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Unknown Executive: Thank you, Rendani. So I'm [ Roy Campbell. ] I have just recently joined Aspen Pharmacare in Investor Relations. I'm working very closely with Sanelisiwe and the management team. It's been an exciting journey so far, and I do look forward into the future and looking forward to interacting with many of you as I have done over the years. Firstly, to Rendani, thank you for hosting us today at your health care conference, and we, at Aspen, wish you all the best over the next couple of days. So today, we are presenting first half 2026 results. Mr. Stephen Saad will take us through the period under review. Sean Capazorio will take us through the financial highlights and Stephen then will go over the group strategy and the outlook. We'll be taking questions from both the floor and over the webcast. So please submit them if you want, and please just introduce yourself as you do. And I know that we'll be seeing a number of you over the next couple of days, but please feel free to get in touch if there's anything that you want to discuss. So with that, I'm going to welcome Mr. Stephen Saad. Good morning, Stephen. Stephen Saad: Thank you, Roy. Good morning, everyone. Good to be here in queue. It's amazing what can change in less than a year. Sometimes you -- sometimes you need the dockers moments to give us some proper introspection and to shape the -- and reset where you are and where you're going to. And just to remind you, in terms of our reset, there were really 3 areas that we looked at. The first was -- and the hardest thing about introspection is being honest. It's the biggest -- it's -- but it doesn't work unless you're incredibly honest with yourself. And so when we looked at our business and where we were, there were really, I think, 3 things that we could see here. Firstly, we have a commercial pharmaceutical business that we've run for nearly 3 decades, and it's a great business, and it's grown almost in every single year. And it's a relevant business because the volumes also grow. And that there is a requirement for quality medicines in emerging markets, I think, is a well-understood concept and we're well positioned there. And together with that, we had made big investments -- and have made big investments in GLP-1s, which we thought was going to be a big growth area, and we -- and that, together with the base business that we understand well was -- gave us a clear indication that we need to keep doing more of what we do in commercial pharma and to make sure the GLP-1s become additive. We looked at our Manufacturing business, and we've got great assets. But somehow, we just seem to stumble across one macro issue after another. And whether -- this time last year, it was tariffs -- tariffs, loss contract, more tariffs, tariffs go away, tariffs could come back now depending upon how things work. So it's a tricky macro environment before that we battled in a regulatory environment. We also battled with COVID. COVID was going to be this big and every [indiscernible] company was going to pass billions of dollars and it came and went. And at a point, you've got to stop saying we've been a little unlucky and our luck will change. I think you need to take matters into your own hands. And it's a painful decision, but you need matters in your own hand means let's get the thing profitable and let's play what we can see in front of us. Let's just do what we can see in front of us. And you'll see a bit of that in the presentation today. And then the final area was dealing with the sum of parts of Aspen. I've never really dealt in those issues with shareholders, but the disjunct between the underlying value of the assets and the share price was so apparent that I felt I had to bring it up to shareholders, which I did in the last presentation. And so we had to think about it and say, well, how do we unlock this value? And to have an underpriced share and to have a whole lot of debt, didn't make a whole lot of sense to us. And we're waiting for the shareholder approval. But by May, we hope that this transaction will be approved. And what it does do is it pins a value at an EBITDA level on what we've been telling you that we thought the value of the shares were and the type of multiples that the business in commercial pharma deserves. And it also gives us financial flexibility. It seems crazy to push through this and to push it and carry debt -- to carry debt through this whole process with an undervalued share. So I think what -- where we get to, hopefully, by the end of May, the approvals is that you have a business that has no debt, has never asked shareholders for a share issue and makes a ton of profit. And I don't know how all the formulas work on returns, but to me it seems like an incredible return. There's no money hospital either funders or from your shareholders. So I'll start with that. Sorry, I jump around a bit and some talk of a little subject. And I'll go straight into the presentation. In the presentation, I just -- I'm going to cover the performance under review and just take you through our key -- what we're trying to do and what came out of our previous one. We really want to sustain and accelerate our earnings growth drivers. And we believe there's some big earnings growth drivers in the business. As I said, in commercial pharma, we've got a sustainable base business, and we've got a GLP-1 rollout in manufacturing. I remind you, we've got a chemical business and a sterile business. So any profitability that you see above minus ZAR 1.7 billion is coming out of the API business. Our sterile business is losing money, and we'll talk about how we reshape it and the contracts that are coming in, how they come on and how we commercialize them. So we'll talk about that. And you will see at the end of this, we've got some very strong earnings growth momentum ahead. In terms of the other part was the sum of parts was to unlock -- to unlock the sum of parts and to also now focus very strongly on free cash flow. What is free cash flow? Well, Aspen has always had very strong operating cash flows. But then we spent a lot of money on buying assets or building assets and CapEx, and that's impacted our free cash flows. We're in a different cycle now with declining capital expenditure, reduced working capital as we built all of these assets, and we've got earnings -- increased earnings. And so Sean will take you through the triggers for free cash flow. In terms of sum of parts, as I said to you at the beginning, we want to show you value. We want to unlock value for shareholders. We absolutely declare that even at current valuations, this -- the business is not getting the valuations. It could, and I understand this confusion because if you make a 101 division and minus 10 and another, then you place a multiple on the 90. In our opinion, the minus 10 is not something that should be of a negative value attached to it. And so -- and we also think it under-appreciates the value of the brand and emerging markets. And you'll see the relative growth of our emerging markets relative to our developed markets, for example, like Australia. For the period under review, just to remind you, last year, we had really good earnings momentum in commercial pharma. We had double-digit growth in constant currency, and we expect to sustain that growth into this period and into -- for this year. You'll see that the GLP-1s -- the growth is now becoming evident in our numbers, and it should be increasingly -- it become an increasing share of the Aspen business from here on in. We've managed to get expanded indications on Mounjaro and the KwikPen. So those were quite big add-ons to the product, which have accelerated the growth of the product in the South African market. A reshape is always difficult. But we've done 90% of the reshape. It's never certain until it's done, but we've -- you can see from the restructuring expenses in this half that, that the majority of it is done. We started the insulin contract in South Africa, and we expect the approval from the regulator in March, but our contract is not with the regulator. It's with the buyer of the product, the owner of the IP. And so our contract with them has started. We had the contract dispute. I'm happy to say it's closed, and it really is the last period that will negatively impact earnings, and Sean will take you through the swing around in earnings in H2 as a result of having this out of the system. The rand has been incredibly strong from an Aspen perspective in rand results. The relative performance of the rand against our basket of currencies has quite a big impact on how we perform. I mean, assuming it shifts as much as it has in the past. And the rand, even if I go back 5 years, it was stronger today against Australian dollar than it was and the euro than it was 5 years ago. So the rand has been really, really strong for us, and it obviously impacts our results, and Sean will take you through the free cash flows. So that's all I've got to say about performance for now. I'll come back and talk about strategy, but I'm going to get Sean up here, who's to take you through the next part of the presentation, the financial portion. Welcome, Sean. Sean Capazorio: Thank you, Stephen. So nice to speak to real people. The last presentation, we spoke to a screen and a couple of people. We had to pay them to come and watch us, but they're happily obliged. But nice to see you all, and thank you for coming. Really appreciate the efforts to be live and also welcome to all the people online. Yes, I'm very pleased to take you through these financial highlights. And as Aspen, we remain absolutely focused on executing on those strategic priorities that Stephen spoke about at the start and with a razor focus on unlocking the sum of the parts value that underpins our investment case. So those are real drivers going forward. If we then get to the financial highlights in this first chart, I've got 3 bars, the one talking to revenue, normalized EBITDA and on the far right, normalized headline earnings. So if I start with revenue, we ended the period with revenue of around ZAR 21 billion, 4% down relative to the prior year. If you sort of look and we'll cover the detail a little bit later, but commercial pharma had solid growth for this half and the decline in the revenue was driven by the Manufacturing segment with the loss of the mRNA contract that Stephen spoke about earlier. If we then look fast forward to the middle graph, which is our normalized EBITDA, we came in there at just over ZAR 5 billion, a 13% drop versus last year's ZAR 5.8 billion. Again, looking under the hood, Commercial Pharma had positive double-digit EBITDA growth, and that decline was driven by the decline in the manufacturing segment. And interestingly, I think you might have read it in our commentary, if you take that ZAR 5.8 billion from last year, the full year EBITDA last year was ZAR 9.6 billion. So we did ZAR 3.8 billion in the second half. And so that's really underpinning our guidance for a strong second half for H2 '26 compared to the ZAR 3.8 billion, and we've done ZAR 5.1 billion compared to the ZAR 3.8 billion in H2 2025. So we're very confident of driving a strong second half performance in our business. And so we're very happy that we're going to have a very positive offset in H2 and end the year with positive growth in EBITDA and all the other metrics. Looking to the right on our normalized headline earnings, we ended the half year at ZAR 5.75, 21% down on the prior year ZAR 7.24. I sound like a stuck record, but again, the main driver of this was the loss of the contract. You'll also want to know why we're sitting at minus 21% here and 13% on EBITDA, why is the gap bigger? Well, this is really a mathematical problem because if you look at our depreciation, our amortization, our finance costs, our tax costs, they're all relatively flat to the prior year. So effectively, your EBITDA gap in absolute terms falls all the way through down to earnings and obviously has a bigger impact on percentage decline when you look at it on a percentage of earnings. The positive to that is, obviously, in the second half of the year when we have a positive delta to EBITDA, which will then translate to an expected full year delta positive to EBITDA, you're going to have the reverse effect where you're going to see good EBITDA growth, but even stronger, and we have guided double-digit normalized earnings growth because of the fact that all of the other metrics below EBITDA are relatively flat or lower than the prior year. This is probably my favorite slide. And I know it's something that we've been putting a lot of focus on. We've had a lot of years of investment, and I think we're now in a cycle of generating strong positive free cash flow. So if we look at the gray shaded bars on the left, my left, that should be your left too, of the screen. I'll just explain the graph, but the light blue one is the cash that we generate from operations. The dark blue is our CapEx spend and the other different color blue is the net -- is the residual balance, which is our free cash flow. So if we look to the first bars there of financial year '25, we generated just over ZAR 5 billion of cash from operations, but you can see we spent just under ZAR 5 billion on CapEx and very little free cash flow, about ZAR 166 million of free cash flow in FY '25. If you go back to the half year last year when we were talking free cash flow, we generated ZAR 1.8 billion of cash from operations, but we spent ZAR 2.6 billion. So we actually had a negative ZAR 0.8 billion of free cash flow last year. Fast forward into this year, we've generated a very, very strong cash flow from operations of ZAR 3.6 billion. You can see quite a significant increase of that ZAR 3.6 billion when you compare it to the ZAR 1.8 billion. And that's notwithstanding that our EBITDA is 13% lower than last year. We've generated more cash. So cash has really been a key driver and focus for us. What are the key things underpinning that cash growth? It's obviously a much lower investment in working capital. We've also reduced our finance cost in cash terms. And we've also managed our tax very, very closely and managed our provisional and tax payments to optimize those as well in compliance with law. So we take all of those together, that's what's driven that big increase in the cash flow from operations. On top of that, we've spent ZAR 1 billion less in CapEx. So last year, we spent ZAR 2.6 billion in the half, down to ZAR 1.6 billion this half. So if you take the combination of those 2, we end up generating just under ZAR 2 billion of free cash flow for the half. So a really good achievement. And I know that's something that everybody has been looking for Aspen to start driving. What are the benefits of driving the strong free cash flow? If you go to the right and look at our net debt, and we're also being honest with ourselves, we put the net debt there in accounting terms, and we also put the constant exchange rate net debt so that we don't take the credit for exchange rate movements. But if you look at the net debt, we ended the year -- half year ZAR 28.6 billion. That's down from ZAR 31.2 billion in June 2025. If you had to look at the June '25 and CER, it's around ZAR 30 billion. So even with the exchange rate out, we've generated a reduction in debt of -- from the ZAR 30 billion down to the ZAR 28.6 billion. And that also includes having funded a dividend of ZAR 0.9 billion in this half as well. So that's a really good achievement for us. That culminated us ending with a leverage ratio of 3.4x and so slightly elevated from FY '25. I've obviously got some slides later on to talk about the APAC divestment, but this -- you won't see much in this bar when we talk to our full year results, assuming that we get completion of the APAC divestment. So this net debt will be pretty much eliminated and we'll certainly -- we'll talk about it in later slides. This -- if I flip to the next slide, I've got the light blue shaded area on the left is our commercial pharma business and the gray shaded area is our manufacturing business. So if we look to the left first, commercial pharma, I've got a revenue bars and EBITDA bars comparing to the prior half. And I'm going to talk CER in this chart because CER is what we measure ourselves on. And so if we look at revenue, a solid 4% growth in revenue for commercial pharma constant exchange rate. If you then look to the right, that 4% revenue growth translates to an 11% growth in constant exchange rate EBITDA growing from up to ZAR 4.8 billion. A key driver of that is, and I think we spoke about this in our previous results, our reshaped business in China, where if you remember, we had quite a lot of expenses when we did the combination of the Sandoz and the Aspen business. And we did guide that we went through a large reshaping process in China last year, and this is the year we get the benefit of that in both the first half and the second half. So that expense saving is a big driver of the EBITDA growth. And underlying that, I know we take it for granted at Aspen, but it's a real achievement is our gross profit margins in our commercial pharma business remained very, very stable. So with the leverage of expense savings and a stable gross margin, you get the increase in your EBITDA growth. And you can see that our EBITDA margin has grown from 28.3%, which is the in the shaded block there on the left, increasing to a healthy 29.2% EBITDA to sales ratio for this half. And we are very comfortable that's a very stable position that we can continue to drive going forward. On the right-hand side, on the manufacturing, turnover is down 26% in CER and EBITDA down 85%. Again, all impacted by the loss of the mRNA contract. If you look at the EBITDA, we ended the last year half at just under ZAR 1.3 billion. And this year, we're coming in at ZAR 0.2 billion. If you remember, last year, we had the benefit of that contract was around ZAR 1.5 billion, and we also then got the settlement that Stephen spoke about in his slide about ZAR 500 million. So if you net those 2, it's around ZAR 1 billion drop, and that's pretty much what you're seeing in the reduction in our EBITDA in this half one. And just bear in mind that this is the last half of the impact of this contract, and we will see positive growth going forward. Looking to our group revenue, just to unpack some of the elements there. So this chart, what it does is it shows our commercial pharma revenue and our manufacturing revenue and then our group revenue comparing the half 1 '26 to the half 1 '25. So if I look at the commercial pharma first, you can see, and I think we've covered this in the previous slide, a nice growth of 4% in the green block. And then underneath that, those are all 3 of our segments, prescription, OTC and injectables. You can see all in constant exchange rate all showing positive growth. Obviously, the standout performer there is the injectables at 7%, and that is driven by the very strong demand that we've had for Mounjaro and the other OTC is showing a very healthy growth and prescription also coming in there with 2% growth. So overall, we're very comfortable with the commercial pharma growth for the half. I did put FYI, if you take the Asia Pacific region out of our sales growth and you just look at our business without APAC, that growth goes from 4% to 5% because APAC had a slightly negative revenue growth in the first half of around 2%, I think. Manufacturing, again, down 26%, which then impacts the group revenue going down by 4%, and that's all impacted and affected by the loss of that contract in this half. I think then moving on to -- I'll just explain this table because it is quite a busy table. This is our group EBITDA slide. So in the dark blue, we're comparing -- we're showing our income statement of revenue and gross profit right down to normalized EBITDA, and we're comparing half 1 '26 to half 1 '25, and we've got the ratios to revenue next to each of those blocks, and then we talk to the percentage reported in constant exchange rate. On the far right, there's a separate block there, and that's the FY '25 full year numbers. And you'll see -- I just wanted to put those down so that you can then compare H1 '25 to FY '25, and you can quite easily see that's the ZAR 3.8 billion that we generated last year in the second half and gives you a sense of what growth we're going to drive in our second half of FY '26. So talking to the revenue first, I think we've covered that with a 4% decline in revenue driven by the manufacturing offsetting the commercial pharma. Coming down to gross profit margin, you'll see our gross profit margin for the group has dropped from 47.6% to 45.4%, a drop of 7% in constant exchange rate. Again, if you look at the underlying gross margins, commercial pharma has stayed very steady at a gross margin of 58.5% and that dilution in the group gross margin is driven predominantly by manufacturing. Pleasingly, if we go down to the expense level, we ended the half with expenses of just under ZAR 5.3 billion. Last year, our expense base was just around ZAR 5.4 billion, so a 2% reduction in expenses. I just wanted to point out that the expenses for Aspen, these are mainly for our commercial pharma business because most of your manufacturing expenses sit in cost of sales, not in expenses. So that drop of 2% there is what's driving the commercial pharma EBITDA margin growth. Obviously, when you put the total business together because of the manufacturing revenue decline, the group expense ratio does -- is elevated up a bit from 24.5% to 25%, but that's just because of the manufacturing revenue decline. Then looking at normalized EBITDA, there, we've ended the half at just under ZAR 5.1 billion, ZAR 5,053 million, an EBITDA percentage of 24%. That's down on last year's EBITDA percentage of 26.5% and last year's EBITDA of ZAR 5.8 billion. If we look at the sort of moving parts there, again, commercial pharma, if you remember from the very -- that slide I took you through on commercial pharma, they've had a very good increase in EBITDA margin and ending at 29.2%. And as I've said, we remain confident for that going forward. And the drop in the EBITDA margin is driven by the drop in the manufacturing EBITDA. What I'd like to alert you to is if you look at the far right and you look at FY '25 full year EBITDA margin, last year, we ended the year at 22%. So we're already above last year's full year EBITDA margin with more growth to come in that margin in the second half as manufacturing lifts in the second half and commercial pharma continues to perform consistently. So those are all the metrics that underpin our guidance for strong double-digit EBITDA growth in H2 relative to the prior year half. Just moving to a different topic now, and I'm talking now around tax rates. You might say, why do I talk about tax rates? Well, for Aspen tax, we respect tax because tax is only expense that falls all the way through down to earnings. So if you don't manage your tax, -- it affects your -- not just your pretax number, it affects your whole income statement. So it's not like an operating expense where you get a tax shield, tax falls all the way through. So we've paid a lot of respect and we watch it very carefully and making sure we're compliant, but at the same time, making sure we manage it in the most optimal way. What this graph does below, it looks at our normalized effective group tax rates from FY '24 to -- going through to FY '25 and then H1 '26. You'll note, and I'll take you through the 2 different bars in a minute, but you'll note there is quite a stepped increase from '24 to '25 and that is a result of the global minimum tax legislation that we took you through in our previous results. And obviously, that's now embedded in our base tax rates. So that's the driver of tax increases from '24 to '25. What we've also done in this chart is we've shown you the tax rate for total operations, which is the sort of the 22% and the 22.2% for H1 '26. So you can see our tax rate is relatively constant this half versus prior year. And then what we've also done is stripped out the APAC business and what is our continuing operations tax rate, and you'll see that jumps up to 22.7% in '25 and 22.8%. So again, stable year-on-year, but a slight uptick, and that's sort of where we think our tax rate will stabilize going forward, obviously, dependent on profit mix and how this global minimum tax is actually implemented when it gets to paying out the actual tax. I think that's all on the tax rate. I think then I'd like to just talk to you about the Aspen APAC divestment and an update there. Just a health warning that these dates I've put you are indicative only, but they are our best guess on what we know at the moment. And I think these dates are pretty consistent to what we presented when we had our call with all of you, I think, in -- sure, it feels like a year ago, but I think it was in January sometime. And so based on all our time lines, we expect to publish a circular to shareholders by the -- on or before 20th of March, which means then we'll have the shareholder vote on or before 22 April. And based on the contract, that will give us a completion date for the contract of end of May, and that's when we'll get the cash -- the initial proceeds from this transaction. And then there will be a 2- or 3-month period where we will have some true-ups of working capital and all the other adjustments. But the big cash flows will happen at the end of May based on these time lines. Looking -- for those of you who have got a bit of an accounting affiliation, the APAC divestment meets what we call IFRS 5 accounting rules. So what does IFRS 5 say? It says if your business segment is material and it has a high probability of being sold, you have to classify it as a discontinued operation. So when you look at our results, you'll see that we've got continued and discontinued split all over the place. So it's quite hard, I think, when you look at those results with a cold eye. And so you'll notice in our commentary, we've put a total operations table there just to help you sort of navigate the old, let's call it, the total operations numbers to the continuing and discontinued operations. I think the important point here is that the balance sheet has been stripped down. So when you look at the balance sheet for Aspen for the half, -- you're going to see our intellectual property going down quite heavily, and that's probably the main one going down because the APAC business had -- it was quite rich in intellectual property value. And all of the APAC value is now sitting in one line called assets held for sale and the net book value sitting there is ZAR 21.8 billion, just under ZAR 22 billion. From a financial effect perspective, the gross consideration for this deal is AUD 237 million. In December, we guided in rands that to be -- just under ZAR 26.5 billion. That was at an exchange rate of, I think, ZAR 11.05 to the Aussie dollar. As we sit now, if you look at today's exchange rate, we could be well north of ZAR 27 billion plus. So it depends on where exchange rates go, we do -- there is -- there could be a benefit from exchange rate, but we'll wait and see. From a net proceeds perspective, we're expecting net proceeds of over ZAR 25 billion. That's based on the ZAR 26.5 billion. So if we get more in rands, then the net proceeds will also go up. Those proceeds will be used primarily to reduce debt. And for those of you that want to try and work out what the profit on sale is, I'll just give you one number, but the debt that's embedded in the APAC business is around ZAR 1.2 billion. You've got to subtract that off your ZAR 25 billion before you compare that to your net asset value if you want to work out a profit on sale, which we will be reporting in the second half of this year should this transaction go through. But it will be somewhere around ZAR 1.8 billion to ZAR 2 billion. I think that's the range that we would expect to come into our earnings per share in the second half. Impact from an income statement perspective, after-tax profits, the loss that we expect from APAC will be around ZAR 1.75 billion of after-tax profits. And that's a number you'll see in the results booklet for the 12 months ending June '25. So we've based this on June '25 numbers. If you take out -- obviously, there's an interest saving that's embedded or interest cost that's embedded in the APAC business itself. If you exclude that, the interest saving for the rest of the Aspen Group based on the reduction of debt is around ZAR 1.2 billion pretax, which is around ZAR 0.9 billion after tax. And if you net the 2 -- net that off the ZAR 1.75 billion, you get to about ZAR 0.85 billion of after-tax impact net of interest saving for the group, which is an earnings of circa ZAR 1.85. Stephen will talk you through the historic profile of the APAC business and also we'll talk you through how we plan to recover our profit gap over the next 2 years. So I thought it would be quite interesting to show you this now, and then you can see the plan how we're going to tackle that gap in the next period. I think it will be quite good for you to all see that. I think my last slide is just on ESG. It's something that we always focus on. It's part of our DNA, and we're passionate about it. And so we've got -- if you remember, we've got our 16 goals under these 4 pillars that we published in our integrated report. And the 4 pillars, just to remind you, our patients, our people, society and the environment. So on the patient side, that's probably our key driver or metric for Aspen from a DNA perspective, and that's to increase access to critical medicines in emerging markets. And I'm pleased to say at this stage, we've had an 8% increase in volumes versus FY '24 of critical medicines. Some of the call-outs here, obviously, we've had -- we've made some good progress in the insulin manufacturer that Stephen spoke about earlier on. We're also making good progress on the serum -- Aspen serum vaccines, which I think Stephen will give you an update on as well. And our generic GLP-1 strategy will also help us in this patient access bucket. From a people perspective, our goal by 2030 is to get to equal gender balance. And I'm pleased to say that as we sit now relative to 2020, we're at 32% of women in top leadership positions, and that's an increase from 19% in FY '20. So good progress there. We still got to get to 50% by 2030, but we're well on track. From a societal perspective, there, our focus is on group ethics and compliance and our deliverable there was to complete that program by the end of FY '25, and we've successfully done that and completed that 100%. And then very importantly, on the environment, our target there is to reduce carbon emissions, Scope 1 and 2 by 50% by 2030. And if you look at the gray block, we're around 24% reduction at this stage relative to FY 2020 as our baseline. Some callouts there. We've increased our renewable energy usage to 19%. So with 8 manufacturing facilities now using solar panels to supplement the energy. We also started to introduce water stewardship plans, and we started our facility in Cape Town. And with our partner, IFC, which is one of our development funding institutions, they've got expertise in this area. And together, we've developed a decarbonization road map project at our Quebec facility that we'll then use as a blueprint to drive down our carbon emission going forward. So I think some very good progress on our ESG. And on that note, I'd like to hand back to Stephen to take you through the more exciting part of the presentation now that we've dealt with all the numbers. Thank you, Stephen. Stephen Saad: Thank you, Sean. Well done, Sean. He's showing up black belts in budgetary control, Sean, well done. It's impressive. Keep your hands on the cash, Sean. Good. I always say this, you've got to have good partners in business. You have people that can make money, but more important are people that can keep money. So let's deal with a little bit with the group strategy here. The group strategy, my heads up to is have a look very carefully at what we see as very strong organic earnings growth and it's capital light. We've spent the capital. So just bear that in mind when considering how we look at the business going forward. So when we look at commercial pharma, this is our base business. It's army of people out in the field selling product. And we've got great dynamics in our market because we're particularly strong in emerging markets. And no matter how they perform, there's always a growing middle class and often don't have a single player, so payer. So if you go into developed markets, the government may pay for all your medicines, for example. Here, people have to pay out of pocket. They try and buy the best medicine they can as affordably. So it's got to be affordable and it's got to have quality. And that's where we've focused our business in terms of branding and quality. And we're in that sweet spot of continuing volume growth across our markets. We've had risks in our base business. We've had risks over the years, start in Venezuela. We've had Russia and Ukraine, and we've had a VBP issue in China. We've managed them all, and you will see from what Sean showed you earlier, we successfully managed the challenges we've had in China. So our base business is solid. There's no road bumps ahead, and it continues to perform. And once again, we're heading for another year of double-digit growth in EBITDA. What we're also going to show you now is I know that a lot of people question GLP-1s, will it work, won't it work, et cetera. What you're going to start to see is evidence of that growth in these numbers, too. When we talk -- I'm going to go straight into GLP-1s and our strategy. When we talk, we're going to really talk about 2 key areas and obviously, an outlook. One is the Mounjaro performance in South Africa and its rollout into sub-Saharan Africa. Two, the semaglutide. Semaglutide is the active ingredient in Ozempic and Wegovy. It's a generic opportunity as we see it and then the outlook for GLP-1s. What you see now on this slide is the GLP-1 market in South Africa and its market value is currently at about ZAR 2.2 billion. Now that represents about a tripling. That market has tripled in 18 months. It's a great category to be in. There's huge unmet demand. And it's a business that Mounjaro in particular, has performed -- has been a key driver in the growth. It was -- we've gone from 21% of the market to 52%. A lot of that's been driven by the new indications, and it will be the quickest brand to reach ZAR 1 billion in the South African market. And I know I said that we're going to get to ZAR 1 billion, and I hope to get to ZAR 1 billion next financial year. We're going to get to this financial year. And we expect to achieve over ZAR 1.3 billion. It's quite hard to pin the number here because every time you pin a number, it goes a little bit higher and higher, but it definitely won't be less than ZAR 1.3 billion of sales in this period. The registration of the KwikPen, which was the device, which moved from a vial, gave us an opportunity now to register the product across Sub-Saharan Africa. And we expect registrations from as early as this calendar year. The process can be a little quick in some of the African territories. And so we think '26, '27 will be a period of registration of products across Sub-Saharan Africa, and we'll get to understand the dynamics of that market as we roll it out. The semaglutide opportunity, semaglutide is effectively a generic launch. Canada is the first market to go patent of size. And we are -- we're definitely in the shake up for an early launch here. What do we say an early launch? We believe that the first products coming to market will be in Q2, calendar year Q2. So May, June might be the earliest product you could get there, but that's our best estimate. And we're hoping to be in the sort of mix towards the end of Q2, Q3 to get registration. There's a process to bringing -- commercializing a product, which means you've got get a number that you've got to try and print onto your products quickly enough and you've got to get your product approved in various provinces. But I think that we're comfortable that we've got a really good shot at being part of what in the generic world called market formation. So that's when the market takes shape and those people with early entrants have a larger share to start with. And we think we're up there with frontrunners. Very proud of that opportunity, proud of our teams for getting us there. But probably more important for Aspen is in many of our emerging markets, when you want to register a product, they will say to you, for example, in the Latin American countries to many, what regulated markets have you got that we can reference your product to. So getting this registration is great for us and great to have the opportunity in Canada, but also becomes a reference market for us because they want to see that a stringent regulator has approved it and then they can reference it. And so it's very important for us because, obviously, emerging markets are key for us. So we also would -- the -- it's a sort of a bipolar patent expiry. In general terms, emerging markets start expiring from this year. and carry on through until '27, end of '27, '28 and regulated markets tend to start in 2030. So it's going to be very important, the sort of scrap in emerging markets. And I think Aspen are really up for it in our key markets. And we're in a good position to be rolling out across those markets, particularly with our presence across many of those markets. Sorry that I make of -- get something out there. In terms of the sort of outlook for ourselves, well, we've got the Mounjaro rollout in South Africa and hopefully, the initiation across Sub-Saharan Africa. And the demand remains strong. It's growing every month. So it's not a -- it's growing every month. We've managed to get a fair bit of stock in, but it is something that we're sort of monitoring almost daily, weekly, trying to understand the offtakes. And I've discussed the semaglutide opportunity there. But it's -- we're very pleased to have a partner like Eli Lilly in terms of pipeline and products. So Eli Lilly, we've partnered with many multinationals, but I don't think we've had one with such a strong base product and pipeline of products. And it's a great position to be in. Now this is -- that covered our commercial pharma business. I want to go into manufacturing now. Now in manufacturing, just to repeat, if you see that we've made ZAR 700 million of profit in manufacturing, understand that we've made ZAR 1 billion somewhere else, and we've lost ZAR 1.7 billion in steriles because to get this to breakeven profitability, we need to cover for the ZAR 1 billion that we lost in the contract and then we -- as a first step. So when we give you guidance, which we will later, we'll say to you our profitability in manufacturing will be the same as last year or in line with last year. That means we've recovered ZAR 1 billion in this year to cover for the contract loss. As I said when I opened, we modified our strategy. We modified our strategy to simply address all the issues that we can control. In a world of moving macro environment, I mean, as we sit today, I don't want to tell you how things move around us, we wanted to be in control of as many levers as we could be in control. And we had to address our cost base, and we had to look and we have to commercialize those contracts. We have absolute certainty on over. The reshaping is largely complete. You will see the benefits in H2, and you'll see the full benefit in financial year '27. So yes, we've had a contract settlement in this period, but it's more than replaced by the annualized savings in financial year '27, and you'll see it's also covered in the second half of this year. Hard processes really not easy, painful for an organization, but in the environment we sell, we find ourselves in very absolutely necessary and gives you a lot more control over everything that we do. So having dealt with that, let's talk a little bit about contract commercialization. So in terms of contract commercialization, the insulin contract is very material for our South African business. We've got one line. We started it. We ramp up that line -- so it will ramp up over the period. We'll have a full impact into financial year '27. We also -- we've now moved -- we're moving on to a second line towards the end of this year. And the second line will be -- will come on stream for financial year '27, and we're hoping to build off that base. The facility in France was particularly impacted by tariffs because the Trump administration was saying, why are you making anything in Europe? Why don't you make it? You can't stand stuff from Europe to the U.S., you must make here and a very different approach to vaccines and vaccine registrations impacted that site. Now we have something called RFQs, which are basically a request for quotes. People come to you and say, "Can you make this product for us? In that tricky period, when we had absolute uncertainty, we had one request the whole year, which was -- and so that's why I said to you, I can't give you any guidance here. I don't know where this is going, et cetera. In the short period we've had in this year, we've already had 6. So the market is turning a bit for us. It's -- we're seeing green shoots there. And happy to say that we've secured additional volumes, which would give us about ZAR 300 million more EBITDA in financial year '27. So it's a great facility. For those of you that visited, it's a great facility, and it's well positioned, and I'm happy to see some momentum there. Pediatric vaccines, quite a frustrating process in terms of a regulatory and a regulatory environment. Environments are very tricky in terms of people are losing funding like WHO, so the U.S. pulls funding. And so there's -- it's not -- it's not always easy to get the timing and the pace right on these. But I'm happy to report there's a process here where you need to first get your local country, SAHPRA registration and then you go to the WHO. We have 2 products registered with SAHPRA, and I'll go to the WHO. PQ is prequalifying. It means you go in. Once they prequalify, you can start tendering. We've got 2 other products in with the regulators, and we expect registration during this calendar year, so over the next 9 or 10 months or so. I think the one worth discussing today is Hexa. Hexa, by implication has got 6 different deals with whooping cough and polio. It's a very broad vaccine. 6 different ingredients to deal with it. And we -- I'm happy to say that the WHO and SAHPRA instead of treating us sequentially on this product, in other words, SAHPRA first then WHO, they're looking at it in parallel. If it works as they propose, we should get registration at a similar time for both. And that would be great for Aspen because the tender cycle for Hexa starts in calendar year '27. So we are trying to get this product registered with both SAHPRA and prequalified at WHO in this year to be able to participate in a tender cycle in financial year '27. So it's been a lot longer process than was initially intimated to us and there was real urgency around vaccines at a point, particularly around COVID, but that urgency seems to have diminished together with funding for a lot of these type of institutions. But we are finally seeing the wheels turning. And hopefully, we'll be talking about Hexa here in the not-too-distant future. So we've spoken lots of numbers, lots of things. And I think sometimes it's easier just to put it on a very simple table to see where you are and to talk about what we're trying to achieve at a group. So what you'll see in the red there is we've lost a contract. It cost us ZAR 1 billion. So let's start at the start maybe. We have ZAR 9.6 billion of EBITDA in financial year '25, and we lost ZAR 1 billion in a contract. And we divest a business in a region which has ZAR 2.6 billion of EBITDA. So you start with the ZAR 9.6 billion and now you strip down to ZAR 6 billion, being the ZAR 1 billion, minus ZAR 1 billion, minus ZAR 2.6 billion. So that's what the red column says. At the bottom, it says we are ZAR 3.6 billion down off our base. Our intention is to restore this business to its ZAR 9.6 billion of EBITDA by financial year '27. So that means we've got to make back ZAR 3.6 billion. What have we got? We had ZAR 9.6 billion, we lose ZAR 3.6 billion. We've got ZAR 6 billion. To get to ZAR 9.6 billion, we need 60% growth, straight EBITDA growth roughly. Of course, in our business, exchange rates are impactful. They're not going to be that impactful on the absolute picture. So our idea is trying to get as much of that back as we can get over the next period. So what is -- what do we -- how does that work? So in 2026, we will guide you that we expect our manufacturing revenue to be stable. And that means we've made back the ZAR 1 billion we've lost in the contract, okay? That's what we have to do to get that back. We will guide you that commercial pharma has double-digit growth. And remember now it's double-digit growth for business outside of APAC, APAC being the divested business. And so you can double up what you see in the first half and you get to see where you are and you reasonably could have a number of ZAR 0.7 billion. Means we're hoping to get back ZAR 1.7 billion of that in financial -- in this financial year, which then leaves us a balance of ZAR 1.9 billion for next year. We've guided you that steriles will get to EBITDA breakeven or better. And so by deduction, you've got ZAR 0.7 billion more in 2027, and that's driven by, one, annualized savings, but two, in new contracts. Commercial pharma is simply -- and then -- so now you've got a balance. And your balance is actually the ZAR 1.2 billion that for 2027 that we now have to make up. So how are we going to make up ZAR 1.2 billion or what -- how much of the -- where will the components of the ZAR 1.2 billion come from? So we start with Commercial Pharmaceuticals. We've got base organic growth, and we expect GLP-1 growth. So we've got South Africa, which is already tracking at a higher cadence in the last month of the month versus the first month. And we are hopeful for some launches in Sub-Saharan Africa, and we're hopeful for a generic launch, particularly in Canada, should be the most impactful if achieved in financial year '27. In addition, what is new to us and recently been completed is we also know we've got an extra ZAR 300 million of EBITDA in our French facility. So hopefully, between all of those, we capture a good portion of the ZAR 1.2 billion, but it will give you a sense of where we're tracking to get to whatever number we get to. Remember, this excludes anything out of the divested businesses. You will have a business with EBITDA, very high EBITDA, hopefully approaching ZAR 9.6 billion, and you'll have no debt and probably have cash. So that's the goal for us as a business. But I think it's just simple -- if you get lots of numbers thrown at you, a simple table can assist with that. And so that -- that's the push for earnings and earnings growth. Now I want to come to the sum of parts and the free cash flows. This unlock -- and obviously, it's all dependent on approval. So this divestment gives us a lot of balance sheet flexibility. And it's -- we've continued -- the base business will continue to drive cash and profitability. Why did we do it? Well, one, I gave you reasons upfront, but it was a compelling valuation, and it leaves us with negligible debt and consequently, a lot of balance sheet flexibility. The remaining part of the business is focused on our faster-growing emerging markets. And when you look at the growth engines I've told you, we've spoken about what drives our earnings growth will be manufacturing, which is not in the region and GLP-1 rollout. And those GLP-1 rollouts are not in this region initially either because the biggest market is Australia and the patent sometime in the 2030s. So we have our growth engines off a smaller base profitability. And if you take the multiple that we got here, which is over 11x EBITDA, if you take that multiple and you put it across commercial pharmaceuticals, then you get -- it's way beyond our total market capitalization. And for that reason, we believe that the commercial pharma is undervalued. Our faster-growing businesses must surely carry a minimum EBITDA of this one. Moving finished -- moving steriles to a positive EBITDA, when we look at Aspen and people -- and you see and say, we assign -- we ascribe an EBITDA to Aspen multiple of 7. And as I told you earlier, what that does is it means that there's a negative applied to our sterile business. Now we completely disagree with that. Our sterile business is very valued. We've got unbelievable assets and they're valuable. It's not if but when. But what we do is we take the heat out of it by getting them profitable, but we don't agree. And everyone is entitled to their own value. I'm not telling how the value. I'm just telling you we as a management team how we look at it. But while there's a disjunct in value, we have to continue to look for opportunities to further unlock value. It doesn't make sense for shareholders if the value remains trapped. So we will continue to look for opportunities to unlock value in the business. What drives free cash flow and improving free cash flow is, one, you've got increased earnings coming forward out of organic earnings. You've got declining CapEx, which Sean has shown you and that decline will maintain. And our growth drivers, the GLP-1s and our manufacturing sterile facilities don't come with extra -- we've made these investments in the past. And so that doesn't drive further CapEx needed for the growth. And as you've seen, we need this reduced capital -- working capital investment. This is interesting because we want to show you the consequences of what we've divested. Much of this will be in a circular when it comes out, if not all of this. But here's the operational impact of the divestment of APAC. As I said, it's material. The revenues are about ZAR 8 billion, and the EBITDA from 2023 was about ZAR 3 billion. It's declined to about ZAR 26 billion -- sorry, ZAR 3 billion goes to ZAR 2.6 billion in '25. And for all intents and purposes, this year, it would be about ZAR 2.3 billion. Some of that's currency movements in there. The Australian currency has not been strong over that period. And the reason I give you ZAR 2.3 billion for this year is that in H1, which we've had, H1 in the region is stronger than H2. Almost all that profits in commercial pharma, and you'll see it has very -- it's got good cash flows, but that cash received will be offset against outstanding debt. What is interesting probably just to give you a sense of the relative growth of some of the emerging markets to this region is when you look at the growth rate percentages, and that table -- the table at the sort of bottom there, you'll see we reported a 6% growth in EBITDA in reported terms, so that's with currency all in. If we look at it what we achieved operationally, it was 11%. If we take this region out, which is what you'll see at the end of this period, the growth jumps from reported from 6% to 13% and in constant exchange rate, it goes from 11% to 16%. So if we were showing you these accounts with Australia divested, you would have seen reported earnings growth of 13%, growing at a constant exchange rate of 16%. So it is material, generates a lot of cash, et cetera. But clearly, as you'll see, was a bit dilutive to the overall growth of the business. So now we get to guidance. Guidance, we had a lot of debates about guidance, whole business, continuing operations, discontinuing. So we're trying to make it as sort of understandable as we could. So if we talk about guidance here, '26, we expect the Commercial Pharma business to retain the single-digit growth in revenue, mid-single and the double-digit constant exchange rate EBITDA growth. And we expect higher margins to persist and will be higher than prior year in Commercial Pharma. We will -- as I've discussed earlier, manufacturing, we expect to be in line with the prior year, which means we have to recoup -- to achieve this, we have to recoup the ZAR 1 billion contribution, and we expect to achieve that, obviously, through the operational improvements across the business. We are absolutely focused on driving positive financial '27 to have our Sterile business into a positive EBITDA and cash flows. And a lot of that is as we -- the annualized savings, insulin ramp-up, and now we've got these increased volumes coming through NDB as well. What does all of that turn into in terms of financial guidance? We expect double-digit growth in normalized HEPS, which Sean has taken you through. We expect EBITDA to be double -- at least double what we achieved in the first half. And that's driven, as Sean showed you, by a much stronger second half of this year versus the prior year. We have stronger free cash flows. Our operating cash flows will exceed 100%, and they traditionally, we've done that for decades. And there's CapEx reduction, which Sean showed you on his slide, which would continue and the lower working capital investments. Tax is relatively stable. And we -- with this transition close, we would have extinguished our debt in total or nearly all of the debt in total. And of course, we cannot tell you about currencies. Two days ago, we would have told you a different story about the dollar currency to today. But while the missiles flying, we are a global business, and we are very impacted by global events as we've seen over the years. And with that, I think that's -- that my last slide. Yes, that is my last slide. So that's our story. So thank you for listening and I appreciate it. And hopefully, there's a fair bit of clarity in what we're doing. But if there's one thing you get out -- I hope you get out of this is that we've taken firm control over the controllables and tried to decrease uncontrollables in the business. Thanks Roy. Unknown Executive: Thank you, Stephen. Thank you, Sean. We can take some questions from the floor, and then we'll go to the webcast. Unknown Analyst: I'm [indiscernible] from Ashburton Investments. Just a question on the commercial pharma business. Revenue was obviously quite positively impacted by the GLP-1's commercialization in the South African market. Can you give us a sense of what that growth was ex that number? And then maybe further to that, there is talk, as you say, of generics starting to come into emerging markets in 2026 and 2027. How do you see that impacting your GLP-1s business in SA provided the regulatory authority actually gets around to approving these guys? Stephen Saad: Yes. So the GLP-1 situation in South Africa, it's quite interesting and interesting dynamic because we will have a generic semaglutide in the market as well. The positioning -- so the Mounjaro patents are a long, long way away. So Mounjaro is the most expensive product in the market, much more expensive than the other products and people buy Mounjaro. The generics come against the second and third products, Ozempic and Wegovy and they will -- they are expected to impact those products. Anybody who wanted to buy a cheaper product would not be buying Mounjaro. They'd buy one of the other branded products because they're cheaper. I firmly believe that the lower-priced products will actually bring in completely different set of users. There are a whole lot of people that can't spend ZAR 3, ZAR 5, ZAR 6 month, they just can't in the South African environment in any environment. And so you're going to get very different users. And I mean, if we get it as affordable as we hope to, this could be something that gets even into the public sector of South Africa. So we're really pushing hard on that affordability, but I actually believe there's a completely different patient profile for those 2 products. Yes. I listened to -- I heard you last [indiscernible] gave me a hard by one-on-one last time, yes. I hope you pleased. Unknown Analyst: Just for everybody else, it's [indiscernible] Mianzo Asset Management. Just a question on the balance sheet, which didn't come up on the slides. You indicated the NAV for the APAC business is ZAR 21 billion and your group equity -- group NAV is ZAR 81 billion. So of that remaining ZAR 60 billion, how do you split that between commercial pharma and manufacturing? Sean Capazorio: In terms of balance sheet value? Unknown Analyst: NAV equity. Sean Capazorio: NAV. Yes, I think manufacturing is probably -- sure. I'm going to give it a go, but I think it's -- we don't really -- because remember, our manufacturing doesn't just service manufacturing, also services our commercial pharma business. So we don't actually go and say, well, manufacturing assets only service manufacturing profit and commercial -- so that split of assets is not just manufacturing. So I think it will be probably an unfair number to quote, but I think your big assets in manufacturing are in your plant, property, plant and equipment, and those are probably ZAR 20 billion odd, I would guess. Stephen Saad: I think it's like 60-20. Sean Capazorio: You've got a lot of IP in the commercial pharma business. Even with the APAC out, you still got about ZAR 50 billion, I think, of IP. But obviously, you've got the whole -- all your other assets and liabilities sitting in there as well. Unknown Analyst: Okay. That's helpful. And then I mean, you focus a lot on EBITDA. How much attention do you focus on return on invested capital because that has shown a concerning declining trend over many years. And do you look at it separately for the Commercial division and the manufacturing division and the group as a whole? Or how do you look at that? Stephen Saad: Yes, I understand there's a formula, and I understand the formula doesn't look good, and we understand that internally. You've also got to understand that Aspen might not fit into every formula you create because, as I said to you, we haven't taken a cent from shareholders, and we've got no debt at the end of all of this, and we've created so much value. So what is not taken account in any formulas is we do buy and sell businesses. I mean we're not very different to private equity in a lot of what we do within every couple of years, every year, we make some fairly significant divestment sales. What we -- but the return on invested capital is not acceptable. I absolutely agree with you. I can't argue with you. It is a problem when you lose ZAR 1.7 billion on ZAR 20 billion of assets, so just using Sean's numbers. So I'm talking about manufacturing. And that needs to change. And as soon as you change that, then a lot of your formulas change. You will find that this divestment will result in an improvement on the return on invested. Sorry, Sean, this is your say. Sean Capazorio: Yes. No, go ahead. Stephen Saad: Are you happy. Will result in an improvement on return on invested capital. But I agree with you, it's something one has to focus on. But I don't think that you can -- you should just put a unilateral formula against. If we took out of the business, these assets are incubating. It's like taking an R&D business and saying, oh, you're not getting a return on these assets. But we do -- if we don't get a return, then yes, you're right. But if we're going from minus 1.7 to 0 to plus 1.7, you're going to get a very different return on those core manufacturing assets. I know Sean said that they split, but -- and that would be -- that should be good. And you get a good sense. We're also not in an industry where you can buy things at 3x EBITDA or 2x, we just don't have -- we don't have those type of luxuries. But then when we sell, we also don't sell at those type of luxury. So if you take 11.4, 11.5x EBITDA, whatever we achieved in the Australian divestment. You take off the depreciation tax after tax, put it over what we've got, you see we're getting -- the return is high as well. So I don't -- I think formulas are very important and they stable, but I think you've also got to try and understand what the adjustments under that. Unknown Analyst: Okay. This is the last one for me. Well on that question is what we're trying to understand is the trend in the return on invested capital. Has it been stable for commercial pharma and has the investment in manufacturing rate down? That's what you're trying to understand. So if you could give us a split in the assets between the divisions, it would be very helpful for the market to better understand the group and where the value lies. Stephen Saad: Yes, agreed. I hear where you're coming from. It's just we've got split assets. We've got a factory and say, take South Africa. It makes for our South African business, and it also makes for manufacturing. So look, we could do that exercise for you, and we could try and work out how we split that out, Sean. I've committed Sean to that, and we can have a look at that. I'm worried he's going to sell it before you get it. Unknown Analyst: My name is Maleen from ABSA. I look after the health care sector. Aspen is one of my clients. I have a very good relationship with Crispen. So I just wanted to know, based on the sale of the APAC business, is the full proceeds going towards basically reducing your debt? Or will be some form of special dividend as well? Stephen Saad: So I think where we are on this. And I mean, I don't think you have to be Nostradamus to work out what we're telling you. We're saying, okay, get the money. We first want to get the money, put it in the bank. Have a look at it for a while. I haven't seen a positive on an Aspen bank account for 30 years, okay? So I just did have a glance and see it. Okay, it looks quite nice up there. And then to say to ourselves, okay, what do you do with the money? Now this is something that we run -- we'd have to run through the Board, but you're asking me, okay? I've got to say to you, I'm telling you that there's a problem with the sum of parts. The value of the company is not represented. So it obviously makes sense to give shareholders back money and that something through a buyback or to buy the shares back. To me, that's a logical answer. I don't have -- I've got lots of people in the Board who've all got ideas and all much smarter than me and all of these type of things. But just logically, it makes sense. You've got no debt, you're generating a lot of cash. And if your share price stays where it is and you don't believe it represents value and you can show in any metrics you want, you just say, here's commercial pharmaceutical business together with the API business, and this is a fair multiple. And then here's the Sterile business, which people have put a negative on, but we think is very valuable. And you add that together and you'll come to a number and you divide by the number of shares, and it's very different to your share price. Then you've got to say to yourself, well, it's got to be something I've got to recommend. We need to be looking at how we return money to shareholders, absolutely. Sean Capazorio: There's another one there. Stephen Saad: We don't have to make massive acquisitions. We just focus on what we've got in front of us. We've spent our money. We now need to deliver on the assets we spent money on, fix all Muhammad's formulas for him, and we have -- and you grow your business organically, why would you want to go and be spending a whole lot of cash when you've got all that growth underneath the... Unknown Analyst: Steve [indiscernible]. I'm just a bit confused. In the first slide, you show adjusted EBITDA of just over ZAR 5 billion. But then in your guidance, you say you'll at least double the first half normalized EBITDA of ZAR 3.8 billion. Stephen Saad: I gave you continuing operations, Steve. So... Unknown Analyst: Is that just continued. Stephen Saad: That's just continuing. So I gave guidance on continuing because if it's gone, it's gone. So just a point made here. We showed you EBITDA of ZAR 5.1 billion for the whole business. That included the APAC divestment. If you take out the number, which is about ZAR 1.2 billion for the half of the APAC divestment, you'll get to ZAR 3.8 billion. So that is what we showed you continuing. And to me, if I'm sitting in your shoes, Steve, that's what I'm looking at. And once again, I'm saying, I've got ZAR 3.8 billion x 2, that's what I've got and it's debt free. And that's for this year. And I gave you a table of what we hope to achieve for '27, okay? Cool. Unknown Executive: Steve and Sean, so there are a couple of questions that have come through, but just in the interest of time, I'm consolidating a few of them speaking about your priorities in terms of capital allocation, and I think that you've just answered that. Zintle from Mazi. She wants to know what the insulin contract regulatory approval entails and whether the ZAR 300 million will be this year, but I think you did say it was in FY '27. Stephen Saad: So that's not to do with insulin. So let's just be clear. There's an insulin contract that has value, and we're hoping that the sales, say, in financial '27 of insulin could be ZAR 1 billion. We're also saying that in independent, that's in our South African facility. In addition to what we've told you, there's a further ZAR 300 million that we expect out of our French facility. And that's EBITDA, so it's not turnover, that's EBITDA. Unknown Executive: Okay. And she also wants to know whether you can split out the Mounjaro revenue in South Africa. I don't know if that's something that... Stephen Saad: Yes, we've given guidance of ZAR 1.3 billion, and you sort of can take sort of half, a little bit less than half or something like that. Unknown Executive: Right. And then I think the last one over here is just in terms of the commercial relationship with Dr. Reddy's in the GLP-1. Stephen Saad: Yes, we have very close relationship with Dr. Reddy's. We identified them as a key strategic partner. Aspen has real strengths in peptides. Remember, we've got an API business that deals -- sorry, GLP-1s, what goes into GLP-1s are peptides. And we have real strengths in peptides as a business. We've got a factory that makes peptides, not those particular ones, but makes peptides. So we went to see the field of players who had the right active ingredient. And we identified Dr. Reddy's as a key partner for Aspen. So we are a key partner with them. We have access to IP through them and other things. So I think there was a question -- was that answer the question? Okay. Thank you. Unknown Executive: Okay. Thank you. I think that's going to have to bring the presentation to a close. Thank you very much for attending this morning and for the participation, both here and online. Rendani, thank you very much for having us. Rendani Magalela: Thank you.
Unknown Executive: Thank you, Rendani. So I'm [ Roy Campbell. ] I have just recently joined Aspen Pharmacare in Investor Relations. I'm working very closely with Sanelisiwe and the management team. It's been an exciting journey so far, and I do look forward into the future and looking forward to interacting with many of you as I have done over the years. Firstly, to Rendani, thank you for hosting us today at your health care conference, and we, at Aspen, wish you all the best over the next couple of days. So today, we are presenting first half 2026 results. Mr. Stephen Saad will take us through the period under review. Sean Capazorio will take us through the financial highlights and Stephen then will go over the group strategy and the outlook. We'll be taking questions from both the floor and over the webcast. So please submit them if you want, and please just introduce yourself as you do. And I know that we'll be seeing a number of you over the next couple of days, but please feel free to get in touch if there's anything that you want to discuss. So with that, I'm going to welcome Mr. Stephen Saad. Good morning, Stephen. Stephen Saad: Thank you, Roy. Good morning, everyone. Good to be here in queue. It's amazing what can change in less than a year. Sometimes you -- sometimes you need the dockers moments to give us some proper introspection and to shape the -- and reset where you are and where you're going to. And just to remind you, in terms of our reset, there were really 3 areas that we looked at. The first was -- and the hardest thing about introspection is being honest. It's the biggest -- it's -- but it doesn't work unless you're incredibly honest with yourself. And so when we looked at our business and where we were, there were really, I think, 3 things that we could see here. Firstly, we have a commercial pharmaceutical business that we've run for nearly 3 decades, and it's a great business, and it's grown almost in every single year. And it's a relevant business because the volumes also grow. And that there is a requirement for quality medicines in emerging markets, I think, is a well-understood concept and we're well positioned there. And together with that, we had made big investments -- and have made big investments in GLP-1s, which we thought was going to be a big growth area, and we -- and that, together with the base business that we understand well was -- gave us a clear indication that we need to keep doing more of what we do in commercial pharma and to make sure the GLP-1s become additive. We looked at our Manufacturing business, and we've got great assets. But somehow, we just seem to stumble across one macro issue after another. And whether -- this time last year, it was tariffs -- tariffs, loss contract, more tariffs, tariffs go away, tariffs could come back now depending upon how things work. So it's a tricky macro environment before that we battled in a regulatory environment. We also battled with COVID. COVID was going to be this big and every [indiscernible] company was going to pass billions of dollars and it came and went. And at a point, you've got to stop saying we've been a little unlucky and our luck will change. I think you need to take matters into your own hands. And it's a painful decision, but you need matters in your own hand means let's get the thing profitable and let's play what we can see in front of us. Let's just do what we can see in front of us. And you'll see a bit of that in the presentation today. And then the final area was dealing with the sum of parts of Aspen. I've never really dealt in those issues with shareholders, but the disjunct between the underlying value of the assets and the share price was so apparent that I felt I had to bring it up to shareholders, which I did in the last presentation. And so we had to think about it and say, well, how do we unlock this value? And to have an underpriced share and to have a whole lot of debt, didn't make a whole lot of sense to us. And we're waiting for the shareholder approval. But by May, we hope that this transaction will be approved. And what it does do is it pins a value at an EBITDA level on what we've been telling you that we thought the value of the shares were and the type of multiples that the business in commercial pharma deserves. And it also gives us financial flexibility. It seems crazy to push through this and to push it and carry debt -- to carry debt through this whole process with an undervalued share. So I think what -- where we get to, hopefully, by the end of May, the approvals is that you have a business that has no debt, has never asked shareholders for a share issue and makes a ton of profit. And I don't know how all the formulas work on returns, but to me it seems like an incredible return. There's no money hospital either funders or from your shareholders. So I'll start with that. Sorry, I jump around a bit and some talk of a little subject. And I'll go straight into the presentation. In the presentation, I just -- I'm going to cover the performance under review and just take you through our key -- what we're trying to do and what came out of our previous one. We really want to sustain and accelerate our earnings growth drivers. And we believe there's some big earnings growth drivers in the business. As I said, in commercial pharma, we've got a sustainable base business, and we've got a GLP-1 rollout in manufacturing. I remind you, we've got a chemical business and a sterile business. So any profitability that you see above minus ZAR 1.7 billion is coming out of the API business. Our sterile business is losing money, and we'll talk about how we reshape it and the contracts that are coming in, how they come on and how we commercialize them. So we'll talk about that. And you will see at the end of this, we've got some very strong earnings growth momentum ahead. In terms of the other part was the sum of parts was to unlock -- to unlock the sum of parts and to also now focus very strongly on free cash flow. What is free cash flow? Well, Aspen has always had very strong operating cash flows. But then we spent a lot of money on buying assets or building assets and CapEx, and that's impacted our free cash flows. We're in a different cycle now with declining capital expenditure, reduced working capital as we built all of these assets, and we've got earnings -- increased earnings. And so Sean will take you through the triggers for free cash flow. In terms of sum of parts, as I said to you at the beginning, we want to show you value. We want to unlock value for shareholders. We absolutely declare that even at current valuations, this -- the business is not getting the valuations. It could, and I understand this confusion because if you make a 101 division and minus 10 and another, then you place a multiple on the 90. In our opinion, the minus 10 is not something that should be of a negative value attached to it. And so -- and we also think it under-appreciates the value of the brand and emerging markets. And you'll see the relative growth of our emerging markets relative to our developed markets, for example, like Australia. For the period under review, just to remind you, last year, we had really good earnings momentum in commercial pharma. We had double-digit growth in constant currency, and we expect to sustain that growth into this period and into -- for this year. You'll see that the GLP-1s -- the growth is now becoming evident in our numbers, and it should be increasingly -- it become an increasing share of the Aspen business from here on in. We've managed to get expanded indications on Mounjaro and the KwikPen. So those were quite big add-ons to the product, which have accelerated the growth of the product in the South African market. A reshape is always difficult. But we've done 90% of the reshape. It's never certain until it's done, but we've -- you can see from the restructuring expenses in this half that, that the majority of it is done. We started the insulin contract in South Africa, and we expect the approval from the regulator in March, but our contract is not with the regulator. It's with the buyer of the product, the owner of the IP. And so our contract with them has started. We had the contract dispute. I'm happy to say it's closed, and it really is the last period that will negatively impact earnings, and Sean will take you through the swing around in earnings in H2 as a result of having this out of the system. The rand has been incredibly strong from an Aspen perspective in rand results. The relative performance of the rand against our basket of currencies has quite a big impact on how we perform. I mean, assuming it shifts as much as it has in the past. And the rand, even if I go back 5 years, it was stronger today against Australian dollar than it was and the euro than it was 5 years ago. So the rand has been really, really strong for us, and it obviously impacts our results, and Sean will take you through the free cash flows. So that's all I've got to say about performance for now. I'll come back and talk about strategy, but I'm going to get Sean up here, who's to take you through the next part of the presentation, the financial portion. Welcome, Sean. Sean Capazorio: Thank you, Stephen. So nice to speak to real people. The last presentation, we spoke to a screen and a couple of people. We had to pay them to come and watch us, but they're happily obliged. But nice to see you all, and thank you for coming. Really appreciate the efforts to be live and also welcome to all the people online. Yes, I'm very pleased to take you through these financial highlights. And as Aspen, we remain absolutely focused on executing on those strategic priorities that Stephen spoke about at the start and with a razor focus on unlocking the sum of the parts value that underpins our investment case. So those are real drivers going forward. If we then get to the financial highlights in this first chart, I've got 3 bars, the one talking to revenue, normalized EBITDA and on the far right, normalized headline earnings. So if I start with revenue, we ended the period with revenue of around ZAR 21 billion, 4% down relative to the prior year. If you sort of look and we'll cover the detail a little bit later, but commercial pharma had solid growth for this half and the decline in the revenue was driven by the Manufacturing segment with the loss of the mRNA contract that Stephen spoke about earlier. If we then look fast forward to the middle graph, which is our normalized EBITDA, we came in there at just over ZAR 5 billion, a 13% drop versus last year's ZAR 5.8 billion. Again, looking under the hood, Commercial Pharma had positive double-digit EBITDA growth, and that decline was driven by the decline in the manufacturing segment. And interestingly, I think you might have read it in our commentary, if you take that ZAR 5.8 billion from last year, the full year EBITDA last year was ZAR 9.6 billion. So we did ZAR 3.8 billion in the second half. And so that's really underpinning our guidance for a strong second half for H2 '26 compared to the ZAR 3.8 billion, and we've done ZAR 5.1 billion compared to the ZAR 3.8 billion in H2 2025. So we're very confident of driving a strong second half performance in our business. And so we're very happy that we're going to have a very positive offset in H2 and end the year with positive growth in EBITDA and all the other metrics. Looking to the right on our normalized headline earnings, we ended the half year at ZAR 5.75, 21% down on the prior year ZAR 7.24. I sound like a stuck record, but again, the main driver of this was the loss of the contract. You'll also want to know why we're sitting at minus 21% here and 13% on EBITDA, why is the gap bigger? Well, this is really a mathematical problem because if you look at our depreciation, our amortization, our finance costs, our tax costs, they're all relatively flat to the prior year. So effectively, your EBITDA gap in absolute terms falls all the way through down to earnings and obviously has a bigger impact on percentage decline when you look at it on a percentage of earnings. The positive to that is, obviously, in the second half of the year when we have a positive delta to EBITDA, which will then translate to an expected full year delta positive to EBITDA, you're going to have the reverse effect where you're going to see good EBITDA growth, but even stronger, and we have guided double-digit normalized earnings growth because of the fact that all of the other metrics below EBITDA are relatively flat or lower than the prior year. This is probably my favorite slide. And I know it's something that we've been putting a lot of focus on. We've had a lot of years of investment, and I think we're now in a cycle of generating strong positive free cash flow. So if we look at the gray shaded bars on the left, my left, that should be your left too, of the screen. I'll just explain the graph, but the light blue one is the cash that we generate from operations. The dark blue is our CapEx spend and the other different color blue is the net -- is the residual balance, which is our free cash flow. So if we look to the first bars there of financial year '25, we generated just over ZAR 5 billion of cash from operations, but you can see we spent just under ZAR 5 billion on CapEx and very little free cash flow, about ZAR 166 million of free cash flow in FY '25. If you go back to the half year last year when we were talking free cash flow, we generated ZAR 1.8 billion of cash from operations, but we spent ZAR 2.6 billion. So we actually had a negative ZAR 0.8 billion of free cash flow last year. Fast forward into this year, we've generated a very, very strong cash flow from operations of ZAR 3.6 billion. You can see quite a significant increase of that ZAR 3.6 billion when you compare it to the ZAR 1.8 billion. And that's notwithstanding that our EBITDA is 13% lower than last year. We've generated more cash. So cash has really been a key driver and focus for us. What are the key things underpinning that cash growth? It's obviously a much lower investment in working capital. We've also reduced our finance cost in cash terms. And we've also managed our tax very, very closely and managed our provisional and tax payments to optimize those as well in compliance with law. So we take all of those together, that's what's driven that big increase in the cash flow from operations. On top of that, we've spent ZAR 1 billion less in CapEx. So last year, we spent ZAR 2.6 billion in the half, down to ZAR 1.6 billion this half. So if you take the combination of those 2, we end up generating just under ZAR 2 billion of free cash flow for the half. So a really good achievement. And I know that's something that everybody has been looking for Aspen to start driving. What are the benefits of driving the strong free cash flow? If you go to the right and look at our net debt, and we're also being honest with ourselves, we put the net debt there in accounting terms, and we also put the constant exchange rate net debt so that we don't take the credit for exchange rate movements. But if you look at the net debt, we ended the year -- half year ZAR 28.6 billion. That's down from ZAR 31.2 billion in June 2025. If you had to look at the June '25 and CER, it's around ZAR 30 billion. So even with the exchange rate out, we've generated a reduction in debt of -- from the ZAR 30 billion down to the ZAR 28.6 billion. And that also includes having funded a dividend of ZAR 0.9 billion in this half as well. So that's a really good achievement for us. That culminated us ending with a leverage ratio of 3.4x and so slightly elevated from FY '25. I've obviously got some slides later on to talk about the APAC divestment, but this -- you won't see much in this bar when we talk to our full year results, assuming that we get completion of the APAC divestment. So this net debt will be pretty much eliminated and we'll certainly -- we'll talk about it in later slides. This -- if I flip to the next slide, I've got the light blue shaded area on the left is our commercial pharma business and the gray shaded area is our manufacturing business. So if we look to the left first, commercial pharma, I've got a revenue bars and EBITDA bars comparing to the prior half. And I'm going to talk CER in this chart because CER is what we measure ourselves on. And so if we look at revenue, a solid 4% growth in revenue for commercial pharma constant exchange rate. If you then look to the right, that 4% revenue growth translates to an 11% growth in constant exchange rate EBITDA growing from up to ZAR 4.8 billion. A key driver of that is, and I think we spoke about this in our previous results, our reshaped business in China, where if you remember, we had quite a lot of expenses when we did the combination of the Sandoz and the Aspen business. And we did guide that we went through a large reshaping process in China last year, and this is the year we get the benefit of that in both the first half and the second half. So that expense saving is a big driver of the EBITDA growth. And underlying that, I know we take it for granted at Aspen, but it's a real achievement is our gross profit margins in our commercial pharma business remained very, very stable. So with the leverage of expense savings and a stable gross margin, you get the increase in your EBITDA growth. And you can see that our EBITDA margin has grown from 28.3%, which is the in the shaded block there on the left, increasing to a healthy 29.2% EBITDA to sales ratio for this half. And we are very comfortable that's a very stable position that we can continue to drive going forward. On the right-hand side, on the manufacturing, turnover is down 26% in CER and EBITDA down 85%. Again, all impacted by the loss of the mRNA contract. If you look at the EBITDA, we ended the last year half at just under ZAR 1.3 billion. And this year, we're coming in at ZAR 0.2 billion. If you remember, last year, we had the benefit of that contract was around ZAR 1.5 billion, and we also then got the settlement that Stephen spoke about in his slide about ZAR 500 million. So if you net those 2, it's around ZAR 1 billion drop, and that's pretty much what you're seeing in the reduction in our EBITDA in this half one. And just bear in mind that this is the last half of the impact of this contract, and we will see positive growth going forward. Looking to our group revenue, just to unpack some of the elements there. So this chart, what it does is it shows our commercial pharma revenue and our manufacturing revenue and then our group revenue comparing the half 1 '26 to the half 1 '25. So if I look at the commercial pharma first, you can see, and I think we've covered this in the previous slide, a nice growth of 4% in the green block. And then underneath that, those are all 3 of our segments, prescription, OTC and injectables. You can see all in constant exchange rate all showing positive growth. Obviously, the standout performer there is the injectables at 7%, and that is driven by the very strong demand that we've had for Mounjaro and the other OTC is showing a very healthy growth and prescription also coming in there with 2% growth. So overall, we're very comfortable with the commercial pharma growth for the half. I did put FYI, if you take the Asia Pacific region out of our sales growth and you just look at our business without APAC, that growth goes from 4% to 5% because APAC had a slightly negative revenue growth in the first half of around 2%, I think. Manufacturing, again, down 26%, which then impacts the group revenue going down by 4%, and that's all impacted and affected by the loss of that contract in this half. I think then moving on to -- I'll just explain this table because it is quite a busy table. This is our group EBITDA slide. So in the dark blue, we're comparing -- we're showing our income statement of revenue and gross profit right down to normalized EBITDA, and we're comparing half 1 '26 to half 1 '25, and we've got the ratios to revenue next to each of those blocks, and then we talk to the percentage reported in constant exchange rate. On the far right, there's a separate block there, and that's the FY '25 full year numbers. And you'll see -- I just wanted to put those down so that you can then compare H1 '25 to FY '25, and you can quite easily see that's the ZAR 3.8 billion that we generated last year in the second half and gives you a sense of what growth we're going to drive in our second half of FY '26. So talking to the revenue first, I think we've covered that with a 4% decline in revenue driven by the manufacturing offsetting the commercial pharma. Coming down to gross profit margin, you'll see our gross profit margin for the group has dropped from 47.6% to 45.4%, a drop of 7% in constant exchange rate. Again, if you look at the underlying gross margins, commercial pharma has stayed very steady at a gross margin of 58.5% and that dilution in the group gross margin is driven predominantly by manufacturing. Pleasingly, if we go down to the expense level, we ended the half with expenses of just under ZAR 5.3 billion. Last year, our expense base was just around ZAR 5.4 billion, so a 2% reduction in expenses. I just wanted to point out that the expenses for Aspen, these are mainly for our commercial pharma business because most of your manufacturing expenses sit in cost of sales, not in expenses. So that drop of 2% there is what's driving the commercial pharma EBITDA margin growth. Obviously, when you put the total business together because of the manufacturing revenue decline, the group expense ratio does -- is elevated up a bit from 24.5% to 25%, but that's just because of the manufacturing revenue decline. Then looking at normalized EBITDA, there, we've ended the half at just under ZAR 5.1 billion, ZAR 5,053 million, an EBITDA percentage of 24%. That's down on last year's EBITDA percentage of 26.5% and last year's EBITDA of ZAR 5.8 billion. If we look at the sort of moving parts there, again, commercial pharma, if you remember from the very -- that slide I took you through on commercial pharma, they've had a very good increase in EBITDA margin and ending at 29.2%. And as I've said, we remain confident for that going forward. And the drop in the EBITDA margin is driven by the drop in the manufacturing EBITDA. What I'd like to alert you to is if you look at the far right and you look at FY '25 full year EBITDA margin, last year, we ended the year at 22%. So we're already above last year's full year EBITDA margin with more growth to come in that margin in the second half as manufacturing lifts in the second half and commercial pharma continues to perform consistently. So those are all the metrics that underpin our guidance for strong double-digit EBITDA growth in H2 relative to the prior year half. Just moving to a different topic now, and I'm talking now around tax rates. You might say, why do I talk about tax rates? Well, for Aspen tax, we respect tax because tax is only expense that falls all the way through down to earnings. So if you don't manage your tax, -- it affects your -- not just your pretax number, it affects your whole income statement. So it's not like an operating expense where you get a tax shield, tax falls all the way through. So we've paid a lot of respect and we watch it very carefully and making sure we're compliant, but at the same time, making sure we manage it in the most optimal way. What this graph does below, it looks at our normalized effective group tax rates from FY '24 to -- going through to FY '25 and then H1 '26. You'll note, and I'll take you through the 2 different bars in a minute, but you'll note there is quite a stepped increase from '24 to '25 and that is a result of the global minimum tax legislation that we took you through in our previous results. And obviously, that's now embedded in our base tax rates. So that's the driver of tax increases from '24 to '25. What we've also done in this chart is we've shown you the tax rate for total operations, which is the sort of the 22% and the 22.2% for H1 '26. So you can see our tax rate is relatively constant this half versus prior year. And then what we've also done is stripped out the APAC business and what is our continuing operations tax rate, and you'll see that jumps up to 22.7% in '25 and 22.8%. So again, stable year-on-year, but a slight uptick, and that's sort of where we think our tax rate will stabilize going forward, obviously, dependent on profit mix and how this global minimum tax is actually implemented when it gets to paying out the actual tax. I think that's all on the tax rate. I think then I'd like to just talk to you about the Aspen APAC divestment and an update there. Just a health warning that these dates I've put you are indicative only, but they are our best guess on what we know at the moment. And I think these dates are pretty consistent to what we presented when we had our call with all of you, I think, in -- sure, it feels like a year ago, but I think it was in January sometime. And so based on all our time lines, we expect to publish a circular to shareholders by the -- on or before 20th of March, which means then we'll have the shareholder vote on or before 22 April. And based on the contract, that will give us a completion date for the contract of end of May, and that's when we'll get the cash -- the initial proceeds from this transaction. And then there will be a 2- or 3-month period where we will have some true-ups of working capital and all the other adjustments. But the big cash flows will happen at the end of May based on these time lines. Looking -- for those of you who have got a bit of an accounting affiliation, the APAC divestment meets what we call IFRS 5 accounting rules. So what does IFRS 5 say? It says if your business segment is material and it has a high probability of being sold, you have to classify it as a discontinued operation. So when you look at our results, you'll see that we've got continued and discontinued split all over the place. So it's quite hard, I think, when you look at those results with a cold eye. And so you'll notice in our commentary, we've put a total operations table there just to help you sort of navigate the old, let's call it, the total operations numbers to the continuing and discontinued operations. I think the important point here is that the balance sheet has been stripped down. So when you look at the balance sheet for Aspen for the half, -- you're going to see our intellectual property going down quite heavily, and that's probably the main one going down because the APAC business had -- it was quite rich in intellectual property value. And all of the APAC value is now sitting in one line called assets held for sale and the net book value sitting there is ZAR 21.8 billion, just under ZAR 22 billion. From a financial effect perspective, the gross consideration for this deal is AUD 237 million. In December, we guided in rands that to be -- just under ZAR 26.5 billion. That was at an exchange rate of, I think, ZAR 11.05 to the Aussie dollar. As we sit now, if you look at today's exchange rate, we could be well north of ZAR 27 billion plus. So it depends on where exchange rates go, we do -- there is -- there could be a benefit from exchange rate, but we'll wait and see. From a net proceeds perspective, we're expecting net proceeds of over ZAR 25 billion. That's based on the ZAR 26.5 billion. So if we get more in rands, then the net proceeds will also go up. Those proceeds will be used primarily to reduce debt. And for those of you that want to try and work out what the profit on sale is, I'll just give you one number, but the debt that's embedded in the APAC business is around ZAR 1.2 billion. You've got to subtract that off your ZAR 25 billion before you compare that to your net asset value if you want to work out a profit on sale, which we will be reporting in the second half of this year should this transaction go through. But it will be somewhere around ZAR 1.8 billion to ZAR 2 billion. I think that's the range that we would expect to come into our earnings per share in the second half. Impact from an income statement perspective, after-tax profits, the loss that we expect from APAC will be around ZAR 1.75 billion of after-tax profits. And that's a number you'll see in the results booklet for the 12 months ending June '25. So we've based this on June '25 numbers. If you take out -- obviously, there's an interest saving that's embedded or interest cost that's embedded in the APAC business itself. If you exclude that, the interest saving for the rest of the Aspen Group based on the reduction of debt is around ZAR 1.2 billion pretax, which is around ZAR 0.9 billion after tax. And if you net the 2 -- net that off the ZAR 1.75 billion, you get to about ZAR 0.85 billion of after-tax impact net of interest saving for the group, which is an earnings of circa ZAR 1.85. Stephen will talk you through the historic profile of the APAC business and also we'll talk you through how we plan to recover our profit gap over the next 2 years. So I thought it would be quite interesting to show you this now, and then you can see the plan how we're going to tackle that gap in the next period. I think it will be quite good for you to all see that. I think my last slide is just on ESG. It's something that we always focus on. It's part of our DNA, and we're passionate about it. And so we've got -- if you remember, we've got our 16 goals under these 4 pillars that we published in our integrated report. And the 4 pillars, just to remind you, our patients, our people, society and the environment. So on the patient side, that's probably our key driver or metric for Aspen from a DNA perspective, and that's to increase access to critical medicines in emerging markets. And I'm pleased to say at this stage, we've had an 8% increase in volumes versus FY '24 of critical medicines. Some of the call-outs here, obviously, we've had -- we've made some good progress in the insulin manufacturer that Stephen spoke about earlier on. We're also making good progress on the serum -- Aspen serum vaccines, which I think Stephen will give you an update on as well. And our generic GLP-1 strategy will also help us in this patient access bucket. From a people perspective, our goal by 2030 is to get to equal gender balance. And I'm pleased to say that as we sit now relative to 2020, we're at 32% of women in top leadership positions, and that's an increase from 19% in FY '20. So good progress there. We still got to get to 50% by 2030, but we're well on track. From a societal perspective, there, our focus is on group ethics and compliance and our deliverable there was to complete that program by the end of FY '25, and we've successfully done that and completed that 100%. And then very importantly, on the environment, our target there is to reduce carbon emissions, Scope 1 and 2 by 50% by 2030. And if you look at the gray block, we're around 24% reduction at this stage relative to FY 2020 as our baseline. Some callouts there. We've increased our renewable energy usage to 19%. So with 8 manufacturing facilities now using solar panels to supplement the energy. We also started to introduce water stewardship plans, and we started our facility in Cape Town. And with our partner, IFC, which is one of our development funding institutions, they've got expertise in this area. And together, we've developed a decarbonization road map project at our Quebec facility that we'll then use as a blueprint to drive down our carbon emission going forward. So I think some very good progress on our ESG. And on that note, I'd like to hand back to Stephen to take you through the more exciting part of the presentation now that we've dealt with all the numbers. Thank you, Stephen. Stephen Saad: Thank you, Sean. Well done, Sean. He's showing up black belts in budgetary control, Sean, well done. It's impressive. Keep your hands on the cash, Sean. Good. I always say this, you've got to have good partners in business. You have people that can make money, but more important are people that can keep money. So let's deal with a little bit with the group strategy here. The group strategy, my heads up to is have a look very carefully at what we see as very strong organic earnings growth and it's capital light. We've spent the capital. So just bear that in mind when considering how we look at the business going forward. So when we look at commercial pharma, this is our base business. It's army of people out in the field selling product. And we've got great dynamics in our market because we're particularly strong in emerging markets. And no matter how they perform, there's always a growing middle class and often don't have a single player, so payer. So if you go into developed markets, the government may pay for all your medicines, for example. Here, people have to pay out of pocket. They try and buy the best medicine they can as affordably. So it's got to be affordable and it's got to have quality. And that's where we've focused our business in terms of branding and quality. And we're in that sweet spot of continuing volume growth across our markets. We've had risks in our base business. We've had risks over the years, start in Venezuela. We've had Russia and Ukraine, and we've had a VBP issue in China. We've managed them all, and you will see from what Sean showed you earlier, we successfully managed the challenges we've had in China. So our base business is solid. There's no road bumps ahead, and it continues to perform. And once again, we're heading for another year of double-digit growth in EBITDA. What we're also going to show you now is I know that a lot of people question GLP-1s, will it work, won't it work, et cetera. What you're going to start to see is evidence of that growth in these numbers, too. When we talk -- I'm going to go straight into GLP-1s and our strategy. When we talk, we're going to really talk about 2 key areas and obviously, an outlook. One is the Mounjaro performance in South Africa and its rollout into sub-Saharan Africa. Two, the semaglutide. Semaglutide is the active ingredient in Ozempic and Wegovy. It's a generic opportunity as we see it and then the outlook for GLP-1s. What you see now on this slide is the GLP-1 market in South Africa and its market value is currently at about ZAR 2.2 billion. Now that represents about a tripling. That market has tripled in 18 months. It's a great category to be in. There's huge unmet demand. And it's a business that Mounjaro in particular, has performed -- has been a key driver in the growth. It was -- we've gone from 21% of the market to 52%. A lot of that's been driven by the new indications, and it will be the quickest brand to reach ZAR 1 billion in the South African market. And I know I said that we're going to get to ZAR 1 billion, and I hope to get to ZAR 1 billion next financial year. We're going to get to this financial year. And we expect to achieve over ZAR 1.3 billion. It's quite hard to pin the number here because every time you pin a number, it goes a little bit higher and higher, but it definitely won't be less than ZAR 1.3 billion of sales in this period. The registration of the KwikPen, which was the device, which moved from a vial, gave us an opportunity now to register the product across Sub-Saharan Africa. And we expect registrations from as early as this calendar year. The process can be a little quick in some of the African territories. And so we think '26, '27 will be a period of registration of products across Sub-Saharan Africa, and we'll get to understand the dynamics of that market as we roll it out. The semaglutide opportunity, semaglutide is effectively a generic launch. Canada is the first market to go patent of size. And we are -- we're definitely in the shake up for an early launch here. What do we say an early launch? We believe that the first products coming to market will be in Q2, calendar year Q2. So May, June might be the earliest product you could get there, but that's our best estimate. And we're hoping to be in the sort of mix towards the end of Q2, Q3 to get registration. There's a process to bringing -- commercializing a product, which means you've got get a number that you've got to try and print onto your products quickly enough and you've got to get your product approved in various provinces. But I think that we're comfortable that we've got a really good shot at being part of what in the generic world called market formation. So that's when the market takes shape and those people with early entrants have a larger share to start with. And we think we're up there with frontrunners. Very proud of that opportunity, proud of our teams for getting us there. But probably more important for Aspen is in many of our emerging markets, when you want to register a product, they will say to you, for example, in the Latin American countries to many, what regulated markets have you got that we can reference your product to. So getting this registration is great for us and great to have the opportunity in Canada, but also becomes a reference market for us because they want to see that a stringent regulator has approved it and then they can reference it. And so it's very important for us because, obviously, emerging markets are key for us. So we also would -- the -- it's a sort of a bipolar patent expiry. In general terms, emerging markets start expiring from this year. and carry on through until '27, end of '27, '28 and regulated markets tend to start in 2030. So it's going to be very important, the sort of scrap in emerging markets. And I think Aspen are really up for it in our key markets. And we're in a good position to be rolling out across those markets, particularly with our presence across many of those markets. Sorry that I make of -- get something out there. In terms of the sort of outlook for ourselves, well, we've got the Mounjaro rollout in South Africa and hopefully, the initiation across Sub-Saharan Africa. And the demand remains strong. It's growing every month. So it's not a -- it's growing every month. We've managed to get a fair bit of stock in, but it is something that we're sort of monitoring almost daily, weekly, trying to understand the offtakes. And I've discussed the semaglutide opportunity there. But it's -- we're very pleased to have a partner like Eli Lilly in terms of pipeline and products. So Eli Lilly, we've partnered with many multinationals, but I don't think we've had one with such a strong base product and pipeline of products. And it's a great position to be in. Now this is -- that covered our commercial pharma business. I want to go into manufacturing now. Now in manufacturing, just to repeat, if you see that we've made ZAR 700 million of profit in manufacturing, understand that we've made ZAR 1 billion somewhere else, and we've lost ZAR 1.7 billion in steriles because to get this to breakeven profitability, we need to cover for the ZAR 1 billion that we lost in the contract and then we -- as a first step. So when we give you guidance, which we will later, we'll say to you our profitability in manufacturing will be the same as last year or in line with last year. That means we've recovered ZAR 1 billion in this year to cover for the contract loss. As I said when I opened, we modified our strategy. We modified our strategy to simply address all the issues that we can control. In a world of moving macro environment, I mean, as we sit today, I don't want to tell you how things move around us, we wanted to be in control of as many levers as we could be in control. And we had to address our cost base, and we had to look and we have to commercialize those contracts. We have absolute certainty on over. The reshaping is largely complete. You will see the benefits in H2, and you'll see the full benefit in financial year '27. So yes, we've had a contract settlement in this period, but it's more than replaced by the annualized savings in financial year '27, and you'll see it's also covered in the second half of this year. Hard processes really not easy, painful for an organization, but in the environment we sell, we find ourselves in very absolutely necessary and gives you a lot more control over everything that we do. So having dealt with that, let's talk a little bit about contract commercialization. So in terms of contract commercialization, the insulin contract is very material for our South African business. We've got one line. We started it. We ramp up that line -- so it will ramp up over the period. We'll have a full impact into financial year '27. We also -- we've now moved -- we're moving on to a second line towards the end of this year. And the second line will be -- will come on stream for financial year '27, and we're hoping to build off that base. The facility in France was particularly impacted by tariffs because the Trump administration was saying, why are you making anything in Europe? Why don't you make it? You can't stand stuff from Europe to the U.S., you must make here and a very different approach to vaccines and vaccine registrations impacted that site. Now we have something called RFQs, which are basically a request for quotes. People come to you and say, "Can you make this product for us? In that tricky period, when we had absolute uncertainty, we had one request the whole year, which was -- and so that's why I said to you, I can't give you any guidance here. I don't know where this is going, et cetera. In the short period we've had in this year, we've already had 6. So the market is turning a bit for us. It's -- we're seeing green shoots there. And happy to say that we've secured additional volumes, which would give us about ZAR 300 million more EBITDA in financial year '27. So it's a great facility. For those of you that visited, it's a great facility, and it's well positioned, and I'm happy to see some momentum there. Pediatric vaccines, quite a frustrating process in terms of a regulatory and a regulatory environment. Environments are very tricky in terms of people are losing funding like WHO, so the U.S. pulls funding. And so there's -- it's not -- it's not always easy to get the timing and the pace right on these. But I'm happy to report there's a process here where you need to first get your local country, SAHPRA registration and then you go to the WHO. We have 2 products registered with SAHPRA, and I'll go to the WHO. PQ is prequalifying. It means you go in. Once they prequalify, you can start tendering. We've got 2 other products in with the regulators, and we expect registration during this calendar year, so over the next 9 or 10 months or so. I think the one worth discussing today is Hexa. Hexa, by implication has got 6 different deals with whooping cough and polio. It's a very broad vaccine. 6 different ingredients to deal with it. And we -- I'm happy to say that the WHO and SAHPRA instead of treating us sequentially on this product, in other words, SAHPRA first then WHO, they're looking at it in parallel. If it works as they propose, we should get registration at a similar time for both. And that would be great for Aspen because the tender cycle for Hexa starts in calendar year '27. So we are trying to get this product registered with both SAHPRA and prequalified at WHO in this year to be able to participate in a tender cycle in financial year '27. So it's been a lot longer process than was initially intimated to us and there was real urgency around vaccines at a point, particularly around COVID, but that urgency seems to have diminished together with funding for a lot of these type of institutions. But we are finally seeing the wheels turning. And hopefully, we'll be talking about Hexa here in the not-too-distant future. So we've spoken lots of numbers, lots of things. And I think sometimes it's easier just to put it on a very simple table to see where you are and to talk about what we're trying to achieve at a group. So what you'll see in the red there is we've lost a contract. It cost us ZAR 1 billion. So let's start at the start maybe. We have ZAR 9.6 billion of EBITDA in financial year '25, and we lost ZAR 1 billion in a contract. And we divest a business in a region which has ZAR 2.6 billion of EBITDA. So you start with the ZAR 9.6 billion and now you strip down to ZAR 6 billion, being the ZAR 1 billion, minus ZAR 1 billion, minus ZAR 2.6 billion. So that's what the red column says. At the bottom, it says we are ZAR 3.6 billion down off our base. Our intention is to restore this business to its ZAR 9.6 billion of EBITDA by financial year '27. So that means we've got to make back ZAR 3.6 billion. What have we got? We had ZAR 9.6 billion, we lose ZAR 3.6 billion. We've got ZAR 6 billion. To get to ZAR 9.6 billion, we need 60% growth, straight EBITDA growth roughly. Of course, in our business, exchange rates are impactful. They're not going to be that impactful on the absolute picture. So our idea is trying to get as much of that back as we can get over the next period. So what is -- what do we -- how does that work? So in 2026, we will guide you that we expect our manufacturing revenue to be stable. And that means we've made back the ZAR 1 billion we've lost in the contract, okay? That's what we have to do to get that back. We will guide you that commercial pharma has double-digit growth. And remember now it's double-digit growth for business outside of APAC, APAC being the divested business. And so you can double up what you see in the first half and you get to see where you are and you reasonably could have a number of ZAR 0.7 billion. Means we're hoping to get back ZAR 1.7 billion of that in financial -- in this financial year, which then leaves us a balance of ZAR 1.9 billion for next year. We've guided you that steriles will get to EBITDA breakeven or better. And so by deduction, you've got ZAR 0.7 billion more in 2027, and that's driven by, one, annualized savings, but two, in new contracts. Commercial pharma is simply -- and then -- so now you've got a balance. And your balance is actually the ZAR 1.2 billion that for 2027 that we now have to make up. So how are we going to make up ZAR 1.2 billion or what -- how much of the -- where will the components of the ZAR 1.2 billion come from? So we start with Commercial Pharmaceuticals. We've got base organic growth, and we expect GLP-1 growth. So we've got South Africa, which is already tracking at a higher cadence in the last month of the month versus the first month. And we are hopeful for some launches in Sub-Saharan Africa, and we're hopeful for a generic launch, particularly in Canada, should be the most impactful if achieved in financial year '27. In addition, what is new to us and recently been completed is we also know we've got an extra ZAR 300 million of EBITDA in our French facility. So hopefully, between all of those, we capture a good portion of the ZAR 1.2 billion, but it will give you a sense of where we're tracking to get to whatever number we get to. Remember, this excludes anything out of the divested businesses. You will have a business with EBITDA, very high EBITDA, hopefully approaching ZAR 9.6 billion, and you'll have no debt and probably have cash. So that's the goal for us as a business. But I think it's just simple -- if you get lots of numbers thrown at you, a simple table can assist with that. And so that -- that's the push for earnings and earnings growth. Now I want to come to the sum of parts and the free cash flows. This unlock -- and obviously, it's all dependent on approval. So this divestment gives us a lot of balance sheet flexibility. And it's -- we've continued -- the base business will continue to drive cash and profitability. Why did we do it? Well, one, I gave you reasons upfront, but it was a compelling valuation, and it leaves us with negligible debt and consequently, a lot of balance sheet flexibility. The remaining part of the business is focused on our faster-growing emerging markets. And when you look at the growth engines I've told you, we've spoken about what drives our earnings growth will be manufacturing, which is not in the region and GLP-1 rollout. And those GLP-1 rollouts are not in this region initially either because the biggest market is Australia and the patent sometime in the 2030s. So we have our growth engines off a smaller base profitability. And if you take the multiple that we got here, which is over 11x EBITDA, if you take that multiple and you put it across commercial pharmaceuticals, then you get -- it's way beyond our total market capitalization. And for that reason, we believe that the commercial pharma is undervalued. Our faster-growing businesses must surely carry a minimum EBITDA of this one. Moving finished -- moving steriles to a positive EBITDA, when we look at Aspen and people -- and you see and say, we assign -- we ascribe an EBITDA to Aspen multiple of 7. And as I told you earlier, what that does is it means that there's a negative applied to our sterile business. Now we completely disagree with that. Our sterile business is very valued. We've got unbelievable assets and they're valuable. It's not if but when. But what we do is we take the heat out of it by getting them profitable, but we don't agree. And everyone is entitled to their own value. I'm not telling how the value. I'm just telling you we as a management team how we look at it. But while there's a disjunct in value, we have to continue to look for opportunities to further unlock value. It doesn't make sense for shareholders if the value remains trapped. So we will continue to look for opportunities to unlock value in the business. What drives free cash flow and improving free cash flow is, one, you've got increased earnings coming forward out of organic earnings. You've got declining CapEx, which Sean has shown you and that decline will maintain. And our growth drivers, the GLP-1s and our manufacturing sterile facilities don't come with extra -- we've made these investments in the past. And so that doesn't drive further CapEx needed for the growth. And as you've seen, we need this reduced capital -- working capital investment. This is interesting because we want to show you the consequences of what we've divested. Much of this will be in a circular when it comes out, if not all of this. But here's the operational impact of the divestment of APAC. As I said, it's material. The revenues are about ZAR 8 billion, and the EBITDA from 2023 was about ZAR 3 billion. It's declined to about ZAR 26 billion -- sorry, ZAR 3 billion goes to ZAR 2.6 billion in '25. And for all intents and purposes, this year, it would be about ZAR 2.3 billion. Some of that's currency movements in there. The Australian currency has not been strong over that period. And the reason I give you ZAR 2.3 billion for this year is that in H1, which we've had, H1 in the region is stronger than H2. Almost all that profits in commercial pharma, and you'll see it has very -- it's got good cash flows, but that cash received will be offset against outstanding debt. What is interesting probably just to give you a sense of the relative growth of some of the emerging markets to this region is when you look at the growth rate percentages, and that table -- the table at the sort of bottom there, you'll see we reported a 6% growth in EBITDA in reported terms, so that's with currency all in. If we look at it what we achieved operationally, it was 11%. If we take this region out, which is what you'll see at the end of this period, the growth jumps from reported from 6% to 13% and in constant exchange rate, it goes from 11% to 16%. So if we were showing you these accounts with Australia divested, you would have seen reported earnings growth of 13%, growing at a constant exchange rate of 16%. So it is material, generates a lot of cash, et cetera. But clearly, as you'll see, was a bit dilutive to the overall growth of the business. So now we get to guidance. Guidance, we had a lot of debates about guidance, whole business, continuing operations, discontinuing. So we're trying to make it as sort of understandable as we could. So if we talk about guidance here, '26, we expect the Commercial Pharma business to retain the single-digit growth in revenue, mid-single and the double-digit constant exchange rate EBITDA growth. And we expect higher margins to persist and will be higher than prior year in Commercial Pharma. We will -- as I've discussed earlier, manufacturing, we expect to be in line with the prior year, which means we have to recoup -- to achieve this, we have to recoup the ZAR 1 billion contribution, and we expect to achieve that, obviously, through the operational improvements across the business. We are absolutely focused on driving positive financial '27 to have our Sterile business into a positive EBITDA and cash flows. And a lot of that is as we -- the annualized savings, insulin ramp-up, and now we've got these increased volumes coming through NDB as well. What does all of that turn into in terms of financial guidance? We expect double-digit growth in normalized HEPS, which Sean has taken you through. We expect EBITDA to be double -- at least double what we achieved in the first half. And that's driven, as Sean showed you, by a much stronger second half of this year versus the prior year. We have stronger free cash flows. Our operating cash flows will exceed 100%, and they traditionally, we've done that for decades. And there's CapEx reduction, which Sean showed you on his slide, which would continue and the lower working capital investments. Tax is relatively stable. And we -- with this transition close, we would have extinguished our debt in total or nearly all of the debt in total. And of course, we cannot tell you about currencies. Two days ago, we would have told you a different story about the dollar currency to today. But while the missiles flying, we are a global business, and we are very impacted by global events as we've seen over the years. And with that, I think that's -- that my last slide. Yes, that is my last slide. So that's our story. So thank you for listening and I appreciate it. And hopefully, there's a fair bit of clarity in what we're doing. But if there's one thing you get out -- I hope you get out of this is that we've taken firm control over the controllables and tried to decrease uncontrollables in the business. Thanks Roy. Unknown Executive: Thank you, Stephen. Thank you, Sean. We can take some questions from the floor, and then we'll go to the webcast. Unknown Analyst: I'm [indiscernible] from Ashburton Investments. Just a question on the commercial pharma business. Revenue was obviously quite positively impacted by the GLP-1's commercialization in the South African market. Can you give us a sense of what that growth was ex that number? And then maybe further to that, there is talk, as you say, of generics starting to come into emerging markets in 2026 and 2027. How do you see that impacting your GLP-1s business in SA provided the regulatory authority actually gets around to approving these guys? Stephen Saad: Yes. So the GLP-1 situation in South Africa, it's quite interesting and interesting dynamic because we will have a generic semaglutide in the market as well. The positioning -- so the Mounjaro patents are a long, long way away. So Mounjaro is the most expensive product in the market, much more expensive than the other products and people buy Mounjaro. The generics come against the second and third products, Ozempic and Wegovy and they will -- they are expected to impact those products. Anybody who wanted to buy a cheaper product would not be buying Mounjaro. They'd buy one of the other branded products because they're cheaper. I firmly believe that the lower-priced products will actually bring in completely different set of users. There are a whole lot of people that can't spend ZAR 3, ZAR 5, ZAR 6 month, they just can't in the South African environment in any environment. And so you're going to get very different users. And I mean, if we get it as affordable as we hope to, this could be something that gets even into the public sector of South Africa. So we're really pushing hard on that affordability, but I actually believe there's a completely different patient profile for those 2 products. Yes. I listened to -- I heard you last [indiscernible] gave me a hard by one-on-one last time, yes. I hope you pleased. Unknown Analyst: Just for everybody else, it's [indiscernible] Mianzo Asset Management. Just a question on the balance sheet, which didn't come up on the slides. You indicated the NAV for the APAC business is ZAR 21 billion and your group equity -- group NAV is ZAR 81 billion. So of that remaining ZAR 60 billion, how do you split that between commercial pharma and manufacturing? Sean Capazorio: In terms of balance sheet value? Unknown Analyst: NAV equity. Sean Capazorio: NAV. Yes, I think manufacturing is probably -- sure. I'm going to give it a go, but I think it's -- we don't really -- because remember, our manufacturing doesn't just service manufacturing, also services our commercial pharma business. So we don't actually go and say, well, manufacturing assets only service manufacturing profit and commercial -- so that split of assets is not just manufacturing. So I think it will be probably an unfair number to quote, but I think your big assets in manufacturing are in your plant, property, plant and equipment, and those are probably ZAR 20 billion odd, I would guess. Stephen Saad: I think it's like 60-20. Sean Capazorio: You've got a lot of IP in the commercial pharma business. Even with the APAC out, you still got about ZAR 50 billion, I think, of IP. But obviously, you've got the whole -- all your other assets and liabilities sitting in there as well. Unknown Analyst: Okay. That's helpful. And then I mean, you focus a lot on EBITDA. How much attention do you focus on return on invested capital because that has shown a concerning declining trend over many years. And do you look at it separately for the Commercial division and the manufacturing division and the group as a whole? Or how do you look at that? Stephen Saad: Yes, I understand there's a formula, and I understand the formula doesn't look good, and we understand that internally. You've also got to understand that Aspen might not fit into every formula you create because, as I said to you, we haven't taken a cent from shareholders, and we've got no debt at the end of all of this, and we've created so much value. So what is not taken account in any formulas is we do buy and sell businesses. I mean we're not very different to private equity in a lot of what we do within every couple of years, every year, we make some fairly significant divestment sales. What we -- but the return on invested capital is not acceptable. I absolutely agree with you. I can't argue with you. It is a problem when you lose ZAR 1.7 billion on ZAR 20 billion of assets, so just using Sean's numbers. So I'm talking about manufacturing. And that needs to change. And as soon as you change that, then a lot of your formulas change. You will find that this divestment will result in an improvement on the return on invested. Sorry, Sean, this is your say. Sean Capazorio: Yes. No, go ahead. Stephen Saad: Are you happy. Will result in an improvement on return on invested capital. But I agree with you, it's something one has to focus on. But I don't think that you can -- you should just put a unilateral formula against. If we took out of the business, these assets are incubating. It's like taking an R&D business and saying, oh, you're not getting a return on these assets. But we do -- if we don't get a return, then yes, you're right. But if we're going from minus 1.7 to 0 to plus 1.7, you're going to get a very different return on those core manufacturing assets. I know Sean said that they split, but -- and that would be -- that should be good. And you get a good sense. We're also not in an industry where you can buy things at 3x EBITDA or 2x, we just don't have -- we don't have those type of luxuries. But then when we sell, we also don't sell at those type of luxury. So if you take 11.4, 11.5x EBITDA, whatever we achieved in the Australian divestment. You take off the depreciation tax after tax, put it over what we've got, you see we're getting -- the return is high as well. So I don't -- I think formulas are very important and they stable, but I think you've also got to try and understand what the adjustments under that. Unknown Analyst: Okay. This is the last one for me. Well on that question is what we're trying to understand is the trend in the return on invested capital. Has it been stable for commercial pharma and has the investment in manufacturing rate down? That's what you're trying to understand. So if you could give us a split in the assets between the divisions, it would be very helpful for the market to better understand the group and where the value lies. Stephen Saad: Yes, agreed. I hear where you're coming from. It's just we've got split assets. We've got a factory and say, take South Africa. It makes for our South African business, and it also makes for manufacturing. So look, we could do that exercise for you, and we could try and work out how we split that out, Sean. I've committed Sean to that, and we can have a look at that. I'm worried he's going to sell it before you get it. Unknown Analyst: My name is Maleen from ABSA. I look after the health care sector. Aspen is one of my clients. I have a very good relationship with Crispen. So I just wanted to know, based on the sale of the APAC business, is the full proceeds going towards basically reducing your debt? Or will be some form of special dividend as well? Stephen Saad: So I think where we are on this. And I mean, I don't think you have to be Nostradamus to work out what we're telling you. We're saying, okay, get the money. We first want to get the money, put it in the bank. Have a look at it for a while. I haven't seen a positive on an Aspen bank account for 30 years, okay? So I just did have a glance and see it. Okay, it looks quite nice up there. And then to say to ourselves, okay, what do you do with the money? Now this is something that we run -- we'd have to run through the Board, but you're asking me, okay? I've got to say to you, I'm telling you that there's a problem with the sum of parts. The value of the company is not represented. So it obviously makes sense to give shareholders back money and that something through a buyback or to buy the shares back. To me, that's a logical answer. I don't have -- I've got lots of people in the Board who've all got ideas and all much smarter than me and all of these type of things. But just logically, it makes sense. You've got no debt, you're generating a lot of cash. And if your share price stays where it is and you don't believe it represents value and you can show in any metrics you want, you just say, here's commercial pharmaceutical business together with the API business, and this is a fair multiple. And then here's the Sterile business, which people have put a negative on, but we think is very valuable. And you add that together and you'll come to a number and you divide by the number of shares, and it's very different to your share price. Then you've got to say to yourself, well, it's got to be something I've got to recommend. We need to be looking at how we return money to shareholders, absolutely. Sean Capazorio: There's another one there. Stephen Saad: We don't have to make massive acquisitions. We just focus on what we've got in front of us. We've spent our money. We now need to deliver on the assets we spent money on, fix all Muhammad's formulas for him, and we have -- and you grow your business organically, why would you want to go and be spending a whole lot of cash when you've got all that growth underneath the... Unknown Analyst: Steve [indiscernible]. I'm just a bit confused. In the first slide, you show adjusted EBITDA of just over ZAR 5 billion. But then in your guidance, you say you'll at least double the first half normalized EBITDA of ZAR 3.8 billion. Stephen Saad: I gave you continuing operations, Steve. So... Unknown Analyst: Is that just continued. Stephen Saad: That's just continuing. So I gave guidance on continuing because if it's gone, it's gone. So just a point made here. We showed you EBITDA of ZAR 5.1 billion for the whole business. That included the APAC divestment. If you take out the number, which is about ZAR 1.2 billion for the half of the APAC divestment, you'll get to ZAR 3.8 billion. So that is what we showed you continuing. And to me, if I'm sitting in your shoes, Steve, that's what I'm looking at. And once again, I'm saying, I've got ZAR 3.8 billion x 2, that's what I've got and it's debt free. And that's for this year. And I gave you a table of what we hope to achieve for '27, okay? Cool. Unknown Executive: Steve and Sean, so there are a couple of questions that have come through, but just in the interest of time, I'm consolidating a few of them speaking about your priorities in terms of capital allocation, and I think that you've just answered that. Zintle from Mazi. She wants to know what the insulin contract regulatory approval entails and whether the ZAR 300 million will be this year, but I think you did say it was in FY '27. Stephen Saad: So that's not to do with insulin. So let's just be clear. There's an insulin contract that has value, and we're hoping that the sales, say, in financial '27 of insulin could be ZAR 1 billion. We're also saying that in independent, that's in our South African facility. In addition to what we've told you, there's a further ZAR 300 million that we expect out of our French facility. And that's EBITDA, so it's not turnover, that's EBITDA. Unknown Executive: Okay. And she also wants to know whether you can split out the Mounjaro revenue in South Africa. I don't know if that's something that... Stephen Saad: Yes, we've given guidance of ZAR 1.3 billion, and you sort of can take sort of half, a little bit less than half or something like that. Unknown Executive: Right. And then I think the last one over here is just in terms of the commercial relationship with Dr. Reddy's in the GLP-1. Stephen Saad: Yes, we have very close relationship with Dr. Reddy's. We identified them as a key strategic partner. Aspen has real strengths in peptides. Remember, we've got an API business that deals -- sorry, GLP-1s, what goes into GLP-1s are peptides. And we have real strengths in peptides as a business. We've got a factory that makes peptides, not those particular ones, but makes peptides. So we went to see the field of players who had the right active ingredient. And we identified Dr. Reddy's as a key partner for Aspen. So we are a key partner with them. We have access to IP through them and other things. So I think there was a question -- was that answer the question? Okay. Thank you. Unknown Executive: Okay. Thank you. I think that's going to have to bring the presentation to a close. Thank you very much for attending this morning and for the participation, both here and online. Rendani, thank you very much for having us. Rendani Magalela: Thank you.
Christoph Barchewitz: Good morning, everyone and welcome to Global Fashion Group's Q4 and Full Year 2025 Results Presentation. I'm Christoph Barchewitz, CEO of GFG and I'm joined today by our CFO, Helen Hickman. I'll start today with an update on the strategic actions we have executed over the past 3 years, followed by an overview of our 2025 regional performance. Helen will cover results for the group and the outlook. Then we'll open it up for Q&A. To start, I want to briefly remind you of what underpins GFG's long-term potential. We hold leading positions across large fashion and lifestyle markets where online penetration continues to increase over time. We serve these markets with a tailored customer-centric approach that it reflects local needs and we maintain strong relationships with both global and local brands. These partnerships are supported by flexible business models that help brands grow in complex markets. We also have a unique operational footprint, supported by proprietary technology and scalable infrastructure, which enables us to deliver a fashion-specific customer experience efficiently at scale. With these foundations in place, we are on track to deliver profitable growth and positive cash flow across our markets. And we do so from a position of financial strength with a healthy balance sheet and a substantial net cash position. This long-term potential is underpinned by the work we have done to reset and strengthen the business. Looking back to 2022, 2 main events have shaped the challenges our business has had to navigate over the past 3 years. One, a difficult post-COVID macroeconomic and fashion e-commerce environment that significantly depressed consumer demand and led to a decline in our active customer base and order volumes; and two, the sale of our CIS business due to the Russian invasion of Ukraine, which significantly reduced the scale and profit of the group. This initiated a reset period for our business. We have successfully actioned this since 2023 by evolving our business model, strengthening our customer flywheel and driving cost efficiency. On business model evolution, we strengthened our brand partnerships and rationalized our offering. We took a prudent approach to inventory. And since the end of 2022, we reduced inventory levels by 43% on a constant currency basis. We curated our assortment by reducing the brand count by 26% as a result of removing long-tail brands from our platforms. On customer flywheel, we dedicated our attention to our high-value customers and increased gross profit per active customer by 14% on a constant currency basis. We delivered this step-up all while applying discipline with marketing costs remaining stable at 7% of NMV each year. Finally, on cost efficiency, we reduced and simplified everywhere across the group. From 2023 to 2025, we reduced our total cost base by EUR 106 million, a 16% reduction in constant currency and released EUR 88 million from working capital. So now let's look at how this reset period has translated into our financial results. As mentioned, we've been operating in a period of demand downturn, which resulted in EUR 168 million reduction in NMV from 2023 to 2025. FX devaluation against the euro accounted for about half of this reduction. Despite facing a lower top line, we substantially improved profitability and cash flow. Adjusted EBITDA improved by EUR 62 million since 2023. Normalized free cash flow improved by EUR 31 million since 2023. Let's now turn to our regional segment results. By executing with discipline across all aspects of our business, we have significantly strengthened our financial operating model. As a result, we delivered a positive adjusted EBITDA for all 3 regions and the group in 2025. This milestone was driven by a return to NMV growth for the full year in our 2 largest regions, ANZ and LATAM. While our reset actions have built stronger foundations group-wide, each region is currently at a different phase in their journey to profitable growth. Starting with ANZ, which now represents half of the group's NMV. ANZ has completed its transition and is now operating as our profitable growth engine. In 2025, ANZ's NMV grew 6% year-over-year in constant currency. Profitability was strong at EUR 26 million in adjusted EBITDA, marking a EUR 28 million improvement compared to 2023. ANZ has strong cash conversion and delivered a positive normalized free cash flow. LATAM represents 30% of group NMV and also delivered 6% NMV growth in 2025. LATAM has achieved a significant turnaround moving from a declining business with negative EUR 22 million adjusted EBITDA in 2023 to a positive EUR 3 million in 2025. Cash flow has improved materially as well with LATAM now near normalized free cash flow breakeven. As the initiatives we put in place continue to flow through, we expect LATAM to move toward the end of its reset phase and into a more profitable growth position. SEA is our smallest region at 21% of group NMV and continues to face a decline with NMV down 15% in 2025. Despite this backdrop and thanks to its strong cost discipline, SEA has remained resilient on profitability, delivering a positive EUR 3 million adjusted EBITDA in 2025 and was also near breakeven on normalized free cash flow. SEA's financial resilience is also partly attributable to its high Marketplace share and sizable Platform Services business. Let's look at that next. Evolving toward a platform-led model by scaling our Marketplace and Platform Services is a core part of our strategy. In 2025, Marketplace represented 39% of group NMV and Platform Services represented 4% of group revenue. Through our reset phase, all regions contributed to our progression toward our group goals of 45% Marketplace share and more than 5% Platform Services share. SEA is the most advanced in this evolution and is also the only region so far to offer a solution where we use a single stock pool to fulfill orders across multiple brand partner channels. This service is the main driver behind SEA's step-up in Platform Services revenue from 2023 to 2025. In ANZ and LATAM, we expect Marketplace to continue expanding, particularly following the rollout of Fulfilled by in 2023 and 2024, respectively. Additionally, our growing marketing platform service is expanding across these regions, serving as another key driver of profitability. Let's now take a closer look at ANZ's results. 2025 marked a clear step up forward -- step forward for ANZ as the region returned to growth and delivered stronger profitability. NMV and revenue steadily grew each quarter, including Q4 with NMV up 6% and revenue up 3% on a constant currency basis. Active customers also closed the year up 4% year-on-year. ANZ achieved a record full year gross margin of 49%, up 2 percentage points from 2024 and we held at the same level in Q4. This flowed through to adjusted EBITDA margin, which expanded 3 percentage points to 7%. ANZ's strong performance has been driven by 3 key areas: a scaling platform mix, more efficient infrastructure and stronger customer engagement. Looking at platform mix. We are strengthening our fashion proposition while shifting to a more inventory-light model. In 2025, more than 20% of NMV came from our own brands and exclusive partnerships, helping us differentiate ourselves. At the same time, our brand partners are participating in our partner offerings. Marketplace now makes up 36% of NMV and 115 brands are live on Fulfilled by since we launched it in 2023. This gives customers more choice and gives brands an efficient and reliable way to grow with us. Additionally, our marketing services revenue is up 36% since 2023, indicative of another great value add for our brand partners. The second major driver is our more efficient infrastructure. With our new order and warehouse management system and expanded partnership with Australia Post, we've had a delivery upgrade. About half of all orders are now delivered in under 48 hours across Australia and New Zealand. In Q4 alone, delivery speed in major cities improved by 10% year-over-year. In Australia, we are the only fashion player to have rolled out Saturday standard delivery at scale for East Coast metro areas. And in New Zealand, we have achieved a meaningful improvement by reducing delivery times by 15% and introducing express next day service for key metro areas. These operational wins support our profitable growth momentum and our third driver, customer engagement. Our Got You Looking masterbrand campaign continues to demonstrate strong results. Amongst the campaign's target audience, unprompted awareness is up 70%, customer trust has increased 62% and 57% of viewers take action after seeing our ads, meaning more visits to the ICONIC app and site. To further strengthen the ICONIC's customer flywheel, we launched the Front Row loyalty program in October last year. This program was co-designed with input from 50,000 customers and is built around ICONS, the loyalty currency members earn when they shop to unlock rewards, special offers and exclusive experiences. Members progress through 4 status levels with higher levels unlocking greater benefits and faster earning. The Front Row is helping us recognize and retain our highest value customers, which deepens loyalty and drives higher order frequency. This supports ANZ's growth agenda, which also includes greater geographic penetration and increased cross-category shopping. In parallel, we continue to drive profitability through scale, ongoing fulfillment optimization and leveraging technology and AI. Turning now to LATAM. 2025 was a year of continued recovery. NMV returned to growth for the full year and LATAM became adjusted EBITDA profitable. We did see LATAM's momentum moderate in the second half. This was partly due to slightly stronger year-over-year comparators and partly due to a more challenging market and competitive environment. Though active customers ended 2025 down 2% year-on-year, LATAM saw higher order frequency and average order value, which reflected our focus on higher-value customers. LATAM's margin profile strengthened with gross margin improving to 44%, up 1 percentage point year-on-year and adjusted EBITDA reaching 1%, up 5 percentage points. Next, we'll cover the strategic drivers for LATAM that have laid the foundation for profitable growth. First, we are changing how we engage with our customers. We have started to refresh our cash back program to increase customer loyalty. We're promoting Club Dafiti, which is where shoppers can access personalized rewards and exclusive promotions. It's highly effective in keeping our high-value customers engaged and coming back to Dafiti. Second, we are scaling our brand partner proposition. A major piece of this is our Fulfilled by offering, which launched in 2024 and now has over 60 brand partners live. We saw 4x more revenue from Fulfilled by in 2025. It is a true win-win where brands leverage our fulfillment network to grow while we monetize our automated fulfillment center capacity. Our partner services go beyond logistics. We have been growing our marketing services with revenue up 42% in 2025 and our revenue per session doubling in Q4. 2025, we also rolled out financing to support our partners' working capital needs while simultaneously optimizing our cash flows. Finally, we are deploying AI-generated product imagery at scale. This reduces our reliance on traditional studio photos and gets products online much faster. This new workflow is about 30% faster. And as we scale it, we expect it to cut production costs by around 2/3. All of these initiatives are building a more resilient and profitable foundation for us in LATAM. Let's now turn to SEA. In 2025, we continue to see the rate of decline steadily ease even as the top line remain challenging. By Q4, NMV was down 10% year-on-year compared to 15% in Q3. SEA's revenue declined less than NMV for both Q4 and the full year. This was a result of improved marketplace commissions and stronger contribution from platform services. Our SEA business is now operating with a more favorable margin mix and leaner cost base. As we work through our initiatives to stabilize demand, SEA is well positioned to translate any return to growth into stronger profitability. To drive stabilization, we are focusing on sharpening our customer proposition while driving simplification and efficiency to progress toward profitable growth. This includes focusing on our top-performing brand partners. In 2025, more than 60% of SEA's NMV came from our top 30 brands. To support this, we have refined our assortment. In retail, we have reduced our intake by 28% from 20% fewer brands since 2023. On our Marketplace, we have reduced long-tail complexity, resulting in a 20% increase in NMV per brand compared to 2023. Alongside our assortment strategy, platform services continue to scale and be an important growth lever for SEA. Our single-stop solution, which is part of our operations services has generated 48% higher revenue in 2025 versus 2023 on a constant currency basis as it enables sales for brand.com and other channels in 2025. An exciting recent development in Q1 is the launch of our Got You Looking in SEA. We took our learnings from ANZ and adapted the masterbrand for ZALORA. Got You Looking is now live across all of our channels. It is designed to demand attention and improve brand preference, drive higher quality traffic and ultimately rebuild a healthier, more profitable customer base over time. Finally, we are continuously driving simplification and efficiency across the business. We successfully reduced SEA's total cost base by 19% on a constant currency basis and released EUR 29 million in working capital since 2023. Altogether, these actions give us a solid foundation in SEA as we progress towards sustainable, profitable growth. I will now hand it over to Helen to take you through the group results and outlook. Helen Hickman: Thank you, Christoph and good morning, everyone. I'll start with customers. At the end of 2025, our active customer base was down 4% year-on-year as we continue to prioritize profitable customer acquisition, engagement and reactivation. This strategy includes engagement initiatives that encourage cross-category shopping, app usage and loyalty program participation. These initiatives in ANZ and LATAM have successfully offset headwinds in SEA to result in a 2.3% increase in group order frequency. In 2025, we generated over EUR 1 billion in NMV, with Q4, our key trading season contributing about 1/3 of the full year. Whilst our full year and Q4 NMV were broadly stable on a constant currency basis, our reported figures were significantly impacted by FX headwinds. Specifically, the Australian dollar and Brazilian real were weak against the euro in '25, both down about 7% year-on-year. With Australia and Brazil being our 2 largest markets, this translated to a lower euro reported value for our NMV and revenue. Our average order value increased in constant currency terms for both the full year 2025 and Q4, offsetting lower volumes in SEA, which drove the group year-on-year decline. The order value increase was driven by inflation, along with a combination of a higher price point assortment and regional mix. Now turning to revenue and margins. We increased our adjusted EBITDA by EUR 27 million against the backdrop of broadly flat constant currency revenue to turn the group full year positive for the first time within our current footprint. Now let's take a closer look at the 2 contributors to this milestone, gross margin improvement and ongoing cost and efficiency actions. Starting first with gross margin improvements. Over our reset period, we have successfully reduced our overall inventory position by 43% on a constant currency basis from the end of 2022 to the end of 2025. We've achieved a healthier inventory profile by reducing discount through a more relevant assortment, increasing inventory turnover and decreasing our share of aged inventory by 10 percentage points. This, combined with a steady increase in Marketplace and Platform Services share has resulted in a 4 percentage point increase in gross margin, rising from 42% in 2023 to 46% in 2025. The second key contributor to the significantly improved adjusted EBITDA position is ongoing cost discipline. Our cost efficiency programs have been a crucial part of our business reset and remain a core part of our strategy going forward. From 2023 to 2025, we've reduced our total cost base by EUR 106 million, representing a 16% reduction on a constant currency basis. This cost reduction has more than doubled the pace of our 7% NMV decline over the same time period. The largest saving came from fulfillment. 2/3 of the reduction was as a result of our own initiatives where we captured efficiencies, including from automation and the order warehouse management system, OWMS, that we implemented in ANZ last year. Another 20% was due to reduced volumes and the remainder related to external factors such as FX. We also delivered significant savings across tech and admin. We continue to streamline our organizational structure along with ongoing reviews and negotiations of all our non-people costs. Across all cost lines, we've reduced our headcount by over 40% over the past 3 years. Together, our 4 percentage point gross margin expansion and EUR 106 million cost reduction have enabled us to reach our milestone of becoming adjusted EBITDA profitable. Turning to our cash. Our normalized free cash flow improvement in 2025 was primarily driven by the EUR 27 million increase in adjusted EBITDA. Lease costs remained broadly stable year-on-year. Working capital moved towards neutral as we cycle the one-off timing benefits seen in 2024. We delivered a CapEx reduction of EUR 16 million following the completion of the OWS (sic) [ OWMS ] investment and ongoing rationalization of our broader technology spend. After adjusting for operational tax and interest, we had a normalized free cash outflow of EUR 32 million, representing a EUR 10 million improvement compared to 2024. In Q4, we generated EUR 46 million of normalized free cash inflow. As a reminder, our cash flow cycle is highly seasonal, generating significant cash flows in Q4, our key trading season and experiencing significant outflows in quarter 1. We closed 2025 with a strong liquidity position of EUR 185 million in pro forma cash and EUR 143 million in pro forma net cash. Pro forma net cash deducts our outstanding EUR 41 million convertible bond liability and other small levels of third-party borrowing. Throughout 2025, we strengthened our balance sheet by repurchasing EUR 13.8 million in aggregate principal amount of our convertible bond, bringing our total repurchase volume at a discount to 89% of the original issue. We have 2 significant funding events taking effect in quarter 1, which I'd like to overlay against our closing December 2025 cash position. Firstly, following bondholders exercising their right to redeem at par on the 16th of March, we will redeem EUR 31.8 million, which is about 3/4 of our outstanding convertible bond. This will leave EUR 9.1 million of the bond outstanding at an attractive terms of a 1.25% interest rate maturing in March 2028. After this redemption, based on the December 2025 balance, this will leave us with EUR 153 million in pro forma cash. Secondly, we increased our funding flexibility through a new credit line. In December, our ANZ business signed a EUR 17 million revolving credit facility to efficiently manage our seasonal working capital needs. When combined with our undrawn funds from our facility with HSBC, we have EUR 23 million in additional available funding. This brings our total adjusted available liquidity position for year-end 2025 to EUR 176 million. This represents a strong financial foundation and significant headroom we have to support our next phase. We're also pleased to announce this morning the launch of a EUR 3 million share buyback program. The repurchased shares are expected to be used to partially meet our ongoing share-based employee remuneration scheme. Now let's look forward to our outlook, starting with guidance for 2026. For NMV, we expect a range of negative 4% to positive 4% on a constant currency basis. As at December 2025 closing effect rates, this translates to EUR 0.99 billion to EUR 1.07 billion. The global macroeconomic environment remains highly volatile, compounded by ongoing geopolitical tensions with distinct macroeconomic factors impacting demand across the 9 countries where we operate. Specifically, our 2 largest markets face near-term headwinds. In Australia, weak consumer sentiment is driven by recent interest rate increases and persistent inflation. Whilst in Brazil, higher interest rates remain and the upcoming general election and World Cup add additional volatility considerations. Our NMV guidance reflects softer current trading and half 1 expectations as well as different half 2 trajectories to account for these dynamics. For adjusted EBITDA, we expect EUR 15 million to EUR 25 million, again at closing December FX rates, building on the EUR 9 million we delivered in 2025. CapEx and leases are expected to be broadly in line with 2025 levels. For working capital, we expect a slightly higher inflow than we delivered in 2025. Our strategy to deliver profitable growth remains unchanged and is built on 3 key pillars. Firstly, business model evolution. We continue to create our assortment across retail and marketplace while scaling our brand partner offerings through our platform, including expanding Operations by, Fulfilled by and Marketing by GFG. This platform mix shift continues to support our evolving business profile towards a gross margin in excess of 47%, 45% Marketplace share and 5% Platform Services share, whilst maintaining broadly neutral working capital. Secondly, the customer flywheel. We are continuously refining our customer strategy with a clear focus on quality and profitability. This means disciplined engagement initiatives, stronger adoption of our loyalty programs and using AI across the entire customer journey. These actions will drive order frequency growth and improve customer economics, whilst keeping marketing investment broadly stable at 7% of NMV. Thirdly, cost efficiency. We will remain focused on cost and capital discipline. As we grow, we create operating leverage from our existing assets, particularly our fulfillment network without requiring significant incremental investment, which keeps CapEx and lease costs broadly stable. Technology and AI are embedded in our operations, helping us execute faster, improve customer experience and remain resilient through market volatility. In summary, applying these 3 pillars through our research phase has established a stronger financial foundation. We will continue to execute this strategy to deliver NMV growth, adjusted EBITDA margin expansion and normalized free cash flow breakeven. We will now open the call to your questions. [Operator Instructions] Operator: [Operator Instructions] Our first question is from Anne Critchlow from Berenberg. Anne Critchlow: I've got 3 to start us off, if that's okay. First of all, please, could you comment on how much weaker trading was in January and February compared to Q4? And then secondly, if you could just comment on the behavior of customers in the last few days. I think in the past, we've seen a sudden drop-off in sales around sort of big global crises and then a return to normal. But just wondering if you're seeing the same pattern. And then also thirdly, on the gross margin outlook, the 30 basis points improvement in Q4 was a bit lower than we've seen looking backwards. Just wondered if that's the sort of trajectory you're looking at perhaps over the year ahead and how quickly you might reach your 47% gross margin target? Helen Hickman: Anne, I'll take the first one, pass to Christoph for the second and then come back to you, Anne, on the gross margin question. So as I mentioned, we have seen some softer trading in January and February compared to where we were in Q4. We've seen sort of a declining customer sentiment in Brazil and Australia at the start of the year. And also, we've also had the classic timing impact of some key seasonal events. So whilst the Q4 as a whole, there will be less of an impact within the months, we've seen a shifting of Chinese New Year and Carnival in Brazil, which also has an impact on January and February to date. Christoph Barchewitz: Yes. And just over the last few days, I guess you're referencing, obviously, the headlines and events in the Middle East. We haven't seen any substantial deterioration beyond what Helen just said. And also the year-on-year comparisons are impacted by the timing. So there's a bit of difficulty in really parsing through day-by-day numbers but there is no material drop off or something that we have seen in the context of past events around COVID or other major moments. So that is not happening. Helen Hickman: And then moving on to gross margin. So yes, obviously, our Q4 year-on-year improvement was softer than the full year as a whole, so the full year stepping forward 1.5 percentage points. We very much continue to expect gross margin expansion into 2026, albeit probably slightly lighter than the full year that we saw in 2025. And also I sort of caution that, that won't necessarily be equal improvements every quarter. But again, our strategy continues and we expect to see those improvements driven by increased marketplace and platform services participation and also continued focus around our retail and our assortment. Operator: Our next question is from Russell Pointon from Edison. Russell Pointon: Congratulations on the results. Three questions, if that's okay. First of all, you referenced the active customer declines in LATAM in Q4 and that's due to competitor activity. Could you just talk a bit more about that? Was it focused across certain categories? Or was it fairly broad-based? And my second question is for LATAM and Southeast Asia, you're highlighting that you're near cash flow breakeven. I appreciate that you're expecting EBITDA to improve in those regions over time. But are there other levers that can help you to generate more positive free cash flow? I assume there's still something to go on inventory. And my third question is finally just in terms of the medium-term guidance, it isn't in the presentations deck. So can you just reconfirm that the medium-term targets of 6% EBITDA margin and breakeven free cash flow? And perhaps looking back versus 12 months ago, how are you tracking versus what you probably expected 12 months ago? Christoph Barchewitz: Yes. Thanks, Russell. Maybe I'll start here and then Helen can build on that. So on the active customer, general comment, I would say is, it's obviously important to recognize, #1, it's an LTM number. So it's always a bit of a lagging indicator. And we've obviously seen that when you look at, for example, the ANZ evolution over time. And as we're going through, for example, the turnaround in Southeast Asia, we would expect to have NMV lead the recovery before it comes fully through in the active customer, partially because of the LTM and partially because of our focus on higher-value customers and the very disciplined approach around customer activation, both new acquisition and reactivation. So from a LATAM perspective, it is a function of our approach and the competitive environment and us being disciplined in protecting both the gross margin and the marketing cost at a level that we think is ultimately the optimum from a profitable journey going forward. To answer the second part of your -- or second question around LATAM and Southeast Asia, yes, we're near normalized free cash flow breakeven, which I think clearly indicates we're not doing much on the CapEx side, as you can see from the group number but it's particularly in those 2 regions, it's really a modest investment into technology. We have obviously the leases that go into a normalized free cash flow and we've been releasing a degree of working capital, in particular, in Southeast Asia to counter the decline in the top line. And the working capital will not repeat in that way. We think there's a bit more to go in Southeast Asia on that. We're very optimized in LATAM, if not maybe a little bit light on the working capital. We will continue to look at all ways of optimizing cash flow but the big driver is really the EBITDA at this point and that's where we want to push in those 2 regions to move higher. And then maybe coming back to the medium-term guidance question around margin. We still believe that we need somewhere around that 5%, 6% or so level of adjusted EBITDA margin. But I think we've chosen to kind of look at the building blocks slightly differently and really focus on the absolute EBITDA, the stable leases, the stable CapEx and generally neutral working capital, although as Helen said, this year, we do expect a bit of cash inflow from the working capital side. So maybe the nuance here is less driving this off the percentage margin and really more looking at the absolute building blocks into moving towards cash flow -- normalized free cash flow breakeven. Hope that helps. Operator: [Operator Instructions] And we have a follow-up question from Anne Critchlow from Berenberg. Anne Critchlow: So I've got 3 follow-ups, if that's all right. And firstly and what steps did you take to focus on higher-value customers? I'm just wondering what that looks like in practical terms. And then secondly, just an update on your AI strategy and the extent to which you're allowing bots on to your site and maybe supporting them to find information. I'd also be really interested to hear your thoughts on how marketplaces can remain relevant in an AI world, lots of discussion around that topic recently. And then finally, just on Southeast Asia. Just wondering what sort of time frame you're thinking about to reach profitability? Christoph Barchewitz: So I'll take the first 2 and then let Helen answer the SEA profitability question. So on the higher-value customers, what it really means is, like every business, we have a very broad range of customer base from people who shop with us literally every other week, very high frequency, very high loyalty, buy both full price and discounted during campaigns and have been with us for many, many years. We're very focused on retaining those customers and giving them value at every part of the journey. And the Front Row program in Australia is a way of doing that in a very tangible way. We have our ZALORA VIP program in Southeast Asia. We're working through a number of initiatives in LATAM around this as well. So this is really focusing on, let's say, the top 25% of the customer base where most of the value comes from in NMV but more importantly, a very, very large share of our profit is really generated. So that's one end of the initiatives. And the other end of the initiatives is to really look at the customers that are not profitable for us and within that to identify how we can either move them into a profitable position and levers there are around shipping fees, they're around the marketing channels that we use. They're around how we trigger conversion from first-time buyers to second and third purchase because we know that once we have 3 purchases, our loyalty forecast is very, very strong. And so it is really both ends of the distribution, if you want, where we're applying. And I think what we're not saying here is we're only going to focus on higher-value customers. We recognize there will always be a distribution but we're trying to tilt the distribution upwards. And as you can see, for example, from the gross margin per active customer improvement of 14%, this is also about moving those numbers forward. So there's a marketing side to this and a marketing efficiency side to this whole strategy but there's also a gross margin per active customer element to this and making sure that, in particular, our discounts are targeted at customers that are loyal or can become loyal versus just churning through and taking advantage of a deeply discounted product but are not actually staying on the platform. So I hope that gives you a bit of color around our customer strategy. The AI topic is definitely very, very high up on the agenda. Our strategy so far is to make sure that our visibility across all of the AI players is strong. We're digitally native. We have 15 years of history of optimizing for that visibility. We have a very large assortment. We have a very well-known brand. And in all of the searches that you can do on those platforms, we come up quite well when people are looking for fashion products, categories, specific trends, those types of things, we are doing already quite well but we're continuing to focus on that and making sure that we're ready for an increase in the traffic coming from those players. So far, this is a very low single-digit percentage across all of our markets. So we're still very early in actually seeing a change in traffic there in our category. How are we addressing the question around the role of platforms in an AI world? I think we generally believe that we are an AI winner, not an AI loser. And obviously, there's a lot of debate in the investor community around that. But we see ourselves as an AI winner. Why is that? #1, because we're digitally native and technology enabled. And so we have a 15-year history of adapting to technology, deploying new technology for the benefit of our brand partners and customers. And we are doing that currently. We've been doing that over the last couple of years. So this is our natural, let's say, playing field. #2, we think that we have always seen players up the funnel that are playing a role in customers coming to our platform. And frankly, this was a fairly concentrated universe of basically 2, 3 companies driving this in all of our markets. So to some degree, more competition in that, let's say, discovery layer is actually, we think, not a bad thing. And we will -- we are looking very actively at both deeper integration and deeper partnering with those players but also where we want to restrict and make sure that we protect our customer base, our organic traffic, those types of things. It's an evolving topic. We are all over it and very, very focused on it because it is a critical driver of the future. In the end, we're in fashion, which we think is a not purely transactional category but we're browsing, discovery, inspiration, entertainment plays an important role. And we have a very large physical component to delivering to the customer. And that side, I think, is very far away from being disrupted by any LLMs or other AI players. And so that side of building the assortment and then making it available with fast delivery, with easy returns, with a trusted player is something that we believe is very important. But just to be clear, we [ believe ] both the discovery funnel up to the checkout and the post-checkout experience is something that we will continue to own and benefit from the adoption of AI by our customers but also throughout our business. Helen, you want to cover the SEA question? Helen Hickman: Yes. Thanks, Christoph. And in your question, you asked when we think SEA will become profitable. So on an adjusted EBITDA basis, SEA turned profitable this year. So it stepped forward close to EUR 5.5 million year-on-year despite the full year NMV decline of 15%. So that's sort of a two-pronged approach around gross margin accretion and then also a disciplined focus around cost. We very much go into 2026 with that same approach, focusing around how we improve our gross margin within the region, also maintain a strong focus around cost discipline whilst we then work very much to turn the rate of decline in the region and to slow that and to ultimately move to growth within the region. Hopefully, that helps. Anne Critchlow: That does. And sorry, a quick follow-up on that. Could you comment also on free cash flow outlook for Southeast Asia? Helen Hickman: Yes. So like all of our regions, our focus very much is to continue to improve their cash position predominantly through improved sustainable profit. So the way Christoph, I think described to an earlier question with the overall structure, it's very much focused around how we improve profit whilst we maintain a disciplined level around CapEx, leases and a slightly favorable working capital position. SEA fits very much in that same framework as we see the evolution of the group. Operator: It appears there are currently no further questions over the phone. With this, I would like to hand over for any webcast questions. Unknown Executive: So we have a few questions about SEA, specifically, at what point do you expect the SEA top line to stabilize? And what is the competitive strategy against intensifying regional players as well as when do you expect the decline in customer numbers to turn around? So we'll start there. Christoph Barchewitz: Yes. So it's obviously hard to predict the timing. But I think from a NMV stabilization, we're looking at it sequentially. As you heard earlier, we have improved from the minus 15% in Q3 to the minus 10% in Q4 and that was clean in terms of the like-for-likes, in terms of the phasing. We now have obviously Q1 in which we have quite a few changes, like Helen mentioned around the real and the Chinese New Year seasonality. And so there's a bit of differences there but we are looking at it really from that perspective. We're planning conservatively for the year to make sure that we are not overstocked. But we do think that we are moving gradually towards a positive territory but that's definitely still a few quarters away given that we're coming from minus 10% in Q4. The active customer number will be lagging and it's also impacted by us focusing on the higher-value customers. So what we would expect is that you see improvements in NMV first and then the active customers kind of following that eventually but instead really driving order frequency and average order value as a way of returning to NMV growth. Competitive strategy is very much focused on our assortment differentiation. So the most relevant brands, driving exclusivity within the brands, so having access to segmented product, brands that are only available on our platform and the dot-com. We also have obviously differentiated experience on the app, especially relative to the general merchandise platforms, which are the main online competitors. And our overall customer engagement is obviously very fashion-centric. The Got You Looking campaign is really stressing that point of differentiation by really being about fashion, style in all aspects of life and about the emotional part of our product category, not focused on price or delivery promise or those types of more hygiene factors that's really dialing up the fashion credibility as a platform and that's a big part of our turnaround strategy here. Unknown Executive: Next, we have a few questions on costs. One for marketing. How much of your net cash position will be reinvested into marketing to reverse the declining trend in active customers? Overall, where do you expect to see cost reductions over the next year? And then also, could you address central costs? Do you expect this to stay flat? Or is there a specific plan to scale that down? And finally, on inventory, where do you expect to see these levels overall, those are the cost areas to cover? Helen Hickman: Okay. Thank you. So let's start with marketing. So we expect to see our marketing percentage of NMV to stay broadly stable at around 7%, which is a trend that we've seen for the past few years. Our focus very much is in investing in marketing with regards focusing on loyalty and profitable -- and attracting our profitable customer base. I think the second question was more about our general overall cost focus and we are expecting to see cost savings into 2026. The answer to that is very much yes, actually broadly sort of an initiatives level. So proactive things that we are doing at sort of at a similar level to that, that we've seen in 2025. Areas of focus continue to be fulfillment, which is a large cost base but we feel there's more efficiencies within the overall fulfillment network. We continue to optimize and streamline our corporate organizational structure. And also, obviously, activities that we implemented towards the back end of 2025 also flow through into an annualization benefit and we'll see the benefit of that coming into 2026. I think there was a specific question with regards our central costs, which are at an adjusted EBITDA level, about EUR 22 million. These consist of both corporate and admin costs, so people and non-people fees but also include our central tech teams of which the majority of the work and focus is supporting our regional platforms. So whilst it's included within our other segments, it's worth noting that they're purely for the benefit of the regional operations. We've seen these costs come down by about 20 -- 10%, sorry, year-on-year and over a 2-year basis, closer to 20%. So the same rigor around organizational structure and nonpeople cost review has been applied to the central costs as it has been, as you'd expect in our regional businesses. And then lastly, on inventory. So we've seen significant declines in inventory over the past 3 years. We expect that very much to stabilize into the future, especially as we then start to build the top line. So we will have to invest in inventory to build and rebuild an retail NMV. However, our focus very much is around efficient assortment. So how we manage the retail and marketplace mix, how we ensure that we've seen improved turns on our inventory and how we maintain that. And also how we keep our aged inventory at levels that we feel comfortable because, again, we've significantly reduced the proportion of our aged inventory over the last couple of years. Unknown Executive: The next question we have is, you say you can double NMV without material additional investment in infrastructure. What does that imply for incremental EBITDA margins? And is that the basis for your medium-term margin ambition? Christoph Barchewitz: Yes. So this is definitely one of the key opportunities. I think for anyone who's been following us for a longer time, we've been very clear that we have significant capacity in our infrastructure, especially in LATAM and in Southeast Asia, which we're obviously trying to leverage through growing the top line but also through shifting more to Fulfilled by and in Southeast Asia services for brand partners and sales that are not on our platform. We do expect that when -- if you were to get to the scale that is mentioned in this question, we would be definitely materially more profitable than we are today because the incremental flow-through from that NMV and that volume would help our fixed cost coverage in fulfillment but also in other aspects of the business quite materially. But equally, as you know from our guidance and the building blocks we've talked about, we are not saying that we need a couple of hundred million euro of incremental NMV to achieve normalized free cash flow. So just want to be very clear about that. We think we're on a good journey. Obviously, if we can get to the upper end of our guidance range this year, we would be closer to that. If we're at the lower end on top line and adjusted EBITDA, we'd be a bit further away from that. So I hope that gives you a bit of color of how we think about the path here. Unknown Executive: Next, we have a few questions around 2026 guidance, specifically on ANZ, is customer growth accelerating? And is that underpinning the top end of your guidance range? And then can you elaborate on the different H2 dynamics regarding NMV growth? If January and February are starting somewhat slower, should we be interpreting this as a warning sign for the year? Helen Hickman: Thank you. So let's firstly touch on Australia. So yes, we're expecting a continued positive trend in our Australia active customers and this being off the back of our focus around customer engagement. So the continued Got You Looking campaign and then the more recently launched loyalty program, Front Row, that was launched back end of the quarter 4 and that gaining momentum into 2026. With regards guidance and half 2, so our 2 largest markets do face near-term headwinds. So as I mentioned, in Australia, we're seeing weaker customer -- consumer sentiment that was driven by a recent interest rate increase and we're seeing persistent inflation. And in Brazil, we're seeing -- continue to see high interest rates and also is the uncertainty in the middle to back end of the year of the upcoming general election in Brazil. We've also got a general election in Colombia in May and the World Cup, which adds additional volatility. I would say that -- those scenarios are obviously built into our guidance of today of minus 4% to plus 4%. And obviously, it depends on both those big markets but also our rate of reduction or NMV decline and then this -- the rate of that turnaround in SEA also plays into the ability for us to achieve within that range or the pace with which we have achieved in that range. Unknown Executive: We have no further questions on the webcast. So thank you all for joining today. If you have any further questions, please reach out to the Investor Relations team directly.
Operator: Good afternoon, ladies and gentlemen, and welcome to the SCOR Q4 2025 Results Conference Call. Today's call is being recorded. There will be an opportunity to ask questions after the presentation. [Operator Instructions] At this time, I would now like to hand the call to Mr. Thomas Fossard. Please go ahead, sir. Thomas Fossard: Good afternoon, everyone, and welcome to SCOR Q4 2025 results on SCOR . I'm joined on the call today by Thierry Leger, Group CEO; and Francois de Varenne, Deputy CEO and Group CFO, as well as other Comex members. As usual, can I please ask you to consider the disclaimer on Page 2 of the presentation. And now I would like to hand over to Thierry. Thierry Leger: Thank you, Thomas, and hello, everyone, also from my end. I hope you're doing well, and I thank you for joining SCOR's Q4 earnings call today. SCOR delivered another strong quarter, finishing 2025 on a high note. The group achieved a full year net income of EUR 846 million, the highest level in SCOR's history. The return on equity reached 19.1%, both clearly exceeding group targets. All 3 businesses contributed to these excellent results, P&C, Life & Health and Investments, each one delivering quarter after quarter. Our employees executed in a disciplined way on the Forward '26 strategic plan. We fully leveraged SCOR's Tier 1 franchise, seeking for every profitable business opportunity. We have continued to grow in a strategic and diversified way. The strong results are also supported by operational excellence and the rigorous cost discipline we established in Forward '26. Accordingly, we achieved EUR 170 million of savings already after 2 years, 1 year ahead of target, allowing us to keep management expenses flat compared to 2023. Let me turn to the 2025 dividend. At year-end, our solvency ratio was 215%, an increase of 5 points compared to 2024 and at the higher end of our target range. The economic value grew by 13.7% at constant economics. The outlook is positive for our 3 businesses, thanks to satisfactory 1/1 renewals and our diversified business model. On the basis of these strong results and confident business outlook, the group's Executive Committee has decided to propose a dividend of EUR 1.9 per share to the Board of Directors for the financial year 2025, up 5.6% from EUR 1.8 per share the previous year. You may recall that SCOR introduced a new capital management framework in 2023, which includes a dividend ratchet policy. Accordingly, the proposed EUR 1.9 dividend per share will set the new floor offering an attractive yield. This demonstrates our ability to create sustainable value and to offer a resilient and predictable dividend to our shareholders. As we are entering the final year of Forward 2026, I would like to take a moment to speak about the significant progress we have made in building a future-ready platform. We have evolved on all 4 pillars, and I'm confident that we will reach 100% completion rate by the end of '26. We are already dynamically allocating capital to diversifying and profitable lines of business today, improving value creation and capital generation. In 2026, we will enhance our monitoring and decision-making platform further. We have expanded in risk partnerships, supporting growth, helping manage the group's risks exposures and generating additional fees. Future developments in this space will mainly depend on the P&C cycle and the attractiveness of new business. Our ALM has evolved from static to standardized from fixed asset durations in the past to improved cash flow matching between assets and liabilities today. Improvements in 2026 will introduce a specific ALM data platform, allowing us to move to a dynamic ALM. And finally, in tech and data, we are on a good path to complete our 6 AI flagship projects. Already in 2026, we have begun applying AI to our core processes and our underwriting. This will be a major strategic area for us in the next strategic plan. And finally, as part of operational excellence, we are enhancing processes, data quality and systems across the value chain. We expect significant simplifications and efficiency quality gains from this program. Let's turn to the renewals. In a more competitive environment, SCOR applied a disciplined underwriting approach to the January renewals. Our teams leveraged SCOR's Tier 1 franchise to seek every profitable and diversifying opportunity to be added to our portfolio. As a result, we have been able to grow our business at still attractive prices and terms overall. Growth has been achieved in our target markets and with some core clients where we profited from a flight to quality. We have faced headwinds in some specialty lines, but we remain confident in our ability to grow profitably in these lines of business in the mid and long term. To conclude, for 2026, I'm confident that we will continue to deliver a P&C combined ratio below 87% as per our 3-year strategic plan Forward '26. In addition, we should be able to continue to build buffers opportunistically. Before handing over to Francois, a few words on what is happening in the Middle East. First of all, our thoughts are with the populations in the impacted countries. We hope that the conflict can be resolved soon. For SCOR, the immediate impact in terms of claims is negligible at this point in time. War is, in general, excluded from our contracts and where war is covered, our exposures are clearly limited, monitored and priced for. Francois, over to you. François de Varenne: Thank you. Thank you very much, Thierry. Hello, everyone. I will now walk you through our Q4 results. I'm pleased to report that 2025 was an excellent year, supported by a strong performance under both IFRS and Solvency II and delivery 1 year ahead of our cash flow targets. In Q4, SCOR reported a net income of EUR 214 million, implying an annualized return on equity of 21.1%, supported by contribution of our 3 business activities. Now I will go on with more details regarding our Q4 results. Let's look first at P&C. In Q4, P&C new business CSM is positive, though modest versus the full year level, reflecting seasonality. First, Q4 new business CSM is impacted by the low number of renewal and then by the early recognition of retrocession contract, a large part of our proportional retrocession cover renewed at 1/1/2026. This shows a pattern consistent with last year. Maybe more relevant is to have a look at the full year 2025 new business growing by 9%, benefiting from growth in our preferred lines, dynamic retrocession buying with some offset by a more competitive P&C pricing environment and some margin pressure in certain inward segments. The P&C insurance revenue is down by minus 1.6% for the quarter at constant FX, mainly driven by a single-digit decline recorded by SBS. On a full year basis and adjusted for large commutation, the full year 2025 insurance revenue growth is flat, consistent with prior guidance provided in previous calls with reinsurance up 2% and SBS down by 4%. Moving on to the underlying performance of our P&C book. P&C performance is excellent again in Q4 as in Q1 and Q2 with a reported combined ratio well ahead of our Forward 2026 assumption of below 87%. Nat Cat ratio stands at 7.6% in Q4 and 6.8% year-to-date, well within the annual budget of 10%. The attritional loss ratio amounts to 74.7% in Q4 and as a reminder, also includes the additional buffer that we put aside during this last quarter of the year. Year-to-date, the attritional loss ratio stands at 76.4%, showing a slight improvement from 2024 at 77%, a very strong achievement given the additional prudence built during the year. As Thierry mentioned it, overall, this supports our confidence in delivering on our Forward 2026 assumption with a P&C combined ratio below 87%. The completion of the annual P&C year-end review confirms all lines are at best estimates and our reserve resilience has even increased. Now let's have a look at Life & Health. Life & Health generated a new business CSM of EUR 170 million in Q4. This is mainly driven by protection and longevity. This is higher than in the previous quarter of the year, but related to quarterly volatility. The full year Life & Health new business CSM stands at EUR 464 million, well above our EUR 0.4 billion new business CSM annual assumption. Life & Health delivered an insurance service result of EUR 115 million in Q4 and EUR 450 million for the full year, comfortably ahead of our guidance of around EUR 0.4 billion per annum. This performance highlights the resilience of the underlying business. On experience variance, we mentioned it in the past, it typically takes at least 2 years before trends can be properly assessed. With 4 quarters of data under IFRS, it remains premature to claim for any victory after the 2024 actuarial review, but the observed positive experience variance is very encouraging. The loss component that you see this quarter relates to a limited number of existing underperforming contracts. After a slight deterioration observed over the first 9 months of 2025, we have taken on this stock of contract prudent action, including strengthening reserves when appropriate. We remain comfortable with reserve levels at best estimate today. As such, this development is fully understood and not a concern for us. The Life & Health CSM is slightly down on a reporting basis at EUR 4.9 billion, but up 6% at constant FX. Before moving to investments, let's have a look to our group reserve resilience. Throughout 2025, we increased P&C reserve prudence as part of our opportunistic buffer strategy, reaching a level above what we initially targeted by the end of 2026 when we presented Forward 2026 in September 2023. This was enabled, of course, by strong underlying P&C performance. Combined with Life & Health, this increased IFRS this increased group IFRS resilience translates into an increase in the group risk adjustment confidence level to 75.5% to 82.5%. As the chart shows, this is another area where SCOR has made significant progress since 2023. Going forward, in 2026, we intend to maintain our opportunistic buffer strategy, mostly on P&C. On investments, performance remains strong. Return on invested assets is at 3.6% in the quarter, generating income of EUR 209 million. This reflects a regular income yield of 3.8%, supported by dividend received from our private equity and infrastructure fund bucket. The credit portfolio remains very high quality and expected credit losses are broadly unchanged during the quarter. Turning to economic value. Economic value increased 13.7% at constant economics over the full year, reflecting the strong business performance across P&C and Life & Health and above the Forward 2026 target of 9% per annum over the plan. Economic value per share stands at EUR 48, broadly stable versus last year. Financial leverage increased to 25.3% from 24.5% at the end of 2025, following the successful issuance of a new Tier 2 debt tranche in September. As a reminder, we are proactively anticipating the refinancing of corporate debt, and we aim to provide credit investors with larger and more liquid tranches. Looking ahead to 2026, I would highlight the potential repayment of EUR 283 million related to the remaining EUR 600 million Tier 2 note, which has its first call date on the 8th of June 2026. Finally, on solvency. The group solvency ratio stands at 215%, up 5 percentage points versus 2024 and Q3 2025, reflecting satisfactory net operating capital generation during 2025. At the same time, during the year, we made further progress in terms of ALM, as mentioned by Thierry, which resulted in an improvement in the solvency ratio sensitivity. I'm personally proud of what we have accomplished over the past 2 years on this topic that is dear to me. Overall, based on the quality of our results over the full year, we remain confident about achieving our Forward 2026 objectives in the final year of execution of this plan. With this, I will hand over to Thomas, and we will start the Q&A session. Thomas Fossard: Thank you very much, Francois. On Page 23, you will find the forthcoming scheduled events. With that, we can now move to the Q&A session. Can I remind you to please limit yourself to 2 questions each. Operator, we can take the first question. Operator: [Operator Instructions] We do have our first question from the line of Michael Huttner with Berenberg. Michael Huttner: It's lovely results. So growth and the legal case. So growth, can you say a little bit more because when I speak to Thomas, he always says Thierry thinks that SCOR is underrepresented in the market in terms of share of wallet or whatever. So any feel for how you picture the potential growth of the franchise would be hugely helpful because it's nice to have margins, but growth is nice, too. And then on the legal case, I think the -- there's one with the -- I can't remember the name, the arbitration. And I just wondered what the status is, whether we could expect anything and anything -- I know you can't talk too much, but maybe you've got something new. Thierry Leger: Michael, thank you. I will take your first question. Francois will take your second one. You're absolutely right. I think that the Tier 1 franchise of SCOR, together with the relatively smaller market share we have globally provides SCOR with an opportunity. And so the way we are looking at it is twofold. First of all, it allows us more than other companies to find opportunities that fit our targets business and target business for us must be the business that is profitable and diversifying. So that's critical for us. So we have more opportunity to grow into this or find opportunities in this segment. And as we have our teams out there every day, always using -- leveraging this franchise, we think, therefore, it should not just be margins. It should also come with some growth. Now clearly, the market is turning softer. And I just want to be clear with everyone, whilst I think we do have that competitive advantage and whilst I'm determined to leave no opportunity, no stone unturned, we will give quality or underwriting priority, and therefore, growth will be an outcome and not a target. I do believe, however, in the current environment, as we have demonstrated in January, we've been able to grow. And it shows exactly the point I'm trying to make that we should have a bit more chances than others. François de Varenne: On your second question, Michael, I'm a little bit like you. I don't remember the name of the case. But I would say that the arbitration process now is closed. So we are waiting now the decision of the panel, which is expected to be due now, I would say, mid-2026 or by the summer. I just remind you on this topic that our provision on all major litigation and arbitration are our best estimate at the end of the year, both in our IFRS accounts and in the solvency ratio. Thomas Fossard: Thank you, Michael. Can we take the next question, please? Operator: The next question comes from the line of Andrew Baker with Goldman Sachs. Andrew Baker: First one on Solvency II. I guess if I look at the underlying capital generation, less the operating capital deployment and the proposed dividend, it was sort of 8 points positive for 2025, which was quite a bit ahead of what you were guiding for. So I guess as we think about 2026, specifically, how would you expect the underlying OCG and the operating capital deployment to play out? And then can you just remind me how we should be thinking about this between quarters, so seasonality between quarters, if possible? And then secondly, can you just help me understand, I think at the January renewals call, you talked about a stable nat cat budget guidance of about 10 percentage points for the year. If I look at your -- you grew premium in cat in a softening market. So presumably, your exposure growth was significantly higher than even the sort of double-digit premium growth you were showing. So how are you able to maintain that flat cat budget in percentage terms? François de Varenne: Thank you, Andrew. I will take the first question, and Jean-Paul will take the second one. So on your first question on net operating capital generation, of course, we are pleased with the profitability of our business. It reflects, as we mentioned already by Thierry and I a few minutes ago, it reflects both the strong underlying performance of our P&C portfolio and further supported by, I would say, better-than-expected Nat Cat claims during the year and also a solid contribution from the invested assets portfolio. The good news this quarter and for 2025 is coming from capital deployment, as you saw it on the slide. As I explained during many road shows, the operating capital deployment has 2 components. One is the capital needs on the in-force portfolio, and then there is also the capital deployment on new business. So it's a complex mixture of the 2 effects. Capital needs usually on our in-force portfolio depends mainly on, I would say, reserve development and how the business that we have written last year come on the balance sheet. And capital deployment, that's the other leg on new business depends, of course, on volume, but also on capital intensity and diversification per line of business. What we see in 2025 is the effect of our diversified growth strategy in both business units, by the way, leading to a lower capital deployment than last year. On the Life side, what we see mostly in 2025, that's the effect of the announcement of the new strategy that we updated in December 2024, with higher profitability on protection and diversifying in longevity. And on the P&C side, that's the other leg of the component, I would say, of the capital deployment that we see mostly this year. So on the P&C side, we see a bit of reduction in our capital -- on our reserve capital and overall also a better diversification. So now I mean, to answer more precisely to your question, what should we expect for 2026. We will revise today a little bit upward our expectation. But let's be precise on what we mean by net capital generation. So for 2026, our expectation is that what I call the double net, the net-net operating capital generation, so which means net of capital deployment and net of the dividend accrual, which mentioned by Thierry now as Rachet at EUR 1.9. So this net-net operating capital generation is expected to be in a range of 3 to 5 points of solvency ratio. Jean-Paul Conoscente: And Andrew, this is Jean-Paul. I'll answer your second question on the Cat ratio. So you're correct that on a gross basis, we increased our exposures at 1/1. And the way we manage our Cat ratio is through the optimization on the ratio side. So our Cat ratio is on a net basis, we have a plan going into the renewals and able to deliver on this plan. We buy our retrocession in accordance, and that is why we're still confident of staying within the cat ratio budget of 10%. And as I mentioned during the renewals, if you look at individual perils, for example, in the U.S., we expect the females to go up compared to last year. On a number of perils, we expect the PMLs to go down compared to last year. But overall, the cat ratio will stay within the 10% budget. Thomas Fossard: Thank you. Can we move to the next question, please? Operator: The next question comes from the line of Shanti Kang with Bank of America. Shanti Kang: So just on the P&C opportunistic buffer building that you said will carry on in 2026. Do you think you could give us a kind of quantum on how much more buffer building will take place? Do you think maybe year-on-year, that will be higher or lower? And then perhaps linking into that, the direction of that risk adjustment percentile, the increased upper end to 82.5% is a good step. How are you thinking about the direction of that going forward? Should we expect that to increase further, for example? François de Varenne: Thank you, Shanti, for your 2 questions. So on the P&C buffer, so we mentioned, you remember last year during the annual call that we were significantly above the initial target of EUR 300 million. We mentioned in Q3 a quarter ago that we already put aside more in 2025 than in 2024. So you can imagine that we are above the double of the initial target today. So which means that we are really confident, that's what I mentioned in my speech at the beginning. We are really confident in the fact that we can really still continue subject, of course, to potential claims in the future, but we can really still put aside in 2026, a significant amount of buffer. It's on a full year basis, you can understand it's a few points of the combined ratio. So despite what we said during the 1/1 P&C renewal call with, I would say, an expected impact of 2 points on the loss ratio. We can absorb the impact over the next 2 years of this slight erosion of the margin by slightly reducing the buffer, but still this should remain quite significant. So what can we imagine that's your second question, the impact on the percentile. So you know that we publish only the group percentile. We don't give the split between P&C and Life & Health. I would say it's difficult to predict. It will depend a little bit on the amount of buffer. So it will depend on the cat ratio and the attritional loss ratio. And for me, it's difficult to make a bet really on what will happen. But if we can still put aside some buffer, it should increase a little bit. But again, take into account that at group level, so we could have also mix effect coming from the rest of the group. Thomas Fossard: Can we move to the next question, please? Operator: The next question comes from the line of Will Hardcastle with UBS. William Hardcastle: First of all, on the call option, can you give us an insight perhaps into what would make you use the option? I think you've got up until the summer should you remain trading above the strike? And how can you help us think about this both tactically and strategically? Second of all, just thinking about the onerous contract in Life & Health, you talked about contracts, sorry. What exactly did these relate to, which underperforming contracts? Is there a specific line or a specific region that these were impacting? Thierry Leger: I will take your first question. So on the call option, as we said already in the past, -- the option is considered in the money when the price reaches or exceeds EUR 28. The call option will expire in June this year. So we still have a bit of time ahead to take a decision. So I just wanted you to be aware, right? But obviously, we are monitoring this. We are monitoring the group situation. Everything necessary will be taken into account, but we have more time for a decision. François de Varenne: On your second question, Will, so again, I reiterate what I say. So that's really linked to the fact that we observed in Q1, minus EUR 6 million of loss component, minus EUR 10 million in Q2, minus EUR 20 million in Q3. So we decided to take action on this portfolio, which is nonperforming. So the adjustment is really linked to the year-end review. We -- day 1 loss on new business remain really immaterial, nonmaterial in Q4. So the EUR 42 million is driven, I would say, by a combination of both volume updates and assumption refinements. We continue, of course, to monitor this portfolio very, very closely, and we will adjust reserve when appropriate and if needed in the future. Today, we are at best estimate. So we are confident on the fact that this book should be okay in the future. On geography, I would say, I will not surprise you. I would say a significant part of the adjustment has been made on our Israelian portfolio, which is in runoff over many years, and that significantly impacted the book during the 2024 review. Thomas Fossard: Can we take the next question, please? Operator: The next question comes from the line of Kamran Hossain with JPMorgan. Kamran Hossain: Two questions from me. The first one is just on dividend trajectory from here. Clearly, a very welcome increase this year after a number of years of maybe keeping it flat. You pointed to kind of better capital generation than you targeted when you set out the initial guidance. Do you think it's possible for the dividend to step up a little bit further as you get into the end of '26? And the second question is just on the Life book. It sounds like you're very pleased with the results you've seen in Life and fast forward kind of 15 months, things seem to be going pretty well there. At what stage do you think it will be possible to increase the EUR 400 million insurance service result in Life? So those would be my 2. And just a really quick word to say, Francois, thanks for your help over the years. Thierry Leger: Kamran, I'll take your first question on the dividend. So I just want to remind everyone of a few things. So first of all, we -- as you pointed out, with a good satisfactory solvency ratio in the upper end of our range at 215% plus the growth in our economic value plus the positive outlook, actually, we felt we are in a good position to increase the dividend. If we look ahead, I guess we have to maybe remember ourselves that this has been the first increase after several years of stability in the dividend where we haven't been able to increase it. That's why we think this is an important first step for us. And I really have to defer to the future on the one side regarding '26, but in particular, to the new strategic plan for better indications on where the dividend journey will go. Just so much, we have now for several months, started to talk a lot about capital generation and how important it is to us. It's one of the core elements we are looking at as a team. And therefore, we are really satisfied with what we have seen so far, and we will put a lot of emphasis on capital generation in '26 and in the next strategic plan. François de Varenne: Thank you, Kamran, for your kind words. On the ISR, if I understand clearly, your question is what could be the guidance? We won't provide a guidance during this call on 2026. I would say if you look at the ISR outcome in 2022 on the Life book, it's the combination of different items. We have a stronger-than-expected amortization of the CSM. We have a positive -- I'm commenting on the full year basis. We have a positive expense variance. We have this impact -- negative impact on onerous contract, mainly coming from year-end review on nonperforming contracts, and we consider today the portfolio is at best estimate. So we prefer to repeat again that only 4 quarters following our Life finance review of 2024 will require at least 4 quarters in addition to what we see today to claim for the victory. Having said this, of course, Thierry and I and Philippe as well, we are very satisfied by the performance of the book, which underscores the resilience and the robustness of underlying business. So we are very satisfied by Q4. It should give you an indication of what we have in mind. Thomas Fossard: Thank you, Kamran. Can we move to the next question, please? Operator: The next question comes from the line of James Shuck with Citi. James Shuck: I just had a couple of questions, please. Just on the capital generation again. I mean, obviously, it was much stronger in 2025, and you've given some helpful guidance for '26 as well. I mean that's looking like kind of 16 points or so -- 11 to 13 points of CapGen over the 2 years, '25 and '26, net of all of the things that you mentioned earlier. I guess the CMD, you were indicating 2 to 4 points. So my question is really kind of what has actually changed? And it's great to see the numbers come through. But is it increased use of retro? Is it slower growth, less capital deployment? Just kind of keen to understand why there's such a big delta to what you're indicating at the CMD versus what we're looking at now. And then secondly, just on the risk of focusing on a negative thing. But I was just interested to understand more about the high level of man-made losses in Q4. This is something that came through in Q3 as well. So I just want to understand if there's any trend there at all. Jean-Paul Conoscente: Yes. The point on capital generation, I mean, you see here the capital deployment really consists of the components that Francois has elaborated. So first, it's really our development of the in-force together with the new business of last year, how this comes on the balance sheet. And what we have seen, in particular, the situation on the Life side is quite stable. So we didn't use a lot of additional capital for the in-force combined. And on the P&C side, we saw even a slight drop of the capital consumption of the in-force. And together with the new business that we bring on the -- in the solvency ratio in the SCR for this year, which is really showing the diversified business strategy that we have outlined, we saw now a reduction of the capital deployment to EUR 160 million. In this mix, you have a bit of diversification also driven by the longevity that we have written in Q4. Thierry Leger: I think, James, that our efforts, right, to focus on capital generation, but also on capital deployment, we have always said diversifying lines to actually get a better mix, a better diversified mix of new business on the books that slowly also get on the books actually and create the reserves that we have. I think this is all going in the right direction. And we see now the numbers slowly emerge. James Shuck: Do you mind if I just quickly follow up on that? Because I can understand how the numbers work to get you to what the numbers are. But my question is really kind of -- it's such a big difference from what you were indicating before. So how was it different to what you were expecting at that time is really my question. François de Varenne: Yes. So I think, I mean, the underlying explanation, I mean, you have it. I mean that's the dynamic on the release on the in-force or capital deployment on the in-force and capital deployment on new business. When we said that we revised a little bit the net-net OCG expectation or assumption for 2026 to 3.5. The EUR 160 million that you see on Slide 21, which is the additional capital deployment through the SCR, it's mostly a good guy of 4 points versus 2024 and we just take the mean or the average of 2 points to lift a little bit upward our expectation. Jean-Paul Conoscente: And James, I'll take your second question. So I think you may have misunderstood. The Q4 environment was heavy man-made losses, but actually man-made losses to score remain in normal. As you mentioned, Q3 was higher, but Q2 was lower. So you have this quarter volatility, which is normal. But if you look across the year, our man-made losses are, I'd say, within the normal expectation, and that's reflected in the quite good attritional loss ratio we produced for the year. James Shuck: Got it. Okay. And best of luck for the future. François de Varenne: Thank you very much. Thomas Fossard: Can we take the next question, please? Operator: The next question comes from the line of Vinit Malhotra with Mediobanca. Vinit Malhotra: Congratulations, Francois as well on your next and all the best for next endeavors. From my side, I mean, there's one topic on the P&C and apologies if it's really 2 sub-questions there. But if you think that the renewals last year were about 7% or so growth, you see 4-point something this year. You see the very strong alternative solutions. I know the SBS is a bit weaker. But -- and I know you said growth is an outcome, not a target. But would you say that the original 4% to 6% target, I think it was, would you say that you're going to be a little bit in the middle of that range? Or would you say where -- given the data we have and then what you probably expect, what would you still indicate to us? And just quickly, just following up again, the 74.7%, which is a very strong attritional level, is that -- do you think some exceptional things there happening? Is it because E&Cs are still helping out? Or is that something that we can think of as likely the starting point? Is it some more commentary on that would be very useful. Jean-Paul Conoscente: Vinit. So regarding your first question, it's still relatively early in the year. And the final outcome of the P&C ISR growth will largely depend on the upcoming renewals also later in 2026. As Thierry mentioned, our focus remains firmly on improving the profitability and quality of the portfolio rather than pursuing volume growth. And accordingly, insurance revenue growth this year will be driven by the availability of attractive and profitable opportunities in the market. So we're not going to provide any indication at this stage as I think it's a bit too early. As you said, the renewals at January 1 on the treaty side were quite positive. We're still earning through the portfolio of 2025 as well in the first and second quarter, especially. And then SBS, the cycle on the insurance side is also quite difficult. So all these factors put together makes it a little bit too early to give you any indication. On your second question on attritional losses, I think, as I mentioned before, there's nothing -- there's no exceptional item in this. It's really the strength of the underlying portfolio that's coming through. You have, as usual, every quarter, some volatility. But I would say the attritional that we're producing for the full year 2025 is pretty much in line with our expectation of the performance of the portfolio. Thierry Leger: And Vinit, just to remind everyone, of course, this attritional loss ratio is including the buffers. And it's also clear that if the renewals are done at slightly worsening trends, right, this will impact, as Francois said before, the buffers first, right? So that means that we are relatively confident still in being able to get the performance around this attritional loss. Thomas Fossard: Can we move to the next question, please? Operator: The next question comes from the line of Ivan Bokhmat with Barclays. Ivan Bokhmat: I've got 2 relatively small questions, please. The first one, thinking into 2026 and '27, there is a solvency reform ongoing. I was just wondering if you could give your expectations of what impact SCOR would see? And the second question, quite technical. As we look at the cash generation from your Life business, it continued to be negative in the second half of 2025. So I was just wondering if you could maybe give some color, is it related to the business mix, like financial solutions growth? Or is there anything that could help us? François de Varenne: So we'll take -- Ivan, I will take your first question. So we don't change what we said on the impact of the EPA reform to be implemented in 2027. We're waiting, by the way, the final guidelines for the implementation of the reform. [ FCO ], we mentioned it, it's mostly an impact through the risk margin and the cost of capital. So we maintain what we said. We will provide probably at the end of the year with publication of the strategic plan an update on this. But we maintain that we expect a good guide of 10 to 15 points of solvency ratio, including the fact that we're going to lose the benefit of the contingent capital facility we've got in the balance sheet. On the second question, Philippe? Philipp Rüede: Yes. On the Life & Health cash flow, I mean, I think better to look at this on a full year basis rather than quarterly. And we remain committed with our goal for forward 2026. And we see improvements underlying it, but still quite some volatility. Thomas Fossard: Thank you, Ivan. Can we move to the next question, please? Operator: The next question comes from the line of Iain Pearce with BNP Paribas. Iain Pearce: Just coming back to this capital generation point. I'm just trying to understand what you're assuming in the 3 to 5 percentage point guidance for next year, particularly around the operating capital deployment. Should we be using this level or the 2025 level of operating capital deployment as a relatively normal level of operating capital deployment? I'm just trying to understand, just clarify that move from the '24 capital deployment to the '25 level. Is it effectively the difference being capital deployment on the in-force was quite high last year and was relatively small this year. And if you're not deploying capital on the in-force going forward, this level is a good level for the 2026 capital deployment. François de Varenne: Thank you, Iain. So again, I mean, you remember, I mean, we mentioned initially in the plan that we had an ambition of, again, net-net operating capital generation of 1 to 2 points during the plan. So net-net means operating capital generation coming from the 3 business lines, so P&C, Life Finance and Investments, net of capital deployment and net of the accrued dividend in the solvency ratio. So this revised expectation or assumption for 2026 to 3 to 5 points is mostly due to the fact that, again, this is the good guy that we see in Q4 on the operating capital deployment. We think as explained -- I explained a few minutes ago and reiterated by F -- we believe, I mean, the observed impact in 2025 is 4 points of solvency ratio, and we take, I would say, half of the good guy in our assumption for 2026. So it's a little bit a new regime that we start to see here as developed by Thierry. We have been working hard on diversifying the portfolio, growing on diversifying line of business in P&C, and we start to see the benefit of the updated Life strategy of December 2024, especially with longevity transaction. We mentioned in the past that we used to have a strong pipeline on longevity. Now we see the traction. Thomas Fossard: Any follow-up Iain? No, that's okay. Okay. Good. François de Varenne: Iain , is already taking... Thomas Fossard: Okay. Thanks for your question. Can we move to the next one, please. Operator: The next question comes from the line of Benoit Valleaux with ODDO BHF. Benoit Valleaux: And first of all, I would like to warmly thank Francois for your strong support to investors, analysts and the financial community in general. And I wish you all the best in your new life. I have 2 questions, maybe the first one related to your rating. You have a better expected solvency margin, strong capitalization, strong underlying profitability, notably in P&C. So I know that rating is not in your hands. But my question is more to know that if your outlook turned positive, for example, this year and maybe with a potential rating upgrade next year, will it have or not for you a positive impact in a soft market in terms of underwriting or no impact really to be expected on that front. And my second question is regarding tax rate, which has been slightly higher maybe than expected in Q4, but still at a good level at 28% for full year '25. Just like to know if you maintain your 30% assumption for '26 -- and I know it's maybe a bit too early, but you made this announcement regarding your business in Ireland beginning of this year. So do you have a view on what will be a potential level of tax rate in '27. Thierry Leger: Benoit, I will take your first question. So regarding ratings. So it's, I guess, clear to everyone that we are not setting the rating. But we do note a few things still. So first of all, as you know, there is 1 out of 4 major rating companies who put us with a positive outlook, which we see as a positive sign for future developments. When we look at -- and we have been consistently communicating on this. When we look at just the capital side with the different rating agencies, we have always been in a very good spot. So the issue we were facing or the challenges from the rating agencies was much more with regard to consistency of our results. Do we have the franchise? Can we actually turn this into profit and capital generation and so on. So that was the challenge we faced. -- takes a moment to regain that confidence. But again, 1 out of 5 has moved positive. and my personal expectation is that others will follow in the next 12, 18 months. But again, I do not set the agenda for this. Impact on business, when it went down, we were quite clear that this did not have an impact on our business. However, going forward, I do actually expect this to have a positive impact because as we want to utilize our Tier 1 franchise better, gaining market share, clients will see a growing contribution from SCOR. And in that regard, an upgrade would actually really help us to gain additional market share tomorrow again if profitability permits that. So this asymmetrical view, I hope I have been able to explain it to you. Again, when it went down, we didn't really lose business, but now on the way up, we will count on it to grow our market share. François de Varenne: Benoit, thank you very much for your words, and thank you for the, I would say, the rich discussions we had together over the last few years, not only when I was CFO, but before as well. So on the tax strategy, I just remind you a little bit what we initiated with Thierry in 2023. remember, we had a significant impairment of our stock of activated on the balance sheet in 2022. So the first priority was to protect what is already activated on the balance sheet to protect them against new and additional impairment in 2023 and after. So that's -- we initiated the strategy. The idea is really to relocate profit from the rest of the world in France. It took 2.5 years to do this. It's done. So we had 2 waves in '24 and in '25 of full restructuring of the internal retrocession structure of the group to move from stop loss to quota share, so to create profit assets and cash as well in Paris. You saw it probably in January, we published a press release. So we redomiciliated one of our 2 Irish platforms, retro -- internal retrocession platform from Dublin to Paris. Now this entity is French based in Paris and regulated by the ACPR, so which means that the profit of this entity is now consolidated in the French tax perimeter -- so which means that I think it's protected now. I mean what is activated is really protected against any potential impairment. And I think now the next step is to convince our auditors to activate what is not activated, and that's roughly EUR 250 million. And I'm sure Philippe will convince our auditors to do it as quickly as possible. On your question on the 30%, so we had this, I would say, assumption of 30% during the plan to take into account that we could have some friction during the 3 years, I mean, with this strategy to redomiciate profit in France. You know that we changed something I mentioned in previous call, but we changed a little bit the way we compute the effective tax rate in Q1, Q2 and Q3, which is a little bit more normative compared to the previous year to avoid the volatility in Q1 and Q2 and Q3 -- and we adjust a lot to actuals in Q4. So don't look at the -- the effective tax rate of Q4, but look at the effective tax rate over the full year, that's a good indication, 28%. I think it's a good indication for the future. Of course, everything is linked as well to the profitability of the business. So we have, as you see it and as mentioned many times during this call, we have an excellent performance of the P&C book. So this performance everywhere in the world is, in a way, repatriated in the French tax perimeter today. So it depends as well, of course, on the future profitability of the book. Thomas Fossard: Can we move to the next question and last question. Operator: The next question comes from the line of Ben Cohen with RBC. Benjamin Cohen: I just had 2 smaller things, apologies. I just wanted to ask, is there more to come through on the expense line in terms of savings in the P&C division after you sort of ahead of targets? And the second question was just the run rate of claims discount benefit in the combined ratio. Is that a reasonable outlook for full year '26? François de Varenne: Thank you, Ben. I will take this last question of my career as CFO. So just to remind you, we manage expenses at group level. Thierry commented in his introduction, the delivery of a significant amount of savings since the beginning of the plan, so EUR 170 million. and you know that we are committed to maintain stable expenses. So that's the way we manage internal expenses. On P&C, it's a one-off. What you see in Q4 is really a one-off that reduced the expenses ratio to 6%. Again, if you look at 2025, the expense ratio stands at 7.4%, which remains slightly below management long-term expectation, and I prefer today to maintain the guidance of 7% to 8%. Thierry Leger: So usually, this would be the moment where Thomas would thank everyone. But given the exceptional circumstances today around Francois's departure by the end of this week, I thought I just want to add a few words before closing this call. So obviously, as I said it, as everyone knows, this is Francois's last quarterly closing, and I wanted to express my sincere gratitude for his significant contribution over the past 3 years as Group CFO. Francois has been my CFO since my beginning. We have gone through difficult times, good times as well, fortunately. Francois has played a pivotal role from the beginning in setting the Forward '26 strategy, but also in establishing a professional and strategic finance function. So Francois may thanks for all of this. Now we all know in life, everything has an end. And therefore, I'm also very pleased to have in Philippe a successor, a talent who can ensure a seamless handover. So Philippe, also to you, thanks for accepting such a challenging role, and I wish you all the best, and I look forward to working with you. I see that Francois is sitting like on needles. I still not close the call. François de Varenne: Thank you. There is a little bit of emotion. So thank you, Thierry, for the kind words, which I really appreciate. It has been a real pleasure to work with you over the last 3 years. SCOR is in good hands with you and your comments. Philippe? A lot of success in your role. I'm sure you will deliver. Just a few final words for me. When I accepted your offer, Thierry 3 years ago in June 2023, I had 4 priorities in mind. First one was to strengthen the resilience of our balance sheet and reserves. The second priority for me was to identify your specific concern you as investor and analysts on SCOR, so that we could take decisive action to reduce progressively our implied cost of equity. My third priority was to communicate with you as transparently as possible. And my last priority was to restore your trust in SCOR. I want to tell to Thomas, it's the day to say thank you to everyone. I want to tell Thomas how much I enjoyed working with him. Thomas, you do a fabulous job. It was a pleasure as well to work with you every day. Your consistently positive energy fascinates me, and it was really a source of pleasure even in our situation in 2024. Learning and continuing to learn is one of the major driving forces in my life. Thanks to you, all analysts and all investors, thanks to your questions, thanks to your comments. I've learned a lot during the last 3 years. So thank you very much for the quality of our discussion, our relationship and for your trust. Thomas Fossard: Thank you very much, everyone. And I think that on this good note, we can close definitively this call today. Thank you, and speak to you soon. Operator: This does conclude today's call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.
Operator: Good afternoon, everyone, and thank you for standing by. Welcome to Evolus' Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference call is being recorded and webcast live. [Operator Instructions] I'd like to turn the conference call over to Nareg Sagherian, Vice President and Head of Global Investor Relations and Corporate Communications. Please go ahead. Nareg Sagherian: Thank you, operator, and welcome to everyone joining us on today's call to review Evolus' Fourth quarter and full year 2025 financial results. Our fourth quarter and full year 2025 press release is now on our website at evolus.com. With me today are David Moatazedi, President and Chief Executive Officer; and Tatjana Mitchell, Chief Financial Officer. Rui Avelar, Chief Medical Officer and Head of R&D, is also with us for the Q&A portion of the call. Today's call will include forward-looking statements. Actual results may differ materially due to risks and uncertainties outlined in our earnings press release and SEC filings. These forward-looking statements are based on current assumptions, and we undertake no obligation to update them. Additionally, we will discuss certain non-GAAP financial measures. These measures should be considered in addition to and not as a substitute for our GAAP results. A reconciliation of GAAP to non-GAAP measures is included in today's earnings release. As a reminder, our earnings release and SEC filings are available on the SEC's website and on our Investor Relations website. Following the conclusion of today's call, a replay will be available on our website at investors.evolus.com. With that, I'll turn the call over to our CEO, David Moatazedi. David Moatazedi: Thank you, Nareg. Good afternoon, everyone. Before reviewing our 2025 performance and outlining our objectives for 2026, I would like to take a step back and provide a broader perspective around our performance beauty strategy. As we enter our seventh year as a commercial stage company, I'm proud of the fact that we are redefining the category through a beauty first lens. We are the first company with a neurotoxin dedicated exclusively to cash pay aesthetic and free from reimbursement dynamics. This approach enables deeper alignment with our customers and allows us to build differentiated long-term partnerships with aesthetic practices, partnerships that are increasingly translating into measurable share gains. The key piece of that strategy is Evolux, the first program in the industry that rewards practices with co-branded media investment tied to purchase volumes. As our customers grow with us, we reinvest to drive awareness for both our products and their practices, strengthening the partnership and reinforcing shared success. We've also focused on increasing patient retention through Evolus Rewards the first SMS-based loyalty program in aesthetics and the only consumer loyalty program co-branded with clinics. The program is designed to drive repeat visits and build lasting relationships between practices and patients. Over the past 6 years, Evolus Rewards has grown to more than 1.4 million treated patients, reinforcing brand preference and contributing to sustained share expansion. In the fourth quarter, we successfully piloted our new portfolio growth rebates, which officially launched at our national sales meeting in January. This growth rebate is designed to reward practices for growing with Evolus across our expanding portfolio of products, further increasing our strategic importance within each account and strengthening our competitive position. Education remains another cornerstone of our model. We have built a world-class medical education platform with broad reach and comprehensive curriculum that includes CME programs, live broadcast, cadaver labs, preceptor ships and small group hands-on trainings. In 2025 alone, we provided hands-on trainings to over 14,000 clinicians directly in their clinics. This year, we are elevating that platform further and we'll be hosting top-tier clinicians with new flagship training events at Evolus' headquarters. These immersive 2-day training will be focused on anatomy, clinical training and business support for high-volume practices. Most importantly, we continue to build a world-class portfolio of differentiated products. Jeuveau, our flagship neurotoxin remains a strong and growing product. We continue to advance the science, supporting its unique precision profile and differentiation, including an independent study published last year in JAMA demonstrating fast onset, the highest peak effect and the longest duration of the toxin study. This represents the second head-to-head study validating Jeuveau's advantages. Clinicians who trial the product recognize the differentiation which has supported our capture of over 14% U.S. market share to date. We continued to gain share in 2025, even in a declining procedural environment, demonstrating the resilience and competitiveness of the brand. In 2025, we also introduced the first new HA technology in over a decade with Evolysse. Our first 2 formulations are now in the market, and we expect FDA approval of Evolysse Sculpt, our flagship mid-face volume product in the fourth quarter. Our proprietary Cold-X Technology creates a natural HA formulation, which successfully demonstrated a longer duration of effect against one of the market-leading brands. Customers are reporting strong satisfaction, noting that gel's efficiency and for giving depth of placement, allowing injectors to achieve a more subtle natural-looking results. To date, more than 3,000 customers have purchased Evolysse, expanding our presence within accounts and increasing our overall share of injectable spend. As we enter the second phase of launch in the second quarter of 2026, we will be initiating a large sampling and experience program, which we expect to broaden the adoption of Evolysse. Internationally, we also continue to make significant progress. Last year, we entered France with our partner, Symatese, transitioned Germany to a direct model in the fourth quarter and delivered strong growth across existing markets. As a result, we now operate in 9 countries outside the United States with international revenue nearly doubling year-over-year. In key markets such as the U.K., we are approaching double-digit market share, reflecting the strength of our positioning outside the U.S. Turning to operating performance. 2025 was a unique year for the aesthetics market and only the third time in 25 years that U.S. injectable procedural volumes declined. Despite that backdrop, Evolus delivered 12% full year revenue growth marking our sixth consecutive year of double-digit growth. We exited the year on an accelerating growth rate of 14% in the fourth quarter, supported by top line growth across all product lines in the U.S. with Jeuveau and Evolysse as well as our international business. Midyear, we made the right decision to rebate our expense structure and align the organization for durable, profitable growth. The benefits of these actions were evident in the second half of the year where we achieved meaningful operating leverage. That structural reset and expense base positions us for 2026, where we expect to deliver on our revenue guidance, while growing non-GAAP operating expenses at a modest 0% to 3%, and expanding operating leverage to result in a low to mid-single-digit adjusted EBITDA margin. Our strategy remains consistent. We are building a global performance beauty company centered on differentiated brands for the cash pay consumer. In 2026, we look forward to introducing Estyme in Europe in the second quarter, expect FDA approval to Evolysse Sculpt in the fourth quarter and continue actively engaging in pipeline opportunities. We are deeply committed to driving profitable growth going forward and continue to target revenue between $450 million and $500 million, with 13% to 15% adjusted EBITDA margins in 2028. This outlook is meaningfully supported by the strengthening U.S. Jeuveau share to the mid-teens, scaling U.S. Evolysse share into the high single digits and the international business growing to more than 15% of total revenue. With that, I'll turn it over to Tatjana to walk through the financial details. Tatjana Mitchell: Thank you, David. Before walking through the fourth quarter and full year results, I want to recognize our commercial and operating teams for their execution throughout 2025. It was a year that required flexibility and discipline as we navigated a challenging U.S. aesthetic market. The organization responded with clear prioritization, thoughtful cost management and a focused allocation of resources towards the highest return initiatives. That discipline allowed us to deliver fourth quarter profitability and positions us well for sustainable annual profitability beginning in 2026. I will now review the financial results. Global net revenue for the fourth quarter was $90.3 million, representing 14% growth over the fourth quarter of 2024. This included $83.1 million of global Jeuveau revenue and $7.2 million from Evolysse. For the full year, global net revenue was $297.2 million up 12% compared to 2024, marking our sixth consecutive year of double-digit growth. International revenue represented approximately 8% of 2025 global revenues, increasing from 5% in 2024. This included product revenue from Europe and Australia and service revenue from our distributor relationship in Canada. We are seeing continued momentum in our international markets, including approaching double-digit market share of toxin in the U.K., our most mature markets. International revenue is expected to become a more meaningful contributor over time as we prepare for the European launch of Estyme in the first half of 2026 and continue to grow our toxin share in existing markets. Turning to gross margin. Reported gross margin for the fourth quarter was approximately 66% and adjusted gross margin, which excludes the amortization of intangibles, was approximately 67%. For the full year, reported gross margin was approximately 66% and adjusted gross margin was approximately 67%. With respect to tariffs, based on announcements to date, Jeuveau, a biologic is not currently impacted by tariffs. Following the recent U.S. Supreme Court decision and subsequent executive actions, Evolysse, which is classified as a medical device and imported from France is currently subject to a 10% tariff. The administration has also communicated the possibility of an additional 5% tariff, though it has not been formally implemented. Our fiscal 2025 results reflect the previous 15% tariff and our 2026 guidance also reflects a 15% tariff assumption. We are evaluating the potential recovery of previously paid tariffs. We also continue to monitor policy developments and will evaluate any potential impact pending further guidance from the administration. Moving now to operating expenses. GAAP operating expenses for the fourth quarter were $55.1 million, down from $57.3 million in the third quarter. As a note on this quarter-over-quarter decrease, we realized the $4.5 million benefit driven by the revaluation of the contingent royalty obligation. Non-GAAP operating expenses for the fourth quarter were $53 million compared to $49.7 million in the third quarter, which includes the timing of costs related to our customer event that shifted from the third quarter to the fourth quarter. For the full year 2025, GAAP operating expenses were $229.8 million compared to $216.7 million in 2024. Non-GAAP operating expenses were $209.7 million in 2025 and within our guidance range of $208 million to $213 million. Importantly, non-GAAP operating expenses declined 4% in the second half of the year compared to the first half reflecting the benefits of expense reductions we implemented in Q2. As a reminder, non-GAAP operating expenses exclude stock-based compensation, revaluation of the contingent royalty obligation, depreciation, amortization and restructuring costs. Within operating expenses, selling, general and administrative expenses for the fourth quarter were $54.7 million compared to $52.8 million in the third quarter. This included $4.8 million of noncash stock-based compensation compared to $5 million in the prior quarter. For the full year 2025, SG&A expenses were $220.8 million, compared to $198 million in 2024, reflecting investments in our evolution into a multiproduct company with the launch of Evolysse in the U.S. as well as investments in scaling existing international markets. Non-GAAP operating income for the fourth quarter was $7.1 million compared to $6.7 million in the fourth quarter of 2024. As a reminder, both non-GAAP operating expenses and non-GAAP operating income excludes stock-based compensation expense, revaluation of the contingent royalty obligation, depreciation and amortization and restructuring charges. Non-GAAP operating income also excludes amortization of intangible assets. Turning now to the balance sheet. We ended the fourth quarter with $53.8 million in cash compared to $43.5 million at the end of the third quarter. The increase was driven by strong sales growth, disciplined expense management and effective working capital execution. As we look ahead to 2026, while we are not providing specific cash guidance, we expect cash usage to be meaningfully lower than in 2025 as operating leverage improves. Our use of cash in 2026 will primarily reflect interest payments and investments ahead of the anticipated launch of Evolysse Sculpt, including inventory build and a milestone payment. Today, we entered into a revolving credit facility with Eclipse Business Capital, providing up to $30 million of availability with an accordion feature up to $40 million. This facility is supported primarily by our receivables and will be used for working capital needs, including inventory build and preparation for the anticipated launch of Evolysse Sculpt. As a reminder, under our long-term debt agreement with Pharmakon, we retain access to 2 additional $50 million tranches with no incremental financial covenants or performance conditions and our existing term loan does not mature until mid-2030. Taken together, our approximately $50 million of cash access to up to $40 million under the revolving credit facility and availability of an additional $100 million under our existing long-term debt agreement provides substantial liquidity and flexibility. Combined with our improving operating leverage and sustained profitability beginning in 2026, we believe we have a clear path to generating meaningful free cash flow in the years ahead. This capital structure gives us the ability to scale the business, proactively manage our debt and continue to invest in growth. We are not planning to raise equity capital and remain highly sensitive to dilution. Let me now summarize our 2026 guidance. We expect total net revenues to be between $327 million and $337 million, which represents 10% to 13% growth over our 2025 results. Evolysse and Estyme injectable HA gels are expected to contribute 10% to 12% of total revenue in 2026. Adjusted gross profit margin for the full year 2026 is expected to be between 65.5% and 67%, reflecting an evolving revenue mix while maintaining the disciplined approach to margin optimization. Non-GAAP operating expenses for 2026 are expected to be between $210 million and $216 million, representing a minimal 0% to 3% increase over 2025. Against our anticipated double-digit revenue growth, this reflects meaningful operating leverage, driven by structural efficiencies implemented over the past year. In 2025, we aligned our commercial organization to support a multiproduct portfolio across U.S. and international markets, and streamlined our support functions, allowing us to scale revenue in 2026 without proportionate increases in field infrastructure. As previously guided, we expect to achieve full year profitability in 2026, delivering a low to mid-single-digit adjusted EBITDA margin on a consolidated basis. Beginning in fiscal year 2026 we will transition our primary profitability metric from non-GAAP operating income or loss to adjusted EBITDA to improve comparability with industry peers. This change does not impact our reported results as the reconciling items between the 2 metrics are consistent. As a point of note, other modeling assumptions for 2026 include, annual interest expense between $16 million and $17 million, which includes interest and amortization of financing costs on the long-term debt facility and on the revolving credit facility. Full year diluted weighted average shares outstanding of approximately 68 million. In summary, our 2026 outlook reflects the structurally improved cost base, disciplined capital allocation and increasing operating leverage, positioning the company for sustained profitability and future free cash flow generation. With that, I will turn it back to David for closing remarks. David Moatazedi: Thank you, Tatjana. As we look ahead, Evolus enters 2026 from a position of strength. We've solidified our operating foundation, expanded our portfolio and demonstrated the discipline required to scale profitably with double-digit growth, a largely flat expense base, and multiple value-creating milestones on the horizon, we are entering a period of accelerating operating leverage and sustained profitability. Our focus remains clear. We're building a global performance beauty company centered on the customer experience, investing to drive practice growth while maintaining the expense discipline necessary to drive operating profit. We look forward to launching Estyme in Europe next quarter and gaining approval of Evolysse Sculpt in the fourth. These milestones, coupled with the continued momentum across our portfolio, reinforce our confidence in achieving 13% to 15% adjusted EBITDA margins in 2028. Thank you for your continued support. We look forward to updating you on our progress throughout the year. Operator, you may now begin the Q&A. Operator: [Operator Instructions] Our first question is coming from Annabel Samimy from Stifel. Annabel Samimy: And I guess good end to the year. Some questions about Evolysse and just trying to understand qualitatively, has the growth of Evolysse been primarily coming from the early adopter population? Are you starting to -- is the new count build starting to come from those injectors who want to start taking advantage of Evolysse in the portfolio? And are you starting to go deeper? Or is it starting to go broader? So maybe you can give some qualitative description around those ordering patterns. David Moatazedi: Sure. Annabel, thanks for the question. So what we're seeing with Evolysse is a business that's continuing to diversify in terms of its customer base. As I mentioned on the call, we're now -- we now have over 3,000 purchasing accounts which represents a large portion of the Jeuveau revenue that was generated last year is now placed in order for Evolysse. So we feel very good about our ability to establish Evolysse in some of those clinics. We were also very pleasantly surprised by the portfolio rebate and how important that was in the fourth quarter within some of those accounts to commit a larger portion of their overall filler and toxin business to us, especially recognizing that we're operating with the first 2 formulations, and we plan to introduce more. So the portfolio rebate helps build on that momentum. What we also see is an opportunity now that we've learned a lot about this product to take it significantly wider. And that's really the initiative that we referenced on the call. In the second quarter, we plan to engage in a heavy sampling and trial program through a universe outside of that group of 3,000 to give them the opportunity to trial the product, to gain the training required, to adopt it and broaden that universe in advance of the approval of Sculpt and subsequent launch. And so we feel that we're on a very good track with the product. You saw the momentum build coming out of the year in the fourth quarter, and we see the momentum continuing to increase. Feedback from customers, we've done a number of surveys, and this is probably the most important part and we know that others have done channel checks, it's very positive on this product. The more experience that clinicians get with Evolysse, they realize that the advanced technology gives them a number of unique differences from the formulations that are currently available in the market. What's happening in the backdrop is consumers are looking for more natural fillers and a more natural look. And Evolysse, because of the Cold-X Technology it's designed in a way that gives you more effect with less product, creating a more natural look rather than relying on the swelling of the HA to deliver that outcome and we hear that consistently on top of the fact that they have the latitude to inject this product at varying depth and I think that gives it also one other clinical advantage that we're hearing in the market as well. So overall, the buzz on this product is great. We're looking to take even wider as we get into the year. Annabel Samimy: I guess a follow-up question to that, is this a product that you think could turn around the growth in the market that I think was probably impacted not just by macro, but possibly changing trends? David Moatazedi: Yes. As you said, there are 2 parts. I think the macro piece mirrors, if you will, the toxin market. And we do believe that you're starting to see improvement in the filler market when you look at the overall category year-on-year. But the changing trends is certainly a part of it because of communication that clinicians now have with their consumers is evolving around the use of HAs and we know that they're using less volume in each treatment. I'm going to turn it to Rui because I know Rui spent a lot of time recently with a number of clinicians talking about how the use of filler is evolving, especially with Evolysse. Rui Avelar: Yes. And I think you've covered the major points, actually. It is a trend towards going to more and more natural. That's certainly one thing, it's certainly been helpful to punctuate the fact that this is a hyaluronic acid and distinguish the different opportunities that are within the filler. The thing that seems to be resonating very well is we saw in the clinical data that you don't need a lot of product to get effect. In fact, examples of less products still getting more effect. That's resonating really well, also less product being required. And then ultimately, from an injector perspective, they really appreciated the fact that you correct to the outcome that you're looking for. You don't have to undercorrect and anticipate swelling, you don't have to overcorrect because you're going to lose some volume because of the HA. So that control has been a big thing for the injectors itself. And finally, our data certainly suggests that the duration is there when we look at the 1-year data from Form and Smooth and the 2-year data from Sculpt. Annabel Samimy: Great. And if I can just ask one last quick follow-up. In terms of the accounts that are ordering, are they predictably ordering after that second training now? Have you seen that consistent with what you've said in the past? Or is there still a pause after they first get trained? David Moatazedi: Yes, it's a great question. I think coming out of the third quarter, we talked about that second training being an inflection point in utilization of the product. And we continue to see that being a really important indicator getting them sampled first and then trialing the product to get trained, followed by a second training, and we continue to emphasize that as well with the field. I talked about all the different training vehicles we have. I want to just -- my hats off to the education team across the company because we have a very comprehensive medical education platform, the launch of Evolysse was marked with a very large webcast, several thousand attendees. We've now done several thousand hands on trainings as well, and we have several thousand more clinics that could go through the second training. So we have our road map mapped out for us with existing clinics to drive meaningful volume increase as well as those new clinics to get that initial training. And we feel like we've got a great handle on this product. We are optimistic that the market is showing signs of recovery, although we do forecast a bit of a decline in the filler market continuing this year, and it is an improvement. But we expect that to start to recover towards the latter part of the year. So overall, we feel like we're on the right track. Our guidance reflects that as well and we're really looking forward to putting this in the hands of more clinicians. Operator: Our next question today is coming from Marc Goodman from Leerink Partners. Alyssa Larios: This is Alyssa on for Marc. I was wondering if you could provide some more detail on the structure of the rebate program, specifically how rewards are tiered for participating clinics and what metrics determine their eligibility? And secondly, looking ahead to 2026, how would you describe the overall marketing strategy? Are there active consumer-facing brand campaigns active right now and how is the investment split across the fillers versus the toxin? David Moatazedi: Okay. Why don't I touch on the rebate and briefly on the marketing strategy, and then I'll have Tatjana touch on the investment overall as you think about really broadly commercial, how you think about that investment. Starting with the rebate, one of the things we've prided ourselves on from the beginning is we value transparency in how we price our products and how we operate. And so when we launch this portfolio rebate, it was designed as a growth rebate in the pilot. And so accounts that purchased 50,000 more in the quarter or 100,000 more in the quarter, they were eligible to receive a growth rebate for committing more of their business to Evolus. And that growth rebate came at the very end of the quarter as a result of directly from their purchases. And that complemented our Evolux program, which I touched on earlier, which is a volume-based pricing program. That is exactly what we're mirroring in the front half of the year. It was very simple to communicate 2 accounts. As a matter of fact, I had the opportunity to present this to a number of accounts in the fourth quarter during the pilot phase. And I'd tell you it was incredibly well received. I think many investors know that one of the challenges when we're a single product company is we were competing against portfolio bundles. This growth rebate in the pilot was designed to work through those bundles and it did so very effectively. And we trained our sales force in January on that growth rebate. It is based on 6 months of purchasing volume for those clinics. So it's from January 1 through the summer and the end of June. And we're hearing very good feedback on it. As a matter of fact, it's not just a portfolio rebate. We're hearing the same with our national accounts where we're seeing a very high growth rate in those national account chains as well, but see an opportunity to partner with Evolus in a more meaningful way. And that's really been the focus of the team. And then lastly, on the marketing strategy. Look, what I love about what we're doing is we're building on these unique capabilities. Our marketing strategy in terms of investing back in the clinics is directly tied to Evolux. And so we're doing unique things like digital advertising, billboards, TV spots, and we're doing them on both Jeuveau and Evolysse. They're all customized around the clinic and they're all targeted within the radius of their practice. And now that we increase our base of users, it's increasing our media spend as well in a very efficient way, and I know Tatjana will touch on that. And the last thing, we do co-promotions as well with other beauty brands. In the first quarter, we did one with Jeuveau and a brand called IPSY, which creates beauty products and accounts were able to purchase Jeuveau and earn a number of these gift bags that they in turn were able to market to their patients as a gift with purchase. And we think this is one of the unique elements of being a cash-based company, focused on the beauty space that enables us to partner with our clinics and give them value-added benefits that help them attract new consumers to their office. That partnership with IPSY was exclusive to Jeuveau, we're the first beauty company they partnered with, and it became a benefit for those patients. But I'll let Tatjana talk a little bit about what that spend means. Tatjana Mitchell: Yes. Thanks, David. So maybe I think it's important to comment on our commercial spend. So the largest portion of that spend is really on our sales team and all of their activities. The next largest is in training. And then the 2 others are marketing where you would consider traditional media, and that's when we talk about CBM, the co-brand marketing. And then the fourth piece that David mentioned are these partnerships. We disclosed our advertising costs. We disclosed this media spend. And for the last 3 years, if you look, it's been in the range of $7.5 million to call it $9 million. And for 2026, it's going to stay in that range. And what we're able to do with that CBM, which is earned through the Evolux program, is really support the practices to drive the highest ROI for us and for them, but it's not this traditional just going out right and spending media into advertising the brands. Operator: Our next question is coming from Uy Ear from Mizuho Securities. Uy Ear: I guess, David, just based on your internal data such as your consumer loyalty programs and whatnot, how are you sort of seeing the market, the toxin market trending and how -- I think you perhaps kind of commented as well on improvement in the facial filler market. Yes, maybe just help us understand what you're seeing based on what you're hearing externally as well as what you are seeing internally? And I guess the second question we have is on your portfolio programs. I think you mentioned it was helping adoptions of Evolysse. Just wondering whether it's also helping with Jeuveau's adoption expansion as well in the accounts? David Moatazedi: Yes. Thanks for the question, Uy. I think we have a really great handle on both not just our internal data, but some of the third-party external data in terms of what that means for the market. And to boil it down in 2025, we believe that the neurotoxin market declined mid- to upper single digits in terms of overall volume. And you saw that our business for Jeuveau, we gained in units despite the fact that you saw the entrance of a new competitor. So here's a brand in its sixth year that's continuing to demonstrate resilience. And I do believe we have a large part to do with a differentiated clinical data set as well as a very sophisticated sales organization with a number of unique tools because of our cash pay advantage. And we see that supported in our Evolus Rewards program that consumers are coming back and seeking retreatment with Evolysse -- with Jeuveau rather. And we continue to see that the retreatment rates rising over time. At the same time, I think we've seen over the course of the year, overall procedural volumes started to show incremental improvements. So especially if you compare to the first half of the year to the back half, we saw a meaningful improvement in the overall toxin market, and we do believe that although not all companies have reported yet, then in the fourth quarter, the market returned back to some level of stability, call it flat to low single-digit growth on the neurotoxin market. And you can mirror that to some degree on fillers, just not back to the same level of recovery and that it reflected that the market was returning to some level of improvement. And we expect that to continue into this year. And that's really what we've modeled is a toxin market with call it, low single-digit growth, a filler market that we'll start to see a road back to recovery for this year. And I think our internal data supports that. We're really pleased with what we're seeing in the market to start the year. I talked a little bit about our national account growth is incredibly healthy to start the year. The discussions around the portfolio that our sales force is having have been incredibly positive, and we're continuing to see momentum there. And so we see it as continuity in the right direction on the overall business. At the same time, it's important to recognize that this is all a marginal improvement over the prior time period. We haven't yet seen a bounce back. And so our guide doesn't reflect that. But to the extent we do, we'd expect to see a fairly short recovery once that does occur. And you're absolutely right that there's an interplay between the benefits of adding a new account for Jeuveau and the willingness to trial Evolysse. And also on the inverse, the Evolysse accounts that have brought Jeuveau into the door. And I think given we're just 3 quarters in, you're just starting to see the benefits of those 2 brands cross-pollinating both around the clinic and in front of the consumer because they earn in rewards on both brands. And so we see a lot of opportunity in 2026, especially with the focus on the portfolio bundle to be able to capitalize on that unique advantage. And of course, the approval of Sculpt only gives us an additional boost as we build on that portfolio benefit. Operator: The next question is coming from Navann Ty from BNP Paribas. Navann Ty Dietschi: Can you discuss your assumption on the competitive launches into the guidance with the BoNT/E and RELFYDESS. And also, if you can discuss your strategy around bundling after when you will be able to leverage Sculpt? David Moatazedi: Navann, thanks for the question. As you pointed out, 2026, we're going to see 2 new toxin entrants from the 2 bigger players in this space. And so we expect AbbVie to launch their neurotoxin, a shorter-acting BoNT/E in the summer is what we understand. And then in the back half of the year, we expect liquid toxin to be introduced by Galderma. So we'll see the sampling that will come with those just as we did last year with the introduction of a player from Korea with Hugel, we expect to see heavy sampling in the market. That is reflected in our guide. And just keep in mind, sampling doesn't always translate over to adoption. So in the near term, it creates some pressure. But over the long term, you start to see accounts will commit to the brands that they're willing to purchase. Although we haven't seen a short-acting toxin in the market, it would be interesting to see their go-to-market strategy, don't have a lot of visibility to that. On the liquid product, we certainly competed with that product in Europe now it's approaching a year. It's been available there. So we're very familiar with it and understand how both consumers and clinicians see that. And I think as we get closer to commercialization, maybe we'll be in a position to talk a little bit more about that aspect. And I think that answered the second part to your question. Navann Ty Dietschi: And just on the bundling, how will the strategy will evolve with Sculpt? David Moatazedi: Yes. I think for this year, we're focused on the portfolio growth rebate for a full year. This is a pretty significant shift in conversations, you can imagine. Our reps are now going in there and having a conversation about committing an account business to us over a 6-month period in order to gain these benefits. These are strategic conversations for the clinic around who they want to commit their partnership to and the portfolio rebate gives us the rationale and the portfolio itself gives us the support to earn that business. And so we're seeing very good uptake early on. We expect to continue to do the portfolio rebate through the back half of the year as well. And as we expect Sculpt approval in the fourth quarter. That will be a product we'll talk about in 2027 more meaningfully and we may look to make adjustments to the portfolio growth rebate as we see it play out over the course of this year. We're just a couple of months in, and we're really pleased with how the field is executing against it. Operator: Your next question is coming from Sam Eiber from BTIG. Sam Eiber: Maybe just following up on the last question. I guess how should we think about filler growth perhaps accelerating in 2027 with the Sculpt launch? I guess, are accounts waiting for the product? Or does it necessarily just change the conversation you're able to have with providers here? David Moatazedi: Yes. Maybe we'll start -- I'll turn it over to Rui to talk a little bit about clinically why this is meaningful to the accounts? And then I can talk a little bit about how that plays into the broader bundle in partnership with the clinic. Rui Avelar: When we think about products like Sculpt, we're now describing the premium sector within the HA and the flagship product there is Voluma, for instance, that's the largest, most successful HA that's ever been launched. We think Sculpt will represent a competitor to that product. And when we think about what we're doing with that mid face, we're asking these gels to come in and take volume and do something that's really quite structural. And remember, it comes from a minimally invasive form. We are very optimistic about this product when we were doing diligence on the product. The investigators were very happy with the performance. And subsequent to that, we've actually gone against a product that's in the market well known and we've shown that -- we showed non-inferiority and superiority at the primary endpoint. And then more impressively, as you follow it out over time, when you get to the 2-year mark, we're showing 2 to 3x more responder rates at the 2-year mark. So we're optimistic. We're optimistic from that data. And as we're getting feedback from people using it in Europe, it's -- that feedback is actually correlating really well with what we saw in the clinical trials. David Moatazedi: Yes. And then as it relates to the overall portfolio bundle, look, we see our positioning in this market continuing to strengthen. You look at Jeuveau, 6 years mature, continuing to capture market share. Evolysse off to an incredibly strong start in a market that has been challenged. But when you back out the underlying market performance, the actual performance of Evolysse within the market has been very strong, and we're doing that without a full portfolio in the space. And so we do believe that this is going to continue to build on our in-market share gain momentum that we continue to demonstrate as a company. And I think you couple that product being highly differentiated with our cash-based strategy on top of this large injector base that's purchasing Jeuveau, and we see a lot of opportunities to drive continued momentum over the next several years. And I'm really excited to see what the international team could do with the Estyme products, in the U.K., where we're now in our fourth year approaching double-digit market share with Nuceiva, which is our toxin there, that Estyme product is going to be rolled out with all 4 formulations all approved at the same time. And so that's going to give the team in the U.K. a real boost in terms of our ability to more effectively compete against the portfolio. So we see this as part of the natural evolution of the company, and we're excited to see this unfold. Sam Eiber: Okay. That's really helpful. Maybe I can just ask a quick follow-up on some of the inventory dynamics at the provider level. Just sanity checking, is that back at what you would describe as normalized levels at this place? Or is there more room to work through that? David Moatazedi: I think what we saw in the middle of last year was a drawdown in inventories, and we continue to believe that accounts are measured in how they take on inventory in this environment. They're seeing an improvement, which means they're a little more open than maybe they were coming out of the second quarter. At the same time, we haven't seen a rebound, where they're back to the inventory levels that they were in before. So that could potentially be something that could be a net positive if we see the market return more strongly as we get into the year. Operator: Your next question is coming from Doug Tsao so from HC Wainwright. Douglas Tsao: David, you touched on it a little bit. But obviously, last year, you had the competitive entrant from the Korean manufacturer, which was a, what I would sort of characterize as sort of an undifferentiated neuromodulator. I guess when you think about both the Galderma as well as Allergan expected launches of RELFYDESS as well as BoNT/E. They're coming at it with sort of this fast onset, one is going with short duration and one is making longer duration claims. I guess I'm just curious if you have a perspective on how those will shape up or influence the market? David Moatazedi: Sure. Yes. I mean look, never take any competitor lightly, let's start there, and never take a moment like a new entrant coming in to capitalize on an opportunity, and I'm really proud of what the team did last year with the entrance of a new toxin player in the space we maintain our focus and you saw us continue to gain share despite the market declining. And I attribute a lot of that to the intensity that we bring to the way that we think around any new competitors. It starts with a heavy review of the science and clinical data. As you said, there are claims that are made around onset or claims that are made on longevity. And in the end, the question is, does the data support some of those claims. And I think that's our job to make sure that we provide a counter to some of the claims that are made in the space, but also to ensure that clinics are focused on the long game. You want to deliver high-quality products, that deliver high patient satisfaction in a profitable way to grow your practice. And we believe that's where we're incredibly well positioned in this space. We're the only company that's reinvesting back into these clinics to help drive that growth. we're reinvesting back and retaining those patients to continue to build on those practices and we're doing it with a broad portfolio. So it will be up to the new players to establish their value proposition in this space vis-a-vis the current products they have, but we think this creates an opportunity for us. And I know the team is very excited for it, and it's something we won't be talking too much about until we get to the middle of the year, but we'll certainly be prepared. Operator: Your next question is coming from Serge Belanger from Needham & Company. Serge Belanger: I guess the first one, David, can you just talk about maybe the seasonality trends for what we've seen so far in Q1? I know some other companies have talked about the winter storms affecting volumes for the early part of the year. Just curious if that's also been an issue in aesthetics. And then secondly, regarding the European market, just curious if they've experienced the same kind of macro headwinds that we've seen in the U.S. on the toxins and especially on the fillers if they've seen that same -- those same headwinds that have affected the U.S. market? David Moatazedi: I want to turn it over to Tatjana to talk a little bit about the seasonality, and then I'll take the comments around it. Tatjana Mitchell: Yes, yes. So what we're seeing in Q1 really is similar to what we saw exiting Q4, which is the toxin market is showing solid demand, right? We do not believe this market is declining. And then the filler market is still pressured, but not seeing those double-digit declines that we saw for most of 2025, and that is consistent with our guidance. also consistent with our plan. We rolled out these plans at the national sales meeting, similarly at the international sales meeting. And we feel good about these and we're executing on them. I can't necessarily say we've seen issues related to the weather. David, maybe you can comment on the European markets. David Moatazedi: That's right. And in Europe, the overall economic environment has been stronger in Europe relative to the U.S. So when you think about the toxin space as an example, we don't believe that the toxin market declined in Europe last year. And at the same time, we do believe that there are signs that the HA market did recover towards the end of the year. And we do believe that it could have been flattish to exit the year in the HA market. And it's been a pretty sharp reversal from what was a decline in Europe in procedure volume for HA products as well. So that gives us some level of optimism that we're trailing about 6 to 12 months behind Europe in terms of our recovery of the HA market. And that's something we're going to watch closely. But as it relates to our guide for this year, just to reiterate, we assumed that the filler market would decline low single digits over the course of this year. Operator: Thank you, and thank you for all your questions. At this time, I'd like to turn the call back to Nareg Sagherian for details on upcoming IR events. Nareg? Nareg Sagherian: Thank you. We look forward to continuing the conversation at the Leerink Global Healthcare Conference in Miami on Wednesday, March 11. We hope to see many of you there. Thank you for joining us today. Operator: Thank you. We reached the end of our call. You may now disconnect your lines.
Operator: Good day, ladies and gentlemen, and welcome to ASUR's Fourth Quarter 2025 Results Conference Call. My name is Dave, and I'll be your operator. [Operator Instructions] As a reminder, today's call is being recorded. Now I'd like to turn this call over to Mr. Adolfo Castro, Chief Executive Officer. Please go ahead, sir. Adolfo Castro Rivas: Thank you, Dave, and good morning, everyone, and thank you for joining us today to discuss ASUR's results for the fourth quarter and full year 2025. Before I begin discussing our results, let me remind you that certain statements made during the call today may constitute forward-looking statements, which are based on current management expectations and beliefs and are subject to several risks and uncertainties that could cause actual results to differ materially, including factors that may be beyond our company's control. Additional details of our quarterly and full year 2025 results can be found in our press release, which was issued yesterday after market close, and is available on our website in the Investor Relations sector. Following my presentation, I will be available for Q&A. As usual, all comparisons discussed on this call will be year-on-year, and all figures are expressed in Mexican pesos, unless specified otherwise. Before getting into the discussion of traffic and financial results, let me start today's call with a recap of the key business developments during the fourth quarter and over the course of the year. The fourth quarter marked an important inflection point for ASUR. While traffic trends in certain markets moderated, we remain focused on strengthening our long-term platform through diversification, disciplined capital allocation and continued operational excellence. Strategically, we completed our expansion into the U.S. airport, commercial market and advanced transformational Latin American growth opportunity. As previously discussed, on December 11, we completed the acquisition of URW Airports, renamed as ASUR U.S. at an enterprise value of $295 million. This transaction established ASUR a direct participation in the U.S. nonregulated commercial airport segment, with operations in major U.S. hubs, including Los Angeles International Airport, Chicago O'Hare and New York John F. Kennedy International Airport. From December 11 through December 31, ASUR U.S. contributed approximately to $133 million in revenues and $86 million in EBITDA. We are excited about what this acquisition brings to ASUR's portfolio. First, it adds exposure to high-traffic dollar-denominated commercial revenues. Second, it diversifies our revenue mix beyond regulated income. And third, creates a scalable platform for future growth in the United States. Revenue and EBITDA for the ASUR U.S. were included within the results of our Mexican operations this quarter. Starting our first quarter 2026 earnings report, we plan to provide more detailed disclosure regarding on the business so that the investment community can better assess revenue profile, margin structure and growth prospectus as fully consolidated operation. In parallel, as disclosed in November, we signed a purchase agreement to acquire Motiva's stake in its airport portfolio, which holds interest in 20 airports across Brazil, Ecuador, Costa Rica and Curacao, for a purchase price of BRL 5 billion, which at the moment represented approximately $936 million. Upon closing this transaction would add approximately 45 million passengers annually to our network, bringing total annual passenger traffic over 116 million. It also provides entrance to Brazil, the largest aviation market in Latin America, while further strengthening our presence in Central and South America. This acquisition enhances our geographic diversification, increases scale and creates long-term operational opportunities, giving ASUR's track record as an efficient airport operator and more important, the opportunity to use the balance sheet. The Motiva transaction remains subject to customary closing conditions and regulatory approvals, while closing expected in the first half of 2026. We intend to fund the acquisition with debt. Together, these initiatives reflect a deliberate expansion, strengthening our position in the U.S. commercial segment while deepening our footprint across high-growth markets in the Americas. Importantly, we continue to adhere to our long-standing strategy of pursuing disciplined accretive acquisitions that increase long-term shareholders' value while preserving balance sheet strength. Lastly, reflecting the strength of ASUR's cash generation model, we returned value to shareholders in form of dividends. During 2025, dividend payment totaled $24 billion. At the same time, we supported our selective expansion strategy and preserve our financial flexibility. Let me now review ASUR's operational performance for the quarter and full year. During the fourth quarter, we handled 17.9 million passengers, up nearly 1% year-on-year with nearly 72 million passengers traveling through our airports during the year. Looking at the quarter performance by region, Mexico was essentially flat with domestic traffic slightly below prior year levels, while international traffic showed modest improvement. We believe this reflects the early stages of normalization following aircraft availability constraints and softer regional demand in earlier year. In addition, traffic in Cancun declined 2% during the quarter, while our 8 other Mexican airports grew middle-single digit. In Puerto Rico, traffic declined 3%, primarily driven by domestic market demand softness, while international traffic remained positive. Colombia once again delivered the strongest performance with our portfolio with fourth quarter traffic increased nearly 6% to 4.7 million passengers, reflecting high single-digit growth in international traffic and mid-single digit in domestic traffic, supported by improving connectivity and resilient demand. Overall, we are seeing gradual stabilization in Mexico and sustained structural growth in Colombia. Passenger volumes from the United States, our larger international source market decreased just 0.6%. While South America contracted 10.9%, on the positive note, Canada and Europe increased by 12.9% and 1.1%, respectively. Looking ahead, we expect a more balanced operation environment across our portfolio. In Mexico, we expect traffic to gradually stabilize over the year as aircraft availability improves. In Cancun, we continue to monitor the dynamic with Tulum Airport. As comparables ease, and airline networks adjust, we believe traffic trends should progressively improve during the year. In Puerto Rico and Colombia, we continue to expect sustained positive momentum, supported by healthy international demand and improved connectivity. Turning now to financial performance. As a reminder, all figures exclude construction revenue and costs and comparisons are all year-on-year, otherwise noted. Total revenue were flat year-on-year at MXN 7.3 billion, reflecting the softer traffic environment in Mexico and the FX impact from the appreciation of the Mexican peso on the commercial activity. Aeronautical and non-aeronautical revenues were essentially unchanged during the quarter. By region, Mexico, revenues were flat due to softer traffic trends and the FX impact from the appreciation of the Mexican peso against the U.S. dollar on commercial revenues. Puerto Rico's revenues declined nearly 6%, affected by the FX impact, while Colombia revenues increased nearly 5%, broadly in line with traffic growth and improved commercial performance. As part of our strategy to increase and enhance commercial offering, we opened 41 additional retail and service units across the network over the past year. This includes 31 in Colombia, 8 in Puerto Rico and 6 in Mexico. These additions contributed to a low single-digit increase in commercial revenues with solid momentum in Colombia, partially offset by softer results in Puerto Rico and Mexico. Commercial revenue per passenger increased 1% year-on-year to nearly MXN 132. By geography, Colombia posted the strongest performance with a 12% gain, followed by Puerto Rico, which rose nearly 4%, while Mexico remained broadly stable at MXN 159 per passenger. Turning to operating costs. Total expenses increased 25% year-on-year. In Mexico, expenses rose 10%, primarily driven by professional fees associated with the ASUR U.S. and the Motiva Airport project, along with the high minimum wages and increased service-related costs. Puerto Rico recorded a 6% increase, mainly due to security expenses and inflationary pressures. In Colombia, expenses doubled largely due to a change in the concession amortization methodology implemented in the previous quarter. As a reminder, we expect the regulated revenues to phase out by 2027 with the concession running through 2032. Starting in the third quarter 2025, we aligned amortization with the updated revenue generation. This is a structural adjustment and will continue going forward. Excluding this account adjustment, costs will have increased just by 1%. Turning to profitability. Consolidated EBITDA decreased nearly 5% to MXN 4.9 billion during the quarter, with adjusted EBITDA margin declining 330 basis points to 66.4% year-on-year, reflecting the dynamics I just explained. Colombia delivered EBITDA growth of 2%, while EBITDA declined by 3% in Mexico and 19% in Puerto Rico, mainly reflecting lower traffic and higher operating costs. Net majority income for the fourth quarter decreased 22% to MXN 2.7 billion, primarily driven by 2 factors: a noncash foreign exchange loss of MXN 155 million in connection with the appreciation of the Mexican peso against the U.S. dollar, while in the fourth quarter 2024 we recorded a MXN 773 million gain. Second, the MXN 407 million adjustment in amortization methodology in Colombia introduced in the third quarter 2025 that I just mentioned. For the full year, total revenues increased nearly 19% to MXN 37 billion. EBITDA rose 2% to MXN 20.2 billion with adjusted EBITDA margin of 67.8% in '25 compared with the 69.7% in '24. In turn, net income declined 20% year-on-year to MXN 10.9 billion, mainly reflecting a noncash foreign exchange loss of MXN 1.9 billion this year versus a MXN 2 billion gain in '24. Moving on to the balance sheet. We closed the year with cash and cash equivalents with MXN 11 billion and net debt of MXN 16 billion, equivalent to 0.8x last 12 months EBITDA. This reflects 2 loans obtained during the second half of 2025, which were secured to pay CapEx projects and fund our strategic U.S. initiative. Even after incorporating these financings, leverage remains at a conservative level and well below global airport peers, presenting ample flexibility to fund regulatory CapEx commitments and future growth. Capital expenditures during the fourth quarter were MXN 3.9 billion invested across our airport network, of which MXN 3.5 billion were invested in Mexico under our master development plan, and the remainder in Colombia and Puerto Rico. For the full year, we invested MXN 7.8 billion in CapEx with a similar geographic breakdown. Investments under our Master Development Programs across our Mexican airports, ensuring the capacity, service quality and regulatory compliance continue to advance. In Puerto Rico and Colombia, we remain focused on operational improvements and commercial optimization initiatives aimed at enhancing non-aeronautical revenue generation. In Mexico, we expect to reopen Terminal 1 in Cancun in the third quarter of this year, which is anticipated to provide a commercial tailwind. New facility will help rebalance passenger flows across terminals and improve the passenger experience, which over time should support higher commercial spending. Wrapping up, ASUR enters 2026 with a strengthened platform, greater diversification, disciplined capital allocation, robust balance sheet and proven operational model. While near-term traffic trends in some markets have moderated, the structural demand drivers for air travel in our region remains intact, and we are confident in our ability to generate long-term value for our shareholders. With that, now we are ready to take your questions. Dave, please open the floor for questions. Operator: [Operator Instructions] The first question comes from Andressa Varotto with UBS. Andressa Varotto: I have 2 questions. I can make the first one and then the next one. Starting with if you could share any additional color and projections about the recent ASUR U.S. acquisitions or if we can try to calculate how much it could add on revenue and EBITDA for the year based on the results showed in this quarter? And also, if you have any update on the process of the Motiva Airports acquisition? Adolfo Castro Rivas: Well, in the case of the U.S., 2 comments. First of all, you have the numbers for the first 20 days, which are, I will say, not something that we can consider as a normalized for the full year in '26. Due to the fact that during the third quarter this year, we're expecting the opening of the new Terminal 1 in New York at the JFK Airport, which is an important element of the equation of this transaction. So more or less the same for the first 3 quarters and then the jump because of the new Terminal 1. In the case of the process for Motiva, everything is -- it's going well. Of course, it's going to take time. There are some process that are slow in the case of aeronautical approvals. But we expect to conclude this during the end, maybe the beginning of the third quarter this year. Andressa Varotto: Very clear. And my other question would be regarding the tax rate. We noticed a lower tax rate this quarter. I would like to understand if this is something that we can expect for upcoming quarters or was more of a one-off effect? Adolfo Castro Rivas: No, that is related to the results of the year. Operator: [Operator Instructions] Our next question comes from Anton Mortenkotter with GBM. Ernst Mortenkotter: I mean we saw really good performance on the commercial side on Puerto Rico and Colombia operations using local currency. So I was just wondering what kind of initiatives were you pushing in those markets? And should we expect to see that non-aero [ part ] continue growing? Adolfo Castro Rivas: Thank you for your question, Anton. Yes, the appreciation of the Mexican peso was for the quarter, 13.4%. So if you see the results in their currency, they were very good. In the case of Puerto Rico, we have worked in the second half of the year very hard on a new strategy into the convenience stores, and there are some other adjustments to improve the operational performance of the duty free. In the case of Colombia, I would say, apart from what I mentioned in terms of the new units we have established there, nothing else. Operator: [Operator Instructions] This concludes our question-and-answer portion of today's call. I would like to turn back over to Mr. Castro for closing remarks. Adolfo Castro Rivas: Thank you, Dave. Ladies and gentlemen, that concludes ASUR's Fourth Quarter 2025 Results Conference Call. We would like to thank you again for your participation. You may now disconnect. Operator: Ladies and gentlemen, that concludes ASUR's Fourth Quarter 2025 Results Conference Call. We would like to thank you again for your participation. You may now disconnect.
Christoph Barchewitz: Good morning, everyone and welcome to Global Fashion Group's Q4 and Full Year 2025 Results Presentation. I'm Christoph Barchewitz, CEO of GFG and I'm joined today by our CFO, Helen Hickman. I'll start today with an update on the strategic actions we have executed over the past 3 years, followed by an overview of our 2025 regional performance. Helen will cover results for the group and the outlook. Then we'll open it up for Q&A. To start, I want to briefly remind you of what underpins GFG's long-term potential. We hold leading positions across large fashion and lifestyle markets where online penetration continues to increase over time. We serve these markets with a tailored customer-centric approach that it reflects local needs and we maintain strong relationships with both global and local brands. These partnerships are supported by flexible business models that help brands grow in complex markets. We also have a unique operational footprint, supported by proprietary technology and scalable infrastructure, which enables us to deliver a fashion-specific customer experience efficiently at scale. With these foundations in place, we are on track to deliver profitable growth and positive cash flow across our markets. And we do so from a position of financial strength with a healthy balance sheet and a substantial net cash position. This long-term potential is underpinned by the work we have done to reset and strengthen the business. Looking back to 2022, 2 main events have shaped the challenges our business has had to navigate over the past 3 years. One, a difficult post-COVID macroeconomic and fashion e-commerce environment that significantly depressed consumer demand and led to a decline in our active customer base and order volumes; and two, the sale of our CIS business due to the Russian invasion of Ukraine, which significantly reduced the scale and profit of the group. This initiated a reset period for our business. We have successfully actioned this since 2023 by evolving our business model, strengthening our customer flywheel and driving cost efficiency. On business model evolution, we strengthened our brand partnerships and rationalized our offering. We took a prudent approach to inventory. And since the end of 2022, we reduced inventory levels by 43% on a constant currency basis. We curated our assortment by reducing the brand count by 26% as a result of removing long-tail brands from our platforms. On customer flywheel, we dedicated our attention to our high-value customers and increased gross profit per active customer by 14% on a constant currency basis. We delivered this step-up all while applying discipline with marketing costs remaining stable at 7% of NMV each year. Finally, on cost efficiency, we reduced and simplified everywhere across the group. From 2023 to 2025, we reduced our total cost base by EUR 106 million, a 16% reduction in constant currency and released EUR 88 million from working capital. So now let's look at how this reset period has translated into our financial results. As mentioned, we've been operating in a period of demand downturn, which resulted in EUR 168 million reduction in NMV from 2023 to 2025. FX devaluation against the euro accounted for about half of this reduction. Despite facing a lower top line, we substantially improved profitability and cash flow. Adjusted EBITDA improved by EUR 62 million since 2023. Normalized free cash flow improved by EUR 31 million since 2023. Let's now turn to our regional segment results. By executing with discipline across all aspects of our business, we have significantly strengthened our financial operating model. As a result, we delivered a positive adjusted EBITDA for all 3 regions and the group in 2025. This milestone was driven by a return to NMV growth for the full year in our 2 largest regions, ANZ and LATAM. While our reset actions have built stronger foundations group-wide, each region is currently at a different phase in their journey to profitable growth. Starting with ANZ, which now represents half of the group's NMV. ANZ has completed its transition and is now operating as our profitable growth engine. In 2025, ANZ's NMV grew 6% year-over-year in constant currency. Profitability was strong at EUR 26 million in adjusted EBITDA, marking a EUR 28 million improvement compared to 2023. ANZ has strong cash conversion and delivered a positive normalized free cash flow. LATAM represents 30% of group NMV and also delivered 6% NMV growth in 2025. LATAM has achieved a significant turnaround moving from a declining business with negative EUR 22 million adjusted EBITDA in 2023 to a positive EUR 3 million in 2025. Cash flow has improved materially as well with LATAM now near normalized free cash flow breakeven. As the initiatives we put in place continue to flow through, we expect LATAM to move toward the end of its reset phase and into a more profitable growth position. SEA is our smallest region at 21% of group NMV and continues to face a decline with NMV down 15% in 2025. Despite this backdrop and thanks to its strong cost discipline, SEA has remained resilient on profitability, delivering a positive EUR 3 million adjusted EBITDA in 2025 and was also near breakeven on normalized free cash flow. SEA's financial resilience is also partly attributable to its high Marketplace share and sizable Platform Services business. Let's look at that next. Evolving toward a platform-led model by scaling our Marketplace and Platform Services is a core part of our strategy. In 2025, Marketplace represented 39% of group NMV and Platform Services represented 4% of group revenue. Through our reset phase, all regions contributed to our progression toward our group goals of 45% Marketplace share and more than 5% Platform Services share. SEA is the most advanced in this evolution and is also the only region so far to offer a solution where we use a single stock pool to fulfill orders across multiple brand partner channels. This service is the main driver behind SEA's step-up in Platform Services revenue from 2023 to 2025. In ANZ and LATAM, we expect Marketplace to continue expanding, particularly following the rollout of Fulfilled by in 2023 and 2024, respectively. Additionally, our growing marketing platform service is expanding across these regions, serving as another key driver of profitability. Let's now take a closer look at ANZ's results. 2025 marked a clear step up forward -- step forward for ANZ as the region returned to growth and delivered stronger profitability. NMV and revenue steadily grew each quarter, including Q4 with NMV up 6% and revenue up 3% on a constant currency basis. Active customers also closed the year up 4% year-on-year. ANZ achieved a record full year gross margin of 49%, up 2 percentage points from 2024 and we held at the same level in Q4. This flowed through to adjusted EBITDA margin, which expanded 3 percentage points to 7%. ANZ's strong performance has been driven by 3 key areas: a scaling platform mix, more efficient infrastructure and stronger customer engagement. Looking at platform mix. We are strengthening our fashion proposition while shifting to a more inventory-light model. In 2025, more than 20% of NMV came from our own brands and exclusive partnerships, helping us differentiate ourselves. At the same time, our brand partners are participating in our partner offerings. Marketplace now makes up 36% of NMV and 115 brands are live on Fulfilled by since we launched it in 2023. This gives customers more choice and gives brands an efficient and reliable way to grow with us. Additionally, our marketing services revenue is up 36% since 2023, indicative of another great value add for our brand partners. The second major driver is our more efficient infrastructure. With our new order and warehouse management system and expanded partnership with Australia Post, we've had a delivery upgrade. About half of all orders are now delivered in under 48 hours across Australia and New Zealand. In Q4 alone, delivery speed in major cities improved by 10% year-over-year. In Australia, we are the only fashion player to have rolled out Saturday standard delivery at scale for East Coast metro areas. And in New Zealand, we have achieved a meaningful improvement by reducing delivery times by 15% and introducing express next day service for key metro areas. These operational wins support our profitable growth momentum and our third driver, customer engagement. Our Got You Looking masterbrand campaign continues to demonstrate strong results. Amongst the campaign's target audience, unprompted awareness is up 70%, customer trust has increased 62% and 57% of viewers take action after seeing our ads, meaning more visits to the ICONIC app and site. To further strengthen the ICONIC's customer flywheel, we launched the Front Row loyalty program in October last year. This program was co-designed with input from 50,000 customers and is built around ICONS, the loyalty currency members earn when they shop to unlock rewards, special offers and exclusive experiences. Members progress through 4 status levels with higher levels unlocking greater benefits and faster earning. The Front Row is helping us recognize and retain our highest value customers, which deepens loyalty and drives higher order frequency. This supports ANZ's growth agenda, which also includes greater geographic penetration and increased cross-category shopping. In parallel, we continue to drive profitability through scale, ongoing fulfillment optimization and leveraging technology and AI. Turning now to LATAM. 2025 was a year of continued recovery. NMV returned to growth for the full year and LATAM became adjusted EBITDA profitable. We did see LATAM's momentum moderate in the second half. This was partly due to slightly stronger year-over-year comparators and partly due to a more challenging market and competitive environment. Though active customers ended 2025 down 2% year-on-year, LATAM saw higher order frequency and average order value, which reflected our focus on higher-value customers. LATAM's margin profile strengthened with gross margin improving to 44%, up 1 percentage point year-on-year and adjusted EBITDA reaching 1%, up 5 percentage points. Next, we'll cover the strategic drivers for LATAM that have laid the foundation for profitable growth. First, we are changing how we engage with our customers. We have started to refresh our cash back program to increase customer loyalty. We're promoting Club Dafiti, which is where shoppers can access personalized rewards and exclusive promotions. It's highly effective in keeping our high-value customers engaged and coming back to Dafiti. Second, we are scaling our brand partner proposition. A major piece of this is our Fulfilled by offering, which launched in 2024 and now has over 60 brand partners live. We saw 4x more revenue from Fulfilled by in 2025. It is a true win-win where brands leverage our fulfillment network to grow while we monetize our automated fulfillment center capacity. Our partner services go beyond logistics. We have been growing our marketing services with revenue up 42% in 2025 and our revenue per session doubling in Q4. 2025, we also rolled out financing to support our partners' working capital needs while simultaneously optimizing our cash flows. Finally, we are deploying AI-generated product imagery at scale. This reduces our reliance on traditional studio photos and gets products online much faster. This new workflow is about 30% faster. And as we scale it, we expect it to cut production costs by around 2/3. All of these initiatives are building a more resilient and profitable foundation for us in LATAM. Let's now turn to SEA. In 2025, we continue to see the rate of decline steadily ease even as the top line remain challenging. By Q4, NMV was down 10% year-on-year compared to 15% in Q3. SEA's revenue declined less than NMV for both Q4 and the full year. This was a result of improved marketplace commissions and stronger contribution from platform services. Our SEA business is now operating with a more favorable margin mix and leaner cost base. As we work through our initiatives to stabilize demand, SEA is well positioned to translate any return to growth into stronger profitability. To drive stabilization, we are focusing on sharpening our customer proposition while driving simplification and efficiency to progress toward profitable growth. This includes focusing on our top-performing brand partners. In 2025, more than 60% of SEA's NMV came from our top 30 brands. To support this, we have refined our assortment. In retail, we have reduced our intake by 28% from 20% fewer brands since 2023. On our Marketplace, we have reduced long-tail complexity, resulting in a 20% increase in NMV per brand compared to 2023. Alongside our assortment strategy, platform services continue to scale and be an important growth lever for SEA. Our single-stop solution, which is part of our operations services has generated 48% higher revenue in 2025 versus 2023 on a constant currency basis as it enables sales for brand.com and other channels in 2025. An exciting recent development in Q1 is the launch of our Got You Looking in SEA. We took our learnings from ANZ and adapted the masterbrand for ZALORA. Got You Looking is now live across all of our channels. It is designed to demand attention and improve brand preference, drive higher quality traffic and ultimately rebuild a healthier, more profitable customer base over time. Finally, we are continuously driving simplification and efficiency across the business. We successfully reduced SEA's total cost base by 19% on a constant currency basis and released EUR 29 million in working capital since 2023. Altogether, these actions give us a solid foundation in SEA as we progress towards sustainable, profitable growth. I will now hand it over to Helen to take you through the group results and outlook. Helen Hickman: Thank you, Christoph and good morning, everyone. I'll start with customers. At the end of 2025, our active customer base was down 4% year-on-year as we continue to prioritize profitable customer acquisition, engagement and reactivation. This strategy includes engagement initiatives that encourage cross-category shopping, app usage and loyalty program participation. These initiatives in ANZ and LATAM have successfully offset headwinds in SEA to result in a 2.3% increase in group order frequency. In 2025, we generated over EUR 1 billion in NMV, with Q4, our key trading season contributing about 1/3 of the full year. Whilst our full year and Q4 NMV were broadly stable on a constant currency basis, our reported figures were significantly impacted by FX headwinds. Specifically, the Australian dollar and Brazilian real were weak against the euro in '25, both down about 7% year-on-year. With Australia and Brazil being our 2 largest markets, this translated to a lower euro reported value for our NMV and revenue. Our average order value increased in constant currency terms for both the full year 2025 and Q4, offsetting lower volumes in SEA, which drove the group year-on-year decline. The order value increase was driven by inflation, along with a combination of a higher price point assortment and regional mix. Now turning to revenue and margins. We increased our adjusted EBITDA by EUR 27 million against the backdrop of broadly flat constant currency revenue to turn the group full year positive for the first time within our current footprint. Now let's take a closer look at the 2 contributors to this milestone, gross margin improvement and ongoing cost and efficiency actions. Starting first with gross margin improvements. Over our reset period, we have successfully reduced our overall inventory position by 43% on a constant currency basis from the end of 2022 to the end of 2025. We've achieved a healthier inventory profile by reducing discount through a more relevant assortment, increasing inventory turnover and decreasing our share of aged inventory by 10 percentage points. This, combined with a steady increase in Marketplace and Platform Services share has resulted in a 4 percentage point increase in gross margin, rising from 42% in 2023 to 46% in 2025. The second key contributor to the significantly improved adjusted EBITDA position is ongoing cost discipline. Our cost efficiency programs have been a crucial part of our business reset and remain a core part of our strategy going forward. From 2023 to 2025, we've reduced our total cost base by EUR 106 million, representing a 16% reduction on a constant currency basis. This cost reduction has more than doubled the pace of our 7% NMV decline over the same time period. The largest saving came from fulfillment. 2/3 of the reduction was as a result of our own initiatives where we captured efficiencies, including from automation and the order warehouse management system, OWMS, that we implemented in ANZ last year. Another 20% was due to reduced volumes and the remainder related to external factors such as FX. We also delivered significant savings across tech and admin. We continue to streamline our organizational structure along with ongoing reviews and negotiations of all our non-people costs. Across all cost lines, we've reduced our headcount by over 40% over the past 3 years. Together, our 4 percentage point gross margin expansion and EUR 106 million cost reduction have enabled us to reach our milestone of becoming adjusted EBITDA profitable. Turning to our cash. Our normalized free cash flow improvement in 2025 was primarily driven by the EUR 27 million increase in adjusted EBITDA. Lease costs remained broadly stable year-on-year. Working capital moved towards neutral as we cycle the one-off timing benefits seen in 2024. We delivered a CapEx reduction of EUR 16 million following the completion of the OWS (sic) [ OWMS ] investment and ongoing rationalization of our broader technology spend. After adjusting for operational tax and interest, we had a normalized free cash outflow of EUR 32 million, representing a EUR 10 million improvement compared to 2024. In Q4, we generated EUR 46 million of normalized free cash inflow. As a reminder, our cash flow cycle is highly seasonal, generating significant cash flows in Q4, our key trading season and experiencing significant outflows in quarter 1. We closed 2025 with a strong liquidity position of EUR 185 million in pro forma cash and EUR 143 million in pro forma net cash. Pro forma net cash deducts our outstanding EUR 41 million convertible bond liability and other small levels of third-party borrowing. Throughout 2025, we strengthened our balance sheet by repurchasing EUR 13.8 million in aggregate principal amount of our convertible bond, bringing our total repurchase volume at a discount to 89% of the original issue. We have 2 significant funding events taking effect in quarter 1, which I'd like to overlay against our closing December 2025 cash position. Firstly, following bondholders exercising their right to redeem at par on the 16th of March, we will redeem EUR 31.8 million, which is about 3/4 of our outstanding convertible bond. This will leave EUR 9.1 million of the bond outstanding at an attractive terms of a 1.25% interest rate maturing in March 2028. After this redemption, based on the December 2025 balance, this will leave us with EUR 153 million in pro forma cash. Secondly, we increased our funding flexibility through a new credit line. In December, our ANZ business signed a EUR 17 million revolving credit facility to efficiently manage our seasonal working capital needs. When combined with our undrawn funds from our facility with HSBC, we have EUR 23 million in additional available funding. This brings our total adjusted available liquidity position for year-end 2025 to EUR 176 million. This represents a strong financial foundation and significant headroom we have to support our next phase. We're also pleased to announce this morning the launch of a EUR 3 million share buyback program. The repurchased shares are expected to be used to partially meet our ongoing share-based employee remuneration scheme. Now let's look forward to our outlook, starting with guidance for 2026. For NMV, we expect a range of negative 4% to positive 4% on a constant currency basis. As at December 2025 closing effect rates, this translates to EUR 0.99 billion to EUR 1.07 billion. The global macroeconomic environment remains highly volatile, compounded by ongoing geopolitical tensions with distinct macroeconomic factors impacting demand across the 9 countries where we operate. Specifically, our 2 largest markets face near-term headwinds. In Australia, weak consumer sentiment is driven by recent interest rate increases and persistent inflation. Whilst in Brazil, higher interest rates remain and the upcoming general election and World Cup add additional volatility considerations. Our NMV guidance reflects softer current trading and half 1 expectations as well as different half 2 trajectories to account for these dynamics. For adjusted EBITDA, we expect EUR 15 million to EUR 25 million, again at closing December FX rates, building on the EUR 9 million we delivered in 2025. CapEx and leases are expected to be broadly in line with 2025 levels. For working capital, we expect a slightly higher inflow than we delivered in 2025. Our strategy to deliver profitable growth remains unchanged and is built on 3 key pillars. Firstly, business model evolution. We continue to create our assortment across retail and marketplace while scaling our brand partner offerings through our platform, including expanding Operations by, Fulfilled by and Marketing by GFG. This platform mix shift continues to support our evolving business profile towards a gross margin in excess of 47%, 45% Marketplace share and 5% Platform Services share, whilst maintaining broadly neutral working capital. Secondly, the customer flywheel. We are continuously refining our customer strategy with a clear focus on quality and profitability. This means disciplined engagement initiatives, stronger adoption of our loyalty programs and using AI across the entire customer journey. These actions will drive order frequency growth and improve customer economics, whilst keeping marketing investment broadly stable at 7% of NMV. Thirdly, cost efficiency. We will remain focused on cost and capital discipline. As we grow, we create operating leverage from our existing assets, particularly our fulfillment network without requiring significant incremental investment, which keeps CapEx and lease costs broadly stable. Technology and AI are embedded in our operations, helping us execute faster, improve customer experience and remain resilient through market volatility. In summary, applying these 3 pillars through our research phase has established a stronger financial foundation. We will continue to execute this strategy to deliver NMV growth, adjusted EBITDA margin expansion and normalized free cash flow breakeven. We will now open the call to your questions. [Operator Instructions] Operator: [Operator Instructions] Our first question is from Anne Critchlow from Berenberg. Anne Critchlow: I've got 3 to start us off, if that's okay. First of all, please, could you comment on how much weaker trading was in January and February compared to Q4? And then secondly, if you could just comment on the behavior of customers in the last few days. I think in the past, we've seen a sudden drop-off in sales around sort of big global crises and then a return to normal. But just wondering if you're seeing the same pattern. And then also thirdly, on the gross margin outlook, the 30 basis points improvement in Q4 was a bit lower than we've seen looking backwards. Just wondered if that's the sort of trajectory you're looking at perhaps over the year ahead and how quickly you might reach your 47% gross margin target? Helen Hickman: Anne, I'll take the first one, pass to Christoph for the second and then come back to you, Anne, on the gross margin question. So as I mentioned, we have seen some softer trading in January and February compared to where we were in Q4. We've seen sort of a declining customer sentiment in Brazil and Australia at the start of the year. And also, we've also had the classic timing impact of some key seasonal events. So whilst the Q4 as a whole, there will be less of an impact within the months, we've seen a shifting of Chinese New Year and Carnival in Brazil, which also has an impact on January and February to date. Christoph Barchewitz: Yes. And just over the last few days, I guess you're referencing, obviously, the headlines and events in the Middle East. We haven't seen any substantial deterioration beyond what Helen just said. And also the year-on-year comparisons are impacted by the timing. So there's a bit of difficulty in really parsing through day-by-day numbers but there is no material drop off or something that we have seen in the context of past events around COVID or other major moments. So that is not happening. Helen Hickman: And then moving on to gross margin. So yes, obviously, our Q4 year-on-year improvement was softer than the full year as a whole, so the full year stepping forward 1.5 percentage points. We very much continue to expect gross margin expansion into 2026, albeit probably slightly lighter than the full year that we saw in 2025. And also I sort of caution that, that won't necessarily be equal improvements every quarter. But again, our strategy continues and we expect to see those improvements driven by increased marketplace and platform services participation and also continued focus around our retail and our assortment. Operator: Our next question is from Russell Pointon from Edison. Russell Pointon: Congratulations on the results. Three questions, if that's okay. First of all, you referenced the active customer declines in LATAM in Q4 and that's due to competitor activity. Could you just talk a bit more about that? Was it focused across certain categories? Or was it fairly broad-based? And my second question is for LATAM and Southeast Asia, you're highlighting that you're near cash flow breakeven. I appreciate that you're expecting EBITDA to improve in those regions over time. But are there other levers that can help you to generate more positive free cash flow? I assume there's still something to go on inventory. And my third question is finally just in terms of the medium-term guidance, it isn't in the presentations deck. So can you just reconfirm that the medium-term targets of 6% EBITDA margin and breakeven free cash flow? And perhaps looking back versus 12 months ago, how are you tracking versus what you probably expected 12 months ago? Christoph Barchewitz: Yes. Thanks, Russell. Maybe I'll start here and then Helen can build on that. So on the active customer, general comment, I would say is, it's obviously important to recognize, #1, it's an LTM number. So it's always a bit of a lagging indicator. And we've obviously seen that when you look at, for example, the ANZ evolution over time. And as we're going through, for example, the turnaround in Southeast Asia, we would expect to have NMV lead the recovery before it comes fully through in the active customer, partially because of the LTM and partially because of our focus on higher-value customers and the very disciplined approach around customer activation, both new acquisition and reactivation. So from a LATAM perspective, it is a function of our approach and the competitive environment and us being disciplined in protecting both the gross margin and the marketing cost at a level that we think is ultimately the optimum from a profitable journey going forward. To answer the second part of your -- or second question around LATAM and Southeast Asia, yes, we're near normalized free cash flow breakeven, which I think clearly indicates we're not doing much on the CapEx side, as you can see from the group number but it's particularly in those 2 regions, it's really a modest investment into technology. We have obviously the leases that go into a normalized free cash flow and we've been releasing a degree of working capital, in particular, in Southeast Asia to counter the decline in the top line. And the working capital will not repeat in that way. We think there's a bit more to go in Southeast Asia on that. We're very optimized in LATAM, if not maybe a little bit light on the working capital. We will continue to look at all ways of optimizing cash flow but the big driver is really the EBITDA at this point and that's where we want to push in those 2 regions to move higher. And then maybe coming back to the medium-term guidance question around margin. We still believe that we need somewhere around that 5%, 6% or so level of adjusted EBITDA margin. But I think we've chosen to kind of look at the building blocks slightly differently and really focus on the absolute EBITDA, the stable leases, the stable CapEx and generally neutral working capital, although as Helen said, this year, we do expect a bit of cash inflow from the working capital side. So maybe the nuance here is less driving this off the percentage margin and really more looking at the absolute building blocks into moving towards cash flow -- normalized free cash flow breakeven. Hope that helps. Operator: [Operator Instructions] And we have a follow-up question from Anne Critchlow from Berenberg. Anne Critchlow: So I've got 3 follow-ups, if that's all right. And firstly and what steps did you take to focus on higher-value customers? I'm just wondering what that looks like in practical terms. And then secondly, just an update on your AI strategy and the extent to which you're allowing bots on to your site and maybe supporting them to find information. I'd also be really interested to hear your thoughts on how marketplaces can remain relevant in an AI world, lots of discussion around that topic recently. And then finally, just on Southeast Asia. Just wondering what sort of time frame you're thinking about to reach profitability? Christoph Barchewitz: So I'll take the first 2 and then let Helen answer the SEA profitability question. So on the higher-value customers, what it really means is, like every business, we have a very broad range of customer base from people who shop with us literally every other week, very high frequency, very high loyalty, buy both full price and discounted during campaigns and have been with us for many, many years. We're very focused on retaining those customers and giving them value at every part of the journey. And the Front Row program in Australia is a way of doing that in a very tangible way. We have our ZALORA VIP program in Southeast Asia. We're working through a number of initiatives in LATAM around this as well. So this is really focusing on, let's say, the top 25% of the customer base where most of the value comes from in NMV but more importantly, a very, very large share of our profit is really generated. So that's one end of the initiatives. And the other end of the initiatives is to really look at the customers that are not profitable for us and within that to identify how we can either move them into a profitable position and levers there are around shipping fees, they're around the marketing channels that we use. They're around how we trigger conversion from first-time buyers to second and third purchase because we know that once we have 3 purchases, our loyalty forecast is very, very strong. And so it is really both ends of the distribution, if you want, where we're applying. And I think what we're not saying here is we're only going to focus on higher-value customers. We recognize there will always be a distribution but we're trying to tilt the distribution upwards. And as you can see, for example, from the gross margin per active customer improvement of 14%, this is also about moving those numbers forward. So there's a marketing side to this and a marketing efficiency side to this whole strategy but there's also a gross margin per active customer element to this and making sure that, in particular, our discounts are targeted at customers that are loyal or can become loyal versus just churning through and taking advantage of a deeply discounted product but are not actually staying on the platform. So I hope that gives you a bit of color around our customer strategy. The AI topic is definitely very, very high up on the agenda. Our strategy so far is to make sure that our visibility across all of the AI players is strong. We're digitally native. We have 15 years of history of optimizing for that visibility. We have a very large assortment. We have a very well-known brand. And in all of the searches that you can do on those platforms, we come up quite well when people are looking for fashion products, categories, specific trends, those types of things, we are doing already quite well but we're continuing to focus on that and making sure that we're ready for an increase in the traffic coming from those players. So far, this is a very low single-digit percentage across all of our markets. So we're still very early in actually seeing a change in traffic there in our category. How are we addressing the question around the role of platforms in an AI world? I think we generally believe that we are an AI winner, not an AI loser. And obviously, there's a lot of debate in the investor community around that. But we see ourselves as an AI winner. Why is that? #1, because we're digitally native and technology enabled. And so we have a 15-year history of adapting to technology, deploying new technology for the benefit of our brand partners and customers. And we are doing that currently. We've been doing that over the last couple of years. So this is our natural, let's say, playing field. #2, we think that we have always seen players up the funnel that are playing a role in customers coming to our platform. And frankly, this was a fairly concentrated universe of basically 2, 3 companies driving this in all of our markets. So to some degree, more competition in that, let's say, discovery layer is actually, we think, not a bad thing. And we will -- we are looking very actively at both deeper integration and deeper partnering with those players but also where we want to restrict and make sure that we protect our customer base, our organic traffic, those types of things. It's an evolving topic. We are all over it and very, very focused on it because it is a critical driver of the future. In the end, we're in fashion, which we think is a not purely transactional category but we're browsing, discovery, inspiration, entertainment plays an important role. And we have a very large physical component to delivering to the customer. And that side, I think, is very far away from being disrupted by any LLMs or other AI players. And so that side of building the assortment and then making it available with fast delivery, with easy returns, with a trusted player is something that we believe is very important. But just to be clear, we [ believe ] both the discovery funnel up to the checkout and the post-checkout experience is something that we will continue to own and benefit from the adoption of AI by our customers but also throughout our business. Helen, you want to cover the SEA question? Helen Hickman: Yes. Thanks, Christoph. And in your question, you asked when we think SEA will become profitable. So on an adjusted EBITDA basis, SEA turned profitable this year. So it stepped forward close to EUR 5.5 million year-on-year despite the full year NMV decline of 15%. So that's sort of a two-pronged approach around gross margin accretion and then also a disciplined focus around cost. We very much go into 2026 with that same approach, focusing around how we improve our gross margin within the region, also maintain a strong focus around cost discipline whilst we then work very much to turn the rate of decline in the region and to slow that and to ultimately move to growth within the region. Hopefully, that helps. Anne Critchlow: That does. And sorry, a quick follow-up on that. Could you comment also on free cash flow outlook for Southeast Asia? Helen Hickman: Yes. So like all of our regions, our focus very much is to continue to improve their cash position predominantly through improved sustainable profit. So the way Christoph, I think described to an earlier question with the overall structure, it's very much focused around how we improve profit whilst we maintain a disciplined level around CapEx, leases and a slightly favorable working capital position. SEA fits very much in that same framework as we see the evolution of the group. Operator: It appears there are currently no further questions over the phone. With this, I would like to hand over for any webcast questions. Unknown Executive: So we have a few questions about SEA, specifically, at what point do you expect the SEA top line to stabilize? And what is the competitive strategy against intensifying regional players as well as when do you expect the decline in customer numbers to turn around? So we'll start there. Christoph Barchewitz: Yes. So it's obviously hard to predict the timing. But I think from a NMV stabilization, we're looking at it sequentially. As you heard earlier, we have improved from the minus 15% in Q3 to the minus 10% in Q4 and that was clean in terms of the like-for-likes, in terms of the phasing. We now have obviously Q1 in which we have quite a few changes, like Helen mentioned around the real and the Chinese New Year seasonality. And so there's a bit of differences there but we are looking at it really from that perspective. We're planning conservatively for the year to make sure that we are not overstocked. But we do think that we are moving gradually towards a positive territory but that's definitely still a few quarters away given that we're coming from minus 10% in Q4. The active customer number will be lagging and it's also impacted by us focusing on the higher-value customers. So what we would expect is that you see improvements in NMV first and then the active customers kind of following that eventually but instead really driving order frequency and average order value as a way of returning to NMV growth. Competitive strategy is very much focused on our assortment differentiation. So the most relevant brands, driving exclusivity within the brands, so having access to segmented product, brands that are only available on our platform and the dot-com. We also have obviously differentiated experience on the app, especially relative to the general merchandise platforms, which are the main online competitors. And our overall customer engagement is obviously very fashion-centric. The Got You Looking campaign is really stressing that point of differentiation by really being about fashion, style in all aspects of life and about the emotional part of our product category, not focused on price or delivery promise or those types of more hygiene factors that's really dialing up the fashion credibility as a platform and that's a big part of our turnaround strategy here. Unknown Executive: Next, we have a few questions on costs. One for marketing. How much of your net cash position will be reinvested into marketing to reverse the declining trend in active customers? Overall, where do you expect to see cost reductions over the next year? And then also, could you address central costs? Do you expect this to stay flat? Or is there a specific plan to scale that down? And finally, on inventory, where do you expect to see these levels overall, those are the cost areas to cover? Helen Hickman: Okay. Thank you. So let's start with marketing. So we expect to see our marketing percentage of NMV to stay broadly stable at around 7%, which is a trend that we've seen for the past few years. Our focus very much is in investing in marketing with regards focusing on loyalty and profitable -- and attracting our profitable customer base. I think the second question was more about our general overall cost focus and we are expecting to see cost savings into 2026. The answer to that is very much yes, actually broadly sort of an initiatives level. So proactive things that we are doing at sort of at a similar level to that, that we've seen in 2025. Areas of focus continue to be fulfillment, which is a large cost base but we feel there's more efficiencies within the overall fulfillment network. We continue to optimize and streamline our corporate organizational structure. And also, obviously, activities that we implemented towards the back end of 2025 also flow through into an annualization benefit and we'll see the benefit of that coming into 2026. I think there was a specific question with regards our central costs, which are at an adjusted EBITDA level, about EUR 22 million. These consist of both corporate and admin costs, so people and non-people fees but also include our central tech teams of which the majority of the work and focus is supporting our regional platforms. So whilst it's included within our other segments, it's worth noting that they're purely for the benefit of the regional operations. We've seen these costs come down by about 20 -- 10%, sorry, year-on-year and over a 2-year basis, closer to 20%. So the same rigor around organizational structure and nonpeople cost review has been applied to the central costs as it has been, as you'd expect in our regional businesses. And then lastly, on inventory. So we've seen significant declines in inventory over the past 3 years. We expect that very much to stabilize into the future, especially as we then start to build the top line. So we will have to invest in inventory to build and rebuild an retail NMV. However, our focus very much is around efficient assortment. So how we manage the retail and marketplace mix, how we ensure that we've seen improved turns on our inventory and how we maintain that. And also how we keep our aged inventory at levels that we feel comfortable because, again, we've significantly reduced the proportion of our aged inventory over the last couple of years. Unknown Executive: The next question we have is, you say you can double NMV without material additional investment in infrastructure. What does that imply for incremental EBITDA margins? And is that the basis for your medium-term margin ambition? Christoph Barchewitz: Yes. So this is definitely one of the key opportunities. I think for anyone who's been following us for a longer time, we've been very clear that we have significant capacity in our infrastructure, especially in LATAM and in Southeast Asia, which we're obviously trying to leverage through growing the top line but also through shifting more to Fulfilled by and in Southeast Asia services for brand partners and sales that are not on our platform. We do expect that when -- if you were to get to the scale that is mentioned in this question, we would be definitely materially more profitable than we are today because the incremental flow-through from that NMV and that volume would help our fixed cost coverage in fulfillment but also in other aspects of the business quite materially. But equally, as you know from our guidance and the building blocks we've talked about, we are not saying that we need a couple of hundred million euro of incremental NMV to achieve normalized free cash flow. So just want to be very clear about that. We think we're on a good journey. Obviously, if we can get to the upper end of our guidance range this year, we would be closer to that. If we're at the lower end on top line and adjusted EBITDA, we'd be a bit further away from that. So I hope that gives you a bit of color of how we think about the path here. Unknown Executive: Next, we have a few questions around 2026 guidance, specifically on ANZ, is customer growth accelerating? And is that underpinning the top end of your guidance range? And then can you elaborate on the different H2 dynamics regarding NMV growth? If January and February are starting somewhat slower, should we be interpreting this as a warning sign for the year? Helen Hickman: Thank you. So let's firstly touch on Australia. So yes, we're expecting a continued positive trend in our Australia active customers and this being off the back of our focus around customer engagement. So the continued Got You Looking campaign and then the more recently launched loyalty program, Front Row, that was launched back end of the quarter 4 and that gaining momentum into 2026. With regards guidance and half 2, so our 2 largest markets do face near-term headwinds. So as I mentioned, in Australia, we're seeing weaker customer -- consumer sentiment that was driven by a recent interest rate increase and we're seeing persistent inflation. And in Brazil, we're seeing -- continue to see high interest rates and also is the uncertainty in the middle to back end of the year of the upcoming general election in Brazil. We've also got a general election in Colombia in May and the World Cup, which adds additional volatility. I would say that -- those scenarios are obviously built into our guidance of today of minus 4% to plus 4%. And obviously, it depends on both those big markets but also our rate of reduction or NMV decline and then this -- the rate of that turnaround in SEA also plays into the ability for us to achieve within that range or the pace with which we have achieved in that range. Unknown Executive: We have no further questions on the webcast. So thank you all for joining today. If you have any further questions, please reach out to the Investor Relations team directly.
Operator: Thank you for standing by. My name is John, and I will be your conference operator today. At this time, I would like to welcome everyone to the WEBTOON Entertainment Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions] I would now like to turn the call over to Soohwan Kim, Vice President of Investor Relations. Mr. Kim, please go ahead. Soohwan Kim: Good afternoon, and thank you for joining us. As a reminder, our remarks today will include forward-looking statements, including those regarding our future plans, objectives and expected performance and our guidance for the next quarter. Actual results may vary materially from today's statements. Information concerning risks, uncertainties and other factors that could cause these results to differ is included in our SEC filings, including those stated in the Risk Factors section of our filings with the SEC. These forward-looking statements represent our outlook only as of date of this call. We undertake no obligation to revise or update any forward-looking statements. Additionally, the matters we discuss today include both GAAP and non-GAAP financial measures. Reconciliation of any non-GAAP financial measures to the most directly comparable GAAP measures are set forth in our earnings press release. Non-GAAP financial measures should be considered in addition to and not a substitute for GAAP measures. Joining me today on the call are Junkoo Kim, Founder and CEO; David Lee, CFO and COO; and Yongsoo Kim, Chief Strategy Officer. With that, I will now turn the call over to our Founder and CEO, Junkoo Kim. Junkoo Kim: Thank you, everyone, for joining us today. I will make a few brief comments on our performance, and then David will provide more details on our results and outlook. For my first thought on the year, please refer to the shareholder letter posted on our Investor Relations website. We reported solid year 2025 results with revenue growth of 3.9% on a constant currency basis and adjusted EBITDA of over $19 million. We are pleased to see MPU growth turn positive in the first quarter, driven by growth in Korea and in Rest of World. We made significant progress advancing our personalization tools throughout the year. As we have become more proficient with AI, we are now making increasingly personalized content recommendations that are unique to our users. In Korea, where we have seen the most progress, we also increased the content diversity at the same time. We are seeing MPU growth as users need more titles and episodes as they get more relevant recommendations. We believe that we can take the learning from Korea and apply them to other regions. We are excited that following the end of Q4 on January 8, 2026, the Walt Disney Company and WEBTOON Entertainment announced that we have completed the previous announced strategic agreement, including both the development of an all new digital comics platform as well as Disney's approximately 2% equity investment in WEBTOON Entertainment. We are targeting a 2026 launch for this new platform. We have already launched a total of 12 format titles on WEBTOON's Mobile vertical-scroll format following the initial collaboration announcement with Disney in August 2025. These have included stories from Amazing Spider-Man, Star Wars and Avengers, and we look forward to introducing an original series later this year. This is a powerful next step for our growing global business and a strong foundation for even greater collaboration with Disney in the year ahead. Finally, we continue to advance our flywheel with IP adaptations, which further keep users engaged with our platform. And I would like to highlight just a few examples here. Animation continues to be a major initiative for us, and we are excited to announce that Amazon MGM Studio greenlit Lore Olympus to be developed into a new animated series from WEBTOON Productions and The Jim Henson company. In Japan, anime is a particular focus, and I'm happy to announce that we reached our target of 20 new anime projects in 2025. We are excited to have launched another anime series on Crunchyroll with DARK MOON: The BLOOD ALTAR this January. We are also seeing success with live action as Netflix announced that viral hit will be adapted into a Japanese live action series following the success of our anime adaptation in 2024. Overall, we believe these financial and operational results demonstrate that our flywheel and strategy are working. Our ecosystem of content, creators and users continues to drive the success of our business. That said, we acknowledge that we have an opportunity to accelerate our flywheel and realize our growth potential faster. We remain laser-focused on deepening engagement across our platform to foster a stronger, more vibrant fandom and look forward to sharing more about our plans in the quarters ahead. With that, I will now turn the call over to David. David, please go ahead. David Lee: Thank you, JK, and thank you, everyone, for joining us. For the fourth quarter, we reported revenue of $330.7 million, in line with our expectations. Our reported revenue was down 4.1% on a constant currency basis and 6.3% on a reported basis as paid content growth was more than offset by declines in advertising and IP adaptations. For the full year 2025, we reported revenue of $1.4 billion. Our reported revenue grew 3.9% on a constant currency basis, driven by constant currency growth in all revenue streams and grew 2.5% on a reported basis. We expanded gross margin by 100 basis points to 24.3% in the fourth quarter as we lapped a number of discrete items that were recategorized from marketing to cost of revenue during the year. We believe we can expand gross margin over time as we execute on our cross-border content distribution strategies and grow higher-margin businesses like advertising. Net loss was $336.5 million in the quarter compared to a loss of $102.6 million in the year prior, driven primarily by goodwill impairments. Net loss for the full year was $373.4 million compared to a loss of $152.9 million in the year prior. We exercised cost discipline through the quarter, leveraging our G&A and marketing expenses to deliver adjusted EBITDA growth. Adjusted EBITDA was $0.6 million in the quarter, exceeding the high end of guidance. This compares to a negative adjusted EBITDA of $3.5 million in the same quarter of 2024. For the full year, adjusted EBITDA was $19.4 million compared to an adjusted EBITDA of $68 million in the year prior. As a result, our adjusted EPS for the quarter was $0.00 compared to a negative adjusted EPS of $0.03 in the prior year and $0.15 for the full year compared to $0.57 in the prior year. Turning to operational health. We continue to focus on driving users to our app as well as converting them to paying users. While fourth quarter app MAU and webcomic app MAU declined 6.5% and 2.6%, respectively, year-over-year, we were pleased to have driven MPU growth of 0.7%, evidence that our personalized content recommendations are working. Importantly, our English platform webcomic app MAU was up 2.2% year-over-year. For the full year, MAU of 7.5 million declined 2.9% year-over-year. While app MAU declined 4.3%, webcomic app MAU grew 1.9% and English platform webcomic app MAU was up 12.8% for the full year. Global MAU declined 1.7% in the quarter. We estimate that global MAU benefited from roughly a 10 percentage point increase in Wattpad activity resulting from automated web traffic in certain noncore markets. While we saw a small increase starting in late Q3 2025, the web traffic peaked in Q4 2025, and we are seeing reduced impact in Q1 2026. Notably, this had no impact on app MAU and is not expected to have a material impact on our business. For the full year, total MAU of $157 million declined 7.1%. Now I'd like to provide an update on our revenue streams at a consolidated level. Starting with paid content. In the quarter, we posted 0.4% revenue growth on a constant currency basis. For the full year, we posted 1.5% revenue growth on a constant currency basis. While ARPU declined 0.3% in the quarter on a constant currency basis, we were pleased to see 4.6% growth for the full year. We believe we can continue to drive MPU growth as we refine our AI-driven personalized recommendation model. Advertising posted a decline of 10.3% in the fourth quarter on a constant currency basis year-over-year. In Korea, we saw similar declines from the same e-commerce advertising partners last quarter, but we experienced growth from other partners. Ad revenue from NAVER was relatively consistent with the fourth quarter of the prior year. For the full year, we posted 0.4% advertising growth on a constant currency basis. Finally, our IP adaptation business saw revenue decline 29.7% year-over-year on a constant currency basis in Q4. As we've shared previously, revenue recognition for IP adaptations can be volatile from quarter-to-quarter, depending on the timing of key milestones for various projects. For the full year, IP adaptation revenue was up 35.5% on a constant currency basis. We had a strong year of IP adaptations in Korea, particularly driven by the theatrical success of My Daughter Is a Zombie and The Trauma Code on Netflix. Now I'd like to look at our results in the context of core geographies. In Korea, during the fourth quarter, our revenue declined 9.1% year-over-year on a constant currency basis as growth in paid content was more than offset by a decline in advertising and IP out of patients. For the full year, we posted revenue growth of 5.9% on a constant currency basis. During the fourth quarter, while MAU of $24.3 million decreased 10.8%, we were pleased to see MPU of 3.7 million grow 3.3% and a paying ratio of 15.1%, reflecting an increase of 207 basis points compared to the fourth quarter of 2024. Korea ARPU on a constant currency basis was up 0.9% compared to the fourth quarter of 2024. For the full year, Korea MAU was $24 million, decreasing 11.1% year-over-year, while Korea MPU was $3.6 million, declining 5.3% year-over-year. Full year paying ratio was 14.8%, up 91 basis points year-over-year. Full year Korea ARPU grew 4.7% to $8.2 million on a constant currency basis. Moving to Japan. For the quarter, Japan revenue declined 1.0% on a constant currency basis. Japan saw a single-digit decline in paid content, offset by a single-digit growth in advertising and IP adaptations, all on a constant currency basis. For the full year, we posted 3.9% revenue growth on a constant currency basis. LINE Manga continued to be the #1 overall app for revenue, including mobile games for the quarter as well as the full year according to data.ai. Compared to Q4 2024, Japan's MAU of 22.2 million increased 0.5%. MPU of $2.1 million declined 6.9% and paying ratio of 9.5% was down 76 basis points year-over-year. Fourth quarter Japan ARPU of $23.30 grew 5.7% year-over-year on a constant currency basis. For the full year, Japan MAU increased 4.9% year-over-year to $23 million, while Japan MPU of 2.2 million declined 0.1% year-over-year. Full year paying ratio of 9.7% was down 49 basis points year-over-year and ARPU grew 3.4% on a constant currency basis. We expect to complete our infrastructure investments by the end of Q1 and redeploy engineering resources to support improvement across our personalized recommendation tools. We believe more personalized AI recommendations may drive MPU growth in Japan as we've done in Korea. In Rest of World, we saw revenue growth of 0.8% year-over-year on a constant currency basis in the quarter, driven by single-digit growth in paid content and triple-digit growth in IP adaptations, partially offset by a double-digit decline in advertising. For the full year, we posted a 2.1% revenue decline on a constant currency basis. Fourth quarter MAU was flat year-over-year after including the 10% growth impact in Wattpad activity resulting from automated web traffic. MPU grew 5.7% and paying ratio of 1.5% increased 8 basis points compared to the fourth quarter of last year. Fourth quarter Rest of World ARPU of $6.50 declined 5.1% year-over-year on a reported and a constant currency basis. For the full year, Rest of World MAU of $110 million decreased 8.4% year-over-year, while MPU of $1.7 million declined 1.5% year-over-year. Full year paying ratio of 1.6% was up 11 basis points year-over-year. Full year Rest of World ARPU increased 0.5% to $6.60 on a reported and constant currency basis. Turning to profitability. Gross profit for the quarter was $80.5 million compared to $82.3 million in the prior year. This resulted in a gross margin of 24.3%, which expanded 100 basis points compared to the prior year. Full year gross profit was $322.2 million compared to $339.1 million in the prior year, translating to a gross margin of 23.3%, which decreased 180 basis points compared to the prior year. Adjusted EBITDA for the quarter was $0.6 million compared to a loss of $3.5 million in the prior year, and full year adjusted EBITDA was $19.4 million compared to an adjusted EBITDA of $68 million in the prior year. On the cost side, Total G&A expenses for the quarter were $65.4 million compared to $77.8 million in the prior year quarter as we exercised cost discipline. Total general and administrative expenses for the full year were $259.5 million compared to $332 million in the year prior. Interest income in the quarter was $4.5 million compared to $6.0 million in the prior year, and other loss was $9.2 million compared to $6.2 million in the prior year period. For the full year, interest income was $19.2 million compared to $15.8 million in the prior year, and other loss was $9.8 million compared to other income of $6.5 million in the prior year. We had an income tax benefit of $18.4 million in the quarter compared to an income tax expense of $4.9 million in the prior year. Income tax benefit for the full year was $16 million compared to tax expense of $3.6 million in the prior year. Depreciation and amortization was $10.6 million in the fourth quarter compared to $12.1 million in the prior year. Depreciation and amortization for the full year was $35.4 million compared to $40.1 million in the prior year. Net loss of $336.5 million was driven by impairment losses on goodwill, the majority of which was attributable to Wattpad. This compares to a net loss of $102.6 million in the prior year quarter. Net loss for the full year was $373.4 million compared to net loss of $152.9 million last year. As a result, fourth quarter GAAP loss per share was $2.36 compared to a loss per share of $0.72 in the prior year period, and full year loss per share was $2.66 compared to a loss per share of $1.21 in the prior year. Adjusted EPS was $0.00 in the quarter compared to a negative adjusted EPS of $0.03 in the prior year period, and full year adjusted EPS was $0.15 compared to $0.57 in the year prior. Our balance sheet remains strong with a cash balance of $582 million and another $11 million of short-term deposits included in other current assets at year-end. We generated $11.2 million in cash flow from operations during the year. We have a capital-efficient business model, and we believe we have the financial strength and flexibility to invest for the long term. Before I wrap up, I'd like to spend a few moments discussing our first quarter outlook. For the first quarter of 2026, we expect to deliver revenue growth in the range of negative 1.5% to positive 1.5% on a constant currency basis. This represents revenue in the range of $317 million to $327 million based on current FX rates. We anticipate first quarter adjusted EBITDA in the range of $0 million to $5 million, representing an adjusted EBITDA margin in the range of 0% to 1.5%. We continue to believe in the fundamental health of our long-term strategy, underpinned by our powerful flywheel of creators, content and users. As we've shared today, we're making numerous investments across all 3 of these areas that we believe will support a return to double-digit year-over-year growth by the end of the year. In closing, I'm pleased with the progress we made in 2025. We're encouraged by the positive signs we see in key metrics like MPU, and we look forward to executing our strategy in 2026. With that, I'd like to turn it back to our operator to begin the Q&A session. Operator: [Operator Instructions] Our first question comes from the line of Mark Mahaney with Evercore. Mark Stephen Mahaney: Okay. Could I ask 2 questions, please? First, any more details on this launch coming up, the 2026 launch with Disney, the all-new digital comics platform? Just talk about what needs to be done in order to put that together, marketing plans, product plans? How far along is this platform to being launched? And then secondly, David, on this return to double-digit year-over-year growth by the end of the year. If that happens, could you just maybe give a little bit more color on that, either by region or by revenue segment? Like what are the factors most likely? Is it recovery in the rest of world market? Is it Japan or Korea? Or is it paid content? What are the factors most likely to get to that return to double-digit year-over-year growth by the end of the year? David Lee: Thanks, Mark. This is David Lee, and those are 2 good questions. Let me take them in turn. First, with regard to Disney, it has been some time since we last spoke to you. So I wanted to be complete. Since we last spoke, first, remember that Disney closed their investment in us on January 8 of this year, purchasing 2.7 million shares for approximately a purchase price of $32.8 million. It's also important that we've been hard at work with them. You'll note that we have launched already with their collaboration 12 reformatted titles, including 7 since the end of Q3. And while I don't think I need to list them all as you'll find them in the materials that we provided, I'm particularly impressed by the strength of those stories, stories that include Predator and Star Wars and even The Unbeatable Squirrel Girl, et cetera. But to your broader question, we've always talked about 2 elements: one, the ability to tell original stories that we have demonstrated success with in the past, new to the world stories. And in our disclosure, we noted we are committed to doing so at least one this 2026 period. I think that's important because I think new-to-the-world originals has powered a lot of the creator success as well as the consumer delight on our platform. The second is we've committed to launching the new consumer platform. Remember, we intend to build and operate completely this new platform in collaboration with Disney. We committed to launching that by the end of the year. You'll note that while I mentioned double-digit growth in revenue by the end of the year, I did not note any disclosed additional investment or burden on the company to achieve these outcomes with Disney. Let me turn to your second question because I think it's important. We recognize that in the guidance we provided, which is flat growth for Q1, that there may be a misconception. We're very confident in our platform. Our flywheel is healthy. We really will deliver double-digit growth by the end of the year, and it comes in 3 parts. First, you will see a return to the strong growth we have demonstrated in paid content, the core of our business. You'll note that we mentioned that in Japan, which has become a very large business for us, where we're still #1 in revenue when you include all consumer apps, including mobile games for 3 quarters running, that we had to take time to invest in infrastructure. While we complete that, we noted by the end of this quarter, Q1. And as a result, you could expect that will drive paid content growth towards the end of the year as one example. The other is advertising. Korea is our most mature business in advertising, and we've been clear now in the last 2 quarterly releases on the impact of a single discrete advertiser and e-commerce provider. We also talk about the health broadly in our ability to grow our legacy businesses and advertising in Korea and the upside future opportunity in Rest of World. This will also contribute to double-digit growth. And then finally, crossover IP, JK was very clear about some very compelling examples. There will be more to come. While this is only 8% of our total revenue in the reported quarter of Q4, the ability strategically for next-generation consumers, for example, in the U.S., where Yongsoo Kim has led growth in English web comic MAU and now you're seeing in MPU for them to see on the big screen or on the small screen, stories that they can discover not just on our platform. And I'll let the results come through the course of the year, but I think this is an important component of our growth by Q4 of 2026 as well. Yongsoo Kim: Mark, this is Yong Kim, the CSO of WEBTOON. Regarding the Disney app launch within this year, the most critical and time-intensive component is the development of the new product. Disney's best content library is already in place. The key is building a new app that delivers the best possible user experience around discovery and recommendation so that this library can be presented to the user in the most compelling way. Operator: Our next question comes from the line of Eric Sheridan with Goldman Sachs. Unknown Analyst: This is [ Julie ] on for Eric. Two, if I could. You talked a little bit about the progress made to your recommendation algorithm in Korea as being a driver toward improved user engagement. Could you talk and expand a little bit around the key learnings within that market and how we should be thinking about the application of various recommendation algorithms to other users or within other markets more broadly? And then on the creator side, you talked a little bit about content diversification coming from the rest of the world. Any updates on how we should be thinking about competitive dynamics for attracting and retaining creators, specifically within the English language markets? David Lee: Thanks, Julie. Good questions. Let me address the first. We are a tech company at heart. And with regard to our business in Korea, we're very pleased to see that in our original business, you're still seeing strong performance. There, metrics like MPU are very important, where we have approximately 50% household penetration in a market where we're an everyday household name, being able to see, as you saw, the total company delivered 0.7% increase in paying users, but Korea specifically in the breakout you saw delivered plus 3%. Because we have very strong awareness in Korea, product innovation and content presentation is an ongoing constant endeavor for us as a tech company. And this AI-driven and machine learning-driven personalization engine is particularly relevant for our most mature market because there's habit formation already in place. So we're pleased with that. And frankly, I think you're going to see more of it outside of just our original foundation market. In fact, we even disclosed that as we've completed our infrastructure project in Japan, we specifically tried to be clear in our script that you will see machine learning-based recommendation engines and CRM that we think will help drive and return the Japan business to the historic growth that you've seen in the past. You'll hear more about our intent to drive global innovation from one market across all markets, but AI is a proven tactic for us, and you'll see more of it as we roll out more results this year. Your second question was with regard to creator content diversification. And I think your question was particularly focused on the market here in the U.S. or what we call the English-speaking markets. So first, I just want to draw attention to the fact that we've intentionally kept our investments in marketing and in product innovation in what we call Rest of World, our English webcomic app MAU growth, which grew 2.2% and prior grew double digits, is now being accompanied with NPU growth. We didn't break it out for you at that level of disclosure, but I wanted to call it out qualitatively as I think it's a meaningful milestone for the company. In order to create a healthy opportunity for creators, it starts with creating a growing and healthy base of paying users, which I think you're seeing today. And then I'd point you to the ongoing comments by JK in his script, but also the shareholder letter, a number of the exciting crossover IP projects that we've talked about. We talked about Chasing Red, starring Riverdale star Madalaine Petsch. We talked about Lore Olympus being greenlit by Amazon. These represent not just great opportunities for us and shareholders, but this represent proof points for that creator who is an amateur, of the 24 million, who wants to be published globally and have a voice. I think there'll be more to come on this, but I think both the platform as well as the off-platform opportunities we'll pursue are reasons why our creator ecosystem remains strong. We are not seeing any pressure with regard to the strength of that part of our flywheel. We think it continues to be foundational and a point of leverage for us. Yongsoo Kim: Regarding the second question, in the U.S., we continue to focus on strengthening our English original content development, not only by bringing proven hits from Korea and Japan, but also developing strong original title locally. Following the success of Lore Olympus, we have seen promising momentum from titles such as Starfish late last year, Chip King earlier this year. Across all markets, including English market, we will continue to carefully manage the balance between globally successful IP and locally developed content. Operator: Our next question comes from the line of Benjamin Black with Deutsche Bank. Benjamin Black: First, a follow-up on the Disney platform. Can you maybe just dig in a little bit to the economics a little bit? How should we be thinking about the margin profile of the new joint platform compared to the core WEBTOON app? And then secondly, maybe a bigger picture question. If we sort of zoom out and look at the broader advertising opportunity for your platform, maybe speak to us a little bit about the investments that are still required to really sort of address that potential opportunity going forward. David Lee: Great. This is David, and I'll start, but Yongsoo will jump in shortly. With regard to what we've disclosed in the past, and here, I'm not going to speak on behalf of Disney. I'm going to focus more on our experience at WEBTOON. Remember, Benjamin, we have partnered with great companies in the past. And we've talked about the economics, the unit economics of when we have our own original, as Yongsoo just mentioned, or when we have a wonderful what we call reformatted title from somebody else's universal platform. When you take out the cost to produce great hits, the ongoing cost structure and margin from a great piece of content, whether they are created by us as an original or by our creators or from outside our platform, we've never disclosed a meaningful margin drainage or impact. And I think from that, you can infer that we're very excited about collaborating not just with Disney, but with anyone who can see us as the destination for this growth we're seeing amongst Gen Z and Gen Alpha here in the U.S. I don't want to go more into detail on Disney. Yongsoo can provide some color on the strength of that relationship. Let me briefly cover ads. When you look at our ads business, we are very careful to maintain the long-term proposition for Rest of World as we're quite early. And that includes actions we've taken to recently focus, for example, the Wattpad effort separate from our broader WEBTOON opportunity in the U.S. This is invest in the fundamental stage for Wattpad. And so I would love to be able to give you more milestones of progress, but we're just not yet there. We're much more focused on growing the paid content business in the U.S. with Global WEBTOON and putting in place the framework for advertising growth second. Let me turn to Yongsoo for any comments you may have. Yongsoo Kim: Yes. Regarding the new platform, as the operator of the new platform, WEBTOON will recognize all revenue and cost. With respect to the content and brand licensing fee, the structure has been determined in a manner that is totally consistent with our existing business. Operator: Our next question comes from the line of Doug Anmuth with JPMorgan. Dae Lee: This is Dae on for Doug. I have 2 as well. First one on your expectations to exit the year growing double digit. I appreciate the comment you gave on paid content versus advertising and by regions. But could you break that down a little bit more? And tell us if the excitement is more around what you're seeing on the MPU side? Or is it more on the monetization side? Because in 2025, the content growth appears to have been driven by ARPU growth. So just curious like how you guys are thinking about the drivers of the double-digit percent growth across those 2? And then secondly, I appreciate the IP adaptation revenue is milestone driven and lumpy quarter-over-quarter. But curious if you can share like how your 2026 pipeline look compared to 2025? And like how much of that or how much contribution from IP addition is baked into your double-digit percent growth exiting the year? David Lee: Good question, Dave. Thanks for them. First, with regard to the double-digit growth we expect by the end of 2026, I think I was careful to make sure that you understood that, that would be driven by both paid content and an improvement in our advertising business trends as well. When one looks at paid content, as you know, the different flywheels we have in Korea, Japan and rest of world are in different states. So let me have you recall what we've described in the past as I think they're important. In Korea, where we have a strong penetration and awareness, MPU and ARPU is critically important as product innovation that we just discussed, including innovations in AI as well as the rollout of content keep that market strong, and we're pleased with the strength of that market. In Japan, when one excludes the recent effort to create the infrastructure to persist in the growth we saw in the first half of 2025, that is a market where LINE Manga is the #1 app. And as you know, we've historically seen not just increase in ARPU, but also a fundamental increase in actual top-of-funnel metrics. So there, we're very early with arguably less than 20% household penetration in a market that is very accustomed to purchasing our digital format. So I would expect that in the mid- to long term, you should see Japan return to healthy growth, not just in ARPU, but also in more mid- and top-of-funnel metrics. And then in Rest of World, we are very early. It's our largest addressable market. We're pleased to have noted the MCU year-on-year growth disclosed in the quarter and the previously disclosed for the last 2 quarters growth in top-of-funnel web comic app MAU in English, but we have not yet committed to significant at-scale revenue growth as we are preparing that market given its potential size for mid- to long-term opportunity in revenue. With regard to advertising, as I mentioned, Korea represents one of our larger opportunities in advertising and a discrete reliance on one e-commerce provider accounted for some of the noise in the numbers in Q4 as disclosed. We believe we have a healthy business and a strong team in more mature markets, and we believe it's very early days for the growth in Rest of World. Japan, as we've described in advertising, has consistently been an area of strength for us, particularly in rewarded video, and I would expect us to return to that strength by the end of this year as well. With regard to the IP pipeline. First, despite the quarterly shifts that you hear us discussing, I want to review the fact that IP adaptation revenue for all of fiscal 2025 grew a whopping 35.5%. So this is a very healthy business, not measured in the swing between one quarter or the next, but zooming out more broadly as a lever point for us to create faster adoption. Qualitatively, I would say we are very pleased with our pipeline in 2026, but we are cautious about promising a specific quarterly impact from that pipeline as we all know that 1 quarter can shift when you are producing great IP hits. And turning it over to Yongsoo now for a comment. Yongsoo Kim: Regarding the end of year growth, the growth of our weapon platform business typically follows a pattern where MAU increased first, followed by MPU growth, which then drives revenue expansion. Last year, we shared updates on MAU growth for our English WEBTOON platform, and we are now seeing that momentum translate into MPU growth in the region with the MPU growth having resumed. In Japan, revenue growth was strong over the past 2 years, but MAU growth was somewhat stagnant. We believe we are now seeing the impact of that dynamic. In response, we are preparing initiatives aimed not only at driving revenue growth in Japan, but also at expanding the overall user base. We expect these efforts to begin delivering meaningful results in the second half of this year in Japan. Operator: Our next question comes from the line of Matthew Cost with Morgan Stanley. Matthew Cost: I guess on the 12 reformat titles of Disney content that are on the WEBTOON app, how is engagement with those titles going? Is it attracting new people? Is it driving new forms of engagement? I guess when you think about the goal of bringing the Disney content on to WEBTOON, what are your early learnings in terms of moving towards that goal from those titles that you put on the app? David Lee: Thank you, Matt. I appreciate the question. First, it is quite early going, candidly, in our collaboration with Disney. I think the pace that we're demonstrating is a reflection of just how large scale the opportunity set is for us in this area, this area, call it reformatted stories on our platform. So we're pleased to present the 12, including the 7 that we have recently announced since the end of Q3, but it's far too early for you to really have a meaningful sense on specific metrics. For us, I think this opportunity won't be measured in a quarter's performance. The collaboration with Disney was always intended for the long-term success of both enterprises, and we're very excited about that. So as Yongsoo mentioned, having an original this year and not just that, but being able to really build this consumer platform he mentioned right and launch it before the end of the year, these are the areas we're focused on versus on probably too early to give results on these important reformatted titles. Operator: Our next question comes from the line of Andrew Marok with Raymond James. Andrew Marok: Maybe one on advertising, if I could. As we're seeing kind of the broader advertising ecosystem take a shift toward more performance-oriented outcomes over brand-focused outcomes, I guess, how is that informing your investment road map, your product focus as you're building out your ad ecosystem? David Lee: Well, it's interesting. When you look at the business with regard to Korea, we have a long history of great products built by our team that are absolutely anticipating future trends around performance. And I'm not going to go through all of them, Andrew. We can do it in a follow-up meeting. But if you look at that business, we've set the pace in many ways for products that are very much tied to the publisher or the advertiser success on platform. I think rewarded video, but not just that. We talked to you about our off-platform deals with large e-commerce creators, one of which we just mentioned. When you look at our business in Japan and Rest of World, we're really just at the beginning stages of rolling out the infrastructure. You should anticipate in the Rest of World business here in the U.S. for us to have long-term success, but it will take us time to establish the direct ad sales force and to build for the North American market specifically, product offerings and advertising that are not just exported from our success in Japan and Korea. That's why we are very cautious about providing any short-term expectations for the business as we recognize we have to build for the market, and that will take us time. Operator: Thank you. Ladies and gentlemen, that concludes our question-and-answer session and today's conference call. We would like to thank you for your participation. You may now disconnect your lines. Have a pleasant day.
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: 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.
Martina Kalkhake: Good afternoon, ladies and gentlemen, and welcome to our webcast on Bilfinger's Full Year and Q4 2025 results. My name is Martina Kalkhake, and I'm joined today by our Group CEO, Thomas Schulz; and our Group CFO, Matti Jakel. We will start with the presentation of the quarterly highlights and also the full year financials and then open up the call to your questions. [Operator Instructions] The event will be recorded also as usual. Now I hand over to Thomas. Thomas Schulz: Thank you very much, Martina. Hello, everybody out of the sunny Mannheim here in Germany. When we look into the year 2025, we can say that we achieved all financial targets what we set out for the year. It was a year with clear market -- our market position expanded, but in a very volatile environment. Our orders received went up 6%, revenues 8%, EBITDA margin up by 30 basis points and free cash flow significantly up to EUR 330 million. We propose a share increase from EUR 2.40 to EUR 2.80 per share. The outlook for 2026, we fixed with EUR 5.4 billion to EUR 5.9 billion, and the EBITDA of 5.8% to 6.2%. On our list, where in the last year acquisitions, we did 3 acquisitions, and we announced 1 signing in that case for Turkey. When we then look into the targets a little bit more detailed, you see on the left side, the revenue development, '24 full year to '25 full year. We achieved an 8% growth and a 4% organic. In EBITDA, we are up 13%. This proves that our system, our strategy with operational efficiency is actually working quite well. Our free cash flow made a significant jump upwards from EUR 189 million to EUR 330 million, which is a 75% increase. Our outlook was EUR 300 million to EUR 360 million but that was actually brought up during the year. When we then look into that what we do as a company, you know that sustainability is the core. Efficiency is the core of the Bilfinger Group to improve that on our customer site and customer businesses. On that very lively slide, I would like to have your focus on the left down part, the greenhouse gas emissions, Scope 1 and 2 intensity measured in CO2 versus million euro revenue. And there, we have a significant step improvement by minus 15% from '24 to '25. The second thing is in the middle of the slide, you see more than 0.5% of our revenue as an investment in learning and development for our people. Our people are our assets. Our people are our reputation, our competence and, in that case, our future. That target, of course, we fulfilled for 2025, and we will fulfill it for 2026 too. Above that, it's about safety. Safety is not only important that all our employees and people related are safe and in safe working conditions, it is actually for our customers a quite good KPI to see how our performance as a company, as a group on customer side is working. And we can announce with, yes, quite a lot of being proud of our own people that we had one of the best years ever in the Bilfinger Group. We actually improved the TRIF from 1.12 down to 0.91 and the LTIF significantly from 0.32 to 0.18, which is both world-class and shows the position of us to help customers to get more efficient. Next thing is that we measure our business in 4 categories because for mechanical industrial service, the European taxonomy and classification out of Brussels just forgot about that part of the industry, which, of course, is quite important. So we introduced, at the beginning of '23, our own classification. What you actually know when you buy, for example, a fridge in an electronic store. A is very environmental friendly, D is not environmental friendly. And here, you see the year '23, '24 and '25 on the left side. And you see that we are in the categories with the darker blue color, step-by-step going up when the gray one, which is actually the coal and fire energy generation-related business is slightly going down. To give you a little bit more information you have on the right side, some of the orders. For, a, it's a clear energy generation CO2 reduction direct business; and, b, it's enhancing energy efficiency and then, c, is all the support for that work. If we then go further to the industry outlook and industry development, how is the business going? We use, for quite a while, the production index and you have that on the left side and its index the first time here to the year 2023. Before it was 2019, the last year before COVID and '23 is the first year after COVID, hardly can say it was completely over, but a good measurement. And you see 4 graphs and the graphs actually symbolize the different industries. Of course, the most sticking out is, of course, the green one, pharma, biopharma with quite an increased outlook to EUR 130 million up in the index up to 2030. Then you have energy, then you have oil and gas and then you have chemicals and petrochem. On the right side, you see very much what our share is. The biggest industry we are operating now in is energy with 24%. The demand is okay and good. And then we have chemicals and petrochem, which is 23%. Demand goes sidewards. And here, the sidewards movement is predominantly out of Germany. We don't see further going down but we don't see a significant up no matter that they are the first positive signs at the end of the tunnel. Then we have oil and gas with 18% where the demand is good, too. And of course, pharma, biopharma, where we still see quite a positive market. Important in that is our outsourcing potential, the potential where customers decide or could decide to give us, Bilfinger, a big part of their complete maintenance business because we are experts in it. We do it more than 1,000 times per day, and that actually generates for the client a lot of positive profit impact. These outsourcing potentials are significant good in the chemicals and petrochem because they are -- our customers are there for quite a while under pressure. And you see energy is good. Oil and gas is good and pharma and biopharma is good, and it's part of our growth story. Then we go further. It's about selected orders. We always show you free orders of different geographies and different industries. On the left side, it's from our dear client, Borealis in Sweden. It's actually about the responsibility of Bilfinger to create an increase in production capacity in chemicals and petrochem. In the middle part, it's about energy. It's Estonia, our customer, Utilitas, and again, it's about district heating. We in Bilfinger a believe strongly that district heating is an ongoing positive development. And it makes actually from an energy point of view, a lot of sense. On the right side, we have oil and gas out of Germany. It's the company, Gassco, and it's about the reliability of the gas supply and gas infrastructure, which is nowadays more important than ever before. Out of that, we go to innovation because we, as an industrial service provider, have a fantastic position by having most of our people permanently on customer side, to create ideas and to make products out of it. This product, what we show today, is the Bilfinger Acoustic Corrosion Detection System. When you are in a processing plant, you have pipes, you have containers, you have storage tanks with material in it, liquids, gas, powder, partly flammable, partly quite aggressive in the environment. And when you try to detect corrosion, which is, of course, important to know what happens, you have normally in regular operation to empty all of that so that you can make your measurements. We developed together with other partners, a special acoustic emission sensor where we can go in a current environment in operation into the plant and measuring the effect of corrosion as a potential threat, leakage and so on. That is not only reducing the downtime for the customer and bringing up cost savings for the client, it is a significant safer approach and fits very much into our safety story. Out of that, we come to the figures. On the top line is our more or less already quite famous opportunity pipeline, what we invented several years ago. It shows actually indexed to 2 years before the amount of possible opportunities for the Bilfinger Group judged by if they will, out of our point of view, happen and if we have a chance to take the order. And when you see the development of the fourth quarter in the last 2 years, we actually improved with that potential what we have in front of us to roughly 110 versus that what we had at the beginning of the year -- at the end of the year 2024 or in the year 2025 -- or '23 and '24. When you look into it, a part of that improvement, of course, comes through our quite active M&A strategy, what we drive. Each M&A is, of course, adding us more potential. Out of that, the orders received, when you look here, we actually had a good year, but as it is typical for us as the Bilfinger Group, we have quite a fluctuation between the quarters in the order intake. It is based on the fact when milestones or contracts are dropping into a quarter from a timing or not. So out of that, we had organically and inorganically negative development versus the quarter 4 in 2024. But our order backlog throughout the year and versus the quarter actually improved by 5% or 4%, which shows a very good stable development of our group and is fully in line with our growth story. Out of that, I would like to give to Matti, our CFO. Matti Jakel: Yes. Thank you, Thomas. Good afternoon also from my side here. Yes, let's take a bit of a deeper look into the numbers. As Thomas said before, the orders received in the fourth quarter were a bit, let's call it, softish based on timing of contract awards and volatility in the markets that we have, I think, communicated quite well over the last 2 years, at least. For the full year, orders received increased by 6% in total, 2% organically. The acquisitions play a role in here, but also we had a little bit of a negative impact from the weakening U.S. dollar. Order backlog reached EUR 4.3 billion after EUR 4.1 billion in 2024, so a very nice increase. Revenue, a strong increase of 8% and 4% organically to EUR 5.4 billion. Growth in the energy sector, in the pharma and biopharma sector and obviously, due to the cost pressure, some decline in chemicals and petrochemicals. As part of our derisking, we introduced to report our revenue shares by a remuneration type. Early on, we just differentiated between projects and service and frame contracts. This year is a better picture almost 50%, 44% to be exact, is time and material, close to 20% is unit rates, 70% is mixed elements in the remuneration and only 20% is lump sum, which gives you a fairly good picture how well our contract portfolio is risk-managed. On the profit side, our gross profit increased from 10.9% to 11.3%. That's an increase on the absolute terms of 13% and again, what we announced during the strategy, product mix improvements, derisking, standardization, all of these do drive our margin improvement across all segments. On the SG&A side, we remained stable across the year at 6.3%. However, we have to say that the acquisitions, the 3 acquisitions that we did in 2025 came in with higher SG&A ratios which does give us opportunities for cost efficiencies in the future years. And EBITDA developed very well from 5.2% to 5.5%, and the last quarter at 6.1% was the strongest quarter sequentially. We had 4.5% in the first quarter, 5.5% in the second, 5.8% in the third quarter and then 6.1% in the fourth quarter. So a very nice development sequentially. Important also is to look at the adjustments. As you know, we do report on the reported numbers, but to give you a full picture here, we had last year a positive contribution from those adjustments of EUR 7 million and this year of negative EUR 8 million. So that's a swing of EUR 15 million. If you factor that in, then you see the real operational improvement, which is then more than the 30 basis points here. If you refer it to EBITDA, then the improvement is 50 basis points. Take a brief look into the segments. You will know that we have changed the segment structure effective January 1, 2026. Here is 2025, so it's the pre-existing segments. Europe, a very large segment with orders received of close to EUR 4 billion. That's a slight decrease organically, but overall a 6% -- a strong 6% increase. Revenue, very similar, organically, a slight decrease, but overall, 6% increase for the full year. Book-to-bill at 1.06, stable, same as last year, 1.06 and the order backlog reached EUR 2.9 billion, so almost EUR 3 billion in the segment. On the profitability, in margin numbers, a slight decline, from 5.9% to 5.8%. But what I mentioned before in terms of the adjustments, here, we have a swing of a total of EUR 17 million. So again, if we look at EBITDA adjusted, that improved from 8.1% to 8.5%. You find those numbers in the backup to the slide deck. International, very nice performance across all KPIs, 17% increase organically, 13% in total when we look at orders received. We did quite well on frame contracts in the United States. The government customers still are hesitant to award contracts. We had the shutdown, shutdown ended and then there was another one. So that takes a little while for this process to restart again. But very good new orders from oil and gas and energy industry in the Middle East. Revenue grew by 6%, 10% organically to EUR 742 million. And the profit from a breakeven position last year to almost 4% for the full year. And again, it's operational excellence that's driving margin expansion not only in the United States but also in the Middle East. And then technologies, also a very nice performance on all KPIs, 6% increase in orders received, nice growth, in nuclear and in biopharma and pharma and the revenue increased by a stellar 17% to EUR 856 million. Book-to-bill at 1.0 is lower than last year, but you know the business is more volatile than the other ones, so nothing to be concerned about. Profit, very stable in the fourth quarter at 8%. But overall, throughout the year from 6.2%, 80 basis points up to 7.0%, a very nice performance in our Technology segment. For the group, net profit for the year, in 2025, we achieved EUR 176 million for the full year. There is an impact in there that I need to mention. We bought back shares from minority shareholders in one of our larger entities that had a negative impact on the financial result and it had a negative impact on our tax rate. So consequently, the earnings for the year and the earnings per share are down by 1% for 2025. Cash flow. I think Thomas mentioned it before, we achieved EUR 330 million free cash flow for the year, a 75% increase, 110% cash conversion rate, some positive effects in here, a large payment from a dispute in the United States that we settled in 2024 and the cash came in, in 2025, so that certainly helped to improve the cash flow. But more importantly, our working capital efficiency that we measure in net trade assets over revenue has improved from 9.6% to 8.3% as we had planned and announced it last year. On the net liquidity or net cash position, no change on the debt side, very stable on the financial debt and also on the leasing liabilities, they fluctuate a little bit with the acquisitions. But we had payouts for the share buyback program. We had payouts for M&A, and we had payout, obviously, for the dividend but still, we increased our net liquidity position from EUR 88 million to EUR 146 million by almost EUR 60 million despite those payouts that we had. No change on net debt and consequently no change on the leverage. We're down to 0.3 at the end of 2025. Capital allocation, very important. No change there. Dividend, very important. We will propose EUR 2.80 per share. That's up 17% from last year where we proposed and paid out EUR 2.40. We are funding our organic growth in terms of sales improvements, people development, innovation, digitalization. M&A plays a significant role. And more importantly, and as we announced at the Capital Markets Day, we will accelerate there. And then obviously, if something is left then we have all kinds of options in terms of shareholder returns, but it's also very important that we maintain no matter what we do, we maintain our investment-grade rating. Let's take a quick look into 2026. The updated segment structure, as shown on the left-hand side. The segments are in size more equal than before. Western Europe is about 1/3 of the group, Central Europe a bit less than 50% and international is about 20% of the group. So it's more balanced than what we had before. We are working on a full restatement, and that restatement will be made available in the week of April 20 to everyone who is interested and we will publish this on our website. So for the Western Europe segment, which includes countries, Holland or Netherlands, Belgium, and the U.K. We see revenues of EUR 1.8 billion to EUR 2 billion for next year and an increased margin of 7% to 7.4%. Central Europe, which includes Scandinavia, the Nordic countries, Germany, Switzerland and Austria, we see a revenue of EUR 2.5 billion to EUR 2.7 billion and an increased margin of 5.8% to 6.4%. And for international, EUR 1.05 billion to EUR 1.2 billion and also an uptick in EBITDA margin of 4.2% to 5.0%, and then reconciliation is just for completeness sake. So that, I think, good targets and what it does for the group. I'll turn over back to Thomas. Thomas Schulz: Thank you, Matti. So this is the group outlook. You see here on the right side of the slide, the full year '24, '25, the outlook for '26 and of course, the midterm targets for 2030 because that is where we run to. When you look to the outlook, the EUR 5.4 billion to the EUR 5.9 billion reflects that what we see in a volatile business market, but at the same time, the growth potential, what we initiate to have. On top of it, an improvement in the EBITDA margin from 5.8% to 6.2%. For us, always as in the year 2025, the midpoint is the most important in that guidance and the free cash flow, EUR 250 million to EUR 300 million because we don't repeat or we can't repeat each year, any legal dispute where we get then cash paid in the year after. Important for us here is the cash conversion. And there, we target, of course, more than 90% towards the year 2030. Important in that is our development as a company. And this actually is the whole strategy of the Bilfinger Group. As simple as it should be, it shows that we work on our own efficiency, what we call operational excellence at the bottom as well as the market expansion and then you see 3 boxes with '25 results just delivered. Then the midterm targets, '25 to '27, what we gave at the beginning of '23, and we gave new midterm targets to 2030 in December last year. You see that the targets what we have from '23 are still on the list, and we achieve. The same we will do, of course, with the 2030 targets. Out of that, summary, again, we expanded sustainable profitable growth in a quite volatile market and the volatility will not end as we are well aware. Our orders received went up 6%, revenue 8%; EBITDA 30 basis points up versus the reported 5.2%, proposal for the dividend is still the same payout ratio of 53% from EUR 2.40 to EUR 2.80. Free cash flow is targeted is EUR 330 million in '25 and quite up from the year before. Outlook, I just explained. And of course, M&A is on our list. We did 3 in last year. And actually, we had one signing of a larger one in just before Christmas. And with that, I would like to give back to Martina. Martina Kalkhake: [Operator Instructions] The first question comes from Michael Kuhn from Deutsche Bank. Michael Kuhn: Starting with E&M International in the fourth quarter, I think quite a standout results contribution. You mentioned operational excellence. Any other things you would like to point out or any more details also on Middle East versus North America performance? Thomas Schulz: So the -- at first, our colleagues did a great job that where we are coming from, especially in U.S., great job. But -- and that's the thing and that's the reason why we keep our strategy target and prioritization target for M&A in North America as well as in the Middle East. We are still too small to be sustainable big player in that market, what has to be with our competence. So the improvement, as Matti said, is predominantly out of the operational excellence, how we are organized, how we work, how management layers, how competence is placed, how the global product centers are working with these parts of the world. And in -- I have to say that, in the situation what we have since Saturday morning in the Middle East, where all our people are safe, and we are very happy and was the first thing what we did in the crisis management. We see that our way of having a decentralized organization, especially with the new segment structure, makes it clear and easy or easier to manage, and that all contributes into a better performance. Michael Kuhn: Understood. Then on the margin improvement in '26, maybe some idea on gross profit versus SG&A/overhead. You mentioned some of the acquisitions you did came with higher SG&A rates. Any cost savings targeted here? And also on top line performance, you mentioned cross-selling initiatives at the CMD. Do you see those initiatives already bearing fruit? Thomas Schulz: With the cross-selling. Yes. Cross-selling is -- actually, it means that we are selling the good products, what we have in some spots to all the customers in the Bilfinger geography. The new segments will enable that because they are more balanced. They are more balanced in size. They are more balanced and competent. They are more focused on the customers. And there are less layers in between us and the customer, which always helps. This cross-selling is not really into the figures from the last few years. It's not really in that what we have in 2025. It improved, but you now, as it is an improvement on very little is still little. So there is more to come. It's actually part of the strategic lever market expansion. Matti Jakel: On the margin side, Michael, and thanks for the question. We continue to drive operational excellence to see margin progression in our gross profit. On the SG&A side, we see a few notches that we can improve year-over-year, and that is what we are also doing. Yes, it's true that the acquisitions came in with higher SG&A cost and we'll take a deep look at what we can do there. And I'm sure we'll find good things that will bear fruit in 2026 in the years following. Michael Kuhn: Understood. And then 2 on M&A. Firstly, on Teknokon. From today's perspective, when would you expect the closing? And can you provide us with, let's say, a few more details or at least an indication on Teknokon annualized top line contribution and profitability? Thomas Schulz: The -- we expect the closing, of course, this year if everything goes well. It should be up to the mid of the year, if things are going as expected. Regarding Teknokon's business performance, we actually gave to the market the information that is in the higher double-digit million range in revenue, but the profitability we will not disclose. Teknokon is -- and Turkey is when you look on a map, easy to understand between our growth areas Eastern Europe to the Middle East. When you look on a map, Eastern Europe for us, potentially at the moment, Czech Republic, Romania and especially Poland. But in the future, Ukraine and all the countries in between to the Middle East is building a bridge and starting with that bridge, Turkey is a very important partner. Michael Kuhn: And then lastly, again, sticking with M&A. How does the pipeline currently look like? Obviously, it can't be too precise, but let's say, is there a realistic chance for further deals over the next few months? Thomas Schulz: Yes. There's definitely a lot of chances, and I can explain that very short. At first, we work for quite a while, very professional and concentrated on filling up the funnel. Second, we are quite clear what we want to have, or we are quite clear what we don't want to have. We actually gave it on the Capital Market Day with 7 strategic points, which gives the parameter set for M&As. And third, it's a market situation. The industry, our end customers are going more and more for the larger service providers based on CSRD reporting, human rights reporting, equal pay reporting, all the reporting which makes it fairly difficult for smaller suppliers to be competitive. So the ones having multi-service in the offering as we up to being the solution provider are easier than that. So we actually have quite a lot of demand and questions from smaller companies to join us to be part of the Bilfinger family. And that is, as you know, a very important part for us because we are a people company. The ones we acquire, we would like to have that they want to be acquired by the Bilfinger Group. Martina Kalkhake: We have further questions on the line. So the next question comes from Olivier Calvet from UBS. Olivier Calvet: Just a couple left. Firstly, can you give us some more color on the hesitant customer behavior you mentioned in North America? Is that from a specific customer type? Or any color you could give us there, that would be great. Thomas Schulz: Yes. Olivier. Thanks for the question. What Matti rightly said is that you all remember, Mr. Elon Musk, coming into the White House at the end of '24, beginning of '25 with the DOGE program. And in that announcement was to cut positions in government-related offices by 50%. We have in U.S. quite a larger business, which is like commercial contracting, where we actually work throughout these offices and on top of it, some of our clients need, of course, permitting and approvals from these offices. And based on the fact that then the people who were on the target list of Elon Musk at the beginning of '25, they said we will work not that much any longer as before and not over time and so on. A lot of approvals, a lot of things just slowed down significantly. And despite the more positive result, we saw that actually in the figures. Olivier Calvet: Okay. That's helpful. And then just to come back on your Middle East exposure, obviously, good to hear that your staff is safe there. Can you shed some light on how you're thinking about risk? How you're thinking about country exposure in the current situation? Thomas Schulz: Yes. The -- at first, again, a big thank you in the Bilfinger Group, very professional risk management, very professional crisis management. The monitoring, the reporting, the taking care of own individuals in the Middle East as well as here in the headquarter and in Europe was outstanding positive. It shows a strong company. When we look into the Middle East, we cover there or we are acting in 7 countries, not in Iran, to make that fairly clear. We are not in Iran. Second, we are doing maintenance predominantly on customer sites and helping them to keep the sites up and running. We help them in engineering. We help them in turnarounds. We do a lot of work on the customer side. That work is still ongoing. And it's not impacted our business through logistics hurdle or traveling people in or out or goods in or out because our organization is acting local in a decentralized manner and on top of it, if we need support, which is always the support out of the competent centers then we do that digital or by phone. When we look into the risk in the Middle East, it's too early to say. But as we know, at the beginning of the crisis, it gets always very hot in the media. And then the dust has to settle and then to see how it goes on. We will go on and not changing our point of view regarding the Middle East as a growth area where we will be bigger, where we have a lot of fantastic great customers and a lot of business with a lot of investments. Olivier Calvet: Yes. Okay. And then just on the margin guidance, I'm not sure you'll be able to or willing to give us that, but just trying. Are you able to quantify how much of a headwind is the chemical business and how much support you're getting from energy in your full year '26 EBITDA guidance? Matti Jakel: Olivier, we're not guiding on industries, as you well know. And as you could see, the development in 2025 that we were moving that the revenue share between the industries were shifting from 28% in petrochemicals and chemicals in '24 to 23% in '25 and conversely, the energy industry from 21% to 24%. So we are -- our business model allows us to deploy resources between the industries. So from that point of view, we feel very well protected against those headwinds, but we don't guide on individual industries. Olivier Calvet: Okay. And maybe final nuts and bolts, just for you Matti. Tax rate you expect for '26. And I am correct in assuming there is no one-offs you expect in the free cash flow guidance for the year? Matti Jakel: Yes, no one-offs on the tax rate and/or the cash flow -- free cash flow. Olivier Calvet: Tax rate you expect for '26 is -- what do you expect? Matti Jakel: 24%, 25%, that's the usual. Martina Kalkhake: And the next question on the line is from Craig Abbott from Kepler Cheuvreux. Craig Abbott: A couple of remaining. Once again, this year, similar to last year, your guidance spread from the low end to the upper end is quite large. I appreciate it's still early in the year and obviously, there's a lot of geopolitical volatility out there. So that's understandable. But I just wondered if you could shed some more color on there about what your scenario assumptions are as to like what would happen to only have a flat top line and what will happen to be able to reach that upper end? That's my first question, and I have one more. Thomas Schulz: Yes. Thank you very much, Craig. As you know, when we give a guidance for us, the most important is the midpoint. And the -- and that is what we actually calculate and then we look around what is the volatility in the market and that gives the spread. So out of that, what we see is, of course, the high volatility in the market and Saturday morning last week was not helping in that to make it like this. Not that we are from a business point of view really heavily impacted as far as we see it at the moment. But of course, it brings uncertainty into the world. And we all know uncertainty is not a good food for investment on our customer side. On the other side, we see the dramatic need and demand for better energy solutions, not only more or lower in cost actually more to be safe that energy is always available at the right amount at the right location, especially in Europe. And that is what we not only have in Europe, we have that in the U.S. too and the thing when we look into that is positive from that. Second in that is the chemical industry, which suffered a lot reached a level where we see and we hear from our customers that their restructuring programs and efficiency improvement programs are taking actually quite a positive development. So slight -- a little bit light, a very small light at the end of that long tunnel we see. So that is another positive in it. Then we go on with the strategy execution. We did by purpose, as we explained it in December, an upgrade of our strategy to be better positioned to that what happens in the next few years, especially our sales force. We will be closer to the client. We will help them more, and we can show them with digital products to be more efficient, which is for us then a more profitable business, too. Last but not least, of course, things like long winter time, high volatility are more on the negative side. On the positive side are the developments, what we see to come, Ukraine, the Baltic states, infrastructure packages and so on. So it is quite a balanced outlook what we think, no matter that we have a very volatile market. Craig Abbott: Okay. And the second question is rather specific, but it was specifically mentioned in your detailed outlook report in the annual report where you were talking about the various end market investment programs. And I'm referring to the U.K. oil and gas services business, which you suggest is expected to decline by 1/4 over the next 3 years, while the industry and therefore, the industry spend would decline, obviously, by a similar amount. I just wondered if you could give us some indication of how significant this end market has been for you? Thomas Schulz: Yes. Actually, this whole oil and gas market in the U.K., when you look 20 years back and where it is now, significant less providers are in that business, a lot are out or completely gone as a company. Actually not so long ago, we saw that with peers. Second, we know that it will go down and we work for years, of course, to counteract on that, as Matti rightly said, to go into other industries, process industries where we were not so focused before on it. But actually, it's the same 80%, 90% of the same work, food, pharma, hydropower, nuclear, there is a lot what we can do more as Bilfinger in the U.K. and actually in Benelux, too and what we call in the Western European segment, which is one of the arguments why we have that as one segment because it's the same thing, shift slightly from one industry into multiple different ones where we have a lot of good experience and already some of it in the top line. So the fact is the U.K. oil and gas business will go down in that service part but the fact is that we were and we are further able to counteract and actually to put something on top of it. Craig Abbott: Okay. And that's very specific U.K. You're not seeing the Norwegian business or other decline? Thomas Schulz: So the -- actually, Statoil just came out that they found another oilfield or another carbon hydrogen field, oil and gas. And there's no intention at the moment that they really go into it like we see it in the U.K. At the same time, we should not forget that the oil and gas industry works very much on expanding their business model into carbon capture, but will be more and more important, similar technology, same customer, similar 80%, 90%, the same work for us. It's actually for Bilfinger quite a good news. So we see an industry going a little bit down and [ others ] will come up. And that is, as we saw in the last few years, helping us a lot. Give you one example in that, that we are not, how to say, playing too much Oracle on U.K. and Norway. Take Germany. When I joined, I think Germany was in the top line, 26%, 27%, and now it's 21% and the group still was growing 8% per annum since 2022. So we are, as Bilfinger with our business model, definitely able to adopt to new situations and to capture opportunities to make out of challenges, actually good opportunities as it should be. Martina Kalkhake: [Operator Instructions]. And the next question comes from the chat from [indiscernible] from AlphaValue and I will read that out. If high energy prices need to lower industrial output in Europe, could that eventually reduce maintenance demand for Bilfinger? How do you see sustained high EU energy prices affecting plant utilization and maintenance? Thomas Schulz: Yes. Let's start with the high energy prices, lower output. It is a relative game. If the prices in Europe are relatively higher than in other parts of the world, our customers are more under pressure with their production cost. So if the world suffers not to get enough oil and gas, then it hits the whole world and maybe some parts more to the east, more based on Iran than actually Europe or the United States at all. Yes, there is a connection in it. But if customers are coming under pressure, regarding the output and the energy costs, they actually get from us more support. They get from us more support. This is a pressure market as we enjoyed already since years in Germany. What is the difference for the Bilfinger Group? We -- I look into Germany now, which is under pressure and was under pressure in the last few years. We actually got more orders in the amount of orders, but they were smaller, significantly smaller in size because in a recession market, if you get an order for 100, you finalize it for 100. In an expanding market, you get an order of 100, you finalize it on 130. That's the big difference. But workload, we have a lot. Then regarding energy prices, plant utilization and maintenance, same thing, same part. We are looking into very much when customers plan to shut down complete plants and where then the lack of capacity, which is then shut down in that location is going. And what we see, it is not all going. It's wrong information to say everything goes to China. We don't see that. We see it in other parts of Europe and other plants to get a higher utilization where we help to shut down as well as to increase the higher utilization. And on the other European plants as well as into the United States. And of course, more and more still from a lower scale, the Middle East plays a more important role in what we call the regular chemical and petrochem business. Martina Kalkhake: Thank you, Thomas. I hope this answers your question, [ Igor ], but feel free to add a follow-up in a chat, if you like. At this time, there is no further question in the chat or also on the line. So let's probably give it a few seconds to add further questions, if you like before concluding the call. So I see there's a further question coming up in the chat. Let's give it a moment. The question is from Gerard O'Doherty from Metzler, Bankhaus Metzler. I don't see a question here in the chat yet. But I think he wants to ask via audio. So I'll ask technicians to open his line. He's dialed in as well. Gerard, can you -- yes, and line open. We need a few more seconds. Gerard we don't see you see dialed in per phone. Would you mind to type your question on the chat, please? Let's give it a few seconds. Otherwise, we can also bilaterally follow up. So unfortunately, that doesn't seem to work. I suggest we conclude the call now as there are no further questions. Now it's coming up. So I suggest we take it. So the question from Gerard is on working capital improvement. What we should expect this year on working capital improvements? Matti Jakel: We continue to work on the working capital management and on the improvements. We had a significant improvement in 2025. That will definitely stick in 2026. A similar improvement, I think, would be more difficult to repeat. Otherwise, our free cash flow guidance would be higher. So you can expect it to stick and we're happy to improve year-over-year. Martina Kalkhake: Thank you, Matti. And there's also a further question from Gerard whether the order pipeline has picked up in January, February of 2026. Thomas Schulz: Yes. We will give comments on the first quarter when we announce the first quarter. I think you expected that answer. The -- yes, not more to say on that. Martina Kalkhake: And another follow-up from Gerard, whether on the FX development in '26, we can give comments regarding the weak U.S. dollar. Matti Jakel: If I knew where the dollar would go, I'd not be standing here, I guess. Well, we have all seen the weakening in 2025 that has sort of come to a plateau. With the events and developments of the last few days, the dollar has strengthened somewhat. But I guess that's the normal volatility in volatile times. It's anybody's guess. So I think there are so many economists out there who are much better suited to comment on where the dollar versus the euro will be in 2026. I think if you ask about exposure as our business is very local, and we're not relying on materials and exports and imports, our exposure is very, very small on the fluctuations of currencies. Thomas Schulz: Yes. We go in line with that, what market in general expects for the dollar development. We work here with the standard agencies about it because in a volatile market to forecast is -- it's [indiscernible]. Matti Jakel: Yes. From -- maybe just one addition here, from an operational point of view, as far as our contracts are concerned, we are not hedging currencies. It's not necessary because we work in a local currency. We are being paid in local currency. So our hedging volume is very, very limited. Martina Kalkhake: We have one further question on the line from [ Andreas Wolf ] from Bereberg. Unknown Analyst: Congratulations on the achievements in 2025. It has now been nearly a year since the U.S. administration introduced its tariffs. Let's see whether those will remain in place. But my question is related to the client behavior that you might have observed since then. What implications does the globalization and location have for Bilfinger's business prospects? Thomas Schulz: Actually, no direct impact. We are a people company. The competence what we have to send around the world, we do digital or by phone. We have a few people who can travel in and out, but the flow of goods of hardware in our group is very, very, very limited. So the tariffs are not hitting us directly. When we then look on the customer side, it is a lot of debate about which impact that has on the different products and the different production costs, et cetera, et cetera. But at the end of the day, it actually focus our clients to get more efficient. And this is the core of what we offer, efficiency improvement and efficiency enhancement on the customer side. It is actually quite a good entry for us to go to the client and saying and talking with them, you have tariff headwind. We can help you to maneuver to monitor -- digital monitor the performance of your site, no matter where they are located and you can let us call it play it in the operation more from an international point of view, which definitely helps customers. So out of that headwind in tariffs, we can do some more products. But it is fair to say that any disruption in the global business always is not a good food for investment. And so the mood on some customer groups is, of course, not that positive, but it's that long, not that positive that we actually don't think that '26 will be a different year than '25. Martina Kalkhake: Thank you very much. That also was the last question on the line and also in the chat. So we conclude today's Q&A session. Thank you all very much for your participation this afternoon. As usual, if there are any further questions, the IR team is here to help you with your models and to answer further questions. Thank you very much, and goodbye. Thomas Schulz: Goodbye. Matti Jakel: Bye. Operator: The conference has now concluded, and you may disconnect. Thank you for joining, and have a pleasant day. Goodbye.
Operator: Good day, ladies and gentlemen, and welcome to ASUR's Fourth Quarter 2025 Results Conference Call. My name is Dave, and I'll be your operator. [Operator Instructions] As a reminder, today's call is being recorded. Now I'd like to turn this call over to Mr. Adolfo Castro, Chief Executive Officer. Please go ahead, sir. Adolfo Castro Rivas: Thank you, Dave, and good morning, everyone, and thank you for joining us today to discuss ASUR's results for the fourth quarter and full year 2025. Before I begin discussing our results, let me remind you that certain statements made during the call today may constitute forward-looking statements, which are based on current management expectations and beliefs and are subject to several risks and uncertainties that could cause actual results to differ materially, including factors that may be beyond our company's control. Additional details of our quarterly and full year 2025 results can be found in our press release, which was issued yesterday after market close, and is available on our website in the Investor Relations sector. Following my presentation, I will be available for Q&A. As usual, all comparisons discussed on this call will be year-on-year, and all figures are expressed in Mexican pesos, unless specified otherwise. Before getting into the discussion of traffic and financial results, let me start today's call with a recap of the key business developments during the fourth quarter and over the course of the year. The fourth quarter marked an important inflection point for ASUR. While traffic trends in certain markets moderated, we remain focused on strengthening our long-term platform through diversification, disciplined capital allocation and continued operational excellence. Strategically, we completed our expansion into the U.S. airport, commercial market and advanced transformational Latin American growth opportunity. As previously discussed, on December 11, we completed the acquisition of URW Airports, renamed as ASUR U.S. at an enterprise value of $295 million. This transaction established ASUR a direct participation in the U.S. nonregulated commercial airport segment, with operations in major U.S. hubs, including Los Angeles International Airport, Chicago O'Hare and New York John F. Kennedy International Airport. From December 11 through December 31, ASUR U.S. contributed approximately to $133 million in revenues and $86 million in EBITDA. We are excited about what this acquisition brings to ASUR's portfolio. First, it adds exposure to high-traffic dollar-denominated commercial revenues. Second, it diversifies our revenue mix beyond regulated income. And third, creates a scalable platform for future growth in the United States. Revenue and EBITDA for the ASUR U.S. were included within the results of our Mexican operations this quarter. Starting our first quarter 2026 earnings report, we plan to provide more detailed disclosure regarding on the business so that the investment community can better assess revenue profile, margin structure and growth prospectus as fully consolidated operation. In parallel, as disclosed in November, we signed a purchase agreement to acquire Motiva's stake in its airport portfolio, which holds interest in 20 airports across Brazil, Ecuador, Costa Rica and Curacao, for a purchase price of BRL 5 billion, which at the moment represented approximately $936 million. Upon closing this transaction would add approximately 45 million passengers annually to our network, bringing total annual passenger traffic over 116 million. It also provides entrance to Brazil, the largest aviation market in Latin America, while further strengthening our presence in Central and South America. This acquisition enhances our geographic diversification, increases scale and creates long-term operational opportunities, giving ASUR's track record as an efficient airport operator and more important, the opportunity to use the balance sheet. The Motiva transaction remains subject to customary closing conditions and regulatory approvals, while closing expected in the first half of 2026. We intend to fund the acquisition with debt. Together, these initiatives reflect a deliberate expansion, strengthening our position in the U.S. commercial segment while deepening our footprint across high-growth markets in the Americas. Importantly, we continue to adhere to our long-standing strategy of pursuing disciplined accretive acquisitions that increase long-term shareholders' value while preserving balance sheet strength. Lastly, reflecting the strength of ASUR's cash generation model, we returned value to shareholders in form of dividends. During 2025, dividend payment totaled $24 billion. At the same time, we supported our selective expansion strategy and preserve our financial flexibility. Let me now review ASUR's operational performance for the quarter and full year. During the fourth quarter, we handled 17.9 million passengers, up nearly 1% year-on-year with nearly 72 million passengers traveling through our airports during the year. Looking at the quarter performance by region, Mexico was essentially flat with domestic traffic slightly below prior year levels, while international traffic showed modest improvement. We believe this reflects the early stages of normalization following aircraft availability constraints and softer regional demand in earlier year. In addition, traffic in Cancun declined 2% during the quarter, while our 8 other Mexican airports grew middle-single digit. In Puerto Rico, traffic declined 3%, primarily driven by domestic market demand softness, while international traffic remained positive. Colombia once again delivered the strongest performance with our portfolio with fourth quarter traffic increased nearly 6% to 4.7 million passengers, reflecting high single-digit growth in international traffic and mid-single digit in domestic traffic, supported by improving connectivity and resilient demand. Overall, we are seeing gradual stabilization in Mexico and sustained structural growth in Colombia. Passenger volumes from the United States, our larger international source market decreased just 0.6%. While South America contracted 10.9%, on the positive note, Canada and Europe increased by 12.9% and 1.1%, respectively. Looking ahead, we expect a more balanced operation environment across our portfolio. In Mexico, we expect traffic to gradually stabilize over the year as aircraft availability improves. In Cancun, we continue to monitor the dynamic with Tulum Airport. As comparables ease, and airline networks adjust, we believe traffic trends should progressively improve during the year. In Puerto Rico and Colombia, we continue to expect sustained positive momentum, supported by healthy international demand and improved connectivity. Turning now to financial performance. As a reminder, all figures exclude construction revenue and costs and comparisons are all year-on-year, otherwise noted. Total revenue were flat year-on-year at MXN 7.3 billion, reflecting the softer traffic environment in Mexico and the FX impact from the appreciation of the Mexican peso on the commercial activity. Aeronautical and non-aeronautical revenues were essentially unchanged during the quarter. By region, Mexico, revenues were flat due to softer traffic trends and the FX impact from the appreciation of the Mexican peso against the U.S. dollar on commercial revenues. Puerto Rico's revenues declined nearly 6%, affected by the FX impact, while Colombia revenues increased nearly 5%, broadly in line with traffic growth and improved commercial performance. As part of our strategy to increase and enhance commercial offering, we opened 41 additional retail and service units across the network over the past year. This includes 31 in Colombia, 8 in Puerto Rico and 6 in Mexico. These additions contributed to a low single-digit increase in commercial revenues with solid momentum in Colombia, partially offset by softer results in Puerto Rico and Mexico. Commercial revenue per passenger increased 1% year-on-year to nearly MXN 132. By geography, Colombia posted the strongest performance with a 12% gain, followed by Puerto Rico, which rose nearly 4%, while Mexico remained broadly stable at MXN 159 per passenger. Turning to operating costs. Total expenses increased 25% year-on-year. In Mexico, expenses rose 10%, primarily driven by professional fees associated with the ASUR U.S. and the Motiva Airport project, along with the high minimum wages and increased service-related costs. Puerto Rico recorded a 6% increase, mainly due to security expenses and inflationary pressures. In Colombia, expenses doubled largely due to a change in the concession amortization methodology implemented in the previous quarter. As a reminder, we expect the regulated revenues to phase out by 2027 with the concession running through 2032. Starting in the third quarter 2025, we aligned amortization with the updated revenue generation. This is a structural adjustment and will continue going forward. Excluding this account adjustment, costs will have increased just by 1%. Turning to profitability. Consolidated EBITDA decreased nearly 5% to MXN 4.9 billion during the quarter, with adjusted EBITDA margin declining 330 basis points to 66.4% year-on-year, reflecting the dynamics I just explained. Colombia delivered EBITDA growth of 2%, while EBITDA declined by 3% in Mexico and 19% in Puerto Rico, mainly reflecting lower traffic and higher operating costs. Net majority income for the fourth quarter decreased 22% to MXN 2.7 billion, primarily driven by 2 factors: a noncash foreign exchange loss of MXN 155 million in connection with the appreciation of the Mexican peso against the U.S. dollar, while in the fourth quarter 2024 we recorded a MXN 773 million gain. Second, the MXN 407 million adjustment in amortization methodology in Colombia introduced in the third quarter 2025 that I just mentioned. For the full year, total revenues increased nearly 19% to MXN 37 billion. EBITDA rose 2% to MXN 20.2 billion with adjusted EBITDA margin of 67.8% in '25 compared with the 69.7% in '24. In turn, net income declined 20% year-on-year to MXN 10.9 billion, mainly reflecting a noncash foreign exchange loss of MXN 1.9 billion this year versus a MXN 2 billion gain in '24. Moving on to the balance sheet. We closed the year with cash and cash equivalents with MXN 11 billion and net debt of MXN 16 billion, equivalent to 0.8x last 12 months EBITDA. This reflects 2 loans obtained during the second half of 2025, which were secured to pay CapEx projects and fund our strategic U.S. initiative. Even after incorporating these financings, leverage remains at a conservative level and well below global airport peers, presenting ample flexibility to fund regulatory CapEx commitments and future growth. Capital expenditures during the fourth quarter were MXN 3.9 billion invested across our airport network, of which MXN 3.5 billion were invested in Mexico under our master development plan, and the remainder in Colombia and Puerto Rico. For the full year, we invested MXN 7.8 billion in CapEx with a similar geographic breakdown. Investments under our Master Development Programs across our Mexican airports, ensuring the capacity, service quality and regulatory compliance continue to advance. In Puerto Rico and Colombia, we remain focused on operational improvements and commercial optimization initiatives aimed at enhancing non-aeronautical revenue generation. In Mexico, we expect to reopen Terminal 1 in Cancun in the third quarter of this year, which is anticipated to provide a commercial tailwind. New facility will help rebalance passenger flows across terminals and improve the passenger experience, which over time should support higher commercial spending. Wrapping up, ASUR enters 2026 with a strengthened platform, greater diversification, disciplined capital allocation, robust balance sheet and proven operational model. While near-term traffic trends in some markets have moderated, the structural demand drivers for air travel in our region remains intact, and we are confident in our ability to generate long-term value for our shareholders. With that, now we are ready to take your questions. Dave, please open the floor for questions. Operator: [Operator Instructions] The first question comes from Andressa Varotto with UBS. Andressa Varotto: I have 2 questions. I can make the first one and then the next one. Starting with if you could share any additional color and projections about the recent ASUR U.S. acquisitions or if we can try to calculate how much it could add on revenue and EBITDA for the year based on the results showed in this quarter? And also, if you have any update on the process of the Motiva Airports acquisition? Adolfo Castro Rivas: Well, in the case of the U.S., 2 comments. First of all, you have the numbers for the first 20 days, which are, I will say, not something that we can consider as a normalized for the full year in '26. Due to the fact that during the third quarter this year, we're expecting the opening of the new Terminal 1 in New York at the JFK Airport, which is an important element of the equation of this transaction. So more or less the same for the first 3 quarters and then the jump because of the new Terminal 1. In the case of the process for Motiva, everything is -- it's going well. Of course, it's going to take time. There are some process that are slow in the case of aeronautical approvals. But we expect to conclude this during the end, maybe the beginning of the third quarter this year. Andressa Varotto: Very clear. And my other question would be regarding the tax rate. We noticed a lower tax rate this quarter. I would like to understand if this is something that we can expect for upcoming quarters or was more of a one-off effect? Adolfo Castro Rivas: No, that is related to the results of the year. Operator: [Operator Instructions] Our next question comes from Anton Mortenkotter with GBM. Ernst Mortenkotter: I mean we saw really good performance on the commercial side on Puerto Rico and Colombia operations using local currency. So I was just wondering what kind of initiatives were you pushing in those markets? And should we expect to see that non-aero [ part ] continue growing? Adolfo Castro Rivas: Thank you for your question, Anton. Yes, the appreciation of the Mexican peso was for the quarter, 13.4%. So if you see the results in their currency, they were very good. In the case of Puerto Rico, we have worked in the second half of the year very hard on a new strategy into the convenience stores, and there are some other adjustments to improve the operational performance of the duty free. In the case of Colombia, I would say, apart from what I mentioned in terms of the new units we have established there, nothing else. Operator: [Operator Instructions] This concludes our question-and-answer portion of today's call. I would like to turn back over to Mr. Castro for closing remarks. Adolfo Castro Rivas: Thank you, Dave. Ladies and gentlemen, that concludes ASUR's Fourth Quarter 2025 Results Conference Call. We would like to thank you again for your participation. You may now disconnect. Operator: Ladies and gentlemen, that concludes ASUR's Fourth Quarter 2025 Results Conference Call. We would like to thank you again for your participation. You may now disconnect.
Operator: Good day, and welcome to the Dexterra Group, Inc., Fourth Quarter 2025 Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Denise Achonu, Chief Financial Officer. Please go ahead. Denise Achonu: Thank you, Betsy. Good morning, and thank you to everyone for joining the call. My name is Denise Achonu, Chief Financial Officer of Dexterra Group Inc. With me on the call today are Mark Becker, our CEO; and our Board Chair, Bill McFarland, who will provide some brief introductory comments. After a brief presentation, we will take questions with the call ending by 9:15 Eastern Time. We will be commenting on our Q4 and full year 2025 results with the assumption that you have read the Q4 and full year earnings press release, MD&A and financial statements. The slide presentation, which supports today's comments, is posted on our website, and we encourage participants to access the slides and follow along with our presentation. Before we begin, I would like to make some comments about forward-looking information. In yesterday's news release and on Slide 2 of the presentation that we have posted to our website, you will find cautionary notes in that regard. We do claim their protection for any forward-looking information that we might disclose on this conference call today. I will now turn it over to Bill McFarland for his introductory comments. R. McFarland: Good morning. Thank you, Denise, and thank you to everyone for joining the call today. 2025 was a record year for Dexterra, $123 million in EBITDA and net earnings of over $40 million and the completion of 2 strategic acquisitions, which significantly advanced our scale and competitive position by strengthening both our U.S. integrated facilities management platform and our industry-leading remote workforce accommodation footprint. We also increased our annual dividend by 14% to $0.40 per share during the year, reflecting the Board's confidence in the strength and sustainability of the business, strong free cash flow generation and our low leverage profile. Management's continued focus on disciplined execution and creating shareholder value was also rewarded by the market with over 60% appreciation in our share price over the last 14 months. As we move into 2026, Dexterra is in an excellent position with an experienced management team led by Mark Becker and a strong and engaged workforce. We will continue to focus on building the business for the long term with the support of our major shareholder, Fairfax, and have created a business that all of our shareholders and stakeholders can be proud of. With that overview, I would like to now pass it over to Mark Becker, our CEO. Mark Becker: Thanks very much, Bill, and let me start by saying what a year, and I just want to say how proud I am of the Dexterra team and what we accomplished together in 2025. Our 2025 results are the accumulation or culmination of hard work over the recent years and the strong execution of our strategic plan. It's been rewarding to see the market better appreciate our business and its future potential. So looking in detail on Slide 5, as I mentioned, 2025 was a very busy and successful year for Dexterra. We generated a record revenue of over $1 billion in revenue, adjusted EBITDA of $123 million that Bill mentioned. And we also delivered very strong -- really, really strong margins as well. We executed on our strategy and reinforced our commitment to creating long-term value for our stakeholders. I'd like to sincerely thank our dedicated employees across the organization, our clients, our business partners and our Board for their support in reaching this achievement. Our employees' commitment to servicing our clients and delivering operational excellence really made our progress possible. In addition to delivering another year of strong, sustainable and profitable growth, as Bill talked about, we completed 2 highly strategic investments in 2025, further strengthening our platform and enhancing our ability to execute our long-term strategy for both of our businesses. The addition of Pleasant Valley Corporation, along with the CMI acquisition, which we completed in 2024, significantly expands our growing U.S. facility management platform. The PVC distributed delivery model that we expect to leverage across North America is complementary to Dexterra's largely self-perform facilities management model. Our partnership with PVC is progressing very well with our collective efforts aligning on both FM and IFM growth opportunities. As well, the acquisition of Right Choice Camps & Catering also strengthened our leadership position in the Canadian workforce accommodations market by adding to our customer base and strategically located camps along with high-quality excess equipment, providing capacity for North American growth and enhancing our ability to take advantage of potential nation building and government infrastructure projects. We will have the Right Choice business fully integrated into the Dexterra platform within Q1, and the onboarding of people and clients has been seamless for us. Open camp optimization in the Montney/Duvernay region is also underway, and we expect to utilize the equipment fleet over the medium term in support of our new growth opportunities. More specifically, in terms of fourth quarter results, I'm pleased to report that we delivered another quarter of strong financial and operating results with robust market activity levels, strong margins across the business and contributions from our acquisitions, resulting in adjusted EBITDA of $33 million for Q4 and adjusted EBITDA margins expanding to 12% from 10.7% in the fourth quarter of 2024, primarily related to our mix of business. During the quarter, PVC and Right Choice contributed $2 million and $6 million, respectively, to adjusted EBITDA. As we continue to execute our plan to deliver reliable and predictable results and deliver value from our capital allocation priorities, we are pleased to see this reflected in the appreciation of our share price, which has increased significantly. We delivered a return on equity of 15% in 2025 and $34 million of free cash flow to our shareholders through dividends and share buybacks. With that, I'll turn things over to Denise to provide an overview of our segmented results and our financial position. Denise Achonu: Thank you, Mark. Turning to Slide 7. I'll begin with a detailed look at our business segments, starting with Support Services. Revenue in Support Services for the fourth quarter was $231 million, an increase of 12% from Q4 2024, driven primarily from strong camp occupancy and the positive impact of the acquisition of Right Choice. As a reminder, PVC is accounted for under the equity method. And accordingly, its revenue is not included in our reported results. Q4 2025 adjusted EBITDA for Support Services increased by 31% over prior year to $24 million, while adjusted EBITDA margins increased 10% in Q4 2025, up from 9% in Q4 2024. The improved profitability and increased margins were achieved despite the broader impact of tariffs, inflation and general economic concerns. This was the result of a focused effort on managing our supply chain, effective client contract management and driving operational efficiencies in the business. PVC contributed $2 million to adjusted EBITDA in the fourth quarter, while Right Choice contributed $4 million in what is typically the strongest quarter for its operations. Adjusted EBITDA margin, excluding PVC, were 9.6%. Support Services' revenue and adjusted EBITDA in 2025 increased 7% and 18%, respectively, compared to 2024, consistent with the same factors already mentioned earlier. Adjusted EBITDA in 2025 from PVC and Right Choice amounted to $3 million and $5 million, respectively. So on a same footprint basis, we increased EBITDA by 9% or $7 million in 2025 in a very challenging economic climate. Our 2026 pipeline of new sales opportunities remains strong across all areas of support services, including facility management opportunities on both sides of the border. And we expect adjusted EBITDA margins for Support Services to continue to exceed 9% in the long term. These margins reflect our team's discipline around finding the right new clients, where we can deliver profitable revenue growth. The partnership with PVC is progressing well and in line with our expectations. We anticipate our investment in PVC will be cash flow neutral in the near term, as we invest in the business and technology to drive strong growth in the U.S. Moving on to asset-based services on Slide 8. Revenue declined 2% year-over-year in the fourth quarter due to lower project revenue related to the timing of camp installation and lower access matting rentals. This was partially offset by the Right Choice acquisition, which contributed $6 million in revenue during Q4 2025. Adjusted EBITDA of $15 million increased 9% compared to Q4 2024, while adjusted EBITDA margin increased 37% in the fourth -- increased to 37% in the fourth quarter of 2025, up from 34% in the fourth quarter of 2024. The margin improvement is related to the change in business mix from higher workforce accommodation equipment utilization, which generates higher margins compared to lower camp installation project activity and the contribution from Right Choice. The timing of new camp installation activity varies based on the timing of new contract wins and client-specific timelines. We have a solid pipeline of future work and see good activity levels in oil and gas infrastructure projects, including the potential for Canadian nation building investment. In Q4 2025, access matting utilization was lower compared to the same period last year, which was at record levels. However, utilization in Q4 2025 did increase over Q3 levels and is expected to remain strong in 2026, similar to 2025 levels. ABS revenue of $173 million for 2025 compared to $192 million in 2024 with the decrease due to the reasons mentioned previously, partially offset by an $8 million contribution in revenue from Right Choice. Adjusted EBITDA for the year increased 9% to $61 million from 2024. Adjusted EBITDA margin for the year was 35% compared to 29% in 2024. Right Choice contributed $3 million in adjusted EBITDA in the year. On a go-forward basis, starting in Q1, we will no longer be reporting the Right Choice numbers separately as the operations will be fully integrated with the Dexterra workforce accommodation platform. We expect adjusted EBITDA margins for this segment to continue to remain between 30% to 40%, depending on business mix. Moving to Slide 9. Thanks to our strong profitability and asset-light operating model, we generated $60 million of free cash flow for the full year in 2025. Our adjusted EBITDA conversion to free cash flow of 49% was impacted by the delayed receipt of a customer receivable funded by the Canadian federal government, of which $11 million was collected subsequent to year-end. Our adjusted EBITDA conversion to free cash flow would have been 58% had that amount being collected by year-end. Our tax losses are also now almost fully utilized. And in 2026, we are required to make income tax payments and installments for 2025 and 2026. We expect to have adjusted EBITDA conversion to free cash flow in 2026 greater than 50% with Q3 and Q4 experiencing the highest conversion to free cash flow as a result of the seasonality of the Support Services business. Management of working capital remains a key focus area, primarily through actively working with our clients for prompt payment of receivables. Corporate expenses for 2025 were $26 million or 2.5% of revenue compared to 2.3% of revenue in 2024. The increase was mainly related to additional investments in sales resources to drive growth and enterprise information technology to manage the business effectively. We expect our corporate cost to continue to approximate 2.5% of revenue in the near term. Net earnings per share of $0.12 for Q4 2025 compared to $0.11 for Q4 2024. During the fourth quarter as well as full year, our net earnings were impacted by an increase in share-based compensation expenses related to the strong performance of our share price in 2025. Share-based compensation, which vests over a 3-year period, includes restricted share units and performance share units, which are directly tied to total shareholder return. As a result, in the fourth quarter, the year-over-year increase in share-based compensation expense was $2.1 million after tax. And for the full year, the after-tax increase was $4.2 million. Share-based compensation payments of $6.7 million were made in Q1 2026 related to units that vested in early 2026. To proactively manage this situation going forward, in early 2026, the corporation entered into a total return swap arrangement with a major Canadian financial institution to effectively hedge changes in share-based compensation expense against our share price. This program will help mitigate in the future the net earnings impact of changes in our share price to share-based compensation expense. Net debt at December 31, 2025, was 1.6x adjusted EBITDA or $200 million. The PVC and Right Choice acquisitions added approximately $115 million in debt in 2025, and we have entered into a collar swap on our U.S. dollar-denominated debt of $16 million to hedge against interest rate fluctuations. Our $425 million term loan matures in 2029 and has significant unused capacity for future M&A activity. In 2025, we purchased 1.5 million shares at a weighted average share price of $7.88 for a total consideration of $12 million, and we paid $23 million in dividends. We remain committed to maintaining a strong balance sheet over the long term and expect to use a portion of our free cash flow in 2026 to pay down debt. Finally, Dexterra paid dividends of $0.375 in 2025 and declared a dividend for Q1 2026 of $0.10 per share for shareholders of record at March 31, 2026, to be paid April 15, 2026. I will now pass it back to Mark for concluding remarks. Mark Becker: Great. Thanks very much, Denise. And before we open it up for questions, as usual, I'll provide some comments regarding our outlook and priorities for 2026 and beyond, which are highlighted on Slide 10. Our investment in our partnership with PVC continues to progress very well. As we continue to build on our shared strategic priorities, we're working jointly to leverage our complementary business models across our U.S. platform and grow our Facilities Management business. So that will continue to be a key focus for us in 2026 and into 2027. It's worth reinforcing, as part of our outlook, the potential opportunity associated with nation building and defense-related government investments is significant across Dexterra. With our well-established defense and government facility management capabilities, we are well positioned to support increased infrastructure and defense spending. Our Workforce Accommodation business is well positioned to benefit from increased nation building investments in energy, mining and various infrastructure projects. A key point for Dexterra business is our growth, and our upward trajectory is not dependent on this activity. These projects really present potential upside to Dexterra's current growth plans. We continue to monitor trade developments and broader economic conditions. Dexterra remains largely insulated from tariffs, direct impacts of tariffs as our labor force and the majority of our supply inputs are domestically sourced. And we are further strengthened by our supply chain through our expanded vendor programs. Renegotiation of the Canada-U.S.-Mexico agreement and ongoing U.S. trade actions present broader potential economic risks that could affect client demand, supply chain or inflation. We're closely monitoring these developments and are well prepared to adjust our strategies as needed to mitigate potential impacts. As we demonstrated throughout last year, we remain committed to our capital allocation priorities, which include maintaining our dividend, our increased dividend, supporting sustaining and high-return capital investments, pursuing additional accretive acquisitions in the medium term and paying down debt. I want to reinforce, though, our near-term focus, as it relates to acquisitions, is to realize the full benefit from the strategic acquisition investments that we talked about. Additionally, we expect to make strategic investments in sales resources and technology to drive innovation, operational efficiency and support organic FM growth. Overall, we're excited and confident in our path forward with our expanded business platform. Our overarching strategic focus remains the delivery of consistent and predictable results, profitable growth in our annual 15% return on equity for shareholders. This returns -- this concludes our prepared remarks. I'll turn the call back to Betsy for the Q&A portion of the call. Operator: [Operator Instructions] First question today comes from Mark Neville with Canaccord Genuity. Mark Neville: Mark, Denise, Bill, maybe first question, if I could just maybe just pick on asset-based business for a second, obviously, really good profitability, but it's been a couple of quarters now where revenues have been down. Obviously, there's some moving parts in the business and with Right Choice integration and maybe some consolidation of the business. Just trying to level set maybe expectations for 2026 around revenue trends. Mark Becker: Yes. Thanks. Thanks, Mark, for the question. And first of all, welcome to the party. We're glad to have you on board as part of our analyst community. I'd say, in general, and Denise talked about this as part of her remarks, ABS side of our business, I mean, there is some lumpiness. There is some timing related to our camp-based work within ABS. And what Denise had talked about was camp mobilizations versus ongoing turnkey contracts that we have in place and the timing of those kind of impacts the ABS revenue. It also impacts the EBITDA as well. I think the way I would look at it, generally speaking, and the other thing I'd mention, too, is the access matting part of our business as well, had a really strong utilization, record year in 2024 in Q4 or quarter. We still have strong access matting utilizations, and we expect that to continue through this year is what we're seeing from our clients. So strong utilizations there. But I think the way I would look at it is we try to talk about our overall growth of mid-single digits in the Support Services business over time. And we would say the same thing about ABS business, the low single-digit growth in revenue over ABS and then the 30%, 40% kind of margin yield, EBITDA yield, adjusted EBITDA yield in that business. I think we do see some lumpiness. We do see some variability in ABS around revenue and even ABS margins as well. I think sticking to the broad annual numbers, we would kind of see that broader guidance sort of play out is the way I would say it and the way I would look at it, just how things play out in terms of the Workforce Accommodations business. Mark Neville: Got it. If I can just ask a follow-up, just to change lanes here, just on capital, buyback activity is a bit muted in Q4. Balance sheet is in great shape. Just curious with the integrations ongoing, is the thought to maybe bring debt down a bit further? Or is there a thought to maybe get back on the market in terms of the buyback? Mark Becker: Yes. And I think we want to -- we'll stay opportunistic around share buybacks. I mean, our NCIB is still active and -- from what we've seen the share price appreciation in our stock. And I think the way we would continue to look at it is PVC second phase buyout is coming. And kind of post dividend, we got $25 million in free cash flow conversion, and that so far is going against our debt. All else being equal, and as we talked about, we want to focus on getting full value from the PVC investment and acquisition and the second phase buyout that is coming towards us, and also, the right Choice acquisition. Stay focused on that. So all else being equal and short of any other acquisitions, notionally, our -- we would be providing free cash flow that would work against our balance sheet, work down our debt in that period is the way I would look at it. Operator: The next question comes from Chris Murray with ATB Capital Markets. Chris Murray: Mark, maybe this is a bit of a broader question, but can we talk a little bit about the camps business, and how you think that, that's going to evolve over the next little while? And I guess the question is more around kind of your positioning in the broader both maybe Canadian and North American market. I think you previously told us that Dexterra had about 8,000 beds. Right Choice brought another 2,000. And you'd always alluded to the fact that the utilization was sort of north of 90%. So I guess a couple of pieces of this question. One, what kind of capacity do you have for some of these new opportunities? I know you've been able to redeploy some equipment from Western Canada to Eastern Canada and assume you do something similar with Right Choice. And does the size of the opportunity change your thinking at all about investing further in this segment? I appreciate it's got probably lower returns on capital, but I'm just trying to understand how to think about how you see the market evolving with what seems like a pretty big wave of demand with infrastructure and defense spending coming. Mark Becker: Yes. Chris, and good question, I think just to level set on the numbers, we got about 22,000 beds under management Canada-wide, of which our own assets it's actually more like 12,000 beds. So we were at 10,000. We picked up another 2,000 beds with the Right Choice acquisition. And we're about high 80s utilization combined with the Right Choice assets in play now. So kind of puts 90% or something a little bit north of 1,000 beds sort of available. The other thing I would point out is we do have long-term contracts. We do have camps that are on long-term arrangements. We also have project-based work that's happening that frees up equipment. So we generally kind of are looking forward. The pipeline is very strong for us -- across the board for us in the business, but workforce accommodations as well, including demand for camp assets. Part of the rationale around the Right Choice acquisition is the excess equipment that was available. We do want to bring that to bear. We're going to balance that out with what we have in terms of the equipment coming available. The other thing I would say, too, is there is the ability to procure market equipment as well as needed within our sustaining growth and capital spend within the year. So our goal is to really ensure based on the pipeline that we've got, what we see coming that we're going to be able to support our growth and the growth targets that I've talked about in terms of being able to have equipment available to support our growth. Chris Murray: Okay. And then maybe to ask another sort of related question is on kind of defense and infrastructure. You mentioned that for the Support Services group, you were looking to pursue some contracts additionally in there. You talked about -- I think the term you used was the pipeline was robust. Can you maybe describe what you're seeing in terms of the opportunity set may be more granularly? And would that get you into a growth rate? I mean, historically, we've talked about a growth rate in this business kind of in the teens or higher. But would that be something that you think is achievable over the next couple of years? And if there's any granularity you can give us on sort of like the -- where you're actually looking at some of these opportunities, that would be helpful. Mark Becker: Yes. So I think if I heard you right, I mean, you're asking about the government defense space for us, which really can feed into facility management contracts as well as even workforce combinations potentially. And we do have quite a history in Canada around defense and government support. What we've seen, and I would say through last year and continuing well into this year, is a lot of activity on that front around opportunities coming under development, I would say, opportunities that have been around for a while, some new opportunities that are coming, a lot of them Arctic-based, Arctic defense based infrastructure, Canadian forces-based defense infrastructure. So there's quite a bit of activity that we're seeing on that front. And I think it's really going to depend on how it all comes to fruition. There's a lot of activity around putting in proposals and supporting expanded projects. And certainly, we're well positioned, as you pointed out, to kind of support opportunities there. We feel really good about that. Again, our mid-single digit, I guess, sort of growth profile, I mean, obviously, I would agree with you that depending what we see there that could be upside to what we see in terms of growth. And we're just making sure we're really well positioned that we are getting our eligibility in and getting -- and we are eligible for these contracts and these projects kind of well in play because there's really a lot of opportunity for us on that front. Operator: The next question comes from Zachary Evershed with National Bank Financial. Zachary Evershed: Congrats on the quarter. On the investment in technology that you guys are talking about, will that be capitalized? And what's your CapEx budget looking like for 2026? Denise Achonu: Zach, yes, so the investments that we're making in technology, specifically this year, relate to around workforce management and human capital management systems. So really systems that will allow us to ensure that we're optimizing our labor performance on a go-forward basis, and therefore, optimizing margins because, as you know, labor are one of our most -- our highest cost, I would say. So as it relates to that system, no, we are expensing it. So we're not capitalizing it, recognizing that we are implementing it over a number of years. So this year, next year, we'll be experiencing that cost. Even though we're expensing it, we do expect, as I mentioned in my comments around corporate expenses, to remain within that 2.5% of revenue that I mentioned. So it is contained within that number. In terms of your other question around capital for 2026, again, expecting that to kind of remain within what we've said in the past, sustaining capital kind of 1% to 1.5% of revenue. So that's what we're expecting for 2026. Mark Becker: Probably, Denise, the only thing I would add is our investment in -- with PVC and PVC Connect, which is our client-facing technology. That's part of the key -- our partnership with PVC Connect around the distributed model. There's going to be investments in that, but that's going to be within the partnership as well. And I think somewhere in our MD&A, we are flagging kind of net neutral cash flow from PVC because we're going to be supporting that investment, which ultimately post-Phase 2 buyout will also be filling that software and it's a key part of the distributed model platform for PVC. Zachary Evershed: That's helpful. And then following up on maybe the margins in Support Services, it looks like the contribution from Right Choice in the Support Services segment was quite high on a margin basis versus the rest of the segment. Can you comment on what's driving that, please? Mark Becker: Yes. Open camps are high margin, right? So we do get kind of good -- if you look at Right Choice platform of activity that they had, and we're certainly taking advantage of the Montney to kind of optimize that between our camps and the Right Choice camps, but pretty much the entire Right Choice platform is kind of high-margin business. So we're going to see that contribution add to us and kind of blend out the usage of that equipment and other turnkey opportunities across our network of workforce accommodations, as we leverage those assets. Operator: The next question comes from Sean Jack with Raymond James. Sean Jack: So I just wanted to dig into the U.S. IFM a little bit more than the opportunity set there. We've been hearing some reports of private company hesitation, little bit of government funding headwinds out in the market, but we're also seeing some large publicly-traded FM peers finished the year quite strong. Do you guys have any comment on what you're seeing for client budgets and overall outsourcing demand? Mark Becker: Yes. Good question, Sean. Like high activity, I would say, we talk about this in a lot of our investor meetings and calls. The kind of outsourced services business in North America is like $275 billion and growing at 6% to 8% a year, which 90% of that is in the U.S. We, I guess, experientially see that in our pipeline with the platform that we have now around CMI within government services, PVC being distributed model, a lot more related to commercial and light industrial space. I would say we are seeing kind of a lot of activity, a lot of outsourcing activity, a lot of bidding activity, and we're excited about that. And I think we've -- it's about -- $50 million or 5% of our business is government, but still, we do see activity even within government. And certainly, as I said, within the commercial, light industrial, not really seeing any pullbacks yet at all. In fact, kind of more towards the opportunity that we're seeing that we've been flagging for kind of more broadly in terms of our U.S. growth profile. Sean Jack: Okay. Perfect. And then second one, just thinking about the fleet optimization that's happening with Right Choice and ABS at the moment, should we expect to see margins improve at all in the short term because of this exercise? Or is this just more about freeing up capacity for new projects? Mark Becker: I think a lot of it is freeing up capacity for new projects. I think we are seeing a lot of activity in the Montney and open camps, which, as I mentioned a minute ago, is high margin. So you've seen our margins be a bit higher because of workforce accommodations activity and occupancy, which a lot of that is within open camps. A lot of that is within turnkey camps, which tends to be higher margin. So that is kind of a key driver of what you're seeing overall in terms of our Workforce Combinations or Support Services margins. And from what everything we're seeing from clients, we expect that to continue. Sean, I'd really say having the equipment available, which we've talked about so much is kind of the key part of that. I think the activity levels and the industry activity levels, the size of our pipeline is really going to be the key driver of our margins within the remote business. Operator: The next question comes from Jonathan Goldman with Scotiabank. Jonathan Goldman: Just a couple of housekeeping ones for me. Can you give us an update on how big your camps business is in Support Services today? And how much of it is exposed to mining versus oil and gas versus infrastructure and others? Just curious how big that business is today. Denise Achonu: Jonathan, so just in terms of your first question, our camp business, so that would be the ABS as well as Support Services components of that is about $600 million. And of that, it kind of breaks down to about 40% of that energy, oil and gas, 30% mining and then about 30% infrastructure. Yes, over the last few years, we've really been diversifying. So if you looked at this a few years ago, it would have been probably a lot more, over 50% oil and gas. And we've been very deliberately kind of diversifying not only just East-West, but also across various industries as well. Jonathan Goldman: Got it. And secondly, how should we think about a normalized run rate for PVC equity income in 2026? Denise Achonu: So when we issued the press release and announced the acquisition, we did give some high-level historical numbers around revenues are about USD 170 million. Again, it's an IFM/FM business. So margins on that would be kind of in or around 8%, so using that with our 40% ownership can give you an idea as to what we're expecting. And you can build some -- a little bit of growth, obviously, because we're -- as we've mentioned, we're focused on growing our U.S. platform and partnering with PVC for that. So expecting some growth in 2026 on those numbers as well. Operator: [Operator Instructions] The next question comes from Zachary Evershed with National Bank Financial. Zachary Evershed: Just double-clicking on the nation building tailwind. Some of the workforce accommodation peers are indicating that those could hit the P&L later in 2026 or early in 2027. Can you comment on your pipeline, any RFPs that you're seeing right now in terms of timing? Mark Becker: Yes. I think it would be kind of across the spectrum is what I would say, Zach. I think we've got some near-term things, Ksi Lisims LNG project, PRGT pipeline, which I know you're well aware that they're flagging more near-term timing. We're seeing other things that are further out in timing. So I would almost say -- and again, you got to see these things play out. We got to see these things come to bear, but we've got kind of a spectrum of near term, meaning things that you might see some proceeds in 2026 and then picking up more in 2027, 2028. This is what we're seeing. But it's certainly kind of a full spectrum of projects, right, all the way from LNG, oil and gas pipeline as well as certainly mining for sure and then the government side as well. Zachary Evershed: Good color. And then, on the economics, what's it looking like for purchasing new build workforce accommodation equipment versus rack rates? Is it getting closer to making sense for new entrant? Mark Becker: Yes. I think we still have to -- new build is still a very expensive proposition in Canada. There is equipment available, and I flag it as part of my comments. There is market equipment available. And Zach, I think you know we can focus on higher-quality equipment. We're a higher-quality provider of workforce accommodations equipment. There is equipment out there that is higher quality that we can get through the market, a little bit of refurb that really just falls within our current numbers. We can bring that to bear. So I think for us, our first place we're going to go is kind of market equipment before we start looking at anything related to new build is what I would say. Betsy, are you there? Hello? Okay. I think we've got all of our questions covered, and I'm hearing there's no more questions in the queue. So we'll wrap it up today, and thanks, everyone, for joining us.
Fabrizio Ponte: All right. Welcome to the Norsk Titanium presentation. We are really happy that you are here today. My goal is threefold. So I will present to you, and I will -- we will discuss where is our market, where is Norsk Titanium today, but most importantly is where Norsk Titanium is going in the future. So without further ado, let me start with a very quick refresher about Norsk Titanium. So we are an additive manufacturing company with a very, very specific and peculiar technology, which is able to deliver additive manufacturing features with mechanical properties that are equal to the forging, which is really, really distinctive in the marketplace. We are qualified in aerospace and defense, and we have a full-scale production capabilities and 2 facilities, one in North America and one here in Norway in Eggemoen, okay? So really, really established to really capture the growth that is coming ahead. So let's talk about our market. We are targeting very technical spaces. So aerospace and defense are certainly our prime targets, including engines and a number of industrial opportunities. These markets are big and growing, okay? So -- and the drivers of this growth is basically driven by the fact that titanium supply is highly constrained. So there -- you have a number of OEMs that are looking for alternative solutions to support their build rates and growth plans, okay? So this is a very, very important factor. Another very important factor is that these people are trying to do the job, not just by finding alternative suppliers, but companies that can help them approach this in a very cost-efficient fashion. And through our technology, they can achieve that. There is a new factor that is developing. And I think these days, you can read it certainly in the news. There is defense that is coming very, very strong. Titanium and specialty alloys are widely used in defense. And today, there is a need in air, in space and in navy to develop parts much faster and in a delocalized fashion. Of course, additive manufacturing and Norsk Titanium are really well positioned on that space. So the market is big, and the market is growing. I mean, it's not just intact, but the market is really, really growing. And this makes us very, very excited. I'd like to bring in one of my customers and one of my lead targets, okay, so which is Airbus because the market is not just only growing and big, but we have customers and lead OEMs that are investing time, money and effort in order to in-source technologies in order to make that happen. And additive manufacturing is right there. I mean, what you see here is the Airbus web story, which came out, I think it was, late in January, if I remember correctly. And if you go in the article, you really understand what is the drive that Airbus has in order to put additive manufacturing and RPD, which is our technology at the core of their industrialization plan. And this is, of course, a very, very, very exciting for Norsk Titanium. We've been working with them for a long time, and we are in a position right now -- on a lead position there that is very fortunate, and it is going to help us to project ourselves in the future. All right. So are we starting from scratch? No, no, we've been working in the last decade to establish our position. So this has been certainly a long development cycle with a lot of work with OEMs, especially in the engineering and in the research departments. But we have established really a very good position for Norsk Titanium. So far, we have delivered over 2,000 parts between aerospace and defense with 0 defect, okay? Nobody can make this claim at this point in time. We have also developed and delivered the world's largest additive manufacturing structural parts, which is in flying and civil aviation. We are very, very proud of that. We are MMPDS listed. So MMPDS is the bible in aerospace and defense when it comes to material and processes. So today, an engineer can go to the handbook and can find all the data that he or she needs in order to design parts. So this is going to help us to translate parts into business in a much faster way. It's going to give us the credibility and the authority that is required by aerospace, defense engineer and industrial engineer to design parts on our data. Last, but not least, we are qualified by 2 U.S. primes, okay? So these are -- our technology is established in defense. It has been used in what we say low-rate production modules, and the challenge will be to go into high rate. So this is the position that today Norsk Titanium enjoys, and this is really our starting point for the future. How do we build that? I mean, as I said before, we really worked hard in the last decade to develop this position. And we worked with our customers, especially in the engineering and R&D department. But going forward, we need to make a step change, and we really need to change gear, as we said there. And how we're going to do that? I mean, we are going to build on -- we're going to -- building on what we already have, we're going to move forward, adopting a new operation -- operating model because at this point, we are in a very strong market growing. We have a very solid position. Now, we need to translate all of that into revenues and into commercial success. And how are we going to do that? We're going to do that with a really new operating model. So we're going to execute in a different way than we did in the past. For one, we're not going to target just engineer and R&D -- the R&D functions with our customers, but we're going to target the entire spectrum of constituencies. So we are now working with procurement. We are talking -- we are working with program. When I say program, I mean the A350, the A320, the Boeing 787. So you need to work with all the constituencies on those OEMs to make it happen. We are also very selective on who do we work with. We work with OEMs that are in markets that we consider very large opportunities. Again, aerostructures, engines, defense belong to that category. We work with OEMs that are pulling for our solution and RPD. They want to include RPD in their industrial platforms. And they have a plan with milestones that are agreed and shared with us. And at the end of the cycle, we have a line of sight to a price, which is going to be number of parts and revenues that Norsk Titanium is going to generate. So this is very, very different than in the past. But one thing is working with qualified and important customers. The other thing is how do we work with them. And we are going to really establish what I call the customer engagement team. So this is a team in Norsk Titanium that is going to be allocated and dedicated to every single lead OEM and it's going to work hand-in-hand with them to help them go through their industrial road map and make sure that we deliver on those shared milestones. These teams are made of also cross-functional within Norsk Titanium. So now, we have a commercial representative, which is keeping the relationship with the customer. We have the technical head, which is coordinating all the technical work that goes into helping them going through the road map. And then, we have program managers. Program managers are the people that internally in Norsk Titanium, when we win projects, they make sure that we can execute internally. They align operation, they align engineering, they align supply chain. It's complex, and you need people that are dedicated and really working in order to execute. So execution is really one of the new traits and one of the new focuses that we are going to have in Norsk Titanium. What do we expect at the end of the cycle? Of course, we expect to win, and we expect to have good chances to realize our future road map. So strategy-wise, which is also revenue-wise, I want to make it very, very simple, okay? So Norsk Titanium is going to follow 3 legs, okay? So as we said, we are going to stay focused on the core. So again, the 3 markets, aerostructures, engines and defense, we want to work with lead OEMs on that core space. Something very new, we are going to establish what we call the RPD ecosystem. So the RPD ecosystem is a deployment of our technology and our machines with those lead OEMs. So you can see the link between the core programs and the RPD. And last but not least, we are also going to focus on short-term opportunities. I mean, we are lucky to have a wealth of opportunities that always come in our door. We need to get better at winning those opportunities. So we have teams that are going to work on that. So now, let me walk you -- let me go a little bit more into the details of these 3 legs, okay? So leg #1 is our core. As I said, it's aerospace, aerostructures, engines and defense. What you see here is basically our development cycle. And we are at different stages depending on the different lead OEM, okay? So what you see here, I think -- I'm sure you can recognize Airbus and the 2 primes we are working with and where we are qualified, so Northrop Grumman and General Atomics. Here, we are really at the end of the development cycle. We are on the tipping point that is going to take us into the commercial area. Now, you go back over here, and you can see here that we are at the beginning of the journey in engines, and we are in launching with landing gear customers, okay? So this portion, which is also very important, will represent a very large opportunity going forward. So we want to make sure that, yes, we focus on the short term, and we realize the opportunity in the short term, but we don't forget that we want to get the full price that we have before us. We have also OEMs in the middle, people like Boeing. I have to say Boeing was a very important driver for us a few years back. We are now working in order to identify a new path to work with them. We are -- as you can see here, there is a lot of Boeing here. But here, we have some work that needs to be done to take this company at the level of this other company. But we have contacts, we have the network there, and we are going to do just that. So -- and again, the short term, the long term, and here, the medium term that needs to go also in the short term. So this is how we are working on our core. Let me go just very quickly into a couple of examples. One, of course, is Airbus. You can recognize possibly one of the slides that we used in previous additions. With Airbus, we need to do 3 things, okay? Number one, okay, we have qualified parts that are flying. We need to make them. We need to ship them, and we need to book them as revenues. This is number one. Number two, there are a lot of new parts. So we call it the Wave 3 that we need to convert into parts. So this is a big job that we need to do in order to make sure that we maximize the number of parts that will be converted to RPD. This is a lot of work that is going to take place in the near term. And last but not least, I'm hopeful that you read the latest press release. We are placing a machine in Airbus, Germany, in order to help us to really expand and set RPD as their core additive manufacturing technology. We are going to do that with a dedicated team, again, commercial engineering and program, and we're going to make sure that here, you have a whole bunch of milestones. We want to make sure that we are going to deliver on every single one of them. So what we do with Airbus is not going to be different than what we are going to do with General Atomics, okay? General Atomics is a very important defense prime in the U.S. We've been working with them for a long period of time. We are qualified. And now, we are in what we call the low rate production of certain devices. The challenge there using our customer engagement team will be to move from low rate to high rate. So we're going to work with General Atomics and other defense primes in order to go into their high rate productions, and we see that as a very large opportunity. So aerostructure and defense with Airbus and with a number of primes are really the biggest opportunity that we have before us in the next -- in the near term. All right. So let's talk about the second leg, which is what we labeled the RPD ecosystem. I can tell you what the RPD ecosystem is not, okay? We are not planning to start selling machines to whoever comes to us, okay? That's not what we are trying to do. What we are trying to do instead is working with lead OEMs to help them to in-source our technology in their ecosystem and design specific ecosystems around the RPD technology. So in the Airbus example, we're going to place the machine. And in the future, we're going to help them to really expand the use of RPD within their ecosystem. And we're going to work with them through placing machines, selling machines, licensing technology or whatever way is going to help them to really establish an ecosystem within their manufacturing universe in order to leverage our technology. We see this as a great opportunity. This is certainly a game-changer, and this is going to help Norsk Titanium to make a step change in market penetration, but also in revenues. I want to say that we are not starting from scratch. We already have between 3 and 5 express of interest from very different customers across multiple industries to source the technology through an ecosystem. They all want to establish ecosystems based on RPD. And that's great news for Norsk Titanium. Okay. I think this is what is happening in Airbus. I went a little bit ahead of myself. So we are placing a machine. The focus here is to help them to qualify the RPD process. So in the past, we've been qualified parts part by part. So every time there was a new part, we were working on the qualification of that specific part. What we are going to do now is qualify the process. And when you qualify the process, then you can qualify parts in a much faster way. And this is going to accelerate our go-to-market and our ability to convert parts into business. Okay. Yes, I think this was the main point. Okay. The last leg is leg #3, which is about converting the rich pipeline of short-term opportunities that we have into wins. Norsk Titanium, because of our technology, because of the features of our technology, receives a number of leads that want to use our technology. So what Norsk Titanium needs to do is become better at winning those opportunities. So we are using basically the same operating model that we are applying to the core, and we have established a dedicated team whose job is to jump on those opportunities, work them and win them, okay? So these are opportunities that are very different than the core. I mean, core typically, you have long-term programs, which are very complex and that requires quite a bit of time. Here, we are talking about opportunities that can be translated in 3 to 12 months, okay? So here, we have the opportunity to add to our revenue line in a relatively short period of time. Again, I always say Norsk Titanium is not in the business of tomatoes and potatoes, okay? So we always need to work hand on hand with the customer to qualify our material and to help them design the part. But in these type of industries, we are talking about energy, we are talking about semiconductor, but it is really a multitude and a very diverse industry base. It takes 3 to 6 months from start to finish. So we expect this work stream to help us increase our top line in a short period of time. The other beauty of this is going to help -- this is going to help us to build muscles, okay? Because by working on short cycle and really jumping on those opportunities with a different attitude and pushing our platform to win those opportunities, we're going to build muscles. It's going to help also on the core. So let me just -- I'm hopeful that I was able to give you a good view of what is the opportunity, where we are and what is our future. But I want also to give you an opportunity to understand what we are going to deliver and where you can measure Norsk Titanium. And we have 4 main milestones, okay? The first milestone is, of course, on Airbus. We -- as I said, we are very advanced in the discussion with Airbus. And this is, by far, the most important milestone that we have. What success is going to look like? I mean, we need to start to convert parts. We go back to the 3 points that I explained before. We need to be successful on placing the machine, and we need to bring this to the place that it needs to be, okay? So this is a very, very important milestone. Milestone # 2, we need to go from low rate in defense to high rate, okay? So we are qualified. Now, the challenge is to go hand-in-hand with a number of defense primes from low rate to high rate. We need to deploy the RPD ecosystem. I mean, in the next, let's say, 2, 3, 5 years, there is a lot of work that we need to do. We are starting with Airbus, but this is going to expand to other 2, 3, 4 other lead OEMs. So this is very important. This is going to be a game-changer for us. And we need to make sure that we have a very structured road map. We deliver all the milestones in that road map. And then last, but not least, we need to convert short-cycle opportunities. This is going to happen this year, next year and the year after. And I think we need to be able to demonstrate that we can not only get those opportunities, but win them and translate them into revenues. So this is the story about Norsk Titanium, about the market, about where we are, but most importantly is where we are going. And the difference is really about more traction from the market because I can tell you that, especially from aerostructures and from defense, we see -- and also from engines, we see really, really more traction than we saw before, especially from defense. Strong interest from our customers and from lead OEMs that have decided to include RPD in their industrial platforms. Now, it's all about execution and making sure that we make it happen. So having a new operating model that is going to enable that is fundamentally important. Thank you for today. And I think I did okay. I'm 22, 23 minutes in, so we have another 5 or 6 minutes for Q&A. Thank you. Ashar Ashary: Thank you, Fabrizio, for the presentation. So I guess we'll move over to the Q&A. Ashar Ashary: So before we begin, I would just remind everyone on the web that they can use the Q&A function if they want to ask any questions. So I guess, I'll start in the audience. So please raise your hand if you want to ask any questions. Unknown Analyst: Discussing these days with Airbus, I guess they all know your financial situation. So how do they kind of ask you, so how are you going to solve this? Fabrizio Ponte: Well, I think, yes, you are right. I mean, Airbus knows us very well. They've been knowing us for 10 years, and they know that we have important shareholders that have been there for us all the way. So this is certainly a guarantee for them, and they feel very comfortable with our situation. And hopefully, this is going to -- they're going to help us, too, because they are a very important part of our success. So we are certainly hopeful that in the next period, they will help us to be also financially successful, not only technically successful. Unknown Analyst: Then, to be convinced that you're going... Fabrizio Ponte: Survive. Unknown Analyst: Survive and succeed in this. Fabrizio Ponte: Yes. And as I said, I think they look at our history and what happened in the past, and they have a high confidence because they see that every time we need to help, we are lucky enough to have a couple of very important shareholders that believe that we are going to be successful, and they are always there to back us up. So we don't start from scratch. We invested $500 million in this company, and we have a very strong and solid position, and we have a very strong shareholder structure. So I think we were able to convince Airbus that we are solid -- we are a very solid concern. Having said that, we also need them to help us, okay? So -- and we made this very, very clear, okay? Ashar, I don't know if you want to add anything? Ashar Ashary: I think you said it perfectly. Fabrizio Ponte: Okay. Very good. Thank you. Ashar Ashary: To the web. So we have one here. What is fundamentally changing under the leadership of you, Fabrizio? Fabrizio Ponte: So what is fundamentally changing, I think, is first, I think I'm lucky enough to get to Norsk Titanium in the moment, which is really the tipping point, okay? So you can clearly see that customer, and tipping point, look at the Airbus web story, you can see that I arrived at the right moment. So I think I'm a lucky guy. But what I'm changing is really our operating model and how we are approaching our customer. I'm really designing a new organization, which is customer-centric that is working around the customer milestones and is there to help and support our customer reaching the milestone that will get us to the success. This is what is changing. And it's not just design around the customer, but it's grounded on execution. I mean, we need to execute. We need to be at best when it comes to execution. So we are working very, very hard to be good at that. Ashar Ashary: Okay. We have received a bunch of questions on the Airbus third production order, but I guess I will try to sum it up. How should we think about Airbus going forward? And is the placement of the machine, is that a step closer to a third production order? Fabrizio Ponte: Okay. So first of all, we've been working with Airbus on this for a long time. I mean, it's very difficult for us to precisely predict exactly when that is happening, and that's one of the reasons why we had to change guidance. I mean, it's very difficult to precisely predict that. We are confident that it's going to take place, but predicting exactly when and how is the challenge that we have. The machine placement, of course, I think anybody can understand, it brings us closer to Airbus, it's going to help in the future. I think it's going to help a little bit also on the conversion on the third production order, but it's more for the midterm than for the short term. The game for the short term is all done, okay? So now, we just need to bring it across the finish line. Ashar Ashary: Do you plan to transfer existing RPD machines to lead OEMs like Airbus? And if the machines are required, which partly is responsible for the CapEx for building them? Fabrizio Ponte: So right now, we -- yes, we are -- in the Airbus case, for example, we are moving an existing machine. So there's no CapEx required. We -- the bulk of the machines are placed in New York. And we'll see. I mean, we will evaluate case by case and decide case by case on what to do. But I think it's an opportunity that we need to evaluate very carefully and make sure that we do the right thing. But it's -- we feel stronger in that, too. Ashar Ashary: What is the current status of the Inconel development program? Fabrizio Ponte: So on Inconel, okay, we've been developing titanium parts for a long time. In Inconel, I think we started maybe 12 months ago, 18 months ago. So I think we made a lot of progress. We have a very, very strong pool from the navy on that material. And I think with their support, their interest, we will be able to really accelerate in closing this development very soon. That's one of our targets, for sure. Ashar Ashary: Sharing RPD machines with your main OEMs lead to any changes in the revenue model? Will this be a licensing revenue or part revenue? Fabrizio Ponte: Yes and yes. So the beauty of the RPD ecosystem is that it will be instrumental to a multitude of revenue streams, okay? Are we selling the machine? Are we licensing the machine? Are we asking for royalties on part by part? Are we going to sell the software? Yes, yes, yes and yes. So it's a beautiful way of expanding the use of RPD. Ashar Ashary: We're at the end, but I will try to squeeze in 2 more questions. What is the cost of relocation the machines to Airbus? And the last one is, do you have any new estimate for when breakeven could occur? So I'll start with the cost of the machine, so right now, the -- moving the machines that we're not going to do that on our own time. Obviously, we're working with the customer on that. So we will -- we have a model where we're cost neutral on placing the machine. It is more important for us to develop the process with them, as Fabrizio said. In terms of breakeven, we're not providing any guidance to the market as we said in our previous operational report, but fundamentally, we're going to work with the customers. We're going to see how this timeline is changing, how some things are coming forward, how some things are moving back. So as time goes by, as we get better milestones and better at controlling the milestones, we'll come back to the market with our plans. I guess, there's no new estimates for breakeven. No, yes. Thank you for the presentation. Fabrizio Ponte: Thank you very much. Ashar Ashary: Thank you to everyone watching in on the webcast and showing up here in person. Fabrizio Ponte: Thank you. Ashar Ashary: Thank you.
Operator: Good morning. My name is Melissa, and I will be your conference operator today. At this time, I would like to welcome everyone to the Bath & Body Works, Inc. fourth quarter 2025 earnings conference call. Please be advised that today's conference is being recorded. During the question-and-answer portion, you may ask a question from the phone by pressing star one. I will now turn the call over to Luke Long, Vice President of Investor Relations. Luke, you may begin. Luke Long: Good morning, and welcome to Bath & Body Works, Inc. fourth quarter 2025 earnings conference call. Joining me on the call today are Daniel Heaf, Chief Executive Officer, and Eva C. Boratto, Chief Financial Officer. In addition to this call and this morning's press release, we have posted a slide presentation on our website that summarizes the information in these prepared remarks and provides some related facts and figures regarding our operating performance and guidance. As a reminder, some of the comments today may include forward-looking statements related to future events and expectations. For factors that could cause actual results to differ materially from these forward-looking statements, please refer to the risk factors in Bath & Body Works, Inc.’s 2024 Form 10-K. Today's call also contains certain non-GAAP financial measures. Please refer to this morning's press release and supplemental materials for important disclosures regarding such measures, including reconciliations to the most comparable GAAP financial measure. With that, I will turn the call over to Daniel. Daniel Heaf: Thank you, Luke, and good morning, everyone. Today, we will discuss our fourth quarter results, our outlook for fiscal 2026, and the early progress we are driving to return the company to consistent growth. Our fourth quarter performance was better than we had anticipated, but still well below the standard we expect for ourselves. Our aspiration is clear: to bring together luxury scent, real benefits, and unmatched access, building a brand consumers love, trust, and choose every day. Last quarter, we introduced the Consumer First Formula, our multi-year plan to return Bath & Body Works, Inc. to sustainable growth. Our fourth quarter results reinforced our diagnosis, and the necessity and urgency of this plan. After a soft start to the quarter, our actions to strengthen our performance were successful, supported by consumer rebound after the government reopened and strong execution of targeted promotions by our teams during key holiday moments. We ended the quarter with net sales down 2% and adjusted EPS of $2.05, both ahead of our expectations. Looking ahead, we expect improvement in our financial performance as we execute the Consumer First Formula with discipline and urgency. However, the full financial impact of the actions we will take will take time and build throughout 2026 and accelerate into 2027. Since launching the Consumer First Formula last quarter, we have been focused on execution. Across the organization, teams are motivated, aligned, and moving with pace. With many new roles and leaders in place, we are implementing an enhanced go-to-market approach with improved processes and collaboration between product, brand, and marketplace teams. Let me walk through some of the progress we are making across our four strategic priorities. First, creating disruptive and innovative products. Strengthening our hero category product offering and restarting our innovation engine is foundational to our plan. Since Q3, our product, merchant, and supply chain teams have been working side by side to take insights from consumers and prestige brands and translate them into innovative products that we can deliver to consumers at extraordinary value and unmatched scale. We are prioritizing investments behind our fragrance icons, our priority product franchises, and the core forms that drive repeat purchase. A recent example is the launch of our new moisturizing hand soap, one that features an updated, efficacious formula, elevated packaging, and is marketed as benefit-first. Since the launch, consumer reviews and sell-through have been strong, so much so that we are now actively chasing into demand. This is a sign of things to come as we refocus on the consumer and our hero category. Our 2026 product pipeline reflects this approach to innovation. It is grounded in consumer insights, incorporates enhanced consumer testing, and is targeted in the body care, home fragrance, and soaps and sanitizers categories where we are the market leader. In the back half of 2026, consumers will begin to see significant product evolution in these hero categories that include new forms and upgraded vessels, such as the restage of our moisturizing body wash and a new flat-back spray hand sanitizer, both directly informed by consumer feedback and designed to look modern while improving usability. We are also strengthening how we communicate product quality by evolving the labeling on our packaging, emphasizing ingredient transparency and highlighting product efficacy and benefits, such as 48-hour moisture and dermatologist-approved claims. We know stronger quality messaging is critical to attract new, younger consumers, and it is already being rolled out across all touch points, including our stores, digital platforms, and our product labels. We expect that our new product formula, upgraded packaging, stronger product claims, and elevated franchise positioning will increase our appeal to new consumers, while also increasing loyalty amongst our core customer base. We also expect consumers to respond positively to the rollout of higher fragrance load across our iconic scent franchises and complemented by new sensitive skin offerings. These examples reflect our focus on strengthening leadership in the core, delivering more consistent and relevant benefit advancements, and better meeting the evolving expectations of today's consumer. In short, these are early actions of a much broader innovation agenda which accelerates in the back half of the year and continues through 2027. Earlier this quarter, we launched our latest Disney Princesses collaboration. Building on the insights from last year's collection, including offering a broader range of accessories, this latest lineup features five new fragrances: Life Is a Fairytale, Snow White, Mulan, Rapunzel, and Aurora, along with the return of two fan favorites from the original collection, Belle and Tiana. The launch has resonated with customers and overall is in line with our expectations. Collaborations remain an important part of our growth strategy, and we have more collaborations planned this year than last. As we said last quarter, we will over time deploy them differently and more strategically to drive energy into our fragrance icons, key franchises, and seasonal collections. A good example of this is the launch of the Peak Collection, specifically designed to support the Easter shop. In summary, we are moving with pace to modernize our product packaging and formulation, and this will become increasingly visible in the back half of the year and continue to build through 2027. Second, reigniting the brand. We have begun laying groundwork to modernize how Bath & Body Works, Inc. shows up and communicates with consumers. Our brand and marketing teams are shifting towards clearer, more elevated brand and product storytelling. We are sharpening our position and creative platform, adopting a modern, consistent visual identity across channels, and increasing investment in upper-funnel media with higher-caliber influencers and creators to build a more culturally relevant presence that sparks excitement and builds awareness with new consumers. Earlier this quarter, our evolved brand identity made its debut on Amazon, showcasing Bath & Body Works, Inc. in a modern and relevant way for today's consumer. I will speak more about the Amazon launch in a moment. This updated visual identity is supported by richer, visually compelling product storytelling that highlights what makes our brand distinct. That everyone deserves to find that feel good. As expert creators, we bring together luxury fragrance, meaningful benefits, and easy access delivered at exceptional value. The new brand expression that debuted on Amazon will begin rolling out across our own channels later this year. As we modernize the brand, creators and influencers at scale will be an important part of our new go-to-market strategy. The use of influencers is a proven go-to-market playbook that will allow us to create a more visible and consistent presence across the social media platforms we know our consumers use every day. These actions are the beginning of a transformation of Bath & Body Works, Inc. from a retailer to a global brand, one that leads with creativity, celebrates product, and creates culture. I know what this looks like when it is successful, and I can see the upside. Third, winning in the marketplace. Discovery should feel effortless. We are focused on meeting consumers wherever they choose to shop—online, in stores, and across third-party platforms. Our global store fleet is a meaningful advantage in beauty and fragrance, one that would take newer competitors significant time and resources to replicate, and we are committed to fully leveraging its strength. To welcome more consumers to the brand, we have taken steps to simplify and modernize the in-store experience. For example, we have reduced SKUs by 10%. Looking ahead, we are focused on enhancing in-store navigation. Changes will roll out later this year, creating a more intuitive, inviting, and elevated shopping journey. I am confident the consumer will feel the difference. At the same time we are making these in-store changes, we are broadening and improving how consumers can discover and shop the brand across owned digital and third-party platforms. A major milestone in this work was our February 20 launch on Amazon. We know consumers often go to Amazon to purchase their beauty products, and this launch gives us access to Amazon's broad, high-intent customer base, enabling us to reach new and lapsed consumers in one of the world's most trafficked marketplaces. The curated Amazon assortment is designed to attract new shoppers to the brand while giving loyal consumers far more convenient access to their favorite products. As we learn more from our Amazon launch, we are evaluating additional opportunities to extend our distribution further in strategic and brand-accretive ways. In parallel, we are elevating our owned digital experience with a focus on reducing friction and improving the customer experience through clearer product navigation, stronger storytelling, and a more intuitive and modern shopping experience. For example, we have now lowered our free shipping threshold from $100 to $50, aligning more closely with specialty retail standards, enhancing our competitive positioning, and crucially reducing friction for new-to-brand consumers. Looking outside of North America, our international business continues to be an exciting opportunity. The international business is approaching $1 billion in retail sales. Our partners, who own and operate the stores, believe in our strategy and are accelerating the pace of new store openings across existing and new markets, including Germany and Brazil. This reflects the strong global demand for our brand and allows us to further expand our reach to consumers worldwide. Our goal here is simple: be in the path of the consumer, spark discovery, and ensure the Bath & Body Works, Inc. brand shows up consistently and powerfully across every owned and partner touch point. Finally, operating with speed and efficiency. We are laser-focused on removing complexity from our business, streamlining decisions, shortening cycle times, and driving productivity. Our multi-year Fuel for Growth program targets $250 million in cost savings over two years, with approximately $175 million included in our 2026 guidance. These savings allow us to accelerate and fund our strategic investments in product and brand. As we move forward, we are closely monitoring indicators that our strategy is gaining traction, and we will share green shoots along the way, such as accelerated growth in new-to-brand consumers, stronger pricing power behind our innovation, improved performance in our hero category, and expanded reach through new distribution channels. The Consumer First Formula represents a comprehensive end-to-end transformation of our company. It is designed to ensure we consistently meet and exceed the expectations of today's modern consumer. This work is well underway. We are moving with urgency, and as the year unfolds, our progress will become increasingly visible to consumers, associates, and shareholders alike. At the core, this transformation is repositioning us from a specialty retailer to a premier global brand. With that, I will turn it over to Eva to walk you through our financial performance and outlook. Eva C. Boratto: Thank you, Daniel, and good morning, everyone. Today, I will provide the details of our fourth quarter results, a wrap up of 2025 performance, and a review of our 2026 guidance. Beginning with the fourth quarter, net sales were $2.7 billion, down 2.3% versus last year and better than the guidance floor we set of down high single digits. This performance reflects improvement as the quarter progressed following a soft start in early November when we navigated significant macroeconomic pressure that impacted our consumer demand. Our targeted promotional and operational adjustments, such as a new Black Friday weekend event, drove dual-channel traffic growth on those key days. Our Q4 category performance reflects the same challenges we shared in Q3. We must deliver consumer-right product innovation, elevate the brand, and be available wherever and whenever she chooses to shop. Body care declined mid-single digits, below the shop, driven by underperformance in seasonal collections, notably Holiday Traditions, which did not resonate for the first time in several years. Consumer research shows our body care offerings have become too predictable and that we need to be more disruptive with modern, benefit-led innovation. On a positive note, Champagne Toast had its strongest year ever, validating our strategy of elevating our core fragrance icons. Home fragrance grew low single digits, performing above shop. Candles were a relatively bright spot, supported by stronger three-wick and single-wick acceptance, better inventory positioning, and disciplined pricing. Soaps and sanitizers also grew low single digits, with our PocketBac sanitizers leading the way. In U.S. and Canadian stores, net sales were $2.1 billion, a decrease of 2.6% to the prior year. Direct channel net sales were $579 million, a decrease of 2.5%. When adjusted for Buy Online, Pick Up In Store, digital outperformed stores. International net sales were $91 million, up 8.6% to the prior year, and system-wide retail sales grew 13%. We are pleased with the rebound of our international business, with all geographies delivering growth, and our partners maintained healthy inventory positions. Our fourth quarter adjusted gross profit rate was 45.7%, better than expected and a decline of 100 basis points to last year, driven primarily by tariff impacts and partially offset by B&O leverage, which benefited from the Q1 2025 exit of a third-party fulfillment center. Mix-adjusted AUR declined low single digits, reflecting our strategies during holiday. Adjusted SG&A rate was 23.2%, an increase of 90 basis points to last year, reflecting softer sales and investment in technology and initiatives associated with the Consumer First Formula. Bringing it all together, adjusted operating income was $614 million, 22.5% of net sales. Adjusted earnings per diluted share of $2.05 exceeded expectations and declined 2% to last year. With respect to inventory, we ended the fourth quarter with inventory down 5% to prior year and, importantly, with clean inventory levels headed into spring. Our real estate portfolio remains healthy, with 60% of our fleet in off-mall locations. In the quarter, we opened 21 new North American stores, all off-mall, and closed 28 stores, primarily in malls. For the year, we opened 32 net new stores. International partners opened 36 stores and closed seven stores in Q4, with 44 net new stores in the year. We ended the year with 573 international locations. Now, for the fiscal year 2025, net sales were $7.3 billion, flat to the prior year, and adjusted earnings per share was $3.21, down 2% to the prior year. For additional full-year results, please refer to the slide presentation we have posted on our website. Turning to our 2026 guidance. We expect 2026 to be a year of disciplined investment behind the Consumer First Formula, balancing rigorous cost control with targeted reinvestment to position the business for sustainable long-term growth. We expect net sales to be down 4.5% to down 2.5%. Key assumptions behind our net sales include a macro environment similar to 2025 with continued value-oriented consumer behavior. Our innovation pipeline, improved marketing execution, and new touch points, such as marketplace and wholesale, will begin to contribute more meaningfully over time, with a greater impact in the back half of 2026 and into 2027. Promotions are assumed at comparable levels to 2025 and will remain an important tool to drive traffic and customer engagement. International net sales are expected to be up mid- to high single digits. We expect full-year gross profit rate of approximately 42.4%, reflecting B&O deleverage primarily due to sales decline and merchandise margin pressure from product investments, partially offset by our Fuel for Growth initiatives. We are assuming tariff levels, inclusive of product cost inflation pressures, remain roughly neutral to year-over-year earnings. We expect full-year adjusted SG&A rate of approximately 29.2%, reflecting normal wage inflation, Consumer First Formula investment, and sales deleverage, again partially offset by Fuel for Growth initiatives. Our Fuel for Growth targets $250 million in cost savings over two years. As Daniel mentioned, we expect approximately $175 million of cost savings in 2026, with those savings earmarked to accelerate investments in innovation, digital, and marketplace capabilities, and high brand-impact initiatives. We expect full-year adjusted net non-operating expense of approximately $230 million, reflecting the interest benefit of the early redemption of our January 2027 bond, an adjusted effective tax rate of approximately 26.5%, and weighted average diluted shares outstanding of approximately 203 million. There are no share repurchases assumed in our outlook. Considering these inputs, we are forecasting full-year adjusted earnings per diluted share of $2.40 to $2.65. Turning now to the first quarter. We expect Q1 net sales of down 6% to down 4%. We expect first quarter gross profit rate to be approximately 42.5%, reflecting approximately 150 basis points headwind from tariffs, as we had no tariff impact in Q1 2025, and B&O deleverage due to the sales decline. B&O dollars are expected to be relatively flat. We expect our first quarter adjusted SG&A rate to be approximately 32.3%, reflecting net sales deleverage and net timing of investments and Fuel for Growth savings. Our first quarter outlook includes adjusted net non-operating expense of approximately $60 million, an adjusted tax rate of approximately 28.5%, and weighted average diluted shares outstanding of approximately 202 million. Considering all of these inputs, we are forecasting first quarter adjusted earnings per diluted share of $0.24 to $0.30. Now for a quick update on capital allocation. We are a strong cash flow generating business, and our top priority remains driving sustainable long-term profitable growth through strategic investments in the business. For the full year 2025, we invested $237 million in capital expenditures. We generated free cash flow of $865 million, including approximately $125 million of working capital benefits that our teams drove. We returned $167 million to shareholders through dividends and repurchased 15.1 million shares for $400 million. In 2026, we expect to invest approximately $270 million in capital expenditures focused on high-return real estate, Consumer First Formula investments largely related to product assortment, and logistics and fulfillment upgrades. We expect to reduce the number of new store openings this year, resulting in square footage growth of approximately 1%. We expect to generate approximately $600 million of free cash flow in 2026, including a $65 million after-tax benefit from the interchange fee litigation settlement. We expect to maintain our annual dividend of $0.80 per share and will redeem our $284 million of January 2027 notes in the first quarter, as I previously noted. We remain committed to returning to our 2.5x gross leverage target over time. As always, we will take a balanced approach, investing to drive long-term growth while returning excess cash to shareholders. To summarize, 2026 is an investment year as we execute our Consumer First Formula with pace and discipline. We are confident in our strategy and our ability to establish Bath & Body Works, Inc. as a premier global brand, one that delivers sustained, durable growth. Operator: Thank you. If you would like to ask a question, please press 1 on your telephone keypad. You may press 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. To allow for as many questions as possible, we ask that you each keep to one question and one follow-up. Our first question comes from the line of Lorraine Hutchinson with Bank of America. Please proceed with your question. Lorraine Hutchinson: Daniel, I wanted to get your insight on the competitive landscape across mass, specialty, and other fragrance players. Some of these competitors are also leaning heavily into content creators and elevated packaging. How are you approaching this, and do you think you are positioned to compete effectively at this point? Daniel Heaf: Good morning, Lorraine. Thanks for the question. Without a doubt, the landscape we are operating in is increasingly competitive. We operate in innovative, useful, fast-growing, high-margin categories that naturally attract strong interest and new entrants. I really love the sectors that we play in. As I explained on the last earnings call in Q3, for a period our product innovation, our brand expression, and our market execution did not keep pace with the competition or with the consumer. We leaned too heavily on promotions to drive the business. The Consumer First Formula is directly addressing those gaps, and we are moving with pace. It is not strategy; it is action. You will see from us bold and disruptive product innovation—you know, we talked about a green shoot on the call in the moisturizing hand wash—new packaging, new formula, benefit-led marketing, and the success that we have had; a refreshed and reenergized brand that resonates with today's consumer; and an elevated and extension and expansion of our distribution in the marketplace, as you have seen with our February launch on Amazon. Now, as part of that marketing evolution, we are going to significantly expand the use of content creators. This is really what I mean by moving from being a specialty retailer to being a global brand. We expect to see a roughly tenfold increase in how we leverage content and how we leverage content creators so we can show up in social media in a way that is modern and relevant. What I love so much about this job and what I love so much about this company is where we sit. We are evolving to adopt the playbooks used by these small insurgent competitive brands, but we do so from a position of strength and with what I believe are significant competitive advantages. We have the scale and resources to invest meaningfully. We have our 2,500 stores globally, which gives us an amazing amount of trap to capture the demand we create. We have our fast, agile domestic supply chain that allows us to chase into demand, and we offer extraordinary value to our consumers. What I like about where we sit is that we will be an incumbent but operating with the pace and the agility of an insurgent brand. I have so much confidence in our strategy, in our competitive position, and, most importantly, in our team's ability to execute with pace. Lorraine Hutchinson: Thanks, Daniel. And Eva, can you talk a little bit about the puts and takes around your gross margin forecast for the year? What's embedded for tariffs, promotions, any other items? I would have thought you would get some of those elevated China tariffs back over the course of the year, so maybe just how you are thinking about the pace of gross margin development through the year? Eva C. Boratto: Sure. Thanks. Good morning, Lorraine. Overall, our outlook assumes about 130 basis points of gross margin pressure. I will start with merch margin, where we expect to see pressure really driven by those product investments that Daniel just referenced. You will begin to see some of that new product in the back half of the year. From a tariff perspective, our guidance assumes tariffs inclusive of product cost inflation. It is tough to separate those, roughly flat to earnings year over year. I would note you will see an outsized impact in Q1 as we are wrapping the start of tariffs, which for us began in Q2 of last year. We had essentially no tariff in Q1 2025. That reverses a little bit with some of the rate movements in Q3 and Q4. We expect to experience B&O pressure as well, natural deleverage given the sales declines, the investments we are making in real estate, and some wage inflation. This is all net of our Fuel for Growth. The Fuel for Growth program that we highlighted, about half of the savings flow to gross margin versus the other half to SG&A. We are continuing to mine for opportunities to improve our underlying cost as we progress. Thank you. Operator: Thank you. Our next question comes from the line of Ike Boruchow with Wells Fargo. Please proceed with your question. Ike Boruchow: Hey, good morning, everyone. Congrats on the improvements. I guess two questions. First one, Eva, can you help us understand the Q1 revenue guide a little more? Just looking for some thoughts really relative to the trends maybe that you saw exiting the fourth quarter? Eva C. Boratto: Sure. Thanks for the question. I will start with a comment we made last November that was very consistent in Q4. When you exclude the benefit of broader promotional activity, our core business has been trending down about 3%. As I noted in my prepared remarks, our plan does assume promotional levels consistent with 2025. We are not building incremental promotional intensity into our plan. That does not mean we will not have different promotional events, but overall, as we think about intensity, we are assuming we are relatively flat. Think about the 3% I referenced as a baseline for 2026. For Q1, we are facing our most challenging year-over-year comparison from a top-line perspective. We had our strongest quarter last year in Q1. Ike Boruchow: Got it. So I guess my follow-up is kind of to that point. So last year in Q1, I think you started off with a really successful collab, which created some tough compares for you this year. But just kind of curious if you can comment on how the follow-up Princess launch, which you had a few weeks ago, did. I think Daniel had some positive comments, but really just trying to understand how you were able to comp that event, and if that sets you up well relative to the Q1 guide that you are giving us today on revenue. Eva C. Boratto: Sure. Let me take that question in a couple of ways. First, on the Disney Princess 2.0 launch, we built on our learnings from last year and our insights. We offered a broader range of accessories. Last year, those accessories sold out very quickly, within a day or a couple of days. Overall, the launch has resonated with existing customers and is overall in line with our expectations. I would say you cannot just look at Disney in isolation as to how it is affecting the overall shop. Q1 to date is tracking in line with the expectations that we just set. While Q1-to-date top line is running above our guidance range, that is consistent with our internal cadence of assumptions, and if there is some movement in timing of key events, that can affect the quarter. Overall, we are running in line with our expectations. Operator: Thank you. Our next question comes from the line of Matthew Boss with JPMorgan. Please proceed with your question. Matthew Boss: Great. Thanks. So, Daniel, maybe taking a step back, what signposts should we look for to know that your Consumer First Formula is working here? What gives you confidence in the plan, or any green shoots that you are seeing at this point? Daniel Heaf: Good morning, Matt. Yes, great question. Let me give you a little bit of color on that. Let me start by saying I am really pleased with how fast the whole company has moved from strategy to action. We are all collectively motivated and aligned behind the four pillars. We are focused on the Consumer First Formula, and I believe we are moving with real pace and discipline. The most important signposts are very clear and measurable, and we expect to see an acceleration in new-to-brand customer growth. We expect stronger pricing power and sell-through behind our core innovation. We are definitely looking for improved performance in our hero category, specifically body care in 2026, and expanded reach and incremental sales from the new distribution channels that we will open this year, like Amazon, which we opened on February 20. These are just some of the tangible proof points that the Consumer First Formula is working. As I have said a number of times, we expect the change to be visible to the consumer before we see the full benefits of our new strategy in the financials. I believe there are things that the consumer is already starting to feel. We talked about the moisturizing hand soap—it is a new formula, efficacious, benefit-led marketing—and we are seeing great customer reaction from that. It is just a signal of the things that we have to come. As I said in Q3, we are really ramping into product innovation in the back half of this year. As Eva mentioned, we talked about the iconization of our fragrances. If we put the right level of marketing, if we build multi-plan behind some of our iconic fragrances, we believe we can make big bigger. We started that with Champagne Toast last year almost as a test, and it had its best year ever. We have a way to go to deliver that, but we will show that in 2026. We talk about winning in the marketplace. International continues to be a great opportunity and grow nicely. We saw system-wide retail sales up double digits, which gives us confidence in the global opportunity for the brand. I would say Amazon is an important structural proof point, one that we have already launched early into the fiscal year, and we know it is an opportunity to acquire new-to-brand customers as well as service existing customers at a speed and convenience that this brand has not offered in the past. That is a little bit of color behind some of the proof points. Eva C. Boratto: And, Daniel, can I just add a couple of additional points from the points you made? As you look at international, our partners are showing confidence in the strategy with acceleration of new store openings next year. We are expanding in new markets, and our store openings will be at least 60 net new store openings. On the point that Daniel made about the moisturizing hand soap, as we look at the productivity of that, the productivity of that is double the gel soap that it is intended to replace. It is just an early proof point of real, tangible benefits when you bring the product to the market that resonates with the consumer. Operator: Thank you. Our next question comes from the line of Mark Altschwager with Baird. Please proceed with your question. Mark Altschwager: Good morning. Thanks for taking my question. Starting with margin, guidance implies low-teens EBIT margin this year. Do you view this as a durable base for the business? And then what is your philosophy on driving faster top line versus EBIT margin expansion in fiscal 2026 and into fiscal 2027? Eva C. Boratto: Sure, Mark. I will start with margin. This business has been a very healthy margin business for a long time. We need to invest for growth responsibly while we are funding the journey through our Fuel for Growth, but we must invest in this business to get the business back to growth, and when you do that, this business leverages nicely. As we think about margin expansion beyond 2026, we will come back to you as we continue to execute on the Fuel for Growth strategy. I would think about it as there is leverage to be had as we drive growth in the business. Daniel Heaf: It is growth and margin, but growth must come first. Mark Altschwager: Thank you. And then a follow-up on capital allocation. You are pausing buybacks, redeeming the nearly $300 million in debt in Q1. But if free cash flow tracks toward the $600 million guide, would you intend to remain out of the market for the full year, or is there a path to resuming some opportunistic repurchases through 2026? Or how are you thinking about the longer-dated maturities on the debt side just as you update your buyback plans? Thank you. Eva C. Boratto: Sure. Thanks, Mark. Our priorities remain the same: investing in the business, returning cash to shareholders, and maintaining a strong balance sheet. We are committed to our 2.5x gross leverage. We repurchased those bonds—earlier in the process of doing so was earnings accretive. We were reserving the cash for those bonds. Of course, as we progress through the year, we will maintain the flexibility to return cash to shareholders after funding our Consumer First Formula priorities. Operator: Thank you. Our next question comes from the line of Simeon Siegel with Guggenheim Partners. Please proceed with your question. Simeon Siegel: Thanks. Hey, everyone. Good morning. Daniel, and sorry if I missed it if you said this—obviously early—but is there any way to quantify the initial reads from Amazon? Maybe how you are thinking about both Amazon and the other incremental wholesale partnerships within the full-year guide for next year? And then just when thinking about wholesale, I am curious, maybe higher level, can you share your thoughts on whether this is something you want to drive customers to wholesale, or is it more so a function of you want to be able to meet your customers where they are? And then just, Eva, just quickly, it was nice to see the B&O leverage, and I heard the comment for go forward. Curious if you could tell us what the leverage point is now for occupancy and then maybe for SG&A as well. Thank you. Daniel Heaf: Hi, good morning. I will take the strategic question and maybe, Eva, you can follow up. The third pillar of the strategy is really winning in the marketplace, and the ambition here is to make discovery effortless. We are focused on meeting consumers where they are and where they choose to shop—online, in our own stores, and across third-party platforms—and Amazon is an important part of the strategy. We have only been live for a couple of weeks, so it is a bit early to be able to assess performance, but there is no question that the channel meaningfully extends our reach by giving us access to Amazon's broad consumer base and helps us connect, as I said, with both new and lapsed shoppers to drive brand discovery. I am particularly pleased with the response that we have had from the way that the brand looks. If you think about when I started here, our own website offered one photograph per product, and I think it was seen very much as a way for store shoppers to replenish. If you look at how our assortment—and it is a limited assortment to start with on Amazon, there are 50 SKUs—looks, the product photography is incredible. You can see the scent stack. You can see the benefits with lifestyle photography. We are starting to sell the brand through an elevated positioning and product storytelling in a way that we have not done so before, and once we have done that at Amazon, of course, it is relatively quick and cheap to start to roll that out across our existing touch points. Amazon is both a place to drive brand and consumer discovery, no question, and we are competing in the marketplace for traffic on Amazon. For too long, we have allowed our competitors to use our keywords and the fact that we did not have an official brand presence to take the demand that was rightfully ours and funnel it towards their product. That is now no longer happening. We have high expectations for this. It will make a meaningful financial impact in the year, and we are ramping into it. Eva C. Boratto: Great. And, Simeon, good morning. To your question about the full-year guide, inherent in our guide is about $50 million, or a half a point of growth, from our expanded distribution efforts. I would note our Amazon partnership is a wholesale model, so we are not realizing full retail sales. We are excited about the start to the launch, and the teams are highly engaged to continue to drive this strategy forward. On leverage points, I would say we do not really have any changes to our leverage point—B&O at about 2% to 3% sales growth and SG&A at about 2.5% to 3.5% sales growth. Thank you. Operator: Thank you. Our next question comes from the line of Kate McShane with Goldman Sachs. Please proceed with your question. Kate McShane: Thank you. Good morning. Thanks for taking our question. Daniel, you mentioned a few times the words luxury and pricing power, and I wondered if you could drill down a little bit more about what specific initiatives center around these strategies. Daniel Heaf: Hi, Kate, yes, I think that is a great question. For too long the brand has not listened to the consumer, and that is what we mean when we talk about putting the consumer at the center of everything that we do. We are taking consumer insights and directly translating that into our new and disruptive, innovative product. This is a new process that we are operating. For too long I think that we have looked at mass as the competition, which of course it is, but really the USP of our brand and what we are getting back to is bringing cues and scents from luxury and making it available at accessible price points. That is really the opportunity that we have in front of us. It is not that we are looking to reposition the brand as prestige or move into luxury price points. That is absolutely not what we are doing, but it is luxury scent with benefits at unbelievable value for consumers. Kate McShane: Thank you. And just as a second question, Eva, we wanted to ask about the international outlook. Is there any risk to the numbers you gave today just given the current circumstances in the Middle East? I know there was a little bit of a drag last time we saw conflict in that region on your international sales. Eva C. Boratto: Yes, thanks for the question, Kate. It is quite early. Let me take a step back. We are pleased with the rebound of our international business. In Q4, all geographies delivered growth, and our partners are starting the year in a healthy inventory position. As we look at the Middle East, today, international represents, as you know, about 5% of our total net sales, with the Middle East currently representing about 40% of the portfolio. That is down quite a bit from where we were a couple of years ago. We have a strong, diversified international portfolio. We are expanding our markets, and we have strong, compelling consumer demographics. I think it is too early to comment on the current dynamic in the Middle East. We will continue to monitor it and pivot. Our stores are open and continuing to function, and we are focused on our partners and our associates, of course. Operator: Thank you. Our next question comes from the line of Jonah Kim with TD Cowen. Please proceed with your question. Jonah Kim: Daniel, as we think about the collaborations and Amazon, how is your retention strategy different, if at all, and how do you think that will evolve over time? And in terms of the core offering, as you continue to evaluate, what is the right mix of body care, candles, and soap and sanitizer going forward? Thank you so much. Daniel Heaf: Hi, Jonah. Let me expand a little bit on collabs. As I said in Q3, we are thinking about collabs differently. We love collab. We want to use them differently and more strategically. We want to use them to drive energy into the things that are permanent about this brand—driving energy into our priority franchises, driving energy into our iconic fragrances, or driving energy into a seasonal collection that we are known for. The good news is we have more collabs this year than we did last year, and we are starting to use them strategically already. A really good example of this is live right now. We launched our Peak collab, which has had really excellent response from consumers. What it is doing is not standing alone as a collab, as a separate thing that is used to drive a quarter, but it is actually set up to drive energy into our Easter collection, and we are starting to see good results from that already. When it comes to Amazon, I do think, as I have said in the past, it is predominantly about meeting new and lapsed consumers. We have a very powerful and very successful rewards program with over 40 million members, and over 80% of our transactions in our own network flow through that. That is an excellent tool for continuing retention, but Amazon does not offer our rewards program. We are getting a benefit of having improved AUR on that. That is what the consumer is getting at the balance for speed and convenience. It really is about new and lapsed consumers on Amazon. On the second part of your question with regards to the core offering, we are focused together on making sure that we are taking share. To take share, we should be growing in line or better than the marketplace. That is the standard we expect of ourselves, and that is what the Consumer First Formula will deliver. I do not really think about what is the right balance for the business. I think: where is the consumer demand, where is the growth in the marketplace, and how are we going to claim our rightful share of that? Eva C. Boratto: And just to repeat what you said earlier, Daniel. Particularly as you look at body care and soaps and sanitizers, these are nice, growing markets out there that we can win in. Daniel Heaf: Absolutely. We do so from a position of strength. Operator: Thank you. Our next question comes from the line of Sydney Wagner with Jefferies. Please proceed with your question. Sydney Wagner: Just one more kind of on the pricing architecture. How are you thinking about the price taking with newness and what your right to pricing is there? Is there any learnings you have had as you have rolled out some of the brand refresh product? And then just as you work to shift brand perception toward being benefit-led, adding dermatologist-approved claims in store, do you feel the consumer is following you there? What has been the early feedback on those specific claims? Thank you. Daniel Heaf: Hi, Sydney. With pricing, I think our strategy is very clear. We have relied too often in the past on deeper and more frequent discounts. As we go into 2027, we are expecting AUR improvement on our innovative products. We are expecting to get paid for our innovation, and that product is not just great, innovative, disruptive product in and of itself. It will be wrapped in new energy and new brand identity. I do believe that when you get it right—great product, great brand—brought together in the marketplace, we can start to regain pricing power. That is absolutely the strategy. As Eva and I have both said, across the whole business, it is not our intention in this financial year to use deeper and more frequent discounts as a lever to growth. We know that is not in the best interest of the business long term. That is how we are thinking about pricing. It is not that the pricing or the tickets will be materially different on innovation. It is the fact that it will not be included in some of the more aggressive discounting that we may do. When it comes to benefit-led, it is very clear in our consumer insights for many years that this is a critical thing that we must crack for new and younger consumers to consider the brand. It is really a multipart, 365 strategy. We have rolled out new claims and new levels of ingredient transparency on our product. You can see it today on our labeling, and the presentation that we showed as part of this call gave a couple of highlights of that. It is now prominent and permanent in stores. Our website just launched what we call the Feel Good Formula, which is giving a much more detailed look into our ingredients and our commitment to a cleaner product. It is early days. We are getting good consumer feedback, and we expect this to be a core part of our brand identity as we move through the year. Critical for us. Operator: Thank you. Our final question this morning comes from the line of Krisztina Katai with Deutsche Bank. Please proceed with your question. Krisztina Katai: Hi. Good morning, and thanks for squeezing me in here. So, Daniel, with the emphasis on attracting new, younger consumers, and I believe I heard you say a roughly tenfold increase in leveraging content creators, can you maybe just talk about your expectations around new customer acquisition, how you see changes in your consumer demographics by age, by income, and then how you are tracking engagement rates on social media platforms that you expect to see as a direct result of these efforts in 2026? Daniel Heaf: Great question. Our expectations on new consumers are that we are expecting to see a trend break in the levels of new consumers that we are attracting to the brand. We are really focused on that. We welcome all consumers to the brand, and that is what I love. We are a broad church when it comes to consumers. We have propositions like Disney Princesses, which clearly skews younger, and we have a very loyal consumer that we love that skews slightly older. Where we want to play, of course, is where the market is growing, which is in the 25- to 30-year-old female demographic, and that is where our innovation in the back half is truly targeted. When it comes to brand, of course, we are tracking new-to-brand consumers. We have really good new metrics on brand health, and we are expecting improvements in that also. When it comes to social media, there are many metrics that we track, but I would say the most important one is going to be number of posts from the influencers. We are really looking for those thousands of influencers that we recruit to be posting their content about our product and our brand in their voice, because we know from having seen this playbook run with other competitors and those insurgent brands I talked about, that is the secret to success in that area. Thank you for your question. Okay. Thank you, everybody, for your questions. When we work in retail, the holidays do not mean a break. With that in mind, I want to take this last moment to extend a heartfelt thanks to our associates across stores, across distribution centers, and our home office for their continued commitment, passion, and determination. We are acting with urgency and clarity against the Consumer First Formula—creating disruptive and innovative product, reigniting our brand, winning in the marketplace, and operating with speed and efficiency—all to attract new and younger consumers. Our expectations for our business and our brand are high, and this work will take time, but we are confident that we have the platform, the plan, and the team to win. Thank you very much, everybody. Operator: Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.
Operator: Good morning, and welcome to The Eastern Company Fourth Quarter Fiscal Year 2025 Earnings Call. At this time, all participants are in a listen-only mode, and the floor will be open for questions following the presentation. If anyone should require operator assistance during this conference, please note this conference is being recorded. Marianne Barr, Treasurer and Corporate Secretary at The Eastern Company, the floor is yours. Marianne Barr: Good morning, and thank you, everyone, for joining us this morning for a review of The Eastern Company's results for the fourth quarter and full year 2025. With me on the call are Ryan Schroeder, Chief Executive Officer, and Nicholas Vlahos, Chief Financial Officer. The company issued its earnings press release yesterday after market close. If anyone has not yet seen the release, please visit the Investors Information section of the company's website at www.easterncompany.com, where you will find the release under Financial News. Please note that some of the information you will hear during today's call will consist of forward-looking statements about the company's future financial performance and business prospects, including, without limitation, statements regarding revenue, gross margins, operating expenses, other income and expenses, taxes, and business outlook. These forward-looking statements are subject to risks and uncertainties that could cause actual results or trends to differ significantly from those projected in these forward-looking statements. We undertake no obligation to review or update any forward-looking statements to reflect events or circumstances that occur after the call. For more information regarding these risks and uncertainties, please refer to risk factors discussed in our SEC filings, including Form 10-Ks filed with the SEC on 03/03/2026, for the fiscal year 2025. In addition, during today's call, we will discuss non-GAAP financial measures that we believe are useful supplemental measures of The Eastern Company's performance. These non-GAAP measures should be considered in addition to, and not as a substitute for, or in isolation from, GAAP results. A reconciliation of each of the non-GAAP measures discussed during today's call to the most directly comparable GAAP measure can be found in the earnings press release. I will now turn the call over to Ryan Schroeder. Ryan Schroeder: Thanks, Marianne. 2025 is a year defined by two things: challenging end markets, particularly heavy truck and automotive, and significant operational progress that positions us well for the future. Our primary end markets remained under pressure throughout most of the year, though we began to see early signs of stabilization in November and December. At the same time, we were navigating tariff impacts and broader macro uncertainties. As a result, our financial performance reflects both the difficult environment and the actions we took to respond decisively. For the full year, revenue was $249 million, down 9% year over year. Adjusted EBITDA was $19.4 million, representing a 7.8% margin, compared to $26.3 million, or a 9.6% margin last year. Importantly, the performance represents roughly a 7% margin on reduced operating scale, which we view as a commendable outcome given the revenue pressure. Encouragingly, the fourth quarter showed sequential improvement. Revenue increased 4% from the third quarter, rising from $55.3 million to $57.5 million. Adjusted EBITDA improved by $1.1 million sequentially. That reflects a 50% margin on the incremental revenue in Q3, clear evidence that our cost actions are working and flowing through to the bottom line as volumes stabilize. While we could not control when the markets would turn, we made sure that 2025 would be the year we prepared The Eastern Company to win going forward. Here is what we did. In 2025, we made the decisive structural changes to The Eastern Company's cost base, portfolio, and operating model. As a result, The Eastern Company is leaner, more focused, and better positioned with a solid foundation for its next chapter of growth. First, we lowered our cost structure. We reduced our cost base, generating approximately $4 million in annual savings from restructuring and footprint optimization initiatives. At the same time, we strengthened leadership. We hired Zach Gorney to lead Everhard, promoted Emilio Ruffalo to lead Big 3, and added two strong commercial leaders to drive growth in both of those businesses. Second, we streamlined the portfolio. We divested the underperforming Centralia Mold division of Big 3, a business that was a drag on earnings. This allowed us to concentrate capital and management attention on our high-conviction core businesses. Third, we addressed tariffs head on. We neutralized approximately $10 million of tariff exposure, offsetting substantially all of the impact through pricing actions and supply chain cost reductions. We are also building more flexible and resilient supply chains, giving customers multiple sourcing options, both domestic and offshore, so we can pivot as the trade environment evolves. Fourth, we invested in future revenue. We executed a commercial realignment to strengthen our go-to-market capabilities going into 2026, expanding new customer relationships and targeting new end markets. We maintained our investment in product development throughout 2025, with output that will become increasingly visible in 2026 and beyond. Notably, our Asia business grew 25% year over year following the deployment of dedicated sales resources in the region, a geography where we see opportunity for incremental profitable growth going into the future. Fifth, we strengthened the balance sheet. We enhanced financial flexibility by refinancing our credit facility. The incremental capital supports organic growth, provides a buffer against macro uncertainty, and positions us to act decisively when the right M&A opportunity arises. Finally, we demonstrated capital discipline. We reduced debt by $8.7 million, returned $2.7 million to shareholders, and repurchased approximately 153,000 shares, or about 2.5% of shares outstanding. Our operating model demonstrated resilience. A 9% revenue decline resulted in only a 20-basis-point gross margin erosion in the fourth quarter. Sequential financial improvement and momentum in our sales funnel suggest the third quarter represented the trough. To summarize, we exited 2025 with a leaner cost structure, a more efficient operational footprint, a stronger balance sheet, and a leadership team that is action-oriented and focused on results. 2025 was the year we built the foundation. I will now turn the call over to Nicholas Vlahos to review our fourth quarter and full year financial results in more detail. Nick, over to you. Nicholas Vlahos: Thanks, Ryan. Before I review the company financial results from continuing operations for the fourth quarter and full year 2025, please note that fiscal year 2025 was a 53-week year with the fourth quarter spanning 14 weeks compared to 13 weeks in the prior-year period. Beginning with net sales, in the fourth quarter of 2025, net sales decreased 13.7% to $57.5 million from $66.7 million in the fourth quarter of 2024. This was due to lower shipments of returnable transport packaging products and truck mirror assemblies. For the full year 2025, net sales decreased 9% to $249 million from $272.8 million in 2024, also due to lower shipments of returnable transport packaging products and truck mirror assemblies. Our backlog as of 01/03/2026 was $81.1 million, a decrease of 10%, or about $48.0 million, from $89.1 million as of 12/28/2024. The decrease was primarily driven by lower orders for returnable transport packaging products. Gross margin as a percentage of sales for the fourth quarter of 2025 was 22.8% compared to 23.0% in the fourth quarter of 2024. This decrease was primarily due to higher material costs on lower sales volume. For the full year 2025, gross margin as a percentage of sales was 22.9% compared to 24.7% in 2024. The decline was attributable to the same factors. As a percentage of net sales, product development costs were 1.6% in the fourth quarter of 2025 compared to 1.7% in the prior period. For the full year 2025 and 2024, product development costs as a percentage of net sales were 1.6% and 1.8%, respectively. Our investment in new products remains disciplined relative to the revenue base during the year. Selling and administrative expenses in the fourth quarter of 2025 decreased $1.2 million, or 10.5%, compared to the fourth quarter of 2024. The decrease was driven by lower commissions, legal fees, and personnel-related costs. For the full year, selling and administrative expenses were essentially flat versus 2024, though 2025 included $2.5 million of restructuring charges, primarily related to the reduction in force in the second quarter and facility cost actions. Operating profit for the fourth quarter of 2025 was $2.2 million, or 3.8% of net sales, compared to $3.0 million, or 4.5% of net sales, in the prior-year period. Other income and expense for the fourth quarter of 2025 was $200,000 of expense compared to $300,000 of expense in the prior period. For the full year 2025, other expense was $500,000 compared to $400,000 of expense in 2024, an increase of $100,000. The increase was driven primarily by a one-time $500,000 write-off of unamortized deferred financing fees associated with the termination of our prior TD Bank agreement, recorded in the fourth quarter of 2025 in connection with our refinancing into a new $100 million five-year revolving credit facility with Citizens Bank. Partially offsetting this charge was a recovery of employment tax credits during the year. Interest expense in the fourth quarter of 2025 was $700,000, unchanged from the same period in the prior year. For the full year, interest expense was $2.7 million, essentially flat with $2.7 million recorded in fiscal 2024. Net income from continuing operations for the fourth quarter of 2025 was $1.2 million, or $0.19 per diluted share, compared to $1.6 million, or $0.26 per diluted share, for the same period in 2024. For the full year 2025, net income from continuing operations decreased 57% to $6.0 million, or $0.98 per diluted share, compared to $13.2 million, or $2.13 per diluted share, for 2024. Turning to our balance sheet, during the fourth quarter, we refinanced our credit facility. In October, we entered into a new $100 million five-year revolving credit facility with Citizens Bank, which supports our long-term growth and enhances our financial flexibility. As of 03/03/2026, we had $66.0 million of availability under the Citizens facility. At the end of Q4 2025, our senior net leverage ratio was 1.35 to 1, compared to 1.64 to 1 at the end of the third quarter of 2025 and 1.23 to 1 at the end of 2024. During the year, we returned $2.7 million to shareholders through dividends. We also repurchased approximately 153,000 shares, or about $3.7 million, of common stock under the repurchase program authorized by our board in April 2025. That completes my financial review. I will now turn the call back to Ryan Schroeder. Ryan Schroeder: Thanks, Nick. So turning to 2026, after spending 2025 doing the structural work, we entered the year with a leaner cost base, a strengthening commercial pipeline, and end market conditions that, while still evolving, are moving in the right direction. The leading indicators we monitor most closely, including order flow, particularly in November and December, OEM production signals, and the depth and quality of our opportunity funnel, are pointing in a more favorable direction than they were a year ago. We remain disciplined in our outlook, but we are cautiously optimistic that we are entering a more constructive demand environment. M&A continues to be an important component of our long-term value creation strategy. We are actively evaluating opportunities that meet our strategic and financial criteria. The pipeline of potential transactions has grown meaningfully over the past year. That said, our approach remains highly disciplined. We are focused on targets that are strategically aligned and immediately accretive. We will update shareholders when there is something meaningful to share. Before opening the call for questions, I would like to briefly address the board and governance matters. In 2025, we welcomed Chan Galvado to our board. Chan brings significant experience that is highly relevant to our end markets and long-term strategy. Earlier this week, we announced that Charlie Henry and Mike Marty will not stand for reelection. I want to sincerely thank both Charlie and Mike for their years of service and meaningful contributions to The Eastern Company. We also used this opportunity to thoughtfully reduce the size of the board, improving agility and decision-making effectiveness. In parallel, we conducted a careful review of our corporate bylaws and implemented several updates designed to enhance shareholder alignment and governance transparency. We will provide additional details in our upcoming proxy filing. With that, operator, please open the line for questions. Operator: Thank you very much. We will now be conducting a question-and-answer session. If you would like to ask a question, a confirmation tone will indicate that your line is in the queue. You may press star 2 if you would like to remove your question from the queue. For anyone using speaker equipment, it might be necessary to pick up your handset before you press the keys. Please wait a moment while we poll for questions. Just a reminder, it is star 1 if you would like to ask a question. I am not seeing any questions in the queue at the moment. There are no questions at the moment, Ryan. Ryan Schroeder: Thank you, Jenny, and thank you, everyone, for joining us today. To close, 2025 was the year that we built the foundation. We took decisive action to lower costs, strengthen our portfolio, reinforce our balance sheet, and invest for future growth, all while navigating a challenging market environment. As we enter 2026, we do so as a leaner, more focused, and more resilient organization. Early indicators are encouraging. Our commercial pipeline is strengthening, and our operating model has demonstrated its ability to perform across cycles. We remain disciplined, focused on execution, and committed to delivering long-term value for our shareholders. With that, I would like to say thank you for your continued support in The Eastern Company, and we look forward to updating you next quarter. Operator: Thank you very much. This does conclude today's conference. You may disconnect your phone lines at this time and have a wonderful day. We thank you for your participation.
Operator: Welcome to Nexxen International Ltd.'s fourth quarter earnings call. At this time, participants are in a listen-only mode with a question-and-answer session to follow at the end of the presentation. This call is being recorded, and a replay of today's call will be made available on Nexxen International Ltd.'s investor relations website. I will now hand the call over to Billy Eckert, Vice President of Investor Relations, for introductions and the reading of the safe harbor statement. Billy, please go ahead. Billy Eckert: Thank you, Operator. Good morning, everyone, and welcome to Nexxen International Ltd.'s fourth quarter earnings call. During today's call, we will discuss our financial and operating results for the three and twelve months ended 12/31/2025 as well as our forward-looking guidance. With us on today's call are Ofer Druker, Nexxen International Ltd.'s Chief Executive Officer, and Sagi Niri, the company's Chief Financial Officer. This morning, we issued a press release, which you can access on our IR website at investors.nexxen.com. During today's conference call, we will make forward-looking statements. All statements other than statements of historical fact could be deemed as forward-looking. We advise caution in reliance on forward-looking statements. These statements include, without limitation, statements and projections regarding our anticipated future financial and operating performance, market opportunity, growth prospects, strategy, and financial outlook. These statements also include, without limitation, statements regarding our partnerships and anticipated benefits related to those partnerships, anticipated benefits related to the company's intended growth and platform investments, forward-looking views on macroeconomic and industry conditions, as well as any other statements concerning the expected development, performance, and market share, or competitive performance relating to our products or services. All forward-looking statements are based on information available to us as of the date of this call. These statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results to differ materially from those implied by these forward-looking statements, including unexpected changes in our business or unexpected changes in macroeconomic or industry conditions. More detailed information about these risk factors and additional risk factors are set forth in our filings with the U.S. Securities and Exchange Commission, including, but not limited to, those risks and uncertainties listed in the section entitled “Risk Factors” in our most recent Annual Report on Form 20-F. Nexxen International Ltd. does not intend to update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. Additionally, the company's press release and management statements during this conference call will include discussions of certain measures and financial information in IFRS and non-IFRS terms. We refer you to the company's press release for additional details, including definitions of non-IFRS items and reconciliations of IFRS to non-IFRS results. At this time, it is my pleasure to introduce Ofer Druker. Ofer, please go ahead. Ofer Druker: Thanks, Billy. I am pleased to report that we met our updated full year guidance and are seeing strong momentum in early 2026. In Q1 to date, contribution ex-TAC and programmatic revenue are trending ahead of our initial expectation following the strongest January and February in our history. This performance reflects the payoff from infrastructure investments made in 2025 to support long-term programmatic trading growth, as well as our ability to form new and expanded partnerships with leading DSPs driven by our differentiated CTV media assets and data. These efforts, along with our strategic differentiation, continued innovation, and a favorable advertising backdrop featuring incremental growth catalysts like the Winter Olympics, FIFA World Cup, and especially the U.S. midterm elections, position Nexxen International Ltd. for a strong 2026. In 2025, we meaningfully upgraded our infrastructure and expanded platform scale, roughly doubling SSP capacity. This positions us to better monetize publisher relationships and support growth in 2026 and beyond. We also increased focus around our enterprise solutions and plan to continue doing so. Over the past several years, we have enhanced our combined DSP and data capabilities through innovative new solutions and deeper AI integration to fuel enterprise adoption. In 2025, we saw early results and expanded on these efforts by adding experienced talent across our go-to-market and product teams and shifting internal sales resources towards our enterprise offering. This combined initiative led us to more than double our enterprise customer base in 2025. We plan to expand these efforts in 2026 to capitalize on the strength of our unique enterprise solutions built on proven technologies developed over the years. While enterprise growth is a long-term process, we believe now is the right time to invest to capture the vast opportunities ahead. Additionally, as AI reshapes how consumers engage across the open internet, we invested in expanding into less-affected formats that offer strong growth potential and revenue durability through exclusive smart TV home screen partnerships and scaled mobile in-app relationships. In 2025, we announced the launch of what we believe is the industry's first programmatic smart TV home screen advertising solution, providing scaled programmatic access to home screen inventory on CTV OEMs. I would like to provide some background, as this type of CTV media has not historically been available for programmatic activation. When a user turns on their smart TV, they land on the operating system home screen, which presents them with a menu of apps and content to consume. According to Nielsen, viewers spend an average of about ten minutes per day on this screen deciding what to watch, making it a highly visible and valuable surface. Until now, advertising space on this page has been sold and managed through direct deals and ad servers. Our innovations transform this surface into a fully programmatic advertising opportunity. It creates a significant new growth channel for advertisers using the same programmatic workflow they already rely on, while enabling OEMs to monetize their home screen inventory more efficiently and effectively. Vidaa, which rebranded as V, is a CTV operating system for Hisense and other OEM brands, and is our first OS partner to adopt this technology, which is now integrated across V-powered devices globally. As announced by The Trade Desk last week, we are pleased to welcome them as our first strategic DSP partner to adopt the solution following an agreement between V, The Trade Desk, and Nexxen International Ltd. to bring this inventory into The Trade Desk Ventura ecosystem. Together, we are collaborating to establish standardized DSP capabilities and drive industry awareness. We have strong conviction in this partnership, believe it is fundamental to building a new ecosystem for programmatic smart TV home screen advertising, and are proud to work with The Trade Desk to bring this opportunity to their vast global customer and partner network. By working directly with the leading enabler of programmatic advertising on the open internet, we believe we can accelerate awareness and adoption of our solution, support industry standardization, and enable trading across both our customer bases. We view this as a pivotal milestone in expanding high-quality programmatic advertising on the open internet through a new, engaging channel that is more resistant to AI-driven disruption. V’s footprint combined with programmatic activation creates a compelling opportunity for advertisers to drive brand impact and ROI. Our V partnership also continues to drive data momentum as we jointly market ACR data in North America and globally. In Q4, we entered a licensing agreement with Yahoo DSP, expanding our TV data partnership with major DSPs, which already included platforms like The Trade Desk and StackAdapt. Together, our smart TV media assets, proprietary data, and strategic partnerships reinforce our ad tech leadership while strengthening our opportunities with brands, agencies, and leading DSPs. In 2025 and early 2026, we partnered with leading mobile in-app ecosystem players to support long-term growth, diversification, and revenue durability with strong early results. Mobile in-app remains a strategic focus, as it is less exposed to AI-driven disruption than browser-based traffic. According to eMarketer, over 80% of mobile ad spend occurred in apps in 2025, and mobile is expected to account for over two-thirds of total digital ad spend by 2027. To capitalize on this shift, we built infrastructure to scale in-app media, enabling us to support growing supply and demand in a channel with strong tailwinds. We will continue enhancing our mobile in-app capabilities and will pursue new and expanded partnerships in 2026 to build on our progress. Next.AI continues to evolve across our platform and is receiving strong client feedback. Customers are achieving better results with less effort while unlocking new capabilities. Our DSP assistant is delivering efficiency gains of up to 97% and satisfaction scores over 90%, helping users act on real-time insights faster while improving outcomes and usability. Our Discovery assistant is also driving operational savings, with some clients reporting reductions of up to 45% in audience research time. Through Next.AI, we are building a difficult-to-match AI advantage across our DSP, SSP, and data platform by streamlining workflows and enhancing supply chain-wide performance, positioning us to win larger enterprise budgets. In 2026, our AI investments and releases will focus on driving growth and generating scalable cost benefits. We are introducing Next.AI to our SSP to optimize publisher performance and revenue. On the DSP side, we will continue integrating our insights and segmentation tool, Discovery, with our DSP so audience data flows directly into our buying platform, supporting accelerated enterprise adoption. Finally, our DSP assistant will expand to include AI-driven QA and campaign troubleshooting, automatically flagging errors to reduce waste and maximize buyer budgets. Internally, Next.AI is becoming more embedded across our sales operations, product, and data teams, driving efficiency and cost savings. AI-assisted coding is accelerating development, enabling faster release of revenue-generating solutions while reducing prior investment needs, freeing up capital for specialized data and AI tools. We have continued releasing solutions designed to capitalize on sector growth trends and major 2026 advertising events. The health vertical has emerged as a growth engine following the release of Nexxen Health, with new measurement and optimization capabilities introduced in Q4 2025, including the first-to-market auto-allocate feature powered by Phrama/health partners. This allows advertisers to optimize spend in real time using real-world health signals and verified outcome data, improving targeting and full-funnel performance, and reinforcing Nexxen International Ltd. as a leading health DSP. We plan to continue investing in vertical-specific solutions to drive growth across additional sectors. We also launched Nexxen Sports in Q4, combining large sports inventory with data-driven insights, targeting, retargeting, and dynamic creative. This solution helps brands drive engagement during live events while enabling advertisers to reach consumers beyond the live window, positioning Nexxen International Ltd. for the biggest live sports advertising year on record, highlighted by events like the FIFA World Cup. Finally, our political advertising solutions position us to capture spend during the 2026 U.S. midterm elections, which we expect to be a major cycle, especially for CTV. While still early in the year, we are very encouraged by our strong start to 2026 and what it signals about the direction of the business. Our momentum validates the strategic decisions made in 2025 and the quality of the product offerings we have built and acquired over the past several years. It also highlights our progress in building a more diversified and durable revenue base as the industry adapts to AI-driven disruption. Our differentiators, including our end-to-end model, V partnership, home screen solution, and platform-wide data and AI integration, are creating growing competitive advantages. Our DSP is now deeply integrated with our exclusive data and media, positioning it to expand our end-to-end enterprise revenue opportunity. This combination is already helping us win larger budgets and deliver stronger outcomes for advertisers and publishers, and we expect scaling benefits in 2026 and beyond. We remain focused on execution and innovation to drive sustainable growth and strengthen our leadership as we help define the future of programmatic advertising. With that, I will turn the call over to Sagi Niri. Sagi Niri: Thank you, Ofer. Before I discuss Q4, I want to remind listeners, as noted in our Q3 earnings call, that results were impacted by several factors. These factors included reduced spending from one DSP customer amid their FPO initiative, softness in our non-programmatic business line, more competitive CPMs, tariff-driven reductions from certain partners, and the absence of political advertising spend compared to Q4 2024. While non-programmatic weakness has persisted and some customers remain cautious due to tariffs and seasonality, I am pleased to report that contribution ex-TAC and programmatic revenue to date in Q1 are trending ahead of our initial expectations, driven by broad-based strength across our programmatic business line. The impact from the DSP customer also appears isolated to Q4. The customer has increased its year-over-year spend with us so far in Q1, and based on this trend and our ongoing discussions, we believe they will contribute positively to our expected growth in 2026. In Q4, we delivered contribution ex-TAC of $97.8 million, reflecting a 7% year-over-year decrease, or a 1% decrease ex-political. Programmatic revenue was $94.3 million, down 4% year over year but up 2% ex-political. Despite this decline, we saw strength in data products and desktop video, along with growth across our health, business, and finance verticals. In contrast, contribution ex-TAC from our non-programmatic business line declined by approximately $3 million year over year. We also experienced year-over-year decreases in CTV, mobile video, and display alongside reduced spending within our retail and government verticals. CTV revenue declined 19% year over year in Q4, or 12% ex-political, to $30.1 million, as results were impacted by several of the factors I mentioned, particularly the DSP customer. Importantly, we are not seeing a negative CTV revenue impact from these customers to date in Q1, and we feel well positioned for CTV revenue growth in 2026 and beyond through the catalysts Ofer discussed. We continue to believe CTV will represent the core long-term growth engine for Nexxen International Ltd. Elsewhere in Q4, desktop video revenue increased 21% year over year, mobile video revenue declined 9%, and overall video revenue represented 72% of programmatic revenue. Contribution ex-TAC from data products increased 51% year over year, self-service contribution ex-TAC declined 5%, and contribution ex-TAC from PMPs and display each decreased 9%. For full year 2025, our contribution ex-TAC retention rate declined to 92% from 102% in 2024. This primarily reflects our decision to discontinue smaller customer relationships that were not generating meaningful contribution ex-TAC, allowing us to focus on larger customers with greater spend potential. Contribution ex-TAC per active customer, however, increased to approximately $563,000, reflecting a 7% year-over-year improvement. We believe we remain well positioned to grow both our retention rate and ex-TAC per customer over time through continued focus on driving full-stack enterprise adoption. Adjusted EBITDA for Q4 was $33.9 million, representing a 35% margin as a percentage of contribution ex-TAC. We remain confident in our ability to expand margins over time through contribution ex-TAC growth, increased enterprise adoption and end-to-end spending, disciplined cost management, and anticipated benefits from our AI initiatives. In Q4, we generated $37.7 million in net cash from operating activities compared to $52.3 million in Q4 2024. As of December 31, we had $133.3 million in cash and cash equivalents, no long-term debt, and $50 million available under our undrawn revolving credit facility. Non-IFRS diluted earnings per share was $0.33 in Q4, compared to $0.48 in Q4 2024. We repurchased 1,440,000 shares in Q4, investing approximately $10.8 million. From March 2022 through 2025, we repurchased approximately 38.5% of our outstanding shares, investing roughly $258.2 million. As of February 28, approximately $2 million remained under our current repurchase authorization, and a new program of up to $40 million has been approved to begin after the current program concludes. Following our additional $20 million of investments in V in Q3, we will invest another $15 million in Q3 2026. Once deployed, we expect to hold an approximately 6%, or $60 million, equity stake, making us the largest shareholder outside of Hisense. Alongside the anticipated benefits from our commercial agreement with V, we continue to expect attractive long-term returns on our investment, which we view as an underappreciated component of our story. This year, we plan to leverage our investment to expand retailer relationships and grow its North American CTV footprint, which we believe will enhance the long-term value of both our data and ad monetization exclusivity, as well as our equity stake. We believe our investment in V provides multiple paths to future value creation for Nexxen International Ltd. and its shareholders. In addition to share repurchases and increasing our reinvestment, we will continue exploring strategic opportunities to accelerate programmatic revenue growth and strengthen our CTV, data, and mobile in-app capabilities. With that, I will turn to our outlook. For full year 2026, we expect contribution ex-TAC in the range of $375 million to $390 million, representing over 8% year-over-year growth at the midpoint, and programmatic revenue in the range of $370 million to $381 million, representing approximately 10% year-over-year growth at the midpoint. Programmatic revenue is expected to continue extending as a percentage of total revenue as we actively evaluate strategic options for our non-programmatic business line and deliberately shift our mix towards higher-growth, higher-quality revenue. In 2026, we expect growth across enterprise self-service, data products, and CTV, driven by focused sales execution, our expanded partnership with V, and growing adoption of our programmatic smart TV home screen solution. We also expect adjusted EBITDA in the range of $122 million to $132 million, representing approximately 33% at the midpoint of our contribution ex-TAC and adjusted EBITDA guidance. As I mentioned, contribution ex-TAC and programmatic revenue have trended above our initial expectations to date in Q1, driven by broad strength within our programmatic business line. We believe this momentum is sustainable, supported by the anticipated payoff from infrastructure investments made in 2025 to scale platform capacity, our extension within mobile in-app, our V partnership, growing adoption of our smart TV home solution, and deeper expected penetration with enterprise customers. In 2026, we expect OpEx as a percentage of contribution ex-TAC to decrease modestly from 2025. Research and development is expected to remain relatively consistent as a percentage of contribution ex-TAC, depreciation and amortization and sales and marketing are expected to decrease slightly as percentages of contribution ex-TAC, and G&A is expected to increase as a percentage of contribution ex-TAC. We also anticipate stock-based compensation will rise. We will continue investing in data, technology, infrastructure, and AI, including further integrating Next.AI across our platform, to improve performance and usability for customers. We believe these investments and our upcoming Next.AI releases will support both long-term revenue expansion and operating leverage. 2026 is shaping up to be an exciting year for Nexxen International Ltd. The mix is improving. The model is scaling. Our recognition is growing, and we are entering the year with momentum, operating leverage, and multiple growth catalysts already working in our favor. Our extended partnership with V and our programmatic smart TV home screen solution are expected to drive meaningful contribution ex-TAC that we believe will scale throughout 2026 and beyond. We believe both strengthen our differentiation while positioning us for accelerated long-term growth across enterprise, CTV, and data products. These initiatives have already attracted strategic partners from across the ecosystem, and based on strong inbound interest and active discussions, we expect additional partners to follow. At the same time, we are also well positioned to capitalize on major advertising events in 2026, including the FIFA World Cup and U.S. midterm elections, building on the strength we saw during the Winter Olympics. After several years of building our platform, business, and brand, and securing important partnerships, we see multiple opportunities for long-term customer and shareholder value creation. As always, we thank our shareholders, employees, and partners for their support. We will now open for questions. Operator: At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. We do request for today's session that you please limit to one question only and one follow-up. We will pause for just a moment to compile the Q&A roster. Operator: Your first question comes from the line of Matt Swanson with RBC Capital Markets. Your line is now open. Please go ahead. Matt Swanson: Great. Thank you so much. Ofer, I would like to follow up on a couple of comments you made about specific formats. The first is I think we talked a little bit more than usual about having some more defensive strategies to how AI is reshaping the open internet. So if you could just give us some more color maybe on how that AI reshaping has maybe impacted the 2025 results or what you are seeing out there? And then just a little bit more, too, on CTV growth within 2026. If it is more about some of these headwinds diminishing, or if it is more about the company-specific tailwinds that you have built up for this to be more of a secular driver. Thank you. Ofer Druker: Thank you very much for the question, and of course I will explain. So when we are looking at AI, in general, we feel that some of these effects already happen in the market. Some of them will grow over the next twelve months or so. We see that the touchpoint between the content and the user and, of course, the advertisers and the users is changing, meaning people are less surfing on the web. They are looking for answers through ChatGPT, and basically the traffic on what we call desktop is going down, and also mobile desktop is going down. So browsing in general is going down, and I think that most of the companies are talking about it and feeling it. So what we did basically in order to encounter this issue, we are increasing our efforts on CTV, which is less affected by AI, and we opened last year the first programmatic marketplace with what we call on-screen native, meaning when people launch their TV, there is a screen that shows all the apps that you can basically consume content from. On this screen, basically, the OEMs are already showing ads, but what we did, we turned this surface into a programmatic surface that we can basically manage through our DSP and connect this surface to other DSPs, like the partnership that we did with The Trade Desk, which is very meaningful, of course. And just to give you some indication, Nielsen, according to their studies and research, says users are facing this surface for about ten minutes a day. So the number of impressions that we see that is coming from V—we are already connected to Vidaa, which rebranded to V—and we see the numbers of impressions that people are generating through these platforms, it is immense. So, of course, this is something that will be less affected by AI, and we took a step last year to be the first company, as we understand it, to offer that on a programmatic level. We believe that this will help us first with AI, but also will help us to grow CTV, which is your other touchpoint that you asked about, and I will elaborate even more on that. Apart from that, when we analyze what other channels or what other type of media will be less affected by AI, we understood that in-app mobile is less affected by AI. So early last year, we started partnering with in-app mobile companies to work with them in order to place their media and to work with their publishers, and our publishers now, because we are basically creating direct relationships with the publishers, in order to place them in our programmatic ecosystem. We see very good initial results that we believe can drive immense growth in the years to come, and this area, from what we understand and see and analyze, is less affected by AI. So I think that these two channels, apart from the in-stream CTV that we are already running and apart from other things that we are already running and less affected, when we are looking at native CTV and in-app mobile, it is increasing our resilience basically to AI disruption and giving us room to grow our business in the coming years. Regarding growth of CTV, this marketplace that we spoke about, this programmatic home screen marketplace that we spoke about, is helping us to build relationships with a lot of partners in the ecosystem that are interested in order to monetize this type of media. As part of that, they will increase their work with us not just on this specific media, but also on in-stream and everything else, which will grow our presence in CTV. The fact that we are unique in our offering, and it is also complementary to what we call in-stream because this same media, which is native on CTV, is very good for performance advertising. Basically, people can buy complementary media positions on the in-stream and on the home screen in order to deliver the results, and our DSP is also very impressive in these results and performance. It is helping clients to basically grow their presence and, of course, to other DSPs to start increasing spend on CTV with us. So I think that, in general, we are in a good spot, and this marketplace will help us and is already helping us to grow our presence in CTV and overall. Apart from that, our teams are working very hard to close the gap on some publishers that are still in a process to be integrating with us in order to grow our reach. But if you check, our reach is also already very massive on CTV, and we believe that this development, this technology, this product that we are issuing is getting the attention of the big DSPs and the big brands that want to participate in that, and they will grow their spend on CTV with us in the future. Thank you. I hope that answers your question. Operator: Your next question comes from the line of Laura Martin with Needham & Company. Please go ahead. Laura Martin: Okay. Can we get an update on data? I know you took the V data and you put it onto The Trade Desk platform. Can you tell us what the revenue stream for data is running at these days? And then for Sagi, could you tell us IFRS revenue was 0% for growth for 2025 and down 10% in the fourth quarter? Could you tell us what it requires for your guidance to hit the sort of up 7%–8% growth rate for 2026? Thank you. Ofer Druker: No problem. So, basically, ACR, that—hi. We are in Israel, so we are sorry that we are not in New York, but we could not basically fly to New York this time. We are staying with some of our families, of course. Anyway, when I am touching the data issues, the data point that you—when we are looking at that, ACR is becoming something that DSPs want to utilize in their platform. There are a few levels of data that we can offer to partners, and, as we indicated also in my script, we are already working with three top DSPs, which are The Trade Desk, StackAdapt, and now Yahoo DSP that joined the project, and we believe that we will be able to add more DSPs and more partners. We see this coming also not just in the U.S., but also internationally, and, of course, we will announce these partnerships in the future. It is helping us in two elements. First of all, direct revenues that are coming from the ACR and the data itself that we are basically reselling or doing activity with the partner. Basically, this type of cooperation is increasing the media spend of these companies on our media positions, which, of course, is a first priority for us. In general, we believe that this type of unique data—there is not a lot of data like that in the open web—is helping us to get the attention of brands, the attention of DSPs and SSPs, and also agencies that are increasing their spend with us in general. It is very hard to give you a number, but the net revenues of the data, of course, are high margin because we are basically selling data here. But we are looking at that as a whole, and it is very meaningful. As I indicated several times, today, data is in more than 80% of our campaigns. We are integrating data, which is one of our advantages, because when you are running an end-to-end solution and you have a strong DMP, you basically can move the data between and also the DSP and SSP with data, and enhance the results of clients and brands and generate more revenues for publishers. So it is not fair to look at it just as the money that we are selling and licensing the data itself. It is connected also to enhance spend in general on media that all these DSPs, brands, and agencies are basically working with us in order to increase their reach together with unique data that we enable them for targeting and measurement. Sagi Niri: Thank you, Ofer. I will take the second question. So, regarding your question on numbers, IFRS, you know, is a different way of reporting things. I want to explain what we are doing on the contribution ex-TAC because it makes more sense and it is apples to apples with our peers. We grew only 3% contribution ex-TAC in 2025. We are not saying otherwise. I think that what you saw on the IFRS side is mainly because we are reporting some of our revenues on a gross basis, and some of the data that we got in 2025, I am reminding you from the previous earnings, was the performance activity, which we did. It is a non-core activity, which we are not too much focused on, and we got a big hit in 2025 on those activities. Some of them, of course, we are looking to understand what we are doing with them, and some of them probably will leave very soon, unfortunately. Having said that, I think that what Ofer just laid out with the growth engines into 2026—which are the in-app mobile partnerships that we signed already in 2025 and we are signing much more in 2026, the V investment and, for the first time, exclusive monetization of their North American inventory, the native display home screen ecosystem which we built, which is unique and nobody else has this solution because of our end-to-end ecosystem and service—brought already The Trade Desk in, and probably it will bring more demand partners and more supply partners into this ecosystem, which can be huge. So I think that having these growth engines in place and, on top, a big focus and restructure of our enterprise business and putting a lot of emphasis on the product over there—we just announced a new UI—so I think all of that will take us to a very good 2026. We are already seeing the first fruits in January, which was the best January we ever had, and February, which was the best February we have ever had. We are seeing the first signs to a really pivotal 2026. So we are quite confident that we can reach this 8% of general growth and almost 10% in our programmatic growth. Laura Martin: Thank you. Operator: Your next question comes from the line of Andrew Marok with Raymond James. Please go ahead. Andrew Marok: Hi. Thanks for taking my questions. Maybe one more on the CTV topic, if we could, just to get a sense of the various moving pieces that are in the 2026 outlook between the macro, the 2026 events, the Ventura integration. Is there any sense of maybe rank ordering those in order of their importance or their upside potential for the 2026 guide? And then maybe separately, you called out the desktop video growing over 20% year over year in 4Q. How sustainable is that? We have seen that format be pretty volatile in the past. How well does that need to do in order for you to hit your 2026 assumptions? Thank you. Ofer Druker: First of all, thank you for the question, but I did not understand the point of what you felt that is volatile in the past. Sagi Niri: The desktop video component. Billy Eckert: Which one? Sagi Niri: Desktop video. What do you mean by that? Desktop. Ofer Druker: Maybe we are not looking at the same thing, but I will explain and then tell me if I touch your concern or not. Our main revenue source and revenue generation also in 2026 will be in-stream that we are managing and selling by our own sales teams and, of course, getting a lot of demand from direct brands that are using our enterprise solution, from DSPs that are basically buying media from us. Overall, this is the majority of our revenues. We feel, as Sagi just mentioned now, a very strong January and February when you are looking at the programmatic level on all fronts and all types of media that we are running, including CTV. When you are looking at the growth that we are now going to bring into the system, it is coming from the native ads, and the amount of media that is associated with that is huge. On this ground, we basically built a partnership with Ventura with The Trade Desk, which we are very proud of to be their first partner because we believe that The Trade Desk can make a very big difference for us because they are the major enabler of the agencies in the world to buy media from companies like us also. I think that the type of discussions and relationships that we are building with them around this unique media will bring us a lot of value in the years to come. Now, this type of media—starting with Vidaa, with V as they rebranded their name now—we already see a lot of growth that will come from more OEMs and publishers that are interested in using this technology, which is making it more efficient. When you are more programmatic and you are turning your media into commodity, you are able to basically monetize much more of your space than when you are doing it manually. In the past year, most people did it with ad servers or manually selling deals on their type of media. Now they can basically integrate programmatically to their sources or our sources and generate more revenue. The second thing is also from big DSPs, other DSPs that want to join this. The first is, of course, The Trade Desk, and more will come, and the others that will come will basically increase the liquidity of the platform and will generate more demand into the platform. We believe that it is a win-win situation, meaning the OEMs that have so much media that they never monetized fully, now they can do that in a very effective and efficient manner, and the advertisers, the agencies that are basically looking at this media, looking at a new channel that they can basically trust. We are working with Ventura to create also standardization of this type of media, which is super important, and education and getting the attention of the agencies and brands into that, and it will increase the usage of the big advertisers and brands and agencies in this type of media and will grow our CTV revenue. So, again, not to confuse: the main revenues this year, in 2026, come from the things that we have done in 2025, meaning in-stream—growing it, building it more, building more relationships. Also, as I mentioned, when people will buy from us native ads, they will increase also their exposure on our in-stream media because it makes sense to run on the same systems and the same reporting. What we start growing now, our revenues, and support our growth in 2026 and years to come, will be the native ads that we are running basically on the operating system screens around the globe and mainly in the U.S. and North America and Canada. I hope that I answer your question. Operator: Your next question comes from the line of Jason Kreyer with Craig-Hallum. Please go ahead. Jason Kreyer: Hi. Thank you, guys. You have talked about the strengths that you have seen early in Q1, and you talked about the record January and February. I am just wondering if you can give more details on what channels are driving that strength. With that, I know you are not giving a quarterly guide, but I just wanted to try to square things between the contribution decline that we saw in Q4 relative to the high single-digit growth that you are guiding to for the year. Where is Q1 shaping up within that continuum? Ofer Druker: We see the growth coming from everywhere, basically, meaning not a specific vertical, not a specific format. It is coming from across the board from all the major partners that we are working with. They are increasing the level of work with us. They are increasing their level of investment in media with us, which is, of course, great. Our salespeople are able to deliver very good results until now in Q1, bringing in the advertisers that we work with and others into the system. We feel that it is a combination of two—or three—things that happen. One is that the fact that we increased our infrastructure last year, almost doubled it, is helping us on the programmatic level because now people can see the real size of our media and they can buy more media from us. It is a process that is taking time. You are not lighting it in one day. It is a process of several months and a lot of investment in the data centers and so on, but we see that it is already generating results very quickly, which is great. The second thing is we are now putting much more effort also on our enterprise solution, meaning our DSP and Discovery tool, which is basically segmentation and data platform. We feel that with all the sessions that we have done with our salespeople and leaders in sales, our message to the market is resonating much better, and we deliver better results by our salespeople, which is, of course, very important, and we feel encouraged by that. The third element is the market itself, which seems to be better than we saw last year, meaning it is more positive. The sentiment is better for advertising until now, and I think that it is basically pushing all the numbers up. As we mentioned, January was the best ever. February was the best ever. The reason that we are keeping our forecast for the year and thinking about this number is that it is only two months. We want to be conservative. If it continues like that and we generate amazing results in Q1 and we see the trend going through also the beginning of Q2, we will look at the numbers for the year and, of course, adjust them accordingly. Operator: Your next question comes from the line of Maria Ripps with Canaccord. Please go ahead. Maria Ripps: Great. Thanks so much for taking my questions. I just wanted to follow up on Jason’s question regarding Q1. How should we think about incremental demand from the Olympics versus the broader underlying trends? Any color on that would be helpful. And then can you maybe share a little bit more color on your enterprise offering? You mentioned that you more than doubled the number of customers last year. I know the sales cycle here can be a little bit longer, but how should we think about it becoming a larger contributor to growth over the next year or two? Ofer Druker: Thank you for your questions. I think that will help us and help people understand better what we are doing, which is great. Again, when we are looking at everything that is happening in the market and how we prepare ourselves, we are always thinking ahead in our strategy. Almost three and a half years ago, when we acquired Amobee and we turned it into our DSP—enterprise DSP—we had the idea that we need to be closer to the brands that are buying media. We need to provide them the best solution in order for them to invest in media, to generate results, to get the performance that they are looking for from their investment. We saw very big progress over the last few years. In the end, last year, and mostly in the end of last year, we also shifted more resources from other sales channels to this sales channel. We brought additional talent into the main points of engagement with the market, and we feel a very big response to that, because what we are talking about for many years about integrating data into the mix of buying media, and smart data into that, is starting to resonate, and people are looking for that. Apart from that, the Next.AI tools that we developed are very practical, generating amazing feedback and results and helping the buyers to buy media better as we see that. When you are looking at that, we believe that—yes, as you indicated—it is true that the growth cycle of these partners takes a little bit longer than when you are launching programmatic activity with someone, because they need to learn the system, they need to train, they need to gain confidence and start moving their budget into that. But a good indication is when we are able to get many more clients to test and run on this platform, and we believe that this is the main growth engine for us in the years to come, meaning we will work with more and more agencies and brands for them to adopt our technology, to generate great results, to run and to incentivize them to run on our media, consume our data, and work together with us in order to achieve that. All of that together is driving great results. Regarding your question about CTV and the quarter, we believe that it is the beginning of the year, so it is two months. This year, we are reporting earlier than we used to, but we see that the fundamental changes we have made with our sales, with our platform, with our programmatic, with interesting products that are able to gain the attention of the big DSPs and brands to work with us, are super important and are driving results for us across the board. We believe that it is something that will continue during the year and the years to come. I hope that I answered your question. Operator: Your last question comes from the line of Barton Crockett with Rosenblatt. Please go ahead. Barton Crockett: Thank you for taking the question. Since this is the end, maybe one and a half or so. I was curious about your guidance. I was wondering if you could parse out a little bit what portion of the growth you are seeing is political, and in general, how the political that you are seeing for this year would compare to what you have seen in the past, and whether you have any early indications, given that there has been some meaningful activity in some of the early primaries in Texas, whether that gives you any learnings in terms of how to think about the political contribution to your growth this year. Also, your growth— you have spoken in the past about a desire for acquisitions, potentially. I assume that guide is excluding any acquisitions that you might do, but if you could confirm that and maybe just update us on where your current stance is about interest in acquisitions, given there has been a lot of reset in valuations of late and maybe rethink as the LLMs ramp. Where you stand on that would be interesting. Thank you. Ofer Druker: Of course. Regarding political, in general, when we are looking at what we learned to do in the last couple of years and in the last round of the last election, we saw that basically our setting—that we have a strong segmentation tool and data that enable the partners to onboard their data in order to target their audience to general channels and so on—is very useful for political use. We built dedicated teams for that. Already last election, they generated the best ever results that we saw from a political cycle. Our focus right now is not taking it into account in a very big manner because we spoke about the first two months. It is not strong in political yet, but we feel there is a lot of interest. There are a lot of partners that are joining our platform now in order to use our technology, which is a great solution for DSPs, which enables you to target audiences in a very smart manner, with a segmentation tool that enables you to launch your data in order to reach the users that you want to reach in these campaigns that you are running. Of course, the media reach that we can offer to these clients. We believe that this political season will be strong and assist us. It is always dependent on what will happen from a political level to see how much money the parties will engage in these campaigns, but we have a sense that it will be a fairly good and rewarding season that will enhance our revenues in 2026. Regarding your other question about acquisitions, we are always open to look around and see. We do not have any target in our mind, and, of course, if we did not speak about it, we are not sure it is active. But we are looking always at how we can grow organically but also non-organically. There are many ways to do that, and our eyes are open in order to see what can be done, because we believe that in this market, of course, you need to evolve all the time and to add mostly size in this case, because we feel that we have the technology that we need in order to compete and win in the market. Barton Crockett: If I could just follow up, on the commentary you had about the DSP pacing up here as we start the year, my recollection is that the DSP really started to hit you in the middle of last year. So the fact that it is pacing up even before you comp that is interesting. Does that imply that you are on pace to recoup everything that you lost from the DSP as you go into the back half, given that you are pacing up here to start the year? If you could elaborate on that, it would be interesting. Sagi Niri: Hey, Barton. Yes. First of all, this one DSP that hurt us in 2025, mainly in Q4, was isolated. Yes, this DSP is now going back into the level of spend that we are used to. It is not there yet, but it is on the right trend. Hopefully, yes, if they will continue as it started with this DSP and, of course, all the other programmatic lines of business that Ofer discussed and shared, we can recoup most of the money. Hopefully, until Q4 it will be the same, but hopefully we can recoup most of the money that we got hit in 2025 for sure. Operator: That concludes our Q&A session. I will now turn the call back over to Ofer Druker for closing remarks. Ofer Druker: Thank you, everyone. Again, sorry for some of the miscommunications—sometimes maybe a bit of a line issue or something like that. In general, we feel that 2026 started very strong for us. We had a record month. We feel that it is across the board. It is not coming from a certain partner or a certain client or a certain vertical. It is across the board, which is great. I feel that it is coming from our technology that is being adopted more in the market, our people that trained, the people that we added adding the value that we expected them to add, and we feel that also the messaging, the brand, is starting to take off, which is great news for us, and we feel positive about 2026 right now. Thank you very much. Operator: Ladies and gentlemen, that does conclude our conference call today. Thank you all for joining, and you may now disconnect. Everyone, have a great day.
Operator: Good day, and thank you for standing by. Welcome to the Dycom Industries, Inc. fourth quarter 2026 results conference call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Ms. Callie Tommaso, Dycom Industries, Inc.'s Vice President of Investor Relations and Corporate Communications. Please go ahead. Callie Tommaso: Thank you, operator, and good morning, everyone. Welcome to Dycom Industries, Inc.'s fiscal 2026 fourth quarter and annual results conference call. Joining me today are Dan Peyovich, our President and Chief Executive Officer, and Drew DeFerrari, our Chief Financial Officer. Earlier this morning, we released our fiscal 2026 fourth quarter and annual results, along with certain outlook information. The press release and accompanying materials are available in the Investor Relations section of our website, including a new outlook expectation summary document which provides additional outlook metrics beyond what will be discussed on today's call. These materials, which we will discuss during today's call, include forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Our discussion and these statements reflect our expectations, assumptions, and beliefs regarding future events and are subject to risks and uncertainties that could cause actual results to differ materially. A detailed discussion of these risks and uncertainties is included in our filings with the SEC. Forward-looking statements are made as of today's date, and we undertake no obligation to update them. Additionally, we will reference certain non-GAAP financial measures during today's call. Explanations of these measures and reconciliations to the most directly comparable GAAP measures can be found in our press release and accompanying materials. Before I turn the call over, I would like to note an update to our segment reporting implemented during the fourth quarter. As a result of the recent acquisition of Power Solutions, we are now reporting our business in two reportable segments: Communications and Building Systems. This new segment reporting reflects how Dycom Industries, Inc.'s business is managed and the positioning of the company's strategies and expanding platform to provide comprehensive solutions as we address the growing demands for digital infrastructure. The Communications segment provides specialty contracting services for telecommunications providers, underground facility locating services for various utilities, including telecommunications providers, as well as other construction and maintenance services for electric and gas utilities. The Building Systems segment provides comprehensive building infrastructure solutions including electrical, energy management, security, and fire safety systems for data centers and other critical facilities. This segment includes the results of Power Solutions, following the closing of the acquisition on 12/23/2025. With that, I will turn the call over to Dan Peyovich. Dan Peyovich: Thank you, Callie. Good morning, everyone, and thank you for joining us. Dycom Industries, Inc.'s fourth quarter results are an excellent finish to a record year as we set new benchmarks across nearly every financial metric we track. We exceeded the high end of our annual revenue outlook, and our performance highlights our unique ability to capitalize on a diverse and intensifying demand environment. We delivered on the two pillars we set as priorities: meaningful margin expansion and improved operating cash flow. Our strategy and focus on scaled efficiencies strengthened our balance sheet and built a platform for sustained, high performance growth. Beyond our solid organic growth, we fundamentally broadened Dycom Industries, Inc.'s reach through strategic M&A. The acquisition of Power Solutions, which closed on December 23, positions us squarely at the intersection of digital infrastructure and the burgeoning data center market. Capitalizing on industry tailwinds, we are aggressively architecting our own trajectory, ensuring Dycom Industries, Inc. and our robust skilled workforce remain the indispensable backbone of the next generation of digital connectivity. I will start by covering our fourth quarter and full-year consolidated results, and then I will move to our fiscal 2027 financial outlook and our objectives for the year ahead. After that, Drew will provide further financial details and insights. For the quarter, we delivered all-time record fourth quarter revenue of $1,460,000,000, an increase of 34.4% compared to Q4 fiscal 2025. Of note, this was a Q4 record both in total and on an organic basis. Organic revenue increased 16.6% for the quarter, a testament to the strength of our backlog and the momentum going into the next year. Adjusted EBITDA was $162,400,000 and adjusted EBITDA margin was 11.1%. EBITDA margin increased by 41 basis points compared to Q4 fiscal 2025. Significant additions to our workforce position us well for next year's growth, but did have some impact on margins this quarter as they are working through the severe winter storms. Non-GAAP adjusted diluted EPS was $2.03, a 42% increase compared to Q4 fiscal 2025. DSOs were 101 days, an improvement of 13 days year-over-year, and operating cash flow increased 27.7% to $419,000,000 for the quarter. As I mentioned, the fourth quarter capped a year of exceptional performance for Dycom Industries, Inc. in which we capitalized on growth opportunities across our demand drivers, while also enhancing our underlying business to deliver stronger margins and improved cash flow. For the full year, we delivered all-time record revenue of $5,550,000,000, an increase of 17.9% compared to fiscal 2025. Organic revenue increased 6.5% for the year. Non-GAAP adjusted EBITDA was $737,700,000 and non-GAAP adjusted EBITDA margin was 13.3%. EBITDA margin increased by 105 basis points compared to fiscal 2025. Non-GAAP adjusted diluted EPS was $11.97, an increase of 29.7% year-over-year. We ended the year more than doubling free cash flow to $435,300,000. Fiscal year 2026 set new records for Dycom Industries, Inc., and importantly, positioned us for continued growth, margin expansion, and further cash flow improvement in fiscal 2027. Shifting to our backlog, our approach to the pipeline remains disciplined. We are optimizing for high-value engagement that balances risk with superior returns, as evidenced by our fiscal 2026 margin performance. Communications demand drivers remain robust, and we moved aggressively to expand our footprint. With the strategic addition of Power Solutions, we successfully entered a new high-demand sector with a distinct customer base, significantly broadening our total addressable market. In addition to diversification, we are capturing new territory, highly focused on digital infrastructure from a position of strength. Our year-end numbers confirm the velocity of our growth. We concluded the year with a record $9,500,000,000 of total backlog, of which $6,300,000,000 is expected to be completed over the next 12 months. Book-to-bill for the year was 1.3x in total and 1.2x on an organic basis, reflecting the increasing demand for our services. As we turn the calendar to the new fiscal year, Dycom Industries, Inc. is strategically positioned for strong growth across multiple demand drivers, led by significant increases in fiber-to-the-home deployments, as well as increasing demand for communications and building systems services to support data center and hyperscaler builds. For fiscal 2027, we expect total revenue between $6,850,000,000 and $7,150,000,000, representing year-over-year total revenue growth of approximately 23.6% to 29%, or approximately 6.6% to 10.3% on an organic basis. We also anticipate continued adjusted EBITDA margin expansion. In Communications, we expect modest adjusted EBITDA segment margin gains driven by operating leverage offsetting continued investment to support our growth. We expect Building Systems to deliver a mid-teens adjusted EBITDA segment margin as we scale the business to capitalize on favorable sector tailwinds. Our strategy remains focused on driving long-term value for our shareholders and providing industry-leading opportunities for our people. Our execution consistently sets the standard for our industry, and we are focused on continuously enhancing the solutions we provide to our customers as their businesses evolve. This operational foundation allows us to be disciplined in our growth. We are high-grading our pipeline and diversifying across robust demand drivers. Collectively, these demand drivers have never been stronger, and neither has Dycom Industries, Inc.'s positioning within. Our service and maintenance work remains the bedrock of our Communications business, delivering over 50% of our Communications revenue in fiscal 2026. This recurring base provides a scaled national footprint of facilities, equipment, and skilled workers, enabling us to aggressively pursue larger capital programs. Our unmatched local knowledge provides significant value for our customers as they plan their network builds across the country. While the growth rate for maintenance naturally trails our high-velocity build program, as it scales with new plant installations and geographic expansion, we will continue to grow this segment with purpose to lock in long-term recurring revenues as our customers' networks expand and densify. We see significant ongoing opportunities to further deepen these relationships and amplify Dycom Industries, Inc.'s role as a long-term partner in our customers' ecosystems. Fiber-to-the-home deployment remains the most mature and dominant driver of growth in our Communications segment heading into fiscal 2027. This quarter, our customers again either affirmed or raised their passing goals. With recently completed customer consolidation, we are seeing the same commitment to fiber infrastructure investment, further reinforcing our strategy. Current industry commitments represent nearly 6,000,000 additional fiber-to-the-home passings. Dycom Industries, Inc. is a leader in this deployment, and our large skilled workforce enables us to meet the growing demand for this critical infrastructure. Virtually, the passing is only the first phase of the revenue life cycle. We are also accelerating our work on customer drops, the lateral connections required if subscribers sign on to the network. Following the initial build, these connections typically take an average of four years to reach terminal penetration, the point at which most potential subscribers in an area are connected. This creates a powerful multiyear tail of quality work. Simply put, Dycom Industries, Inc. is well positioned to lead the fiber-to-the-home market for the next decade. We believe that our strategy, deep customer relationships, and proven performance will enable Dycom Industries, Inc. to be a leader in the BEAD program as it enters the funding phase. The NTIA has already cleared the large majority of states, representing more than $30,000,000,000 in total spend, and NTIA has moved over $17,000,000,000, or more than half of that amount, into the funding stage. Our teams are in active discussions at the state and subgrantee levels, which has translated to additional verbal awards with subgrantees, increasing the $500,000,000 of verbal awards we noted last quarter. We believe these verbal awards will begin moving to contracted backlog in Q1 or Q2. Our customers are choosing Dycom Industries, Inc. because they recognize that delivering on these massive individual programs requires a specialized, high-capacity workforce that only we can provide at scale. We continue to expect the first revenue opportunities in Q2, and we anticipate revenue to ramp as programs move from the planning phase into active construction. In the 2026 bill, the wireless equipment replacement program is transitioning into its next phase in accordance with the original build plan. While Drew will provide further details on this program, we remain ready to capture any future surge in network densification or new infrastructure initiatives. Shifting to the long-haul to middle-mile fiber opportunity. Recent hyperscaler announcements by Verizon, AT&T, Meta, and Corning confirm our thesis. Existing networks lack the capacity and latency required to support growing data consumption and AI inference. This quarter, hyperscalers collectively raised their CapEx guidance to nearly $718,000,000,000, representing an approximate 70% increase year-over-year, affirming both the need and the capital behind it. The $20,000,000,000 addressable market that we identified across long-haul, middle-mile, and inside-the-fence fiber infrastructure continues to grow as it progresses through the ecosystem. We are seeing more activity today than ever before, giving further confidence in the revenue opportunities now and in the future. As we have said before, these large programs have a longer planning phase than fiber-to-the-home or other programs. We see their pace ramping considerably for builds that would start in earnest in calendar 2028. Dycom Industries, Inc. is uniquely positioned for the long-haul, middle-mile, and inside-the-fence opportunity set. First, we believe we were first on the field executing Lumen's overpull program. Their program continues, with Lumen announcing that they received another $2,500,000,000 of awards this quarter to bolster their current build. We expect our revenue to continue to ramp this year as we look to deliver on Lumen's overpull program. Second, both overpull and new construction builds require massive foresight, geographic scale, and technical sophistication. Complexity favors Dycom Industries, Inc. While the incubation period from inception to construction is longer than fiber-to-the-home, these programs generate elongated build cycles that provide revenue visibility well into the next decade. Lastly, the surge in long-haul capacity must be matched by the fiber density inside the data center campus. We continue to secure new awards inside the fence, validating that hyperscalers require a strategic, scaled partner to sustain their build pace. Our strategy is to position Dycom Industries, Inc. as the indispensable partner for hyperscalers and carriers alike. We have deployed dedicated teams to work directly with customers and the supply chain, ensuring we proactively plan and precisely execute every program. Our recent acquisition of Power Solutions and entry into the data center space is one way we are leaning into those partnerships. Dycom Industries, Inc. now offers an extended suite of solutions across the digital infrastructure space, and we are already seeing opportunities to bring our Communications and Building Systems services together to meet the intensifying requirements of hyperscalers. Specifically, they are looking for Dycom Industries, Inc.'s breadth, scale, and proven execution, whether it is inside the four walls or interconnecting the fiber between data centers. We view this as a substantial growth driver and are executing a clear, disciplined strategy to capitalize on this demand. Since closing the Power Solutions acquisition just over two months ago, the business is performing well, and the integration has proceeded on schedule. We are leveraging their specialized expertise to sharpen our approach to the data center and digital infrastructure markets. The strong cultural and operational alignment between our teams has allowed us to hit the ground running, and we are very pleased with its initial contributions to our broader portfolio. As we look to the year ahead, we are focused on four core strategic priorities. First, talent and workforce development. We are investing heavily in our workforce, now over 19,500 strong, to meet intensifying customer demand. In the coming weeks, we will break ground on a new state-of-the-art training facility outside of Atlanta. While we operate numerous facilities nationwide, this center represents a major step in staying ahead of evolving technical demand. Designed to house employees for immersive, multiweek programs, the facility will provide hands-on training in real-world environments to ensure our teams consistently deliver the safety, quality, and expertise that define the Dycom Industries, Inc. brand. This investment is part of our overall strategy, which includes significant enhancement of our benefits package as we continue our efforts to remain the employer of choice in our space. As diverse demand drivers intersect and overlap, we anticipate an industry-wide shortage of skilled labor that will favor Dycom Industries, Inc.'s scaled workforce and proven execution. As a trusted partner, we maintain constant dialogue with our customers to build our talent ahead of the curve. Second, expansion of our Building Systems segment. With Power Solutions as our foundation, we are actively pursuing opportunities to drive their organic growth beyond their current footprint as well as pursuing additional complementary acquisitions, while remaining committed to our strict criteria and long-term debt leverage target. Third, margin expansion. We will continue to drive margin improvement through productivity gains and operating leverage. Our commitment to field efficiency is unwavering, rooted in our disciplined approach to safety, quality, and financial performance. This past year, we delivered significant margin expansion and are applying that same discipline to fiscal year 2027. Fourth, operating cash flow and fleet optimization. We have made significant strides in our cash position by improving internal processes and controls and sharpening our cash conversion cycle. We have driven significant improvement in our net DSOs, which are nearing a range we expect to remain relatively steady. We will continue to identify and execute on opportunities to further enhance operating cash flow. This includes capturing additional efficiencies within capital expenditures, as reflected in our reduced spend last year and our outlook for fiscal 2027. This reduction is a result of long-term strategic planning, not short-term cost savings. As a leading customer for many of our equipment suppliers, and the strategic decision to favor ownership over leasing, we hold a unique position in our R&D cycles. R&D partnerships have led to advanced telematics that provide real-time insight into usage, maintenance, and diagnostics. By leveraging these insights, we have optimized our fleet, allowing us to maintain high performance levels with a lower capital footprint. In summary, Dycom Industries, Inc.'s strength is rooted in the expertise of our large workforce and our proven ability to raise the bar for our customers. In striving to deliver at the highest possible level, we believe we are setting the industry standard for what focused scale and high-quality execution looks like. Our record performance and historic backlog are a direct reflection of the trust we have earned as an indispensable partner to the world's leading carriers and hyperscalers. As we move into fiscal 2027, we will continue to leverage our scale and technical sophistication to solve the industry's most complex challenges and meet commercial opportunities, from the massive fiber-to-the-home buildout to the critical infrastructure requirements of the data center and AI economy. We remain committed to the disciplined growth and superior execution that define Dycom Industries, Inc., drive long-term value for our shareholders, and long-term opportunities for our people. I would like to thank the entire Dycom Industries, Inc. team across all 50 states for your relentless commitment to safety and quality, and to delivering at the highest level for our customers and communities, as we pursue our vision to be the people connecting America. With that, I will turn the call over to Drew for a deeper look at the financials. Drew DeFerrari: Thanks, Dan, and good morning, everyone. We delivered record annual results in fiscal 2026 with strong revenue growth, significant margin expansion, and robust free cash flow. We executed well in Q4, and we are excited to welcome Power Solutions to Dycom Industries, Inc. Together, we are positioned at the center of the powerful secular trends driving growth in digital infrastructure services. For the fourth quarter, we delivered strong growth in revenue, adjusted EBITDA, and adjusted EPS. Consolidated total contract revenues were $1,458,000,000, a 34.4% increase over Q4 2025. Organic revenue exceeded the high end of our expectations, growing 16.6% after excluding the acquired revenues from Power Solutions of $95,800,000 and the extra week in our 53-week fiscal year. Consolidated adjusted EBITDA of $162,400,000 increased 39.6% over Q4 2025. Adjusted EBITDA margin of 11.1% was within our range of expectations and increased over 40 basis points compared to Q4 2025, even as we increased our workforce to meet the growing demand for our services and experienced severe winter weather at the end of the quarter. Consolidated adjusted net income was $60,500,000, and adjusted diluted EPS was $2.30 per share. These results are adjusted to exclude nonrecurring acquisition-related items and the amortization of intangible assets. For the segment results, Communications revenue was $1,362,000,000, driven by continued execution of fiber-to-the-home programs, wireless activity, fiber infrastructure programs for hyperscalers, and maintenance and operations services. We are pleased with the strength of our relationships and diversification across our customer base. AT&T and Lumen each exceeded 10% of total revenue for the quarter, contributing $350,500,000 and $147,700,000, respectively. Following Verizon's acquisition of Frontier during our fourth quarter, their combined revenue was $205,600,000, also exceeding 10% of total revenue. Customers exceeding 5% of total consolidated revenue for the quarter were BrightSpeed, Charter, Comcast, and Uniti. Adjusted EBITDA for Communications increased 30% to $151,300,000, or 11.1% of segment revenue. The Building Systems segment includes Power Solutions results from the date of acquisition on December 23 through January. Revenue was $95,800,000, and adjusted EBITDA was $11,100,000, or 11.6% of segment revenue, with results impacted by several seasonal holidays during the abbreviated operating period. This acquisition fundamentally broadens our reach into the data center market. The integration is proceeding on schedule, and the business is performing in line with our expectations. Backlog at the end of Q4 was $9,542,000,000, including $8,333,000,000 of Communications backlog and $1,209,000,000 of Building Systems backlog. Backlog expected in the next 12 months was $6,358,000,000, including $5,250,000,000 from Communications and $1,108,000,000 from Building Systems. Strong cash flows remain a primary focus, and we delivered excellent results. Operating cash flow totaled $642,500,000 for the full fiscal year, and free cash flow increased 216% to $435,300,000 after capital expenditures net of disposal proceeds. The combined DSOs of accounts receivable and contract assets, net, improved to 101 days, a 13-day improvement over Q4 2025. We made solid progress improving our cash conversion cycle in the Communications segment and of the newly acquired business, which is further bolstered by the lower DSO profile in our Building Systems segment. I am pleased to report that our ERP implementation is on track, and we are actively deploying additional phases during fiscal 2027, further enabling future operational efficiencies. As we previously disclosed, the $1,950,000,000 acquisition of Power Solutions was completed in the quarter on a cash-free, debt-free basis, subject to working capital and other post-closing adjustments. The purchase price consisted of approximately 1,000,000 shares of Dycom Industries, Inc. common stock, with the remainder of consideration paid in cash. The net cash payment at closing of $1,630,000,000 was funded with a mix of proceeds from a $1,100,000,000 senior secured term loan A facility, a $600,000,000 364-day bridge loan facility, and cash on hand. During January, we raised $800,000,000 of senior secured term loan B, repaid the bridge loan facility, and added the remaining net proceeds from the debt issuance to cash on the balance sheet. We ended the quarter with cash and equivalents of $709,200,000 and total liquidity of $1,460,000,000. The maturity of our senior credit facility has been extended to December 2030, and we had a total of $1,540,000,000 term loan A outstanding and an undrawn $800,000,000 revolving credit facility. The term loan B balance was $800,000,000 outstanding with a maturity in January 2033. Additionally, we have $500,000,000 senior notes outstanding that mature in April 2029. Pro forma net leverage at the end of the quarter was approximately 2.3x adjusted EBITDA, and we see a clear path to delever further to approximately 2.0x net leverage over the next 12 months, in line with our expectations at the time of the transaction and maintaining our financial flexibility for continued strategic growth and investment. Going forward, we remain committed to our capital allocation priorities of investing in organic growth, pursuing strategic M&A, and opportunistically repurchasing shares. We continue to observe strong demand across a diverse set of drivers, creating significant opportunities for continued strong growth and performance. For fiscal 2027, we expect total contract revenues to range from $6,850,000,000 to $7,150,000,000. For the Communications segment, we expect contract revenues to range from $5,700,000,000 to $5,900,000,000, increasing approximately 6.6% to 10.3% organically when compared to $5,350,000,000 of fiscal 2026 Communications revenue after excluding the extra week in our 53-week fiscal year. For the Building Systems segment, we expect contract revenues ranging from $1,150,000,000 to $1,250,000,000. We also anticipate continued adjusted EBITDA margin expansion. For Communications, we expect modest adjusted EBITDA segment margin improvement as operating leverage offsets continued investment in our workforce to meet growing demand. For Building Systems, we expect a mid-teens adjusted EBITDA segment margin as we scale operations to capture increasing market opportunities. To highlight some of the expectations driving our outlook range for fiscal 2027, within Communications, we expect continued strong demand from fiber-to-the-home programs, increasing demand from long-haul and middle-mile fiber infrastructure builds, growing inside-the-fence opportunities, and modest growth in our service and maintenance business. We expect revenue from wireless equipment replacements to decline by approximately $100,000,000 in fiscal 2027 as the program transitions into its next phase, in accordance with the original build plan. We expect a further step down in fiscal 2028 as this program moves towards completion. Our strategy positions us well for future wireless opportunities, whether other equipment upgrades or overall densification. And for the Building Systems segment, we expect exceptional demand for electrical services in a growing data center market. We expect annual capital expenditures, net of disposal proceeds, to range from $210,000,000 to $220,000,000 for fiscal 2027 as we efficiently utilize our fleet of assets and strive to continue to reduce our capital intensity. For Q1, we expect total contract revenues of $1,640,000,000 to $1,710,000,000, adjusted EBITDA of $200,000,000 to $220,000,000, and adjusted diluted EPS of $2.57 to $2.90 per share, excluding the impact of intangible amortization expense. Dan Peyovich: We encourage you to review the outlook summary document newly available on the company's Investor Center website for additional metrics. With a record fiscal 2026 behind us, Dycom Industries, Inc. enters fiscal 2027 with solid strategic positioning and a strong financial foundation. We remain focused on the disciplined execution necessary to convert robust industry demand into long-term value for our shareholders. Operator, this concludes our prepared remarks. You may now open the call for questions. Operator: Thank you. As a reminder, to ask a question, please press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. We will now open for questions. Our first question will come from Sangita Jain from KeyBanc Capital Markets. Your line is open. Sangita Jain: Good morning. Thank you for taking my question. Dan, can you talk a little bit about how you plan to increase the scope of work that you are doing inside Power Solutions? I know Dycom Industries, Inc. has telecom expertise, so maybe you can expand into cabling or something else that you are currently not doing there? Any color there would be helpful. Dan Peyovich: Good morning, Sangita. First, I just want to say Power Solutions acquisition is going incredibly well. The integration is going just as we expected it to be. This is an incredibly strong, very deep leadership team that has been in that market for a very long period of time. So we are excited about how they are performing. We are excited about the opportunity set in front of them. And if you probably heard me say, the demand, especially in the DMV right now, is just off the charts. So plenty of opportunity there. As you can see, we are outlining significant growth for them this year. You know, with the range we gave is 15% to 25%. Really, that is about trying to ramp into that over the year and set us up for the future and what that looks like. So we are investing in that business. You know, we are certainly adding resources to that business. And then to your question, the cross-sell is quite frankly taking flight even earlier than we anticipated. The reaction from the hyperscalers has been fantastic. You know, where we can bring our inside-the-fence Communications work and couple that with what Power Solutions is doing inside the four walls, we think that is a recipe that wins over time. And again, with both of our proven expertise, the response has been fantastic. If you think about inside the four walls, one, I would point to how we named the segment. So Communications, obviously, for the Dycom Industries, Inc. business that is in the legacy side, but Building Systems, we wanted to be specific. So first, you know, we are really architecting Dycom Industries, Inc. around digital infrastructure. It is about both the compute of data and the transmission of data around the country, getting it all the way from the data centers themselves to the end consumer or to the end business. That is really our playbook. We want to be straight down the fairway as we are thinking about it. With Power Solutions, obviously, there are opportunities for organic expansion, and we are going to look into that. It is continuing to work on that over time. And we are also looking at M&A opportunities, and we have been vocal about that. That is not just limited, to your point, not just limited to electrical. We call it Building Systems for a reason. We are not thinking about civil infrastructure. We are not thinking about getting outside of digital infrastructure. But there are other opportunities inside the four walls at a data center that could make sense. And as everybody knows, it is a very active space right now. And, you know, we are optimistic. Again, we have got discipline around what we are looking for, strategy around what we are looking for. It has got to have really strong culture. It has got to fit, you know, with the growth opportunities that we see. But, yes, there could be other disciplines that we bring into the fold. Sangita Jain: Thank you for that, Dan. And then on the fourth quarter organic growth, which was especially strong given winter weather and the holidays, etcetera, can you talk a little bit about where you were most surprised versus your internal expectations? If there was any notable project pull forward that came in? Thank you. Dan Peyovich: No pull-forwards. And, yes, we are obviously very pleased with the overall performance, exceeding the high end of our range that we gave at the beginning of the year, giving that revenue outlook at the beginning of the year that we raised after Q1. But notably, for the fourth quarter, as you point out, one, we had to work through significant winter weather. What it shows really, one, the ability of our team to execute even in those conditions. We did get a little bit of margin pressure from that, but the ability to keep that going. But, importantly, the demand from our customers. The demand coming out of Q4 and the demand going into this year, you can see it in the guide that we gave for fiscal 2027. You can see it in the organic growth that we are talking about in the Communications side and the outlooks for 2027. So it really just shows all of these different demand drivers as they are coming through the business, and the opportunity set there. So nothing specific. Really, I would say, points to the overall demand. One thing I would point out, you know, we did have wireless that increased in Q4. And you do have to think about that. As Drew talked about, you know, we expect about $100,000,000 of deceleration in line with the original expectations of that program. But since we got that work and have been executing, we have talked about back half in the four years that it is going to start to taper off. So you do have to include that going the other direction. Sangita Jain: Thank you. Operator: Our next question comes from Eric Luebchow from Wells Fargo. Your line is open. Eric Luebchow: Great. Thanks for taking the question. Dan, I wanted to just ask about the long-haul, middle-mile, and inside-the-fence work. I know you quantified the $20,000,000,000 TAM a few quarters ago. Sounds like you are optimistic that that is going to prove conservative, and we have seen some interesting announcements from the likes of Meta and Corning recently. So maybe any kind of quantification on how that program is progressing? And where you think that addressable market ultimately goes? It sounds like $20,000,000,000 is just the start. Dan Peyovich: It really is, Eric. If we think about the $20,000,000,000, and remember that is back-half weighted because these programs are complex. They take a while to get off the ground. But what you have seen since the last quarter, and I think we put that number out a couple quarters ago, in this last quarter you saw a number of our customers now talking about it and talking about significant opportunities and appetite for hyperscalers. As recent as yesterday at some of the conferences, even more demand that they are seeing on their side. It does take time for that to get through the ecosystem, and that is what we tried to talk about early on when we identified the $20,000,000,000. You know, we really think that we were first on the field with what we have been doing for Lumen. Saw another nice increase to their PCF that they are going to continue to build on over time. And then you have the new construction work, which again just takes further time to come in. I would really think about ramping this year, continuing to ramp this year, continuing to ramp in 2027, and a lot of that really taking flight in calendar 2028. Is it more than $20,000,000,000? We strongly believe that. Is there going to be more that comes there? What I would tell you is today, we are getting more phone calls and seeing more opportunities than we saw even a quarter ago or, frankly, even a week ago, the demand is that strong. And it comes back to a little bit of what I talked about at the beginning. This is about a change in how they need to transmit this data. They need more capacity. They need ultra-low latency for these applications and for the future of AI. So we are excited that we can be a trusted partner there, and we really think that over time that is going to continue to grow, and we will continue to update as we see that move. Eric Luebchow: Great. Thank you, Dan. And maybe we could just touch on the BEAD program. You talked about it a little bit. Sounds like the verbal award balance is above that $500,000,000, but it also seems like it is taking a little longer for the funds to actually get dispersed. I think Louisiana is the only one that I have seen. So maybe you could just talk about the construction timelines there, when you think that is really going to ramp and kind of hit a more full run rate. Dan Peyovich: We still believe Q2 that we have some revenue opportunities to be putting work in place overall. But as we talked about, and really unchanged from what we have been saying for a bit now, if you really think about that in calendar 2027, it is getting some momentum. So it is great to see progress. You know, nearly all the states and territories are approved. So to your point, funding, this has pushed the funding down, and that continues to grow over time. We think that the addressable market is approaching $20,000,000,000, but it is going to take some time for those to get off the ground. You have got numerous states at different paces, the way that they are pushing it down to the subgrantees, and then those subgrantees also at different paces. Within that, I will just frame the context for you. If you think about a local cooperative where they own their own poles, they have probably already done the engineering today. As soon as they get the funding pushed down, they can hit the go button, and that is why we talked about something in Q2. But the bigger program, the longer duration build, those are probably going to come on much later in the year. So, again, great to see progress. We all wish it would go a little bit faster. Absolutely. But we have a lot of confidence in that coming through the supply chain soon. Eric Luebchow: Thanks, Dan. Thank you. Operator: Our next question will come from Joseph Osha from Guggenheim Partners. Your line is open. Mike Spressody: This is Mike Spressody on for Joe. Just to kind of follow up on that BEAD program, is it fair to say that the big guidance does not imply the full potential impact for this year? And then also, how do margins from this program differ from your traditional work? Are they more accretive or anything like that? Thanks. Dan Peyovich: Mike, I think you are breaking up just a little bit. I think you are referring to the BEAD program again and just how it is built over time. Mike Spressody: Yeah. Exactly. Thank you. Dan Peyovich: Yeah. First, on the margin profile, similar to all of our work. We think about everything on the Communications side very similarly. If it is taking the same type of skilled workforce resources, if it is taking similar types of equipment, then the margin profile and that return ends up in a similar range. So that does not mean every project is exactly the same, but it is in the same similar bandwidth. And we believe BEAD will play out that way over time. But, and I think this is an important point, you have got fiber-to-the-home demand that is really just reaching another level. And, again, I do want to point out, it has not peaked yet. You still have a ton of growth that is happening in that program. You have got everything going on with the hyperscalers and those long-haul, middle-mile builds that is significant. You still have a lot of activity on the wireless work today. We continue to add to our service and maintenance platform. When you put all those together and you start adding them up and showing the increases over time, without question, there is going to be pressure on labor. So if you think about skilled workforce, as you get later this year and really starting in calendar 2027, that is where we think Dycom Industries, Inc. is exceptionally well positioned. And we have been investing heavily in our workforce to make sure that if you think about BEAD and the needs that our customers can have there, when you already have these other programs going fast, we need to have been investing years ago. We need to be thinking about having a strategy that was very long term. You probably heard me in my prepared remarks talk about, and I am really excited about this, a new training facility that we are opening outside of Atlanta. This is something you are going to hear more about in the coming days, and we have numerous training facilities around the country. But this one is really taking it to the next step. So picture a Hollywood-style town where our folks can be working in the front yards and backyards of America in a simulated environment, where they are going to stay on site for a multiweek training curriculum so that we can get them very quickly oriented to the work, highly skilled to deliver at the level that Dycom Industries, Inc. is expected to do overall. I should point out, this facility is also not just what we are doing on the Communications side, but the Building Systems side as well. That is just another example of how we invest in front of programs to make sure that we will have the skilled workforce that our customers need, and that the partnerships that we have and the depth of those partnerships allow us to plan those very far into the future. So back to your original question on BEAD, just really think about it lightly coming in this year. It is just going to take a while for these programs to start. Again, we are excited about backlog that we have verbally awarded, and I want to point out that it is still verbal to date. We think those should transition to actual awards and move to backlog in either Q1 or Q2, with some activity starting in Q2. But think about calendar 2027 as really when those projects are going to come online. Mike Spressody: Thank you. Dan Peyovich: Thank you. Operator: Our next question comes from Frank Louthan from Raymond James and Associates. Your line is open. Frank Louthan: Great. Thank you very much. Can you comment on what the current growth rate is at Power Solutions today versus what it was when you acquired the business? And then secondly, can you characterize your exposure to EchoStar, any project that they have currently, and if you have removed any of that from your guidance? Thanks. Dan Peyovich: No exposure to EchoStar, so nothing to think about there for Dycom Industries, Inc. On Power Solutions growth rate, we talked about their trailing four-year CAGR at about 15%, Frank, and that is what we gave as we were doing the acquisition and announced it for folks to look ahead. Obviously, as you saw in the guide, we are looking at that really as the bottom end of the range, so 15% to 25%. But here is the really important point. This is an organization that is delivering across around 3,000 skilled workforce, so 3,000 electricians, over a billion dollars of revenue. That is a very large base. And when you think about growth as a percentage, remember, you add the skilled workforce by the person, and doing that on a much larger base is something that you really have to lean into. So, you know, if you think about how we are looking at the year, how do we continue to invest in Power Solutions, a fantastic business that has got great leadership, a fantastic strategy that they have proven over time, but we want to really lean in with them so we can think about future growth and future growth opportunities. And I just want to come back to Dycom Industries, Inc. as a whole. When we think about growth, there is a right way to do growth and there is a wrong way to do growth. We have had a ton of discipline around our backlog. You see that in our margin profile. You see that last year, not only did we significantly increase our backlog, not only did we continue to diversify our backlog, but we also improved our margin profile. And this year, as we look at the year out in front of us, we are telling you again that we continue to improve that margin profile as we continue to grow, but as we invest in the business to ensure future growth too. So just a couple important points there. Frank Louthan: Great. Thank you very much. Operator: Thank you. Our next question comes from Michael Dudas from Vertical Research. Your line is open. Michael Dudas: Yes. Good morning, Callie, Dan, and Drew. Morning. Maybe a follow-up on Frank's, you know, on your answer to Frank on the margin front. Maybe talk a little bit, you know, you are investing in the business for the future. How much relative to fiscal 2027 versus 2026? And I think just also on the Power Solutions side, historically, in their self-perform capabilities, have they, what has been their growth rate on the labor front? And is that within expectations on, you know, from hiring and getting folks in to execute the backlog, not just for this year, but for several years out? Dan Peyovich: Thanks, Mike. So on margin profile, you know, you look at last year, we grew over 100 basis points year-over-year. Very pleased with the overall results, and that has been a year of change and growth. We did a major acquisition, and I think, again, I would just point to how well Dycom Industries, Inc. is executing overall to be able to do all of those things at once. As you look towards this year, again, we have big ideas and big initiatives that continue our growth and continue that long-term strategy. What is really important, and to the point of your question, is that we have to continue to invest ahead of that. We added a lot of headcount for the Communications side in the back half of last year. We see that continuing as we continue to get ahead of these programs that I talked about early on that are starting to stack on top of each other. That takes an investment. We have to invest in training. We have to bring those folks on. They are obviously not as productive day one as they are six months in. So when we think about that and we add it into the growth profile of the overall enterprise, that is when we say, hey, we are going to continue to grow margin. But I would not set expectations to be going as fast as we did last year from a raw dollars or a percentage profile, but still to grow, to have that into our backlog when I think a lot of others, during periods of growth, maybe struggle with improving those margins. We feel really good about that. Going to Power Solutions, they are really about labor. A lot of people know the hyperscalers buy all the big electrical equipment directly. That does not come through the P&L of Power Solutions. So it really is about workforce. So if you think about 15% to 25% growth that we are projecting for this year, you are growing labor in a very similar range to that. And as I mentioned to Frank, you think about that on a raw number of skilled workforce headcount, when you get to the size of Power Solutions, they are working on dozens of data centers. Those are really big numbers in the DMV. We are partnered with the local union. We are getting well in front of that. But at some point, again, this goes back to responsible growth. You want to grow at the right rate where you continue to deliver and, quite frankly, differentiate the level of service that we deliver to our customers over time. And that is what you see in the outlook. Michael Dudas: I appreciate it. It makes sense. And just my quick follow-up. You mentioned a little bit about acquisitions in some of your prepared remarks in response to questions. Maybe you could share a little bit on the timing on getting to that 2.0 level, the size, the cadence, you know, what should we anticipate maybe over the next 12 to 18 months? I am assuming maybe there is another Power Solutions out there. I am thinking a bit more modest in cadence and size. Dan Peyovich: I think it is important to go back to the long-term strategy that we operate and talking about long-term returns for our shareholders and long-term opportunities for our people. Obviously, we did the Power Solutions acquisition. That was a very large acquisition for Dycom Industries, Inc. historically. But what we did well ahead of that, Mike, we were very intentional to drive our net leverage down before we did the acquisition. I do not remember the exact number, but I think it was about 1.2x, maybe 1.2x and change when we did that. And then we talked last quarter about our ability to bring that net leverage down quite quickly. We talked about 12 to 18 months, but really what you heard Drew say earlier was to do that inside of 12 months. To finish the year with a very strong cash position and already get that down to 2.3x, pro forma. We feel really good about the opportunity set that allows us to think about from an M&A perspective. Long-term strategy includes improving our cash flow. And if you look at our free cash flow, I am incredibly proud of what our team was able to accomplish there. Our free cash flow increased 216% year-over-year, and I would point to these are durable changes that we have built into the business. These are not simply pulling a lever or taking a one-time thing. This is really about how we change, one, how we collect cash, we change our operating cash collection profile and how we are thinking about that. So, again, durable. On the free cash flow side, you heard me talk a little bit about how we are thinking about our fleet differently and using technology differently there, so we can optimize that as well. And what that does is it positions us in a place where those are big changes in cash position overall, sets us up much better when you think about M&A. So those are things that we set in motion quite some time ago to enable us to be able to continue the path that we are on today. When it comes to size, again, we have got a strategy around it. We are looking for very specific cultural fit, very specific growth opportunities. It could be something else in a factor range of the size of Power Solutions, and there could be other opportunities that are much smaller than that. It is really going to depend on, and there is obviously no guarantees about timing or how these work out. We are going to be patient, but we are seeing some attractive things in the space. Michael Dudas: Understood, thanks, Dan. Dan Peyovich: Thank you. Operator: Our next question comes from Judah Aronovitz from UBS. Your line is open. Judah Aronovitz: Hey, good morning. Thanks for taking my question. On for Steven Fisher. Just on the Building Systems margin guidance, can you talk about how you are thinking about the margin potential in that business, and how quickly can you improve kind of the mid-to-high teens level that you have talked about? And related to that, what investments need to be made, and if you can quantify the margin drag from those investments in 2027, that would be helpful. Dan Peyovich: This is really, again, about having a long-term strategy to do this. So when we think about that business, we did talk about mid-to-high teens margin profile that they have delivered historically. Mid-teens is really the right way to think about it today. We are talking about significant growth opportunities. We want to do that right, maintaining the level of service that they have proven over decades is so imperative in a market where the demand is surging at the level that it is today. We are going to have that discipline. We are going to have that patience. We are very pleased, obviously, with the growth profile for 25% from a revenue perspective. But we feel like mid-teens is a very strong return in that space. And I think if you look, comparatively, you would see that as well. So we feel very pleased with that. Over time, obviously, we are going to, just like we are on the Communications side, work to improve that. But right now, I think that is a really good starting point. Judah Aronovitz: Thanks. And then I was just curious about SG&A as a percent of sales in Q4. A bit higher than it has been in quite some time, and I assume that is reflective of the headcount you are adding, but I was wondering if there is anything else in there, maybe something related to Power Solutions mix or anything else? And then what is the expectation kind of going forward? Thanks. Drew DeFerrari: Yeah. Judah, thank you for the question. This is Drew. I would just point out we did have some transaction costs that we called out in the quarter, and that was in G&A, so over about $18,000,000 in there. And then as we think about the Building Systems segment, the G&A profile does come into the business as well. So if you are looking at the just total overall dollars, there will be some increases there as well. Judah Aronovitz: Thank you. Operator: Our next question will come from Richard Cho from JPMorgan. Your line is open. Richard Cho: I just wanted to get a little bit on the hyperscale opportunity. As we look through this year, and then into next year and 2028, it seems like there is a lot of this build that is coming back-half weighted, and it could be a big change. But what is kind of driving the near-term hyperscale revenue, and how should we think about its growth for this year and then into next? Thank you. Dan Peyovich: So today, you have, obviously, the Lumen overpull that does not have the same kind of new construction logistics or permitting around it. So that program that we have been working on for over a year now, that is going to grow this year. I would think about that first, Richard. And then you do have smaller legs. You know, the way that these long-haul, middle-mile routes are working, there are some very big programs like Lumen is talking about, there is everything in between, and then there are some that are just, you know, 100 or 200 miles. Those much smaller distances can be added in more quickly, obviously. But when you are looking at routes that are thousands of miles or much longer, those are the ones that are going to push further on duration. And then, as you would expect, there are also the pricing dynamics. So routes that are easier are going to cost less, so those can come online a bit quicker. The more expensive routes are going to take time and have higher revenue profiles, those out years of 2027, 2028. Richard Cho: Got it. And the clarification on the acquisitions, are you looking in the DMV area for acquisitions, or could this be a new geographic location? Dan Peyovich: So we are nonspecific just to DMV. You know, there are obviously a number of other markets. But I would say what was important to us with the Power Solutions acquisition was starting in a market that has been there for a very long time. This is a market that has been around for decades. It has sustainability, it has a future build profile. With that now, we can certainly be thinking about some of these frontier markets or markets that are newer and ramping up considerably. They are all on the table as we think about it going forward. Richard Cho: Yeah. Those markets seem like they are going to be building for a while. Thank you. Dan Peyovich: Thank you. Operator: Thank you. Our next question comes from Adam Thalhimer from Thompson Davis. Your line is open. Adam Thalhimer: Hey, good morning, guys. Dan Peyovich: Good morning. Adam Thalhimer: Also had a question on the M&A pipeline. Dan, is that all within the Building Systems segment, and then what should our expectations be on timing? Dan Peyovich: Yes, we are predominantly looking in the Building Systems segment, and that is mostly, Adam, as you know. Dycom Industries, Inc. has been a major acquirer and consolidator of the Communications space. There are still some opportunities out there, but, quite frankly, when you are in all 50 states and you are across the same kind of customer base that we have today, we do not need to do those from an M&A perspective. Those are places where we can and have shown we can grow organic. So thinking a lot more about the Building Systems space, as I mentioned in response to Sangita's question earlier, it does not just have to be electrical. There are other systems that happen in that digital infrastructure space or inside the data center. From a timing, you know, these things do not pace out some particular way you want them. I mean, we closed Power Solutions two days before Christmas. This is how things time out. We are active in the space. There are a number of opportunities that are out there. There are a number of really strong businesses that are coming to market for all the reasons you would expect. Sure, the multiples are higher, but the businesses are more valuable and the growth profile is stronger. So we are optimistic, but, you know, there is no guarantees on time. We are going to be patient and make sure it fits. Adam Thalhimer: Good color. And then I think you mentioned Power Solutions geographic expansion. Just curious what you are thinking there. Does that mean just starting to pick up some work in West Virginia, North Carolina, sort of building out from the DMV? Dan Peyovich: Exactly. They are not in every space. Even if you think about the DMV itself, you know, you could still continue to expand. And as everybody knows, that space itself is expanding. You mentioned West Virginia; there are other markets that are really kind of coming online more in that territory. So today, you know, we feel really good about the growth profile they have. There are opportunities for future organic expansion. That group, because they have been around for a very long time, they have got a ton of talent. So those are all things we are thinking about as we layer that together with M&A. What I would just say is we are very optimistic in the continued growth of the Building Systems segment. Adam Thalhimer: Thanks, Dan. Dan Peyovich: Thank you. Operator: And our next question comes from Liam Burke from B. Riley Securities. Your line is open. Liam Burke: Thank you. Good morning, Dan. Good morning, Drew. Dan Peyovich: Good morning. Liam Burke: Dan, with your growing EBITDA and your growing cash flow, as you balance opportunities through acquisitions and managing the balance sheet, how are you balancing your current leverage ratios versus what you see in the potential acquisition pipeline? Dan Peyovich: Yeah. I think about it the same way as we always have. We are going to be very responsible on our net leverage. I think you have to think about it over time because we might do acquisitions that could come through that are going to push it up a bit when we know, just like we did with Power Solutions, that we can bring that down. And I mentioned, Liam, this is a strategy that goes back so that we have these improvements in the business. So we can do more M&A and stay ahead of it without really changing the way that we look at our overall net leverage profile. Liam Burke: Great. And when you are looking at the traditional business, when negotiating longer-term contracts, are you seeing more favorable terms of pricing now that the scale is getting bigger, projects are more complex, and you seem to be the leader in the space here? Dan Peyovich: Yeah. You know, I think we are the only ones that are across all 50 states, and we certainly have a number of customer relationships. If you think about the margin improvement last year, you think about the margin improvement this year, I do want to be really clear about this. This is not coming from us increasing pricing with our customers. This is coming from, obviously, operating leverage, but also internal efficiencies that we are improving. Now over time, can those pricing dynamics change? We will see as these different programs come online and ramp up. But right now, one, we feel really good with our return profile. You know, we have a long-term view with our customers. We want to deliver and execute for them across cycles, certainly across decades. We have shown that we can do that. But I would not think about it from purely us having an opportunity to continue to raise pricing. And, also, I would point out that we do not need that to continue the margin improvement that we are on. Liam Burke: Great. Thank you, Dan. Dan Peyovich: Thank you. Operator: Thank you. And I am showing no further questions from our phone lines. I would now like to turn the conference back to Mr. Dan Peyovich for closing remarks. Dan Peyovich: Thank you all for your time today. We look forward to talking to you again in around 90 days. Thank you all. Be safe, and be well. Operator: Thank you. This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.
Horst Pudwill: Good morning, everybody. It gives me great pleasure to welcome all of you to our TTI Group Company 2025 Annual Results Announcement. Obviously, you can see we are trying to save money. Last year, the table was twice as big. Anyhow, we are in a semi-war condition. And what I can tell you and deliver you today by our Group CEO, Mr. Steve Richman; Vice Chairman, Stephan; Group CFO, Frank Chan. I think that we have done fantastic and none of our competitor has duplicated our results over the last 3 years. And we will go with full confidence ahead. To make it short, we delivered a strong 2025, particularly given the macroeconomic and geopolitical volatility. We continue driving market share and gained market share and delivered record profit, with the third consecutive year of free cash flow above $1 billion. Now to make it easy to understand, $1 billion means $1,000 million. So, we're talking about $3,000 million, and that is an achievement. I'm now going to hand over the floor to our Group CEO, Mr. Steve Richman, to explain and enlighten you about our activities on our future and why we are so bullish looking forward for 2026, with a strong momentum like never before. Please, Steve? Chi Chung Chan: Well, before Steve gives you the most exciting news and prospects, I will start from giving you our results first. So yes, like I said, thank you, Chairman. 2025 indeed was a pretty challenging year, and yet we managed to deliver a 4.4% revenue growth to USD 15.3 billion and a record net profit of $1.2 billion, a 6.8% increase. MILWAUKEE continued to fuel the group's growth with 8.1% reported sales growth. Excluding the discretionary suspension of some promotion programs in the second half of 2025, on an underlying basis, MILWAUKEE actually grew 10.3% last year. RYOBI business had another outstanding year, with sales grew 5.4% in local currency. Our 9% non-core business declined by 20.4% due to the planned exit of the HART business and the rationalization of our floorcare sales. Gross profit increased by 6.7% to $6.3 billion, with margins increased by 91 basis points to 41.2%. The improvement is due to the positive mix of MILWAUKEE and RYOBI business with higher margins, strong EMEA performance and our ongoing focus in improving productivity and operational efficiencies across all business units and manufacturing locations. With gross margins increased by 91 basis points and our SG&A increased by only 80 basis points, our EBIT grew 5.2% to $1.3 billion, with margins improved to 8.8%. After adjusting the associated cost for the exit of the HART business, our normalized EBIT margin will be at 9.3%, a 57 basis points increase. Net profit increased by 6.8% to close to $1.2 billion as we continue to further reduce our finance costs despite partially offset by slightly higher effective tax rates. Net profit margin of 2025 was at 7.9%. Earnings per share increased by 6.8% to USD 0.656 per share. The Board recommended a final dividend of HKD 1.32 per share, an 11.9% increase as compared to the HKD 1.18 per share in 2024. Together with the HKD 1.25 interim dividend paid, subject to shareholders' approval to the recommended final dividend, total dividend for the year 2025 will be HKD 2.57 per share, an increase of 13.7% over 2024, representing a payout ratio of 50.5% as compared to 47.5% in 2024. We have continued to invest in strategic selling expenses and R&D for new product innovations and to improve our group's performance. In 2025, SG&A as a percentage to sales was at 32.5%, 80 basis points higher than 2024. Part of the increase was due to the one-time write-off of intangible assets as we exited the HART business, which will not be recurring in 2026 and the associated costs related to the rationalization of underperforming product lines and business units. We have, however, managed to lever down our non-strategic SG&A by 42 basis points. Admin expenses now account for 9.8% of sales, and we do expect further efficiency improvements can be achieved. Net finance costs reduced by 37.6% to $33.6 million as we continue to leverage our very strong balance sheet, exceptional free cash flows generated to effectively manage our debt portfolio and get very favorable terms from our finance providers. Effective tax rate was at 8%, 20 basis points higher than 2024 as we continue to take a prudent but proactive approach to the group's global tax strategy. We continue to maintain that current high single-digit effective tax rate is sustainable going forward. Our balance sheet continued to be very healthy and strong. Shareholders' equity increased by 9.3% to close to $7 billion. Net current assets increased by 21.8% to $3.4 billion. With this strong balance sheet, we will be able to navigate any changes in this still very challenging global environment. Working capital as a percentage to sales was at 15.5%, slightly higher than the 14.4% in 2024, and yet we believe this ratio is still one of the best in our industry. Inventory days increased by 4 days to 106 days, mainly on finished goods due to tariffs. We are comfortable with the current level, but expect there can be further improvements in inventory days going forward. Receivable days was at 46 days, lower than last year by 1 day, while our payable days held flat at 96 days. CapEx spend was at $289 million, very comparable to the $291 million reported in 2024. The spend mainly focused on new products, automation, quality and productivity across all our global manufacturing units. We expect the CapEx spend for 2026 will be at the similar level, approximately 2% of sales. We've delivered over $1.2 billion operating free cash flows each year in 2023 and 2024. In 2025, we've continued to deliver close to $1.4 billion free cash flows despite all the tariff headwinds. We firmly believe we will be able to continue to deliver another $1 billion free cash flow in 2026. With our very strong cash flows generated and prudent working capital and CapEx management, we ended the year 2025 in a net cash position of $700 million. We have continued to cost effectively manage our debt portfolio. In 2025, we've reduced our total gross debt by $300 million or 23.5%, while increased our cash balance by $446 million to close to $1.7 billion. As a result, we are in a net cash position of $700 million at the end of 2025. Fixed rate, lower cost debt account for 80% of the group's total debt portfolio, while short-term debt is only representing only 36% of the total debt. With our robust balance sheet and strong cash flows, we've been asked a lot about our capital allocation strategy. We structured our capital allocation strategy with the primary objective to expand enterprise value and deliver long-term attractive returns to our shareholders. First priority is to invest in our core business to deliver sustainable growth with continued profit margin expansion. Next is to evaluate high-quality acquisition opportunities that will create growth opportunities and synergies with our current core business to further improve the group's value. We will continue to assess our dividend policy, balancing the payback and internal growth opportunities. Over the past 10 years, our dividend per share growth has outpaced our net profit growth, with dividend per share delivering a 21.8% CAGR, while our net profit delivered a 14.1% CAGR during this period. Last but not least, share buybacks. The Board intends to implement a discretionary share buyback plan of up to USD 500 million over a period of 18 months to be administered by an independent leading financial institutions. With that, I would like to pass the floor to our CEO, Mr. Steve Richman. Steven Richman: Thanks, Frank. Good morning, everybody. Our journey at TTI has been one based on our bookends of success; our people and our culture. We recruit, retain and invest in the best people throughout the globe. That is core to who we are at TTI every single day. Now our users, our distribution partners, our shareholders have seen it firsthand what these people need, how they're passionate about our business, how they drive solutions every single day and how they drive the top line and bottom line performance. Our people, the passion they have and what they deliver has resulted in outstanding performance year after year after year. And that is because of relentless focus on our consumers and our professional end users, delivering outstanding solutions that help their lives every single day. The end result, another record-breaking year in 2025. Now when we talk about 2025, leading into 2026, there's 3 areas that we really need to talk about. Those areas all combine from growth, profitability and execution. All of this is based on a one-team performance. If you think about TTI, it's about the people throughout the company coming together as one team and how do we deliver as one team. Well, our operations people challenge each other based on the manufacturing in the RYOBI business or the MILWAUKEE business. Our new product development system says what does great look like and how do we get better? How do we improve? How do we change the game? Our growth engine from our sales and our job site solutions and our commercialization, all challenge each other to say, what does great look like? That one-team philosophy leads to outstanding results year in, year out. How does that occur? It occurs clearly through leadership. We talk a lot about leadership. Do you believe we can have this success without great leaders? And I'll tell you no way. And we have outstanding leaders from the entry-level leaders we bring into the company and grow and learn and educate to our middle management leaders that have been here 5 years or 10 years that are growing with experience. And those leaders continue to have a thirst for growing and learning and educating and getting better. And then, of course, there's our senior leadership group. Now, think about this for a second. How many companies do you know where the senior leaders have been together for over 19 years. Very few. What does that mean? It's because of our culture. It's because of these gentlemen up here. It's because of what has been developed year after year at TTI. That senior leadership group with the relationships they have built over the 19 years is exceptional. But what they have because of that relationship is part of our culture. They have the candid dialogue, candid communication where they can challenge each other. Alex Duarte, who runs our EMEA business, can challenge Darrell Hendrix and Greg Borland and the rest of the sales team on where do we go from here? What does great look like? What's the right commercialization plans? We do the same in the operations side, the supply chain piece, the financial side of our business. And this is what drives excellence every single day. That is because we are TTI, and we think of these things differently. How does that tie to 2025 and beyond? When we think about growth, we think about how are we going to grow in the future and what does that look like? Let's start with EMEA. EMEA and the team dominate in specific markets, both in the consumer side of the business and in the professional business. However, there's also opportunity. And that opportunity is to take that same domination and expand that domination into new other markets on the consumer front with RYOBI and on the professional front with MILWAUKEE. The next opportunity is where we're at the beginning of our journey of growth? Asia and Latin America. On the MILWAUKEE part of the business, we've gone from a test and learn to be able to now grow, now invest more, now understand how we drive solutions in those markets in a significant way. David Butts on the MILWAUKEE side in the Asia portfolio is driving that kind of success as we enter markets like Japan and say, how big can we become? How do we earn the right with that professional end user? We have that same opportunity in Asia and Latin America now for the first time with our RYOBI business, our consumer business, the #1 brand in the globe. And we have that opportunity to be able to say, how do we test and learn in Asia? How do we test and learn in Latin America? And how do we drive that success so we become, like in other regions, the dominant brand? Our success, many of you believe or may believe that how can you grow more in North America? How can you grow more in Australia with both the MILWAUKEE brand and the RYOBI brand? Well, let me tell you, we believe we're still in the early innings of our journey. Question may be why? And the why is because we have a relentless opportunity to expand the market, get users into new businesses. And as we build new businesses, the opportunity to grow becomes more and more significant every single day. That expansion is also how we think of those businesses and how we say, how can we solve the problem of the consumer and the pro in North America and Australia in a different way? Not only taking market share, expanding those markets, launching those new businesses and earning the right from the consumer and the pro to grow. Next in 2025 and beyond is profitability. We made some hard decisions. We eliminated the HART business. We made a decision in our Floor Care business to restructure the entire business and start from scratch. We brought in one leader, a veteran in Floor Care, but understands that we need to change, how we do product development, how we do manufacturing, how we look at supply chain, clearly, how we commercialize. And the focus there is how do we follow what RYOBI and MILWAUKEE has done and understand we have to earn the right with the consumer to win. And if we do that in a way where we're delivering disruptive innovation, leveraging our technology partners from RYOBI and MILWAUKEE, leveraging the people as one team from both, then this journey, even though it's at the beginning, has a bright future in many, many years to come. Last but not least, is how we think about the globe and how we say, how can we leverage our back office? How can we leverage our negotiating costs on IT? How can we do the things globally to be able to free up more cash to invest in the 2 most dominant brands in the globe, MILWAUKEE and RYOBI. And that continues and will be the path for '26 and beyond. Last, just clearly execution. Now, many people believe that execution is the easy part. We are a paranoid group at TTI. We actually believe this is the most challenging part of any business. You have to prioritize, you have to execute flawlessly and what do you do? I can stand up here all day and so could Ty Stravinski and Shane Moll, who are coming up next and talk about our execution throughout the globe in each and every business and all of the regions. I'm going to give you 2 examples today. One is the foundation of our global manufacturing organization that we put together years ago on the basis that the world was going to change, and we had to have a global footprint. Last year, you combine that with a one-time sales suspension in North America, and that combination allowed us to mitigate tariffs in a way that no one else could. The second is how many of you have heard of disasters with ERP implementation at companies that shut down distribution, shut down manufacturing, shut down sales. It occurs every single day, and you read about it. Our teams in North America were relentless about this. They understood the risk. They put a robust plan together. They understood that project leadership and execution and a one team was absolutely essential. And they did that in a manner to ensure that we were going to have success. And guess what, they executed flawlessly. The combination of growth, the combination of the right profitability and the combination of execution is the foundation not only for what we delivered in '25, combined with our people and our culture, but why we're confident about '26 and beyond. Now, our financial focus areas, as Frank just talked about, and Horst, sales growth, absolutely essential for our success. We all understand that. We are a growth company. We are a technology company that must grow. How do we do that? How do we accomplish that? Mid-single-digit growth for TTI. No question about it. Double-digit for MILWAUKEE, single digit for RYOBI. Profitability, our internal plan, as we stated, is to grow to 10% EBIT in 2027. And last, which is clear, is free cash flow with a target over $1 billion. These fundamentals of financial focus are throughout the company. All the leaders understand, and we've all embraced it together to understand this means we are doing the right things for our consumers and our professionals and our distribution partners throughout the globe. Now, let's talk a little bit about the business in 2025 by brand. If you think about the business today versus where it was many years ago, we have the 2 most dominant brands in the world, the #1 consumer brand in RYOBI, the #1 professional brand in MILWAUKEE, 91% of our sales today in 2025 and growing are these 2 brands. With that, the results from those 2 brands delivered over 4% growth in 2025, even with the challenges we had with tariffs and other factors, as Ty will discuss and Frank already took you through. The MILWAUKEE business grew over 7.9%. The RYOBI business had a great year at 5.4%, outstanding results overall and just the beginning. Now, why did we dominate so well with both of those brands? The relentless pursuit of all of our team members for our consumers and our professional end users. We understand that clearly. What makes up that dominance? Clearly, cordless leads the way for the dominance with both of the brands. Why are we unique with cordless? We've been in the cordless lithium ion product lines and product range longer than anybody else. And part of that is for over 20 years, both in RYOBI and in MILWAUKEE, we have clearly been forward and backward compatible with every product that a user would buy on the consumer space or the professional space. Now, why is that important? It's the confidence. It's the confidence. If I'm a pro on a job site, I understand that all of my batteries are going to fit all of the products. If I'm a consumer buying a lawn and garden product today and I had a power tool, I know that they will all fit. That confidence is unique and something that MILWAUKEE and RYOBI have built year after year after year. Now, let's spend a couple of minutes on MILWAUKEE. Shane Moll is going to take you through an extensive perspective on the MILWAUKEE business. But let me just cover a couple of facts. $160 billion opportunity, total addressable market. Now, that's based on the verticals that we're in today, the market segments we're in today, the regions that we are in today. It is not based on the future. The future is bright because we're going to go into more markets, more regions of the world. We're adding more businesses throughout. We're adding more verticals. And what we want to leave you with is we're not a product company. MILWAUKEE is a solution company. We deliver productivity and safety on the job every single day for our users. That's why the pros trust us everywhere in the world. RYOBI, $80 billion total addressable market, #1 brand in the globe. Once again, opportunities to expand into new markets and dominate markets, markets in EMEA, markets in Asia, markets in Latin America, add new businesses underneath the RYOBI platform, continue to innovate and disrupt in a significant way. All of that with RYOBI leads us to success. And the RYOBI brand, what is it? It's the brand that the consumer is confident in, in their home, in their garage, in their outdoor power equipment and outdoor space and clearly, in their lifestyle space where they can bring it to a soccer field or bring it to the mountains for camping. That is RYOBI. We combine that like MILWAUKEE that has the best distribution partners in the globe. But in RYOBI, think about our dominance in ANZ and the Americas. In the Americas, we have the #1 distribution partner in the globe in The Home Depot. In ANZ in New Zealand, we have the #1 distribution partner called Bunnings. The combination of that gives us a clear competitive advantage versus everybody else in the market. And then you combine the opportunities for our other distribution partners everywhere in the world today and into those new markets. Now when we think of innovation, we at TTI think about disruptive innovation every single day. Disruptive innovation, many of you remember what we talked about last year. Disruptive innovation clearly comes from Clayton Christensen's Harvard Professor's model about The Innovator's Dilemma. How do we disrupt what we are doing? Many of you may believe this is about product. And what you see is just the product we introduced in 2025. And we clearly believe our ability to deliver disruptive product for the consumer and the professional is better than anybody else in the globe. No question. However, disruptive innovation for us is not just product alone. It's how we leverage AI in the supply chain. It's how we use AI to leverage quality and manufacturing inside our facilities. It's how we disrupt what we are doing. It's how we think about our service strategy throughout the globe and what matters in one country versus another as we disrupt the current formula. Disruption is not about product alone. Although it's important, and we believe we're best in the world in delivering those solutions to our consumers and professionals, we believe that disruption is part of our DNA in TTI and leads to our success year in, year out, and that's what we are dominating with TTI. Now, let me turn this over right now to 2 of our other outstanding leaders, Ty Stravinski, who's going to take you through after Frank, some in-depth analysis on our financials going forward. and Shane Moll, who's going to take you through some information you've been asking for in the MILWAUKEE brand and the detail behind where we're taking the markets to disrupt with MILWAUKEE going forward throughout the globe. Ty? Unknown Executive: Great. Thanks, Steve. I'm super excited to be here today, and I'm going to go through a little bit more of in-depth into the financial results that Frank mentioned upfront. So, we're going to start off with our first slide, which is the sales growth -- full-year sales growth for TTI. Our 2 leading brands, MILWAUKEE and RYOBI, delivered solid results in 2025. MILWAUKEE reported 7.9% in reported growth, but a 10.3% in underlying growth when adjusted for the non-recurring events. RYOBI reported 5.4% in local currency. Our other non-core businesses, as Steve mentioned, represent 9% of our total global revenue. That declined 20.4% due to that planned exit of our HART business, along with the market softness and rationalization of our Floor Care business. After adjusting for the non-recurring MILWAUKEE events, the TTI adjusted full-year sales growth was 5.7% versus the reported 4.1% in local currency. Let's dive a little bit deeper into that MILWAUKEE underlying growth, so you can get some clarity there. Full-year sales growth was impacted by our decision made at peak tariff times to suspend certain product sales and promotions in the second half that were disproportionately affected by tariffs. MILWAUKEE reported a global sales growth of 7.9% in local currency, but the estimated underlying sales demand of 10.3% after adjusting for the 4.2% of the reduction related to the sales suspension, offset by the 1.8% of pricing actions that we had. The underlying MILWAUKEE demand remains strong and consistent with our multi-year growth trajectory and reinforcing our confidence in our continued growth in the future. Turning to our RYOBI sales. The RYOBI business had an outstanding year, growing 5.4%, marking the second consecutive year of single-digit growth off of the high pandemic levels. Power tools grew single -- high-single-digits, and our outdoor products grew low-single-digits as certain storm events from 2024 did not reoccur in 2025. As the business is more closely tied to our consumer spending and weather, these results demonstrate the strength of the RYOBI platform, and they reinforce its ability to deliver sustainable long-term growth. When you look at our other business, Steve hit on it a little bit, but looking at the other areas of business, we're really focused on driving profitability and improvement and stabilization. We reduced the all other business sales, which now make up 9% of the total global revenue by 20.4% in local currency in 2025. The planned exit of the HART business contributed 40% decline to this decrease and the $156 million of sales will not repeat in 2026. Now, I want to take a little bit of time and talk through some of the color and clarity around the first half and second half sales growth for TTI. When you look at how the non-recurring items impacted the first half and second half sales growth, you'll see the adjusted sales growth is well balanced across both halves with a slight acceleration into the second half as sales were reported 5.6% in the first half and 5.7% in the second half. The main driver of the adjusted sales growth relates to the major ERP conversion that Steve mentioned that we did in the MILWAUKEE business on July 1. This required the pull forward of sales from the second half into the first half, and this inflated the first half sales by 1.9% and impacted the second half sales. The second non-recurring item relates to the MILWAUKEE sales suspension I mentioned in the prior slides. This impacted the second half sales for TTI by 3.2 points in the second half. Clearly, this demonstrates that the strong demand continued for our products across both periods within 2025. Gross margin walk. So, looking at our full-year gross margin compared to 2025, we saw a 91 basis point accretion. The main contributors were outperformance and growth in our higher-margin businesses of MILWAUKEE and RYOBI, which now make up 91% of our total global revenue. This drove a 55 basis point margin improvement. Our strong performance in our EMEA and Asia regions, which have higher gross margins, drove 57 basis points of margin accretion for the business. The work the teams did to really leverage costs in our factories and work with our supply base to drive down costs and move and mitigate tariff activities, but we still saw a 21% drag even over these efforts in our -- after our pricing actions. Overall, TTI continued its overall year-over-year increase in gross margin in a challenging tariff environment and landscape. Looking at our EBIT. We delivered a normalized EBIT margin before the HART exit cost of 9.3%, which is a 57 basis point increase versus 2024. The main drivers were the work that we've done to take out the structural corporate, admin and G&A costs and really leverage synergies, AI and leveraging our assets. As I mentioned earlier, the gross margin performance from our EMEA and Asia regions drove additional EBIT margin accretion of 18 basis points after the investment in resources to drive the growth in those regions. Finally, the mix towards higher-margin businesses aligned with the leverage of the global initiatives that Steve mentioned before, really delivered another 19 basis points of improvement. These combined brought our normalized margin to 9.3%, which is where we're using as our basis as we build towards our internal target of 10% EBIT margin in the near future. As Frank mentioned in his section, we've delivered 3 consecutive years of over $1 billion in free cash flow generation, and our gearing is now negative 10%. This performance, along with our confidence in our future plans, allows us to continue our increased dividend trend and to announce our intended stock buyback plan of USD 500 million over the next 18 months. We anticipate that the combination of our plans, along with these actions will further increase shareholder returns for years to come. Thank you very much. And I'd now like to turn it over to Shane Moll, Group President of MILWAUKEE Tool to go through some more exciting details regarding the MILWAUKEE business. [Presentation] Shane Moll: All right. MILWAUKEE Tool employees throughout the word are united by a single mindset that is to disrupt everything we do for the greatest outcome for our users. As you saw in the video there from Dan, Max and Tony, leaders at the center of our innovation engine, we challenge the status quo in what we do every single day. Our expertise in machine learning and AI is reshaping how we're bringing new solutions to market. We continue to extend our capability to increase the safety, productivity and quality of our users throughout the world. MILWAUKEE continues to expand our capability to address the problems that are being approached in the field every single day. Today, I will share with you how MILWAUKEE remains unique in understanding the distinct problems that are encountered by the trades throughout the world and how we're leveraging technology to increase safety and productivity. I'll share with you how MILWAUKEE is purposeful and intentional in the verticals that we serve and the end markets that we compete in. We serve in end markets that are not only recession-proof, but are also delivering the highest growth in the world. And finally, I will share with you how we continue to invest in innovation that's purposeful to keep MILWAUKEE in a leadership position, to expand our profitability and accelerate our growth. Today, MILWAUKEE is developing deep relationships within 10 key trade verticals, a level of scale and focus unmatched by anybody in the industry. MILWAUKEE continues to compete in these trade verticals with execution that begins with over 1,600 highly skilled job site solutions team members that are embedded deep, building partnerships with the trades to understand the rapidly changing needs. The workplace is simply becoming more complex, and MILWAUKEE continues to engage in the field to better understand the challenges that they face every single day. Our partnerships enable us to develop solutions with the trades that we partner together, solutions that they not only trust but specify and demand in their work, creating an opportunity for MILWAUKEE to increase our position in the market and expand our profitability. Solving the challenges today, in addition to anticipating the problems that will occur in the field together, enables us to continue to expand our $160 billion total addressable market. MILWAUKEE's pipeline of innovation is evidenced by over 17 distinct global businesses, each catered specifically for our core trades and aligned with the problems that they're facing in the field every single day. Each of these businesses are led by subject matter experts, experts that understand the challenges that we are facing together. These subject matter experts work together to address this $160 billion total addressable market that is bound by our understanding of the trades unlike anybody in the industry. As the job sites continue to evolve, we ensure that we stay ahead by continuing to address the problems that the trades face every single day, and we address them together. Not only does this allow us to enter businesses, this allows us to create entirely new businesses to continually increase our progressive opportunity for growth well into the future. This results in a cycle of innovation, business creation and partnerships that make MILWAUKEE the brand of choice. Now, I would like to thank the investment community for this next topic we're going to address because this is something that we've been asked for quite some time. And the question is, what is MILWAUKEE's end market exposure? Well, before I get into the detail, a couple of key takeaways. Number one, our exposure to our end markets is purposeful. It ties to the trade verticals that we're focused on, the segments that they work in, the solutions that we deliver. So, this is intentional in the markets that we serve. We serve markets that are both recession-proof as well as high growth. So if you look at MILWAUKEE's end market exposure, the key takeaway is that we are anchored by the highly durable market of service and maintenance work that is work that requires to be done regardless of the economic environment, in addition to taking advantage of the high-growth opportunities that are in the markets of technology, energy and manufacturing. So, MILWAUKEE is anchored to both durable markets that are recession-proof as well as these high-growth markets, is one of the reasons why we continue to be very confident in our 10%-plus growth well into the future. Now, let's talk a little bit about each of these markets. Service and maintenance, as I shared, is highly durable. It's one of the most robust and fastest-growing segments of the market for MILWAUKEE. This represents residential services, commercial services, transportation maintenance and mining. And if you think about this aspect of work, it's around us everywhere; aging homes, aging commercial buildings, aging industrial facilities and aging vehicle fleet and increasing demand in transportation and mining throughout the world is resulting a surge in retrofit, repair and upgrade work. In addition, electrical efficiency mandates in addition to smart building adoption as well as labor that's being outsourced as the trades exit in a lot of these facilities where the work needs to be done. That's why MILWAUKEE is partnering with these trades within service and maintenance to deliver safety and productivity solutions that we can address the problems together. This is why MILWAUKEE continues to invest in this very robust and fast-growing segment of our market. Next, technology, energy and manufacturing. It simply is hard to ignore. This is areas of the market and the fastest-growing markets across the developed regions throughout the world. This includes data centers, high-tech manufacturing, power utility, water utility, gas as well as telecom utilities. These are simply put the fastest-growing segments of construction throughout the world. They're supported by heavy investment throughout the world, led by artificial intelligence, reindustrialization, grid modernization and electrification. And if you look at these segments of work, why we like them a lot is we've been focused on our trade verticals coming up on 2 decades. And if you look at a job inside of a data center, in a data center, the work required by the mechanical, electrical and plumbing trades is double the amount of work in a traditional non-residential construction site. So simply put, in a market where the constraints on labor have never been more challenging, that's why they work with us to develop these safety and productivity-driven solutions. So as you see, as you look at these 2 end markets combined, these end markets represent about 80% of the demand for the solutions of our product worldwide. These greatly overweigh our exposure to residential construction and remodeling. This is why MILWAUKEE is so confident in our growth as we move forward to deliver 10%-plus growth because we are anchored to in a purposeful strategy to the fastest, largest and most resilient segments in the world. Now in order for us to be relevant in these end markets requires a continued investment in innovation. Now, you see this innovation as we release hundreds of new solutions every single year. But the true matter of differentiation for MILWAUKEE is not just the solutions that we deliver, it's the manner in which we innovate. Because we're deep, tied partner to the trades, we have unique insight unlike anybody in the industry, solving the problems with them. So, we're able to pinpoint our investment in R&D and our investment in innovation to maximize the safety and productivity of the trades. You could see this in 3 key areas throughout our business. First is the physical solutions that we deliver to truly interrupt workflows. One of the unique solutions that we delivered this year is the M18 Branch Conduit Bender. This is an application that's done in data centers and high-tech manufacturing throughout the world. It's one of the largest consumptions of labor on job sites, period. And why is that the case? Because today, it's being done by manual tools. MILWAUKEE innovated by bringing powered intelligence to this application that brings a high level of quality, drastically increases productivity on the job site as well as in pre-fab environments to provide a safety and productivity solution that is unmatched in bringing productivity to the job site. Another example is in a newer end market that we're servicing, which is the natural gas technician. MILWAUKEE just introduced the MX FUEL Electrofusion Processor. That is a unique product that provides portability and capability unlike the industry has ever seen. In addition, it provides the intelligence to deliver traceability and quality of work that MILWAUKEE can only deliver. These solutions let these end markets know that we are focused on delivering solutions specifically for them. If you look at the area of PPE, one of the fastest-growing segments of our business, what we've done with our BOLT Safety program worldwide in our helmet program simply is remarkable. We recently received accolades by receiving the top 2 spots of the 5-star Virginia's Tech Gold Standard Safety study that have reaffirmed to us independently that we are leveraging innovation to increase the safety of workers throughout the world. Coupled with this, MILWAUKEE continues to invest in innovation across our platform technology, the things that are hard to see unless you crack open our tools. What we're doing to innovate in areas of motors, batteries, electronics and sensors to truly bring intelligence and productivity unlike anybody in the industry. And last but not least, is that MILWAUKEE is very well known for our physical solutions, but we probably have not talked a lot about our digital solutions as well. MILWAUKEE continues to invest in software, connectivity, AI and machine learning to create digital unified ecosystems like what we delivered with AUTOSTOP, deliver safety to the world that has never been seen before by leveraging machine learning and the largest connected tool platform in ONE-KEY. ONE-KEY is the largest digital enterprise-wide inventory management system that allows unmatched investment and productivity for trades throughout the world. So as you see, MILWAUKEE is not only adjacent and tied to the end markets that deliver resilient growth, we also are delivering solutions that is the reason why they continue to ask and partner with MILWAUKEE on job sites throughout the world. I think you see MILWAUKEE has been executing a very unique strategy over the past 20 years. It's a strategy that enables us to have unmatched insight into the challenge that the trades face every day. It enables us to not only deliver new solutions, but also create new market opportunities for growth and purposely aligned to the end markets that are recession-proof and are the highest growth in the world. MILWAUKEE continues to invest in innovation to provide safety and productivity that will enhance our profitability and enhance our growth well into the future. But as Steve noted, all of this is anchored by remarkable people and an exceptional culture. Thank you. Unknown Executive: All right. Thank you, management team. We'll now go to the Q&A session portion of the presentation. Fast, maybe if everybody can just say their name and firm and try to keep it to one question and a follow-up to give everybody an opportunity. Karen? YY Li: Yes. This is Karen from JPMorgan. Thanks a lot for the management team once again making efforts to fly to Hong Kong. I know it's a lot of effort flying from the U.S., particularly given the current situation. And then congratulations on the solid results. I do have -- I can ask only one question, is it? So, maybe I think my first and foremost question will be regarding your revenue growth. I hear you regarding, I think, mid- to high single-digit blended revenue growth for MILWAUKEE plus will be low teen for MILWAUKEE in 2026. I think that is certainly very solid, particularly given a lot of uncertainty going on in the world, including the U.S. But how do we actually think about while we've been talking about in terms of TAM expansion, a very solid demand driver? I think Shane is highlighting, and thanks so much for sharing the breakdown in terms of the end demand for MILWAUKEE. We are definitely seeing the data center and so on is now forming a big part of that. But how do we think about how this is playing into our numbers? And particularly, yes, Home Depot, which is our partner is also talking about the TAM expansion. And then can I ask, Steven, what is the underlying assumption for that revenue growth in terms of interest rate fiscal policy in the U.S.? Horst Pudwill: Go ahead, Steve. Steven Richman: Clearly, as you heard from Shane and from Ty and from Frank, we clearly believe that the TAM expansion as we add new businesses and as we go into more depth in the verticals that, that opportunity becomes very, very relevant for us on the MILWAUKEE side as well as on the RYOBI side of the business. Both of them have geographical expansion opportunities as well. The one thing you have consistently seen from us is, as we add new businesses, our current TAM for each one of those verticals continues to grow and our opportunities that we see globally continue to grow as well. Underlying demand is extremely positive. And that's positive because of our ability to drive market expansion. It's our ability to be able to go deeper and partner with our core users. It's clearly the ability on the MILWAUKEE side where there's a shortage of labor everywhere in the globe of that talented labor, and they are looking for more productivity solutions and more safety solutions every day. And that's why our confidence level for double-digit growth continues year after year and our investment in disruptive innovation to be able to accomplish that. YY Li: Are you assuming any interest rate cut for the year behind that 10% to 15% level? Steven Richman: We are not assuming anything dramatic in terms of interest rate cuts or changes. As you saw from Shane, the majority of our business is not based on residential construction. And that's why we are so confident in terms of the verticals we're in, the users we supply every single day. Jacqueline Du: This is Jacqueline Du from Goldman Sachs. First of all, I just want to say, I think this is TTI's best ever results presentation. And thank you so much for the very detailed top line breakdown as well as the performance attribution analysis. Super helpful. I just have one question. I think you have a slide on EBIT margin walk. If we take a forward-looking perspective, you have this 10% OP margin target by 2027, right? I just want to know what are the detailed measures to deliver that target? Can you do a forward-looking attribution analysis as well? Unknown Executive: Yes. First off, I think if you take a look when we back out the HART business, right, and you take a look, you can get to that 9.3%, from that perspective, it's a continuation of what we do as a business, right? It's a continuation of what Shane talked about. And as we look at new product verticals to get into additional trade verticals to get into where we see higher profit margins from those products, as we continue to expand our geographical regions, right, into different parts of EMEA into Latin America, as we get into the Asia markets more, those tend to be higher gross margin regions of the world for us, both from the RYOBI and the MILWAUKEE side of the business. And that really helps us drive that gross margin side. And then from an SG&A side, we've continued to look at ways to leverage costs, leverage the back-office operations, leverage technology, AI, continue to work as one team globally to try to leverage in those costs, too. So, we have the plan put forth, I mean, to get to the 10% internal target. And as Steve mentioned, it's a matter of execution, which is what we do really good. Johnson Wan: This is Johnson from Jefferies. Thank you for giving me the opportunity to once again meet you guys. It feels like every 6 months, we see all the friends and the whole investor community all here at the TTI results presentation. So from the set of results, I get the sense that TTI is very focused on profitability, which is something I really like to see. And exiting that HART business was, I think, one way to go to that path. So, what was the reason though? Why we exited the HART business? Because I remember a few years back, sitting in the same room, we were very excited about the HART business. So, was there a relationship breakdown with Walmart that led to this? What was the lessons that we took away from this exit of the HART business? So, that would give us some clarity on that. Steven Richman: Thanks, Johnson. Let me be real clear. As we stated, yes, we're focused on profitability. But we are a technology company based on growth. And our growth drivers are the 2 most dominant brands in the globe, one being MILWAUKEE on the professional side and the other being RYOBI on the consumer side. Overall, it was our decision that as we have this most dominant brand in RYOBI, the ability and the need to be able to compete with ourselves was not strategically the right approach versus us to, say, how do we leverage and increase innovation in the RYOBI brand? How do we take that brand and develop more market opportunities with that? How do we expand into new markets? And how do we look at all of that together? And that led us to the conclusion that the strategy to exit HART was the right call. Johnson Wan: So the RYOBI products will now be sold in Walmart or that will not? Steven Richman: No, that's not what I'm saying. What I'm saying is that we believe in the RYOBI brand. We believe in our distribution strategy that we have today for the RYOBI brand. And we believe that there's additional new markets for us to attack from Asia to Latin America, as well as delivering more and more innovation and more and more new businesses under the RYOBI brand and the RYOBI platform. Xiao Feng: This is Xiao Feng from CITIC CLSA. So, 2 quick questions. I think this is a very interesting presentation regarding the downstream market exposure breakdown for the MILWAUKEE Tools. So the first one is, what do you expect a potential change of the exposure? I'm very glad to hear that you guys are very recession-proof, but do you think the breakdown between manufacturing, energy, technology, manufacturing versus maintenance, repairment, will that breakdown change potentially in the future based on your outlook? The second question is, what is the downstream exposure of RYOBI? How does that look like? Shane Moll: I'll take the MILWAUKEE question. So, one of the exciting things about these end markets that we serve that represent a majority of our demand is on the technology, energy manufacturing side, there's a very significant backlog of work that needs to get done and a lot of the challenges are driven by the access to labor and the shortage of labor. So, we think that the current relationship between those 2 end markets for our business is going to be very consistent into the near future, driven largely by the stability and the durability of what's happening in the service and maintenance side as that continues to -- it's hard to ignore the aging infrastructure and what's happening. And then also technology and energy and manufacturing, you see the investment there continues. The backlog is incredibly strong. We're very close to our trade partners that are completing the work as well as the owners that are investing in these projects. So, we feel confident with the mix into the near term in terms of our end market exposure. So, we don't expect that, that is going to change drastically moving forward. Steven Richman: On the consumer front, let's talk a little bit about RYOBI and why we're so confident in the brand. There is the future piece of new geographical expansion. There is the ability to be able to say, we're going to enter new businesses under RYOBI. But the core is real clear. When you have an installed base of millions and millions of batteries and products that are out with individuals throughout the globe. And that platform is backward and forward compatible for over 20-plus years. And people have already invested in that platform and that system. The ability for them to continue to buy and acquire more and more products into that platform that will help them solve their needs in the house, in the garage, in the yard, in the lifestyle that they live is absolutely unbelievable in terms of long-term growth and long-term opportunity. You combine that within the Americas and Australia, as I said, with the 2 largest, best understanding consumer-driven distribution partners with The Home Depot and Bunnings. And that's why we are confident on top of the rest of the growth opportunities that we have nothing but growth in the future. Eric? Eric Lau: Eric from Citi. Actually, a big congrats to the management for the excellent result. And then thank you so much for the great presentation. May I have just a follow-up question about the top line growth like Karen just asked? You said the top line growth mid- to high single digit. And then my question is, why don't we set higher, right, high single-digit, then assuming MILWAUKEE, not low teens, but should be mid-teens? Because the point is we see a couple of tailwind this year. You just mentioned you are going to reduce the tariff exposure, right. Suppose this speed up the industry consolidation. And then the second is the -- you just mentioned AI machine also improve their R&D, speed up the new product development. And then more important is the largest customer, Home Depot and then the competitor, Lowe's also speed up the same-store sales growth this year, around 2% as maximum, right, versus flat last year. So, why don't we set mid-teen for the MILWAUKEE growth this year? Shane Moll: Eric, you always have an optimistic... Eric Lau: So my point is concern... Shane Moll: No, let's walk through it a little bit. I mean, when we think about what that looks like for 2026, we continue to charge forward with the double-digit 10% to 12%, let's use that range for the MILWAUKEE side. RYOBI is always going to -- we're looking at a low single-digit to mid-single-digit growth from that side. We're exiting the HART business, which won't be repeating. So, you're going to have a drag, right, in '26 from that aspect. And we're still working on that stabilization and improving the profitability of the all other business right now. So, we're going to continue to have that as a continued shrinking piece of the business as we go forward. So when you model all of that together, I think when you get to -- that gets you to a mid-single digits with a stretch to get higher, but obviously, mid-single digits from that perspective. Eric Lau: Yes. I know. My point is why don't you set a little bit higher for MILWAUKEE growth, I mean, say, mid-teens rather than low teens, I mean? Shane Moll: 10% and 12% on a -- really big number, is a big number, Eric. Right? Steven Richman: It's a lot of new companies, Eric. Lot of new companies. Eric Lau: I mean, what's your concern or growth constraint for this year? Can you share a little bit more color here? Steven Richman: Growth constraint or concern? We don't have concern. We do not have concern. We believe everything that Shane talked about in MILWAUKEE is why it will continue to grow, while the new dominance in new markets and regions will continue to grow, that the Asia and Latin America are opportunities. All of that is opportunities for continued growth. The level of growth that you want is we love the passion that you always have about the business and the growth expectations. At the same time, we are -- believe that we are very prudent in terms of saying this is where our numbers are as we go forward into 2026. Chi Chung Chan: Yes. And Steve, internally, we do have a higher target for our business units. Shane Moll: There's always a stretch. Steven Richman: There's always a stretch, Eric. Always a stretch. Terrence Chang: This is Terence Chang from Macquarie. So, I just want to kind of ask management about -- obviously, last year, the company did a great job in mitigating the tariffs. And obviously, a week ago, we have the Supreme Court ruling on the tariff. So, I guess it's a 2-part question. In terms of first part, on the U.S. business, what exactly is your sourcing exposure by region, hopefully? And also with the tariff rate currently at 10% as compared to 20% for Vietnam specifically, are we going to see some potential tailwind going into the second half of the year, while maybe first half, you will see some sort of tariff headwinds? So, maybe it will be helpful if you can walk through the sourcing part and also on the tariff cadence -- impact of the tariff cadence. Steven Richman: So as we discussed years ago, we made a strategic decision to have a global manufacturing strategy, which clearly means China, clearly means Vietnam, Mexico, U.S., Germany, throughout the globe and many other parts throughout the globe as well. That plan was clearly executed, as we said, by the end of last year, which leaves us in a situation to supply the U.S. market that we will not be shipping product from China for the U.S. portfolio and the market today for 2026. Now, you say what's next? What does it mean with all the rulings? There's clearly not clarity. We are in a fluid situation that changes sometimes daily, sometimes weekly, sometimes monthly. And because of that, we cannot give you any distinct clarity on what that's going to look like for the rest of this year until we have some final clarity ourselves on what that means for ourselves and our distribution partners. Unknown Executive: Good. Why don't we wrap it up there? Let me hand it back to the management team for some closing remarks. Horst Pudwill: It's not getting boring. Don't worry. I think the strength of TTI is that we have accumulated cash. We are ready for opportunities. And I'm very proud to say of our management. We have a succession plan, and you have seen that our business has been growing from strength to strength in the last years. And I assure you the best is still to come for TTI. If you have watched what was presented by Shane Moll and by you, Ty, you are not wrong, why keep an eye on TTI and invest. And I will be one of the first one who will lead the coup. Thank you very much for attending.
Operator: Good day, and thank you for standing by. Welcome to the Altisource Portfolio Solutions S.A. fourth quarter 2025 earnings call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Michelle D. Esterman, Chief Financial Officer. Please go ahead. Michelle D. Esterman: Thank you, operator. We first want to remind you that the earnings release and quarterly slides are available on our website at www.altisource.com. These provide additional information investors may find useful. Our remarks today include forward-looking statements, which involve a number of risks and uncertainties that could cause actual results to differ. Please review the forward-looking statements section in the company's earnings release and quarterly slides, as well as the risk factors contained in our 2025 Form 10-K. These describe some factors that may lead to different results. We undertake no obligation to update statements, financial scenarios, and projections previously provided or provided herein as a result of a change in circumstances, new information, or future events. During this call, we will present both GAAP and non-GAAP financial measures. In our earnings release and quarterly slides, you will find additional disclosures regarding the non-GAAP measures. A reconciliation of GAAP to non-GAAP measures is included in the appendix to the quarterly slides. Joining me for today's call is William B. Shepro, our Chairman and Chief Executive Officer. I will now turn the call over to William. William B. Shepro: Thanks, Michelle, and good morning. I will begin on slide four with our 2025 highlights. We are pleased with our full-year 2025 results. We grew service revenue, adjusted EBITDA, and GAAP earnings compared to 2024. These improvements reflect disciplined execution, lower interest expense, and strong sales wins across both business segments. The strong sales wins, including fourth quarter wins estimated to generate $13,200,000 in stabilized annual revenue, should put us in a strong position to mitigate the impact of anticipated legacy revenue losses, materially diversify Altisource Portfolio Solutions S.A.'s revenue base, and support our growth. We are particularly excited by the growth of our HUBZU inventory from recent sales wins. HUBZU's foreclosure auction and REO inventory grew by 137% since the end of the third quarter to 13,500 assets as of mid-February. Turning to slide five. Service revenue for 2025 increased by 7% to $161,300,000 with sales wins in both segments contributing to the growth. The business segment's adjusted EBITDA improved by $3,000,000, or 7%, to $47,600,000, and total company adjusted EBITDA improved by $900,000, or 5%, to $18,300,000, driven by higher revenue, partially offset by revenue mix and modestly higher corporate costs. Moving to slide six, we improved total company 2025 GAAP loss before income taxes to $14,100,000 from $32,900,000 in 2024. This was primarily driven by lower interest expense from the new capital structure, partially offset by $3,600,000 of debt exchange transaction expenses and a $7,500,000 loss from a legacy litigation settlement. 2025 net cash used in operating activities would have been close to zero if you exclude the debt exchange transaction expenses and $1,200,000 of higher first quarter cash interest expense related to the prior debt agreement. Adjusting for these items, net cash used in operating activities improved by approximately $60,000,000 over the last five years. We ended the year with $26,600,000 in unrestricted cash. Turning to slide seven. Fourth quarter 2025 service revenue was $39,900,000, up 4% from the fourth quarter of last year, driven by growth in the origination segment. Fourth quarter 2025 business segment adjusted EBITDA of $11,400,000 was flat to the fourth quarter 2024, while higher fourth quarter 2025 corporate segment costs resulted in total company adjusted EBITDA of $4,000,000 for the quarter. The corporate segment's costs were $700,000 higher than the prior year primarily from foreign currency fluctuations. Our fourth quarter GAAP loss before income taxes and noncontrolling interests improved to $8,100,000 from $8,400,000 in the fourth quarter 2024, primarily from lower interest expense partially offset by a $7,500,000 loss from a legacy litigation settlement. Before turning to the segment updates, I want to address developments related to Rithm. As we discussed last quarter, the cooperative brokerage agreement between Altisource Portfolio Solutions S.A. and Rithm, which I will refer to as the CBA, expired on 08/31/2025. Despite the expiration of the CBA, at Rithm's discretion, we continue to manage CBA REO assets and receive new referrals with limited exceptions. From a 2026 guidance perspective, which I will review shortly, we assume that this business will roll off during the first half of this year. With respect to Onity, Rithm provided notice in the fourth quarter that it is terminating its servicing agreements with Onity. As the service transfers occur, we expect a reduction in our foreclosure trustee, title, and field service referrals from Onity tied to these portfolios. Our 2026 guidance assumes that the Onity-serviced Rithm-owned MSRs transfer to Rithm during the first half of this year. Although we would prefer to retain this business, we believe that our sales wins, once stabilized, should more than offset the anticipated reduction in service revenue and EBITDA from the Rithm- and Onity-related changes. As a result, the midpoint of our 2026 guidance reflects service revenue growth and close to flat adjusted EBITDA, with Rithm and Onity representing a significantly smaller share of our revenue base by 2026. Turning to slide eight in our countercyclical Servicer and Real Estate segment. 2025 service revenue of $126,000,000 increased 5% from last year, reflecting a full year of the newer renovation business and growth across foreclosure trustee, Granite, and field services, partially offset by fewer home sales in the marketplace business. 2025 Servicer and Real Estate segment adjusted EBITDA increased by 6% to $44,600,000, with adjusted EBITDA margins higher due to revenue mix. Slide nine summarizes our Servicer and Real Estate segment wins and pipeline. In 2025, we won an estimated $20,600,000 in annualized stabilized service revenue wins, including $11,500,000 in fourth quarter wins. Two of the larger fourth quarter wins were in our higher-margin marketplace business unit, which we also refer to as HUBZU. The first was an REO asset management and foreclosure auction agreement with a residential loan servicer, and the second a CWCOT first-chance foreclosure auction agreement with an existing customer. We ended the year with a Servicer and Real Estate segment total weighted average sales pipeline of $19,300,000 on a stabilized basis. The pipeline includes a couple of larger opportunities for our trustee and title businesses that we are optimistic should close in the second quarter, if not sooner. Turning to slide 10 and our growing HUBZU inventory. We onboarded the two new HUBZU wins I just discussed and are off to a strong start. As of February 15, total HUBZU inventory stands at 13,500 assets, compared to 5,700 assets as of September 30. These two wins were significant contributors to this growth. We anticipate revenue from these customers to grow during the year as REO and foreclosure referrals proceed to sale. Moving to slide 11 and our Origination segment. 2025 service revenue grew 16% to $35,200,000. Adjusted EBITDA increased 19% to $2,900,000, with margins improving modestly. Service revenue growth was driven by continued expansion in the Lenders One business, including onboarding the forecasted $11,200,000 in third quarter wins. Due to these wins, the Origination segment service revenue growth accelerated in the fourth quarter, increasing 40% year over year. For 2026, we anticipate strong year-over-year service revenue and adjusted EBITDA growth for the Origination segment as recently won business continues to grow and scale, and we convert our sales pipeline to wins. Slide 12 outlines our Origination segment sales wins and pipeline. We secured an estimated $1,800,000 in wins, primarily in Lenders One, and ended the year with an estimated $14,900,000 weighted average sales pipeline. We are actively engaging with several large prospects and anticipate additional wins in 2026. Turning to slide 13 in our Corporate segment. 2025 corporate adjusted EBITDA loss was $29,300,000, reflecting a year-over-year increase in costs primarily related to nonrecurring benefits in 2024 and higher foreign currency expenses in 2025. We believe corporate costs should remain relatively stable as revenue grows. Moving to slide 14 and the business environment. We have been operating in a challenging environment with both low delinquency rates and origination volume, though recent indicators are improving. Ninety-plus-day mortgage delinquency rates modestly increased to 1.45% in December 2025. As of 12/31/2025, there were 560,000 late-stage delinquent mortgages, the highest level since February 2023. In 2025, foreclosure starts grew by 25% and foreclosure sales grew by 17% compared to 2024, although still significantly below pre-pandemic levels. We believe the increase over 2024 reflects the end of the VA foreclosure moratoriums, rising FHA delinquency rates, and a softening real estate market. We anticipate that borrowers may face additional pressure in 2026 given the fourth quarter implementation of the April 2025 FHA mortgagee letter that extends the time between loan modifications from every 18 months to every 24 months. For the origination market, total 2025 mortgage origination unit volume increased 19%, driven by a 92% increase in refinance volume, partially offset by a 2% decline in purchase volume. For 2026, the MBA projects 5,800,000 loans originated, or 7% year-over-year growth, with a forecasted 8% increase in refinance volume and a 6% increase in purchase volume. Turning to slide 15 and our 2026 outlook. We are forecasting service revenue of $165,000,000 to $185,000,000 and adjusted EBITDA of $15,000,000 to $20,000,000. At the midpoint, this represents 8.5% service revenue growth and close to flat adjusted EBITDA. Revenue growth assumptions include roughly flat industry-wide rates, the MBA's forecasted origination volume growth, and our estimated timing for the onboarding and ramp of sales wins, conversion of pipeline opportunities, and price increases for certain services, partially offset by the assumed loss of business related to the CBA and Rithm's termination of its servicing agreements with Onity. The projected adjusted EBITDA reflects forecasted service revenue growth and scale efficiencies, partially offset by product mix and modest growth in corporate segment costs. The forecast range for service revenue and adjusted EBITDA primarily reflects timing differences in the potential loss of business related to the CBA and Onity service transfers and the ramp in business from sales wins and pipeline conversion. At the midpoint of the guidance, we are forecasting to generate positive operating cash flow for the year. Moving to slides sixteen and seventeen. Our 2026 outlook is supported by momentum in the businesses we believe offer the greatest long-term growth potential: Lenders One, HUBZU Marketplace, foreclosure trustee, title, Granite, renovation, and field services. The anticipated growth of these businesses forms the foundation for Altisource Portfolio Solutions S.A.'s Project 45 strategic initiatives, our company-wide objective to achieve a run rate of $45,000,000 in adjusted EBITDA by 2028. While individual businesses and support group contributions to this initiative may vary, we believe the businesses we identify best position Altisource Portfolio Solutions S.A. for meaningful, diversified growth. Turning to slide 18. We believe we are positioned to diversify our revenue base, ramp newly won business, maintain cost discipline, and lower corporate interest expense in 2026. The Project 45 initiatives, supported by our 2025 sales wins, should help mitigate the impact from anticipated Rithm-related revenue losses and support a stronger, more resilient Altisource Portfolio Solutions S.A. I am proud of what the team has accomplished in 2025, and I am excited about our prospects for 2026 and beyond. I will now open up the call for questions. Operator? Operator: Please press 11 on your touch-tone phone and wait for your name to be announced. To withdraw your question, please press 11 again. Showing no questions at this time. I would like to turn the call back to William B. Shepro for closing remarks. William B. Shepro: Thank you, operator. We are pleased with our 2025 performance and believe we are set up well for continued growth. Thanks for joining our call today. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.