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Andreas Meier: [Interpreted] Ladies and gentlemen, good morning, and a warm welcome to BASF in Ludwigshafen. We are very pleased that you have accepted the invitation to our annual press conference. Some of you could not be present here in Ludwigshafen and will be connected with us live on the Internet. So warm welcome to you, too. You will be talking today to Markus Kamieth, Chairman of the Board of Executive Directors; and Dirk Elvermann, the CFO of BASF. The conference, as mentioned, will be broadcast live on the Internet on our homepage and also on LinkedIn. The conference language is German with a simultaneous interpretation into English. During the discussion later, English questions will be answered in English. So if you're using a headset for the simultaneous interpretation or want to use them, you find the English channel on channel 1 and the German channel on channel 2. For the photographers here in the room, during the first 5 minutes, you can take photos during the presentation. But afterwards or during these [ photos ], please switch off the flashlight and afterwards, please take your seats. All accredited guests should have received an electronic press folder with all the important documents via e-mail. And that's all on housekeeping, and I give the floor to you, Markus. Markus Kamieth: [Interpreted] Thank you, Andreas. Good morning, and welcome to Ludwigshafen, and also to those in front of the monitors. First of all, thank you, Andreas, for you, for having taken over this job. You are doing this for the first time or have been doing this for the first time for a long time because Nina Schwab-Hautzinger left to join Roche, but you probably heard yesterday that we will welcome Thomas Biegi as successor of Nina Schwab-Hautzinger soon. And I think in future, he will take this job, but well, you will have to agree with him. Dirk Elvermann and I will present and explain the most important figures and developments of the 2025 business year. 2025 marked by many geopolitical and headwinds in the world that unfortunately had a negative impact. Consequently, we, in the chemical industry, faced an uncertain and very volatile global market environment and with considerable headwinds. As previously stated, we, therefore, focus primarily on the things we can control within the framework of our Winning Ways strategy. We successfully started up the major assets at our new Verbund site in Zhanjiang, and we also accelerated our cost savings programs and significantly streamlined BASF's organization. Moreover, we progressed swiftly and successfully with the announced portfolio measures. But let me also mention that the year 2025 and particularly the fourth quarter did not develop as we had anticipated. Our prerelease on January 22 already gave you an indication of this. Let's now turn to the details of BASF's financial performance in the fourth quarter of 2025, always compared with the prior year quarter. Overall, sales declined considerably because of strong currency headwinds and slightly lower prices. At the same time, we achieved slightly higher volumes. All segments reported volume growth, except for the Chemicals segment. Volumes rose particularly in Surface Technologies, Agricultural Solutions and Nutrition & Care segments. From a regional perspective, we achieved a remarkable volume increase of 13% in China and posted solid growth in North America. In Europe, we recorded slightly lower sales volumes. Compared with the fourth quarter of 2024, prices declined in 5 of our 6 segments, most notably in Chemicals and Materials due to ongoing competitive pressure. We could only increase prices in the Surface Technologies segment, primarily owing to higher precious metal prices. Currency effects burdened sales in all divisions and were mainly caused by the strong depreciation of the U.S. dollar, the Chinese renminbi and Indian rupee. Portfolio effects slightly dampened sales growth, and this was mostly related to the sale of our Decorative Paints business. Based on this underlying sales development, EBITDA before special items came in at EUR 1 billion compared with EUR 1.4 billion in the prior year quarter. Currency headwinds lowered EBITDA before special items in the fourth quarter of 2025 by around EUR 110 million. Ladies and gentlemen, overall, BASF Group's EBITDA before special items reached EUR 6.6 billion in the full year of 2025. The decline compared with 2024 was mainly due to lower margins and negative currency effects, and the latter amounted to EUR 235 million in the full year 2025. Due to continued low market demand and pressure on margins, earnings in BASF's core businesses, especially in the Chemicals segment, declined considerably. Higher contributions from BASF's stand-alone businesses could only partially compensate for this decrease. Let's now turn to our portfolio measures. Our agreement with Carlyle marks an important milestone in realizing the full value of our Coatings business. Prior to that, we had divested our Decorative Paints business to Sherwin-Williams. Under Carlyle's operational leadership, we want to continue to strengthen the leading position of the Coatings business. This will create further upside potential for the 40% equity share we will continue to hold after closing. We are on track to close the transaction in the second quarter, as previously announced. On the basis of the 2 transactions, BASF's Coatings business is valued at an enterprise value of EUR 8.7 billion. Let's move on to Agricultural Solutions. Our team here once again delivered a very strong performance in 2025 and achieved an EBITDA margin before special items of 22%. We are on track to reach IPO readiness in 2027. Last year, excellent progress was made on the legal entity and ERP separation. By early 2027, the separation will be completed in all regions. In November, we announced the future management Board for the Ag business. Its members combine extensive industry expertise with the required capital market experience. The management team headed by Livio Tedeschi will drive the transformation of Ag Solutions into an independently steered company focusing solely on the agricultural sector. The planned listing of our Agricultural Solutions business will mark the next decisive step to unlock additional value for our shareholders. The planned IPO is targeted to take place on the Frankfurt Stock Exchange. And what is also good news is another piece of news. In January, we announced that BASF Agricultural Solutions is acquiring AgBiTech, a supplier of biological solutions to control insect pests. It has pioneered the use of nucleopolyhedrovirus technology to develop insect control solutions based on naturally occurring viruses. With operations in Brazil, the United States and Australia, AgBiTech serves farmers growing soybean, corn, and cotton as well as specialty crops. This acquisition is an important step in the value creation journey of Agricultural Solutions. The new technology will complement BASF's existing biosolutions portfolio and underscores the commitment to a more sustainable, holistic approach in agriculture, in line with the business strategy of Ag Solutions. The transaction is expected to close in the first half of 2026. From the stand-alone Ag business, let's return to the beginnings of our value chain. We successfully started up all 32 key production lines at our Zhanjiang-Verbund site on time and below budget, a remarkable achievement and a testament to the capabilities of our teams. We also started up the steam cracker, the heart of the Verbund, without any lost time. This steam cracker is flexible, so we can use both naphtha and butane as feedstocks. I was very pleased to hear Linde's CEO, Sanjiv Lamba, describe this as one of the fastest cracker starts up ever. Linde supports us with their cracker technology and engineering expertise and contributed to this major achievement of our teams in Zhanjiang. The team executed this complex task with outstanding dedication and success. We are confident that we will operate the site at high utilization rates even in the current market environment. Nevertheless, I want to note that we expect a slightly negative earnings contribution from the Zhanjiang-Verbund site in the first year of operations, mainly due to start-up related costs. From 2027, we expect the site to contribute positive earnings. Ladies and gentlemen, MDI is an important product for BASF and a key component of our polyurethane value chain. It is indispensable in the construction, automotive, coatings, adhesives and furniture sectors. Classic applications include rigid and flexible foams. It can be found as insulation and upholstery material in your car. For example, I think you're not sitting on such a chair at the moment. In the United States, we are currently expanding our MDI plant in Geismar, Louisiana. The final phase is on track, and we are planning to start up production in the third quarter of 2026. At USD 1 billion in total, the project marks BASF's largest investment ever in the United States. Through this expansion, we are doubling our MDI capacity in Geismar to around 600,000 metric tons per year to serve the growing U.S. market. With that, I will hand over to Dirk Elvermann. Dirk Elvermann: [Interpreted] Well, thank you very much, Markus, and good morning. I would like to start by looking at the financial figures of BASF Group for the full year 2025 compared with 2024 as usual. EBITDA before special items came in at EUR 6.6 billion, representing a decline compared with the prior year. However, the EBITDA margin before special items, excluding metals, remained almost stable at 12.3%. Net income improved by 25% to EUR 1.6 billion. Net income from shareholdings in 2025 amounted to EUR 1.3 billion compared with EUR 602 million in the prior year. This increase mainly resulted from higher earnings contributions from the at equity consolidated participation in Wintershall Dea. Free cash flow increased by around EUR 600 million compared with 2024, and more information is provided on the next slide. Cash flow from operating activities amounted to EUR 5.6 billion as compared to EUR 6.9 billion in 2024. The decline was primarily driven by changes in other operating assets caused by an increase in precious metal trading positions. Furthermore, net income included higher noncash items and reclassifications than in the prior year. Ladies and gentlemen, in 2025, cash flows from operating activities included a dividend from Wintershall Dea. Reimbursements that Wintershall Dea received under the federal investment guarantees were distributed to its shareholders as dividends. BASF, which holds 72.7% in Wintershall Dea, received around EUR 900 million after tax in 2025. In the first half of 2026, we expect to receive almost EUR 800 million after tax through the same mechanism of which around EUR 500 million was already paid out in January. I think it is important to further explain this. Federal investment guarantees are insurance against political risks such as expropriation or the consequences of war. As with any insurance policy, coverage does not come for free. The guarantee beneficiary, in this case Wintershall Dea, paid insurance premiums for many years, a triple-digit million euro amount in total. Now Wintershall Dea is entitled to and has asserted its claim to insurance coverage. Let's now turn to payments made from property, plant and equipment and intangible assets. In 2025, these decreased by almost EUR 2 billion to EUR 4.3 billion, which demonstrates that we have passed the peak investment phase for the Zhanjiang-Verbund site. Overall, free cash flow improved strongly and amounted to EUR 1.3 billion. In terms of our balance sheet, total assets amounted to EUR 76.2 billion as of December 31, 2025, down by EUR 4.2 billion compared with year-end 2024. But this decline was caused by lower noncurrent assets, mainly on account of currency effects. At 45.1%, BASF's equity ratio remained stable and very solid. By year-end 2025, we have reduced our net debt to EUR 18.3 billion. In 2026, we will use a substantial part of the cash proceeds from our portfolio measures to further strengthen our balance sheet. The maturity profile of outstanding bonds will allow us to further reduce net debt considerably this year, hereby underpinning our current single A rating. Let's look ahead to BASF's capital expenditures between 2026 and 2029. We aim to grow with high capital efficiency by reducing capital expenditures, increasing the utilization of existing assets and optimizing our net working capital. After the successful start-up of our Zhanjiang-Verbund site, we are now bringing down CapEx below the level of depreciation. For BASF Group, we plan capital expenditures of EUR 13 billion between 2026 and 2029. This is 20% lower than the 4-year forecast we gave you last year and more than 30% lower than our planning for 2024 to 2027. In 2026, we planned total capital expenditures of EUR 3.3 billion compared with EUR 4 billion in 2025. The reduction reflects lower CapEx for the Zhanjiang investment. We now expect only a further EUR 600 million in 2026 after EUR 1.6 billion in 2025. With our good current site and planned setup, we have sufficient own capacities in key markets to support our volume growth without requiring major new investments. And we say we are well invested by now. Ladies and gentlemen, where do we stand with BASF's cost-saving programs? In a nutshell, we have accelerated the implementation. By the end of 2025, we already achieved a total annual cost reduction run rate of around EUR 1.7 billion, and this represents an increase of EUR 100 million compared with our original savings target for this date. In 2025, the associated onetime costs amounted to EUR 700 million, and this increase in onetime costs of around EUR 300 million was caused by higher provisions for severance payments. In contrast, the planned onetime costs for 2026 will be reduced from EUR 500 million to EUR 300 million. By the end of 2026, we now expect annual cost savings of EUR 2.3 billion instead of EUR 2.1 billion as planned. The cumulative onetime costs are now expected to amount to EUR 1.9 billion in total. And this shows our positive momentum in bringing down our cost base and our ongoing focus on this crucial topic that we are dedicated to. On the right-hand side of this slide, you can see that between December 2023 and December 2025, we reduced the number of BASF senior executives by 11%. The number of employees decreased by 4,800 if we exclude the around 1,000 employees who were recruited at the Verbund site in China in the same period. This demonstrates that we are actively streamlining our global organization at all levels. In 2026, we will further advance in this direction. We recently communicated our next steps to create more value, which will happen in BASF's service organizations. And these are Global Digital Services and Global Business Services. Why are we doing this? Against the backdrop of our successful portfolio measures and the differentiation between core and stand-alone businesses, we now also want to streamline IT, finance and HR services to meet the needs of BASF's core businesses. In Global Digital Services, we are rationalizing and harmonizing BASF's IT application landscape and sharpening the Digital Service portfolio through consolidation and standardization. In this context, we plan to open a cost-efficient digital hub in Hyderabad, India. We will adjust our existing location footprint and take out significant costs. Building on competitive service levels and focused digitalization, these measures allow us to capture efficiency gains and achieve a significant reduction in the Digital Services workforce. Similarly, in Global Business Services, we intend to streamline the service portfolio, drive automation and establish cost-efficient global hubs. We, therefore, aim to bundle a significant portion of our business services in 2 global hubs in Asia. At the new global hub in India, we intend to bundle services with a focus on finance and HR. And the established hub in Kuala Lumpur in Malaysia is foreseen to focus on global supply chain services in the future. Existing regional hubs will complement this setup. With these decisive steps, we aim to harvest synergies and secure structural cost advantages. Markus? Markus Kamieth: [Interpreted] Thank you, Dirk. A key objective of our Winning Ways strategy is attractive shareholder distributions via dividends and share buybacks. That is why we will propose a dividend of EUR 2.25 per share for the 2025 business year to the Annual Shareholders' Meeting. Based on the year-end share price, this represents an attractive dividend yield of 5.1%. The second pillar of our attractive shareholder distribution policy is our buyback program. In view of cash proceeds already received and further proceeds expected, particularly from portfolio measures, we started buying back shares in November 2025. By year-end 2025, we had repurchased shares of around EUR 355 million. Moving on to our outlook for 2026. From today's perspective, we do not expect a meaningful market upswing or a significant easing of geopolitical tensions in the near term. Our forecast for the BASF Group assumes that GDP growth will be slightly lower and that global industrial production growth will be significantly lower than the 2025 level. We expect a further decline in chemical production in the mature economies and weaker growth in the emerging markets. Our planning is based on an average oil price of USD 65 per barrel of Brent crude and an exchange rate of $1.20 per euro. Based on these assumptions, we expect EBITDA before special items to be between EUR 6.2 billion and EUR 7 billion in 2026. BASF Group's free cash flow is expected to be between EUR 1.5 billion and EUR 2.3 billion. Payments made for property, plant and equipment and intangible assets are estimated to be reduced to EUR 3.4 billion. I'd like to add that from a market perspective, the start to the first quarter has been as challenging as expected. In January, volumes in China continued to develop very positively, which is partly related to the timing of the Chinese New Year. But in the remaining regions, volume development has been weak. Given the considerably stronger U.S. dollar in the prior year quarter, currency headwinds on EBITDA before special items could amount to up to EUR 200 million in the first quarter of 2026 alone. So 2026 is likely to be another transitional year with significant headwinds for our industry. Most of the improvements we aim to achieve will need to be driven by our own efforts. We expect a gradual recovery of market conditions in the later part of this year and in 2027 and see promising early indications. However, we are also mindful of short-term demand constraints due to geopolitical and trade-related effects. Let me highlight 3 topics that we will continue to prioritize in 2026. We will continue to actively drive measures to structurally reduce costs by rigorously implementing our cost savings programs, and we will bring down CapEx significantly below the level of depreciation. In parallel, we will hunt for volumes to increase the utilization rates of our plants. And after the successful start-up of our new Verbund site in China, it's now all about filling the asset's increasing utilization rates. Based on our highly competitive cost position, we are confident that we will achieve this goal fairly quickly. Furthermore, we will focus on the completion of the final phase of the MDI capacity expansion in Geismar to capture further profitable growth in North America. And we will build on our successful portfolio measures to crystallize and unlock the value of our stand-alone businesses. We will stay on course to further strengthen our core businesses by implementing the necessary measures. In summary, delivering on our Winning Ways strategy means combining active portfolio steering with capital discipline and strong operational execution when it comes to CapEx and costs. And this way, we will create value for our company. Thank you very much, Dirk and I are looking forward to your questions now. Andreas Meier: [Interpreted] Thank you very much for your presentations. Now the Q&A session. And well, just raise a hand if you would like to take the floor, and I will call your name. [Operator Instructions] We will try to finish the conference by 11:30. [ Mr. Lisman ], Rheinpfalz, you are the first. Unknown Attendee: [Interpreted] Yes. [ Lisman ], Rheinpfalz. You just mentioned that you had to really ask for getting the insurance payment based on the federal guarantee. So were there court proceedings? And secondly, you announced that 4,400 flats in Ludwigshafen will be sold. What about the earnings you expect there? How do you want to use these funds? Does this mean strengthening the balance sheet in order to reduce indebtedness? Markus Kamieth: [Interpreted] Okay. Let me start with the federal guarantee. No, no litigation, no court proceedings, [ Mr. Lisman ]. That we really had to request it actively means you have to request this. The money doesn't come automatically, but you have to report that damage occurred. This is what we did. And then the whole process was handled very constructively and within the time line. So no litigation, but just handing in a justified request. Well, in case of sums like this, nobody just says, yes. So it has been looked into. The flats. Well, I think as of now, we cannot give you a figure here that we expect. The process is starting now. We announced that this is a step we want to take. We asked a company to take care of selling the lion's share of these flats, and we will then wait and see what is being offered. But of course, on the basis of the flats, you can calculate for yourselves what the sum will look like. And what we will use the funds for? Well, we cannot give you exactly what we will do, but strengthening the balance sheet means we free the capital tied up in the flats and make it available for the company. And you are familiar with our general strategy when it comes to investing in our future at Ludwigshafen, including new capacities, and it's about payouts to our shareholders. And we have of course, other opportunities to use our capital. So no clear definition how these funds will be used. Andreas Meier: [Interpreted] Then Ms. Weiss, Thomson Reuters, please. Patricia Weiss: [Interpreted] Well, thank you very much. The worth or value increasing, portfolio increases were on your own set of priorities for 2026. And now there were some clear points that you already started. What's open on your list, what you have planned for when you took your term of office, and what can be still expected? And tariffs, the last verdict from the Supreme Court in the United States. So there are repayments of your U.S. company to -- well, into proceedings to gain back the monies from the tariff policy. Markus Kamieth: [Interpreted] Well, tariff policies can be done by Dirk Elvermann. And I take the other question. So let me remind you that the transaction of Carlyle with Coatings still has to be concluded this year. We expect that for Q2, and it looks very well. But as I said, this still has to succeed. And then there is the big ambition when there is the IPO for Agricultural Solutions for 2027. This is what we aspire. We take all the preparations and that is, well, a lot of work still for 2026. So let me say we are in the middle of everything still, and with our stand-alone businesses, we stick with ECMS too. So that is the quasi-automotive catalyst business that we have. So we want to proceed with our stand-alone business journey completed and then lifted to a new level of ambition, but under the ownership of BASF. So we said we do not want to sell this business. And with batteries, the situation is as is. We focus on ourselves, but we are open for partnerships. And here, too, we have to check whether there are opportunities and possibilities to increase the value of our battery and battery materials business. So we are in the middle of everything, and there's still a lot of work to be done. Tariffs? Dirk Elvermann: [Interpreted] Well, for the tariffs, the most recent developments, of course, have increased uncertainties. And we still don't have a final evaluation of the situation and how high the effects would be and what to do. I think last year, we already made it very clear that it is still valid that the direct effects of tariffs to us and our subsidiaries are relatively low, because we have a very strong local-for-local business, 80% to 90%, and that is still valid. And what concerns us most is the general uncertainty caused by these short-term tariff changes taking place, and that also affects our customer industries or mainly them, and that's still the state of the situation. But still proceedings, litigations, well, this is mainly discussed very often. It is quite obvious. So if the entire regulatory situation changes, then there is a legal claim for BASF Corp to really follow up on this. But the question is, will this really happen, and to which extent? This is not quite clear. And many people are already dealing with it, and you can see it with other companies, too, that at the moment, the situation is very dynamic. And yes, we follow it closely. Andreas Meier: [Interpreted] Okay. Let's continue with Mr. [indiscernible], please. Unknown Attendee: [Interpreted] Yes, you mentioned, well, investing -- going through with your investing, so that the world markets are productively tapped, so to speak. And BASF is still generating money. So this money is used for a restructuring or transforming of assets towards a green chemistry situation? Or is your track that you take rather that you check what you could acquire, that you could buy? Markus Kamieth: [Interpreted] Thank you. So first of all, well, do we invest in Germany? So to invest through to take our money and go through with it, that's not very obvious to explain. It is something that we use to explain that we use this wave of new investments. So we invested a lot of money in new capacities at the Ludwigshafen site, but also in Antwerp. We invested also in the United States and, of course, in Asia, particularly in China. So we come out of this wave now where we wanted to invest in new CapEx. So now we are through with our investment for the moment. So we used everything which was available for us on the market. Of course, we will continue investing in maintenance and optimization of our asset portfolio. Also in Ludwigshafen, we significantly invest into maintenance at the site, and this is large amounts of money. So it shouldn't just sound like we turn off the tap and we don't invest any longer. But you're quite right, of course, that there are also other possibilities to change the portfolio. And in our strategy, we said that acquisitions in order to further strengthen the core of BASF and to prepare it for the next decade, make it stronger for our growth, and this is still the target of our strategy. But in today's market environment, this is not our highest priority. It still, however, remains an opportunity for BASF to establish in the consolidating European market, but also in the strong Asian market. Andreas Meier: [Interpreted] Matthias Kros from Rhein-Neckar-Zeitung, please. Matthias Kros: [Interpreted] So first of all, on the cost savings, you said that the program was accelerated. You might say that you expanded it too because the sum that you want to save is even higher. So what's the reason for it? Was it necessary to save more? Or did it just come along because you wanted to go through with it faster or deeper going? What is the background here? Then headcount reduction, 4,800 was the number that you gave. Could you tell me how much of this number goes to the Ludwigshafen side? And this process is not concluded, obviously. Do we have to expect that the headcount here in Ludwigshafen goes below 30,000, would you say? And we also talked about shutting down assets last year. So to which extent will further shutdowns come for Ludwigshafen. Markus Kamieth: [Interpreted] Well, that's many, many questions all at once. On the cost-saving programs, Dirk, you can certainly add to what I now say. So accelerating and adding, you mentioned both. Well, this program, it always seems as if this program ends at a certain point, and then we don't continue it. But productivity increased and, of course, also cost saving never ends at the end of a program. So an acceleration always looks as if the last bar is higher, as if anything is added. But we always continuously continue that. So the market for chemistry worldwide shows a certain picture, particularly in Europe, particularly with chemistry growth, which in Europe was negative. In Germany, very negative. So here, the cost pressure will stay. And so in the next years, from my point of view, we will have to look to increasing productivity and stabilizing costs and saving costs. So we will not get out of this phase. And our message to our employees is, and we really want to be very transparent here. There's never the moment when we are finished with saving costs. So the market and our competition will put pressure on us. And you saw it in the subject of services. We want to see the perspectives. We want to develop in a way that we can be better in competition. Dirk Elvermann: [Interpreted] So let me complement on that. You asked whether it's necessary. Yes, in a way, it is. BASF was in a difficult environment in 2025, but everybody did a very good job. But at the same time, for Germany, with our earnings, we are in a negative situation. And this is why there is no alternative to continuing our cost saving, but also to take it one step further to see where we can increase productivity. The earnings situation of the company is at a low level right now. And I told you before, looking at our EBITDA margin, you can see very clearly that we have to make further efforts, and we do that continuously and very consistently. Markus Kamieth: [Interpreted] And back to your other question, a split of the number, 4,800 that Dirk mentioned before, I don't know the exact split. We do publish sometimes. Maybe [ Mr. Lisman ] has checked it up already, but I don't know what the exact split is for this number. A significant part of these 4,800 are in Europe. And a significant share of that, again, is in Ludwigshafen. But of course, we can do a fact check here because I don't have the exact figures now. With a perspective, looking into the future for Ludwigshafen, what we want to do is we want to make Ludwigshafen leaner and stronger. Leaner and stronger means that we want to invest in our assets where we see the opportunity to be successful. Just now at the site, we see a lot of expansion investments that we mentioned before. We also have some small adjustments, but we are not planning for any major shutdowns at the core of the Verbund site at Ludwigshafen. But I cannot exclude it for all times. This is the dynamics that we're in. We have to adjust to the market. We did that for tens of years, and we will do so in the future. But what is continuing to happen in Ludwigshafen, and you will have learned about that, too, we have a very strong program when it comes to cost savings, when it comes to personnel cost savings. And in 2025, we took a significant step forward here. You can see it in the one-off costs that Dirk mentioned before, and we will continue to do so in 2026 and 2027, and even accelerate this. So the reduction of headcount here at Ludwigshafen in production, but also in nonproduction areas will continue. And where we will land, what figure it will be? Well, I can't give you any figure here. I've always said this. And I think with the benefit of hindsight, it was a good idea not to give any figures, because the situation has strongly changed already. So let's not forget, it always feels as if time flies since the day when Trump stood in the, yes, Rose Garden with his sign. And the world has changed. And we have to really keep adjusting and keep being flexible. So it was a good idea not to give you one exact factor. We work together with the employee and representatives. We work through the individual projects as best as possible. So today, again, you don't get a target figure. Andreas Meier: [Interpreted] Okay. Mr. Freytag, FAZ, please. Bernd Freytag: [Interpreted] Regarding Ludwigshafen, one follow-up question. So what range is the loss? And what do you expect this year? Second question, Mr. Elvermann, when you ask tariffs to be back, how much have you paid here, to give us an idea? Mr. Kamieth, regarding the European chemicals policy in general. The EU with the critical chemical alliance would like to pick value chains which may be protected or are seen as worth to continue, may probably be subsidized. What are you hoping for here? Markus Kamieth: [Interpreted] Very complex questions. Let me start with chemicals, legislation, EU. Maybe you can take over then. Complicated issue, Mr. Freytag. Let me limit myself to Critical Chemicals Alliance. Otherwise, so many other topics will be added that are decided for us in Brussels. Critical Chemicals Alliance, developed from 2 different types of motivation. It's an initiative by the EU Commission. On the one hand, the shock after corona, because we realized in many value chains, Europe is not in a robust situation. And if we don't watch out, we will lose more value chains in Europe, and we will become even more dependent on other regions or even individual countries. Buzzword, rare earths. Buzzword, antibiotics. During COVID, it turned out, oh, it's not a good thing to be in that weak situation in Europe. Secondly, a short-term aspect, and that's the import pressure that we experienced from the U.S. and from China regarding the chemical industry in Europe, because they put capacities in Europe under pressure. I say we caused this problem, of course, to a large extent, because competitiveness situation is very difficult here. So I welcome this approach. The industry, the EU Commission and many advisers want to sit down and discuss how can we come up with a regulatory framework to make sure that on the one hand, we maintain the European chemical industry. And on the other hand, we do away with the critical dependencies. But I think we must not switch it in a way to come up with an island solution for Europe. We must not have a protectionist development in the chemical industry in Europe. That would be the wrong development. This is why we say we need a balanced approach where protection is necessary for reasons of resilience or, maybe in some cases, in a targeted way for competitive reasons. We are in favor. If it means that it will help, it's okay. But if it continues with noncompetitive situations in Europe, we are against. As a chemical industry in Europe, we don't want to live in a zoo. We want to still live out in the wild. So my appeal to the EU Commission often is do not come up with too many specific aid packages, just make sure you take away the load from our shoulders, so that we can continue breathing. So that's my approach here. But of course, I could spend hours discussing this. Dirk Elvermann: [Interpreted] Mr. Freytag, the other questions. Well, tariffs, I think it's too early to give you exact figures here. Let me tell you, we don't have such a high direct tariff burden, not even in the U.S. I mean, we're not talking about very, very high sums of money. But as Markus said, we look at this specifically. And once we have an opinion, we will announce it. But there is still a lot of momentum in this. BASF SE, well, maybe I can give you one figure. EBIT of BASF SE this year, more than EUR 1 billion negative, of course, for different reasons. Let me start by saying, here on site, people are doing a great job and earnings figures increased on site compared to the prior year. We have a slightly higher capacity utilization, and a lot of things are developing in the right direction with a lot of helping hands. However, the structural weakness in Germany and Europe is continuing. It continues to be a burden. And due to restructuring, of course, we have one-off costs now. We cannot avoid that. And this is reflected also in the figures of our operating activities, but more than EUR 1 billion negative at SE level. This is more than compensated by the positive contributions from the group as a whole. But let me add, that's really important. I understand that this is an interesting figure for you. And well, the earnings of BASF SE, but please bear in mind, BASF SE includes a lot of things. It's the company for our biggest production site, the competitiveness of which is dear to our heart, because people are doing a great job here to make sure that this site becomes fitter. On the other hand, BASF SE is the group company, the parent company here of the group. So it includes a lot of things that are not directly related to the production of this site. So it's a charged figure, so to say. We need to interpret it cautiously. And I always warn against to overinterpret fluctuations in this figure and then thinking you know about the competitiveness of the site. I take a close look. It's important to us to make the site of future fit for the future, fit for a green future, and we are right on track here. Andreas Meier: [Interpreted] Okay. Did this answer all your questions? Thank you. Mr. Leo, Xinhua. Unknown Attendee: [Interpreted] Mr. Kamieth, in today's press release, we read that last year, the Zhanjiang-Verbund site was started up successfully. It's the third biggest production site of BASF globally. Why is BASF continuing to invest so much money in China? Looking at today's uncertain times, how important is the Chinese market in the global strategic approach of BASF? Markus Kamieth: [Interpreted] Thank you for the question. Yes, you are right. In the fourth quarter, so with the highlight of the steam cracker very early in January, we, from our point of view, successfully started up the site. As I said, 32 production assets were started up within only 4 weeks. And I would say, looking at the complexity and the success, I'm only talking about the technical start-up, not the construction, which was also great. But to achieving this with such a quality, I think this is the first ever in the chemical industry. So great performance by the team. And this goes to show that this is what our workforce really, really is able to do. We are very proud of this. Of course, this does not protect us against a very difficult market in China. I said, well, the market is growing. There is volume growth in China. However, prices are under enormous pressure because of high overcapacities in China. This does not only go for the chemical industry. In China, for 40 months in a row, we have producer price inflation. So this producer price inflation is not what the consumer sees, but what the producing industry sees, and there is a strong margin pressure because of this in all Chinese industry. But we think in the mid to long term, this will be a successful site for BASF because the strategic location is fine in South China, in the Guangdong Province, where the heart of Chinese growth is to be found, and we are very competitive. China represents almost 54% of the global chemical market. We are at the right location, with the right assets, with a site which, especially within China, but also at global level is producing with a very, very low CO2 footprint. So strategically speaking, very good. Operationally, in the short term, more difficult than expected. But still, we are convinced that this was the right decision. Even though in '26, 2027, the financial performance will be a little more difficult. In China, we generate around 13% of group sales of the BASF Group. This will increase slightly with the new site to between 15% and 20% probably, but China will become more important for us. And you have to put it in perspective. I tend to compare this with the U.S. The U.S. will still be a much bigger, much more important market than China in future. Sometimes the press says, well, we are somewhat biased here, but we are not. Andreas Meier: [Interpreted] I have 8 further questions. So let us please be brief, and also with the answers, brief answers, please. Ms. [indiscernible] next. Unknown Attendee: [Interpreted] Yes, I would like to come back to China for a minute. So you said Zhanjiang will be profitable starting 2027. I think that's what you said. Could you please go a little more in depth what about the development of the margins and why you assume that things are going to be better? Will overcapacities go down? Or is BASF so cost efficient? Or are the Chinese customers prepared to pay more for carbon or low-carbon products? And maybe one question on India on top of that. So with the trade agreement with India, is the market more attractive now for BASF? Or, yes, the service centers that you established there, is that to do with the trade agreements? Or is it just a matter of time? Markus Kamieth: [Interpreted] Well, the elements that you just mentioned for the potential increase of profitabilities are all correct, but they will not happen in 2026 or 2027. So not on short time. The reason for increase in profitability, 2025, '26 and '27. '25, of course, we had high costs in investing. Now in '26, the direction will be better, but it is still below the 0 line. In 2027, it's getting better. So we are in a ramp-up situation just now, a gradient. And then in 2027, we will have a site which is full up and running with no ramp-up costs. So the ramp-up costs, required additional employees, people who help, additional costs occur. And now we expect a gradual recovery of margins in China, nothing dramatic, but a steady development, I'd say, of the margins. And that's a scenario for the site. So in 2027, we will enter the positive region. But then medium term, some things will come in that you also mentioned. For example, the high attractiveness for low-carbon products that will come at the end of the decade in China. Then there's going to be a recalibration taking place of capacities in China, not very speedily, but over time. So all these things will then come, and this is why we stick to our profitability statements for 2030. No, India -- sorry, India, maybe you? Dirk Elvermann: [Interpreted] Well, it happens at the same time. So your second option. So in India, of course, we look at the growing market in India, and it is an interesting market for us. We said so in the strategy too. And it is also the location for competitive services, particularly in the transactional regions. So it happens at the same time. So we went there, and we also announced the hubs, but it is not as if a lot more has to be interpreted into that situation. And the free trade agreement with India and also the free trade agreement with Mercosur, once it happens, both have no major impact on the chemical industry, because the chemical volumes in India are relatively low compared to the overall trade volume. So it's smaller portions. But there is a potential positive effect to the overall industry in Europe and particularly in Germany. So we really support free trade agreements. So we don't want to erect walls. We want to have free trade agreements. That's what we want to invest in. And that's what we like India, we like Mercosur, but the direct impact on BASF is small. Andreas Meier: [Interpreted] Bettina Eschbach. Bettina Eschbach: [Interpreted] I have 2 questions on India. The 2 new hubs, can you give us a figure, how many jobs will be created and maybe also how many come from Berlin, how many people will be maybe transferred from Ludwigshafen to the hubs? Markus Kamieth: [Interpreted] Well, first of all, Ms. Eschbach, it's going to be global hubs. They will be very important, and that goes both for the digital services, but also for the business services, and particularly for the transactional services. For business services, that is finance and personnel, so HR. So those are going to be global hubs. And let me be very clear about this, for the further hubs that we have, particularly in Berlin, we do not plan to shut down Berlin. We want to continue our hub in Berlin, and the hub is going to be smaller when it comes to the jobs there, but it will play a major role for us and for the services rendered there. A concrete figure, how much less Berlin will have and how much more India? Well, I can't give you that now. We have our direction of travel. We communicated that. We will further work on that. And of course, we, first of all, have to speak with the employee representatives. We have a very good exchange with them going on, and then there's going to be figures afterwards. Now it's early times. Andreas Meier: [Interpreted] Okay. Ms. Martin, please, from Bloomberg. Marilen Martin: [Interpreted] Well, one question on China, please. So what is the capacity utilization that you expect in 2026 and '27 and further? And another question on Wintershall. What about the situation there? Is it the payments that you set for 2026? Are those the last ones? Or will you receive further ones? Markus Kamieth: [Interpreted] Well, let me take the China question. We are very fast when it comes to high capacity utilization. And last year, we already communicated and discussed that with you. And in February, I saw that the steam cracker in Zhanjiang has full capacity utilization, and all downstream plants that you can ramp up quickly, because it's products that you can bring into the market without qualifications, they have high capacity utilization. And in 2026, they will already have a target capacity utilization of very high percentages. And that goes for many products. There are a few exceptions where we are quite aware of being slower because the market situation looks difficult. That's the exception. But there are a few assets where only with the new products, we have to go through the specification and qualification process. We have our surfactants, for example, that's the detergents that go into consumer products. And here, typically, when you produce that from a new plant, a new asset, you have to go through a test period with the customer, and that's about 6 months' time. So here, the ramp-up is a little slower. So this time of the year, half capacity utilization, next year then 100%. But we do use the capacity utilization because it has a very cost-efficient position in China, so we can be quick here. And on Wintershall, for 2025, we had EUR 900 million that we received. And in January, we got another EUR 500 million, and there's going to be EUR 300 additional millions to come. and that then fulfills our claim that we have into this capital coverage of Wintershall. So that's our share, the full share. And then there's going to be another EUR 100 million payment in 2027 and '28, but that will not come from guarantee payments, but it will come from a tax refund, because part of this amount is capital income tax. And then in end of 2027, the rest will come depending on how quickly the tax authorities will work. Andreas Meier: [Interpreted] On my list, I still have Mr. Reitz, Ms. Dostert, Mr. Schreiber, Ms. Nehren-Essing, and Tom Brown. I hope that everything will be covered. And we do have a few minutes left. So let's continue with Mr. Reitz. Hartmut Reitz: [Interpreted] Thank you. I have a question regarding the capacity utilization at the Ludwigshafen site. You mentioned that you are making progress. Maybe you can comment on the situation and the challenges ahead of you. And when it comes to selling the BASF-owned flats. To keep such a number of flats owned by the company is regarded as a commitment to society on part of the company. So are there financial reasons for selling this? Is the pressure too much? Markus Kamieth: [Interpreted] Okay. It's important, regarding your second question, to stress the following. We do understand that the news really made a lot of people uncertain in and around Ludwigshafen. That's understandable. And we do understand the irritation we triggered given those who are in charge at political level and of course, also the tenants in these flats. That's obvious. I experienced this personally. I grew up in a flat owned by [indiscernible] AG and my parents understood they sold the flat and my parents were very concerned what will happen to us now. But well, everything was fine in the end. But I do understand these concerns. Of course, you can say social responsibility, yes, that is one aspect, definitely. But on the other hand, just as an experiment in theory, if we didn't have these flats today, and we stand here today and say, we have income, we have money, we'd like to buy 4,500 flats. There would be a lot of question marks. Why is BASF buying flats? So from a point of view of the company, it is capital tied up, which is a significant amount. And it shows where we have other challenges and where this capital could be used in a better way. I think you need a balanced approach. And of course, we care about the responsibility we have for the Ludwigshafen site and the region. And this is why we will approach the process of this sale, as we announced, in a very responsible manner. And of course, we expect guarantees on part of the buyers that comply with our responsibility. We do not just want to neglect any kind of responsibility, but this is capital that can be used very well in different areas of the company. And from my point of view, for the tenants in Ludwigshafen, it can all be really, really fine. But we have to be successful, and we do everything we can to make it successful. Now capacity utilization in Ludwigshafen, I don't have the figure. I don't know it. You indicated the capacity utilization in Ludwigshafen is going in the right direction. I cannot confirm this. Let me tell you, we are still at a low level. I cannot give you a clear figure. And I just mentioned, and that's correct. Capacity utilization compared to the prior year, which was at a low level, is going in the same direction. So this is the trend I can give you, but there are no significant changes that would be worth a headline. This is just saying a first step in the right direction. But these are just nuances in Europe. In the region of Europe, the figure went down. But in all regions, we grew above market level. Maybe I should have made this part of my speech. So volume-wise, we grew ahead of the market. In Europe, we say our shrinkage was lower compared to the market. Ludwigshafen and Antwerp remain under pressure. If we have a slightly higher capacity utilization compared to prior year, it's minor figures. Capacity utilization-wise, we are still very much under pressure in Europe. This is why we have such a cost pressure, because we need to adjust to this situation. Andreas Meier: [Interpreted] Ms. Dostert, SZ. Elisabeth Dostert: [Interpreted] Last year, you said you had a capacity utilization of 80%. Is that the bad type of capacity utilization? First question. Second question, in Ludwigshafen, when does BASF SE want to make a profit again? Or will you remain at the level where you are at the moment figure-wise? And number three, is there any segment which your new Verbund site in China covers where there are no overcapacities at the moment? Markus Kamieth: [Interpreted] The last question is a difficult one. Yes, yes, there are products we produce in Zhanjiang where there are no overcapacities. That's a matter of fact. But the majority of products we produce there, it's maybe 30 or 40. This operates in a well-supplied market of the chemical industry, well-supplied market that includes different degrees of available capacities ranging from balance to slight overcapacity, up to products which are under enormous pressure at the moment. So we have everything at the Zhanjiang site. But if you take the average with this site today, we enter an oversupplied market in China. I don't want to tell you anything about individual products, maybe I would make a mistake, so I do not want to do this. The 80% last year for Ludwigshafen capacity utilization. The capacity utilization of Ludwigshafen site or of the BASF Group is not a figure I often take a look at, because it's such a huge KPI that doesn't help you when you control the company. It's easy to communicate. It's easy to remember, but I don't look at it so often. So I don't know what the 80% were. The capacity utilization at Ludwigshafen is at a historically low level. There was some tailwind because we took out some capacities over the last 5 years, TDI, adipic acid, caprolactam closures. Of course, this helps. But capacity utilization has not changed considerably, and this is because the European market is shrinking rather than growing. And so I cannot give you more details on the 80%. Well, when will BASF have black figures? Well, as soon as possible. We don't have a specific BASF planning in our strategy, but we are working on whatever we have as part of the [ Lucid ] program as part of the strategy to make it a profit-generating pillar of the group. Otherwise, we will not reach the ambitious targets we have. Ludwigshafen should not be a drain on the group. So this is why there are a lot of expectations when it comes to Ludwigshafen. But we don't have a year I can give you now when we want to be in the area where we have positive figures again, but this is also how we communicate it to our team. Andreas Meier: [Interpreted] Mr. Schreiber, please, brief question. Unknown Attendee: [Interpreted] Well, we heard about overcapacities in China. This means that a lot of chemicals are entering Germany and Europe. Prices are going down. Do you think prices will recover? Do you have a forecast here? And you said emission certificates were in the 3-digit million range. Can you give us a figure for 2025 here? Markus Kamieth: [Interpreted] 2025, it was a little more compared to 2024. Just look at the ETS price and then you will know. But the statement is true, in '25, it was slightly higher than 2024. We think prices will not go down dramatically. In case of many products, we still reached a level where many companies in the chemical industry are not really making a profit. You see how many companies are going bust in Europe. In China as well, a lot of companies are no longer operating profitably. So we have reached the bottom, so to say. Recovering -- well, I think in many products, we will not go down any further. But let me also tell you, we see so many products from China in Europe now. It's important to state Europe is still a net exporter of chemical products. We, value-wise, export more products from Europe than importing them to Europe. But there is an imbalance, because we have a lot of import pressure from the U.S. and China when it comes to energy-intensive, high-volume products. And in public, this then rules the discussion about the chemical industry. But we are by far the biggest producer of specialty chemicals in Europe. Very often, we talk about ETS, about imports from China. These are the base products, what we call upstream products. But the BASF is not a pure upstream company. Pressure is enormous, but when it comes to specialty chemicals, Europe is very strong and a net exporter. That's important. I mean, import pressure from China is an issue, but not that much. Andreas Meier: [Interpreted] Ms. Nehren-Essing. Michaela Nehren-Essing: [Interpreted] Well, many questions were already answered and were also already questioned, but I have one more. At the beginning of your presentation, you said that there are also signs heading into the direction of improvement of the situation. Maybe you can go into that a little more in detail. Where do you see this? And I have a question on the selling of the 4,400 flats of BASF. How high are the costs, the annual costs, because that will also play an important role once you sell flats, because they have to be maintained and all that. Markus Kamieth: Well, second question, I don't have an answer. Maybe you, Dirk. Dirk Elvermann: Well, I do not have an answer on the running costs, but maybe I can put it into perspective. So the flats, what we do not want to do is that we want to save costs here. What we're talking about is how can we use the money reasonably for the company. And I said we have to focus, and we want to use our funds for good chemical production also here in Germany and at the site. And this is why we said, well, real estate administration is not what we want to do really. If we find a buyer that also takes over the social charter that we arranged for our rentees, then we can, of course, find a good solution and with our tenants. And I do not see any, well, proper costs or expenditures in our budget. We just want to use the funds where they best fit. Let me just put it very simply. So the flats are operated today by BASF Bauen and Wohnen, that is a real estate administrator for us, and they actually have a business model that they do it as good as possible as a real estate administrator can do. So for us, it is not something where we say we can save costs here, because these costs remain in this real estate cycle with the tenants, and it's a different cycle. Markus Kamieth: [Interpreted] Positive signals. That's another subject that you alluded to. Looking at what is happening in the world just now, there's many things that can go wrong, a very high volatility, nervousness, well the tariff verdict in the United States, the war planes went into the Gulf War, U.S. war planes. So these are things that are difficult to rate. So it is sometimes also difficult to see positive signals. But let me start in Germany. The infrastructural package was announced with a lot of attention. And last year, we had to say, particularly for our Anglo-Saxon investors, we said it's not going to start in 3 months. But in 2026, we see the first signs and it really gets started. I talk to people who, for example, work in the construction building business. They get this incentive from the government to invest in new buildings, in new barracks for the Army. Maybe you saw recently the purchasing index was mentioned with a figure of over 50. I don't remember the last time when it was over 50, that has to be many, many years ago. But there is a certain optimism, obviously, that in Germany, positive activity is to be expected. But it's too early to celebrate because there are other indicators that point in the different or in the other direction. All in all, we see increased confidence with our consumer and customer partners that goes into the right direction. So well, we reached the trough, so to speak. And that's all I can say at this point. There are some signs for positive growth signals. But if that is going to be sufficient impulses to push us over the 0 line, so to speak, let's see. But if you look into the media, you can find a lot of connecting points to be a little more optimistic for the second half of 2026 and then in 2027 compared to looking back. Michaela Nehren-Essing: [Interpreted] Can I have an additional question, please? Coming back to the flats that you want to sell. You said you manage the flats from yourself, for your own company, as an own unit, you say. But once you sell the flats, that means that you need less people to administer these flats and maintain them, which again means, well, headcount reduction. Markus Kamieth: [Interpreted] Well, it can and might happen, but it doesn't have to. It's early times in this process. So we communicate things very early. We make a decision, and then we don't have all the answers right at the beginning. At BASF Bauen and Wohnen, as far as I remember, they have 80 to 90 staff. And then you have to see, in a potential new construction that has to take over Bauen and Wohnen. And of course, we will keep 1,400 flats because they are near the site, and we want to keep it. But you can see that it is not a subject which will have a big effect on our portfolio and our budget. But we have to accept that there are people who are concerned now, and we shouldn't speculate. But it might be that if the buyer doesn't have any capacities to do the administration of these flats and to maintain them, that these people will be again employed by this buyer. But it's early times, as I said. Andreas Meier: [Interpreted] Tom Brown. Tom Brown: Just a quick one to close off. In light of the bearish environment this year and the insolvencies we've seen in Germany, especially, like do you have a projection on how much capacity you expect to leave the European market? And just kind of building from that, looking at Ursula von der Leyen's comments in Antwerp and the delays in EU Mercosur as well as the delays to funding for Ukraine, do you think there's an argument for centralizing greater power in Europe at the Brussels level? Markus Kamieth: The second question, it's a very fundamental question. I think if you would ask anybody in Europe, [indiscernible] form of the European Union and its constituents or processes, so to say, you would find a high vote. And I would say even people in the European Commission would say, yes, it would be needed because we are struggling with the 27 votes, 27 Unity votes on a lot of big decisions. But there's also no easy answer. And I think, for me, it is not appropriate to now use the word like you used, centralization. It's an oversimplification of what is needed. Everybody wants to make Europe successful. We want to make Europe successful. We have to make Europe successful. I can only warn that especially parties that are making public noise around criticizing that the EU is maybe not good for Germany, that they don't get, let's say, too much airtime with their oversimplistic arguments, because Europe is good for us, Europe is good for European industry, Europe is good for most citizens in Europe, but we could use a more future-ready European Union, so to say, I would say. And I think there probably even Mrs. von der Leyen would subscribe to this. Your first question was on insolvencies... Tom Brown: Yes, insolvencies... Markus Kamieth: I don't know. We have published this -- the Cefic has published this in January. You have maybe seen this if you were in Antwerp, that over the last 3, 4 years, already 9% of the European chemical capacity has been closed with a consequence that 90,000 jobs have already been -- direct and indirect jobs have been affected. And if you look at the dynamics, we are not at the end. So there is more capacity that will be closed. There are insolvencies, there's restructuring. And I would say there's also delayed restructuring now with some asset sales that are happening in Europe. So I would say the time of restructuring in the European chemical industry is not yet over from a BASF perspective. This is also something we feel is necessary. So that's why I said earlier, a protectionism in Europe is not good for the industry, and it's also not good for BASF, because to some extent, the overcapacity also in Europe has to be addressed. The overcapacity is not only in China, it's also in Europe. And noncompetitive assets have to also be restructured. And we believe that this actually is a source of relative competitive advantage for BASF, because we have, in Europe, very competitive assets. In sites like Ludwigshafen and Antwerp, with a high degree of integration, a low cost base in terms of asset cost and good energy integration will actually play out their relative advantage compared to many other chemical sites in Europe, smaller nonintegrated that will get into difficulties. Andreas Meier: [Interpreted] Thanks. We have to come to an end because we have some other calls coming on. And if you have any further questions, we will have to do that later. So thank you very much for the presentation. Thank you very much for your questions and your interest. And before we close the conference, I would like to give you a few points of housekeeping. Today's AGM is going to take place on the 30th of April in the Congress Center Rosengarten in-person attendance, and we will inform you also on the results of the first quarter 2026. We will have a media office area installed for you, and we would love to welcome you there. For the TV and radio teams registered for short interviews with Mr. Kamieth and Mr. Elvermann, please don't approach us here. We have reserved some quiet rooms. Please just contact my colleagues at the door to the lobby. So that's the end of our annual press conference. Thank you very much for your interest. We are looking forward to further exchanges with you and invite you for a little refreshment in the lobby. Thank you very much.
Johan Svanstrom: All right. Now we officially start. So good morning, and welcome to the presentation of Rightmove's Results for 2025. I'm joined today by Rory Hook, our CFO, sitting here, who'll be here in a second. First, a couple of takeaways. Our 2025 performance showed strong continued delivery in a competitive market, and we will step up the pace further in '26. We continue to deliver compelling value from and across our platform to both core and other partners. We have a very strong position with consumers, partners and our data. And with our AI capability, we're enhancing all of that even further. We continue to deliver our proposition. We're executing our strategy. We're excited about all future opportunities to further digitize the U.K. property sector. Now we delivered some really strong KPIs for last year. Revenue growth of 9% was supported by ARPA and membership increases in the core business as well as contribution from growth in our strategic growth areas. Underlying operating profit growth of 9% reflects our revenue growth and ongoing investments in people, technology and product delivery. Underlying EPS grew by 11%, and we increased capital returned by 21%. And finally, time on site at 16.8 billion minutes was the second highest on record, only beaten by the COVID exceptional burst in '21. Said differently, the equivalent of 32,000 years of time was spent on Rightmove platform last year. We made some strong operational progress as well right across the platform last year. So from the left, over 85% of that large audience came through direct and organic traffic and we grew our app users by strong 11%. We continue to evolve to meet consumers wherever they are and we doubled their engagement numbers in social media channels. We saw a strong penetration of our top packages in Estate Agency and New Homes as well as a very fast start for our latest and market unique Estate Agency own product, Online Agent Valuation. Our Agency retention was the second highest in over 10 years, and third-party surveys showed record positive sentiment scores for Rightmove. We continued our strategic and operational progress and growth in the strategic growth areas. And all of this was delivered through Rightmove's platform and leading data. We did over 6,000 tech releases. And after a multiyear build, we now have 31 live strategic AI projects at year-end. It's an increase of 4 on our November update, and we tripled the number of data models used to process our proprietary data in the platform. This strong stance is down to purposeful work and investments over the most recent years and has a strong trajectory for future product delivery. And finally, on people, we have a world-class, engaged and energized team. 89% of our team described Rightmove as a great place to work. So my sincere thanks to all hard and smart working Rightmovers for delivering our results of last year. It is a competitive market out there, but our position is stable and it's strong. And that's because we keep delivering great value for both consumers and partners. We remain the leading place for consumers looking to make a move in U.K. property. And while facing various competitive dynamics, over time, we have, for years, averaged over 70% share of portal time on similar web and over 80% on Comscore. In December '25, we were at 75% and 89%, respectively. And that love and trust from consumers drives frequency, leads and, of course, a lot of data signals. And those enable us to drive strong outcomes and value for our over 19,000 U.K. estate agents and New Homes partners. Now I want to touch on that value point a bit. We operate in a competitive market, and we always gauge how we can do even better. So we commissioned third-party surveys quarterly with over 1,600 independent agents contributing responses. The top left chart here shows that the total positive sentiment scores from those surveys. These are -- there are 2 big takeaways. One, just in absolute terms, we've seen a positive trend and a new record high actually by the end of last year. Market conditions and general sentiment out there often impact survey responses. So in the context of the weaker Q4 in the property market through the U.K. budget hesitance, that's actually an excellent result. And two, in relative terms, you can see a 1.7x differential between Rightmove and the main portal competitors. Now we ask for feedback at branch frontline, branch management level and company management levels, and we also go deep on several subcategories. You can see that we lead across subcategories across business results, value and inclusive services at the bottom of this chart. So we rate really well in what's a competitive market, yet we, of course, always look for opportunities to improve and for all partners. Part of the value and those strong scores come from our Building Success Together program, which we launched in early 2024. We invest resource in supporting our partners' business objectives. We also help them to understand what happens in the market and where Rightmove can bring. And as noted top right, this comes in many forms and at true scale. Dedicated account management in the field, our Rightmove Plus and Rightmove Hub tools, which are both available to all partners regardless of package levels. We're sponsoring and collaborating with several leading industry organizations across the Estate Agency, New Homes and Rental operators. We continue to invest in and progress these 2. Rightmove Plus, as an example, is the business management tool for partners. Last year alone, had new features and enhancements introduced over 25x. And our partners' engagement value from Rightmove Plus is clear, 28 million sessions recorded in the year. So in summary, we deliver Rightmove outcomes and value from a broad range of solutions, packages, products, data, insight, training, dedicated servicing through our account management and support teams and we measure these results. Now let's move to the property end markets for a bit. Within sales, top left here, it was really a year or 2 halves. H1 was strong, building on 2024 and with successive Bank of England rate cuts. H2 was weaker year-on-year due to the fears around the late autumn budget. If you take them together, 2025 as a whole, so 10% more completions versus '24, and that was in line with long-term averages. Looking at the year ahead, top right, there's been a clear post-budget bounce back in available stock, which is now at a 10-year high. This has caused slower price growth, which is, of course, supportive for buyers in the market. Now these elevated levels of resale stock is less helpful for New Homes developers. So on the bottom right here shows New Homes as a proportion of total for sale stock on our site. And with approved planning applications at an all-time low, we don't expect a material recovery of the development numbers in the market in H1 this year. With the rentals, bottom left, increased supply and reduced demand continues to improve the more extreme imbalance seen in previous years and which we have talked about. So the 2025 average of 10 inquires per available property is still above the pre-COVID average of 6 to 7 though. And of course, all these segments, of course, mortgage rates is a key driver, and it continues on a steady downward trajectory. At the 31st of January, the average 5-year fixed rate was 4.35%, that's 55 bps lower than a year earlier, and that's per Rightmove's daily mortgage tracker. So with that, let me pass over to Rory for more detail on our financials. Ruaridh Hook: Thank you, Johan. Good morning, everyone. I'm delighted to present our financial results for 2025. Overall revenue grew 9% compared to 2024 with strong growth across the business. Starting with Agency, Row 1 in the table, revenues increased by 9% to GBP 305 million. If you look at the chart on the right, the light blue bars showed that this growth was driven primarily by ARPA-led games, which continue to be mainly discretionary. An additional contribution of GBP 6 million came from increased Agency membership numbers. And moving down the table to New Homes, revenues here also rose 9% to GBP 75 million. This was in spite of continued headwinds in the New Homes end market with new builds coming to the market remaining subdued. You can see the impact of this in the chart with the dark green showing revenue growth contribution of less than GBP 1 million from higher average membership increasing by 1%. The ARPA growth contribution remained strong, contributing GBP 5 million. At the bottom of the table, our strategic growth areas delivered another strong performance. Revenue increased by GBP 5.7 million, up 25% to GBP 29.1 million. Commercial revenues grew 13% to GBP 15.3 million as we continue to focus on customer acquisition with membership increasing 29% year-on-year. Mortgages revenue was up almost 50% to GBP 6.8 million. This was weighted towards the first half of the year, mainly reflecting the timing of interest rate changes and hesitancy in the property market around the budget, impacting activity in H2. Rental Services made up of our Lead to Keys product, referencing ancillary services, saw revenues up 35%, driven by strong growth across the Lead to Keys product. For completeness, the non-SG&A parts of other revenues being data services, overseas and third-party advertising grew 2% year-on-year. Revenues outside the core represented 11% of group revenue, up from 10% last year. Compared to December 2024 across Agency and New Homes, membership increased by 225, up 1% to 19,272. This increase was due to growth in Agency membership, which increased by 261, up 2% on December 2024. This was due to high Agency retention of 90%, continued growth in Agent formation as well as current partners opening new branches. Within New Homes, we saw a year-on-year decline of 36 developments, down 1% at year-end. You can see in the bottom right chart, a decrease of traditional developments in orange of 113, offset by an increase in housing associations in teal of 77. New developments coming on site remain low. We are not seeing a pickup in build rates and have seen traditional developments fall to their lowest level since January 2018. We do not see this changing in H1, but continue to be optimistic that developers will be encouraged to build more by H2 and in future years. Overall ARPA increased by GBP 97 to GBP 1,621. 60% of ARPA growth was product-led with similar percentage in both Agency and New Homes as our partners chose to upgrade or purchase incremental product. The remaining 40% of ARPA growth came from contract renewals, which all proceeded as expected. Given partner engagement with our strong suite of value-adding products, we expect a similar split this year. In terms of product ARPA growth, we saw upgrades in Agency come from multiple sources, ranging from upgrades through the package ladder from lower threshold packages to new joiners joining straight into the top package. You can see this in the pie chart for Optimiser Edge joiners in the middle of this slide. The migration of the old top package, Optimiser 2020, has gone well and will be fully retired by H1. Joiners in New Homes to the advanced package, shown top right, similarly came from upgrades and new joiners. We had a new top package, Ascend, launched in May with 818, 28% of developments live at the end of the year. We expect a similar split of upgrades going straight into this top package, but flagged that the advanced package remains highly attractive, especially for smaller developers. So expect to still see good inbound into advance next year. Taking these 2 pie charts together, you can see that key for both New Homes and Agency is that we do not rely on a single source of joiners to the top package and expect penetration to continue to increase in both. The other driver of ARPA growth comes from incremental product purchase. You can see from the charts at the bottom for both Estate Agency and New Homes. ARPA increases at the initial upgrade in month 1. This is the column marked upgrade. Then we see ARPA increase across the first year and the second year. In both Estate Agency and New Homes, you can see that ARPA keeps growing far past the initial upgrade. This happens as partners choose to purchase more of the same products or add additional products to their package mix. We have shown the previous top package in Agency Optimiser 2020 and in New Homes Advance to illustrate how we have seen this before. And that the initial months of the new top packages in both Agency and New Homes are performing as we expect and have seen previously. We know that continuing to provide great value and superior outcomes to our partners through continually evolving and new products sees them choose to engage further. Also, at the end of last year, we added online agent valuation exclusive to optimize our Edge partners and with an average price of GBP 170, providing both another reason to upgrade to the top package and also encouraging existing partners to increase their current product spend. Moving on to costs. Underlying operating costs increased by GBP 11 million year-on-year, resulting in a 70% underlying margin as we invested with discipline and within our cost framework. The main driver of costs remains our investment in people, up GBP 4.6 million or 7%. The other main cost component was our continued investment across technology with an increase of GBP 4 million. In the year, there was GBP 9 million of internal labor capitalization with total CapEx at GBP 10 million. As guided in November, we expect to see an increase in labor capitalization in 2026 with total CapEx to be around GBP 16 million, less than 4% of revenue. In 2026, we will see investment as outlined last November, which will mainly be in people. We anticipate over 100 joining before the end of the year in roles across data, product and engineering. A few of these roles will be through our new flexible resource provider, which will provide us with the flexibility of headcount over the investment phase. Other material increase in cost will be the AI-powered operations area with work on the back office initial phase already commencing. All in, post capitalization, this incremental investment is expected to total around GBP 12 million in 2026 as guided in November. We remain highly cash generative with a cash conversion ratio of 107% of operating profit. As we continue to grow the strong cash generation of our business, this leaves us well placed to return surplus cash to shareholders. This year, a total of GBP 220 million was returned to shareholders, GBP 141 million via share buybacks and GBP 79 million via dividends, an increase of 21% year-on-year. We reduced our share count by 2%, meaning over 40% of issued shares have now been repurchased and returned 6% of our year-end market capitalization in the year. This morning, we announced a final dividend of 6.59p, bringing the total dividend to 10.64p. There will also be a share buyback program of GBP 90 million until the 31st of July. This will be funded by the growth in earnings, but also reducing cash reserves from December's GBP 43 million to around GBP 20 million by half year, which we see as sufficient to manage the working capital of the business going forward. Our capital allocation policy remains prioritize investment in the business, evaluate value-accretive M&A and return all surplus cash to shareholders via a progressive dividend linked to earnings and buyback thereafter. Turning to financial guidance. This remains the same as set out in November. Looking at the right hand of this slide, revenue growth in 2026 will be between 8% and 10%. We expect H1 growth to be lower than the full year 2026 growth with a higher growth percentage in H2. This is due to the high comparator in H1 last year, particularly in Mortgages, which saw significant activity in H1 2025 due to the stamp duty changes and falling interest rates. And in New Homes due to the full year impact of 36 developments, fewer developments, contributing a negative revenue comparator of around GBP 1.5 million. For Core, we anticipate that membership will grow around 1% and we lifted ARPA growth to between GBP 110 to GBP 120. At an overall level, for the SGAs, we anticipate growth to be around 20% to 30% range. Underlying operating profit will grow by 3% to 5%, resulting in an underlying operating margin no lower than 67%. With no change to our longer-term target set out in November, we anticipate underlying operating profit growth in later years to be at similar levels to revenue growth as we still see no reason for a margin lower than 67%. That concludes the financials. I'll now hand you back to Johan. Johan Svanstrom: All right. Thank you, Rory. So our investment case outlined here will be familiar to most and this summarizes our approach to value creation at Rightmove. On the left, Rightmove has exceptionally strong foundations. We have established a differentiated leading platform at the heart of the U.K.'s large and structurally growing property market. The platform is digital, low-cost, capital-light, driving higher returns on capital. The subscription-based B2B model has a proven ability to deliver and generate value in all market conditions. Moving to the middle of the diagram. We're using powerful data and profound network effects to deliver that value to all stakeholders. And with it, we're executing an expanded growth strategy with targeted investment and delivering data and AI-backed product innovation and that is done through a high-caliber and very energized team. We're entering now our 27th year with confidence to deliver a larger, diversified, yet very connected Rightmove platform. All said, this will continue to deliver compelling financial outcomes. Now our strategy is to develop the leading digital ecosystem for the whole moving experience, powered by exceptional data and network effects. And our people, data and platform really are the foundations and strong differentiators for the 3 business pillars of Core Partner, Consumer and New Growth. The property market is a huge economic activity, and we think there's a long runway to deliver more digital value and grow our business. And that, of course, includes the use of AI. Now there's been a lot of debate who the winners and losers might be, both for classifieds and more recently across a range of industries, really. So I want to talk to property classified specifically. In my view, there are really 4 components you need to win to compete effectively also in an AI world, consumers, partners, data and AI capability. We're really well positioned across all of these. We were well positioned before gen AI, and we will be with the next generations of AI as well. And here's why. We're a technology company. We built up market leadership through deep knowledge, digital leadership and deep layers of servicing our industry in the first 3 of these 4 components and that's been done over 25 years and at an increasing pace. We keep doing that day in, day out, improving all the time. The numbers are leading and they're deep. Now the most recent components of these 4 is, of course, AI capability. AI models and tools, they're fast developing, it's dynamic and they're not fully defined yet. Here's the thing, though. Anybody can get a hold of AI capability. It's an enabling technology that you can buy, skills you can hire and that you can learn to operate. We've done exactly that and for several years already. So what Rightmove has? It's a very, very solid performance and performance platform and business model. It's creating the fundamental attributes that are mentioned here, important to any business success. And in turn, they all boil down to 2 things, which, again, deliver true business results and sustained leadership, trust and vertical innovation. Now we obviously thought a lot about this. In our view, in the case of property classifieds is that LLMs or start-ups running on LLMs are missing or are quite far away on 3 of these 4 components that matters so much in this particular vertical. ChatGPT has been around now for 3 years, yet referral traffic to us is still under 0.5%. And actually, their U.K. app downloads and traffic has leveled off in the last 5 or so months. But more so, I don't think they or other horizontal LLMs can or want to service our vertical as deeply and focused as we and others do, nor to innovate as relentlessly and deep in the specialty of it. Now I'll be very open-eyed and give the large LLMs the upper hand of AI capability and AI innovation overall. But remember, again, they actually enable and sell that capability to buyers like ourselves. So as we add this AI capability to Rightmove, we combine it with the first 3 components that we already have and that are so strong. We're in the best place of anybody to innovate and service this vertical in new and even better ways. I'm actually going to go and cover these 4 components in a bit more detail because it's so important and so topical. Let's start with consumer and partner. You're familiar with network effects and how they're part of a great business like Rightmove and how we invest in them. But I think it's very important to understand that in case of home exchanges, there are 3 special aspects of these network effects, which make them even stronger for property classifieds and certainly in the U.K. So first, in the middle, property transactions, they're high value, highly personal, take a particularly long time in this country and they're very often done in joint deliberation with another person. There's also an incredible amount of browsing done on properties because of 2 things: homes, they're fun to dream of or to be inspired by; and also becomes -- because finding the right one and really deciding when it's time to move is such a serious and important life decision that comes at a high price. So the habit loops are therefore massive. This is very different from a number of B2C categories like e-commerce or research of different kinds, where AI or agents can provide an alternative and shortcut path. And secondly, to the left here, the same consumer actually plays multiple roles, to consider the 4 key roles who use Rightmove and their multiple use. Very often, a buyer is also a seller, and the seller is also a buyer. In the same chain of events or at different points in life. There are 2.5 million private landlords in the U.K. renting to tenants. And those landlords, of course, themselves live and move. There are parents who help their kids with a rental or a first-time purchase, while they themselves might be downsizing or buying a second home. So here's the point. The individual gets value from the same property platform for many different needs. They've seen it in the past. They know what the quality is and they are being in different roles. So the platform is trusted. It's specialized. It has all these different audience roles. So in a way, this forms like a consumer side, individualized network effect in itself, not just across to the other side of the platform. And again, that's very different to, for example, e-commerce and other verticals where the consumer might only be a buyer. And thirdly, of course, in the U.K. property vertical, there's a diverse nature of our partner base, the Estate Agents, New Homes developments, developers, rental operators, commercial and smaller niches. And even in a single branch, an Estate Agency, you can have sales, lettings, commercial, potential financial services, a business owner and branch staff. The U.K. partner is very fragmented and with low barriers to entry. There are many, many different roles that benefit from being on the platform. Agents are local property experts and they can access a highly effective audience platform and with a lot of services included to power their business goals. So in our view, when you combine these 3 points, property complexity, consumer multiuse and agent diversity, you realize that the trusted and vertically specialized UX of the portal will not be replaced by generic or horizontal AI interfaces. Now let's talk about the fourth component, AI capability. We've been building a great tech and data AI capability for a few years now as we reported on several times since 2023. And the simplified, and I know it's simplified tech stack view on the left here, outlines how our Core platform is built on Google Cloud with logically connected enterprise tools like Big Query, Looker, Model Armor, Vertex AI and so forth and is running AI models from Google, like Gemini, Nano Banana and so forth. Now we have a close strategic and product team collaboration also with Google. And we are actually working together, and we have a good view on what's coming in the future. Now we have orchestrated the platform, the stack, the pipelines to nevertheless be flexible, performant and trustworthy. So we have relationships with and we also use Microsoft, OpenAI, Anthropic and a host of smaller solutions. Some of those smaller ones are pure-play AI, some of the more AI-enabled existing software. Our data science team, they can build and connect proprietary Rightmove data models or external models or a combination of them. In November, we showed you one example of the proprietary model and how it uplifts the results, something that is only possible for us because we're in the stack. At the end, the stack enables us to deliver more value and differentiated outcomes for partners and consumers and, of course, gain operational leverage and productivity for ourselves. The 31 strategic initiatives plus a whole host of many more AI tests across the business today will soon be less of a number counting exercise and rather it's going to be completely infused in an organic way of operating. We're perfectly set up to leverage AI capabilities. Now I'll come back to very crucial component, data. We estimate that over 90% of our data is proprietary. It's also interconnected and we leverage it with human expertise and usage in mind. This data is not available anywhere else and it keeps compounding inside our ecosystem. We've shown you many examples of large data sets in the past. Here, just outlining a few examples, but to illustrate how unique and valuable this data is. For property, as an example, we have over 28 million unique properties on our Rightmove optimized UPRN address framework. And someone might say, "Well, that's all scrabble, isn't it?" Fact is that over 50% of the metadata underpinning a Rightmove listing is not scrapable from the face of our site. And for partners, we have, for example, built 57,000 defined geographic agent patches. We dynamically optimize them with our data and also with input and tailoring from our partner agents. That drive unique insights, products and great outcomes. For consumers, for example, again, the 69 billion first-party signals, they don't only provide that strong habit loop that I mentioned before, but they, of course, convert to outcomes through moving auction strength of buyers and sellers. Again, they also drive unique products, insights and recommendations and provide fodder for what we develop next. And the real magic and protection is how those and many more data points are interconnected in the platform. There are a few more examples in the middle, the data compounds and the fortifies. And finally, in the third column, but not to be forgotten, we overlay our human expertise to enrich this data being completely vertically focused. We also make sure it delivers real outcomes and value for humans that is using the data. All said, we hold the living map of U.K. property moving. The value is not in AI itself. It's what AI can deliver when it sits on the best property data in the U.K. So to sum it all up, we combine these 4 components. What we have is one connected ecosystem already powered by data and it's enhanced by AI. All right. So over to some of the concrete product delivery that drove the 2025 results and a bit of a glimpse towards '26 and onwards as well. We increased the pace of delivery in '25 with only a few of the features illustrated here. And I'm going to talk to the renters checklist on the left. It's an important example because it's part of our rental market solutions to digitally enable more of the moving journey. We've seen some strong growth metrics in 2025. A few of them are noted here. And with this renters checklist for consumers, we put all the tenancy admin in one place on My Rightmove, seamlessly integrating it with things like open banking and verifications and what to do next. The average user revisited their checklist 8 times. The information is stored in their Rightmove account, so it can be reused. That, of course, builds a lifetime value opportunity for us. And like many other products, this product also helps the other side of the platform, in this case, lettings agencies. They benefit from operational efficiency through the enhanced leads and seamlessly have those in their CRM. Now they can also operate the entire flow digitally in the Rightmove Plus environment from referencing deposits and many more things, all the way to contracts. A quick step back to the outline from November of how we're accelerating the consumer demand going forward. Number one is that we are adding and enhancing ways of searching. Number two is that we're accelerating our services in a consumer home-moving journey, what we call Beyond Find (sic) [ Go beyond Find ]. And here, I've got 2 examples of what we're working on. The Move Journey Assistant set up for sales and the expansion of My Rightmove into My Home, a full-service hub for homeowners. Now across the consumer domain, we have around 25 key releases or so planned for 2026. And for context, that's more than the entire platform consumer and partner sites together delivered in 2023. Now I want to expand a bit on conversational search, no surprise, which we launched only a few weeks ago to a limited amount of traffic. So here's just a demo of what it looks like. I'm going to talk over while you follow this. So this experience and features built through our partnership with Google Cloud it's using Gemini models. It's trained on and interrogates our listings, text and images and we use over 1 billion proprietary image database and many attributes that goes into the listings. As of today, it links straight into listings on the main site. And we'll evolve this tool led by the data that we see and our design expertise and we're going to make sure that we deliver a high-quality experience. Data so far from thousands of conversations tells us that users seem to have a pretty good idea of what they're looking for. They continue to explore and engage with tools in the main flow of listings and on the site. And so far, those who engage with conversational search are almost 3x more likely to send a lead versus the control group. Overall, feedback has been very positive. Now I want to consider a little bit the conversational assistance in searching a bit more strategically. Now first, on the left here, this is really, in many ways, it's just a continuum of changes. However, you discover, we have you covered, right? So we're entering another search modality or paradigm for consumers, and our position is the same as it has been with previous changes. Discovery is key, right? The classic behavior of visual scrolling and comparing properties, I believe, will always be there. But longer term, I also think this holds a real amplification opportunity for Rightmove. Conversational search will enable hyper-personalization and new utility for consumers on our platform that I couldn't get before. So AI assistance will be useful up and down the funnel and seamlessly provide complementary information along a complex moving journey on the platform. This will drive 2 things: higher platform engagement; and substantially more intent and behavioral data signals. And we can convert that data signal to increased value and targeting for Core partners and for diversified revenue opportunities, just like we have done in the past. Now we have already started a few years back to build many more of these consumer features with exactly that in mind. And you can see some of this in the graph and in the table metrics here. Impressive growth, and a lot of that comes from well-defined features and, of course, the scale of the audience and traffic that we can apply them to. Every feature we built is research and data-backed. It brings utility, frequency and data to us on an ongoing basis. And with it, as noted right here, we create enhanced partner value and, of course, revenue opportunity for Rightmove. Some of these improve or enable new products for Core partners. For example, the enhanced lease to lettings agents with the appointment bookings with the New Homes Ascend package. Others are monetized separate through commercial relationships that we have, like, for example, mortgages or ancillary lettings products. And here's the thing, as we scale and compound this data, we just increased the revenue and profit opportunities. Now over to the partner side. We released significantly more product and optimization source of partners in '25. A few key ones are set out in this slide. And I want to highlight online agent valuation on the left, as Rory mentioned before. It's soft launched in the fall and it's off to a great start. This tool works on both sides of the platform. It enables consumers to receive a digital valuation estimate from an Estate Agency with a quick turnaround and it's an opportunity for agents to start a new online relationship with a potential vendor through our platform. It leverages and reinforces our existing valuation domain on various tools, slotting in very logically with instant valuation, local valuation alerts, best price and premium price guides and so forth. And agents, in this case, can also choose to use an AI tool to support the responses in OAV. And for those that do, we have seen so far in the data that the response times are 16% faster on average, and the cohort actually books 20% more visits. So OAV, I think, is a good example of where AI is an enhancer of an already great digital product with real value. But AI is not the entire product itself. Finally, with OAV, Rightmove's platform also gets more data signals through up-to-date photos and property attributes supplied by the consumer. And this is before the property becomes a listing gets put on the market. That, of course, can feed into our AVM, which is a business line on its own and also powers many other things internally that we can build on for the future. Both '25 and '26 show how we are developing across several product lines and segments much more in parallel than in the past. And with AI bringing more efficiency and marketing opportunity to partners. Moving on from Core to the strategic growth areas. These grew, as you heard from Rory, by 25% as a group and that's close to 3x the Core growth rate. Operationally, we've taken some great strides forward in the year. For commercial, we added 275 new members to the platform. This year, we will launch our new search pages. And at that point, every aspect of the user web journey will have been completely overhauled to commercial-first experience. We'll also be launching our first chargeable product in the segment during the year. In Rental Services, revenues grew by 35%. And as we set out in November, we started to roll out the upfront modules of inquiry manager and enhanced leads to dual agents within their Core subscription. It's a process that is ongoing over '26. This is an exciting market penetration step-up. It brings efficiency to agents, to landlords and to tenant applicants and it's a true market scale. And in Mortgages, we saw strong growth overall. You will have seen that we announced a new exciting partnership with NatWest, the U.K.'s leading digital mortgage lender, which will be introduced in April across both sites and our apps, and we'll also continue to build out the broker opportunities over the course of this year. And finally, again, and importantly, a reminder, the SGAs all strategically reinforced the Core platform, drives user utility and frequency, and again, thus the great data sets that we have. Now this slide is a reminder of the 3 focus areas that we described in November. We are positively stepping up the pace with an eye to the medium-term opportunity of a more diversified and technically advanced platform. We're driving towards that larger digital opportunity in the U.K. property ecosystem. Now also as a reminder, we set some really ambitious midterm target KPIs for these initiatives. And I'm glad to report that all of this is mobilized in one way or another and the capabilities will be built and realized throughout 2026. We're going to see results along the way. One example, of course, being the successful launch of conversational search already in the very beginning of the year. So we'll come back to these areas and the KPIs over time. And I hope you can see that we drive this business with discipline, high quality and our goal is to deliver strong value and returns. So in conclusion, here are the key takeaways I showed you at the start of the presentation, and I want to repeat them. We're happy with the strong results in '25. It was a record year for innovation for Rightmove. We look forward to an exciting 2026. And as you can see in the graph, we're stepping up our innovation and delivery considerably yet again. We will grow revenue and profit in line with guidance, adding to strong financial returns in both the short and medium term. And with that, we're going to go to Q&A. Johan Svanstrom: So Rory is going to join me up here. Please raise your hands. Yes, some already did. Say your name when you're passed a microphone and let's aim for 2 questions in the first instance. We can double back if it's fine. Jessica Pok: Jessica Pok from Peel Hunt. I've 2 questions, please. The first one, just on the ARPA guide, Rory, GBP 110 to GBP 120. Can you give us an idea of how we should think about that Agent versus New Homes given the trends that we've seen last year? And then the second one, maybe on Mortgages. The new relationship with NatWest, any color on what triggered the change and what we can expect from that relationship in the near term? Ruaridh Hook: So on ARPA guidance, GBP 110 to GBP 120 is the blended ARPA guidance. Expect Estate Agency to be towards the bottom end of that and New Homes well above the blended rate. I would flag that in both EA and New Homes, we expect their ARPA growth to be higher than they saw in 2025. Johan Svanstrom: All right. And on NatWest, yes, we're very excited about entering a new partnership here. We've had a great partnership with our other partner for the last couple of years. NatWest is really the #1 mortgage lender in digital channels. So that tells you, I think, something about the vision alignment that we have. We continue to work deeply with one partner because we're quite keen to both build the business, of course, give more -- consumers more utility on the platform, but really also try to innovate along the way in this industry, which is still very fragmented and analogous and off-line and so forth. So those are really the few simple reasons behind it. William Packer: It's Will Packer from BNP Paribas. A couple of questions. Firstly, could we talk a little bit about agent relations? So from today's update, the survey data looks very encouraging, although I know we didn't see the absolute numbers, but that would be interesting. Retention is at record levels. You've got new agent additions. But then in contrast, if you read the trade press, it all sounds a bit grim. You've got the court case coming. And I think there's a perception that your relations with your customers are more adversarial versus some of your peers globally. How do we square that circle? Is it -- there's a few loud adversarial agents, but the median agent is getting happier. Can you just give us a bit of color there? And then secondly, your framing around the labor intensity of Rightmove is a little bit different to some of your peers within classifieds and other platform businesses. You're growing headcount aggressively. It sounds like that's going to continue for a little while. Could you frame that for us? Is that catch-up investment because the previous management team didn't hire enough people? When can we see the labor force to stabilize? Any color there would be useful. Ruaridh Hook: I'll take. You can jump in. Look, the first one, you mentioned some of those KPIs, which I think stand out, right? High -- second highest retention in a decade, highest take-up of our new product, OAV. We had record uptake of Optimiser Edge. That shows customers are engaging with our products and really happy with the outcomes. That, for us, is a real sign of strength in terms of relationship we have with customers, of which over 80% are now with us for 5 years. They know us well. They know our products well and we work with them to grow their businesses. You're always going to have a small minority, might be louder than the majority, but I would say that those KPIs, what we look at to show the strength of our products and the value that we provide our customers. We also, as we showed today, do monitor sentiment and we're delighted to see that sentiment not only much higher than competitors, but growing. So we don't rest on our laurels. We take it very seriously, and we keep our finger to the pulse in terms of how agents are feeling. And we support them as the property market ebbs and flows. And ultimately, for us, key coming back to providing those great products, and I think that take-up really shows it. In terms of the labor intensity, yes, we're adding over 100 and those 100 people are going to be building some fantastic products and fantastic assets. They're going to make Rightmove stronger and on our path to higher growth. That, for us, is a short-term investment. It's going to allow us to build many of the things that will enable us across the domains that Johan talked about. And we've provided a flexible resourcing partner as well to help us accelerate or pull back in that recruitment as we see fit. For us, this is about driving higher profit growth. And this is about us building things that we're really excited about that we see great ROIs from and that requires some head count in the short term. But what you will see and what we look forward to bringing to you on a regular cadence is some of the really exciting products that they're going to build. William Larwood: Will Larwood from Berenberg. Firstly, just obviously integrating a lot more AI functionality going forward, consumer with like conversational search, et cetera. How can we expect sort of the cost profile of the business to shift particularly thinking about sort of using more compute going forward? And then secondly, you mentioned it very briefly in terms of the mortgage broker side of things, but if you could provide an update on that, that would be great. Johan Svanstrom: Yes. Yes, I'll start with AI. So look, we obviously anticipate and budget for compute cost that didn't exist in the past because of this. But I think there are a couple of important things to remember, a, again, back to that slide of how we set things up. We set it up in a very organized, very orchestrated away, and we have fantastic control over this just like we have on other costs. Here's the thing. It's a cost to deliver opportunity, right? And if you look at token cost overall, I mean, they keep coming down by 80%, 90% on an annual basis across the world, right, both because models become more efficient themselves and because there's a lot of competition out there. So it's an item to keep track of, but it's not something that concerns us particularly, right? Yes. So Mortgages, I'll go to that one as well. So we are -- I think we talked a little bit about this before. So we have brokers on the platform, but it's a small part of what we do today. A lot of attention has been on the MIP product, building awareness with consumers seeing what that does and obviously deliver great results. What we did last year was prepared a little bit more to be able to scale the broker side of the business as opposed to one-to-one relationships with brokers because there's literally 5,000 of them in the U.K. And it's also really about looking at this as -- I think of this as an inevitable trajectory kind of thing. Because of who we are, the interest in properties, the fact that 2/3 of properties needs to be financed, us having some kind of service in this space makes sense and that's evidenced already. But it's a long-term thing to build. There's still awareness. They're still optimizing it. There's still -- we're still, but what we're trying to do again is build a better experience and an experience that doesn't exist anywhere else. That takes some optimization. It's 2% of our revenue today. We're happy with the growth, but there's going to be a test and learning as we go along with it and we're executing on it really well. So over time, there will be broker options as well. And it's about understanding the consumer. And again, because of all the consumers that we have, what's their mindset, right? Are they close to transaction or they're really out shopping and still want to get an affordability check. So segmenting that and dissecting and making very logical for them and, therefore, funnel them to different opportunities for financing is important. And that doesn't come just from saying we do one thing on the website, right? But again, fantastic opportunity going forward and lots of money in this space, and I think we have a real right to play. Andrew Ross: Andrew Ross from Barclays. I've got 2 on AI. First one is about the conversational search you've rolled out on platform. What are you observing in terms of the conversion rate from search into leads or any kind of outcome-based metric that you track from and kind of what impact is it having on clicks on to featured and promoted listings as part of it? That's the first question. And then the second one is you guys have obviously applied to put an app into ChatGPT. Can you just give us some context as to what the thought process was as to why do that? On the one hand, you're kind of feeding the beast. On the other hand, first-mover advantage is where the users are. What were the kind of puts and takes? How are you thinking about it? Johan Svanstrom: Yes. And so when it comes to conversational, again, I outlined a few stats, right? We -- because of our traffic and in spite of having it on a minority of that traffic already, we've seen thousands of conversations, lots of messages, very good flow-through in terms of people getting the results that they wanted and also, as expected, coming back over to the main site and digging around and using different tools and so forth. We have seen that uptick of about 3x the sort of lead sending propensity. But to be honest, is that cause a correlation? It could be the most qualified users that have been on Rightmove before and so forth. Or is it a novel way and, therefore, they become interested? I think it's too early to say. And anyone who talks about these data points, I think it's important to give that kind of context. Now again, I point back to this as an opportunity, right? The fact that how consumers experience the site and the listings and what they do with it? First of all, this is a first version of integration. And how partners show up in that? That will, of course, evolve over time, right? It depends on how much of a traction this will see from consumers, small minority or complement to -- for a lot of people to what they do, it's just simply too early to tell. But again, the opportunity, if you think about it, it's a much more personalized and engaged consumer in different ways doing this. And that further qualification of someone's behavior has value. So the fact that there's potentially new or, for sure, different commercial opportunity around this is also there and that goes through our heads, right? But it's early days. And the second one on ChatGPT, yes, I think you maybe outlined it well, puts and takes, consideration. Look, today, they're just -- they're meaningless in terms of a feed or a platform for people actually looking for and going after homes. So as we said, with those stats, right? And I think most of the peers report the same numbers, very, very small. But look, it is a tool that lots of people use for different things. So for us, this is a test-and-learn, right? We want to be where some consumers are and see what we can learn from that. And very importantly, of course, it's an app that we created. It basically displays listings and consumers then go back and do much more of the experience where they have all that experience and again, all the data and tools in their own history and so forth on Rightmove and that's what we expect going forward as well. Andrew Ross: And you keep all the data, right? Johan Svanstrom: Yes. Joseph Barnet-Lamb: Joe Barnet-Lamb from UBS. Two for me. First one, a technical modeling one, but I think it's important for the interpretation of ARPA guidance. So historically, forecasting agency was simple as ARPA times by the average membership. But we now have a growing proportion of non-ARPA revenue within Agency. So can you just clarify which revenue streams within Agency are non-ARPA? How big they were in '25 and how you expect that to change into '26? Then the second question is just on buybacks. We see you're effectively restarting and spending excess capital generation beyond dividends and spending half of the GBP 40 million that you've accrued, whilst you weren't buying back. Can you just give a bit of color on why you aren't spending all of the excess cash to get you back down to 0? And a sort of general commentary on sort of the merits of running a net cash balance sheet given where your share price is? Ruaridh Hook: Sure. Two for me. Yes, you're right. ARPA used to be much easier. You took kind of customer numbers, multiplied by ARPA and you got roughly our revenue number. There is a non-ARPA element, which is because we don't count agent accelerator in our ARPA calculation because it's a program rather than a package and also insurance revenue in the rental services part of the business because that's insurance to consumers and landlords. So therefore, it's not counted under the average ARPA. Those 2 together, used to be almost 0 a few years ago. Great to see them grow, and they're around about GBP 3 million. So that's what you should add on once you take your average ARPA times by your customer numbers. In terms of the share buybacks, great, we -- first thing to flag, we return all of our surplus cash to shareholders, and we don't see that changing. We've reduced our cash reserves from GBP 40 million to GBP 20 million, which we think is sufficient to run the business from a working capital perspective going forward. For those that have been with Rightmove for a long time, GBP 20 million was always the number that we used to have and feel very comfortable that, that's a manageable cash reserves for our working cap. So flag that. In terms of looking at debt for share buybacks, I think is what you're asking, we're not philosophical about no debt on the balance sheet. At the same time, we see there's many pros and cons of having no debt on the balance sheet. It's something that we continually evaluate and discuss with our advisers and with the Board. At the moment, we don't have plans to leverage up. But I would say, as always, nothing is off the table, and we'll continue to evaluate all of our options. Joseph Barnet-Lamb: Just one follow-up maybe on Agent Accelerator -- on Agent Accelerator, obviously, with what we're seeing with new agent formation, is it fair to assume that the Agent Accelerator will grow faster in '26 than the average of Agency? Ruaridh Hook: It's Agent Accelerator, low ARPA. So don't get too carried away. Great to see the agent formation come back. I wouldn't expect to see that continually rising given its record levels. So I'd just be cautious about that, but great to see that market open up. Marcus Diebel: Marcus Diebel with JPMorgan. Johan, just one question again on investments. And clearly, we've seen '26 is going to be a peak year. Again, we're going to guide for like 3% to 5% operating profit growth. Given where the shares are and you're prioritizing, obviously, buybacks and those things, I mean, how critical is it really for you that '26 is really sort of a one-off in terms of operating profit growth and things bounce back relatively quickly, i.e., do you feel that some investments that you clearly had in mind are now a bit more put on hold longer term? Is that the case? Just a question for what is the mood? How critical is to see a meaningful margin bounce already in '27? And then the second question, just in general, because you touched on this value-accretive M&A. Are we then talking about sort of like investments in tech? Do you feel there are some tech assets out there that you should get to? Any comments would be interesting because it feels there won't be much. I just want to be really clear on this. Johan Svanstrom: Yes, I'll have a go. Maybe, Rory, you can fill in. But look, we -- when it comes to the investments, right, as we outlined, and I say it again, we have a great foundation, a great tech platform. We're doing this because we think there's more opportunity in this market. We look at the U.K. property market, our position and what we can do together with others over the medium term. we want to step up that pace. That's what we're doing. And in terms of how that's shaped, we've guided to '26 and what that means on both revenue growth and operating profit growth. And we're not going down, as we said before, to be specific year-by-year. But of course, you can assume that the profit growth will start aligning more to the revenue top line in the years following, right? So that's kind of all we can say. And as usual, you look at the business and you look at the opportunities or sometimes challenges ahead and you adjust after that. But we're very happy with what we're doing right now and off to a great start with it. Secondly, on M&A and maybe value -- well, value creation and what kind of companies. Yes, I mean, look, there's always been a plethora of proptechs in the start-up space. And now many of them come with AI after them. So I can tell you in some conversations we've had with agents directly, some of them, of course, use AI already. It's like, "Hey, here's a quicker way to do admin or whatever it is." They're start seeing some of the AI-enabled products that we actually equipped them with, and they're also inundated, right? They get so many pitches from that dot AI and the other dot AI on an ongoing basis. So it's a little bit confusing. And as usual, there's a lot of promise. Again, as I said before, I mean, AI is one thing, right? You got to -- you actually got to build it on something. And it's a filter and automation tool, right? But it certainly doesn't provide the whole experience. So that doesn't mean that there aren't interesting companies, and we keep a good eye on them. We have conversations with several of them. But for now, our organic growth path and with the capability we have is clearly how we operate mainly. Marcus Diebel: Maybe in this context, it's actually quite interesting. I mean, yes, we see a lot of start-ups approaching agents, very early, very small niche. But do you feel that the large players, the open AIs of the world also go directly to agents and asking them to upload and work closer together. Is there anything that you see you or hear? Ruaridh Hook: Nothing, I would say, particularly on, let's say, the big LLMs from an enterprise perspective. And first of all, because our 16,000 memberships typically consist of very small, medium-sized businesses. But the fact, again, that many of them are interested in using tools, right, whether that's a free user or paying GBP 20 a month. And some of them are, of course, more advanced in trying to figure out what's happening either on their own or again, sold by someone else. But I don't think that's a particular thing that we see, no. Annick Maas: Annick Mass from Bernstein. The first one is on ChatGPT, again. So can you tell us a bit more about how the user data is shared in between ChatGPT and youself? At what point do you get access to the user and actually can follow them around and actually can collect the data exclusively? And the second one is on Opti Edge. When agencies don't decide to upgrade, generally, why is that? Do they keep the money and they don't invest? Do they go for something else? Can you just tell us a bit through the challenges that you hear when you're meeting with agencies? Johan Svanstrom: I'll take one. You can take two. Yes, so on ChatGPT, again, what we built is an app and it has an end point and it sits within -- or will sit within the ChatGPT environment, right? And what the consumer will experience is to be able to do conversations that -- and answers will come partly from ChatGPT. And in the case of serving up property listings that are relevant, that will come from us. And what I think others have reported and what you can expect, it's a fairly simple outline, right? Yes, it's possible to find our brand there. You can find it today, but now we can find it in a slightly more organized fashion. And consumers will be very encouraged and already know where to go and find the full experience. So that's kind of the outline right now. And that means that the really valuable aspects of data on how people navigate and what they've done before and what they want to do in the future will remain in the Rightmove platform. And of course, remember, again, we're building a conversational interface on Rightmove, right? People already have that habit loop. It's like, "Hey, I can do all of this conversation, including complementary information on Rightmove." So yet another reason, I think, to not worry too much about some other alternative universe being built out. But again, interesting enough to test it. That's the way we view it. Ruaridh Hook: On Optimiser Edge, we actually don't want all customers on Optimiser Edge. We cater packages for all different types of customers and different types of businesses. And we want them to have choice and Optimiser Edge doesn't see all customers. low stock, low value, depending on where you are in the country, depending on competitiveness, funding, lots of different reasons. The strength of our account management team is knowing what products work for which customers. And the way that they start the conversation isn't about which package to be on, but which packages or which products are going to help you grow the business. And depending on that product mix is what then will generate a recommendation of which package to be on. And so for some, Essential is absolutely the right package to be on, and we don't expect them to move. Others, we'll see them move from Essential to Enhance to Opti and others will come straight in. And that was a little bit of what I wanted to show earlier was the variance of how we see the inbound into the Optimiser Edge package. The other stat I would flag is that over 50% of our customers are choosing to purchase products above their committed levels. So again, they can engage and see value in our product without having to move up the package ladder. So for us, it's about coming back to offering a plethora of different products that suit whatever needs a business has, but also fit whatever the property market is doing because the property market, as we all know, in the U.K. can change a lot. So we want products that suit them whatever is happening in the property market. Sean Kealy: First question, Johan, I was really pleased to hear you describe ChatGPT is meaningless at the moment, given they're 0.5% of your referral traffic. First question from me, from both a technical and sort of market power point of view, if it came to it, would you have confidence in blocking LLMs, not just from scraping data for training, but also for the grounding process in search? And sort of what would be the puts and takes? And how would you look at that decision? And then secondly, where you've rolled out market capabilities, for example, in conversational search? Are you finding that the major LLMs are good enough off the shelf? Or are they requiring quite a bit of fine-tuning customization to work with the data that you've got and Rightmove effectively, only Rightmove has? Johan Svanstrom: Got it. Yes. So look, on the first one, technically, you can choose to be in an environment and you can choose not to be in an environment. And so I think that option is already there. Again, it's an interesting environment to test and learning, probably very small meaning at the moment. It might grow, and then it will be relevant to be there. So we'll see how that goes over time, simply. But the optionality is absolutely there. I think on the conversational side that we've done ourselves. So again, we operated the current version with Gemini models from Google. And again, it has the benefit of -- it's all very tied up through our stack. But we have also built that capability to switch that out for literally any other large LLM. We have those relationships and conversations as well. So it's off the shelf in the sense that the general LLM is there. Now as you know, every week or 2 or whatever, there's another dot-something version coming out. And the 3 things that we optimize for is it's not just cost, right? Again, that's kind of a tailwind over time because it's going to continue to come down. But it's cost, it's quality and it's performance, right? Quality is very important. And performance as in speed and response rates. And already today and even as a consumer, at least if you pay, right, you can see for yourself how the models act a little bit differently. And of course, we have a fantastic platform and capability in the teams to judge these older things, right? So we built this stack where we can plug and play on the side and then we decide what we take live. And we run concurrent what's called evaluation models. So models that evaluate the models on an ongoing basis. So it will continue to go along that way simply. Then maybe the last point. Yes, of course, the generic LLM capability is one thing. The really interesting thing to create a fantastic experience and relevant experience for the consumers to combine it with the data that we have. And again, the more people actually use this and/or any other personalization features on our sites, the more tailor that experience can be. And a lot of that comes -- or the vast majority of that really comes from our own platform. Giles Thorne: Giles Thorne from Jefferies. Back on Mortgages, please. The attributes, Johan, you used earlier to describe what pulled you towards NatWest, I'm pretty sure the things that were used to describe nationwide when the MIP product was first developed. So I'm still a little bit none-wiser as to what went wrong with the nationwide partnership and what NatWest now solves. So I wanted to push you on that a bit harder. And then the second thing still on Mortgages is just to hear your latest thinking on how you solve for the problem of the broker product only appearing after a failed MIP, if that's even still the case? So an update there. Johan Svanstrom: Okay. Thank you. So I'll leave you to judge your own wiseness, Giles. But we've -- as I said before, we've had a great relationship with Nationwide and what we are looking at now, where are we now, what are our own plans, what have we learned from all the data. And we have selected NatWest as our partner going forward for what we think are really good reasons. And on the second question, yes, the broker path to a large extent has been -- because we have been focused so much on understanding the MIP path has been focused on, okay, who doesn't get a MIP for what reasons? And over time, of course, as I said before, we want to expand those choices for consumers through our segmentation, seeing what they do on the site and potentially what they are outright requesting. Some of that experimentation has been going on already, and that's going to continue in the future. Giles Thorne: And just a follow-up. Where is the remortgaging product? I think that was due to be second half of '25 -- I forget the exact date, but I'm pretty sure we passed the original signal around when you're going to launch that. Johan Svanstrom: No, it's launched. It's on the site. Again, it's not the main focus. Remember that we had a lot of first-time buyers, of course, on the site. And for lender partners, often, they want to try to get a hold of new customers. Now the remortgage product is absolutely there, has been there for a while. But it's sitting as we have said before, logically connected, so closer to the home valuation tools, for example, where people might be in that mode of, "Hey, I'm tracking the value of my property. That might be because I'm thinking about selling or I'm thinking about refinancing because I'm staying." So that's where that is. And again, over time, that's an opportunity to obviously build that out further, but it's going to come with -- in the right placements and as we see fit. Ruaridh Hook: Great. Well, I think that's -- well, I'll squeeze you in, Andrew, last one. Andrew Ross: So another on one AI and about kind of Agentic. And I appreciate there's a whole separate conversation about whether you'd actually want your personal agent to be searching for a house. But in a future world where that could be possible from a technology perspective, what's your view about whether you'd let agents be searching on your site, how you kind of set up the technology to do it? Do you let them call and do whatever they want on any sites? Do you make sure you have a commercial relationship where it has to be free your flow? Like how are you thinking about the Agentic journey? Johan Svanstrom: Yes, a little bit, let's say, early, but clearly, the Agentic opportunity keeps growing. But again, I just -- what you said yourself, remember property, particularly. AI is a filter, an advanced form of a filter, humans make decisions, right? It goes for a lot of processes. So the level of filtering assistant, obviously taking out admin tasks and so forth, big opportunity in AI, but humans need to be in the loop still for a lot of things and even more so for other things, including this one. So we'll see how that evolves over time. I really can't talk to the technology of it or who we might have a relationship with. There are interesting precedents on Amazon shutting down. I think it was Perplexity's Agentic rolling around. I don't know where that sits, right? But it's something that we'll deal with over time, just like we deal with other opportunities. Ruaridh Hook: I would say thank you all for your good questions today, and I wish you the best of the day. Johan Svanstrom: Thanks, everyone.
Operator: Hello, everyone. Thank you for joining us, and welcome to the Chartwell Q4 and Year-end 2025 Results Conference Call. [Operator Instructions] I will now hand the call over to Vlad Volodarski, Chief Executive Officer of Chartwell. Vlad, please go ahead. Vlad Volodarski: Thank you, Hillary. Good morning, and thank you for joining us today. There is a slide presentation to accompany this conference call available on our website at chartwell.com under the Investor Relations tab. Joining me are Karen Sullivan, President and Chief Operating Officer; Jeffrey Brown, Chief Financial Officer; Jonathan Boulakia, Chief Investment Officer and Chief Legal Officer; and Gordon Chiu, Chief Technology Officer. Before we begin, I direct you to the cautionary statements on Slide 2 because during this call, we will make statements containing forward-looking information and non-GAAP and other financial measures. Our MD&A and other securities filings contain information about the assumptions, risks and uncertainties inherent in such forward-looking statements and details of such non-GAAP and other financial measures. More specifically, I direct you to the disclosures in our 2025 MD&A under the heading Risks and Uncertainties and Forward-Looking Information for a discussion of risks and uncertainties. These documents can be found on our website or on the SEDAR+ website. Turning to Slide 3. 2025 marked the successful completion of our 5-year strategy. Our teams achieved all strategic goals in resident satisfaction, employee engagement and occupancy. Same-property occupancy reached 95.2% in December, reflecting both strong demand and outstanding execution by our teams across the country. As shown on Slide 4, 2025 was also another exceptional year operationally and financially. Same-property average occupancy increased 480 basis points. Same-property adjusted NOI increased 18.4% and FFO increased 40.8%. These results were broad-based and consistent across our operating platforms. These results are a powerful reflection of the dedication, care and professionalism of our people. Across all aspects of our business, our teams introduced new programs, tested ideas, shared learnings and scaled what worked. At the same time, we continue to invest in technology and management processes to simplify work, improve insight and support better decision-making at the residence level. What stands out is the culture behind the performance, teams staying focused on customer experience, taking accountability for outcomes, remaining curious and innovative and working together across functions. We are tremendously grateful to our teams for their excellent work that produced these outstanding results. With that, I'll pass the mic to my partners. Karen will walk you through the operational initiatives. Jeff will cover our financial performance, and Jonathan will provide you an update on our growth and portfolio optimization initiatives. Karen? Karen Sullivan: Thanks, Vlad. Moving on to Slide 5. We had another strong quarter of leasing activity with a positive net permanent move-in to permanent move-out of 276 units and continued growth in occupancy in all four provinces. Our closing ratios in Q4 were significantly higher at 22% initial contacts to permanent move-ins compared to our typical closing ratio of 15% as prospects took advantage of 2025 rates before market increases came into effect in January. Although the outbreak season started relatively early, it peaked in late December and has been trending down ever since. Our winter dip is quite similar to 2025 and in line with our expectations. We held our first open house event in select properties in January prior to the very cold spell in order to add to our pipeline of qualified prospects. In addition to this event, we continue to implement property-specific marketing strategies as well as numerous corporate initiatives. This includes the recent introduction of an AI-powered chatbot on our website, representing the first-of-its-kind application in Canadian seniors housing at the individual property level. The chatbot provides prospects with a new always-on channel to engage, receive property-specific information and convert into booked tours. In Q4, we held training sessions across the country for over 200 of our sales personnel. The focus was on building proactive sales behaviors, strengthening [ personal ] brand and digital presence, increasing confidence with care-related conversations and understanding how AI influences the prospect journey. We also launched a new more competitive sales commission program, which came into effect in January as well as an automated commission payment process. In terms of expense control, we reduced our same-property staffing agency costs by 57% in 2025 compared to 2024 through our continued focus on recruitment and retention activities. Turning to Slide 6. Chartwell's Wish of a Lifetime continued to contribute positively to earned media through -- sorry, this quarter through human interest storytelling that highlighted residents' experiences and acts of kindness. One notable example is the story of Angie Carnegie from Aurora, who wished to see her original play staged and brought to life for the first time. The story was covered in local media and included attendance from local dignitaries, including the Mayor. Finally, in Q4, the operations teams integrated three new properties, two in Quebec, Chartwell Azalis and Chartwell Panorama, both of which are large 30- and 31-story residences in beautiful locations in the Greater Montreal area as well as The Edward in Calgary, our first boutique living property. We also opened Edgewater by Chartwell in December, a 155-unit independent living property in Nanaimo, BC and have already welcomed the first 30 residents with an additional 7 due to move in shortly. I'll now turn it over to Jeff to take you through our financial results. Jeffrey Brown: Great. Thank you, Karen. As shown on Slide 7, in Q4 2025, net income was $7.2 million compared to net income of $3.5 million in Q4 2024. FFO grew to $81.2 million in Q4 2025, an increase of 40.9% compared to Q4 2024. Our reported FFO does not include $2.5 million or $0.08 per unit of income guarantees related to recently acquired properties. Q4 2025 FFO growth benefited from higher adjusted NOI of $28.8 million, higher adjusted interest income of $1.5 million and higher other lease revenue of $1.2 million, partially offset by higher adjusted finance costs of $3.3 million, higher G&A expenses of $2.4 million and lower management fees of $2.2 million. In Q4 2025, our same-property occupancy increased 430 basis points to 94.7% and our same-property adjusted NOI increased $11 million or 16.9%. We also had an 11.6% increase in our NOI per occupied suite. In 2025, net income was $29.5 million compared to $22.4 million in 2024. FFO grew to $278 million, an increase of 40.8% compared to 2024. Our reported FFO does not include $8.2 million or $0.028 per unit of income guarantees related to recently acquired properties. 2025 FFO growth benefited from higher adjusted NOI of $109.8 million, higher adjusted interest income of $3.7 million, higher other lease revenue of $2.2 million and lower depreciation of PP&E and amortization of intangible assets used for administrative purposes of $0.5 million, partially offset by higher adjusted finance costs of $20 million, lower management fees of $7.6 million, higher G&A expenses of $7.1 million and lower other income of $0.9 million. For 2025, our same-property occupancy increased 480 basis points to 92.8% and our same-property adjusted NOI increased $45.7 million or 18.4%. Our same-property NOI for occupied suite increased by 12.2% during the year. Slide 8 summarizes our same-property operating results for each platform. All of our platforms posted occupancy gains in Q4 2025 compared to Q4 2024, and all are operating above 90% occupancy, which has positively impacted our results. Our Western Canada platform same-property adjusted NOI increased $3 million or 14.4%. Our Ontario platform same-property adjusted NOI increased $6.2 million or 17.1% and our Quebec platform same-property NOI -- adjusted NOI increased $1.8 million or 22.8%. Turning to Slide 9. At February 26, 2026, liquidity amounted to $483.8 million, which included $88.9 million of cash and cash equivalents and $394.9 million of borrowing capacity on our credit facilities. During the year ended December 31, 2025, we raised total gross proceeds of $720.5 million of equity through our ATM programs at an average price of $18.52, which helped support our transaction activity. And we continue to improve our leverage metrics with interest coverage ratio growing to 3.5x and our net debt-to-adjusted EBITDA ratio declining to 6.9x. We also continue to improve our financing flexibility and have grown our unencumbered asset base to $2.1 billion. For the remainder of 2026, our debt maturities include $209.6 million of mortgages with a weighted average interest rate of 2.99%. As of February 26, 2026, we estimate the 10-year CMHC-insured mortgage rate to be approximately 3.85% and the 5-year unsecured debenture rate to be approximately 3.88%. Yesterday, our Board approved a 2% increase in our monthly distributions from $0.051 per unit to $0.052 per unit. The increase will be effective for the March 31, 2026 distribution, which is payable on April 15, 2026. I will now turn the call to Jonathan to discuss our recent acquisitions and portfolio optimization activities. Jonathan Boulakia: Thanks, Jeff. We continue to execute on our portfolio strategy of enhancing our asset base to generate increased quality NOI. I'll highlight some of the deals that we completed in Q4 2025 as pictured on Slide 10. On October 1, 2025, we acquired a 449-suite retirement residence, Les Tours Angrignon in Montreal, Quebec for $88.5 million. On November 3 (sic) [ November 1, ] we acquired Residence L'Aubier in Quebec, which was developed by our development partner in Quebec, Batimo for $128.2 million. Also on November 3, we acquired Residence Panorama, a 238-suite waterfront residence in Laval, Quebec for $76 million. At 31 stories, Chartwell Panorama is the tallest residence in our portfolio. On December 1, we acquired Residence Azalis, a 334-suite, 30-story waterfront residence in Repentigny, Quebec, for a purchase price of $111 million. On December 2, we acquired the Edgewater Retirement Residence in Nanaimo, BC for a purchase price of $102.7 million. This waterfront new property was purchased pursuant to a forward purchase agreement. On December 15, 2025, we acquired a 90-suite boutique residence, The Edward, in Calgary, Alberta for a purchase price of $53 million. And finally, on December 18, we acquired the remaining 15% ownership interest in Residence Legende in Greenfield Park, Quebec from Batimo for $17.9 million. As you can see, in 2025, we continued to grow our portfolio with over $1.7 billion of completed and announced acquisitions. We continue to evaluate several interesting opportunities to grow and enhance the quality of our real estate portfolio. We remain disciplined in how we approach underwriting, diligence and integration of our new acquisitions to deliver enhanced services to the residents, mitigate disruption to operations and achieve our required investment returns. We are also engaged in discussions with local and national developers across the country to restart our development program and create a meaningful pipeline of state-of-the-art assets to bring in our portfolio. We will purchase such developments in a prudent manner with a preference for off-balance sheet development similar to our arrangement in Quebec. Further to this initiative, we announced the development of the 111 suite Chartwell Kingsview Retirement Residence in Calgary with an advance of $4.5 million of the total committed $6.5 million mezzanine financing to local developers. Chartwell will be the operations manager of the project and will have a call option to acquire the residence on stabilization. The project is in an affluent residential area of Calgary in proximity to various neighborhood amenities and will feature self-contained IL apartments and an attractive amenity package. As I've noted, we have invested significant financial and management capital pursuing acquisitions in line with this strategy and have initiated new development projects to support a strong pipeline of future property growth. We have also identified properties within our portfolio that no longer fit this core strategic focus due to their location, size, age and/or service offering. We entered into a definitive agreement to sell one of these noncore properties in Ottawa for $49 million. We intend to pursue dispositions of some or all of these properties as market conditions allow with proceeds expected to be used to support future development and acquisition activity that is in line with Chartwell's current strategy. I'll turn it back to Vlad to wrap up. Vlad Volodarski: Thank you, Jonathan. Turning to Slide 11. We are entering the next phase of Chartwell evolution with clarity and confidence. Our 2026-2028 strategy is focused on generating robust FFO per unit growth through exceptional resident experiences, empowered teams, a well-established agile management platform and the prominent Chartwell brand, driving market-leading occupancies across a growing and renewing portfolio of community-tailored residences. From a performance perspective, our targets are clear. We're focused on maintaining weighted average occupancy above 95%, growing revenue per occupied suite by more than 4%, controlling costs, maintaining strong balance sheet capacity and executing approximately $2 billion of acquisitions and developments, funded in part by approximately $1 billion of dispositions through 2028. Underpinning all of this is our leading management platform, strong company culture and most importantly, our people. Our success depends on teams who put residents first, take ownership of outcomes, stay curious and innovative, simplify and improve how we work and collaborate across the organization. These guiding principles are not aspirational. They're embedded in how we do business every day. With a proven strategy, strong industry fundamentals and exceptional teams, I'm confident in Chartwell's ability to continue delivering strong operating performance and long-term value for all of our stakeholders. Chartwell culture manifests itself in our results, and it leaves in our stories. I will now close our prepared remarks with a story from one of our residences as pictured on Slide 12. Shortly after Kathy and her husband, Mike, moved into Chartwell Thunder Bay, their plans to settle into their new community were disrupted by an unexpected and serious health crisis. Kathy was hospitalized with a condition that required intensive treatment and an extended period of care away from the residence. Throughout this difficult time, our team stayed closely connected to Kathy and Mike, checking in regularly, offering reassurance and supporting them through a period filled with uncertainty. When Kathy's conditions stabilized enough for her to leave the hospital briefly, the team looked for a way to help her reconnect with life beyond treatment. Knowing how meaningful music was to Kathy, they worked with the local community to arrange for her to attend the Christmas concert by Juno award-winning Canadian singer/songwriter, Johnny Reid. It was Kathy's first outing since being hospitalized. The evening included not only the performance, but a personal moment with the artist and a dedication made especially for her. This may sound like a small gesture, but it reflects something fundamental for Chartwell, always a resident-first approach delivered by people who truly know those they serve and who are empowered to act with compassion and purpose. These are the moments that build trust, reinforce why our work matters and quietly brings our responsibility to life. Thank you for your attention this morning. We would now be pleased to answer your questions. Operator: [Operator Instructions] Your first question comes from Lorne Kalmar from Desjardins. Lorne Kalmar: Congrats on a great finish to a great year. Just on the development side, it looks like you guys reintroduced a disclosure we haven't seen since the early innings of COVID. Obviously, a lot of talk about, developments ramping up here in the next little bit with you guys and more broadly. I was just wondering, over maybe the next 2 years, what do you expect, if you can give us a range in terms of annual development spend? I know obviously, there's a preference for off-balance sheet, but just trying to get an idea of where your heads are at in this regard. Vlad Volodarski: Thanks, Lorne. We have a couple of projects that are ongoing already, and those are on our balance sheet. So we have two developments in Montreal area. Those are additions to the existing residences. And as I said, those are on balance sheet. We look to really invest in development mostly off balance sheet with options to purchase the properties when they get to stabilized occupancy. There may be a few additions that we will execute on our balance sheet, but the majority of the development that we expect to conduct over the next couple of years will be off balance sheet. Lorne Kalmar: Okay. That's really good color. And then maybe just sticking on the development side with the ramp-up, is that a reflection of just a great opportunity to develop? Or is it also a reflection of a declining acquisition opportunity set? Vlad Volodarski: Well, for us, it's strategic to grow the portfolio with high-quality newer assets. We continue to see very interesting, as Jonathan pointed out, acquisition opportunities, and we're working through a few right now. With those, we never know whether we're going to be the ultimate purchaser of the properties or not. There is some competition always for high-quality properties. And also, Canadian market is not very large. And especially when people focus on properties types that we're focusing on, newer, larger, more efficient and larger urban markets, it becomes even smaller. And so our development strategy is really the one that is more in our control, where we're trying to build our own pipeline of future acquisitions that will not be dependent of the availability of somebody else's product in the market. Lorne Kalmar: Okay. And then maybe just one last one. I know it's still early days in terms of seeing this next development cycle kick off. But are there any markets where you're concerned at this point that we might see an oversupply or an overbuild in terms of just projects that are sitting at the early stages of development or permits? Vlad Volodarski: At this point, no, it's hard to tell. As you know, it takes at least 2 years to build a building from the time you put the shovel in the ground. So it's too early to speak about that because we have not really seen any meaningful construction starts yet. I think everybody expects that we will see some in 2026. But I also want to remind everybody that demand has been growing by 4%, 4.5% per year for the last 4 years and will continue at that pace for the next 20 years. It's hard to imagine that the industry will be able to build that much product to really catch up and exceed that demand that continues to grow. Some markets probably could be disrupted for a short period of time. But at this point, it's hard to tell which ones they're going to be. Operator: Your next question comes from Jonathan Kelcher from TD Cowen. Jonathan Kelcher: First question, just on the outlook for 2026, same-property occupancy to maintain an average of 95%. Is there any new supply hitting some of your markets that might impact some of that same-property occupancy? Jeffrey Brown: Nothing -- there are some LTC openings that could have some impact, but we're not seeing a lot of new retirement residence competition opening up. Jonathan Kelcher: Okay. So it's -- you guys are just being a little conservative on that... Vlad Volodarski: Well, Jonathan, we are in this uncharted territory, right, where it is really hard to predict the potential for occupancy growth because we've never been at these -- not just Chartwell, the industry-wide never been at these high levels of occupancy. So it's not like we can point to 5 years ago, everybody was at 98%, so that's achievable. So for us, we continue to focus on great resident experience, great sales processes, marketing processes, and we hope that we can exceed the 95% occupancy, but we will see by how much. Jeffrey Brown: And we still want to obviously have our move-ins exceed our move-outs with -- just given the higher turnover in the senior sector compared to other housing sectors. Jonathan Kelcher: Yes. Fair enough. I was just trying to get is there anything out there that you're seeing that might stop just the sort of general increase for the industry. And secondly, just on the rent growth for -- 4%, how would that break down on what you're seeing on when units turn over versus what you're pushing through on renewals? Jeffrey Brown: So our renewal pricing strategy has and continues to be inflation plus 1% or 2%, sort of matching the cost increases in the properties with the rate increase. And then on turnover, we're seeing mid- to high single digits and in some markets, even low single-digit rate increases. Vlad Volodarski: Low double digit. Jeffrey Brown: Low double-digit rate increases, sorry. Jonathan Kelcher: Okay. So shouldn't that work out to higher than 4% then overall? If you're getting 1/3 at 8% or 9% and the other 2/3 at 3% to 4%? Vlad Volodarski: It might. We continue seeing the impact of the incentives that's been granted throughout 2025. So you'll see our occupancies increase significantly in 2025, and there have been some incentives that were put in place to achieve that occupancy growth, the full year impact of those incentives will be felt in 2026. And so that will suppress a little bit the overall blended rate growth. Jonathan Kelcher: Okay. Fair enough. And then just lastly, like Ballycliffe, haven't talked about that one in a while. It's up running complete. Would you -- would that be something you'd expect to sell this year? Jeffrey Brown: Yes. Vlad Volodarski: Yes. Jonathan Kelcher: And the ballpark pricing? Vlad Volodarski: We're not yet ready to announce. It's still in progress. So as soon as we can talk about it, we will. Operator: Your next question comes from Tom Callaghan from BMO. Tom Callaghan: Maybe just to start on the acquisition side and building off some of Lorne's questions there. Can you just talk about what you're seeing in terms of pricing and competition, maybe relative to 12 months ago? I think over the course of '25, we've obviously seen some cap rate compression. Just given the outlook and underlying supply-demand fundamentals, like would you expect to continue to see tightening on pricing over the balance of '26? Or do you think it's kind of more stabilized? Jonathan Boulakia: We have seen some -- a little cap rate compression. I think it's probably stabilizing now. We're still seeing a lot of opportunities in the market, both one-offs and portfolio level. And in terms of the market, it is somewhat competitive, but we think we have a competitive advantage being -- our reputation in the market as a credible buyer. We do a lot of underwriting work really early on in the process. We give credible offers early on in the process that we stick by. So vendors -- the feedback we're getting is that vendors like working with us because of our experience, our experience underwriting, our credibility, our speed of execution and our ability to integrate properties into our platform effectively with as little disruption to residents and staff as possible. And so that kind of gives us, we feel, a competitive advantage, but it is a competitive process. Tom Callaghan: Got it. That's helpful, Jonathan. And maybe I think you referenced some interesting opportunities in prepared remarks. Would some of those encompass kind of more of the portfolio-type deals? Or is it mostly one-off buildings? Jonathan Boulakia: We're seeing both. One-off... Tom Callaghan: Maybe the last one -- sorry. Jonathan Boulakia: No, go ahead. Tom Callaghan: And maybe last one for me is just you did note in your '26 outlook there the expectation for margins to expand year-on-year. Can you just maybe talk about some goalposts in terms of the quantum of that expansion? Jeffrey Brown: Yes. We do think that we should have margin expansion again in 2026, and it -- still be in the low 40% range, where we think there's an opportunity to move that up into the low to mid-40% range as we continue to grow rate above operating expenses. Operator: Our next question comes from the line of Himanshu Gupta from Scotiabank. Himanshu Gupta: On expected rent growth of 4%, do you think there was a view that once we get to that 95% occupancy, cross the bridge to get there, that blended rent growth could become like 5%? And maybe now like the affordability angle is coming up. So it's not just about full capacity, but there's an affordability as well. So that's why 4% is the right number, and not the 5% you can achieve. Fair to say that? Vlad Volodarski: Well, the strategy statement that we put out and the metrics around it says above 4% growth. So 4% marks in our minds, at least the bottom of what is possible for the next 3 years. And as Jeff pointed out, we are continuing to be measured in the rent increases that we put through for our existing residents. They will be tied more to the overall inflation in our cost, labor, food and others. And then market rents, we do think can grow by high single digits in the next 3 years given the supply-demand dynamics. Himanshu Gupta: Okay. And then talking about incentives, you did mention that incentive coming down. Can you elaborate what is it now and where it can go? Jeffrey Brown: Yes. Himanshu, it's approximately 5% of revenue right now. And they come down. There's a number of recurring incentives that were used over the 2024 and 2025, and those roll off or burn off with turnover. So it's hard to predict exact resident turnover, but we expect them to grow this year as we have the full year impact of the 2025 incentives and then start really burning off in 2027, 2028. Himanshu Gupta: Okay. Okay. That's helpful. And then turning attention towards the acquisition activity, The Edward, Calgary acquisition. What kind of cap rate are you expecting there? I don't remember you guys doing anything in Alberta in the last couple of years. So is that like a focus market now? Jonathan Boulakia: Sorry, is Calgary a focus market? Himanshu Gupta: I mean, do you expect to be more active in Alberta, Jonathan? I mean, obviously, you were active in the other three provinces quite a bit in the last couple of years. And is Alberta [indiscernible] very well now? Jonathan Boulakia: For sure. We consider Alberta and Calgary specifically in Alberta to be core markets and areas of focus for future growth, both on the acquisition side and on the development side. And the cap rate would be consistent with published guideline cap rates that we see in publications. So we don't normally disclose the actual cap rates that we pay, but it would be in the high 5%, low 6s cap rate. Himanshu Gupta: Okay. And would you say -- is there like a spread between Alberta versus Ontario? Or is it quite comparable? Jonathan Boulakia: Alberta and Ontario, I think, would be relatively similar in terms of cap rates. Himanshu Gupta: Okay. Okay. And maybe just last question since I have you, Jonathan here. You did mention about some cap rate compression you have seen. For this development cycle to continue, do you need to see more cap rate compression from here? Or whatever you have achieved is enough to bring on more supply? Jonathan Boulakia: Well, we're seeing some developments pencil out now with the current cap rates and current expectations on rate. But as Vlad mentioned, most of our development is what we call off balance sheet. So we're going to be buying these at prevailing cap rates and fair market value when they're stabilized or on construction completion. So if and when that happens, we'll be paying whatever the appropriate price is. Himanshu Gupta: Okay. Okay. Fair enough. And just one last one. That Ontario -- that portfolio acquisition, when are you expecting it to close? Is it the CMHC approval which is taking forever? Jonathan Boulakia: Well, we are still waiting for third-party approvals, yes, and we would expect to close in Q2. Operator: Your next question comes from Sairam Srinivas from ATB Cormark Capital Markets. Sairam Srinivas: Just looking to the quarter, and I might have missed this, but did you guys guide for the acquisition and disposition number for '26? Jonathan Boulakia: I'm sorry, can you repeat that? Sairam Srinivas: Just looking at your commentary on acquisitions and dispositions. I'm not sure if I missed this, but do you have a number for '26 in terms of your... Jonathan Boulakia: No. We provided a strategic plan for the next 3 years of a target of $2 billion of acquisitions and $1 billion of dispositions of noncore properties. But we don't set an annual goal or plan. It's as market conditions allow. And so we will sell and buy as we see opportunities to do so. Sairam Srinivas: Okay. And Jonathan, maybe going back to your comments on the competition you're seeing in the acquisition market. Can you give us a color in terms of the kind of firms you're seeing competing over there? Is it more like more funds competing or more operators as well? Jonathan Boulakia: We're seeing the typical competition for assets. We're seeing competition from domestic owners and operators like us, and we're also seeing U.S. capital coming into Canada as it has been doing so for the last decade. So we just see more of that, but nothing particularly new. Sairam Srinivas: That's good color. And maybe just on the developments, Vlad, I know you mentioned thinking about on balance sheet versus the option and developments. When you historically look at acquiring a new project or newly developed facility versus something that you have probably developed on balance sheet or through your partnerships, are there advantages you've seen operationally that work better for your design builds versus those that you probably acquired through the market? Jonathan Boulakia: Definitely. So when we're doing the off-balance sheet or on-balance sheet development for that matter, we are involved from the get-go from the site selection point to the preliminary design, the feasibility, the programming and all the way to the finishes. And we play an oversight role on the construction quality. So we know exactly what we're getting and what we're getting at the end is exactly what we want. So there is certainly a difference. Now we've been very fortunate in our last 2 years of acquisitions where we have been buying new properties and they are great state-of-the-art properties. By and large, they're almost all newly developed properties. So we've been fortunate. But as Vlad said, we want to plant the seeds for the future where we don't know if those conditions will continue to exist. And so we're preparing ourselves for that potential turn in the market where we don't have those great opportunities. And so we will create them for ourselves. And yes, when we create them for ourselves, we have, I guess, more of a say in what we're ultimately going to buy. Operator: Your next question comes from Giuliano Thornhill from National Bank. Giuliano Thornhill: I just kind of wanted to start on the margins. So the low 40s, 95% occupancy looks pretty achievable. And just given that occupancy last year for the same property pool was up by 480 bps, the margins were up in that 300 bps. Going forward, do you see that margin increase accelerating as we get into these higher occupancy levels? Jeffrey Brown: I would say they would accelerate. We're already operating at the high occupancy levels, but we do expect them to increase with the increase in occupancy. Giuliano Thornhill: Right. Okay. And then moving to the growth portfolio. I know that's higher quality, recently built. Where does something of that quality stable out to at those levels? Jeffrey Brown: And that -- just to be clear, that portfolio includes properties where we've had a change in ownership. So there's a number of properties that we are part of, the Welltower joint venture, that are included in there as well just for clarity. But we do think that portfolio as well can get into that low to mid-40% range. Giuliano Thornhill: Okay. And just going back to the transaction volumes that you guys commented on earlier, how much of that is Chartwell actually interested in? Like what's the, I guess, dollar volume? And what would Chartwell be interested in and what's out there? Jonathan Boulakia: Sorry, are you asking what's the dollar value of potential acquisitions that we see? Giuliano Thornhill: Yes, yes, exactly. Jonathan Boulakia: Yes. We don't typically comment on things that are in the market that we're still kind of kicking the tires on. But we would expect 2026 to be a very active year in the seniors' real estate market. Giuliano Thornhill: And is it still going to be focusing on that kind of care-lite product type that you've been acquiring? Jonathan Boulakia: Yes. By and large, yes, but we do like continuum of care type properties. So we are focused -- we are looking at all -- the whole spectrum of care on the privately funded -- on the private side. But yes, our [indiscernible] thought would be the more independent side with preferably some care component in the building. Giuliano Thornhill: Yes. And I guess the follow-up I'd ask is just kind of do you think with the LTC waitlist growing and obviously higher acuity patients coming in, do you think that could impact the demand later on given like 3, 5 years out, just as more and more people come in with other issues? Vlad Volodarski: We think that the demand is going to grow on all sides of the continuum of care spectrum. We think there's going to be continuing strong demand for more independent senior apartment type of developments. And there's definitely always going to be demand for care. And so our team has been putting in place programs, Care Assist Program in particular, that is Chartwell's proprietary program on care. We have technology that helps people to deliver care -- assess clients, deliver care and bill for it. And you'll see our care revenue has been growing at a pretty robust pace for the last couple of years, and we expect that, that will continue and our properties will be set in such a way that we can accommodate people and their care needs and help them to stay with us as long as they choose to. Operator: Your next question comes from Pammi Bir from RBC Capital Markets. Pammi Bir: Just coming back to maybe the Investor Day and the outlook that you presented there. As you kind of look now at 2026, and we've now had a few months passed, has your view changed at all either perhaps better or maybe even moderating a bit in terms of how you think about 2026? I mean the commentary seems optimistic, but also at the same time, seems perhaps conservative. So just trying to get a pulse on how you're thinking about the year relative to a few months ago. Vlad Volodarski: I don't think anything has changed from a couple of months ago. We're very optimistic about our ability to continue to deliver great services to our residents and continue to grow profitability through occupancy and rental rate growth. We'll continue to focus on controlling the costs and looking to put a lot more new innovative ideas out there in the market and test them and see what works. So I don't think anything has changed from that perspective. Pammi Bir: Okay. And then just on the total occupancy, I think you're sitting at about 93%. Maybe just expanding on one of the earlier questions, is that portfolio something you think you can get to in terms of like the 95% threshold this year? Or will that take a little bit longer? Vlad Volodarski: Well, we'll see. We might. There are some homes in that growth bucket that just -- Karen gave an example of Edgewater in Nanaimo that just opened in December. So it has 30 -- maybe plus 7, 37 people, 130 units. So for that home, it may be way too aggressive to assume, although I'm looking at Karen, she's not nodding her head. Yes, too aggressive to assume that, that will hit 95% this year. So we have a few homes like that. The rest of that portfolio should be at 95% or higher. Pammi Bir: Okay. And then maybe just coming back to the same property portfolio. Again, lots of good detail in terms of what you're thinking from an occupancy and margin standpoint. I mean, should we ultimately expect that in terms of organic growth, you'll be tracking close to, call it, the high single digits, low double-digit range based on all the sort of goalposts that you've provided? Vlad Volodarski: I think it is reasonable. So the rental rate growth over 4%, expenses 4% or lower. And then we still have some occupancy to get to 95% average that we expect to achieve this year or higher. So if you do that math, then it looks like your estimates will be about right. Pammi Bir: Okay. And then just lastly, on the dispositions, you've done one deal so far this year. What does the sort of near-term pipeline look like? I'm not sure if you have stuff on the market currently. And I'm just curious if there's portfolios in there at all and what sort of NOI impact that may have if you do move forward on some additional deals? Vlad Volodarski: Yes. At this point, Pammi, we can't really talk about. These are all very preliminary transactions that are in progress. There are a few of them that we're working on, but you never know whether they're going to be completed or not. So as soon as we can talk about it, we will. But the target remains for the next 3 years to dispose of the noncore portfolio. We value it at over $1 billion today. Operator: Your last and final question comes from Tal Woolley from CIBC Capital Markets. Tal Woolley: Obviously, a big year, unannounced acquisitions. I think it was $1.7 billion of stuff that you've closed and is yet to be closed. Can you just talk a little bit about any signs of integration strain either at the corporate level or on the ground? Vlad Volodarski: Well, we -- frankly, I was surprised of how well our teams were able to integrate these acquisitions, pleasantly surprised because it's not an easy task to take on properties and transition it from one operator to another, especially because we were transitioning many properties from different types of operators. There are some that were managed by smaller companies, some that were managed by larger companies. And it's really been a great experience, hard work, but a great experience for residents and employees of these homes and the feedback that we've been receiving, we were just recently together with the general managers from all of our homes. And those who joined us more recently couldn't have been more complimentary about the process that they and their teams and the residents went through to join the Chartwell family. So it's been a great experience, and we have not experienced any strain. We are very cognizant about the impact that the large volume of these acquisitions has on the support teams in the corporate office and the operations teams in the field, and we're making sure that there's good processes, enough resources dedicated to these transitions. And there's definitely risk associated with it, and we're trying to manage this risk to the best of our ability. The good news is all acquisitions or the vast majority of the acquisitions that we've done over the course of the last 2 years have exceeded our expectations in terms of the financial performance. Tal Woolley: Okay. And then when you take on like that kind of volume in a year, I'm just wondering like can you start to go back and like leverage your buying power more effectively, whether it's like for food or medical supplies, that kind of stuff? Like is there -- like can you get better operating synergies out of this? And is that part of the reason why we're sort of seeing your direct operating expenses per suite start to fall? Jeffrey Brown: Tal, we do that regardless of the level of acquisition activity. So just given the scale of the company, we're very focused on buying power and leveraging the number of properties we have across the country. So we think that does help in our underwriting of acquisitions and should help to some effect on the overall buy, but wouldn't materially drive our operating expenses. Tal Woolley: Okay. And so when I'm looking at that direct operating expense per occupied suite figure, if it's down year-over-year, is it down mostly because the occupancy is up so high? Or are you actually seeing some operating expenses... Jeffrey Brown: They grew on an absolute basis, but because occupancy grew faster than the operating expenses, you're seeing the decline in the operating expense per occupied suite. Tal Woolley: Got it. And then as demand continues to pick up here, how do you feel -- like are you finding you've got the right suite mix for now? Or are you finding it like you need more supportive-living suites or assisted-living suites? How are you matching demand at this point in time? Vlad Volodarski: Tal, most of our properties are in the independent supportive living category, which basically means that we can provide a significant amount of support and care to the residents in their suites, and that's the Care Assist Program that we have with the technology that was recently implemented across the country. And so those properties can accommodate people from fully independent to people who require quite a bit of care. And so that's where the majority of our portfolio is, and we're very happy with that breakdown. We have some neighborhoods or wings of the properties where -- that we designate as memory living or assisted living. Those are specifically designed areas where packages are more all-encompassing, and we have higher staffing levels to accommodate people with higher needs or specific needs like in memory care. But generally, we're pretty happy with the breakdown that we have. And as I said, the -- my expectation is that demand will continue to grow on both sides of the spectrum where people will look for more independent type of accommodation for socialization purposes and will continue to grow a part of our business where we provide services for people with more care needs. Tal Woolley: Okay. And then just lastly, I think the last big deal you've got to close, I think, is the Sifton portfolio. Will you -- like for this year, would you look at completing the balance of that with your credit facilities? Or do you expect it to be through some dispositions by then or perhaps using the ATM? Jeffrey Brown: Yes. So we have a combination of some dispositions and also approximately $170 million of CMHC financings underway. So between those and cash on hand, we'll be able to fund that portfolio acquisition. Operator: There are no further questions at this time. I will now turn the call back to Vlad Volodarski, Chief Executive Officer of Chartwell, for closing remarks. Vlad Volodarski: Thank you again, everybody, for joining us. If you have any further questions, please do not hesitate to give any one of us a call. Goodbye. Operator: This concludes today's call. Thank you for attending, and you may now disconnect.
Teresa Urquijo: Good afternoon, ladies and gentlemen. Thank you for joining MERLIN's Full Year '25 results presentation. You can find all the materials that will be presented in today's call on our website. I will please ask you to abide by the disclaimer contained in it. Our CEO, Ismael Clemente, along with our two directors Ines Arellano and Francisco Rivas will walk you through the main highlights of 2025. We'll then open the line for Q&A [Operator Instructions]. With no further delay, I pass on the floor to Ismael. Ismael Orrego: Thank you, Teresa. Good afternoon, everyone. We are in front of a very interesting set of results, certainly, the best I have seen since we have been leading this company. It's been almost perfect year because the fantastic performance of the data center division has been accompanied by very, very solid performance also on the traditional asset classes. And all that has been reinforced by an excellent behavior of the share. So frankly speaking, what can I say? I mean the operating momentum is super strong. We are enjoying satisfactory rental growth in all asset classes, traditional and nontraditional, because in data centers, we are also achieving better rents than underwritten. We have a high occupancy, 95.6%, and continue solidly generating FFO with a plus 5.1% print in the year. In offices, we have a very remarkable like-for-like of 3.5%. But more importantly, an interesting release spread of 4.8%, which is probably the reflection of what we commented in past calls that the Madrid market particularly is now under a certain like short squeeze. I mean, there is distraction on the offer side, which is causing, of course, an effect on the pricing of the demand. The occupancy stays at all-times high, 94.2%, and this is particularly noteworthy in a year in which Barcelona has been a relatively softer market than it was in the past, and has lost occupancy. So Madrid has been able to compensate Barcelona, which will continue for the coming years to be one of our weak spots that we will continue working because sooner or later, the market will digest the current situation of oversupply and will come back to normality. In logistics, we have been positively surprised by the release spread, particularly because, as commented on a number of past calls, this is a market where we were seeing a little bit of less strength than we have been seeing in the past years. But this year has been extremely strong, particularly on the release spread. The reason why the like-for-like is low is simply because we have lost 3 points of occupancy, which is normal, because we were occupied at 99%. And we told you that there was only one way to go from there, which was down. And -- but we ended the year with a very good printing occupancy of 96.4%. Shopping centers, another super strong year, surprising us on the upside with a very good like-for-like of 4.7% and still with very affordable rental levels for our clients at 11.0% in occupancy cost ratio. So very, very strong year in shopping centers. On data centers, well, basically, we have achieved a full derisking of Phase 1. So Phase 1 is now water under the bridge. I mean, we will report it as assets in operation from now on in order to try also to simplify your lives, because if we continue reporting Phase 1, Phase 2 and soon Phase 3 is going to be -- is going to be a rubik cube. So that will convert into assets in operation with an occupancy of 100%. We have also achieved a very interesting derisking of Phase 2 with the lease-up of our Arasur 2 asset 48 megawatts, which is around 20% of the total capacity of Phase 2, but more importantly, it was the next Indian trying to attack the fort. I mean it was ready for service December 2026. And as such, now is done. The next ready for services are end of '27. So we have now plenty of time to work on those -- on the leads in which we are already working and starting exchanging technical documentation, and then we will need to come to terms in the economic side of the business and then move into documentation, which, in some cases, particularly with hyperscalers, can be a painful process. In terms of financial performance, the value uplift has been very strong, but this has been mainly boosted by data centers who have contributed close to EUR 360 million increase to the total revaluation of the portfolio. 4.7% GAV increase in the year. The total shareholder return, 10.2% is fantastic. But more importantly, we believe it's relatively sustainable, because we know what is coming, and we think unless the world goes upside down, which is another possibility, if 2026 is a relatively simply flat year in terms of performance of traditional asset classes, we believe we can achieve very similar figures at the end of December. Our financial situation remains very strong. The loan-to-value is low at 28.9%, 100% fixed rate. And we don't have maturities till November 2026, maturity which is already tackled. I mean with the existing cash at banks and a number of bond taps and bank lines that we are signing in the coming days, that maturity will be already tackled without affecting the CapEx needs of the data center department. And we have been able to maintain our rating, both with S&P and Moody's, which is always interesting because at the end, that cost is one of our raw materials. And we need to continue keeping our competitiveness in terms of rating. In terms of value creation, EUR 129 million in noncore divestments, as already disclosed to market, you were perfectly aware that we had this almost done. And then probably the most interesting thing is that we have another close to EUR 130 million already signed and to be executed in '26 and '27, which is very interesting because basically almost half of our targets for '26 and '27 are already covered in the absence of any accidents. It's important to pay homage to the activity of our different business divisions. The year has been excellent in terms of pre-lets. In offices, we have signed more than 56,000 square meters beyond the daily trading, I mean, the ins and outs that happen every day in the portfolio. In logistics, 73,000 plus and Head of Terms, which we believe is going to become a reality of another 55,000. So significant progress also in logistics. And in shopping centers, to me, the most salient activity in the year has been the inauguration with an almost full pre-let of the Marineda extension, 26,000 square meters, which has made the Marineda concept in La Coruna even more dominant than ever. I mean it's a center, which is really rock solid and is one of the jewels in our little crown. And in data centers, well, we are now at 112 megawatts IT versus 45 latest reporting. And therefore, when 66 new megawatts have been lit and the prospects for the derisking of the rest of the Phase 2 remain brilliant. So in terms of main financial magnitudes, the GRI print was EUR 541.9 million, plus 3.5% like-for-like in the year. The FFO, what we broke our own record is better than the one of year 2019, EUR 326.7 million plus 5.1% year-on-year. But it is important to note that in 2019, we had EUR 84 million of BBVA rents in our belly. So with a little bit of help from data centers, around EUR 30 million, we have been able to overcome the sale of the BBVA portfolio, which, with hindsight, I believe, was an excellent decision because we delevered the company in anticipation of high interest rate cycle. And that gave us also a sufficient financial muscle to be able to develop Phase 1 of our data center deployment program, which was absolutely necessary because have we tapped the market to develop data centers starting from scratch and the market will have been a little bit incredulous about our capacity to do. So we had to do it with our own money, and BBVA was instrumental for that. The EUR 0.58 achieved are plus 7% versus the initial guidance, although we updated to EUR 0.56 in -- I think it was in 3Q, we updated to EUR 0.56. In reality, we expected EUR 0.56, but in dataset, we have had little income from -- particularly from better margin in our data center operation and well, some income also from NRCs from the installation of machinery on behalf of our clients through remote hands agreements in our data center division. The LTV stands at 28.9%, which is pretty low, but more interestingly, net debt-to-EBITDA stands at 9.0x. Of course, it is growing, but it is growing as we are spending in the construction of new units in our Data Center division. The NTA per share is EUR 15.36. And for the first time, we are very, very close in our share price to our NTA, which is incredible to see. I mean, I'm really, really enjoying to see that when I shut on my computer, and I see the share price evolution, I am really humbled. The GAV like-for-like has gone up by 4.7%. But very importantly, with an EPRA net income yield of 4.6%, which is sound, because these days, improving NTA or improving GAV through asset revaluations is easy, but we have taken exactly the contrary way. I mean we have completely recalculated our prospects for particularly logistic pre-lets and part of the logistics division and we have decided to expand a little bit our yields in order to make sure that we repair the roof now that the sun is shining rather than doing it when the things start to get rough. TSR, as commented, and leads us to propose dividend per share of EUR 0.44 for the year, which is slightly above the 80% threshold, but I think we have to share a little bit with our shareholders the good operating momentum of the company. In terms of EPS, we have, after careful reflection for the moment, we have taken the decision to continue to not capitalize interest expenses. We believe it is cleaner. We believe it reflects better the real operation of the company. And therefore, as a consequence of that, we are indicating for 2026, a relatively flat figure in terms of EPS and DPS. But we will, of course, endeavor to bid it if we can. It won't be easy because it is mainly attributable -- the reason why it's flat is mainly attributable to the fact that all the growth in top line is absorbed by more financial expenses as we continue basically building. We continue building our inventory. And as a consequence, we continue employing our debt capacity. And this is, of course, raising the bar of our financial expenses. And for the moment, it is hitting in our top line growth. 2027 will be a different thing. I mean, in 2027, will be a year in which we will start seeing the first hints of what the DC division will bring in the future to this company and '28, '29 and '30 as commented on many other occasions, at least on the model, of course, you never know, but they look like a big party. That is it. I mean I pass the floor to Ines Arellano who is going to comment on the different asset classes and Francisco Rivas will comment specifically on the Data Center Division. Inés Arellano: Thank you, Ismael. So moving to what today represent 55% of our portfolio, offices. We've generated EUR 292 million of rents, and that is a 3.5% increase in like-for-like as commented by Ismael, very, very sound, with a very high release spread up 4.8%. It is true that if we were to take into account this one lease that we mentioned last year, it would have been 0.4%, but at least it's in the positive arena. The occupancy at 94.2% all-time high. Again, we'll watch very carefully how the evolution in Barcelona keeps ongoing, but we are confident that eventually this will be digested. It's been a very healthy leasing activity market with more than 275,000 square meters contracted. And in terms of valuation, we see a 1.2% like-for-like increase with an implied gross yield of 4.9%, not reaching 5 yet, which as you know, it's always been the number that we thought should be the right one for office. Ismael Orrego: 5.25%. Inés Arellano: Okay. And a net initial yield of 4.2%, and this implies a 2 basis points yield expansion. And as said, the little momentum continues, as demonstrated in Slide 8 with five very good examples of standout leasing deals spread across not just CBD, but also key peripheral corridors, and they all have secured very high-profile tenants. You have three assets here that are still in the work-in-progress portfolio, meaning these are not in operations yet. But you also have two like Castellana 278 and Las Tablas where we've secured very high tenants, very high-quality tenants like a university and a bank. Moving to Slide 9. We continue, again, to see a strong trend of reconversions. And we wanted to lay down what is the current stock of Madrid. You see a little bit of everything. So this number may seem a little bit big to you, depending on the source that you used to consider. We've taken the Belbex number -- this is not only made by pure office buildings. It's also taking into account the offices associated to industrial users, some residential buildings that are being used as offices as well and also administrative buildings. What we see is that there's more than 1 million square meters expected to go back to their original residential use, because right now, as we stand, the highest and best use for a lot of these space is actually beds, beds, because this is both living, resi, hotels. And there is an additional 1.5 million square meters that could be reconverted again to these other uses out of the pure office building. What are we doing? We have identified 7% of our stock in Madrid office, okay, not the whole stock, but just in Madrid whereby this doesn't mean that we're going to be selling the whole 7%. But we've identified 33,000 square meters that will be sold so that somebody else reconvert it plus another 27,000 square meters that we are going to suddenly refurbish or reconvert them for educational uses. Moving to Slide 10. What we see is that -- well, we still believe that unique assets deserve to remain as offices. And this is a perfect example, Alfonso XI. There's a clear scarcity of good space, 10,000 square meter size buildings in prime CBD, and we are fortunate of having owning these unique assets, is right in the middle of Madrid, and we know that there are best-in-class tenants looking for space like this one. So we are going to refurbish this asset. We are actually refurbishing this asset, and the expected yield on CapEx will be around 9.6%. So there's another example in Page 11. Again, super prime office building, Liberdade. As you know, this one we bought it on purpose to be converted into what it will soon be probably the best office building in the Lisbon market. And as of today, even if we have not started commercialization, we have fully let to a top luxury group, all the retail, the high street retail space. Then we have Adequa. This is to show you that there's no only demand for pure prime CBD assets. Adequa is one of those examples where a tenant of ours that was willing to expand to grow in a campus, very, very close to Castellana has actually signed an agreement with us, a turnkey project. And so again, the yield on CapEx around this one is around 10%, 10.4%. And we will soon in '28 and '30, we will have these two buildings built up and completing what today is Campus Adequa. And then finally, this is a jewel. This is a very small building, but a true jewel. and it's going to be even more valuable once Renazca project gets executed. As you know, it has been approved. And once it is executed, we know very well that a lot of tenants will be willing to pay very high rent for these unique assets, which for those who have visited Plaza Ruiz Picasso building is just next to it, you can actually monitor the works from that one. Moving to logistics in Slide 15. GRI like-for-like has been positive despite the loss of a tenant in 48,000 square meter warehouse in [indiscernible] that had an impact of 3% in occupancy. The sound 5.8% Release Spread, together with an average CPI of around 2.5%, has helped to increase rents by 2.5 reaching EUR 86 million. Gross yield at 5.7%, slightly higher than the average yield of the portfolio 5.3%, and net initial yield at 5. The leasing activity has been strong with more than 440,000 square meters contracted compared to only 100,000 square meters in '24, while valuation uplift has been moderate being only 1.2% on a like-for-like basis. This has been mainly driven by the increase in CapEx. Certainly more on future development, but a little bit as well on existing assets due to, for example, fire safety measures. In '25, we finished construction and delivered 21,000 square meters fully led to [indiscernible]. And we've also sold 73,000 square meters warehouse that was under refurbishment in Vitoria and have added a couple of projects to the committed pipeline, now amounting to 279,000 square meters. Yield on CapEx for all these projects remain quite appealing at 13.2%. The noncommitted land bank has therefore reduced by 61,000 square meters outstanding at 183,000 square meters located mainly in Madrid and Barcelona. If we move to shopping centers, well, this has been said already by Ismael. it's great performance in every KPI that you can look at, the GRI of EUR 133 million, it's an uplift of 4.7% like-for-like. It's a great combination of a very high Release Spread plus CPI. In terms of valuation, this EUR 2.1 billion portfolio has gone up by 2.9% with an implied gross yield of 6.4 and net initial yield of 5.7. And this portfolio, shopping center portfolio is shifting to adapt to market trends and customer needs, and we are seeing retailers demanding new formats, so fewer, but bigger and certainly better located. The synergies with logistics, they continue to be a reality, and this is value also for the largest storage spaces that they required and experience of our customers keep on being the main and main focus of everything that we do. And in Slide 21, you have a few examples of new retailers leasing space in our assets, mainly focused on health and beauty and leisure/home entertainment. And with no further delay, I pass the floor to Francisco who will explain where the future is coming from, the data centers. Francisco Gonzalez: Many thanks, Ines. Moving into the Data Center section, I would like to start by congratulating, Ismael did, our data center team and the vision for a fantastic 2025 year, which had a very strong workload and proved the excellent execution. Part of this effort, as you have seen, has been crystallized at the beginning of this year, 2026, with the signing of very significant contracts across our assets. Turning now to the presentation on Page 24, we provide as always an overview of the two phases under operation and/or construction with updated figures. On the one hand, we present the results of Phase 1, which we will now refer as Ismael said, as assets in operation, where the 64 meg have been fully contracted. The originally 14.5% gross yield on cost shared with you 12 months ago has now increased to 15.8% with a stabilized GRI of EUR 97 million above the previous EUR 88 million reported 12 months ago. Regarding Phase 2, which we will refer as work in progress WIP, we have been able to redensify the first two buildings in Lisbon moving from 36 meg to now 40 meg increasing the total size of Phase 2 from 246 meg to 254 meg as you have here in the presentation. And this has led as well to an update of both the total investment amount and expected stabilized GRI now at EUR 397 million, delivering a very attractive 14.4% gross yield on cost. And in terms of commercialization, moving now to Page 25, we have successfully completed the letting of the three assets of this Phase I, following the signing of an 18-meg contract with a very well-known new cloud operating [indiscernible] and first time in our portfolio reaching the full occupancy of our assets in operation. And for those of you who are more curious about the technical aspects, 34 meg out of the 64 are air cooled while 30 meg are liquid cool. And by the type of specification we have it means that these 30 meg liquid cool are targeting above 70 KV per rack. On our experience right now, they are more in the 120 KV per rack, which shows that the type of technology they are using is the last of one of [ NVIDIA ]. On Page 26, we show how the rental income will ramp up on a yearly basis with EUR 31 million already received in terms of rents in 2025 and a forecast of EUR 66 million for 2026, resulting in a stabilized GRI as we mentioned before, of EUR 97 million in 2027. From a value creation perspective, Page 27 shows the breakdown of total costs incurred. The valuation already captured, although it's a little bit more limited in [indiscernible] in the signing of this new contract that the appraisal was not aware of and the expected additional value to be accrued if the value assumptions remain unchanged as we are disclosing in the footnote. So this EUR 291 million estimated value, we expect to be captured in the next valuations if those are retained. Moving to Phase 2. On Page 28, we include a brief reminder of the commercialization status of our data center assets that we divided, as you know, in bookings, advanced negotiations and let or prelet. And with this in mind, in Page 29, we summarize the status of the different projects of Phase 2 with now a total capacity of 254 meg IT. Going one by one, in Bilbao 2, what we call ARA II, the construction is progressing on schedule. After 14 months of execution, we have gained sufficient certainty to enter into prelet agreement as the ready-for-service dates that we show in the presentation, December 2026 are very, very certain. This is a highly complex deployment because we will coexist the deployment of the equipment that we have as landlords, but also the client equipment, which are largely based on a liquid cooling solution. The kind is -- was already in our portfolio is very well, no new cloud operator focused on AI and the level of densities that the client is requesting allows us to know that they are using a state-of-the-art technology, as all of you know. The connection to the substation of this building 2 has been already completed with our first building, what we call ARA III and right now, we are just progressing with cabling of that -- of those that were created for our first asset there. Regarding Bilbao ARA I, as we will show in the following slides, the construction has started at the end of last year, beginning with piling works, and we have maintained our estimated ready for service by the end of 2027. Moving now to the center part of the page, in Lisbon Compos. At the end of 2025, we started the construction of the first two buildings following, believe it or not, 1.5 years of piling works. And please consider the Lisbon region is both flood-prone, as unfortunately, we have experienced some few weeks ago, but also is located in a seismic zone and which has required a significant soil preparation, reason why of this 1.5 years of previous works. And as an example, the piling works have reached approximately 35 meters in depth, just to avoid situations as recommended. And thanks to this preparation, none of the works were affected by the heavy rains experienced in the region earlier this month. From a construction point of view, we have once again redensified the buildings, increasing capacity to 40 mg per building IP, benefiting from the insights gained from client discussions that we have held over the last months. In parallel, substation works have also started with a ready for service in all these first two buildings by December 2027. In terms of leasing, we are in very good progress regarding the initiative that we will comment on the following slides, while keeping the buildings ready for the latest computing technologies in case the first option does not ultimately materialize. Moving into the 2 Madrid projects. In [indiscernible] approval, what we call [Foreign Language] in Spain of the land, and we are in the final stage of securing the organization permits to begin on-site works, which will run simultaneously with the building construction. The ready-for-service is currently planned for the first half of 2029. Regarding [indiscernible] located, as you know, on the same street as [indiscernible] we obtained environmental assessment approval at the end of last year and right after demolition works are started and are going and the construction permit has been already requested just to make sure that when we finalize the demolition works, we can immediately start. Given the previous timing experiences, we are still maintaining ready- for-service in the second half of 2029 although knowing that we have already power on site what in our naming we call power ready supplied, we have already entered in negotiations with several clients interested in this site precisely for the reason that power is already there. Regarding CapEx commitment planning for Phase II and now I'm moving into Page 30. 2025 has been a record year for the company in terms of CapEx commitments. And this is significant because you need to know that a significant portion of this CapEx relates to equipment, which typically has shorter execution timelines once we commission it on site. Commitments have reached EUR 987 million versus the previously reported EUR 836 million, but also the next two years looks very strong in terms of CapEx commitments. So in the absence of any capital event, the company expects to tap the debt market, as Ismael was mentioning before, again, mainly during the second half of the year, once the equity that we raised in 2024 is fully deployed and at work. The target stabilized GRI is planned for 2030 as mentioned in the last quarter presentation, at EUR 387 million, delivering a 14.4% stabilized gross yield on cost. All these figures are reflected in Page 31, 32 and 33, which includes images showing construction progress in both Bilbao, Arasur and Lisbon campuses. And for those attending to our Capital Markets Day in the 9th and 10th of March, you will have the opportunity to see these projects at a human scale, which I think I can tell you that is pretty impressive. Finally, on Page 34, we would like to share the status of our EU Gigafactory initiative. As previously mentioned in the last year call, timelines of this initiative have experienced significant delays and based upon our latest information, the work resolution is now expected before year-end 2026. As we have stated several times, our Phase 2 projects were not conditional upon obtaining the EU Gigafactory award. In fact, this initiative was not even under consideration when we launched Phase 2 and we have always maintained discussions with traditional clients, both hyperscalers and new class operators in line with our original business plan. Nevertheless, as we always say, we've tried to be constructive shareholders -- stakeholders and good citizens, and we remain prepared for initiatives that could benefit the regions where we operate, particularly the Iberian Peninsula and we strong believe we continue believing that bringing the EU Gigafactory status to our region will create a lot of value, whether we are -- whether or not we are directly involved. As you may recall, we have set most of our capacity in Arasur, Capacity 1, and the full capacity of [indiscernible] for this initiative in Spain and the first two buildings for our Lisbon campuses of the Portuguese initiative. And we were always betting an Iberian consortium, so both Spain and Portugal, something that looks like were well received because most of the countries are doing exactly the same in other parts of Europe and offering several locations per country to allow synchronized computing and across the campuses. Situation as of today is that the Spanish government has shown a preference for another Spanish project. And thereby, they have released the capacity that we have reserved for that initiative in ARA II and [indiscernible] I, which, as you have seen, are both now fully let as following the -- what we have always commented to have one option and the other. With regards to ARA I, we are in advance negotiation with a particular client, and those negotiations, of course, will be more intensified and documented once the ready-for-service dates are becoming more and more and more closer. Regarding our Lisbon Campos, we remain committed to this EU initiative, which is now why we are moving forward with the first two buildings in connection with the Portuguese proposal. And once again, as we approach ready-for-service dates, the number of clients inquiring about availability continues to grow. For this reason, we will welcome clarity from the EU in terms of the timing because as soon as we are approaching and approaching delivery times, normally more clients are interested and we would want to have to take a decision there. And now Ismael will close this presentation with the closing remarks and outlook before we enter into Q&A. Ismael Orrego: Okay. Francisco, thank you. Well, on Page 36, closing remarks and outlook. Everything which is written here is pretty evident. So I'm not going to torture you with any more bulls***. The only thing that I will say is that the idea is to move in terms of lets and pre-lets from the current 112 to as close as possible to 100 megawatts in data centers. And this could be achieved through one of several combinations of facts. I mean, more normally, it will be through the documentation of the Lisbon lease which could come in the form of formalization of the EU Gigafactory program or otherwise, through an alternative route. I mean we have been lately adapting our -- the design of our campus there to the specific requirements of a certain client. You must have noticed that the total capacity has increased by 8 megawatts. Well, this came at the cost of 12 additional million in construction cost that I believe makes sense. And now the white rooms conform to the specifications of concrete SOQ of a concrete client. But more importantly, are perfectly flexible to adapt to the requirements of either other neo hyperscalers or neo cloud clients. So with that, I believe the 2026 should be the year of Lisbon. We will work -- we will endeavor to achieve that target. And that's it, dividend and FFO, we have already commented on it. And I believe the best thing we can do is move into Q&A so that you can make your questions in the line. And we will do our best to be able to reply to your questions. Operator: [Operator Instructions] The first question comes from the line of Marios from Bernstein. Marios Pastou: I've got a couple of questions from my side. So firstly, on the lease-up and the pre-letting of your data center pipeline. I think you mentioned that Bilbao building 2 was pre-let to existing neo cloud tenant and that Madrid say, was to a new neo cloud operator. So can you comment on the occupier type you're having discussions with across Phase 2 and whether we should anticipate a diversification of your tenant base across that phase? Ismael Orrego: Okay. Look, Marios, basically the leasing of Bilbao 02 has been closed with an existing client of ours. The one in Madrid, however, was a different one. At present, the diversification of our tenant roster is perfectly distributable. You can imagine with only 112 megawatts let, that I will beg you all to wait till we are 1 gigawatt in operation in order to calculate the real diversification of our portfolio, because have you calculated our diversification in logistics in 2014, you will have come to the -- this main conclusion that it was 72% DHL. But now no client -- individual client represents more than 10% of our rent. So we need to continue building if we want to continue leasing. What I can tell you, talking about Phase 2 and preliminary conversations for Phase 3 is that we are talking to every kind of clients you can imagine. You love hyperscalers. We are talking to all the hyperscalers except one, which is a self-builder. But the other three, we are talking to them. And we are talking to no less than 5 Tier 1 neo clouds alike. So sooner or later, we will end up closing an agreement with a big hyperscalers and you all will breathe with tranquility. But I need to remind you that closing deals with hyperscalers is not an easy thing. It comes at a cost, because they are the fastest cowboy in town. And as such, they have a big pistol. And you have to be very, very careful because that pistol can kill you. So it's big organizations, complicated organizations, you can engage in very fruitful and healthy conversations with the infrastructure guys, with the cable guys, with the first-line guys, but when you move into middle office and back office, it can be complicated. And at times, it is as frustrating as reaching contractual status and then stopping conversations because the conditions can turn abusive very quickly. So we will end up closing deals or reaching agreements with hyperscalers, but probably already in Phase 2 and more surely in Phase 3, but you need to bear with us for a second because we also need to defend our financials, which are your financials. So let's not be childish on this, and let's not -- let's be careful about what we wish for because closing an agreement with one of these is very easy. However, the fact that this agreement is good is a very different thing, okay? So we have to continue working in that respect. What I can tell you is that we are now technically qualified with 3 out of the 4 hyperscalers, so at least we know that our facilities conform to their technical specifications. And sooner or later, we will end up closing. Operator: The next question comes from the line of [ Veronique from Kampen ]. Unknown Analyst: Maybe first on just the other business lines. I was hoping could you give some additional color on what you expect in terms of occupancy rate, any big departure planned in '26, especially for offices and logistics? So your view towards '26 for those business lines? Ismael Orrego: Okay. Well, in offices, the idea is to remain relatively flat. So we have finished this year at 94.2%. The idea is to finish this year between 93% and 94%, which is already a significant effort because you have to take into account that in April, we are losing 11,000 square meters from Meta in Barcelona in the middle of '22 at. Yes, in a building, which is a winner, clearly winner in the market, but replacing 11,000 square meters in today's market in Barcelona is not an easy task. So we have to be prudent, taking into account the situation of the market there. In logistics, our idea is to improve a little bit the occupancy or compared to the 96.4% we have. It's quite binary because it depends a lot on whether we are able to lease one big shed in the Henares corridor or not. If we lease it up, then it's going to be very close to 100% again. But let's not plan for that, at least for the moment, we will inform in due time. And then in shopping centers, we are going to remain relatively flat, because it's almost impossible to go higher. I mean, yes, I mean, you can go 20 basis points higher or that it is complicated to go significantly higher. In shopping centers, in fact, what we are trying to do now is to yield manage a little bit our portfolio, because we are the cheapest shopping center owner in Iberia in terms of OCR. And that is always a very interesting position to start from, and we will yield manage a little bit our shopping centers, although the behavior is impeccable for the moment. Unknown Analyst: Okay. That's clear. And then one question around data centers. So your gross yield on costs went up again. And you also mentioned that the margins actually were better than expected, but I see that's a number that you haven't changed in the slides. So could you give some color on the movements on those numbers and why you still report a 70% margin if it was actually better so far? Inés Arellano: Because Veronique, this is Ines. What has been better is the today's margin. While we are on ramp-up, we do not achieve the 70%. So 70% margin is on stabilization. And so we were expecting lower than what we have achieved margin during the ramp-up. 70% remains as the stabilization margin. Ismael Orrego: Okay. And regarding the growth yield on cost, it is simply a reflection of the fact that the market is helping us. I mean, yes, of course, I mean, there are -- the teams are doing a fantastic job, but we are operating in a market which is quite favorable at present. So this is why we are improving -- if you look at our forecast in data centers, both in terms of cost per megawatt and delivery times, we have been absolutely bang on compared to the numbers we gave you. So our construction cost has been exactly the one we forecasted. Even though you might notice that in Phase 2 is higher than in Phase 1, the only reason is that in Phase 2, we had to buy 2 of the 6 plots of our data centers. And also Phase 2 is fully liquid, while in Phase 1, we had some air, okay? So that is the reason why we have a higher cost. Also Lisbon, as commented by Frank, is a slightly more costly construction to make because of the strict seismic regulations similar to Japan or California. We expect -- I mean, the -- we have already raised by 20 basis points the expected yield on cost on Phase 2. let's see how the leases come up. We might be able to bid it or not. I mean, that we better say than sorry. I mean we prefer to underestimate a little bit rather than being absolutely bullish, particularly when there is so much to be done before inaugurating those assets. I mean the RFSs other than Bilbao, Arasur 2 are expected for the end of '27. And between now and the end of '27, there is a lot to see. So let's continue -- let's remain prudent. Unknown Analyst: Okay. Clear. Sorry, one small follow-up on Lisbon. I just wanted to double check. It says now advanced negotiations on the slide for the Lisbon asset. Is that referring to the EU effect? Or is that concerning something a different tenant? Ismael Orrego: That one is concerning the EU Gigafactory. Then with different tenants, it cannot be -- it is not advanced negotiations. It's simply leads, bookings. The Portuguese government is conscious of that. They are honest people, and they are also trying to find a way to firm up part of the commitment rather than leave everything conditional upon obtaining the EU program. They are looking at ways to firm up part of their commitment so that we can close an agreement and we don't need to go through an alternative route. Operator: So the next question comes from the line of Florent Laroche from ODDO. Florent Laroche-Joubert: So actually, I would have just one question on data centers. So we can see that -- so you have made a lot of progress on Phase II. So congratulations, but we can see that you have also a lot of work to do before completing Phase II. Why is it today the right timing to present us the Phase III in 2 or 3 weeks? And why it is the right timing maybe to start to launch this Phase III in terms of risk? Ismael Orrego: Well, the reason is twofold. On one side, we have a number of internal definitions, and we report as we reach the milestones of those specific definitions. But in my mind, I see Phase 2 significantly derisked. Let's leave it that way. Second, power land is a scarce asset in Europe. I mean everyone is dying to get powered land. We are lucky enough to have a lot of power land in our ownership, because we started asking for power in 2021 and '22 when nobody else was asking for that. So I think it is in the best interest of all of our shareholders that we make full use of that powered land. And then the future only God knows, but at least make use of everything we currently have because we continue enjoying very interesting yields on cost. And what is more important, we continue commercializing in clear market. At the beginning, when we explained this new venture of data centers to all of you, our prediction is that we will commercialize maybe Phase 1 in clear market, there will be no competition. But certainly, we were expecting competition for Phase 2. The truth is that the market is full of noise, full of bull****, but in reality, very few people are really building or building to the exact specifications of AI, and therefore, very few can really meet the requirements of AI clients. And to our surprise, we are commercializing Phase 2 almost on a clear market basis. The next reasoning is that if we go fast with Phase 3, we could achieve a very similar result. So basically, I believe it will be extremely unfair to our shareholders not to move. We know it's a lot of complication. We know it's a lot of construction yards. We have recently incorporated one executive just for the control of our works. But I think the best thing we can do if we want to be responsible managers is to move on and continue developing capacity because we are in a situation in the market which is as favorable as you can probably think. Operator: The next question comes from the line of Celine from Barclays. Celine Huynh: I just have two questions, please. The first one is on the beat on the FFO this year. It was driven by better gross to net margin in DCs. Can you explain how you achieved that and whether we could expect the same in 2026? And secondly, it's about retail. Your name popped up in the news regarding a large Spanish shopping center portfolio. Can you provide any comments if you can? And if you can't comment, we've seen the expansion into DCs, but there wasn't much mention about retail. So can you clarify your appetite for shopping centers going forward? Ismael Orrego: Okay. Well, starting by the easiest, which is the FFO gross to net. Well, as commented by Ines, we have basically improved compared to our projections, because we had a better margin. And talking about margin, the margin we expected for this year, that was not the stabilized margin, okay? It was not 70%. It was well below 70%. That was the margin we expected for this year that we have beaten that margin a little bit because we have been able to operate more efficiently our data centers. And then we have, as commented before, we have also benefited from a number of little tweaks and things that we have been doing on behalf of our clients. Many of our clients do not have a super big established presence in Europe. And as such, they rely on our own engineers in order to install equipment or make offices fit-outs, do improvements to their equipment once installed. I mean we are helping them to do that, and they are paying us for that service. And as a consequence, we have improved a little bit the gross to net margin in our data centers, but not to a point in which we are in a position to reforecast the 70% stabilized, which we are -- we will very soon reach. But we cannot reforecast that because, first, 70% is already a very good gross to net margin, particularly compared to what our peers in the U.S. are getting. And second, because we still do not have all the information in order to be able to reforecast that. And then retail... Inés Arellano: Celine, just to be clear, can you please repeat the question that you made? Celine Huynh: There was just a news that you were about to bid on a Spanish portfolio, retail portfolio. So could you comment on that? Ismael Orrego: Well, basically, we are very happy with the performance of our retail. We have in a number of occasions commented with you that being a listed company, sometimes you cannot be too contrarian to the market because if we had, we would have loved to bid for 1 or 2 assets in the past 3, 4 years, but we have been being -- we would have been slaughtered in a public place, I mean had we done it. So now there is a retail portfolio available in the market that we have analyzed in depth in a number of occasions already. It was very difficult to reach an agreement with the sellers because it was a relatively convoluted situation. But now it's out there. What I can tell you is that the assets are high quality. They will make a perfect fit with ours. But I can also tell you that this will be a capital recycling exercise. So if you are afraid about us using one penny out of our data center spending capacity, this is not the case. I mean if we are to bid for this portfolio, which we will only do if we can achieve a positive capital recycling figure, I mean if the capital recycling disappears, we will not bid. And we are not going to participate in an investment banking auction. So we will do our best. We have a number of pros and cons. Our main con is that, of course, we don't control the French connection. Our main pro is that the Spanish staff, we know them very well. They are colleagues in the market and they will be probably very happy to join the family. So we will see what comes out of that process. But if one day, we end up bidding for that and we are successful, what I can assure you is that we will rotate internal capital, try to sharpen the pencil a little bit in terms of ROA, I mean, try to obtain a positive print, positive arbitrage in ROA and make sure that the data center effort is not even disturbed by this acquisition. Remember, there is a big hype in the market about resi transformation, et cetera. We have a number of levers that we could action in order to make sure that we can rotate capital in an efficient way, okay? Celine Huynh: Okay. Ismael, just to be sure, we're talking about a portfolio that is worth more than EUR 1 billion, right? So you would have to sell more than EUR 1 billion. Is that correct? Ismael Orrego: Yes. That is... Celine Huynh: Okay, that is a big amount. Ismael Orrego: Yes. Operator: The next question comes from the line of Fernando Abril from Alantra. Fernando Abril-Martorell: I have 3, please. First on the recent [indiscernible] rent. So it was clearly above your expectations. I think correct me if I'm wrong, but it was around EUR 140,000 more or less per megawatt month. So I know it is Madrid, but how should we interpret your embedded 130 assumption for the entire Phase 2 because it seems a bit prudent probably to me. Also on the contract terms of the Bilbao 2 and Hefata, I don't know if there were any material changes to duration or escalator structures compared to previous agreements. And then last, you know that the Spanish grid operator, and also several Spanish utilities have recently announced increased CapEx plans for the power network. So I would like to know your view on this and whether you believe or not that these investment plans will meaningfully alleviate grid congestion and improve the power availability in Spain or not? Ismael Orrego: Thank you, Fernando. Well, first, on the price of Hefata 2, we are not going to be very specific because it's our client, and of course, the terms of engagement of our contracts have to remain secret. But it is true that in the global underwriting of Phase 2, we were relatively conservative at 118.5% on average, and we are beating those figures. But it's always good to remain prudent because there could be deviations in course. There could be many things, equipment that could vary. So we have to be -- we have to remain prudent, but it's true that in that particular contract, it's been better than expected. And then in terms of contract, basically the same that we have been doing up to now in the region of 10 years and with fixed escalators, which are now slightly higher because the 10-year inflation swap is also higher. So we are happy with the contract to all terms. Remember that one of the reasons among many that why we moved into data centers is because they were able to improve our WAULT once we sold the 3 portfolio. That, of course, was a secret weapon. I mean it was clearly improving our average WAULT across the portfolio. One of the reasons why we moved into data centers was because the WAULT were pretty attractive. They remain so. And in fact, not only that remain, so the clients are now wanting longer terms if they can, in exchange for rent because they are trying to lock up IT capacity in a market which is starved of IT capacity. There is very few, very few places where you can land 20, 30 megawatts of AI capable equipment. It's -- there are not so many places in the world. Colocation is a different thing. But AI is very special, and there are not so many places in the world where you can do it. And one thing also that the clients like a lot and why they are ready to compromise for longer terms is expansion capacity. I think it was a good vision in our side to bet from the very beginning on super large plots with a lot of energy in which we could grow with the client doing one building, another building, a third building and a fourth building. That has been probably a very good decision and clients like it because once they send their experts, their engineers to a certain location, they achieve significant synergies if they can operate a more significant capacity than simply just one data center and move to another place within the country. So this is the situation. And regarding [indiscernible] and the increased CapEx, it's a much welcome piece of news. Of course, our stance with the regulator has always been that they need to improve the grid. The Spanish grid is, believe it or not, because all of you are affected by the 28th of April blackout last year, but that was a different thing and happened for different reasons. That the Spanish grid is super high quality. It is very well designed, very well duplicated and wet and is very robust. Of course, it will need investment in order to adapt to the new demand because at present, we are coming from a world in which the consumption was going down year after year because many households were incorporating self-generation. And as such, the consumption was going down and down and down. But we are in front of an era in which consumption contrary to some of the official estimates that were made a long time ago and probably wrong with the new circumstances, consumption will go up and will go up very significantly, if only because of the effect of the data center industry. As a consequence, the country has to make an effort in terms of bringing together generation and consumption. So that means investing in distribution and transport. And any news in that respect are very much welcome. The alternative is to allow and probably could be a very interesting complement, the alternative will be to allow private grids. But that is always complicated in Europe. As you know, it's the world -- the word private is not very much allowed in Europe. And private grids are only a reality for very small distances. I mean when you are bringing a certain generation mainly from renewable sources into a certain point that bigger grids are not that common in Europe. So very happy to see that they are starting to move. The only problem is the speed of movement, which, as you know, is a problem always with the public sector. For the moment, the only entry door we have found to the grid is through agreements with renewable producers. And this is what we are doing. I mean we are engaged in a number of negotiations with a number of renewable generators and you will be keeping abreast of our evolution over the coming months/years because it is the only practical way to access the grid as of today. I mean one day, there will be a bigger grid and electricity eventually will be widely available. But if you want to continue honoring your demand request from your clients, the only way is through agreements with renewable generators. Operator: The next question comes from the line of Stephanie Dossmann from Jefferies. Stephanie Dossmann: I would have two questions. The first one regarding data centers and the appraisal values. I understand that appraisers recognize the value creation closer to the time of the lease signing. But could you say how much of Phase 2 is currently factored into the appraisal values? Francisco Gonzalez: So what the appraisers are doing is they're just incorporating into their valuation the assets that are under construction. So once we start construction, then those assets come into the perimeter. You have seen June 2025 that we have incorporated several assets, mainly ARA II and Lisbon 1 because they have already started construction. And then in December 2025, we have incorporated -- we started construction as disclosed before in ARA I and Lisbon 2, which means that the appraisal takes that into the appraisal. The rest of the power land that we have is not being -- so it's hold at cost. And only when we start construction, then is when we -- when the appraisal enters into that valuation. From a valuation point of view, then you need to differentiate between the assets which are under operation and the assets that are considered as WIP. In the cases of assets in operation is exactly what like an office building or shopping center or logistics that we have. So they do normally a DSF of 10 years. And that's the reason why they arrive at this value. And regarding WIP, as you may remember in logistics, appraisers tend to wait until the very last moment when the asset is completed and you have a tenant to reappraise the asset and then we're holding at cost the different development. But also, you need to be aware that those type of exercises normally were carried out over a period of between 9 months and 15 months only because the construction of logistics is much, much quicker. In the case of a data center, it's different. First one is, first, the land that you hold at cost already just because you are starting a construction there. It means that this power land all of a sudden becomes more -- becomes a reality first. And second, you are incurring a lot of cost and approaching pre-lets over the period of the 2 years that normally 2.5 years that takes us to build this type of assets. So I would say that the value is little by little absorbed until delivery times. Of course, the fact that we have pre-lets or not pre-lets of course, give more certainty to the projects, but this is how they are normally approaching it. Inés Arellano: Stephanie, just to add to what Francisco commented, it is very important for you to know that the 4 land plots that are -- that have been included in the scope of work for the appraisers, they were on land that belong to us. So just by putting the market value, which is powered land and not raw land, they were sitting in our balance sheet at almost nothing, just by consider them as powered land that it's a significant uplift on a relative basis, of course, right? So Phase 2, as Frank said, the first thing to know is or the first thing to bear in mind is how that land -- the market value of that land stands. In our case for what we had before, is certainly an uplift, not -- it is not the same for the land that we buy, of course, because that's the market value. And then as the different milestones of CapEx keep on going and as you approach the cash flow, you will get more value crystallized. But for this 4 particular projects, there's obviously been an uplift because they're sitting in our balance sheet for long at almost 0. Stephanie Dossmann: All right. And my second question relates to more traditional business. The office market in Barcelona. You said it is softer, of course. I was wondering what you expect on the midterm. I mean I understand you expect no oversupply shortly, but will the demand be strong enough to see higher Release Spread going forward? And what's your view generally speaking on the Barcelona office market? Ismael Orrego: Okay. Look, the Barcelona office market is in a digestion crisis. 320,000 square meters without client joined the market at the end of '24 and that hit is still being felt across the market. So this is taking a hit on the tension, the demand tension in the 22 ARA, more noticeable in occupancy than for the movement in rents but clearly noticeable. Our expectation in a normal world is that we had positive Release Spread overall in Barcelona this year, not brilliant, 1.7%, but still positive. So rents are holding for the moment. The market has corrected itself, as you can expect. So no new construction starts have happened since 2024. And in normal circumstances, unless the Afghanistan, Pakistan war expands to Iran, Israel and U.S., Russia, normally, within 18 to 24 months, Barcelona should be able to absorb the excess offer and come back to a certain normality. That would be what we would normally expect. Could be a little bit more, could be a little bit less, but Barcelona remains a strong small city, I mean, very specialized in certain submarkets within offices. A little bit of pharma, a little bit of gaming and tech. And as a consequence, we expect the city to continue performing robustly once they have been able to absorb this little blip caused by a situation of oversupply and touristification of the office development. Operator: And the final question comes from the line of [indiscernible]. Unknown Analyst: I have a couple of questions, if I may. One is in relation to your guidance for 2026. I'm trying to understand what assumptions are going in there in terms of additional debt funding. I think you said that in the second half, you're going to raise some more debt. In terms of share count, if you assume any change in that? And also in terms of the logistics, whether you assume that, that big asset that has been vacated by the client is going to be lifted up at any point during the year. So that's my first question. Ismael Orrego: Okay, Daniela. Look, regarding the guidance, the guidance stems out of our modeling of the year. We believe that the top line, the income could go up by around EUR 40 million easily, but it's going to be eaten by bigger financial expenses mainly. Why is that? Because there will be two events during the year. Money is fungible, so EUR 800 million will disappear when we have to repay our bond. And second, the speed at which we are spending or investing money in CapEx because of our Phase 2 deployment is significant. Already in 2025, we exceeded our original budget. I say ever, I believe the original budget was like EUR 830 million and we ended up spending like EUR 980 million. So we have spent more money in CapEx commitments, okay, in the year than -- commitment, meaning when we commission a certain equipment, we pay between 20% and 40% upfront, and then we pay the rest upon the reception of the equipment. However, that money for us becomes untouchable because we need to phase that payment if and when the equipment is received. So in our models, this is what we are seeing. Whether that could be achieved, I mean if we are quick in leasing up some logistic gaps, we should be able to improve it. They wouldn't move that much the needle because if you take into account that logistics account for around EUR 84 million of our rents and the rents expected for this year are going to be in the region of EUR 600 million, it's not going to move the needle that much. What share count considered for the guidance, same share count. And that is, of course, a very tricky question, I know, because you are already assuming that there is going to be capital issuance at some point. But this is -- I mean, we are talking apples-to-apples. The 58 is with the same share count we have at present. Unknown Analyst: Second question, if I may. And that's on Phase 3. I wonder whether there's been any investment, even minimal infrastructure preparation in Lisbon. If I'm correct, Lisbon is Part 1 of your Phase 3. And given what you mentioned about the earthquake risk and all that kind of stuff. I wonder whether there's already been a little bit of investment in infrastructure into that and related to also Phase 3, what would be the earliest date that you would like to start ordering equipment or start properly deploying into Phase 3? Ismael Orrego: Okay. Regarding the commissioning of equipment for Phase 3, et cetera, we will inform in detail about Phase 3 on the Capital Markets Day. But you will see what is basically the cash flow schedule in -- for Phase 3, and you will see it significantly overlaps with Phase 2. Regarding whether we have already advanced infra investments for Phase 3, yes. I mean, in Lisbon, we have been preparing the ground for plots 3, 4, 5, and we might start precharging land for plots 6 and 7. But we are talking about relatively humble investments. I mean we are not talking about significant things. Likewise, we have spent money in the licensing of a number of projects, including, for example, the one in [indiscernible] where we are already requested construction license, and we have already applied for specific planning status by the autonomous region. We are building up electric capacity in anticipation of Phase 3. For example, the whole purpose of the Solaria agreement in November was that, was to illuminate plots 5 -- 4 and 5 of Arasur and some of the other agreements that we might be reaching in or have reached in as we speak, are also related one way or another to Phase 3 or pipeline. But we will inform about all that in the Capital Markets Day. The only thing that is important for you to keep in mind is that Phase 3 will be defined with everything that is being licensed and has power. So it will not include any pie in the sky or talking about things in which we could get the electricity, et cetera. We will be very specific about that on the Capital Markets Day. Operator: Thank you very much. There are no further questions. Just a quick reminder, many of you already know, but we'll be hosting our Capital Markets Day in Bilbao the following 9th and 10th of March. It won't be broadcasted. It will be recorded and then uploaded into our website. But all of our material will be published on our website that morning, the 10th of March. So hopefully, all of you can make it so you get to enjoy a nice wine. And you know where we are in case you have any other questions and have an excellent weekend.
Operator: Good day, and thank you for standing by. Welcome to the Prosegur Cash Full Year 2025 Results Presentation. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Miguel Bandres, Head of IR. Please go ahead. Miguel Ángel Bandrés Gutiérrez: Good morning to everyone, and thank you for joining today's call. I'd like to welcome you to our 2025 Q4 and full year results presentation that will be presented by Jose Antonio Lasanta, our CEO; Javier Hergueta, our CFO; and myself. The presentation shall take around 30 minutes in which we will share the most relevant events that have taken place in the period for our business as well as our performance. We'll comment on our key financials, our geographical performance and our transformation effort as well as our sustainability initiatives and will end with key concessions. After, we will open a Q&A session. Should we not get to respond to everything in today's session, we'll get back on any open topics on an individual basis. I want to again thank you all for your attendance and just remind everyone that this presentation has been prerecorded and is available via webcast on our corporate web page that you can find at www.prosegurcash.com. But before I hand the floor to Jose Antonio, I'd like to share some news regarding cash that have lately appeared in the media. They cover interesting topics such as the importance of cash for lower income families in the U.K., the stance towards cash of North Americans, how often cash is used in Colombia or the resilience of cash payments in the Eurozone. There are all cases that show the relevance of cash in different geographies and for different purposes, be it privacy, inclusion or budgeting or expense control. In the first news we can read from the BBC that the UK government will grant cash payments to people that happen to be in financial need. This new funding scheme will provide emergency funds for low-income individuals across England. This highlights how important cash is for all segments of society, especially for those that are most vulnerable. To reach them effectively and to allow them to buy their expenses accordingly, no other payment means is as effective and as inclusive as cash is. In the second year, we crossed Continue continent towards the U.S. We read from MoneyWise, that 84% of Americans oppose having a cashless country, citing privacy and spending control as key reasons for their positioning. Once again, in different places around the world, citizens are rising to defend their privacy and their right to control their personal spending. 84% is more than a relevant amount as we take into consideration when regulators are working on warrantying basic economic premium for which cash, its acceptance and its availability are crucial. Next, and moving down to Colombia, we can read from the [indiscernible] that this country stands out amongst cash users since 7 out of 10 daily payments are made with physical money. Here, we can see that in Colombia, consumers stand behind their payment choice, backing cash as their most preferred option. When doing this, they show with their example, the relevance of cash for Latin American economies and the preference citizens have for it. And lastly, and coming back to Europe, we can read from Euronews that Europeans pay for more than half of their purchases in cash. In 14 of the 20 countries in the Eurozone, cash is the most widely accepted method of payment accounting for between 45% and 55% of all transactions. Again, here, we can see that because of the many positive attributes cash has, it's the preferred payment means in over 70% of Eurozone countries. All the above are a reflection of the many events and news that take place in the world regarding cash that underscore its unique attributes and the endorsement it gets from consumers and authorities alike. We are proud to assure that the availability of cash in society continues to run smooth and effectively in close collaboration with other relevant stakeholders such as financial institutions, retailers or regulators. After this news update, I will share today's agenda. Firstly, Jose Antonio will review the period's highlights. Second, Javier will share with us the key financials for the year, after which Jose Antonio will take the floor again to reflect our transformation initiatives, and then I'll share key developments per region. Finally, Jose Antonio will update us on the latest sustainability developments before sharing key conclusions and open the Q&A session. This being said, Jose Antonio, the floor is yours. José Antonio Lasanta Luri: Thank you, Miguel, for sharing interesting news in the world of cash. Good morning to everyone, and thank you for attending. 2025 has been a challenging year for our company, in which despite an unfavorable exchange rate environment in Argentina, a key market for us, having taken decisive steps towards its macro normalization we have managed to maintain a relative operating margins and improve our bottom line in relative and absolute terms based on our determined transformation and a sequential improvement in Europe and a strong performance in Asia. All of this demonstrates our business model resilience. Our top line has shown organic growth of over 5%, which has been tainted by an 11.1% currency impact that accelerated as the year progress. We must remember that 70% of our revenue is not in euros and is hence affected both by the evolution of U.S. dollar versus the euro and by local currency fluctuations versus the U.S. dollar. Combining both elements, sales declined by 4.9%. Despite the above, we have been able to maintain a 12% EBITDA margin, I would like to here highlight that the nonrecurring efficiency program we have carried out since Q2 to improve our operations and in which we have invested more than EUR 15 million has been finalized and offset by positive extraordinary items. To end the year, our EBITDA margin has improved in Q4 by 30 basis on a quarter-on-quarter basis, reaching 12.5% on sales. Net profit has increased by 3.3% and 30 basis points versus 2024 to EUR 94 million, showing the improved performance of the bottom part of our P&L. Regarding Transformation, we continue to advance at a very strong pace. Sales for these solutions now account for 35.2% of total revenue and the penetration has increased by 300 basis points year-on-year. Of particular relevance has been the performance of our Cash Today solutions that have behaved very well in our geographies. In terms of cash flow, our free cash flow reached EUR 108 million on the back of disciplined CapEx control as well as in strict working capital management. With this, we have been able to reduce our total net debt by EUR 36 million year-on-year, which is a clear proof of our commitment to debt reduction. Lastly, I want to share that we have effectively repaid the EUR 600 million bond we've had out outstanding and that our balance sheet is strong, flexible and well funded on to 2030. As well, our Board has proposed a EUR 62.5 million dividend for the year 2025 to be paid in 2026, which implies maintaining the same dividend per share as the prior year. Lastly, it's important for us to highlight that Standard & Poor's has included us in the demanding Global Sustainability Yearbook for 2026, which recognize our constant effort to have a sustainable company. With this, I'd like to hand over to Javier so he can share with us our key financials. Javier Hergueta Vázquez: Thank you, Jose Antonio. First, looking at our profit and loss account. Revenue has reached EUR 1,987 million. As we can see on the right-hand side of the page, Organic growth reached 5.3%, while inorganic at almost 1%. However, as Jose Antonio pointed out in the prior slide, foreign exchange has negatively affected us by 11.1%. When totaling all these effects, our overall sales have decreased by 4.9% in the year. Asia continues to be clearly our organic growth leader, and we foresee that to continue into the future. Our EBITDA totals EUR 356 million, which, together with depreciation of EUR 118 million in the period makes us reach an EBITDA of EUR 238 million, 5% less than in 2024. It is important to highlight that despite both the currency and Argentina's normalization impact on our country mix, we've been able to maintain our 12% relative margin. Looking at the bottom right-hand side of the page, the one-off impact from the extraordinary efficiency program that summed EUR 50 million and for which we expect a payback of 18 months has been offset by other positive extraordinaries fundamentally related to prior acquisitions deferred payments. As we continue down our P&L, amortization of intangibles reached EUR 22 million, EUR 3 million less than last year and with which we reached an EBIT of EUR 260 million, 10.9% of sales, which is 10 basis points improvement versus 2024. It is important as well to note that the financial results totaled EUR 47 million, EUR 13 million less than in 2024, mainly on lower currency impact with which we reached an earnings before taxes of EUR 169 million, EUR 3 million more than 1 year ago and allows us to improve our margin over sales by 60 basis points to 8.5%. Taxes totaled EUR 75 million in line with last year in absolute terms and results in a reduction of 60 basis points in the tax rate to 44.4%, a trend that should continue into the future. With that all, our net profit reaches EUR 94 million, growing 3.3% versus one year ago and represents 4.7% of total sales, a 30 basis points improvement year-on-year. I want to underline the resilience of our P&L that shows especially in its bottom part towards net profit. This all allows us to deliver earnings per share of EUR 0.0607, 1.2% better than the one achieved a year ago. Even in such an adverse environment, we have been able to not only protect but improved profitability for our shareholders. If we go to Page 5, we can review our cash flow and net debt position. Starting from the EBITDA I shared in the prior page of EUR 356 million for the year, provisions and other items deduct EUR 69 million, EUR 34 million more than the prior year, explained by the difference year-on-year in extraordinaries and other noncash items. Income tax implied a cash outflow of EUR 83 million, EUR 19 million more than in 2024 while CapEx has totaled EUR 82 million, showing our discipline towards CapEx management, which we aim at maintaining in relative terms over sales. Investment in working capital has totaled EUR 14 million despite growing organically at 5.3%, as we've seen earlier and representing a substantial reduction of EUR 21 million year-on-year as a result of an effective DSO and DPO management. With this all, our free cash flow reaches EUR 108 million, implying a 77% conversion over EBITDA in the year, improving 300 basis points over 2024. Interest payments reached EUR 19 million, slightly over a year ago despite the refinancing program carried out throughout the last part of the year. And M&A payments have totaled EUR 52 million contributing to reduce the M&A-related outstanding debt by EUR 70 million. Dividend outflow totaled EUR 61 million and treasury stock some EUR 8 million in 2025. Our net financial position at the beginning of the period was at EUR 643 million, to which we shall decrease the net cash flow and as well deduct the EUR 10 million negative impact from foreign exchange rate. These results in the net financial position for the end of the period of EUR 711 million, increased fundamentally due to M&A payments made and extraordinary efficiency costs to which we must add EUR 98 million of IFRS 16 debt, EUR 55 million in deferred payments and EUR 40 million positive of treasury stock achieving a total net debt of EUR 850 million, reducing EUR 36 million year-on-year and taking it below 2023 levels. Our resulting leverage ratio has reached 2.4x, 0.1x more than 2024 fundamentally driven by the effect of currencies on our EBITDA levels. As said, we are confident that into 2026, we will be able to continue our deleveraging. With this, I would like to hand over to Jose Antonio, so he can share with us on Transformation. José Antonio Lasanta Luri: Thank you, Javier. Looking into Transformation, I'm very happy to share that these solutions now represent 35.2% of our total sales. In 2025, revenue of our Transformation solutions reached EUR 700 million, which is a 4.1% increase in relative terms. Once again, this underlines that our products are very well received by our customers and continue to trust in us as a key service provider. This growth over 2024 is especially relevant if we take into account that in 2024, we undertook very relevant nonrecurring projects of ATMs in Latin America that have not been repeated into 2025. Together with the already mentioned currency impact that, of course, as well affects the sales. Penetration of our total sales, as I said, now reached 35.2%, implying an increase of 300 basis points year-on-year. If I am to highlight one especially key performer, this has been our Cash Today solutions but continue to deliver extraordinary growth in our geographies and to which we have increased our product type range. We are determined to continue the transformation of our company into the future, focusing on our key solutions. Cash Today, ATMs, banking correspondence and ForEx business. With this, I would like to pass over to Miguel, so he can share with us the key highlights of our performance by region. Miguel Ángel Bandrés Gutiérrez: Thank you, Jose Antonio. I would like to first start sharing with you the key developments in Latin America, our main region that accounts for 58% of group sales. Revenue in the region totaled EUR 1,145 million in 2025 and this implies a decline of 11.5% versus the same period achieved a year ago, driven fundamentally very strongly adverse 17% currency effect. The evolution of the U.S. dollar versus the euro as well as the local currency versus the U.S. dollar have taken negative toll on our sales. Very important to note that underlying organic growth has been 5.4%, which reflects a positive evolution overall in the region, save Argentina. Different elections that have taken place in the later part of the year and the measures taken in order to balance public spending have affected consumption as reflected in our figures. We're confident that as the country continues its change efforts, growth will restart, and we'll see strong activity back. Transformation products have experienced as well a very positive year despite the currency effect and they've managed to grow versus the prior year, reaching EUR 435 million, which is 38% of total sales, increasing thus the penetration by 490 basis points. Growth in the region has been fueled by strong performance of Cash Today and banking correspondent initiatives. In terms of margins, pro forma EBITDA, which excludes the one-off impact of the EUR 50 million efficiency program carried out in the region in the last three quarters and other extraordinary items related to prior acquisitions, payments has reached 16.1% of sales. That is an 80 basis point reduction versus one year ago, fundamentally due to the Argentina normalization as well as the effect of currencies and the country mix. we believe this margin should expand into 2026. Turning now to Page 8. Europe accounts for 33% of group sales. Revenue in the region has reached EUR 662 million. That's a 1.4% or EUR 9 million increase over a year ago. This growth is backed on an organic positive 1.5% growth that has been slowly by receiving the accelerating quarter-on-quarter and that we believe will continue into 2026. The region experienced a minor 0.1% drop back from currency effect. We have to underline that this growth has taken place in a year where Spain and Portugal have seen modest 2% increases in GDP terms, and Germany, our biggest market in the region has experienced no growth. Transformation in the region now reaches 33% of total sales, a 10 basis point improvement over one year ago. The main contributor to this Transformation product growth continues to be Cash Today, which we believe still has a lot of room for growth from our expanded product range. When we look at margins, pro forma EBITDA, which excludes extraordinary positive impacts due to prior M&A payments, has improved by 15.6% to reach EUR 35 million and in relative terms, totals 5.4% of sales, 70 basis points better than in 2024. We're confident that on a pro forma basis, the margins of the region will continue to grow and will actively contribute to the company's more balanced growth and margin profile. We now turn to Asia Pacific, a region that now represents 9% of group sales, up from 7% in 2024. Sales in this geography have reached EUR 180 million, a significant 26.4% improvement year-on-year. It's particularly important to note that this growth has been propelled by a 21.7% organic growth, which continues strong across the region. Such a growth is backed from strong economies, a significant outsourcing still to be developed and an increasingly high adoption of our transformation products. However, as we've already seen in prior quarters, currencies have reduced our revenue by 8.1% in euro terms. They've been affected by the decline in both local currencies versus the U.S. dollar and U.S. dollar versus the euro throughout the year. Looking at Transformation. These products have grown by 53.9% to reach EUR 47 million in 2025. The penetration achieved is of 25.8% of sales, a significant increase of 460 basis points year-on-year. Especially noteworthy, considering the strong push of the core business. This growth has been driven fundamentally by the ForEx business. In terms of margins, as anticipated, EBITDA significantly improved to double the territory, reaching 10.4% of sales and EUR 19 million in absolute euro terms. Thank you for your attention, and now I'll turn it to Jose Antonio. José Antonio Lasanta Luri: Thank you, Miguel. I would like to now share our key sustainability-related development. Regarding the environment, I am glad to share our achievements in terms of decarbonization. We have reached our goal of reducing our carbon footprint by 8.4% versus a reference year of 2023, and clearly beating our yearly target of 1.7% reduction. This shows our commitment to reducing the impact of our business and the environment in an always economically meaningful manner without jeopardizing quite the opposite of our financials. As well, I am pleased to let you know that we have been ranked in Standard & Poor's 2026 Global Sustainability Yearbook, it is noteworthy to reckon that this list recognizes a select group of companies recognizing us in the top 15% amongst over 8,000 candidates for outstanding sustainability performance. Turning to our people. I'm very happy to share that we've been able to reduce our workplace accident frequency rate by 9% versus 2024 as a result of the multiple initiatives in terms of training and prevention we have invested in over time and to continue improving our team's safety, reflecting the above rate, we have launched a Road to Safety training targeted at our fleet teams taking into account that a large portion of our colleagues are in the logistics area and that this is where most accidents take place. We are sure that this initiative will have a very positive impact. Lastly, in the governance area, I am proud to share that we maintained the highest rating on the AENOR Good Corporate Governance index reaching G+++ rate, a level granted only to the best-performing companies. And as well, I want to share that almost 2,500 employees have achieved our corporate compliance certification that assures that we are a more robust and trustworthy company. Lastly, this year, we have improved in almost all key ESG ratings we are in. We can see particularly significant improvements in the S&P Global and MSCI ratings showing that third-party independent agencies ratify our efforts and achievements in the matter. We are sure that by taking care of our people by decreasing accidents, reducing our impact on the environment and improving our governance, we build a more sustainable company. And now I would like to summarize my main conclusions. 2025 has been a very demanding year in which we've been able to improve our bottom line profitability as well as continue to transform in an adverse exchange rate environment. Our business has weathered the normalization actions undertaken by the Argentina authorities as well at the dollar and other currencies devaluation. In this difficult environment, we have been able to both implement the efficiency program and capture growth and profitability in Europe. We have been showing a resiliently accelerating quarter-on-quarter improvement, while Asia continues to show a strong growth. We foresee these trends to continue into the future. Transformation has been at the forefront of our strategy where we are to focus on our four key families of solutions. Cash Today, ATMs, CORBAN and the ForEx business. Regarding them, we will continue to enlarge our offering and digitalize our portfolio. These efforts have resulted in improving our net profit by 3.3%, demonstrating our strong commitment to creating shareholder value and maintaining a strong shareholder remuneration while we reduce debt. In all, as said, 2025 and despite the evolution of currencies in Argentina's normalization, has been a transformative year for us. We have improved our bottom line, made our operations more efficient and continue to transform our company. We are sure that we are best prepared to face 2026, a year in which we are already working hard to continue delivering and where you should see an improved LatAm business and continued profitability and growth in Europe and a consolidation of our Asian performance. Thank you very much again for your attention. And now I would like to open the floor to any questions that you might have. Operator: [Operator Instructions] We will not take the first question from the line of Alvaro Bernal from Alantra. Alvaro Lenze Julia: I have three. The first one is regarding LatAm. We have seen it has suffered significantly this quarter with declines in organic growth. If you can explain a bit better the underlying behind this? Is it solely because of Argentina or Brazil is also suffering? And your view on this going forward into 2026, do you expect a recovery here? And also, if you can shed some light regarding the margins in the region, it would be very helpful. That's the first question. The second one is regarding investments. We have seen muted investments in both CapEx and leases this year. How do you see this going forward? Do you expect them to jump again as you renew, for example, opening stores for the ForEx business? Or if you can give us some color, it would be very helpful. And lastly, how do you see net debt for 2026? Do you have a specific target in mind? Leverage or whole number? It would be very helpful. José Antonio Lasanta Luri: Thank you, Alvaro. Going to your first question, it's true what you're saying. If we take out Argentina, the growth of LatAm has accelerated in the fourth quarter. So it's been mostly Argentina, I would say, 100% of the issue in the fourth quarter. How do we see it in the future? We see that is going to be an important improvement in Argentina back to the relative performance that was before year 2025. So we see margins stabilizing and getting to where we were in 2024. It's true that the mix is going to change in the mix of countries. So there will be some change in there, but there is going to be an improvement, and it's going to be an important improvement there in Latin America. Second question on CapEx. Again, it's true what you are saying. This year, we've been quite shy on the CapEx of ForEx. But this year, we are going to have a stronger boost where we have won two big airports, Frankfurt new terminal and JFK Terminal 1, Terminal 6. So we'll be investing on those two airports, and we'll keep investing on new retail branches. So there's going to be some boost in CapEx there on the ForEx business. At the same time, we are going to keep optimizing our CapEx in the rest of the areas. So I think we are going to see that there is going to be optimization on the -- what we call infrastructure CapEx. And we see some improvements there. But as you said, totally overcome by the CapEx we are going to undertake on the ForEx business. And on the third question, our commitment is to deleverage to keep bringing down the debt of the company. So we believe there is going to be a delivery on relative terms, but also in absolute terms as we have seen this year. This year has been mainly focused on three areas. And this year, I think it's going to be -- we are going to see deleveraging on banking debt as well. The bank also -- Yes. I think that's more or less the answer to your three questions. Operator: We will now take the next question from the line of Enrique Yaguez from Bestinver Securities. Enrique Yáguez Avilés: A bunch of questions about Argentina and then a couple of them [ other ] issues. Regarding Argentina, I don't know if you could give us what kind of organic declines suffered last year, how much are the Argentina worth over the total group revenue? In the first quarter, you see some signs of recovery. I mean, in the medium term, probably we will stabilize, but how is the situation now? Then on the restructuring plan announced in LatAm last year, I would like to know if all the costs have been already [ incurred ] or just provision and how would that cope with the recent labor reform announcing Argentina? If you could save some money or not [indiscernible] on this. Sorry, I was late at the conference, but I didn't now if you provided what was the net extraordinary impact of EUR 12 million in Q4 because I think on a gross basis, it could be higher here because probably more restructuring costs we are improving in LatAm. Thank you very much. José Antonio Lasanta Luri: Thank you, Enrique. Regarding your first question, in Argentina, there were three things that happened. The first one was a consumption came down because of the policies of the government, and although you see an increase on GDP of the country, the GDP growth has been mainly focused on the energy and our cultural sector. But the internal economy and the [ consumption ] is very depressed right now. Although the government has stated that this year is going to be a much better year. To tell you the truth, we have seen very small recovery. There's been some recurring but really small and not at such extent as government has stated. The second event that has happened is that the valuation has been much worse than inflation. So [indiscernible] more accounts of the valuation has been quite important. And then the third one has been the monetary policy restrictions that the government has put a constraint on the money that the banks have to hold that has been at 58% compared to 13% that is in Europe north of 58%. I think the government has said that we are going to open this year and they want to really make the internal growth, internal consumption growth much higher. And we are going to be very -- we are going to be expecting or looking forward to this very early. Although I think we have -- what has been really an achievement for us is that after some of the restructuring costs, we are now at the same relative terms than we were before 2025. So I think the country has done a tremendous effort in adjusting the cost structure, which is really difficult in our business. And really, the country has done very, very well on that front. Restructuring cost, it's true that it's been incurred like 90%, 95% of the whole program. So in February, we are going to do the last few weeks, but it's [ small bit ]. And why not in January? It's because non-January is a very strong month in Latin America and also a lot of people take holidays. So it's very difficult to adjust your last weeks during January and where we've done it during February, but everything is done in February. The plan is to have a payback of around 18 months. So we are going to see the -- all the savings, we are going to harvest the savings of this program during the year, we are going to see at the late part of the year, a very important kick back for the savings. And then the third question was about -- is we mainly -- some deferred payments that we have in some of the M&As. You know that whenever we do a transaction, we try to -- we record the business plan given by the sellers and normally is quite bullish. And there's been some adjustments on the deferred payments of [ the tail ] of the acquisition that we've done that we did in 2023 and then [ 2022 ]. Enrique Yáguez Avilés: [ The compensation growth from M&A ] José Antonio Lasanta Luri: Yes. Do you want to... Javier Hergueta Vázquez: Just to clarify, if you still have [ that ] it's basically the adjustment on the pending payments, which are recognized in our balance sheet. So as Jose Antonio was saying, we are typically recognizing it on the initial business case and there are typically some adjustments between that scenario and the actual performance, and this is reflecting that. So lower level of pending payments going forward in our balance sheet. Enrique Yáguez Avilés: Okay. And how much was the restructuring cost in Q4 in LatAm just to have the... Javier Hergueta Vázquez: So in Q4, we've undertaken EUR 3 million more of efficiencies programs in Latin America. So when you see the LatAm figures, I mean, in the adjustments, EUR 3 million come from the efficiencies program, EUR 3 million come from the M&A arena. Operator: We will now take the next question from the line of Joaquin Garcia-Quiros from JB Capital. Joaquin Garcia-Quiros: So the first one is in Europe, we've seen some recovery or acceleration throughout the quarters. Now the growth is almost up 3% for the fourth quarter. What can we expect for this year? Should we see this 3% more or less now as the trend going forward? Or was it just something specific for this quarter and Germany should continue to weigh down of that growth? And then for Asia Pacific, it's been growing fairly positive throughout this year. Should that growth continue? Or should we expect already a slowdown in 2026? And then lastly, assuming that Argentina recovers, would mid-single-digit EBITDA growth be achievable? Thank you. José Antonio Lasanta Luri: Thank you, Joaquin. How do we 2026 by region, as you said, I think the global business, we are going to see a growth of mid-single digits in terms of sales and some profitability enhancement above that. So I think that's the global picture. If we go by region, I think Latin America is going to improve, mainly because of Argentina. We are positive on that one because of the restructuring program. So we are going to see some earnings enhancing there. Then Europe, we are going to see some growth in the business. I think the 3% growth, I think, is going to be beaten this year. It's going to be a bit higher and also some earnings enhancing there. And in Asia, still a small region, but we are very positive on it. Indonesia is doing a fantastic job and also the Philippines, India -- we have seen a very strong growth there. And then I think the Australian issue that we have has been more or less solved. It will be completely resolved hopefully in June to September 2026, which will be signed a deal with the major customers for medium-term for medium term. So I think that's going to give us a lot of stability. And if we look at the lower part of the P&L, I think we are going to have also good news on the financial cost on the tax and the tax rate both in the P&L and in the cash flow because, as you know, in Argentina, taxes are paid -- made on previous year profits. So this year, our taxes have been -- our tax bill has been quite high for the profit that we have had in Argentina. So next year, we are going to have some tax bill cut because of that. So that will improve also our cash flow. So I think we are positive on the -- of achieving the mid-single digit growth in global terms then some earnings enhancing at EBITDA level has been a much better increase on the net profit level. I that's going to be more or less the summary. And this is going to be reflected on cash flow because of this tax bill that we just mentioned. So that's our -- and we will use this cash flow to deleverage a bit more. So this is more or less the summary that we have for 2026. Operator: There are no further questions at this time. I would now like to turn the conference back to Jose Antonio Lasanta, for closing remarks. José Antonio Lasanta Luri: Thank you very much for your attendance and for your questions, investing questions as always and we'll meet next year and as I said, I think we are very positive on 2026 because of the trends of the market. And because of the last issues on the industry that you know that yesterday, Brink's announced the acquisition of NCR. And I think this is going to be the confirmation of a strategy that we are seeing that CAD companies are going to take the lead and the forefront for bank ATM [indiscernible] of outsourcing that we are seeing in the market. So thank you very much for your attendance. Thank you very much. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Hello, everyone, and thank you for joining the PharmaMar Full Year Results 2025. My name is Gabriel, and I will be coordinating your call today. [Operator Instructions] I will now hand over to your host, José Luis Moreno, Head of Capital Markets and Investor Relations. Please go ahead. José Martinez-Losa: Thank you, Gabriel, and good morning to everyone, and thank you for joining us for today's PharmaMar Earnings Conference Call to discuss our 2025 Financial Results. On the call with me today are María Luisa de Francia, Chief Financial Officer; Luis Mora, Managing Director of PharmaMar; and Pascal Besman, the Senior Vice President of Strategic Development. After our comments, we'll open the floor for your questions. And before we begin, please note that certain statements made during this call may constitute forward-looking statements, and these statements are based on current expectations, and actual results might differ materially from those projected. A full safe harbor statement is available in the corporate presentation on our website and together with the press release and the results report issued this morning. We undertake no obligation to update these statements, except as required by the applicable law. All right. Well, I'm pleased to say that 2025 was a very strong year for the company with clear progress, both strategically and financially. Strategically, a key milestone in 2025 was the U.S. approval of Zepzelca as first-line maintenance therapy in October. And this, of course, represents an important step for patients and a meaningful catalyst for the business. Financially, we delivered very strong -- very solid performance. Revenues grew 27% year-on-year, reflecting strong execution and the increased scale of our business. Our top line growth translated into a significant step in profitability with EBITDA up by roughly 5x versus '24 and net income up 187% year-on-year. Importantly, we achieved these results ahead of the expected European approval for Zepzelca, which is granted, it should provide an additional tailwind to revenues and further reinforce our growth trajectory. And with that, I will hand over to María Luisa to walk you through the financials in more detail. And then Luis Mora will update you on our development plans for the years ahead. María Luisa? María de Francia Caballero: Thank you, José Luis. Good morning, and thank you all for joining us in the 2025 results conference call. Regarding the financial statements for the year just ended, we would like to highlight the following points. First, a substantial increase in revenue from all of the company's sources of income, sales plus 20%, royalties plus 4% and licensing revenues 66%. We expect this trend to continue in 2026 with growth in sales due to the potential approval of Zepzelca for Europe and also growth in royalties due to the approval of Zepzelca as a first-line maintenance treatment last October, which will increase sales for our partners in the U.S. in 2026. Another point is the maintenance of R&D expenditure at the same level as last year and in line with our expectations for next year with the projects we are involved in, which Luis Mora will detail below. We had also a slight increase in operating expenses, for example, in commercial expenses, where activities have been carried out to prepare for the eventual launch of Zepzelca in Europe in 2026. This increase has been -- this increase in expenses -- in operating expenses has been partially netted out by the European grants obtained its first the Sylentis project. All the above has led to EBITDA of EUR 68 million, approximately 5x that of the previous year, as José said before, and to a net profit of EUR 75 million. Finally, and also noteworthy is the generation of operating cash flow amounting to EUR 53 million. This has enabled us to close the year with cash and financial investment of EUR 168 million, while debt remains at similar levels to 2024. This financial situation enabled us to continue with our ongoing projects without any pressure as Luis Mora is going to explain right now, and I pass the floor to Luis Mora. Luis Capitán: Okay. Thank you, María Luisa. 2025 has been a great year for PharmaMar with significant milestones achieved for both patients and the company. We obtained the approval in the United States and Switzerland for Zepzelca in first-line maintenance non-small cell lung cancer. The compound was licensed to Merck for Japan and both the pivotal trials, LAGOON and SaLuDo trials continued successful according to schedule. We also submitted the registration dossier for Zepzelca in Europe for first-line maintenance non-small cell lung cancer and the compounds P54 and PM534 are continuing day-to-day development. The total revenue as María Luisa described it has grown by 27%. I would like to highlight the growth of Zepzelca in Switzerland and especially in France under the early use model with a 31% increase. This clearly demonstrates that Zepzelca is changing the treatment paradigm for the patients. I also want to highlight to increase Yondelis raw material sales to our partners with a 20% growth compared with '24 as well as the growth in Yondelis royalties in the U.S.A., which have more than doubled compared with 2024. This means that Yondelis continues to grow, being considered a standard treatment for soft tissue sarcoma. In Europe, where there are already 6 approved generic version of Yondelis, the unit sales have grown by approximately 4% compared with '24. This help us to introduce in the future lurbinectedin in leiomyosarcoma in first-line treatment. Regarding Zepzelca in the United States, the royalties have decreased by 12% compared with '24 for 2 reasons. One is the exchange rate Euro-U.S. dollar, which has had a negative impact 7.5% and another to enter a new competitor into the market. However, in this last quarter, we have seen a significant change that we expect that will continue to grow in 2026 with the approval of [indiscernible] in first-line small cell lung cancer maintenance therapy. Finally, looking ahead to the next 12 months, important milestones are on the horizon that will be transformative for the company. The European registration dossier for Zepzelca for first-line maintenance non-small cell lung cancer is currently under evaluation by EMA, and we expect the opinion likely in the first quarter of this year. If this is the case and given the European Commission time lines, we could begin marketing the product in some European countries in the second half of this year. In fact, our entire marketing, sales, market access, medical affairs, logistics team is working intensively on this. We expect it to grow in commercial expenditure in 30% over the next [ 2 ] years. The LAGOON trial for second-line treatment non-small cell lung cancer is expected the top line results in the second half of this year. If the results are positive in either arm where Zepzelca is administrated either as a single agent or in combination with irinotecan. It will lead to another registration dossier likely in the second half of this year for the second line, and this is the objective of the company to any patient with small cell lung cancer will have the opportunity to take lurbinectedin in first on the second line. The SaLuDo trial, which compares Zepzelca plus high-dose doxorubicin, Zepzelca plus low-dose doxorubicin against doxorubicin alone is expected to complete enrollment in the first half of this year ahead of the schedule. We expect the results in the first half of '27, and if positive, they will lead another registration dossier in 2027 with potential approval in '28. The other 2 products we have in the clinical development pipeline, PM54 has already reached the recommended dose in both infusion regimens included in the separated Phase I trials, and we expect it to show the data in the next ESMO Congress in Madrid in October as we have observed very manageable safety and promising efficacy. This encourages us to begin a very ambitious plan in 2026 with expansion as a single agent for different tumor types as well as initiating combination trial with another chemotherapy agent and immunotherapy. In fact, the FDA already approved the new IND for this combination trial with immunotherapy at the end of 2025. Similarly, PM534 is in dose escalation in 2 different Phase I trials with 2 different institution regimens, and we expect to begin expanding 1 of 2 regimens in different tumor types in the second half of this year. In summary, '25, we executed as planned and '26 will be a transformative year for the company with significant milestones, both commercially and in the development for our compounds. Now I pass across to [indiscernible] Thank you. José Martinez-Losa: Thank you, Luis. And well, with this, we conclude our speech today, and we open the floor to questions. Gabriel? Operator: [Operator Instructions] Our first question is from Joseph Hedden from Rx Securities. Joseph Hedden: It's been the first quarter since Zepzelca's label was expanded for first-line use. So 90 million sales in the U.S. Can you just tell us how that compares to your internal expectations? And perhaps any feedback that you've received from U.S. docs or any kind of usage metrics other than the sales that you may have? Pascal Besman: All right Joe, Pascal here. We're not going to tell you what our projections are and Jazz doesn't give you what their projections are. So unfortunately, not much that I can help you with. And in terms of inventory levels that you're asking, that's not something that we make public other than if there was a situation where there was a problem with inventory, then we would feel that would be material. But obviously, we were expecting to see an uptake after the October FDA approval in the first-line maintenance setting. That happened with a 13% quarter-over-quarter bump, which we're pleased to see. And we expect, personally, we as PharmaMar expect that to continue, as Jazz indicated on their call earlier in the week. Joseph Hedden: Okay. Fair enough. And then perhaps if I could have one on Yondelis. It was interesting to see that U.S. sales climbing again there after the NCCN inclusion. Do you expect that trend to continue through this year of having a much better year with royalties coming from J&J sales there? Luis Capitán: Yes. We expect that continues to grow if you compare '26 with '25. In fact, from the inclusion in NCCN guidelines, the combination of Yondelis plus doxorubicin in first-line leiomyosarcoma, the use of Yondelis is increasing dramatically, and we expect that to continue to grow in 2026. Joseph Hedden: Okay. And then perhaps if you could just reconfirm your expectations for generic entry for Yondelis in the U.S.? Luis Capitán: I don't know. This is not -- remember, it's J&J territory, it's not PharmaMar territory, then we don't know where they will potentially enter the generics. So we don't know. I can advise you not -- in principle, not in 2026. Operator: Our next question is from [ Rowan Ropali ] from Santander. Unknown Analyst: Can you hear me? Luis Capitán: Yes. Unknown Analyst: Okay. Perfect. So I have a few questions. The first one is on the potential approval of Zepzelca in the first-line maintenance setting in Europe. Are there any updates on the pricing negotiation process that we should be aware of? And have you already initiated discussions with the relevant national authorities in key European markets? The second one was concerning the M&A and in-licensing. How is the process progressing at this stage? So should we expect any concrete developments or announcements this year? And that would be everything. Luis Capitán: Okay. Thank you very much. As I said in my speech minutes ago, we expected accordingly the calendar from the EMA opinion at the end of this quarter for first-line small cell lung cancer maintenance therapy. That is we expected. And then accordingly, the European Commission time lines, they have 2 months after the EMA opinion to send us the authorization for commercialization in this territory. This is the time line. Regarding the pricing, the procedure in all the European countries, you can start the submission dossier for pricing and not before the EMA opinion because at the end of the day, you negotiate the pricing and reimbursement from one particular label. And the label is included in the EMA opinion, then you can negotiate before you have this label, okay? But in fact, this is all the PharmaMar team regarding this matter as working more than 1 year ago. Then in order to be ready, the dossier for submission immediately after the EMA opinion. And regarding the licensing here, okay, we can't disclose the [indiscernible] and the process. We have some options in the table. And when we will arrive some type of agreement, we will disclose. Operator: We will now move on to text questions. So I will hand over to the management team. Please go ahead. José Martinez-Losa: Thank you. Now we have some written questions that we received. And we can start with these ones about Zepzelca. The first one says, now that the FDA has approved lurbinectedin as a first-line maintenance therapy for small cell lung cancer, could we expect significant increase in U.S. royalties by 2026? Luis Capitán: Yes, that is what we expected in the second line, you compare with the first-line maintenance therapy. First of all, the number of cycles in the IMforte trial, if we compare with the basket trial, is quite a double and it's about 30% of the patients potentially in this disease. Then we expect the royalties will be growing across 2026. José Martinez-Losa: We have another question about some regulatory issues also regarding with Zepzelca. Could you please confirm whether IMforte has been officially approved in Uruguay and Ecuador as mentioned by [ Adrian ]. Luis Capitán: Yes, Uruguay was approved in the last quarter 2025 and Ecuador in this year, January. José Martinez-Losa: We have another question also in regulatory issues. As the dossier for IMforte being submitted in the Japanese authorities for approval? Luis Capitán: Well, I want to remember it's not about territory. We license the drug to Merck, and this is the Merck task. And when Merck decide to disclosed or not, this process is a Merck decision. It's not PharmaMar decision. José Martinez-Losa: Okay. More about pricing. When do you anticipate receiving reimbursement for IMforte in Switzerland? Luis Capitán: Well, we are in the negotiation process actively. This is a normal process. We expected in the middle of the year, finalize this process in order to have the price and reimbursement for first-line maintenance therapy. But I want to remind you that from the commercial point of view, we are already selling in first line, but we're waiting for final pricing and reimbursement. José Martinez-Losa: So in that regard, there's another question of the same person that he asked about if you could say anything about the pricing that we have in Switzerland for [indiscernible]. Luis Capitán: No, it's in the negotiation process. You can't disclose that. José Martinez-Losa: Okay. All right. We have other questions about other molecules in the pipeline, PM54. So the FDA has approved IND for the new Phase I/II of PM54 with immunotherapy since the trial targets multiple tumor indications, could we expect to include several immunotherapies as well? Luis Capitán: Well, we are in the decision process when we will start the trial, we will announce. We have several options like in the synergistic effect is already demonstrated with this type of compounds. We have several options, and we will start the trial, we will disclose, okay? Could be atezolizumab, pembrolizumab, durvalumab, et cetera, et cetera. José Martinez-Losa: In this regard, there are also questions about what's the time frame when we could start. You've mentioned that we'll start this year. What can we expect about starting point and endpoint? Luis Capitán: Yes, we are already prepared every seeing the protocol. We already contacted with the centers to start the trial, and we expected to start the trial in the first half of this year. José Martinez-Losa: All right. We have a question about Sylentis. And if you could provide any update on SYL1801 and specifically, is the Phase Ib trial expected to start surely. Luis Capitán: Well, when the SYL1801 was disclosed the data, the team are still analyzing the data. They have worked so hard in the preclinical setting in order to be focused in the next trials in some subtype of DCC. And when we will start the trial, we will announce. We are working on that. José Martinez-Losa: Thank you. We're receiving more questions. Here's another one. R&D investment decreased from EUR 103 million to EUR 95 million this year. Does this reflect a natural tailing of late-stage trial costs? Or is a strategic decision to be more selective in early-stage compounds like PM534, PM54? Luis Capitán: No, this is a normal one. When you have several Phase III ongoing or you finalize the Phase III, the investment in R&D are down, in fact, given the Phase III ongoing. But according to María Luisa's speech, we expect the similar numbers in 2023 than 2025, but this is the major reason. José Martinez-Losa: Okay. We have another one about Zepzelca. With the FDA approval of Zepzelca in combination with atezolizumab, how does management expect this change in treatment paradigm to impact the long-term peak sales estimates compared to the previous second-line monotherapy use? Pascal Besman: Well, to echo what Luis said recently, maybe I'll add a little bit more. Out of 100 patients who are diagnosed with extensive stage small cell lung cancer, about 95% are treated in first-line induction. About 75% have been seen to be treated in first-line maintenance, about 50% to 60% in second line. So right away, you can see by having the first-line maintenance label, there are more patients in the pool. In addition, as Luis also mentioned, the number of cycles that are seen on a mean or median basis is about double from 4 to 8, moving from second line to first line. And a third key point is to consider market share between atezolizumab and durvalumab, which are both approved insofar that these 2 drugs are widely seen as Coke and Pepsi, especially in small cell interchangeable duopoly. And therefore, if atezo plus lurbinectedin is better than atezo, it's seen that atezo lurbinectedin is better than durva. In addition to that, in terms of market share potential, atezolizumab has a version that's been approved in the U.S., U.K. and Europe and Switzerland of a subcutaneous, whereas durvalumab does not and will not have one. So with all that said and with the caveat that we're not making predictions that Jazz hasn't themselves made, we expect sales to be improved starting this year as they were in the last quarter after the first -- the approval in October. José Martinez-Losa: Thank you, Pascal. We have received -- talking about Jazz, we have received some other questions about the patent situation in the U.S. and we cannot answer these questions. I guess these are more questions for our partner, Jazz, who's doing a great job in the U.S. The final question here says the company spent EUR 34 million on share buybacks in '25. Given the cash position, how is management balancing further buybacks against potential M&A or licensing opportunities to diversify the oncology portfolio? I'll take this one. We do not -- I mean, from the company, we do not see either doing one or another. I mean the fact that we're doing share buybacks program does not mean that we cannot consider, as Luis has mentioned now, in-license deals or any other deals. So we could do both, and we're happy to look at everything. Talking about share buybacks, if we're going to do further buybacks, as you know, we decide that on a yearly basis, same as the dividend policy. I mean, from our perspective, from the company perspective, our first priority is investment in R&D. And once we've covered all that and we have room for more stuff like dividend increase or the share buyback, then we decide on the year. But again, the fact that we do additional share buybacks, if we do it or whatever, does not mean that we're not going to consider in-license agreements or M&A or any other deal. And I think these are all questions that we received in written. So in summary, just to wrap up, our 2025 results demonstrate robust growth driven by rising Zepzelca revenues and a meaningful advance across our clinical development portfolio. And in addition, we expect a strong flow of important news in the near term. And with this, we conclude our call today, and we would like to thank you all for joining us and Gabriel. Operator: Thank you. This concludes today's PharmaMar Full Year Results 2025. Thank you for joining. You may now disconnect your lines.
Operator: Greetings, and welcome to TeraWulf Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. John Larkin, Senior Vice President, Director of Investor Relations. Thank you. You may begin. John Larkin: Thank you, operator. Good afternoon, and welcome to TeraWulf's Fourth Quarter and Full Year 2025 Earnings Call. Joining me today are Chairman and CEO, Paul Prager; CTO, Nazar Khan; and CFO, Patrick Fleury. Before we begin, please note that our remarks today may include forward-looking statements. These statements are subject to risks and uncertainties, and actual results may differ materially. Words such as anticipate, expect, believe, intend, estimate, project, could, should, will and similar expressions are intended to identify forward-looking statements. For a discussion of these risks, please refer to our filings with the SEC available at sec.gov and in the Investor Relations section of our website. We will also reference certain non-GAAP financial measures. Reconciliations to the most comparable GAAP measures are available in our earnings release and filings. With that, I'll turn the call over to our Chairman and CEO, Paul Prager. Paul Prager: Thank you, John, and good afternoon, everyone. 2025 was a defining year for TeraWulf. We said we would transition this company into a scaled power-backed AI infrastructure platform, and we did. Our strategy is simple and disciplined, control energy advantaged sites, engineer infrastructure around power and contract long-term credit-backed AI capacity. Everything we did in 2025 supports that strategy. First, we acquired 100% of Beowulf Electricity & Data, eliminating related party complexity and fully integrating power generation expertise into our platform. In today's market, power is the gating factor. If you don't control power, you don't control your destiny. We do. Second, we secured long-duration site control at Cayuga, up to 400 megawatts at a retired coal facility with real grid infrastructure already in place, brownfield, power backed, scalable. That's our model. Third, we signed a 450-megawatt lease with Fluidstack supported by Google's credit. That was a platform-defining deal. It validated our model, our execution capability and ability to contract at scale. With Google's warrants, it will be our largest shareholder. That alignment speaks for itself. Fourth, we replicated the model in Texas through the Abernathy joint venture, proving portability across power markets. And fifth, we executed the WULF Compute and Flash Compute financings. These transactions demonstrated that contracted credit-enhanced AI infrastructure supports scalable and repeatable capital structure. Operationally, we delivered WULF Den and CB1, began recording HPC revenue and have now delivered CB2A for Core42. We are building, delivering and contracting simultaneously. And since year-end, we added approximately 1.5 gigawatts of additional power back capacity in Kentucky and Maryland. Now let's talk about what actually differentiates us, power and execution. The AI build-out is not constrained by GPUs. It is constrained by power, interconnection, transmission and increasingly new generation. That's why Morgantown matters. Morgantown is not just another data center site. It is a former coal generation facility in the Washington, D.C., Northern Virginia corridor, one of the most power-constrained data center markets in the world. Our Phase 1 vision includes approximately 500 megawatts of new dispatchable generation, 250 megawatts of battery storage and 500 megawatts of data center load, followed by a similar Phase 2. Critically, the site is being engineered to operate as a net generator to the state. We are not just consuming capacity. We are adding it in constrained markets that is the only sustainable model at scale. This industry is moving towards integrated bring your own generation campuses. We are well ahead of that curve because we are fundamentally a power company that builds and operates digital infrastructure, not the other way around. We know how to permit generation. We know how to build generation. We know how to operate generation. We understand grid behavior, and we know how to integrate generation, storage and compute in a way that works for customers and regulators. There are very few teams that can do that credibly and at speed. We are premier among them. Turning to Kentucky. Demand is extremely strong. We are engaged with every major hyperscaler and several large AI compute platforms. A data room is open, diligence is active. Conversations are robust and substantive. This week, we met directly with Governor, Beshear and state leadership. The alignment at the state and local level is clear and constructive. Kentucky understands the economic and strategic import of power backed AI infrastructure. This is 480 megawatts, a campus with immediate power availability, expansion potential and strong state support. We are excited and highly confident in the long-term value of this asset. While we execute on the platform, we are consistently evaluating a constant pipeline of additional opportunities. We review hundreds of sites and most do not meet our standards. We are disciplined around 4 key elements; power control and durability, scalability in 250 to 500-megawatt phases, signed credit-backed contracts, we do not speculate. And fourth, capital efficiency. We turn sites away all the time. But when we do find one that meets these criteria, we move decisively. Importantly, we already control the sites necessary to deliver our targeted 250 to 500 megawatts of contracted capacity annually through the end of the decade. The runway is in place. Growth from here is execution. Finally, we are building the team to match the ambition of the platform. We recently added a senior data center construction lead for Meta and have strengthened origination, project management, commissioning and cybersecurity capabilities. This business is one in the trenches of engineering detail, construction discipline and operational rigor. We are staffed accordingly. So in summary, the strategy is clear. The sites are secured. The capital is in place. Customer demand is strong. The team is built. Now it is about disciplined delivery, turning contracted megawatts into energized capacity and durable recurring cash flow. With that, I'll turn it over to Nazar. Nazar Khan: Thank you, Paul. Let me start with delivery and risk compression. WULF Den and CB1 were delivered in the third quarter and generated revenue throughout the fourth quarter. CB2A is operational and CB2B is expected to be fully online in March. By the end of the first quarter, all Core42 capacity will be energized and revenue producing. Following contract execution, Core42 requested incremental fit-out enhancements. We adjusted sequencing accordingly. The monthly recurring charge was revised, no penalties were triggered and revenue commencement remains aligned with the customer's deployment schedule. Turning to the Fluidstack buildings. CB3 is expected to deliver in mid-May. After signing, the tenant finalized certain design optimizations, which we incorporated without changing building footprint or lease economics. The associated revenue timing impact has been incorporated into the financial model. Importantly, CB4 and CB5 were designed collaboratively with the tenant from inception. These buildings reflect a fully standardized, repeatable design and represent the majority of contracted WULF compute capacity. Several structural improvements materially reduce execution risk. First, electrical redundancy has been optimized and standardized. Second, trade stacking and sequencing have been refined to minimize rework. Third, long lead equipment was procured after final design alignment. And fourth, mechanical and electrical systems now follow a repeatable installation model. Execution risk declines as design standardizes and CB4 and CV5 reflect a mature optimized build. Both buildings remain on schedule with targeted lease commencement dates of third quarter and fourth quarter of 2026, respectively. Through design optimization, we increased critical IT capacity from 162 megawatts to 168 megawatts per building without impacting the base construction budget. That incremental 12 megawatts across the campus is expected to generate approximately $200 million of additional lease revenue over the initial term. Finally, Abernathy, our joint venture remains aligned with its fourth quarter 2026 lease commencement and continues progressing under fixed EPC structure, which further limits construction cost variability. Execution requires managing scope, timing and cost in real time. We have incorporated adjustments transparently and remain focused on disciplined delivery. Large-scale AI infrastructure requires active management of scope, schedule and cost. We have incorporated refinements transparently, preserved economics, increased capacity and maintain budget integrity. Execution remains disciplined and on track. With that, I'll turn it over to Patrick. Patrick Fleury: Thank you, Nazar. The second half of 2025 was transformational for the company. We secured over $12.8 billion of HPC lease agreements, executed $6.5 billion of debt and equity-linked financing and materially strengthened our balance sheet liquidity while carefully managing and minimizing dilution. Let's begin at a high level before diving into the financial details. We are a business in transition and executing on rapid growth. The 2025 results still reflect a meaningful contribution from Bitcoin mining and its inherent volatility, including commodity pricing and complex network difficulty dynamics. Over time, that volatility will decline as long-term credit-enhanced HPC revenues become the dominant driver of results. Importantly, while mining introduces revenue volatility, its flexible load profile has been strategically valuable at Lake Mariner, supporting demand response participation and power cost management. Mining is not a long-term growth focus, but it has enabled the transition. The 2025 results of operations reflect that transition in motion and the balance sheet reflects that we have the capital structure to execute. In the fourth quarter of 2025, revenue was $35.8 million, down from $50.6 million in 3Q '25, primarily driven by lower Bitcoin production. Importantly, HPC lease revenue increased to $9.7 million in Q4, up 35% from $7.2 million in Q3. For the full year, revenue increased 20% to $168.5 million from $140.1 million in 2024, with digital asset revenue of $151.6 million and HPC lease revenue of $16.9 million. We commenced HPC leasing in July 2025 and have energized 18 megawatts of critical IT capacity as of year-end. As additional buildings come online, revenue mix will continue shifting towards stable contracted HPC revenue. Cost of revenue, exclusive of depreciation increased 10% from $17.1 million in Q3 to $18.9 million in Q4. Demand response proceeds recorded as a reduction in cost of revenue decreased [Technical Difficulty] million in Q3. For the full year, [Technical Difficulty] million in 2024, primarily due to higher realized power prices. Demand response proceeds also increased year-over-year from $8.6 million in 2024 to $17.7 million in 2025. Operating expenses increased as we scaled the platform to support HPC deployment. Quarter-over-quarter operating expenses rose to $8.8 million from $4.5 million. Full year operating expenses increased to $19.7 million in 2025 from $7.6 million in 2024, reflecting staffing and operational readiness. For context, TeraWulf finished 2024 with under 100 full-time employees and will exit 2026 with close to 300 full-time employees. Let me address the HPC leasing segment profitability as presented in Note 19 of our 10-K. The as-reported annual segment profit margin is approximately 42% versus our long-term guidance of approximately 85%. That difference is driven by 3 factors; first, $1.2 million of tenant fit-out revenue and associated costs during 2025. PFO carries a modest margin as provided for under the HPC leasing. Second, $4.1 million of development and pre-revenue operating costs; and third, partial period revenue contribution as buildings [ ramps ]. Adjusting for those factors yields approximately 77% segment profit margin in 2025, which is consistent with ramp expectations and converging towards our 85% steady-state margin guidance as utilization stabilizes. SG&A expense also increased as we scaled the platform to support HPC deployment. Quarter-over-quarter, SG&A expense rose to $66.6 million from $16.7 million. Full year SG&A expense for 2025 totaled $147.8 million from $70.6 million in 2024. After adjusting for stock-based compensation, SG&A increased from $39.7 million in 2024 to $94.5 million in 2025. This increase is primarily attributable to an incremental $47.5 million of new hires, strategic growth performance and milestone-based employee compensation in 2025, reflecting the notable scale of execution achieved during calendar 2025. Adjusting for this item results in total SG&A of approximately $47 million in 2025, in line with our prior guidance of $50 million to $55 million. Depreciation increased to $88.6 million in 2025 from $59.8 million in 2024, reflecting infrastructure placed into service and accelerated depreciation of $19.6 million associated with certain mining assets transitioning to HPC use. Interest expense in Q4 was $62.4 million compared to $9.8 million in Q3, and we recognized interest income of $31.5 million in Q4 compared to $4.1 million in Q3. Annual interest expense for 2025 and 2024 was $80.2 million and $19.8 million, and we recognized interest income of $39 million and $3.9 million, respectively. The increases in net interest expense were expected following our capital raises at TeraWulf and WULF Compute in the second half of 2025. Actual cash interest paid during Q4 and calendar year 2025 was $6.9 million and $13.9 million, respectively. Change in fair value of warrant and derivative liabilities in 2025 was a loss of $429.8 million, primarily related to the Google warrant. This is a noncash loss and therefore, does not affect our liquidity. Equity and net loss of investee net of tax for 2025 was $4.1 million, which represents TeraWulf's 50.1% share of the net loss of the Abernathy Joint Venture, which was formed in October 2025 and has not yet commenced operations. Our GAAP net loss in 2025 was $661.4 million compared to a net loss of $72.4 million in 2024, with the increase primarily driven by noncash fair value adjustments related to the Google warrant and noncash depreciation. Our non-GAAP adjusted EBITDA in 2025 was negative $23.1 million, down from positive $60.4 million in 2024. As a reminder, these results are inclusive of significant increases in SG&A and operating expenses over the past 12 months as we invest heavily in our HPC business. Turning to the balance sheet and liquidity. As of December 31, 2025, cash and restricted cash totaled $3.7 billion. Total assets amounted to $6.6 billion, with total liabilities of $6.4 billion. Regarding liquidity, as detailed in our fiscal year-end 2025 investor presentation on the slide titled Capital Structure. As of January 31, 2026, the HoldCo parent entity had approximately $500 million of available cash or approximately $300 million pro forma for the Kentucky acquisition announced on February 2. Regarding project level capital positions and construction progress, both WULF compute and Abernathy are fully funded through substantial completion with long-term fixed rate financing, eliminating construction funding uncertainty and reducing reliance on near-term capital markets access. Importantly, we do not anticipate the need for additional equity to fund our currently contracted development. As of January 31, 2026, WULF Compute had approximately $3 billion of gross cash or $2.6 billion net of debt service reserve and interest-earning construction accounts, with $850 million of CapEx spend complete and $2.38 billion remaining. That leaves approximately $200 million of cash cushion, which is incremental to the substantial contingency embedded in the financing structure. As Nazar noted, schedule adjustments resulted in approximately $16 million less projected revenue in years 2025 through 2026. However, design optimization has increased capacity from 162 to 168 critical megawatts across CV4 and CV5, generating approximately $200 million of incremental revenue over the initial lease term. The net effect improves projected cash flows and reduces expected debt and maturity by approximately $45 million versus prior projections. Finally, with regard to the Abernathy JV, as of January 31, 2026, the JV had approximately $1.5 billion of gross cash or $1.2 billion net of debt service reserve, interest during construction, letter of credit and HoldCo LockBox accounts, with $268 million of CapEx spend complete and $1.1 billion remaining. That leaves approximately $70 million of cash cushion at Flash Compute with a further $100 million liquidity reserve at the parent JV, supported by a $1.35 billion lump sum EPC contract with [indiscernible]. With respect to Kentucky, we have proposals in hand for secured loan facilities to fund pre-lease development to preserve HoldCo parent liquidity. Demand for near-term power remains strong, and we are targeting 480 megawatts online in the second half of 2027. We do not build on speculation. In summary, 2025 reflects a business transitioning from volatile Bitcoin mining revenue to stable contracted HPC revenue. Mining has strategically supported that transition. Contracted HPC revenue is ramping, liquidity and contingency are strong. With that, operator, we are ready to take questions. Operator: [Operator Instructions] Our first question comes from Mike Grondahl with Northland Securities. Mike Grondahl: First, I just wanted to start with Kentucky. That site sounds like the reception has been strong. Could you give us a few more details on the site and what an ideal customer or lease would look like there? Paul Prager: Mike, this is Paul Prager. It's a fantastic site. This was the site of a former smelter. It's at a transmission super highway. Multiple utilities can service the property. What was most compelling about it, was its central location and the immediate availability of power in scale. Demand for the site is extremely strong. Our data room is open. Every major hyperscaler and several large AI compute platforms are doing diligence. The conversations to date have been substantive with some written term sheets already coming over the desk. Earlier this week, I was down in Kentucky. I met with Governor, Beshear and state leadership. The alignment at the state and local level is clear, very constructive, very, very, very pro-business. The importance of this project for the local community, particularly the public schools, which Kentuckians are super proud of is massive. We held a community info session 2 nights ago. We had a job fair yesterday. We filled the auditorium and then some. We're extremely excited and confident in the long-term value of the asset. As Patrick has said from day 1, we're all focused on the best financial credits to be our long-term customers. I think we've operated that way in the past, and that's the message going forward. I think you'll see a world-class credit as our next customer for what we're hoping to be a 10- to 15-year deal. I think we'll see that deal happen pretty soon. I don't want to give you a drop dead date, but we're in very, very active and substantive discussions. Mike Grondahl: Great. And then secondly, the Maryland site, seems like a lot of potential up to 1-plus gigawatts, but a little bit more complex. And kind of playing into what you guys have talked about, bring your own power, how does that play into some of TeraWulf's strengths? Paul Prager: Sure. Just to be clear, Chesapeake Data, it's about the power and load differentiation. It's a gig site with certainly a gig data center load capability, 500 megawatts of battery storage capability. It's a former coal generation campus. It's in the Northern Virginia corridor, which means prices are exceedingly competitive. It's designed to be a net contributor to the Maryland grid. It's very well supported by Governor Moore and MDE. Again, both Maryland and Kentucky, by the way, have very sophisticated brownfield programs, which make it really easy for a guy like us who's been around the block and owned and operated coal-fired power plants shutting down, mitigated them, did everything the right way. These 2 states have very, very progressive programs on how we do that at commercial feasibility. Listen, the market is moving to bring your own generation. We said that a year ago. In December, Alphabet bought Intersect for almost $5 billion. In January, Microsoft raised dedicated generation as part of their 5-point infrastructure strategy. President Trump in January floated the notion that PJM emergency auctions needed to incentivize new generation. New generation projects would go to the top of the queue for interconnect. And then just the other night, in the State of the Union, the President stated data centers need to build and fund their own generation. So that's where the world is going. We have a real and growing power shortfall. Morgan Stanley says potentially 47 gigawatts, 2025 to '28. The hyperscalers are openly stating that power is the binding constraint. Look at anything recent public commentary by Colette Kress, NVIDIA's CFO, Sundar, Alphabet's CEO; certainly Jens Huang, NVIDIA's CEO. I mean it's all about we need power. So delivering generation alongside that load solves the problem. We could bring incremental megawatts to the grid or the system, dispatchable generation using CCGTs, not just bridging power. And we have a history of partnering with grid operators to solve reliability and adequacy challenges. What's our core competency? We've been talking about this. This is the only team out there. For 25 years, we have been developing, building, renovating, rescuing generation, 6 gigs of power generation experience on this team together on this team, it's been over 25 years. We have deep expertise in siting, interconnection, generation development. And that's why we could go and take on a project like Morgantown and have the support that we can from both the local and state communities as we pursue this. We're really excited about Morgantown. It's a big job, but it fits into our schedule. And again, we've told the world we're 250 to 500 incremental megawatts of data center load every year, and this fits right in. Operator: Our next question comes from Tim Horan with Oppenheimer. Timothy Horan: Do you think the pricing and terms and conditions in Kentucky can be materially better than what you've done in the past? And the construction schedule seems pretty ambitious. Do you have the labor and all the equipment you think you'll need and, I guess, the permits to get it done? Paul Prager: So I think I'll go first and maybe Nazar, you can go second. In terms of the labor, yes, Kentucky is a fantastic -- it's just a fantastic place. You have not only the construction expertise and the trades expertise, but you got people that really want to work. We brought on for that job Fluor, which I consider to be a world-class contract party. We've dealt with them in the power space for a long time. They have relationships along in our C-suite for many, many years at every level. We are already ahead of the curve in sort of procurement. We have a proven design that our hyperscaler customers really like. And we think because it's immediate available power, we don't think -- we know because we've got this very robust conversation going on right now with folks that want to come in and be our customers there for competitive pricing. Naz? Nazar Khan: Yes. And just to add to what Paul said. As Paul said, we brought in a Fluor on the EPC side. So we're already hitting the ground running with respect to the overall development of the project. And so the time lines that you see for the second half of '27 are reflective of ongoing and meaningful discussions already with the EPC. So that's -- so we feel pretty good about the overall time line. The other big component is gathering the labor that's going to support the project as well. And so there have been efforts already underway for both the mechanical, electrical and civil scopes to get the requisite labor to support the project as well. So that date is informed by quite a bit of discussion that we've had with Fluor, who's our EPC as well as the work that we've done on site since the acquisition. In terms of just the overall economics, I think we've said these on prior calls, we really think about these projects on an unlevered yield basis. And so if you look at where we've been historically, we think we'll be in that ZIP code or maybe better over time. But again, as we think about the overall economics of the project, we're always kind of zeroing in on what's the unlevered yield that we're developing at and pushing to kind of maintain and continue to increase that as well. Operator: Our next question comes from Chris Brendler with Rosenblatt Securities. Christopher Brendler: Congratulations on the progress here. I wanted to ask on couple of -- on the power side. First, I noticed that the PUE across all these sites is right in line with the initial deals at 1.25. And you mentioned in the slides that that's best-in-class. And my understanding was there were certain aspects of like Mariner and Cayuga that drove that 1.25, but maybe I'm mistaken, it seems like it's standard for TeraWulf to operate at that incredible efficiency. Can you just give us a little color there on why you're able to sort of runcurles around your competitors when it comes from a PUE standpoint? Nazar Khan: Sure. Chris, it's Nazar here. So there's a couple of factors in that. As you noted, one is just the geographic location. And again, as we are more in the northern half of the country versus southern half of the country, there are benefits that we have from an ambient conditions perspective with respect to the design and being able to meet that peak PUE. You'll see the Abernathy site is at 1.4 PUE, again, which is reflective of just the geographic location. In addition to that, we have invested heavily kind of on the cooling side as well. And so we're giving ourselves extra room on the design that we have on cooling as well to maintain that lower PUE. So in general, as we think about where we are for generally kind of in the northern half of the country where we have these off seasons during kind of the winter and the spring and where the summer isn't sustained heat, we think we can kind of maintain that 1.25 PUE. Christopher Brendler: Okay. Was there also a redundancy aspect to it? Are you still not using big diesel generators in these sites? Nazar Khan: That's correct. And again, that gets back to these brownfield sites. So typically, you're seeing us play at brownfield industrial sites. And the way to think about it is when the smelter was there, there was a significant investment to design and build a smelter at that site. The last thing that Century wanted was a single point of failure on power coming into the site, no different than a data center, right? So there's 5 different lines coming into that site, which provides a considerable amount of kind of redundancy. So when we look at sites like that, we see that there are multiple independent pathways for the delivery of power, which obviate the need for on-site kind of backup generation. So again, Morgantown, similar. It used to be a former coal-fired power plant, that 1.5 gigawatt coal-fired power plant did not want to have a single point of failure and getting power out. We're utilizing that same system now to kind of bring power back in. So the big benefit with these industrial -- former industrial brownfield sites is that usually, they have that built-in redundancy that data centers want as well. Paul Prager: I just wanted to thank for that question regarding PUE because we put a page in the deck called critical IT capacity, the metric that matters. And what we're going to be trying to do and really sort of ensure the Street and our retail shareholders understand gross megawatts measure scale, but it's critical IT megawatts that measure monetized execution. And we think of TeraWulf as an execution story. So we're really going to be reporting more in the context of critical IT as opposed to just gross megawatt capacity. We think it's far... Christopher Brendler: Great. One more quick question is the 0.5 gig of battery power sort of caught my eye. Can you just give us a little color on why and what that means? Nazar Khan: So as we're adding these large loads and if you see in the statements that we've made, we want the site to be overall a net supplier of energy back to the grid and to the state. So having that battery storage allows the load at the site to operate in a way [Audio Gap] really impacting peak demand. And so it's kind of a critical peak demand shaver, which we think, again, provides -- makes the loads that are there assets back to the grid rather than burn it. So we think the right composition is about 0.5 megawatt of storage per megawatt of load. And so that's why you see in each of the phases at Morgantown for every megawatt of load, there's about 0.5 megawatt of battery storage. Christopher Brendler: That's great. Congrats on 2025 transformational year, looking forward to 2026. Operator: Our next question comes from Nick Giles with B. Riley. Nick Giles: Guys, I want to congratulate you for the progress across all fronts. Maybe just following up on that last one, you mentioned the battery storage, and there just appears to be some different moving parts at Chesapeake. So can you just give us a sense for how CapEx could differ from Mariner and what you're doing to really derisk that development? Nazar Khan: Sure. So when we think about -- as we think about the composition of Morgantown, as you noted, there's a few different legs here versus what we're doing at Lake Mariner or other sites. On the data center side, we're in that $8 million to $10 million per megawatt range for CapEx. And so that's what we've done at Lake Mariner, at Abernathy. And as we look to contract Kentucky, we're in that same range. In Morgantown, now, we're adding 2 incremental legs. One is the power generation side and the second is the battery storage. On the power gen side, we're in that -- we're going to be somewhere in the $2 million to $3 million per megawatt range for the fully delivered power plant. Part of that will be time. Part of that will be the type of turbines that we are deploying, and we're working on a number of different alternatives for that site as we speak. But that will be around $2 million to $3 million per megawatt for that capacity. And there's about another million or so kind of dollars per megawatt on the critical IT load. So kind of the battery storage is usually kind of priced in a megawatt hour basis. But when we translate it back to just kind of the overall load, that's around another $1 million. And so when we think about what we're offering back to our customer, it's the data center that they're already paying for in other deals that we have, that $8 million to $10 million per megawatt range. In addition to that, now it's the components on the generation side, the $2 million to $3 million per megawatt on the dispatchable gas-fired generation and then another $1 million or so on the battery storage. So all in around $13 million to $14 million per megawatt on a fully loaded basis. What that does kind of embedded within that, we will be seeking to kind of charge that full cost back in the capacity payment back to the underlying customer. So they'll effectively now be long the value of the generation as well as long the capacity in the data center. With the grid connectivity, we will have now kind of the ability to both bring the power in from the grid as well as generate more than enough power to offset that load kind of going out. And so on a net basis, we think over time, the net cost of power that the tenant will realize will be meaningfully lower than just a grid solution only. So kind of on the ins and outs, again, there'll be kind of paying a capacity payment for all of the CapEx, both on the gen side as well as the data center. But they'll be belong kind of the value of that gen -- the value of that energy, and that will be offset by whatever they pay for the power coming in. So net-net-net, we think it's a very strong position. It gives the tenant, a, a quicker path to scale up in scale, that gigawatt is a large amount. And b, we think over time, their net cost of power will be meaningfully lower than a solution that's relying on the grid only. Nick Giles: Nazar, I really appreciate all that detail. I'm sure others will have follow-ups. I just wanted to squeeze one in on the regulatory side, I think you still need approvals from FERC at Morgantown. Can you just walk us through what the timing looks like there and how we should think about what you ultimately need to get across the finish line from a third-party perspective? Nazar Khan: Yes. It's pretty pro forma approval process that we've done countless times. It happens anytime you transfer an existing power facility to another party. We're certainly -- they tend to look for things like are you monopoly in the area, stuff like that. We are not. We consider this to be just pretty routine. We would expect FERC approval within 3 to 6 months. Operator: Our next question is from Stephen Glagola with KBW. Stephen Glagola: Could you update us on any remaining zoning requirements or state and local approvals needed to move forward with the Hawesville data center campus? That's one. And then two, separately, while Cayuga has already received zoning approval, are there any additional permitting or regulatory steps still outstanding for that site? Paul Prager: We'll go backwards. I'll start with Cayuga. And in Cayuga, we had our first informal session with the planning Board a couple of nights ago. It went very well. They were engaged. They asked good questions. And so that process is one where we go ahead and finalize our application. That will take another month or so. They then meet on it, they review it. We come to an agreement together on what that permit should look like. They'll be solving for certain conditions like are you drawing water from the lake? What will noise levels be in the midst of operation? What are you doing for the site in terms of beautification, things like that. These are all reasonable things. It's what we do. It's what any company in redeveloping a former power plant or industrial complex does. The Cayuga process, as you know, first was -- had to go through zoning board of approval to ensure that it was consistent with the definition required to achieve a permit. It did win the day on that. And so we're just ordinary course routine working together with the planning board of the town to move forward. With respect to Kentucky, Naz? Nazar Khan: Yes. So on Kentucky, Stephen, from a permit perspective, we have to obtain the requisite building permits. That being said, we had a town hall this week in Hawesville. We had a workforce session for potential employees. And so the entire Judge Executive, Economic Development Director in Hawesville are all kind of fully on board and very eager to kind of get us going. As Paul mentioned earlier, it's an extremely supportive environment. And so while we don't have the permits in hand, everyone is fully aware of what we're doing. We briefed them on both the scope, size and scale of the buildings that we're bringing. Importantly, as a part of what we're doing at Hawesville, we're also decommissioning and taking down the old aluminum smelter. So there's a big cleanup that's happening at the site as well, which the town is very eager to have happened. So we got to do all that, but that's, I think, going to come in time. We're expecting -- as soon as we can get this lease signed up, we'll be in a position to kind of submit all those things. We have previewed a number of those things, and we're hopeful that it should be a pretty smooth process to kind of get approvals around that. Paul Prager: Just 2 more things. One is with respect to both of these projects, there's not just one permit you get. There's a principal notion of a permit for a facility. But all along the way, you have -- whether it's a specific demolition permit or a building permit for a particular structure, you need to get local permit. The second thing I just wanted to mention about Cayuga, which is kind of interesting, as the state has become really a popular place for people, and they look forward to doing more data centers there, they are starting to come with this notion of what about power. The beautiful thing about the Cayuga site is it was a former power site. It can be again. We have the ability both in terms of the landlord's huge site, which is 400 acres. We have the ability to sort of bring in our own power generation if that was ever something important to state or local constituents. So Cayuga is, I think, really a much better site than just any other one in terms of that part of the world because of its ability to house a power plant on it, if it's needed. Operator: Our next question is from Darren Aftahi with ROTH. Darren Aftahi: First one, if I may. Could you kind of characterize the -- maybe competitive process at Hawesville, maybe comparing that to like Mariner? And are we talking about one entity taking the 384, is it going to be multiple entities? And then I've got a follow-up. Paul Prager: I'll start maybe just by giving you -- in the environment that we were contracting for Lake Mariner, I think we were very confident we had a really special site. But I think the hyperscalers were on the growth curve in terms of education. They were on the growth curve in terms of figuring out design. When we started Lake Mariner, I think people were not as rock solid in their design notions or in terms of how they would fill out their customers' ledger. So I think we're in a very different environment now. We're in an environment where the hyperscalers are -- I mean, this is [Audio Gap] I've been in over the course of the last 45 years. I mean you've got Meta is very aggressive. Google's got a great program. Amazon's got a great program. Microsoft come back into the market. They're extremely competitive. You've got some of the neos that are really seeking larger and larger facilities. So we're in a much more competitive environment where the customers actually have much more definition to what it is they want. The second thing is when we started out with Lake Mariner, we had already built some buildings a little bit. And so we had to sort of work with our customers, for instance, in WULF Den and CB1 and 2 on sort of figuring out the design elements that they wanted even in CB3. Whereas 4 and 5, we built those buildings from the ground up with the customer, which made the whole procurement and build process that much more efficient. So I would tell you, we have a much more committed and sophisticated customer right now who knows the design needs that he or she wants, and we're in a much more competitive environment. So we're pretty excited about -- that was -- what the beautiful thing about Kentucky is its immediate availability has just enabled a very robust dialogue for us in terms of filling out our customers. But Naz, do you want to add something? Nazar Khan: Yes. The only thing to add, Darren, is we're targeting 1, maybe 2 customers for the entire site. Darren Aftahi: That's helpful. And then just as a follow-up. I mean, so you've given -- you've kind of raised your bogey and given this 250 to 500 range. I guess what are the 1 or 2 deterministic factors that kind of drive that range? And given your background in power as a team, I mean, is there any reason we could think maybe there's upside to that range? I'm just trying to get an understanding of what that context really means. Nazar Khan: I can start here, and then Paul, you can jump in. The 250 to 500 is a very kind of calibrated range that we're giving you. It factors in the operational and just deployment capabilities. Again, this is getting hundreds of people on site across multiple trades. It's a procurement process around equipment and ensuring that we're not the last buyer, but we have quite a bit of room between what we need and where the market has availability. And then from a financing perspective, it's what the company can bear from an accretive perspective. So when we talk about 250 to 500 megawatts per year, that's $2.5 billion to $5 billion of incremental capital per year that we are guiding the market that we're going to spend every year for the next few years. And so when we talk about the 250 to 500 really is a calibrated guidance around all of the various facets that are required to properly execute and deliver upon capacity. So that's where we are. That's what we see is available. 1.5 years or so ago, we were guiding at 100 to 150. As we've been able to now deploy capacity and understand the needs of customers, we've upped that guidance to 250 to 500. We remain very confident that every year for the next few years, we will continue to sign up another 250 to 500 megawatts of critical IT load with customers, deliver that 12 to 18 months hence and do that year-over-year and continue to kind of grow shareholder value as we're doing that. Paul Prager: Yes. I would want to add a few things. Number one is we selected Fluor to be our contractor in Kentucky. Why? Because we think they're the most skilled contractors in the country. They're particularly good on the front-end projects so that the execution side goes flawlessly. I think as we move forward, the notion of the selection of Fluor was scalable growth so that we could work with them on additional projects on a national level. The second thing is we're all about execution. Again, whether it's on the development side or the execution side, we could talk as much about our pipeline as you want. We could talk as much about all the projects that we're reviewing before we decide to make a move. But at the end of the day, if we don't deliver for our customers, we are out of business and we have failed our investors. So we need to be conservative here because we're still on the -- we're still a nascent business. I mean we've seen changes in the design of our facilities just between CB2A, B, 3, then 4 and 5. And so I think as we're learning and growing in partnership with our customers and now our leading contractor in Kentucky, we will continue to enhance our execution capabilities -- and if there is an opportunity to grow beyond what we've said is 250 to 500 incremental critical IT load, then we will. But for right now, we have to keep our eye on the ball. The table is full of lots of cookies and cakes and candies, but we have to stay focused on the meat and potatoes and deliver for our customers. Operator: Our next question comes from Brett Knoblauch with Cantor Fitzgerald. Brett Knoblauch: Paul, I guess you have multiple attractive sites that you could theoretically kind of go and lease out now. I guess in talking to prospective customers, is there a reason why they would want maybe the Kentucky site over Lake Cayuga or maybe the mega campus that you're building in Maryland? And has in your mind, what maybe site is next up for grabs changed? Has kind of Kentucky jumped to the top of the list? Paul Prager: Listen, I -- so first off, the answer is the demand is so significant. I think that a party would be happy to take everything off the table at any one time. But it's about time to power. And that's why Kentucky has become so important to the customers that we're in discussion with. The ability to have that kind of scale within this short period of time or [ albeit ] promptly, if you will, just makes it one of the most exciting sites in the country. The one thing that we've been pushing, Brett, is we like regional diversity. We think hyperscaler customers are getting focused on that, too. We think they've seen now, they've experienced what happens now first in Ohio and then now down in ERCOT. When you get everybody all in one place, it's a question of security, but it's also a question of what can the grid really handle. And so I think having regional diversity is something that our customers find compelling. And that's a good reason for them to really focus on Kentucky, that and the immediacy of its power. Brett Knoblauch: Awesome. And then I think in the prepared remarks, you said that Kentucky could potentially expand beyond the 480. I guess to what extent have you guys looked into that? And how much do you think it could expand beyond 480? Paul Prager: I think, listen, we've talked to our power suppliers there. We understand the grid there. I think that -- and again, I was just with the governor a couple of days ago, and he's really terrific. He runs DGA. He is very commercial. He's very pro-business for the state. I think that we will have opportunities to expand our footprint both in the generation side and on the customer side in Kentucky. But again, I have to stay focused, right? My job is execution. I've got to deliver these facilities to our customers, and we're doing that at Lake Mariner. And Kentucky is going to be a very prompt bid. We've already issued a limited notice to proceed to floor just because our customers really want to get onto that property. So we're doing everything we can to facilitate that. Just going to really focus on execute. Operator: Our next question comes from Michael Donovan with Compass Point. Michael Donovan: To follow up on what you're talking about, Paul, on sizing and design plans. For Maryland and Kentucky phase build-outs, what is the target critical IT megawatt per building or hall you're thinking about today? Should we think about repeatable modules similar to Fluidstack? And what drives that sizing decision? Nazar Khan: Yes. This is Nazar here. So in the Fluidstack context, that 168 megawatts of critical IT load is the base design that we worked closely with them on developing. You've seen that number pop up subsequently with other of our peers as well. But in that context, that's kind of the base design. That puts you a little over kind of 200 megawatts of gross capacity. And so in general, as we're having discussions with various customers, we typically look at that 200-megawatt gross, 160-megawatt net as kind of a building block that we're building off of. And so the design that we're working on with Fluor really kind of incorporate that, again, roughly 200 megawatts plus or minus gross, 160 megawatts plus or minus net critical IT megawatts as the base building block from which we're kind of deploying that. And so when we talked about Kentucky, for example, in that 380 of net, that's a couple of those buildings would kind of consume that capacity. Operator: Our next question is from John Todaro with Needham & Company. John Todaro: First one is more high-level political regulatory. It sounds like really good conversations with the governors in Kentucky and Maryland. Just wondering though more at a broader level, how you are viewing some of the pushback at the state level to data center builds. Just any commentary there, whether sort of the media articles might be overblown or if there is some risk there. Nazar Khan: So it all requires, I would say, thoughtful and careful engagement. How you bring your load on is critical to how you're perceived and what impacts you have. And so if you have been listening to us for the last few years when we talk about Bitcoin mining, we've said from the beginning, there's a way to do Bitcoin mining that's accretive and an asset back to the grid, and there's a way to do it where you're not. And so we have been very engaging with. I mean, for example, in Kentucky, we spent a tremendous amount of time with the energy supplier there, Big Rivers and have developed a very close and strong working relationship with them, where we are kind of aware of the challenges they have on committing to supporting a large load. And if it's there, it's great. And when it's gone, it's not so great. That's a, and so kind of ensuring that our interests are aligned with them and they have clear visibility on where we are. And then b, just in terms of the overall load profile and when you're consuming power and what happens at those kind of peak demand hours. And so we've been very, again, thoughtful in thinking through how does our load and where we're locating these loads tie back to what's happening in the grid around it and how do we ensure that, again, that our loads can be overall assets and kind of beneficial back to the grid and to the local communities versus just kind of coming in and being burdens. And so I think the articles, the news is news and kind of it comes out, how it comes out. But we pride ourselves in trying to be very thoughtful around the issues that we think are pertinent and properly addressing them. And so hopefully, over time, you'll see even in Kentucky, based upon how we're structuring things with the local utility down there, that it hopefully becomes a model for how things should be done an example of how data centers should be integrated back to grids. John Todaro: Great. And then second one is just on kind of where we are in the headcount growth for Kentucky and Maryland and just, I guess, how you frame up some of the G&A guardrails around there. Nazar Khan: So we are in the early stages on both. We have kind of ramped up the Kentucky team to half a dozen or so folks over time, including the on-site personnel, that's going to be over 100 people for Kentucky by itself. Each of our sites, we are targeting somewhere in that 100 to 120 people range for fully loaded staffing once the site is fully operational. And we're probably a couple of people in Maryland right now. As was noted earlier, we're pending kind of FERC approval to take over the site. There's existing generation at the site, and so we're ramping that team up to kind of support the operations as well. So I'd say we're in a couple of dozen people between the 2 sites now, but that's quickly increasing. And again, we should be hitting towards the end of the year, early next year, we should be hitting pretty sizable numbers in Kentucky, and we'll kind of be in that 100 people range at Kentucky by this time next year, I would guess. Paul Prager: We've also, of course, added at the corporate level so that we can manage the much larger portfolio and stay on top of everything from procurement. And so it's legal, it's accounting, it's IT. It's everything that you need at the corporate level to manage projects of this scale. Operator: Our final question is from Martin Toner with ATB Cormark. Martin Toner: When do you think Phase 1 of Morgantown might be able to be turned on? Nazar Khan: We're working through that as we speak. So at Morgantown, in addition to the 3 legs we mentioned earlier, just kind of run the load, the data center, the gas gen and the battery storage. There's also a remediation that goes along with that. We were with the MDE just this afternoon and kind of scoping that out. And so once we get definition around the timing and scope of that remediation plan, that will then kind of feed into just the timing. If you look at what we said kind of in the deck, we've kind of positioned this as kind of end of '28, kind of in '29 and beyond. So generally, that's where we are. But over the next, I'd say, couple of quarters here, we'll have greater definition to provide around the specific timing of Morgantown. Paul Prager: Coming at it from 10,000 feet, State of Maryland had some challenges because they've shut down a lot of their great generation. They weren't really as pro generation as -- or as prescient to what would happen as a lot of other states, which have been very, very supportive like Pennsylvania next door. So the governor has really changed policy. We've received written commitments for expedited permitting for our site. So I don't think this is going to be business as usual. I think they're really keen to have us come there, create jobs, both at the county level and the state level. The reception has been amazing, but they have literally given us sort of an office to work with to expedite all sorts of permitting from the repowering to the remediation. Operator: We have reached the end of the question-and-answer session, and this concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.
Operator: Welcome to the Hertz Global Holdings Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions] I would like to remind you that this morning's call is being recorded by the company. I would now like to turn the call over to our host, Johann Rawlinson, Vice President of Investor Relations. Please go ahead. Johann Rawlinson: Good morning, everyone, and thank you for joining us. By now, you should have our earnings press release and associated financial information and these can be accessed through the Investor Relations section of our website. I want to remind you that certain statements made on this call contain forward-looking information. Forward-looking statements are not a guarantee of performance, and by their nature, are subject to inherent risks and uncertainties. Actual results may differ materially. Any forward-looking information relayed on this call speaks only as of today's date, and the company undertakes no obligation to update that information to reflect changed circumstances. Additional information concerning these statements including factors that could cause our actual results to differ is contained in our earnings press release and in the Risk Factors and Forward-Looking Statement section in the filings we make with the Securities and Exchange Commission. Our filings are available on the SEC's website and the Investor Relations section of the Hertz website. Today, we'll use certain non-GAAP financial measures which are reconciled with GAAP numbers in our earnings press release available on our website. We believe that these non-GAAP measures provide additional useful information about our operations, allowing better evaluation of our profitability and performance. Unless otherwise noted, our discussion today focuses on our global business. On the call this morning, we have Gil West, our Chief Executive Officer, who will discuss strategy, operational highlights and our fleet. Our Chief Commercial Officer, Sandeep Dube, will share insights into our commercial strategy followed by Scott Haralson, our Chief Financial Officer, who will discuss our financial performance. I'll now turn the call over to Gil. Wayne West: Thanks, Johann. Good morning, everyone, and thank you for joining us. I want to start by thanking the Hertz team, their focus, discipline and resilience, especially those serving our customers in the field was evident throughout the year but particularly during the fourth quarter holiday travel season, which is historically one of our most operationally intensive periods. Together, they executed consistently against our goals and made real progress, building momentum for the year ahead. 2025 marked the first full year operating under the back-to-basic strategy, guided by our North Star metrics, we brought greater discipline to fleet management, revenue optimization, rigorous cost control and improving the customer experience. The work is far from finished, but the progress we made this year materially strengthened the foundation of our business for the long term. In 2025, we achieved a full year adjusted EBITDA improvement of more than $1 billion year-over-year. We drove sequential improvements in revenue, RPU and RPD and improved utilization by sweating our assets and drove DPU down in line with our North Star target. We brought DOE per transaction day down despite lower volumes. We also completed our fleet rotation and successfully secured our model year '26 buys at our target prices and volumes. That allowed us to begin selling model year '25 through our enhanced retail channels, continue our short hold strategy, introduce a more optimized mix of car classes and achieve our lowest average fleet age in almost a decade. And we delivered a nearly 50% improvement in customer satisfaction. As we turn to the fourth quarter, typically challenging seasonal environment was amplified by a number of external headwinds that were primarily isolated to the quarter from government shutdown, coupled with FAA cancellations, multiple technology vendor outages and unfavorable residual value environment to elevated recall volumes. Taken together, these created outsized pressure of well over $100 million on our business and kept us from hitting some of our targets. But even within that environment, we made progress. In the fourth quarter, adjusted EBITDA improved $150 million year-over-year, but our strongest result this quarter was revenue. In fact, it was our strongest revenue result in nearly 2 years. If you remember, we entered 2025 with revenue down double digits year-over-year. And by the end of the fourth quarter, we were nearly flat revenue with a 3% smaller fleet, significant accomplishment, driven by our ability to sequentially improve RPU and RPD and sustained utilization and transaction days, all with a smaller fleet. We also saw a more stable industry pricing backdrop throughout the quarter, which is especially noteworthy given the very polarizing peak and off-peak dynamic that plays out during this period every year. This is evidence that both our commercial investments in pricing and demand generation are paying off and that the industry setup is more positive than in prior periods. While DPU, as I mentioned, was in line with our North Star target for the year, in the fourth quarter, it moved above our North Star target due to a revised Black Book residual value forecast and lower-than-expected whole sale prices from heavy OEM and rental car company deflating during the car market seasonal low period. While we monitor multiple market trend sources, we have historically indexed heavily on Black Book forecast, which tends to be more seasonally volatile. As of the end of the year, it was down nearly 5% year-over-year, resulting in a $60 million noncash charge to depreciation. By contrast, Manheim average rental vehicle prices in December were up 2.85% year-over-year. And as we look ahead, updated projections from our partners at Cox Automotive show that their Manheim used vehicle value index is expected to end the year roughly 2% higher than in December 2025. While our forecast is not predicated on such a positive outlook, our internal analysis is encouraging and we've seen early signs of recovery in Q1 in line with these Manheim values, which in January were up 2.4% year-over-year. On the cost side, we brought adjusted DOE per transaction day down 6% year-on-year. This moved us closer to our North Star target in the low 30s. Recall volumes peaked in mid-November and December, taking over 20,000 cars out of service, which is almost 3x higher than the normal rate. This resulted in us having to carry more fleet than we had planned and limited our performance, which had ripple effects across the business, impacting our fleet utilization, particularly for our rideshare business. We have strategically managed through this by redeploying available fleet where it would have the most impact. And as a vast majority of these recalls lack available fixes and restrict us from renting and selling vehicles. We are actively working with our OEM partners to find solutions to minimize fleet downtime. Recall volumes have moderated slightly throughout the first quarter but remain elevated. With this in mind, we're staying disciplined in our capacity planning to ensure our rentable fleet stays well utilized and inside of demand. It's clear Q4 presented real challenges, but the decisions we made throughout 2025 held up under pressure and reinforced that our strategy is the right one. Today, Hertz stands on a meaningfully stronger foundation than it did a year ago. A healthier fleet, improved unit economics, a more disciplined operating model, a better customer experience. And what I want to be clear about is this, the improvements we're seeing in the business are structural, they're permanent. The headwinds we faced and continue to navigate are transitory. That difference matters, and it's what gives me confidence in the trajectory ahead. That confidence is already being validated as 2026 is off to a good start. Q1 trends in both revenue and RPD are positive year-over-year, a particularly encouraging sign given that this is typically a seasonal trough period for the industry. This means we're entering the upcoming peak period from a position of strength. Looking ahead to the rest of the year, we remain focused on accelerating revenue, RPD and RPU growth while staying disciplined on cost, putting core rental business firmly on the path to profitability. While rent-a-car remains our core business today, this transformation is about becoming more than a single line of business. We're executing with discipline in the business that powers us now, but we're intentionally building the capabilities that will power what's next. We're laying the groundwork for a diversified value-creating platform that will unlock value beyond the core. The Hertz platform spans rent-a-car, service, fleet and mobility. It's still early days. And while the areas of our platform sit at different maturity levels, each presents meaningful upside, both near and long term. In rent-a-car, we'll maintain steady momentum in our mature airport locations by driving pricing, utilization, demand generation and asset management. We still -- we see real near-term upside from growth in our off-airport locations in areas like insurance replacement local commercial agreements and small business. We're also sharpening our focus to unlock additional value in our franchise footprint while piloting new offerings in service. We see a particularly strong runway in fleet through Hertz car sales and in mobility, where the long-term opportunity has the potential to become as, if not more meaningful than our core rent-a-car business. We're transforming Hertz car sales into a truly omnichannel experience, meeting customers where they are online, in person through rent to buy and delivery right to their door. The opportunity here is significant. We are a used car factory with a building customer base, and we're building the shopping experience to match, one that can ultimately rival the largest used car dealers in the country. We have a constant supply of preowned vehicles and sales volume that already puts us in the top 5 used car dealerships in the country. Our improved website has a wide variety of vehicles for sale and intuitive interface, enhanced imagery and more detailed descriptions to help customers shop more confidently. We already have scale in shifting our primary sales channel to retail as a major unlock. We also have established key partnerships with Cox Automotive, Amazon and Palantir that gives us the capability to scale this business profitably, Hertz car sales value proposition has never been more compelling as new cars are increasingly out of reach for many buyers with prices topping $50,000 on average. With our shorthold strategy, we deliver best bang for the buck as consumers can get a nearly new car for around half the cost. This is an important differentiator as we head into spring, typically a peak buying season, which will be bolstered this year by record high tax returns. Now to mobility. Hertz owns and manages fleets at scale with core strengths and fleet ownership, large-scale operations, world-class maintenance and vehicle fleet financing. Along our physical infrastructure, operating capacity and leadership experience, this business is evolving to meet the mobility needs of tomorrow, whether driver led or autonomous. Our journey in mobility began in ride share by renting cars to Uber and Lyft drivers. Today, we operate the largest rideshare rental fleet in the world. And it has become one of our highest growth potential businesses with double-digit revenue opportunities. And in the background, we're developing and testing new approaches in this space with strategic partners. While it's difficult to quantify the full growth potential of our Mobility business at this stage, the opportunity undoubtedly is significant. For context, Uber's CEO has described autonomous vehicles as potentially a multitrillion dollar market. We're building the capabilities now to ensure Hertz is positioned to play a significant role in that ecosystem. Today, our rental car business remains the largest consumer of our time and operational focus. But as we scale the broader platform across rent-a-car, service, fleet and mobility, the mix will evolve. Rental will become one part of a more diversified value-creating enterprise. With that, I'll turn it over to Sandeep. Sandeep Dube: Thanks, Gil, and good morning, everyone. I want to jump right into the headlines on revenue this morning. The fourth quarter, the industry's typical trough period with volatile seasonal demand, represented Hertz's strongest year-over-year revenue result since Q1 2024. After adjusting for Q4 2024's onetime loyalty gains, in Q4 2025, we drove year-over-year revenue growth with the primary driver being RPD which was nearly flat on a year-over-year basis. Most importantly, RPD for the airports in the Americas, our largest segment, was positive year-over-year for the quarter. We achieved this meaningful sequential improvement despite several headwinds, including a lower car class mix, the extended government shutdown and elevated recalls. In Q4, we achieved a difficult feat by improving both year-over-year pricing and days sequentially, primarily driven by Hertz's commercial strategies. Our revenue metrics showed good sequential progression. Q4 2025 adjusted revenue was sequentially 4 points better, going from down 4% to about flat. RPD mirrored the same sequential improvement on a loyalty adjusted basis as well. The driving factors of these improvements were the same as detailed in our Q3 earnings call. Let's dive deeper into the details a bit. First, driving a better customer experience. Our Net Promoter grew by nearly 50% year-over-year and it is driving better organic demand for our brands. Second, generating greater durable demand from higher-margin channels. Direct website demand is showing strong growth. Our corporate business is gaining ground. We are now driving consistent growth in our off-airport business, and our mobility business is growing revenue double digits. Third, improving our pricing tactics and strategies. We are on a multiphase approach to bring more sophistication in the way we drive demand with a focus on driving positive RPD for comparable asset class. Mid-quarter in Q4, we executed a totally new pricing metrics and we saw immediate results from that change in driving positive RPD. Our next situation is going into test mode in a few weeks. I expect phase improvements in the sophistication of our pricing approach. Fourth, better monetization of our higher RPU assets. This was achieved by improved asset deployment, having the right vehicle at the right location, ensuring that higher RPU assets are effectively monetized. Fifth, better value-added product sales. We drove better sales of our value-added products through improved operational performance and pricing sophistication. Lastly, local level profitability and optimization. We continue to manage our business at a more granular level of profitability. These commercial strategies and tactics primarily drove the positive momentum in Q4 2025. Most importantly, these foundational changes raised the baseline productivity of our revenue and RPD production, and we expect these gains to largely persist irrespective of the macroeconomic environment. And just a reminder, we are still in the early innings of a transformation of our commercial strategies, and we expect more foundational improvements in the coming quarters. If you step back even further, the takeaway here is the sequential improvement through 2025 as a result of our back to basic strategy. We started 2025 down double digits year-over-year on revenue and down mid-single digits year-over-year on RPD. This narrowed to near parity on both metrics by the end of the year, and they have both turned positive in the early part of 2026. We also delivered improvements in utilization across our total fleet in each of the quarters in 2025, including Q4, where we were able to offset the impact of higher rate of recalls and delivered an improvement of 200 basis points year-over-year. Total fleet includes all vehicles irrespective of operating status, whether in service, out of service or in our car sales inventory. Looking [indiscernible] we are delivering clear results and building momentum for the year ahead. 2026 is off to a strong start as the strength we saw at the end of December for the holidays carried forward into the new year. In January, we are seeing year-on-year positive revenue and unit revenue growth, mostly driven by a couple of percentage points increase in global RPD, reflecting pricing growth in both our Americas and our International segments. February is trending even more positively and March looks to continue on that trajectory. As a result, we expect Q1 2026 revenue to be up mid-single digits year-over-year with fleet growth of only low single digits. Q1 2026 is also supported by a more constructive industry environment compared to Q4 2025, with the industry demand environment looking better. For the rest of 2026, we will manage our growth in a disciplined manner. This means holding airport growth at or below TSA levels, while pursuing off-airport and mobility opportunities. At the same time, we are focused on doing more for our customers. The improvements we have seen in our Net Promoter Score is a clear indicator that our work to create a more consistent, convenient and caring customer experience are resonating. We are deeply grateful to the millions of customers who choose Hertz, and we have recently lowered the threshold for achieving 5-star status to reward them even more for their loyalty. At a time and status across the travel industry feels harder to earn than ever, we are offering a faster, more transparent part, providing more value with every booking and one more reason to continue choosing Hertz. So in summary, our commercial playbook is working, and the results are starting to prove it. With that, I'll hand it over to Scott to walk through our financial performance. Jon Kirchner: Thanks, Sandeep, and good morning, everyone, and thanks for joining us. As you heard from Gil and Sandeep, the fourth quarter had a number of items that cloud the results. But once you get past the transitory impacts in the quarter, you can see some interesting foundational elements. The revenue trends are improving. Our fleet is rotated and model year 2026 buys have been secured at prices and volumes we expected. In spite of a richer fleet mix in 2026, which will provide a tailwind to RPD, we still expect to keep DPU for the year below $300 per unit. NPS took a big leap forward in 2025 and that's prime to continue in 2026. Our digital customer experience, operational consistency and customer-focused initiatives are being recognized by our customers. We have found a good balance between utilization and NPS scores, but have our eyes set on improving both at the same time. The moves we made last year to create a rental car fleet with an average age of less than 10 months, which is the youngest it's been in almost a decade and to drive record-setting utilization are now strategic tailwinds. The cost and efficiency actions paid dividends and will get even better in 2026. Throughout 2025, we pulled off a difficult task. We lowered unit cost while also reducing units. That's difficult to do in a heavy fixed cost and operationally complex business like ours. We have real opportunities for growth in 2026. The focus of that growth will be at our off-airport locations and in our mobility business. Our expansion of the platform outside of traditional rental car is progressing nicely. Our digital car sales business has made some important technological advancements on both the back-end website and the merchandising capabilities as well as the digital transformation of the car sales process. While early, we think 2026 digital expansion could produce a meaningful progression in the percentage of our car sales that will be transacted through retail channels. On mobility, while we are the industry leader in rental ride share, we are growing and developing the business to meet evolving needs. We also have been actively building in the background a substantial set of capabilities that we will be leveraging to position Hertz to be a significant player in the aggregation of the supply of mobility in the future, whether that is driver led or autonomous. This will ultimately be the future of Hertz, but we are balancing the current optimization of the mature part of our business while building the platform for the future. Even though the absolute financial results are not where we want them to be yet, the actions we have taken over the past year or so are showing real sustainable results and the opportunity in front of us is exciting. So with that preamble, I do want to quickly walk through some details in the quarter, where we are with liquidity and cover a bit of our 2026 outlook. Starting with the quarter. For Q4, we reported revenue of $2.0 billion, which came in ahead of consensus expectations with RPD broadly in line and down approximately 1% year-over-year. Importantly, excluding the prior year loyalty adjustment, revenue growth was up year-on-year with RPD nearly flat. Adjusted EBITDA for the quarter was a negative approximately $200 million. While this is a $150 million year-over-year improvement, it was still about $100 million off of our target. This was entirely in our vehicle carrying cost. We incurred about $20 million of additional costs resulting from the additional fleet to compensate for the elevated recalls. We also had a $20 million loss on the sale of assets due to the large number of cars available in the marketplace that weighed on residuals in the quarter. We also took a noncash depreciation expense of approximately $60 million due to the late in the quarter residual value adjustment by Black Book. While we do believe the adjustment on the forward view of residuals to be a bit conservative, we did take the entire impact to the P&L. We view these items as mostly isolated to the fourth quarter, albeit recalls will likely remain elevated throughout the first quarter. We expect the residual value market to improve as we head into the peak car sale cycle starting in Q1 into Q2. The government shutdown duration and timing also weighed on results. We were able to recoup most of the days lost in the period, but it did come in more off-peak days production since the shutdown came in what was becoming an improving October with positive demand and pricing momentum. While difficult to quantify and while the revenue for the quarter was still positive, we estimate the government shutdown cost us an additional $10 million to $20 million of adjusted EBITDA in the quarter. In total, the underlying business performed better than the reported adjusted EBITDA would suggest as we performed well on the items within our control. Transaction days were almost flat year-over-year as we kept the higher fleet to mitigate the recall issues and recoup some of the days lost due to the transitory events. Utilization remains solid. And even with the additional fleet, the global fleet was 3% lower than prior year. Adjusted DOE per day was another positive story. It improved 6% year-over-year, coming in at $36.39 as our cost initiatives are taking hold. It did, however, reflect higher collision severity and repair cost and ongoing elevated insurance costs. We still have more to do, but have done good work on addressing operating expenses in our big 3 categories: labor facilities and vehicle maintenance and repair. With further work to be done in growth in transaction days in 2026, we do expect lower unit costs this year. Core SG&A remained flat with total year-over-year variances primarily stemming from the timing of expenses in 2024, with 2025 being a more normalized expense level. Turning to depreciation and DPU. For 2025, we produced a full year net DPU of $300 per month. While this is right at our North Star metric, we were certainly not happy that we had to take a late charge to depreciation due to the move from Black Book. We were expecting to be below $300 per unit. However, if residual values end up where we think they will in 2026, this will prove to be timing of the expense and will benefit us with less depreciation this year. The fourth quarter ended at $330 per unit, down 21% year-over-year, but nonetheless, higher than we expected. Now let's talk liquidity. We ended the quarter with approximately $1.5 billion of total liquidity, including revolver capacity. This reflects the impact of the partial redemption of $300 million of the 2026 notes in Q4, leaving $200 million outstanding. The Wells Fargo make-whole liability, which had been reserved for some time, was primarily concluded with the $346 million payment made in late January. This reduced our available liquidity to just under $1.2 billion. This number was about $100 million lower than expected due to the timing of vehicle dispositions that were delayed and the early acceptance of vehicles in Q4 due to the larger number of recalls and the impact of the government shutdown. Other than the cost to carry the additional vehicles in the quarter, the timing of the vehicles in and out of the fleet is not expected to have any meaningful positive or negative impact on our expected liquidity at the end of the second quarter. Also, our ABS programs remain healthy with ABS vehicle fair values comfortably above net book values and market access is solid. We recently entered into financing transactions that we expect will result in an increase in our liquidity by approximately $200 million at an attractive cost of capital. We also have several other liquidity enhancement opportunities that we'll be evaluating in the coming months, that could total more than $500 million. In addition, we also have approximately $400 million of first lien capacity to refinance the expiring revolving credit facility commitments in June of this year. With the disciplined growth that we have planned for 2026, we have access to the liquidity capacity to make that happen. We expect to reach the low point of liquidity at the end of Q2 at something likely below $1 billion, as we invest in the fleet in the first half of the year and then expect to end the year well north of $1 billion as free cash flow generation improves after Q1 and from the return of capital that happens in the fleet rotation cycle in the back half of the year. To be clear, this assumes we action some of the liquidity enhancements we have available to us. Finally, let's turn to guidance for the year. For Q1, we expect transaction days and fleet to increase low single digits year-over-year. Total fleet utilization will likely be flat in Q1 year-over-year due to the impact from the heavy winter storms and continued elevated fleet recalls, which should decline throughout the quarter. On the revenue front, as Gil and Sandeep noted, January saw positive year-over-year RPD and revenue growth, with February trending even better and March bookings to date showing a similar trend. However, Q1 is still an off-peak quarter for us and the recall levels are still going to impact our results. Given this, our Q1 expected margin range is in the negative high single-digit to low double-digit range, which is a year-over-year improvement of approximately 600 to 800 basis points, assuming DPU at around $300 per unit. For the full year, we previously communicated an outlook of a 3% to 6% adjusted EBITDA margin range. While the revenue trends were positive and the internal expectations for DPU are in line with prior expectations, it is early in the year, and we would like to see more game film before we revise the guidance upward. That's why we are maintaining the guidance for the year in the 3% to 6% margin range. We continue to target $1 billion of adjusted EBITDA in 2027. With that, I'll turn it back to Gil for closing remarks. Wayne West: Thank you, Scott. 2025 was a year of back to basics, focused on rebuilding the core and transforming Hertz for the long term. We first tackled our fleet, the biggest problem to solve, along with cost and revenue, all while elevating our customer experience. Through our fleet strategy and rotation, we operated as an asset management company, and the team turned our fleet, which was once a massive headwind, into a competitive advantage positioning us well for 2026 and beyond. We delivered year-over-year improvements in unit cost even with a smaller fleet and we see a long runway of cost and productivity initiatives that cut across all aspects of our business. This, along with operating leverage from growth should help propel us forward. Unit revenue growth has been a key area of focus. The team's work around customer service, demand generation in the right segments, revenue management strategies and initiatives are paying off and we have the talent, tools and technology to continue this momentum and return Hertz to solid profitability this year and achieve over $1 billion in adjusted EBITDA in 2027. But our transformation does not stop there. We're both pragmatic and ambitious, focused on what's in front of us while also planning for the future. We're making progress in developing our platform to unlock value beyond our core business, leveraging the same operational discipline, rigorous cost control and revenue optimization that would define this turnaround. With that, let's open it up for questions. Back to you, operator. Operator: [Operator Instructions] Our first question comes from the line of Chris Woronka with Deutsche Bank. Chris Woronka: I guess, Gil, to start off, one of your competitors recently took about a $500 million write-down related to EVs. And obviously, Hertz went through a process a couple of years back that I think is complete or largely complete. Can you maybe give us a refresh on where you guys are in EVs and your strategy has changed or evolved at all recently? Wayne West: Yes. Chris, thanks for the question. Yes, I think a lot of headlines across all the automotive industry on EVs, of course, of late. And I think we're probably a little further down the road than most, and we do have a bit of a different strategy now in that I'd just start with some context. We're the largest fleet supplier to rideshare in the world, as I mentioned. It's really important to get that fleet right because the rideshare just has different fleet needs in our traditional rack business and EVs remain central to rideshare and remain a long-lived asset in that fleet. So we're just probably more experienced than anyone as an EV fleet operator at scale. We've been building a lot of operational muscle around EVs over the years, and that includes the technical expertise as well as operating infrastructure. So kind of as part of our transformation, as you well know, we've gone through and rightsized our EV fleet based on what the natural demand is for EVs. So essentially, we've redeployed that fleet in the right channels with the majority of that fleet moving towards rideshare business. And that puts EVs into real high-intensive operating environments. And that helps us accelerate our learning curve. So specifically with our Tesla fleet, just to give you an example, we're in the process of doing an interior refresh on that fleet. So it's really given the where we've encountered on the interiors over the last several years. So this is a low-cost investment per vehicle for us. And then the vehicle condition comes out looking nearly new and then extends the life of the useful life of that asset. And then, of course, has considerable economic benefits for us on that fleet. So we got a world-class maintenance and tech ops team. And they've done this all their life really on older generation aircraft, applying a similar approach where we refurbish the interiors and do it at a low cost. So it's what's happening with our Tesla fleet. And ultimately then, I think with that fleet, the limiting life factor will be battery life at this point, kind of given the current battery replacement cost. But even that could change in the future. But we got to remain agile with our EV fleet. It's really set us up well, though in our rideshare position. And then it's probably worth noting that, that experience we've been building with EVs really sets us up well in the future for AVs because I think every future autonomous vehicle will likely be an EV. So all that will bode well for us in the future. Operator: Our next question comes from the line of Chris Stathoulopoulos with Susquehanna International Group. Christopher Stathoulopoulos: So Gil, if a lot of commentary here on the mobility business, your prepared remarks I think you said mobility has the potential to more than surpass rent a car. So could you dig into a little bit more here on the future potential of the mobility business for Hertz? What does that look like? What is the plan for the next year, 1, 3, 5 years, if you could? Just want a little bit more detail on how you're thinking about that. Wayne West: Thanks, Chris. I mean, obviously, as we mentioned in the call, the potential is significant here, and we continue to position Hertz for the future of mobility. And I think we'll be a big part of that because we've got -- we've already got great partnerships in the rideshare space. So as you think about kind of the next step of mobility, it's really the evolution of rideshare into autonomous. So we've been piloting some innovative new models with a strategic partner, and we're starting to scale some of those. We'll talk about those in the future. But I think we're a natural player in mobility and ultimately, the AV space as it continues to evolve. So we've got really an incredible team leading our mobility business. I'm extremely bullish about what that future looks like. So maybe just to recap, as I see it, at least, how the space plays out. First of all, it will be a huge TAM, if you will. We had some comments in the script about that. And it's not a winner-take-all game. It's very big. And I think we're -- Hertz is really one of just a limited number of companies that have all the necessary ingredients to be a major player in AVs, right? Our core business is owning and operating large fleets of vehicles. And that's a foundational requirement in AVs and the model for mobility going forward. So we've got an iconic brand. We've got a global footprint. We got operational excellence. We got really advanced maintenance capabilities. And then, of course, large fleet management skills and as I mentioned -- just mentioned, experience managing EVs. And again, I'll just reiterate, I think in the future, almost all AVs will be EVs. So that experience will be a big stepping stone for us. But we've got rideshare experience, the infrastructure. We're an asset-heavy business, but we've got the vehicle financing capability. And then we've got a team literally with years of direct AV operating experience. So I mean, in sum, I think we've got the right ingredients to do it. We're focused on it. But I'd be remiss if I also didn't say we're also focused on making sure the core business is turning, head in the right direction, and we're not going to be distracted by anything around that. But we can do more than one thing, and we are and mobility is a big part of our future. Operator: Our next question comes from the line of Dan Levy with Barclays. Dan Levy: I wanted to go back to the question of DPU. And I know your North Star metric is the $300. But perhaps you could just walk us through again the path to how you can sustainably be at that $300 given some of the vehicle inflation that we've seen, what offsets do you have? Because just mathematically, if you're holding a car for 18 months and the price is going up, that DPU is going to just increase above $300. So what offsets do you have to get it to that $300? And what's the confidence on that? Wayne West: Yes. Thanks, Dan. I appreciate the question. I'll start, and Scott, feel free to add. But yes, we've got confidence that kind of our end-to-end fleet strategy that we've talked about in the past will work in any environment, first of all, and we can maintain the sub-300 DPU this year and beyond. So although as we noted, there's some seasonality in the trends and some volatility. But we've rotated the fleet. We've got model year '25, '26 vehicles to sustain our depreciation North Star and the used car market set up well this year as we move forward. We've also pivoting into heavier retail car sales, along with shorter hold periods. And I think both of those will be tailwinds for us as we go forward. But ultimately, it's about managing the right buy, hold and sell at a make-model trim level in order to maximize the retention value over that whole period. It's not necessarily the cap cost. It's the retention value from what we buy it for the net purchase price and what we sell it for. And that retention value then over that whole period is the key. So -- and managing that really gives us the ability to hit our DPU targets. Scott Haralson: Yes. Dan, it's Scott too. I'll just add an important sort of mathematical component here. Obviously, we buy a ton of vehicles at sort of large volumes that are significantly below MSRP. And at that sort of discount level, I mean, ideally, you turn around and sell the vehicle the next day, obviously, to monetize that discount. But obviously, we can't do that, and we rent the car for a period of time. But to Gil's point, the idea of a short hold has significant mathematical components, albeit operationally complex because you do need a large inflow of vehicles, you need the piping to be able to exit vehicles at that volume. So the combination of all those things create the ability to optimize DPU that we think will be below $300. And we have the capabilities to drive it a good bit further once all of the components sort of start humming. So I think mathematically, you could easily get to that point. And historically, the rental car business has been well below $300. So I don't think we're charting new territory here, respectively. But I think there's a lot of components that we've definitely gotten good at, and we'll continue to do that. But I think mathematically, it's important to sort of think of it around those factors. Dan Levy: Great. And if I could just ask a follow-up on the liquidity standpoint. So I appreciate the commentary on Q2 being the trough and some other liquidity actions. But just given you're still going to be a ways away from being free cash flow positive, maybe you could just comment on the free cash flow dynamics. But in the absence of that, what other capital raise options you have to keep the liquidity in line until you hit free cash flow positive? Scott Haralson: Yes. Let me touch on a couple of points there, Dan. I think we'll make pretty sizable strides in free cash flow generation in '26. Obviously, post Q1, if you sort of look at the margin profile, we'll be somewhat cash flow neutral in the year post Q1. And so the -- obviously, we got to drive the business in '27 to the point where we become cash flow positive, covering all of the components within our working capital needs. But we talked about a few things that we have in the pipeline, the $200 million initiative that we created, which was an alternative letter credit facility that reduces the need for those funds to be taken out of the RCF. We have a large number of initiatives that are not your typical sort of first lien offering, which we have as well that talk about things like more capacity within our ABS structure. We have real estate assets that are both locations we no longer need. I mean we're a 100-year-old company. So we have some excess assets that we need to monetize as we optimize our facility footprint. But we also have other locations where we do operate and want to continue that we may do sale-leaseback transactions on at a very good cost of capital. That's a better capital allocation than owning real estate across the entire network. We also have a number of strategic initiatives to grow our franchise base, including new geographies where we don't operate today, plus some locations that are corporate-owned and operated, which are desirable franchise opportunities that are both strategically interesting, but also create an upfront capital infusion opportunity. So there's a whole host of items here that give us a good bit of flexibility, including the first lien capacity that we have, which is roughly $400 million. A lot of that comes from the rolling off of some of the RCF capacity that we can refinance in the year. Operator: Your next question comes from the line of John Healy with Northcoast Research. John Healy: Gil, I wanted to go to a comment that you kind of weaved into the prepared remarks a few times, you used the word off-airport. And you seem to use it in separation with the word mobility. So would just love to get your view on the word off-airport, what you guys are doing there. If it is separate than the mobility business, and is it related to maybe a desire to get back into the insurance business that the company was in a while ago. Wayne West: Yes. Thanks, John. Yes, just to clarify, I appreciate that question. The way we were using it, the term off-airport was in respect to our rental car business, not for mobility. So it's a separate and included part of our rental car business. And we consider, of course, on-airport and our what we call Hertz local addition, off-airport volume in that mix. And maybe just for context, that growth in that, we do see the growth and it's profitable growth for us, and we're disciplined about that. But if you recall, as we rotated the fleet, we had to shrink our fleet in order to accelerate the rotation of the fleet. We're managing capital. We're managing vehicle availability. We're managing -- working our way through depreciation, all those things. So we had to shrink to accelerate the fleet rotation. Essentially, we kept our airport capacity more or less flat during that period. And we shrink in our off-airport HLE location and to some degree, our mobility business. So as we think about off-airport and growing that business in '26, it's really just kind of going back to where we were in prior years is certainly the first step of that. The demand is there, again, in various segments. And so that's really the context of off-airport. Mobility is separate, right? We're growing that business. It's even at a much faster rate than off-airport. And it's through the partnerships. And again, that's got, we think, a long runway. Scott Haralson: John, this is Scott. Just a quick comment. I think we view those businesses differently, too, by the way. The airport has different demand profiles, obviously driven by airlines and TSA demand, our off-airport business has a different cycle to it, obviously, related to insurance replacement and even some of the leisure demand and commercial components operate on a different cyclical component. So as we think about growth profiles, profitability profiles. We do view those a bit differently, which is why when we talk about growth, we segment it out into the sort of airport off-airport, rideshare components just because they behave differently. John Healy: Great. And then just one question on cap structure and balance sheet. You guys have said that, I believe, 300 to 600 basis points of EBITDA margin this year. If you're at the high end of that range, does that get you towards kind of cash flow breakeven for the year? And just longer term, any thoughts about the approach to deleveraging here? I mean, even on the '27 goal of $1 billion in EBITDA, even if we earmark a lot of that improvement to debt repayment, we're still an awfully levered company. So just wanted to get your thoughts about how we bring down leverage. And I know you talked about sale leaseback and some of those things. But I would just love to get your view on ideal cap structure and hypothetically, like maybe when we could be below certain leverage levels? Scott Haralson: Yes. John, it's a good question. Obviously, the business has to get to the point where it can cover its sort of debt servicing and working capital needs. I mean you could probably do the math within our balance sheet, but the sort of free cash flow breakeven number sits in that sort of 6% to 7%. So yes, at the high end of that, we're going to be pretty close to sort of free cash flow breakeven for the year. And I've said this before, obviously, the business has to get to the point where it's producing free cash flow to start thinking about using those funds to delever. There are other components that will take place in the future as well as we refinance. We may have the capability within our stock price to use equity at some point in the future that we've talked about that we're definitely price sensitive to that because we are so optimistic about where the business goes. And the other components of that, that we think through are how the platform and the initiatives will play out in forming the ability to delever. We think the components of mobility and fleet car sales will both drive operating profits to the business as well as an infusion of equity capital that may also participate in all the holistic views of capitalizing those components necessary to grow those businesses, but also helping the cap structure at the same time. So there's a lot of moving pieces, and this is going to happen over time. But the first step is getting the business on solid profitable footing. Operator: Our next question comes from the line of Ryan Brinkman with JP Morgan. Ryan Brinkman: With regard to the Hertz car sales strategy, what are you expecting in terms of the percentage of vehicles disposed of via various channels in 2026 relative to 2025? And maybe looking beyond this year also, what is assumed already in your North Star target for per unit depreciation of under $300 per month or $1 billion of EBITDA in '27 versus what level of disposition performance would be incremental to those targets? Wayne West: Yes. I'll start with the latter point, Ryan. Nothing, right? We're not assuming that Hertz car sales factors into the $1 billion of EBITDA in '27 or really anything material this year. The real key from a growth standpoint, there's 2 points I would make here on Hertz car sales because we do want to grow the percent of car sales that we have into retail. Keep in mind, historically, what we've done is to move volume through the rental car seasonal periods and do it through wholesale channels in order to match the timing of kind of the ins and outs of that. So we're shifting our strategy to move the bulk of that volume through retail channels and shorten our sales time to do that. Today, we're roughly at, call it, about 1/3 of our cars move through retail channels. Today, that's both Hertz car sales, our direct sales along with retail partners that we have established to move volume through. Aspirationally, we want to grow that to about 80%. So there's a path there, and we're pushing hard to do that. And then if you peel that back, I think we tried to cover a little bit of this in the script, but we see kind of a couple of pieces to that, right? We've got a physical footprint today. We've been investing in our digital channels and e-commerce as well. And the combination of those creates a really good model for us, right? So we can meet our customers where ultimately they want to be, right, rather than just relying either/or on a physical channel or a digital channel. So that combination is really important for us. We've got a lot of great ingredients to drive this. Of course, we've got a building customer base. People are test driving our cars every day. We've done rent to buy. We partnered with Cox to revamp our website. Again, I would encourage you guys to go see it. It's really impressive. I would also just mention, on a customer basis, the cars we sell to customers. The Net Promoter Scores of those buyers are as high as anything I've ever seen anywhere. They're over 90% Net Promoter Scores. That's almost impossible achievement, candidly. So the experience is already good. We've got a great trusted brand. And then it's a matter of top-of-funnel demand. We've got big partnerships that drive that. And then the real problems for us to solve are distilling that into qualified leads and conversion rates. And the team is really focused on that. We've got some great people helping us. And that -- those are the real keys. Along with driving up our net margin per sale. It's not just about volume. Ultimately, it's about adding a few thousand dollars to the net here, selling hundreds of thousands of cars where we have the material impact. So the net margin is key in the equation. We've been focusing really hard on reconditioning cost, along with capturing F&I that on the back end of the transaction that we've never had. So combination of those 2 plus selling more digitally reduces the overall selling expenses. So -- and we're seeing the margin side heading the right way on a per car basis, and then it's about increasing volume. We're -- look, it's -- this isn't easy, obviously, but we got the ability to -- again, we've already got the scale. It's just a matter of channel shift in the way we're selling. So a big opportunity for us. Ryan Brinkman: Okay. And then lastly, with regards to the more sophisticated approach to pricing that you referenced in your prepared remarks is leading to higher revenue per unit, and you expect to contribute more, are you utilizing a refining a new or existing software system? Or what would you say are the drivers of the progress so far and the catalyst for further improvement? Scott Haralson: And just to clarify, are you talking about the car sales or our rental business, rental car business? Ryan Brinkman: Now the rental, the pricing that's baked into the RPD. Scott Haralson: So we're doing the same, by the way, on the cars. But go ahead, Sandeep. Sandeep Dube: Yes, this is Sandeep here. Yes. Thanks for the question there on pricing sophistication. So see, we are relooking broad scale how we price demand overall, right? And it's a combination of improved systems. And we've talked about this in prior earnings calls around our work around there. And that's a longer term, and we are well on that journey. On top of that, you have to always relook how you structure your pricing and the approach that you use within the systems, right? And that's the piece that I referred to when I talked about Q4, where we've infused the revenue management team with some new talent. There's some really good thinking that's going on there. And we've applied different queries into how we actually price for demand, and that's leading to a different outcome there. So I think it's a combination of systems and different thinking. And by the way, this is still in the early innings of how we kind of go about this. This is a journey, and I expect continuous improvement on this front. Operator: Our next question comes from the line of Chris Woronka with Deutsche Bank. Chris Woronka: So the second question is going to be kind of as we think about the $1 billion target for next year on EBITDA, we know that the North Star targets are kind of numerically. But if I think about how much fleet maybe that requires? And then also more importantly, on the revenue side, maybe you can, at a high level, directionally bucket for us where you think -- is this market share on corporate? Is it market share on leisure? Is it more rideshare where you don't maybe have quite as much direct competition? If you could maybe, at some high level, bucket those out for us, what you think drives that would be super helpful. Wayne West: Okay. Well, I'll start, and I would encourage Scott and Sandeep to dive in. Thanks, Chris. Yes, first of all, I think in terms of the $1 billion EBITDA in '27, I mean, a little bit of context, at least from my view, I mean these aren't uncharted waters, right? We've been there in the past. Others in the industry are there now and achieve that level of performance. So it's clearly achievable. I think the North Star financial targets that we've given on DPU, RPU and DOE, along with some just modest growth, get us there conceptually, and we can talk about any of those assumptions. And then, of course, the approach we've taken on back to basics laid a foundation to get there. The trajectory of all those metrics are heading that way, right? They turn, they're heading that direction. I think the biggest economic lever, as you know, is the fleet, which we've addressed, and that's the economic engine. And we're tracking really with all the North Star metrics directionally where we want to go. We'll never be satisfied with the timing and we'll keep pushing hard. That is the one variable that's always a little difficult to gauge given the kind of nature of the significant transformation we've been doing. But there's a strong sense of urgency at the team. Everybody is full throttle. The needles are moving. So we've talked about depth some, maybe the revenue piece, you want to touch on. Sandeep Dube: Yes. On the revenue piece, I think, again, it's going to be very, very disciplined growth, right? And going back to our business lines, right? On the airport side, we're going to be very clear that our growth is going to be at or below TSA levels. And the beauty in there is we're going to keep refining the segments that we -- the segment mix there so that we generate a higher and higher margin out of our airports. And for the off-airport business, again, there's more growth there, and we'll keep working on that. I think Gil alluded to that earlier on. By the way, there's a segment mix play within the off-airport segment business line as well, which would help us enhance the margins there. And then lastly, mobility, again, we have talked about that. There's more growth there. We're growing that business at a pretty good clip and we'll continue on that journey. But I would say discipline in where we grow and discipline on how we fleet is the answer there. Scott Haralson: Yes. I think just real quick before we wrap up the call here, Chris, is that I think mathematically, all 3 levels of the North Star get you well above $1 billion. I think the point here is that there's a number of ways to get there. They all don't have to hit to hit $1 billion, plus you've got the fourth dimension of scale, which plays into here. And then we really haven't even talked about the platform component that adds on to it. So Gil talked about timing, but I think the takeaway is there's multiple ways to get there. Operator: There are no further questions at this time. This concludes the Hertz Global Holdings Fourth Quarter and Full Year 2025 Earnings Conference Call. Thank you for your participation.
Operator: Good morning, everyone, and welcome to Grupo Televisa's Fourth Quarter and Full Year 2025 Conference Call. Before we begin, I would like to draw your attention to the press release, which explains the use of forward-looking statements and applies to everything we discuss in today's call and in the earnings release. I will now turn the call over to Mr. Alfonso de Angoitia, Co-Chief Executive Officer of Grupo Televisa. Please go ahead, sir. Alfonso de Angoitia Noriega: Thank you, operator. Good morning, everyone, and thank you for joining us. With me today are Francisco Valim, CEO of Cable and Sky and Carlos Phillips, CFO of Grupo Televisa. Last year was marked by several milestones, both at Grupo Televisa and TelevisaUnivision, which Bernardo and I are confident will allow us to keep creating value for our shareholders. At Grupo Televisa, let me touch on four major achievements. First, our strategy to focus on attracting and retaining value customers in cable allowed us to grow our Internet subscriber base by around 47,000 in 2025. This marks a full year turning point after losing Internet subscribers, both in 2023 and 2024, mainly driven by a strategy decision not to retain low-value subscribers. Second, we keep executing on the implementation of OpEx efficiencies and the integration between Izzi and Sky to extract further synergies. This contributed to expanding our 2025 consolidated operating segment income margin of 39.1%, by 200 basis points, driven by a year-on-year OpEx reduction of 8.3%. Third, we kept a disciplined CapEx deployment approach to focus on free cash flow generation. In 2025, we invested MXN 12.2 billion in CapEx, which is equivalent to 20.7% of sales. This CapEx is intended to deliver higher returns over the investment and has allowed us not only to have close to 1.4 million gross adds during the year, but also to upgrade 4.5 million homes to FTTH technology. This basically means that we ended 2025 with around 9 million homes or approximately 45% of our total footprint passed with FTTH technology. Valim will elaborate on our plan to keep upgrading our network later during the call. And fourth, in 2025, we generated around MXN 5.9 billion in free cash flow, allowing us to prepay bank loan due in 2026, with a principal amount of around MXN 2.7 billion. This debt repayment comes on top of the $220 million principal amount of our senior notes already paid on March 18. Additionally, at the end of 2025, Grupo Televisa's leverage ratio of 2x EBITDA compared to 2.5x at the end of last year, mainly driven by our free cash flow generation. And at TelevisaUnivision, I will mention three key milestones. First, 2025 was a breakthrough year for our direct-to-consumer business, as ViX delivered record revenue since it was launched, achieving profitability in every quarter and expanded operating margins throughout the year. For the full year, our DTC business represented nearly 1/4 of the total company revenue, driven by robust advertising growth from our free tier and the continued expansion of our premium subscription offerings. Moreover, our DTC business is now a significant contributor to our adjusted EBITDA, accounting for approximately 20%, driven by its industry-leading margins. Second, the efficiency plan to reduce gross operating expenses at the TelevisaUnivision by around $400 million in 2025, delivered outstanding results. During the year, our total operating expenses declined by around 8% year-on-year for total operating expenses of around $3.2 billion. This shows a disciplined execution of our cost savings initiative. This OpEx reductions have been fully realized in our 2025 results. And third, looking at TelevisaUnivision's leverage and debt profile the company ended the year at 5.6x EBITDA, an improvement from 5.9x at the end of 2024, driven by growth. Moreover, in 2025, TelevisaUnivision successfully refinanced $2.3 billion of debt, which extended its credit facilities and eliminated all near-term maturities. Deleveraging remains a core strategic priority for TelevisaUnivision. Having said that, let me turn the call over to Valim, as he will discuss the operating and financial performance of our consolidated assets. Francisco Valim Filho: Thank you, Alfonso. Good morning, everyone. In 2025, consolidated revenue reached MXN 58.9 billion, representing a year-on-year decline of 5.5%, mainly driven by lower revenue at Sky. Operating segment income reached MXN 23 billion, equivalent to a slight decrease of only 0.6% year-on-year. Turning to our fourth quarter results. Consolidated revenue reached MXN 14.5 billion, representing a year-on-year decrease of 4.5%, while operating segment income reached MXN 5.9 billion, equivalent to a year-on-year expansion of 6.1%, driven by the efficiency measures that we have been implementing since the integration of Sky. Now let me walk you through the operating financial performance of our cable operations. We ended December with a network of 20 million homes after passing around 59,000 new homes during the quarter or over 118,000 new homes during the year. During the quarter, we continued to execute our strategy to focus on value customers rather than volume, while working on customer retention and satisfaction. This contributed to achieving a monthly churn rate below our historical averages of 2% for the third consecutive quarter. Our broadband gross adds remained solid, allowing us to deliver 25,000 net adds during the fourth quarter compared to net adds of around 22,000 in the third quarter and 6,000 in the second quarter and the disconnection of about 6,000 in the first quarter of 2025. In video, we also experienced stronger gross adds than in the first three quarters of the year and managed to reduce churn. Therefore, we lost about 31,000 video subscribers during the fourth quarter compared to 43,000 disconnections in the third quarter and 53,000 cancellations in the second quarter and a loss of 73,000 video subscribers in the first quarter of 2025. Moreover, we expect these improving trends to continue going forward, influenced by our multiyear partnership with Formula 1 to provide line coverage of all Grand Prix via Sky Sports channels available through Izzi and Sky, beginning in the fourth quarter of last year and through the 2028 season. Moving to mobile. Our net adds of 95,000 subscribers during the quarter showed sustained momentum as they were mostly in line with the 94,000 net adds in the third quarter. Our innovative MVNO services are already making our bundles more competitive, allowing us to increase the share of wallet of our existing customers and helping us to reduce significantly the churn of our existing customers. During the quarter, net revenue from our residential operations of MXN 10.6 billion, which accounted for around 90% of total cable revenue decreased by only 0.6% year-on-year. This marked the best quarter of the last 2 years at our residential operations from a revenue growth performance standpoint and compares well to a decline of 1.8% in 2025. On a sequential basis, net revenue from our residential operations remained stable, potentially signaling a gradual recovery. During the quarter, net revenue from our enterprise operations of MXN 1.2 billion, which accounted for around 10% of our cable revenue fell by 4.2% year-on-year. Due to the timing of revenue recognition of an important contract signing in the fourth quarter of 2025 and because of tough comps. Moving on to Sky's operating and financial performance. During the fourth quarter, we lost 304,000 revenue-generating units, mostly coming from prepaid subscribers that had not been recharging their services. In addition, beginning in the second quarter, we started to charge an installation fee of MXN 1,250 to all new satellite pay-TV subscribers to increase the return on investments on this service. This translated into a slowdown of video gross additions for Sky that has been steady over the last three quarters. Sky's fourth quarter revenue of MXN 2.8 billion declined by 16.8% year-on-year, mainly driven by a lower subscriber base. To sum up, segment revenue of MXN 14.5 billion fell by 4.5% year-on-year, while operating segment income of MXN 5.9 billion increased by 6.1%, making it the best quarter of the year driven by efficiency measures that we have been implementing and synergies from the ongoing integration between Izzi and Sky. Our operating segment income margin of 40.9% expanded by 410 basis points year-on-year. Regarding CapEx deployment, our total investment of MXN 4.6 billion accounted for 31.8% of sales in the fourth quarter. During the year, our CapEx deployment of MXN 12 billion, equivalent to $645 million, or 20.7% of sales. The main reason behind having a higher total investment relative to our 2025 CapEx budget of around $600 million was the strong-than-expected Mexican pesos, particularly during the second half of the year and the fact that around 50% of our CapEx budget is in local currency. Finally, operating cash flow for Cable and Sky, which is equivalent to EBITDA minus CapEx was MXN 1.3 billion in the fourth quarter, representing 9.1% of sales. For 2026, our CapEx to sales ratio should be close to 25% as we plan to upgrade 6 million homes to fiber-to-the-home technology, increase our subscriber base and support growth. This basically means that we expect to end 2026 with 75% of our total footprint passed with FTTH technology. Alfonso de Angoitia Noriega: Thank you, Valim. You're doing a great job. Now let me walk you through TelevisaUnivision's 2025 results released on Tuesday morning. As expected, the company's full year revenue fell by 5% year-on-year to $4.8 billion, while adjusted EBITDA of $1.6 billion, increased by 2%. Excluding political advertising and FX volatility, adjusted EBITDA increased by a healthy 7% year-on-year, underscoring the scalability of a profitable DTC business and the sustained impact of the cost reduction initiatives launched at the end of 2024. Turning to the fourth quarter. Revenues of $1.3 billion declined by 2% year-on-year, while adjusted EBITDA of $396 million fell by 12%. Excluding political advertising, total revenue grew by 1% year-on-year, while adjusted EBITDA decreased by 5%, despite continued DTC profitability and continued cost management. Moving on to the details of our revenue performance. During the quarter, consolidated advertising revenue was flat year-on-year. In the U.S., advertising revenue was 11% lower as continued growth in ViX and higher pricing were more than offset by declines in linear advertising due to secular softness and political spending relative to the prior year due to the absence of U.S. presidential election cycle. Excluding political advertising, advertising revenue in the U.S. fell by 3%. In Mexico, advertising revenue increased by 15% year-on-year, driven by the strong ViX growth and a resilient linear business, including private sector advertising. In local currency, advertising revenue in Mexico grew by 6%. During the quarter, consolidated subscription and licensing revenue decreased by 4% year-on-year. Continued growth in ViX across both the United States and Mexico along with higher U.S. linear subscription and licensing revenue, including benefits from our new Hulu agreement and higher content licensing, more than offset the loss of Fubo, the temporary YouTube TV carriage dispute and ongoing net subscriber declines. However, these increases were more than offset by lower linear subscription revenue in Mexico due to the renewal cycle with Izzi Sky and the cancellation of another distribution company, which we have already lapped. Moving on to the balance sheet. TelevisaUnivision ended 2025 with $440 million in cash, an increase of 33% compared to the previous year. Total CapEx investments were $119 million for the full year or a year-on-year increase of 4%. We expect CapEx deployment to remain at similar levels in 2026. Speaking about the 2026 World Cup, it represents a great opportunity both for Grupo Televisa and TelevisaUnivision, and we are approaching it with a fully integrated strategy across broadcast, streaming, digital and social. Our goal is to deliver comprehensive coverage with flawless execution, while maximizing the commercial impact across platforms. In Mexico, ViX will become the official home of the World Cup, making ViX the exclusive streaming destination for all 104 matches available at a preferential price for customers of Izzi and Sky. ViX premium annual subscribers will get access included while ViX's monthly subscribers and the customers of Izzi and Sky will have the option to add on World Cup coverage. Finally, considering several opportunities in the telecom sector in Mexico that we're currently exploring, our Board of Directors approved suspending the payment of our regular dividend in 2026. This will be presented for approval at our Annual Shareholders' Meeting. To wrap up, Bernardo and I are confident that our focus on value customers, efficiencies and ongoing integration between Izzi and Sky at Grupo Televisa and further integration and operational optimization at TelevisaUnivision now that our DTC business represents over 20% of consolidated revenue and adjusted EBITDA, will allow us to create greater value for our shareholders in 2026. Now we're ready to take your questions. Elsa, could you please provide instructions for the Q&A? Operator: [Operator Instructions] The first question today comes from Marcelo Santos with JPMorgan. Marcelo Santos: I have two. The first is for Valim. Could you please walk us through the fiber plan, how many homes with fiber-to-the-home do you have today? I mean, is this goal -- what is the goal exactly, if you could repeat? And is it for the end of 2026? So just wanted to get a bit more color on this plan. And the second question is about the competitive environment. How has been like the room to increase prices? Could you make some comments on how the market is going? Alfonso de Angoitia Noriega: Thank you, Marcelo. Valim, please. Francisco Valim Filho: Thank you, Marcelo. So I think that the fiber deployment is we're already at 9 million homes with fiber today, and planning to get to 15 million, 16 million by the end of 2026. So that would mean 75% of our existing network would be fiber-based. So that is on plan and on target. Regarding the competitive environment in Mexico, I think it's important to emphasize that we have been increasing ARPU consistently over the last several quarters. So it's due to price increases, mostly is due to more products to more -- to our existing customers and better and better services. So that's what we decide. We see that our alternative players, their flat or declining ARPU as opposed to ours, which is increasing constantly. And that's the route we are taking, not so much on price increases, but enable to sell more to the existing clients. And so the competitive environment in Mexico has been very stable over the last 2, 3 years, basically. And what we have been doing also consistently is focusing on high-value clients that will churn less and value our services and be able to acquire more services from us. That's the strategy moving forward. Alfonso de Angoitia Noriega: Pretty much a rational competitive environment. Marcelo Santos: Great. Just a follow-up on the first answer. When you mentioned the 9 million today and to 15 million to 16 million, this is really like fiber-to-the-home where there's no cable involved anymore, like it's fiber box in the home? Or is it like more fiber to the curb, but there is still a cable. Alfonso de Angoitia Noriega: No. Marcelo, fiber is still a cable. It's just a different cable. Marcelo Santos: HFC, sorry. Alfonso de Angoitia Noriega: Yes, I understand what you're saying. And just couldn't a point the joke. So it's just, yes, we will have fiber to the home on 15 million, 16 million homes by the end of the year. So if acquired, actually, nowadays, when the network is deployed, there are no deployments in HRC. So we still have a percentage of our deployments are in HRC because we are not with the full coverage. But as we grow our subscriber -- our fiber network, every new subscriber goes into fiber, and we migrate them as conditions are needed into fiber. So in a few years, all of our clients will not only be under a fiber network infrastructure, but also be connected to our fiber network. Operator: The next question comes from Matthew Harrigan with Benchmark. Matthew Harrigan: You're kind of almost uniquely exposed to AI positively on the telecom side, given all the repetitive processes and consumer-facing kind of customer journey experiences. And then on the media side with your JV, I think you're -- I know you're obviously the largest volume producer of Spanish programming in the world, and you may even be #1 overall. You had a lot of dislocation in the U.S. media names a few weeks ago on account of 20. And I was just curious, what's your broad perspective on how AI affects you both on the blocking and tackling side on telecom and then on the creative side on TelevisaUnivision, both with respect to your in-house content creation being even faster and more short form and then more competition you might face on people and companies aren't nearly as well funded as you. Alfonso de Angoitia Noriega: Thank you, Matthew. A very interesting question. I'll answer the media side and then Valim can take the telecom side. On the media side, we're experimenting with AI and production through AI. It's a very important tool. So in terms of script driving in terms of production itself, it is very useful. So we're experimenting especially. We launched last year our micronovelas on the short form. We produced -- we started producing last year this type of content. This year, we will produce more than 300 micronovela. And some of them are produced 100% with AI. So we're moving in that direction, moving I mean, using AI more and more, which will become a very efficient way of producing content. Francisco Valim Filho: In telecom, AI is mostly useful in how we handle our customer and how we operate our network. And as we speak, we are in very challenging and deep changes into the organization, making sure we have AI all over, meaning from the network usage to the client interface. So in the next few months, we're seeing significant impacts on how we interact with customers focusing on basically 100% AI. So 2026 will be the year we'll flip from a typical call center kind of a thing to full AI, everything AI in terms of customer relationship. So this is the year that will go from a typical telephone to an AI-based telecom operator. Matthew Harrigan: Great. It feels like even with some pretty straightforward kind of enterprise AI applications, you're in a great place without being too fans on the value LM models. Francisco Valim Filho: And sorry, just to complement on that, we are operating with the large guys, which is the typical Oracle, Salesforce, AWS kind of guys. So we have a clear path and we're working with the right guys to be able to achieve it. Operator: The next question comes from Ernesto Gonzalez with Morgan Stanley. Ernesto Gonzalez: It's on the opportunities you're exploring in Mexico Telecom. Just wanted to see if you can comment a little bit on whether these opportunities are in the fixed market or on the mobile market or any additional color you can give? And on the residential or your operations in Mexico, operating segment income was really strong in the fourth quarter. How sustainable is this margin level? Alfonso de Angoitia Noriega: Well, yes, we are actively exploring opportunities in the telecommunications sector. But unfortunately, we cannot comment on specifics or at this point, share more information. Hopefully, we can get those to materialize. There's no guarantee, of course, that they will we'll be in touch as those -- as we make progress as to those. And as to your second question, Valim? Francisco Valim Filho: We keep on optimizing our operations like we were just discussing a few moments ago, try to make sure our systems are more AI-oriented in order to make our processes more efficient, not only from a customer facing perspective, in other words, the clients see and understand that we are closer to them and providing better service, but also the flip side to that discussion is that it would allow us to have a lower cost base. All in all in the service of our clients. So yes, we keep on pursuing increasing operating cash flow. Operator: The next question comes from Alejandro Azar with GBM. Alejandro Azar Wabi: Third one is on your comment, Valim, of the 25% CapEx to sales for 2026. Is that on the telecom service or it's telecom enterprise or it's the full telecom enterprise satellite? Should we think 25% of consolidated Televisa? And my second question is also on -- relative to Sky. With the rate of the connections that we have had in the last couple of years. And if this continue, it becomes really tough for Televisa at the consolidated level, at least on the EBITDA side to show growth. I'm just wondering if you guys can give us more color of how you see Sky going forward, if there is a level where you see these connections or your total clients might normalize? Francisco Valim Filho: Okay. That's a great question. I think that the CapEx discussion is up to 25%. It comprises everything. Izzi Sky and Bestel, our B2B, our DTH and our cable fiber business. So that comprises it all. With regards to Sky, I think there is just misperception of what Sky really is. used to be a great business, all over the world, DTH represented a great business. But in all markets, what has happened is with the advancement of the networks, the FIC networks, Obviously, the connections are better and a lot of the streaming are also competing with that. So you see Internet plus the first streaming that doesn't allow much room for a DTH platform to keep on growing. So our plan is basically to make sure that we have the lowest possible cost at the Sky, meaning it's revenues minus variable cost, programming costs, minus the satellite and conditional access. Other than that, it's a cash flow generating business. So we don't expect it to stop or to normalize or level at any point. And I don't think that's something that people have seen anywhere else given the conditions that I have just described. So as you segregate that segment, Sky and its direct costs, which is -- which are the only costs that they basically have. And so everything else is our B2B and our B2C business. So I think that's the way you should approach this market as opposed to this is an overall thing and our revenue was declining. Yes, our DTH revenue is declining as expected. And what we did is streamline the DTH business. So keeps on generating cash and will be generating cash for the foreseeable future. And we have a business that is long lasting, which is our direct-to-consumer and B2B businesses. Alejandro Azar Wabi: One more, if I may, and this is just to remind us all, when do you have to pay the transaction of Sky? Alfonso de Angoitia Noriega: It's 2027 or 2028. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Angoitia for any closing remarks. Alfonso de Angoitia Noriega: Well, thank you very much for participating. Give us a call if you have any additional questions. Have a great weekend. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.