around the EVO+ sort of launch. How should we think about competition in 2026? And can you give any color around what is that ASP delta between EVO+ versus EVO in China? And how much of the 2026 China growth algorithm is being driven by price versus volume and sort of underlying demand and improving macro? Warren Foust: Yes, it's a good question, Simran. And what I would say is even just appending to Deborah's previous comments because I think they're somewhat related, we're still wildly underpenetrated as far as refractive surgery as a percentage of the myopia epidemic that exists in this world. China is no different. They, in fact, lead in that. Maybe India is right there close with them. And so I think we collectively, as those that want to impact that epidemic. Lens-based refractive surgery is growing, but that's one piece of it. And so I think there's going to be plenty of opportunity for us, plenty of opportunity for competition as well. What I would say about the competitors, look, we take it really seriously. It's a little flattering, if I'm honest, that phakic IOLs are starting to grow. And I think it just speaks to LASIK is in most markets on the decline and folks are looking for another way to treat. And this reversible approach, I think, is really appealing to the patient, or potential patients. So it's a strong recognition we're happy with. Many companies have come as competitors in the past, and they all are non-Collamer lenses. They are acrylic lenses, which are varying types, but it typically creates a more rigid structure. And history will tell you that of the many that have come, only a few have really even stayed in the market. And so Collamer is a differentiator for us, 30-plus years. We had a pretty big head start on the market. And so we're taking advantage of that, but we can't just rely on that. We also have to continue to innovate. And so it's important for us to bring products like EVO+ into the Chinese market to allow us to expand. So that gets to your question around ASP. What we've seen so far is a lot of excitement around EVO+. So we're happy about that. And we're going to continue to try and scale up our Swiss plant to be able to satisfy the demand. We are seeing a premium. We're not sharing the premium. You can imagine why it's a competitive advantage to us. What I'll say is that customers see the difference and patients are paying for the difference. And so we'll see where that goes. It's still really early. I wouldn't make too much out of it yet, but we are pleased with the early progress. Operator: The next question comes from John Young with Canaccord Genuity. John Young: I just want to follow up on the comments on EVO+ and the launch in China. If I recall the strategy correctly, a part of it also was to defend against value-based purchasing in China. Are you seeing any headwinds or -- to the traditional EVO lens right now from VBP in China? And do you expect any? Warren Foust: Yes. We haven't heard anything about VBP. And so what I would say is, in order for a VBP to happen, typically, it happens in the public market. It can happen in the private market. There are examples of that in dental. And I think even in some of the provinces, they've tried to look at orthokeratology. But we've not heard anything about VBP. Remember that our competitor, the Loong Crystal that you hear about, they don't have a toric version yet. You need multiple competitors in the market before the government has typically gotten interested in it. We certainly can't predict one way or the other what's going to happen, wouldn't try to do it. But to answer your question, haven't heard a thing about VBP and feel like so far, so good. John Young: Great. And then in your script, you also talked about the importance of people in the organization. I'm just wondering, have you had any higher-than-usual turnover in the organization outside the restructuring with all the changes that have been going on? Deborah Andrews: No. Things have been pretty steady in that regard. We have a wonderful team. We have wonderful employees in the organization. They're all very happy, to be very honest, that the Alcon transaction did not go through because they love working here, and we love having them. So yes, so far, so good in that regard. Operator: The next question comes from David Saxon with Needham & Co. David Saxon: I wanted to get your thoughts on what year has no stocking dynamics for China, just so we can kind of better frame what a normal year is for China sales? Like, is 2023 at 185 kind of a clean year in your view when you think about channel inventory and not necessarily returning to that in '26, but over the near-term? Warren Foust: It seems like an easy question to answer, but the reality is China is going through -- was going through such a hypergrowth period that the distributors -- the single distributor at the time and then the 2 distributors, once we brought on HTDK, were doing everything they could to get inventory, get folks trained, get it out into -- remember, these are thousands of hospitals in a very large, diverse country. And so I don't know when you would say that the in-market demand ceased in such a way that it started backchanneling or backfilling inventory at the distributor or anywhere else within that distribution lane. So I don't know that, that question can be answered. What I can tell you is that on a go-forward basis, we understand our inventory position very well, and we have very good controls in place to ensure that we don't allow that to happen to us again. And so feel good about the contractual levels of inventory with our importers, feeling better about the stabilization seemingly, of the China business in 2025 and excited for a clean start here in '26. David Saxon: Okay. Great. And then just as my follow-up, I wanted to switch gears to the U.S. and just to get an update on the strategy. How has it evolved since early to mid-last year? What's going right? What are some areas that need retooling? Warren Foust: Yes. Our U.S. team is so good. The people running that organization are fantastic. And what I'll tell you is, they -- a couple of years ago, you'll remember the language of Highway 93. And that's -- that wasn't -- at the time, it was 93 customers, but it's not really designed to be 93 customers. It's designed to be a mindset of let's focus on the customers that are willing to partner with us and that want to drive EVO ICLs as an option for their patients. And that team has expanded upon that list now and what they've done is really get into the economics of making EVO ICL a better business for these refractive surgeries -- excuse me, these refractive surgeons that want to grow their practice. And they'll describe a market -- it's a refractive market that's not shrinking. It's one that's shifting and it's shifting away from LASIK, which requires corneal tissue removal and going to a reversible procedure that when priced appropriately, when taught appropriately to the staff and therefore communicated appropriately to a potential patient, it's a really high profit opportunity for those practices. And so they're focused around that mission. They have strong training and message discipline, and they're executing against it. And you saw the results for 2025 with double-digit growth, and we're excited to see what they're going to do this year. And they're doing it on a string budget relative to what it was a couple of years ago. We were wasting money in the U.S. We were spending it in the wrong places. I learned a lot of lessons in that. I was sitting right here for it. And so I feel like we're in a better place. Operator: The next question comes from Mason Carrico with Stephens. Mason Carrico: I'll keep it to one. The deck that you guys published on the Alcon merger included language around STAAR's inability to penetrate lower diopter patients, which makes up the majority of refractive patients, and that is deviated from prior commentary around moving down the diopter curve. So could you just talk about that shift in messaging and really how it informs your strategic decision-making and process moving forward? Warren Foust: Yes, it's a fair question. And I would just make one subtle correction to it, and it's that it's not a change in messaging from the standpoint of we know we have to go down the diopter curve in order to be effective. We know that even in the publication you're referring to, that we made progress coming down the diopter curve starting back at the -- I don't remember from memory, but minus 12 diopter down to something like minus 9, minus 9.5. Now we're at that point where we have to continue to go down the diopter curve, and it's hard to do. It's hard because in markets around the world where customers have invested in infrastructure to treat patients with laser technology, they want those technologies that they invested in to pay dividends. And so the reality is we're going to keep fighting that fight. We're going to keep pushing appropriately for our customers to consider EVO lower diopters. We know that the higher diopter refractive error correction the patient has, the more tissue you have to take, which induces dry eye, which does other things. And so we're going to continue to push. We haven't made as much progress as we would like to make. We always want to make more. Some markets will do better. Some markets will continue to have wild amounts of high myopia. Think of Asian markets like China, like India, like Korea and Japan, there's plenty of high myopia patients to treat. But we're going to keep the fight up, and I'll take your question as encouragement that we need to do so. Operator: The next question comes from Adam Maeder with Piper Sandler. Adam Maeder: Two for me. The first one is on China and lots of questions have been asked, but not sure we've discussed expectations for ICL in-market growth in FY '26? And it sounds like things have started to stabilize some over the course of 2025. Do you expect to see further recovery this year? And just any finer point you can put on it would be appreciated. And then I had a follow-up. Warren Foust: A lot of the same challenges we've been fighting in -- that we fought in 2025 are still there. There's still macro challenges in China. They're just getting better. You see the stock markets doing a whole lot better in China, but you see the housing market is still a little bit depressed. They're coming out of the Chinese New Year. I don't know that we have good data on it yet. I think the tone out of Chinese New Year was seemingly positive. We'll see. The stimulus that the government has put into place through the course of 2024 and then 2025, we think, is starting to help. Maybe it's some of the driver behind even the stock market surge. So cautiously optimistic about their economy. What role that's going to play in in-market sales, too hard to tell. What we can tell you is that Q4 in 2025 was a nice acceleration relative to the previous quarters in in-market sales. That left us for the full year '25 around, we believe, a single-digit in-market demand growth versus the prior year. So hopefully, we get a little bit of that momentum coming out of Q4. Hopefully, the economy stays as it has been or gets better, but it's still too early to tell, thus the reluctance to give guidance. Adam Maeder: Okay. That's very helpful, Warren. I appreciate the color. And for the follow-up, I wanted to ask about innovation and prioritizing innovation. I think that was mentioned a couple of times during the call in the shareholder letter. So I guess, what can you tell us today about the innovation pipeline and specifically, how we should think about some of these new products potentially getting regulatory clearance and impacting models? Warren Foust: Yes. Great question because it's the third pillar in our strategy here, and it's a place where we have -- candidly, we haven't delivered in the way that we really want to. EVO is amazing. The Collamer material is differentiated. And now the onus is on us to bring new products to market. Proud of V5, proud of bringing EVO+ to China. That's going to be a differentiator for us, we believe. We'll also bring the Lioli injector, which is incremental innovation. The lens is still the star of the show, but it will be a nice way for our customers to be able to inject EVO into their patients. And then we're working on a series of projects in the background. We hope to be able to update you even in subsequent calls on time lines. Think of milestones like when we start to do first-in-man treatments and when we go through other stage gates of the design control process, which is an important part of the R&D process. We want to give you that visibility, just not ready to do it yet. Connie Johnson: That's all the phone questions we have so far. Warren Foust: Okay. Operator, it sounds like there's no more questions? Operator: That concludes the question-and-answer session and today's conference call. Thank you for attending today's presentation. You may now disconnect.