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Operator: Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to Banco Macro's Fourth Quarter '25 Earnings Conference Call. We would like to inform you that the 4Q '25 press release is available to download at Investor Relations website of Banco Macro at www.macro.com.ar/relaciones-inversores. [Operator Instructions] Also, this event is being recorded. [Operator Instructions] It's now my pleasure to introduce our speakers. Joining us from Argentina are Mr. Juan Parma, Chief Executive Officer; Mr. Jorge Scarinci, Chief Financial Officer; and Mr. Nicolas Torres, Investor Relations. Now I'll turn the conference over to Mr. Nicolas Torres. You may begin your conference, sir. Nicolas Torres: Thank you, and good morning. Good morning, and welcome to Banco Macro's Fourth Quarter 2025 Conference Call. Any comments we may make today may include forward-looking statements, which are subject to various conditions, and these are outlined in our 20-F, which was filed to the SEC and is available on our website. Fourth quarter 2025 press release was distributed yesterday and it's available on our website. All figures are in Argentina pesos and have been restated in terms of the units referring at the end of the reporting period. As of 2020, the bank began reporting results applying hyperinflation accounting in accordance with IFRS IAS 29 as established by the Central Bank. For recent comparison, figures of previous quarters have been restated behind IAS 29 to reflect the accumulated effect of inflation adjustment for each period through December 31, 2025. I will now briefly comment on Banco's fourth quarter 2025 financial results. In the fourth quarter 2025 Banco Macro's net income totaled ARS 100 billion, ARS 290.7 billion in fiscal year 2025 recurring from the loss posted in the previous quarter. The result was 26% or ARS 34.4 billion lower than the result posted in the fourth quarter of 2024. In the fourth quarter of 2025, the accumulated annualized return on average equity and accumulated annualized return on our assets were 5.1% and 1.4%, respectively. Excluding ARS 82.9 billion of nonrecurring expenses in the fourth quarter of 2025, net income would have totaled ARS 183 billion and ARS 393.7 billion in fiscal year 2025. And accumulated ROE and ROA would have been 6.6% and 1.8% respectively. In fiscal year 2025, net income totaled to ARS 290.7 billion, 32% lower than in fiscal year 2024. Total comprehensive income totaled ARS 303 billion and was 1% higher than the fiscal year 2024. In the fourth quarter of 2025, ARS 82.9 billion restructuring expenses were recorded related to our retirement plans and provisions for severance statements. Excluding nonrecurring expenses fourth quarter '25 net income would have been ARS 183 billion and fiscal year 2025 net income would have totaled ARS 393.7 billion, excluding the third quarter and fourth quarter 2025 nonrecurring expenses. Representing an accumulated ROE on our rate of 6.6% and 1.8% respectively. In the fourth quarter of 2025, operating income before general, administrative and personnel expenses, total of ARS 1.17 trillion, 39% or ARS 324.2 billion higher than in the third quarter of 2025 and 9% from ARS 94.4 billion higher than in the same period of last year. Fiscal year 2025, net operating income before general, administrative and personnel expenses totaled ARS 4.1 trillion, 33% lower than fiscal year 2024. In the fourth quarter of 2025, provision for loan losses totaled ARS 169.3 million, 1% from ARS 1.8 million lower than in the third quarter of 2025. On a yearly basis, provision for loan loses increased 243% or ARS 120 million. In Fiscal year 2025, provision for loan loses totaled ARS 538.1 million and were 274% higher than fiscal year 2024. In the quarter, net interest income totaled ARS 836.5 billion, 13% or ARS 96.4 billion higher than the third quarter of 2025 and 19% or ARS 135.9 billion higher year-on-year. This result is giving a 7% increase in interest income and a 1% decrease in interest expense. In fiscal year 2025, net interest income totaled ARS 3.1 trillion and was 44% higher than fiscal year 2024. Interest income of 8% while interest expense decreased 23%. In the fourth quarter of 2025, interest income totaled ARS 1.4 billion and 7% from ARS 91.6 billion higher than third quarter 2025 up 30% or ARS 324.1 billion higher than the fourth quarter of 2024. In fiscal year 2025, interest income totaled ARS 5 trillion, 8% higher than fiscal year 2024. Income from interest on loans and other financing totaled ARS 1.44 trillion, 3% or ARS 33.5 billion higher compared with the previous quarter, mainly due to a 141 basis points increase in the average lending rate, while the average volume of private sector loans remained almost unchanged. On a yearly basis, income from interest on loans increased 58%, were ARS 379.3 billion and in fiscal year 2025, income in interest on loans and other finance will total ARS 3.61 trillion, 13% higher than the fiscal year 2024. In the fourth quarter of 2024, interest on loans represent 74% of the total interest income. In the fourth quarter of 2025, income from government and private securities stood at 105% to ARS 306 million quarter-on-quarter and decreased 1% or ARS 6.2 million compared with the same period of last year. Fiscal year 2025, income from the government of private securities totaled ARS 176 trillion, 58% lower than fiscal year 2024. The fourth quarter of 2025 in terms of FX, the bank's strategy to remain short in U.S. dollar during the second half of 2025 proven successful. The combination of the short dollar position together with the [indiscernible] position and the allocation of the pesos generated by the sale of U.S. dollars resulted in a net gain of ARS 26.3 billion. In the fourth quarter of 2025, interest expense totaled ARS 565.1 billion, decreasing 1% or ARS 4.8 billion compared to the previous quarter and 50% higher compared to the fourth quarter of 2024. In fiscal year 2025, interest expense totaled ARS 193 trillion, 23% lower than fiscal year 2024. Within interest expenses, interest on [indiscernible] quarter-on-quarter due to 168 basis points decrease in the average rate paid on [indiscernible] the average volume of private sector deposit increase 7%. On a yearly basis, interest on deposits increased 48% or ARS 107.6 million. In the fourth quarter of 2025, the [indiscernible] net interest margin, including FX, was 21.7% higher than the 18% posted in the third quarter of 2025 and lower than 24.7% posted in the fourth quarter 2024. In the fourth quarter of 2025, [indiscernible] net income totaled ARS 192.4 billion versus 1% or ARS 1.2 billion higher than in the third quarter of 2025 and was 8% or ARS 89 billion higher than the same period last year. Fiscal year 2025, net income totaled ARS 767.4 million, which was 20% higher than fiscal year 2024. In the quarter, other operating income totaled ARS 72.3 billion 3% or 2.1% lower than in the third quarter of 2025 due to lower other income and lower service-related fees, which were partially offset by higher income from each [indiscernible] and on a yearly basis, our operating income increased 30% or [indiscernible]. In fiscal year 2025, our operating income totaled ARS 292.1 billion, a change from fiscal year 2024. In the fourth quarter of 2025, Banco Macro's administrative expenses plus employee benefits totaled ARS 412.4 billion, 15% or ARS 54.8 billion higher than the previous quarter, due to higher employee benefits, which increased 18%, and higher administrative expenses, which increased 8%. On a yearly basis, administrative expenses plus employee benefits increased 20% or ARS 68 billion. In fiscal year 2025 administrative expenses plus employee benefits were unchanged compared to fiscal year 2024. Employee benefits increased 18% or ARS 45.8 billion quarter-on-quarter. Compensation and bonuses increased 156% or ARS 68.7 billion. In fourth quarter of 2025, the bank recorded ARS 82.9 billion restructuring expenses related to early retirement plans and severance payment provisions. Excluding restructuring expenses, employee benefits would have decreased 8% or ARS 17.1 billion. On a yearly basis, employee benefits increased (sic) [ decreased ] 30% or ARS 67.5 billion, and excluding restructuring expenses, employee benefits would have been 7% or ARS 15.4 billion lower. In fiscal year 2025, employee benefits associated with personnel involved in restructuring expenses totaled ARS 49 billion. In the fourth quarter of 2025, efficiency ratio reached 38.7%, improving from the 46.5% posted in third quarter of 2025 and the 39.4% posted one year ago. In fourth quarter of 2025, expenses increased 13%, while net interest income plus net fee income plus other operating income increased 36% compared to the third quarter of 2025. It is worth mentioning that during fiscal year 2025 Banco Macro reduced its branch network by 75 branches down to 444 branches from 519 branches in December 2024 and reduced its headcount by 514 employees. All this was achieved while gaining market share, both in private sector loans and private sector deposits. In the fourth quarter of 2025, the result from the net monetary position totaled ARS 277 billion loss, 27% or ARS 58.6 billion higher than the loss posted in third quarter of 2025 and 5% or ARS 13.2 billion lower than the loss posted one year ago. Higher inflation was observed during the quarter, 189 basis points above third quarter of 2025. Inflation was 7.86% compared to 5.97% in the third quarter of 2025. In fiscal year 2025 the result from the net monetary position totaled ARS 1.05 trillion loss, 66% lower than the one posted in fiscal year 2024. Inflation in 2025 reached 31.5% compared to the 117.8% registered in 2024. In fourth quarter of 2025, Banco Macro's effective income tax rate was 42.7%. In fiscal year 2025 the effective tax rate was 43.1%, higher than the 9.2% registered in fiscal year 2024. Further information is provided in Note 24 of our Financial Statements. In terms of loan growth, the bank's total financing reached ARS 10.71 trillion, decreasing 2% or ARS 211 billion quarter-on-quarter and increasing 40% or ARS 3.1 trillion year-on-year. In the fourth quarter of 2025, peso financing increased 2% or ARS 196.4 billion, while US dollar financing decreased 20% or $407 million. In fiscal year 2025 both peso financing and U.S. dollar financing increased 36% and 12% respectively. It is important to mention that Banco Macro's market share over private sector loans as of December 2025 was 8.3% (sic) [ 8.6% ], increasing 30 basis points compared to December 2024. On the funding side, total deposits increased 8% or ARS 958.1 billion quarter-on-quarter totaling ARS 13.7 trillion and increased 24% or ARS 2.6 trillion year-on-year. Private sector deposits increased 11% or ARS 1.26 trillion quarter-on-quarter while public sector deposits decreased 33% or ARS 310.4 billion quarter-on-quarter. In increase in private sector deposits were offset by time deposits which increased 17% or ARS 978.5 billion while demand deposits increased 5% or ARS 308.1 billion quarter-on-quarter. In the quarter, peso deposits increased 3% or ARS 234.9 billion, while US dollar deposits increased 10% or $300 million. On a yearly basis, peso deposits increased 18%, while dollar deposits decreased 4%. As of December 2025, Banco Macro's transactional accounts represented approximately 47% of total deposits. Banco Macro's market share over private sector deposits as of December 2025 totaled 7.9%, 90 basis points higher than December 2024. In terms of asset quality, Banco Macro's non-performing to total financing ratio reached 3.87%. The coverage ratio, measured as total allowances under expected credit losses over non performing loans under central bank rules, reached 119.86%. Commercial portfolio non-performing loans improved 17 basis points down to 0.68% from 0.85% in the previous quarter while consumer portfolio non-performing loans deteriorated 93 basis points in the fourth quarter of 2025 up to 5.23% from 4.3% in the third quarter of 2025. In terms of capitalization, Banco Macro accounted an excess capital of ARS 3.6 trillion, which represented a capital adequacy ratio of 30.6% and Tier 1 ratio of 30.6%. The bank's aim is to make the best use of this excess capital. The bank's liquidity remained more than appropriate. Liquid assets to total deposits ratio reached 73%. Overall, we have accounted for another positive quarter. We continue to show a solid financial position. Asset quality remain under control and closely monitored. We keep on working to improve more our efficiency standards and we keep a well optimized deposit base. At this time, we would like to take the questions you may have. Operator: [Operator Instructions] Our first question comes from Brian Flores from Citi. Brian Flores: I have a first question here on your guidance. I just wanted to know if there is an update on the soft guidance you provided in the last months after the election. I think it was 35% in real terms for loans, 25% in deposits and low teens in ROE. So I just wanted to check if any of these variables in your view has changed. I know it's a very fluid environment in Argentina. So just checking on that. And then a second question just very quick. We saw strong security gains recovering from public securities. So I just wanted to understand how in your view would this be considered? Or how much would be considered recurring in nature and how much stemming from the volatility that we had in the election cycle? Jorge Francisco Scarinci: Brian, this is Jorge Scarinci. Yes, on your first question, yes, we are going to maybe modify a little bit our guidance basically according to local consensus of economists are reducing a little bit the real GDP growth for 2026 to levels of between 2.8% to 3%. And also in addition to that, there is also the consensus is estimating a higher inflation for '26 compared to the one that we were working with in the last quarter of last year that was 20%, and now the new update is 27%. So due to those -- I mean, modifications on those 2 macroeconomic variables, we are also fine-tuning our guidance for growth for 2026. In terms of loans, we're expecting 20% real growth in the calendar year of '26 and deposit growth of 6% in real terms. Also, as you could see in this press release, we are -- we have started to report a kind of reported ROE and ROA and also an adjusted ROE and ROA due to the restructuring charges that we posted in the fourth quarter and we expect some other of this type to come between first and second quarter of '26. So in terms of, I would say, adjusted ROE for '26, we are working with a level of 8% area, basically in terms of ROE and in terms of ROA close to 1.8% to 2% area, right? So that is answering your first question in terms of guidance. In terms of your second question, in terms of the security gains, I would say that one of the main drivers for the weak quarter that we posted in -- as of September was a bad performance of the bond portfolio related to the increased volatility in the macroeconomic variables due to the election that -- or the midterm election that took place the 27th of October. And what we saw in the fourth quarter was a reversal of trend, some declining nominal and real interest rates and some rebound in the local peso securities that we hold in our portfolio. So I would attribute most of this to the repricing that we saw in the fourth quarter as a kind of an opposite effect compared to the one that we saw in the third quarter of last year. Brian Flores: No, super clear. Just a quick follow-up on maybe the gap between loans and deposits, right? Because it used to be, I would say, narrower. Now it's widening. So I just wanted to understand, you are seeing basically a change in maybe the savings capacity of people, if you think maybe this, as you mentioned, this lower or slower GDP is translating into this change in behavior? Or any color you could give as to why deposits are at this expectation that is maybe significantly lower than the previous base case? Jorge Francisco Scarinci: Well, first, we continue to hold almost 24% of total assets in terms of securities that could be used in case of that we need to finance the gap between the increasing loans and deposits. Even though that we continue to have a loan-to-deposit ratio, of course, below 100%. So even though in relative terms, we are growing or we are expecting to grow more in loans and deposits, but in absolute terms, the difference is not going to be the much. And besides of that, we are forecasting that, for the moment, real interest rates to be slightly positive, and that's why we are not forecasting a big increase in terms of deposits in 2026. Operator: Our next question comes from Lindsey Shema from Goldman Sachs. Lindsey Marie Shema: First off, I mean, we saw some continued deterioration in consumer asset quality and also seems like the macro scenario is still a bit tougher, but that there was some incremental improvement in cost of risk. So maybe just how are the early indicators looking for asset quality? And what makes you feel a little bit more constructive on cost of risk going forward? Or do you see that kind of deterioration coming back? And then for my second question, on the political landscape, it seems like labor reform is on track to be enacted. The vote is tomorrow. What do you think is next on the administration's agenda? And what do you as a bank really need to see to give you greater certainty going forward? Jorge Francisco Scarinci: Lindsey, in terms of your first question, what we are seeing is that the speed of the deterioration of the consumer portfolio has been reduced. As you could see in terms of cost of risk, we posted slightly below levels of the one that we posted in the third quarter. In the first quarter, we are seeing kind of, for the moment, neutral news. I would say that it's kind of relatively stable in terms of the figures that we are seeing at least as of January compared to December. However, going forward, we expect to have maybe more positive news by the end of the first and second quarter of this year. That's why we are forecasting for 2026 a cost of risk of 5.2%. This is slightly below the 5.6% that we posted in the calendar year of '25. In terms of... Juan Parma: Maybe Jorge, if I may add to that, this is Juan Parma. We took early action during 2025 by constraining loan origination back from April last year. What we are seeing is that in terms of new vintages and new origination, the performance of the vintages is better than the portfolio as a whole and back to the levels we used to see in 2024. So that recomposition of the portfolio with better new origination is what is actually driving the stabilization and positive outlook in terms of cost of credit. Basically, it's what we are seeing in the new originations that we tightened up since around April, May last year. Jorge Francisco Scarinci: And Lindsey, in terms of your second question, I would say that in the last 3, 4 months, the government, I would say that is leading the agenda, managing all the political issues going on, like introducing the labor reform at the end of '25 and that was approved by the Congress in January by deputies in general and in February, deputies in particular, and also expected to have the Senate to approve it. Also, we expect our tax reform to come at some point in the next month or so. I would say that next Sunday, that is going to be the 1st of March, President Milei is going to open the ordinary session of the Congress and he is going to, in our view, give a speech on the coming reforms or projects to be sent to the Congress. So I think that we have to be clear-eyed for his speech next Sunday in order to have a more, I would say, better landscape of what's going to be on the agenda of the government in 2026. Juan Parma: But I would say, adding to Jorge, that what we have seen after last year, a very positive outcome in terms of the midterm elections is the government using its political capital and its majority in Congress to push on their strategy to keep a tight monetary policy and a tight FX policy, focusing on reducing inflation while maintaining fiscal surplus and solving for the competitiveness of the economy by deregulation. So that's their strategy. They will try to improve the competitiveness of the economy by reducing the Argentina cost, right, both in fiscal terms with the tax reform, labor costs with the labor reform using their renewed political capital after the midterm elections. The recent approval that needs to be finally validated by Congress this Friday on the labor reform is a demonstration of that. And as Jorge was mentioning, we expect President Milei in his opening speech of the Congress session for this year to outline what is his agenda in terms of pushing reforms using this political capital through the year, and we expect that to continue. There is one comment that, I think, is relevant for the banking industry in the labor reform, by the way, which is that as part of the labor law, there was a relevant article that defined whether if banks or fintech wallets are the ones to pay salaries. And it was a positive outcome for the banking industry because the law confirmed that the only way to pay salaries or pension payments in Argentina is only through bank accounts, not through wallets or digital accounts. So that's a good outcome for the bank and for the industry as a whole. Operator: Our next question comes from Yuri Fernandes from JPMorgan. Yuri Fernandes: Congrats on the profitability recovery in the quarter. I would like to understand a little bit just the mark-to-market on the securities, like the trading gains. Like this line is always volatile, right? And it's hard to predict but if you can help us understand how to better think this line, how to better model and what drove like the -- probably the sovereign bond in Argentina, but I would like to understand also what drove the gains during this quarter. And then I can ask a second quarter regarding deposits. I guess I heard well, the 6% real growth. It sounds a little bit low, right? I think expectations for the industry was that deposits would still grow, I don't know, 20%, 25% in real terms. So my question is how to grow loans, right, with such a low potential growth of deposits? If you are seeing any change in reserve requirements. So just trying to understand a little bit like the message on liabilities. Jorge Francisco Scarinci: I will start by your second question. Yes. Basically, I mean, I think I answered before, why we're expecting a 6% real growth in deposits on the fine-tuning of macroeconomic variables and also on slightly narrower positive real interest rate expected for '26. Even though that, we are expecting to grow loans by 20% in real terms. This is slightly below what we grew our loan book in '25. '25 was a great year, 40% in real term was a great year. And again, we have, as I mentioned before, this securities portfolio that in the case that loans are growing above what we are expecting can be used to finance the gap if deposits are growing at 6% and not growing more than that. In terms of your first question, it is not very easy to answer. I would say that because we have a combination of, I would say, 68% of our bonds that are tied to inflation and another 32% which are tied to variable rates. I would say that the best way to model this is what you are expecting for domestic prices or I mean, for inflation or the wholesale rate going forward. So that is going to be maintained. You are going to see a kind of [indiscernible] and steady income on a quarterly basis on our bond portfolio. However, if you are expecting some volatility there, on ups and downs that is going to affect the pace of the bond gains on a quarterly basis. Operator: Our next question comes from Pedro Leduc from Itau BBA. Pedro Leduc: We see NIMs recovering almost halfway here. At the same time, we're seeing still some credit quality pressures. Question to you is when we think about risk-adjusted NIMs for 2026, I know the average for 2025 is a bit weird to look at. But if you could help us understand a bit if the fourth quarter is a good starting point for us to build upon for risk-adjusted NIMs and what the drivers are for us to look at this line in 2025 -- '26? Jorge Francisco Scarinci: I would say just as a starting point, the fourth quarter is kind of a reasonable measure. Going forward, we're expecting a little bit of pressure on rates, maybe on margins a little bit. So we finished '25 with a net interest margin on the area slightly above 20% and 21.5% approx. We're seeing this maybe in the level of 20% for '26. And as an opposite effect, we are seeing slightly below cost of risk in '26 compared to '25. So as overall, I would say that slight compression on the NIM adjusted by credit quality in '26. Pedro Leduc: Versus the average of '25, no, but from the starting point. Jorge Francisco Scarinci: Yes, from the starting point, yes. Operator: Our next question comes from Pedro Offenhenden from Latin Securities. Pedro Offenhenden: I wanted to ask on -- you mentioned additional personnel expenses in the following quarters. Could you help us to frame this remaining impact as how much of the total restructuring costs were already recognized this quarter? Juan Parma: So maybe you can talk, Jorge, about the restructuring costs we booked in '25 and how much of that is still to benefit '26 and we can talk about what to expect going forward. Maybe I can take it both of it. From the ARS 82 billion that we booked in '25 concentrated in the fourth quarter, there are still ARS 36 billion of that, that will help personnel exits that will benefit '26. In terms of additional restructuring costs, you should expect similar numbers for the following quarters. But you should note that the condition for us to report an expense as a restructuring cost is one that will take out operational expenses on a permanent basis. So the likes of reduction in personnel that won't be replaced. That's what we define by restructuring costs. That's why in the following quarters, you should expect us to continue reporting with the same type of language being consistent to the point that restructuring cost is cost to take us out cost on a permanent basis. And in that sense, reporting or talking about reported and adjusted results and reported and adjusted ROEs, but we expect to continue in the following quarters with this action, which we believe is positive because it will end the year with a lower recurrent cost base for the company. And back to the previous point, compensating the margin compression that Jorge was talking about. That's why we are doing as inflation goes down, rates go down, margins compress, we are reacting on the cost side to compensate this effect. Operator: Our next question comes from Carlos Gomez-Lopez, HSBC. Carlos Gomez-Lopez: First, to confirm what you said earlier, which is that adjusting for the restructuring charges, you think that something like an 8% ROE for the year is realistic. Second, I would like to know if you have any update on your exciting acquisition of Personal Pay? Any update you can give us versus the call that you had 2 or 3 weeks ago? And finally, when you look at loan growth, I mean it has been coming down and down and down. And I mean, you are already giving us the expectation that it will be 20%, but actually 20% is an improvement from where we are today, when do you see the trend breaking and starting to see some more activity in the system? . Jorge Francisco Scarinci: Thanks, Carlos. On the first question, yes, we think that including all these restructuring charges and all the guidance in terms of growth in both loan deposits et cetera, we are expecting to deliver an adjusted ROE in the area of 8% in '26. I'm going to the third question. I mean, our main business is to lend money. And of course, we would like to lend as much money as we can, of course, considering credit risk and all that. But of course, what we are not seeing for the moment is the economy growing at very high rates. So the guidance that we are giving is like between maintaining share and gaining a little bit of basis points in share. We are not reducing our share in terms of loans. And you can see in the quarter that we reported that we are growing the shares in both loans and deposits. So the idea is to continue in that path going forward. But of course, we need the macro economy of Argentina to push harder in order to see a high level of loan growth. In terms of Personal Pay... Juan Parma: I can comment on that, Jorge, thank you. Yes. We announced the acquisition of 50% of Personal Pay, which is Telecom's wallet. This was a cash-in transaction. So all our equity investment went into the company to develop the company. This will be built as a bank-as-a-service business where we will, on one hand, work on engaging the around 30 million customers that Telecom have to use the wallet and then do financial intermediation with a bank-as-a-service model. As I think have explained when we talked about this with some of you in the specific call we had on Personal Pay about 3 weeks or 4 weeks ago, we have the option to do this through Banco Macro or do this through an existing or a new subsidiary of Banco Macro so we are considering those options while we build the technology and the services to connect the wallet with the bank as a service. So more to come on this front, and we will update you accordingly once we know how exactly this bank as a service model will be built. Operator: Our next question comes from [indiscernible]. Unknown Analyst: I wanted to ask regarding the restructration, if you have any target for headcount and for a number of branches by the end of 2026 and which is the impact in ROE because of these restructuration charges? Jorge Francisco Scarinci: I would say that in terms of both headcount and branches, we're expecting a reduction in both similar levels than the one that we saw in '25 just to give you some guidance there. And I would say that approx the impact on ROE in terms of these restructuring charges are approximately 3 percentage points. That is what we are calculating on '26 on the impact on restructuring charges on ROE. Unknown Analyst: Okay. So just to check, reported ROE will be around 5%, then right? Jorge Francisco Scarinci: Approximately in the area of 5% and they adjust it in the area of 8%. Operator: Our next question comes from Matias Cattaruzzi from Adcap. Matias Cattaruzzi: I wanted to ask you a question about the recent rise in dollar liquidity in the system. As it improved, how are you thinking about the possibility of gradually expanding USD lending beyond traditional dollar generating clients? Under what conditions would Macro feel comfortable lending dollars to nondollar earners, if at all? Juan Parma: So I will answer from the bank's perspective. Then there is the question, which is around the enablement of this, which is a question around regulation. So as I listen to your question, I understand you're well-versed on how the regulation is today. So let me start by that in the benefit of others that may be not that familiar with it in case that's the case. Today, in Argentina, you can only lend dollar from depositors to clients that have their revenue streams in dollars. So basically, exporters. So that limits your ability to deploy dollar deposits to only those type of customers. With your own dollars, not the dollars from depositors, but the dollars from the bank, you can lend to anyone. The reality is that if you take the total deposits in the system denominated in dollars, they move from being 1/4 of total deposits measured all in dollars, 25% to now 37%. So there is an advancement of dollar-denominated deposits in the total deposits of the banking system as a whole. With this limitation, eventually, this creates a bottleneck because you cannot deploy those reports. So the government is exploring alternatives to evolve from that situation. If that was the case, and I cannot say when and if this will happen because this depends on a change on regulation, and I cannot speak to that. We are prepared to lend because it will be -- if the regulation changes, then it will be up to each bank to define the appetite to use that space and lend their dollar capacity. We are bullish on that. We believe that we can work with high-quality customers, both on the commercial segment and on the individual segment to deploy that lending -- that dollar lending capacity. So we believe that if that regulation evolves allowing this to happen, this will turn into something positive for the bank because we are in the bullish side of the market regarding that. But we depend on the regulation to change or to evolve to take advantage of that opportunity. Operator: Our next question comes from Ernesto Gabilondo from Bank of America. Ernesto María Gabilondo Márquez: Congrats on your results. Very close to a recurring ROE of 7% in 2025, if excluding the restructuring costs. My first question is a follow-up on the 2026 guidance. Any color on NPLs? Can you confirm you have reached the NPL peaks? And when do you see them trending down in 2026? Any color in terms of fee income growth and also in recurring OpEx growth, so removing the restructuring costs, how do you see recurring OpEx growth? And also, when do you see the ROE returning again to high teens? Can you walk us through over the next years? And my second question is on your loan growth expectations. We have seen a lot of investments announced in Argentina. So in your case, which would be the sectors that you are financing or that you are seeking to finance leveraging on these announcements? And especially you have a very strong capital base, so maybe you have the opportunity to finance projects with longer duration when compared to your peers. And the last question is in your capital ratio. How do you see your capital allocation this year in terms of buybacks, dividends or potential M&A activity? Jorge Francisco Scarinci: I will try to answer all your questions. In terms of asset quality going forward in the same trend that we are seeing the cost of risk lower in terms of the level that we posted in average in '25. We're expecting also NPLs to go in the area of between mid to low 3s. That is in accordance with the 5.2% cost of risk that we are expecting for '26 compared to the 5.6% that we saw in '25. Basically, in terms of loan growth that you are on to asking, I would say that, yes, there are some investments that have been announced in Argentina in different sectors, mostly in energy, mining. Some of those investments are going to be done this year. Others are going to be done in '27, '28, et cetera. Of course, and it is also related to the other question that you asked, we have the best capital base in Argentina. And of course, we are expecting and prepared to finance those projects this year and following years. Of course, it is pretty sure that the bank wants to make the best use of this excess capital. And we have been trying to grow as much as we can in the past -- than we could in the past and going forward also in terms of dividend policy last year and also this year, we have a 100% payout ratio in terms of current dividend, that is this year is what the board is going to propose to the shareholders' meeting. And of course, we have to wait for the Central Bank to see if that dividend is going to be paid in 1 installment, 3, 6 or whatever. But again, we are working in order to clean down this excess capital going forward with the combination of organic, inorganic growth, cash dividend and if it is the case, on buyback programs, such as the one that we posted or put in place in the past. So it is pretty sure that we are very well prepared and positioned to take advantage of any positive news, both in the macroeconomic scenario and also within the financial sector in '26 and onwards. In terms of when we are going to be seeing mid-teens in terms of ROE, one thing to take into consideration is that maybe in 2028, Argentina would be entering to, again, I would say, nominal reporting because of '25, '26 '27, Argentina in the 3 years in a row we are having less than 100% inflation, we are going back to noninflation adjusting reporting. So we should be reporting nominal numbers and, of course, ROE since '28 onwards. So I think that's between '28 and '30, I think that is going to be the year where we are going to see macro delivery mid-teens ROEs and maybe something above that. Juan Parma: And I would add to Jorge's comments that by the end of 2027, our restructuring program will enter in full effect in terms of being able to capture the benefits of the restructuring. So the restructuring costs that we talked about will continue mostly to '26, part in '27. So by the end of '27, entering into full effect in '28, we will be able to capture and harvest the full benefits of the restructuring program, okay? If you read into our press release and results announcement, you will see that the ARS 82 billion of restructuring costs are related with costs that in '25 were ARS 49 billion. So we cannot talk here about future savings of these actions, but you can read into that. So if we continue with this, you can also read into how much that full effect of restructuring costs could mean in '28. Coupled with what Jorge mentioned about the stopping if Argentina continues in the inflation reducing trend, moving from real ROEs to nominal ROEs in '28. So by then, I'm pretty confident that we will be able to reach the mid-teen ROEs going forward. You answered -- Jorge mentioned back to the question on financing projects, longer tenors and so forth. Jorge mentioned about the capital strength of the bank. I would also add the liquidity strength and funding strength from the bank because after the successful placing of negatiated obligations that we did last month, we have also extended our funding capacity to support such projects for -- in a range of -- for 3 to 4 years. So we expect that. The other reality is that companies in Argentina have been benefiting from the access to capital markets and issuing a substantial amount and a record amount, I would say, of U.S. dollar-denominated debt. But we expect that after that cycle, then private lending -- the private lending market will turn on, particularly if rates in the U.S. at some point go up, we expect this to be an opportunity for that. So we are keeping that liquidity remaining ready to support the energy sector, the mining sector, the infrastructure sector of Argentina that at some point will start to get traction, we believe. Ernesto María Gabilondo Márquez: This is super helpful. Just a follow-up in terms of the NPL. So just to confirm, the NPL already peaked in the fourth quarter and you're expecting, for example, NPL to go to low to mid 3% and cost of risk to 5.2%. But how should we think about the timing throughout 2026? Is this something that will start to go down in the first quarter? Or is this something that will go down more in the second half of this year? So just a little bit of color on that. Jorge Francisco Scarinci: Yes. I think that we might see numbers more on the positive in the second half of '26, some stable numbers in the first half of '26. Operator: Our next question comes from Kaio Prato from UBS. Kaio Penso Da Prato: I have a quick on my side, please. Just to follow up on loans. If you are already seeing any pickup in loans sequentially because it has been weak on a quarter-over-quarter basis or if this is expected to accelerate more towards the second half? And second is still on loans. You mentioned about this reduction in overall growth expectations and talked about GDP. But is there any segment that you are seeing specifically slow down? Or if this is mostly related to our appetite on consumers? So just some breakdown between both would be good as well. Jorge Francisco Scarinci: We continue to see more service sectors as I mentioned before, energy and within energy, oil, gas and then you have mining, agribusiness sector. Those are the most active. The ones that are lagging a little bit are, I would say, construction, could be infrastructure for the moment, even though prospects for '26 of infrastructure are positive. Maybe massive consuming sectors are also not having a good performance. We expect these sectors as I commented to be the other leaders or the worst performance in '26. Juan Parma: I would also add that there is a bit of a binary situation in terms of credit quality and risk in an economy which is opening, although deregulation at some point will come and help by reducing the Argentina cost. It is clear that there will be winning sectors and losing sectors. Probably on the winning side, is all the sectors around mining, energy, agriculture, also services, to some extent, commerce retail if economy starts to pick up. The manufacturing sector is the one that is under the spotlight now, and we are seeing some specific manufacturing sectors like the textile sector, the clothing sector, like the automotive sector suffering because of the opening of the economy. So another lens to look at is not only where we -- how much we grow, in average, but be selective given this significant change in the structure of the micro economy by sector in Argentina. Kaio Penso Da Prato: Yes. Okay. But in terms of the loan, it's clear. But in terms of the loan growth, it's already improving sequentially? Or should we expect more of this growth towards the second half of the 2026? Jorge Francisco Scarinci: I think well, always the first quarter is the seasonally lowest. So I think that it's going to be in a gradual increase trend towards the end of '26. Operator: [Operator Instructions] There are no more questions at this time. This does conclude the Q&A section. I will now turn it over to Mr. Nicolas Torres for any final remarks. Nicolas Torres: Thank you all for your interest in Banco Macro. We appreciate your time and look forward to speaking with you again. Have a good day. Operator: Banco Macro's Fourth Quarter '25 Conference Call is now closed. You can disconnect now on, and have a wonderful day.
David Squires: Welcome to Senior plc's 2025 Full Year Results Presentation. And thank you for making the effort to get here. And thanks also go to Deutsche Numis for hosting us here at their facility. And a warm welcome to you for those of you joining remotely. Before we present our results, can I just address the elephant in the room. I'm sure that everyone saw our announcement last Friday regarding discussions with potential offerors. As you will appreciate, it is not appropriate to comment further here other than to remind everyone that there can be no certainty that any offer will be made nor as to the terms on which any firm offer might be made. Please refer to the full statement issued on Friday and restrain yourselves when we get to the Q&A from asking questions that you know we will not be able to answer. In terms of our agenda this morning, I will briefly cover the highlights. Alpna will run through and comment on the results, and then I will give an update on markets, investment proposition and outlook. 2025 was a pivotal year for Senior. We successfully completed the sale of our Aerostructures business to Sullivan Street Partners on the 31st of December 2025, a crucial element in delivering on our strategy to be a market-leading fluid conveyance and thermal management company supplying highly engineered products and systems. As Alpna will show in a few minutes, we had a strong financial performance with both divisions contributing well and our balance sheet is in great shape. That has allowed us to increase our total dividend to 3p per share, an increase of 25% compared to 2024. Trading in the first 2 months of 2026 has started well, and the Board's expectations are unchanged for 2026. And looking ahead, we are on track to achieve the medium-term targets we set out last year, which again, Alpna will demonstrate. So before I talk about markets and outlook, I'll hand over to Alpna to take us through the financial results. Alpna Amar: Thank you, David, and good morning, everyone. I'm pleased to take you through Senior's financial results for the 2025 financial year. It has been a year of strong financial performance across the group with continued momentum in both divisions and meaningful progress towards our medium-term financial targets. With that, turning to some of the key financial highlights. Revenue increased to GBP 738 million, up 6% at constant currency. Adjusted operating profit rose 22% at constant FX to GBP 63.6 million and adjusted operating profit margin expanded by 110 basis points to 8.6% reflecting pricing, volume, increased commercial activity and operational improvements. Adjusted profit before tax was GBP 51.2 million, up 24% at constant currency, and adjusted EPS grew 9% to 9.65p, demonstrating strong underlying earnings momentum. I'm pleased to say return on capital employed increased 140 basis points to 13.1%, reflecting higher earnings. We also achieved cash conversion of 90%, up 400 basis points on the prior year. We have proposed a total dividend of 3p per share for 2025, an increase of 25% year-on-year. So this slide covers the revenue bridge. On a reported basis, revenue grew 4% to GBP 738 million with currency headwinds of roughly GBP 10 million. On a constant currency basis, revenue was up 6%. Looking at divisional performance at constant FX. Aerospace revenue increased 10% to GBP 426 million. Civil aerospace revenue increased 9% year-over-year, largely driven by positive pricing and volume. Defense also had strong growth, up 12% as we continue to see increased volumes for the F-35, the C-130 and other military programs and higher pricing. Revenue from adjusted markets increased 14%, largely driven by demand from the semiconductor equipment market. And in Flexonics, revenue was broadly flat at constant FX. 2025 saw a softening in the North American and European heavy-duty truck market. But despite this, our land vehicle revenue increased 1.6% with the ramp-up of new programs. David will expand on this later. Revenue from power and energy markets decreased by 2%. Higher demand in our downstream oil and gas and nuclear business was offset by lower revenue in upstream oil and gas and other industrial sectors. Moving to the adjusted operating profit bridge. Adjusted operating profit increased 20% despite a modest GBP 1 million FX headwind. Starting with 2024 on the left-hand side of GBP 53 million, Aerospace delivered the largest uplift of GBP 12 million, benefiting from increased pricing, volume drop-through, mix and commercial settlements as well as strong operational execution. Flexonics also contributed positively, supported by strong aftermarket sales in our downstream oil and gas and nuclear business as well as restructuring initiatives. In addition, the contribution from our China joint venture was significantly higher year-over-year. Lastly, performance-related incentives associated with the group's improved results were charged through central costs, largely driving the increase there. We ended 2025 with adjusted operating profit of GBP 63.6 million, an increase of 22% on a constant FX basis. So turning to divisional performance. Aerospace had an excellent year. Book-to-bill increased from 1.17 to 1.21, driven by increasing demand and build rates. At constant FX, revenue was up 10.4%, adjusted operating profit increased 32.5%, resulting in margin expansion of 190 basis points, reaching 11.4%. The Aerospace division delivered on a number of fronts, including positive price increases, closing out a number of commercial settlements as well as achieving operational efficiencies. Demand was strong across civil defense and adjacent markets with Spencer, our U.S. hydraulic fluid fittings business, delivering outstanding growth of 32% year-over-year, further demonstrating our ability to integrate value-enhancing bolt-on acquisitions. During the year, the Aerospace division was awarded new contracts as well as extensions of existing contracts. For example, we secured a multiyear contract for highly engineered aerospace standard parts from Airbus to be manufactured in Europe, and we were also awarded a 3-year contract from an industry-leading distributor for high-pressure hydraulic fittings. Now on to Flexonics, where we delivered a resilient result in softer end market conditions. Book-to-bill went from 1.01 to 0.93, given softer conditions in the heavy-duty truck market, but also due to higher prior year comparative where we had a large project for expansion joints related to a new CATOFIN plant in India. In addition, our aftermarket business in downstream oil and gas tends to have relatively short lead times, and therefore, order flow can be lumpy. At constant FX, revenue increased marginally and adjusted operating margins rose to 11.2% and to 12.1% when including the contribution from our China JV. We benefited from favorable aftermarket mix, particularly in our Pathway business as well as successful execution of restructuring in selected operations across North America and Europe. The China JV performed especially well with our share of profit rising to GBP 3 million from GBP 1.2 million last year. The Flexonics division was awarded a number of important contracts this year. We were awarded the supply of fluid conveyance assemblies for multiple light vehicles across diesel, gasoline and hybrid platforms by a global supplier. In addition, Flexonics was awarded exhaust gas recirculation, coolers on a new engine type to be used on multiple platforms by a leading global manufacturer of heavy-duty trucks. Slide 10 shows the reconciliation of adjusted operating profit to the statutory reported profit for the period for the continuing business. It also highlights our interest and tax charges. Net finance costs increased by GBP 1.3 million due to high interest rates on variable rate debt and higher average net debt in comparison to the prior year. IFRS 16 interest charge on lease liabilities increased by GBP 0.4 million, and we had net finance income from our pension plans of GBP 2.1 million. A tax charge of GBP 11.3 million was recognized on our adjusted profit before tax. We expect the effective tax rate of 20%, 22% for the full year 2025. In terms of reconciling adjusted profit to statutory profit, we had just under GBP 1.6 million of amortization, which was noncash related to acquisitions, site relocation costs of GBP 2.4 million for the transfer of manufacturing from the -- from our U.S. to our cost-competitive facility in Mexico as well as costs related to the relocation of our U.K. innovation center in Wales. We had GBP 7.3 million of pension benefit clarifications. These relate to the U.K. defined benefit pension scheme buy-in which took place in September 2025. As part of the due diligence work undertaken for the buy-in, some historical benefit clarifications were identified. Most of these have already been funded through the pension buy-in process. The remainder will be funded from the GBP 23 million actuarial surplus. We had GBP 5 million of restructuring initiatives, largely related to head count reductions in Flexonics across North America and Europe as well as a result of softer end market conditions in the heavy-duty truck market. We had GBP 0.8 million related to the fair value change on contingent consideration and other related costs for the Spencer acquisition and a GBP 4.5 million tax benefit on adjusting items. After these adjustments, reported profit for the year was GBP 27.3 million. Moving to cash flow generation. Free cash flow increased 37% year-over-year to GBP 36 million. We can see the key drivers here of adjusted operating profit to free cash flow. Starting from the left, we have our adjusted operating profit of GBP 64 million. Add back of depreciation and amortization of GBP 29 million and just over GBP 6 million of other items. Working capital outflow was GBP 8 million, of which GBP 5 million related to inventory build to support customer demand and the balance being a movement in receivables of GBP 14 million and payables of GBP 10 million. Working capital was circa 14% of sales in 2025, partly driven by the timing of customer collections at the year-end. For 2026, we currently expect it to be 18% of sales to support customer demand, predominantly in aerospace. CapEx of GBP 32 million equates to 1.5x depreciation excluding the impact of IFRS 16 depreciation. For 2026, CapEx is expected to be lower at 1.3x as we continue to support growth in both divisions. Operating cash flow amounted to GBP 57 million. We paid interest of GBP 14 million and tax of GBP 7.5 million, giving us GBP 36 million of free cash flow. Our 2025 performance reflects higher profits, strong working capital discipline and CapEx investment to support growth. We remain focused on maintaining excellent cash generation as a core enabler of investment, shareholder returns and balance sheet strength. So what does that mean in terms of net debt? While net debt, including IFRS 16 leases, reduced significantly to GBP 117 million at the year-end, a reduction of over GBP 110 million. Strong free cash flow proceeds from the Aerostructures disposal and disciplined capital allocation contributed to this outcome. You see the opening net debt balance of GBP 230 million on the left-hand side, the free cash flow I talked about of GBP 36 million. We then see GBP 3 million of free cash outflow for discontinued operations, dividends paid of GBP 10 million, share purchases for the employee benefit trust of GBP 7.4 million, joint venture dividends received of GBP 1 million, proceeds from the disposal of Aerostructures and Spencer Aerospace contingent consideration of GBP 108 million as well as other items of GBP 12 million, predominantly leases. And finally, FX giving us our closing position of GBP 117 million. Leverage ended the year at 0.9x, placing us in a strong financial position as we moved into 2026. Moving on to our financing position, which remains strong. We had GBP 294 million of committed facilities diversified across U.S. private placement notes and bank credit facilities during the year. We issued a new private placement note of USD 40 million. We repaid U.S. private placement maturities totaling USD 60 million and GBP 27 million. And in January 2026, we've repaid the GBP 30 million term loan used as a bridge to the Aerostructures disposal. Our balance sheet is strong, liquid and well structured with ample headroom to support growth and disciplined capital deployment. So our 2025 performance demonstrates clear progress towards our medium-term financial targets, across margin, cash conversion and return on capital employed. Group operating profit margin of 8.6% continues to trend upwards. Aerospace margin reached 11.4%, progressing towards our mid-teens target. Flexonics margin of 11.2%, excluding the JV, sits well within our expected 10% to 12% range. We said we would achieve at least 10% even in a down year and 2025 was a test for this given the softer conditions in the heavy-duty truck market. If we include the JV, the margin was 12.1%, which exceeds the range. Return on capital employed of 13.1%, steadily advancing towards a 15% to 20%. Cash conversion exceeded the 85% target, delivering 90% in 2025. As you can see, we remain firmly on track to deliver against these targets. We underpin the targets with a strong balance sheet. We were comfortably within our target leverage of 0.5x to 1.5x. Our leverage was at 0.9x at the year-end of 2025. Revenue growth of 6% at constant FX in 2025 was in line with our expectation of mid-single digit organic revenue growth through the cycle. Now turning to Slide 15, capital allocation. Our capital allocation framework remains unchanged, disciplined, returns-focused and aligned with shareholder value creation. In 2025, we invested GBP 32.6 million in CapEx to support business growth. This equated to 1.5x. We expect this to trend down to 1.3x in 2026, and our medium-term expectation continues to be 1.1x. We invested 2.1% of revenue in research and development in 2025, consistent with our 2% to 3% of revenue target. Dividends of GBP 12.3 million reflects our progressive dividend policy. We are proposing a total dividend of 3p per share in 2025, which is a 25% increase on the prior year and equates to an earnings cover of 3.2x. As stated previously, leverage remains comfortably within our target range. We continue to explore value-accretive bolt-on M&A aligned with our core capabilities. Finally, in view of Rule 2.4 announcement last week, we have postponed the staff, the GBP 40 million share buyback program, which had been due to commence following publication of the full year results. This will be kept under review, and we will make a further announcement as necessary. And with that, I will hand back to David, who will take us through the markets and strategy section. David Squires: Thank you, Alpna. So let's turn our attention to markets. So in 2025, Aerospace represented 58% of the group's revenues and Flexonics was 42%. And as Alpna has mentioned, Aerospace division sales grew 10% on a constant currency basis, and Flexonics grew marginally despite softer land vehicle markets. Aerospace and defense is now 48% of the group, with civil aerospace being around 2/3 of that and defense 1/3, which represents a good growth opportunity. Sales to adjacent markets from our aerospace business was 10% in the full year, with revenues from semiconductor equipment customers increasing. Our business is facing into land vehicle at 25% of group revenues and power and energy 17%, continued to perform well against a mixed market backdrop. Similarly, aerospace was 32% of group's revenue in 2025. This includes both large commercial, regional and business jet sectors. Growth in the end market measured in revenue passenger kilometers or RPKs was healthy at around 5%. And we expect long-term civil aerospace market growth of 3% to 4%, driven by the growing middle classes in Asia as well as fleet modernization and aircraft replacement. We have very good positions on all single-aisle and wide-body platforms as well as most regional and large business jet programs. In 2025, our civil aerospace sales grew 10% at constant FX, driven by improved pricing and higher build rates. Both Airbus and Boeing have record order books with single-aisle and wide-body rates set to increase further this year and beyond, which will drive further growth for Senior. You'll be aware that many countries are committing to higher defense spending. Senior has good content on key U.S. and European military aircraft platforms. In 2025, our defense sales grew strongly 12% year-on-year, and that was driven by higher sales to C-130, F-35 and strong military aftermarket demand. Turning now to Flexonics. We had a strong performance in 2025 relative to end markets. In land vehicles, the new contracts we have won over the last couple of years reached a peak production, which is why our passenger vehicle sales growth is 31% year-over-year compared to market growth of just 1%. And while truck markets were slower in 2025 compared to 2024, particularly in the second half of the year, we did outperform the market in North America, with our sales down 18%, while the market declined 25%. Our European truck sales reduced by 1%, in line with the market. ACT Research are expecting truck markets to continue to be weak in the first half of '26 before starting to recover in the second half of the year. In power and energy, a really strong performance at our Pathway business in Texas led to strong downstream oil and gas and nuclear sales. While upstream oil and gas sales continued to be subdued as we continue to reduce our exposure to commoditized products. At last year's Capital Markets event in March and at our half year results presentation in August we went through our fluid conveyance and thermal management strategy in detail. I won't repeat everything we discussed then, but we have included relevant material in the appendices to enable more detailed discussions on a one-to-one basis. We believe we have a compelling investment proposition. With a century of relevant experience, we can genuinely claim to be experts in fluid conveyance and thermal management. We have truly differentiated products with rich background and foreground intellectual property, coupled with expert design and manufacturing know-how. We operate in attractive and structurally resilient end markets and are well positioned to take advantage of that over the medium term. And we have long-lasting relationships with our customers and are trusted by them to deliver excellent products and to respond with agility when they need our support. Our senior operating system is driving operational excellence and efficiency across the group. And our global footprint with a strong presence in our home markets and world-class facilities in cost-competitive countries is a real advantage. And finally, as these 2025 results have demonstrated, our financial strength with improved performance, strong cash flow generation and low leverage supports investment and shareholder returns. So let me finish by talking about the outlook for Senior. Trading in the first 2 months of 2026 has started well, and the Board's expectations are unchanged for 2026. In aerospace, growth in civil aircraft build rates and increased demand across its other markets is expected to drive further good progress in 2026 and beyond. Flexonics expectations for 2026 are unchanged with robust double-digit margins being maintained when including the JV, notwithstanding the softer conditions in certain end markets. Looking ahead, we are confident of delivering enhanced shareholder value as we execute on our strategy and continue to strengthen our financial performance in line with our medium-term financial targets. So with that, we'll open the floor for any questions, which Alpna and I will be delighted to answer. Any questions? Yes, Tom? Thomas Rands: Thomas Rands from Berenberg. Just 2 questions, if I may. First one, on the Flexonics head count reductions. I think you said that was relating to mainly the Class 8 heavy truck activities. As and when that activity picks up again, how much of that head count do you think will come back in? How much is temporary versus permanent kind of takeout? And then the second one is just on M&A pipeline. How active, what sort of valuations are you seeing? Anything interesting in the... Alpna Amar: I'll take the first one. Thanks for that, Tom. In terms of Flexonics headcount, so what we've said is that we took GBP 5 million of cost out in 2025. It predominantly related to Flexonics. In terms of savings, we have about GBP 4 million of savings in 2026. And it really depends on if and when that market comes back as in terms of timing, as to how much of that cost comes back, but some of it was structural costs that was taken out, and some of it was temporary costs that was taken out. So it was a bit of both. David Squires: Yes. And I think on the M&A side, look, we've got -- I got Nigel Major, our VP of Strategy, here with us today. So Michael -- sorry, Nigel, not Michael. Nigel maintains a really good and healthy pipeline. We've been quite focused on that for some time. And when you went through our capital allocation policy, which looks at both returning cash to shareholders when it's sensible to do so, but also looking at bolt-on accretive M&A. So I think in the appendix, you'll see our acquisition heat map where we lay out those areas that we're most interested in. But I think the Spencer acquisition has been a great success. There's a lot of growth yet to come from that acquisition and everything else that sort of encouraged within the business such as working with our colleagues in Ermeto in France to develop their range of products with help from Spencer. So that's kind of a typical type of acquisition we do, really looking at products in aerospace or industrial markets that are bespoke. They have got high design content and have decent margins, good returns on capital and really facing into sort of the attractive markets we're currently facing into. So think of it as bolt-on accretive M&A that we'd be most interested in. Not rushing out to do anything. But certainly, we maintain an active pipeline. Richard Paige: It's Richard Paige from Deutsche Numis. Just 3 from me, please. Just on aerospace. Obviously, really strong margin performance in 2025. I think back to the Capital Markets Day, you spoke about pricing being obviously half of that and 80% covered with long-term agreements at that point. Has that progressed at all on that side? On the second one, strong performance in the joint venture in China. Is there anything exceptional in that, that we should be aware of? And then just on the third point, semicon, obviously, a very strong outlook and strong performance you've had this year. Could you just remind us of the lead times in that business for you, please? David Squires: Yes. So on the pricing side, yes, those -- well, remember, Richard, there's 3 elements to the margin progression up to the mid-teens where roughly half of it come in pricing, a quarter from operational efficiency and a quarter from volume. We made good price -- good progress on pricing last year. Some of the pricing we'd already done cut in last year, some of it cuts in next year as well. So we've got one big negotiation left to do that we're in the midst of, and we would anticipate that concluding this year, and that's the bulk of the long-term agreements. We've got a lot of purchase order business, spot business. So that gets priced as it goes along. And then on an ongoing basis, we'll have contracts coming up for renewal. So -- but we've got a very good approach to pricing now. Look, it's fair we always look for win-win solutions with our customers, but we're absolutely on track to achieve our objectives from a pricing perspective and that gives us half of that margin improvement. So it's in a good place. On the JV in China, yes, it's a good fun business. And the -- our joint venture partner, PPM, works very closely with us. They're primarily focused on the land vehicle business, a lot of it is passenger vehicle, but they also do truck business. Cummins were in China almost before any other Western company, and they asked us to set up this facility long before I joined the company. And it's kind of been bubbling under, but it's really now holding its own. So some fantastic products. One of the products they made last year that helped. I didn't know, but in the steering column, you have a little bellow. So if you hit the steering wheel in the crash, the bellows absorbs the impact and allows it to fold. So we won all of that business because the previous supplier for our customer wasn't performing very well. And our team in China developed prototypes qualified in record time and that led to all of the business being awarded to us. So that was one of the reasons why we did really well last year, and we'll continue to do so. But that's just one example. And in fact, this particular customer now wants us to build the same product in the joint venture facility in Mexico for all the North American business. So a really good example of how we've been able to progress our business there. So there are good cost competitive location, but really great at engineering as well. I'll keep going. Semiconductor -- yes, semiconductor, strong demand. Our main customer is Lam Research. Out of our Meta Bellows facility, Lam has been doing well. We've been doing well. The product -- from a standing start, it's probably 4 to 6 months. But because we've got ongoing forecast orders, the actual cycle time through the factory is nearer 6 weeks. So we got pretty good forecasts from Lam. We monitor what's happening in the industry more generally. So we can respond quite quickly if the demand goes up if that was where your question was going. Yes. Andrew Humphrey: It's Andrew Humphrey at Peel Hunt. Just a couple, if I may. One to follow up on Richard's question on the aerospace. You've obviously highlighted pricing, volume, mix, commercial settlements all been pretty strong positive drivers in '25, contributing to that result. Pricing, you've obviously talked about the agreements continuing to come through there this year and next. Volume, it feels like it's in a pretty good place, given the reporting that we're seeing everywhere. I wanted to ask commercial settlements, I guess, can't model those, but I wanted to ask about mix in the light of your comment on spot business rather than contract business. It does feel like kind of volumes have picked up maybe a little bit ahead of what we were expecting. Does that mean sort of more spot business for you? And does that tend to be positive for margin? And yes, let me pause there. I have a couple of more. David Squires: Yes. I think from a volume perspective. So worth reminding what I said in the presentation there. If you look at our aerospace business now that we have sold structures, we're about 1/3 large commercial aircraft, 1/3 regional and biz jet and a 1/3 defense. So slightly different growth characteristics in those 3 sectors, but they were all strong last year. In fact, we did see good military aftermarket business last year, and we see that sort of continuing at the moment. So that's one of the things that helps. Otherwise, I think our growth was where we thought it would be coming through on the civil side with those rate increases, we'd expect that to continue. So far, the demand signals we're seeing from Boeing and Airbus are what we would expect. Andrew Humphrey: Great. Maybe on Flexonics then as well. A couple of things there. Obviously, we had the ACT numbers back around Q3, indicating like challenges ahead for '26. I think you talked a lot about that. I wonder we're now sort of nearly 6 months down the road from there, I wonder how the early signs that you're seeing with customers compare that view from back in October, November time. And then also on Flexonics on the oil and gas side, clearly, it's kind of early days given events over the weekend, but it also feels like a few parts of the market have been positioning for disruption in the Middle East for a few weeks now. I wonder what early indications you're seeing from customers there. David Squires: Okay. So on the heavy-duty truck side, first of all. So ACT are currently predicting a 3% growth in 2026, but that's really a game of 2 halves there. If you look at year-on-year, it's significantly down in the first half of the year with the recovery starting in the second half of the year. So we'd like to be a bit further into the year before we call it what we really think is going to happen, that would be great. If we do get that strong recovery come in the second half of the year, but it's off a pretty low comparator remember. So far, our expectations are unchanged, but we're monitoring that very carefully for anything that might change. So first half down, and we're expecting the second half to be up a bit. Let's hope it improves, it might improve. We'll see. And then oil and gas, gosh, it really is a bit early to be answering that one about the disruption by current events. I think for us, what's important is more downstream oil and gas. We've really moved away from -- we had one business that supplied parts that used to sit on top of drill bits for downhole drilling, and we've really moved away from that because the product was quite commoditized. A lot of it have been offshored. It's not that important to us now. So what is important is industrial process control, downstream oil and gas, the huge expansion joints that go into refineries and so on. That's predominantly all aftermarket business. So as long as people are running CATOFIN plants, refining, running nuclear plants and in power and energy, then we'll continue to get good aftermarket from that. What we don't have this year is the big anchor project we had in the '24, start of '25 for the Government Authority of India Limited, which was our new CATOFIN plant. So this year, it's really all that repairs, spares, emergency callouts, et cetera. So it's quite a short cycle business so far, so good. Andrew Humphrey: And maybe finally on FX. I think [ 131 ] to FY '25, clearly kind of more of a headwind this year. Any additional actions that we're taking to accommodate that? Alpna Amar: In terms of FX, I mean, if I look at where our earnings are at, I mean, 2/3 our business is in the U.S. And so yes, there would potentially be an FX headwind in 2026. And yes, so I mean we are looking to make sure that's baked into our pricing, that we are taking the right actions locally to do that. I mean -- and it's mainly a translation risk in terms of how we transact with our -- in our businesses. It tends to be local for local. David Squires: Any more questions? Alex, no questions today? Alexandro da Silva O'Hanlon: Can I ask a couple of? David Squires: Yes. I can see them on the top of your tongue. Alexandro da Silva O'Hanlon: Good to put me on the spot. Alex O'Hanlon, Panmure Liberum. If I ask a couple of quick questions. Firstly, on the working capital absorption out, you showed that there was good progress there to 13.5% and indicated we should see that going back up to 18% in FY '26. How should we think about the range for the medium term? Where should that sit? Alpna Amar: So I mean it will probably be somewhere in between, Alex. So in terms of '25, the working capital was impacted by some -- by collectibles that happened at the year-end in terms of customer receipts. At the moment, we think it will be about 18% for FY '26. We hope we'll come in better than that, but that's where it's standing today. And then in terms of the medium term, we hope to get that down over the 3 years. We're making good progress against that. But at the same time, we are seeing that demand come through in aerospace. So we will need to support to ramp that -- support that ramp up. David Squires: Alpna drives the business very hard on their inventory as you can imagine. Alexandro da Silva O'Hanlon: No, definitely. And then just one other question. In terms of aerospace, I mean, we've kind of picked apart the margin and the benefits there already in a lot of detail. But is there any further information you can give us on how much the benefit from contract settlements was in FY '25, when we're thinking FY '26, it could be a headwind if there's a non-repeat? David Squires: Yes, there was a few million there. I think what we talked about was an insurance settlement in the first half year, that was GBP 3 million. I think we said that. So -- but I will say there's always one-offs. Alpna Amar: Yes. I mean we do push the businesses at the year-end in terms of closing out any customer negotiations and getting things settled as does any business. And the team did a great job in 2025 of doing that. And as David said, there's always that you have that every year in any business. So it's -- we don't disclose the exact amount, but it was -- yes, it was a good number. David Squires: And that's baked into our guidance as well, aren't those... Alpna Amar: Yes, that's baked in. David Squires: Okay. Any last questions? Yes, Tom. Thomas Rands: Thomas Rands again from Berenberg. Just one follow-up just on your comment around military aftermarket being strong. We always think of Senior as an OE, kind of not an aftermarket kind of play. What was driving that within military? And are there any other opportunities elsewhere? I was always thinking no, but these things [ possibly happening ] now again. David Squires: Yes. So as a percentage now it's slightly higher because the aftermarket we do have is within our fluid conveyance businesses. So business like SSP in California, Metal Bellows in Boston have decent military aftermarket, C-130, for example. Think how many C-130s are flying there. And we do get aftermarket associated with that for our international customers as well as our sort of U.S. domestic customers. So that -- there's always an ongoing level. And at the moment, that was increasing last year, and we see that continuing to be strong. Andrew Douglas: Are there opportunities elsewhere? David Squires: Yes. I think we're always pursuing more opportunities to increase that aftermarket as part of our growth strategy for sure. Okay. Thank you very much, everybody. I really appreciate you taking the time to come this morning. Look forward to following up with you. Alpna Amar: Thank you.
David Squires: Welcome to Senior plc's 2025 Full Year Results Presentation. And thank you for making the effort to get here. And thanks also go to Deutsche Numis for hosting us here at their facility. And a warm welcome to you for those of you joining remotely. Before we present our results, can I just address the elephant in the room. I'm sure that everyone saw our announcement last Friday regarding discussions with potential offerors. As you will appreciate, it is not appropriate to comment further here other than to remind everyone that there can be no certainty that any offer will be made nor as to the terms on which any firm offer might be made. Please refer to the full statement issued on Friday and restrain yourselves when we get to the Q&A from asking questions that you know we will not be able to answer. In terms of our agenda this morning, I will briefly cover the highlights. Alpna will run through and comment on the results, and then I will give an update on markets, investment proposition and outlook. 2025 was a pivotal year for Senior. We successfully completed the sale of our Aerostructures business to Sullivan Street Partners on the 31st of December 2025, a crucial element in delivering on our strategy to be a market-leading fluid conveyance and thermal management company supplying highly engineered products and systems. As Alpna will show in a few minutes, we had a strong financial performance with both divisions contributing well and our balance sheet is in great shape. That has allowed us to increase our total dividend to 3p per share, an increase of 25% compared to 2024. Trading in the first 2 months of 2026 has started well, and the Board's expectations are unchanged for 2026. And looking ahead, we are on track to achieve the medium-term targets we set out last year, which again, Alpna will demonstrate. So before I talk about markets and outlook, I'll hand over to Alpna to take us through the financial results. Alpna Amar: Thank you, David, and good morning, everyone. I'm pleased to take you through Senior's financial results for the 2025 financial year. It has been a year of strong financial performance across the group with continued momentum in both divisions and meaningful progress towards our medium-term financial targets. With that, turning to some of the key financial highlights. Revenue increased to GBP 738 million, up 6% at constant currency. Adjusted operating profit rose 22% at constant FX to GBP 63.6 million and adjusted operating profit margin expanded by 110 basis points to 8.6% reflecting pricing, volume, increased commercial activity and operational improvements. Adjusted profit before tax was GBP 51.2 million, up 24% at constant currency, and adjusted EPS grew 9% to 9.65p, demonstrating strong underlying earnings momentum. I'm pleased to say return on capital employed increased 140 basis points to 13.1%, reflecting higher earnings. We also achieved cash conversion of 90%, up 400 basis points on the prior year. We have proposed a total dividend of 3p per share for 2025, an increase of 25% year-on-year. So this slide covers the revenue bridge. On a reported basis, revenue grew 4% to GBP 738 million with currency headwinds of roughly GBP 10 million. On a constant currency basis, revenue was up 6%. Looking at divisional performance at constant FX. Aerospace revenue increased 10% to GBP 426 million. Civil aerospace revenue increased 9% year-over-year, largely driven by positive pricing and volume. Defense also had strong growth, up 12% as we continue to see increased volumes for the F-35, the C-130 and other military programs and higher pricing. Revenue from adjusted markets increased 14%, largely driven by demand from the semiconductor equipment market. And in Flexonics, revenue was broadly flat at constant FX. 2025 saw a softening in the North American and European heavy-duty truck market. But despite this, our land vehicle revenue increased 1.6% with the ramp-up of new programs. David will expand on this later. Revenue from power and energy markets decreased by 2%. Higher demand in our downstream oil and gas and nuclear business was offset by lower revenue in upstream oil and gas and other industrial sectors. Moving to the adjusted operating profit bridge. Adjusted operating profit increased 20% despite a modest GBP 1 million FX headwind. Starting with 2024 on the left-hand side of GBP 53 million, Aerospace delivered the largest uplift of GBP 12 million, benefiting from increased pricing, volume drop-through, mix and commercial settlements as well as strong operational execution. Flexonics also contributed positively, supported by strong aftermarket sales in our downstream oil and gas and nuclear business as well as restructuring initiatives. In addition, the contribution from our China joint venture was significantly higher year-over-year. Lastly, performance-related incentives associated with the group's improved results were charged through central costs, largely driving the increase there. We ended 2025 with adjusted operating profit of GBP 63.6 million, an increase of 22% on a constant FX basis. So turning to divisional performance. Aerospace had an excellent year. Book-to-bill increased from 1.17 to 1.21, driven by increasing demand and build rates. At constant FX, revenue was up 10.4%, adjusted operating profit increased 32.5%, resulting in margin expansion of 190 basis points, reaching 11.4%. The Aerospace division delivered on a number of fronts, including positive price increases, closing out a number of commercial settlements as well as achieving operational efficiencies. Demand was strong across civil defense and adjacent markets with Spencer, our U.S. hydraulic fluid fittings business, delivering outstanding growth of 32% year-over-year, further demonstrating our ability to integrate value-enhancing bolt-on acquisitions. During the year, the Aerospace division was awarded new contracts as well as extensions of existing contracts. For example, we secured a multiyear contract for highly engineered aerospace standard parts from Airbus to be manufactured in Europe, and we were also awarded a 3-year contract from an industry-leading distributor for high-pressure hydraulic fittings. Now on to Flexonics, where we delivered a resilient result in softer end market conditions. Book-to-bill went from 1.01 to 0.93, given softer conditions in the heavy-duty truck market, but also due to higher prior year comparative where we had a large project for expansion joints related to a new CATOFIN plant in India. In addition, our aftermarket business in downstream oil and gas tends to have relatively short lead times, and therefore, order flow can be lumpy. At constant FX, revenue increased marginally and adjusted operating margins rose to 11.2% and to 12.1% when including the contribution from our China JV. We benefited from favorable aftermarket mix, particularly in our Pathway business as well as successful execution of restructuring in selected operations across North America and Europe. The China JV performed especially well with our share of profit rising to GBP 3 million from GBP 1.2 million last year. The Flexonics division was awarded a number of important contracts this year. We were awarded the supply of fluid conveyance assemblies for multiple light vehicles across diesel, gasoline and hybrid platforms by a global supplier. In addition, Flexonics was awarded exhaust gas recirculation, coolers on a new engine type to be used on multiple platforms by a leading global manufacturer of heavy-duty trucks. Slide 10 shows the reconciliation of adjusted operating profit to the statutory reported profit for the period for the continuing business. It also highlights our interest and tax charges. Net finance costs increased by GBP 1.3 million due to high interest rates on variable rate debt and higher average net debt in comparison to the prior year. IFRS 16 interest charge on lease liabilities increased by GBP 0.4 million, and we had net finance income from our pension plans of GBP 2.1 million. A tax charge of GBP 11.3 million was recognized on our adjusted profit before tax. We expect the effective tax rate of 20%, 22% for the full year 2025. In terms of reconciling adjusted profit to statutory profit, we had just under GBP 1.6 million of amortization, which was noncash related to acquisitions, site relocation costs of GBP 2.4 million for the transfer of manufacturing from the -- from our U.S. to our cost-competitive facility in Mexico as well as costs related to the relocation of our U.K. innovation center in Wales. We had GBP 7.3 million of pension benefit clarifications. These relate to the U.K. defined benefit pension scheme buy-in which took place in September 2025. As part of the due diligence work undertaken for the buy-in, some historical benefit clarifications were identified. Most of these have already been funded through the pension buy-in process. The remainder will be funded from the GBP 23 million actuarial surplus. We had GBP 5 million of restructuring initiatives, largely related to head count reductions in Flexonics across North America and Europe as well as a result of softer end market conditions in the heavy-duty truck market. We had GBP 0.8 million related to the fair value change on contingent consideration and other related costs for the Spencer acquisition and a GBP 4.5 million tax benefit on adjusting items. After these adjustments, reported profit for the year was GBP 27.3 million. Moving to cash flow generation. Free cash flow increased 37% year-over-year to GBP 36 million. We can see the key drivers here of adjusted operating profit to free cash flow. Starting from the left, we have our adjusted operating profit of GBP 64 million. Add back of depreciation and amortization of GBP 29 million and just over GBP 6 million of other items. Working capital outflow was GBP 8 million, of which GBP 5 million related to inventory build to support customer demand and the balance being a movement in receivables of GBP 14 million and payables of GBP 10 million. Working capital was circa 14% of sales in 2025, partly driven by the timing of customer collections at the year-end. For 2026, we currently expect it to be 18% of sales to support customer demand, predominantly in aerospace. CapEx of GBP 32 million equates to 1.5x depreciation excluding the impact of IFRS 16 depreciation. For 2026, CapEx is expected to be lower at 1.3x as we continue to support growth in both divisions. Operating cash flow amounted to GBP 57 million. We paid interest of GBP 14 million and tax of GBP 7.5 million, giving us GBP 36 million of free cash flow. Our 2025 performance reflects higher profits, strong working capital discipline and CapEx investment to support growth. We remain focused on maintaining excellent cash generation as a core enabler of investment, shareholder returns and balance sheet strength. So what does that mean in terms of net debt? While net debt, including IFRS 16 leases, reduced significantly to GBP 117 million at the year-end, a reduction of over GBP 110 million. Strong free cash flow proceeds from the Aerostructures disposal and disciplined capital allocation contributed to this outcome. You see the opening net debt balance of GBP 230 million on the left-hand side, the free cash flow I talked about of GBP 36 million. We then see GBP 3 million of free cash outflow for discontinued operations, dividends paid of GBP 10 million, share purchases for the employee benefit trust of GBP 7.4 million, joint venture dividends received of GBP 1 million, proceeds from the disposal of Aerostructures and Spencer Aerospace contingent consideration of GBP 108 million as well as other items of GBP 12 million, predominantly leases. And finally, FX giving us our closing position of GBP 117 million. Leverage ended the year at 0.9x, placing us in a strong financial position as we moved into 2026. Moving on to our financing position, which remains strong. We had GBP 294 million of committed facilities diversified across U.S. private placement notes and bank credit facilities during the year. We issued a new private placement note of USD 40 million. We repaid U.S. private placement maturities totaling USD 60 million and GBP 27 million. And in January 2026, we've repaid the GBP 30 million term loan used as a bridge to the Aerostructures disposal. Our balance sheet is strong, liquid and well structured with ample headroom to support growth and disciplined capital deployment. So our 2025 performance demonstrates clear progress towards our medium-term financial targets, across margin, cash conversion and return on capital employed. Group operating profit margin of 8.6% continues to trend upwards. Aerospace margin reached 11.4%, progressing towards our mid-teens target. Flexonics margin of 11.2%, excluding the JV, sits well within our expected 10% to 12% range. We said we would achieve at least 10% even in a down year and 2025 was a test for this given the softer conditions in the heavy-duty truck market. If we include the JV, the margin was 12.1%, which exceeds the range. Return on capital employed of 13.1%, steadily advancing towards a 15% to 20%. Cash conversion exceeded the 85% target, delivering 90% in 2025. As you can see, we remain firmly on track to deliver against these targets. We underpin the targets with a strong balance sheet. We were comfortably within our target leverage of 0.5x to 1.5x. Our leverage was at 0.9x at the year-end of 2025. Revenue growth of 6% at constant FX in 2025 was in line with our expectation of mid-single digit organic revenue growth through the cycle. Now turning to Slide 15, capital allocation. Our capital allocation framework remains unchanged, disciplined, returns-focused and aligned with shareholder value creation. In 2025, we invested GBP 32.6 million in CapEx to support business growth. This equated to 1.5x. We expect this to trend down to 1.3x in 2026, and our medium-term expectation continues to be 1.1x. We invested 2.1% of revenue in research and development in 2025, consistent with our 2% to 3% of revenue target. Dividends of GBP 12.3 million reflects our progressive dividend policy. We are proposing a total dividend of 3p per share in 2025, which is a 25% increase on the prior year and equates to an earnings cover of 3.2x. As stated previously, leverage remains comfortably within our target range. We continue to explore value-accretive bolt-on M&A aligned with our core capabilities. Finally, in view of Rule 2.4 announcement last week, we have postponed the staff, the GBP 40 million share buyback program, which had been due to commence following publication of the full year results. This will be kept under review, and we will make a further announcement as necessary. And with that, I will hand back to David, who will take us through the markets and strategy section. David Squires: Thank you, Alpna. So let's turn our attention to markets. So in 2025, Aerospace represented 58% of the group's revenues and Flexonics was 42%. And as Alpna has mentioned, Aerospace division sales grew 10% on a constant currency basis, and Flexonics grew marginally despite softer land vehicle markets. Aerospace and defense is now 48% of the group, with civil aerospace being around 2/3 of that and defense 1/3, which represents a good growth opportunity. Sales to adjacent markets from our aerospace business was 10% in the full year, with revenues from semiconductor equipment customers increasing. Our business is facing into land vehicle at 25% of group revenues and power and energy 17%, continued to perform well against a mixed market backdrop. Similarly, aerospace was 32% of group's revenue in 2025. This includes both large commercial, regional and business jet sectors. Growth in the end market measured in revenue passenger kilometers or RPKs was healthy at around 5%. And we expect long-term civil aerospace market growth of 3% to 4%, driven by the growing middle classes in Asia as well as fleet modernization and aircraft replacement. We have very good positions on all single-aisle and wide-body platforms as well as most regional and large business jet programs. In 2025, our civil aerospace sales grew 10% at constant FX, driven by improved pricing and higher build rates. Both Airbus and Boeing have record order books with single-aisle and wide-body rates set to increase further this year and beyond, which will drive further growth for Senior. You'll be aware that many countries are committing to higher defense spending. Senior has good content on key U.S. and European military aircraft platforms. In 2025, our defense sales grew strongly 12% year-on-year, and that was driven by higher sales to C-130, F-35 and strong military aftermarket demand. Turning now to Flexonics. We had a strong performance in 2025 relative to end markets. In land vehicles, the new contracts we have won over the last couple of years reached a peak production, which is why our passenger vehicle sales growth is 31% year-over-year compared to market growth of just 1%. And while truck markets were slower in 2025 compared to 2024, particularly in the second half of the year, we did outperform the market in North America, with our sales down 18%, while the market declined 25%. Our European truck sales reduced by 1%, in line with the market. ACT Research are expecting truck markets to continue to be weak in the first half of '26 before starting to recover in the second half of the year. In power and energy, a really strong performance at our Pathway business in Texas led to strong downstream oil and gas and nuclear sales. While upstream oil and gas sales continued to be subdued as we continue to reduce our exposure to commoditized products. At last year's Capital Markets event in March and at our half year results presentation in August we went through our fluid conveyance and thermal management strategy in detail. I won't repeat everything we discussed then, but we have included relevant material in the appendices to enable more detailed discussions on a one-to-one basis. We believe we have a compelling investment proposition. With a century of relevant experience, we can genuinely claim to be experts in fluid conveyance and thermal management. We have truly differentiated products with rich background and foreground intellectual property, coupled with expert design and manufacturing know-how. We operate in attractive and structurally resilient end markets and are well positioned to take advantage of that over the medium term. And we have long-lasting relationships with our customers and are trusted by them to deliver excellent products and to respond with agility when they need our support. Our senior operating system is driving operational excellence and efficiency across the group. And our global footprint with a strong presence in our home markets and world-class facilities in cost-competitive countries is a real advantage. And finally, as these 2025 results have demonstrated, our financial strength with improved performance, strong cash flow generation and low leverage supports investment and shareholder returns. So let me finish by talking about the outlook for Senior. Trading in the first 2 months of 2026 has started well, and the Board's expectations are unchanged for 2026. In aerospace, growth in civil aircraft build rates and increased demand across its other markets is expected to drive further good progress in 2026 and beyond. Flexonics expectations for 2026 are unchanged with robust double-digit margins being maintained when including the JV, notwithstanding the softer conditions in certain end markets. Looking ahead, we are confident of delivering enhanced shareholder value as we execute on our strategy and continue to strengthen our financial performance in line with our medium-term financial targets. So with that, we'll open the floor for any questions, which Alpna and I will be delighted to answer. Any questions? Yes, Tom? Thomas Rands: Thomas Rands from Berenberg. Just 2 questions, if I may. First one, on the Flexonics head count reductions. I think you said that was relating to mainly the Class 8 heavy truck activities. As and when that activity picks up again, how much of that head count do you think will come back in? How much is temporary versus permanent kind of takeout? And then the second one is just on M&A pipeline. How active, what sort of valuations are you seeing? Anything interesting in the... Alpna Amar: I'll take the first one. Thanks for that, Tom. In terms of Flexonics headcount, so what we've said is that we took GBP 5 million of cost out in 2025. It predominantly related to Flexonics. In terms of savings, we have about GBP 4 million of savings in 2026. And it really depends on if and when that market comes back as in terms of timing, as to how much of that cost comes back, but some of it was structural costs that was taken out, and some of it was temporary costs that was taken out. So it was a bit of both. David Squires: Yes. And I think on the M&A side, look, we've got -- I got Nigel Major, our VP of Strategy, here with us today. So Michael -- sorry, Nigel, not Michael. Nigel maintains a really good and healthy pipeline. We've been quite focused on that for some time. And when you went through our capital allocation policy, which looks at both returning cash to shareholders when it's sensible to do so, but also looking at bolt-on accretive M&A. So I think in the appendix, you'll see our acquisition heat map where we lay out those areas that we're most interested in. But I think the Spencer acquisition has been a great success. There's a lot of growth yet to come from that acquisition and everything else that sort of encouraged within the business such as working with our colleagues in Ermeto in France to develop their range of products with help from Spencer. So that's kind of a typical type of acquisition we do, really looking at products in aerospace or industrial markets that are bespoke. They have got high design content and have decent margins, good returns on capital and really facing into sort of the attractive markets we're currently facing into. So think of it as bolt-on accretive M&A that we'd be most interested in. Not rushing out to do anything. But certainly, we maintain an active pipeline. Richard Paige: It's Richard Paige from Deutsche Numis. Just 3 from me, please. Just on aerospace. Obviously, really strong margin performance in 2025. I think back to the Capital Markets Day, you spoke about pricing being obviously half of that and 80% covered with long-term agreements at that point. Has that progressed at all on that side? On the second one, strong performance in the joint venture in China. Is there anything exceptional in that, that we should be aware of? And then just on the third point, semicon, obviously, a very strong outlook and strong performance you've had this year. Could you just remind us of the lead times in that business for you, please? David Squires: Yes. So on the pricing side, yes, those -- well, remember, Richard, there's 3 elements to the margin progression up to the mid-teens where roughly half of it come in pricing, a quarter from operational efficiency and a quarter from volume. We made good price -- good progress on pricing last year. Some of the pricing we'd already done cut in last year, some of it cuts in next year as well. So we've got one big negotiation left to do that we're in the midst of, and we would anticipate that concluding this year, and that's the bulk of the long-term agreements. We've got a lot of purchase order business, spot business. So that gets priced as it goes along. And then on an ongoing basis, we'll have contracts coming up for renewal. So -- but we've got a very good approach to pricing now. Look, it's fair we always look for win-win solutions with our customers, but we're absolutely on track to achieve our objectives from a pricing perspective and that gives us half of that margin improvement. So it's in a good place. On the JV in China, yes, it's a good fun business. And the -- our joint venture partner, PPM, works very closely with us. They're primarily focused on the land vehicle business, a lot of it is passenger vehicle, but they also do truck business. Cummins were in China almost before any other Western company, and they asked us to set up this facility long before I joined the company. And it's kind of been bubbling under, but it's really now holding its own. So some fantastic products. One of the products they made last year that helped. I didn't know, but in the steering column, you have a little bellow. So if you hit the steering wheel in the crash, the bellows absorbs the impact and allows it to fold. So we won all of that business because the previous supplier for our customer wasn't performing very well. And our team in China developed prototypes qualified in record time and that led to all of the business being awarded to us. So that was one of the reasons why we did really well last year, and we'll continue to do so. But that's just one example. And in fact, this particular customer now wants us to build the same product in the joint venture facility in Mexico for all the North American business. So a really good example of how we've been able to progress our business there. So there are good cost competitive location, but really great at engineering as well. I'll keep going. Semiconductor -- yes, semiconductor, strong demand. Our main customer is Lam Research. Out of our Meta Bellows facility, Lam has been doing well. We've been doing well. The product -- from a standing start, it's probably 4 to 6 months. But because we've got ongoing forecast orders, the actual cycle time through the factory is nearer 6 weeks. So we got pretty good forecasts from Lam. We monitor what's happening in the industry more generally. So we can respond quite quickly if the demand goes up if that was where your question was going. Yes. Andrew Humphrey: It's Andrew Humphrey at Peel Hunt. Just a couple, if I may. One to follow up on Richard's question on the aerospace. You've obviously highlighted pricing, volume, mix, commercial settlements all been pretty strong positive drivers in '25, contributing to that result. Pricing, you've obviously talked about the agreements continuing to come through there this year and next. Volume, it feels like it's in a pretty good place, given the reporting that we're seeing everywhere. I wanted to ask commercial settlements, I guess, can't model those, but I wanted to ask about mix in the light of your comment on spot business rather than contract business. It does feel like kind of volumes have picked up maybe a little bit ahead of what we were expecting. Does that mean sort of more spot business for you? And does that tend to be positive for margin? And yes, let me pause there. I have a couple of more. David Squires: Yes. I think from a volume perspective. So worth reminding what I said in the presentation there. If you look at our aerospace business now that we have sold structures, we're about 1/3 large commercial aircraft, 1/3 regional and biz jet and a 1/3 defense. So slightly different growth characteristics in those 3 sectors, but they were all strong last year. In fact, we did see good military aftermarket business last year, and we see that sort of continuing at the moment. So that's one of the things that helps. Otherwise, I think our growth was where we thought it would be coming through on the civil side with those rate increases, we'd expect that to continue. So far, the demand signals we're seeing from Boeing and Airbus are what we would expect. Andrew Humphrey: Great. Maybe on Flexonics then as well. A couple of things there. Obviously, we had the ACT numbers back around Q3, indicating like challenges ahead for '26. I think you talked a lot about that. I wonder we're now sort of nearly 6 months down the road from there, I wonder how the early signs that you're seeing with customers compare that view from back in October, November time. And then also on Flexonics on the oil and gas side, clearly, it's kind of early days given events over the weekend, but it also feels like a few parts of the market have been positioning for disruption in the Middle East for a few weeks now. I wonder what early indications you're seeing from customers there. David Squires: Okay. So on the heavy-duty truck side, first of all. So ACT are currently predicting a 3% growth in 2026, but that's really a game of 2 halves there. If you look at year-on-year, it's significantly down in the first half of the year with the recovery starting in the second half of the year. So we'd like to be a bit further into the year before we call it what we really think is going to happen, that would be great. If we do get that strong recovery come in the second half of the year, but it's off a pretty low comparator remember. So far, our expectations are unchanged, but we're monitoring that very carefully for anything that might change. So first half down, and we're expecting the second half to be up a bit. Let's hope it improves, it might improve. We'll see. And then oil and gas, gosh, it really is a bit early to be answering that one about the disruption by current events. I think for us, what's important is more downstream oil and gas. We've really moved away from -- we had one business that supplied parts that used to sit on top of drill bits for downhole drilling, and we've really moved away from that because the product was quite commoditized. A lot of it have been offshored. It's not that important to us now. So what is important is industrial process control, downstream oil and gas, the huge expansion joints that go into refineries and so on. That's predominantly all aftermarket business. So as long as people are running CATOFIN plants, refining, running nuclear plants and in power and energy, then we'll continue to get good aftermarket from that. What we don't have this year is the big anchor project we had in the '24, start of '25 for the Government Authority of India Limited, which was our new CATOFIN plant. So this year, it's really all that repairs, spares, emergency callouts, et cetera. So it's quite a short cycle business so far, so good. Andrew Humphrey: And maybe finally on FX. I think [ 131 ] to FY '25, clearly kind of more of a headwind this year. Any additional actions that we're taking to accommodate that? Alpna Amar: In terms of FX, I mean, if I look at where our earnings are at, I mean, 2/3 our business is in the U.S. And so yes, there would potentially be an FX headwind in 2026. And yes, so I mean we are looking to make sure that's baked into our pricing, that we are taking the right actions locally to do that. I mean -- and it's mainly a translation risk in terms of how we transact with our -- in our businesses. It tends to be local for local. David Squires: Any more questions? Alex, no questions today? Alexandro da Silva O'Hanlon: Can I ask a couple of? David Squires: Yes. I can see them on the top of your tongue. Alexandro da Silva O'Hanlon: Good to put me on the spot. Alex O'Hanlon, Panmure Liberum. If I ask a couple of quick questions. Firstly, on the working capital absorption out, you showed that there was good progress there to 13.5% and indicated we should see that going back up to 18% in FY '26. How should we think about the range for the medium term? Where should that sit? Alpna Amar: So I mean it will probably be somewhere in between, Alex. So in terms of '25, the working capital was impacted by some -- by collectibles that happened at the year-end in terms of customer receipts. At the moment, we think it will be about 18% for FY '26. We hope we'll come in better than that, but that's where it's standing today. And then in terms of the medium term, we hope to get that down over the 3 years. We're making good progress against that. But at the same time, we are seeing that demand come through in aerospace. So we will need to support to ramp that -- support that ramp up. David Squires: Alpna drives the business very hard on their inventory as you can imagine. Alexandro da Silva O'Hanlon: No, definitely. And then just one other question. In terms of aerospace, I mean, we've kind of picked apart the margin and the benefits there already in a lot of detail. But is there any further information you can give us on how much the benefit from contract settlements was in FY '25, when we're thinking FY '26, it could be a headwind if there's a non-repeat? David Squires: Yes, there was a few million there. I think what we talked about was an insurance settlement in the first half year, that was GBP 3 million. I think we said that. So -- but I will say there's always one-offs. Alpna Amar: Yes. I mean we do push the businesses at the year-end in terms of closing out any customer negotiations and getting things settled as does any business. And the team did a great job in 2025 of doing that. And as David said, there's always that you have that every year in any business. So it's -- we don't disclose the exact amount, but it was -- yes, it was a good number. David Squires: And that's baked into our guidance as well, aren't those... Alpna Amar: Yes, that's baked in. David Squires: Okay. Any last questions? Yes, Tom. Thomas Rands: Thomas Rands again from Berenberg. Just one follow-up just on your comment around military aftermarket being strong. We always think of Senior as an OE, kind of not an aftermarket kind of play. What was driving that within military? And are there any other opportunities elsewhere? I was always thinking no, but these things [ possibly happening ] now again. David Squires: Yes. So as a percentage now it's slightly higher because the aftermarket we do have is within our fluid conveyance businesses. So business like SSP in California, Metal Bellows in Boston have decent military aftermarket, C-130, for example. Think how many C-130s are flying there. And we do get aftermarket associated with that for our international customers as well as our sort of U.S. domestic customers. So that -- there's always an ongoing level. And at the moment, that was increasing last year, and we see that continuing to be strong. Andrew Douglas: Are there opportunities elsewhere? David Squires: Yes. I think we're always pursuing more opportunities to increase that aftermarket as part of our growth strategy for sure. Okay. Thank you very much, everybody. I really appreciate you taking the time to come this morning. Look forward to following up with you. Alpna Amar: Thank you.
Operator: Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to Banco Macro's Fourth Quarter '25 Earnings Conference Call. We would like to inform you that the 4Q '25 press release is available to download at Investor Relations website of Banco Macro at www.macro.com.ar/relaciones-inversores. [Operator Instructions] Also, this event is being recorded. [Operator Instructions] It's now my pleasure to introduce our speakers. Joining us from Argentina are Mr. Juan Parma, Chief Executive Officer; Mr. Jorge Scarinci, Chief Financial Officer; and Mr. Nicolas Torres, Investor Relations. Now I'll turn the conference over to Mr. Nicolas Torres. You may begin your conference, sir. Nicolas Torres: Thank you, and good morning. Good morning, and welcome to Banco Macro's Fourth Quarter 2025 Conference Call. Any comments we may make today may include forward-looking statements, which are subject to various conditions, and these are outlined in our 20-F, which was filed to the SEC and is available on our website. Fourth quarter 2025 press release was distributed yesterday and it's available on our website. All figures are in Argentina pesos and have been restated in terms of the units referring at the end of the reporting period. As of 2020, the bank began reporting results applying hyperinflation accounting in accordance with IFRS IAS 29 as established by the Central Bank. For recent comparison, figures of previous quarters have been restated behind IAS 29 to reflect the accumulated effect of inflation adjustment for each period through December 31, 2025. I will now briefly comment on Banco's fourth quarter 2025 financial results. In the fourth quarter 2025 Banco Macro's net income totaled ARS 100 billion, ARS 290.7 billion in fiscal year 2025 recurring from the loss posted in the previous quarter. The result was 26% or ARS 34.4 billion lower than the result posted in the fourth quarter of 2024. In the fourth quarter of 2025, the accumulated annualized return on average equity and accumulated annualized return on our assets were 5.1% and 1.4%, respectively. Excluding ARS 82.9 billion of nonrecurring expenses in the fourth quarter of 2025, net income would have totaled ARS 183 billion and ARS 393.7 billion in fiscal year 2025. And accumulated ROE and ROA would have been 6.6% and 1.8% respectively. In fiscal year 2025, net income totaled to ARS 290.7 billion, 32% lower than in fiscal year 2024. Total comprehensive income totaled ARS 303 billion and was 1% higher than the fiscal year 2024. In the fourth quarter of 2025, ARS 82.9 billion restructuring expenses were recorded related to our retirement plans and provisions for severance statements. Excluding nonrecurring expenses fourth quarter '25 net income would have been ARS 183 billion and fiscal year 2025 net income would have totaled ARS 393.7 billion, excluding the third quarter and fourth quarter 2025 nonrecurring expenses. Representing an accumulated ROE on our rate of 6.6% and 1.8% respectively. In the fourth quarter of 2025, operating income before general, administrative and personnel expenses, total of ARS 1.17 trillion, 39% or ARS 324.2 billion higher than in the third quarter of 2025 and 9% from ARS 94.4 billion higher than in the same period of last year. Fiscal year 2025, net operating income before general, administrative and personnel expenses totaled ARS 4.1 trillion, 33% lower than fiscal year 2024. In the fourth quarter of 2025, provision for loan losses totaled ARS 169.3 million, 1% from ARS 1.8 million lower than in the third quarter of 2025. On a yearly basis, provision for loan loses increased 243% or ARS 120 million. In Fiscal year 2025, provision for loan loses totaled ARS 538.1 million and were 274% higher than fiscal year 2024. In the quarter, net interest income totaled ARS 836.5 billion, 13% or ARS 96.4 billion higher than the third quarter of 2025 and 19% or ARS 135.9 billion higher year-on-year. This result is giving a 7% increase in interest income and a 1% decrease in interest expense. In fiscal year 2025, net interest income totaled ARS 3.1 trillion and was 44% higher than fiscal year 2024. Interest income of 8% while interest expense decreased 23%. In the fourth quarter of 2025, interest income totaled ARS 1.4 billion and 7% from ARS 91.6 billion higher than third quarter 2025 up 30% or ARS 324.1 billion higher than the fourth quarter of 2024. In fiscal year 2025, interest income totaled ARS 5 trillion, 8% higher than fiscal year 2024. Income from interest on loans and other financing totaled ARS 1.44 trillion, 3% or ARS 33.5 billion higher compared with the previous quarter, mainly due to a 141 basis points increase in the average lending rate, while the average volume of private sector loans remained almost unchanged. On a yearly basis, income from interest on loans increased 58%, were ARS 379.3 billion and in fiscal year 2025, income in interest on loans and other finance will total ARS 3.61 trillion, 13% higher than the fiscal year 2024. In the fourth quarter of 2024, interest on loans represent 74% of the total interest income. In the fourth quarter of 2025, income from government and private securities stood at 105% to ARS 306 million quarter-on-quarter and decreased 1% or ARS 6.2 million compared with the same period of last year. Fiscal year 2025, income from the government of private securities totaled ARS 176 trillion, 58% lower than fiscal year 2024. The fourth quarter of 2025 in terms of FX, the bank's strategy to remain short in U.S. dollar during the second half of 2025 proven successful. The combination of the short dollar position together with the [indiscernible] position and the allocation of the pesos generated by the sale of U.S. dollars resulted in a net gain of ARS 26.3 billion. In the fourth quarter of 2025, interest expense totaled ARS 565.1 billion, decreasing 1% or ARS 4.8 billion compared to the previous quarter and 50% higher compared to the fourth quarter of 2024. In fiscal year 2025, interest expense totaled ARS 193 trillion, 23% lower than fiscal year 2024. Within interest expenses, interest on [indiscernible] quarter-on-quarter due to 168 basis points decrease in the average rate paid on [indiscernible] the average volume of private sector deposit increase 7%. On a yearly basis, interest on deposits increased 48% or ARS 107.6 million. In the fourth quarter of 2025, the [indiscernible] net interest margin, including FX, was 21.7% higher than the 18% posted in the third quarter of 2025 and lower than 24.7% posted in the fourth quarter 2024. In the fourth quarter of 2025, [indiscernible] net income totaled ARS 192.4 billion versus 1% or ARS 1.2 billion higher than in the third quarter of 2025 and was 8% or ARS 89 billion higher than the same period last year. Fiscal year 2025, net income totaled ARS 767.4 million, which was 20% higher than fiscal year 2024. In the quarter, other operating income totaled ARS 72.3 billion 3% or 2.1% lower than in the third quarter of 2025 due to lower other income and lower service-related fees, which were partially offset by higher income from each [indiscernible] and on a yearly basis, our operating income increased 30% or [indiscernible]. In fiscal year 2025, our operating income totaled ARS 292.1 billion, a change from fiscal year 2024. In the fourth quarter of 2025, Banco Macro's administrative expenses plus employee benefits totaled ARS 412.4 billion, 15% or ARS 54.8 billion higher than the previous quarter, due to higher employee benefits, which increased 18%, and higher administrative expenses, which increased 8%. On a yearly basis, administrative expenses plus employee benefits increased 20% or ARS 68 billion. In fiscal year 2025 administrative expenses plus employee benefits were unchanged compared to fiscal year 2024. Employee benefits increased 18% or ARS 45.8 billion quarter-on-quarter. Compensation and bonuses increased 156% or ARS 68.7 billion. In fourth quarter of 2025, the bank recorded ARS 82.9 billion restructuring expenses related to early retirement plans and severance payment provisions. Excluding restructuring expenses, employee benefits would have decreased 8% or ARS 17.1 billion. On a yearly basis, employee benefits increased (sic) [ decreased ] 30% or ARS 67.5 billion, and excluding restructuring expenses, employee benefits would have been 7% or ARS 15.4 billion lower. In fiscal year 2025, employee benefits associated with personnel involved in restructuring expenses totaled ARS 49 billion. In the fourth quarter of 2025, efficiency ratio reached 38.7%, improving from the 46.5% posted in third quarter of 2025 and the 39.4% posted one year ago. In fourth quarter of 2025, expenses increased 13%, while net interest income plus net fee income plus other operating income increased 36% compared to the third quarter of 2025. It is worth mentioning that during fiscal year 2025 Banco Macro reduced its branch network by 75 branches down to 444 branches from 519 branches in December 2024 and reduced its headcount by 514 employees. All this was achieved while gaining market share, both in private sector loans and private sector deposits. In the fourth quarter of 2025, the result from the net monetary position totaled ARS 277 billion loss, 27% or ARS 58.6 billion higher than the loss posted in third quarter of 2025 and 5% or ARS 13.2 billion lower than the loss posted one year ago. Higher inflation was observed during the quarter, 189 basis points above third quarter of 2025. Inflation was 7.86% compared to 5.97% in the third quarter of 2025. In fiscal year 2025 the result from the net monetary position totaled ARS 1.05 trillion loss, 66% lower than the one posted in fiscal year 2024. Inflation in 2025 reached 31.5% compared to the 117.8% registered in 2024. In fourth quarter of 2025, Banco Macro's effective income tax rate was 42.7%. In fiscal year 2025 the effective tax rate was 43.1%, higher than the 9.2% registered in fiscal year 2024. Further information is provided in Note 24 of our Financial Statements. In terms of loan growth, the bank's total financing reached ARS 10.71 trillion, decreasing 2% or ARS 211 billion quarter-on-quarter and increasing 40% or ARS 3.1 trillion year-on-year. In the fourth quarter of 2025, peso financing increased 2% or ARS 196.4 billion, while US dollar financing decreased 20% or $407 million. In fiscal year 2025 both peso financing and U.S. dollar financing increased 36% and 12% respectively. It is important to mention that Banco Macro's market share over private sector loans as of December 2025 was 8.3% (sic) [ 8.6% ], increasing 30 basis points compared to December 2024. On the funding side, total deposits increased 8% or ARS 958.1 billion quarter-on-quarter totaling ARS 13.7 trillion and increased 24% or ARS 2.6 trillion year-on-year. Private sector deposits increased 11% or ARS 1.26 trillion quarter-on-quarter while public sector deposits decreased 33% or ARS 310.4 billion quarter-on-quarter. In increase in private sector deposits were offset by time deposits which increased 17% or ARS 978.5 billion while demand deposits increased 5% or ARS 308.1 billion quarter-on-quarter. In the quarter, peso deposits increased 3% or ARS 234.9 billion, while US dollar deposits increased 10% or $300 million. On a yearly basis, peso deposits increased 18%, while dollar deposits decreased 4%. As of December 2025, Banco Macro's transactional accounts represented approximately 47% of total deposits. Banco Macro's market share over private sector deposits as of December 2025 totaled 7.9%, 90 basis points higher than December 2024. In terms of asset quality, Banco Macro's non-performing to total financing ratio reached 3.87%. The coverage ratio, measured as total allowances under expected credit losses over non performing loans under central bank rules, reached 119.86%. Commercial portfolio non-performing loans improved 17 basis points down to 0.68% from 0.85% in the previous quarter while consumer portfolio non-performing loans deteriorated 93 basis points in the fourth quarter of 2025 up to 5.23% from 4.3% in the third quarter of 2025. In terms of capitalization, Banco Macro accounted an excess capital of ARS 3.6 trillion, which represented a capital adequacy ratio of 30.6% and Tier 1 ratio of 30.6%. The bank's aim is to make the best use of this excess capital. The bank's liquidity remained more than appropriate. Liquid assets to total deposits ratio reached 73%. Overall, we have accounted for another positive quarter. We continue to show a solid financial position. Asset quality remain under control and closely monitored. We keep on working to improve more our efficiency standards and we keep a well optimized deposit base. At this time, we would like to take the questions you may have. Operator: [Operator Instructions] Our first question comes from Brian Flores from Citi. Brian Flores: I have a first question here on your guidance. I just wanted to know if there is an update on the soft guidance you provided in the last months after the election. I think it was 35% in real terms for loans, 25% in deposits and low teens in ROE. So I just wanted to check if any of these variables in your view has changed. I know it's a very fluid environment in Argentina. So just checking on that. And then a second question just very quick. We saw strong security gains recovering from public securities. So I just wanted to understand how in your view would this be considered? Or how much would be considered recurring in nature and how much stemming from the volatility that we had in the election cycle? Jorge Francisco Scarinci: Brian, this is Jorge Scarinci. Yes, on your first question, yes, we are going to maybe modify a little bit our guidance basically according to local consensus of economists are reducing a little bit the real GDP growth for 2026 to levels of between 2.8% to 3%. And also in addition to that, there is also the consensus is estimating a higher inflation for '26 compared to the one that we were working with in the last quarter of last year that was 20%, and now the new update is 27%. So due to those -- I mean, modifications on those 2 macroeconomic variables, we are also fine-tuning our guidance for growth for 2026. In terms of loans, we're expecting 20% real growth in the calendar year of '26 and deposit growth of 6% in real terms. Also, as you could see in this press release, we are -- we have started to report a kind of reported ROE and ROA and also an adjusted ROE and ROA due to the restructuring charges that we posted in the fourth quarter and we expect some other of this type to come between first and second quarter of '26. So in terms of, I would say, adjusted ROE for '26, we are working with a level of 8% area, basically in terms of ROE and in terms of ROA close to 1.8% to 2% area, right? So that is answering your first question in terms of guidance. In terms of your second question, in terms of the security gains, I would say that one of the main drivers for the weak quarter that we posted in -- as of September was a bad performance of the bond portfolio related to the increased volatility in the macroeconomic variables due to the election that -- or the midterm election that took place the 27th of October. And what we saw in the fourth quarter was a reversal of trend, some declining nominal and real interest rates and some rebound in the local peso securities that we hold in our portfolio. So I would attribute most of this to the repricing that we saw in the fourth quarter as a kind of an opposite effect compared to the one that we saw in the third quarter of last year. Brian Flores: No, super clear. Just a quick follow-up on maybe the gap between loans and deposits, right? Because it used to be, I would say, narrower. Now it's widening. So I just wanted to understand, you are seeing basically a change in maybe the savings capacity of people, if you think maybe this, as you mentioned, this lower or slower GDP is translating into this change in behavior? Or any color you could give as to why deposits are at this expectation that is maybe significantly lower than the previous base case? Jorge Francisco Scarinci: Well, first, we continue to hold almost 24% of total assets in terms of securities that could be used in case of that we need to finance the gap between the increasing loans and deposits. Even though that we continue to have a loan-to-deposit ratio, of course, below 100%. So even though in relative terms, we are growing or we are expecting to grow more in loans and deposits, but in absolute terms, the difference is not going to be the much. And besides of that, we are forecasting that, for the moment, real interest rates to be slightly positive, and that's why we are not forecasting a big increase in terms of deposits in 2026. Operator: Our next question comes from Lindsey Shema from Goldman Sachs. Lindsey Marie Shema: First off, I mean, we saw some continued deterioration in consumer asset quality and also seems like the macro scenario is still a bit tougher, but that there was some incremental improvement in cost of risk. So maybe just how are the early indicators looking for asset quality? And what makes you feel a little bit more constructive on cost of risk going forward? Or do you see that kind of deterioration coming back? And then for my second question, on the political landscape, it seems like labor reform is on track to be enacted. The vote is tomorrow. What do you think is next on the administration's agenda? And what do you as a bank really need to see to give you greater certainty going forward? Jorge Francisco Scarinci: Lindsey, in terms of your first question, what we are seeing is that the speed of the deterioration of the consumer portfolio has been reduced. As you could see in terms of cost of risk, we posted slightly below levels of the one that we posted in the third quarter. In the first quarter, we are seeing kind of, for the moment, neutral news. I would say that it's kind of relatively stable in terms of the figures that we are seeing at least as of January compared to December. However, going forward, we expect to have maybe more positive news by the end of the first and second quarter of this year. That's why we are forecasting for 2026 a cost of risk of 5.2%. This is slightly below the 5.6% that we posted in the calendar year of '25. In terms of... Juan Parma: Maybe Jorge, if I may add to that, this is Juan Parma. We took early action during 2025 by constraining loan origination back from April last year. What we are seeing is that in terms of new vintages and new origination, the performance of the vintages is better than the portfolio as a whole and back to the levels we used to see in 2024. So that recomposition of the portfolio with better new origination is what is actually driving the stabilization and positive outlook in terms of cost of credit. Basically, it's what we are seeing in the new originations that we tightened up since around April, May last year. Jorge Francisco Scarinci: And Lindsey, in terms of your second question, I would say that in the last 3, 4 months, the government, I would say that is leading the agenda, managing all the political issues going on, like introducing the labor reform at the end of '25 and that was approved by the Congress in January by deputies in general and in February, deputies in particular, and also expected to have the Senate to approve it. Also, we expect our tax reform to come at some point in the next month or so. I would say that next Sunday, that is going to be the 1st of March, President Milei is going to open the ordinary session of the Congress and he is going to, in our view, give a speech on the coming reforms or projects to be sent to the Congress. So I think that we have to be clear-eyed for his speech next Sunday in order to have a more, I would say, better landscape of what's going to be on the agenda of the government in 2026. Juan Parma: But I would say, adding to Jorge, that what we have seen after last year, a very positive outcome in terms of the midterm elections is the government using its political capital and its majority in Congress to push on their strategy to keep a tight monetary policy and a tight FX policy, focusing on reducing inflation while maintaining fiscal surplus and solving for the competitiveness of the economy by deregulation. So that's their strategy. They will try to improve the competitiveness of the economy by reducing the Argentina cost, right, both in fiscal terms with the tax reform, labor costs with the labor reform using their renewed political capital after the midterm elections. The recent approval that needs to be finally validated by Congress this Friday on the labor reform is a demonstration of that. And as Jorge was mentioning, we expect President Milei in his opening speech of the Congress session for this year to outline what is his agenda in terms of pushing reforms using this political capital through the year, and we expect that to continue. There is one comment that, I think, is relevant for the banking industry in the labor reform, by the way, which is that as part of the labor law, there was a relevant article that defined whether if banks or fintech wallets are the ones to pay salaries. And it was a positive outcome for the banking industry because the law confirmed that the only way to pay salaries or pension payments in Argentina is only through bank accounts, not through wallets or digital accounts. So that's a good outcome for the bank and for the industry as a whole. Operator: Our next question comes from Yuri Fernandes from JPMorgan. Yuri Fernandes: Congrats on the profitability recovery in the quarter. I would like to understand a little bit just the mark-to-market on the securities, like the trading gains. Like this line is always volatile, right? And it's hard to predict but if you can help us understand how to better think this line, how to better model and what drove like the -- probably the sovereign bond in Argentina, but I would like to understand also what drove the gains during this quarter. And then I can ask a second quarter regarding deposits. I guess I heard well, the 6% real growth. It sounds a little bit low, right? I think expectations for the industry was that deposits would still grow, I don't know, 20%, 25% in real terms. So my question is how to grow loans, right, with such a low potential growth of deposits? If you are seeing any change in reserve requirements. So just trying to understand a little bit like the message on liabilities. Jorge Francisco Scarinci: I will start by your second question. Yes. Basically, I mean, I think I answered before, why we're expecting a 6% real growth in deposits on the fine-tuning of macroeconomic variables and also on slightly narrower positive real interest rate expected for '26. Even though that, we are expecting to grow loans by 20% in real terms. This is slightly below what we grew our loan book in '25. '25 was a great year, 40% in real term was a great year. And again, we have, as I mentioned before, this securities portfolio that in the case that loans are growing above what we are expecting can be used to finance the gap if deposits are growing at 6% and not growing more than that. In terms of your first question, it is not very easy to answer. I would say that because we have a combination of, I would say, 68% of our bonds that are tied to inflation and another 32% which are tied to variable rates. I would say that the best way to model this is what you are expecting for domestic prices or I mean, for inflation or the wholesale rate going forward. So that is going to be maintained. You are going to see a kind of [indiscernible] and steady income on a quarterly basis on our bond portfolio. However, if you are expecting some volatility there, on ups and downs that is going to affect the pace of the bond gains on a quarterly basis. Operator: Our next question comes from Pedro Leduc from Itau BBA. Pedro Leduc: We see NIMs recovering almost halfway here. At the same time, we're seeing still some credit quality pressures. Question to you is when we think about risk-adjusted NIMs for 2026, I know the average for 2025 is a bit weird to look at. But if you could help us understand a bit if the fourth quarter is a good starting point for us to build upon for risk-adjusted NIMs and what the drivers are for us to look at this line in 2025 -- '26? Jorge Francisco Scarinci: I would say just as a starting point, the fourth quarter is kind of a reasonable measure. Going forward, we're expecting a little bit of pressure on rates, maybe on margins a little bit. So we finished '25 with a net interest margin on the area slightly above 20% and 21.5% approx. We're seeing this maybe in the level of 20% for '26. And as an opposite effect, we are seeing slightly below cost of risk in '26 compared to '25. So as overall, I would say that slight compression on the NIM adjusted by credit quality in '26. Pedro Leduc: Versus the average of '25, no, but from the starting point. Jorge Francisco Scarinci: Yes, from the starting point, yes. Operator: Our next question comes from Pedro Offenhenden from Latin Securities. Pedro Offenhenden: I wanted to ask on -- you mentioned additional personnel expenses in the following quarters. Could you help us to frame this remaining impact as how much of the total restructuring costs were already recognized this quarter? Juan Parma: So maybe you can talk, Jorge, about the restructuring costs we booked in '25 and how much of that is still to benefit '26 and we can talk about what to expect going forward. Maybe I can take it both of it. From the ARS 82 billion that we booked in '25 concentrated in the fourth quarter, there are still ARS 36 billion of that, that will help personnel exits that will benefit '26. In terms of additional restructuring costs, you should expect similar numbers for the following quarters. But you should note that the condition for us to report an expense as a restructuring cost is one that will take out operational expenses on a permanent basis. So the likes of reduction in personnel that won't be replaced. That's what we define by restructuring costs. That's why in the following quarters, you should expect us to continue reporting with the same type of language being consistent to the point that restructuring cost is cost to take us out cost on a permanent basis. And in that sense, reporting or talking about reported and adjusted results and reported and adjusted ROEs, but we expect to continue in the following quarters with this action, which we believe is positive because it will end the year with a lower recurrent cost base for the company. And back to the previous point, compensating the margin compression that Jorge was talking about. That's why we are doing as inflation goes down, rates go down, margins compress, we are reacting on the cost side to compensate this effect. Operator: Our next question comes from Carlos Gomez-Lopez, HSBC. Carlos Gomez-Lopez: First, to confirm what you said earlier, which is that adjusting for the restructuring charges, you think that something like an 8% ROE for the year is realistic. Second, I would like to know if you have any update on your exciting acquisition of Personal Pay? Any update you can give us versus the call that you had 2 or 3 weeks ago? And finally, when you look at loan growth, I mean it has been coming down and down and down. And I mean, you are already giving us the expectation that it will be 20%, but actually 20% is an improvement from where we are today, when do you see the trend breaking and starting to see some more activity in the system? . Jorge Francisco Scarinci: Thanks, Carlos. On the first question, yes, we think that including all these restructuring charges and all the guidance in terms of growth in both loan deposits et cetera, we are expecting to deliver an adjusted ROE in the area of 8% in '26. I'm going to the third question. I mean, our main business is to lend money. And of course, we would like to lend as much money as we can, of course, considering credit risk and all that. But of course, what we are not seeing for the moment is the economy growing at very high rates. So the guidance that we are giving is like between maintaining share and gaining a little bit of basis points in share. We are not reducing our share in terms of loans. And you can see in the quarter that we reported that we are growing the shares in both loans and deposits. So the idea is to continue in that path going forward. But of course, we need the macro economy of Argentina to push harder in order to see a high level of loan growth. In terms of Personal Pay... Juan Parma: I can comment on that, Jorge, thank you. Yes. We announced the acquisition of 50% of Personal Pay, which is Telecom's wallet. This was a cash-in transaction. So all our equity investment went into the company to develop the company. This will be built as a bank-as-a-service business where we will, on one hand, work on engaging the around 30 million customers that Telecom have to use the wallet and then do financial intermediation with a bank-as-a-service model. As I think have explained when we talked about this with some of you in the specific call we had on Personal Pay about 3 weeks or 4 weeks ago, we have the option to do this through Banco Macro or do this through an existing or a new subsidiary of Banco Macro so we are considering those options while we build the technology and the services to connect the wallet with the bank as a service. So more to come on this front, and we will update you accordingly once we know how exactly this bank as a service model will be built. Operator: Our next question comes from [indiscernible]. Unknown Analyst: I wanted to ask regarding the restructration, if you have any target for headcount and for a number of branches by the end of 2026 and which is the impact in ROE because of these restructuration charges? Jorge Francisco Scarinci: I would say that in terms of both headcount and branches, we're expecting a reduction in both similar levels than the one that we saw in '25 just to give you some guidance there. And I would say that approx the impact on ROE in terms of these restructuring charges are approximately 3 percentage points. That is what we are calculating on '26 on the impact on restructuring charges on ROE. Unknown Analyst: Okay. So just to check, reported ROE will be around 5%, then right? Jorge Francisco Scarinci: Approximately in the area of 5% and they adjust it in the area of 8%. Operator: Our next question comes from Matias Cattaruzzi from Adcap. Matias Cattaruzzi: I wanted to ask you a question about the recent rise in dollar liquidity in the system. As it improved, how are you thinking about the possibility of gradually expanding USD lending beyond traditional dollar generating clients? Under what conditions would Macro feel comfortable lending dollars to nondollar earners, if at all? Juan Parma: So I will answer from the bank's perspective. Then there is the question, which is around the enablement of this, which is a question around regulation. So as I listen to your question, I understand you're well-versed on how the regulation is today. So let me start by that in the benefit of others that may be not that familiar with it in case that's the case. Today, in Argentina, you can only lend dollar from depositors to clients that have their revenue streams in dollars. So basically, exporters. So that limits your ability to deploy dollar deposits to only those type of customers. With your own dollars, not the dollars from depositors, but the dollars from the bank, you can lend to anyone. The reality is that if you take the total deposits in the system denominated in dollars, they move from being 1/4 of total deposits measured all in dollars, 25% to now 37%. So there is an advancement of dollar-denominated deposits in the total deposits of the banking system as a whole. With this limitation, eventually, this creates a bottleneck because you cannot deploy those reports. So the government is exploring alternatives to evolve from that situation. If that was the case, and I cannot say when and if this will happen because this depends on a change on regulation, and I cannot speak to that. We are prepared to lend because it will be -- if the regulation changes, then it will be up to each bank to define the appetite to use that space and lend their dollar capacity. We are bullish on that. We believe that we can work with high-quality customers, both on the commercial segment and on the individual segment to deploy that lending -- that dollar lending capacity. So we believe that if that regulation evolves allowing this to happen, this will turn into something positive for the bank because we are in the bullish side of the market regarding that. But we depend on the regulation to change or to evolve to take advantage of that opportunity. Operator: Our next question comes from Ernesto Gabilondo from Bank of America. Ernesto María Gabilondo Márquez: Congrats on your results. Very close to a recurring ROE of 7% in 2025, if excluding the restructuring costs. My first question is a follow-up on the 2026 guidance. Any color on NPLs? Can you confirm you have reached the NPL peaks? And when do you see them trending down in 2026? Any color in terms of fee income growth and also in recurring OpEx growth, so removing the restructuring costs, how do you see recurring OpEx growth? And also, when do you see the ROE returning again to high teens? Can you walk us through over the next years? And my second question is on your loan growth expectations. We have seen a lot of investments announced in Argentina. So in your case, which would be the sectors that you are financing or that you are seeking to finance leveraging on these announcements? And especially you have a very strong capital base, so maybe you have the opportunity to finance projects with longer duration when compared to your peers. And the last question is in your capital ratio. How do you see your capital allocation this year in terms of buybacks, dividends or potential M&A activity? Jorge Francisco Scarinci: I will try to answer all your questions. In terms of asset quality going forward in the same trend that we are seeing the cost of risk lower in terms of the level that we posted in average in '25. We're expecting also NPLs to go in the area of between mid to low 3s. That is in accordance with the 5.2% cost of risk that we are expecting for '26 compared to the 5.6% that we saw in '25. Basically, in terms of loan growth that you are on to asking, I would say that, yes, there are some investments that have been announced in Argentina in different sectors, mostly in energy, mining. Some of those investments are going to be done this year. Others are going to be done in '27, '28, et cetera. Of course, and it is also related to the other question that you asked, we have the best capital base in Argentina. And of course, we are expecting and prepared to finance those projects this year and following years. Of course, it is pretty sure that the bank wants to make the best use of this excess capital. And we have been trying to grow as much as we can in the past -- than we could in the past and going forward also in terms of dividend policy last year and also this year, we have a 100% payout ratio in terms of current dividend, that is this year is what the board is going to propose to the shareholders' meeting. And of course, we have to wait for the Central Bank to see if that dividend is going to be paid in 1 installment, 3, 6 or whatever. But again, we are working in order to clean down this excess capital going forward with the combination of organic, inorganic growth, cash dividend and if it is the case, on buyback programs, such as the one that we posted or put in place in the past. So it is pretty sure that we are very well prepared and positioned to take advantage of any positive news, both in the macroeconomic scenario and also within the financial sector in '26 and onwards. In terms of when we are going to be seeing mid-teens in terms of ROE, one thing to take into consideration is that maybe in 2028, Argentina would be entering to, again, I would say, nominal reporting because of '25, '26 '27, Argentina in the 3 years in a row we are having less than 100% inflation, we are going back to noninflation adjusting reporting. So we should be reporting nominal numbers and, of course, ROE since '28 onwards. So I think that's between '28 and '30, I think that is going to be the year where we are going to see macro delivery mid-teens ROEs and maybe something above that. Juan Parma: And I would add to Jorge's comments that by the end of 2027, our restructuring program will enter in full effect in terms of being able to capture the benefits of the restructuring. So the restructuring costs that we talked about will continue mostly to '26, part in '27. So by the end of '27, entering into full effect in '28, we will be able to capture and harvest the full benefits of the restructuring program, okay? If you read into our press release and results announcement, you will see that the ARS 82 billion of restructuring costs are related with costs that in '25 were ARS 49 billion. So we cannot talk here about future savings of these actions, but you can read into that. So if we continue with this, you can also read into how much that full effect of restructuring costs could mean in '28. Coupled with what Jorge mentioned about the stopping if Argentina continues in the inflation reducing trend, moving from real ROEs to nominal ROEs in '28. So by then, I'm pretty confident that we will be able to reach the mid-teen ROEs going forward. You answered -- Jorge mentioned back to the question on financing projects, longer tenors and so forth. Jorge mentioned about the capital strength of the bank. I would also add the liquidity strength and funding strength from the bank because after the successful placing of negatiated obligations that we did last month, we have also extended our funding capacity to support such projects for -- in a range of -- for 3 to 4 years. So we expect that. The other reality is that companies in Argentina have been benefiting from the access to capital markets and issuing a substantial amount and a record amount, I would say, of U.S. dollar-denominated debt. But we expect that after that cycle, then private lending -- the private lending market will turn on, particularly if rates in the U.S. at some point go up, we expect this to be an opportunity for that. So we are keeping that liquidity remaining ready to support the energy sector, the mining sector, the infrastructure sector of Argentina that at some point will start to get traction, we believe. Ernesto María Gabilondo Márquez: This is super helpful. Just a follow-up in terms of the NPL. So just to confirm, the NPL already peaked in the fourth quarter and you're expecting, for example, NPL to go to low to mid 3% and cost of risk to 5.2%. But how should we think about the timing throughout 2026? Is this something that will start to go down in the first quarter? Or is this something that will go down more in the second half of this year? So just a little bit of color on that. Jorge Francisco Scarinci: Yes. I think that we might see numbers more on the positive in the second half of '26, some stable numbers in the first half of '26. Operator: Our next question comes from Kaio Prato from UBS. Kaio Penso Da Prato: I have a quick on my side, please. Just to follow up on loans. If you are already seeing any pickup in loans sequentially because it has been weak on a quarter-over-quarter basis or if this is expected to accelerate more towards the second half? And second is still on loans. You mentioned about this reduction in overall growth expectations and talked about GDP. But is there any segment that you are seeing specifically slow down? Or if this is mostly related to our appetite on consumers? So just some breakdown between both would be good as well. Jorge Francisco Scarinci: We continue to see more service sectors as I mentioned before, energy and within energy, oil, gas and then you have mining, agribusiness sector. Those are the most active. The ones that are lagging a little bit are, I would say, construction, could be infrastructure for the moment, even though prospects for '26 of infrastructure are positive. Maybe massive consuming sectors are also not having a good performance. We expect these sectors as I commented to be the other leaders or the worst performance in '26. Juan Parma: I would also add that there is a bit of a binary situation in terms of credit quality and risk in an economy which is opening, although deregulation at some point will come and help by reducing the Argentina cost. It is clear that there will be winning sectors and losing sectors. Probably on the winning side, is all the sectors around mining, energy, agriculture, also services, to some extent, commerce retail if economy starts to pick up. The manufacturing sector is the one that is under the spotlight now, and we are seeing some specific manufacturing sectors like the textile sector, the clothing sector, like the automotive sector suffering because of the opening of the economy. So another lens to look at is not only where we -- how much we grow, in average, but be selective given this significant change in the structure of the micro economy by sector in Argentina. Kaio Penso Da Prato: Yes. Okay. But in terms of the loan, it's clear. But in terms of the loan growth, it's already improving sequentially? Or should we expect more of this growth towards the second half of the 2026? Jorge Francisco Scarinci: I think well, always the first quarter is the seasonally lowest. So I think that it's going to be in a gradual increase trend towards the end of '26. Operator: [Operator Instructions] There are no more questions at this time. This does conclude the Q&A section. I will now turn it over to Mr. Nicolas Torres for any final remarks. Nicolas Torres: Thank you all for your interest in Banco Macro. We appreciate your time and look forward to speaking with you again. Have a good day. Operator: Banco Macro's Fourth Quarter '25 Conference Call is now closed. You can disconnect now on, and have a wonderful day.
Operator: Ladies and gentlemen, good day, and welcome to the Yatsen Fourth Quarter and Full Year 2025 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Sophia Peng, Investor Relations Manager. Please go ahead. Sophia Peng: Thank you, operator. Please note that the discussion today will contain forward-looking statements relating to the company's future performance and are intended to qualify for the safe harbor from liability as established by the U.S. Private Securities Litigation Reform Act. Such statements are not guarantees of future performance and are subject to certain risks and uncertainties, assumptions and other factors. Some of these risks are beyond the company's control and could cause actual results to differ materially from those mentioned in today's press release and this discussion. A general discussion of the risk factors that could affect Yatsen's business and financial results is included in certain filings of the company with the Securities and Exchange Commission. The company does not undertake any obligation to update this forward-looking information, except as required by law. During today's call, management will also discuss certain non-GAAP financial measures for comparison purposes only. Please see the earnings release issued earlier today for a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results. Joining us today on the call from Yatsen's senior management are Mr. Jinfeng Huang, our Founder, Chairman and CEO; and Mr. Donghao Yang, our CFO and Director. Management will begin with prepared remarks, and the call will conclude with a Q&A session. As a reminder, this conference is being recorded. In addition, a webcast replay of this conference call will be available on Yatsen's Investor Relations website at ir.yatsenglobal.com. I will now turn the call over to Mr. Jinfeng Huang. David, please go ahead, sir. Jinfeng Huang: Hello, everyone. Thank you for joining Yatsen's fourth quarter and full year 2025 earnings call. I will start with a macro overview and our key financial performance, followed by an overview of our operational highlights under our key strategy initiatives over the past year. China's beauty industry maintained an upward trajectory throughout 2025. According to the adjusted data from the National Bureau of Statistics, beauty retail sales grew by 8.2% in the fourth quarter, the highest quarterly growth rate of the year. For the full year 2025, beauty retail sales grew by 5.1%, rebounding from the decline in 2024. While the market demonstrated robust recovery, the landscape was also marked by intensified competition, particularly during major shopping festivals. Against this backdrop of growing yet highly competitive market, we successfully executed our strategy initiatives to capitalize on the industry's upward momentum. Our total net revenue grew by 20.1% year-over-year for the fourth quarter, performing in line with our previous guidance and significantly outpacing the industry average. More importantly, this growth was driven by our Skincare brands, which accounted for 61.1% of our total net revenues in the fourth quarter. Our profitability also marked an improvement, recording net income under both GAAP and the non-GAAP measures for the fourth quarter. For the full year 2025, we also achieved a solid recovery in both revenue and profitability. Total net revenue returned to a growth trajectory increasing by 26.7% year-over-year to RMB 4.3 billion. Both our Color Cosmetics and Skincare brands delivered year-over-year growth with Dr. Wu and Galenic, serving as the primary drivers of this robust performance. For the full year, Skincare brands contributed 53% of our total net revenues. On the bottom line, we narrowed our full year net loss margin to 2.2% from 20.9% in the prior year while delivering a non-GAAP net income margin of 0.2%. This non-GAAP profitability turnaround is the direct result of our enhanced gross margin, optimized operational efficiencies and positive operating leverage from our top line growth. Our robust performance demonstrated the long-term value of our strategy transformation. Throughout the year, we remained steadfast in our commitment to 3 core initiatives: driving R&D-led product innovation, strengthening brand equities across our multi-brand portfolio and improving our overall profitability. I would now like to dive in deeper into these key focus areas. First, we leveraged our established R&D infrastructure to fuel a pipeline of innovative products, driven by proprietary ingredients development, open collaboration and application of AI in areas such as molecular structure prediction, our system efficiently translates cutting-edge technology into market-ready solutions. Our high-growth brands have all benefited from this refined R&D ecosystem with Galenic as a prime example. In September, Galenic launched the VB serum, further strengthening the brand's ABC cellular level skin care framework. The product saw a rapid surge in sales, becoming one of Galenic's top sellers and winning the breakthrough repairing serum of the year at the 2025 Cosmo Beauty Awards. In December, Galenic introduced another flagship innovation, the Couture Revelation Cellulaire reviving cream. Utilizing the brand's active anchor penetration technology, it delivers our exclusive patent anti-aging ingredient, Lumiskin deep into the skin to achieve significant firming and lifting effects. With these launches, Galenic has established a comprehensive presence across key skin care categories, including serums, creams and masks. We believe that our expanded product portfolio could not only optimize our channel mix by providing more offerings across different platforms, but also increase customer lifetime value by encouraging broader regime adoption. Second, we continue to focus on deepening the value and the market positioning of our brands. With a portfolio that spans from mass to premium and from color cosmetics to skin care, we possess a unique comprehensive view of the beauty industry. This allowed us to precisely address the evolving needs of diverse consumer segments. For example, by leveraging Dr. Wu's decades of expertise in clinical skin renewing treatments and capturing the latest trends in medical aesthetics, the brand launched the PDRN serum. This product is designed to meet growing consumer demand for clinic-inspired results from the comfort of home. Driven by these deep consumer insights, Dr. Wu experienced robust growth over the past year and was recognized as the annual growth breakthrough brand from Douyin. This success has further solidified Dr. Wu's brand authority and awareness in the skin renewing segment, effectively translating market momentum into long-term brand equity. Third, we remain dedicated to enhancing our profitability and operational excellence. We see clear opportunities to further improve profitability across several dimensions. To begin with, we are optimizing our product mix by prioritizing products with higher gross margins. Channel-wise, we plan to maximize marketing efficiencies through data-driven customer relationship management and a more stringent return on investment discipline while we are allocating spend toward higher return platforms. Beyond our front-end operations, we are also optimizing operational workflows to drive cost optimization. Lastly, as our top line continues to grow, we expect to gain operational leverage across our fixed expenses. So collectively, these initiatives bolster our confidence in delivering steady margin expansion while sustaining our growth momentum. In summary, 2025 was a pivotal year. Our R&D breakthroughs, deep consumer insights and enhanced operational efficiency have returned us to growth and optimize our profitability. Moving forward, we will stay committed to long term driving brand equity through innovation and delivering a quality profit-centric growth. Thank you. I will now turn the call to Donghao. Donghao Yang: Thank you, David, and hello, everyone. Before I get started, I would like to clarify that all financial numbers presented today are in renminbi amount and all percentage changes refer to year-over-year changes unless otherwise noted. The total net revenues for the fourth quarter of 2025 increased by 20.1% to RMB 1.38 billion from RMB 1.15 billion for the prior year period. The increase was primarily due to a 51.9% year-over-year increase in net revenues from Skincare brands partially offset by a 9.1% year-over-year decrease in net revenues from Color Cosmetics brands. Gross profit for the fourth quarter of 2025 increased by 20% to RMB 1.07 billion from RMB 893 million for the prior year period. Gross margin for the fourth quarter of 2025 was 77.7%, remaining largely flat as compared with 77.8% for the prior year period. Total operating expenses for the fourth quarter of 2025 decreased by 15.6% to RMB 1.08 billion from RMB 1.28 billion for the prior year period. As a percentage of total net revenues, total operating expenses for the fourth quarter of 2025 were 78.6% as compared with 111.8% for the prior year period. Fulfillment expenses for the fourth quarter of 2025 were RMB 77 million as compared with RMB 63.5 million for the prior year period. As a percentage of total net revenues, fulfillment expenses for the fourth quarter of 2025 were 5.6% as compared with 5.5% for the prior year period, remaining largely flat. Selling and marketing expenses for the fourth quarter of 2025 were RMB 893.8 million as compared with RMB 690.6 million for the prior year period. As a percentage of total net revenue, selling and marketing expenses for the fourth quarter of 2025 increased to 64.8% from 60.1% for the prior year period. The increase was primarily driven by higher traffic acquisition costs amid intensified competition during the Double 11 shopping festival. General and administrative expenses for the fourth quarter of 2025 were RMB 74.4 million as compared with RMB 100.1 million for the prior year period. As a percentage of total net revenues, general and administrative expenses for the fourth quarter of 2025 decreased to 5.4% from 8.7% in the prior year period. The decrease was primarily driven by lower payroll expenses and share-based compensation expenses, coupled with the leveraging effect of higher total net revenues in the fourth quarter of 2025. Research and development expenses for the fourth quarter of 2025 were RMB 38.8 million as compared with RMB 26.3 million for the prior year period. As a percentage of total net revenues, research and development expenses for the fourth quarter of 2025 increased to 2.8% from 2.3% for the prior year period. The increase was primarily driven by higher payroll expenses resulting from rise in research and development headcount. There was no impairment of goodwill for the fourth quarter of 2025 as compared with an impairment of goodwill of RMB 403.1 million for the prior year period. Based on our assessment, no impairment indicators were identified as of December 31, 2025. Loss from operations for the fourth quarter of 2025 was RMB 12.7 million as compared with RMB 390.7 million for the prior year period. Operating loss margin was 0.9% as compared with 34% for the prior year period. Non-GAAP income from operations for the fourth quarter of 2025 was RMB 11.8 million as compared with RMB 93.2 million for the prior year period. Non-GAAP operating income margin was 0.9% as compared with 8.1% for the prior year period. Net income for the fourth quarter of 2025 was RMB 3 million as compared with net loss of RMB 378.8 million for the prior year period. Net income margin was 0.2% as compared with net loss margin of 33% for the prior year period. Net income attributable to Yatsen's ordinary shareholders per diluted ADS for the fourth quarter of 2025 was RMB 0.08 as compared with net loss attributable to Yatsen's ordinary shareholders per diluted ADS of RMB 3.98 for the prior year period. Non-GAAP net income for the fourth quarter of 2025 was RMB 41.2 million as compared with RMB 107 million for the prior year period. Non-GAAP net income margin was 3% as compared with 9.3% for the prior year period. Non-GAAP net income attributable to Yatsen's ordinary shareholders per diluted ADS for the fourth quarter of 2025 was RMB 0.46 as compared with RMB 0.99 for the prior year period. Now I would like to briefly walk you through the highlights of our full year results. Total net revenues for the full year of 2025 increased by 26.7% of RMB 4.3 billion from RMB 3.39 billion for the prior year period, primarily attributable to a 63.5% year-over-year increase in net revenues from Skincare brands, combined with a 1.9% year-over-year increase in net revenues from Color Cosmetics brands. Gross profit for the full year of 2025 increased by 28.4% to RMB 3.36 billion from RMB 2.62 billion for the prior period. Gross margin for the full year of 2025 increased to 78.2% from 77.1% for the prior year period. The increase was primarily attributable to increasing sales of higher-gross margin products. Loss from operations for the full year of 2025 was RMB 185.8 million as compared with RMB 824.9 million for the prior year period. Operating loss margin decreased to 4.3% from 24.3% for the prior year period, primarily because there was no impairment of goodwill for the full year of 2025. Non-GAAP loss from operations for the full year of 2025 was RMB 84 million as compared with RMB 224.3 million for the prior year period. Non-GAAP operating loss margin decreased to 2% from 6.6% for the prior year period. Net loss for the full year of 2025 was RMB 92.4 million as compared with RMB 710.2 million for the prior year period. Net loss margin decreased to 2.2% from 20.9% for the prior year period. Net loss attributable to Yatsen's ordinary shareholders per diluted ADS with the full year -- for the full year of 2025 was RMB 0.87 as compared with RMB 6.99 for the prior year period. Non-GAAP net income for the full year of 2025 was RMB 8.4 million as compared with non-GAAP net loss of RMB 128.2 million for the prior year period. Non-GAAP net income margin was 0.2% as compared with non-GAAP net loss margin of 3.8% for the prior year period. Non-GAAP net income was attributable to Yatsen's ordinary shareholders per diluted ADS for the full year of 2025 was RMB 0.19 as compared with non-GAAP net loss attributable to Yatsen's ordinary shareholders per diluted ADS of RMB 1.26 for the prior year period. As of December 31, 2025, we had cash, restricted cash and short-term investments of RMB 1.05 billion as compared with RMB 1.36 billion as of December 31, 2024. Net cash used in operating activities for the fourth quarter of 2025 was RMB 69.4 million as compared with net cash generated from operating activities RMB 202.2 million for the prior year period. Net cash used in operating activities for the full year of 2025 was RMB 94.7 million as compared with RMB 243.7 million for the prior year period. Looking at our business outlook for the first quarter of 2026, we expect our total net revenues to be between RMB 958.6 million and RMB 1.08 billion, representing a year-over-year increase of approximately 15% to 30%. These forecasts reflect our current and preliminary views on the market and operational conditions, which are subject to change. With that, I would now like to open the call to Q&A. Operator: [Operator Instructions] And today's first question comes from Maggie Huang with CICC. Manqi Huang: This is Maggie Huang from CICC. Firstly, congratulations for achieving a non-GAAP net income turnaround for the whole year. And I have 2 questions. My first question is that how do we plan to improve our net profit margin in this year? And my second question is about our plan to expand our profit portfolio for Skincare brands in this year. That's my 2 questions. Donghao Yang: Well, thank you very much for your question. Regarding your first question, I think this year, we're going to continue to grow our Skincare business much faster than our Color Cosmetics business. And with Skincare business, the gross margin, net margin are typically much higher than Color Cosmetics brands. So by doing that, we're going to be able to improve our margin profile. And secondly, our top line will continue to grow this year. And as a leveraging effect, we do believe that our net margin will improve accordingly. And your second question regarding the growth of our Skincare business. I think the most important thing that we're going to do to grow our Skincare business is R&D. In the last 5, 6 years, we've been investing aggressively in our R&D capabilities. And if you look at the past -- especially the past 1 or 2 years, the phenomenal top line growth of our Skincare business has largely been due to the contribution of our R&D team in terms of better products which meet our consumers' demand. Operator: Ladies and gentlemen, that does conclude the question-and-answer session. I'd like to turn the conference back over to management for any additional or closing comments. Sophia Peng: Thank you all once again for joining us today. If you have any further questions, please feel free to contact us at Yatsen directly. Our contact information for IR in both China and the U.S. can be found in today's press release. Have a great day, everyone. Operator: Thank you. That does conclude our conference for today. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.
Operator: Good day, and thank you for standing by. Welcome to UroGen Pharma Ltd.'s 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 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Vincent I. Perrone, Senior Director of Investor Relations. Please go ahead. Vincent I. Perrone: Thank you. Good morning, everyone. Welcome to UroGen Pharma Ltd.'s full-year 2025 Financial Results and Business Update Conference Call. Earlier this morning, we issued two press releases, the first providing an overview of the refinancing of our debt facility with Pharma Advisors, and the second providing an overview of our recent corporate highlights and financial results for the fourth quarter and year ended 12/31/2025. Both releases can be accessed on the Investors portion of our website at investors.urogen.com. Joining me today are Elizabeth A. Barrett, President and Chief Executive Officer; Mark P. Schoenberg, Chief Medical Officer; David Lin, Chief Commercial Officer; and Christopher Degnan, Chief Financial Officer. On today's call, we will be making certain forward-looking statements. These may include statements regarding our ongoing commercialization activities related to Jelmyto and Zasturi, our ongoing and planned clinical trials and nonclinical studies, the commercial and clinical development milestones, market and revenue opportunities, our commercialization and long-term growth strategy and expectations, as well as anticipated data, regulatory filings and decisions, the potential benefits of our products and product candidates, future R&D efforts and milestones, our corporate goals, and 2026 financial guidance, among other things. These forward-looking statements are based on current information and expectations that are subject to change. A description of potential risks can be found in our earnings press release and latest SEC disclosure documents. You are cautioned not to place undue reliance on these forward-looking statements and UroGen Pharma Ltd. disclaims any obligation to update these statements. I will now turn the call over to Elizabeth A. Barrett, Chief Executive Officer. Elizabeth A. Barrett: Thanks, Vincent. Good morning, and thank you for joining us today. Our top priority is the commercial launch of Zysturi in recurrent, low-grade, intermediate-risk, non–muscle invasive bladder cancer, a pivotal step in advancing our long-term growth strategy. As we outlined in our earnings release this morning, we are encouraged by the early 2026 trajectory following the permanent J code becoming effective January 1. Zasturi revenue in 2025 was $15,800,000, reflecting early launch dynamics as we work through typical reimbursement and operations steps necessary to build the foundation for broader adoption. With a permanent J code now in place, a key barrier to adoption has been removed, facilitating more predictable patient access. Since that milestone, as expected, we have seen a clear acceleration across key launch indicators including the number of new and repeat prescribers, patient enrollment forms, and new patient starts. Overall, we are pleased with how the launch is unfolding in early 2026 and we are on track with the assumptions we have made around its trajectory. Zesturi addresses a large and underserved market, and based on our assumptions regarding market penetration, pricing, and physician adoption, we believe Zesturi has the potential to achieve greater than $1,000,000,000 in peak revenue. Importantly, Zasturi provides the first and only medication approved by the FDA that can provide patients with a primary office-based therapy that can result in extended recurrence- and treatment-free living. Turning to the rest of the business, Jelmyto generated net product revenue of $94,000,000 for the full year 2025, reflecting continued underlying demand growth. We are also advancing our pipeline in a disciplined manner. UGN-103, our next-generation formulation of Cisteri, demonstrated compelling complete response results in the Phase 3 Utopia trial, consistent with the ENVISION study. We remain on track to submit an NDA in recurrent low-grade, intermediate-risk, non–muscle invasive bladder cancer in 2026, with potential FDA approval in 2027. With a clear regulatory pathway established for UGN-103, and low-grade IR non–muscle invasive bladder cancer, we are evaluating its potential in additional bladder cancer settings including as an adjuvant in intermediate- and high-risk bladder cancer as part of our broader life cycle strategy. UGN-104, our next-generation formulation of Jelmyto, continues to progress through Phase 3 with enrollment expected to complete by 2026. Finally, following the refinancing of our term loan with Pharmacon, we have further strengthened our balance sheet and enhanced our financial flexibility. Together with our existing cash on hand, this refinancing provides additional nondilutive capital that supports our operating plan and allows us to continue executing our strategy in a disciplined manner. Importantly, our fortified balance sheet enables us to fully support the ongoing Zistory launch, advance our next-generation pipeline, and thoughtfully pursue life cycle management opportunities over time. We believe this approach positions us well to allocate capital responsibly and create long-term value for patients and shareholders. I will now turn the call over to Mark for a clinical update. Mark? Mark P. Schoenberg: Thank you, Liz. As a reminder, the ENVISION trial, which supported approval of assessed duty, demonstrated an approximately 80% complete response rate at three months. Importantly, among those patients who achieved a complete response, the probability of remaining free at 12 months was approximately 80% by Kaplan-Meier estimate, and at 24 months was approximately 72% by Kaplan-Meier estimate. In practical terms, that translates to a substantial proportion of patients expected to remain disease free two years following treatment. Zesturia is delivered as a convenient six-dose regimen in the outpatient setting and does not require surgery or maintenance therapy. Taken together, these clinical and practical advantages support Cystoree's growing role for adults with recurrent, low-grade, intermediate-risk NMIBC and position it competitively within an evolving treatment landscape. I would note that what I am about to share reflects anecdotal feedback from early adopters and patient conversations rather than formal study outcomes. From those discussions, we are hearing that Zasuri is integrating smoothly into routine practice. Physicians have commented on the simplicity of administration and the ability to incorporate the six-dose regimen into existing patient workflows without requiring procedural changes or additional infrastructure. Several urologists have shared that following their first experience with Cisteri, the process becomes predictable and manageable within the normal flow of their clinic. We are also hearing encouraging feedback from the patient perspective. For individuals who have undergone multiple TURBT procedures, having a nonsurgical treatment option delivered in the outpatient setting has been meaningful. Physicians have described patients as being receptive to, and in some cases enthusiastic about, the opportunity to avoid additional surgery under general anesthesia while maintaining disease control. Taken together, while anecdotal, this early feedback reinforces our confidence in how Story's clinical durability and practical ease of use are translating into real-world adoption. Turning now to the pipeline, UGN-103 is our next-generation mitomycin-based formulation for adults with recurrent, low-grade, intermediate-risk non–muscle invasive bladder cancer. We are developing UGN-103 to build on the foundation established by Zasduri. UGN-103 is designed to improve upon the current formulation with a shorter manufacturing process and a more streamlined reconstitution procedure. Results from the ongoing Utopia Phase 3 trial demonstrated a 77.8% complete response rate at three months. We have aligned with the FDA that the data from this trial can support an NDA submission in this indication. We are planning to submit in 2026, which would position us for potential FDA approval in 2027. As Liz mentioned, we are evaluating life cycle management and pipeline expansion opportunities for UGN-103 beyond low-grade intermediate-risk disease. This includes exploration of its potential in high-grade NMIBC, as well as an adjuvant setting for intermediate-risk patients. We anticipate holding Type C meetings with the FDA in the second or third quarter to align on the development plans for these programs. We expect both studies to be randomized, controlled, and event-driven trials. Subject to regulatory alignment with the FDA, we intend to initiate the high-grade NMIBC study in 2026. We look forward to providing additional details as those plans are finalized. UGN-104, our next-generation program for low-grade upper tract urothelial cancer, continues to progress in Phase 3, with enrollment expected to complete by 2026. UGN-501 is our investigational next-generation oncolytic virus in development for high-risk non–muscle invasive bladder cancer. IND-enabling studies are well underway, and our goal is to submit the IND and initiate a Phase 1 clinical trial in 2026. While our initial focus remains bladder cancer, we see potential to explore this platform more broadly beyond the genitourinary system. Overall, we believe the recent progress made across our programs positions us well over the coming year with multiple clinical and regulatory milestones ahead. I will now turn the call over to David for the commercial update. David Lin: Thank you, Mark. I want to reinforce what Liz shared earlier. We are very encouraged by how the Zestiri launch is developing and it continues in line with our expectations. The commercial execution we are seeing reflects the significant groundwork laid throughout 2025, as we are beginning to see that preparation translate into broader engagement across the urology community. From FDA approval through year-end 2025, our focus was on intentionally building the commercial foundation required for long-term success. We expanded and trained the commercial organization, established reimbursement pathways, and worked closely with urology practices to support operational readiness ahead of broader adoption. Zestiri generated $1,800,000 in net product revenue in Q3 and $14,000,000 in Q4, bringing full-year 2025 revenue to $15,800,000. As discussed, these early quarters reflected the foundational launch during the miscellaneous J code period. As of 12/31/2025, we had 838 activated sites of care, with 102 unique prescribers and 32 repeat prescribers. Payer execution continued to support access, with over 95% of covered lives having open access to Zasturi by year-end. The permanent product-specific J code became effective on January 1, 2026, and since that time, we have seen a noticeable step up in adoption and utilization trends through January and February. It is still early days; however, the directional indicators are consistent with our expectations that reimbursement clarity would support broader uptake. Importantly, we are not seeing any material friction points in reimbursement, logistics, or treatment delivery. Just as important, we are beginning to see greater engagement from community-based urologists. As expected, many community practices were more cautious prior to the permanent J code going into effect, and we are now seeing growing participation as reimbursement processes normalize and confidence builds. We believe this shift toward increased community adoption will be an important contributor to growth as we move through 2026. We are also tracking the conversion timeline from patient enrollment form, or PEF, to dosing. We have previously said that conversion cycle was in the 45- to 60-day range, reflecting the onboarding and workflow integration typical of a new product launch. Over the course of 2026, we expect conversion time to narrow as sites gain familiarity and operational efficiencies improve, ultimately moving closer to the two- to three-week time frame we see today with Jelmyto. As we continue through 2026, our commercial organization is scaled to support the 8,500 in our target universe who treat approximately 90% of the low-grade, intermediate-risk non–muscle invasive bladder cancer patients in the U.S. Our focus remains on disciplined execution, expanding peer-to-peer education, supporting appropriate patient identification, and ensuring practices have the tools they need as adoption continues to build in a measured and sustainable way. We have also begun to increase our investment in patient awareness initiatives to complement our physician-focused efforts, ensuring that patients are informed about their treatment options. Turning to Jelmyto, it generated net product revenue of $94,000,000 in 2025. While growth has moderated for a more mature product, we continue to drive consistent engagement and steady demand across the treating community based in part on compelling, durable, complete response data. Importantly, the expansion of our commercial organization in support of Zasturi also enhances our overall urology presence, which we believe can provide incremental support to the Jelmyto franchise over time. I will now hand it over to Chris to discuss financials. Christopher Degnan: Thank you, David. Revenues were $109,800,000 for the year ended 12/31/2025, compared with $90,400,000 in 2024. The 21% year-over-year increase was driven by the commercial launch of Zastory in 2025 as well as increased sales of Jelmyto. Research and development expenses for the year ended 12/31/2025 were $67,100,000, compared with $57,100,000 in 2024. The year-over-year increase was primarily driven by higher manufacturing cost for Zasturi, which are recognized as R&D expenses prior to receiving FDA approval, costs associated with the Phase 3 trials for UGN-103 and UGN-104, and the acquisition of UGN-501, partially offset by lower clinical trial costs and regulatory expenses in connection with Sistori. Selling, general, and administrative expenses were $105,100,000 for the full year ended 12/31/2025, compared to $121,200,000 for the full year 2024. The year-over-year increase in SG&A expenses was primarily driven by Story commercial activities, including the sales force expansion following Zastore approval in 2025, as well as an increase in overall commercial operation costs. Financing expense related to the prepaid forward obligation to RTW Investments was $18,500,000 for the year ended 12/31/2025, compared with $23,400,000 in the prior year. The decrease was driven primarily by changes in underlying assumptions for remeasuring the effective interest rate. Interest expense on our prior $125,000,000 term loan facility with Pharmacont Advisors was $15,300,000 in 2025, compared with $12,500,000 in 2024. The increase was primarily attributed to the interest expense on the $25,000,000 third tranche of the loan that was funded in September 2024. We reported a net loss of $153,500,000, or $3.19 per basic and diluted share, for the year ended 12/31/2025, compared with a net loss of $126,900,000, or $2.96 per basic and diluted share, in 2024. As of 12/31/2025, our cash, cash equivalents, and marketable securities totaled $120,500,000. As Liz mentioned, today, we announced that we have entered into a second amended and restated loan agreement with Pharmacont Advisor providing for a senior secured term loan facility of $250,000,000, consisting of two tranches. The initial tranche of $200,000,000 is funded at closing and was used to refinance our existing $125,000,000 term loan facility and provide additional nondilutive capital. The agreement also includes a second tranche of $50,000,000, which may be drawn at our discretion through 06/30/2027, subject to customary conditions. All outstanding loans with Pharmacon will accrue interest at a fixed rate of 8.25% and will be repaid with four equal quarterly principal payments beginning in 2030. The facility includes customary prepayment provisions, including applicable premiums and make-whole amounts. We believe this refinancing enhances our financial flexibility and provides additional nondilutive capital to support continued investment in the Ziptori launch, life cycle management initiatives, and advancement of our pipeline, while maintaining a disciplined approach to capital allocation. Finally, turning to guidance, we are providing 2026 guidance for Jelmyto net product revenue and total company operating expenses. Given that ZESTORIA remains in the early stages of its launch, we are not providing formal sales guidance for 2026 at this time. For the full year 2026, net product revenues for Jelmyto are expected to be in the range of $97,000,000 to $101,000,000. This implies a year-over-year growth rate of approximately 3% to 7% over 2025. Full-year 2026 operating expenses are expected to be in the range of $240,000,000 to $250,000,000, including noncash share-based compensation expense of $20,000,000 to $24,000,000. The anticipated year-over-year increase in company operating expenses is primarily driven by three factors: an increase in noncash share-based compensation expense attributable to a higher stock price at the 2026 grant date and an overall increase in employee grants; the annualization of costs associated with our salesforce expansion following the Story approval in 2025; and our life cycle management plans for UGN-103. That concludes our prepared remarks. We will now open up the call to questions. Operator? Operator: Please press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Our first question comes from Kelsey Goodwin with Piper Sandler. Kelsey Goodwin: Hey, good morning, and thanks for taking our questions, and congrats on the quarter. Maybe first, I know you are not providing anything on the enrollment forms, but do you have any color or commentary you can provide there and maybe a way we could benchmark it to what you are seeing with Jelmyto, what you saw in their launch? And then in terms of the potential guidance for Zostery, I guess, when might you be able to provide that, or would that be maybe a 2027 thing? Thank you. Elizabeth A. Barrett: Yeah, I will ask Chris to answer this second question, and then and then David can answer the first question. Christopher Degnan: So, Kelsey, thanks for the question. You know, it is early in the launch, as we said. And there are certain variables that can affect the near-term uptake. So, you know, once we get a better visibility to steady-state demand, I would say at least two quarters post the permanent J code, then we could consider providing formal guidance for Zastore. Elizabeth A. Barrett: David, I will pass. David Lin: Yeah. Hi, Kelsey. It is David. With regard to patient enrollments, as expected, since the permanent J code became effective at the beginning of the year, we are seeing step up in a number of key indicators, so PEFs being one of them, and that is really in large part due to the fact that we have new writers as well as growing repeat writers. Thanks for the question. Elizabeth A. Barrett: Hey, Kelsey. Just to put a little bit of a finer point on that, to your point about how is it doing versus Jelmyto, I will tell you that, you know, and cautiously tell you because I— that all of our indicators in the month of February surpassed Jelmyto. So if you think about patient enrollment forms, you think about new patient starts and doses, we are now tracking ahead of where Jelmyto is. So take that into consideration when you think about the number for the year that we have said we are— with where our guidance is. And if you think about it versus where Jelmyto is, I think that will show you that we are on track for, you know, to hit that number. So just want to— that that is a little bit more color. I know everybody is wanting specific numbers, but I think that is the best we are going to be able to do. But I think that should give everybody confidence in kind of where we are right now. Kelsey Goodwin: That is great. Thank you so much. Operator: Our next question comes from Raghuram Selvaraju with H.C. Wainwright. Raghuram Selvaraju: Thanks so much for taking my questions and congratulations on all the progress this quarter. I just wanted to drill down on the prescribers and repeat prescribers for a second. So two questions here. Firstly, among the repeat prescribers, can you comment on the trend in this number and if you are seeing it steadily ticking up month over month, quarter over quarter? Secondly, with respect to those prescribers who have deployed Zesturi, but are not yet repeat prescribers, have you received any feedback from this group indicating how likely they would be to become repeat prescribers? And are there any specific considerations that are emerging that would prevent them from becoming repeat prescribers? Elizabeth A. Barrett: Yeah. David? David Lin: Hi there. Thanks for the question. In terms of repeat prescribers, we are seeing steady growth in— I will just comment, in both new and repeat prescribers. So to your point around repeat prescribers, what we see with them is that once they have a very positive experience with a patient, and the workflow becomes incorporated into their practice, and they have the confidence around reimbursement, which is now reinforced with the effectiveness of a permanent J code, that is really what enables them to become repeat prescribers. With many of the new prescribers, what they are really waiting to see is they typically want to make sure that they have a claim submission and they get reimbursed. And as their practices become more familiar with the medicine, implementing it in their workflows, they are very likely to become repeat prescribers. And so what we have heard from the prescriber base is that it is a steady growth in— as they become more familiar, they tackle more patients. Raghuram Selvaraju: Very helpful. And then just quickly on life cycle management, I was wondering if you have a sense, assuming timely submission of UGN-103, approximately when you might potentially be in position to introduce it into the market in the United States? And secondly, if you could comment at all at this juncture on what you expect the dynamics to be between UGN-103 and Zasturi, and how you are thinking about 103 relative to Zasturi from a commercial positioning standpoint. Thank you. Elizabeth A. Barrett: Yeah. So the plan would be to not introduce it into the market until after we get a permanent J code. So what— what, you know, we have discussed is that we would file this year, you will get approval in 2027, and so then it would likely be 2028 when we would be in a position to launch it. And what we would do is the goal would be to transition to UGM-103 as quickly as possible, but I— you know, because there is going to be a lot of confusion, so we have to make sure that we handle that very quickly to avoid any of that. And then at the point in time where we feel confident we are not going to lose, you know, physicians and patients with Zosturi, that they will switch to 103, then we will make that switch. So we have a— we will be very purposeful, purposeful about that, and then pull Zosturi as quickly as possible. So there will not be a lot of the— to your point, the dynamic of 103 and Zasturi being on the market at the same time. That will happen, obviously. There will be a transition period. But we want to make that transition period as quick as possible. Raghuram Selvaraju: Thank you. Operator: Our next question comes from Michael Schmidt with Guggenheim. Michael Schmidt: Hey, good morning. Thanks for taking my questions. On ZOZURI, could you just provide some more comment on current views, especially as we think about what types of patients are leveraging the Story at this point in time? What percentage of patients are, you know, considered unfit for TURBT surgery as opposed to those that are fit and are just seeking an alternative to surgery? And how do you expect that use pattern to shift over the rest of this year? So that is question number one. Then question number two, I think you did mention some potential life cycle management opportunities, especially for UGN-103, including evaluation as an adjuvant therapy. And I am just curious, based on your market research, how well does the concept of adjuvant therapy in general resonate with patients as opposed to just using therapy as a replacement of surgery, you know, instead of as an add-on? How do you think about that? Thank you so much. Elizabeth A. Barrett: Yeah. Sure. David can answer the first, and then Mark, please be prepared to answer the question around life cycle management. David Lin: Hey, Michael. This is David. In terms of your question, I think the first thing I will say is that physician customers have been very enthusiastic about the compelling data surrounding Zasturi. We have talked about— and as we have gained more experience in the market, that complete response and durability of response really does resonate, and they do see it as a paradigm change. In terms of the patient types that they are giving Zasturi, while not a precise science, I will say they are using as we expected. So the first would be people who recur early, second would be those who have frequent recurrences, and third, those who they feel just should not go through another surgery. So we are hearing patients across the board, and that is what gives us a lot of confidence that the value proposition is getting across to them. That is supported by the fact that we have a permanent J code now in 2026. It has opened up utilization, as we discussed, in more community practices, and it is really consistent with how we thought about the launch at this point in time. Mark P. Schoenberg: Michael, thanks. And with respect to the life cycle management question, the expansion of the use of 103 in the adjuvant setting would have to be in the setting of treating patients where we currently believe TURBT would be obligatory. So that would be in patients with a new diagnosis where a patient would— a transurethral resection to make a diagnosis, likely for new-onset intermediate-risk disease as well as new-onset high-grade disease, primary therapy would not be the standard of care but adjuvant therapy would. So we think there would be enthusiasm for it in both settings, and it would expand markedly the opportunities for patients to take advantage of the benefits of 103 in both settings. So adjuvant for new diagnosis intermediate-risk disease, as well as adjuvant therapy for patients with high-risk disease. Elizabeth A. Barrett: Great. Thanks so much. Yeah. And— and just to answer the— you know, add a little bit more color on the patient dynamics, that, you know, from the adjuvant— of how that is being used today, we do not really know. Obviously, we do not track that. We do know some physicians today are using it in the adjuvant setting for the recurrence, but we do not promote that, right? Because our data is clearly without surgery. And I think that that is very important because the idea of not having to go through surgery— while physicians may not love that idea, some of them— patients really do. And the reality of it is that the 80% complete response and the durability that we have shown— keep in mind that that is without surgery. And so we do want to— while we do recognize that some physicians may be less comfortable and they will do it in the adjuvant setting even today, we do want ultimately for them to use it without surgery because we think that is in the best interest of the patient, frankly. And we think that that also differentiates us versus all of our competitors. So anybody coming in, you know, as they are coming in, they are in the adjuvant setting, and right now, we are the only ones that are showing it as a primary. And I think that that is going to be really important as we go forward. Operator: Our next question comes from Leland Gershell with Oppenheimer. Leland Gershell: Good morning, and I am glad to hear the update. Thanks for taking our questions. We have two— one just on the commercial side with Astoria. As you develop that market, wanted to ask what you are seeing in terms of the community versus academic centers that are— that are kind of buying into it. Is it different than how Jelmyto proceeded in its early launch? David Lin: Yeah. Hey, Leland. Your question around channel mix, it is a little bit different. I think as you saw with Jelmyto, it was very heavily concentrated with hospitals, particularly in the beginning. What we saw in 2025 with Zasturi is that we saw about 60% utilization in a hospital-type setting. And obviously, with the effectiveness of a permanent J code, we expected that that would actually bring on more community users. And since the beginning of the year, we have started to see that happen. And as we sit here at February, I can tell you that the mix of settings has started to pivot toward the community settings. So we are looking at about 50/50 right now for Zasturi. And we do continue to— we would expect to see is that as these community settings come on board, they get experience with using the product, filing claims, and getting reimbursed, we will continue to see continued growth in the community setting over time. Leland Gershell: Okay. Great. And then development question. You had mentioned you are looking at Zystri in the adjuvant setting in high risk. Just wondering if you could share more detail on that and perhaps other expansion opportunities in high risk? Would you be— could you be looking at the Story in combination with others? And then the adjuvant setting, would that be in BCG naïve with TURBTs, or would there be an opportunity in BCG unresponsive? Just curious if you can share any more detail there. Thank you. Mark P. Schoenberg: Yeah. Thank you, Leland. So I think there are a lot of opportunities in high-risk disease. One area we are particularly interested in is in the BCG-unresponsive papillary high-grade disease, where we think there is a real opportunity. So we are in the process of finalizing a protocol to launch an adjuvant trial at high-risk disease, and, obviously, we will be happy to share details when that protocol is finalized. But we do think that Zosturi all by itself— or in this case, it would be 103— as a single agent would be very useful for this particular population, and that is where we would start our investigation. Liz may want to comment further on possibility of combining with other agents, however. Elizabeth A. Barrett: Yeah. I mean, I think we have definitely considered that. But it would be good— we definitely want to see how we do with just monotherapy, you know, post TURVT. But absolutely open to and have been looking at potential combinations. So we will do that as well. I mean, it makes sense for us to be in multiple areas, multiple patient populations. And so our ability to quickly launch these incremental clinical studies and broaden the patient utilization is a core strategy for us. And that is how we will ensure long-term, sustainable growth, by really being able to hit all of the patient populations in non–muscle invasive bladder cancer. There is no reason why it should not work across the board, and that is our intention. Leland Gershell: Thank you. Very helpful. Operator: Our next question comes from Paul Choi with Goldman Sachs. Paul Choi: Hi, good morning, and thank you for taking our questions. My first question is, Liz, can you maybe offer a framework about how you are thinking about the level of investment in promoting the Zasturi launch given that you eventually plan to transition to UGN-103 in the future? And just sort of what level of investment is needed here to generate a positive return on all the investment you are putting into the product currently and in the past? And then my second question is, I think in the past, you have indicated that you thought you had enough capital to sustain yourself to profitability. And so I guess how are you thinking about prioritizing capital allocation with this new loan on the forward here? And do you feel like, you know, now your— your is finally where you need it to be to get to profitability? Thank you for taking our questions. Elizabeth A. Barrett: Sure. I will answer the first, and then I will ask Chris to talk about the longer-term sustainability of the financials and our investment. And, you know, I think that where we are with investing in Zasturi versus 103, we are investing in Zasturi like 103 does not exist. I mean, we are doing everything we can to ensure the maximum opportunity and we will continue to do that. And, you know, I will give you an example. We just had a new person join the commercial team that was— in a couple of weeks— that, hey, what is one thing that I have really appreciated, and that is we have the resources. So we have resourced this launch like it needs to be, and there is nothing— no stone that we are leaving unturned, including, you know, engaging in patients. So while we are not doing broad-based DTC, we clearly are trying to reach patients in a more targeted manner. So I would say, again, absolutely fulfilling every aspect of the launch. So we are not looking at it as this is just temporary and in 2028 we are going to have 1— we are not looking at it like that. We are looking at it because what we build for Zasturi will be the foundation for UGN-103. So we are going after it correctly and, again, not leaving any stone— you know, in time for that commercial opportunity. So I feel really good about where we are from that standpoint, and we will continue to do that. And I will just ask Chris to comment on the expenses and where we are going from— Christopher Degnan: Yeah. And thanks, Paul, for the question. So, you know, as we said before, the path to profitability is really tied to the Story launch and the uptake, and we are on track there. You know, the purpose of the refinance really accomplished two things for us. One, meaningfully reduced our cost of capital— so the prior loan had a, you know, seven and a half percent plus three-month SOFR variable rate, so call it 12% interest rate— and we reduced that now down to 8.25%. And then two, it gave us financial flexibility. So one, extended the repayment period— you know, it was going to start second quarter next year, now starts 2030— and did bring in additional nondilutive capital to further build out the balance sheet. But to be clear, we will remain disciplined in our approach to capital allocation, balancing path to profitability and then also making sure that we are investing in the long-term growth strategy. Elizabeth A. Barrett: And I will just add that the addition of the $50,000,000 or $75,000,000 does not change what we have said before around path to profitability, right? It gives us some cushion and gives us more flexibility, but it does not— we are not— we did not do that because we needed, you know, that money to get to profitability. But it definitely gives us flexibility. So just to be really clear, we have not changed our commentary around path to profitability. Operator: This time, please press 11 on your touch tone phone. Our next question comes from Aydin Huseynov with Ladenburg. Aydin Huseynov: Hi, good morning. Thanks for taking our questions. I have a couple, one on Zasturi, one on UGN-501. For Zasturi, I appreciate confirming the long-term guidance for Zasturi. So I just wanted to better understand, maybe if you could provide some color in terms of when do you think this peak sales would occur. Is it 2035, 2040? And what would happen after you reach those peak sales? And for UGN-501, the question is, I just wanted to better understand the RTGel technology and how that would help UGN-501 oncolytic virus to be differentiated from other oncolytic viruses, and whether you would need a primer to activate the virus. Thank you so much. Elizabeth A. Barrett: Yeah. Thanks, Chris. I will ask Chris to answer the first question, and then we can turn over to Mark to answer around 05:01. Okay, and thanks. So, let me pass the— Christopher Degnan: Peak or time to peak, you know, I would assume roughly four years to peak. So now that we have the J code, a four-year ramp to peak is reasonable. Elizabeth A. Barrett: And, Mark, you want to just talk about 05/2001 with and without the gel? Mark P. Schoenberg: Sure. Thank you. So, as you— as many who are listening know, our current plan to launch a Phase 1 study in 05/2001, which we will do this year in high-grade disease, is an aqueous-based preparation that is preceded by the use of an activating agent that you were alluding to, DDM. We are in the process of studying how long dwell time or longer dwell time could potentiate the efficacy of the virus in the setting in which we will initially explore its use, which is obviously intravesical therapy for bladder cancer. So we are in the process of doing that currently. Theoretically— and, again, this is speculation currently, but we are looking into this right now— we believe there may be an advantage to a longer dwell time, which may obviate the need for additional interventions prior to introduction of the virus. But that is currently under investigation, and we will obviously share details when we have more to share. Aydin Huseynov: Thank you. Thanks so much. Very helpful. Thank you. Operator: That concludes today's question-and-answer session. I would like to turn the call back to Elizabeth A. Barrett for closing remarks. Elizabeth A. Barrett: So just want to say thank you to everybody for the support. As you heard today, very excited about how things are going with the launch. You know, we gave information that hopefully gives you the confidence that, you know, where we are, we are starting out the year very strong. So we obviously will look forward to sharing all of the information from Q1 and the Q1 earnings. But suffice it to say that we are excited about where we are. We think we are in a great position to hit our goals and hit all of the milestones that we expected on the Story, which Jelmyto is doing well as well. And then want to focus the back half of the year around expansion into other areas. So I think from a company perspective, we feel like we are in a great position. We are in a great financial position. Things are going really well with the launch. We are executing against our pipeline, and so that we actually are in a position where we see the future being a long-term sustainable growth and being able to do that. So, again, thank you everybody for hanging in there for all these years. We are finally, I think, at a place where we have all been working toward, and appreciate the support. So we will be keeping everybody up to date. Look forward to seeing some of you at the conference tomorrow. So thanks a lot. You can disconnect now, operator. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect, and have a great day.
Serge Van Herck: Good morning to all of you. Welcome to our EVS Broadcast Equipment presentation on our fiscal year 2025 full year results. I'm Serge Van Herck, the CEO of EVS, your host today. And I'm here with Veerle De Wit, our CFO; and Benoit Quirynen, who is in charge of our strategy and acquisition. So welcome to this 2025 session. A few topics to note before we start. The PowerPoint that we are using here today is on our website. This session will be recorded and will be made available later on our website. And last but not least, when you have questions, please put them in the chat we can then at the end of our session indeed read through your questions and then answer them. So again, welcome to this session. And the first slide -- the next slide is one for Veerle. Veerle De Wit: Yes. Good morning to everyone. So let us start by a small disclaimer. So this presentation actually includes some numbers, and we'll discuss the performance of 2025, but there also are some forward-looking statements within this presentation. Those statements are based on current expectations and our management's assessment of the environment we operate in. We do declare that these statements are subject to a number of risks and uncertainties, and that could lead to a materially different statement in the future. We will elaborate on some of those risks during this presentations, but there can also be risks or market risks that affect or potentially could affect our performance in the future. These risks may contain potentially technology changes, new market requirements, price pressure from competition, but also some macroeconomic or geopolitical events that we cannot foresee today. EVS does not take any obligation of publicly reviewing the forward-looking statements to reflect these risks. Serge Van Herck: Thank you, Veerle. So let me go forward here with the agenda. What will we be discussing today? Well, of course, we'll give you an update on our business. We'll have a financial more detailed update. We look towards the future with our outlook, and then we'll have, of course, our conclusions before going to your questions, where we will be providing a few answers. So let's start with that business update, and let's go forward to the next slide. You'll see that revenue-wise, we keep on growing. So we are quite happy and proud, of course, to say that we are delivering here a fifth consecutive year of record revenue results, which is in line with the strategy that we developed at the end of 2019 called PLAYForward. So happy to see indeed that growth strategy is delivering upon its expectations and that in an uneven year 2025, again, we are realizing record revenues, which are close to the top of our guidance. And I'll have Veerle explaining on the next slide some more details about those numbers. Veerle De Wit: Yes. So on Slide 7, you'll see that we have a strong financial performance, and this is in a challenging macroeconomical environment. Our order book grows with 11.3% and closes in at EUR 182 million. Our revenue next to that, as Serge was mentioning, has again reached a record high. We closed at EUR 208.1 million, and it's a 5.1% growth. This growth has been impacted by currency, especially a weakening dollar. correcting for currency changes and therefore, for a constant dollar, the revenue would have been at EUR 211.6 million, which would have represented a growth of 6.9%. To be noted that, that growth is exceptional. Mind that 2024 had Big Event Rental Revenue. And so if we normalize 2024, excluding -- to exclude that Big Event Rental Revenue, the growth was at 14.2%, which is a stellar growth for us. It also ends at the high-end range of our guidance. From an EBIT perspective, I believe that we also put down a strong EBIT performance. We had an EBIT performance at EUR 43.3 million, which is actually a decline of 3.7%. But again, normalizing this performance with the constant currency, the EBIT would have been EUR 46 million, a growth of 2.4%. After a strong -- weaker first half, our performance in second half has been really, really strong, combining a very strong revenue performance, but also with a very, very sound cost control to reach that EBIT number. From a net profit point of view, we see a net profit of EUR 38.5 million. It is a decline of 10%, but it is to be noted that the net profit is impacted by some elements that change between EBIT and net profit. So we, first of all, have a EUR 0.8 million of interest on long-term receivables. This is a temporary impact that was already declared in first half. And then there is a EUR 1.2 million of true-up -- tax true-up related to prior periods. If you would have normalized the net profit with those two elements, the net profit would have dropped to 5.6% compared to last year. From an FTE point of view, we see a growth to 792.8 FTE at year-end. It is a growth of 12.4%, and it actually demonstrates an 87 FTE growth throughout the year, which partly obviously is linked to new acquisitions and for the rest is linked to, yes, growth in our team member base primarily linked to the Double Down North America strategy and to some investments in research and development. So again, we believe that our revenue growth in 2025 is strong and is in line with our PLAYForward strategy. And it's important to note that it overcompensates the Big Event Rental Revenue of 2024 and therefore, is an important milestone in our growth path. Serge Van Herck: Thank you, Veerle. Going to that next slide with our key highlights for the year. We're happy to say like our press release also says that we delivered a fifth consecutive year of record revenue with accelerated momentum in North America. So let's have a look to those different topics here. Let's first start with market and customers. So we see indeed that our business in North America is growing strong, and that despite the tariff situation that we've seen early last year. We see also that the number and the size of large commercial deals keeps increasing. We see that our channel partner strategy is delivering on the expected growth. We see -- and we've been saying that for a few years now that we expect our LAB customers, our Live Audio audience Business customers to grow and that we definitely see both in revenue and in order intake. We also see an increased cross-selling between solutions, which is clearly highlighting the value of the EVS ecosystem that we are offering to our customers. And last but not least, here in the beginning of that market and customers paragraph, when we talk about Big Events 2026, we have indeed secured the contracts for large events this year. And we're also happy to say that our new technology VIA-MAP, but also Move Up and T-Motion will be used in some of those important games. When talking about technologies, we've been further working on XtraMotion, and we have launched XtraMotion 3.0. We have further extended the generative AI effects and features by giving more and more capabilities, which we see more and more being deployed and used by our customers. We have further expanded our MediaCeption portfolio with Move Up and Move IO, thanks to the acquisition of MOG Technologies that we did in 2024. T-Motion and Move solutions have now extensively also been used during those big winter events. So happy to say that MOG and T-Motion have been used over there. And last but not least, in '25 at IBC, we also launched Tactiq as part of the flexible control room solutions, which will have a major impact in the future on the way that our customers are creating live production. So another important launch in 2025. When we look to the corporate topics, of course, number one is the acquisition of Telemetrics in the U.S. and XD Motion in France to enable us to create the new T-Motion Media Production Robotics solutions. Last year, again, we've received for the fourth year in a row, the top employer certification. And we see that our engagement survey with our colleagues shows that we are indeed a great place to work. We keep on focusing also on ESG. We understand that the world is changing. But at this moment in time, we still believe that ESG is part of our DNA, and we will continue to focus on that. We are, at this moment, also proactively looking and trying to mitigate potential supply chain disruptions. And we further, of course, make sure that the application of the U.S. tariffs hinder us as little as possible, of course. When we look to the team in North America, at the end of 2024, we had about 50 team members, at the end of 2025, we were above 100, and that is indeed because we've done the acquisition of Telemetrics, but also we've been hiring colleagues, further colleagues in sales and customer support. And by doing that acquisition of Telemetrics, we have now also an R&D and a manufacturing capability in North America, more precisely in the U.S.A., of course. And last but not least, here for our shareholders, happy to say, of course, that we have that fifth year of record revenue and then an uneven year and that we see indeed our order book further growing and that at the same time, we are creating quite some additional cash. We're delivering a strong EPS of EUR 2.73 per share. And last but not least, if you look at the total shareholder return since 2020, we see an increase of 159%, of course, which is based on the growth of our valuation and the dividends that have been paid during that period. So when we go to the next slide, when we talk about what we like to say our BHAG, our big hairy audacious goal to become that #1 solution provider in the live video industry, we definitely see that 2025 is helping us forward with achieving that objective by 2030 and which will also generate at least a revenue number of about EUR 350 million in 2030. So we're quite happy with the results that we've been able to deliver, which are on the top of our guidance and for EBIT even slightly above our guidance. When we talk about PLAYForward strategy, I'll be happy to have on the next slide, Benoit, taking us through some of those evolutions. Benoît Quirynen: Thank you, Serge. Good morning, good afternoon, everyone. So yes, we continue our journey, our transformation journey for our portfolio. So we -- as you know, we evolved from a product company to an ecosystem company. And we are more and more articulating the solutions that we created in the last years to transform these solutions to behave more as an ecosystem in multi-tier market. So we see an evolution and a higher appetite in our business model, more OpEx, more on demand, and we are structuring our systems for that. We are growing definitely more in broadcast centers and even beyond broadcast centers in live audience business. While we were EVS company focused on hardware, we are really becoming software everywhere, and we have launched as well some SaaS services. And while we were focusing mainly on sports, now our portfolio and our customers are adopting our technologies to support workflows for entertainment, news and starting to use it as well more and more for digital. So our portfolio is really adapted to the market structure. So we see a continuous market growth based on growing supply of live events. So the volume of live events is increasing and the complexity of live events is also increasing, especially because the consumers, the audience, they want more and more immersive content. They want to be part -- they want the emotion of the event. Second, we see an evolution in the client landscape structure. We see consolidation. We see transformation in the business models as well of our customers. And we see that based on that, they are changing their operating models. We see more and more remote productions. We see hybrid production mixing on-prem systems and cloud systems. We also observe the adoption of artificial intelligence. And this is reflected as well based on the technology trends and our technology, where we help our customers to adopt the IP-based technologies. We help our customers to adopt artificial intelligence and all these changes in the operating model. I don't need to detail. I think this Monday, the fact that the macroeconomic context is changing and it's sometimes changing fast. And as mentioned by Serge, we remain committed on the ESG dimension to make sure that we optimize globally our governance and also globally our carbon footprint. So we do that based on the 4 solutions that we have created along the years. Organically or through acquisitions. So we have the 4 solutions, LiveCeption, MediaCeption, MediaInfra. And this year, we have as well T-Motion, which is the Media Production Robotic solution based on the two acquisitions. So we are articulating these four solutions as a mission-critical ecosystem. And we have seen the adoption of LiveCeption by key customers as a Gravity Media and FightPoint broadcast showing that the XT-VIA server is still leading the pack in terms of the quality of the product and solution. We have seen as well the adoption by the RBFA, Royal Belgian Football Association of the Xeebra VAR solution, but operated in a different way, in a fully centralized way. And we have done this deployment with the support of Gravity Media partner. And then we have also deployed LiveCeption Zoom, which enables our -- the operators, so the replay operators to now have more precision to really capture the emotions and Zoom on the face of the athletes when they are in the middle of their action. In terms of MediaCeption solution, the VIA-MAP integrating MediaHub has been deployed and will be deployed during the Big Events this year. We have also won customers in North America who will articulate all its production around MediaCeption workflows from ingest to distribution and including media management. We have also won and starting to deploy NDR for the Tagesschau, in fact, one of the most known show in Germany, where VIA-MAP will also be used. And based on our acquisitions in Puerto in 2024, we have also enhanced the MediaCeption portfolio to increase the flexibility and the efficiency, thanks to the two products, Move Up, which is a flexible ingest and Move I/O, which is the transcoding. Then in terms of media infrastructure, we have also proven that our Neuron View technology helps our customers in OBVAN and Greek Video, which is a very large LSP in North America is now adopting Neuron View. Cerebrum is at the core of very complex workflows on Gravity Media. So trying to -- or not trying, but solving the complexity that I was referring in the previous slide. We have also launched at IBC, Tactiq as the core of flexible control room that will enable our customers to adopt flexibility within their production with operators playing multiple roles depending on the nature of the production. And we also have sealed a strategic partnership with Qvest, which is important because this flexible control room solution assumes change management by our customers. And so it's important that our channel partners can help our customers to adopt these new technologies and transform their way to operate. And last but not least, the T-Motion solution has been created based on the two acquisitions in the Media Production Robotics. The two solutions have been -- the two companies have been selected, in fact, because they provide both safe, stable, smooth systems with sustainability as a core of their offerings. And in fact, as mentioned by Serge before, some of the technologies here have always also been used -- sorry, during the winter events a few weeks ago. So globally, what we observe is that the number of customers leveraging multiple EVS solutions is continuously increasing. So we see the adoption of the EVS ecosystem. And I will hand over to Serge. Serge Van Herck: Yes. Thank you, Benoit, for that overview. And let me indeed continue with one of our major growth engines, which is North America. You remember in 2024 that we added a specific pillar to our strategy to accelerate our growth in North America. And we're quite happy to see indeed that this is becoming reality, not only in revenues, but also in order intake and pipeline creation and a number of colleagues, of course. So what you can see here indeed is on the left-hand side, the order intake for our Live Audience Business customers in North America, which is growing really strongly over those last years and which shows indeed that our strategy is the right one to focus on that type of customer. We also see that -- and that is good for the future, of course, that our pipeline, our commercial pipeline keeps increasing and is contributing to our overall pipeline growth that we will see on a later slide. But this is definitely an important growth. As we can see that in the U.S., the growth of the funnel year-over-year is 47%. So that definitely shows that we also have quite some opportunities in front of us to continue the growth that we are realizing in the U.S.A. And last but not least, here on the picture, you can see a few of our new colleagues. As I said before, we doubled from 50 to 100 end of '24 to end of '25 by hiring more sales and customer service colleagues, but of course, also with the acquisition of Telemetrics, which gives us now also engineering and production facilities in North America. So that is really definitely an important element of our strategy that is helping us to realize our growth. When we go to the next slide, I'll ask Veerle to comment a bit on that path to our BHAG. Veerle De Wit: Yes. Thank you, Serge. And as mentioned by Serge earlier on. So this is our BHAG goal. It's achieving EUR 350 million of turnover by 2030 and most of you probably have seen this slide before in orange, you see the linear growth compared to the ambition defined in 2019 and the revenue we did at that point in time, it was EUR 103 million revenue. And so the orange is a linear growth towards that EUR 350 million. In blue, you see the realized revenue number year-by-year. So we remain ahead of track versus that linear growth. And the good thing is that if we actually look at our projections for the future, based on our current portfolio, we see that we can achieve something or number in 2030 that is a little bit north of the EUR 300 million. This is by just following the market growth and also growing the market share that we have in each of our different solutions. And then the remainder is obviously still a focus item for our merger and acquisition strategy. And you'll see for the first time, and we won't stop at EUR 350 million in case we find, for instance, bigger acquisitions that can help us fuel that growth in the future. But you see actually the lighter blue box, the goal is to close the gap to the EUR 350 million by further merger and acquisitions. And the good thing is that we have the financial power actually to execute on that strategy. So we remain very confident that they carry an ambitious goal of reaching EUR 350 million by 2030 is within our hands. And for sure, we will continue our journey towards that path. Serge Van Herck: Thank you, Veerle. Going forward to the next slide talks about our total addressable market, and you will recognize that slide as we've been using that also at the end of '24 during our Investor Day and then we indeed said at that moment in time that we're working to further increase our total addressable market which indeed in '25, we have done, of course, by the acquisition of Telemetrics and XD Motion. So there, we are increasing our total addressable market with about something more than EUR 100 million. But in the meantime, with new solutions, also, for instance, in LiveCeption and MediaCeption. We are taking some part of the camera business by our AI capabilities like XtraMotion. So we definitely continue working on further expanding the total addressable market. And as Veerle said, we still foresee to do some further acquisitions in the future, and that will be with the same objective of further increasing that total addressable market. Going to the next slide, we come back to that acquisition that we did in 2025. And here, I'll ask Benoit to take over again. Benoît Quirynen: Thank you, Serge. So we did acquire two companies in 2025. In fact, the first company was Telemetrics based in U.S., Allendale, New Jersey, and then XD Motion, which is based in Coignieres in France. So both acquisitions position EVS in the Media Production Robotics as a real leader in this domain. So in fact, with this new solution, we enhance our ecosystem. We aim to reduce the complexity. And we -- by this acquisition, we also creativity. We create flexible solution for our customers to enhance this creativity. And with this two acquisitions. We make also an extension. We go from control room to the studio. As you see on the drawing here, of course, the robots are in the studios and in the venue. So that means that it's an important step for EVS. The two companies are very complementary, in fact, and they bring different kinds of robots, different kinds of gears that can be articulated and controlled by software-driven controller. And what we plan to do is to really develop the software control also to embed more and more AI. So with these 2 solutions, now we have the broadest premium Media Production Robotics portfolio, covering both indoor studio environment and also covering the news outdoor, typically for stadiums, but also typically for Big Events. What we want to do with EVS is to enhance the services, thanks to our global worldwide coverage. We want to increase the quality and coverage of our SLA. We want also to develop further the solutions to include AI and then we want to really embed these solutions into the EVS ecosystem to reduce the complexity for our customers and increase the creativity. So AI is really something at the core of EVS solutions. We didn't start it just after Chat GPT, we started much earlier. Since 2017, EVS is deeply engaged in AI transformation. And we apply AI across our whole portfolio to increase productivity and automation, to reduce the complexity for our customers, but also to address the creativity. So we embed in our solution, third-party AI. In fact, and typically, we can do object detection, face detection, person detection to index the content so that it can be retrieved easier. But we have also developed creative tools with XtraMotion for a very nice replay for cinematic effects, a lot of computer vision AI technologies that are our own models developed by our own teams and really very specific to address two key aspects of AI deployment in media, which is, first, the need to cope with very short latency. In fact, and second, we have the need as well to address the predictability. In fact, it's very important for our customers to have mission critical environment, very predictable. And so we know that with LLM, there is a kind of unpredictable results. Here, we focus on predictability. So deployments on-prem to reduce the latency and a predictable solution. And of course, we don't limit the application of AI to our solutions. We also use AI internally for coding for developing our software and across all our processes, as corporate tools, for example, to improve the support that we bring to our customers. And I hand over to you, Serge. Serge Van Herck: Thank you, Benoit, for that update on those topics. So let me continue here also with some ESG topics here and more specifically about our team members. We know how important it is to have engaged team members and we do a yearly follow-up an engagement survey, and the results that come out of that are quite encouraging, and we see a very strong engagement level of our colleagues. EVS is a great place to work at 92%. That really shows how we engage our colleagues are. And we also see that from an external world and the certification for top employer also shows that what we do within HR, within the company are definitely the right things for making sure our colleagues are fully engaged all over the world. And last but not least, you also see here on those awards that we receive from Ecovadis from Sustainalytics which also gives an indication of what we do on the ESG side. So there as well, we see quite strong. We keep seeing quite strong results. So we are very happy with that. Going forward on the next slide, let me also touch upon a few main risks that we see at this moment in time. Of course, U.S. tariffs were a big issue in 2025. Fortunately, we've been able to mitigate the impact for our customers in the U.S. by changing our supply chain for the U.S., and that helped us indeed to reduce that impact to our customers. Using our pricing power, we also made sure to pass on a portion -- well, not a portion, the whole impact of those tariffs, but also part of the exchange rate fluctuations that we had with the dollar. And as we see that most of our competitors are also based outside of the U.S. and that the U.S. tariff situation didn't create a commercial disadvantage fortunately. Another topic that we are watching closely is, of course, the availability and the cost of components, which we see for the moment some components rising in cost anywhere the availability also becomes questionable. So we are trying to make sure that this does not further hit our P&L or our capability to deliver, of course, equipment to our customers. So if we remember in COVID times 2020, we also had something like that, and we were also able to mitigate that situation. The impact of a weaker U.S. dollar, we tried to reduce the impact as much as possible. we've seen our growth in North America even being bigger than what we expected, so that helped us to mitigate part of the impact of a weakening dollar. But next to that, we also have a strategy to secure our foreign exchange rate flows with the objective, of course, to limit the impact on the net profit due to that weakening dollar. So those are some of the main risks that we try to mitigate at this point in time. Going forward, we come to the financial update details and I'll ask Veerle here indeed to walk us through those detailed financial numbers. Veerle De Wit: Yes, Serge and let us start by the top line performance. In terms of order intake, our order intake outpaced our revenue, ensuring actually continuous fueling of our order book. We closed an order intake of EUR 225 million. It's a 7.8% growth year-over-year. And that number includes some of the Big Event Rental contracts of 2026 that Serge mentioned before for a total of EUR 14.9 million out of that number. When we look at a geographical perspective, both EMEA and NALA have considerably contributed to this growth while APAC had a little bit more of a tougher year also linked to the strong euro compared to the local currencies over there. But obviously, it's very good to see that our main regions, EMEA and NALA strongly contributed to this performance. To be noted as well that at constant currency, we expect that there is an impact of around EUR 7 million in order intake. So our order intake would have been EUR 7 million higher should the dollar or not have weakened or would the dollar not have weakened. From a revenue point of view, we already mentioned it. We secured a total sales of EUR 208.1 million. So it's a 5.1% growth. At constant currency, it would have been 6.9% growth. And for us, it was very important to see that we did not only compensate Big Event Rental of 2024, but we even grew over and above that number. So basically, all in all, the growth is of 14.2%, which is obviously a strong base growth. We see a balanced growth as well in revenue across all regions. So it's a little bit different when we look at order book -- order intake, but from a revenue point of view, actually, all of our regions contributed to this growth which, for sure, North America and Latin America demonstrating the strongest growth. And this is a testimony to our Double Down North America strategy, basically. And then to be mentioned from an order book perspective, we continue to grow our order book. Our order book stands at EUR 182 million, which is an 11.3% growth and in numbers, the total order book is growing by EUR 18.5 million. It is to be noted that it is primarily our long-term order book that is increasing significantly. So with secured sales for 2027 and beyond, of more than EUR 81 million. So you see the growth there. We traditionally around EUR 53 million, EUR 56 million of long-term order book. This has now increased to EUR 81 million. So it's a very strong growth. And it's primarily a result of a couple of large longer-term strategic contracts that have been won. It does mean that our 2026 secured sales is a little low. It sits at EUR 100.6 million which is a 6% decline versus the number that we reported at the end of 2024. So the number we reported at the end of 2024 was of EUR 107 million. It is to be noted that, that number eroded throughout 2025, with approximately EUR 10 million. So we could look at a restated number of EUR 97 million there. And in that case, our order book is growing. However, that order book for 2026 is also including Big Event Rental. So I think it is fair to say that from a base business point of view, our order book is not the strongest. This is also linked to the fact that we were able to convert quite some order intake from second half into revenue still in 2025. And so we are confident that we can continue that way of working in 2026 as well. When we go to the next slide, we have some more detailed revenue analysis. We started showing that, I believe, last year as well. So we look at a couple of strategic angles when we do our revenue analysis. Some of the angles look at market pillars. So when you look at the market pillar, you see a strong expansion of our LAB Business, LAB Business being general broadcasters or leagues or stadia or corporates. We do see that revenue grows from EUR 90 million back in 2023, up to EUR 122 million in 2025. So it's truly 6% growth over a 2-year span. And obviously, the LAB is an area where we strategically want to position EVS more and more. So we're very happy with that growth number. When we look at the regions as well, and those are the blue bars that you see, you see that primarily, our growth engine is North America. And if you look at 2023, when we did a number in North America of EUR 56 million right now growing to EUR 78 million. It is obviously good to see that, that growth is absolutely there. So it's a 39% growth, spending a 2-years period. And finally, and you do not see this on this slide or in the graph, but we also focus on recurring services revenue and also there, we continue to grow our SLA basis. So there is a growth in our SLA basis of 37% over 2 years' time. And next to the SLA, we also see more and more flex license revenue, but also ODA, so on-demand activation revenue contributing to that recurring revenue status. So also there, from our strategic angle point of view, we're very happy to see those results. If we go to the next slide, you will then see our profitability. From a profitability point of view, we first look at the gross margin and that gross margin has dropped a little bit compared to fiscal year '24. We closed in a gross margin of 70.8%, which is a 1.5 points drop. It's primarily the consequence of a couple of different drivers. First, there is a change in the business model that is following the U.S. tariffs. So since 2025, we take the impact of the tariffs into our bill of material. It's a EUR 2.1 million impact. That tariff impact is offset by local price increase or price increase in the U.S. We implemented a price increase a little bit later than the tariff impact. So there might be some small erosion there. Second, we have a dilutive impact following the acquisitions we did in October or over summer but they concluded in first of October 2025. So they contributed for 1 quarter into our numbers. And overall, they diluted our gross margin by 0.5 points. And finally, there is also some margin erosion following a weaker dollar because obviously, in the U.S., we sell in U.S. dollars, but most of our components are actually still bought in euros. So obviously, there's also some erosion from that point of view. All in all, we're very confident. We still believe that this is a strong gross margin and we continue to monitor, obviously, all the elements impacting that bill of material as close as possible. From an operating expense point of view, we concluded an operating expense at EUR 103.9 million. So it includes actually all operating expenses, but also other revenue and expenses and ESOPs. So all the way down to the EBIT. It's a 6% growth, but to be noted that it's a very strong control over the second half of those operating expenses. Our first half, we were close to a 10%, even 11% growth. And so we were really able to slow down that growth in second half as to secure our EBIT margin. Why is this increase? It's primarily linked to investments in additional team members. First of all, to support our Double Down North America strategy, but also to accelerate some R&D tracks. And then next to that, it's also the integration of XD Motion and Telemetrics for the fourth quarter of 2025. To be noted that those operating expenses for the full year evolved completely in line with what we set out for ourselves internally. So after a strong and a strong growth in first half, we were very happy to demonstrate that we really can control these operating expenses in the second half. From an EBIT point of view, all of this resulted into an EBIT performance of EUR 43.3 million. It's a 3.7% decline, but we believe that it's a solid EBIT margin at 20.8% EBIT to revenue. That decline is actually also linked to some investments in our operating expenses for which we have a scheduled return on investment that goes beyond 2025. So for instance, the Double Down North America plan has a return on investment that should start as of 2026. And obviously, also the investments in R&D are for longer-term return plans. At constant currency, as mentioned already, the EBIT would have been at EUR 46 million, which is obviously an increase compared to last year. So also there, we see the impact of the weakening dollar. From a net profit point of view, we secured a net profit of EUR 38.6 million, which is 18.5% net margin and as mentioned, it is declining compared to 2024 by 3.2 points, but it's following a lower finance income and a higher tax rate I already explained those events previously. They are expected to be one-off events or events that can recover in the future. Net profit results in a diluted earnings per share of EUR 2.73 per share, which is a small decline of EUR 0.29 per share decline year-over-year, but it's in line with expectations. As mentioned, EBIT guidance was between EUR 36 million and EUR 43 million. So in that sense, we did achieve the high end range of our guidance as well. If you look at the balance sheet or financial structure, we have a net cash position that closes at EUR 58.4 million. It's a decline of 22% compared to 2024. But that decline is fully modeled. First of all, it is because we used quite some cash in financing activities. So we increased our dividend payment. We did a share buyback program end of 2024 that concluded in 2025. And we had reimbursement of lease liabilities. So all of this was planned. We also used cash for like EUR 14.1 million in investment activities linked to business acquisitions or to loan to associate companies. And all of this was obviously offset by a net operating cash flow that increased. So we're very happy with the EUR 58.4 million net cash position at the end of 2025. And as mentioned, it is a decline, but following some well-modeled investments. From a net working capital point of view, you do see quite an important increase in net working capital. So it moves up to EUR 102.2 million. It's an 11.7% increase but that increase is fully linked nearly to trade receivables. First of all, there is the general increase of our business volumes. But second, there were significant deliveries at the end of the year. So our revenue number in December was very, very strong. And obviously, that is receivable that is not due by the end of December and therefore, sits in open receivables and impacts our net working capital. From a net working capital to sales ratio, we're at 49% at the end of the year. But again, it's hard -- it's largely impacted by revenue that we realized in the final month of the year. Looking at trade receivables, you see the reflection of our DSO. And again, also there, we go back to numbers that were '22, '23 in but it's, in our opinion, not concerning because again, it's linked to those shipments at year-end. It's linked to some results sales increase in North America with some major ongoing projects for which the collection is a little bit delayed. And it's also linked to the integration of the receivables for T-Motion. If we look at the structure of our receivables, they remain very healthy. We have some long-term overdue over 90 days. They represent 18% of the total balance, but it's linked to a very limited number of specific cases where we have a very strong focus together with the customer, and we have very low risk of no payment. And we have several of those overdues that actually have been settled early in 2026. So we're confident that this is well under control. If we go to the next slide, we share an overview of our intangible assets. So everything that we put under IAS38, as you surely know, we launched two intangible asset projects back in 2022 for a total of EUR 12.2 million. First project was related to VIA-Map that was announced in September 2023, which, at which point in time, the creation of new intangible assets ended and we started the depreciation of that VIA-Map project in first -- fourth quarter of 2023. And you see that, that quarterly depreciation is now scheduled for a 5-year period at about EUR 0.5 million a quarter. The second project we actually wrote off back in fourth quarter 2024. It was a write-off of EUR 1.1 million and the reason actually for the write-off is that the criteria for IAS38 were not yet met. Not met anymore, let's say it that way. The developments were certainly not in vain, but a product is no longer planned to be launched as a stand-alone product but it's actually a component of the VIA-Map. So the return on investment can no longer be measured. And as such, IAS38 needed to be dropped for that project. But all of this, what it shared with you already in the past, Also, the third project that we launched in 2024, it still contributes to further creation of intangible assets. We have an overall capitalization of EUR 2 million for fiscal year 2025. And we expect to start depreciation of that project as of 2026, end of 2026, beginning of 2027. We continuously evaluate if we have further projects that qualify for IAS 38, there are none at this point in time that we are aware of. But obviously, those things can change quite rapidly. Moving to the next slide. Serge, do you want to do the introduction for the outlook? Serge Van Herck: Yes. Thank you, Veerle. Thank you for the update on our financial numbers, detailed financial numbers. So let's look now indeed into the future to the outlook. Before asking you to give the guidance for 2026. Let's go to the next slide to have a look at what the commercial opportunity pipeline looks like, and it is definitely an important one. Because it's looking ahead, and it's showing us, indeed, if we have the potential to continue our growth. And the answer to that question is definitely yes. We see that the pipeline that we have here, and it's a snapshot that has been taken on the February 1 of each year. We see throughout those years that it's definitely accelerating and also in 2026. And so we see that it's growing quite nicely since 2019 was a factor of 2.4x. And definitely also, we see an acceleration from '25 going into 2026. So that is definitely important because it shows us indeed that we have the commercial opportunities in front of us in order to be able to continue our growth also in 2026. And that leads us to the next slide, Veerle that you will indeed comment. Veerle De Wit: Yes. Thank you, Serge. So obviously, we have an important order intake of 2025 that continue to fuel our order book. But as mentioned, that order book is primarily growing from a longer-term perspective and our secured sales or secured order book for 2026 stands at EUR 100.6 million at this point in time. We are confident that this is still a strong level and provides us robust foundations for the years ahead. We are closely aligned to what was mentioned last year at order book. But as mentioned, we reported EUR 107 million order book at the beginning of 2025. But that number experienced some erosion. So there was like EUR 10 million of erosion throughout 2025, linked to milestone projects for which milestones shifted into later periods. We consider that this effect that we saw in 2025 was an exceptional effect. Basically, as our forecasting process has now changed. We now exclude any milestone at risk. And so we're a lot more prudent in our secured sales number than we were last year. Experience has shown us that we need to be careful with milestones that are potentially at risk. So we believe that, that EUR 100.6 million is to be compared to a normalized basis of EUR 97 million of last year. It's true that EUR 100.6 million includes Big Event Rentals. So from a base business point of view, we may see that this number is rather weak, but it's because actually we were able to take some quite some revenue in 2025 of order intake that was done in 2025. So even some of the fourth quarter orders were still delivered in 2025, and this is actually thanks to an organized preproduction of our hardware and software. You may ask your question, why did we start preproduction. So anyhow to a company for our new business model in the U.S. we dissociate now hardware production flows from software production flows. And we just benefited from the occasion to make sure that we have a steady state production of our hardware instead of waiting for us for a confirmed sales order to start producing the hardware as well. It provides us with a lot more agility. It's an agility that is also welcomed by our customers. And so it is something that we will continue in 2026 as well. We will continue to preproduce the hardware and finalize the software as soon as the customer order is confirmed. So we have on one hand, the secured sales for 2026. On the other hand, as Serge was mentioning, we have a pipeline that is very promising. Our pipeline is demonstrating a growth of 26% compared to the same period last year. We don't see any specific drivers impacting that pipeline. It's on the same conditions as last year. It's within a similar environment. So there's no real reasons to believe that, that growth is not a real, real growth. And so a growth of 26%. So we diligently looked at our order book the pipeline, the current market dynamics, and therefore, we set our guidance for the year 2026 to EUR 220 million to EUR 240 million. The midpoint is at EUR 230 million, EUR 230 million, which is close to the consensus, the midpoint of the consensus with EUR 232 million. So we believe that, that more or less models, what the market also reflects Obviously, the range is still quite large. It's a range of EUR 20 million. In the past, we used to call out a range of EUR 15 million, at the beginning of the year. But we do believe that with the growth of our overall business, that EUR 20 million is also obviously justified. Looking at the next slide, we look at the dividend proposal. And based on our capital allocation strategy that we announced last year and the dividend policy that we have in vigor for the years, '25 to '27. EVS does foresee a dividend payment for the year 2025 of EUR 1.2 per share. You see the dividends that we paid out for the years '23 to 2025, and you see the increase of EUR 1.1 dividend per share in '24 to EUR 1.2 in 2025. The final dividend of 2025 will be paid in May, and interim dividend has already been paid in the month of November was EUR 0.60. So the remaining dividend of EUR 0.60 per share is scheduled to be paid in May, and it should be May '26. I apologize for that. Obviously, it's always subject to market conditions, and it's also subject to the approval of the Ordinary General Meeting of Shareholders scheduled on May 19. Serge, over to you again. Serge Van Herck: Thank you, Veerle. That brings us indeed to the conclusions of this presentation. So when I go on the next slide, what will be the key activities for 2026. Well, you see indeed that we'll continue to focus on consolidating our leadership on LiveCeption. There is no doubt about that. The second one will, of course, be further strengthen the cross-solution ecosystem and further grow the MediaCeption, the Media Infrastructure and the T-Motion business lines. The third topic is continue growing in North America. We definitely see that we have opportunities for further growing. It's for sure one of the largest markets in our industry. So we really think that we can further grow in North America. We'll continuously also further work on developing those adjacencies, some of those adjacent markets that we've started to approach like, for instance, the corporate market is one of them. We continue diligently on that one. The channel partner part is, of course, critical to our strategy, and we expect to further strengthen that this year by putting even more focus on it than before, also with some additional resources. And last but not least, of course, we look forward to continuously deliver those Big Events. And we've seen already some important winter events coming on screen, but we have in the summer some other major events, sporting events happening and that we will also be able to support and deliver on screens worldwide. So those are the key activities for '26. And when we come then to the next slide, which really presents the conclusion of today, I would say that we see that our figures in '25 prove that we are progressing well towards our BHAG and that the strategic growth pillars that we've been focusing on definitely demonstrate that progress we were hoping for. The EPS of EUR '25 definitely supports the dividend of EUR 1.2 per share that Veerle just mentioned. You also just heard from Veerle that we are projecting a revenue guidance of somewhere between EUR 220 million to EUR 240 million, including a Big Event Rental, which definitely shows that we are very confident in our growth. And last but not least, we expect to further invest in North America as we see considerable growth over there. And next to this investment, we also will further make sure that we control our expenses. You've seen Veerle explaining that we've been focusing heavily on our expense control, especially in H2. And as such, that should enable us to ensure a balanced growth as to support, of course, our long-term profitability model. And that's it for today in this presentation, and I give the floor to you by checking indeed the questions that we have in the chat here. So I'll ask my colleagues here indeed also to check those questions that came in, in the chat and maybe I can read them together with you. Serge Van Herck: And I see the first one coming from Michael, who had -- who has four questions. And his first question is, let me read it. What made you decide to start preproduction? It resulted in faster conversion of order to sales. Was this upon request of customers? Did this pull some sales into Q4 that otherwise would have landed in '26? Veerle, do you want to start answering that question? Veerle De Wit: Yes. I think I explained already part of it. So we do think we had official delivery terms that were still quite long. We have tried to keep those delivery terms long from a predictability point of view for a very long time. But we also see that in reality, we were delivering faster and faster. So it was a theoretical delivery term of 20 weeks, I would say. But in reality, we've seen that we've never been at 20 weeks. We've rather been at 16 weeks on average for the -- up until the year 2024. It has been accelerating throughout the past couple of quarters to 12 or even 10 weeks. And so we saw that when we introduced the new business model for the U.S., we saw that the preproduction of our hardware, not necessarily linked to confirmed sales orders was actually also giving some flexibility or some steady state, I would say, in our production teams that was welcomed very much. So it allows continuous production without necessarily being linked to the inflow of your order intake. And so we decided to also implement that way of working, not only for the U.S., but also for the rest of our business. So there, where in the past, we used to wait for a sales order to be confirmed to launch the production. We now actually preproduce the hardware. And when the sales order comes in, we actually finish off the production with the configuration requested by the customer. Yes, we really believe that this is an interesting way of working. It allows us to accelerate again our delivery terms, which is something that is welcomed by the market and especially for smaller customers. I think large customers, they do plan well ahead. Smaller customers, it was perhaps -- the 20 weeks was perhaps very long. And so this gives us the agility to definitely accelerate the book-to-bill ratio. So yes, we did get some sales get pushed into fourth quarter or revenue get realized in fourth quarter that traditionally would have landed in 2026. Yes, for sure, because this way of producing allows us greater flexibility and agility as well. Serge Van Herck: Yes. Thank you, Veerle. And let me add to that again, the importance of seeing our opportunity, commercial opportunity pipeline grow, which indeed shows us that we should be able also this year to generate that kind of conversion. I continue with Michael's question here on the gross margin in H2 was below that of H1 in '25, partly due to dilution from acquisitions. Was the rest due to a mix effect? Or was there also an impact from higher input costs like memory chips and graphics cards? Veerle? Veerle De Wit: Yes. So we don't really see an impact of higher prices for memory chips and graphic cards at this point in time, basically because we planned well ahead our supply chain. So for -- well, anyhow already on the software, there's a very limited impact. There is not a lot of storage, et cetera. So the impact there is very, very minimal. From a hardware point of view, we actually secured our supply chain for the current version of our hardware. It might impact us for the new versions of hardware, which may come within 1 or 1.5, 2 years. But at that point in time, we still have the ability to fix the price as well still in the market for that new hardware or new server, and we'll see at that point in time how we balance cost and revenue. Yes, the gross margin did go down a little bit in second half. And as mentioned, it's partially linked to a dilution of the acquisitions. Next to that, we did compensate for the tariffs and for U.S. dollar, a weaker U.S. dollar, but that compensation came probably a little bit later than the impact of the increase. So it's always difficult to measure exactly what that impact would have been. Is there any other specific trends? I would not say so. We don't see a general increase in our discounting either. We do know that there is one deal, an important deal that was signed with a little bit higher discount rates than traditionally, and that is also having its impact, but it's a one-off event in that case. Serge Van Herck: Okay. Thank you, Veerle. The third question was about our costs -- operating costs in H2. How were we able to keep it at the same level as H1? I think you already partially answered that, but maybe you can reconfirm that, Veerle. Veerle De Wit: Yes. I think it's a very strong cost control. Travel expenses is a big portion of our operating costs. And yes, we have been very diligently looking at that and slowing it down. And we hope that this will also have its long-term effect that we challenge more the travels that we do. Next to that, yes, very strong control over employee costs and also the growth in team member base. So we have been really limiting the growth in second half. And we continue this way of working in 2026 as well. So we shouldn't expect now a huge increase in terms of team member costs. There will still be investments, but it's not like we have been slowing down investments that will now all of a sudden pop up again in 2026. So it's really much more diligent looking at what do we really need, what are our priorities and making those decisions. So... Serge Van Herck: Okay. Thank you, Veerle. I'll move to a few questions from [ Guy Sips ]. I'll take the first one on North America, the efficient -- the investment efficiency and return on investment, how do we evaluate the return of those investments? And what KPIs will we use for the future? So let me answer that one. Benoit, I'll let you answer the second one as well on the T-Motion and robotics. But for the first time, those investments, what, of course, we look at is the creation of pipeline that's looking forward. That's an important one. Then, of course, order intake results are key. We see our growth in front of us. So that means that order intake targets have further increased for North America. So we'll be focusing on that. And last, but not least, is about revenues, of course. So those are the most important KPIs that we are following at this moment in time for checking on our investments on North America. And we know that some of those investments will take more than a year, of course, to fully deliver upon their expectations. Benoit, question #2 on T-Motion integration. Benoît Quirynen: Yes. So first, we started the integration in Q4. So globally, in terms of gross margin, the gross margin is lower for robotics for the moment than on the rest of the portfolio. We plan to increase the gross margin along the way because we want to value more the software than the hardware globally. And yes, it will take a bit of time. Globally, the T-Motion revenue compared to the EVS revenue is less than 10%. And so that means that the effect of the lower gross margin is quite diluted in the overall portfolio. Serge Van Herck: Okay. Thanks, Benoit. The third question was on ecosystem and cross-selling. So indeed, we stress the fact that we see that further increasing. We'll do now our best guessing here. We see indeed from our orders we get from large customers that this is indeed increasing. At this moment in time, we can't share our detailed numbers on that one, but it's definitely an important element, and we see more and more customers having 2, 3 or even sometimes 4 solutions. But bear with us, we are working on that, and we would expect in the future to give more detailed numbers on that cross-selling, what that eventually means, all right? Then last question from Guy that I'm reading here, given that Telemetrics & XD Motion together contributed for EUR 4.6 million revenue and diluted margins in Q4, while the full year pro forma contribution has been substantially high. How should we think about the expected revenue and profitability impact in '26? Veerle, do you want to take that one? Veerle De Wit: Yes. I think it's difficult to just extrapolate the numbers of fourth quarter because they were quite exceptional. So we don't believe that, that is repeatable from the longer term. But definitely, from a gross margin point of view, there's a lot of reasons to believe that we can limit the impact on the gross margin, so 1 to 1.5 points because basically, it's also a question of scale. So obviously, T-Motion, we won't have huge investments into sales to actually drive revenue growth. It is something we are leveraging our sales infrastructure that we have. It's a very tangible product. So it's easy, understandable and can be positioned. So with very minimal investments, we can actually expect growth. And also, where we expect margin improvement is from an SLA point of view. So this is what Benoit was referring to earlier on. We do believe that we need to scale SLA revenue for T-Motion. And also there, we will leverage the support for organization. So yes, part of it is really specialized sales support, but for the rest, we can leverage the existing organization that we have already. So again, it's very tough to just extrapolate the fourth quarter performance. And we do believe that, that 1% to 1.5% points, gross margin dilution is the best guess for 2026. Serge Van Herck: Okay. Thank you, Veerle. I'm moving to questions from David, David Vagman. Can you quantify intangible capitalization in '26? Veerle De Wit: Yes, it's going to be fairly limited to one project only. This is what I mentioned previously. So we continue to develop the project that we launched in 2024. It's probably going to be between EUR 2.5 million and EUR 3 million on this specific project. And then, we'll have to see how -- if any new projects come by. We have no understanding of any new project at this point in time, so -- but this one and only project will probably account for EUR 2.5 million to EUR 3 million. Serge Van Herck: Okay. Thank you, Veerle. Next question from David was about how much opportunity do you have to increase prices in '26, given exchange rates, tariffs and component prices, but also competition. So let me answer that one. So we'll be careful, of course. The tariffs, of course, will pass on if those changes because those will be applicable for everybody and everybody understands that. Component prices, yes, there were already some components that are increasing heavily in price. So we might pass on some of those increases. The market understands that those prices are increasing. So we think we can explain that. And a similar situation is applicable, of course, for competition. The components, they are acquiring are also subject to those price increases. So yes, we have price power, but we'll be careful in applying that. But any cost increase, definitely, we'll try to -- we'll make sure to pass them on to our customers by increasing prices where needed. Another from David, how much of the '26 order book is to be generated in H1 '26, most of it given shorter delivery times? Veerle, do you want to take that one? Veerle De Wit: Yes, I don't think we'll provide a specific number. But yes, the majority of that order book is planned for first half. So yes, it's a logical event of the shorter delivery times for sure. Yes. Serge Van Herck: Then the next question is from Jean-Pierre Tabart about our workforce in the U.S. So yes, we increased with more than 50 projects in '25. Do we expect the same pace in '26? There the answer is definitely no, unless we would do another acquisition, of course, but that's not on the agenda today here. So definitely, we'll slow down. We still see some increase also to further strengthen, for instance, the telematics or the T-Motion teams and some commercial roles, but it will definitely be much slower than in 2025. Then, the next question from Jean-Pierre. Will the growing integration of AI enable you to accelerate the execution of your innovation road map while controlling your R&D expenses, less recruitment required? That is indeed a good question. So definitely, AI is helping us to first improve our products, the features and capabilities that we provide to our customers based on certain of our AI capabilities is increasing the value that we propose to our customers. So we also expect to see revenue generating out of that further increase. And then, to respond to the question here, will it help to accelerate the execution of our innovation road map while controlling our expenses? The answer is yes. We are indeed having several colleagues within the company, and not only within R&D, already using AI tools to improve efficiency. So I think we did already more than a year ago first proof of concept, and we saw already an improvement of about 7% in the R&D environment, and we expect that to further increase. So that's definitely something that we focus on. And with new tools coming online and more and more available, we are testing them and see what value that they bring indeed. Then, Jean-Pierre's third question is, why not provide EBIT guidance? That is because we typically do that with the Q1 results. So indeed, after the fiscal year results, we provide a guidance on revenue. And with Q1 results, we will be providing EBIT guidance. All right. Let me go forward here with a question from [ Alexander Leipold ]. What gross margin level do you expect for '27 -- sorry, '26, considering the additional T-Motion dilution and continuing dollar weakness? And at what point do you expect T-Motion margins to converge with EVS group margins? Veerle and Benoit, do you want to take that? Veerle De Wit: Yes, I do believe that, again, from an organic point of view, we believe that we can sustain the margins that we do right now. So we did some price increases over summer to cover for the weaker U.S. dollar. So it does take a little bit of time to make sure that they flow through in our P&L. But we do expect that we right now have the right balance. And obviously, there might be a mix that is still playing in our disadvantage. On the other hand, we see that more and more software embedded in our solutions offsets the mix impact. So all in all, we expect that from an organic point of view, we can keep our margins. As mentioned, the impact of T-Motion is 1 to 1.5 points for the full year 2026. And yes, how much time does it take us to convert to standard EVS margins? Benoit, I'll let you. Benoît Quirynen: I think it will take a few years, in fact, because we have to proceed with the integration, the transformation, also the communication to our customers valuing the SLA because the SLA, as mentioned by Veerle, is also an important component of the increase of the gross margin. So it will take a few years. Veerle De Wit: Yes. Yes. And we see it from past experience as well, it's a gradual progression. But if we look, for instance, at the acquisition of Axon that we did in 2020, after 4 to 5 years, we start to see a conversion or a profit margin that is closer to what we would expect from a standard EVS portfolio. So it depends on also prices that we can push into the market, but then also leverage growth and all of the -- it's a combination of all these elements, obviously. Serge Van Herck: Thank you, Veerle and Benoit. I go to some questions from Alexander Craeymeersch. So first one is, on a like-for-like basis, your '26 order book is currently running 12% behind where it was at this point last year. Given that backdrop, do you have confidence that you can deliver organic growth ahead in -- ahead of '25, given that H2 has somewhat weakish organic growth? Or is the stalling inorganic growth a bit temporary? Veerle, I guess, you can start, and I will complement that. Veerle De Wit: Yes. Yes. So I do believe if we unleash traditional metrics on our beginning of year order book, I think, yes, probably we can say that, that is weak. However, what we mentioned is when we change for the new business models and we do now that preproduction and we're gaining an agility in terms of deliveries, we believe that actually historical metrics on our order book are not very relevant anymore. So that's why our current guidance is much more focused on pipeline and our ability to convert that pipeline into won orders and deliveries. So yes, we do believe that it is possible to define historical metrics order book given the changes in the business dynamics. Serge Van Herck: Yes. And I will repeat myself here, the fact that we see our commercial pipeline further growing is a positive element looking forward, of course. So that's something that we need to keep into mind, of course. Second question from Alexander was about Asia Pacific revenues were down 25% year-on-year in the second half, yet, there was no specific commentary on this in your results. That's indeed because we are mainly looking at the full year and that we saw full year revenues for APAC being more or less stable to -- compared to the year before. Could you help us understand what's driving that weakness? And what your outlook is for the region going forward? Veerle De Wit: Yes. I think... Serge Van Herck: Yes. Veerle De Wit: I'm sorry. Serge, you want to... Serge Van Herck: Yes. Go ahead, Veerle. I will complement. Veerle De Wit: Yes. And definitely -- so it's very important to note. So there is no immediate FX impact for APAC. So we sell there in euro. What we do see is that customers are delaying decisions actually. So with the current euro being relatively strong for them, a lot of decisions are being postponed and delayed, waiting for a little bit of a better climate. So obviously, the slowdown of order intake over 2025 in APAC will have its effect on the revenue taking in that region. And yes, in second half, they were down year-over-year, but it's definitely an element of that order intake slowing down as well. So the revenue always lags a couple of months on order intake. Will that recover? We'd expect that to recover. Now, on the other hand, we don't expect the biggest growth out of APAC in 2026 either given the order intake of 2025. So yes, we'll have to look there, so -- but there's no real FX headwind specifically to that region. And I think on the FX exchanges or impacts compared to U.S. dollar, I think we've been able to quantify that in the press release already. So I'm not sure if there are further questions around that. Serge Van Herck: Okay. Thank you, Veerle. I think we went through most of the questions. So did I miss something? I see a question about the increased dividend of EUR 1.2. Will that be the level in the next years to come? I think that you answered that one, Veerle, as well. Veerle De Wit: Yes. So we issued a dividend policy for the years '25 to '27 at EUR 1.2 per share. So in principle, that is fixed over the next couple of years. Obviously, always dependent on market situation and our results. But that is the guidance at least for the years to come. Serge Van Herck: All right. Then, I see a question from [ Patrick Millecam ]. Beginning of '24, you indicated the EUR 7.4 million order intake for Big Event Rentals. In the '24 results, you realized a record revenue of EUR 15.8 million. Now, you already have EUR 14.9 million order intake for Big Event Rental. What is your best guess for the total eventual revenue for Big Event Rental in '26? And do you expect additional revenue orders? Veerle De Wit: Yes. I think, yes. Benoît Quirynen: You have to be so good to be in that one. Yes. Veerle De Wit: Yes. I think we secured like EUR 14.2 million from an EVS point of view, but then the order intake from T-Motion added on top of that. So yes, we do expect Big Event Rental in 2026 is going to be around EUR 15 million. It can move up a little bit still from what we have secured right now because sometimes there are some small orders being added just prior to the event, but it's going to be very close to that number. Benoît Quirynen: And '26 is a different kind of event scheduled than '24. Veerle De Wit: Yes. Absolutely. Benoît Quirynen: In fact, the multisport events happen in the winter and not in the summer. In fact, the order -- some of the orders are taken earlier and typically the year before. Serge Van Herck: Good. I'm looking to my colleagues here. I think I took all the questions here. Did I miss any? No. It's okay. Veerle De Wit: I don't think so. Unknown Executive: No. Serge Van Herck: All right. So, good. Well, then, I think we can close this right on time. So thank you all for participating today. Happy that you could follow this session. As you can see, we're quite proud and happy, of course, with the results that we've been able to deliver in '25, which are at or even slightly above the guidance that we gave throughout the year. It was not an easy year, and a lot of things happening in the world, a lot of headwinds, but still we are proud with the results that we achieved. And we have quite high confidence that we can continue also in 2026 on that growth path that we have set out for the years to come, of course. So thank you again for joining us. Thank you, Veerle; thank you, Benoit, for helping me here with the presentation. And as I said before, this will be also available on our website very soon. Well, the presentation is already available, and the recording will be available very soon. So thank you very much for attending today and look forward to see you soon. Have a nice day. Veerle De Wit: Bye. Benoît Quirynen: Thank you.
Operator: Thank you for standing by and welcome to the ADT Inc. fourth quarter and full year 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press. If you would like to withdraw your question, thank you. I would now like to turn the call over to Elizabeth Landers, Vice President, Investor Relations. You may begin. Elizabeth Landers: Good morning, and thank you for joining us today to discuss ADT Inc.'s fourth quarter and full year results. Speaking on today's call are Jim DeVries, ADT Inc.'s Chairman, President, and CEO; Jeff Likosar, our CFO; and Omar Khan, our Chief Business Officer. We are structuring today's call a bit differently with the majority of the call focused on our strategy and key priorities to position ADT Inc. for the future. Jim will start with a broad strategic update, focusing on how we are reshaping the future of smart home security. Omar will then describe more about our recent acquisition of Origin AI, and then Jeff will briefly describe our 2025 financial results as well as our long range financial outlook and capital allocation priorities. After their prepared remarks, we will open the call for analyst questions. This morning, we issued a press release and presentation summarizing our financial results. Both are available at investors.adt.com. We will reference our non-GAAP financial measures today. Reconciliations to the most comparable GAAP measures are included in the earnings presentation on our website. Unless otherwise noted, all financials and metrics discussed reflect continuing operations. Non-GAAP cash flow measures include amounts related to our former solar business through February 2024. Included in our remarks today are a number of forward-looking statements that fall within the safe harbor provided by the Private Securities Litigation Reform Act. These forward-looking statements are subject to risks and uncertainties that are laid out in the earnings presentation on our website and in our SEC filings. Actual results may differ materially. Please refer to our SEC filings for more details. I will now turn the call over to Jim. Jim DeVries: Thanks, Elizabeth, and good morning, everyone. I am pleased to report that ADT Inc. again delivered a solid quarter and that our overall performance for 2025 was within the guidance ranges we shared at the beginning of the year and updated on our October call. Jeff will share more regarding 2025 financial results later on this call, and he will also comment on our longer-range financial outlook and capital allocation priorities. I will spend the next several minutes sharing our vision for ADT Inc. and how we are reshaping smart home security, emphasizing our strategic focus areas, key initiatives, and investment priorities for 2026 and beyond. As you know, ADT Inc. is the most trusted brand in smart home security, and we have remained the leader in our space throughout our 150-year history. We have a national footprint, unmatched monitoring and service infrastructure, and longstanding relationships with millions of customers who rely on us every day. ADT Inc.'s mission to protect and connect what matters most remains consistent, and we are focused on providing peace of mind to our customers. As I have shared before, our overall strategy is anchored in three core differentiators: unrivaled safety, premium experience, and innovative offerings. We deliver best-in-class protection anchored by our professional monitoring and delivered with top-notch service. During my tenure as CEO, customer expectations, the state of technology, and the manner in which we fulfill our mission have evolved with increasing speed. Homes are more connected. Technology is more intelligent. Customer expectations regarding responsiveness, personalization, and convenience are higher than ever before. Security is no longer just about reacting to alarms. We see the future of smart home security different from the past, and ADT Inc. is leading the way to transform the delivery of and even the definition of smart home security. At the core of that strategy is a simple idea: combining ADT Inc.'s human experience with intelligent technologies to deliver better outcomes for our customers and with better economics for the business. More specifically, we are building technology that, combined with our more than 12,000 professionals, will provide solutions to provide increased peace of mind for our customers. Our vision is to provide protection that is always available, powered by artificial intelligence; enable real-time and split-second response with deeper information and context during emergencies; deliver a personalized experience that lives and evolves with the customer tailored to lifestyles and life stages; and offer solutions for everyone across all U.S. households, small businesses, and families through a variety of use cases. Protection that follows people, not just properties. We have made substantial progress in the foundation for this vision in recent years. These include the launch and expansion of our ADT Plus platform and features, the transition to virtual service, early accomplishments in AI, and consistent improvements in our go-to-market model. A key objective during 2026 is to invest in the acceleration and broadening of our progress. We are investing in product technology, both in ADT Plus as well as in our new technology related to ambient sensing. We are investing in customer service and artificial intelligence, as well as our related IT infrastructure. And we are investing in customer acquisition efficiency, including marketing to new segments and refining our channel strategy. I would like to share a little more detail on these key investments in 2026. First, investments in product technology. We have built a solid proprietary platform, which enables more rapid innovation and more explicit differentiation. Following the launch of Trusted Neighbor in late 2024, we continue to add more use cases and features. Just recently, we launched LiveLight, a lighted outdoor ADT sign enabling first responders to visually identify and verify an address during an emergency. We also launched MySafety, enabling on-the-go mobile security integrated with the ADT Plus ecosystem. We are expanding penetration of our ADT Plus app to more channels including, most importantly, a third-party network of more than 100 dealers who will transition to ADT Plus in the third quarter. A topic which I am very excited about is our recent acquisition of Origin AI, which, using advanced presence sensing technologies and intelligence, will enable use cases and features unique to ADT Inc. Omar Khan, our Chief Business Officer, will share more detail about Origin AI shortly. The theme of our customer service initiatives is the power we can uniquely bring to our customer by supplementing our 12,000 employees with the power of artificial intelligence. We have made substantial progress in service and efficiency in recent years. A highlight is our virtual service initiatives, under which we now handle approximately 50% of our service calls via remote diagnosis and resolution rather than utilizing a truck roll. This has led to meaningful customer service improvements with positive feedback while also improving our cost efficiency. In addition, our initial artificial intelligence efforts in 2025 have led to 23% of our calls being routed through AI, with steadily improving levels of containment, that is handling the call without any human engagement. We exited 2025 with all of our chats first routed through AI. Importantly, we continue to benefit from highly trained employees available in situations where a human interaction is the best solution, both in the event of an emergency or when an on-site service visit is the best way to resolve a customer concern. During 2026, we are planning to advance our service-oriented artificial intelligence within our call center operation and, importantly, also invest in AI beyond our call centers. Our primary focus is to strengthen our understanding of customers, which we will accomplish via transcription and analysis of a large percentage of customer interactions with our agents. We use these insights to improve our interactions—in some cases by prompting employee agents and in other cases reducing the need for human involvement. I am especially excited by the opportunities here to proactively identify and resolve customer needs or desires rather than reactively after a customer reaches out to us. We anticipate this rich information will facilitate improvements in customer satisfaction, speed of issue resolution, and cost efficiency. Working with an outstanding AI partner, Sierra, we are also beginning to leverage artificial intelligence within our lead-to-sale processes, which we believe will bring higher levels of conversion. The third area in which we are making 2026 investments is improvements in new segments and acquisition efficiency. We already enjoy the benefits of a very strong and trusted brand and a variety of routes to market. During 2025, we shifted a majority of our sales to a model that effectively combines sales with system design, configuration, and installation into a single role, most accomplished in a single home visit. We also refreshed our advertising platform to our When Every Second Counts campaign, and we continue to benefit from our capabilities to selectively buy accounts in bulk and integrate them into ADT Inc. Among our key priorities in 2026 is expansion into e-commerce channels and the launch of a new product line we are calling ADT Blue, to appeal specifically to more value-conscious and DIY customers. This will include more marketing investment to target those customers more specifically than we have in the past. We believe our ADT Blue launch will help us acquire customers for both our DIY and DIFM solutions as we now appear in e-tail channels where many customers shop. In addition, we are refining our overall marketing approach with an objective of rationalizing our highest-cost acquisition sources, which include affiliate marketing partners and, in some cases, our dealers. We expect this to have a near-term effect of reducing our organic new subscriber additions while strengthening longer-term economics for our overall go-to-market ecosystem. We will also continue to evaluate bulk account purchase options and potentially full acquisition opportunities in our industry with attractive economics. Our intent and core objectives are threefold. The first is to drive more growth. This includes in our core residential business as well as DIY-oriented or more price-conscious consumers along with small businesses and aging-in-place or health-oriented customers. The second is to strengthen customer loyalty, improving our customer retention. And the third is to improve efficiency specific in customer acquisition to fund growth. Overall, we are focused on delivering unparalleled and differentiated customer value propositions, capitalizing on large and fast-growing smart home and security markets. Our scale, our professional monitoring expertise, our employees, our advanced technologies, and our installed base give us advantages that are very difficult to replicate. Our 2026 initiatives and investments are designed to create the next generation of smart home security. We expect these initiatives to generate benefits, including growth in our core, expanded participation into adjacent TAMs, improved attrition, and greater efficiency. We have the team in place to execute this strategy. We are building on ADT Inc.'s strengths while revolutionizing the manner in which we deliver smart home security. We are focused and disciplined and absolutely committed to creating long-term value for our customers and shareholders. Before Jeff shares more about our financial outlook and capital allocation plans, I will turn the call to Omar, who will share more about why we are so excited about our acquisition of Origin AI. Omar? Omar Khan: Thanks, Jim, and good morning, everyone. Last week marked a defining milestone in ADT Inc.'s history with the acquisition of Origin AI. This acquisition reflects a strategic decision to integrate ambient intelligence directly into our platform, unveiling the next layer of home intelligence. Two years ago, we launched our proprietary platform, ADT Plus, which we have been advancing and scaling with hardware and software features to support additional channels and customer types. We expect AI sensing to become an integrated offering for ADT Plus customers over the next 12 to 18 months, advancing all aspects of our product and services platform. With this acquisition, we now own what we believe to be the world's leading Wi-Fi-based signal processing engine, algorithms, and AI models, backed by over 200 global patents and 50 talented innovators. Think of it as a sixth sense that knows what is happening inside the home without the use of cameras or listening devices. This technology uses existing Wi-Fi signals, the ones that are already bouncing off your walls and off your body, and uses proprietary algorithms and AI models to interpret the smallest changes in deflection. We call it AI sensing. It can distinguish a human from a dog, a fall from a nap, and even detect a person's breathing pattern, all without requiring a single wearable device or a camera. This is a privacy-first security that solves notification fatigue by significantly reducing false alarms and providing zone-based knowledge of where someone is in the home when there is a life safety incident. Why Origin? Because they have spent years perfecting the intellectual property that everyone else is just starting to talk about. For 6,000,000 existing households via software updates and simple hardware like smart plugs. Our consumer market research shows customers have a high demand and willingness to pay for these AI-verified presence, motion classification, and health-related features. Simultaneous with the acquisition, we have signed a five-year agreement with a minimum value of $30,000,000 plus activation fees with Verisure, the leading smart home security provider in Europe and Latin America, who will continue to scale Origin's technology across their footprint. We believe over time our newly acquired technology will accelerate our user engagement, increase our role in customers' lives, drive subscriber and RMR growth, and will reduce our subscriber acquisition cost. We expect to launch a pilot this year with the commercialization across the ADT Plus platform and app starting in 2027. In short, we now own the brain of the smart home. We are moving the industry from “Did the door open?” to “Is my family okay?” And we are doing it with the most advanced, privacy-compliant AI on the market. I will now turn the call over to Jeff and look forward to answering any of your questions related to Origin and product strategy for ADT Inc. Jeff Likosar: Thanks, Omar, and good morning, everyone. I will take just a couple minutes to highlight our fourth quarter and 2025 financial results, which you can see in the deck and press release we issued earlier this morning. As Jim mentioned, we are very pleased with our overall performance with all guidance measurements within the ranges we shared at the beginning of the year and updated in our October call. We continue to focus especially on strong cash generation, and we grew our adjusted free cash flow, including interest rate swaps, by 16% in 2025. This reflects our disciplined capital allocation and our balanced approach investing in our business while also returning capital to shareholders. Along with our capital structure improvements, this enabled us to return nearly $800,000,000 of capital directly to shareholders during 2025. This included roughly $600,000,000 in share repurchases and $187,000,000 in dividends. Full-year revenue was $5,100,000,000, up 5%, with adjusted EBITDA of $2,680,000,000, up 4%. The key positive year-over-year drivers included growth in monitoring and services revenue, higher install revenues and margins, efficiency improvements, and general cost controls, enabling funding of our investment priorities. Adjusted EPS was exceptionally strong, up 19% to $0.89 per share, benefiting from EBITDA growth and lower share count. Attrition ended at 13.1%, behind our record level from earlier in 2025 due mainly to elevated nonpaid disconnects. As a reminder, we divested our multifamily business in October, which represented approximately $2,600,000 in RMR from roughly 200,000 subscribers. Including the effect of this disposition, our 2025 ending RMR balance was approximately flat to 2024. I will touch more on our capital structure and flexibility in a moment, but want to also highlight that we reduced our leverage to 2.7x adjusted EBITDA with several debt transactions during 2025. During the fourth quarter, these included refinancing of our 2028 notes and all but $75,000,000 of our April 2026 notes. Our 2025 performance and progress positions us well heading into 2026 where, as Jim described, we are focused on executing several initiatives that position us for the future. I will spend the rest of the time describing how these key initiatives and priorities fit into our financial model and our commitment to generating shareholder returns. The strategy we are executing is designed to reinforce and build upon the strengths of our business model: stable recurring revenue, strong margins, durable free cash flow, and, more recently, our capital allocation flexibility. As we invest in technology, service excellence, and more efficient customer acquisition, our goal is to improve long-term growth in unit economics, not just near-term results. We enjoy very durable recurring revenue resulting from our annuity-like $4,300,000,000 annualized recurring monthly revenue balance. With its high gross margins, this is a core asset and the foundation of our cash generation and shareholder return capabilities. We have been very disciplined in management of that asset in recent years, with a focus especially on growing our cash generation while continuing to invest in our business. Our 2025 adjusted free cash flow, including interest rate swaps, has more than doubled since 2021. During that period, we have generated more than $3,000,000,000 of adjusted free cash flow while investing in subscriber acquisition spending sufficient to have grown our recurring monthly revenue balance by 9%. Our focus on unit economics, facilitated by higher install revenue per unit, has contributed to that progress. We have also invested in the technologies and infrastructure that provide the foundation for the initiatives we have described today, and we will continue to invest in 2026. Because we believe our stock is very attractively priced, we have also prioritized capital allocation towards repurchase in recent years. Including dividends, we have returned $1,600,000,000 to shareholders since 2021. Our flexibility to do this is enabled by the refinancing transactions I mentioned earlier and our having repaid more than $2,000,000,000 of debt during that time. As we enter 2026, our commitment to shareholder returns is stronger than ever. We expect the initiatives Jim outlined to generate more growth, improve customer loyalty, and strengthen subscriber acquisition efficiency. We are targeting 1,000,000 more subscribers by 2030, with growth both in our core markets and adjacencies such as DIY and aging-in-place or health applications. We are targeting 11% attrition with loyalty from expanded use cases and our commitment to customer service. And we are targeting a two-year revenue payback enabled by our broadened channel presence and reduced reliance on high-cost acquisition methods. We are consequently sharing today a multiyear financial framework that targets compounded annual growth rates of 5% for revenue, 10% for EPS, and adjusted free cash flow in excess of 10%. As part of our commitment to return capital directly to shareholders, we are today announcing a new three-year $1,500,000,000 share repurchase authorization. And we are maintaining our existing $0.055 per share quarterly dividend. Beyond direct shareholder returns, we also anticipate allocating more capital to M&A than we have in recent years. Some of this may be in the form of technology or capability development, as in our recent acquisition of Origin AI, and some may be in the form of footprint expansion or account acquisition. We will also continue to responsibly manage our debt levels. While we are very comfortable with our current capital structure, we anticipate continuing to reduce leverage, targeting 2.5x adjusted EBITDA. Relative to our longer-range framework, we expect 2026 will have very strong cash generation for which we are targeting 20% growth, which is above our multiyear framework, with some offsetting pressure in 2027 from higher cash taxes and interest next year. We expect lower 2026 growth in revenue and EPS, both of which we expect to be approximately flat to 2025. This reflects our prioritization of cash generation and share repurchases. We are also investing approximately $50,000,000 during 2026 in the product technology, service, and go-to-market initiatives Jim described. Like all companies, we face an uncertain tariff environment, and our guidance includes approximately $45,000,000 in additional subscriber acquisition costs from tariffs. Our guidance does not include the purchase accounting effects of our Origin acquisition; we will provide an update on this on our next call. We expect this year's full-year cash generation to be skewed towards the first quarter, driven by seasonally lower SAC spend and several timing items. To conclude my remarks, I want to emphasize why we see ADT Inc. as such a compelling investment. We own the most trusted brand in the smart home security space. Our valuation is underpinned by a stable, resilient, and recession-resistant recurring revenue base. We enjoy an unmatched footprint and scale with an unwavering commitment to delivering peace of mind. We increasingly own proprietary technologies and are leveraging artificial intelligence to improve both service and efficiency. We have demonstrated an ability to generate exceptionally strong free cash flow, which we have deployed in a disciplined fashion. Our flexibility from this cash generation and our efficient and well-laddered debt structure affords sufficient flexibility to return capital directly to shareholders. Overall, we are very pleased with our 2025 results and are excited by our future. Thank you again, everyone, for joining our call today. And thank you also to our more than 6,000,000 customers, our more than 12,000 employees, and to the first responders across the United States. Operator, please open the call to questions. Operator: Thank you. We will now begin the question-and-answer session. We ask that you please limit yourself to one question and one follow-up. Your first question today comes from the line of George Tong from Goldman Sachs. Your line is open. George Tong: You are guiding to 2026 revenue and EPS to be flat. You touched on the tariff impact that you expect this year on subscriber acquisition costs. Can you talk more about factors that you expect to constrain revenue and EPS performance this year? Jim DeVries: Sure, George. It is Jim. Thanks for the first question. I will touch on revenue, and Jeff, you want to hit earnings? So on the flat revenue, we are certainly aspiring to do better than flat in 2026, entering our year with RMR roughly flat to last year. As you know, recurring revenue makes up 85% of our revenue, and so if we are coming in flat to last year, that is a headwind for 2026. We have also about a point of headwind from the sale of our multifamily business. And then, George, you asked about some of the factors which might impact it. Some of the changes that we are contemplating in dealer and affiliate partnerships have the potential for short-term disruption. I want to mention, I am bullish on these investments. We are excited about ambient sensing, entry into some of the new TAMs, retail, e-commerce. We have a brand-new CMO who brings a great deal of experience and talent to the table. And I see no reason why after our transition we get back to our 5% revenue growth and 10% EPS growth and the numbers that Jeff outlined. Jeff Likosar: Yeah. And I would add Jim's comment about the very strong margins. We have a number of efficiency actions, some which are continuing from last year and some new ones that will lower some costs that go with that revenue, and then that is largely offset by the cost of the investments that I mentioned. I mentioned around $50,000,000 between technology in product, IT, and AI related, particularly some marketing investments, also the tariff headwind. On earnings per share, we will benefit a bit from net repurchases, offset somewhat by higher amortization, a little bit higher interest expense, and we would expect the tax rate to be approximately flat. And then I will emphasize the cash where we are expecting a very strong cash year, and that is a result of a bit less SAC investment. It is also the result of having entered the year in a strong position and aware of some working capital opportunities during the year, and cash interest we expect to be lower in 2026 than it was in 2025. George Tong: Got it. That is very helpful. And as a follow-up, you talked about initiatives you have in product technology, customer service, and acquisition efficiency to your new medium-term financial framework. Can you elaborate on which of these initiatives you consider to be relatively new or a departure from your prior strategy? Jim DeVries: I would offer a couple, George. Obviously, the investments in ambient sensing are new for us with the acquisition of Origin. We see this new technology as a very significant change that we will be integrating into our product going forward. It is unmatched in the industry and a differentiator for us. We continue to advance our investments and our capability in AI, and I am excited about what I see on that front. Not only are we making advances in customer service, but now we are beginning to turn to sales, marketing, and growth and leveraging AI capability there. And then a third one is we will be leaning more assertively into DIY for customers who are more value conscious. And we will be in retail and e-commerce in a way that we have not been historically. Jeff Likosar: And one thing I would add, implicit in that—and Jim mentioned this in prepared remarks—is as we shift into some of those channels, generally, we expect those to be lower-cost acquisition channels, and we will rationalize the amount of marketing and selling we spend in some of the higher-cost acquisition channels. Which is among the reasons why our revenue guide is as it is, with some potential near-term disruption as we work through that transition. George Tong: Very helpful. Thank you. Operator: Your next question comes from the line of Peter Christiansen from Citi. Your line is open. Peter Christiansen: Good morning. Thanks for the question. Nice free cash flow out, for sure. Jim, I want to talk to you about, you know, of these first steps you are making in AI-first monitoring—obviously, a huge potential trend. What is your vision on how this could evolve over the next, I do not know, five or so years, and is there an opportunity here to really change the calculus on ADT Inc.'s cost leverage? Jim DeVries: Thanks for the question, Pete. I will offer a couple of comments, and then Omar is with us today, and he will have a couple comments as well. Short answer to your question: I think so. I think ADT Inc. is a company that is built for AI to be just incredibly transformational. We, as you know, have had a really heavy focus on customer service. Scaling AI in both voice and chat, I think something like 100% of our chat interactions already channeled through AI. Last year, 20% of our calls were channeled through AI, containment continues to improve. And then, even more exciting than how we are leveraging AI in customer service, leveraging AI in sales and marketing is sort of the next frontier for us. So we are partnered with Sierra, a fantastic partner. They are helping us expand into the e-commerce experience. We are doing two-way SMS to improve our lead contact rates. I think we mentioned in the script, we are next leveraging AI in transcription to analyze all our customer interactions, not just customer service but including sales. And so I think the future is really exciting on leveraging AI for us. Omar Khan: Thanks, Jim. And in addition to that, on the product and technology side, what Origin's AI sensing platform gives us for the first time is the ability to insert an intelligence layer between the signals that get generated in the home and our monitoring and response and the consumer. So for the first time, we will be able to take the signals, get some additional context from those signals. So, for instance, if there is a sensor activity in the home or a sensor signal in the home, our ability now will be to know whether or not whatever that motion is, how to classify it, whether it is a person, whether it is a pet, whether it is a mechanical vacuum cleaner. In addition to that, we will be able to help first responders in our monitoring centers to know where those intruders or people may be in the home in the event of an emergency, and then whether or not they are still in the home when a first responder arrives. So you can see that that intelligence layer is going to give us a lot more context real time about what is happening in the home, and it will absolutely positively impact the efficacy and the efficiency of our monitoring and response in our first responder communications. Peter Christiansen: That is helpful. And, Omar, I guess, generally across the industry, how do you think about this acquisition, Origin AI, strengthening ADT Inc.'s competitive moat, or perhaps just AI in general creating more entrants potentially—big tech, that kind of thing? Just curious how you are thinking about the competitive setup. Omar Khan: Yeah. No. It is a great question. And I think it is a core reason why we bought Origin AI and the IP portfolio because from a competitive set perspective, this gives us the ability to take off-the-shelf and traditional sensors and cameras but augment them with additional signals that are privacy-first. It gives us the ability to both enhance the use cases in the security space by giving us more intelligence on what is happening in the home and how first responders and monitoring can take advantage of those signals, but also start to push us into adjacent use cases like Jim talked about earlier on the call. The ability for us to know changes in gait and changes in motion gives us incredible opportunity to lean into the aging-in-place opportunity and grow that side of our business as well. So it becomes both a moat for us as well as an ability for us to capture additional markets and RMR growth. Jeff Likosar: And, Pete, one thing I would add, and I appreciate the way you framed the question. But as we began our efforts in AI, it was at first focused on things that have hard cost reduction—you know, easy-to-measure cost reduction. We need to answer the phone fewer times, dispatch fewer trucks. Also, with improved service, next category is customer outcomes—more means of preventing customers from canceling, proactively resolving customer needs. But as I expect you can tell, the thing we are most excited about is this third category, which is better use cases for consumers to keep them safer, to make them more protected in their homes, to open up new use cases, expand the TAM as you see in the presentation deck and as you have already heard. But that is exactly why we are making the investments we are making in 2026. Peter Christiansen: Absolutely. That is super helpful. Super interesting too. Thank you. Operator: Thanks, Pete. Your next question comes from the line of Ronan Kennedy from Barclays. Your line is open. Ronan Kennedy: Hi. Good morning. This is Ronan Kennedy on for Manav. Thank you for taking our questions. Elements of this were asked and answered as part of George's question, but I would like to ask it another way, if I may, please. The framework shows 2026 as a transition year. I want to confirm if that is how you would categorize it, with revenue and EPS flat, and then you have that return to 5% revenue and 10% EPS growth over the longer term. Is there a specific operating or market inflection point, whether it is the subscriber growth, attrition, pricing, and new products, that gives you confidence in what would appear to be a meaningful reacceleration after 2026, rather than remaining in kind of range-bound? Could you talk to those, please? Jim DeVries: Yeah. Sure, Ronan. I will make a couple comments, and then Jeff will add his perspective. First, just from a grounding perspective, I think our 2021 to 2025 CAGR for revenue growth was 5%. And, you know, getting back to 5% to me, I see no reason why we do not get back to 5%. On the EPS front, I think the long-term objective we had was 10%. I think that is very doable, with substantial buyback and 10% free cash flow. Our five-year CAGR on cash is 21%. And so I do not think it is a significant trajectory change to get back to where we have been for the last five years. That said, some of the things that give me confidence that these investments will be substantially positive for us: we are continuing to expand ADT Plus, our proprietary platform, and having good success on that front. AI is probably a touch more advanced than I anticipated it to be, and I love the opportunities that we see with AI in sales and marketing. Origin, as Omar just pointed out, is a fantastic acquisition, and the new technology will help us both from a use case perspective and from a differentiation perspective. And I do not think Omar or Jeff mentioned this, but Verisure, the largest security player in Latin America and Europe, already through licensing agreements deploys some of the use cases that we are talking about with Wi-Fi sensing, and actually in hundreds of thousands of homes. So this is not terribly far out. And then the last thing I would mention, Ronan, we will have a pretty substantial DIY investment in 2026. It will be meaningfully EBITDA negative during the year, but I like what we are seeing. We have a new leader over DIY. Year to date, we are up almost 23%. That is prior to the new product being available in Q2 and prior to being in retail and e-commerce in a meaningful way. So I think as those investments take shape, I feel really confident about the future. Jeff Likosar: Yeah. And I would add a couple points. One is that implicit in your question is how we deploy capital. And we have, for the past few years, been focused, as we have described, on cash generation, having more than doubled our adjusted free cash flow between 2021 and 2025. The last couple years especially, but also over the last five years, we have returned significant capital to shareholders, $1,600,000,000. We are announcing today a $1,500,000,000 share repurchase program. That is because we believe the stock is very attractively priced and does not reflect what we believe is intrinsic value of the business. So as this technology rolls out, as we begin to commercialize it, as we execute the other things that Jim mentioned, and as we undertake some of the actions to make our go to market more efficient, we would anticipate some combination of deploying more capital towards adds and/or enjoying more adds for the same amount of capital. So that also becomes the inflection point—just the allocation of more capital towards adds that will go along with the completion of the things that Jim described. Ronan Kennedy: Thank you both very much for that. And as a follow-up, in this multiyear framework, can you quantify or qualitatively characterize that targeted 5% revenue growth into major drivers, whether that is message subs growth, your installation activity, your RMR, adjacent TAM, the new entry, pricing, or even the M&A? How should we think about the major contributors to that targeted 5% growth? Jeff Likosar: Yeah. The main contributor will be RMR just because RMR is our largest base of revenue. We noted an objective of a million more subscribers. It is maybe worth mentioning that some of those subscribers might be more value-conscious or more price-centric. So those subscribers could be lower revenue per unit. But the crux of it will be more subs and/or RMR, with the precise combination dependent to a certain extent on how well each of these various initiatives work. Maybe worth noting that we have internal plans and objectives that are in excess of that. Then we anticipate continuing to command within any particular segment of customers or cohort of customers a pricing premium because of the fact that we deliver the best service, the best protection, the best monitoring capabilities of anybody else in our space. Ronan Kennedy: Thank you, Jeff. Appreciate it. Operator: Your next question comes from the line of Ashish Sabadra from RBC Capital Markets. Your line is open. Ashish Sabadra: Thank you for my question. I just wanted to follow up on the change in the customer acquisition strategy. Jeff, I believe you mentioned there was success in the DIY year to date, which is up 23%. So if you could just elaborate on that—one, the kind of success that you are seeing and how these new product launches in Q2 or Q3 will be a further tailwind for that strategy going forward. Maybe if I can just ask another question on the same topic, it would be just that focus on the e-com channel. How might the shift from LLM adoption impact e-com customer acquisition over the midterm? Thanks. Jim DeVries: Thanks, Ashish. Jeff and I will tag team this one as well. So on DIY, we have not historically leaned in in an assertive way in DIY. There is a handful of reasons why, but over the course of the last six months or so, we have been paying more attention to this segment. One of the lenses, I will say, that we contemplate DIY through is having a relationship with the customer when the customer is younger and has less sophisticated security needs, and then as their security needs develop, converting them to a DIFM customer. From a customer lifetime value perspective, we need about seven, eight, maybe nine or 10 DIY customers to create the same value as a DIFM customer. And so although we are excited about the growth, the key strategic challenge for us is to get really good at conversion. And this year, we have been paying a lot more attention to fishing in the pond of value-conscious customers. DIY, while it has a small denominator, is up just under 23%, and later this year, as we roll out a new product lineup and begin to advertise more aggressively in this space and develop our e-commerce capabilities, we feel pretty good about this new segment. Jeff Likosar: Yeah. And I would add, more generally, we are always fine-tuning our customer acquisition strategy. But part of what we are doing in 2026 is a bit more than fine-tuning. And just for context, we acquire customers via phone sales, field sales. We mentioned that during 2025, we migrated to what we call a tech engineer model, which is something of a hybrid of both a salesperson or a person who configures a customer system and installs it. We have our dealer channel. We have bulk. We have e-commerce and moving to e-com and retail. All have different characteristics with respect to the cost of the sale and the commissions. And then the same on marketing. We spend marketing dollars on upper-funnel brand advertising, affiliate partnerships, social. Some of our marketing is with partners. So what we are doing this year more assertively is reducing the kinds of adds where we spend the most, combined between the marketing cost and the commission cost. And, you know, I think we have an opportunity to become more efficient—potentially, as already mentioned, with some near-term disruption. It is part of the reason that we are not counting on as many new subscriber additions during 2026 as we otherwise would. But we think beyond that, we will have reset the cost of sales and marketing and go-to-market cost more generally. Ashish Sabadra: That is very helpful color. And maybe just as a follow-up, how should we think about the EBITDA growth in 2026? Should it be more in line with the revenue and EPS growth? Any color there will be helpful. Jeff Likosar: Thanks. Yeah. We are focusing on earnings per share. Many of the drivers, as you know, are similar. Earnings per share, of course, benefits from share repurchases. It also has the amortization and interest, as I mentioned earlier. But the overall operational dynamics are the same. One of the reasons that we are emphasizing earnings per share more is because some of the things I just described in terms of the way we acquire customers will have, or may have, different accounting manifestations. As you know, there is a meaningful portion of our subscriber acquisition that we capitalize. If we acquire a customer through one channel, we would capitalize the marketing cost. If we instead were to spend more money, just as a, for example, on upper-funnel advertising, we would expense all of the related advertising cost. That effect is less pronounced in EPS over time than it is in EBITDA. But aside from that, the accounting manifestation, the operational drivers are the same. Ashish Sabadra: Thank you. Thanks, Jim. Thank you. Operator: Your next question comes from the line of Greg Parrish from Morgan Stanley. Your line is open. Greg Parrish: Hey, guys. Good morning. Thanks for taking my question. I just wanted to ask a high-level question about technology acquisition. You decided to buy this AI sensing technology. I think you spoke on the call about potentially more technology M&A in the future. So maybe just from a high level, why do you think it is an advantage for you to own rather than license some of this technology? It pertains to Origin AI and then maybe as well for the potential future investment. Jeff Likosar: I will just real quick. I mentioned on the call that in the coming years, we would anticipate potentially more on M&A than in recent years. Part of that is because we have not spent that much capital on M&A, the attractiveness of share repurchases being one of the reasons. And then we are always looking at the landscape. And, as you know, sometimes there are good assets available, sometimes not. Sometimes we pursue one and end up walking away from it. So I would not read too much into it other than that we will continue to evaluate, and then the two broad categories would be technology-related as one category. Another category would be expansion of footprint—you know, more subscribers, kind of bulk-like M&A. But I will pass it over to Omar on the more specific question as to the advantages of owning. Omar Khan: Thanks, Jeff. You know, we are always undergoing analysis around buy versus build, license versus acquire. There are certain situations where it will make sense for one or the other. For Origin AI specifically, the reason it made sense to acquire across our entire portfolio was multifold. One was we are integrating this into our proprietary ADT Plus platform. So it is not something where we are licensing a specific use case or a small engine. We are actually integrating Origin's intelligence layer across our entire product portfolio. It will impact pretty much every use case we have in the company. So from a foundational perspective, it is incredibly important for us to own not just the technology, but own its trajectory over time so we can continue to control it. It is one of the main reasons we innovated and brought ADT Plus to market. The second area is that we did a fairly thorough IP analysis, and Origin's IP is both seminal and foundational, and it is incredibly exciting for us to continue leveraging the 50-plus professionals that are at Origin AI to continue propagating and developing new IP in the space. It is not just a point-in-time acquisition. We also bought an engine that will continue to produce next-generation intellectual property for us to leverage going forward. Greg Parrish: Okay. Great. That is very helpful color. And then maybe, Omar, since you are on the call here and we are talking about potential technology M&A, what capabilities or technologies are out there that maybe could bolster the platform over time? Are there capabilities that you think would fit well in the portfolio that maybe the offering does not have today that you can see adding in the next couple years? Omar Khan: Yeah. I mean, I think for us, as we look at it, there are use cases that we see opportunities for us to grow in. Obviously, continue to expand the core business security use case. And in those areas, generally, we are looking at licensing or sourcing technologies. There is an area of adjacent use cases like aging in place and additional types of health monitoring. In those spaces, we will continue to look at leading-edge technology where IP or technology or product acquisition could become a differentiator for us. But we are doing a lot of other work in the AI space specifically related to sensor fusion and bringing those signals together to provide insights to our customers and to our monitoring centers. But right now, our focus is really taking advantage of the Origin AI acquisition, making that operational over the next 12 to 18 months, and then integrating it into our portfolio and launching additional services and capabilities to grow our subscriber base and our RMR. Greg Parrish: Okay. Thanks very much. Jeff Likosar: Just emphasizing the balanced capital allocation. No. Sorry. I was just going to emphasize again balanced capital allocation. We do not want to come across as a dramatic shift, but we do anticipate more M&A just because we have not spent as much, and we just did one that was a relatively sizable outflow the first part of this year. But I will remind of the $1,500,000,000 share repurchase authorization, which we think is a very attractive use of capital. Operator: We have reached the end of our question-and-answer session. I will now turn the call back over to Jim DeVries for closing remarks. Jim DeVries: Thank you, Rob, and thanks, everyone, for taking the time to join us today. We are confident in our plans for 2026. Key goals for our team will be to develop investments in new product technology and to meet our commitments for gross adds and retention. I would like to extend my appreciation to our ADT Inc. employees, our dealer partners. Congratulations on a good fourth quarter and a strong 2025. Thanks again for joining, everybody, and have a great day. Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.
Serge Van Herck: Good morning to all of you. Welcome to our EVS Broadcast Equipment presentation on our fiscal year 2025 full year results. I'm Serge Van Herck, the CEO of EVS, your host today. And I'm here with Veerle De Wit, our CFO; and Benoit Quirynen, who is in charge of our strategy and acquisition. So welcome to this 2025 session. A few topics to note before we start. The PowerPoint that we are using here today is on our website. This session will be recorded and will be made available later on our website. And last but not least, when you have questions, please put them in the chat we can then at the end of our session indeed read through your questions and then answer them. So again, welcome to this session. And the first slide -- the next slide is one for Veerle. Veerle De Wit: Yes. Good morning to everyone. So let us start by a small disclaimer. So this presentation actually includes some numbers, and we'll discuss the performance of 2025, but there also are some forward-looking statements within this presentation. Those statements are based on current expectations and our management's assessment of the environment we operate in. We do declare that these statements are subject to a number of risks and uncertainties, and that could lead to a materially different statement in the future. We will elaborate on some of those risks during this presentations, but there can also be risks or market risks that affect or potentially could affect our performance in the future. These risks may contain potentially technology changes, new market requirements, price pressure from competition, but also some macroeconomic or geopolitical events that we cannot foresee today. EVS does not take any obligation of publicly reviewing the forward-looking statements to reflect these risks. Serge Van Herck: Thank you, Veerle. So let me go forward here with the agenda. What will we be discussing today? Well, of course, we'll give you an update on our business. We'll have a financial more detailed update. We look towards the future with our outlook, and then we'll have, of course, our conclusions before going to your questions, where we will be providing a few answers. So let's start with that business update, and let's go forward to the next slide. You'll see that revenue-wise, we keep on growing. So we are quite happy and proud, of course, to say that we are delivering here a fifth consecutive year of record revenue results, which is in line with the strategy that we developed at the end of 2019 called PLAYForward. So happy to see indeed that growth strategy is delivering upon its expectations and that in an uneven year 2025, again, we are realizing record revenues, which are close to the top of our guidance. And I'll have Veerle explaining on the next slide some more details about those numbers. Veerle De Wit: Yes. So on Slide 7, you'll see that we have a strong financial performance, and this is in a challenging macroeconomical environment. Our order book grows with 11.3% and closes in at EUR 182 million. Our revenue next to that, as Serge was mentioning, has again reached a record high. We closed at EUR 208.1 million, and it's a 5.1% growth. This growth has been impacted by currency, especially a weakening dollar. correcting for currency changes and therefore, for a constant dollar, the revenue would have been at EUR 211.6 million, which would have represented a growth of 6.9%. To be noted that, that growth is exceptional. Mind that 2024 had Big Event Rental Revenue. And so if we normalize 2024, excluding -- to exclude that Big Event Rental Revenue, the growth was at 14.2%, which is a stellar growth for us. It also ends at the high-end range of our guidance. From an EBIT perspective, I believe that we also put down a strong EBIT performance. We had an EBIT performance at EUR 43.3 million, which is actually a decline of 3.7%. But again, normalizing this performance with the constant currency, the EBIT would have been EUR 46 million, a growth of 2.4%. After a strong -- weaker first half, our performance in second half has been really, really strong, combining a very strong revenue performance, but also with a very, very sound cost control to reach that EBIT number. From a net profit point of view, we see a net profit of EUR 38.5 million. It is a decline of 10%, but it is to be noted that the net profit is impacted by some elements that change between EBIT and net profit. So we, first of all, have a EUR 0.8 million of interest on long-term receivables. This is a temporary impact that was already declared in first half. And then there is a EUR 1.2 million of true-up -- tax true-up related to prior periods. If you would have normalized the net profit with those two elements, the net profit would have dropped to 5.6% compared to last year. From an FTE point of view, we see a growth to 792.8 FTE at year-end. It is a growth of 12.4%, and it actually demonstrates an 87 FTE growth throughout the year, which partly obviously is linked to new acquisitions and for the rest is linked to, yes, growth in our team member base primarily linked to the Double Down North America strategy and to some investments in research and development. So again, we believe that our revenue growth in 2025 is strong and is in line with our PLAYForward strategy. And it's important to note that it overcompensates the Big Event Rental Revenue of 2024 and therefore, is an important milestone in our growth path. Serge Van Herck: Thank you, Veerle. Going to that next slide with our key highlights for the year. We're happy to say like our press release also says that we delivered a fifth consecutive year of record revenue with accelerated momentum in North America. So let's have a look to those different topics here. Let's first start with market and customers. So we see indeed that our business in North America is growing strong, and that despite the tariff situation that we've seen early last year. We see also that the number and the size of large commercial deals keeps increasing. We see that our channel partner strategy is delivering on the expected growth. We see -- and we've been saying that for a few years now that we expect our LAB customers, our Live Audio audience Business customers to grow and that we definitely see both in revenue and in order intake. We also see an increased cross-selling between solutions, which is clearly highlighting the value of the EVS ecosystem that we are offering to our customers. And last but not least, here in the beginning of that market and customers paragraph, when we talk about Big Events 2026, we have indeed secured the contracts for large events this year. And we're also happy to say that our new technology VIA-MAP, but also Move Up and T-Motion will be used in some of those important games. When talking about technologies, we've been further working on XtraMotion, and we have launched XtraMotion 3.0. We have further extended the generative AI effects and features by giving more and more capabilities, which we see more and more being deployed and used by our customers. We have further expanded our MediaCeption portfolio with Move Up and Move IO, thanks to the acquisition of MOG Technologies that we did in 2024. T-Motion and Move solutions have now extensively also been used during those big winter events. So happy to say that MOG and T-Motion have been used over there. And last but not least, in '25 at IBC, we also launched Tactiq as part of the flexible control room solutions, which will have a major impact in the future on the way that our customers are creating live production. So another important launch in 2025. When we look to the corporate topics, of course, number one is the acquisition of Telemetrics in the U.S. and XD Motion in France to enable us to create the new T-Motion Media Production Robotics solutions. Last year, again, we've received for the fourth year in a row, the top employer certification. And we see that our engagement survey with our colleagues shows that we are indeed a great place to work. We keep on focusing also on ESG. We understand that the world is changing. But at this moment in time, we still believe that ESG is part of our DNA, and we will continue to focus on that. We are, at this moment, also proactively looking and trying to mitigate potential supply chain disruptions. And we further, of course, make sure that the application of the U.S. tariffs hinder us as little as possible, of course. When we look to the team in North America, at the end of 2024, we had about 50 team members, at the end of 2025, we were above 100, and that is indeed because we've done the acquisition of Telemetrics, but also we've been hiring colleagues, further colleagues in sales and customer support. And by doing that acquisition of Telemetrics, we have now also an R&D and a manufacturing capability in North America, more precisely in the U.S.A., of course. And last but not least, here for our shareholders, happy to say, of course, that we have that fifth year of record revenue and then an uneven year and that we see indeed our order book further growing and that at the same time, we are creating quite some additional cash. We're delivering a strong EPS of EUR 2.73 per share. And last but not least, if you look at the total shareholder return since 2020, we see an increase of 159%, of course, which is based on the growth of our valuation and the dividends that have been paid during that period. So when we go to the next slide, when we talk about what we like to say our BHAG, our big hairy audacious goal to become that #1 solution provider in the live video industry, we definitely see that 2025 is helping us forward with achieving that objective by 2030 and which will also generate at least a revenue number of about EUR 350 million in 2030. So we're quite happy with the results that we've been able to deliver, which are on the top of our guidance and for EBIT even slightly above our guidance. When we talk about PLAYForward strategy, I'll be happy to have on the next slide, Benoit, taking us through some of those evolutions. Benoît Quirynen: Thank you, Serge. Good morning, good afternoon, everyone. So yes, we continue our journey, our transformation journey for our portfolio. So we -- as you know, we evolved from a product company to an ecosystem company. And we are more and more articulating the solutions that we created in the last years to transform these solutions to behave more as an ecosystem in multi-tier market. So we see an evolution and a higher appetite in our business model, more OpEx, more on demand, and we are structuring our systems for that. We are growing definitely more in broadcast centers and even beyond broadcast centers in live audience business. While we were EVS company focused on hardware, we are really becoming software everywhere, and we have launched as well some SaaS services. And while we were focusing mainly on sports, now our portfolio and our customers are adopting our technologies to support workflows for entertainment, news and starting to use it as well more and more for digital. So our portfolio is really adapted to the market structure. So we see a continuous market growth based on growing supply of live events. So the volume of live events is increasing and the complexity of live events is also increasing, especially because the consumers, the audience, they want more and more immersive content. They want to be part -- they want the emotion of the event. Second, we see an evolution in the client landscape structure. We see consolidation. We see transformation in the business models as well of our customers. And we see that based on that, they are changing their operating models. We see more and more remote productions. We see hybrid production mixing on-prem systems and cloud systems. We also observe the adoption of artificial intelligence. And this is reflected as well based on the technology trends and our technology, where we help our customers to adopt the IP-based technologies. We help our customers to adopt artificial intelligence and all these changes in the operating model. I don't need to detail. I think this Monday, the fact that the macroeconomic context is changing and it's sometimes changing fast. And as mentioned by Serge, we remain committed on the ESG dimension to make sure that we optimize globally our governance and also globally our carbon footprint. So we do that based on the 4 solutions that we have created along the years. Organically or through acquisitions. So we have the 4 solutions, LiveCeption, MediaCeption, MediaInfra. And this year, we have as well T-Motion, which is the Media Production Robotic solution based on the two acquisitions. So we are articulating these four solutions as a mission-critical ecosystem. And we have seen the adoption of LiveCeption by key customers as a Gravity Media and FightPoint broadcast showing that the XT-VIA server is still leading the pack in terms of the quality of the product and solution. We have seen as well the adoption by the RBFA, Royal Belgian Football Association of the Xeebra VAR solution, but operated in a different way, in a fully centralized way. And we have done this deployment with the support of Gravity Media partner. And then we have also deployed LiveCeption Zoom, which enables our -- the operators, so the replay operators to now have more precision to really capture the emotions and Zoom on the face of the athletes when they are in the middle of their action. In terms of MediaCeption solution, the VIA-MAP integrating MediaHub has been deployed and will be deployed during the Big Events this year. We have also won customers in North America who will articulate all its production around MediaCeption workflows from ingest to distribution and including media management. We have also won and starting to deploy NDR for the Tagesschau, in fact, one of the most known show in Germany, where VIA-MAP will also be used. And based on our acquisitions in Puerto in 2024, we have also enhanced the MediaCeption portfolio to increase the flexibility and the efficiency, thanks to the two products, Move Up, which is a flexible ingest and Move I/O, which is the transcoding. Then in terms of media infrastructure, we have also proven that our Neuron View technology helps our customers in OBVAN and Greek Video, which is a very large LSP in North America is now adopting Neuron View. Cerebrum is at the core of very complex workflows on Gravity Media. So trying to -- or not trying, but solving the complexity that I was referring in the previous slide. We have also launched at IBC, Tactiq as the core of flexible control room that will enable our customers to adopt flexibility within their production with operators playing multiple roles depending on the nature of the production. And we also have sealed a strategic partnership with Qvest, which is important because this flexible control room solution assumes change management by our customers. And so it's important that our channel partners can help our customers to adopt these new technologies and transform their way to operate. And last but not least, the T-Motion solution has been created based on the two acquisitions in the Media Production Robotics. The two solutions have been -- the two companies have been selected, in fact, because they provide both safe, stable, smooth systems with sustainability as a core of their offerings. And in fact, as mentioned by Serge before, some of the technologies here have always also been used -- sorry, during the winter events a few weeks ago. So globally, what we observe is that the number of customers leveraging multiple EVS solutions is continuously increasing. So we see the adoption of the EVS ecosystem. And I will hand over to Serge. Serge Van Herck: Yes. Thank you, Benoit, for that overview. And let me indeed continue with one of our major growth engines, which is North America. You remember in 2024 that we added a specific pillar to our strategy to accelerate our growth in North America. And we're quite happy to see indeed that this is becoming reality, not only in revenues, but also in order intake and pipeline creation and a number of colleagues, of course. So what you can see here indeed is on the left-hand side, the order intake for our Live Audience Business customers in North America, which is growing really strongly over those last years and which shows indeed that our strategy is the right one to focus on that type of customer. We also see that -- and that is good for the future, of course, that our pipeline, our commercial pipeline keeps increasing and is contributing to our overall pipeline growth that we will see on a later slide. But this is definitely an important growth. As we can see that in the U.S., the growth of the funnel year-over-year is 47%. So that definitely shows that we also have quite some opportunities in front of us to continue the growth that we are realizing in the U.S.A. And last but not least, here on the picture, you can see a few of our new colleagues. As I said before, we doubled from 50 to 100 end of '24 to end of '25 by hiring more sales and customer service colleagues, but of course, also with the acquisition of Telemetrics, which gives us now also engineering and production facilities in North America. So that is really definitely an important element of our strategy that is helping us to realize our growth. When we go to the next slide, I'll ask Veerle to comment a bit on that path to our BHAG. Veerle De Wit: Yes. Thank you, Serge. And as mentioned by Serge earlier on. So this is our BHAG goal. It's achieving EUR 350 million of turnover by 2030 and most of you probably have seen this slide before in orange, you see the linear growth compared to the ambition defined in 2019 and the revenue we did at that point in time, it was EUR 103 million revenue. And so the orange is a linear growth towards that EUR 350 million. In blue, you see the realized revenue number year-by-year. So we remain ahead of track versus that linear growth. And the good thing is that if we actually look at our projections for the future, based on our current portfolio, we see that we can achieve something or number in 2030 that is a little bit north of the EUR 300 million. This is by just following the market growth and also growing the market share that we have in each of our different solutions. And then the remainder is obviously still a focus item for our merger and acquisition strategy. And you'll see for the first time, and we won't stop at EUR 350 million in case we find, for instance, bigger acquisitions that can help us fuel that growth in the future. But you see actually the lighter blue box, the goal is to close the gap to the EUR 350 million by further merger and acquisitions. And the good thing is that we have the financial power actually to execute on that strategy. So we remain very confident that they carry an ambitious goal of reaching EUR 350 million by 2030 is within our hands. And for sure, we will continue our journey towards that path. Serge Van Herck: Thank you, Veerle. Going forward to the next slide talks about our total addressable market, and you will recognize that slide as we've been using that also at the end of '24 during our Investor Day and then we indeed said at that moment in time that we're working to further increase our total addressable market which indeed in '25, we have done, of course, by the acquisition of Telemetrics and XD Motion. So there, we are increasing our total addressable market with about something more than EUR 100 million. But in the meantime, with new solutions, also, for instance, in LiveCeption and MediaCeption. We are taking some part of the camera business by our AI capabilities like XtraMotion. So we definitely continue working on further expanding the total addressable market. And as Veerle said, we still foresee to do some further acquisitions in the future, and that will be with the same objective of further increasing that total addressable market. Going to the next slide, we come back to that acquisition that we did in 2025. And here, I'll ask Benoit to take over again. Benoît Quirynen: Thank you, Serge. So we did acquire two companies in 2025. In fact, the first company was Telemetrics based in U.S., Allendale, New Jersey, and then XD Motion, which is based in Coignieres in France. So both acquisitions position EVS in the Media Production Robotics as a real leader in this domain. So in fact, with this new solution, we enhance our ecosystem. We aim to reduce the complexity. And we -- by this acquisition, we also creativity. We create flexible solution for our customers to enhance this creativity. And with this two acquisitions. We make also an extension. We go from control room to the studio. As you see on the drawing here, of course, the robots are in the studios and in the venue. So that means that it's an important step for EVS. The two companies are very complementary, in fact, and they bring different kinds of robots, different kinds of gears that can be articulated and controlled by software-driven controller. And what we plan to do is to really develop the software control also to embed more and more AI. So with these 2 solutions, now we have the broadest premium Media Production Robotics portfolio, covering both indoor studio environment and also covering the news outdoor, typically for stadiums, but also typically for Big Events. What we want to do with EVS is to enhance the services, thanks to our global worldwide coverage. We want to increase the quality and coverage of our SLA. We want also to develop further the solutions to include AI and then we want to really embed these solutions into the EVS ecosystem to reduce the complexity for our customers and increase the creativity. So AI is really something at the core of EVS solutions. We didn't start it just after Chat GPT, we started much earlier. Since 2017, EVS is deeply engaged in AI transformation. And we apply AI across our whole portfolio to increase productivity and automation, to reduce the complexity for our customers, but also to address the creativity. So we embed in our solution, third-party AI. In fact, and typically, we can do object detection, face detection, person detection to index the content so that it can be retrieved easier. But we have also developed creative tools with XtraMotion for a very nice replay for cinematic effects, a lot of computer vision AI technologies that are our own models developed by our own teams and really very specific to address two key aspects of AI deployment in media, which is, first, the need to cope with very short latency. In fact, and second, we have the need as well to address the predictability. In fact, it's very important for our customers to have mission critical environment, very predictable. And so we know that with LLM, there is a kind of unpredictable results. Here, we focus on predictability. So deployments on-prem to reduce the latency and a predictable solution. And of course, we don't limit the application of AI to our solutions. We also use AI internally for coding for developing our software and across all our processes, as corporate tools, for example, to improve the support that we bring to our customers. And I hand over to you, Serge. Serge Van Herck: Thank you, Benoit, for that update on those topics. So let me continue here also with some ESG topics here and more specifically about our team members. We know how important it is to have engaged team members and we do a yearly follow-up an engagement survey, and the results that come out of that are quite encouraging, and we see a very strong engagement level of our colleagues. EVS is a great place to work at 92%. That really shows how we engage our colleagues are. And we also see that from an external world and the certification for top employer also shows that what we do within HR, within the company are definitely the right things for making sure our colleagues are fully engaged all over the world. And last but not least, you also see here on those awards that we receive from Ecovadis from Sustainalytics which also gives an indication of what we do on the ESG side. So there as well, we see quite strong. We keep seeing quite strong results. So we are very happy with that. Going forward on the next slide, let me also touch upon a few main risks that we see at this moment in time. Of course, U.S. tariffs were a big issue in 2025. Fortunately, we've been able to mitigate the impact for our customers in the U.S. by changing our supply chain for the U.S., and that helped us indeed to reduce that impact to our customers. Using our pricing power, we also made sure to pass on a portion -- well, not a portion, the whole impact of those tariffs, but also part of the exchange rate fluctuations that we had with the dollar. And as we see that most of our competitors are also based outside of the U.S. and that the U.S. tariff situation didn't create a commercial disadvantage fortunately. Another topic that we are watching closely is, of course, the availability and the cost of components, which we see for the moment some components rising in cost anywhere the availability also becomes questionable. So we are trying to make sure that this does not further hit our P&L or our capability to deliver, of course, equipment to our customers. So if we remember in COVID times 2020, we also had something like that, and we were also able to mitigate that situation. The impact of a weaker U.S. dollar, we tried to reduce the impact as much as possible. we've seen our growth in North America even being bigger than what we expected, so that helped us to mitigate part of the impact of a weakening dollar. But next to that, we also have a strategy to secure our foreign exchange rate flows with the objective, of course, to limit the impact on the net profit due to that weakening dollar. So those are some of the main risks that we try to mitigate at this point in time. Going forward, we come to the financial update details and I'll ask Veerle here indeed to walk us through those detailed financial numbers. Veerle De Wit: Yes, Serge and let us start by the top line performance. In terms of order intake, our order intake outpaced our revenue, ensuring actually continuous fueling of our order book. We closed an order intake of EUR 225 million. It's a 7.8% growth year-over-year. And that number includes some of the Big Event Rental contracts of 2026 that Serge mentioned before for a total of EUR 14.9 million out of that number. When we look at a geographical perspective, both EMEA and NALA have considerably contributed to this growth while APAC had a little bit more of a tougher year also linked to the strong euro compared to the local currencies over there. But obviously, it's very good to see that our main regions, EMEA and NALA strongly contributed to this performance. To be noted as well that at constant currency, we expect that there is an impact of around EUR 7 million in order intake. So our order intake would have been EUR 7 million higher should the dollar or not have weakened or would the dollar not have weakened. From a revenue point of view, we already mentioned it. We secured a total sales of EUR 208.1 million. So it's a 5.1% growth. At constant currency, it would have been 6.9% growth. And for us, it was very important to see that we did not only compensate Big Event Rental of 2024, but we even grew over and above that number. So basically, all in all, the growth is of 14.2%, which is obviously a strong base growth. We see a balanced growth as well in revenue across all regions. So it's a little bit different when we look at order book -- order intake, but from a revenue point of view, actually, all of our regions contributed to this growth which, for sure, North America and Latin America demonstrating the strongest growth. And this is a testimony to our Double Down North America strategy, basically. And then to be mentioned from an order book perspective, we continue to grow our order book. Our order book stands at EUR 182 million, which is an 11.3% growth and in numbers, the total order book is growing by EUR 18.5 million. It is to be noted that it is primarily our long-term order book that is increasing significantly. So with secured sales for 2027 and beyond, of more than EUR 81 million. So you see the growth there. We traditionally around EUR 53 million, EUR 56 million of long-term order book. This has now increased to EUR 81 million. So it's a very strong growth. And it's primarily a result of a couple of large longer-term strategic contracts that have been won. It does mean that our 2026 secured sales is a little low. It sits at EUR 100.6 million which is a 6% decline versus the number that we reported at the end of 2024. So the number we reported at the end of 2024 was of EUR 107 million. It is to be noted that, that number eroded throughout 2025, with approximately EUR 10 million. So we could look at a restated number of EUR 97 million there. And in that case, our order book is growing. However, that order book for 2026 is also including Big Event Rental. So I think it is fair to say that from a base business point of view, our order book is not the strongest. This is also linked to the fact that we were able to convert quite some order intake from second half into revenue still in 2025. And so we are confident that we can continue that way of working in 2026 as well. When we go to the next slide, we have some more detailed revenue analysis. We started showing that, I believe, last year as well. So we look at a couple of strategic angles when we do our revenue analysis. Some of the angles look at market pillars. So when you look at the market pillar, you see a strong expansion of our LAB Business, LAB Business being general broadcasters or leagues or stadia or corporates. We do see that revenue grows from EUR 90 million back in 2023, up to EUR 122 million in 2025. So it's truly 6% growth over a 2-year span. And obviously, the LAB is an area where we strategically want to position EVS more and more. So we're very happy with that growth number. When we look at the regions as well, and those are the blue bars that you see, you see that primarily, our growth engine is North America. And if you look at 2023, when we did a number in North America of EUR 56 million right now growing to EUR 78 million. It is obviously good to see that, that growth is absolutely there. So it's a 39% growth, spending a 2-years period. And finally, and you do not see this on this slide or in the graph, but we also focus on recurring services revenue and also there, we continue to grow our SLA basis. So there is a growth in our SLA basis of 37% over 2 years' time. And next to the SLA, we also see more and more flex license revenue, but also ODA, so on-demand activation revenue contributing to that recurring revenue status. So also there, from our strategic angle point of view, we're very happy to see those results. If we go to the next slide, you will then see our profitability. From a profitability point of view, we first look at the gross margin and that gross margin has dropped a little bit compared to fiscal year '24. We closed in a gross margin of 70.8%, which is a 1.5 points drop. It's primarily the consequence of a couple of different drivers. First, there is a change in the business model that is following the U.S. tariffs. So since 2025, we take the impact of the tariffs into our bill of material. It's a EUR 2.1 million impact. That tariff impact is offset by local price increase or price increase in the U.S. We implemented a price increase a little bit later than the tariff impact. So there might be some small erosion there. Second, we have a dilutive impact following the acquisitions we did in October or over summer but they concluded in first of October 2025. So they contributed for 1 quarter into our numbers. And overall, they diluted our gross margin by 0.5 points. And finally, there is also some margin erosion following a weaker dollar because obviously, in the U.S., we sell in U.S. dollars, but most of our components are actually still bought in euros. So obviously, there's also some erosion from that point of view. All in all, we're very confident. We still believe that this is a strong gross margin and we continue to monitor, obviously, all the elements impacting that bill of material as close as possible. From an operating expense point of view, we concluded an operating expense at EUR 103.9 million. So it includes actually all operating expenses, but also other revenue and expenses and ESOPs. So all the way down to the EBIT. It's a 6% growth, but to be noted that it's a very strong control over the second half of those operating expenses. Our first half, we were close to a 10%, even 11% growth. And so we were really able to slow down that growth in second half as to secure our EBIT margin. Why is this increase? It's primarily linked to investments in additional team members. First of all, to support our Double Down North America strategy, but also to accelerate some R&D tracks. And then next to that, it's also the integration of XD Motion and Telemetrics for the fourth quarter of 2025. To be noted that those operating expenses for the full year evolved completely in line with what we set out for ourselves internally. So after a strong and a strong growth in first half, we were very happy to demonstrate that we really can control these operating expenses in the second half. From an EBIT point of view, all of this resulted into an EBIT performance of EUR 43.3 million. It's a 3.7% decline, but we believe that it's a solid EBIT margin at 20.8% EBIT to revenue. That decline is actually also linked to some investments in our operating expenses for which we have a scheduled return on investment that goes beyond 2025. So for instance, the Double Down North America plan has a return on investment that should start as of 2026. And obviously, also the investments in R&D are for longer-term return plans. At constant currency, as mentioned already, the EBIT would have been at EUR 46 million, which is obviously an increase compared to last year. So also there, we see the impact of the weakening dollar. From a net profit point of view, we secured a net profit of EUR 38.6 million, which is 18.5% net margin and as mentioned, it is declining compared to 2024 by 3.2 points, but it's following a lower finance income and a higher tax rate I already explained those events previously. They are expected to be one-off events or events that can recover in the future. Net profit results in a diluted earnings per share of EUR 2.73 per share, which is a small decline of EUR 0.29 per share decline year-over-year, but it's in line with expectations. As mentioned, EBIT guidance was between EUR 36 million and EUR 43 million. So in that sense, we did achieve the high end range of our guidance as well. If you look at the balance sheet or financial structure, we have a net cash position that closes at EUR 58.4 million. It's a decline of 22% compared to 2024. But that decline is fully modeled. First of all, it is because we used quite some cash in financing activities. So we increased our dividend payment. We did a share buyback program end of 2024 that concluded in 2025. And we had reimbursement of lease liabilities. So all of this was planned. We also used cash for like EUR 14.1 million in investment activities linked to business acquisitions or to loan to associate companies. And all of this was obviously offset by a net operating cash flow that increased. So we're very happy with the EUR 58.4 million net cash position at the end of 2025. And as mentioned, it is a decline, but following some well-modeled investments. From a net working capital point of view, you do see quite an important increase in net working capital. So it moves up to EUR 102.2 million. It's an 11.7% increase but that increase is fully linked nearly to trade receivables. First of all, there is the general increase of our business volumes. But second, there were significant deliveries at the end of the year. So our revenue number in December was very, very strong. And obviously, that is receivable that is not due by the end of December and therefore, sits in open receivables and impacts our net working capital. From a net working capital to sales ratio, we're at 49% at the end of the year. But again, it's hard -- it's largely impacted by revenue that we realized in the final month of the year. Looking at trade receivables, you see the reflection of our DSO. And again, also there, we go back to numbers that were '22, '23 in but it's, in our opinion, not concerning because again, it's linked to those shipments at year-end. It's linked to some results sales increase in North America with some major ongoing projects for which the collection is a little bit delayed. And it's also linked to the integration of the receivables for T-Motion. If we look at the structure of our receivables, they remain very healthy. We have some long-term overdue over 90 days. They represent 18% of the total balance, but it's linked to a very limited number of specific cases where we have a very strong focus together with the customer, and we have very low risk of no payment. And we have several of those overdues that actually have been settled early in 2026. So we're confident that this is well under control. If we go to the next slide, we share an overview of our intangible assets. So everything that we put under IAS38, as you surely know, we launched two intangible asset projects back in 2022 for a total of EUR 12.2 million. First project was related to VIA-Map that was announced in September 2023, which, at which point in time, the creation of new intangible assets ended and we started the depreciation of that VIA-Map project in first -- fourth quarter of 2023. And you see that, that quarterly depreciation is now scheduled for a 5-year period at about EUR 0.5 million a quarter. The second project we actually wrote off back in fourth quarter 2024. It was a write-off of EUR 1.1 million and the reason actually for the write-off is that the criteria for IAS38 were not yet met. Not met anymore, let's say it that way. The developments were certainly not in vain, but a product is no longer planned to be launched as a stand-alone product but it's actually a component of the VIA-Map. So the return on investment can no longer be measured. And as such, IAS38 needed to be dropped for that project. But all of this, what it shared with you already in the past, Also, the third project that we launched in 2024, it still contributes to further creation of intangible assets. We have an overall capitalization of EUR 2 million for fiscal year 2025. And we expect to start depreciation of that project as of 2026, end of 2026, beginning of 2027. We continuously evaluate if we have further projects that qualify for IAS 38, there are none at this point in time that we are aware of. But obviously, those things can change quite rapidly. Moving to the next slide. Serge, do you want to do the introduction for the outlook? Serge Van Herck: Yes. Thank you, Veerle. Thank you for the update on our financial numbers, detailed financial numbers. So let's look now indeed into the future to the outlook. Before asking you to give the guidance for 2026. Let's go to the next slide to have a look at what the commercial opportunity pipeline looks like, and it is definitely an important one. Because it's looking ahead, and it's showing us, indeed, if we have the potential to continue our growth. And the answer to that question is definitely yes. We see that the pipeline that we have here, and it's a snapshot that has been taken on the February 1 of each year. We see throughout those years that it's definitely accelerating and also in 2026. And so we see that it's growing quite nicely since 2019 was a factor of 2.4x. And definitely also, we see an acceleration from '25 going into 2026. So that is definitely important because it shows us indeed that we have the commercial opportunities in front of us in order to be able to continue our growth also in 2026. And that leads us to the next slide, Veerle that you will indeed comment. Veerle De Wit: Yes. Thank you, Serge. So obviously, we have an important order intake of 2025 that continue to fuel our order book. But as mentioned, that order book is primarily growing from a longer-term perspective and our secured sales or secured order book for 2026 stands at EUR 100.6 million at this point in time. We are confident that this is still a strong level and provides us robust foundations for the years ahead. We are closely aligned to what was mentioned last year at order book. But as mentioned, we reported EUR 107 million order book at the beginning of 2025. But that number experienced some erosion. So there was like EUR 10 million of erosion throughout 2025, linked to milestone projects for which milestones shifted into later periods. We consider that this effect that we saw in 2025 was an exceptional effect. Basically, as our forecasting process has now changed. We now exclude any milestone at risk. And so we're a lot more prudent in our secured sales number than we were last year. Experience has shown us that we need to be careful with milestones that are potentially at risk. So we believe that, that EUR 100.6 million is to be compared to a normalized basis of EUR 97 million of last year. It's true that EUR 100.6 million includes Big Event Rentals. So from a base business point of view, we may see that this number is rather weak, but it's because actually we were able to take some quite some revenue in 2025 of order intake that was done in 2025. So even some of the fourth quarter orders were still delivered in 2025, and this is actually thanks to an organized preproduction of our hardware and software. You may ask your question, why did we start preproduction. So anyhow to a company for our new business model in the U.S. we dissociate now hardware production flows from software production flows. And we just benefited from the occasion to make sure that we have a steady state production of our hardware instead of waiting for us for a confirmed sales order to start producing the hardware as well. It provides us with a lot more agility. It's an agility that is also welcomed by our customers. And so it is something that we will continue in 2026 as well. We will continue to preproduce the hardware and finalize the software as soon as the customer order is confirmed. So we have on one hand, the secured sales for 2026. On the other hand, as Serge was mentioning, we have a pipeline that is very promising. Our pipeline is demonstrating a growth of 26% compared to the same period last year. We don't see any specific drivers impacting that pipeline. It's on the same conditions as last year. It's within a similar environment. So there's no real reasons to believe that, that growth is not a real, real growth. And so a growth of 26%. So we diligently looked at our order book the pipeline, the current market dynamics, and therefore, we set our guidance for the year 2026 to EUR 220 million to EUR 240 million. The midpoint is at EUR 230 million, EUR 230 million, which is close to the consensus, the midpoint of the consensus with EUR 232 million. So we believe that, that more or less models, what the market also reflects Obviously, the range is still quite large. It's a range of EUR 20 million. In the past, we used to call out a range of EUR 15 million, at the beginning of the year. But we do believe that with the growth of our overall business, that EUR 20 million is also obviously justified. Looking at the next slide, we look at the dividend proposal. And based on our capital allocation strategy that we announced last year and the dividend policy that we have in vigor for the years, '25 to '27. EVS does foresee a dividend payment for the year 2025 of EUR 1.2 per share. You see the dividends that we paid out for the years '23 to 2025, and you see the increase of EUR 1.1 dividend per share in '24 to EUR 1.2 in 2025. The final dividend of 2025 will be paid in May, and interim dividend has already been paid in the month of November was EUR 0.60. So the remaining dividend of EUR 0.60 per share is scheduled to be paid in May, and it should be May '26. I apologize for that. Obviously, it's always subject to market conditions, and it's also subject to the approval of the Ordinary General Meeting of Shareholders scheduled on May 19. Serge, over to you again. Serge Van Herck: Thank you, Veerle. That brings us indeed to the conclusions of this presentation. So when I go on the next slide, what will be the key activities for 2026. Well, you see indeed that we'll continue to focus on consolidating our leadership on LiveCeption. There is no doubt about that. The second one will, of course, be further strengthen the cross-solution ecosystem and further grow the MediaCeption, the Media Infrastructure and the T-Motion business lines. The third topic is continue growing in North America. We definitely see that we have opportunities for further growing. It's for sure one of the largest markets in our industry. So we really think that we can further grow in North America. We'll continuously also further work on developing those adjacencies, some of those adjacent markets that we've started to approach like, for instance, the corporate market is one of them. We continue diligently on that one. The channel partner part is, of course, critical to our strategy, and we expect to further strengthen that this year by putting even more focus on it than before, also with some additional resources. And last but not least, of course, we look forward to continuously deliver those Big Events. And we've seen already some important winter events coming on screen, but we have in the summer some other major events, sporting events happening and that we will also be able to support and deliver on screens worldwide. So those are the key activities for '26. And when we come then to the next slide, which really presents the conclusion of today, I would say that we see that our figures in '25 prove that we are progressing well towards our BHAG and that the strategic growth pillars that we've been focusing on definitely demonstrate that progress we were hoping for. The EPS of EUR '25 definitely supports the dividend of EUR 1.2 per share that Veerle just mentioned. You also just heard from Veerle that we are projecting a revenue guidance of somewhere between EUR 220 million to EUR 240 million, including a Big Event Rental, which definitely shows that we are very confident in our growth. And last but not least, we expect to further invest in North America as we see considerable growth over there. And next to this investment, we also will further make sure that we control our expenses. You've seen Veerle explaining that we've been focusing heavily on our expense control, especially in H2. And as such, that should enable us to ensure a balanced growth as to support, of course, our long-term profitability model. And that's it for today in this presentation, and I give the floor to you by checking indeed the questions that we have in the chat here. So I'll ask my colleagues here indeed also to check those questions that came in, in the chat and maybe I can read them together with you. Serge Van Herck: And I see the first one coming from Michael, who had -- who has four questions. And his first question is, let me read it. What made you decide to start preproduction? It resulted in faster conversion of order to sales. Was this upon request of customers? Did this pull some sales into Q4 that otherwise would have landed in '26? Veerle, do you want to start answering that question? Veerle De Wit: Yes. I think I explained already part of it. So we do think we had official delivery terms that were still quite long. We have tried to keep those delivery terms long from a predictability point of view for a very long time. But we also see that in reality, we were delivering faster and faster. So it was a theoretical delivery term of 20 weeks, I would say. But in reality, we've seen that we've never been at 20 weeks. We've rather been at 16 weeks on average for the -- up until the year 2024. It has been accelerating throughout the past couple of quarters to 12 or even 10 weeks. And so we saw that when we introduced the new business model for the U.S., we saw that the preproduction of our hardware, not necessarily linked to confirmed sales orders was actually also giving some flexibility or some steady state, I would say, in our production teams that was welcomed very much. So it allows continuous production without necessarily being linked to the inflow of your order intake. And so we decided to also implement that way of working, not only for the U.S., but also for the rest of our business. So there, where in the past, we used to wait for a sales order to be confirmed to launch the production. We now actually preproduce the hardware. And when the sales order comes in, we actually finish off the production with the configuration requested by the customer. Yes, we really believe that this is an interesting way of working. It allows us to accelerate again our delivery terms, which is something that is welcomed by the market and especially for smaller customers. I think large customers, they do plan well ahead. Smaller customers, it was perhaps -- the 20 weeks was perhaps very long. And so this gives us the agility to definitely accelerate the book-to-bill ratio. So yes, we did get some sales get pushed into fourth quarter or revenue get realized in fourth quarter that traditionally would have landed in 2026. Yes, for sure, because this way of producing allows us greater flexibility and agility as well. Serge Van Herck: Yes. Thank you, Veerle. And let me add to that again, the importance of seeing our opportunity, commercial opportunity pipeline grow, which indeed shows us that we should be able also this year to generate that kind of conversion. I continue with Michael's question here on the gross margin in H2 was below that of H1 in '25, partly due to dilution from acquisitions. Was the rest due to a mix effect? Or was there also an impact from higher input costs like memory chips and graphics cards? Veerle? Veerle De Wit: Yes. So we don't really see an impact of higher prices for memory chips and graphic cards at this point in time, basically because we planned well ahead our supply chain. So for -- well, anyhow already on the software, there's a very limited impact. There is not a lot of storage, et cetera. So the impact there is very, very minimal. From a hardware point of view, we actually secured our supply chain for the current version of our hardware. It might impact us for the new versions of hardware, which may come within 1 or 1.5, 2 years. But at that point in time, we still have the ability to fix the price as well still in the market for that new hardware or new server, and we'll see at that point in time how we balance cost and revenue. Yes, the gross margin did go down a little bit in second half. And as mentioned, it's partially linked to a dilution of the acquisitions. Next to that, we did compensate for the tariffs and for U.S. dollar, a weaker U.S. dollar, but that compensation came probably a little bit later than the impact of the increase. So it's always difficult to measure exactly what that impact would have been. Is there any other specific trends? I would not say so. We don't see a general increase in our discounting either. We do know that there is one deal, an important deal that was signed with a little bit higher discount rates than traditionally, and that is also having its impact, but it's a one-off event in that case. Serge Van Herck: Okay. Thank you, Veerle. The third question was about our costs -- operating costs in H2. How were we able to keep it at the same level as H1? I think you already partially answered that, but maybe you can reconfirm that, Veerle. Veerle De Wit: Yes. I think it's a very strong cost control. Travel expenses is a big portion of our operating costs. And yes, we have been very diligently looking at that and slowing it down. And we hope that this will also have its long-term effect that we challenge more the travels that we do. Next to that, yes, very strong control over employee costs and also the growth in team member base. So we have been really limiting the growth in second half. And we continue this way of working in 2026 as well. So we shouldn't expect now a huge increase in terms of team member costs. There will still be investments, but it's not like we have been slowing down investments that will now all of a sudden pop up again in 2026. So it's really much more diligent looking at what do we really need, what are our priorities and making those decisions. So... Serge Van Herck: Okay. Thank you, Veerle. I'll move to a few questions from [ Guy Sips ]. I'll take the first one on North America, the efficient -- the investment efficiency and return on investment, how do we evaluate the return of those investments? And what KPIs will we use for the future? So let me answer that one. Benoit, I'll let you answer the second one as well on the T-Motion and robotics. But for the first time, those investments, what, of course, we look at is the creation of pipeline that's looking forward. That's an important one. Then, of course, order intake results are key. We see our growth in front of us. So that means that order intake targets have further increased for North America. So we'll be focusing on that. And last, but not least, is about revenues, of course. So those are the most important KPIs that we are following at this moment in time for checking on our investments on North America. And we know that some of those investments will take more than a year, of course, to fully deliver upon their expectations. Benoit, question #2 on T-Motion integration. Benoît Quirynen: Yes. So first, we started the integration in Q4. So globally, in terms of gross margin, the gross margin is lower for robotics for the moment than on the rest of the portfolio. We plan to increase the gross margin along the way because we want to value more the software than the hardware globally. And yes, it will take a bit of time. Globally, the T-Motion revenue compared to the EVS revenue is less than 10%. And so that means that the effect of the lower gross margin is quite diluted in the overall portfolio. Serge Van Herck: Okay. Thanks, Benoit. The third question was on ecosystem and cross-selling. So indeed, we stress the fact that we see that further increasing. We'll do now our best guessing here. We see indeed from our orders we get from large customers that this is indeed increasing. At this moment in time, we can't share our detailed numbers on that one, but it's definitely an important element, and we see more and more customers having 2, 3 or even sometimes 4 solutions. But bear with us, we are working on that, and we would expect in the future to give more detailed numbers on that cross-selling, what that eventually means, all right? Then last question from Guy that I'm reading here, given that Telemetrics & XD Motion together contributed for EUR 4.6 million revenue and diluted margins in Q4, while the full year pro forma contribution has been substantially high. How should we think about the expected revenue and profitability impact in '26? Veerle, do you want to take that one? Veerle De Wit: Yes. I think it's difficult to just extrapolate the numbers of fourth quarter because they were quite exceptional. So we don't believe that, that is repeatable from the longer term. But definitely, from a gross margin point of view, there's a lot of reasons to believe that we can limit the impact on the gross margin, so 1 to 1.5 points because basically, it's also a question of scale. So obviously, T-Motion, we won't have huge investments into sales to actually drive revenue growth. It is something we are leveraging our sales infrastructure that we have. It's a very tangible product. So it's easy, understandable and can be positioned. So with very minimal investments, we can actually expect growth. And also, where we expect margin improvement is from an SLA point of view. So this is what Benoit was referring to earlier on. We do believe that we need to scale SLA revenue for T-Motion. And also there, we will leverage the support for organization. So yes, part of it is really specialized sales support, but for the rest, we can leverage the existing organization that we have already. So again, it's very tough to just extrapolate the fourth quarter performance. And we do believe that, that 1% to 1.5% points, gross margin dilution is the best guess for 2026. Serge Van Herck: Okay. Thank you, Veerle. I'm moving to questions from David, David Vagman. Can you quantify intangible capitalization in '26? Veerle De Wit: Yes, it's going to be fairly limited to one project only. This is what I mentioned previously. So we continue to develop the project that we launched in 2024. It's probably going to be between EUR 2.5 million and EUR 3 million on this specific project. And then, we'll have to see how -- if any new projects come by. We have no understanding of any new project at this point in time, so -- but this one and only project will probably account for EUR 2.5 million to EUR 3 million. Serge Van Herck: Okay. Thank you, Veerle. Next question from David was about how much opportunity do you have to increase prices in '26, given exchange rates, tariffs and component prices, but also competition. So let me answer that one. So we'll be careful, of course. The tariffs, of course, will pass on if those changes because those will be applicable for everybody and everybody understands that. Component prices, yes, there were already some components that are increasing heavily in price. So we might pass on some of those increases. The market understands that those prices are increasing. So we think we can explain that. And a similar situation is applicable, of course, for competition. The components, they are acquiring are also subject to those price increases. So yes, we have price power, but we'll be careful in applying that. But any cost increase, definitely, we'll try to -- we'll make sure to pass them on to our customers by increasing prices where needed. Another from David, how much of the '26 order book is to be generated in H1 '26, most of it given shorter delivery times? Veerle, do you want to take that one? Veerle De Wit: Yes, I don't think we'll provide a specific number. But yes, the majority of that order book is planned for first half. So yes, it's a logical event of the shorter delivery times for sure. Yes. Serge Van Herck: Then the next question is from Jean-Pierre Tabart about our workforce in the U.S. So yes, we increased with more than 50 projects in '25. Do we expect the same pace in '26? There the answer is definitely no, unless we would do another acquisition, of course, but that's not on the agenda today here. So definitely, we'll slow down. We still see some increase also to further strengthen, for instance, the telematics or the T-Motion teams and some commercial roles, but it will definitely be much slower than in 2025. Then, the next question from Jean-Pierre. Will the growing integration of AI enable you to accelerate the execution of your innovation road map while controlling your R&D expenses, less recruitment required? That is indeed a good question. So definitely, AI is helping us to first improve our products, the features and capabilities that we provide to our customers based on certain of our AI capabilities is increasing the value that we propose to our customers. So we also expect to see revenue generating out of that further increase. And then, to respond to the question here, will it help to accelerate the execution of our innovation road map while controlling our expenses? The answer is yes. We are indeed having several colleagues within the company, and not only within R&D, already using AI tools to improve efficiency. So I think we did already more than a year ago first proof of concept, and we saw already an improvement of about 7% in the R&D environment, and we expect that to further increase. So that's definitely something that we focus on. And with new tools coming online and more and more available, we are testing them and see what value that they bring indeed. Then, Jean-Pierre's third question is, why not provide EBIT guidance? That is because we typically do that with the Q1 results. So indeed, after the fiscal year results, we provide a guidance on revenue. And with Q1 results, we will be providing EBIT guidance. All right. Let me go forward here with a question from [ Alexander Leipold ]. What gross margin level do you expect for '27 -- sorry, '26, considering the additional T-Motion dilution and continuing dollar weakness? And at what point do you expect T-Motion margins to converge with EVS group margins? Veerle and Benoit, do you want to take that? Veerle De Wit: Yes, I do believe that, again, from an organic point of view, we believe that we can sustain the margins that we do right now. So we did some price increases over summer to cover for the weaker U.S. dollar. So it does take a little bit of time to make sure that they flow through in our P&L. But we do expect that we right now have the right balance. And obviously, there might be a mix that is still playing in our disadvantage. On the other hand, we see that more and more software embedded in our solutions offsets the mix impact. So all in all, we expect that from an organic point of view, we can keep our margins. As mentioned, the impact of T-Motion is 1 to 1.5 points for the full year 2026. And yes, how much time does it take us to convert to standard EVS margins? Benoit, I'll let you. Benoît Quirynen: I think it will take a few years, in fact, because we have to proceed with the integration, the transformation, also the communication to our customers valuing the SLA because the SLA, as mentioned by Veerle, is also an important component of the increase of the gross margin. So it will take a few years. Veerle De Wit: Yes. Yes. And we see it from past experience as well, it's a gradual progression. But if we look, for instance, at the acquisition of Axon that we did in 2020, after 4 to 5 years, we start to see a conversion or a profit margin that is closer to what we would expect from a standard EVS portfolio. So it depends on also prices that we can push into the market, but then also leverage growth and all of the -- it's a combination of all these elements, obviously. Serge Van Herck: Thank you, Veerle and Benoit. I go to some questions from Alexander Craeymeersch. So first one is, on a like-for-like basis, your '26 order book is currently running 12% behind where it was at this point last year. Given that backdrop, do you have confidence that you can deliver organic growth ahead in -- ahead of '25, given that H2 has somewhat weakish organic growth? Or is the stalling inorganic growth a bit temporary? Veerle, I guess, you can start, and I will complement that. Veerle De Wit: Yes. Yes. So I do believe if we unleash traditional metrics on our beginning of year order book, I think, yes, probably we can say that, that is weak. However, what we mentioned is when we change for the new business models and we do now that preproduction and we're gaining an agility in terms of deliveries, we believe that actually historical metrics on our order book are not very relevant anymore. So that's why our current guidance is much more focused on pipeline and our ability to convert that pipeline into won orders and deliveries. So yes, we do believe that it is possible to define historical metrics order book given the changes in the business dynamics. Serge Van Herck: Yes. And I will repeat myself here, the fact that we see our commercial pipeline further growing is a positive element looking forward, of course. So that's something that we need to keep into mind, of course. Second question from Alexander was about Asia Pacific revenues were down 25% year-on-year in the second half, yet, there was no specific commentary on this in your results. That's indeed because we are mainly looking at the full year and that we saw full year revenues for APAC being more or less stable to -- compared to the year before. Could you help us understand what's driving that weakness? And what your outlook is for the region going forward? Veerle De Wit: Yes. I think... Serge Van Herck: Yes. Veerle De Wit: I'm sorry. Serge, you want to... Serge Van Herck: Yes. Go ahead, Veerle. I will complement. Veerle De Wit: Yes. And definitely -- so it's very important to note. So there is no immediate FX impact for APAC. So we sell there in euro. What we do see is that customers are delaying decisions actually. So with the current euro being relatively strong for them, a lot of decisions are being postponed and delayed, waiting for a little bit of a better climate. So obviously, the slowdown of order intake over 2025 in APAC will have its effect on the revenue taking in that region. And yes, in second half, they were down year-over-year, but it's definitely an element of that order intake slowing down as well. So the revenue always lags a couple of months on order intake. Will that recover? We'd expect that to recover. Now, on the other hand, we don't expect the biggest growth out of APAC in 2026 either given the order intake of 2025. So yes, we'll have to look there, so -- but there's no real FX headwind specifically to that region. And I think on the FX exchanges or impacts compared to U.S. dollar, I think we've been able to quantify that in the press release already. So I'm not sure if there are further questions around that. Serge Van Herck: Okay. Thank you, Veerle. I think we went through most of the questions. So did I miss something? I see a question about the increased dividend of EUR 1.2. Will that be the level in the next years to come? I think that you answered that one, Veerle, as well. Veerle De Wit: Yes. So we issued a dividend policy for the years '25 to '27 at EUR 1.2 per share. So in principle, that is fixed over the next couple of years. Obviously, always dependent on market situation and our results. But that is the guidance at least for the years to come. Serge Van Herck: All right. Then, I see a question from [ Patrick Millecam ]. Beginning of '24, you indicated the EUR 7.4 million order intake for Big Event Rentals. In the '24 results, you realized a record revenue of EUR 15.8 million. Now, you already have EUR 14.9 million order intake for Big Event Rental. What is your best guess for the total eventual revenue for Big Event Rental in '26? And do you expect additional revenue orders? Veerle De Wit: Yes. I think, yes. Benoît Quirynen: You have to be so good to be in that one. Yes. Veerle De Wit: Yes. I think we secured like EUR 14.2 million from an EVS point of view, but then the order intake from T-Motion added on top of that. So yes, we do expect Big Event Rental in 2026 is going to be around EUR 15 million. It can move up a little bit still from what we have secured right now because sometimes there are some small orders being added just prior to the event, but it's going to be very close to that number. Benoît Quirynen: And '26 is a different kind of event scheduled than '24. Veerle De Wit: Yes. Absolutely. Benoît Quirynen: In fact, the multisport events happen in the winter and not in the summer. In fact, the order -- some of the orders are taken earlier and typically the year before. Serge Van Herck: Good. I'm looking to my colleagues here. I think I took all the questions here. Did I miss any? No. It's okay. Veerle De Wit: I don't think so. Unknown Executive: No. Serge Van Herck: All right. So, good. Well, then, I think we can close this right on time. So thank you all for participating today. Happy that you could follow this session. As you can see, we're quite proud and happy, of course, with the results that we've been able to deliver in '25, which are at or even slightly above the guidance that we gave throughout the year. It was not an easy year, and a lot of things happening in the world, a lot of headwinds, but still we are proud with the results that we achieved. And we have quite high confidence that we can continue also in 2026 on that growth path that we have set out for the years to come, of course. So thank you again for joining us. Thank you, Veerle; thank you, Benoit, for helping me here with the presentation. And as I said before, this will be also available on our website very soon. Well, the presentation is already available, and the recording will be available very soon. So thank you very much for attending today and look forward to see you soon. Have a nice day. Veerle De Wit: Bye. Benoît Quirynen: Thank you.
Operator: Good morning, and welcome to the Turning Point Brands Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Andrew Flynn, Chief Financial Officer. Please go ahead. Andrew Flynn: Good morning, everyone. Earlier today, we issued a press release covering our fourth quarter results. available in the Investor Relations section of our website at www.turningpointbrands.com. During this call, we'll discuss consolidated and segment operating results, the operating environment and our progress against our strategic plan. Before we begin, please refer to the forward-looking statements and risk factors in our press release and SEC filings. We'll also reference certain non-GAAP financial measures. Reconciliations and explanations are included in today's earnings release. With that, I'll turn the call over to our CEO, Graham Purdy. Graham Purdy: Thanks, Andrew. Good morning, everyone, and thank you for joining our call. We are pleased with how the year wrapped up and the momentum we built for 2026. Revenue increased 29% to $121 million for the fourth quarter, including $41.3 million in Modern Oral net revenue. Adjusted EBITDA increased 14% to $30 million for the quarter. We are initiating 2026 Modern Oral gross revenue guidance at a range of $220 million to $240 million in Modern Oral net revenue at a range of $180 million to $190 million. As we've stated in the past, we are ready, willing and able to increase our investment behind our white pouch brands and expect a portion of that investment to be accounted for as contra revenue under GAAP. Accordingly, we think it's valuable for us to provide transparency into difference between gross and net to evaluate our progress over time. Our focus is on building lasting consumer relationships that require front-loaded investment. Once consumers enter the franchise, we tend to see consistent repeat purchasing that supports revenue over many years. While this category is still in the early stages, we believe the average consumers with lifetime value could last decades. In addition, we expect first quarter 2026 consolidated adjusted EBITDA to be between $24 million and $27 million. We are currently working on several significant and exciting sales and marketing initiatives and investments for white pouch that make it difficult to accurately project EBITDA beyond Q1. Obviously, when looking back at 2025, we are most pleased with the growth of our white nicotine pouch brands, they're long-lasting vibrant flavor options, comfortable mouth feel and flexible nicotine levels continue to win with consumers. Both FRE and ALP have cultivated strong brand identities that resonate with their respective consumer bases. During the quarter, net white pouch sales increased by 266% year-over-year and gross sales increased 337%. We continue to make progress expanding freeze distribution to large regional and national c-store chains and ALP already one of the top [ D2C ] pouch brands in America, has started to appear on bricks-and-mortar shelves in select retailer tests. Recall that we initially expected ALP to be exclusively D2C for all of 2025. Suffice it to say, we are pleased ALP's running ahead of schedule, and we expect to significantly expand bricks-and-mortar distribution about during Q2. We believe the nicotine pouch space, like most other nicotine businesses, will ultimately feature 5 to 6 widely distributed brands that command most of the market. Analysts expectations for the size of the category differ the most believable approach, if not exceed, $10 billion in manufacturers revenue by the end of the decade. Our Q4 performance and sales growth trajectory support our long-term target of double-digit market share in the category. In order to best position the company to capitalize on this multibillion-dollar opportunity we have made and will continue to make significant investments in the business and refine our route-to-market strategy to prioritize FRE and ALP while continuing to generate strong cash flow from our [ heritage brands ]. Key investment initiatives include reallocating sales and marketing resources, increasing the head count of our sales force, improving our online presence, ramping up investment in chain accounts, pursuing brand-enhancing partnerships, expanding to international markets and building out U.S. manufacturing for our white pouch brands. We are pleased with our progress on the manufacturing front and expect to qualify the first production lines at our new [ ruble ] factory over the next several months. We've been particularly encouraged by our ability to identify and onboard new sales talent. We are ahead of schedule in our goal of doubling the size of our sales force. The rest of the Stroker's segment portfolio also performed better than expected in the quarter. Overall, Stoker's net revenue increased 70% to $81 million reflecting a 9% increase in our legacy brands and the [ aforementioned ] 266% increase in Modern Oral revenue. During the fourth quarter, Zig-Zag revenue was down 13% to $40 million and 9% sequentially. This decline was as anticipated and in line with expected opportunity costs with our laser focus on Modern Oral. With that, I'll hand the call over to Summer to walk through the progress of our key go-to-market initiatives. Summer Frein: Thank you, Graham. As he noted, we continue to make significant investments to support our go-to-market strategies, prioritizing FRE while also maximizing the cash flow from our legacy brands. Throughout the quarter, we continued to expand our efforts and our initiatives to support the growth of FRE, focused on sales and marketing. We remain committed to optimizing our approach to expand distribution, improving brand merchandising and ensuring adequate inventory conditions. We are seeing the early benefits of the new sales and merchandising tools referenced in prior quarters, which are enabling our sales team to secure the ideal assortment, establish shelf space and execute a premium look and feel at retail. We finished 2025 strong with our continued progress in large-scale chains and look forward to sharing further progress throughout 2026. We were grateful to have recently spent time with some of you at the sold-out Professional Bull Riding event in Madison Square Garden. These events are high octane and nationally televised providing a unique opportunity to engage with our consumer base and build brand awareness. We look forward to sharing other opportunities that we're exploring, which align with FRE's Own Your Edge, tagline and brand [ ethos ]. With regards to Zig-Zag, we continued executing product, retail and cultural initiatives that build upon our 145-year legacy and strengthen our premium position across the segment. During the quarter, we advanced the rollout of natural lease flat wraps, expanding distribution and awareness in this fast-growing tobacco segment. We also supported trial of our legacy paper products through targeted regional programs and sampling tied to major sporting weekends in key markets. We continue to advance the brand's evolution into a lifestyle platform with new apparel lines and culturally relevant brand activations that embody Zig-Zag's life fast burn slow ethos. In the quarter, we also had some exciting news from Stoker's with the launch of a new flanker brand, Stoker's Proud. Stoker's Proud offers a traditional long cut while delivering the same 100% American-made quality dip that Stoker's is known for. It's designed to attract value-seeking can consumers while insulating the broader brand from category pricing pressure. We'll share more about this expansion in coming quarters. In closing, we continue to build our brands for the long term, execute and deliver against our omnichannel plan and win consumers. Our focus is to prioritize strategic investments that maximize the value of our world-class brands and further strengthen and leverage our distribution capabilities. Let me now turn the call back over to Andrew to go through our financial results. Andrew Flynn: Thank you, Summer. Sales were up 29% year-over-year to $121 million for the quarter. Growth was driven primarily by Modern Oral, while we continue to invest in sales and marketing to support that expansion. For the quarter, gross margin was 55.9%, which is flat versus last year. Reported SG&A was $47.7 million for the quarter, which was up $3.1 million sequentially, the increase is driven by our planned commitment to invest in Modern Oral related sales and marketing as well as increased outbound freight charges. Adjusted EBITDA was up 14% year-over-year to $30 million for the quarter, at a 24.8% margin. Going into segment performance. Zig-Zag segment net sales were down 13% year-over-year to $40 million for the quarter, which was in line with our expectations. For the quarter, Zig-Zag gross margin was 54.6%, which was up 40 basis points versus last year. Stoker's segment net sales increased 70% year-over-year to $81 million for the quarter. The Stroker's segment now accounts for 67% of consolidated net sales. Legacy Stoker's brands increased by 9% year-over-year to $39.7 million for the quarter, driven by continued share growth in [ MST ] that was partially offset by anticipated declines in loose leaf. Modern Oral nicotine pouch net sales FRE and ALP were up 266% year-over-year achieving total revenue of $41.3 million. For the quarter, white pouch now accounts for 34% of consolidated net sales, up from 12% a year ago. We ended the quarter with $222.8 million of cash. Free cash flow for the fourth quarter was $19.2 million. CapEx for the quarter was $3.3 million. On to guidance and other items, as previously noted, we are initiating full year 2026 Modern Oral gross sales guidance of $220 million to $240 million and net sales guidance of $180 million to $190 million. We expect first quarter 2026 EBITDA of $24 million to $27 million, inclusive of increased white pouch sales and marketing investments. For modeling purposes, the effective income tax range is 23% to 26% on a go-forward basis. Budgeted CapEx for 2026 is $4 million to $5 million, exclusive of projects related to our Modern Oral business. We expect to spend between $3 million to $5 million for the full year to supplement our Modern Oral PMTAs. Now let me turn it back to Graham. Graham Purdy: To conclude, we are pleased with our year-end results and excited about our prospects for 2026. I'll now turn it over to questions. Operator: [Operator Instructions] Our first question comes from the line of Eric Des Lauriers with Craig-Hallum Capital Group. Eric Des Lauriers: Congrats on another very impressive quarter here. First one for me on the investment opportunity. So you mentioned you're already willing and able to invest in nicotine pouch growth this year. It sounds like you have some investments picking up in Q1 with that EBITDA guide. Just wondering if you could provide a bit more color on the sales and marketing sort of opportunities that you see in front of you right now? And just how we should be thinking about that for this year? Andrew Flynn: Eric, Andrew here. for the question. So yes, the way we're thinking about the EBITDA guide is that we are investing in sales and marketing. And we're also preparing ourselves for the launch of ALP in bricks and mortar in Q2. So we'll need to invest dollars upfront in order to have a successful launch in the second quarter. Eric Des Lauriers: All right. That's helpful. And then on domestic production, it's nice to hear the progress there. I think you said initial lines to be qualified in the coming months. Could you just expand on the domestic production outlook for the year, whether that's how many lines you expect to bring online? Or how do you think about the mix of domestic versus international production and how that should evolve throughout the year? Andrew Flynn: Yes. So we expect to qualify the lines in the next couple of months. And really, what we've done is we've -- in 2025, we spent CapEx dollars investments in infrastructure of the building. These are things like HVAC systems, electrical, plumbing, et cetera. We've got those lines and those lines are becoming more efficient week by week. So we're encouraged with the progress that they've made. We will have -- we will continue to use our Indian partner because both brands are growing. And so the U.S. will supplement the growth. So we think that between the 2 locations, we'll have no supply chain constraints, in terms of enhanced margins, it's going to take a while to get the inventory out of the -- in the U.S. and through our P&L. So we expect to see some green shoots in margin enhancements towards the end of the year. But one thing I will say is what we're doing to help with the margin profile is we are very much focused on freight. Our inbound freight. There are some opportunities for us to optimize there, and we've taken advantage of that. Operator: Our next question will come from the line of Ian Zaffino with Oppenheimer. Ian Zaffino: As far as the investment and the ramp of Modern Oral, what should we expect as far as timing of all this investment? And maybe the better way to ask it is what does that investment look like exiting '26? So how much will it come down? And maybe what are your view as kind of a sustainable rate? Andrew Flynn: Yes. I think the way we're thinking about it is that the investment will be somewhat lumpy through the year as we see opportunities to invest that we think are high ROI projects, we will do that. And so to give you an exact figure in terms of investment ratio, I think it's going to be -- it's going to modulate quarter-to-quarter. Ian Zaffino: Okay. And then would you be able to give us kind of a sense of what to expect as far as the store count ramp for ALP? Should it be similar to what we've seen in FRE recently? Just maybe use that as a benchmark. Graham Purdy: Yes. Thanks, Ian. Look, I think that we're, number one, incredibly excited about the ALP launch in Q2. We've laid some groundwork here as of late. And so we think that we're going to come out of the gate very strong there. As we think about it, we're entering 2026 with a ton of enthusiasm and a ton of excitement around both potential for FRE and ALP and really putting some investment dollars behind that to yield the strong growth. That said, we think that the store count growth will probably look similar to the sort of early days of the FRE launch. As we focus in and hone in on areas where we've gotten free distribution currently, so we can round up the portfolio inside of those particular retail stores. And we have a specific focus around fee this year with chain wins. So we're pretty excited about sort of all the above relative to both FRE and ALP. Operator: Our next question comes from the line of Aaron Grey with Alliance Global Partners. Aaron Grey: First question for me, just want to piggyback off the last 1 here and maybe focus more on that free distribution, which you just alluded to there, Graham. So I appreciate the color that you provided on ALP distribution, but for FRE, which has been kind of the main horse for brick-and-mortar distribution. It seems like you still see some opportunities for wins in white space in 2026. So maybe some more color in terms of expectations there? And you mentioned some change there, so I know that can be sometimes a big step change in uncertainty in terms of the timing. So any color there would be appreciated. Graham Purdy: Yes. Look, I think that there's still tremendous amount of store opportunity out there in both sort of the chain environment, which we view as substantial at this point in time. as well as continued growth in our independent customers. We also see green shoots relative to the level of distribution that we have in stores and specifically our share of shelf and what we see in our internal in terms of what that yields. So it's not necessarily at all times about raw store count adds. It's about the maturity of each of the stores that we get in distribution and making sure that we're winning inside those specific stores, but we do expect continued store growth this year. It may be a little bit lumpy relative to when chains come online, but we continue to expect upward trajectory there. Aaron Grey: I appreciate the detail there. Second question for me. I just wanted to get some control of how are you thinking about innovation in the category, the need to stay ahead on that front as other large players aim to introduce new products, particularly given the FDA's new fast track PMTA program. So I know we've talked about flavors a lot, but also more it seems like that's a big initiative for some of the larger players. So how are you thinking about innovation in the category? Any color there would be helpful. Graham Purdy: Yes. Look, I think our first focus is winning with the existing products that we have. We think we have a tremendous edge relative to our flavor profiles, our satisfaction levels within our product, our moisture level, the majority of the category today is sold in sort of the [ Montandintergreen ] environment. We feel very confident that we're sort of covered up where the biggest portion of the market is. In terms of long-term innovation, as we continue to grow our store count, we continue to grow the business, we certainly see opportunities down the road to make some investments behind additional flavor options. But at this point in time, we think we've got a portfolio with both FRE and ALP that we can win. Operator: Our next question comes from the line of Nick Anderson with ROTH Capital Partners. Nicholas Anderson: First one for me, just on nicotine pouch consumption, it looks like U.S. consumers are using more on a per day basis than they were a year ago. But that's still well below some of the more developed international regions. Just curious how you see growth evolving in this industry near term? Will it be more from existing consumers using more or new users entering the category? Any color there would be helpful. Graham Purdy: I think the great news is both. And as you pointed out, the consumption patterns of existing consumers continues to grow as Modern Oral becomes a greater share of their nicotine requirements. And as you see the growth in the category, certainly, we're seeing consumer uptake from other tobacco products, specifically cigarettes and even vapes. So I think it's just a tremendous opportunity where sort of both provide growth vectors for the category. Nicholas Anderson: I appreciate that. Second one for me on the tax landscape within Modern Oral, but we're seeing several safe considering tax hikes on nicotine pouches. Just wondering if you could provide some color on the potential for these increases this year. And just how that might impact the pricing and promotional environment going forward? Graham Purdy: Yes. So taxes are something that the tobacco companies have dealt with for decades now. And I think the good news on the tax front is if you think about taxation in a specific state level, it impacts every product that's within that state. So there's no disadvantage for one manufacturer or another manufacturer relative to the tax landscape. We would anticipate that taxes will, over the long haul, will continue to grow and look more like sort of the existing tobacco products. But for us, that the absolute opportunity of winning inside the states where taxes are aren't at this point in time, that doesn't really matter to us because playing fields level, and we think we've got a winning product. Operator: Our final question will come from the line of Gerald Pascarelli with Needham & Company. Gerald Pascarelli: Great. I know you don't provide a breakout by brand, understandable, but I was hoping that you could maybe broadly unpack for us the revenue performance between FRE and ALP this quarter. Just wondering specifically if you saw a slowdown in ALPs [ DTC ] growth or if you had better-than-expected performance in FRE, which we know is lower gross margin? So the basis of the question is just trying to reconcile some of the drivers behind the negative mix that you cited in terms of the Stoker's segment level gross margin in the quarter. So any color there would be great. Graham Purdy: Yes. For internal reasons, we haven't split out specifically ALP in FRE. But what I can say is both brands performed within our expectation in the quarter. Gerald Pascarelli: Okay. And then for Graham, just I guess, a high-level question. Now that we're through year 1 of the white pouch rollout, if you could just talk about any learnings you've had where you view the biggest white space opportunities from a distribution perspective? And how you balance getting into some of these larger national chains, which are seemingly more expensive versus maybe doubling back to retail locations where you're currently present and where you've done very well historically to get more shelf space and more facings to build out your presence at some of these retail locations you're currently in? So any color there would be great. Graham Purdy: Sure. Sort of reference prior answer here on this call. Sort of green shoots all over the place for us. When you think about the leaning into ALP and the retail distribution there as we ramp that tons of white space. It's virtually all white space for ALP out there, FRE still a tremendous amount of store level distribution opportunities. Still a tremendous amount of opportunities relative to expanding the portfolio inside of existing stores. And so we're focused on really all of the above because we think that there's so much opportunity out there. We've made a tremendous amount of investment in our sales force to really solidify sort of the ground troops to be able to go out and tackle that opportunity. You can see sort of how we're thinking about this coming year and ramping up our investment, we think that there's opportunities to invest in trade programs. There's opportunities to invest in further strategic partnerships to build out our brand profiles. And so ultimately, what we think is long term, brands are going to win in this space. And for us, we think about ALP as probably one of the leading sort of brand properties in the space given the connection there. The large [ D2C ] footprint, FRE has done a great job relative to leaning into its equities with the [ Probo Writing ] Association partnership. We think that there's other opportunities out there that we're incredibly excited to invest behind. And so I think that it's really all of the above, more stores, more facings, more product in there for both FRE and ALP. And we think as we continue to build the brand profiles that we have a winning combination and ultimately, our goal is to be a strong challenger brand in the space where we think, the combination of those two brands could achieve a #4 position in the space and maybe with a little bit of upside. Gerald Pascarelli: I do want to circle back to your first question about the gross margin performance in Stroker's. So one thing to keep in mind is that we had an elevated tariff rate in the fourth quarter. And so that had an impact on the Stroker's margins because of the white pouch. We did -- we had an [ add ] back in EBITDA, but that's in the adjusted EBITDA. It's not in the gross margins. Operator: This concludes our question-and-answer session, and I will now hand the call back over to Graham for any closing comments. Graham Purdy: Thank you, operator. Really appreciate everybody getting on the call. We feel great about how we finished 2025. And I can tell you how enthusiastic and excited we are about the opportunities in front of us in 2026. So we look forward to talking to you in a few months here, and we'll talk to you then. Operator: This concludes today's call. Thank you all for joining. You may now disconnect.
Operator: Hello, and welcome to the Kaspi.kz and FY 2025 Financial Results. My name is Harry, and I will be your operator. [Operator Instructions] I would now like to turn the call over to David Ferguson with Kaspi to begin the presentation. Please go ahead. David Ferguson: All right. Thank you, Harry. Good morning, good afternoon to everyone on the call. Welcome to Kaspi's Fourth Quarter and Full Year 2025 financial results. I'm David Ferguson from Kaspi. As usual, I'm joined by Mikheil Lomtadze, CEO and Co-Founder of Kaspi; Tengiz Mosidze; and Yuri Didenko, the Deputy CEO of the company. We'll take you through the strategic highlights financial results for the final quarter of last year and provide guidance for this year, and then we'll open up the call to Q&A as usual. So on that note, first of all, I'll hand over to Mikheil. Mikheil, over to you. Mikheil Lomtadze: Hello, everyone. Yes. Thank you, David. So let's move straight to the presentation. So our results for the year have been quite strong. We're obviously reviewing the underlying performance without the influence of external factors. But at the same time, I do think that we are at the stage when we can continue investing into long-term growth and value creation, which we always prioritize and also distribute the -- and resume the dividends, considering the strong cash generation, which our business model allows. So we are proposing a dividend of KZT 850 per ADS, subject to shareholder approval. The performance itself of underlying performance has been quite strong. Our net income has grown 18% percent without the impact of some of the external factors which we've discussed during the year. Those are the smartphones, sales reductions and shortage of supply, some tax changes, minimum reserve capitals and the interest rate -- high interest rate environment during 2025. And in spite of those if we include those factors would -- our net profit consolidated grew around 10% and underlying profit grew around 18% during the year. Next slide. In terms of the last quarter, last quarter, considering all the headwinds still was quite solid. Underlying performance and the net income growth reached 13%. We have had good, reasonable growth across all our businesses and some of the most important metric for us, which is consumer engagement. And one of those is monthly transactions proactive consumer. It's 7 monthly transactions per consumer, which is, we believe, is a world-class indicator and very few businesses can have such consumer engagement and that is an important metric, which going forward, we can create more value for the company. David will cover some of the verticals further. But in general, we're pleased with performance in a quite challenging environment in 2025. The biggest asset we have or I would say, the reflection of the quality of our products and services is our brand. And our brand is #1 consumer brand pretty much in every category and by wide margin. So here, you can see just some of the selected metrics, which just tell you how strong our brand is. For example, the mobile application installed on your phone, almost half of the respondent service during the year. are having our mobile application on their smartphone considering, which is 6x more than the nearest brand. And the same sort of wide margin in payments were like 13x the second brand, e-Commerce, 3x, travel, more than 4x. And we have a very strong position in the cars, for example, 9x the nearest brand. And that's an important asset. That's something which notwithstanding what's going on around the terms of the external factors, which unfortunately are not entirely under our control, things we can control and things we execute on our are reflected in the consumers using our products, merchants using our products and the brand indicators. So the trust that we have from the consumers and the merchants is extremely important for us, and that's the reason to create the value [ later ] and just testament to the management really being extremely focused on the quality of our products. Another example of how this quality is actually reflected in some of the innovations is the Pay-by-palm, which Kaspi Alaqan, which we just launched under 90 days. And clearly, we have unprecedented adoption, I think very few markets in the world can showcase such an adoption of the innovative service. So we have now almost 0.5 million customers in Almaty registered for with Kaspi Alaqan almost 6,000 merchants are accepting our payments through the Alaqan and that's almost 10% of the of the transactions in the stores where we have been merchants connected to Alaqan. So it just tells you that Pay-by-palm, it's truly changing the consumer behavior. So we have changed consumer behavior from cash to cashless to the mobile payments then to the QR code and now to the Pay-by-palm. So we believe Pay-by-palm has a bright future. Adoption has been remarkable. Consumer feedback has been remarkable. Everybody is really super excited and achieving 10% penetration at the merchants just in three months and having 0.5 million customers, by the way, to put the 0.5 million customers into perspective. This is almost third of the population of the largest city of Kazakhstan where we started to launch. We are only in one city at the moment, and we're scaling city by city across the board during the year. We're replacing the old network, and we're installing the new devices, which are equipped to accept all kinds of payments and are purposely built for Alaqan. As being an innovative company, that's a testament of how consumers are using every your next product, and the penetrations were again achieving are unprecedented, remarkable. And in just three months having 1/3 of the population in the largest city registered in the service. That's really very encouraging. We're extremely happy and we're just focused on really an execution and replacing the old network with the new devices. I also would like to walk you through some of the penetration numbers, which we have across all our services now. This is our key services. You don't really have here all our products and services. But just to give you -- just to give you an overview, the payments being the highest penetrated. We still believe that B2B payments has a huge potential, and there is a range of innovations, which we have been rolling out during the last year and some of the services we plan to do this year. E-Commerce, in general, we believe, will be the driver for the growth. E-Commerce is something where we create the most value for both the merchant and the consumer. E-Commerce is when merchant is making the decision to sell something pretty much anywhere across the country and then hopefully in other countries. And then consumer is making a decision to buy something. So it's a front end of consumer and merchant relationship all the services around e-Commerce like delivery, advertising, value-added services around financing payments. So when merchant sells, it needs to get the financing. When consumer buys, it needs to pay for it and the merchant accept the payments. So all the universe of our services is highly applicable to e-Commerce. So e-Commerce is our important focus, and it's focused in Kazakhstan, and it will be focused in Turkiye as well. And then, of course, merchant finance, which has been the fastest-growing product had delivered an advertising, which we're scaling very responsibly. Again, we want to make sure that delivery is not going against consumer in terms of the organic search, for example. So the results have to be high and relevant, high accuracy, but we have a very strong results, and David will show you the take rate is increased due to the value-added services of delivery and advertising, which we have launched. And on the consumer side, only for our m-Commerce using e-Commerce and as we get more merchants migrating to e-Commerce, especially from m-Commerce, when we have more consumers and the more selection and more price competitiveness, which we have been driving. We are regarded as one of the lowest and the best price e-Comms in the country. So that really drives the liquidity of the transactions. And of course, e-Grocery, which we are scaling across the country that it grows to is the fastest-growing e-Commerce business for us. So those are the things which we'll be focused during the year, and they will be driving our growth and the Kaspi Delivery and Kaspi Advertising being highly scalable, high-margin businesses will contribute to the to our profitability. Next slide is about Turkiye. So I just want to spend really more time about our progress in Turkiye. So as you can see from this slide, our focus has been the growth of number of orders, and we have been focused on growing the number of orders through growing consumer engagement and consumer engagement, in our case, is a very simple sort of metric, which talks about the health of our services. And we would rather have 1 million basically of the engaged consumers, which frequently transact with us and are coming back and love our service, then have 10 million consumers which are one-offs because of whatever the promotion onetime promotion or some other temporary benefit, which after that they leave. So we are focused on engaged consumers. Engaged consumers will drive future of the business. That has been the playbook and in Kazakhstan. It will be the same in Turkiye. We have tested different parts of our models, then I'm really happy that all those -- our expertise and technology in the personalization, in search, in the marketing and improvements in delivery, they are giving and yielding very similar results. And this is an example we have been growing our orders quarter-on-quarter. And in the fourth quarter, we had the 19% growth, which is a very high growth for some time already for the company. In terms of the -- some other improvements or improvements, which we have received during the year is all our efforts around again, which I mentioned, the consumer engagement, so engaged number of purchases, I've mentioned, increased 19%. We are not focused on growing monthly active consumers, right? So -- but we're really happy that once the active consumer will grow 15%, which is a very good number in the fourth Q. But what is more important for us is that the growth of engaged consumers have been 29%. And those are the consumers which repeatedly buying with you and those are the ones which generate the value. And then, of course, we understand the relationship between the quality and speed of delivery with the customer happiness and the growth of the business. So next-day shipping, we have improved also coverage from 47% to 63%. So those are not all metrics we're working around, but those are the ones which just give you a bit of a flavor what really we're focused on. And again, growing engaged consumers, growing number of purchases is for us the very important focus, which results in all the investments and the time we're spending on key components of that, right? Again, that is about personalization, meeting customer demands within the right product in the right time, through the right channel, then we have marketing and we have focused on delivery and the quality and speed and broadening the payment options. And the broadening payment options means actually that the customers can buy more items more affordably. So all those things working together, give us these results. We're very encouraged and are really focused on -- we just focused on continuously bringing the Turkiye and Hepsiburada metrics to Kaspi. So if you look at the -- and compare the Kaspi and Hepsiburada metrics, those are the ones which just give you a view of this, what we call sort of engagement opportunity, right? So if you think about compared Kaspi and Hepsiburada those metrics, you can see that active consumers in Kaspi is 7.4 million, which is -- and Hepsiburada, 11.8 million, which -- so Hepsiburada, has 1.6x more consumers. However, GMV per consumer is 1.6x less in Hepsiburada than in Kaspi. And then if you think, okay, what is actually driving such a difference, one simple metric that the frequency of purchases in Kaspi is almost 4x more than in Hepsiburada. So in Kaspi, 24 purchases per consumer per year and 6.7% in Hepsiburada, And then when you think, okay, what drives that purchases which are translated into profits, is actually the engaged consumers that are coming repeatedly and the costs related to those consumers are more and more sort of efficient, right? The consumers are coming back. There is limited marketing costs and so on and so forth. So 66% growth of engaged consumers in Kaspi despite of its scale continues to grow and Hepsiburada with opportunity in front of it, 29%, so 2.3x less. So again, everything we do is we are focused on growing the number of engaged consumers, growing right number of frequency of purchases and introductions, and those will result in the economics and profitability going forward. And that's our strategy. In 2026, we'll manage Hepsiburada around Turkiye business around EBITDA breakeven, and we'll continue targeted investments. But we also believe there is a question always from investors, can you continue developing Hepsiburada and the Turkiye and at the same time, resuming dividends and returning capital to shareholders? So the answer is yes. And we're resuming that. And now we're comfortable with all the things we have actually tested that we're in the right path, and we'll just continue executing to deliver the world-class services to consumers and merchants. I'll get back to you. David Ferguson: Great. All right. So thanks a lot, Mikheil. So let's run through the respective platforms. So first of all, payments in Kazakhstan, a TPV growth of 14% year-on-year in the fourth quarter, 19% for full year '25. So that is pretty much bang in line with the guidance of around 20% TPV growth for the year driven by solid trends and solid and consistent trends in transaction volumes of 12% for the fourth quarter and 14% for the full year. As we've talked about many times before, a slight take rate attrition, and that's just the result of Kaspi Pay and Kaspi B2B lower take rate products growing in share. So the combination of decent TPV growth with some take rate dilution is slightly lower revenue growth at 7% in the fourth quarter and 12% for the full year. It's just the natural flow through there. And overall, the more moderate rate of growth just reflects the scale now of this business. At the bottom line, a 4% growth in the fourth quarter and 13% for the full year. I'd just say to keep in mind on the fourth quarter, it was at least in part impacted by some of the costs related to the launch and scaling of Alaqan. So that will sort of normalize as we go into this year. Moving on to marketplace in Kazakhstan. So Underlying growth, strong, 12% in GMV growth in the fourth quarter, 19% for the full year. If you -- that's after the effect of smartphones, sort of pre-smartphones, 11%, and that's just slightly lower than the full year guidance of 12% to 14% the GMV growth. On that, I would say, and I guess this would be a question. There was no improvement at all in smartphone dynamics in fourth quarter. GMV from smartphones was down around 24%, which is pretty consistent with the year trend. So that's the explanation for Q4, although what I would say more encouragingly, having been down materially throughout or since March of 2025. smartphone category did return to growth in January of this year. And from March, we just have a favorable year-over-year comp. So we do expect that sort of growth in marketplace to normalize over the first half of this year and that smartphone issue to be a 2025 issue rather than a 2026 issue. So that's on GMV growth. If you look at purchases, purchase is very strong and consistent at 34% in the fourth quarter, 35% for the full year. So not really impacted to a material extent by issue and you see that demand is strong. And as Mikheil talked about, you also see the ongoing trend of take rate expansion. Take rates across the marketplace and specifically e-Commerce hitting gold time highs driven on the back, particularly of advertising and delivering those value-added services. If we look specifically at e-Commerce, the fastest-growing part of marketplace, 9% GMV growth in the fourth quarter, 16% for the full year. It's e-Commerce that's really impacted by smartphones and that sort of pretty obvious when you look at x smartphones 27% GMV growth for full year '25. Again, same point on purchases. If we want to look at sort of real demand on the e-Commerce platform, growth in purchases up 70% and 83% the fourth quarter and full year, it illustrates that demand is strong. And as we've said in sort of prepared remarks, the competitive position of the e-Commerce platform is unchanged. The smartphones was a very sort of specific anomaly, take rate hitting 13.1% for the fourth quarter and 12.7% for the full year. So again, that point an all-time high take rate, driven by advertising, driven by delivery. And here you see that advertising growing quickly, up 45% year-on-year in the fourth quarter and up 64% for the full year. We talked on our last call about some of the new advertising products that we launched at the end of last year, and they'll be very helpful for sustaining decent advertising growth both this year and into the medium term. The other driver of e-Commerce is also grocery, which, as Mikheil said, is the sort of the fastest-growing major product line that we have. Growth really not slowing down at all, up 53% for the GMV growth of 53% for the year and number of consumers now well north of [ 1 ] million approach B14 million. So continuing to scale very, very nicely. And again, would expect grocery to keep posting very, very decent growth into the medium term. Part of the reason for our success in e-Commerce is actually a result of the m-Commerce business. So this is sort of a bit more color on the dynamics within marketplace. What you can see here is that migration of both merchants and from merchants and consumers from commerce to e-Commerce is taking place now at a very rapid rate here. It's just two sort of vertical examples. M-Commerce, GMV down 5% and for shoes and clothing category, but e-Commerce GMV up 103% or for the health and beauty category. M-Commerce growth of 1%, this is for full year '25 versus for e-Commerce growth of 62%. So of course, this means lower growth in m-Commerce, but the value even when m-Commerce isn't growing is that you've got those relationships with off-line merchants through m-Commerce, through the other products and services that we offer and you're their first point of call as they migrate their businesses online. And that's something pure online only e-Commerce players do not have. So this is a material sort of competitive advantage. Having said that, I mean, you shouldn't assume that commerce is completely sort of tax growth if we ex out the smartphone issue for last year, it still delivered 11% GMV growth of 7% including smartphones and minus 4% growth in the fourth quarter, including smartphones plus 3%, excluding. But the m-Commerce will be one of the things that drives the growth in e-Commerce. And longer term, e-Commerce will just naturally evolve around the more services part of the economy, which doesn't migrate to e-Commerce, restaurants, beauty salons, gyms, those kind of areas, but that's over the sort of the medium term. m-Commerce take rate strong and consistent, 9.4% in the fourth quarter, 9.2%, up slightly for the full year. Clearly, the growth driver of marketplace is e-Commerce, though, I think that's pretty clear. And then on Kaspi Travel, this is also now a more relatively at least more mature business within marketplace, 6% GMV growth in the fourth quarter, 14% GMV growth for the full year with some take rate expansion. But again, I mean, I think the point is pretty clear. The main driver of the marketplace business is the core e-Commerce franchise and the value-added services around advertising delivery and financing for both the merchant and the consumer. So the combination of decent GMV growth, but strong take rate improvement results in materially faster revenue growth. 13% and 23% ex smartphones, up 21% for the fourth quarter and 30% revenue growth in the marketplace for full year 2025. Net income growth was down 7% in the fourth quarter but up 6% for the full year. Now part of the reason here for the decline in the fourth quarter is again the smartphone issue growth, net income growth would have been positive otherwise. But also a lot of the growth in marketplace that growth in purchases is being driven by lower ticket size, frequently purchased, but lower ticket size items where the cost of delivery is a higher part of the GMV from the first of January beginning of this year, we've raised the price of delivery to protect against that. So again, that will sort of be an issue that is less obvious as we move into 2026 increase in the price of delivery offsets. The sort of the dilution from growth in small ticket items. So then finally, moving on to fintech in Kazakhstan. 4% growth TPV growth in the fourth quarter. Again, lower growth in the marketplace means a lot of growth in fintech, 13% growth for the full year. Growth driven by -- across all products, but again, been the case now for several years, the merchant and micro business financing has really been the growth driver of the lending part of the business. [ Order ] fintech trends broadly stable over the year. So those trends being both sort of pricing. Yield flat at 24% over the year and cost of risk probably unchanged at 2.2%. We've talked about it on previous calls, the increase in the NPL ratio. That's just a function of as collections become more efficient as we get better collecting, the probability of collection improves. Those nonperforming loans stay on the balance sheet. So that's the reason for the increase. Number one, number two, we'd expect it to stay broadly around that sort of 6% level for the remainder of this year. And the lower coverage, that just reflects, again, I've said this before, growing share of car loans. That's a collateralized product. Requires less coverage and the growing share of the merchant financing, the fastest-growing lending product, which is a lower risk product. Again, we'd expect the coverage to stay around that level. Although it just varies, it [ all ] depending on the exact pace of growth between those -- the mix of different products. Loan portfolio growth was good, both in the fourth quarter and for the year, up 27% and 31% and growth in savings growth in deposits, up 16% and 18%. So actually pretty consistent throughout the year. So decent TF fee growth with stable pricing translates into a decent revenue growth up 19% in the fourth quarter, up 20% for the full year. The net income growth was 4% and 9%. So again, fintech is the marketplace was affected by the smartphone issue. Fintech has been impacted by material increase in interest rates over the course of the year, higher taxes and higher national bank reserve requirements. If you ex all those factors, which is -- with the position we were in 12 months ago, when we started the year, our fintech growth was around 18% for the fourth quarter and also 18% for the full year 2025. So that just gives you a sense of the impact these external factors have had on the performance of the business and particularly fintech over the course of the year. On Hepsiburada, when Mikheil already talked about it, I think we said on the last call, a simple metric for investors to track the improvement in the performance of the business is just look at purchases. And you can see that purchase momentum at the end of the year, up 19% was dramatically better than at any other point during the year and actually for some time. So here too, similar strategy to the marketplace in Kazakhstan, driving a number of orders, which is frequency of purchase, the things that we will buy on a day-to-day basis to increase the relevancy and engagement on the platform. And that is clearly coming through and can improve further. That is partly at the expense of ticket size, frequently purchased items, cost less. So you have slightly lower GMV growth. So just to be clear, the 13% and the 7% growth in the fourth quarter and full year, respectively. That's the real growth, the 49% and the 45% is the nominal growth in the business. From our perspective, what's important, again, is that the momentum -- where this business finished the year from a top line perspective? Is in a dramatically better position from where it started for the year. And of course, we're still in the early days of the plan for Hepsiburada for [indiscernible] With take rate improvement and with also grass growth in delivery revenue that led to faster growth in revenue. 18% in the fourth quarter, 13% for the full year. So again, you see that the revenue momentum is starting to get up in real terms to much better levels at Hepsiburada, of course, the improvements that we're making, there is an investment behind that. The aim here now is to sort of to keep the business at around EBITDA breakeven, reinvest into improving the products and services, driving engagement and driving the growth to create a much more bigger business and with scale with a highly engaged user base. It's what will drive the profitability of the business. So we'll keep that strategy of investing to build a much bigger, much more valuable asset in the medium term. But you can see that the results are starting to come through, and we've got a lot to continue working on. That wraps up the review of the respective segments. So, I mean, here is just a summary for Kazakhstan, 15% revenue growth in the fourth quarter and 19% for the full year, 18% and 21%, underlying, net income growth 1% and 10%, in the fourth quarter and full year underlying 13% and actually 18% for the full year. So again, just a really clear indication of the impact that higher rates higher taxes and regulatory requirements and smartphones have had on the business in 2025 including Turkiye, you see that revenue increase to just a $4 trillion, which is just over $8 billion of revenue for the full year. And again, sort of similar, you see on the top line to -- sorry, on the bottom line, the net income growth for the full year was flat year-on-year. $1.1 trillion tenge, just around $2.1 billion, and we're reinvesting we've reinvested the profit growth into Hepsiburada. And just that -- sorry, I should say just on this slide, that net income growth there of 10% for full year '25, that compares with the revised guidance for last year of 10% to 12% at the lower end, reflecting, again, the absence of recovery in smartphones in the fourth quarter. So looking forward to 2026, a couple of points to make here. So firstly, guidance as usual for GMV, TPV and TFV. However, guidance now includes Hepsiburada and Turkiye. So previously, last year's guidance was Kazakhstan only. This year's guidance is Kaspi.kz. It includes Kazakhstan and Turkiye. To give you the base to work off, these are the GMV TPV and the TFV numbers. including Hepsiburada in 2025. Clearly, the bulk of heps businesses is a marketplace that goes into although there are components of payments and fintech as well. And if you want to work out those components, you can just compare these numbers with the respective segments for Kazakhstan that have just run through and you can split out what's from Kazakhstan and what's from Turkiye. The growth, again, we've been pretty clear the growth now going forward for '26 and medium term will be driven by marketplace GMV. So this around 20% is both Kazakhstan Marketplace and Turkiye, our marketplace, TPV and TFV the same. And then the bottom line or the profitability level will guide on adjusted EBITDA. Here is the base to work off $1.6 trillion tenge for 2025. And this just reflects now with Kazakhstan and Turkiye as a multi-country business, different interest rate environments and cycles, different tax levels, different regulatory changes this sort of axes out those things is a better reflection of the sort of underlying business and just aids comparability between the different countries. So we're looking for around 5% EBITDA guidance. I mean here, just one point beyond the point about sort of reinvestment in Hepsi. From talking with investors, a lot of investors talk to me about the benefit from interest rates go it potentially moving down this year. And it's logical, but you just need to keep in mind, it hasn't happened yet. And we don't assume in this guidance any sort of reduction in rates. And I think that may be some of the sort of differences between where some sort of buy side our expectations and versus our own. So just let's keep that in mind. It is reasonable to assume that rates can come down over the medium term and that we'd be -- that would be a material benefit for us, but we're not there today. Just on the marketplace guidance. So also what we will now do again, combining Kazakhstan and Turkiye. So we guide from marketplace as a whole. This gives you the 2025 reconciliation. We'll split it is e-Commerce. These are the two comparable businesses between Kazakhstan and Turkiye. I mean, these relate to the metrics that Mikheil showed you, this is what we're focused on trying to drive. These two components in 2025, were 54% of marketplace GMV. We expect them to be around 60% of marketplace GMV this year. And then m-Commerce, travel and e-Commerce with the Kazakh specific parts of marketplace, we'll have them sort of separately. So this will just give you a sense of how we'll report from Q1 and going forward of Q1 '26. Here is the reconciliation from net income to adjusted EBITDA. I won't go through it line by line. If people have questions, we can just take this offline. So that's on that side of things. But I think that generally wraps up our comments. So Harry, let's open the call up to Q&A, please. Operator: [Operator Instructions] Our first question today will be from the line of Luke Holbrook with Morgan Stanley. Luke Holbrook: I'm just going to send to mine on Hepsi and Turkiye. The first is that you're obviously seeing more positive changes regarding the order trajectory, more same and next-day delivery. But in that context, with 2/3 of orders now say more next phase? Is this a year where we could potentially see peak losses? Or do you see more investment required here to improve the selection and the delivery offering? By extension on that, my second question is just more on [ Rabobank ] and the $300 million of investment. I'm just trying to work out, can you be clearer on what that investment looks like and the type of products that we could expect to see in timing should the acquisition complete? And then the final question, again, just entering more on Turkiye and the broadening of potentially e-Grocery offerings. I'm just wondering where you stand, particularly in light of Uber's more activity with [ Gati ] and trend go in the sector and whether you see it as a necessity at some stage for Hepsi's proposition. David Ferguson: All right, Luke. Thanks a lot for your question. So the role in Turkiye, maybe I'll just pass them all on Mikheil, [ Peak ] losses, [ Rabobank ] and e-Commerce in Turkiye. Mikheil Lomtadze: Yes. Sure. Thank you for your questions. In terms of our strategy and investments, again, our -- we'll manage the Turkiye business around EBITDA breakeven, which basically means that we'll be investing into the consumer engagement and the consumer engagement increase comes from faster delivery again, all around the data and personalization so that consumers can find their products. We're investing into technology and we're scaling technology out of Kazakhstan as we speak. We're making -- we're making investments in organizing data in a way that it's 360 degrees around consumers around the merchants, which enables us to delivered better quality services. So all those are the investment areas. So when you think about what you call or think about the losses, we really think about that we are just investing into creating -- it's not necessarily -- we're not focused on the size, not bigger business, but definitely a more valuable business, which excites merchants and the customers. So that would be our strategy for this year, and then we will see how it goes in the future. In terms of the -- what we will be basically showing you the progress through the year, of course, and in terms of the investments into things like delivery and marketing, those investments are again targeting consumers growing the share of engaged consumers who shop with us frequently. In terms of the financial services or fintech. First of all, we already have the capability to provide fintech products through the microfinance company subsidiary, which is owned a fully owned subsidiary of Hepsiburada, and some of the products we plan to launch notwithstanding the full banking license. And when we talk about the banking license, that just gives us an opportunity to launch the wide range of the financial products, especially around the consumers and the merchants both on the savings side and the lending side. $300 million, it's an investment, which comes together with the capital and you have work just going through the regulatory approval. But as soon as those will be taking specific steps on the products, we'll be updating you in due course. We don't really like to speak about the future products, which we will launch. But the one thing which we can clearly say the investment of $300 million, which we are forecasting and also actually did say about it last year that is already taken into account when we're thinking about resuming the dividends. And then the third question was... Luke Holbrook: e-Grocery, what's... Mikheil Lomtadze: Yes. Well, this is actually pretty exciting. I think the fact that Uber is doubling down on the investment just tells you that Turkiye is an attractive destination and there are several companies like that entering the market is just a testament to its attractiveness. So that's on the move. We're not in a [ quick ] commerce business. So we're not -- that's not the business which we have in Kazakhstan, either, at least at this stage. We are focused on the e-Grocery business, which is not about small ticket fast commerce items, but it's about staffing your fridge with your household. And even though we deliver very fast in Kazakhstan, we're not in the quick commerce business yet. And -- but for the Turkiye itself, we will see at the moment, we're really -- the way we sort of operate the data guides us what our consumers want. And based on what our consumers want, we develop those services. And when we talk about this year, our focus will continue to be on the same things which we worked on last year, and those would be growing engaged consumers, understanding what type of items our consumers want and then working with the merchants to enable this assortment. And at that stage, there is no -- we don't -- at this stage, we don't have intention to move into quick commerce. Luke Holbrook: Understood. And just to clarify, there's no specific ring fencing that this year will be peak investment in Turkiye from what you've just said there. It just depends on ROI and trajectory through the course of this year? Mikheil Lomtadze: Well, I mean, the investments, which we're saying if you're saying, we will be -- will our profitability in 2027 will be higher compared to 2026, the investments that we're making are, again, if we see that investment gives us frequency and we see investment gives us the consumers which are coming back. we will continue investing into those consumers. If we believe that making improvements into delivery and increasing speed is something which retains those consumers, and they come back to us, we will continue those investments. So that's the way we have done in Kazakhstan, and that's the way we plan to do in Turkiye, and we tested all those elements during 2025. And we do see how consumers are responding. Merchants are responding and we're very excited about it. We've launched the weekend deliveries, which didn't exist before, and that's speeding up delivery again. And of course, temporarily, you're running operation, which can potentially process more orders. But you're starting for the specific segments of the consumers on the lower volumes, and that means that your running network, not at full utilization. When you look at Kaspi, Kaspi has -- what is it like almost 7x, 6, 7x more order frequency per consumer during the year. So that just gives you a huge scale on the network of the delivery and the logistics, which gives you a very strong return. And at this stage, when we think about the Turkiye, we are building up that capability. So utilization rates won't be as high as Kaspi during this year because we still have a long way to go to increasing frequency of the purchases. Whether investment will be in 2027, less than 2026. I'm not going to give you such a forecast or guidance. But the one thing I can tell you that what we're investing into, we believe, will bring the growth and the engagement of the consumers in the future. Kaspi was -- when we started Kaspi now is a $2 billion net income business. And at some point, it was minus $60 million. So there are no vehicles, but we know the playbook is there and we know how our consumers and merchants react, and we're very excited about this opportunity to build up the very loyal engaged consumer base, which is happy with our services. Operator: The next question today will be from the line of Gabor Kemeny with Bernstein Society General Group. Gabor Kemeny: This is Gabor here from Autonomous. To continue on Turkiye, can you comment a bit further on the competitive environment? I mean, you obviously have one large competitor, there are a number of smaller ones. I wondered how you perceive their behavior as you have been accelerating your volumes at Hepsi. So that's the first one. Second one is we have an EBITDA guide. Would you be able to give us a flavor of how you expect the bottom line to develop with all those moving parts around regulatory changes, taxation reserves, et cetera, that will be helpful to understand the dividend capacity of the business. And to follow up on that, can you give us a flavor of the sustainable dividend payout going forward? David Ferguson: Yes. Well, maybe I'll take the second and then pass it to Mikheil to talk on Turkiye. Well, I think -- so we've declared 850 Kazakh tenge per share for the final quarter of last year. And we've said that we believe that, that is sustainable for the remainder of this year. So you can extrapolate that to work out the total dividend for this year, the potential total dividend for this year. So that's the first thing I'd say. The -- you asked about payout ratio as well that 850 tenge per share is exactly the same as we paid in the final quarter. just prior to Hepsiburada acquisition. So I think you can think about, again, you can see what kind of payout ratio that was in 2024. And you probably -- you look at a similar number for 2026. Clearly, we've gone within an amount we believe will be sustainable going forward. We're not looking to cut the dividend the next quarter. So that's the main point to make that -- should give people a decent level of predictability. On the other, we're not going to give you guidance -- we're giving guidance on EBITDA, so we're not going to give guidance on net income. I think just the things though to keep in mind at the net income level are. So as of today, no reduction in interest rates, number one. Number two, higher taxes in Kazakhstan in 2026. So this isn't just something that was a 2025 event. The bank tax only went off from the first of January this year. So this is something that people need to be aware of. So that will add around 200 bps to the tax rate. So that's something to build in. And then there's also the higher national bank reserve requirements, which will have an impact on the bottom line as well. So clearly, there's a number of different factors that will weigh on the bottom line this year, those factors should be in the base by the end of -- of end of this year and you get the upside and return to growth next year, but we still need to work through them. And hopefully, as we work through them, we start to move in the second half of the year into interest rates moving down, which again would be a positive for next year. But as I said, we're not there yet. That's fully as much as I can say. Mikheil Lomtadze: And as a question about the question about the competitive dynamics. I mean, we are very respectfully observing the competitive dynamics, of course, and that's not different from Kazakhstan or Turkiye. But at the same time, again, our priority is really just to focus on the very high quality of the products and services, which is the final product the company needs to produce for consumers to come back and for the merchants to do business with you. And that's basically where our focus is. So our focus is on the operations on increasing the engaged customers, which eventually will increase the frequency of the orders. And that's basically what we're focused on. I don't know if maybe -- if you have any specific questions other than that, we're not waking up in the morning thinking about competition, and we're not going to slip in the evening to thinking about competition. we're thinking about consumers and we're thinking about merchants, and that's our priority. This is the way we went on business in Kazakhstan, and this is the way we do business in Turkiye. Operator: [Operator Instructions] The next question will be from the line of James Friedman with SIG. James Friedman: I wanted to ask first, David, a modeling-related question. In terms of Slide 19, is this fully pro forma -- I'm looking at Slide 19 in the press release. So it's the one where it says the guidance slide -- the guidance now includes Turkiye. I'm just trying to understand, is this fully -- is the '25 number fully pro forma so we get the -- yes, that one. So we get the underlying period of comparison. David Ferguson: Yes. The -- so that -- so 2025 numbers, they include Hepsiburada, the only thing -- so that number one, they include Hepsiburada, Number two, it's relevant for all segments, but particularly GMV. Number three, the only thing you need to keep in mind, I would say, is that -- and this is more when you're just forecasting forward. Remember, we only acquired Hepsiburada, at the end, we closed the deal at the end of January of last year. So it's approximately 12 months of Kaspi and 11 months of Hepsiburada, They are the things to keep in mind there. But other than that, yes, I mean this is the pro forma base to work from. James Friedman: Got it. And then, Mikheil, in your prepared remarks, you were -- you were mentioning that you some of the effect if you would prefer -- you're focused on the frequency of use as opposed to the total number of users. So like RPAC, as opposed to accounts up file. Can you elaborate on that as you migrate to Turkiye with Hepsiburada? Mikheil Lomtadze: Well, I mean, basically our First of all, just also to make it will be -- 2026 will be also almost a full year where we can now make them comparable. So that will make, I think, everybody's life easier, right? So we can actually pretty much compare consolidated business 2026 to 2025. So that's -- that would be a good news for everyone. Number two is, because we acquired Hepsiburada in January of last year. Number two, in terms of the way we sort of manage again, what we're saying is that the new -- the customer's growth was 15% in the last quarter, which is a great headline. However, again, what is our focus. Our focus is engaged consumers because those are the ones which make business work, and those are the ones which repeatedly come back and interact with you and buy from you. So the things which you are right in the sense that those are the consumers which are keep basically buying with you. Therefore, you have less marketing costs, you have less operating cost to serve them, and that's what is giving you the very favorable economics on the consumer level going forward. And we know that worked in Kazakhstan, and it will work exactly the same way in Turkiye. The one thing which we should also keep in mind that we are also a true believer in building up different services around the consumer needs and not just, let's say, e-Commerce, for example. So things which are related to the fintech and others will be something which we'll be also working on during 2026 and onwards. And when you think about the scale of the business and how much network effects and synergies that can have, you can extrapolate the way that Kaspi has been really doing. The comparison we gave you, it was only on the e-Commerce side. The comparison, if you think about the breadth of the services around the consumers and merchants and if you go beyond e-Commerce, I mean, it's massive. I'm not saying that this will be automatically happening. Of course, it will take a lot of work from us, but the opportunity on a total level around household needs of the consumer and the business needs of the merchants, it's just massive. And we just gave you something to compare between e-Commerce, pure e-Commerce comparable piece because that's where our focus is. Because we believe that if consumers are buying with you frequently and the merchants are selling with you frequently, though this is the combination from which you can build because that is the point when the merchant is making a decision to sell and the consumer is making decision to buy. And all the other services are built around that. It's much more difficult to make a fintech financial services into marketplace and it's much easier to make marketplace into fintech financial services. Operator: And this will conclude our Q&A today. So I'd like to hand back to David and Mikheil for any closing remarks. David Ferguson: Well, does have -- Jamie said he was going to drop back into the queue. But if James has another question, we can take it if you've got any follow-up, James. Operator: I apologize, we do have a follow-up question from the line of Gabor Kemeny. Gabor Kemeny: Just on fintech, the TFV growth which you expect to slow down to 5%. Can you give us some context there? Because I understand that you are not planning to change your -- I mean, the year, the growth yield is expected to stay stable around 6%. So presumably pricing stable. So what is expected to drive the slowdown in lending/? David Ferguson: I would just say one thing to think about is TFV growth is linked to GMV growth in Kazakhstan. And if you think about where the GMV growth is coming from, it's generally coming from lower ticket items, less so the extreme example of that is grocery, which is just less credit sensitive. So people are still using the same amount of credit to buy the consumer electronics items, but that now is a mature, slower growing category within marketplace. So it just reflects the change in -- at least one key reason is it just reflects the changing shift in the marketplace business. Actually, that's a long run trend. Operator: And we have a follow-up from the line of James Friedman also. James Friedman: Yes. Thank you. In terms of what you were calling out earlier, David, about the e-Commerce versus m-Commerce relative growth rates. Can you talk about how that impacts the consolidated take rate overall? Yes. I think it's the one or... David Ferguson: Okay. So it's take rate positive. So because if we look -- sorry, just flicking the slides, e-Commerce, well, let's do the end of the year. E-Commerce take rate finished last year at 12.7%, so just short of 13%. So e-Commerce is faster growing and its higher take rate versus m-Commerce which is just around sort of under 10% take rate. So that's one thing. And why -- because e-Commerce, well, lends itself to delivery. So that's a clear value-added service that's not relevant for m-Commerce and commerce going to the physical location. And at least to date, the advertising products are all around e-Commerce. So again, the value-added services are all linked to e-Commerce. It's not to say you can't have value-added services for m-Commerce as well. And actually, m-Commerce take rate has consistently increased. But if you think about the two big ones that we've talked about, delivery earned advertising, they are really relevant to e-Commerce. So it's actually a positive dynamic from a take rate and revenue perspective. Mikheil Lomtadze: I would like to make one quick comment on this. So even though it's a it's a positive dynamic from the take rate and revenue perspective, e-Commerce is more operations heavy than m-Comm, right? So let's say, delivery. And we are investing into delivering. We're monetizing the delivery of the merchant side, but the buildup of delivery, especially on the lower ticket item side, we're still investing. So when you think about the take rate, take rate is [ tie ] potential is much higher the services we develop around consumer and the merchants have a huge potential and deliver a lot of value for both. But profitability of e-Commerce on is less than comes m-Commerce because of the operational side of working with -- on the delivery -- on the long term, of course, that will be something different, but immediate in fact, when you move m-Commerce, like if you move the merchants GMV from m-Commerce, which is in-store experience to e-Commerce, and you add on top of it, the operational costs related to the delivery investments, the take rate and the delivery take rate decrease revenue, but the delivery is decreasing the profitability. So the margin of the e-Commerce at that immediate migration will be less. But the take rate and the future potential is much bigger. Operator: And we have a follow-up from the line of Luke Holbrook with Morgan Stanley. Luke Holbrook: I just wondered if we could just touch on Agentic AI or Agentic Commerce here being the elephant in the room for e-Commerce companies as well around the world. Just your views on where we stand today regarding any partnerships you have. Large language models with ChatGPT and as considerations from your perspective, that would be interesting to hear. Mikheil Lomtadze: Yes, thank you for the call. I mean, I think what we would like to -- yes, that's a separate subject, maybe even the different call, I would say. I mean, in general, we are working on the assistance to help our merchants to be -- to do business more efficiently and help our consumers to make purchases as well seamlessly navigating the help of the virtual assistance. So that's basically we're already applying a lot of it internally. And yes, I think it deserves a separate call and a separate discussion maybe with you, too. But we're developing this in-house. And I think I've mentioned this to the discussion we had recently. Operator: And that will conclude Q&A. I'd like to leave the floor to the Kaspi team for any closing remarks. David Ferguson: All right. So thanks, Harry, for the call. Thank you all for joining. Please get in touch with any questions. We are in the U.S. this week. Keep in touch. Happy to take questions off-line. Thanks, everyone, for your time, and speak to you soon. Thanks a lot. Bye-bye. Operator: This concludes today's webinar. Thank you all for joining. You may now disconnect from the call.
Operator: Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to the uniQure Fourth Quarter and Year-End 2025 Earnings Call. [Operator Instructions] I would now like to turn the call over to Chiara Russo, Senior Director of Investor Relations. Please go ahead. Chiara Russo: Good morning. and thank you for joining us for uniQure's year-end 2025 earnings call. Earlier this morning, uniQure released its financial results for the fourth quarter and year-end of 2025, and our press release is available on the Investors and Media section of our website at uniqure.com. Our 10-K was also filed with the SEC earlier this morning. Joining me on the call this morning are Matt Kapusta, Chief Executive Officer; Dr. Walid Abi-Saab, Chief Medical Officer; Kylie O'Keefe, Chief Customer and Strategy Officer; and Christian Klemt, Chief Financial Officer. After our formal remarks, we'll open up the call for Q&A. Before we begin, please note that we will be making forward-looking statements during this investor call. All statements other than statements of historical fact are forward-looking statements. They are based on management's beliefs and assumptions and on information available to management only as of the date of this conference call. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including without limitation, the factors described in uniQure's most recent SEC filings. Given these risks, you should not place undue reliance on these forward-looking statements, and we assume no obligation to update these statements even if new information becomes available in the future. Now let me introduce Matt Kapusta, uniQure's CEO. Matthew Kapusta: Thanks, Chiara. Good morning, everyone, and thank you for joining us on our year-end 2025 conference call. For more than 25 years, uniQure has been driven by a singular mission to deliver transformative medicines to patients living with rare genetic and other debilitating diseases. Along that journey, we have successfully developed 2 approved gene therapies. For the past decade, we have been deeply focused on advancing AMT-130, a novel one-time administered treatment designed to address the underlying cause for Huntington's disease. In September of last year, we reported groundbreaking 3-year data from our Phase I/II study of AMT-130, which were widely embraced by the HD community. These data demonstrated a statistically significant 75% slowing of disease progression as measured by the composite Unified Huntington's disease Rating Scale, a statistically significant 60% slowing as measured by Total Functional Capacity, a reduction in neurofilament light, a key indicator of neurodegeneration from baseline and supportive trends across other key clinically meaningful endpoints. Importantly, these outcomes were assessed against a carefully and methodically constructed patient-matched external comparator derived from Enroll HD, the largest independent Huntington's Disease natural history data set in existence encompassing longitudinal clinical grade data for more than 30,000 participants that has been rigorously and painstakingly collected over the past 14 years. While the months since sharing our landmark data have presented certain challenges, they've only strengthened our conviction that AMT-130 has the potential to benefit patients with Huntington's disease and reinforced our unwavering commitment to the HD community. As previously disclosed, during the October 2025 pre-BLA meeting, the FDA conveyed that data submitted from the Phase I/II studies of AMT-130 were unlikely to provide the primary evidence to support a BLA submission. We subsequently held a Type A meeting with the agency on January 30 to discuss next steps. In the meeting minutes we received on Friday, February 27, the FDA explicitly affirmed their commitment to exercising appropriate regulatory flexibility to facilitate the development of safe and effective therapies for HD. Still, the FDA strongly recommended we conduct a Phase III randomized double-blind sham surgery controlled study of AMT-130. While we respect the agency's perspective and share its commitment to rigorous science, we believe it's appropriate to fully and carefully consider how regulatory flexibility is applied in the context of a rare, monogenic, slow progressive and ultimately fatal neurodegenerative disorder, for which there are no approved disease-modifying treatments. In our view, the totality of evidence generated to date for AMT-130 warrants continued substantive dialogue regarding the most scientifically grounded and feasible regulatory pathways given the severity of the unmet need and the irreversible nature of the disease. While this was not the feedback we were hoping for, we remain highly confident in the strength and durability of our data. Our focus now is on constructive engagement with the FDA to further define a clear and efficient regulatory path forward. We are actively evaluating the agency's recommendations, including potential Phase III study designs while preserving our commitment to advancing the program responsibly and expeditiously. In addition, we intend to update our Phase I/II statistical analysis plan to incorporate a 4-year analysis that we expect to conduct in the third quarter of 2026. We believe extended follow-up will further inform the durability and magnitude of effect observed to date. Let me be clear, we remain unwavering in our commitment to the HD community and greatly appreciate their tireless support over the past months and years. The urgency in the community is real, and we strongly believe AMT-130 has the potential to deliver meaningful disease-modifying benefits. Our team is fully engaged in determining the clearest and most efficient regulatory pathways to bring this therapy to patients as quickly as possible around the world, and we look forward to providing further updates as these discussions progress. With that, I will turn the call over to Walid to provide additional color on HD and our other clinical programs. Walid? Dr. Walid Abi-Saab: Thank you, Matt. Good morning and good afternoon, everyone. I would like to start by reiterating that the recent feedback from discussions with the FDA does not change our mission. We strongly believe that AMT-130 represents the most compelling therapeutic data set generated in Huntington's disease to date and that these results provide the first clinical evidence that gene therapy can potentially alter the course of HD. As Matt noted earlier, we had a meeting where I had a Type A meeting with the FDA in late January. This meeting, we reviewed the previous FDA guidance and discuss key elements of our data package, including the statistical approach, construction of the natural history external control, biomarkers and clinical endpoints. We also shared with the agency additional sensitivity analyses and discussed additional data generation and considerations regarding the design of a Phase III trial. The official meeting minutes received from the FDA stated they cannot agree that data from the Phase I/II studies compared to an external control are sufficient to provide the primary evidence of effectiveness to support a marketing application. The agency also highlighted the absence of treatment effects relative to sham subjects in the U.S. Phase I/II study after 12 months. We respectfully have a different interpretation of these results than the FDA. In patients with early HD, 1 year is generally insufficient to reliably detect a meaningful progression of their disease. In the sham controlled portion of our U.S. study, control patients did not show clinical worsening after 1 year, making it virtually impossible to demonstrate any effect over that short period of time for a therapy designed to slow disease progression. To that end, evidence of disease slowing started to emerge in the second year of follow-up and has become even more pronounced in the third year. In rare diseases, where progression is slow, longer observation periods are required to demonstrate an improvement in the disease course. This is often addressed through comparison to well-characterized external controls derived from natural history data sets using statistical methodologies designed specifically for that purpose. There are multiple precedents where such approaches have supported regulatory approvals. Still, during the recent meeting, the agency strongly recommended we conduct a well-designed Phase III randomized, double-blind sham surgery-controlled study to demonstrate efficacy of AMT-130. We believe that a multiyear sham-controlled study could impose significant risks and burden to patients. Some might even consider it this trial design to be unethical. The HD patient community strongly agree with the sentiment and has communicated directly to the FDA on multiple occasions. These considerations warrant careful evaluation, particularly in the context of a rare, progressive and ultimately fatal neurodegenerative disease. Importantly, Huntington's disease is supported by 1 of the most comprehensive natural history databases and rare disease. Enroll HD alone includes more than 30,000 participants with high-quality longitudinal clinical data collected over many years through the extraordinary efforts of the HD community. We believe that this body of real-world evidence provides a strong foundation to inform efficient and scientifically rigorous study designs making a long-term sham-controlled study of a one-time administered therapy difficult to justify. We do hope that the FDA will be willing to work with us on ways to leverage this valuable natural history data to design an adequate and well-controlled Phase III study. We plan to request a Type B meeting in the second quarter of 2026 to further discuss potential Phase III study design in purchase that address the agency's feedback while also considering feasibility and patient risk. Additionally, we intend to amend and submit for review an updated statistical analysis plan for the ongoing Phase I/II study to include 4-year follow-up data compared to an external control. We believe extended observation has the potential to demonstrate continued durability and increased clinical meaningfulness of AMT-130 over time. Following unsolicited outreach by ex U.S. regulators after our 3-year data disclosure in September 2025, we have initiated regulatory discussions with several agencies. We will continue these discussions throughout the year and we'll provide an update once we have additional clarity on the regulatory pathway. We look forward to the opportunity to potentially bring forward our innovative treatment to patients outside the U.S. in an expedited matter. Meanwhile, we continue to analyze the large body of data we have accumulated with AMT-130. In February of 2026, just recently, we presented at the CHDI meeting in Folgwings, California, a new analysis showing that propensity score methodology using clinical covariants with TRACK HD and PREDICT HD data sets effectively substitutes for baseline stride volume in prediction of Huntington's disease progression. The Coveris use in these analyses were the same as those used in the 3-year analysis we shared in September 2025 to match AMT-130 patients to their counterparts and the external competitor cohort from the Enroll HD study. We continue to develop a manuscript with the complete results of our 3-year analysis and anticipate publication in the peer-reviewed medical journal later this year. Moving on to Fabry disease. In February, we reported preliminary safety and exploratory efficacy data from 11 patients in the ongoing Phase I/II trial of AMT-191, which was presented at the World Symposium in San Diego, California. As the cutoff date -- as of the cut update on January 8, 2026, all 11 patients in free dose cohorts exhibited elevated alpha-Gal A enzyme activity with 6 patients successfully withdrawn from enzyme replacement therapy. As of today, I'm pleased to report that all 11 patients have been withdrawn from enzyme replacement therapy. Importantly, dose-dependent elevation in alpha-Gal A enzyme activity were observed across the 3 dose levels. These increases were durable for the measured period of time, ranging from more than 1 year, the longest follow-up patient at the high dose to the shortest follow-up period of 4 months when the patients treated at the middle. Stable plasma lyso-Gb3 levels were maintained those dose across all those cohorts regardless of ART status through the cutoff date. AMT-191 continued to show a manageable safety profile. No serious adverse events related to AMT-191 have been reported in the mid- and low doses. 2 patients at the mid-dose experienced asymptomatic Grade 3 liver enzyme elevation. For protocol, any such grade 3 LFT increases are considered potential dose-limiting toxicity, which require review and confirmation by the independent data monitoring committee. Following such a review, these events were confirmed as dose limiting toxicity. And per protocol, we have paused dosing at the mid and high doses pending further evaluation. I'm pleased to report that both patients have responded well to corticosteroid therapy and are tapering off steroids with no loss of alpha-Gal A enzyme activity as of today. Turning now to AMT-260 for metal temporal epilepsy. 2025 was a productive year for the program. We shared data from a case study of the first patient treated with MT-160 with up to 6 months of follow-up presented most recently in September 2026 at the International League against epilepsy meeting in Lisbon, Portugal. Initial data showed a promising reduction in seizure frequency over the first 6 months with no serious adverse events. We have since completed enrollment of 5 more patients in the first cohort and begun enrollment in the second cohort. We expect enrollment to be completed in the second cohort by midyear. Additionally, we plan to provide an update in the second quarter on all 6 treated patients in the first cohort, including those with nondominant and dominant hemisphere lesions with at least 6 months of safety, tolerability and seizure frequency outcomes. I will now touch base on some additional pipeline updates. Phase I/II episode I trial of AMT-162 for SOD1 ALS remains on voluntary enrollment and treatment hold based on the recommendations of the independent data monitoring committee following a September 2025 review of preliminary data related to the safety and efficacy of AMT-162 in the context of a dose-limiting toxicity that was observed in 1 patient in the second cohort. This event of dorsal root ganglia toxicity resulted in a serious adverse event determined to be related to AMT-162. We will continue to collect data and evaluate data from the patients as they're being accumulated. Now I will turn over the call to Kylie to discuss our ongoing work with the HD community. Kylie? Kylie O'Keefe: Thank you, Walid. Starting out with AMT-130 to the Huntington's disease patient community. We want to thank you for your extraordinary strength, resilience and unwavering commitment to advancing disease-modifying therapies for HD. Your courage in the face of daily challenges your willingness to participate in research and your steadfast advocacy are the driving forces behind progress in HD. Importantly, your push for regulatory flexibility for HD through petitions, congressional engagement, direct dialogue with regulators and persistent public advocacy has elevated the urgent needs of families living with HD and we'll continue to do so. . Your engagement, partnership and determination continue to inspire us here at uniQure. And together, we will keep moving forward. We remain committed to the HD community. And as Matt noted, we remain committed to finding the most expeditious path forward for AMT-130. Over the past quarter, we have significantly expanded our engagement with neurosurgeons, neurologists and multidisciplinary care teams across the U.S. receiving overwhelmingly positive feedback on the AMT-130 data set and its potential to meaningfully impact patients. These discussions have reinforced both the clinical relevance of our data and the strong interest across the HD treatment centers of excellence in advancing this therapy. In parallel, we are actively assessing ex U.S. opportunities, evaluating priority markets based on epidemiology, regulatory pathways, pricing and reimbursement landscape. In addition, we will be actively pursuing name patient and early access program opportunities in rare disease outside of the U.S. that help enable access to therapies ahead of formal reimbursement decisions, offering hope to patients and families while broader market access processes continue. This disciplined approach ensures we are building a scalable global strategy to maximize the long-term value of our program for all stakeholders. Moving to AMT-260. We also see significant market opportunity for a potential gene therapy and temporal lobe epilepsy, where a substantial proportion of patients remain drug-resistant despite multiple antiseizure medications and continue to face ongoing unpredictable seizures, that drive injury risk, cognitive decline, psychiatric comorbidities and reduced quality of life. Even with surgical resection or neuromodulation, many patients are not eligible or failed to achieve durable seizure reduction, underscoring the need for innovative disease-modifying approaches that can address the underlying epileptic genetic focus and provide sustained benefit from a one-time intervention. Similarly, for AMT-191 in Fabry disease, a one-time gene therapy has the potential to address the underlying enzyme deficiency and meaningfully reduce lifelong treatment burden, positioning it to compete in a market currently defined by chronic enzyme replacement therapies and other long-term therapies. Importantly, enzyme replacement therapies require regular lifelong infusions, may be associated with the infusion-related reactions and antidrug antibodies, and often provide incomplete tissue penetration, highlighting the potential advantage of a durable one-time genetic approach. Overall, our customer-facing team remains intensely focused on disciplined execution today, while thoughtfully building the capabilities, partnerships and evidence base required to drive the long-term success across our full portfolio. Now I will turn the call over to Christian for a financial update. Christian Klemt: Thank you, Kylie. I'll be sharing the financial highlights of the full year of 2025. Please refer to the earnings press release issued this morning and our quarterly filings with the SEC for additional details. Revenue for the year ended December 31, 2025, and was $16.1 million compared to $27.1 million in 2024. The decrease of $11 million was primarily driven by a $10.7 million decrease in collaboration revenue and a $6.1 million decrease in contract manufacturing revenues, offset by a $5.8 million increase in license revenues. Cost of contract manufacturing revenues was nil for the year ended December 31, 2025, compared to $17.1 million in 2024. Following the divestment of the Lex facility in 2024, cost of contract manufacturing revenues are recorded net associated revenue within other expenses. Research and development expenses were $140.7 million for the year ended December 31, 2025, compared to $143.8 million in 2024. A decrease of $3.1 million was primarily driven by a $26 million decrease in total other research and development expenses, $25 million of which related to decreases in employee, contractor related and severance costs as well as facility costs resulting from the 2024 divestiture of the company's Lexington manufacturing operation and organizational restructuring in the same year. This was offset by $22.9 million increase in total direct research and development expenses, of which $19.4 million related to the preparation of a potential BLA submission for AMT-130. Selling, general and administrative expenses were $65.5 million for the year ended December 31, 2025, compared to $52.7 million in 2024. The $12.8 million increase was primarily driven by a $9.4 million increase in professional fees, including $6.5 million incurred to support the preparation of the planned commercialization of AMT-130 in the United States as well as a $3.6 million increase in employee and contractor-related expenses and a $2.8 million increase in other expenses. This was offset by a $1.8 million decrease in share-based compensation expenses and a $1.2 million decrease in severance costs. Cash, cash equivalents and investment securities totaled $622.5 million as of December 31, 2025, compared with $367.5 million as of December 31, 2024. The net increase was primarily attributable to proceeds of approximately $404.2 million raised through public offerings of ordinary shares and prefunded loans. With this strong balance sheet, we believe uniQure is well positioned to execute its clinical and operational priorities throughout the coming year. Expect cash, cash equivalents and investment securities will be sufficient to fund operations into the second half of 2026. We I'll now turn the call back over to Matt. Matthew Kapusta: Thank you, Christian. As we look ahead to 2026, our priorities are clear. We are focused on constructively engaging with regulatory authorities inside and outside the United States to define the most appropriate path forward for AMT-130, advancing our pipeline programs with discipline and continuing to generate high-quality data across our portfolio. The strength and durability of our Huntington's disease data set, the progress in Fabry disease and TLE and our strong balance sheet position us well to execute on this strategy. Most importantly, we remain committed to the patients and families we serve. The urgency in these communities is real, and we believe our gene therapy platform has the potential to meaningfully change the trajectory of devastating diseases. We look forward to updating you as we continue to advance our programs thoughtfully and responsibly. With that, we will open the call to take questions from our research analysts. Operator, please proceed. Operator: [Operator Instructions] Your first question comes from the line of Paul Matteis with Stifel. Unknown Analyst: This is Julian on for Paul. I guess primarily are there any paths that you can potentially pursue in order to push your agenda beyond just the traditional FDA channels here I'm curious like what other levers you can pull to potentially garner support for registration based on either the existing data or the 4-year data. And then for the 4-year data, can you just confirm whether you plan on submitting that to the agency and whether we can expect the additional handful of patients in the analysis -- in the 3-year analysis as well? Or if you just plan on sharing 12 patients of data at 4 years. Matthew Kapusta: Okay. Yes. I maybe will answer the first part and then Walid can answer the second part. Yes. I mean the other avenues we can pursue are potentially outside the United States, quite frankly. I mean inside the United States, the avenues go through the FDA. I think what we've seen over the last several months is a tremendous amount of advocacy on behalf of the patient community. In my view, that is a critical part of educating and informing elements outside of the FDA around the needs and the sense of urgency within the community. We've also heard from the scientific and clinical community that continue to believe that regulatory flexibility is absolutely required for genetically defined diseases like HD that are neurodegenerative and progress very slowly. . So to me, that's going to be an essential element of this and then pursuing opportunities where we can bring AMT-130 to patients as soon as possible outside the United States, where there seems to be real interest for regulatory authorities, I think that's what we're going to pursue. On the 4-year data, I can hand it over to Walid. Dr. Walid Abi-Saab: So on the 4-year data, we informed the FDA that we will be amending the protocol or the SAP specifically to conduct such analysis, and will submit it to them as well. we did not specifically discuss with them what that would mean. Actually, we don't believe that there's any reason we have today to believe that this will change the FDA's position regarding the Phase I/II trials. I need to be clear on that. Having said that, what data will be evaluating it would be essentially presenting the data of the 12 patients at 4 years. but also the -- all the patients who have by then reached would have reached 3 years as well. So we'll be presenting the totality of the data. I think those data are very important for the HD community and to be able to continue to demonstrate the durability of the effect as well as a potential even a more evident treatment effect of AMT-130. Operator: Your next question comes from the line of Joe Schwartz with Leerink Partners. Joseph Schwartz: So in last week's CNBC interview with Dr. McGarry seemed concerned about the morbidity associated with procedures and involving bur holes, which is what you used with AMT-130. So I'm just wondering, was this a major sticking point? Did it come up in the Type A meeting? Have you done everything possible to educate the FDA on that front? And what is your strategy for the Type B meeting and outside the U.S. to now? Matthew Kapusta: Yes. I mean we don't want to comment directly on what Dr. McGarry said. But just in terms of the interaction with the FDA obviously, they're going to be focused on patient safety. We have, in our view, quite a strong safety profile. We have not seen disease clinical safety events associated with AMT-130 since December of 2022. We obviously saw some safety events that were associated with the procedure. It is a surgical procedure. We also know, as we've disclosed previously that there are some volumetric changes that are as to be expected, those are not associated with any clinical consequences as we've seen, and we see no increases in neurofilament light that would be associated to the extent that those volumetric changes were related to accelerating atrophy. And we've had experts in our recent meetings with the FDA, we've had experts on the call that have talked about volumetric MRI changes. We've had clinical experts that have seen patients. So we've done everything we can to educate the FDA in this regard. Joseph Schwartz: The strategy for the -- do you want to talk about that? Dr. Walid Abi-Saab: Sure. So for the Type B meeting, our main goal is going to be to discuss with the agency designs for the Phase III trial. As I said, we believe that we are very fortunate in the space to have a very high grade ongoing contemporaneous natural history, specifically, I'm talking about enrolled HD with more than 30,000 participants. this, what I call a treasure trove that is generally provided to us by CACI and through the hard work of many, many patients and their families and the whole HD community. We think that could deleverage to be able to help us somehow strengthen study designs for Phase III and try to avoid designs that would be difficult and challenging to the patients, so we're looking forward to be working with the FDA on that. We hope that they will work with us and acknowledge the flexibility they often talk about that should be afforded to rare diseases. That's going to be the key focus of that type of meeting. the second quarter. Operator: Your next question comes from the line of Peyton Bohnsack with TD Collin. John Peyton Bohnsack: This is Peyton on for Joe. Real quickly, when talking about the Phase III design, how quickly do you think that you would be able to enroll it -- would you be able to use an 18-month endpoint similar to what's been seeing outer in the space? And then has this changed your partnering decisions at RF . Dr. Walid Abi-Saab: Maybe I'll take the first part and then turn it over to Matt for the partnering piece. I think it's premature for us to talk about the logistics and how easy it will be to recruit or not. Because as you heard, we haven't yet defined the design. The duration is 1 element. The duration often depends on the sample size as well, the level of control, how are we using it? Are we leveraging also external control using patient statistics or other types of techniques. So it's really premature to do that. Having said that, I think we are very comfortable with the interest of patients. We've seen that after we've published the results back at September, and that has also increased through this a lot of the great work that's been done over the past number of months, but our externally facing group in dealing with these various sites across the U.S. predominantly. And I'm not really too worried right now, but we cannot give you more details until we figure that out a bit more of the design. Matthew Kapusta: Yes. On the partnering side, I also think it's a little too early. We need to understand what the Phase III study design and protocol is going to be the number of years and the investment that's required. I mean, we're obviously focused right now. We've got a strong balance sheet, and our strategy has been to take this forward and commercialize it ourselves. We really believe in this product it deserves to be taken forward. It needs to be brought to patients, and we're going to do everything we possibly can to do that. And if partnering plays a role in it, then we'll have to evaluate it at that time, but it's a little premature to weigh in on that right now. Operator: Your next question comes from the line of Ali Merrill with Barclays. Unknown Analyst: This is Jason on for Elli. So first, can you give some more color on the different scenarios for a potential Phase III design. So what are you going to the FDA within proposing? And has the FDA so far given any guidance on the length of the study or endpoints? And then secondly, across these different scenarios, what would the cost of the Huntington Phase III program look like? And does your cash runway include this? Dr. Walid Abi-Saab: Thanks, Jasmine. It's really premature to be able to get into those details. I -- whatever I say now would definitely be different after we talk -- so there's been no specific discussions on the length of the trial. As we said, the FDA was very clear about their strong recommendation to do a double-blind sham-controlled trial, that is -- that is adequately powered, which is, again, the right thing to do to be able to evaluate this as the adequately powered part. Now we need to discuss with them whether there is openness to use maybe other designs or how we can leverage the external control. But honestly, whatever I say now, really is not -- it's very high likely to change. So I really would not like to go down that path. And what's the other question? For Christian, regarding the run rate. Christian Klemt: Yes. So I mean, same comment a bit as Vale with all the uncertainties around the investments into kind of the various late-stage opportunities we have kind of run scenario analysis with built in development spend, but it's way too early to comment on specifically how much of that would relate to 130 vis-a-vis 260 or 191 . Operator: Your next question comes from the line of Susan Zane with Kempen. Suzanne van Voorthuizen: This is Suzanne from Kempen. Maybe 1 clarifying question on the indices program about other jurisdictions. What regions are you talking about? And what's the status of your discussions with regulators outside of the U.S.? And then I have 1 for the program. Did I catch correctly that the update in Q2 will be on 6 patients from the first dose cohort with 6 months follow-up? Or will there also be some early data from the second dose cohort -- and perhaps for seizure specifically, can you give a sense of what reduction in the seizure frequency we should consider as good or what level would be a great result. Kylie O'Keefe: Absolutely. So on the first question around ex U.S., I think we're looking at a number of different jurisdictions at the moment. We're taking into consideration a number of factors. We're looking at obviously epidemiology regulatory pathways and then also pricing and reimbursement, looking, as I mentioned, at named patient programs and early access programs that are applicable to rare diseases and really taking that into assessment as we think about the strategy moving forward for ex U.S. regions. We've obviously mentioned that we're going to be in discussions with both MHRA in the U.K. and EMA from a European perspective. And then we're going to be looking at what other opportunities that affords us outside of those 2 jurisdictions. So that's on the first question and then handing over to Walid on the epilepsy question. Dr. Walid Abi-Saab: Yes. So on the epilepsy, we will be presenting the data on exactly what you said, the first 6 patients, 6-month seizure frequency. Honestly, this is a Phase I study. So we have not yet set an expectation. We're trying to figure out overall safety, tolerability and evidence of pharmacodynamic effect. It's a learning process. So more to come once we share the data. Operator: Your next question comes from the line of Luca Issi with RBC Capital Markets. Luca Issi: Maybe if I can circle back on the ex U.S. opportunity here Matt and Kyle. How should I think about the overall commercial opportunity here? I believe Roche was able to generate close to $100 million a quarter from selling the levies to ex U.S. before the drug obviously run into safety issues. Is that the right comp for us to think about it? Or would you advise against us? . Kylie O'Keefe: Absolutely. So I think it's probably a little bit premature to be talking about commercial opportunity because we're truly in the planning and strategy phase around thinking through what opportunities would we be going after. But I do think that what we're bringing into the thinking is exactly that Roche comp around how have they gone after certain regions through named patient and early access programs as well as other cell and gene therapies that have walked this path ahead of us, and we will be taking those learnings on board. So a bit premature on commercial opportunity, but I do think that we will be looking at Roche and other companies for thinking through best practices. Operator: Your next question comes from the line of Salveen Richter with Goldman Sachs. Salveen Richter: Can you just help us understand the totality of the sticking points with the FDA here? And why a sham controlled is required versus a prospective natural history comparator? Matthew Kapusta: Thanks, Salveen. Yes, the FDA at the pre-BLA meeting raised the point that those studies were designed as hypothesis-generating studies and any such analysis after we've collected the data and we looked at them would be considered post hoc. And then recently, they reverted to start looking at the double-blind part of the U.S. study and raising questions around absence of any clinical or biomarker signal in that smaller U.S. study, which was sham-controlled. As I said in my comments earlier, we really do not have the same interpretation as the FDA in this type of rare disease where there's slow progression, and we are taking people early in their disease. It's really difficult to detect a meaningful and reliable change after 1 year in a Phase I/II study such as ours. And as such, you need to start looking at data from a subsequent time point. And what we have seen with AMT-130 that every time we looked at the data, the signal became more and more evident and as such, we believe that this warrants an evaluation compared to an external control, which is the kind of regulatory flexibility that 1 should be affording to diseases such as Huntington, which are monogenetic, progressive and rare. And the also procedure that we do, which is one-time administered gene therapy. So these are the kind of things that we're going to be discussing with the FDA and continue that dialogue because fundamentally, the AMT-130 is doing what we have been expecting it to do, and that effect continues to be stronger and stronger. And we're going to keep on analyzing these data and accumulating more data. And we're hopeful that we're going to be able to align with the FDA on a study design that would allow us to confirm these findings and then we will take this 1 step at a time as we start getting more clarity with them. Operator: Your next question comes from the line of Uy Ear at Mizuho. Uy Ear: I guess I'm just still don't quite understand why the FDA is requiring a sham study. Like I understand the objection the FDA had previously and it didn't sound that in your Phase I/II study, it didn't sound it like the FDA was objecting to natural history. I guess this time around, what is it about the -- Is there anything about the natural history database that they objected to or the kind of data or the kind of statistical plan that we involved with using natural history that they're not comfortable with. I guess that's the first question. And the second question is, Matt, are you committed to taking this forward even with a sham study? Matthew Kapusta: Yes. I mean, Walid can chime in. But I mean we disclosed that back in November of 2024, that the FDA had stated in writing that we may use the data from the Phase I/II study in comparison to an external control as the primary basis for a BLA submission. And honestly, I'm looking at Walid here, I don't think that they've necessarily had any criticisms of the Enroll HD database. I mean this is a database, again, with more than 30,000 participants. It's been collected over the last 14 years, and it's a clinical-grade natural history. I mean, this is almost -- I mean this is effectively a clinical trial. So -- and moreover, part of the comparison was actually contemporaneous with the patients that we enrolled. So there's a lot of check boxes there. And it's puzzling to us other than the fact that a sham-controlled study is certainly gold standard science. But -- it's hard to understand why with such a plethora and treasure trove of natural history that not being able to leverage that in a way for a registrational pathway would obviously would be very disappointing. With respect to your second question, I mean, I believe in my soul that AMT-130 can benefit patients with HD. And over the years, I've gotten to know these patients, know their families and I understand the urgency of this unmet need. And if there is a study that we believe is feasible and ethical, we're going to do everything we can to drive AMT-130 forward. Operator: Your next question comes from the line of Patrick Trucchio with H.C. Wainwright. Unknown Analyst: This is Louis Santos and Patrick. I just wanted to ask if there was anything in the FDA's feedback that's precluded potential accelerated path with this supposed Phase III study based on an interim analysis, say, of surrogates, including NFL. Dr. Walid Abi-Saab: Yes, there was no discussion on this with the FDA, but there's no reason to think that. Actually, it was verbally communicated in the previous time that, that would be possible as well. So I do think that, that could be an option if we go down that path. But again, let's first discuss what that phase season would look like, and then what potential accelerated approval or full approval pathway that would be. Operator: Your next question comes from the line of Kristen Kluska with Cantor. Kristen Kluska: Was part of your discussions with the FDA around a lack of biomarker data? And is there going to be an expectation that you'll be able to show some of this in a sham-controlled study. . Dr. Walid Abi-Saab: So the FDA, as I said, reverted back to looking at the 12-month data of our U.S. study because that's the only study that had the sham control in it and they raised challenges they don't see biomarker data in that small sample size over 1 year. There was no specific discussion on 3-year data or requirement for what we need to show or not at this point. So it's really premature for me to get into that. But we will provide more details on the Phase III and the FDA expectations after we align with them in the second quarter. Operator: Your next question comes from the line of Yanan Zhu with Wells Fargo. Unknown Analyst: This is Juan on for Jan. So in previous questions, you mentioned that you were trying to avoid Phase III design that will be too difficult or too challenging to the patients. Can you elaborate on that point? Are you talking about the length of study? And what would be considered too difficult? Is it like a 3-year or longer study? And I have a quick follow-up. . Dr. Walid Abi-Saab: Yes. I think the concept of having a sham surgery where patients would be essentially anesthetized for an extended period of time 10 to 12 hours where you have to cut through the skin and maybe superficially drill a hole in the skull without really going through the bone. All of these elements represent risk for these patients, especially if the length of the study is 2 or 3 years, and they're going to be spending all this time not knowing that whether they get a drug or not. And then potentially at the end of this period, they might have progressed enough that they cannot benefit from the drug or they will never really get back that level of worsening. I think this is where we find it a bit difficult, particularly with the type of therapy that we provide. And so that's why we're very keen to work with the FDA. I mean we know that ultimately, we have the same goal. We want to bring safe and effective medicine to patients. We share that. And we know that the FDA definitely cares about patients. They indicated that. We just want to work with them and appeal to their flexibility to be able to design, again, scientifically sound studies to leverage the available data that exists now so that we can minimize the burden to the patient as much as possible. Unknown Analyst: Got it. And in plan Type B meeting. Is there any additional evidence that you plan to present to FDA or is just a discussion on the Phase III design? Dr. Walid Abi-Saab: No, it will be only to discuss the Phase III design. We're not doing any additional analyses or anything like that until we update the SAP and the next time we share the data would be in the fourth quarter. . Operator: Your next question comes from the line of Rod Lee with Wolfe search. Guofang Li: Just another quick follow-up to the trial design. So what is the biggest pushback from the FDA? Why do they feel strongly that you need to run the Sham control trial because they seem to be open to a single-arm trial like for stoke therapeutics and practices? Just wondering what are the key differences here? Matthew Kapusta: Well, you're absolutely right. They're certainly precedent for genetic diseases and one-time administrative medicines to be approvable without doing a placebo-controlled study. I mean, it's a theoretical benefit, right? I mean there's a reason why sham controlled or placebo-controlled is gold standard, and that's because it addresses potential bias, whether that's a selection bias or motivational bias. There's no disagreement that a placebo-controlled study is a higher level of robustness. But in our view, it really doesn't reflect regulatory flexibility given the urgency of unmet need here nor does it necessarily take under consideration the tremendous amount of natural history data that can be leveraged in order to provide a very useful and meaningful comparator. So -- but that's what -- based on our understanding, what we think the FDA is seeking is a maximum reduction of potential bias in recommending that we do a sham-controlled study. Guofang Li: Right. Just to be clear, if they really want a SAM controlled trial was still dedicated to move forward to a trial. Matthew Kapusta: Yes. I mean I think we're going to do some feasibility work. I mean we did do a sham controlled portion of our Phase I/II study. It was a 1-year in a much smaller study. But I think if we do our feasibility work, and we think it's feasible and the patient community is supportive of it, I think we're seriously going to consider that. I think we need to. We have to. If this is feasible and the patient community supported, we have a moral obligation given the strength of our data to continue to pursue this. I really feel that very strongly. And again, I understand these things cost money and they take time and that's something we can explore the best way to do that. But I'm here at this company because I want to bring therapies like AMT-130 to patient populations like Huntington's disease patients. . And again, given the strength of our data, I think this is an endeavor that we continue to be dedicated to. Operator: Ladies and gentlemen, that concludes today's call. Thank you for joining. Have a great day. You may now disconnect.
Operator: Hello, everyone. Thank you for joining us, and welcome to the Xeris Biopharma Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] I will now hand the call over to Allison Wey, Senior Vice President of Corporate Communications and Investor Relations. Please go ahead. Allison Wey: Thank you, Warren. Good morning, and welcome to the Xeris Biopharma 2025 Full Year Financial Results Conference Call. Earlier this morning, we issued a press release detailing our 2025 financial and operating results and financial guidance for 2026. This press release is available on our website. Joining me on the call today is John Shannon, our CEO; and Steve Pieper, our CFO. Following our prepared remarks, we will open the call for questions. Before we begin, I'd like to remind you that today's discussion will include forward-looking statements regarding Xeris' future expectations, plans, strategies, objectives and financial performance. These forward-looking statements are based on management's current assumptions and beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed or implied. For a discussion of these risks and uncertainties, please refer to the risk factors described in our filings with the SEC. Any forward-looking statements made on this call speak only as of today's date and except as required by law, the company undertakes no obligation to update or revise these statements. In addition, during today's call, we will reference certain financial measures that are presented on a non-GAAP basis. A reconciliation of these non-GAAP measures to the most directly comparable GAAP measures is included in our earnings release. With that, I will now turn the call over to John for his opening remarks. John Shannon: Thanks, Allison, and good morning, everyone. We expected 2025 to be a transformational year for Xeris and it was. Our performance extended well beyond our incredible fourth quarter and full year revenue growth. Across the organization, we executed with discipline and focus, advancing our strategic priorities and driving measurable progress throughout the business. Most importantly, we reached a defining milestone, financial self-sustainability. Our progress across the entire business has enabled us to forever put behind us the question of our ability to self-fund our strategy, our pipeline and our future. Now as we enter 2026, we do so with clear momentum positioned to drive rapid revenue growth, execute on our advanced pipeline and thoughtfully prepare for even greater opportunities ahead. I'm excited and confident that our long-term strategy is firmly on track. Before diving into the details, I want to recognize and thank the entire Xeris team. The performance you delivered in 2025 and the strength of our outlook for 2026 is a direct result of your extraordinary commitment, focus and disciplined execution across every part of our enterprise. Now to the results. Fourth quarter total revenue grew 43% year-over-year to nearly $86 million. This outstanding quarterly result was driven by strong demand across all 3 products. For the full year, total revenue increased by an incredible 44% to $292 million. This performance was broad-based and strengthened as the year unfolded. Most importantly, it fueled our ability to deliver nearly $60 million in adjusted EBITDA and for the first time, net income on a full year basis. The exceptional performance we delivered in the fourth quarter was no aberration. It reflects consistent progress throughout the year as we executed with increasing discipline and effectiveness. As a result, we exited 2025 with strong momentum, increased confidence in our strategy and a significantly stronger operating platform. With that, let me walk you through performance across our 3 commercial products. First, Recorlev. Recorlev remained the primary growth engine for Xeris in 2025 and delivered another strong quarter in Q4. Recorlev's growth was driven by continued expansion of the patient base, ending the year at approximately 700 patients nearly doubling the number of patients on therapy from a year-end 2024. This growth reflects expanding prescriber awareness in a very dynamic market coupled with increasing confidence in Recorlev's differentiated clinical profile. Turning to this year. In January, we nearly doubled our Recorlev commercial team significantly expanding our sales and patient support organizations to increase the quantity and quality of our health care provider and patient interactions. This expanded commercial footprint is expected to further escalate awareness and adoption, and we expect to see the impact of this expansion, most notably in the second half of this year and continuing well into the future. We believe Recorlev is still in the early stages of realizing its full commercial potential. Last week, we filed a patent infringement lawsuit against 2 ANDA filers to vigorously enforce our rights and defend Recorlev. We are very confident in the quality and strength of our intellectual property, our legal position and our long-term outlook for Recorlev. We have built a strong IP foundation for Recorlev with 4 Orange Book-listed patents that run until March 2040 and orphan drug exclusivity, which runs through the end of 2028. Our Recorlev strategy is unchanged. Recorlev is and will continue to be on an exciting journey for many years to come. And our expectation shared during our Investor Day last June of $1 billion of peak sales by 2035 remains securely intact. Moving to Gvoke. Gvoke delivered steady, reliable growth in 2025 reinforcing its role as a durable and predictable contributor to our portfolio. On a full year basis, revenue grew 14%, supported by broad access, strong prescriber awareness and continued alignment with treatment guidelines. Gvoke remains a potentially life-saving rescue product that should be in the hands of every person with diabetes at risk of having their blood sugar go too low. Keveyis. Keveyis continues to outperform expectations, and 2025 was no exception. The brand's strength and durability have only become more evident given that we were able to end the year with an increase in the number of patients on therapy versus 2024. As we highlighted throughout 2025, success with Keveyis reflects not only the product itself, but the comprehensive support we provide to patients living with primary periodic paralysis. Importantly, Keveyis represents our long-standing commitment to serving a small, highly underserved patient community, and it remains deeply aligned with our mission to make a meaningful difference in the lives of patients with rare diseases. Turning to our pipeline. XP-8121 continues to advance according to plan. The anticipated initiation of Phase III in the second half of 2026 marks a significant value creation inflection point for the program and underscores our conviction in its blockbuster commercial potential. XP-8121 addresses a significant unmet medical need. There are over 20 million patients with hypothyroidism on daily oral replacement therapy today. Of those 20 million patients, we believe there are 3 million to 5 million patients who are unable to achieve and sustain normal range due to GI absorption issues. XP-8121 is a once-weekly subcutaneous levothyroxine injection that potentially solves this problem for many patients. As we look ahead to Phase III, the program is entering a pivotal stage, one where execution, milestones and value creation become increasingly tangible and visible. We believe XP-8121 has the attributes to become a differentiated high-impact therapy for patients and a meaningful growth driver for Xeris. Building on our strong commercial momentum, we are entering 2026 with 3 clear priorities. First, we remain focused on driving rapid revenue growth and are making targeted investments across our sales, patient support and commercial infrastructure. Second, we will continue to advance XP-8121, our once-weekly subcutaneous levothyroxine for hypothyroidism. We believe XP-8121 has the opportunity to become our next blockbuster potentially generating $1 billion to $3 billion in peak revenue. As we have prepared to initiate our Phase III program in the second half of 2026, we intend to significantly step up our R&D investments marking a critical milestone for both the asset and the company. Third, we remain committed to maintaining a strong balance sheet with disciplined operating execution. This approach preserves our flexibility to make ongoing prioritized investments in our business. Together, these priorities position Xeris perfectly to drive sustained performance over the near, medium and long-term. With that momentum as context, before turning the call over to Steve, I'd like to briefly share our outlook for 2026. For the full year, we are expecting total revenue between $375 million and $390 million, representing more than 30% growth at the midpoint compared to 2025. We will continue to be adjusted EBITDA positive even as we significantly step up our R&D and commercial investments. Now with that, I'll turn the call over to Steve, who will take you through our financial results in greater detail and review our guidance for 2026. Steven Pieper: Thanks, John. The results we are reviewing today are the product of a year defined by discipline, focus and strong execution across the organization. I, too, want to thank our employees for your dedication, accountability and relentless focus on delivering against our priorities. Your efforts continue to strengthen our operational foundation and position us for sustained success. Turning now to the fourth quarter and full year results. Total revenue for the fourth quarter was $85.8 million, representing 43% growth year-over-year. The strong performance reflects continued underlying demand across our portfolio. Importantly, this performance reinforces the momentum we carried through the end of the year as we enter 2026 with a solid foundation for continued growth. For the full year, total revenue was $291.8 million, an increase of 44% compared to 2024. This growth was driven by robust demand across all 3 commercial products, Recorlev, Gvoke and Keveyis. Looking at our performance from a product level. Recorlev revenue was $45.3 million in the fourth quarter and $139.3 million for the full year. This reflects growth of more than 100% both for the fourth quarter and the full year and was driven almost entirely by a continued expansion of the patient base, reflecting strong underlying demand and increasing prescriber confidence. Gvoke delivered revenue of $24.6 million in the fourth quarter and $94.1 million for the full year. Performance reflected steady prescription growth, broad access and favorable gross to net dynamics. Gvoke continues to serve as a stable and predictable contributor to our revenue base. Keveyis generated revenue of $12.8 million in the fourth quarter and $47.6 million for the year, supported by an increase in the average number of patients on therapy. Our performance continues to benefit from our focused approach to ongoing health care provider and patient support. Overall, the breadth of contribution across our portfolio reinforces the durability of our revenue base and the focus of our team to meet and exceed goals. Gross margin for the fourth quarter was 87% and for the full year was 85%, reflecting steady improvement relative to prior year, driven by favorability from product mix. R&D expenses were $7.9 million for the quarter and $31.2 million for the year. The 22% increase year-over-year primarily reflects our continued disciplined investment in advancing our pipeline including increased spend to support our preparation for the upcoming Phase III clinical trial, XP-8121. SG&A expenses were $47.5 million for the quarter, representing an increase of approximately 18% compared to prior year. For the full year, SG&A expenses were $182.4 million, an increase of approximately 12% driven by incremental personnel-related investments to support the rising demand for our commercial products. Adjusted EBITDA for the fourth quarter was $25.1 million an improvement of $16.8 million compared to last year. For the full year, adjusted EBITDA was $59.4 million. The improved results reflect continued operating leverage and underscores our ability to scale revenue while maintaining a disciplined approach to expense management. We also delivered another period of net income in the fourth quarter and as a result, we reported net income on a full year basis for 2025. Importantly, our 2025 performance resulted in an improved balance sheet which provides us with the flexibility to fund continued revenue growth, advance XP-8121 and operate the business from a position of financial strength. As John outlined, we have entered 2026 guided by a clear set of priorities that underpin our decision-making. These priorities include: one, driving continued rapid revenue growth; two, initiating the Phase III study for XP-8121, a significant milestone for the company. And lastly, maintaining disciplined investment prioritization as we continue to enhance operating leverage. We believe this balanced approach positions us well for 2026 and beyond. Turning to our outlook for 2026. We expect total revenue to be between $375 million and $390 million for the full year, representing over 30% growth at the midpoint. This outlook reflects expanding patient demand across our products. Our revenue growth is also expected to drive a modest improvement in gross margin as we continue to benefit from a favorable product mix. Moving to R&D. As we plan to initiate our Phase III study for XP-8121 in the second half of the year, we expect R&D to increase by approximately $25 million. This step-up reflects a deliberate and disciplined allocation of capital to advance XP-8121 and is critical to unlocking its significant long-term value and future potential which we believe is $1 billion to $3 billion in peak sales. Looking at SG&A, we continue to invest and scale our commercial enterprise to support Recorlev on its own journey to $1 billion in peak sales by 2035. As such, we plan to increase SG&A by approximately $45 million in 2026 primarily due to the expansion we recently completed. This deliberate material step-up in investment will drive significant revenue growth, resulting in improved operating leverage across the business. As we committed to in 2025, we expect to remain adjusted EBITDA positive moving forward. And specific to 2026, we expect adjusted EBITDA will grow on an absolute dollars basis compared to 2025. Our business has never been on more solid financial ground. The sales growth momentum is enabling our reinvestment strategy and every dollar we deploy is aimed at expanding our capabilities and positioning Xeris for sustained long-term growth. With that, I'll turn the call over to the operator for Q&A. Operator: [Operator Instructions] Your first question comes from the line of David Amsellem with Piper Sandler. David Amsellem: So just a couple for me. Helpful color on the spend this year. I was wondering, though, as you think about the expansion of Recorlev and the widening of the addressable market that you've seen and certainly your competitors have seen. Can you talk about the extent of additional operating leverage that you think you're going to be able to realize longer-term? And specifically interested in further sales force expansion? Or I guess we've seen, for instance, your competitor expand the sales force a few times. Is that a good way to think about what you're going to need to do to adequately support Recorlev. So that's #1. And then #2, as you think about the IP litigation, and I realize this is going to play out over the long-term, but just help us understand how that's playing into your sense of urgency regarding the potential acquisition of an asset where you can leverage your now expanded commercial organization. That would be helpful color as well. John Shannon: Thanks, David. It's John. Let's start with the expansion. And we just doubled our commercial footprint as of the first of January. And when I say that, it's not only our salespeople, but all the patient support, medical affairs, pharmacy services, all of those things that it takes to manage this very complex patient as you bring them on to therapy. So we see that as a significant move that we need to do in order to continue to drive the growth we're driving and get those patients on therapy and keep them on therapy. As we continue to expand into outer years, we'll need to add more resources in that capacity. It just takes more to, again, manage the patient loads. So we see that as continuing and continuing based on scale and how we grow there. We're also making additional investments in data, studies, things like that. So we'll see that over time as well. And we -- so we see a constant and consistent increase in expense and investment on Recorlev for the next several years. As it relates to your question, I think, around IP litigation and how does that change anything? Well, as I said in my opening comments, our strategy is unchanged on Recorlev. We will continue to do exactly what we said we were going to do. We think -- we know we can get this thing to $1 billion by 2035. Those investments will again continue to come on a scaled approach so that we can, again, manage the growth that we're driving. So we see that as longer-term, and we feel strongly that we'll continue to do that, and we'll be able to get this to a $1 billion product by 2035. Operator: Your next question comes from the line of Brandon Folkes with H.C. Wainwright. Brandon Folkes: Congratulations on another very good quarter. So maybe just following on from the earlier line of questioning. Can you just help us think about the evolution of capital deployment beyond 2026. As you realize this operating leverage in the business, what's your updated thinking about sort of internal allocations that you've laid out today on the call versus perhaps external business development. Does the emergence of this IP litigation change your appetite to perhaps sort of bring in something between sort of now and when 8121 comes to market to just sort of hedge the product concentration risk. And then secondly, maybe I'll just ask this because maybe it goes in. Can you just talk about the evolution of gross margin here longer-term? How should we think about gross to net in 2026 across your portfolio as we think about the evolution just with regards to product mix? John Shannon: Let me try to start this, Brandon, and I don't know that we got all those questions in there, so we'll try to answer them all. So as you heard in our comments, we're in a position where we're self-sustainable in terms of the amount of leverage we're getting from the business and our ability to support whatever is in front of us, specifically 8121 and Recorlev growth. And as it relates to the IP, again, nothing's changed. It's unchanged. We weren't surprised by these lawsuits. So we knew this was coming. We saw this coming. We're prepared for it. And we still see a future where we have lots of opportunities in front of us with respect to our own existing technology and capabilities to drive growth for a long time as well as external. So we see all of that in front of us. And now that we're at this point, where we're forever have situations where as long as we continue to grow, we'll be able to continue to leverage that in the future growth. So -- and then I'll let Steve cover any of the kind of... Steven Pieper: Yes, I'll just add on to John's comments around operating leverage and some of the questions that have come up. I mean, I think when you start to do the math on our growth trajectory and look at even with the step-up in investment, it's becoming clear that the balance sheet is as strong as ever, and it will continue to improve, and our operating leverage will continue to improve and so that opens up capacity to do other things. The good news is we don't have to do other things. We've got great assets both commercial assets and asset in the pipeline, a blockbuster in the wings, but certainly opens up capacity to do other things. We'll continue to be disciplined about business development and evaluating those things. Touching on your question around gross margin and gross to nets. Yes, gross to net, we benefited on Gvoke specifically this year. I would say gross to nets on balance have kind of steadied out. So we're not expecting any material movement either way in '26 on the gross to net front. From a gross margin perspective, as we've noted over the last 1.5 years, we've seen a nice steady increase in our gross margin really benefiting from product mix. We see that continuing for the foreseeable future and approaching kind of best-in-class gross margin profile for a company that looks like us. So hopefully, that addresses your questions, Brandon. Operator: Your next question comes from the line of Chase Knickerbocker with Craig-Hallum. Chase Knickerbocker: Congrats on all the progress here. Maybe just first to start out a little bit more color on guidance would be helpful. Can you just kind of walk us through maybe with kind of some rough outlines how you're kind of thinking about the top line by product in 2026, obviously, largely being driven by Recorlev, but any sort of thoughts kind of down the product portfolio would be helpful. Steven Pieper: Chase. Yes, I'll take this one. So on the revenue, I think maybe I'll start with the easiest one is Keveyis. We see that Keveyis kind of been a steady contributor over the last 5, 6 quarters in terms of its revenue contribution and it's kind of flattening out, so to speak. So I think that's a fair assumption moving forward. On Gvoke, I think what we've talked about over the last year is that we see that, again, being a steady contributor in that high single-digit, low double-digit growth. And I would anticipate that we're going to see that play out in 2026 that way. And then for Recorlev, that is the growth driver. So you can kind of back into the math there in terms of the contribution there. But that's on balance what we're expecting. And we do expect some contribution from our partnerships other revenue. Historically, it's been in that 5% to 10% range. I think that's a fair assumption for 2026. Chase Knickerbocker: Helpful. And maybe just specifically on Recorlev. Obviously, very strong implied guide. Can you maybe talk to us about kind of what you've seen so far in Q1 even kind of before that sales force expansion benefit that you will get here and there was a competitive product that was kind of expected in the market in 2026. I mean any kind of anticipation that you sensed in the market from that is kind of now unwound and kind of come to your benefit? Just some thoughts there would be helpful. John Shannon: Yes, Chase, it's John. I think the first quarter is as we expected, it's pretty typical. We get a lot of payer resets and co-pay resets and things like that, that slowed down the quarter early on in January. We see that it's another typical year. But that's all kind of starting to revolve pretty aggressively in February and going into it usually does so in March. So we're seeing that standard. In terms of a lack of a new competitor, I don't think that's really changed much. The market dynamic is still very strong towards finding and diagnosing people with hypercortisolemia and getting them treated. So that is -- that momentum continues in the marketplace. And now with our expanded team in there, we're in a great position to capture more of it. And we don't see any of that slowing down in our organization as well as with any of our competitors. Operator: Your next question comes from the line of Dennis Ding with Jefferies. Yuchen Ding: We have 2 on Recorlev. So #1, it's been a few years since the launch. So I guess what is holding you back from issuing Recorlev guidance? And I guess, what additional data do you need to make in an informed approach to guidance? And then #2, do you have any updated thoughts on how you're thinking about the market if Teva indeed is able to secure specialty pharmacy to distribute generic Korlym. And if you think that's a risk at all. John Shannon: Yes. Dennis, the first one is we don't give specific product guidance, and we haven't. And so we just give a total revenue guidance and try to give the color Steve just gave. So there's no hesitation there. It's just -- that's what we do. And then I don't know I understood or could even hear your last question. So maybe you could repeat that. Yuchen Ding: Yes. Maybe I'll just repeat that. Yes, I was just wondering if you have any updated thoughts on how you're thinking about the Cushing's market and for Recorlev specifically if Teva is indeed able to secure a specialty pharmacy to distribute generic Korlym, if you think that is a risk at all for your business moving forward? John Shannon: Yes. We don't see that as a risk at all for our business with respect to generic Korlym. We haven't seen that for the last couple of years. We don't see that going forward. This is a scenario where a clinician will have to write a referral for someone to normalize cortisol in order to get to Recorlev, and that's a very different approach than what Korlym does. Operator: Your next question comes from the line of Roanna Ruiz with Leerink Partners. Byunghyun Ahn: This is Michael Ahn for Roanna Ruiz at Leerink Partners. Congrats on your great quarter. We have some questions about XP-8121. Could you provide more color on your interactions with the FDA regarding the upcoming initiation of the Phase III program? And are there any remaining gating items or regulatory dependencies that needs to be handled before the initiation. John Shannon: So we've had all the interactions with the agency. We're very much aligned on everything we need to do. So no regulatory gating. The gating that we're going through right now is we want to enter that Phase III trial with the actual go-to-market device and formulation scale up for commercial scale-up. So we're going through all the steps before we start that Phase III to get all that work done and enter that Phase III with the actual go-to-market device, scaled up at commercial scale, which is really important when you're going into kind of a narrow therapeutic window area with a lot of range of doses. We want to make sure we take the time now so that we don't create delays later in the approval process. So that's what's really the gating item, and that's what we're working on. Byunghyun Ahn: Got it. Great. And are you thinking about any partnership optionality for 8121 at all? John Shannon: That's a great question. We don't need to do a partnership. We have what we need to get this to market. We think it's an outstanding opportunity for ourselves. And from that perspective, we don't need to, but it doesn't mean that the right situation came along that we wouldn't consider that. Steven Pieper: That would drive incremental value. Operator: Your next question comes from the line of Jason Dorr with OpCo. Jason Dorr: Jason on for Leland Gershell. Congrats on the strong quarter. Understanding you're in the process, could the team provide any guidance on the patent infringement lawsuit for Recorlev against the ANDA filers? Maybe what might the time lines be? And what does a favorable outcome look like for the Xeris team? John Shannon: Well, as you can tell, we're very early in. We just filed on Thursday, the lawsuit. Timing-wise, I don't know, years, months. So more to come on that. We feel really strongly in our 4 Orange Book patents that run until 2040. So that's really important that we kind of make sure we defend and stay behind those. Operator: Your next question comes from the line of Jenna Davidner with Barclays. Jenna Davidner: I was just curious on the Recorlev litigation, what your openness or appetite for a settlement could be appreciating your confidence in the 2040 patent time frame, but also maybe the balance between removing any potential overhang that could, in theory, last several years versus settling for a couple of years prior to 2040. I'm just curious what your thought process there is. John Shannon: Thanks for the question, Jenna. I clearly can't comment on legal strategy and litigation strategy. So -- but I do appreciate the question. Operator: There are no further questions at this time. I will now turn the call back to John Shannon, CEO, for closing remarks. John Shannon: Thanks, and thanks, everyone, for your questions. In closing, 2025 was a defining year for Xeris. We exited the year with strong momentum, a more durable operating foundation and tremendous confidence in our strategy. We believe our commercial portfolio is well positioned to drive continued rapid revenue growth in our pipeline, specifically XP-8121, adds extended meaningful longer-term value as we look ahead. As we enter 2026, our priorities are clear. We believe the immediate and long-term opportunities for Xeris are increasingly exciting, and we remain committed to translating our continued success and momentum into long-lasting value for the patients we serve and our shareholders. We appreciate your time and your continued support, and thank you. Operator: This concludes today's call. Thank you for attending. You may now disconnect.
Operator: Good day, everyone, and thank you all for joining this AAON, Inc. Q4 2025 Earnings Release Conference Call. As a reminder, all phone lines are in a listen-only mode to prevent background noise, but later, you will have the opportunity to ask questions during the question and answer session provided after our prepared remarks. To signal for a question, simply press star and 1 on your telephone keypad, and your line will be placed into a queue. Once again, it is star and 1, ladies and gentlemen. Also a reminder, today's session is being recorded. It is now my pleasure for opening remarks and introductions to turn the floor to Director of Investor Relations, Mr. Joseph Mondillo. Welcome, sir. Joseph Mondillo: Thank you, operator, and good morning, everyone. The press release announcing our fourth quarter and full year 2025 financial results was issued earlier this morning and can be found on our corporate website, aaon.com. The call today is accompanied by a presentation that you can also find on our website as well as on the listen-only webcast. I will begin with our customary forward-looking statement policy. During the call, any statement presented dealing with information that is not historical is considered forward-looking and made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995, the Securities Act of 1933, and the Securities and Exchange Act of 1934, each as amended. As such, it is subject to the occurrence of many events outside of AAON, Inc.’s control that could cause AAON, Inc.’s results to differ materially from those anticipated. You are all aware of the inherent difficulties, risks, and uncertainties in making predictive statements. Our press release and Form 10-Ks that we filed this morning detail some of the important risk factors that may cause our actual results to differ from those in our predictions. Please note that we do not have a duty to update our forward-looking statements. Our press release and portions of today's call use non-GAAP financial measures as defined in Regulation G. You can find the related reconciliations to GAAP measures in our press release and presentation. Joining me on today's call is Matthew J. Tobolski, President and CEO, and Rebecca A. Thompson, CFO and Treasurer. Matthew will start off with some opening remarks. Rebecca will follow with a walkthrough of the quarterly results, and Matthew will then finish up with outlook for 2026 and some closing remarks. With that, I will turn the call over to Matthew. Matthew J. Tobolski: Thanks, Joe, and good morning. 2025 was a year marked by several notable achievements, delivered alongside transformational investments that are building a more resilient and scalable business. Importantly, we have made these investments with clear priorities and disciplined execution, strengthening our foundation and sustaining strong commercial momentum. Robust bookings and revenue momentum underscore demand for our products and custom solutions as customers seek greater operational efficiency, supporting continued market share gains. As we enter 2026, we have clear visibility into growth drivers and a well-defined plan that positions us for improved operating performance and margin expansion as temporary headwinds fade. The data center market continues to represent our most robust and dynamic growth opportunity. In 2025, Basics branded sales increased 143% to $548 million while backlog grew 141% to $1.3 billion. Strong demand resulted in a book-to-bill of 2.4 for the Basics brand on the year. Our differentiated custom air and liquid cooling solutions continue to gain momentum as customers increasingly require highly engineered systems tailored to their specific performance and scalability needs. This dynamic aligns directly with Basics' core strengths—custom engineering, thermal management innovation, and speed—and it positions us well to grow with this increasingly demanding AI data center market. Our focus is now squarely on converting this demand into sustained profitable growth through disciplined program execution and capacity readiness. AAON branded sales and bookings remained resilient in 2025, particularly in light of a 16% decline in overall industry volumes. Despite the refrigerant transition and the ERP rollout at our Longview facility, AAON branded sales declined just 8%, significantly outperforming the broader industry. Bookings saw even stronger performance, growing approximately 12%, driven primarily by national accounts, which increased 86%. This sales growth represents deliberate market share gains as customers increasingly recognize the total cost of ownership advantages our products deliver across their building portfolios. In other words, while we work through near-term friction, we continued to take share in the places that matter most and where our differentiation is strongest. Building on the operational foundation established in prior years, we advanced several initiatives designed to drive margins to optimal levels and support durable long-term growth. These included strategic investments in people and leadership, manufacturing capacity, supply chain management, product development, and IT systems and infrastructure. Over the past eighteen months, we have expanded our manufacturing footprint by more than 25% and meaningfully strengthened our leadership depth. Our investments in supply chain management will improve supply reliability, help reduce material costs, and improve working capital discipline going forward. These actions are practical, execution-focused, and designed to improve throughput, reduce variability, and enhance margin performance over time. Our focus on innovation drove meaningful advances in product development, most notably in support of AI data centers where we introduced unique concepts designed to enhance scale, operating efficiency, and strategic flexibility. In 2025, we also became the first manufacturer in the commercial HVAC industry to commercialize rooftop units up to 40 tons with cold climate heat pumps that are capable of delivering reliable heating performance at ambient temperatures down to negative 20 degrees Fahrenheit. We also made significant progress in upgrading our legacy ERP, which is critical to supporting long-term scalability. As expected in a transformation of this scale, when issues were encountered, we addressed them directly and implemented a revised rollout approach that prioritizes stability, customer deliveries, and execution certainty. We are sequencing remaining ERP implementations under a disciplined governance framework with Redmond scheduled for 2026 and Tulsa expected in 2027. This approach reflects control and intentionality, allowing us to protect service levels while preserving the long-term benefits of the system. Alongside these accomplishments, 2025 included several temporary challenges, most notably the industry's refrigerant transition early in the year, and incremental complexity from our ERP upgrade. While these factors pressured margins in the near term, they are well understood, largely contained, and do not change our confidence in meaningful margin improvement as execution continues to strengthen. Before turning it over to Rebecca, I want to share my perspective on how we ended the year. Bookings and backlog remained strong in the fourth quarter. Basics branded bookings again reached record levels, driving backlog to $1.3 billion, up 45% sequentially and 141% year over year. AAON branded bookings were also strong, and increased 20% year over year with backlog up 24% sequentially and 61% from the prior-year period. That demand strength, paired with actions to improve execution, set the stage for a strong 2026. Operationally, production drove record sales. Basics branded sales more than doubled year over year, supported by the continued ramp at Memphis and strong throughput of liquid cooling solutions in Longview. AAON branded sales increased 9.5%, supported by a 42% increase in Alpha Class heat pump sales, and represent the strongest quarterly growth since 2024. Across our facilities, fourth quarter margins reflected differing operational dynamics. Margin momentum in Tulsa moderated sequentially due to normal seasonality and temporary supply chain constraints that reduced production volumes. Redmond delivered stable margins, balancing productivity gains with targeted investments to support strong Basics growth in Longview and Memphis. Memphis, though still a near-term margin headwind, remained on plan and achieved profitability for the first time in a quarter. Together, Tulsa revenue and Memphis comprise the AAON Oklahoma and Basics segments with Memphis results reflected in both. On a combined basis, fourth quarter sales grew 31% and incremental margins were a solid 25%. While incremental margins remain below our long-term target, they are improving and they reflect temporary pressures expected with ramping a new facility. With production volumes in Tulsa increasing materially in January and February, and Memphis continuing to ramp, we expect strong growth and accelerated incremental margin going forward. At Longview, which represents the Coil Products segment, Basics production and profitability remained exceptionally strong, while AAON branded throughput and productivity improved sequentially. Margins reflected this progress, partially offset by the impacts of a five-day closure to support a wall-to-wall inventory at year-end. In summary, the softer than expected fourth quarter margin was primarily driven by lower production at Tulsa. With a strong backlog and production already approaching record levels, Tulsa is positioned to become a meaningful tailwind in 2026. Supported by robust Basics backlog and accelerating momentum in Longview and Memphis, we are positioned for 2026 to be a strong year for growth and margin expansion. We have a clear view of the drivers, our teams are executing, and we are confident in that trajectory. I will now turn the call over to Rebecca, who will walk through the quarterly financials in more detail. Rebecca A. Thompson: Net sales in the fourth quarter increased 42.5% year over year to $424.2 million. The increase was driven primarily by 138.8% growth in Basics branded sales, reflecting continued strong demand for data center cooling solutions and higher utilization of our Memphis facility. AAON branded sales were also additive to the year-over-year growth in the fourth quarter, increasing 9.5%, driven by higher production levels at our Tulsa facility and a favorable comparison to the prior-year period, which had been negatively impacted by the industry's refrigerant transition. Gross margin was 25.9% in the fourth quarter, down from 26.1% in the prior-year period. The modest year-over-year contraction was primarily driven by unabsorbed fixed costs with our new Memphis facility. Looking ahead, utilization and productivity at the Memphis facility continue to increase, and we are positioned for these capacity gains to provide meaningful operating leverage in 2026. As a result of these unabsorbed costs, fourth quarter non-GAAP adjusted EBITDA margin was 15.2%, down from 15.8% a year ago, and the fourth quarter diluted EPS was $0.39, up 30% from 2024. Looking at the segment financials, beginning with AAON Oklahoma, net sales increased 11.1% year over year to $215.5 million. This double-digit growth was driven by a strong starting backlog and improved production throughput, which supported higher backlog conversion despite a challenging industry backdrop. The fourth quarter benefited from a favorable comparison to the prior-year period, which had been disrupted by the industry's refrigerant transition. AAON Oklahoma gross margin was 27.5%, down from 30.7% in the prior-year period, as a result of incremental overhead expenses of $6.4 million associated with the new Memphis facility. AAON Coil Products sales increased $49.6 million, or 93.6%, from the year-ago period, driven by $75.3 million in Basics-branded liquid cooling product sales, which grew 100% during the quarter. AAON branded sales of this segment declined year over year 1.8%, but increased 15.2% sequentially as production momentum improved. AAON Coil Products gross margin was 21.3% in the fourth quarter, up from 16.1% in the prior-year period and 11% from the prior quarter. The year-over-year margin expansion reflected improved operating leverage on higher throughput at the Longview facility along with a favorable mix of high-margin Basics branded sales. This was partially offset by a full five-day plant shutdown at Longview at year-end to conduct a wall-to-wall inventory count. In the near term, Basics will continue to be a positive tailwind in dollars, but we do not expect product mix will be as favorable as we saw in Q4. Sales at the Basics segment grew 109.1% in the fourth quarter to $106.1 million. The strong growth was driven by sustained demand for data center solutions, as the market continues to demonstrate strong momentum and the business captures additional market share, as evidenced by our strong order intake and increasing backlog. Increased utilization of our Memphis facility was also a significant contributing factor, providing additional production capacity that was additive to the segment results. Basics segment gross margin was 27.1%, up from 18.8% in the prior-year period. The strong year-over-year increase was largely a result of a favorable comparison to the prior-year period along with accelerated production from our new Memphis facility. Turning now to the balance sheet. Cash, cash equivalents, and restricted cash balances totaled $1.2 million on December 31, 2025, and debt at the end of the quarter was $398.3 million. Our leverage ratio was 1.77. In 2025, cash flow from operations was a source of cash of $0.5 million, compared to $192.5 million in 2024. Capital expenditures in 2025, including expenditures related to software development, decreased 3.9% to $204.9 million. Overall, we made substantial capacity and working capital investments to support our expanding backlog and ongoing market share gains. As returns on these investments begin to materialize, we are positioned for operating cash flow to improve significantly in 2026, driven by higher earnings and improved working capital efficiency. That flexibility supports our continued growth investments, including planned 2026 CapEx of $190 million. I will now turn the call back over to Matthew. Matthew J. Tobolski: Thank you, Rebecca. Looking ahead, we enter 2026 with strong visibility across both brands and confidence in our ability to execute. That visibility allows us to remain focused on production, prioritize throughput, improve delivery performance, and convert demand more efficiently as we move throughout the year. The Basics brand remains the company's key growth driver, fueled by exceptional demand from the data center market and our differentiated custom design solutions. During the quarter, Basics secured a strong volume of new orders at attractive margins, with the majority scheduled for production at our Memphis facility as it continues to scale. This demand profile and production mix position us to increase output efficiently, optimize the fixed cost investments made in 2025, and drive robust growth in 2026. As utilization improves, we are positioned for the economic benefits of that scale to increasingly flow through to margins. The AAON brand also maintains strong momentum. Backlog at the end of the fourth quarter was up 61% year over year, reflecting strong demand across the business. While backlog levels and lead times remain extended, we are actively managing this through production ramp up and improved execution across the network. Despite a soft commercial HVAC market, bookings have remained strong, underscoring the resilience of our business. Importantly, we are seeing improving operational cadence as we work through backlog and position AAON for stronger performance in 2026. 2025 was a year of meaningful structural change and strategic investment, building on AAON's strong foundation and positioning the company for sustained long performance. As we move into 2026, our focus shifts squarely to execution, leveraging that foundation, improving throughput, accelerating backlog conversion, and continuing progress towards our margin objectives. For the year, we anticipate sales growth of 18% to 20%, a gross margin of 29% to 31%, with margin progression expected to be uneven by quarter as capacity ramps and product mix normalizes. SG&A as a percent of sales is expected to be about 16%, and depreciation and amortization expenses are expected to be in the $95 million to $100 million range. These expectations reflect our confidence in demand, improving execution, and the operating leverage embedded in our cost structure. In closing, I want to thank our employees, customers, sales channel partners, and shareholders for their continued support. We enter 2026 with clear priorities, improving momentum, and confidence in our ability to execute and deliver stronger results. With that, we will now open for questions. Operator: And a reminder to our audience that it is star and 1 to ask a question. I will open them one at a time, and you will be invited to pose your questions. First question today will come from the line of Ryan Merkel at William Blair. Ryan James Merkel: Hey, everyone. Good morning, and thanks. Matthew, can we just start on the gross margin in the quarter? A miss versus your expectation. It sounds like Tulsa was the reason, but just clarify that for us. And then you made some comments about recovery in Q1, and I am curious in Q1 2026 if gross margins can get back into the range you gave for guidance for the year, kind of in that 30% range? Matthew J. Tobolski: Yes. And good morning, Ryan. Thanks for the questions. So first, touching on the fourth quarter margin. When we look at the driver, the single biggest driver of that margin, kind of against expectation, was around Tulsa volumes. And so our volumes in Tulsa had normal seasonality, which certainly we expected, but we had some additional supply chain constraints that put some pressures on the overall throughput and velocity in the quarter. I want to touch on the supply chain piece because I mentioned in the call, and I have certainly talked about this in the past, there has been a lot of investment that we are making to really strengthen the capacity and our supply chain organization. And a lot of that is to improve reliability. There are going to be economic benefits, certainly, from better purchasing strategies with our supply base. But most importantly, we anticipate strengthening reliability of deliveries to be one of the biggest drivers of our progress in supply chain. And so that is going to really help alleviate some of these, I will say, speed bumps that we have had going forward. And so as we look forward, I mentioned on the call that when I think about the Tulsa volumes in January and February, we have accelerated substantially out of Q4 within our Tulsa segment. And when we think about what that is going to mean, it is going to mean a substantial benefit from overall velocities that are going to be able to provide us some of that margin uplift that we are expecting. That will be a little bit offset in the first quarter from product mix that we would expect to see out of our Longview site. Longview had a very large contribution of Basics revenue, but as we continue ramping the AAON branded revenue in Longview, you will see some pressures in Longview. And so net of that, there is a little bit of offset from Longview, but Tulsa will certainly be driving improvement into the first quarter out of the fourth quarter. Ryan James Merkel: Got it. Okay. So just the bottom line there, the supply chain issues we have kind of been talking about, it sounds like you have got some plans there to stabilize that and we should not see that being an issue going forward. Is that right? Matthew J. Tobolski: Yes. We are getting a lot better visibility into supply chain performance. And so we, going forward, anticipate a lot of the noise that we saw in 2025 around supply reliability to abate. And so what I would say is while there were challenges in Q4 from a supply base perspective, they were substantially lower than they were earlier in the year. And so we are seeing the incremental progress in supply chain stability, and a lot of that is reflecting the efforts and investments we are making in our supply chain organization. Ryan James Merkel: And then just on the guide for revenue for 2026, just looking for a few more details. Obviously, Basics, the orders and the backlog is really strong. I am curious, are you going to be in that kind of 40% to 50% Basics revenue growth in 2026 that you have talked about? Or could it be a bit better? And then comment on the light commercial market. Are you assuming sort of a flat market there? And then I think you had some price increases that came in Q4, so I am curious how much price you have in the guide for 2026? Matthew J. Tobolski: Yes. So from a growth driver perspective, the growth in the Basics side is not really up to that 50% range. It is definitely about half of that that is sort of built into the guide. A lot of the growth is going to be coming out of the AAON brand, and in particular, coming out of the Tulsa organization. So as we enter the year, our AAON Oklahoma segment has backlogs that are extended beyond where we want them to be. That is certainly partly driven by some of the supply challenges that we have had, but really, coming out of the, I will say, improving supply stability, coupled with the improving velocity in the plants, you are going to see the AAON side of the business provide meaningful growth inside that segment in Tulsa. We are already seeing that as we are kind of two-thirds of the way through the first quarter, with AAON Oklahoma running near record volumes as we sit today. So certainly seeing the drivers being great growth out of the Basics segment, but also really strong recovery in the AAON segment that is going to be a huge driver of growth in 2026. And your question on pricing, so if you kind of recall last year, we had really two pricing actions. We had a price increase at the beginning of the year, and then really, I will say, a surcharge that really was in response to tariffs, but also the sort of secondary effects of price-cost dynamics around the tariff backdrop. And so, when we look at what was done towards the end of the year, there is really not any big pricing that were taken at the back half of the year on the AAON side of the business. So really, that growth that you are looking at, that is really growth in volume that we are talking about going forward in 2026. I am sorry. The other one piece too, I meant to touch on, is you asked the question on the commercial HVAC market and the backdrop in that sense. And to your point, the indicators and kind of how we see the market at a high level perspective is flattish in 2026. We do not see a huge recovery in the market as a whole. But really, I would say the intentional efforts that we have with our Alpha Class air-source heat pump, coupled with the national account strategy, that is what is driving outperformance in our bookings and what we see as being the big driver of outperformance going into 2026. Thank you very much. Operator: Our next question will come from the line of Noah Kaye at Oppenheimer. Noah Kaye: Thanks for taking the questions. Can I just follow up on that last one? Matthew, I think you said, if I heard correctly, the guided midpoint maybe even assumes 25% or so revenue growth for Basics. And I am just trying to put that with where the backlog ended. So, am I understanding that you only expect to ship about half of your backlog in 2026? Is that math right? And if so, why would that be the case? Matthew J. Tobolski: Yes. It is a great question. And really, I would just start off by talking about the buying dynamics in the data center market. And the data center segment space does not trade in the sort of lead time mindset that the commercial HVAC market does. And so the dynamics that we see embedded in our backlog is a combination of projects built upon a lot of longer duration, multi-phase projects and programs. Demand is strong and robust, and so given that dynamic, while the backlog is certainly there, there definitely is an extended period that is built into that backlog. And it is allowing us to ramp with a lot of clarity, not just in 2026, but going into 2027 as well. And when we think about that backlog, there is potential for a little bit of movement in there, not as much driven by our production throughput, but really driven by just some of the constraints. We see a little bit of movement in the market, the data center market as a whole, on project deliveries just as the entire kind of supply network feels the pressure of the overall demand. So you might see a little bit of that backlog move in or move out, but fundamentally, it is really driven by these longer duration programs. Noah Kaye: Can we talk about cash generation? I mean, if I am doing my math right, you built something like $225 million of working capital in 2025. Can you put some finer points around your operating cash flow generation expectations for 2026, kind of how you see the cadence of that? Are you starting to collect more on accounts receivable? And how quickly do you see debt reduction? I am just trying to figure out how to model your interest expense. Rebecca A. Thompson: Yes, certainly. No problem. First, I do want to point out, if you look at the cash flows on a quarterly basis, we did see improvement in our cash flows from operations to be positive Q3 and Q4 with sequential improvement. I would expect this positive trend to continue into 2026. So you can see, at the end of the year, you will notice our accounts receivable is up at the end of the year, highlighting our conversion of our contract assets and contract liabilities. To this point, I will also point out the contract liability that you see at end of the year is part of our efforts to negotiate down payments on some of these upcoming jobs so that we can better manage our working capital and liquidity. So we do anticipate cash flows to improve through our increased earnings, through a lot of these supply chain improvements that Matthew has talked about in our buying practices, and then also through increased billings and conversion of our contract assets. When you think about debt, it will remain elevated for most of the year. We expect it to come down a little, maybe towards the back half of the year. But interest will be higher just given the starting point at the beginning of the year with a higher debt balance, and we expect that to remain elevated for most of the year. Noah Kaye: Alright. I will take the rest offline. Thank you. Operator: Our next question this morning comes from Brent Thielman at D.A. Davidson. Brent Edward Thielman: Hey, thanks. Good morning, Matthew, Rebecca, Joe. Matthew, just in terms of the composition of the Basics backlog and, I guess, specifically orders this quarter, is it over-indexed to one or two big orders? Is it predominantly hyperscalers, or are you getting some more traction outside of that customer segment? Just some more color around that. Matthew J. Tobolski: Yes. Brent, when we think about the backlog composition, obviously we do not dive into the exact customers that are in that backlog. But at a high level, there certainly is diversity in that customer base and kind of customers inside that backlog. The one thing I always point out is while it is great, bookings that we see in the quarter, certainly given the scale of data center orders, there is a little bit of skew given some of the orders. So one order certainly can represent, say, a concentration in a customer in that given quarter. But what we are seeing kind of on a collective basis is introduction of new customers and introduction of diversity in customer base with hyperscalers, some of these sort of build-to-suit colocation providers, and colocation providers. So we continue seeing the efforts that we are focusing on to diversify our customer base pay off in the overall bookings cadence. Brent Edward Thielman: And then, I guess, on the AAON branded side, Matthew, how do we think about sort of order intake going forward in that? I am sure you are ramping up production in Tulsa, but you have had some challenges here. Are you taking a step back from new orders, or do you feel comfortable that production levels are where you want them to be and you are going to continue to ramp up new order intake here going forward on that side of the business. Matthew J. Tobolski: Yes. So on the AAON side, one thing I want to point out is certainly 2025 on the AAON side of the business does not represent the performance expectation that we hold for ourselves. And so we certainly did not deliver the throughput and the reliability that our customers expect and deserve of us. And so when we think about going into 2026, we are dedicated and focused on driving operational improvements and really increasing the execution certainty for our customer base. So that is going to result in sequential ramping up production throughout the year. We are going to be driving productivity growth, especially in the Oklahoma and the Longview segments, really to ensure that we get back to the lead times our customers want and need as well as ensuring that the delivery reliability is what they expect and deserve. And so you will see strong growth in the overall sales from an AAON side throughout the calendar year as we continue driving and executing on that strategy. But I do want to point out that even with the challenges that we faced in 2025, we made huge investments in ensuring the support was there for our customer base. And so we have invested heavily in customer care and customer service departments to really bolster the customer experience even in the midst of some turbulent times on the AAON side of the business. Data is going to continue being things we invest in going forward to ensure the customer experience is meeting the mark for where we hold ourselves from an overall business perspective. And so when we look at this kind of in aggregate, we had a challenging year. We are driving velocities as we enter 2026 and throughout 2026 to really push more volume to our plants. But even in that challenging backdrop, you saw the bookings growth remain strong and actually increase even in the midst of that, which really highlights the value proposition and the focus that we have on doing what is right for our customers even in the midst of those challenging times. And so we anticipate, even in that flattish commercial HVAC backdrop, we anticipate seeing our bookings growth continue to strengthen throughout 2026 supported additionally by a really good ramp up in our execution and productivity at our plants. Operator: Our next question this morning, and caller, I do apologize, I mispronounced your name. We will hear from Timothy Wojs at Baird. Timothy Ronald Wojs: Pretty close. Good morning, everybody. Maybe just to start on the Oklahoma business, Matthew, where are your lead times at today? And how did those track into the back half of the year, and when would you expect your lead times in the Oklahoma business to kind of fully get back to normal? Matthew J. Tobolski: Yes. So certainly, lead times are beyond where we want them to be. And it is hard to put an exact quantification on it because it does vary based on production lines and kind of product type within our plant. But they are definitely out substantially longer than where we want them to be. For some of our more high-volume lines, they might be in the mid-20 weeks timeframe, which is definitely beyond where we want them to be. And so our goal throughout the year is to really drive throughput and really bring those lead times down. Now, it is an interesting balance because as we look at how we rounded out the back half of the year, we have certainly shown and delivered higher productivity than we had at the beginning of the year in the Oklahoma segment. We have been pushing more and more volumes through our plant. And as we think about that in basically the first couple of months in Q1 of this year, we are running at or near record levels of volume throughput within our site in Oklahoma. Yet in that backdrop, we see our backlog continuing to creep up, which is telling us that even in the midst of a challenging environment, we are continuing to see strength in our overall product offering, which is resulting in bookings exceeding some of our production volumes. And so it is a little bit of a hard thing to pin down because if we had a static input in our bookings, it would be very easy to give you a mathematical description of where we get back to normalized lead times. But as we drive our volumes up, we are continuing to see our bookings strengthen, which is kind of creating a difficult dynamic to really drive them down as fast as we want them to be driven down. But it is certainly a huge focus for us to responsibly grow the volumes within the Oklahoma segment and, in doing so, drive the lead times back to more target levels within our operation. But it is going to be a balancing act of how much production volume we push coupled with what the order cadence looks like. Timothy Ronald Wojs: Okay. That is helpful. And then I guess on the Basics business, I mean, you are exiting the year at $1 billion in backlog. I think your current footprint, once it gets fully ramped, I think you have outlined $1.5 billion as the potential revenue. I guess, what is the expectation on your part in terms of what you need to do with capacity? And then does that kind of backlog versus ultimate revenue kind of throughput in your current capacity limit your ability to kind of take orders in the Basics business in the near term? Matthew J. Tobolski: That is a great question. And really, I want to start off by maybe framing the way we look at capacity and really the use of capital. We certainly made a huge investment in the last eighteen months between the Longview expansion and the Memphis facility, and that provides huge meaningful upside in the overall production volume that we have in our fleet. One of the things beyond just supply chain that we invested in in 2025 was really a strong focus in manufacturing and operations excellence within the organization, and bringing in some really great talent to help take this organization to the next level and operate as a true multi-site manufacturer. And I bring that up because as we sit here as an executive team, a leadership team, and we stare at this investment that we have made, the challenge that we have in front of the team is to drive as much volume to these existing investments as possible before we have to have another substantial uptick in the overall capital investment. And so while we look at that $1.5 billion sort of footprint capacity that we have talked about in the past, the challenge to the team, and really what they are looking to do, is actually unlock more capacity inside the existing investment to unlock more than just $1.5 billion of capacity and really drive better returns for our investors in doing so. And so part of what we are doing at the end of last year into this year is truly mapping where the opportunity exists inside that footprint to better quantify how much volume we can truly put through that investment because we do believe there is more capacity than $1.5 billion there. And that really is a lot of what we are focused on here in the first part of the year, quantifying that and creating a very executable strategy to drive that forward. So in the near term, we certainly do not see the capacity being a limit to our ability to take new orders. I would say that, fundamentally, the gating mechanism is not the square footage. It is really just the ramp rate. And I say that because ramping responsibly and doing so in a way to drive margins is critically important to our execution strategy. And so we do want to moderate how fast we push on the gas pedal to make sure we do it in a profitable, responsible, and high-quality manner. So near term, I do not see that as being really a limit, the footprint being a limit. I see the ramp rate being the limiting factor. But in the long term, we are certainly looking to figure out how much more we can drive in revenue in our existing investment beyond that $1.5 billion we talked about in the past. Brent Edward Thielman: That is helpful. And then just the last one. I do not know if you said it or not, but did you give the Memphis revenue contribution in the fourth quarter in the Basics segment? Matthew J. Tobolski: Rebecca, I do not know if we have that broken out or not. Just double check that. Rebecca A. Thompson: Not. Matthew J. Tobolski: Just at a high level, I would say, just high level, I think it is around $25 million to $30 million in contribution in the fourth quarter. Brent Edward Thielman: Okay. That is great. Thanks, guys. Good luck on this year. Operator: We will hear next from Julio Romero at Sidoti & Company. Julio Romero: Thanks. Hey, good morning, everyone. I wanted to ask about, at the midpoint, your 2026 sales growth guidance already implies sales dollars above what was implied by the three-year Investor Day targets that you had for 2027. Just how would you help us think about the other Investor Day targets—the gross margins and the SG&A, 32%–35%, 13%–14%? Are those still on track? Do you see that as more of a run rate for 2027 and entering 2028? Help us think about that there. Matthew J. Tobolski: Yes. Good morning, Julio. And certainly, if you look at the revenue numbers that we have, it certainly indicates that we are pushing harder than we kind of implied during Investor Day, which really, I would say, a lot of that comes from visibility and clarity of our ramp rates and allowing us to execute that plan with a good level of visibility and clarity going forward. So certainly, the top line number, we have had a lot of clarity on how we can drive that forward. Margins, obviously, you are going to see a sequential margin improvement in 2026. As we think about 2027 from a margin perspective, those targets are still what we are driving towards. The one thing I would say is as we are pushing the revenue harder, there is certainly some level of pressure that exists in margin. And particularly, I am going to use Memphis as an example in this piece, which is when we are pushing growth fundamentally at those growth rates, we have got to be investing ahead of the overall throughput to allow us to effectively actually drive that throughput. And so there is some pressure that, I would say, pins us towards the bottom end of that when we view 2027. But certainly, there is upside as we continue driving velocity through Tulsa to sort of offset some of that. So the margin profile certainly is something we are still driving towards in 2027 and really exiting 2027. But the SG&A side, that one is a little bit, I would say, certainly a target we are driving towards. But there is some more pressure on the SG&A side as we really ramp up the facilities and get some of these investments in people and process and technology in place. And so there is a little more pressure on the SG&A side. We have not really quantified that at this point, but I would say we see our sequential decline year over year to 16% in our target for 2026. We anticipate continued leverage as we go forward, just do not have a quantified number on that quite yet. Julio Romero: Super helpful, and it makes a ton of sense. And on that topic, Matthew, of investing ahead of throughput and ramping responsibly, can you just touch a little bit on the IT systems and infrastructure upgrades that you talked about in the deck? Not less from a quantification perspective and more just trying to understand what you are doing on that front. Matthew J. Tobolski: Yes. And in particular, the reference there is a lot around the technology investments around the ERP upgrades, and I want to really just frame this in a perspective on how we are focusing in 2026. So when we talk about shifting out the go-lives in Redmond and Tulsa, it is not because of a lack of performance of the system. It is not because of a misconfiguration. It is solely driven by operational discipline and our hyper focus on ensuring we can drive volumes to get our lead times down. And so really, in that environment, with such strong backlog, such strong demand for the product, the focus on pushing out the ERP is to allow our operations team to drive the volume increase, to drive throughput, and really execute to be able to get those lead times down. And the focus is not around adding an additional kind of complexity in there with the ERP go-live. It is to really allow us to focus, hyper focus, on that execution to allow those lead times to get back where we want them to be throughout 2026. So that really is the focus and the commentary on the overall go-live. I would touch on, while we had pressures when we went live in the Longview site, we have not had the same level of challenges within the Memphis site. And so sequential go-lives are improving, and really we are getting more and more run time with the technology systems, and we are seeing the benefits of it. It is really just a focus on making sure we drive volumes to our plants. Julio Romero: Great. Thanks for the color. Operator: And we will move next to the line of Chris Moore at CJS Securities. Christopher Paul Moore: Hey, good morning, guys. Thanks. I had a couple. So on the revenue growth for this year, 18% to 20%, just in terms of the quarterly revenue trajectory—maybe I missed it—but do you expect it to increase on a quarterly basis, or just any thoughts there? Matthew J. Tobolski: Yes. I mean, I would just say the year will start off softer as far as absolute dollars as well as year-over-year growth itself, and you should anticipate improvement as we move through the year, both on a year-over-year growth perspective but also on an absolute dollar perspective. So we definitely expect that things will strengthen as we move throughout the year. Christopher Paul Moore: Perfect. Appreciate that. And in terms of, you broke down about 37.8%, you said, was liquid cooling equipment. Do you expect that percentage to change much in 2026, 2027? I am just trying to get a sense. Does that impact margins much moving forward? Matthew J. Tobolski: Yes. What I would say is, that 37.8% liquid cooling, obviously that is revenue being driven through the Longview plant, primarily for the Basics brand. As we layer on the Memphis site, Memphis certainly has a broader portfolio of products being manufactured there, including some of our high-performance pre-cooling chiller products. And so I bring that up to say that as a percentage, that may moderate a little bit, but I would say total volume, total dollars, certainly we do not see that going down at all. We see that being a driver of growth. And so we are introducing more volumes of broader products to the overall Basics platform that you would fundamentally think, as a percentage, might drive that down a little bit. Christopher Paul Moore: Got it. And just from a competitive standpoint, that 37.8% liquid cooling— I am just trying to get a sense of the competitive environment today versus a couple of years ago. Is that a bigger percentage than you are seeing from most competitors? Just trying to understand how the dynamics are evolving. Matthew J. Tobolski: Yes. I mean, that is, I will say, a bit of a loaded question in the sense that we broadly, as an industry, talk about liquid cooling products. And when I look at the competitive landscape, one of the things I will always harp on is the AAON and Basics brands. They are not targeted at being V2 manufacturers. We are not chasing what a lot of other people are doing. We are focused on differentiation, and a lot of that differentiation is coming through the sort of consultative approach in how we approach the market and really that engineering and technical backbone that we have. And so the liquid cooling orders that we have, they are focused on high-performance liquid cooling opportunities, driven by scalability and platform development with our customers. They are not as much about chasing kind of, I will say, lower-capacity, high-volume, lower-margin type orders. And so you might see others with higher percentages or others with liquid cooling that might be at the same level of scale within their overall portfolio. I would just point out, we are fundamentally looking at the space a little bit differently and really focused on unique and kind of more high-value liquid cooling opportunities versus kind of high-volume liquid cooling opportunities. And that is a bit of what you see different in the mix with us and some of our competitors. Christopher Paul Moore: Got it. I appreciate that. I will leave it there, Matthew. Thank you. Matthew J. Tobolski: Thanks, Chris. Operator: And ladies and gentlemen, that was our final signal from our audience, and we thank each of our callers who signaled for a question today. Mr. Mondillo, I am happy to turn it back to you, sir, for any additional or closing remarks that you have. Joseph Mondillo: Yes. Thank you, Jim. I would just like to thank everyone for joining us on today's call, and if anyone has any questions over the coming days and weeks, please feel free to reach out to myself. Have a great rest of the day, and we look forward to speaking to you in the future. Thank you. Operator: Ladies and gentlemen, this does conclude the AAON, Inc. Q4 2025 earnings release. We thank you all for your participation, and you may now disconnect your lines.
Operator: Ladies and gentlemen, thank you for joining us today. Welcome to Compugen Ltd.'s Fourth Quarter and Full Year 2025 Results Call. At this time, all participants are in listen-only mode. An audio webcast of this call is available in the Investors section of Compugen Ltd.'s website at www.cgen.com. As a reminder, today's call is being recorded. With us from the Compugen Ltd. team are Dr. Eran Ophir, President and CEO, and David Silberman, Chief Financial Officer. Dr. Michelle Mahler, Chief Medical Officer, will join for the Q&A. Before we begin, we would like to remind you that during this call, the company may make projections or forward-looking statements regarding future events, business outlook, development efforts and their potential outcome, the company's discovery platform, anticipated progress and plans, results and timelines for our programs including disclosure of clinical data, financial and accounting-related matters, as well as statements regarding our cash position and cash runway. We wish to caution you that such statements reflect only the company's current beliefs, expectations, and assumptions, but actual results, performance, or achievements of the company may differ materially. These statements are subject to known and unknown risks and uncertainties, and we refer you to our SEC filings for more details on these risks, including the company's most recent annual report on Form 20-F. The company undertakes no obligation to update projections or forward-looking statements in the future. With that, I will now turn the call over to Eran. Eran Ophir: Thank you, operator. And welcome to everyone joining our call today. On today's call, I would like to highlight some of our key achievements in 2025 and outline our planned strategic priorities for 2026. During 2025, we made progress across our business—scientifically, operationally, and financially—including the following key highlights: we extended our expected cash runway into 2029, assuming no further cash inflows, through a non-dilutive transaction with AstraZeneca tied to rilvegostomig, their differentiated PD-1/TIGIT bispecific, the TIGIT component of which is derived from COM902, our fully owned Fc-reduced anti-TIGIT antibody. We also diversified our leadership team as I stepped into the CEO role in September 2025, and Anat Cohen-Dayag transitioned to Executive Chair. On the clinical side, we advanced our clinical programs, initiating new clinical trials with our wholly owned potential first-in-class anti-PVRIG COM701 and our potential first-in-class anti–IL-18 binding protein antibody GS-0321, licensed to Gilead. We also advanced our clinical footprint, opening sites in the U.S., Israel, and France in our COM701 clinical trial. In addition, we presented clinical updates at ESMO and SITC conferences for COM701 and GS-0321, respectively. So let me elaborate on each of these highlights, starting with the most recent update—our December 2025 strategic transaction with our partner AstraZeneca, where we monetized a small portion of our future rilvegostomig royalties to AstraZeneca. This deal is important today and for the long term because it added $65,000,000 in upfront non-dilutive capital from AstraZeneca to extend our expected cash runway into 2029. It provides an additional $25,000,000 at the next milestone payment, which is BLA acceptance, and thereby increases our total remaining milestones to up to $195,000,000 from $170,000,000 previously, and we retained the majority of our royalty interest, leaving our economics fundamentally intact. So both before and after the deal, we remain eligible for up to mid-single-digit tiered royalties from rilvegostomig. We believe this deal allowed us to unlock value today, continue advancing our innovative immuno-oncology pipeline including COM701, GS-0321, and our early-stage pipeline, and it allows us to reach both internal and partnered catalysts, all of this without compromising our long-term upside in rilvegostomig, a potentially multibillion-dollar asset. And to put this into context, rilvegostomig is being advanced by AstraZeneca in a broad late-stage development program, including 10 active Phase III trials. AstraZeneca previously estimated a non-risk-adjusted peak annual revenue potential of more than $5,000,000,000 for rilvegostomig. Next, let me briefly touch on the leadership transition. I am excited and privileged to have had the opportunity to step into the role of President and CEO in September 2025. With Anat now serving as Executive Chair, we believe we have a leadership structure that combines operational focus and strategic continuity, a strong foundation for Compugen Ltd.'s next phase of growth. Turning now to clinical execution, starting with COM701. In the MAIA ovarian clinical trial in platinum-sensitive ovarian cancer, we initiated dosing and expanded our trial footprint globally by opening trial sites in the U.S., France, and Israel. I also want to highlight the data we presented at ESMO last year from the COM701 pooled analysis of Phase I clinical data in platinum-resistant ovarian cancer. The pooled analysis demonstrated that COM701 was well tolerated and showed consistent durable responses in patients with heavily pretreated platinum-resistant ovarian cancer, particularly in those without liver metastasis, representing patients with lower disease burden and potentially less immunosuppressive tumor microenvironment. We believe this data supports the rationale for advancing COM701 in the earlier-line settings as maintenance therapy in platinum-sensitive ovarian cancer. These programs underscore our commitment to pioneering innovative biology. Regarding GS-0321, our partnered program with Gilead, we initiated dosing in a Phase I dose-escalation and expansion trial and subsequently presented a trial-in-progress update at SITC. Overall, we believe that our achievements in 2025 set the stage for continued execution in 2026, which transitions me nicely to our 2026 strategic priorities, which include continued execution of the MAIA ovarian adaptive trial. The first sub-trial is a randomized trial comparing COM701 monotherapy to placebo in the maintenance setting of platinum-sensitive ovarian cancer, a setting where there is a significant unmet medical need and no current standard of care. We are on track to have an interim analysis in Q1 2027. This data could lead to maintenance monotherapy path-to-registration and form a potential backbone for drug combinations in this population. We are also enabling a potential broader clinical development plan across ovarian cancer lines of treatment and in other indications where clinical signals were seen for COM701. In parallel, we are executing on our Phase I trial with GS-0321. As a reminder, the first patient was dosed in January 2025. GS-0321 is our potential first-in-class anti–IL-18 binding protein antibody licensed to Gilead. We believe that the key differentiator of GS-0321 is that it is not a cytokine, but an antibody harnessing cytokine biology for the treatment of cancer. It is a new and unique mechanism, and based on preclinical data, this approach may offer advantages on both safety and efficacy. Gilead has already paid €60,000,000 upfront and an additional $30,000,000 when we successfully achieved IND clearance. We are eligible to receive up to an additional $758,000,000 in future milestones and single-digit to low double-digit tiered royalties. The ongoing Phase I constitutes two parts: part one, dose escalation, and part two, dose expansion. In addition, we continue to track our partner AstraZeneca's progress very closely as they execute on their broad Phase III rilvegostomig program. Given the recent history in the TIGIT field, it is worth taking a moment to explain why we maintain confidence. For us, the answer is clear: antibody format matters, and clinical and combination strategy matters. So let me explain. On formats, rilvegostomig is an anti–PD-1/TIGIT bispecific antibody that has reduced Fc functionality. This design delivers coordinated inhibition of both PD-1 and TIGIT on the same immune effector cells, with cooperative binding resulting in greater efficacy than anti–PD-1 plus anti-TIGIT single-agent combination when tested in ex vivo patient-derived models of non-small cell lung cancer. In addition, this format, using reduced Fc functionality, may reduce the unwanted depletion of immune effector cells and maintain a favorable safety profile. On clinical strategy, AstraZeneca's trials are designed differently from some other companies' TIGIT trials and also include novel combinations like ADCs that have not been tested thus far. So to summarize, our confidence in rilvegostomig is based on its differentiation as a different drug format and a different clinical trial and combination strategy. Lastly, turning to our early-stage pipeline. With our current cash runway expected into 2029, 2026 will be a year of continued focus on our early-stage pipeline, which is managed by the largest team within Compugen Ltd. Unicigen is the AI/machine-learning-based computational engine that generated COM701, COM902, and GS-0321, and we remain committed to investing in this differentiated discovery platform. Before stepping back, let me summarize where we are today. We have a unique positioning and solid financial outlook that enable us to continue and leverage our computational drug target discovery engine to deliver the next generation of novel immuno-oncology assets. We have a clinical pipeline grounded in potential first-in-class immuno-oncology science, and we have two validating partnerships—AstraZeneca and Gilead—representing approximately up to $1,000,000,000 in potential milestones plus royalties. Our team is consistently striving to deliver at the highest levels. I am incredibly proud of what our team has delivered and equally excited about the opportunities ahead. Thank you to everyone at Compugen Ltd. for your dedication. I will now turn the call over to David for the financial update before we open the call for questions. Operator: Thanks, Eran. David Silberman: I am pleased to say that we are advancing in 2026 with a solid balance sheet and cash runway, assuming no further cash inflows, expected to fund our operating plans into 2029, and we anticipate using this runway as planned to advance our COM701 platinum-sensitive ovarian cancer trial, MAIA ovarian, and to support the progression of GS-0321 in the clinic, together with continued investment in our early-stage pipeline. Going into the details, I will start with our cash balance. As of 12/31/2025, we had approximately $145,600,000 in cash, cash equivalents, short-term bank deposits, and marketable securities. The cash balance at year-end 2025 included the $65,000,000 upfront payment from AstraZeneca for the monetization of a small portion of rilvegostomig future royalties. On the revenues front, we reported approximately $67,300,000 in revenues for the quarter ended 12/31/2025, and approximately $72,800,000 for the year ended 12/31/2025, compared to approximately $1,500,000 and $27,900,000 in revenues for each of the comparable periods in 2024. Revenues for 2025 include the upfront payment of $65,000,000 from AstraZeneca and a portion of the upfront payment and the IND milestone payment from the license agreement with Gilead, while the revenues for 2024 reflect a portion of the upfront payment and the IND milestone payment from the license agreement with Gilead and the $5,000,000 clinical milestone payment from AstraZeneca. Moving to expenses, R&D expenses for the quarter ended 12/31/2025 and for the year ended 12/31/2025 were approximately $5,500,000 and $22,800,000, respectively, compared with approximately $5,900,000 and $24,800,000 for the comparable periods in 2024. The decrease in 2025 was mainly due to lower clinical expenses resulting from winding down prior clinical trials, partially offset by an increase in clinical expenses related to the MAIA ovarian trial initiated in 2025. Our G&A expenses for the quarter ended 12/31/2025 and for the year ended 12/31/2025 were approximately $2,100,000 and $8,900,000, respectively, compared with approximately $2,200,000 and $9,400,000 for the comparable periods in 2024. Finally, on net profit, for the quarter ended 12/31/2025, we reported a net profit of approximately $56,800,000, or approximately $0.60 per basic and diluted share, compared to a net loss of approximately $6,100,000, or approximately $0.07 per basic and diluted share in the comparable period of 2024. Net profit for the year ended 12/31/2025 was approximately $35,300,000, or approximately $0.38 per basic and diluted share, compared with a net loss of approximately $14,200,000, or approximately $0.16 per basic and diluted share in the comparable period of 2024. With that, I will hand over to the operator to open the call for questions. Operator: Thank you. Ladies and gentlemen, we will now open for questions. If you wish to decline from the polling process, please press the appropriate key. If you are using speaker equipment, kindly lift the handset before pressing the numbers. The first question is from Daina Graybosch of Ernek Partners. Please go ahead. Rabeeb (for Daina Graybosch, Ernek Partners): Hi. This is Rabeeb on for Daina. First question I would have is, can you help us level-set on what to expect in the Q1 2027 update with COM701 in terms of what we expect to see in that update? And then the follow-up to that is, can you help us understand the timeline and what is required for that path to registration that you mentioned in the call? Thank you. Eran Ophir: Michelle, do you want to take it? Michelle Mahler: Sure. I am happy to take it. Thanks for the question. So the current trial is an adaptive trial design, and we expect that there will be data maturation in 2027, and regarding the timeline and what will be required for registration, it is going to really depend on the totality of the data. We are planning for success and would have to consider other subsequent plans or trials, which we are still in discussion on and not at this point in time ready to disclose. Eran Ophir: Yes, I think we can say at a high level, as we said in the past, that there are a few opportunities here. One is to continue if the data indeed is meaningful clinically. That can continue the path for the treatment as monotherapy. It can open a path for combination strategies in that population, and of course, because we know the trial signal also in PROC and other indications, a positive monotherapy signal in this trial also opens many other options. But I guess our first steps would be in that specific population following a positive readout. Operator: The next question is from Josh Nicholson of Stifel. Please go ahead. Josh Nicholson (for Steve, Stifel): Hey, team. This is Josh on for Steve. Could you just remind us of the cadence of potential outlying milestones for rilvegostomig and maybe just provide some color on the next trigger for a milestone payment upcoming? Thank you. David, do you want to take it? David Silberman: Yes, sure. Hi, Josh. Thank you for the question. As a reminder, we did the deal with AstraZeneca in December. We disclosed that our next milestone will be BLA acceptance, on which we will be entitled to an additional $25,000,000 on top of what we are already entitled to. So going forward, we will still be entitled to $195,000,000 in milestones from AstraZeneca under the rilvegostomig deal. Operator: We are having some technical issues. Just a moment, please. Hello? Can you hear us? Eran Ophir: Absolutely. Operator: Okay. So maybe the speakers just disconnected. We will move to the next question. The next question is from Swayampakula Ramakantha of HC Wainwright. Please go ahead. Swayampakula Ramakantha (HC Wainwright): Thank you. This is RK from HC Wainwright. Good morning, Eran. So I am trying to think through the ovarian trial. Previously you had stated you will have some interim analysis done in 2026. Now it has moved to 2027. I am just trying to understand the shift. Is it because you are adding additional centers, or is it because you see a slower accumulation of events than what you initially modeled for? Eran Ophir: Yeah. Thanks, RK. So we reported that shift already in the previous quarter, and the reason back then was a bit slower—by the way, it is not only a Compugen Ltd. issue—but again, for us, it was a bit slower opening of the major academic U.S. sites, which we are very glad that now all of them are open. Actually, now all the sites are open—all 28 sites are open. We mitigated for that. Gladly, we were approached by the Akaji Giniko group, which actually has experience in that specific patient population, and they approached us to contribute to the study. So gladly, they joined as well. We now have all the sites open, fully on track to have the readout in Q1 2027. Obviously, in any trial, we need to see that the events are accumulating as expected. Other than that, everything is on track, and the readout will continue to be in Q1 2027, as we reported also in the last quarter. So no change in this quarter for that. Swayampakula Ramakantha (HC Wainwright): Okay. And then in terms of the AstraZeneca relationship, obviously, recent monetization speaks to the alignment, to the deep alignment, that AstraZeneca wants to have with the drug. Are there any discussions of expanding the use of the COM902-derived TIGIT in an additional multispecific format within the AstraZeneca portfolio? Eran Ophir: So AstraZeneca controls rilvegostomig. We do not discuss with them their own plans. I mean, we did see recently—and this is, I think, illustrating the commitment for the program—we did see recently a new Phase III trial now in gastric in combination with claudin 18.2 ADC, which is now in clinicaltrials.gov. So this would be, when it is activated, the eleventh Phase III trial. So they are expanding with rilvegostomig. It is not specifically COM902, but rilvegostomig, which contains COM902. For COM902 specifically, we fully own it, and, obviously, it is a different opportunity that we can leverage in other collaborations. Probably AstraZeneca, with rilvegostomig, will move that one and not specifically COM902. Swayampakula Ramakantha (HC Wainwright): And then the last question from me is on the 0321. In terms of the data that is expected, would that be in any of the medical conferences? Or where would we see that data? And will we see more than just initial safety? Eran Ophir: So we initiated—the first patient was dosed in 2025. By our agreement with Gilead, obviously, when we report data, it has to be fully aligned with them. For now, we do not have guidelines, but typically—and also, I think what Gilead will do themselves—is to report it in a scientific conference, and typically it will include activity plus safety. But for now, we are not making any commitment because it will need to be in alignment with Gilead. Thank you. Operator: The next question is from Leland Gershell of Oppenheimer. Please go ahead. Leland Gershell (Oppenheimer): Hey, good morning. Thanks for taking our question. I am just wondering, as we await the update on 701 in about a year from now, 2027, just wanted to ask what you may plan to be presenting at the various oncology meetings this year—ESMO, SITC, and so forth. Can you give us a flavor of what we might see out of Compugen Ltd. through 2026? Thank you. Eran Ophir: Overall, from what we currently disclosed—and obviously, during the year, we might update it—from what we currently disclose, for the Gilead program, as I have just mentioned, we do not have any specific guidelines, but it could go along medical conferences along the year. AstraZeneca—and again, it is AstraZeneca's program and AstraZeneca's decision—but they do have some clinical readouts this year, and they might report them in some of the scientific conferences. They did not disclose yet when. And this is basically what we disclosed for this year. And, obviously, next year would be the MAIA study, which is an important one. Great. Thank you. Operator: This concludes the Q&A session and Compugen Ltd.'s investor call. Thank you for your participation. You may go ahead and disconnect.
Operator: Good morning, everyone, and welcome to Astrana Health, Inc. Fourth Quarter and Year End 2025 Earnings Call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session and instructions will be provided at that time. Today's speakers will be Brandon Sim, President and Chief Executive Officer of Astrana Health, Inc., and Chandan Basho, Chief Operating and Financial Officer. The press release announcing Astrana Health, Inc.'s results for the fourth quarter and year ended 12/31/2025 is available at the Investors section of the company's website at www.astranahealth.com. The company will discuss certain non-GAAP measures during the call. Reconciliations to the most comparable GAAP measures are included in the press release. To provide some additional background on its results, the company has made a supplemental deck available on its website. A replay of this broadcast will be available at Astrana Health, Inc.'s website after the conclusion of this call. Before we get started, I would like to remind everyone that this conference call and any accompanying information discussed herein contain forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by terms such as anticipate, believe, expect, future, plan, outlook, and will, and include, among other things, statements regarding the company's guidance, continued growth, acquisition strategy, ability to deliver sustainable long-term value, ability to respond to the changing environment, liquidity, operational focus, strategic growth plans, and acquisition integration efforts. Although the company believes that the expectations reflected in these forward-looking statements are reasonable, as of today, those statements are subject to risks and uncertainties that could cause the results to differ materially from those projected. There can be no assurance that those expectations will prove to be correct. Information about the risks associated with investing in Astrana Health, Inc. is included in the filings with the Securities and Exchange Commission, which we encourage you to review before any investment decisions. The company does not assume any obligation to update any forward-looking statements as a result of new information, future events, change in market conditions or otherwise, except as required by law. Regarding the disclaimer language, I would like you to refer to Slide Two of this conference call presentation for further information. With that, I will now turn the call over to Astrana Health, Inc.'s President and Chief Executive Officer, Brandon Sim. Brandon, please go ahead. Brandon Sim: Good morning. Thank you for joining us today. Astrana Health, Inc. delivered another year of record revenue, adjusted EBITDA, and free cash flow, extending our track record of consistent performance. In a year marked by regulatory recalibration, industry cost pressure, and broader market volatility, our model performed exactly as designed, demonstrating stability, predictability, and operating leverage. Our mission remains clear: to deliver high-quality, high-value, and accessible care to communities nationwide. We are building the nation's leading patient-centered, payer-agnostic healthcare platform, and our results reflect the advantages of that strategy. By empowering providers to deliver the highest quality care at the lowest total cost, we create durable value for patients, physicians, payers, and shareholders. The predictability of our delegated risk model, combined with our integrated care model, diversified payer and market exposure, and technology-driven leverage, provides clear visibility into long-term scalable growth. Periods of complexity tend to differentially reward operational excellence. In that environment, we expanded deliberately, strengthened our competitive position, and further advanced a business designed to compound consistently across cycles. I will begin first with highlights for 2025, then turn the call over to Chandan to review our financial results and guidance in greater detail, before we open the line for questions. In the fourth quarter, total revenue was $950.5 million, increasing 43% year over year, and adjusted EBITDA was $52.5 million, up 50% year over year. For the full year 2025, revenue reached $3.2 billion, adjusted EBITDA totaled $205.4 million, free cash flow was $104.5 million, and non-GAAP adjusted EPS on a fully diluted basis was $2.20, each a record for the company. Stepping back since 2019, through multiple regulatory cycles, evolving risk adjustment models, varying macroeconomic and cost trend conditions, and the global pandemic, Astrana Health, Inc. has grown revenue by 467%, representing a 34% compound annual growth rate. Over that same six-year period, adjusted EBITDA increased 79%, or 25% annually, and free cash flow grew 727%, or 42% annually. Taken together, this performance reflects the remarkable consistency and scalability of our model. It underscores the strength of our fully delegated care approach, where aligned physicians, disciplined risk management, and the purpose-built technology and AI-driven platform work together to deliver predictable clinical, financial outcomes over time. This sustained performance is the result of deliberate execution against a clear strategic framework quarter after quarter. First, we continue to grow memberships deliberately. We ended the year serving 1.6 million members in value-based care arrangements, driven by sustained demand from both payer and provider partners for coordinated, accountable care. Our expansion remains measured, grounded in disciplined underwriting and aligned partnership across all of our markets. We focus on cultivating physician leadership, partnering with high-quality payers, and deploying the Astrana Health, Inc. care model, enabled by our technology and AI-driven infrastructure, to scale with visibility and control. That disciplined approach was reflected in a constructive annual enrollment period, with mid single-digit growth in Medicare Advantage membership year over year, supported by strong alignment with our payer partners. More broadly, that disciplined growth translated into strong performance across both our core and expansion markets. California revenue grew 50% year over year, reflecting continued strength in our foundational market. Outside of California, revenue grew 90% year over year as newer markets scaled. At year end, approximately 19% of total revenue was generated from membership outside California, reflecting continued geographic diversification and a progressively more balanced revenue base. Importantly, this growth is anchored in strong provider engagement across the platform, with high retention and disciplined provider network expansion. Second, our growth continues to be anchored in disciplined risk progression. For more than 30 years, we have taken a measured approach to assuming full risk, entering arrangements only when rates are aligned with underlying medical cost trends and when the data infrastructure and clinical programs are in place to manage that risk responsibly. That philosophy underpins the long-term stability and predictability of our business. In the current environment, some participants have responded to elevated medical cost trends in the industry by retrenching from risk exposure. That can be prudent when rate alignment or operational readiness is constrained. But our model was designed to operate through complexity. Our performance is driven by care delivery infrastructure, technology, physician alignment, not by coding intensity or arbitrage. We prioritize repeatable economics over transient performance. The strength of our care model, payer relationships, and technology platform enables us to secure appropriate economics and manage medical cost volatility across cycles with discipline and predictability. As a result, we are able to expand thoughtfully into full-risk structures even as others recalibrate. We are still on track for approximately 80% of our revenue, and more than 36% of our owned membership, to be in full-risk arrangements by the end of the first quarter 2026, reflecting alignment with patient outcomes while maintaining clear control over the pace and structure of that risk assumption. Consistent with prior commentary, several full-risk contracts that were expected to commence in mid-2025 instead began in early 2026 as part of the coordinated implementation process. The economics of those arrangements were agreed in line with our underwriting standards, and we are seeing encouraging early performance as they come online. Third, we continue to deliver strong clinical outcomes while maintaining disciplined control over medical cost trend in 2025 across both our legacy Astrana Health, Inc. and legacy Prospect businesses, in both the fourth quarter and full year. Medical cost and utilization trends remained well controlled. Legacy Astrana Health, Inc. performed slightly ahead of our projected 4.5% cost trend, and legacy Prospect met expectations. This performance underscores the durability of our delegated care model and our ability to manage medical cost volatility across diverse populations. Engagement remains a core driver of performance. Annual wellness visit completion rates approached 80% in our legacy Astrana Health, Inc. markets, with meaningful gains in newly integrated Prospect populations. This level of engagement enables earlier intervention, tighter care coordination across care settings, and more predictable cost management. These outcomes are powered by our proprietary platform, which embeds real-time insights, next-best-action workflows, and automated authorization processes directly into provider and care team workflows, increasingly supported by AI agents. More than two-thirds of prior authorizations are automatically approved, improving access while reducing administrative burden. Within our delegated risk model, providers operate with transparent performance data and financial alignment, reinforcing accountability at the point of care. We observe a 24% higher gap-closure rate and a 30% higher annual wellness visit completion rate compared to less engaged providers. These differences translate into stronger quality performance and more consistent financial results, and we expect similar improvements over time as newly integrated populations adopt our platform. We see this translate into predictable cohort maturation in our expansion markets. Southern Nevada achieved run-rate profitability in 2025, with a 20% year over year improvement in medical loss ratio. This improvement reflects the scalability of our delegated care model which we have observed across prior expansion markets. As we launch our full-risk delegated model in Texas this year, we expect to see a similar maturation curve over time. Fourth, our Astrana Health, Inc. care enablement technology platform continues to drive meaningful operating leverage across the enterprise, enabling disciplined, capital-efficient growth in new markets while expanding margins within our existing business. On the growth side, our platform makes the J-curve shallower and accelerates time to profitability as we scale into new markets, by standardizing and automating workflows, accelerating clinical integration, and embedding real-time data and risk infrastructure from day one. This was demonstrated by the successful onboarding and integration of a new care enablement client and its affiliated hospital at the beginning of the year. We also launched a fully delegated partnership with a large payer partner in Texas on January 1, expanding our delegated Medicare Advantage footprint with limited incremental overhead. Within our existing operations, we continue to drive measurable efficiency gains. G&A as a percentage of revenue was 6.8% in 2025, down 75 basis points year over year despite $26 million of one-time transaction-related costs, and down 110 basis points on an adjusted basis. This reflects operating leverage embedded in our platform as revenue scales. We believe our model supports continued EBITDA margin expansion as we scale revenue and continue to embed AI-driven automation across the enterprise. In combination, these four pillars—disciplined membership growth, measured risk progression, consistent clinical execution, and technology-driven operating leverage—form a model that is structurally positioned to expand margin and share across cycles. Before turning it over to Chandan, let me briefly address two important items. First, on Prospect, integration remains on track and continues to validate the strategic rationale for the transaction. During the fourth quarter, we completed the standardization of financial reporting across the combined organization, established live visibility into medical economics and utilization trends, and aligned clinical workflows and organizational structure under the Astrana Health, Inc. care model. As a result of this progress and early performance, we now expect to achieve the high end of our previously communicated $12 million to $15 million in annualized synergies over the coming quarters. Provider engagement has remained strong throughout the integration. More than six months after closing, we continue to see over 97% gross retention among Prospect primary care physicians. This level of stability reflects strong continuity of provider relationships and alignment with the Astrana Health, Inc. model. Looking ahead, I would also like to address the 2027 Medicare Advantage Advance Rate Notice. While the industry-level rate update was approximately flat, our preliminary analysis suggests that the impact to Astrana Health, Inc. is expected to be meaningfully more favorable than for the industry at large, reflecting the structure of our care model and strengthening our competitive position in the current environment. First, we do not rely on audio-only visits or unlinked chart reviews for risk adjustment. CMS has estimated that the disallowance of these diagnosis sources represents a 1.53% headwind to the industry. But given our encounter-based longitudinal delegated care model, we expect our exposure to this change to be minimal. With respect to the risk model revision and normalization, CMS estimates an industry headwind of 3.32%. Based on our initial actuarial review of the updated risk model coefficients, we expect a materially lower impact than the industry-wide estimate given our historically conservative approach to risk adjustment and our emphasis on preventive care, quality performance, and medical cost management. More broadly, this environment favors organizations that generate performance through clinical execution and disciplined cost control, rather than coding intensity. That is precisely how Astrana Health, Inc. operates. As regulatory changes level the playing field with respect to risk adjustment, we believe the strength of our clinical infrastructure and technology platform positions us to widen our advantage over time. Over three decades and multiple regulatory cycles, we have demonstrated consistent growth and sustained profitability. That track record gives us confidence in the durability of our model and the diversity of our revenue streams. As we enter 2026, we expect continued disciplined membership growth, measured risk progression, stable medical cost performance, and further operating leverage from our technology platform. We are operating from a position of structural strength. Our platform is designed to expand margins, generate consistent free cash flow, and gain share across regulatory cycles. Our history demonstrates that resilience clearly. In an environment where underwriting discipline, physician alignment, and clinical execution matter more than ever, we believe Astrana Health, Inc. is structurally advantaged. We see opportunity, not constraint, to continue compounding growth and advance our mission to provide high-quality, high-value care to the communities we serve. With that, I will now turn the call over to Chandan Basho to review our financial results and outlook in greater detail. Chandan Basho: Thank you, Brandon, and good morning, everyone. Our fourth quarter and full-year results reflect disciplined execution during a period of significant scale and integration. We successfully closed the Prospect Health acquisition while continuing to invest in our platform and maintaining solid performance across the legacy Astrana Health, Inc. and Prospect businesses. Before turning to the financial highlights, I wanted to address our annual report filing timeline. We will be filing a Form 12b-25 due to a material weakness in internal controls over financial reporting related to acquisition and purchase accounting processes. The matter relates to the timing and documentation of certain control procedures. The financial results reported today are in accordance with U.S. GAAP, and the matter did not result in any material misstatement or restatement of prior periods. We have already implemented enhancements to our accounting processes and expanded our team's resources. We will continue to invest in the accounting function in order to complete remediation on an expedited basis. We expect to file the 10-Ks within the 15-day 12b-25 extension period. We are pleased with the performance of the business in the fourth quarter and full year of 2025. Total revenue for the fourth quarter was $950.5 million, up 43% versus the prior-year quarter, driven by the full-quarter contribution from Prospect and continued organic growth in our Care Partners segment. For the full year 2025, revenue was $3.2 billion, representing 56% year-over-year growth and at the high end of our guidance range. Adjusted EBITDA for the fourth quarter was $52.5 million, up 50% versus the prior-year period. Adjusted EBITDA for the full year was $205.4 million, up 21% year over year. Medical cost performance in the quarter for both legacy Astrana Health, Inc. and legacy Prospect remained well controlled for both and slightly better than our expectations, continuing to reflect the differentiated outcomes of our fully delegated, technology-enabled care model. For the fourth quarter, net income attributable to Astrana Health, Inc. was $6 million and earnings per share was $0.12, compared to negative $0.15 in the prior-year period. Adjusted earnings per share for the quarter was $0.54, and for the full year 2025, adjusted earnings per share was $2.20. Turning to cash flow and the balance sheet. For the full year 2025, free cash flow totaled $104.5 million, with an over 50% conversion rate relative to adjusted EBITDA. This exceeded the high end of our previously communicated conversion range and reflects strong underlying cash generation. We continue to expect strong free cash flow growth into 2026 as new full-risk contracts ramp, working capital normalizes, and integration-related investments decline. We ended the quarter with $429.5 million of cash and $648.7 million of net debt. Our net leverage ratio on a pro forma basis was 2.6 times. We continue to expect meaningful deleveraging over the next twelve months through profitable growth, free cash flow generation, and disciplined debt reduction. During the fourth quarter, we repurchased 634,000 shares at an average price of $22.23, reflecting our disciplined capital allocation framework and confidence in the long-term value of the business. In addition, the Board has increased the maximum aggregate amount of shares that may be purchased on the company's existing stock repurchase program from $50 million to $100 million. The company may determine to continue to make repurchases under the program following the filing of the 10-Ks. Entering 2026, we expect continued revenue growth and adjusted EBITDA expansion driven by growth across our core and expansion markets, ramping full-risk contracts, realization of Prospect synergies, and sustained cost discipline. While medical cost trends remain elevated across the industry, our disciplined contracting approach, diversified payer mix, and proven clinical model position us to manage these pressures while preserving margin discipline and cash flow generation. For the full year 2026, we expect revenue in the range of $3.8 billion to $4.1 billion, adjusted EBITDA between $250 million and $280 million, and free cash flow between $105 million and $132.5 million. For the first quarter of 2026, we expect revenue between $900 million and $1.0 billion and adjusted EBITDA between $60 million and $70 million. The midpoint of 2026 guidance reflects our operating plan. The low end assumes a stacked downside case rather than a shift in underlying execution or operating trajectory. Our guidance reflects a deliberately prudent planning framework. On the headwind side, we have embedded expected declines in Medicaid and exchange enrollment, adverse selection associated with expected Medicaid and exchange disenrollment, losses associated with new cohorts in expansion markets, incremental new market entry costs, conservative medical cost trend assumptions, and zero contribution from the California Hospital Quality Assurance Fund (HQAF). On the tailwind side, we have modeled improved 2026 Medicare Advantage rates, realization of Prospect synergies, continued maturation of full-risk cohorts, and ongoing operating efficiencies driven by automation and AI deployment. Performance to the higher end of our range would be driven primarily by medical cost trends outperforming our conservative assumptions, lower-than-modeled Medicaid and exchange disenrollment, stronger-than-expected new market maturation, and potential continuation of the HQAF program. Taken together, our guidance reflects disciplined underwriting, embedded conservatism, and confidence in the durability and scalability of our operating model. With that, operator, we will now open for questions. Operator: Thank you. We will now be conducting a question-and-answer session. Our first question is coming from Ryan Daniels from William Blair. Your line is now live. Matthew Contarion: Hello, this is Matthew Contarion. Thank you for taking the questions. So given that you finished this year with cost trends in line with expectations for the legacy Astrana Health, Inc. business and the Prospect Health business, what are the expectations of cost trends for 2026? And I know in your prepared remarks, you talked about the conservative cost trend you took for 2026. But if you could share a number, that would be great. And then how are you expecting the cost trend across the different patient segments for 2026? If you could provide some color into what went into the cost trend guide for the different patient segments and their expectations, that would be great. Brandon Sim: Matthew, good morning. Thank you for joining the call. And please tell Ryan hello. On 2025, as we mentioned on the call, we did come in slightly ahead of expectations for our trend, which you may recall was in the mid-4% range, blended across our lines of business. Going forward in 2026, we are conservatively embedding assumptions of just over a 5% trend, a slight increase due to our expectations, as Chandan outlined in the prepared remarks, of potential Medicaid and exchange disenrollments, as well as potential adverse selection related to those disenrollments. However, we do expect that trend continues to be well controlled in that mid-single-digit range, and our estimates and guidance are predicated on that conservative trend assumption. In terms of per line-of-business split of that trend assumption, similar to 2025, we expect Medicare Advantage to be slightly lower than that and Medicaid and commercial and exchange to be slightly higher than that. Hopefully, that helps. Operator: Thank you. Our next question is coming from Michael Hopp from Baird. Your line is now live. Michael Hopp: Thank you. On the 2026 EBITDA guide range, $250 million to $280 million feels a little bit wider than your typical cadence. I know, Chandan, you listed out the headwinds and tailwinds, but I am trying to get a bit more comfort on the bridge. So I was wondering if you could provide some extra quantification. The way I am thinking about it is a $205 million jump-off. Get the full annualized Prospect, so now you are up to, call it, $246 million. Get about $15 million, if I am not mistaken, coming back from those negotiated full-risk contracts. So you are at $261 million. That is what I can bridge so far. The pieces I cannot quantify are, like, how much of the $12 million to $15 million Prospect synergies can you realize this year, expected G&A improvement from the AI and efficiency, and then lastly, those expected exchange and Medicaid headwinds, how much is in your guide and how much offset is from positive MA rates, organic growth? Just more color there, and whether you think I am missing any notable pieces. Thank you. Brandon Sim: Hey, Michael. Good morning. Thanks for the question. This is Brandon. With regards to the range of the guide, we do believe it is consistent with past ranges. I believe last year's range was around just over 10% of the guide, and this year it is also around 11%. So it is a similar percentage as a range—percentage of the range is a similar percentage of midpoint, that is. That being said, happy to provide more color on the earnings call bridge. We ended the year just above $205 million of adjusted EBITDA. There is obviously the run-rate full-year impact of Prospect, as well as synergies coming in on the high range—the $12 million to $15 million annualized. We expect in the high single digits contribution for the 2026 full year because of the phasing in of those synergies over time. We also expect in the mid-$20 million range in terms of forward conversion and contract rates, as well as $5 million—$5 million to $10 million—high single digits in terms of expansion market improvements. We expect in the tens of millions, and happy to quantify that more, you know, as well, on Medicare rate versus acuity, and that is a tailwind, not a headwind. On the headwind side, however, in terms of Medicaid enrollment and the rate-acuity mismatch, we are expecting approximately a 1% to 1.5% negative spread on Medicaid rate/acuity, as well as conservatively assuming 10% to 15% Medicaid disenrollments throughout the year. And so doing the math there, that is, call it, a negative $20 million or so impact, and perhaps another mid-single-digit impact for exchange enrollment and mix. There are some other puts and takes, including, as Chandan mentioned, assuming $0 for the Hospital Quality Assurance Fund for California, which is a mid-single-digit impact as well. And so adding all of those together, with some puts and takes around the edges, you do get from the $205 million number to the midpoint of guide, which is $265 million. And as Chandan implied in the prepared remarks, the low end of that range really is a stacked downside case. It assumes that all of the variables are negative at the exact same time, and we view the midpoint of the range, as Chandan mentioned, to be more reflective of our operating plan at this time. Operator: Thank you. Our next question today is coming from Jailendra P. Singh from Truist Securities. Your line is now live. Jailendra P. Singh: Thank you, and thanks for taking my questions. I want to follow up on your comments around the 2027 MA Advance Notice. Thanks for the color there. Are you willing to put a stake in the ground in terms of what the all-in rate update means for you guys, like, Advance Notice? And in the event rates do not improve in the final notice—hopefully they do—but if they do not improve, how do you think about your ability to hit your 2027 EBITDA target? My point is that where we stand today, just wondering if you still feel good about that $350 million target? Brandon Sim: Hey, Jailendra. Good morning. Thank you for the question. On the Medicare Advantage rate notice, as I mentioned in the prepared remarks, we do believe that Astrana Health, Inc. will be less materially impacted—or will be more positively impacted, that is—by the impact of the Advance Notice versus the industry at large. As I remarked, the 1.53% that CMS has embedded in industry average is related to disallowed diagnoses that Astrana Health, Inc. does not rely on for its risk coding practices. As we mentioned in the past, Astrana Health, Inc.'s risk adjustment factor across its Medicare Advantage membership is just over 1.0, which is the national average for Medicare Advantage. And so the risk model renormalization and the risk model coefficients, which were published along with Advance Rate Notice, are not a 3.5% or 3.3% headwind as CMS has suggested on average for the industry. A reminder that these 3.32% and 1.53% numbers are industry averages, not necessarily the impact for any given organization. And so when our actuarial team, for example, used the newly revised risk model coefficients on our HCC profiles, we found that, in combination with the renormalization factor, that was not as large of an impact. We are not willing to necessarily quantify that at the moment, because these risk factors could obviously still change. The coefficients could still change, and our HCC behavior—our providers—could change. But we do believe it places a great floor for us in terms of the maximum negative impact that this could have for us. If nothing changes about the Advance Rate Notice, as you asked, we still believe that rates should be a positive, you know, 2.5% to 3% as it relates to Astrana Health, Inc. as an organization, which, given our industry-leading ability to control Medicare Advantage cost trend, should position us for either a margin-flat or only slightly margin-dilutive year even in 2027, even in the face of contracting rates for the industry at large. This is not even including changes that payers may make, such as changes to benefit design, reducing benefits in order to protect their profitability pools. With regards to the 2027 guide, we continue to believe that the 2027 guide is within the range of outcomes. That being said, much has changed in the world since we put that guidance out, I think, over a year ago now, and we will continue to operate the business in a rational way in order to optimize for medium- and long-term value. Thank you, Jailendra. Operator: Thank you. Our next question today is coming from Craig Jones from Bank of America. Your line is now live. Craig Jones: Great. Thank you. Maybe to follow up on what we think might happen on the final rate notice, Brandon. So we saw, like, you know, comments out of UNH indicating that the 5% trend CMS used should be 9% to 10%, even MedPAC seemed to indicate it might be going higher. An opinion on what that rate should have been for the national average and then maybe what you think CMS will actually end up doing for the final notice? Thank you. Brandon Sim: Thanks for the question. We have been working very hard, along with other organizations, to advocate for a constructive rate notice environment so that we can continue providing great care with great value to American citizens. That being said, it is hard for me to prognosticate necessarily. We do believe that effective growth rate should be in the high single-digit range, and we have been in contact with CMS in order to inform them of those views and explain how the actuarial analyses and the math might support that view. That being said, it is very difficult for me on this call to predict what would happen, but I would say that we would agree with industry consensus that the effective growth rate should be in the high single digits. That being said, we are very supportive of efforts to reduce risk coding as a differentiated competitive advantage. We believe that clinical efficacy and efficiency should be the competitive advantages that organizations have when taking risk, rather than risk model gamification. So we are generally broadly supportive of changes to the risk model to make the playing field more equitable and fair for all care delivery organizations. Operator: Thank you. Our next question today is coming from David Michael Larsen from BTIG. Your line is now live. David Michael Larsen: Hi, congratulations on a good quarter and year. You talk a little bit more about Prospect. It is sort of my understanding that this hospital that you now own, a portion of it, is Astrana Health, Inc. members where you are bearing risk. What percentage of Prospect revenue and earnings is fee-for-service versus risk? And then within that risk pool, how are your margins coming along? And can you just remind us of the expected EBITDA contribution from Prospect? Thanks very much. Brandon Sim: Good morning, David. Thank you for the question. You are right in that there is one acute care hospital, which we report as part of the Care Delivery segment. That being said, the vast majority of Prospect revenue maps to what we would call the Care Partner segment and has been reported in the Care Partner segment, similar to the legacy Astrana Health, Inc. business. And so it is not a large portion of the Prospect revenue that is fee for service. I would say approximately 10% to 15% is fee for service—that is my guess. I will have that confirmed for you. That being said, I think that Prospect integration continues to be strong. As I mentioned earlier, provider engagement is extremely strong and retention is strong, with over 97% gross retention among Prospect PCPs. And the hospital operates in a very much managed care setting, which means that it is serving Prospect—now Astrana Health, Inc.—membership as well as membership from other managed care organizations in a way that allows us to optimize for quality of care, as well as deliver value for our physicians, our patients, and our care partners. Operator: Thank you. Our next question today is coming from Ryan M. Langston from TD Cowen. Your line is now live. Christian Borgmeier: Hi, good morning. This is Christian Borgmeier on for Langston. Could you provide color on the nature of those AI tools that represent the tailwind for 2026? And then how are you thinking about sort of the AI opportunities for Astrana Health, Inc. over the next couple of years, beyond 2026? Brandon Sim: First, clarifying my comment on the last question: actually closer to the 10% number, so very similar in terms of fee-for-service versus value-based revenue percentages to the legacy Astrana Health, Inc. business. On the AI question, very excited about the AI tools that are being developed on a day-to-day basis here at Astrana Health, Inc. Of course, I would first want to comment that in other parts of the country, where payers and providers are not as seamlessly coordinated in a unique delegated risk payor-provider model such as the one that we run here at Astrana Health, Inc., there is an escalating war, so to speak, in terms of using AI to increase reimbursement and selectively push down reimbursement. We believe that these are nonproductive items for the American healthcare system. We believe that we must use AI to fulfill its promise and allure of lowering healthcare costs, not increasing it, and that has been the focus for us as we develop AI tools here at Astrana Health, Inc. As a reminder, we have over 100 U.S.-based data scientists, machine learning engineers, AI engineers, software engineers, and staff supporting our AI efforts to build a fully proprietary platform using state-of-the-art AI technology that is being developed on a day-to-day basis. Our AI software platform includes automated tools for payer-related functions, such as automating and improving prior authorizations much more quickly and giving members prior authorization approvals in hand on their phones in a text message during the visit itself, right after the conclusion of the visit, so that they have access to specialty and follow-up care immediately. We have built AI tools for automatically processing and adjudicating claims, as well as ensuring that fraud, waste, and abuse is minimized in terms of the revenue cycle and reimbursement process. And we have also built AI tools around other parts of the payer-delegated functions such as credentialing, eligibility, and more. On the provider-facing side, we built a suite of AI tools that allow providers to have access to real-time data and insights both at the point of care and for our care teams so that there is continuity of care between episodic visits, which is consistent with the Astrana Health, Inc. care model and longitudinal care model that we have developed for over 30 years here at Astrana Health, Inc. That means that providers have access to next-best-action workflows, they have access to real-time claims and utilization data, as well as real-time insights into where patients might be high risk in their given panels. That same information is also piped to our care teams—hundreds of clinical staff that we employ—that also take care of members, engage them post discharge, engage them in transitions of care, and ensure that they are being routed appropriately in the right time frame to the appropriate site of care. In aggregate, we believe that this AI infrastructure that we built not only allows us to execute our care model in a consistent and scalable way from market to market, including our expansion markets, but also allows us to reduce G&A over time, which is shown in the over 100 basis points of adjusted G&A improvement on a year-to-year basis, even as revenue grows very strongly year over year. We are very excited about the potential going forward. We expect further G&A improvements as a percentage of revenue, as well as consistent scalability and cohort maturation in our expansion markets. Operator: Thank you. Our next question today is coming from Matt Shea from Needham & Company. Your line is now live. Matt Shea: Hey, thanks for taking the question. I wanted to touch on the Care Enablement business. Last quarter you talked about a robust pipeline here. Would love to get an update on that. Maybe comment on the win to start the year. And are there any other late-stage deals in the pipeline that might convert in 2026 or any deals contemplated in the guide? And then on the gross margins, how should we think about the right level for the Care Enablement business? Can we get back to 50% plus? Or is this lower level sort of the near-term expectation for the combined business? Thanks. Brandon Sim: Thanks for the question. On the Care Enablement business, we are pleased to have onboarded the new client that we discussed last year as smoothly at the beginning of this year. There continues to be a pipeline for care enablement. Clients are obviously longer sales cycles given the extensive nature of the integration and moving infrastructure to the Astrana Health, Inc. infrastructure. That being said, we do think that there is a strong pipeline of care enablement clients and we continue to actively develop that business. On EBITDA margins, we do think that over the last couple of quarters, we have operated at the 20% to 25% EBITDA margin range, and we expect that to be the correct EBITDA margin range going forward for the Care Enablement business. Operator: Thank you. Our next question is coming from Andrew Mok from Barclays. Your line is now live. Andrew Mok: Hi, good morning. You mentioned Medicaid and exchange disenrollment as drivers of the higher trend this year. Can you share what you are expecting from a disenrollment perspective for each of those business lines and what level of visibility you have into those declines at this point in the year? Thanks. Brandon Sim: Thanks for the question, Andrew. On Medicaid, I think I mentioned in an earlier answer, we are expecting approximately around the 10% range in disenrollments, plus or minus a few percent in terms of our base and more aggressive cases, as well as some rate-acuity mismatch due to potential adverse selection baked into our 2026 guidance. On exchange, we are expecting in the low tens of percentages of decline. Of course, we are not necessarily seeing that at the moment, but that could change as automatic re-enrollees see the higher premiums, and we are actively watching that concern. On Medicaid, we are actively seeing enrollment on a monthly and real-time basis. Historically, we have lost members in Medicaid due to the effects of redeterminations at around 0.5% to 1% a month, and that is the assumption going forward as well. Operator: Thank you. Our next question today is coming from Matthew Dale Gillmor from KeyBanc Capital Markets. Your line is now live. Matthew Dale Gillmor: Hey, thanks for the question. I wanted to follow up on the Prospect integration, but more focused on the member engagement metrics. I think Brandon mentioned that legacy Astrana Health, Inc. wellness visits are up to 80% and Prospect is gaining. Can you give us a sense for the AWV improvement you are driving at Prospect? What are some of the key systems and processes that are behind that? And how that might affect cost trend in your results in 2026 and beyond? Sure thing. Thanks so much. Brandon Sim: Thanks for the question. On Prospect, while it is early—we closed the deal in July 2025—we are already merging the two organizational structures, the clinical side and the quality teams. We are ensuring that they are engaging in the exact same care processes. They are using our technology platform to ensure that they understand, and that we understand, where the gaps in care are for our patients, and using our engagement tools such as our automatic calling systems, our care delivery sites, and the legacy Prospect care delivery sites in order to get out in front of the patients and into the community to encourage higher annual wellness visit rates. To be clear, it is not that legacy Prospect was doing a poor job engaging members. They have been running a very successful business—had run a very successful business for over 30 years as well—and a profitable one also with high quality. And so I think with the combined strength, infrastructure, and technology enablement of our platform, we really will expect strong annual wellness visit engagement and quality score growth in the legacy Prospect business. That being said, it is a bit early to share numbers, but we will certainly be sharing that as the year progresses. And, as a reminder, we do continue to expect on the high end of the range in terms of synergies because of the advanced state of the integrations thus far. Operator: Thank you. Next question today is coming from Gene Mannheimer from Freedom Capital. Your line is now live. Gene Mannheimer: Thanks. Good morning. Congrats on a good finish to 2025. I just wanted to ask, with respect to the guidance, is there any seasonality to it that you want to call out in particular? And is this guidance all organic? That is to say, is there any tuck-in M&A contemplated? Thank you. Brandon Sim: Thanks for the question, Gene. To answer the latter question first, there is no planned M&A in the currently provided 2026 guidance. While the company reserves the right, certainly, and we are seeing a lot of opportunities on the market at this time, we will evaluate these opportunities, as well as the opportunity to buy back our own stock, according to our capital deployment guidelines and models internally from the finance team. But there is no M&A currently embedded in the 2026 guidance. In terms of the cadence, we expect, as in prior years, that the third quarter is a stronger quarter than the other quarters. We also guided to Q1 as well, and so we expect that cadence to hold up into the remainder of this year. Operator: Thank you. We have reached the end of our question-and-answer session. I would like to turn the floor back over for any further or closing comments. Brandon Sim: Thank you very much, operator. Thank you, everyone, for joining the call. We believe that our delegated care model is built to compound through complexity. We are excited to take on this year for the opportunities that abound, and we look forward to continuing to create value for our patients, our providers, payer partners, and shareholders. If you have any questions, please feel free to reach out to investors@astranahealth.com and have a wonderful week. Thank you. Operator: Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.
Operator: Good morning, and welcome to today's conference call to discuss Uniti Group Inc.'s fourth quarter and full year 2025 earnings results. My name is Gigi, and I will be your operator for today. Today's call is being recorded, and a webcast will be available on the company's Investor Relations website at investor.uniti.com, beginning today and will remain available for 365 days. At this time, all participants are in a listen-only mode. Participants on the call will have the opportunity to ask questions following the company's prepared comments. It is now my pleasure to introduce Bill DiTullio, Uniti Group Inc.'s Senior Vice President of Investor Relations and Treasurer. Please begin. Thank you, Gigi. Bill DiTullio: Good morning, everyone, and thank you for joining today's conference call to discuss Uniti Group Inc.'s fourth quarter and full year 2025 results. Speaking on the call today will be Kenneth A. Gunderman, our CEO, and Paul Bullington, Uniti Group Inc.'s CFO. John Harrobin, President of Kinetic, will also be joining us this morning during Q&A. Before we get started, I would like to quickly cover our safe harbor statement. Please note that today's remarks may contain forward-looking statements. These statements include, but are not limited to, statements regarding Uniti Group Inc.'s fiber build strategy, the business's growth potential, our 2026 outlook, and other statements that are not historical facts. Numerous factors could cause actual results to differ materially from those described in the forward-looking statements. For more information on those factors, please see the section titled Safe Harbor Statement in the accompanying presentation and the Risk Factors section in our filings with the United States Securities and Exchange Commission. With that, I would now like to turn the call over to Kenneth. Kenneth A. Gunderman: Thanks, Bill. Good morning, everyone, and thank you for joining. 2025 was a landmark year for Uniti Group Inc. We successfully closed our transformative merger with Windstream, establishing us as the premier insurgent fiber provider. We have a scaled national wholesale fiber footprint that puts us in a rare company to win large-scale fiber infrastructure deals, and we are first or early with fiber to hundreds of tier two and tier three markets around the country. Within a few months of closing the merger, we have established a new insurgent leadership team with recent successful experience in fiber-to-the-home businesses. We reignited the fiber builds at both Kinetic and Fiber Infrastructure and have significantly lowered our cost of capital through several landmark ABS transactions. We are well positioned strategically. We have the right assets and plan and team in place to future proof our business. Slide five highlights the early success of our execution. In the fourth quarter of last year, we had terrific year-over-year revenue growth in our core fiber business of 13%. At Kinetic, where our transformational efforts are most acute, consumer fiber gross adds of 38,000 in the fourth quarter were the highest ever, and net adds of 28,000 were the highest in almost three years, bringing Kinetic churn down to our industry-leading levels at Uniti Group Inc. is a big focus of ours, and we have already started to see success, posting the best consumer fiber churn since the pandemic. Importantly, we also hit an inflection point in December and have heavily ramped up the build. Our business is being fueled by twin engines right now, including the fiber-to-the-home build at Kinetic and the hyperscaler AI build at Fiber Infrastructure. As we previously foreshadowed, the fourth quarter was a record quarter for us in terms of new bookings, bringing the largest customer contracts ever signed in our company's history. Our priorities will not change this year. We are going to ramp our fiber-to-the-home build at Kinetic targeting 450 to 500 new homes, almost doubling last year's activity, and approximately 700,000 consumer fiber subs by 2026. At Fiber Infrastructure, we are continuing to benefit from all the tailwinds driving wholesale fiber, including fiber-to-the-home, mobile wireless, satellite, and, of course, hyperscaler and generative AI demand, among others. For the hyperscalers, we expect to see even more activity in 2026 than last year. Importantly, we are now starting to show solid lease-up on these builds, demonstrating our discipline in making investments in this space. At Uniti Solutions, we are beginning to cross-sell products into our on-net fiber base at Uniti Fiber and Kinetic. Today, we estimate our managed services attachment rate to be below 0.1x at Uniti Fiber, and we think it could rise to be materially higher over time. Lastly, we are going to continue our track record of optimizing the balance sheet through disciplined access to the capital markets as well as through monetizing non-core assets, as Paul will discuss later. 2026 is an important inflection year for Uniti Group Inc., and in particular is a big investment year at Kinetic. As such, showing progress towards key goals is critical, and we previously committed to some milestones as highlighted on slide seven. We achieved our first milestone during the fourth quarter of greater than 50% of Kinetic subs now on fiber, and we are on track to achieve the other critical milestones throughout the course of this year and next. As such, we still expect to realize consolidated revenue and EBITDA growth in 2027. We are laser-focused on operational excellence, customer obsession, and intensely growing our fiber business and executing on our strategy of building fiber in unique locations, including overbuilding legacy networks and moving customers onto our own fiber. All of this combined with aggressively managing out-of-services will lead to growth. As slide eight illustrates, we expect to show progress on key metrics every quarter, and as you can see, we continued to grow in the fourth quarter of last year. We are well on our way to 3.5 million homes passed with fiber and 1.25 million fiber subs by 2029, and we are also closer to 90% of our revenue coming from our core business. Our progress on these metrics reinforces our conviction that we are creating substantial value for our shareholders every step of the way. As outlined on slide nine, in order to fully maximize the opportunity in front of us, we have to quickly transform Kinetic into an insurgent fiber provider as opposed to a traditional telecom operator. Within just months of closing our merger, we now have an insurgent leadership team in place. Led by John and Robin, we have hired over a dozen new leaders in construction, sales, operations, customer loyalty, and analytics that have relevant recent fiber-to-the-home transformation experience. We have also revamped our go-to-market strategy by focusing on the customer and eliminating obvious pain points, investing in high-impact value-added products and services, and expanding our direct sales channel partnerships. As I mentioned earlier, we have also successfully reignited the build by de-emphasizing subsidized builds and bringing in third-party crews to help us build more quickly. The metrics I went through earlier indicate that our transformation is showing early signs of success, and I am highly confident that will continue. With that said, we are in the early days. 2026 will not only be an investment year, but a major inflection year on several fronts. While we fully expect to hit some bumps along the road towards achieving these goals, in the end, we will be successful in accomplishing our long-term objectives. Turning to Fiber Infrastructure, the opportunity in wholesale fiber right now is generational in nature, and we are extremely well positioned with the right strategy and assets to capture our share in both dark fiber and wave. There has never been a better time to be a wholesale fiber provider. Broadband trends are accelerating across virtually all categories, especially AI-driven use cases, as evidenced by our record quarter of new bookings. Although we are building substantial amounts of new fiber, especially for the hyperscalers, we are doing it profitably, and our scaled national footprint gives us terrific lease-up potential, driving our blended anchor lease-up cash yields to 34%, the highest we have ever seen. We are in the early innings of an unprecedented fiber build within our industry. This opportunity continues to grow for us, so today, we are providing a multiyear view of what we believe the opportunity for Uniti Group Inc. is at this moment in time. First, I want to reiterate that our focus is on disciplined strategic fiber builds and related economics, the same disciplined growth we have applied in prior build cycles. The top table on the right side of slide 11 shows the early returns we are seeing on the build today. We have chosen to use IRRs versus cash yields due to how these deals are structured with large upfront payments from the customers. With that said, you can see that we are not only getting strong economics on the anchor, but the lease-up as well. We are highly confident that the lease-up will continue to grow substantially, especially since we are building dense fiber networks that pass key strategic locations within our footprint. When we build fiber for the hyperscalers, we plan to build inside our existing footprint, or we will look for ways to strategically expand our connected footprint. We are not building one-off networks. We are building networks where we have the ability to lease them up for many years into the future, and we see a long runway, especially when we start to hit the inference phase. We are also seeing benefits from some of these builds by using the back for our own business, including and especially at Kinetic. Slide 12 illustrates over the next three years, we expect to build approximately 6,000 new route miles of fiber, and we expect to get close to $1 billion of cumulative non-recurring cash revenue and up to $25 million of recurring cash revenue by 2028. Over the next three years, a meaningful portion of our economics is supported by executed contracts, including 100% of the economics included in our 2026 guidance. Beyond this three-year build cycle, we not only expect more fiber builds to come, but importantly, we expect to really ramp the lease-up. This will lead to additional non-recurring cash revenue of approximately $500 million after 2030. As a result, we expect to achieve a total return on our capital of 2x to 4x. With that, I will turn the call to Paul. Paul Bullington: Thank you, Kenneth. Starting on slide 14, I would like to review key fourth quarter highlights for both Kinetic and our Fiber Infrastructure segment. We saw another strong quarter with significant progress made across several fronts. Starting with Kinetic, we expanded our fiber network to pass an additional 80,000 homes with fiber, our highest level of new passings in over three years, ending the year with approximately 1,900,000 homes passed with fiber. Kinetic also added 28,000 net new fiber subscribers during the fourth quarter, ending the quarter with 535,000 total fiber subscribers. As Kenneth mentioned earlier, this was the highest level of net adds in almost three years, and total 20% from the prior-year period. Kinetic consumer fiber revenue grew 24% year over year during the quarter. This growth is being driven by strong adoption of our fiber-to-the-home product bolstered by the performance of the various marketing initiatives at Kinetic that target both our newer and more seasoned cohorts. At Fiber Infrastructure, we recorded consolidated bookings MRR of $1,700,000, tying the highest level on record. Slide 15 highlights the sustained momentum we are seeing within Kinetic Fiber. We achieved fiber penetration of 29% during the quarter, which was up 30 basis points sequentially and 150 basis points year over year. 5% year over year, these trends support higher lifetime value per passing and improving returns on our incremental capital spend for fiber. Turning to slide 16. The strong improvement in our cohort fiber penetration is being driven by highly targeted marketing initiatives being deployed by the Kinetic team. Penetration levels in our 2024 year-one cohort now exceed year-two penetration rates in our older cohorts. We expect to maintain or improve this trajectory going forward, and the team is now focused on executing the playbook to increase penetration in our older cohorts. Given our current trajectory, we remain confident that achieving our 40% terminal penetration target is very realistic. Slide 17 lays out our key targets for Kinetic in 2026. As Kenneth alluded to earlier, we are targeting to reach 2.3 to 2.35 million homes passed with fiber by the end of this year, which would bring fiber coverage within the Kinetic book over 50%, a significant milestone in our goal to reach 3.5 million homes by 2029. We also expect to end the year with between 675,000 to 700,000 fiber subs and realize $635,000,000 to $655,000,000 of consumer fiber revenue in 2026, an increase of roughly 25% to 30% from the prior year. In terms of cost per passing, we expect the cost going forward will likely be in the $900 to $1,000 range, resulting in a blended cost of $800 to $900 per passing over the life of the fiber build program. Slide 18 provides a pro forma view of Uniti Group Inc.'s consolidated results for the fourth quarter. Consolidated pro forma revenue was down approximately 5% year over year during the quarter, primarily driven by the continued decline in legacy copper and TDM services, and at Uniti Solutions. However, top-line growth in other parts of the business continued to be strong, with Fiber Infrastructure growing 6% year over year and Kinetic fiber-based revenue inclusive of consumer, business, and wholesale services growing 16% year over year. As we continue to execute on and accelerate our fiber overbuild plan, fiber services at Kinetic will deliver consistent, strong growth quarter over quarter. In addition to the information provided in our earnings materials, we have also included additional supplemental pro forma financial information on our Investor Relations website. Slide 19 further demonstrates that the growth in each of our core fiber lines of businesses has been very strong, and we expect that growth to continue given the superior nature of fiber as a service. With this pace of growth, we expect fiber to overtake legacy services as the majority of our revenue by 2026. As a reminder, we will continue to face headwinds from legacy services over the next couple of years that will weigh on consolidated revenue and EBITDA. With that said, there are three important points I would like to make. First, legacy services in no way diminish the value of our core fiber business. Secondly, within a relatively short period of time, the shift to higher fiber revenue will make legacy services revenue increasingly less material. And thirdly, in the meantime, Uniti Solutions is generating significant and predictable cash flow. Please turn to slide 20, and I will now cover our full-year 2026 outlook for the combined company. Beginning with Kinetic, we expect revenues and contribution margin to be $2,150,000,000 and $905,000,000, respectively, at the midpoint. We expect to deploy approximately $1,200,000,000 of net CapEx at the midpoint of our guidance as we accelerate our fiber build. At Fiber Infrastructure, we expect revenues and contribution margin to be $975,000,000 and $560,000,000, respectively, at the midpoint for full year 2026. Our outlook for net CapEx at Fiber Infrastructure this year is $140,000,000 at the midpoint of our guidance and represents capital intensity of approximately 14%. It is important to note that a meaningful driver in the year-over-year growth at Fiber Infrastructure is coming from dark fiber, high-hyperscaler IRU deals that are expected to be accounted for as sales-type leases. Under GAAP, the present value of the lease payments from these deals is recognized as a one-time amount of revenue and EBITDA in the period that the fiber route is delivered to the customer. This differs from our typical IRU arrangements classified as operating leases under which revenue is recognized ratably over the lease term. Accordingly, we expect the revenue from these large sales-type lease dark fiber deals to be lumpy and to come in unevenly during 2026. More specifically, we expect a significant portion of this revenue will be recognized in the first quarter, with the bulk of the remaining amount to be recognized later in the year, most likely the fourth quarter. Please also note that, as has always been our practice, our net CapEx reporting offsets our gross CapEx by upfront payments received in an IRU arrangement, as the cash received will offset a significant portion of the CapEx relating to these sales-type lease arrangements. Turning to Uniti Solutions, we expect revenues and contribution margin of $700,000,000 and $310,000,000 at the midpoint. As we have mentioned several times before, Uniti Solutions is not core to our go-forward Fiber Infrastructure strategy. However, this business does generate meaningful, predictable cash flow. While we expect revenue and EBITDA to continue to decline at a mid-teens pace year over year over the next few years, a crucial part of our strategy is to retain the most profitable portion of this business while winding down low-value legacy and TDM services. Altogether, we expect consolidated revenue and adjusted EBITDA of approximately $3,630,000,000 and $1,450,000,000 at the midpoint of our 2026 outlook, with consolidated net CapEx of about $1,400,000,000. On slide 21, we have provided a tabular reconciliation of our pro forma full year 2025 results to our 2026 outlook that summarizes the contribution from our core fiber businesses as well as the impact from legacy and TDM services. Finally, I would like to provide some brief comments on our capital structure. Since announcing our agreement to merge with Windstream, we have successfully executed on a series of planned actions that were systematically implemented to extend our debt maturities, lower our overall cost of debt, establish access to new debt markets, optimize our mix of secured and unsecured debt, and drive meaningful interest expense savings. As slide 22 highlights, partially as a result of these actions, the blended yields on our debt have improved significantly, falling an impressive 560 basis points over the past three years from around 12.5% in February 2023 to around 6.9% today on a blended basis. Recently, we closed on our inaugural ABS financing at Kinetic, which was unlocked as a result of the recombination of our businesses, with resounding success. Our Kinetic ABS transaction saw the tightest spreads and highest demand for a deal of its kind, further validating the strength of the Kinetic Fiber business and the attractiveness of the markets in which we operate. Further, in January, we successfully completed a $1,000,000,000 add-on to our 8.625% unsecured notes, allowing us to take out our $500,000,000 term loan with similarly priced unsecured debt. We intend to use the majority of the remainder of the proceeds from this transaction to opportunistically reduce other debt in the near term. Going forward, we believe that ABS will play a growing role in our capital structure, given its comparative cost advantage. However, as I have said many times previously, we intend to be balanced in our approach and to maintain a healthy mix of both ABS and non-ABS debt in our capital structure. ABS will be an important part of our strategy to fund the strategic investments we are making in our business, it is not the only source of capital we have at our disposal. For example, as has been our practice at Uniti Group Inc., we are constantly evaluating our portfolio of assets for optimization. Optimization opportunities could include assets that are underutilized or fallow, assets that are outside of our prioritized footprint, or assets for which we can receive premium valuation multiples. Based on our analysis over the past six months, we believe there are $500,000,000 to $1,000,000,000 of non-core assets that we could monetize. As slide 23 shows, between excess fiber, non-core and non-clustered assets and operations, such as select non-clustered Kinetic, and non-Southeast Fiber Infrastructure markets, as well as spectrum and other real estate assets, we believe the opportunity exists to generate material proceeds over the next twelve to thirty-six months. It is important to note that the monetization of these assets would have a negligible effect on our adjusted EBITDA, as many of them are underutilized today and currently produce minimal to no cash flow for the business. To be clear, any divestiture would be entirely opportunistic. We are not currently running a formal sales process. With that, we will now open for questions. Operator? 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. Our first question comes from the line of Gregory Williams from TD Cowen. Gregory Williams: Great. Thanks for taking my questions. Kenneth, you noted the IRRs here for anchor returns at 22%, obviously a great return. Can you help us with the mechanics? I mean, not to get the network scale, and a lot of it is the upfront cash flow you receive that helps the NPV there. Is this sustainable? The way I think about it is with 22% returns, you did not invite more competition. Or do you just have that breadth and scale to keep the competition out? Then second question is just on housekeeping. The $1 billion of non-recurring revenue you are seeing from now to 2028, can you help us with the cadence of that? Is that going to be sort of linear or ramp up in the later years? Kenneth A. Gunderman: Good morning, Greg. I will take the first one, and then Paul, you can take the second. On your first one, Greg, yes, we are very pleased with those returns. And, as you know, historically, we have typically shown cash yields versus IRRs when it comes to our anchor and lease-up builds. But in this case, those numbers will exceed our traditional anchor yields and lease-up yields, and so we felt that IRRs were probably a better number to show to give a true view of these deals. And I think one of the reasons that you are seeing high numbers is because we are, in addition to some greenfield builds, we are selling some existing infrastructure. So that is a part of what we are doing with the hyperscalers. It has been for some time, and that is a big part of what we did in the fourth quarter of last year in some of the record deals that we talked about. So when you think about a greenfield build, the IRRs might be a little bit lower depending upon how much of the NRC you have, but then when you blend that with mixing in selling some existing infrastructure, you obviously drive those yields higher. And selling existing infrastructure either to the anchor or in lease-up, it is very analogous to the words when we describe lease-up. Right? Because that is really what you are doing. You are selling the second, third, fourth customer off of a build or off of existing infrastructure, and that is really the core business that we are gearing towards. This build cycle is terrific. We are using it to fill in parts of the network that we have strategically wanted to build in the past. We are using it to strategically expand our footprint. And so the build cycle itself is great. But what we are really playing for is that half a billion of recurring cash revenue that is building and, frankly, we feel great about that. I think your question about, you know, these returns are attractive, does that invite competition, I think the reality is, yes. It does. That is why the entire fiber industry is focused on this opportunity and looking for ways to play in this space. But I do think, and we have said this publicly, but I do think that the hyperscalers prefer to work with large-scale fiber providers who have breadth, who have expanded footprints across multi regions, and, importantly, have a track record of building both on time and on budget. And I think for us, to drive these returns, as I said, we are leveraging that existing footprint. So we feel like we are really well positioned competitively, certainly relative to upstarts and even relative to other fiber providers, large-scale fiber providers, because we are targeting our backyard. We are building in areas where we have a right to win. So I think we are going to continue to see these great returns going forward. Paul, you want to take the second question? Paul Bullington: Yes. I will take the second. I will just, and I will add on to that last point you made, Kenneth, and just say that the returns are not necessarily equal. In most of these deals, we are leveraging existing assets to a great degree. So someone coming in to try to compete against those existing assets might not have a simple return profile. So keep that in mind as well. In terms of the $1,000,000,000 you referenced and the cadence, we, you know, we show in our materials today the growth at Fiber Infrastructure year over year. That growth is being largely driven by these types of deals that are coming in immediately. So you can kind of see directionally a little bit of the impact in 2026 from these types of deals. And then, you know, we have already booked $6,670,000,000 of total contract value—not all of that is upfront, of course, but we are well on our way towards, you know, numbers that are approaching that $1 billion mark as well with what we are booking today and certainly with what we are seeing and have visibility to within the funnel. It is a little hard to predict because these deals are not all equal. Like I said a few minutes ago, some of these deals leverage existing assets and can be turned over to the customer fairly quickly. Some of them can take two to three years to deploy if there is significant strip construction involved. And so since we are not going, you know, we do not recognize the revenue from these upfront sales-type leases until we deliver the fiber, it can take a little time between the signing of these deals and the delivery of the fiber and the recognition of the revenue. So I think you are going to see, Greg, it build over the next two to three years as we continue to sell deals out of the funnel and work to execute on those and deliver the fiber. So I think you are going to see kind of a steady ramp over the next two to three years. Gregory Williams: Got it. Thank you. Operator: Thank you. One moment for our next question. Our next question comes from the line of Frank Louthan from Raymond James & Associates. Frank Garrett Louthan: Great. Thank you. Can you give us the confidence you have in the resources for the expanded fiber build and then the hyperscale AI build? Any concerns on labor or material availability to reach those goals? And then a follow-up question, EchoStar has been canceling some of their leases with some of the towers. I just wanted to see what sort of exposure you guys might have there on the fiber side, and is there any of that factored into your guidance? Kenneth A. Gunderman: Great. Good morning, Frank. I will take part of the first one, and then I will ask John to comment on the Kinetic element of the build, and then I will come back and talk about DISH and EchoStar. We feel great about where we are from a resource perspective. We have been planning for reigniting the Kinetic build for eighteen months, really, since we announced the merger. So a lot of time and effort went into that. John joined Uniti Group Inc. well before the merger closed, so I am going to let him take it from there on Kinetic. But on the Fiber Infrastructure side of the equation, we have been in build mode for years, and I think we have got terrific third-party contract relationships around the industry, including supply chain relationships on procuring fiber and labor. And, as you know, there was a time when, at Uniti Group Inc., we built a large portion of our fiber internally, but we pivoted away from that over the years. We are now outsourcing probably 90% of the fiber builds, and we have got a few internal strategic crews at Uniti Fiber to help us where we really need it. But for the most part, we are relying upon really trusted, third-party relationships where we have got a track record of performing in both directions. And so I feel great about it and think that when, you know, Paul is mentioning the deployment cycle for the next three years in this build cycle, like I said, 100% of what is in the funnel is contracted at this point for 2026, and roughly 50% of 2027 is contracted. So we are already working on deploying these deals and are well on track for deploying them on time. So feel great about it. John, you want to comment on Kinetic? John Harrobin: Yes. I am really pleased with the progress at Kinetic. I mean, you know, 80,000 is significantly up since our prior quarter and among the highest quarters the company has ever delivered, and we expect that number to grow every single quarter throughout 2026. So we are clearly confident that we are on track for the 2,300,000 at 2026, which puts us at a little over 50% fiberized in our entire network, and well on track for the 3,500,000 at 2029. The new team that came in December 1 has years of experience building and managing fiber networks. I have had the privilege of working with Mandy San Pedro, our Chief Network Officer, at Verizon, and he and Bobby Walters, our Head of Construction now at Kinetic, came over from Brightspeed, where they built 1 million homes a year for the past two years. And so they came in and made a fairly quick impact, you know, putting in new procedures so that we now have a single pane of glass of every single project in our funnel, and we are able to make sure that we are not surprised if things go wrong left or right. They have got enough engineered prems, enough permitted prems to deliver the number of homes that we need. So I feel really confident about it and expect that you will see improvement quarter over quarter. And, you know, mathematically, you will see the clear pace to 2.3 by the end of the year. Kenneth A. Gunderman: Great. And, Frank, on your EchoStar question, we are very aware of the force majeure position they have taken publicly. We are obviously in dialogue with them ourselves and agree with the rest of the infrastructure industry that that is an inappropriate position on their part, and I will leave it at that. With respect to the exposure that we have to DISH, I would say that our revenue exposure to DISH is less than 1%, so it is immaterial in our view. And with respect to the impact of that in our guidance for this year, we are really assuming no recurring revenue from DISH throughout the course of this year. So immaterial impact and certainly less material when you include how we are treating it in the guidance, and we think their position is tenuous at best. Frank Garrett Louthan: Great. I would tend to agree with you. That is great. Thanks for the insight. Operator: Thank you. One moment for our next question. Our next question comes from the line of Richard Choe from JPMorgan. Richard Choe: Hi. I wanted to ask about the $1,500,000,000 hyperscale opportunity. How much of that do you expect to win? And can you talk a little bit more about how you expect that opportunity to grow? Just wanted to get a better sense of, as we kind of move forward, you talked about it a little bit, but how much bigger is that kind of funnel or pipeline as you are seeing right now? Kenneth A. Gunderman: Good morning, Richard. So I think the $1,500,000,000 you are referring to is the funnel that we mentioned earlier in the presentation, and then we talk about on page 12, we talk about how we see the hyperscaler opportunity actually factoring into our various financial metrics, including revenue, route miles built, and CapEx and NRCs. So I think if you tie those two together, that is really how we see it impacting our financials. So we are winning a good percentage of that funnel. As I have mentioned, a large percentage of the business that we anticipate over the next three years is contracted at this point, and so we are in the process of deploying it. But some of that is based upon our view of the funnel that we are going to win. And then certainly beyond 2028, there is an estimate of what we think we are going to win from a funnel perspective, including, by the way, lease-up. And I have said this many times, including in answering Greg's question earlier, but a big part of what we are winning with the hyperscalers is not just greenfield deals. It is lease-up. It is waves. It is traditional dark fiber. In fact, over the weekend, I heard about a transaction where we won a $200,000 MRR waves deal where we are providing capacity by derivative to a hyperscaler, and that is terrific business. So that is part of what is in that funnel. So when you see these numbers and you see the one-time revenue, do not forget about the $500,000,000 of recurring cash revenue that we expect over time, and some of that is coming from hyperscalers. The only other thing, and hopefully this is answering your question, Richard, and if not, just jump in with a follow-up. But the other thing I would say, and this is a good thing, but we have continuously struggled to try to forecast what the opportunity is for us. You know, we have been very measured in our comments about the hyperscaler business, the AI build, over the past, I would say, eighteen months. We progressively gave more and more guidance. We have given our view of what the TAM is for us. We updated our view of the TAM. And, frankly, every time we put numbers on a page, I go back and look at them later and think those were conservative. And so we continue to be emboldened by the opportunity that we see, but we also know that you, and certainly investors, want to have our best view of what the opportunity is. And as I said in my prepared remarks, what you see in the deck today is our best view at this moment in time, and we will continue to update those as we go forward. But I think based on the funnel and our success on winning the deals that we really want to win, we feel really great about the opportunity ahead of us. Richard Choe: No. That makes sense, and that does answer the question. I was just trying to get a sense of what you are currently seeing and knowing that the hyperscalers can move very quickly for a lot more capacity with a lot of capital behind it. So that helps. Thank you. Operator: One moment for our next question. Our next question comes from the line of Brendan Lynch from Barclays. Brendan Lynch: Great. Thanks for taking my question. It looks like the ARPU in Kinetic was up about 5%. What do you think is sustainable? And maybe give us some color on what your overall ARPU strategy is going forward? John Harrobin: Yes. This is John. Thank you for that. Yes, 5% I think is a little bit higher than the averages, and, you know, we have a track record of delivering higher-than-industry-average ARPU at Kinetic. As we said last quarter, I do not think the double-digit growth that we experienced last quarter is sustainable. I think we are sacrificing customers and volume at that level for incoming customers. And so going forward, I think on a sustainable level, it will be inflationary increases and inflation ARPU accretion, 2% to 3%. This next year, as we reset, I think it is probably toward 2%, but certainly growth. And, you know, I think there is a lot of headroom in ARPU, and we are just getting started. So there are kind of three big levers for ARPU growth, and this is our strategy. One, inflationary price-ups, and we do that surgically. We do that on a more segmented basis now. We are in the process of executing a price-up to our fiber base this first quarter, and we are doing it this time more surgically based on the customer's attributes and profile relative to their speed and trying to get customers to upgrade their speed along with the increase. So, yes, there is an increase, but we can also offer you increased speed. I mean, that is a very standard industry practice, and we are trying to perfect it here. So one is, you know, price-ups, inflationary price-ups. Two is our ability to move our base up the speed ladder, and we, last year, late last year, we introduced 2-gig into our portfolio. And in the fourth quarter, we set a record in terms of percent of new customers taking gig speeds. We have also set a record for upgrading our base in the fourth quarter of existing customers to gig-plus speed. So right now, as we sit here today, we have about 40% of our base on gig-plus speeds, our fiber base. We know that we could upgrade 60% of them, and that is not counting the 1-gig customers that we can upgrade to 2-gig. So it is utilizing that speed ladder strategically and upgrading the customers to more advanced capabilities. And the third aspect of our strategy is to sell additional value-added services to those customers. We call those VAS services. VAS, and we recently reset our VAS portfolio in the fourth quarter, introduced some new services. We also partnered with Eero. We are going to be introducing at least two new value-added services in the second quarter. And so with the combination of inflationary price-ups, upgrading customers along the speed ladder, and selling value-added services, we are confident that we will deliver the guidance of 2% this year and 2% to 3% on a durable basis in terms of fiber ARPU. Brendan Lynch: Great. Thanks. That is all very helpful color. Maybe on a similar trend thought there, you could talk a little bit about customer churn and what your strategy is there to address that. And when customers do churn, what is typically their next best option? John Harrobin: Yes. So, like, this past quarter we set a record not only in top-line sales growth and fiber sales and also quality in terms of gig attach rate and VAS attach rate. We also had our second-best churn quarter in the company's history. First best was in first quarter 2021 in the middle of the pandemic. That said, we still have more room to go. And last quarter, we talked about the five fundamental actions that we took to lower churn. We executed those actions, and I think the changes that we made are durable and will help our overall churn trajectory. Not only did we make the fundamental value prop and non-pay churn, which is showing up really well in new customer early-life churn, but also fundamentally, we eliminated a bunch of pain points. This past quarter, we set a record in first-call resolution, a record in terms of trouble tickets for our customers, a record for repeat visits from our techs, a record for save rates in our retention queue, and a record low in terms of transfer rates, you know, the unnecessary transfers where we are bouncing customers around. Those are real customer pain points, and we set a record in the fourth quarter in all those areas, and that is a direct correlation to churn. So I think we are going to see the momentum continue there. And, you know, at Frontier, we were among the worst in the category in terms of churn when we started that transformation in 2021, and by the end of this past year, they were among the best or the best outside of AT&T and Verizon. And I am really pleased that Stacy Vongbinet from Frontier started with us on February 9 as our Chief Customer Officer. Stacy and Jonathan Wu from Frontier led the loyalty and data science and customer operations efforts to drive durable loyalty, and they are both here now. And all our results and all the fundamentals that we put in place are not even the beneficiaries of their more advanced practices of using AI to change workflow and to get ahead of what customers' opportunities are so we could be more predictive about it. So I am super excited and bullish about our ability to further improve churn. Brendan Lynch: Great. Thank you. Operator: Thank you. One moment for our next question. Our next question comes from the line of David Barden from New Research. David Barden: Hey, guys. Thanks for taking the questions. It has been a great conversation so far. I wanted to maybe ask kind of two interrelated questions. So I guess the first question is maybe for you, Paul. If you annualize the fourth quarter EBITDA, you are going to get to the very high end of the guidance range that you have given this year. And you are guiding for year-over-year EBITDA growth in the fourth quarter 2026. I guess I have got some questions, which are number one, is there some of this one-time hyperscale IRU-type revenue that was in the fourth quarter 2025 that we should not be kind of annualizing as a run rate? And then second is, within the guide, could you be more specific about what is contributing to the revenue and EBITDA from these kind of one-time items that, you know, we maybe should not be using as a jumping-off point for 2027 necessarily? Thank you. Paul Bullington: Yes, David, thank you. Good to have you on the call. Appreciate the question. Yes, there was a little bit of one-time hyperscaler revenue in 2025. So, you know, again, David, this is going to be a little bit lumpy as we go forward. So, you know, those kind of one-time revenues are going to make comparison periods a little bit more difficult. So I appreciate the question. But there was a little bit in the fourth quarter of this year, so it increased the jumping-off point a little bit. But, you know, we are not talking about a whole lot there. So fourth quarter is pretty close. There was some other one-time revenue non-hyperscaler related in the fourth quarter as well that Bill and I can take you through sort of offline, I am happy to do that as well just to make sure you level set. And then in terms of hyperscaler revenue, this kind of sales-type lease one-time revenue that we have talked about in 2026, I mentioned that within 2026, it is going to be lumpy. A good portion of it coming in in the first quarter, and then the bulk of the rest of it probably later in the year, maybe most heavily tilted towards the fourth quarter. So we are going to have a little bit of up and down, I think, as we go through the year. We provided, David, in the materials kind of a reconciliation of that fiber revenue at Fiber Infrastructure from 2025 to 2026. So you can see the year-over-year growth there, and a lot of that is being driven by the hyperscaler. So you can kind of get directionally close to the growth over the course of this year that is kind of one-time hyperscaler-type growth. But, like I said earlier in the call, you know, we have sold some large deals. Some of these deals are going to take a while to implement. We have got visibility, as Kenneth has talked about, into future deals that are going to come in. And so we expect this one-time hyperscaler-type revenue to be recurring in a sense over the next and to build over the next three years. And kind of, you know, as we go through the next three years, I would expect it to actually build year over year. But from any quarter to its comparative quarter, you might see some lumpiness and some jumping around. David Barden: And I apologize. I have maybe a follow-up too. So just as a quick follow-up, so do the rating agencies, when you talk to them, look at this kind of recurring, non-recurring revenue EBITDA as recurring, or do they look at it as kind of non-recurring and ignore it? Paul Bullington: Yes. I know that that is a conversation that the rating agencies have developed. I do not know a definitive point of view on it. I guess it is kind of new in our numbers and in some of our peers' numbers. So we will kind of have to have an ongoing dialogue with the rating agencies to talk through that, David, as we go forward. But I do not want to necessarily speak for how they are going to view it. Operator: Thank you. One moment for our next question. Our next question comes from the line of Anna Goshko from Bank of America. Anna Goshko: Hi, thanks very much. So just a kind of follow-up on the prior question from David. So on the sales-type lease accounting for these hyper deals that are the cash upfront, is there something about the nature of those contracts that required you to book it this way? And, you know, I know we all spend a lot of time kind of, you know, understanding the Lumen deals, their PCF deals, so that they have, like, $13,000,000,000 of these. And they are accounting for it in a different way. So they are receiving the cash upfront but, obviously, amortizing it over the life of the contract. So I understand that you would, you know, I do not know all the ins and outs necessarily of their contract, but wondering if you are aware that if there is a difference in the contracts that you have on these hyper with these hyperscalers versus what they have been selling? Paul Bullington: Anna, thanks for the question. Appreciate it. Obviously, I do not have a lot of insight into Lumen and their deals and their accounting. So I will kind of stay away from comparisons of our deals to theirs and our accounting to theirs. But what I can tell you, Anna, is our accounting policies have not changed with regard to how we account for and recognize revenue from these IRU lease deals. We follow GAAP. We follow lease accounting. And each of these deals really has to stand on its own. We will take a look at each deal. We will look at the specifics of the contract and the specifics of the deal to determine whether or not it is accounted for on an operating basis or on a sales-type lease basis. So you are going to see both of those accounting methods going forward, and it is going to depend on the characteristics of the deal. I will say, sort of directionally, that the hyperscaler deals, just given the massive size of those deals, are more likely going to be, are more likely to trip into a sales-type lease accounting than sort of the traditional lease-up lower-volume dark fiber deals. So, you know, happy to, again, we can kind of get into some lease accounting with you a little bit on operating versus sales-type lease, you know, offline. But yes, I would just leave it at that for the call today. Operator: Okay. And then if I can just follow up, what is the average length of these IRUs? Secondly, do you have the traditional O&M or operating and maintenance contract that is over the life of the contract? And then what is my other question? Oh, you know, so one of the things that Lumen has made clear is that they have made clear in the contract with the hyperscalers that the capacity is only for the internal consumption of the customer. Do you have that same arrangement? Paul Bullington: Yes. I will start. All good questions. I will start, and I will turn it over to Kenneth for the last piece. These are IRU deals that are structured very similarly, I would say, to classic IRU deals. You know, what is creating different accounting is just the specifics of the deals. Like I said, the size of the deal. And as you kind of go through the analysis of, you know, just applying GAAP accounting. But these are generally, you know, if you looked at it just from a business standpoint, you would see very traditional IRU structure. So they tend to be 20 years in length. They have O&M associated with them that provides a recurring revenue that is, you know, MRR, recurring, classic recurring revenue that we will be receiving, you know, throughout the course of the deal, typically with escalators. A lot of these deals also have colo, colo involved as well. So ILA regeneration or other forms of colo, which we think is likely to be sort of a bit of a growing revenue stream from these deals just given the massive amount of fiber that is being taken down by a lot of these deals. If you light all that fiber, there is a lot of colo that you need, a lot of equipment that you need along these routes to power that fiber. So we think colo could be a much more meaningful part of the recurring revenue stream from the hyperscaler dark fiber deals over time than the traditional deal. Kenneth A. Gunderman: Well, I will hit that last question, Anna, but I will want to add a couple things to the series of questions about the structure of these deals. And Paul hit on all of this really, but just to double down on it. Number one, we recognize this is different than what we have shown in the past, but I think the nature of this opportunity, the nature of these deals, calls for it. So this is not necessarily a decision on our part to change accounting methodology or presentation style. This is just what the accounting is driving towards. Frankly, I think it is actually better visibility into the underlying economics for investors than the traditional way of showing these deals. So, for example, we have always had one-time fiber sales like this in our portfolio in the past, but at Uniti Group Inc., it has usually been something around $20 million to maybe $25 million a year of this. Right? So, Anna and others, you will know that we have had one-time revenue in our business in the past, and it has either been equipment sales or deals structured like this from these one-time fiber deals where we are building a big greenfield for someone like the government, for example, or some of our other customers where the economics just calls for it. It is just now these deals are much bigger, and it is a much bigger part of the revenue. But, so we have done this in the past, number one. Number two, we are showing all the revenue upfront as opposed to showing amortized revenue over time. That is the critical difference. And so, for example, if we talk about the record quarter of bookings in the fourth quarter of $1,700,000, but if you actually treated the hyperscaler deals that were turning up in 2026 as traditional IRU revenue, that bookings number would have been over $4,000,000 of MRR. So that is a record quarter by a factor of two or two and a half. But that $4,000,000 of MRR would be a little bit misleading because a lot of that would be amortized revenue. And so, rather than showing an inflated bookings number of $4,000,000, we are actually just showing higher cash revenue and EBITDA in the time period when this business gets turned up. So I think the real point of all of that is, do not think about the economics of these any differently than IRU deals. It is the same. It is just a question of how we report it. And that really gets into your last question, Anna, and really why we talk so much about the lease-up, because when we sell a greenfield deal, it is not about the anchor for us. It is really about the lease-up. And so we are getting all this one-time revenue and funded and largely funded builds, and we are playing for the $500,000,000 of recurring revenue that comes through the lease-up over time. And I think the way we structure these deals, I do not want to get into specific customer agreements, but we absolutely structure these deals in a way where we have the maximum lease-up potential with the minimal amount of competition from our anchor customer. So I will leave it at that, and you can draw your own conclusions about our point of view on that. I would also say, and this is very important, when we put this fiber in the ground, we are not building for just the anchor and the anchor's lease-up potential. We are building for lease-up potential for traditional wholesale, traditional enterprise, which we think is going to be a huge opportunity once inference comes. And so, as a result, the CapEx that we are putting in the ground is a little bit higher on the front end, because we are adding that extra conduit, or we are adding that extra second conduit, and we are even blowing fiber potentially through it to provide the ease of lease-up after the fact. So very focused on the lease-up, and I think about these deals as the economics of these deals as being very much like traditional IRUs. Operator: Thank you. At this time, I am showing no further questions. This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Hello, everyone, and welcome to the Venture Global, Inc. fourth quarter 2025 earnings conference call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. To withdraw your question, please press 1 again. I will now hand the conference over to Benjamin Nolan, Senior Vice President, Investor Relations. Please go ahead. Benjamin Nolan: Thank you, John. Good morning, everyone, and welcome to Venture Global, Inc.’s fourth quarter 2025 earnings call. I am joined this morning by Michael Sabel, Venture Global’s CEO, Executive Co-Chairman, and Founder; Jonathan Thayer, our CFO; and other members of Venture Global’s senior management team. Before we begin, I would like to remind all listeners that our remarks, including answers to your questions, may contain forward-looking statements, and actual results could differ materially from what is described in these statements. I encourage you to refer to the disclaimers in our earnings presentation, which is available on the Investors section of our website. Additionally, we may include certain non-GAAP metrics such as consolidated adjusted EBITDA, which we may refer to simply as EBITDA during this call. A reconciliation of these metrics to the most relevant GAAP measures can be found in the appendix of the earnings presentation posted on our website. Finally, the guidance in this presentation is only effective as of today. In general, we will not update guidance until the following quarter and will not update or affirm guidance other than through broadly disseminated public disclosure. I will now turn the call over to Michael Sabel. Michael Sabel: Thank you, Ben. Good morning, everyone, and thank you for joining us today. We are pleased to share our fourth quarter and full-year 2025 results and provide guidance for 2026. I will begin the call with an overview of our key accomplishments and future plans before shifting to our LNG projects individually. I will then make some remarks on the LNG industry and the current events before turning over the call to Jack, who will provide a more detailed review of our financial results and guidance for 2026. Following all prepared remarks, we will open the line to Q&A. Turning to page 5 of the presentation, 2025 was a landmark year for Venture Global. In January, we went public. We reached commercial operations at our first project, Calcasieu Pass, in April. At Plaquemines, after producing our first cargo in December 2024, we have ramped up commissioning activities and are now generating more than one commissioning cargo per day. And at CP2, our largest project to date, we launched construction and raised financing for the first phase in July. This means we are simultaneously constructing 57+ MTPA of capacity across two facilities. Phase 1 of Plaquemines is on track for COD this year, and construction of the first phase of CP2 is running well and is on schedule and on budget. Total assets grew by approximately $10 billion to $53 billion, and EBITDA and income from operations nearly tripled. Venture Global is on track to be the largest LNG producer in North America, supported by more than $134 billion of total contracted third-party revenue, which we expect to continue to grow as we add to our existing base of 49 MTPA of long- and intermediate-term offtake agreements. For 2026, it is worth noting that we now have 69% of expected production capacity contracted, a percentage that should rise quickly as we anticipate signing additional short- to intermediate- and long-term contracts in the near term. Venture Global equity has been publicly listed for just over a year now, and our priority has been to control what we can control and deliver on what we promised. As you see on page 6, we have accomplished a great deal this year. The number of cargoes we produced in 2025 was at the high end of the guidance range set out at the IPO. We reached FID at CP2 Phase 1. We secured 7.75 MTPA of additional 20-year SPAs. We leveraged data generation and analysis lessons learned from Calcasieu Pass to further increase production capacity at Plaquemines, and we identified low-cost bolt-on production opportunities at our first three facilities in excess of what we had originally anticipated. In addition, as you can see in the column to the right, we believe there should be further upside to each of these areas in 2026, and we are working diligently to deliver growth and returns for our shareholders and customers. The constant pursuit of excellence is core to our culture. As we have highlighted on page 7, the combination of structural benefits from our modular approach, massive data capture and analysis, and our unrelenting focus on continuous learning and improvement translates into superior LNG production and project-level operating and maintenance costs that are currently about 30% below industry averages, and we see room for further improvements. We have continued the process of bringing most of the typical EPC functions in-house, which has enabled us to construct our facilities in less than half the time many other LNG projects take, which, combined with our faster production ramp, translates into lower costs and better returns. While efficiency and speed are important objectives, our first priority remains the safety of our employees, contractors, and communities, as reflected in our best-in-class safety record. Finally, we are working to monetize the key components of the LNG value chain and augment our LNG portfolio with complementary midstream, shipping, regasification, and, in the case of CP2, nitrogen removal assets, all of which we expect should give us better access to attractively priced gas, protect and enhance margins, and improve our customer connectivity. We view our LNG infrastructure as technology assets that we are constantly optimizing to be safer, faster, and more efficient. You can see on page 8 our near-term outlook for the buildup of production from our facilities. We anticipate Calcasieu Pass, Plaquemines, and CP2 Phases 1 and 2, when complete, will generate approximately 68+ MTPA on an annual run-rate basis with room for upside from optimization efforts and peak production opportunities. Of this 68 MTPA, we have contracted approximately 72% already on a long-term basis. Beyond that, we have included what we anticipate will be our next additions following CP2 Phase 2. As I will discuss in more detail shortly, we expect to be able to add approximately 13 MTPA of bolt-on capacity at CP2 and Plaquemines at costs well below even our own industry-low construction pricing and even faster than our industry-leading construction timelines. This tremendous growth in the number of trains and related infrastructure translates into a more than doubling of monthly ship loadings, growing from approximately 43 per month today to approximately 90 per month in 2029. This, in turn, could transform our cash flows. For example, assuming just a $3 per MMBtu liquefaction fee for our uncontracted volumes, we estimate that by 2029 our EBITDA could be about $11 billion. Assuming a $5 per MMBtu on uncontracted volumes, that estimated EBITDA number could rise to $17 billion, reflecting the straightforward impact of installation of more trains producing more LNG commodity product. Our new production ramp is expected to be staggered with the COD dates of our existing projects such that as we complete commissioning at one project and move to long-term fixed-rate contracts, the new production capacity should begin to ramp, creating a balanced portfolio of long-, intermediate-, and short-dated sales agreements. This should improve cash flow visibility and provide an optimal balance of margin and predictable cash flow while, importantly, retaining very valuable upside earning optionality. As we advance on schedule this year at CP2 and next year to COD of Phases 1 and 2 of Plaquemines, we will activate an increasing portion of our $134 billion of long-term contracted third-party revenue, now blended with a growing portfolio of intermediate-term tenor sales contracts. We are actively working to add to both the 20-year and intermediate-term contract portfolios and anticipate more deals in the coming quarters. Importantly, we currently target funding all of our project CapEx and incremental growth with our existing construction loans, retained earnings, and incremental project-level borrowing, with no parent-level equity, preferred, or debt anticipated at this time. Notably, we have executed our Plaquemines and CP2 construction financings while retaining 100% ownership of those projects and, therefore, of course, 100% of future earnings. Turning to page 9, since we re-entered the contracting market in April, Venture Global has signed 9.25 MTPA of new 20-year SPAs with a fantastic portfolio of customers. This is more volume than any other LNG company in the market, demonstrating that the world's top buyers trust our execution and reliability. Today, we are pleased to announce our first five-year contract at Venture Global Commodities for approximately 0.5 MTPA with Trafigura. Additionally, last week, we signed a new 1.5 MTPA 20-year SPA with Hanwha Aerospace, marking our first long-term contract with a South Korean customer. These two new binding agreements add to the four we signed in the fourth quarter 2025 with Naturgy Atlantic LNG, Mitsui, and Tokyo Gas. On page 10, I will highlight our performance in Q4 and the exceptional year-over-year increase in our results. As you can see, we nearly tripled revenue, income from operations, and EBITDA through the gradual ramp of commissioning. Jack will discuss these numbers in greater detail later, but the main takeaway is our company's ability in the fourth quarter to generate over $2 billion of EBITDA and $1 billion of net income during a period of disruptive market dynamics, including swings in commodity prices and a period of challenging ship availability, underscoring the resiliency of our business model and resourcefulness of our team. Turning to page 11, thanks to our innovative temporary power solution, all 30 liquefaction trains at Plaquemines have undergone initial startup. We also recently filed a request with FERC to increase the authorized peak liquefaction capacity at both Plaquemines and CP2 to 35 MTPA, as well as filing with FERC and the U.S. Department of Energy for up to 31 MTPA of bolt-on expansion at Plaquemines. Our construction success is predicated on our mission to be the safest LNG developer in the industry, as reflected by our 0.16 total recordable incident rate compared to the national average of 2.2. I mentioned our commercial success in 2025 earlier, and now early 2026, but our finance team is also very busy as we issued $3 billion of Plaquemines notes to repay construction financing, and we are currently hard at work to finalize the construction loan for Phase 2 to fully fund the construction of that phase of CP2. Turning to page 13, we show a summary of the projects we are planning to bring online by the end of the decade, as I just discussed. As you know, there are further low-cost bolt-on and growth opportunities available to us, but we thought it would be helpful to outline our near-term development plans. Moving to page 14, it was business as usual at Calcasieu Pass during Q4, as we exported 38 cargoes, which is down slightly from our prior expectations, as ship availability and Atlantic storm delays late in the quarter did impact several anticipated cargoes. I wanted to provide some update commentary on the Calcasieu Pass arbitrations. In January, we received a favorable no-liability decision in the Repsol arbitration proceedings. Going forward, the non-cash reserve, which reflects our best estimate of award outcomes from BP and the other three remaining arbitrations, is currently estimated to be a $13 million per quarter adjustment to revenue at Calcasieu Pass through the 20-year duration of the SPA contract terms, while the impact to EBITDA will be less due to adjustments for noncontrolling interest and taxes. Importantly, this is an estimate, and there is no cash impact to our fourth quarter financial statements. We will update these estimates in our financials quarterly as we receive arbitration results and incorporate any final financial awards or settlements going forward. Also, while BP has raised the quantum of their damages claim, our position as to our exposure there is unchanged, as the clear language of the contracts prevents recovery of the categories and magnitude of damages sought by BP. Turning to page 15, Plaquemines continues to progress construction, commissioning, and the performance reliability assurance testing required in advance of Phase 1 COD in Q4 of this year and Phase 2 COD in mid-2027. Although we continue to utilize and rely on a significant amount of temporary power, in the second quarter we expect Phase 1 will transition to its permanent power plant configuration. We are yet to achieve substantial completion, but we are on schedule and targeting substantial completion under the scopes of the EPC by late summer, so coming soon. Turning to page 16, CP2 is now just over seven months from Phase 1 FID announced on July 28. Despite this short period, I am pleased to announce construction of Phase 1 is proceeding well on schedule and budget, and over the weekend we raised the roof on our first LNG tank, making it the fastest time to a roof raise of this size in the history of the LNG industry. Furthermore, we now have six of the 26 liquefaction trains delivered to the site and on foundations, and expect delivery of the first pretreatment module in the coming months. With respect to Phase 2, as I mentioned, we have now signed 5 MTPA of 20-year SPAs to support the financing for the project. We continue to have constructive conversations with offtakers and expect to announce additional SPAs in coming quarters. With $1.7 billion of equity already invested in Phase 2, we expect project financing and FID to be complete in coming weeks. We anticipate funding the entire CP2 project with retained earnings and a construction loan from a group of leading banks, enabling Venture Global to again maintain 100% ownership in one of the world's largest LNG projects. On page 17, we depict the first two bolt-on expansions we expect to develop after FID of CP2 Phase 2, subject to additional contracting and regulatory approval. The bolt-ons at CP2 and Plaquemines are straightforward liquefaction train and gas turbine additions that should add around 6.4 MTPA each. The additions leverage the benefits of our modular approach, resulting in what we expect to be much lower cost and much shorter construction timelines. These developments exemplify the advantages of our midscale modular approach to the original designs, as well as the power to leverage existing redundancies built in. Turning to page 19, the past few months and recent events have demonstrated the impact of seasonality, the inherent tightness of LNG supply and demand, and, of course, the impact of geopolitics on our market. While LNG spreads compressed in late 2025, cold weather in January and February has exhausted gas inventories in Europe to low levels, lifting LNG forward curves. Of course, this is all impacted by current events over the weekend. Furthermore, a number of LNG projects under construction have announced delays with their planned start dates. As you can see on the left, the forward curves reflect the market expectation for LNG prices in both Asia and Europe to remain at considerable spreads over Henry Hub through 2028, even during periods of expected cold weather and higher U.S. gas prices. Of course, these are the forward curves reflected on Friday. As we approach production at CP2, our pipeline infrastructure which enables us to access Permian gas at Waha and Katy is likely to become increasingly supportive of expanded margins. Importantly, Waha gas is expected to remain at a significant discount to Henry Hub, creating an opportunity for positive basis impact at CP2, highlighting the value of our investment in nitrogen removing units to address high nitrogen levels found in that basin. Flipping to page 20, based on our bottom-up view of the global LNG market on the left, we expect demand to meet or exceed supply through the end of the decade, then quickly move to undersupplied early next decade unless additional liquefaction capacity is added. This positively supports contracting demand for our growing portfolio. Importantly, these assumptions are conservatively based on demand growth of 4.7% through 2035, which is below the historical 5.3% from 2015 to 2025. Demand for clean baseload electricity continues to grow, and new LNG markets are being developed throughout the world. Historically, demand for energy, and certainly gas, increases as price declines, provided the physical infrastructure exists to support it, which we see on page 21, where we see expansion of regasification infrastructure which is further positioned to grow by approximately 40% from 2024 to 2030, with upside as new projects are announced. China alone is positioned to add more than 100 MTPA of regas capacity by 2030. India is committed to taking natural gas from just 6% of primary energy mix to 15% by 2030 as well. There has also been a sharp increase in developments from new markets like Iraq, Vietnam, the Philippines, South Africa, New Zealand, and others. We see countries around the world increasingly require reliable, consistent sources of energy, seek alternatives to cross-border pipelines, and make investments to meet rising power demand. Furthermore, we estimate regasification utilization would only need to reach 40% of capacity in order to offset all of the new liquefaction infrastructure currently under construction, which again has seen slippage in FIDs and projected startup timing. Page 22 reflects the growth in gas-powered generation in both Europe and China. Not only are investments being made in regasification infrastructure, but also in gas power generation, which we expect to experience heavy utilization, particularly at attractive LNG prices. In 2025, a high-price global LNG market, less than 3% of Chinese power was produced from natural gas, while more than 55% came from coal. As existing installed gas generation capacity operates at higher capacity factors and new gas-fired power generation is added, we expect LNG imports to follow as delivered LNG prices moderate. Domestic gas production is flattening in China, and new pipeline additions are limited. Furthermore, we estimate that every 1% share gain by LNG relative to coal would translate into 34 MTPA of LNG demand. At $10 per MMBtu LNG prices, for example, the cost of electricity in China is about 7 to 8¢ per kilowatt hour, converging on the cost of coal-fired power generation, and history has proven that people consume affordably priced electricity. In the event LNG prices were to fall below $10 per MMBtu and gas and coal power generation approach parity, we would expect a sharp demand response, creating an LNG price floor at levels supporting liquefaction margins well in excess of those reflected by current long-term SPA prices. Of course, we are in moments of price volatility, but we expect those, as we move beyond current events, to smooth out. Consequently, we are confident that the market is building the infrastructure to easily absorb new LNG supply, and demand elasticity should mean every drop of LNG the market would be able to produce over the next several years should be consumed at reasonable prices. As evidenced by the forward curve, historical precedent, and contracting activity, our customers feel the same. I will now turn it over to Jonathan, our CFO, who will review the financials and our updated guidance. Jonathan Thayer: Thank you, Mike. Pardon me. And good morning to those on the line. I will be referring to the Venture Global, Inc. Form 10-K for the year ended December 2025. The 10-K is available on our website, and some of the key results are summarized on page 24 of the presentation. During this call, I will highlight results I believe are salient to this audience, and I encourage you to review the entirety of our financial statements in detail. Beginning with revenue, our top line was $4.4 billion for Q4 2025, a $2.9 billion increase from $1.5 billion during the equivalent period in 2024. This increase in revenue was driven by $3.8 billion from higher sales volumes, 478 TBtu in Q4 2025 compared with 128 TBtu in Q4 2024, which was partially offset by $945 million from lower net rates, primarily at Calcasieu Pass due to the commencement of LNG sales under its post-COD SPAs. For the full year 2025, revenue was $13.8 billion, up $8.8 billion from $5.0 billion in 2024, primarily due to increased sales volumes partially offset by lower rates. Our income from operations was $1.7 billion in Q4 2025, a $1.1 billion increase from $594 million in Q4 2024. This shift was primarily driven by the higher sales volumes I mentioned previously, which resulted in a greater total margin for LNG sold. These increases were partially offset by $50 million of higher operating costs in support of the ramp up of LNG production at the Plaquemines project and operating our tankers, as well as $32 million and $147 million of higher G&A and depreciation expenses, respectively. We experienced a reduction in our development expenses of $72 million quarter over quarter, as many of the costs associated with our three-phase CP2 project were capitalized. For the full year 2025, income from operations was $5.2 billion, up $3.4 billion from $1.8 billion in 2024. Our net income attributable to common stockholders, which we will refer to as net income, was $1.1 billion for Q4 2025, a $196 million increase from the $871 million in Q4 2024. Higher interest expense and changes in interest rate swaps negatively impacted Q4 results year over year by $330 million and $476 million, respectively. For full year 2025, net income was $2.3 billion, up $800 million from $1.5 billion in 2024. Shifting to consolidated adjusted EBITDA, we earned $2.0 billion during Q4 2025, a $1.3 billion or 191% increase from $688 million in Q4 2024. This increase in consolidated adjusted EBITDA was driven chiefly by higher sales volumes, partially offset by lower prices. For the full year 2025, consolidated adjusted EBITDA was $6.3 billion, a $4.2 billion or 200% increase from $2.1 billion in 2024. The increase in consolidated adjusted EBITDA was again driven by higher sales volumes, partially offset by lower prices. Our projects exported a total of 128 cargoes in Q4, which increased by 95 cargoes compared with the same period in 2024. Of these cargoes, 478 TBtu of volumes are reflected in our results for Q4 2025, more than tripling production compared with 128 TBtu in Q4 2024. I would also like to call out several additional financial updates. The company issued $3.0 billion of Plaquemines notes in the quarter, which, in combination with the proceeds from interest rate swap breakages, we used to repay $3.2 billion of the Plaquemines construction loan. For the year, we raised $33.0 billion in support of our development and to refinance existing debt. Also during the quarter, we secured a new $2.0 billion corporate revolving credit facility, which was undrawn at year-end. For the full year 2025, we reduced total leverage at Calcasieu Pass by $190 million, and at Plaquemines, we reduced total leverage by $919 million. Moving to project performance and forward guidance, on page 25, we are looking to produce between 486 to 527 cargoes from both facilities in 2026, and including volumes sold under our long-term SPAs, we have now contracted 69% of potential 2026 cargoes. In the fourth quarter at Calcasieu Pass, on the 38 cargoes exported, we realized an implied weighted average liquefaction fee of $2.10 per MMBtu, which incorporates arbitration-related reserves. For 2026, based on average liquefaction fees achieved from SPAs and excess cargoes sold on a forward basis to date, we expect an implied weighted average liquefaction fee of $1.98 per MMBtu at Calcasieu Pass, including an adjustment for arbitration reserves. For the full year 2026, we expect to export 145 to 156 cargoes. At Plaquemines, the facility exported 90 cargoes at a realized weighted average liquefaction fee of $6.20 per MMBtu on our commissioning cargoes during the fourth quarter, which was negatively impacted by a brief period of margin compression in December as Henry Hub prices escalated, shipping day rates increased, and TTF remained largely static. The shipping impact was partially mitigated by our owned and chartered fleet, demonstrating the advantages of maintaining a fleet of controlled vessels. In total, Plaquemines exported 234 cargoes in 2025, which we expect to rise to 341 to 370 cargoes in 2026. This wider-than-normal range of potential production is driven by the inherent variability in the commissioning process, as we prioritize the completion of construction and commissioning and address any remediation items through the startup process, which may cause brief periods of interruption. Thus far, including Phase 1 COD in Q4, Plaquemines has contracted 59% of potential cargoes for the year, capturing a weighted average liquefaction fee of $4.50 per MMBtu on those contracted commissioning cargoes and fourth quarter SPA cargoes. As you see on page 26, based on this cargo count, we are providing consolidated EBITDA guidance for a range of $5.2 billion to $5.8 billion for 2026. This range assumes a liquefaction fee of $5 to $6 per MMBtu for cargoes remaining to be sold over 2026, consistent with current TTF and JKM forward price expectations as of Friday. On average, if fixed liquefaction fees over the remainder of 2026 increase or decrease by $1 per MMBtu, we expect our consolidated adjusted EBITDA range to adjust accordingly by $575 million to $625 million. While we do not typically provide quarterly consolidated adjusted guidance, and do not intend to do so in future quarters, as you will see on page 27, we did want to provide some color with respect to the impact of Winter Storm Fern, as well as the residual impact of margin compression in late Q4 2025. Relative to a $5.50 per MMBtu liquefaction fee on our available capacity, we estimate higher Henry Hub prices, the absence of several foregone cargoes, and basis impact at Plaquemines will have had approximately a $500 million impact on Q1 2026 consolidated adjusted EBITDA, which we now expect to range from $1.15 billion to $1.25 billion. I will now turn the call back over to Mike. Michael Sabel: Thanks, Jack. Before I turn to questions, I want to address the concerning situation unfolding in the Middle East. We are monitoring developments closely and hoping for the safety of all Americans and everyone else in the region. The events over the weekend have had a strong impact on global energy markets. With the largest available incremental LNG capacity in the world, the United States will play a critical role during this historic disruption in the market. Venture Global stands ready to help keep the market stabilized and supplied. I will now stand by for questions. Operator: Thank you. We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press 1 on your telephone keypad. To withdraw your question, please press 1 again. Please pick up your handset when asking a question. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Our first question will be coming from the line of John McKay from Goldman Sachs. John, your line is now open. John McKay: Hey. Good morning, everyone. Thank you for the time. Hey. Good morning. Mike, can we start on the macro? I know you just touched on it right here. Maybe just any perspective on what you guys are seeing in the market right now? What are you watching for a read on what is going on, how long the Qatar disruptions could last, etcetera? And then, to connect it to all of this, just walk us through a little bit of what your ability to transact against these current prices could look like? Michael Sabel: Thanks. Yep. No. Obviously, it is a sad situation in the Middle East, and we are hoping for a fast recovery. We have a very long-term view on the market, which is that low and stable LNG prices increase demand over time, and our business model is designed to deliver low-cost LNG into the market. In the short term, the higher prices are helpful for our spreads, obviously. We probably have the largest number of available cargoes in the market. On Friday, it was us and Qatar that had the largest available volumes, and so, with Qatar for the moment turned off and potentially damaged, the market is waiting to see if there can be an estimate on when it can turn back on and the ships can start to flow through. Obviously, the price in the market with physical commodities is based upon the price of the last available physical cargo, and the market is going to take a few days, I think, to digest what that looks like. Europe, as you know, has been and is at fairly low historic levels of storage, and so this is not helpful timing, though spring is around the corner in a few weeks here, so that should help. There are markets in Asia that are also heavily reliant on Qatar supply, and every day that ships cannot flow through, that creates a lot of backup and incremental demand. We are unique also in that we have our own fleet of ships. With owned and leased, we have nine ships. We take delivery of two more here in coming months. We are uniquely able to move cargoes with our own vessels in this market while TTF and JKM have spiked, so have shipping rates, and so shipping is going to play a very critical role in support of the market and having impact on the ability to move the cargoes. John McKay: I appreciate that, Mike. I want to look a little longer or medium term through the back of the decade. You guys are laying out a pretty large construction plan, fair amount of CapEx, of course, associated with that. Can you again walk us through what your funding plans look like right now? And how much of that plan to get to mid-80s or somewhere into the 80s on capacity is based on an assumption of higher prices in the market? Thanks. Michael Sabel: Yep. None of it is based on higher prices. We can comfortably execute it with attractive returns at the long-term contracts that we have and the ones that we are working on, and at the prices on the commissioning cargoes as well. We are working, as we said, to hopefully finish up the second phase FID for CP2, and as we guided to, we currently do not expect to use any parent debt, preferred, or common equity, just project-level construction loans and retained earnings. And for the bolt-ons, which, after the second phase of CP2, is incremental 13+ MTPA, we expect again to be able to use retained earnings and construction loans, leveraging incremental contracts as well. And so from a capital standpoint, our plan today and our expectation is that we will be able to finance that incremental CapEx without tapping parent capital materially again, and retain 100% ownership of that growth. And, as I said in the opening statement, with those two bolt-on transactions, that would get us to that roughly 90 cargoes a month in 2029. Operator: Thank you for your question. Your next question comes from Manav Gupta from UBS. Your line is now open. Manav Gupta: Good morning, Mike and team. My first is we recently saw a filing by you in which you basically indicate that you would be in a position to run Plaquemines at 35 MTPA and maybe CP2 at 35. I am trying to understand how you are able to find these incremental volumes in your system. Is it the engineering? Is it the design? Is it operational efficiency? Are the massive data operations that you have set up? Help us understand how these incremental volumes are available in the system. Michael Sabel: Good morning, Manav. Thanks. We really designed the facilities to physically and safely be able to operate at that capacity of 35 MTPA if conditions support it, which means during the cold months we are able to operate at that level. On an annual level, that would work out to around 31 MTPA for the year. The facility, from a safety standpoint and a throughput capacity, could operate at 35 for the whole year if it were cold for the whole year, but when you average it out, at that level it would operate 31 MTPA. The way we achieved it is a combination of lots of adjustments we have made from CP1 to Plaquemines and CP2, and it is a combination of our managing pressure and our modularity and our controls. I would say it is almost all driven by the mass amount of data collection that we process. I think we are now capturing over 500,000 data collection points every 10 seconds between Calcasieu Pass and Plaquemines, and we have a large data science team and AI programmers that consume that data and incorporate it into our operations and our process design. We have achieved extraordinary dividends from it, so we are extremely pleased. We are able to, particularly because we have so many trains that we operate now, experiment with changes in configuration that allow us to fine-tune production. Manav Gupta: Perfect. My next question, Mike, is more on your vision. We will see a big build-out of LNG. How do you see Venture Global positioned in it? You are the low-cost provider. We also see you as somewhat of an industry disruptor, which is basically going out there and asking a question of why should it take six years to develop an LNG project when it can be done in two or three years. The reason I am also asking is there were some competing LNG projects which are basically saying, okay, we do not actually want to do this anymore. Maybe that is a function of they really cannot compete against people like you. So help us understand your vision for the company in the massive LNG build-out that we will see in the next four or five years. Michael Sabel: Thanks, Manav. I think our space is the same as many other spaces. When there are new business models and disruption in different categories, the incumbents in existing parts of the market react to it. In our industry, we all produce the identical product, the same liquid methane commodity, and it is largely differentiated on price, and we do have a significant price and speed advantage. We are bringing on large volumes of liquefaction in the market, we believe, and that will inevitably have an impact on people making decisions to invest capital to expand production capacity that in some cases would be multiples more expensive than what we are bringing on. We do expect it to have a deterrent impact as we come into the market, and we know, in the future, because we are bringing on volumes at scale, we will have a positive impact on lowering the price, which, as I mentioned a few minutes ago, we like because part of our mission and part of the satisfaction we get out of what we are doing and working so hard is to lower global energy prices, and over time that fundamentally increases demand for us. Since we are able to add so much more volume, we make money for shareholders with volume even if prices compress. Thank you. Operator: Thank you very much for your question. Your next question comes from Elvira Scotto from RBC Capital Markets. Your line is now open. Elvira Scotto: Thanks. Good morning. I know you talked a little bit about the macro, but maybe a little bit more here, especially as there are concerns around supply glut. I mean, obviously, current events notwithstanding. You talk about lower prices driving demand and coal-to-gas switching. To the events of this weekend, were you actually seeing incremental demand? Can you talk a little bit more about that? And prior, as TTF or global prices move lower? Michael Sabel: Yeah. Thanks for that question, because that is actually one of the important things that we wanted to talk about on this call. When we look at the market in the next four, five, six years, we see, when you map out the new projects that are projected to come online and demand that is the same or slightly below what it has tracked for the last 10 to 15 years, which is over 5% annual growth, that the market is in balance to a little bit short in the next few years but then, in the early 2030s, is very short, and, of course, if projects are delayed, then the short gets more significant. Even with the current balance, which the market can see, the projects that are coming, the market net spread today as of Friday was between $5 and $6, and, as we announced this morning, we just did a very attractive five-year deal at VGC, and we are working on more of them now. That really belies the argument that there is terrible spread compression coming. We think that, based on what we see in the market and demand, the markets look really steady. Over time, the replacement cost of liquefaction capacity is going to set what the floor price is, and we think the global cost of new liquefaction capacity is north of $2,000 per ton when you take global costs into account, and at that price, you really need $3.50 to $4.50 minimum for long-term contract prices to support returns. On the question of downside protection, it is obviously empirical that when energy prices go down, demand goes up. It has been the case in human history other than pandemics. The question is, is there a physical infrastructure in place that allows for increased demand as prices go down? The answer is absolutely yes. The market today has a lot more regas capacity than it utilizes. I think in the next couple years, the market will approach over 1,500 MTPA of regas capacity globally, and a good estimate for 2030 market supply is around 620 MTPA, and so the market’s almost triple regas capacity relative to supply. There is plenty of capacity for prices to have an impact on demand as they go down. We also always like to point out what is the converted price of the delivered fuel to a market into electricity. At a $10 per MMBtu price into China, for example, or Asian markets, that is 7 to 8¢ per kilowatt hour electricity. That is extremely attractive, similar for Europe, and historically electricity prices, and by corollary fuel prices at that level, are bought at full production capacity. We are very optimistic on what the prices are going to be in the next few years, and we are seeing it in our contracting activity. We do not need it to be there, but we just believe that it will average there and average higher. As I said in the script I just read, because we are adding so much volume of liquefaction trains, even at low prices, at $3 per MMBtu in the next few years, that could equate to $11 billion of EBITDA in 2029 with the extra trains, and at $5, which we think is very possible too, that would be $17 billion, which is a reflection of just the massive scale of trains that we keep adding. I know that was a walk-by, Elvira. Hopefully, it was helpful. Elvira Scotto: Yeah. That was very helpful. Then you touched on it a little bit, but on the contracting side, you announced these two new contracts in the past few days, the 20-year SPA with Hanwha and the five-year contract with Trafigura. Can you talk a little bit about pricing around those contracts? And then how do you see the appetite for long-term SPAs? Finally, remind us the mix that you target between long-term, medium-term, and short-term contracts? Michael Sabel: The Hanwha contract, we have not disclosed any specific prices on it, but it is consistent with what we have been doing recently in our contracting. Our 20-year and our midterm contracting activity is very busy, and we expect more deals in coming quarters on both 20-year and midterm. The midterm contract is, I am not going to give you an exact price, but it is north of a $3 net spread over five years, and so relative to the 20-year contract price, very attractive for us, and again illustrates the demand and pricing in the market relative to what some people view as significant compression coming, which we disagree with. We are very, very busy on both midterm and long-term contracts, and we expect that to continue. We are approaching, we are almost at 50 MTPA of 20-year contracts, which is right around the nameplate capacity of Calcasieu Pass, Plaquemines, and CP2. On a traditional nameplate capacity, which does not apply to us anymore, we are almost fully contracted on a 20-year basis, which allows us to right-size the construction loans that we use to support those projects at coverage levels that give us the same debt coverage that the rating agencies want to see that will allow us to be investment grade around COD for the projects. From a debt coverage, both debt amortization and interest coverage, we are the same as the rest of the market. Of course, we produce a lot more than that. That gives us enormous upside optionality and very free to cheap capacity, and that will begin to pay us dividends. I mentioned it briefly in the script, but in the case of CP2, we invested heavily and foresaw the opportunity almost three years ago to access gas directly from the Permian, Waha, all the way to CP2, and we have invested massively in large-scale nitrogen removing units. I think it will end up being over $1 billion that has been invested, and pipelines along lateral CPX and the Blackfin pipeline that interconnects and takes us all the way to Katy, and transportation agreements that physically connect us to Waha, and that combined with the nitrogen removal unit make us unique as the only facility that can take massive direct volumes from Waha to our facility and handle the large amounts of nitrogen efficiently. We are feeling good about that. That was three years of engineering and design work and execution. Operator: Thank you very much for your question. Your next question comes from Chris Robertson from Deutsche Bank. Chris, your line is now open. Chris Robertson: Thank you, Operator. Good morning, Mike. Michael Sabel: Good morning, Chris. Chris Robertson: Just going back to the long-term SPA agreements signed this year and last, I know you are not commenting directly on pricing, but can you comment around the directionality, let us say, of liquefaction fees over time? Has that been fairly range-bound over the past few quarters? Or has that moved up due to a rising-tide-lifts-all-ships type of market environment here? Michael Sabel: We have been holding it steady deliberately because we are able to provide attractive returns at that price, and we are able to execute the volume of contracts that we want, but we are at a significant discount to where we think the rest of the market is getting priced. We are going to maintain our levels because we have a lot of volume that we can build very attractively at those price points. This is a culmination of 12 to 13 years of work for us to build out the team and the supply chain and the sites to be able to continue to do this, and so we are going to continue to add the 20-year deals at prices that are very nice returns for us and allow us to continue to grab market share. We are excited to add the liquefaction trains very cost effectively that give us the higher volumes of production capacity that, regardless of the price volatility, generate enormous amounts of free cash for us. Chris Robertson: Thanks for that, Mike. Following up on a few of the points there, just looking at the expansionary nature of the CP2 and Plaquemines bolt-ons, how are you thinking about, is there a change in calculus on the amount of long-term contracted coverage or nameplate capacity on long-term contract required by the lenders? If so, what are you targeting in terms of total contracted nameplate on those expansion projects? How should we think about expected CapEx on a dollar per MT basis, just given their nature of not being new build assets but expansions? Michael Sabel: Thanks for that question. Our primary focus after the second phase of CP2 are the two discrete bolt-ons, one at CP2 and one at Plaquemines, and they are four-block, eight-train additions that marry up really well with the existing balance of plant, and, as you said, allow us to do it very cost effectively. We expect it to be at a significant discount to the already good cost that we are able to achieve, and also we will be able to build it faster because there is a lot less that goes with it. They are each around 6.5 MTPA. After those, we will watch the contracting progress of our 20-year deals and our five-year deals to see what the expansions are after that, but we are focused primarily on those two discrete projects because they are so much less expensive and so much faster, and we designed Phases 1 and 2 for CP2 and Plaquemines to anticipate them. In particular for CP2, it is inside the existing wall, and the pipe bracket connections are very short. It will go in very quickly and very efficiently. Those bolt-ons will allow us to get to that kind of 81 to 85 MTPA in early 2029. We need to keep pace with the permitting, which is very strong in this environment, but with our existing supply chain, our teams, and our sites, we can layer that in very quickly and start to produce from them later in 2028 and 2029. That will get us to roughly 90 cargoes loading a month in 2029. Chris Robertson: Thank you, Mike. I appreciate the answers. I will turn it over. Operator: Thank you very much for your question. Your next question now comes from Greg Brody from Bank of America. Greg Brody: Good morning, everybody. Michael Sabel: Hey, Greg. Good morning. Greg Brody: Good morning, everybody. Michael Sabel: Hey. Good morning. I think you just, as you laid out very nicely that you do not have capital expectations at the holding company between equity and debt, just talk a little bit if, at the project level, things have changed a little bit. Are you still planning on funding 50/50? And talk about the appetite for banks to support that. Michael Sabel: The appetite of the banks on the construction loan side is extremely strong. The quality of the execution by the teams and the projects is appreciated by the banks, and since we are largely building identical things and process systems at our facilities and projects, the bank capital market can understand it well and has great visibility into tracking progress. That has supported us in having very efficient access to the bank capital markets, and we expect that to continue to be the case. We have already invested a lot of equity from retained earnings into the second phase of CP2, and when we finance that second phase, it will become one financing, and so we do not expect to have to add, at this point, capital from the parent to support it. It will be construction loans, existing capital invested, retained earnings. After this coming Phase 2, the bolt-ons are unique because they are less expensive and they turn on even faster. Do not hold me to this or invest based on this. It is a forward-looking statement, but it is roughly 20 months or so to turn on the bolt-ons because there is so much less kit that is required to do those bolt-ons. When you produce revenue so quickly and earnings so quickly on those bolt-ons, it gives you a lot of flexibility in how you can finance, at the project level, those sites. The combination of speed and lower cost gives us lots of really attractive options about how to add it and how to contract it in the market. Greg Brody: Got it. Then maybe just last one for me. Obviously, you have had some success with the arbitrations as of late. How are you thinking about that as part of your funding plan? To the extent you settle anything, and just a reminder on timing for when you think we will actually get some numbers from the BP process. Michael Sabel: There is no hearing expected to be set for BP this year, so that process will play into next year, probably later next year, before there are any further developments there. We expect the next results on the arbitration front in coming quarters. On the back of the very successful result on the Repsol win, we remain positive on outlooks for the remaining arbitrations, and so we are hoping to largely have resolution in the next few quarters and have it all behind us. Operator: Thank you very much for your questions. There are no further questions at this time. I will now turn the call back to Michael Sabel, CEO, Executive Co-Chairman, and Founder, for closing remarks. Michael Sabel: Thank you, everybody. We appreciate the time this morning, and we look forward to conversations in coming days with all or many of you, and we are going to be working hard for everybody through these challenging and volatile markets in parallel with all the construction activity that continues. So thanks again for the support, and we look forward to seeing and speaking with you soon. Operator: This concludes today's call. Thank you for attending. You may now disconnect.
Operator: Good morning, and welcome to Norwegian Cruise Line Holdings Ltd. Fourth Quarter and Full Year 2025 Earnings Conference Call. My name is Rob, and I will be your operator. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions for the session will follow at that time. As a reminder to all participants, this conference call is being recorded. I would now like to turn the conference over to your host, Sarah Inmon. Sarah, please proceed. Sarah Inmon: Good morning, everyone. Thank you for joining us for our fourth quarter and full year 2025 earnings call. I am joined today by John Chidze, President and CEO of Norwegian Cruise Line Holdings Ltd., and Mark A. Kempa, Executive Vice President and Chief Financial Officer. As a reminder, this conference call is being simultaneously webcast on the company's Investor Relations website. We will be referring to a slide presentation during this call which can also be found on our website. Both the conference call and presentation will be available for replay for 30 days following today's event. Before we begin, I would like to cover a few items. Our press release with fourth quarter and full year 2025 results was issued this morning and is also available on our website. This call includes forward-looking statements that involve risks and uncertainties that could cause our actual results to differ materially from such statements. These statements should be considered in conjunction with the cautionary statement contained in our earnings release. Our comments may also reference non-GAAP financial measures. A reconciliation to the most directly comparable GAAP financial measure and other associated disclosures are contained in our earnings release and presentation. Unless otherwise noted, all references to 2025 and 2026 net yield and adjusted net cruise cost excluding fuel per capacity day are on a constant currency basis and comparisons are to the same period in the prior year. With that, I would like to turn the call over to our CEO, John Chidze. John? John Chidze: Thank you, Sarah, and good morning, everyone. It is my pleasure to be here with you today. I would like to thank my Norwegian Cruise Line Holdings Ltd. colleagues for their warm welcome and Mark for his partnership. There are many reasons that I agreed to join the Board last February, and now become CEO. This is a special company. It founded the modern cruise industry. We have iconic brands, an extremely loyal guest base, and a dedicated team. At the same time, Norwegian Cruise Line Holdings Ltd. has clearly not been performing to its full potential. Over the past two weeks since becoming CEO, I have been moving quickly to immerse myself in all aspects of our business and culture. I have begun a deep review of operations, spending time with our leadership and beginning to engage across the organization to better understand where we are performing well and where we are not. As someone who has built a career at consumer-focused companies, I share the team's passion for delivering an unbeatable guest experience. I have seen our company at moments of real strength, as well as through some of its most challenging periods, including the pandemic. I have experienced firsthand the resilience of this company and its people. I bring deep familiarity with the cruise industry from my prior years on the Norwegian Cruise Line Holdings Ltd. Board of Directors. We span transportation, hospitality, entertainment, construction, logistics, revenue management, touring, and more. We do this while managing various distribution channels and regulatory frameworks around the world. Our industry relies on guests booking their voyages months, sometimes even years, in advance. I have also successfully led a number of yield-driven, asset-intensive businesses through periods of transformation and performance improvement. Those experiences have reinforced a simple lesson. Sustainable improvement comes from disciplined execution, operational rigor, and a clear focus on the fundamentals. This is the approach I intend to bring to Norwegian Cruise Line Holdings Ltd. We are operating a capital-intensive business with a balance sheet that is overly levered and a cost structure that must continue to be streamlined. Indeed, we have some challenges that need to be addressed immediately, and others that will take more time. We also have strengths to leverage. My takeaway after these first two weeks: we have to create a burning platform sense of urgency balanced against optimism and excitement for the opportunities ahead of us. Let me be clear, our strategy is sound, our execution and coordination have not been. And a culture of accountability is essential and necessary going forward. The good news is that we have the assets, we have the brands, and we now have the right focus. Job one is fixing execution and driving accountability and urgency. This comes from optimizing the organization and eliminating bureaucracy. There were clear failures in the basics of developing coordinated plans and a clear operating cadence around key enterprise-wide initiatives. The culture was very siloed, with the lack of a one-team mentality, which fed into this lack of cohesion. And I found that while there was work being done, the alignment and focus was not where it needed to be. Job two is improving efficiency and return on invested capital, ensuring that our capital allocation decisions are grounded in measurable returns. The company invested heavily in our ships, and as a result, our product is strong. However, we underinvested in technology, revenue management capabilities, and customer-facing systems. Correcting this imbalance is one of our top priorities. And job three is unlocking operational upside in revenue management, itinerary optimization, and monetization of our private destinations. There is important work ahead to return our company to sustained growth and value creation. It is the combination of my turnaround experience and tenure leading consumer-focused companies and industry understanding that provides me with the confidence that we can deliver for our shareholders, guests, and team members. What will make this possible is our leadership team. As of the past few months, we have put in place essentially an all-new leadership team in most of our critical functions with a skill set and experience level that is well suited for the work ahead. Now, this group needs to bond. We need to create a culture of accountability and empowerment. The pieces are definitely here, and I am already encouraged by the team's excitement and commitment to this turnaround. Some actions are already underway, and you will see further announcements over coming quarters as we streamline and reorganize the business to better execute. To that end, I am working closely with our brand and executive leadership teams to take a fresh look at how we can improve day-to-day execution and drive more consistent results. Mark Keslauskas was named President of Norwegian Cruise Lines in December, bringing more than three decades of experience across sales, operations, and innovation in the global travel industry. Mark has a strong track record of driving commercial performance and enhancing the guest experience, and his leadership will be instrumental at the brand level. I am also working closely with Jason Montague, our Chief Luxury Officer, as he continues to lead Regent Seven Seas Cruises, and Oceana cruises. Together, we are focused on ensuring that each of our brands continues to deliver distinctive, high-quality experiences that resonate with our guests. Our executive leadership team brings together experienced company and industry veterans alongside new seasoned leaders from outside the industry, particularly in areas like technology and strategy. At the Norwegian brand, we recently onboarded a seasoned industry veteran to lead that brand's revenue management function along with a Chief Marketing Officer that is honing our brand messaging and the way we engage with our guests. Going forward, our decisions will be driven with a focus on revenue management. We will work with and direct sales and marketing to better align our resources. This is just one example of our teams coming together across the company around a common goal of improving performance. My priorities are straightforward: improve execution, strengthen financial discipline, reduce leverage, and focus the organization on the areas that will drive sustainable value creation over time. Once we complete our review and finalize our operating plan, progress will require patience, discipline, and consistent execution. I look forward to sharing more detail on these priorities as we progress. With that, I will turn it over to Mark to walk through our fourth quarter results and our outlook for 2026. Mark? Mark A. Kempa: Thank you, John, and good morning, everyone. I will begin with our fourth quarter results on slide five, which were ahead of or in line with our expectations. Net yields in the fourth quarter grew 3.8%, while adjusted net cruise cost ex fuel of $158 was below guidance, increasing only 0.2%, driven by strong cost controls, which ultimately drove adjusted EBITDA of $564,000,000, exceeding our guidance. Adjusted net income for the quarter was $130,000,000, and adjusted EPS of $0.28, which excludes an approximately $95,000,000, or $0.20, write-off related to certain information technology assets included in depreciation and amortization expense. Now moving to our full year 2025 results on slide six. Starting with our top line performance, net yields rose 2.4% compared to the prior year as expected. We continue to have a disciplined cost management approach, and our adjusted net cruise costs ex fuel per capacity day rose only 0.7%, slightly better than our guidance and well below inflation. Overall, we made important strides in 2025. Our adjusted EBITDA increased 11% to $2,730,000,000, our adjusted operational EBITDA margin improved 160 basis points to 37.1%, and our adjusted EPS increased 19% to $2.11. Moving to slide seven, I will touch on a few operational highlights since our last earnings call. At the Norwegian brand, under the leadership of our new Chief Marketing Officer, we launched a refreshed brand platform, reintroducing our iconic 1990s tagline “It’s Different Out Here,” and anchoring the brand in the values that have always set Norwegian apart: freedom and flexibility. Norwegian also opened bookings for Norwegian Aura, the largest of our Prima-class ships, with her first voyages setting sail in 2027. At Oceana, we continue to sharpen the brand's policy fleet wide, positioning in the luxury space, announcing an adults-only. The shift is already yielding results. The sales of Oceana Sonata delivered a record-breaking opening day with bookings surpassing the launch of Oceana Laura by 45%. Strength in our luxury portfolio was also evident at Region VII Cs, where January bookings were up 20% year over year with robust demand across the destination portfolio. In addition, we recently announced new ship orders across all three brands, one for Norwegian Cruise Line, one Sonata-class ship for Oceana Cruises, and one Prestige-class ship for Region. We now have 17 ships on order slots through 2037, securing coveted shipyard buildings and locking in our long-term growth plan. Importantly, given the timing of the deliveries for these new ship orders, they require only modest initial capital outlays. We do not expect them to have a material impact on our near-term leverage. Turning to Great Stirrup Cay on slide eight. We are very encouraged by the early results following the opening of the pier, a new expansive pool, and enhanced guest amenities on the island. Initial guest feedback has been incredibly positive with strong guest satisfaction scores across the board. The early feedback reinforces our confidence that our investments are improving the guest experience and will drive strong returns. Importantly, we remain on track to open the Great Tides Waterpark later this summer, which will further elevate the island's offering and strengthen demand as we move into 2027. Great Stirrup Cay is a central pillar of our Caribbean strategy. We remain highly confident in the long-term opportunity in the region, which delivers strong financial returns, attracts a broad and growing guest base, provides a stable operating environment, and allows us to target more new-to-cruise and premium family guests. While our Caribbean strategy required a shift in deployment, in hindsight, it is clear that this shift, which resulted in a 40% capacity increase in Q1, was executed without the necessary enterprise-wide coordination, as John referenced. In addition, the capacity increase was premature as the supporting infrastructure and commercial initiatives around Great Stirrup Cay were not yet ready to support and accommodate the additional capacity. While phase one of the enhancements opened at the end of 2025, we increased capacity into the region ahead of the full build-out at Great Stirrup Cay, which includes the Great Tides Waterpark. Importantly, we did not sufficiently align revenue management, sales, marketing, itinerary planning, and on-island monetization strategies to support that deployment shift. The individual components were moving forward, but they were not integrated under a single cohesive operating plan designed to absorb the capacity at the right yield. As a result, the headwinds we are experiencing in the first quarter are more pronounced than we anticipated last quarter, which I will address in more detail shortly. As we stepped back and evaluated our 2026 deployment, it became clear that our commercial strategy, including our sales, marketing, pricing strategy, and revenue management tools, were not aligned with our deployment. As a result, certain itineraries did not receive the coordinated commercial support required to maximize performance and yields, which is weighing on our expected performance for the full year. We entered 2026 slightly behind our ideal booking curve in certain itineraries, creating near-term pressure on pricing and yield which is evident in our guidance. Moving forward, we expect that creating tight integration between deployment planning and commercial execution will ensure itineraries are fully supported by a cohesive plan around revenue management, pricing, and marketing from day one. We are embarking on a disciplined business review to ensure full alignment across our deployment, marketing, and pricing, and look forward to sharing more with you on this process in the coming quarters. As John mentioned earlier, we are moving with a sense of urgency to overcome these challenges. However, given the booking lead times, the benefits will phase in over time. We are confident that these steps will position us for stronger, more sustainable performance over the long term. This leads me to our 2026 guidance on slide 10. Let us start with net yields. As a result of the headwinds I discussed earlier, we expect net yield growth in the first quarter to decline approximately 1.6% as higher occupancy was more than offset by pricing pressure. Looking to the balance of the year, we expect net yields to stabilize and modestly improve, growing at approximately 0.6%, bringing our full-year net yields to approximately flat. However, we do not expect this gradual improvement to be symmetrical across all three quarters. At our Norwegian brand, we are experiencing pricing headwinds in select markets as a result of certain execution missteps, including sailings in the Caribbean and Bahamas and itineraries out of our new home port of Philadelphia. In Europe, the tailwinds we had expected to occur in Q3 are not as strong as previously anticipated, given the aforementioned execution missteps. Outside of these markets, we note that heightened competitive activity in Alaska has also pressured yields due to elevated industry capacity levels. That said, we remain focused on improving our commercial strategy and expect these headwinds to fade as we better align our strategy with deployment. We recognize that this level of top-line performance falls short of our expectations and our long-term objectives. As I mentioned earlier, we are undertaking a disciplined business review to fully assess the drivers of this underperformance and to ensure we realign deployment, pricing, and marketing to restore sustainable net yield growth. Turning to costs, our discipline on the expense side remains firmly intact, and this marks the third consecutive year of strong cost control. In the first quarter, we expect adjusted net cruise cost ex fuel to decrease approximately 0.8%. Looking to the remaining nine months of the year, we expect unit cost to grow approximately 1.4%, bringing full-year unit cost growth to approximately 0.9%, well below inflation. Our cost savings program represents a structural change in culture. We are building the muscle to continuously identify efficiencies, remove waste, and improve processes. That work will continue throughout 2026 and beyond as we remain focused on driving sustainable margin expansion. As a result, we expect first quarter adjusted operational EBITDA margin to improve to approximately 29.1% compared to 28.4% in 2025, and adjusted EBITDA of $515,000,000. For the full year, we expect margins to remain essentially flat year over year at approximately 37%, while adjusted EBITDA increases approximately 8% to $2,950,000,000. Adjusted EPS is expected to be approximately $0.16 in the first quarter, and for the full year we expect adjusted EPS to increase approximately 13% to $2.38. Deleveraging remains a top financial priority, and for the full year 2026, we expect net leverage to remain approximately flat at 5.2 times. Keep in mind, this reflects the delivery of Norwegian Luna in March and Seven Seas Prestige in December, which temporarily increases reported leverage by approximately a quarter turn as the associated EBITDA contribution phases in. While we continue to grow capacity at a healthy pace, we are focused on driving stronger top-line performance and margin expansion to support further net leverage reduction over time. As these new ships ramp and contribute meaningfully to EBITDA, we expect net leverage to resume its downward trajectory. At the holding company level and at the brand level, we are taking an appropriately disciplined approach to guidance. Rebuilding credibility with the market starts with setting clear, realistic expectations and delivering on them consistently. We are acting with urgency to strengthen the business execution, but we are also realistic that meaningful improvement requires deliberate effort over time. Our focus is on building a stronger, more durable foundation and restoring performance in a way that is sustainable and credible. Before I turn the call back over to John, I want to take a moment to highlight the progress we have made on our cost savings initiatives over the past several years on slide 11. We expect 2026 to mark another year of sub-inflationary adjusted net cruise cost ex fuel growth. That would represent nearly three consecutive years of essentially flat unit cost growth while we deliver on our $300,000,000-plus savings target. These results are the product of the disciplined work of our transformation office, which has methodically reviewed cost structures across the business, identifying efficiencies and removing waste, all without compromising the guest experience. While much of the early focus was on shipboard efficiencies, we are now expanding and accelerating the program to drive further operating leverage by optimizing SG&A. Importantly, this is not a one-time program. We have embedded cost discipline into our culture, and we intend to continue driving efficiencies and margin expansion well beyond 2026. With that, I will turn it back to John for closing remarks. John Chidze: Thank you, Mark. Before opening the call to questions, I want to underscore our focus going forward. Together with our Board and executive leadership team, we are focused on improving execution, strengthening financial performance, and reducing leverage over time, while remaining firmly committed to delivering the exceptional vacation experiences our guests have come to expect across our three incredible brands. As I said before, we have the assets, we have the brands, and we now have the focus. I recognize that our 2026 outlook is below the long-term aspirations we previously communicated. Closing that gap requires focus, rigor, and accountability, and that is exactly what we are bringing to this next phase. We look forward to keeping you apprised of our progress. Mark A. Kempa: Before we move to Q&A, I want to briefly address the current conflict in the Middle East. We are closely monitoring the situation in Iran and the broader region. The safety of our guests and crew is always our top priority. At this time, we are not operating in the affected areas, and there are no impacts to our scheduled itineraries. As it relates to fuel, the longer-term impact remains uncertain. However, we are currently approximately 51% hedged for 2026 and 27% hedged for 2027, which helps mitigate near-term volatility. We will continue to monitor developments closely and will adjust as necessary. With that, operator, please open the line for questions. Operator: Thank you. At this time, we will now be conducting a question-and-answer session. Our first question comes from the line of Steven Moyer Wieczynski with Stifel. Please proceed with your questions. Steven Moyer Wieczynski: John, welcome in and congratulations on the CEO appointment. So I have two questions that I am going to try to ask here in one. So, John, obviously, you have only been in your seat for a very short period of time, but you noted and Mark commented in his prepared remarks that there have been execution missteps with aligning your commercial strategy with your deployment. So I guess my first question is about these Caribbean deployments and maybe how you address these capacity overhangs moving forward? I mean, or if you start to pivot away from decisions that previous management implemented in the Caribbean. And then second question is probably for you, Mark. But if we look at slide 10 and look at the implied guidance for 2Q–4Q, you obviously have a negative yield-cost spread. But from our seat, that seems somewhat conservative even with your deployment headwind. So, Mark, not sure what you would say about that, but any comments would be helpful, especially given the fact Caribbean capacity starts to ease after the first quarter and maybe it is more about Alaska and Europe that you called out in your prepared remarks, but any comments there would be super helpful. Thanks, guys. John Chidze: Yes. So in terms of your question about Caribbean deployments, clearly, I think the Caribbean is the place to be. I think it really ties back to when I said it was a very siloed effort organization, not a cohesive plan. So I think clearly, as we said in our remarks, our timing was off. I think we got a little ahead of ourselves. Again, there was not a great cohesive plan. Marketing was going in one direction. Topping of the island was going in a different direction. So I think in the intermediate to long term, we are very confident about the Caribbean. Again, I just think this is where we have got to do a better job running a very well-coordinated, well-executed plan. I think we will be fine. It is just a lot of short-term misfires too, if that is kind of how I think I would describe it. Mark A. Kempa: Yes, Steve. So strategy around the Caribbean is sound. We said that our private island Great Stirrup Cay is a central pillar of that. I think this squarely reflects the pretty dramatic shift in capacity toward the region without the right commercial apparatus working in sync as a cohesive unit across the board, hence why we have seen some changes over the last few months of our various leadership. So I think going forward, as we correct those missteps and we align our strategies as one unit, I think we will continue to see improved performance around that. I think, Steve, on your second portion, there was a mouthful, but I think you are referencing the implied guidance of Q2 to Q4 as well as maybe a negative spread there. Apart from the Caribbean and Bahamas where we have had a capacity increase, I think when we referenced some of the commercial missteps or execution, that is also affecting us in Europe. While Europe as a whole, the market is fine, we are not seeing the expected tailwinds that we expected to harvest over the summer as a result of some of our own missteps. So we are in the process of, again, working on that and correcting that. Apart from that, I think we are seeing softness in Alaska. I think Alaska has seen mid-single-digit increase in capacity across the industry, and I think that is putting pressure on the broader industry around that. So that is a little bit of a drag for us this year. Steven Moyer Wieczynski: Okay. Thanks, guys. Appreciate it. Operator: Next question comes from the line of Benjamin Nicolas Chaiken with Mizuho. Please proceed with your question. Benjamin Nicolas Chaiken: Hey, thanks for taking my questions. Just to maybe follow up on Europe. So last year, you kind of did these long-duration immersed strategies into Europe in 3Q and you did that on the heels of April 2, which seems like an obvious formula for weakness. But as you were kind of suggesting in the previous comment, that you were not expecting 3Q this year to be a tailwind as a result of your own missteps. I guess I am just—can we flush this out? Can we unpack that a little more? I believe Caribbean should be either your lowest or close to your lowest from a capacity mix standpoint. Yes. So help us unpack how the missteps in the Caribbean impact that 3Q kind of year-over-year comparison versus last year? Mark A. Kempa: Yes. Thank you, Ben. Look, you are absolutely right. We did have a shift in itinerary or deployment that was already pre-planned for 2026 prior to any events last year in March, April. I think the issue around Europe is we in fact did decrease our longer deployment itineraries. In fact, as a stat, I think we had about 160 voyages last year which were nine to fourteen days. This year, those same voyages are down to the low 60s. So we did, in fact, reduce it by 50% to 60%. Where we are seeing some pressure is on a good portion of those sailings we do have quite a bit of open-jaw itineraries. And as a result of that, we are seeing a little bit of pressure from our consumers around those open jaws. And that is something, again, that goes back to what I would call commercial misalignment in terms of our deployment and commercial strategy. So while we cannot correct that for 2026, it is something that we are focusing on in the future that we believe is very correctable, but of course, we will not see the fruits of that until 2027 and beyond. Benjamin Nicolas Chaiken: Okay. And then, John, in your prepared remarks, I believe you spoke about either a mix of my words and your words, but I believe you spoke about a culture of inefficiency and bureaucracy. Maybe you could expand on this. How did this manifest in results? Was this a cost headwind or more of a strategy and capacity allocation related? And then what are you doing specifically to change this culture? Thanks. John Chidze: Yes. I think it was a little bit of both. I think, as I said, it was very siloed and not—I hate to keep using the word cohesive, but cohesive strategy and cohesive execution, which allowed a lot of these sort of missteps. I find a culture that really has no sense—not no sense, but it needs a much greater sense of urgency and accountability. I think both of those were missing. And yes, there are clearly, as we said in our remarks, I think the company has done a great job ship side in terms of looking at costs, but I think we have definite opportunities on the shore side to optimize the company. And so what am I doing to get after it? Again, to create that culture—one, trying to create cohesive plans. Trying to go after the costs. I also think the other huge opportunity is revenue because it was so disjointed, underinvested, as I said, in technology, in revenue management, sales going in one direction, marketing in another, itinerary planning in another, lack of real focus on revenue management. I think pulling all that together, I actually think our biggest opportunity is revenue. And while you might not see that one immediately given the nature of our industry and people are already fairly well booked in 2026, you should definitely start to see the fruits of that in 2027. So kind of look at it as a tale of two cities. I think both sides of the coin are opportunities for us. The culture is what will drive both of those at the end of the day. Operator: Our next questions come from the line of Conor T. Cunningham with Melius Research. Please proceed with your question. Conor T. Cunningham: Hi, everyone. Thank you. John, maybe we could just stick with you on maybe following up to Ben's comments a little bit there. You mentioned that you are going through a full review process now. Just curious on when that will actually be—you know, understand a lot of it is culture and more of a broader strategy as you kind of take the reins. John Chidze: Well, as I said, I think our strategy is correct. I like—as Mark noted, we have as a company invested a lot in our ships. So I think our ships and our guest experience, our sort of crew enthusiasm and crew dedication is good. Whether it takes three months, four months, five months to kind of really dig in to where we have gotten a little bloated, where we are not efficient, where should we be looking to invest short term, I cannot tell you exactly, but it is not a one-year process by any stretch of the imagination to kind of pull together what do we want to do immediately, what do we want to do but for certain reasons maybe we cannot get after until 2027, sort of racking and stacking those priorities. So I would say in the next couple of quarters, we should have that pretty buttoned up. But I do not know—I cannot give you an exact date by any stretch. I have been here all of two weeks, so— Conor T. Cunningham: Yeah. No. I realize that you have been there for a short period of time. Just—okay. So just as a follow-up, maybe, have you guys actually been in contact with Elliott? And then when you look at their presentation, what would you actually agree with, as you kind of digest it? John Chidze: The answer is yes. We have been in touch with Elliott like we have with all of our shareholders. And we are actually headed out for a two-week road show basically with investors, which we are literally hitting the road this week and next week. So that was already set up. That is one of the first things I wanted to do when I stepped in, is go talk to shareholders and get their perspective on what we have done well and clearly what we have not done well. So that is all underway, and obviously hearing from Elliott is just like any other shareholder, meaning we are very interested in what they have to say, their thoughts on how we better drive long-term shareholder value. So yes, that is what I would say. Mark A. Kempa: And Conor, I think as John has said, I think there is a huge opportunity here as we focus on the revenue side. We brought in a top-notch commercial revenue officer who is an industry veteran, who has significant experience in other areas of the industry of correcting this issue. And while that is going to take some time to harvest, we believe that, again, we are putting in the right structural components underneath that to really drive the top line as well. Conor T. Cunningham: Appreciate it. Thank you. Operator: Our next questions come from the line of Matthew Robert Boss with JPMorgan. Please proceed with your question. Matthew Robert Boss: Great, thanks. So, John, you enter 2026 slightly below your optimal booking range. Could you speak to actions maybe more in the immediate term to support improvement in booking trends? Maybe specifically your mindset on preserving price relative to load factors? John Chidze: I think, again, having been here two weeks, I am going to defer to Mark on that one. I am not that deep in the weeds yet, to be honest. Mark A. Kempa: Yes, Matt, great question. So yes, we are slightly behind the optimal book curve as we mentioned. And as a result, when you look at our guidance, I think that is reflective of both the first quarter as well as the remaining three quarters. It is always a delicate balance between price and load, but I think when you step back and you think about our longer-term strategy of a central pillar around the Caribbean, getting more premium families on board, monetizing our island, we will continue to focus on load factor. And in fact, I think our load factor this year is increasing by over 200 basis points. So the balance is going to be finding that right price together with the right yield and load factor. I think, again, if we align all of our commercial departments rowing in one direction, I think you are naturally going to see increases in both. Matthew Robert Boss: Great. And then maybe, Mark, to that point, could you elaborate on your cost growth outlook for this year? Meaning, I know this has been a strong area of focus in particular for you personally over the last couple of years. But any areas of incremental low-hanging fruit that you see to further rationalize the cost structure? Or maybe on the flip side, investments needed to drive yields multi-year in your view? Just what is the best way to think about the balance that we should consider here? Mark A. Kempa: Yes, I think as John mentioned, one of the areas that we have not invested in enough is customer-facing systems, technology, and both marketing and revenue management technology. I think as you all recall, we started investing in a new revenue management system last year. It has just started up and running over the last six to eight weeks. So that will take some time. I think, again, when you step back and you look at where our cost culture over the last two to three years has been, yes, we have made good progress. We have always said this is a $300,000,000-plus program. But a lot of that was focused on shipboard efficiencies. And now our eyes are squarely turning on the SG&A component using that same muscle. So while—when you dig down, there is never any low-hanging fruit, but I think you are going to see us taking much more methodical, urgent actions around that side of the equation going forward to right-size that piece of the business. Matthew Robert Boss: Great color. Best of luck. Operator: Our next question is from the line of Brandt Antoine Montour with Barclays. Please proceed with your questions. Brandt Antoine Montour: Good morning, everybody. Thanks for taking my questions. So, John, I want to get your sense—I mean, in your prepared remarks, you touched on technology and revenue management, customer-facing systems. Do you, these together, do you think that there is a disadvantage at Norwegian of scale? And the reason I ask is, you said that this would require patience. How long in your experience does it take to see these types of turnarounds start to come to fruition? John Chidze: Yes, I do not think we are at a disadvantage at scale. I think, again, if we showed the same discipline on the shore side, the SG&A side, that we have done on the ship side, I think we can definitely see some improvements over 2026 and 2027 because costs you can go after faster than the revenue side given, again, how far out people book. But I think our investments in revenue management, as Mark said, in some of our guest-facing technology, the island coming online, better monetization of that island. I think the revenue side, again, you are going to see more 2027–2028. So they kind of go at slightly different paces, just given how our industry sets up. But I think we are all going—Mark might not say it is low-hanging fruit, but I would say there are lots of opportunities. So I will quibble with him a little bit there. And that is our job to go after that and go get it, again, focus on it as much as we did on ship-side costs. Brandt Antoine Montour: Thanks for that. And then just a follow-up question. It has been all of one and a half days since the geopolitical events unfolded in the Middle East, understanding that you do not have direct exposure there. But have you seen or do you expect to see near-term bookings pressure on other international itineraries, namely Europe, from Americans? And have you baked anything for that into your guidance? Mark A. Kempa: Yes, good morning, Brandt. So, so far we are, what, a day or two into this and I cannot say that we have seen anything noticeable around that. In terms of the guidance, our guidance is our best view of how we see the world. But I would certainly not say we have baked anything in for the last two days of geopolitical issues. As I think John noted in his prepared remarks, we will see—obviously, we could see a little bit of pressure on fuel. The good news is that we are over 50% hedged for the year. And the one thing that we can control is fuel consumption. And I think when you look at this year, where we are heading, about 3%, our implied forecast implies that we are going to be down fuel consumption per capacity day, and that comes off of 2025, where we were down 6% per capacity day. So we are controlling what we can control, and, you know, we are hopeful that this unrest in the Middle East area settles soon. Operator: Thanks, everyone. Our next question is from the line of James Hardiman with Citi. Please proceed with your questions. James Hardiman: Hey, good morning. Thanks for taking my questions. And John, welcome aboard and good luck. So we have talked a lot today about some of the missteps—investors very much appreciate, along the way, misalignment. And I think sort of the ownership on that front. I maybe wanted to dig into if there might be other factors also at play here, namely sort of the cyclicality piece, right, the strength of the consumer broadly and then maybe the competitive piece, right? Your relative positioning within the industry. Obviously, you guys have some really impressive peers. And so just trying to dig in a little bit more—do you think the consumer is slowing? Do you think that you have lost any credibility with consumers as we think about, you know, fixing this going forward? Just trying to make sure we understand all the pieces. Thanks. John Chidze: Yes. So I would start out by saying—I am going to let Mark get a little more granular. But I think the other thing besides our missteps, I think the other thing investors really need to focus on is that, as we talked about, it really is a whole new team, which I was lucky. I mean a lot of people have been brought in, not just the head of Norwegian; we have a new head of technology who came from two Fortune 500 companies and a new head of strategy and a new revenue management. I would say, even having been on the Board—kind of back on the Board about a year ago—the quality of the team is instantly better, but the downside, which turns into an opportunity, is most of them have only been here three or four months. So yes, we had missteps, but I think we have much higher-caliber people in the key roles. So now we have just got to gel, as I said, and become one team, and I think they are equally excited about what we can accomplish. I would say, you know, yes, missteps, but also in some of my previous turnarounds, you have to go in and kind of clear the field, spend three to four months going to find the right people to put in place. I think for the most part, we have that here. I think in terms of what Mark is seeing with the consumer, he can give you a little more color on that. Mark A. Kempa: Yes, James, good morning. Look, I think overall, we are not seeing issues with the consumer. The consumer continues to be strong relative to cruise and relative to our space. I think what we are seeing in terms of our specific results throughout the areas are really as a result of some of the missteps that we have taken. Equally as important, our luxury brands continue to do very, very strong, and we are very happy with that. I think the big focus is really on our mass brand, Norwegian, aligning our commercial strategy and getting much, much sharper on our execution. So I would say from our standpoint, a good portion of this is probably self-inflicted wounds that we can correct—of course, correct over time. James Hardiman: Got it. That is really helpful color. And then, maybe staying with you, Mark. You touched on a little bit of this, but as we think about the phasing of the year, I guess particularly on the top line, I think most of us were bracing for a pretty rough first quarter. As we think about that 0.6% yield growth in the back of the year, obviously, 2Q, you are still not going to have the benefit of Great Tides. So I am assuming we should maybe still be modeling February to be down in terms of yields before we get maybe some relief in the back half of the year? Also, just really just trying to get an understanding as to what the exit rate looks like and how that might influence 2027. And then anything to call out in terms of cost phasing as well. Thanks. Mark A. Kempa: Yes, James. So look, I think when you look at the balance of the year, as we have said, Q2 is for the most part pretty well sold. As we did mention, we are seeing some pressure in Europe as a result of our own missteps. Alaska is seeing pressure from the broader industry. But I think when you start to look toward the fourth quarter and where we are, given that we will have our full island amenities as well as the water park, we will have about a third of our passengers touching the island in the fourth quarter. That is where I think we are going to really start to see some of the turnaround starting to occur. So I do not want to get too far ahead of our skis here, but we have got some work to do over the next couple of quarters. Operator: The next questions are from the line of Vince Ciepiel with Cleveland Research. Please proceed with your questions. Vince Ciepiel: Hi, thanks for taking my question. Obviously, the old target for low- to mid-single-digit yield growth in '26 versus the flat today. There has been some degradation in the last 90-plus days, and just trying to understand kind of the shape and pace of it. Is it—when you look at your bookings, is it just things overall have been a little bit worse versus plan? Or when you look at it by month, has there been anything encouraging, discouraging, that when you kind of look at the more recent trend line in bookings, how it has informed kind of your perspective on the year? And when you think about kind of this starting negative and moving towards—it sounded like more positive yield growth in the fourth quarter. Does that require an improvement in bookings trajectory that you are seeing right now or just kind of assume more of the same? Mark A. Kempa: Hi, Vince. Good morning. So look, I think when you think about bookings, it all starts with momentum. And as you start to see some changes in the momentum, you start to get slightly behind the booking curve. That has—as we all know—that has ramifications down the line over the next few quarters. The positive news is, again, we have made some organizational changes, more of which you are going to see, I think, over the course of the next few weeks. We are aligning our organization to ensure that they are operating as one cohesive unit. And we have got some good industry talent that are now running the key areas. So yes, it is going to take some time, but it takes time to turn the ship, so to speak. But we are seeing some positive green shoots. It is just—time is needed. And we have got a lot of opportunities on the horizon. John Chidze: And I think, Mark, as noted on, I think, the last question, the luxury brands are performing very well. So I think, again, our missteps, our lack of cohesion, are really with the Norwegian brand, but because that is the largest brand by far, that is where you are seeing it pull the overall Norwegian Cruise Line Holdings Ltd. down. So I am actually encouraged by the fact that we are executing well with two out of three. I think I know our opportunity is really around the Norwegian brand as well as all the other things we talked about. We can do better on revenue across all three brands. We can optimize SG&A across all three, but specifically, I think our big opportunity on the revenue side is Norwegian. Vince Ciepiel: Great. And maybe digging in a little bit more there, when you step back and think about flat yield for the year, Caribbean is 40% of the mix and it is probably safe to assume that is negative. But based on some of your other commentary, it does not sound like Europe and Alaska are kind of hitting it out of the park for you. So I do not know. I feel like going into this call, there was probably more concern that Caribbean would be even more negative than maybe what this overall guidance implies. So can you just talk about how you have managed price in the region, what you are seeing overall? And I think in years past, you have talked about how price matters a lot more and it takes a lot longer to go earn it back. So just how you are navigating the pricing side in the Caribbean through this reshuffling? Mark A. Kempa: Yes. Hi. So as I said earlier, it is always a balance between price and load factor. And as we continue to build our presence in the Caribbean, we are going to continue to balance that. Obviously, we are seeing some pricing pressure as a result of our missteps, and we are working on correcting that. When you think about Europe, I thought I was clear earlier. Europe as a whole is not—we do not see issues with the market. We see issues with our execution in the market. And again, there are opportunities around the margin to fix that for 2026. But we certainly can fix that for 2027. It is just a matter of not seeing the expected tailwinds that we would have thought year over year on that, that we had expected earlier. And Alaska, again, is a little bit of a soft spot. We are seeing some pressure there just from a broad industry standpoint. So again, these are all things that we believe are fixable. And it is going to take time, but with the right alignment, the right leadership, I think we have a huge opportunity in front of us. Operator: Our next questions come from the line of Elizabeth Dove with Goldman Sachs. Please proceed with your questions. Elizabeth Dove: Hi, thanks for taking the question. John, as you are stepping into this new role as CEO and taking a bit of a fresh look at things, I am curious as you think about the portfolio long term, how are you defining what is strategically core versus maybe non-core within the brand portfolio? And I will ask my second question at the same time, which is, obviously, Oceania and Regent have a different profile as Norwegian—yield, margins, etcetera. Any way that you can help us think about those relative margins or return profile of those brands versus the Norwegian brand? John Chidze: Yes. So I think we absolutely—as I said, I like the strategy. I like the assets and the brands we have. I think the quickest and most predictable way to get back on the right track and deliver long-term shareholder value is, again, to execute, work on revenue management, work on making sure we have an aligned cohesive plan, going after where we need to optimize the business. So I am actually very pleased with the portfolio we have. I just think there is lots of work to do around all three brands. And I could not begin to tell you about the margins on the three brands. I really have not dug in that much. I do not really think we go into that kind of level of detail anyway. But I look at them all as core is my honest answer. Elizabeth Dove: Thank you. Operator: Thank you. Our last question comes from the line of Trey Bowers with Wells Fargo. Please proceed with your question. Trey Bowers: Hey, guys. Thanks for the question. I guess just quickly getting back to the Elliott from before. They have obviously proposed one named new Board member and would like to have a few more. How open are you guys to some fresh set of eyes on the Board? Yeah. I will just stop there. John Chidze: Yeah. I would say like any company you would expect to say, we are always looking at renewing our Board. I think we have added three or four Board members over the last couple of years. So I think that is a constant process. The non-gov—governance committee goes over. So I would just say all kinds of people throw us suggestions, and we will definitely look at those as a Board and go from there. Trey Bowers: I guess just following up on Lizzie’s question. If someone was to approach you guys and were interested in one of the brands, would you explore that? Or you feel like everything is so devalued right now that that would not be an option? John Chidze: Yes. I think, again, I believe in these three brands. I think the best way to drive shareholder value is to go execute well, take out the excesses, and let this team coalesce because, again, it is pretty brand new. And to me, that is the best path to go down. Obviously, you always reevaluate things like any company over a longer time period, but I am pretty confident in what our plan is here. Operator: Thank you. This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.
Operator: Thank you for standing by. This is the conference operator. Welcome to the Zymeworks Inc. Fourth Quarter 2025 Results Conference Call and Webcast. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be a Q&A session. I would now like to turn the conference over to Sharnell Elander, Vice President of Investor Relations. Sharnell, please go ahead. Sharnell Elander: Thank you, operator, and good morning, everyone. Thank you for joining our fourth quarter 2025 results conference call. As usual, I would like to remind you that we will be making a number of forward-looking statements during this call, including, without limitation, those forward-looking statements identified in our slides and the accompanying oral commentary. Forward-looking statements are based upon our current expectations and various assumptions, and are subject to the risks and uncertainties, including those associated with the company, our industry, and at our stage of development. For a discussion of these risks and uncertainties, I refer you to the latest SEC filings as found on our website and as filed with the SEC. In a moment, I will hand over the call to Kenneth H. Galbraith, our Chair, CEO, and interim Chief Financial Officer, who will provide an overview of recent business updates. Kenneth will then hand the call over to Bijal Desai, our Senior Vice President of Finance, to discuss our cash position and financial results for the fourth quarter 2025. Following this, Dr. Sabeen Mekan, our SVP and Chief Medical Officer, will provide progress updates on the Phase I clinical trial for ZW251. At the end of the call, Kenneth, Sabeen, and Bijal will be joined for Q&A by Paul A. Moore, our Chief Scientific Officer, Scott Pashton, our Acting Chief Investment Officer, and Adam Sherwitz, our Acting Chief Development Officer. As a reminder, the audio and slides from this call will also be available on the Zymeworks Inc. website later. I will now hand the call over to Kenneth. Kenneth H. Galbraith: Great. Thank you, Sharnell. Good morning, everyone. First, for those on the call, I hope you and your families are all safe and well, wherever you are joining the call from today. I would like to begin by recognizing the results of the Phase III HORIZON-GEA-01 trial as presented at ASCO GI by our partners, Jazz and BeiGene. Zanidatumab in combination with chemotherapy, with or without a checkpoint inhibitor, demonstrated a median PFS exceeding one year with a median overall survival exceeding two years in first-line metastatic or locally advanced HER2-positive GEA patients. This represents a clinically meaningful outcome in a setting where long-term survival has historically been limited and unmet need remains significant. An additional planned interim analysis for median OS for the zanidatumab plus chemo regimen that just missed the statistical significance at the initial interim analysis is currently expected by mid-2026. Benefit was observed consistently across clinically relevant subgroups, irrespective of PD-L1 expression, which was studied as an exploratory endpoint in the HORIZON-GEA-01 rather than a stratification factor. On these data, we are optimistic that zanidatumab has the potential to redefine the treatment paradigm in first-line HER2-positive metastatic or locally advanced GEA. We received strong positive feedback from key opinion leaders, who recognize both the magnitude and durability of benefits seen in the study against the known and manageable safety profile. Our partners are now preparing for upcoming global regulatory interactions, potential approvals, and inclusion in physician guidelines. I will highlight now. From a U.S. regulatory perspective, Jazz expects to complete the submission of the supplemental BLA with the FDA in 2026 under the Real-Time Oncology Review program in the U.S. For zanidatumab, zanidatumab has been granted Breakthrough Therapy designation for patients with HER2-positive GEA. We expect these designations will allow for greater speed in regulatory interaction. In addition, the data from HORIZON-GEA-01 has been submitted for inclusion in the National Comprehensive Cancer Network guidelines, as previously disclosed. We therefore share in Jazz's expectations to have zanidatumab approved and launched for the treatment of GEA in the second half of this year, subject to completion of FDA review and approval. Concurrently, BeiGene is working towards the supplemental BLA for tislelizumab in the U.S. in 2026 for review by the FDA. We believe these steps reflect the clinical relevance of the results and support the path toward broader patient access. Outside of the United States, we believe Jazz and BeiGene will intend to continue working on plans and timelines for regulatory interactions with respect to zanidatumab and tislelizumab in GEA, and we look forward to reporting such progress as appropriate. Our confidence in zanidatumab’s potential has only increased since we commenced registration studies in 2021 and partnered with Jazz in 2022, in addition to our existing APAC partnership with BeiGene. These partnerships allowed us to accelerate the development of zanidatumab and broaden its therapeutic potential in many other HER2-expressing tumors while sharing development risk and transferring costs to our partners. We believe zanidatumab's demonstration of a substantial survival benefit in metastatic or locally advanced GEA, a tumor type where prior HER2-targeted agents have struggled to materially extend outcomes, strengthens confidence in zanidatumab's differentiated mechanism of action, and meaningfully reduces risk in the broader development program beyond the initial accelerated approvals for second-line biliary tract cancer received previously in the U.S., China, Europe, and now Canada. Building on this foundation, zanidatumab is being evaluated by Jazz across multiple mid- and late-stage studies, including breast cancer and other HER2-expressing solid tumors, including in a pan-tumor study. Breast cancer, in particular, represents a setting where additional novel HER2-targeted therapies, such as zanidatumab, may provide opportunities to continue improving upon the current standard of care for patients in multiple treatment settings. In January, Jazz updated enrollment guidance for the EMPOWUR-303 trial, in which they expect to complete enrollment in 2027 with top-line data readout expected later in 2027 or in early 2028. Given zanidatumab's dual epitope binding and differentiated biology, we are optimistic about its potential performance in the treatment of patients with metastatic HER2-positive breast cancer. Jazz is also pursuing collaboration with partners to combine zanidatumab with novel therapies. For example, the Phase I trial in combination with BI’s zanidotinib was recently initiated to explore the combination in metastatic HER2-positive breast cancer along with other potential tumor types. Collectively, these ongoing studies are designed to expand the clinical footprint of zanidatumab into indications where meaningful differentiation may translate into durable clinical and patient benefit. Consensus estimates for peak sales of zanidatumab have doubled over the last few years, indicating clear potential for zanidatumab to achieve a multibillion-dollar peak sales level. With progress from our partners towards global regulatory approvals in first-line GEA and first-line BTC, and accelerated development goals in metastatic breast cancer and other tumor indications, these advances represent significant opportunities to build on the financial value of zanidatumab for Zymeworks Inc. and our shareholders. This quarter, we reported regulatory approvals for zanidatumab as monotherapy in both Canada and the United Kingdom for the treatment of second-line biliary tract cancer. From a financial perspective, this expansion is expected to translate into regulatory milestone payments for global approvals in GEA of up to $440 million, as well as a further $89 million collectively from Jazz and BeiGene upon approval in a third indication, as highlighted in our press release. Zymeworks Inc. is also eligible to receive up to $977.5 million in commercial milestone payments tied to the achievement of sales thresholds. Approximately $1.5 billion in milestone payments remain possible under our collaboration agreements with Jazz and BeiGene. As use broadens across indications and geographies, we expect cumulative revenue contributions through both royalties and milestones to scale meaningfully. As disclosed today under the collaboration with Jazz, Zymeworks Inc. is eligible to receive tiered royalties of 10% to the high teens on global annual sales of zanidatumab up to $2 billion and 20% on annual net sales above $2 billion. Jazz holds marketing rights globally to zanidatumab, excluding Asia, but including marketing rights in Japan. Under the collaboration agreement with BeiGene, Zymeworks Inc. is eligible to receive tiered royalties of mid-single to mid-double digits on annual net sales of zanidatumab up to $1 billion and 19.5% on annual net sales above $1 billion. BeiGene holds marketing rights to zanidatumab in Asia, excluding Japan. The strengthening clinical foundation for zanidatumab provides the basis for executing the royalty-backed note financing announced today. We view this as an opportunity to proactively leverage a validated, scaling asset to secure efficient, nondilutive capital while preserving long-term upside. Our ability to utilize unique and creative financial structures is important to achieving optimal value for shareholders from our collective assets. I would like to spend a few minutes talking through this strategic financing with Royalty Pharma and how it fits within our broader capital strategy, using growing visibility into future royalties to fund the next phase of disciplined, value-accretive capital deployment. As announced with our press release today, the agreement with Royalty Pharma provides us with $250 million of low-cost, nondilutive capital in the form of nonrecourse royalty-backed notes. To be clear, this is not a monetization. The full value of the zanidatumab royalties returns to Zymeworks Inc. after the note is fully repaid. But unlike a traditional royalty-backed loan, there is no stated interest rate, and not all of the zanidatumab royalties are needed as security for repayment of the debt. Obligation for repayment of the principal and cost of such capital is serviced from a portion of the zanidatumab royalty stream itself—30% rather than 100% with a traditional royalty loan—and provides the framework for a longer duration for the debt on attractive terms on a nonrecourse basis. The structure of the repayment provides an appropriate sharing of duration risk with Royalty Pharma for an appropriate return. We worked very closely with Royalty Pharma to design this unique debt facility, which reflects our optimism in achieving approval of zanidatumab in first-line GEA, as the loan is not conditional on FDA or other regulatory approvals. Our hope is that zanidatumab becomes the clear HER2-targeted agent of choice for GEA over a long time period. The agreed structure allows us to securitize the note with only 30% of the zanidatumab royalty stream until repaid. Therefore, Zymeworks Inc. retains 70% of the royalty stream throughout the duration of the term, preserving the majority of ongoing cash flows. Royalty proceeds will be utilized to repay the principal, unlike in a traditional royalty loan where 100% of the royalty proceeds could be encumbered. As a result, both the net present value and total royalty retained over the life of the asset, with a much shorter duration, were superior relative to alternative loan structures we evaluated, and the royalty note incorporates a longer duration profile. From our perspective, this approach allows us to preserve a greater portion of near-term royalty cash flow compared to a conventional structure, thus allowing for accelerated reinvestments. In addition, all earned regulatory and commercial milestones under agreements with Jazz and BeiGene will be retained by Zymeworks Inc., including, as mentioned earlier, $440 million in near-term milestone payments tied to future regulatory approvals of zanidatumab in GEA, $89 million in regulatory milestones for a third indication beyond biliary tract cancer and GEA, and up to $977.5 million of potential commercial milestone payments. Altogether, again, these milestone payments represent $1.5 billion of potential future revenue for Zymeworks Inc. Just as importantly, Royalty Pharma demonstrated strong conviction in the underlying royalty; Royalty Pharma was highly enthusiastic about including this asset in their portfolio, reinforcing external validation of its long-term commercial potential. We have been very deliberate about protecting the potential long-term upside of zanidatumab royalties. Only a defined portion of royalties are subject to this agreement. Once the cap is reached, the royalty reverts fully to us. We continue to own the long-term upside of additional indications being developed and potentially commercialized by our partners. In addition, no other future royalty streams that may become available to us, like with pasritamig under our license with J&J or others, are encumbered by the royalty note. This transaction ultimately allows us to protect our core zanidatumab royalties and milestones while accelerating access to attractively priced capital and provides us with the ability to reinvest with a disciplined return framework. This framework uses both continued share repurchases and potential strategic acquisitions to compound predictable revenues into durable, long-term shareholder value. From a use of proceeds standpoint, this capital enhances flexibility across those two primary levers, in addition to providing capital for our cash runway, which already extends beyond 2028. First, we retain the flexibility to continue to repurchase shares opportunistically. Our stock continues to trade below what we believe is the future value of underlying assets. The ability to opportunistically reduce our share count at an attractive discount while the value of future cash flows expand is a very powerful way to drive growth of long-term total shareholder return on a per-share basis. As of today, we have utilized approximately $62.5 million of the $125 million share repurchase program authorized in November 2025. We will continue to see the ability to drive long-term TSR at a compelling discount, given the current market price of our shares. The proceeds of this financing will provide us the flexibility to continue to invest in our own business’s prospects. Second, we have the ability to deploy capital into the acquisition of high-quality assets and platforms where we see synergy in one of many factors, such as strategic fit, royalty potential, differentiated science, and favorable cash or tax attributes. Because we have internal research and development expertise, we can attribute value to development-stage and partner programs differently than traditional royalty companies or traditional R&D-focused biotechs. We are not just evaluating assets for an income yield. We are evaluating probability of technical success, regulatory pathways, and commercial positioning. We believe this gives us an informational and analytical edge to pursue multi-asset acquisitions where we can attribute value to assets in a different way. Importantly, as we deploy this capital into additional royalty-bearing assets, we believe scaling and diversifying the portfolio has the effect of reducing the structural discount often applied to smaller, single-asset royalty streams. We intend to deploy the capital dynamically across royalty asset and platform acquisitions, as well as our ongoing share repurchase program, as a flexible allocation framework that can adjust based on opportunity and market conditions. In addition, we have the continued ability to generate additional royalty and milestone streams from our wholly owned R&D portfolio as an alternative to external acquisition. To summarize, this transaction with Royalty Pharma provides us with additional capital on attractive terms in a unique structure to achieve our strategic and financial objectives, with no equity dilution and optimal strategic flexibility. We would expect to continue to utilize creative structures for capital, partnerships, and acquisitions where we believe they can be useful to building long-term value for our business. As part of our strategy, we see acquisitions as a potential way to add to our existing royalty portfolio, where acquisitions also allow us to feed our R&D engine. Internal discovery will always be important at Zymeworks Inc.; having the ability to source high-quality external innovation enables us to continuously bring differentiated science into a development infrastructure that we know how to operate efficiently. Our R&D organization is built to advance assets to meaningful value-inflection points. Whether those assets are internally discovered programs or externally acquired ones, the goal is to focus on assets that have the potential for meaningful patient benefit and future partnership. Once we reach that stage for either internally or externally acquired assets, partnerships would allow us to translate scientific progress into long-duration economic participation through royalties and milestones, without assuming the full capital burden of late-stage development and commercialization. Over time, that is what we expect will build and diversify our emerging royalty portfolio. So in practice, we hope that acquisitions will expand what R&D we work on, should help de-risk and advance those programs, and partnerships have the ability to convert that progress into recurring, capital-efficient future cash flows. That closed loop is central to how we aim to scale innovation into a durable economic engine. We look forward to providing updates against these capital allocation objectives. I will now hand over the call to Bijal to walk through our financial results for the fiscal year 2025 along with our current financial position. Bijal Desai: Thanks, Ken. Total revenue was $106 million for 2025 compared to $76.3 million for 2024. The increase for the year was driven mainly by achievement of significant clinical and regulatory milestones and exercise of an option under our collaborations with J&J, BeiGene, GSK, Daiichi Sankyo, and BMS. This growth was partially offset by a decrease in development support and drug-related supply-related revenue from Jazz, reflecting the transition of responsibility for certain zanidatumab clinical activities to Jazz under our collaboration agreement. Overall, operating expenses were $198.5 million for the year 2025, compared to $213.4 million for 2024. The decrease is primarily due to a nonrecurring impairment charge recognized in 2024 related to our discontinued program zanidatumab zovodotin, partially offset by a slight increase in research and development expenses. The increase for research and development expenses for the year was primarily due to an increase in unallocated costs largely related to noncash stock-based compensation expense as well as consulting and rent expenses. The increase was largely offset by a decrease in R&D program costs, as a decrease in expense of late-stage programs, including zanidatumab, zanidatumab zovodotin, and ZW220, more than offset the higher investment in early-stage clinical and preclinical programs, including ZW209, ZW1528, ZW251, ZW191, and ZW171 until ZW171 was discontinued. General and administrative expenses were consistent with the prior year as an increase in noncash stock-based compensation was offset by a decrease in salary and benefits due to reduced headcount, as well as decreases in consulting, rent, and information technology expenses. Net loss was $81.1 million for the year 2025 compared to a net loss of $122.7 million in 2024. The change for the year was primarily due to an increase in revenue and decrease in total operating expenses and in income tax expense, partially offset by a decrease in interest income. As of 12/31/2025, we had $270.6 million of cash resources consisting of cash, cash equivalents, and marketable securities, compared to $324.2 million as of 12/31/2024. Based on current operating plans, and assuming full execution of the $125 million share repurchase plan, we expect our existing cash resources as of 12/31/2025, when combined with anticipated regulatory milestone payments of $440 million related to the potential approvals of zanidatumab in GEA in the United States, Europe, Japan, and China, as well as the net proceeds from our nonrecourse royalty-backed note, to fund our planned operations beyond 2028. This anticipated cash runway does not take into account any contribution from additional future milestone payments or royalties related to zanidatumab, other current licensed product candidates, or contributions from future partnerships and collaborations. For additional details on our quarterly results, I encourage you to review our earnings release and other SEC filings as available on our website at www.zymeworks.com. In January 2026, the company announced an adjusted gross operating expense framework (non-GAAP), reflecting disciplined capital allocation across research and development, and general and administrative activities of approximately $300 million over a three-year period ending 12/31/2028. Despite the royalty-backed note financing announced today, we expect continued discipline in our approach to general corporate operating expenses with no change in our prior guidance for the three years ending 2028. The company currently expects adjusted gross operating expenses in 2026 to be approximately 20% lower than in 2025, excluding the impact of any acquisition-related expenses or new partnerships and collaborations. A reconciliation of historical non-GAAP adjusted gross operating expenses to the nearest GAAP metrics can be found in our earnings release and on our Investor Relations website. I will now pass the call over to Sabeen, who will provide a brief update on our clinical development program ZW251. Sabeen Mekan: Thank you, Bijal. Following my update last quarter, I am pleased to report that the Phase I study of ZW251 in GPC3-expressing tumors including hepatocellular carcinoma is progressing as planned. The trial is actively enrolling and is expected to include approximately 100 patients through dose escalation and optimization, with sites currently open across North America, Europe, and the Asia Pacific region. At ASCO GI in January, we presented a trial-in-progress poster outlining the study design, including a starting dose of 3.2 mg/kg in the dose-escalation portion. This starting dose reflects a data-driven decision informed by our prior experience with ZW191. In that program, where we utilized the same linker–payload technology and a drug-to-antibody ratio of eight, we began to observe early signs of activity at the 3.2 mg/kg dose level after starting at 1.6 mg/kg. ZW251 incorporates a lower drug-to-antibody ratio of four, which supported our confidence in initiating dose escalation at 3.2 mg/kg. We look forward to providing further updates on ZW251 as dose escalation advances. In parallel, we expect to share additional clinical data from ZW191 as the data set from our dose-escalation study matures and the program progresses through dose optimization. I will now hand the call back to Ken to provide closing remarks. Kenneth H. Galbraith: Thank you, Sabeen. As you can see on this slide, we have an eventful year ahead of us with multiple value-generating catalysts. This year, we hope to execute across each element of our novel strategy and illustrate the integration of the various development strategic initiatives. This means delivering clinical progress on our wholly owned R&D portfolio, continued progress on development and commercialization of zanidatumab and pasritamig by our partners, expanding new partnerships and collaborations, and demonstrating tangible outcomes, including the potential for critically aligned acquisitions by year-end. In January 2026, we announced our R&D priorities for 2026 and beyond, including our intention to continue conducting Phase I clinical studies for ZW191 and ZW251 in 2026. In addition, we announced that beyond 2026, we expect to advance our advanced research efforts on multispecific antibody and engineered cytokine platforms, funded partially with early-stage partnerships and collaborations. INDs for our currently wholly owned multispecific programs ZW209 and ZW1528 remain on track for submission in 2026. As usual, we expect to have representation of our platform and pipeline throughout scientific conferences in 2026, including at AACR in San Diego in April. A significant priority for Zymeworks Inc. in 2026 is to integrate new partnerships and collaborations into our existing wholly owned portfolio to share funding and risk with partners. We look forward to providing progress updates throughout the year on these expected catalysts and on the continued execution of our evolving strategy. I would like to end the call with this thought: one of the clearest illustrations of our model today is the journey of a single drug, zanidatumab, during my tenure as CEO since 2022. Zanidatumab was designed and developed in-house by our team. We advanced it through rigorous science and validated our asymmetric platform. Early in my tenure, we made the decision to partner strategically rather than sell it outright, generating meaningful upfront payments, structured with milestones and royalties, to ensure we captured potential upside as a shareholder value driver for our shareholders. The upfront proceeds funded the expansion of our wholly owned R&D portfolio over the past three years, strengthened our balance sheet, and contributed to the value creation reflected in our share price over time. Now we find that zanidatumab may be a more successful new medicine than we anticipated back in 2022, with the ability to generate a much higher level of peak sales, and the structure of our partnership provides a meaningful value of future cash flows over a long time period. Today, that same asset is again serving as a catalyst—this time, through the royalty note financing announced today—to unlock additional nondilutive capital. We are able to accelerate the reinvestment of that capital into new value-generating assets, including potentially externally sourced innovations that meet our strategic and return thresholds. In many ways, it is a full-circle moment. One internally generated medicine helped build the portfolio we have today and is now providing the capital to expand our business further with the ability to generate additional sources of royalties and milestones, both internally and externally. What is more, we may have the ability to do this again with pasritamig, which continues to demonstrate a highly encouraging safety and efficacy profile in Phase I combination regimens, including with docetaxel, as presented last week at ASCO GU, as well as assets from our existing platform partnerships, or other royalty-generating assets that we may choose to bring in or that result from new partnerships from our wholly owned pipeline. This transaction with Royalty Pharma underscores something fundamental about our model. We understand how to develop differentiated medicines, and we also understand how to underwrite cash-producing assets. Very few biotech companies can do both well over the long term. The ability to originate innovation internally and allocate capital externally allows us to compound value in a disciplined way, using science to create high-quality assets, partnerships that generate capital, and utilizing that capital to acquire and scale the next wave of royalty-generating opportunities for long-term shareholder returns. With that closing comment, I would like to thank everyone for listening, and I will turn the call over to the operator to begin the question-and-answer session. Operator? Operator: Certainly. As a reminder, to ask a question, please press 1-1. To withdraw your question, please press 1-1 again. Our first question will come from the line of Charles Zhu of LifeSci Capital. Your line is open, Charles. Charles Yue-Wen Zhu: Hello. Good morning, everybody. Thank you for taking our questions and congratulations on all the progress and the updates that you presented today. My question here is regarding your GPC3 ADC ZW251. It sounds like you will have about 100 patients through dose escalation and optimization. Any qualitative comments around how the enrollment data collection is going and, also, at what point might you make an internal decision whether or not to bring this forward in-house and how far, versus partnering development for this particular asset? Thank you. Kenneth H. Galbraith: Yeah. Thanks, Charles. I will start with that, and I will see if Sabeen has anything to add later. But, you know, I would expect this would follow along very similar fashion to our Phase I program for ZW191, which is still obviously playing out. So I think, obviously, with 191, we had a very quick operational execution on the clinical study. We went from first patient in to first data presentation in about ten and a half months, which I think is related to the structure of how we think about clinical execution in early-stage studies and the geographic footprint we have. If you look on ClinicalTrials, you see we have a very similar clinical trial footprint for ZW251. You know, it is a different tumor type, different treating physician group. It is a little early to make predictions about that, but I think you will see the same cadence of we are not going to give guidance about when an initial data disclosure will be made. It will probably be exactly like it was last year for ZW191: when we think we have something interesting to provide, we will do that in a peer-reviewed setting, and we will likely not give guidance around that until right before it is necessary to in terms of a public abstract or a public oral presentation. I think once we get through an initial presentation, it is a little bit easier with the cadence. So, you know, we have indicated we are going to have some ZW191 data update coming soon from the full dose-escalation data for that. But I think for the initial data presentation for ZW251, we will let our clinical folks do their work. I think it is recruiting nicely, the way that we expected. And I think once we have something that we want to say, we will submit an abstract to a peer-reviewed medical meeting and are happy to present the data there for all to see. And I will just see if Sabeen has anything else she wants to add on that in terms of guidance. Sabeen Mekan: I think the only thing I would say is that the enrollment for ZW251 is exceeding very nicely according to our plan. As Ken mentioned, it is a different patient population, but we are very excited with this molecule. As you know, in dose escalation, the timeframe often depends upon the number of dose-escalation cycles and follow-up and how quickly you see responses. I mean, with ADCs, it is generally very quick. But with a Phase I program, we generally want to wait until we have a wholesome dataset to present, and as Ken mentioned, we will do so at a peer-reviewed conference when we get to that point. Charles Yue-Wen Zhu: Understood. Thank you very much for taking the questions, and congrats again on the progress. Kenneth H. Galbraith: No. Thanks, Charles. Operator: Our next question will be coming from Brian Cheng of J.P. Morgan. Your line is open, Brian. Brian Cheng: Hi, Ken. Hi, team. Thanks for taking our questions this morning. First, just curious on the timing of the royalty-backed financing. Is that driven by something that you already found on the BD side that accelerated that need to secure the royalty-based deal? Can you help us define the accelerated timeframe on an acquisition here? And then we have a quick follow-up. Thank you. Kenneth H. Galbraith: Yes. Thanks, Brian. Thanks for the question. I think the timing for the royalty note has as much to do with completion with Royalty Pharma, you know, and the current commercialization cycle of zanidatumab and the cost of capital that is available to us right now, as much as it does to where we see near-term use of proceeds. I would not read too much into that. You know, we obviously see a compelling opportunity to continue to buy our own shares and reduce share count over a period of time. We think it is a really good investment for our current shareholders, and we are halfway through the current authorized plan, and we will continue on that at the current share price. So this provides a little bit more balance sheet to do that. We did want to add to the balance sheet also just to make sure that we were able to take advantage of opportunities for acquisitions we see in the marketplace, whether that is licensed assets that bear royalties, whether it is development assets, or whether that is platforms that are available to us. So, you know, we did want to have some capital available for that. We know we are active obviously in looking at those opportunities and assessing them, but we have a very disciplined approach, a very high standard for using that capital to bring other assets inside the company, and we will just let that play out without getting too far in front of ourselves in terms of guiding around timeframe or anything else. But I think it is just as much about looking at where zanidatumab is in the development cycle and the cost of capital that is available to us right now, and so we decided that we would complete that exercise now, and we will just let the transactions that follow—whether it is additional share repurchases or potential acquisitions—just let that follow, and then explain those as they are completed. Brian Cheng: Got it. And looking ahead into April, can you give us a sneak peek of what to expect at AACR from your internal R&D side? What could really move the needle there for the entire portfolio? Kenneth H. Galbraith: Yeah. I think on the scientific side, I will just let Paul maybe give you a little bit of foreshadowing. Obviously, you know, none of the abstracts are public yet, so we will have to wait till that standpoint. But maybe Paul can talk a little bit about what we have been working on that we are excited about to talk about in April without getting too definitive. Paul A. Moore: Yep. Thanks, Ken. Yeah. Brian, as you know, we have both multispecifics and ADC capability in-house, and we have been applying that to oncology. So that is the AACR. That is where we have been, you know, traditionally over the last few years having a pretty high presence. We intend to have a high presence again this year. You know, on the ADC front, we did allude to a new payload technology that we have been developing. So we cannot speak specifically too much about that, but that technology is built on a similar philosophy and design that we used to develop the TOPO payload that was a clinical validation with ZW191, the folate receptor, and what the ZW251 program is built on. So you can expect to see progress and updates on that technology. Again, we are also pushing forward on our multispecifics, so you can also anticipate potential news on that front as well. Other than that, I cannot really say too much on the specifics. Brian Cheng: Alright. Thank you. No worries. Thank you. Kenneth H. Galbraith: Thanks, Brian. Operator: And our next question will be coming from Yigal Nochomovitz of Citigroup. Your line is open, Yigal. Yigal Dov Nochomovitz: Yes. Hi. Great. Thank you very much for taking the questions. Pasritamig is an asset you have been talking about more frequently recently. Would love to get your thoughts on the recent data and wondering whether the profile that is emerging in the Phase I is exceeding your expectations. And then on PTK7, the biparatopic ADC, just broadly, can you talk about the learnings from zanidatumab and how much of that was translated into the design of PTK7, please? Thank you. Kenneth H. Galbraith: No. Thanks very much. I think I will let Paul answer the second question on PTK7, and then maybe let Adam answer the question on pasritamig because he was at ASCO GU over this past week. So maybe Paul, can you take the second question first and then Adam follow-up? Paul A. Moore: Yeah. No. Thanks, Yigal. Yeah. No. So PTK7 is a target that we have been very interested in. We see it pairing nicely with both TOPO and also with the RAS payload technology. PTK7 has an attractive tumor expression profile. Lung cancer in particular is attractive, but there are other indications as well. So our effort on that, though, has been really to, you know, as part of our philosophy on ADCs, we think about the payload, but we also think about the front end of the antibody and so really how do you best deliver payload with an antibody-based modality. And for PTK7, what we thought, or what we felt from our data, was that a biparatopic actually gives better delivery than just a monospecific antibody. So there, we did deploy the same technology that is used in zanidatumab, our Azymetric technology, which allows us to pair different binding specificities, different epitopes that are targeting PTK7. And what is very important is that when you do build those, you screen multiple different specificities to get the right pair that actually gives you the biparatopic effect that you want, which is the enhancement of internalization. But you also have to think about other features as well, such as the CMC properties and the PK properties of that pair. And that learning that we got from zanidatumab did put us in good position to understand then how to develop that for PTK7 biparatopic. So that is an overview of that, Yigal. Adam Sherwitz: And then maybe on the pasritamig, this is Adam, if you want me to pass through. Certainly, lots of enthusiasm and excitement coming out of ASCO GU this past weekend from J&J. You know, physicians largely agree that this is a very well-tolerated drug that has a lot of potential. J&J's enthusiasm is obviously clear with multiple registration trials that they have publicly stated and disclosed at least some of the details around them. So we are certainly enthusiastic about it. We think that the safety is a key aspect of the differentiation. And, of course, the efficacy is very impressive so far, but obviously still early days. So a lot of enthusiasm on that front, both from us and from J&J and the physicians in the space. Yigal Dov Nochomovitz: Thank you. Kenneth H. Galbraith: Thanks, Yigal. Operator: And our next question will be coming from Eva Fortea-Verdejo of Wells Fargo. Your line is open, Eva. Eva Fortea-Verdejo: Good morning. Thanks for taking our questions, and congrats on the progress. Thank you. Stepping back to your broader strategy, what types of assets are you looking to bring in through acquisitions? Any specific therapeutic areas or development stage you are looking for? And how should we be thinking about the cadence of these deals? And just as a follow-up, you mentioned cash runway extends beyond 2028. Are any potential acquisitions accounted for in the cash runway? Thanks. Kenneth H. Galbraith: Yeah. I will just answer your second part of your question first, and I will pass over to Scott to talk a little bit about the first part, if he wants to do that. So, no. There are no acquisitions included in our cash runway forecast. There are also no new partnerships or collaborations, which could be inflows, as a part of that. So, as we complete transactions, whether they are acquisition-related or partnership or collaboration-related, or if it is progress of existing collaborations, we will update that cash runway. Obviously, we are, you know, well beyond 2028 when you look at the milestones coming in from just GEA and the reduction we have taken in R&D spend this year over last year, which will continue. So I think we feel very comfortable with the runway that we have and the proceeds that we have available to allocate, whether it is continuing share repurchases or exploring some of the acquisitions that we will talk about. And I will let Scott provide some more guidance around that, if he would like. Scott Pashton: Yeah. Thanks. Look. I think there are two questions embedded in that, which is sort of therapeutic areas for deal making and sort of the timing and cadence of deals. We think a lot about the world-class production engineering team we have in Vancouver. It is the team that made zanidatumab, that developed the Azymetric that led to pasritamig, and has an amazing ADC platform and innovative immunology assets. So we really have incredibly high conviction that that team will be developing the next zanidatumab. And what I mean by that is an innovative medicine that drives really dramatic patient benefit. So given that expertise in-house, we think a lot about that as a resource and how it impacts our right to win when we are looking at deal making. So we feel like we have an advantage there, but we are certainly not going to restrict ourselves to the areas of oncology and immunology, but it does factor into sort of the hurdle rate on return that we might expect when looking at deal making. Your second question was sort of when will we do deals? And we are just not in a position to give explicit guidance on deal timing. I think I can tell you sort of our core values around deal making, which is, one, as I mentioned earlier, opportunities that we understand well. I would say number two is that we have a real clear reason to be the right buyer and a right to win that deal. And then we overlay that with a very strict return threshold, that the deal making externally is always done and weighed against the opportunity to own more of our existing portfolio, which we have a very, very good sense of its value at all times, and any capital deployment externally is going to be weighed against the IRR achieved from those share repurchases. Kenneth H. Galbraith: Yeah. Thanks, Scott. And, Eva, obviously, you know, the arrangement that we put with Royalty Pharma today is a part of that strategy. You know, it is a longer-term duration which I think lets us have a little bit more strategic flexibility about the types of assets we might look at and the payback we need to have from those assets. And, obviously, accessing this capital from Royalty Pharma in this structure gives us something, you know, low, low, low, low, low double-digit cost of capital, which I think just allows us to think about target returns in a different way than maybe traditional biotechs might think about. Eva Fortea-Verdejo: Got it. Thanks. Kenneth H. Galbraith: Yep. Operator: And our next question will come from Yaron Benjamin Werber of TD Securities. Your line is open. Steven (for Yaron Benjamin Werber): Hi. This is Steven on for Yaron. One question about the 20% plan for lower OpEx, maybe a little bit more color on how that is going to look. And then in terms of fulfilling that, I mean, $125 million share repurchases—any sense of the cadence on that? Thank you very much. Kenneth H. Galbraith: Yes. Thank you. I will take those two questions. Second, on the cadence of share repurchases. Obviously, we did a $60 million share repurchase starting in 2024, which took about twelve months, and that was really, you know, funded entirely by milestones that were received from Jazz and BeiGene for the BTC indication approval. Right now, we authorized another $125 million in November. We are obviously, you know, halfway through that pretty quickly. And in addition to the, you know, the balance sheet we have now and the Royalty Pharma financing of $150 million, we obviously have expectations of another $150 million in capital being available to us upon GEA approval in the U.S., based on our next Jazz milestone. So we feel fully resourced to move as quickly as opportunities allow ourselves to move on the remainder of that $62.5 million, as well as consider authorizing further before then. Right now, given the underlying value we see in our assets in the future, it is a very compelling discount for us to think about reducing share count for our shareholders through investing in our business and returning capital through share acquisitions. So we will continue to pursue that as long as that compelling discount continues to be available to us. I think if you look on the spending side, if you look over the last three years, we took the upfront payment from Jazz, which was about $375 million back in 2022. We put that to work over a three-year time period to build the current wholly owned portfolio that we have right now. I think given that we have now established a pretty reasonable portfolio, the cadence of continuing to do that is going to slow down a little bit, and that will result in some reduction from last year to this year's spending. In addition, we have said now is the time to start to integrate partnerships and collaborations into that wholly owned, unencumbered portfolio that we have built to both clinical and preclinical assets, which is quite broad, obviously, between the multispecifics, the dual engineered cytokines, and our next-generation ADCs. So I feel quite comfortable that we still have a robust R&D operation inside the company even at a slightly reduced spend level. And as we manage that ourselves and bring in partnerships and collaborations, which will bring in funding towards that, the direction of R&D spending will be downward, but we will still have a very viable R&D operation that will continue to build unencumbered assets in combination with potentially earlier-stage partnerships, unlike what we have done in the past three years in building a wholly owned portfolio. So different strategy, different purpose, but we still think we have a very robust and innovative R&D operation that integrates well with the thoughts around the royalty assets that we have in zanidatumab and eventually pasritamig and things that we can add from outside the company inside, whether they are unpartnered assets, additional novel platforms like Azymetric, or assets that are already licensed, which will carry royalty or milestones in the future. Thank you. Operator: And our next question will be coming from the line of Stephen Douglas Willey of Stifel. Your line is open, Stephen. Stephen Douglas Willey: Yeah. Good morning. Thanks for taking the questions. Just a couple on the IND submissions for this year. So I know that development of DLL3-targeting therapies has grown increasingly crowded. There is a number of different modalities out there, and the target is only really relevant to a couple of indications. So can you just speak to the target product profile you are hoping to see with ZW209 in Phase I and just how you are currently thinking about strategic interest here? Then also just curious why you are targeting an ex-U.S. regulatory submission for ZW1528. Just wondering if that is predicated on enrollment kinetics, is that due to the ability to move faster through dose escalation? Thanks. Kenneth H. Galbraith: Yeah. I can answer the second question. Maybe I will pass over to Paul to talk a bit more about DLL3 and what we are trying to accomplish, not just with ZW209, but in the broader sense in the TriTCE platform. But, no, I think, you know, both these assets are quite interesting from our standpoint. We are obviously interested in considering strategic interest and potential partners who want to move along with us into the clinic at this stage. That is something that we are continuing to have discussions about. ZW1528, we just see the ability to move much more quickly in early clinical studies in an ex-U.S. environment. I think it is not unusual if you look at respiratory expertise in clinical studies. There is quite a bit of it in both the EU and the UK—separately, because that is not in the EU—but there is a lot of respiratory expertise in Europe, and in some cases, abilities to go faster than the U.S. in early clinical studies. So the same way we have gone faster with ZW191 by having integrated sites in Asia Pacific and Europe to go along with the U.S., we are doing the same thing with ZW251 with a pretty big ex-U.S. footprint. I think with ZW1528, we have the ability to access the expertise that is necessary and go quickly in early clinical studies outside the U.S. rather than in the U.S. And so that is what we are looking at doing for that. And I will pass the DLL3 question on to Paul. Paul A. Moore: Yeah. Thanks, Ken. Thanks, Stephen, for the question. Yeah. I mean, just as a reminder, the way we designed ZW209 is that it incorporates costimulation directly in the BiTE—in the trispecific. So it is a trispecific binding DLL3, CD3, and CD28. So although the DLL3 space has gained a lot of traction because it is a very viable target, we feel that we have a truly differentiated molecule. We would be the first with that type of design all in one molecule. And the thinking and the design of that molecule took a lot of work to get that balance of CD3 and CD28 so that we only engage CD28 after we have targeted CD3. So we think that will then drive the benefit—that it then drives a deeper T cell response. T cells are more sustained in their ability to maintain activity over a period of dosing. And you can even see that reflected—that desire to have that component—reflected in other people's T cell engager designs where they add in CD28 as a separate molecule. We think by putting it into a single molecule, it can really give you a lot of benefit out of the gate. So there, we pushed that forward with DLL3. There was also a lot of learnings that we made from our ZW171 program in the delivery, the sub-Q, the step-up. So we think we can accelerate quite quickly based on those learnings. We have Sabeen's team well positioned to execute on that based on the efficient execution of the ZW171. So we are well positioned, and we think we can, you know, execute and get to inflection data quite quickly overall. Behind that, of course, that same mechanism design, we also are very excited about applying it to other targets. We did have a nice presentation at SITC where we talked about how we can expand target base both in solid tumors, heme-onc, as well as sort of more gated strategies as well. So there is a lot behind that platform and other molecules that we are also developing. But we are very excited about ZW209 as a proof-of-concept molecule as well as really providing benefit that we think you can get beyond existing T cell engagers by having that beneficial costimulation in the design. Stephen Douglas Willey: Maybe just a follow-up. So if the advantage of costim then is to improve durability of response—at least that is what I am intimating from your comments—does that then inherently require you to take that through a later stage of development to be able to prove out that durability beyond the Phase I all-comers trial? Paul A. Moore: Yeah. Yeah. I think I should state the durability of response, but also the breadth of response. So we also feel like there are certain patients with T cells in solid tumors that maybe do not have enough punch from just a CD3 engagement. We think both the breadth and the durability of response, you know, we hope to enhance. So we think we should see signals during the dose escalation if our projections are in line with what we actually execute and see. But you are right. There may also then take time for longer benefit to see the duration of response, like, as you say, as we get into expansion phases or part of the study. Sabeen Mekan: I would like to add in this setting that, as Paul mentioned, given the additional mechanism of action, we are expecting an improvement in response rate as well as the duration of response, which would translate into progression-free survival in this setting, and there may be additional patients who respond but typically do not respond to tarlatamab or other DLL3 agents that are in development. Our goal is, given the fact that we already have agents approved in this setting, we could easily compare our efficacy based on existing molecules, which may help us in evaluating our efficacy at an earlier stage without even taking it into a later stage of development. I mean, we could choose to take it later if we would like to. Stephen Douglas Willey: Thanks for taking the questions. Kenneth H. Galbraith: Yeah. Thanks, Steve. Operator: And our next question will be coming from the line of Mayank Mamtani of B. Riley Securities. Your line is open, Mayank. Mayank Mamtani: Yes. Good morning, team. Thanks for taking our questions, and congrats on progress on several fronts, including the Royalty Pharma note and the continued repurchase. If I may ask a HORIZON-GEA question quickly, clarification of this next OS analysis that is coming up. Are you aware that that data could constitute a major BLA amendment once, you know, you have that available? And, also, was curious if you could touch on the rationale of the zanidotinib combination with zanidatumab study. Looks like a multi-indication study, you know, that could also have head-to-head data versus T-DXd or T-DM1? Then I have a quick follow-up. Kenneth H. Galbraith: Yeah. I think on the question related to the median OS readout, I do not think we want to comment about any regulatory strategy related to that. Obviously, Jazz has stated very clearly in their call last week that they believe that they have sufficient data from the current HORIZON-GEA-01 study to file in the U.S., and, obviously, they have initiated that process. The timing of the outcome from the second analysis of median OS, and the ability to add that to an existing filing versus file that later to add to an approved label is something I think Jazz will talk about at the time when that data is available and not ahead of that from a regulatory strategy perspective, if that is okay. Sorry. Can you repeat your second question again, sir? I did not hear quite clearly. Mayank Mamtani: Sorry. Yeah. The zanidotinib, the study of the HER2 TKI with zanidatumab. Looks like a multi-indication study and just breast cancer, and some head-to-head data versus T-DXd might be generated there. So just curious on the vision there of that study. Kenneth H. Galbraith: Yeah. As I said, I do not think we want to go much beyond what is available on ClinicalTrials, but, obviously, that is an approved TKI now, and zanidatumab is as well. So the ability to look at combinations of two approved agents in indications they have not yet been labeled for is a pretty standard practice. And I think we have always known that the combination of zanidatumab and a TKI could be very interesting in multiple indications. I think we were just waiting for the next generation of TKIs to be approved. This one is pretty interesting from our perspective, having followed all of them for some time period. So it would not be surprising to look at a range of indications in that combination. And then after understanding the data that come out of the combination studies, deciding what the next steps are from there. I am most happy to let Jazz and BI and data drive those future decisions. Mayank Mamtani: Okay. Thank you. And on the GPC3 liver cancer program, could you just confirm if, you know, patients there are enriched for high GPC3 expression or not? And if you are able to comment on how much validation and even differentiation you could show versus, you know, the GPC3 CAR-T data that we have seen? Thank you. Kenneth H. Galbraith: Yeah. I will let Sabeen answer the first part of that question, and then second part, maybe Paul could comment if he feels the need. Sabeen Mekan: As for the ZW251 GPC3 program, we are enrolling all levels of GPC3 expression. The target tumor type that we are enrolling in this patient population is hepatocellular carcinoma mainly, which has very high levels of GPC3 expression. According to the literature available, more than 90% of patients have some level of expression, so we are fairly confident that most of the patients enrolled are going to have expression levels. The other thing is we will be evaluating GPC3 levels during the course of our study for all of our patients, and in the end, do a comparison for the efficacy with regards to expression levels once we have enough data. Paul A. Moore: Yeah. And I would just think your second part of your question was how does it compare to other modalities? And I think, you know, certainly GPC3 has been a target of high interest in liver cancer. There has been some success with CAR-Ts, but, you know, they have their own challenges, CAR-Ts, but certainly that does bode well for the value of the target. We think we are really quite competitive and really one of the first to really think about using ADCs, and the data that we have from the ZW191 program using the same TOPO payload really gives us a lot of conviction that we are on the right track with the tolerability and the profile that that showed there. Of course, we will wait for the data. Sabeen Mekan: Thank you. Kenneth H. Galbraith: Thanks for the question. Operator: And our next question will be coming from the line of Jonathan Miller of Evercore ISI. Your line is open, Jonathan. Jonathan Miller: Hi, thanks so much for taking my questions and sneaking me in here. And congrats on the financing. One more on the strategy side and the financing side. Obviously, between this financing and the expected milestone that is coming from Jazz this year, you have got a lot more flexibility. Ken, I know you spoke about balancing capital allocation across a number of different things. But is it fair to assume that this—that today’s financing—opens up larger potential BD opportunities to you guys? And can you give a little bit of commentary on maybe what size of targets you are looking at given the cash position, the expected cash position once all of this is cleared out? And then sort of relatedly, you talked a lot about keeping OpEx even though you have gotten the new capital. Is it fair to assume that if you do bring in development-stage assets as part of your BD activity, that is going to come with additional OpEx liability, and you are going to have to spend against those assets to generate value off of them? Can you give me a little bit of, you know, bookends about how I should be thinking about what that liability could be? Kenneth H. Galbraith: Yeah. No. Great questions, as always, Jonathan. You know, I think the way we feel about the current financing is, again, we have, you know, the right amount of R&D spend that we want to have right now. I think we have, you know, made a really great investment the last three years in the wholly owned portfolio, and that cadence is slowing down a little bit. And I think integrating the partnership collaboration is the right thing to do with how all of those programs that deserve to go forward will get funded. I think that is great. We have obviously been able to continue to invest in ourselves by continuing our share repurchases at even a much more accelerated rate than when we started this in 2024, and it is allowing us to, you know, return capital to shareholders from, you know, milestones and commercial revenue from zanidatumab, usually as we started in 2024, a little bit in advance of maybe receiving all of those milestones. So those are all great. I think, obviously, a part of this financing strategy now is to find an appropriate cost of capital with a long-term duration that allows us to think about the types of things that we will invest in. I do not think it makes us think about larger transactions necessarily. It does expand the amount of capital that might be available so that, you know, as we find those that achieve our target hurdles for IRR, we can hopefully be able to finance those and do those quickly, which is a part of having that capital available right now. And I think from our standpoint, we are also trying to match the types of assets we are looking at and when those might appreciate in value versus the duration of liability that we now have to be paid back out of royalties. So we, you know, chose intentionally to pick a long-term duration liability, and that was created by, you know, only securitizing 30% of the royalty against the loan. That makes it a longer-term duration liability and just gives a little bit more thought that we can look at assets that do not have to have an immediate payback or income associated with them immediately to cover the financing cost. I think we feel comfortable that we have done that. So I think we have used the liabilities on our balance sheet to give us a little bit more strategic optionality and flexibility in the type of assets that we are looking at. We are obviously anxious to execute against this part of the element of our strategy so we can show our shareholders what we meant by our strategy and what types of things we should expect. That might take, you know, multiple transactions to understand how we are trying to accumulate assets externally inside the company. One aspect of that with respect to capital discipline is if we are to bring in an asset which has some R&D investment required as a part of that, that is going to have to come from the same capital allocation pool as the acquisition. So that will be one of the defining factors—looking at what additional R&D investment is required to move something forward to get appreciation versus acquiring something that is already licensed and someone else is covering the development cost as a part of it. But I would expect the capital allocation to acquisitions also have to cover any incremental spend in R&D over and above the current base that we are establishing this year versus last year, if that makes sense. Jonathan Miller: Does make sense. And then I guess if I can sneak in one more to dovetail with that, I know you have the potential to do more with the internal pipeline, the wholly owned pipeline, as it reaches the appropriate stage of development. And acknowledging that you are not going to give guidance on any particular asset, can you talk about, broadly across the wholly owned portfolio, at what stage of development, what are the key data readouts that you think unlock the ability to do partnerships with them or monetize those assets in this sort of way that you have been pioneering? Kenneth H. Galbraith: Yeah. Well, I mean, it is always, you know, when you talk about this, it is always, you know, most obvious to look at, you know, the asset that is in the lead or has the most clinical data around it, but that is not necessarily where you might see the first collaboration or, you know, as much interest from our side on collaboration. We have as much interest in understanding how we can move some of the early-stage programs forward. You know, we have a really interesting construct in ZW209 looking at DLL3 in a trispecific format. We have an incredible portfolio of targets behind that that are really interesting in other solid tumors and heme-onc, even thinking about autoimmune. So trying to move those earlier programs forward with partnerships is as relevant for us in discussions as getting clinical data and trying to expect a partnership post clinical data or trying to bring on a partner to start funding at IND because it reduces our risk or shares cost. So we are interested in all aspects of that. So it would be fair to say that we are open now—maybe that we were not in the past three years—but open now to looking up and down the portfolio in different therapeutic categories, in different product formats, whether it is ADCs, our dual engineered cytokine or cytokine program, of which we have more than ZW1528 available to us. So it might be the early collaborations are things that get done before looking at later-stage partnerships based on clinical data. And we are just being open to understand how we integrate it in with our wholly owned portfolio right now and still have some unencumbered, independent assets of our own as a result of looking at different types of partnerships and collaborations that we can integrate into that portfolio. Jonathan Miller: Great. Thanks so much. Kenneth H. Galbraith: Yep. No. Thanks, Jonathan. Our next question will be coming from Ethika Goonewardene of Truist. Your line is open. Ethika Goonewardene: Hey guys, good morning and thanks for taking the questions. I have got two quick ones for you and then a big-picture one. I will start with the two quick ones. Just quickly on ZW191, by the time you present the data, can you tell us how much of that six and nine milligram, the dose levels, will be backfilled to about ten to twelve patients? About what amount of follow-up you anticipate having on hand when you present that data? And then the other quick question was just building on Stephen's previous question. Given the toxicities—and this is for specifically ZW209—given the toxicities that we have seen with CD28 engagement, would not improved safety of ZW209 be a near-term signal that the mechanism is working and perhaps be an inflection point for you to consider strategic optionality? I will give you my longer question afterwards. Kenneth H. Galbraith: You have a longer question than that? Okay. Maybe I will let Paul answer the second part of your question about DLL3, and then I will give Sabeen a little bit of a chance to think about how much of the first part of your question we want to talk about because, you know, hopefully, if this stuff is going to be coming up, we may not want to get too far ahead of that. But I will let Paul answer your DLL3 or CD28 costim question first. Paul A. Moore: Yeah. That is a great question, and I am glad you brought that point up because I think that is very—that could well be a very important inflection point—is, you know, understanding the profile of the molecule. We, again, have emphasized that the CD28 should only engage upon CD3 engagement, and trigger signaling also is still contingent on engagement on DLL3. So it has the same classic pattern or design as a T cell engager, and we think that that careful design should be reflected in the tolerability of the molecule, maintaining that localized activity in the tumor microenvironment where DLL3 is very selectively expressed in tumors. So it is such an attractive target for this approach. So I completely agree with your sentiment, and I think that was an important point to bring up. Ethika Goonewardene: Thanks. Is this Sabeen? Sabeen Mekan: Yeah. So I will start with the ZW191. When we presented the data at the meeting, we had mentioned that we completed dose escalation at that point in time, and we were planning to start dose optimization. Dose optimization is proceeding very well. And so we are very clear with the number of patients that we have in Part 1 since it is already completed. Since we completed that in Q4 of last year, we think that by the time we present the updated data, we are going to have reasonable follow-up to present both the safety and efficacy of those patients. I would also say that the Part 2 dose optimization enrollment is proceeding very well as well, and it is according to our plan. We are hoping that we will provide an update to you about the completion of enrollment sometime in the near future. Alright, Ken. Brace yourself for the long one. Kenneth H. Galbraith: Is it multipart? Ethika Goonewardene: No. No. It is okay. It is just a long one. So let us get to it. So payload resistance continues to emerge as an issue for ADCs. So, big picture, how are you guys thinking about this very real problem that the field is going to have as ADCs become even more commonplace? How are you planning on deploying capital to bring in new assets and build your own capabilities to address it? Thanks. Kenneth H. Galbraith: Yeah. I will just start briefly and then let Paul comment, because we have been thinking about this a lot. I mean, we really like the 519 payload that we developed back in 2022–2023 that we now have on ZW191 and ZW251 and also ZW220, which is IND-ready. So I think we really selected, you know, a great payload in the camptothecin analog class, and we are very proud of data we are seeing right now because I think it is showing that there is some benefit from the work that we did to select a proprietary payload with very specific characteristics, and it is providing some differentiation from clinical data you are seeing from exatecan or other generic payloads; that is great. There has obviously been a tremendous amount of crowding in that class in multiple targets, especially some of the therapeutic areas that we started out. We were looking at gynecological cancers, thoracic—both non-small cell and small cell—and head and neck as well as GI indications for our ADCs and T cell engagers. And it is safe to say that in the gynecological cancer side, some of the initial indications, especially PROC, are quite crowded with different targets and different payloads approaching. There are still opportunities, I think, in some earlier settings, but we have been thinking really about, you know, the next payload. We have been working for some time period to try and find another class of toxins that might be interesting. I know it has been reported that Daiichi Sankyo has been doing the same thing. You know, it is hard to find a payload that is as effective that comes from that camptothecin analog class. And that drove some of our efforts to think more about, you know, small-molecule approaches that might be better targeted with ADC constructs or a dual-payload strategy to maybe do something a little bit differently. And I think Paul can talk a little bit about our work, and that will be the focus of some of our presentations at AACR coming up in April. Paul, do you want to add to that? Paul A. Moore: Yeah. No. Totally, Ken. I think the challenge about the space and the busyness in the TOPO space—I think there we really thought carefully about how we designed ours. So, as Ken alluded to and as has been reported in the ZW191 data, we feel like our care in design and tolerability as well as efficacy does put us in a good position so that we can get out front with those molecules. We can combine hopefully, in the future, and sort of differentiate on the clinical strategy. Behind that, though, I think we for sure are looking at next-generation payloads. Where else do you go to broaden out the opportunities for ADCs? We are really empowered with the success we have seen in our ability to deliver payloads and small molecules, and we want to then just translate that into other payloads. So one, as we talked about, will be the pan-RAS. We think we can do it also for other small molecules as well, or toxins—pancos. So that work is also proceeding. I think really thinking about the tolerability profile, the linker stability, the potency of the payload, the balance there—also when you start thinking about dual payloads—how those toxicities interplay and, again, thinking about the combination and the bystander and the overlap of toxicities is very important. And, you know, we are thinking about that. So I think there is a lot of opportunity still in the ADC space. You know, it really depends on careful design and really balancing, pragmatically, what should work—thinking about PK, thinking about bystander activity, as well as very importantly, also how you deliver—the modality that you use to deliver it. Is it a monoclonal antibody? Is it a bispecific? Is it a biparatopic? At Zymeworks Inc., we are really well positioned to also think about that end of the ADC as well with our protein engineering capability. So thanks for the question. Operator: And our next question will be coming from Rene Benjamin of Citizens. Your line is now open. Rene Benjamin: Thank you. Good morning, and congratulations on all the progress. Ken, maybe I would love to kind of get an idea as to thinking about future—yes. Can you hear me? Kenneth H. Galbraith: I hear you now. Go ahead. Yep. Yep. Rene Benjamin: Thanks for taking the questions. As you think about future buybacks, can you maybe take us through the criteria of these future buybacks and your thoughts on kind of when enough is enough? As we are thinking about modeling this out, you know, to the future. And then maybe one for Sabeen. As you think about, you know, the HCC indication, what other additional indications may show promise given GPC3 expression, and what kind of efficacy criteria would you want to see that would guide you into either expansion cohorts or expanding into these other indications? Thanks. Kenneth H. Galbraith: No. That is great. Sabeen, do you want to take the GPC3 question first? Sabeen Mekan: Yes. I can take that. So HCC is a tumor that we have highlighted for GPC3 expression, although there are other tumors that express very high levels of GPC3 expression. We have evaluated those pretty well and are going to be including some of those patients into our study. And as we move forward from signal, we may potentially include others into our development plan. Some of these tumors include some rare germ cell tumors. There are certain lung cancer patients who express GPC3. We are evaluating them very carefully with regards to including them into our development plan. There are certain pediatric tumors and sarcomas, so we have our eye on that. We just wanted to start our development plan with tumors that have highest expression, which is HCC, and also HCC is an area of very high unmet medical need, particularly after first line. The patients relapse after first line, and we think that given the wide therapeutic window that we have observed with our ZW191, we wanted to apply that in the HCC population as well. As you know, there is evidence to indicate that cytotoxics work in HCC. The main concern there is having the therapeutic window, and what we have seen with ZW191 gives us a lot of confidence that we should be able to have that both in terms of safety, which is critical in this patient population, because, as you know, a lot of the HCC population have abnormalities in their liver function and cytopenias. But given the safety that we observed with ZW191, we are fairly confident that this ADC should be well tolerated in this patient population. And also from an efficacy perspective, the current standard of care treatment in the already treated HCC population, the response rates would be lower than 15%. We are expecting that we should be doing much better than the current standard of care in this patient population. Kenneth H. Galbraith: That is great, Sabeen. Thank you. And, Rene, just going back to your question about share repurchases, you know, we really see that as a return of capital. So I think, you know, we started this back in 2024 with the idea that we were going to start to see commercial revenues from our investment in zanidatumab, and that started with approval milestones in 2024 in the U.S., another one in 2025 in China. And, you know, we were very clear that we felt it was important to return that capital to shareholders, and we have chosen to do that through repurchasing shares just because it does provide a, you know, there is a compelling discount for us right now between the underlying share price and what we see as the, you know, the future cash flows that can be derived just from zanidatumab on its own, not counting pasritamig or other parts of the business. And that compelling discount shows us that, you know, reacquiring those shares at those prices and retiring them can really be an effective way to boost total shareholder return over the long term. Now that always has to go along with continued investments in the numerator part of that equation, which is continue to build value in the business, which we have been doing through our significant R&D investment in our portfolio behind zanidatumab. So we are doing both of those at the same time. And I think that will always be the case. I think in November when we saw the top-line data from HORIZON-GEA-01, we felt very comfortable this was going to be something that should be approved based on the current dataset, and approved in a timeframe that would bring in the additional milestone that we expect later this year from Jazz for GEA. The royalty transaction we did with Royalty Pharma today is a way of just bringing forward some of the commercial royalties from further in the future to today to just give us optionality to continue to buy back shares. So we are halfway through the current $125 million authorized share program. We think that is a compelling discount, which we think provides a good investment for our shareholders to buy back a number of shares. And over time, as the business continues to build and become more valuable, that will be valuable on a per-share basis. So we have done that more aggressively starting this November. I think a part of that was just what we felt was a disconnect between, you know, a great outcome for HORIZON-GEA-01 and getting more optimism and confidence of our next randomized study, the EMPOWUR-303, in metastatic breast cancer. I know it is a different study. It is a different tumor type. We have got a lot of confidence out of the large randomized HORIZON-GEA-01 study outcome—understanding that zanidatumab could be a more powerful HER2-targeted agent than trastuzumab in combination in GEA—and that that could read over into metastatic breast and other indications eventually. So we probably had a higher confidence level on the cash flows related to the outcome of that study than maybe we felt was embedded in the market price. And so it just gave us an even more compelling discount to acquire shares, which is why we have been doing it very aggressively. We will continue to do that. And when we reach the end of the $125 million authorized plan, then we will speak with our Board and decide again the size and cadence of the next share buyback. But as of right now, I think it is a very compelling investment, and in the years to come I think our investors will benefit by this aggressive share purchasing by looking at the compelling discount against what we view as the future cash flows from not just zanidatumab, and as we add additional assets—whether royalties or partnerships—around the portfolio, that is going to drive that even further. And reducing that share count is a way that has been proven to generate outsized returns. We obviously have capital limitations. We need to make sure we fund our R&D efforts. We need to make sure we have a strong balance sheet, which we do right now. But as more royalties and milestones come in, that is just generating additional free cash flow for us that we need to figure out how to allocate. And right now, allocating it to share repurchases has been a pretty, hopefully, thoughtful capital allocation, but a pretty compelling thing to do. If we can add some strategic acquisition to the internal R&D we are funding, then I think the mix of all three of those will evolve over time. And right now, we will just continue to return that capital from commercialization of zanidatumab back to shareholders through those share repurchases. Rene Benjamin: Thanks for taking the questions, and congrats again. Kenneth H. Galbraith: No. Thanks very much, Rene. Appreciate that. Operator: And I would now like to hand the call back to Ken for closing remarks. Kenneth H. Galbraith: That is great. Yes. Thank you, everyone. I appreciate your time in listening to us today. We obviously had a very eventful 2025 at Zymeworks Inc. here. At the end of last year, finally reading out the HORIZON-GEA-01 study after four years from starting that study back in 2021. We were so pleased with the results for patients, and it really energized our business. We have had a great start to 2026, and I am expecting a very eventful and full year for us. I think the Royalty Pharma transaction we have announced today, with $250 million in note financing, is a very unique and creative financing structure which I think can be a catalyst for us for additional strategic change, and we look forward to reporting on our progress against that and the other events we laid out today in the weeks and months ahead. We look forward to giving those updates to you along the way. Thank you very much for your time, and please be safe, wherever you are in the world. Thank you. Operator: And this concludes today’s conference. Thank you for participating. You may now disconnect.